Leonen Cases

G.R. No. 212683, November 12, 2018

name of Tortal, married to Taniguchi.6

JERSON TORTAL, Petitioner, v. CHIZURU TANIGUCHI, Respondent.

On April 11, 2000, Taniguchi filed a petition for the nullity of her marriage with Tortal. The petition was docketed as Civil Case No. CV-00-0149 and was raffled to Branch 260, Regional Trial Court, Parañaque City.7

E.

DECISION LEONEN, J.: An allegation of a trial court's lack of jurisdiction to render the assailed judgment, final order, or resolution must be brought in a separate action for annulment of judgment under Rule 47 of the Rules of Civil Procedure. This resolves the Petition for Review on Certiorari1 filed by Jerson E. Tortal (Tortal) assailing the Court of Appeals December 13, 2013 Decision2 and May 14, 2014 Resolution3 in CA-G.R. CV No. 98955. The assailed judgments upheld the Regional Trial Court October 28, 2011 Decision, which annulled the levy and sale of a house and lot covered by a compromise agreement between Tortal and Sevillana P. Sales (Sales).4 On June 8, 1999,5 Tortal married Chizuru Taniguchi (Taniguchi). They lived in a 250 m2 house and lot in BF Homes, Parañaque City, which was covered by Transfer Certificate of Title (TCT) No. 142089 and registered in the

On August 25, 2003, the Regional Trial Court granted the petition and annulled Tortal and Taniguchi's marriage. In the same decision annulling their marriage, the Regional Trial Court declared the house and lot to be Taniguchi's exclusive property.8 Tortal did not move for the reconsideration of this decision. Hence, it became final and executory on October 14, 2005.9 While the petition for nullity of marriage was pending, Sales filed a complaint for collection of sum of money against Tortal. The collection complaint was docketed as Civil Case No. C-1262 and raffled to Branch 63, Regional Trial Court, Calauag, Quezon. Sales and Tortal eventually entered into a compromise agreement, which was approved by the Regional Trial Court of Calauag.10 On December 3, 2003, Tortal and Taniguchi's house and lot was levied upon in accordance with the Regional Trial Court of Calauag's Compromise

Judgment. The property was then sold at a public auction to Sales for P3,500,000.00.11 On May 24, 2005,12 Taniguchi filed a Complaint for Reivindication of Title, Annulment of Levy and Sale in Execution, Injunction, Damages and Attorney's Fees against Tortal and Sales. She prayed that an injunction be issued against the Register of Deeds of Parañaque City, and that the levy over the house and lot and the sale to Sales be declared null and void.13 Her complaint was docketed as Civil Case No. 05-0198 and was raffled to Branch 257, Regional Trial Court, Parañaque City.14 On September 14, 2005, the Regional Trial Court of Parañaque City granted Taniguchi's application for injunction and enjoined the Registry of Deeds of Parañaque City from cancelling TCT No. 142089 and from issuing a new one in Sales' favor.15 On October 28, 2011, the Regional Trial Court of Parañaque City nullified the levy and the sale of the house and lot to Sales, and made permanent the injunction against the Registry of Deeds of Parañaque City. The fallo of its Decision read:

WHEREFORE, the preliminary injunction issued on September 14, 2005 is hereby made permanent. The levy and sale by public auction of the property covered by TCT No. 142089 of the Registry of Deeds of Parañaque conducted by Sheriff Benedicta G. Hebron and the Certificate of Sale issued pursuant thereto are declared null and void. Defendant Jerson E. Tortal is ordered to pay plaintiff Chizuru Taniguchi the amount of P50,000.00 for moral damages, P50,000.00 for exemplary damages, and P50,000.00 for attorney's fees and the cost of suit.

Tortal failed to bring up Taniguchi's citizenship during pre-trial and only did so for the first time on appeal. 19

IT IS SO ORDERED.16

The fallo of the Court of Appeals December 13, 2013 Decision read: WHEREFORE, the Appeal is hereby DENIED. The Decision dated 28 October 2011 of the Regional Trial Court of Parañaque City, Branch 257, in Civil Case No. 05-0198, is AFFIRMED.

Tortal and Sales appealed the Regional Trial Court October 28, 2011 Decision but on December 13, 2013, the Court of Appeals17 dismissed their appeal and upheld the assailed Decision. The Court of Appeals rejected Tortal's allegations about the supposed defects of the Regional Trial Court August 25, 2003 Decision nullifying his marriage with Taniguchi. It pointed out that this Decision had long become final and executory.18 It likewise rejected that Taniguchi had property because Filipino citizen. It

Tortal's assertions no right to acquire she was not a emphasized that

It also stressed that Tortal should have assailed the Regional Trial Court August 25, 2003 Decision nullifying his marriage with a petition for annulment of judgment, not in the present case which only questioned the nullity of the levy and sale of the house and lot to Sales. Nonetheless, it asserted that the period for filing a petition for annulment of judgment had likewise long passed.20

21

SO ORDERED.  (Emphasis in the original) Only Tortal moved for the reconsideration of the Court of Appeals December 13, 2013 Decision, but on May 14, 2014, the Court of Appeals22 denied his motion. In his Petition for Review on Certiorari23 before this Court, petitioner Tortal maintains that the Regional Trial

Court August 25, 2003 Decision nullifying his marriage with respondent was null and void as there was no valid service of summons on him. He further claims that substituted service of summons by publication was improperly complied with; thus, the Regional Trial Court never obtained jurisdiction over him.24 Petitioner likewise asserts that Taniguchi's foreign citizenship precludes her from owning real property under Philippine law.25 Finally, petitioner declares that contrary to the Court of Appeals' findings, the issue of respondent's capacity to acquire real property was "impliedly included or inferable from the issues raised"26 before the Regional Trial Court during pre-trial. In her Comment27 to the petition, respondent Taniguchi contends that the Regional Trial Court August 25, 2003 Decision, which granted her petition for nullity of marriage and upheld her exclusive ownership over the house and lot, attained finality as early as October 14, 2005 because neither respondent nor the Solicitor General moved for its reconsideration. Hence, she presses that the same issues may no longer be reopened or

relitigated.28 Respondent then maintains that the issue of her citizenship and lack of capacity to own property was never brought up before the Regional Trial Court. Furthermore, she asserts that petitioner failed to explain how the pre trial order impliedly included the issue regarding her supposed lack of c pacity or how this issue could be inferred from it.29 In his Reply,30 petitioner merely reiterates his previous arguments regarding the Regional Trial Court's lack of jurisdiction over the petition for nullity of his marriage with respondent and respondent's lack of capacity to own real property.31 The only issue for this Court's resolution is whether or not petitioner Jerson E. Tortal may assail a final and executory judgment nullifying his marriage with respondent Chizuru Taniguchi in his appeal of the Court of Appeals December 13, 2013 Decision, which granted respondent's petition for annulment of levy and sale in execution. The

Petition

lacks

merit.

Petitioner claims that he failed to participate in the proceedings for the

nullity of his marriage with respondent before Branch 260, Regional Trial Court, Parañaque City because summons was never served on him, either personally or by substitution.32 If indeed summons was not properly served on petitioner, then his remedy was to file a petition for annulment of judgment under Rule 47 of the Rules of Civil Procedure. An action for the annulment of judgment is an equitable recourse that is independent of the case and is allowed only in exceptional cases, such as when there is no more available or other adequate remedy.33 A petition for the annulment of judgment of Regional Trial Courts may be given due course if it is sufficiently proven that the "ordinary remedies of new trial, appeal, petition for relief or other appropriate remedies are no longer available through no fault of the petitioner."34 Furthermore, Rule 47, Section 2 of the Rules of Civil Procedure provides only two (2) grounds for an action for annulment or judgment: extrinsic fraud and lack of jurisdiction. Nonetheless, extrinsic fraud cannot be considered a valid ground in an action under Rule 47 "if it was availed of, or could have been availed of, in a motion for new trial or petition for relief."35

Rule 47, Section 3 then provides that an action for annulment of judgment, if based on extrinsic fraud, should be filed within four (4) years from discovery of the fraud, or if based on lack of jurisdiction, then before the action is barred by laches or estoppel. In the action for the nullity of his marriage with respondent, petitioner claims that respondent deliberately indicated a non-existent address, instead of his real address; thus, he never received the summons and the Regional Trial Court failed to acquire jurisdiction over him.36 However, instead of directly assailing the Regional Trial Court August 25, 2003 Decision, which granted the nullity of his marriage in an action for annulment of judgment, petitioner chose to tackle the issue in his appeal of the Regional Trial Court October 28, 2011 Decision, which nullified the levy and sale by auction of the house and lot to Sales. This is clearly not the correct remedy. The Court of Appeals did not err in dismissing his appeal and in upholding the Regional Trial Court October 28, 2011 Decision, striking down the levy and sale by auction, thus: Still and all, appellant Tortal is not left without any recourse. If, indeed, he

believes that the RTC, Br. 260 erred in awarding the property to appellee despite being a Japanese national, he should have filed a Petition for Annulment of Judgment under Rule 47 of the 1997 Rules of Civil Procedure. Upon this point, the court a quo's disquisition is well-taken It is doubtful that defendant Tortal could in the instant case assail the validity of the final decision of RTC Br. 260. Following the principle of res judicata, the dispute on ownership was deemed to have been put to rest with the finality of the said decision. Under the doctrine of res judicata, a matter that has been adjudicated by a court of competent jurisdiction must be deemed to have been finally and conclusively settled if it arises in any subsequent litigation between the same parties and for the same cause . . . . Certainly, the remedy available to defendant Tortal is not in this proceeding, but through a petition for annulment of judgment with the Court of Appeals under Rule 47 of the Rules of Court.37 (Emphasis in the original)

Moreover, it became final and executory as early as October 14, 2005;38 hence, the lower courts did not err in granting the petition for nullity of levy and sale at auction since respondent was the established exclusive owner of the house and lot. Thus, petitioner had no authority to use the real property as security for his indebtedness with Sales.

Without a ruling from the Court of Appeals nullifying the Regional Trial Court August 25, 2003 Decision, which granted the nullity of petitioner and respondent's marriage and declared respondent as the exclusive owner of the house and lot, this Decision remains valid and subsisting.

SINDOPHIL, INC., Petitioner, v. REPUBLIC OF THE PHILIPPINES, Respondent.

WHEREFORE, premises considered, the Petition for Review is DENIED. The assailed Court of Appeals December 13, 2013 Decision and May 14, 2014 Resolution in CA-G.R. CV No. 98955 are AFFIRMED.

THIRD DIVISION

The presumption that a holder of a Torrens title is an innocent purchaser for value is disputable and may be overcome by contrary evidence. Once a prima facie case disputing this presumption is established, the adverse party cannot simply rely on the presumption of good faith and must put forward evidence that the property was acquired without notice of any defect in its title. This resolves Sindophil, Inc.'s (Sindophil) Petition for Review on Certiorari1 assailing the June 19, 2012 Resolution2 and November 23, 2012 Resolution3 of the Court of Appeals in CA-G.R. CV No. 96660. The Court of Appeals deemed as abandoned and, consequently, dismissed Sindophil's joint appeal with a certain Marcelo R. Teodoro (Teodoro) for their failure to file their Appellants' Brief within the required period.4

DECISION

This case involves a 2,791-squaremeter parcel of land (Tramo property) located on Aurora Boulevard (Tramo), Pasay City, currently in Sindophil's possession. Sindophil anchors its right to the Tramo property on Transfer Certificate of Title (TCT) No. 132440, which was purportedly issued by the Register of Deeds of Pasay City.5

LEONEN, J.:

On July 27, 1993, the Republic of the

G.R. No. 204594, November 07, 2018

Philippines filed a Complaint6 for revocation, annulment, and cancellation of certificates of title before the Pasay City Regional Trial Court, and impleaded Sindophil as one of the defendants. In its Complaint, the Republic alleged that per TCT No. 10354,7 issued by the Register of Deeds of Pasay City, the Tramo property was initially registered under the name of Teodoro on November 12, 1964. Teodoro then sold it to a certain Reynaldo Puma (Puma), causing the cancellation of TCT No. 10354 and the issuance of TCT No. 128358.8 Subsequently, Puma sold it to a certain Lourdes Ty (Ty). Puma's TCT No. 128358 was cancelled and TCT No. 129957 was issued to Ty.9 Finally, on May 3, 1991,10 Ty sold the property to Sindophil, causing the cancellation of TCT No. 129957 and the issuance of TCT No. 132440 to Sindophil on March 24, 1993.11 Despite the issuance of certificates of title over the Tramo property, the Republic claimed that TCT No. 10354 in the name of Teodoro was "spurious or of do4btful authenticity."12 For one, the registry records of the Register of Deeds of Pasay City showed that it was issued for a parcel of land in the name of a certain Maximo Escobar, not Teodoro.13 Another instance was that

Teodoro's TCT No. 10354 provided that it emanated from TCT No. 3632; but the memorandum of cancellation annotated on TCT No. 3632 provided that it was cancelled by TCT No. 8081 issued to a certain Efigenia A. Vda. de Inocencio, not by TCT No. 10354 supposedly issued to Teodoro.14 Furthermore, TCT No. 10354 provided that it covered Lot 3270-B of the subdivision plan Psd18572, allegedly a portion of Lot 3270 registered in the name of the Republic of the Philippines under TCT No. 6735. An examination of TCT No. 6735, however, revealed that it was never subdivided and that it remained under the name of the Republic. Neither was there a record of subdivision plan Psd18572 recorded with the Department of Environment and Natural 15 Resources.  For these reasons, the Republic argued that TCT No. 10354 and all certificates of title that emanated from it, including Sindophil's TCT No. 132440, were null and void and should accordingly be cancelled.16 In their Answer,17 Teodoro, Puma, Ty, and Sindophil countered that the Republic was estopped from questioning the transfers considering that it had allowed the series of transfers and even accepted the "tremendous amount[s] paid"18 as capital gains tax. They added that the

Complaint was filed because of the Register of Deeds' "personal grudge"19 against them because they had questioned a consulta issued by the Register of Deeds before the Administrator of the Land Registration Authority.20 Finally, they contended that they were innocent purchasers for value and, in the absence of evidence to the contrary, reconveyance should not lie.21 Arguing that the Republic had no cause of action against them, they prayed for the dismissal of the Complaint.22 During trial, only the Republic was able to present its evidence. Defendants Teodoro, Puma, Ty, and Sindophil were all deemed to have waived their right to present evidence when they failed to present any evidence or witness despite several settings. The parties were then ordered to file their respective memoranda; but instead of filing a memorandum, Sindophil filed a Motion to Re-Open Case,23 praying that it be allowed to present evidence that it was a buyer in good faith. As to why it failed to present evidence during trial, Sindophil explained that its witness, Sindophil President Victoria Y. Chalid (Chalid), suffered a stroke which prevented her from testifying during trial.24 Lastly, it pointed out that the Regional Trial Court granted the Republic a total of 110 days to file a

formal offer of evidence. Thus, Sindophil prayed that it be "given equal opportunity to present [its] defense since the [Regional Trial Court] had been very lenient to [the Republic's counsel,] the Office of the Solicitor General[.]"25 The Regional Trial Court, however, went on to decide the case without acting on Sindophil's Motion to ReOpen Case. In its November 13, 2009 Decision,26 it ruled in favor of the Republic and voided the certificates of title issued to defendants Teodoro, Puma, Ty, and Sindophil. It found that the Tramo property claimed by Teodoro under TCT No. 10354 was derived from TCT No. 6735 registered in the name of the Republic.27 However, no annotation of the supposed transfer to Teodoro was annotated on TCT No. 6735.28 On the claim of defendants that they were innocent purchasers for value, the Regional Trial Court said that this defense was "just a mere [assertion] and was never supported by any documents."29 It stated that defendants failed to discharge the burden of proving that they were purchasers in good faith and for value, thus, rejecting their argument.30 The dispositive portion of the Regional

Trial Court November Decision read:

13,

2009

Section 1(e) of Rule SO of the 1997 Rules of Civil Procedure.

WHEREFORE, in view of the foregoing, TCT No. 10354 in the name of Marcelo R. Teodoro and all subsequent titles derived therein, TCT Nos. 128358, 129957 and 132440, in the names of Reynaldo Puma, Lourdes Ty and Sindophil, Inc., respectively, are hereby declared Null and Void. The Re[gi]ster of Deeds is hereby ordered to effect the cancellation of the same. Likewise, defendants are hereby directed to refrain from exercising or representing acts of ownership and/or possession over the land covered by the titles declared Null and Void.

IT IS SO ORDERED.34 (Emphasis in the original)

SO ORDERED.31 (Emphasis in the original) Sindophil, together with Teodoro, appealed before the Court of Appeals.32 However, for failure to file their appellants' brief within the required period, the Court of Appeals deemed the appeal abandoned and consequently dismissed it. The Court of Appeals June 19, 2012 Resolution33 stated: In view of the failure of the defendantsappellants to file their Appellants' Brief within the period allowed to them, we hereby consider their appeal as ABANDONED and, consequently, DISMISSED pursuant to

Sindophil filed a Motion for Reconsideration35 with its appellant's brief36 annexed to it. It explained that it failed to file its appeal brief on time because its counsel, Atty. Rovenel O. Obligar (Atty. Obligar), transferred his law office from Pasig City to Las Piñas City and, in the process, his house helpers probably lost or inadvertently disposed of the Resolution directing the filing of appeal brief.37 In its November 23, 2012 Resolution,38 the Court of Appeals denied Sindophil's Motion for Reconsideration, thus: This has reference to the motion filed by the defendant-appellant Sindophil, Inc., through its counsel, for reconsideration of the resolution promulgated in this case on June 19, 2012. We find no cogent reason to warrant a reconsideration of the aforementioned resolution. The petitioner, through its counsel, admitted in its motion that it committed lapses. It has to suffer the consequence of such lapses. Procedural

rules

have

their

own

wholesome rationale in the orderly administration of justice. Justice is to be administered according to the rules in order to obviate arbitrariness, caprice or whimsicality (Vasco vs. Court of Appeals, G.R. No. L-46763, February 28, 1978, 81 SCRA 763, 766). Thus, procedural rules are not to be belittled or dismissed simply because their non-observance may have resulted in prejudice to a party's substantive rights. Like all rules, they are required to be followed except only when, for the most persuasive of reasons, they may be relaxed to relieve a litigant of an injustice not commensurate with the degree of his thoughtlessness in not complying with the procedure prescribed. While it is true that litigation is not a game of technicalities, this does not mean that the Rules of Court may be ignored at will and at random to the prejudice of the orderly presentation and assessment of the issues and their just resolution. As held by the Supreme Court in Garbo vs. Court of Appeals, G.R. No. 107698, July 5, 1996, 258 SCRA 159: "Procedural rules are tools designed to facilitate the adjudication of cases. Courts and litigants alike are thus enjoined to abide strictly by the rules. And while the Court, in some

instances, allows a relaxation in the application of the rules, this, we stress, was never intended to forge a bastion of erring litigants to violate the rules with impunity. The liberality in the interpretation and application of the rules applies only in proper cases and under justifiable causes and circumstances. While it is true that litigation is not a game of technicalities, it is equally true that every case must be prosecuted in accordance with the prescribed procedure to insure an orderly and speedy administration of justice." Procedural rules, therefore, are not to be disdained as mere technicalities that may be ignored at will to suit the convenience of a party (Santos vs. Court of Appeals, G.R. No. 92862, July 4, 1991, 198 SCRA 806). We find the instant case to be not an exception to the aforementioned rule. WHEREFORE, in view of the foregoing premises, we hereby DENY the motion for reconsideration filed in this case by the defendant-appellant Sindophil, Inc. SO ORDERED.39 On January 18, 2013, Sindophil filed its Petition for Review on Certiorari40 before this Court. After four (4) Motions41 for Extension, the Republic filed its Comment42 on July 15, 2013. In its July 31, 2013

Resolution,43 this Court noted the Comment and directed Sindophil to file its Reply within 10 days from notice. Sindophil was served a copy of the Comment on September 18, 2013 and had until September 28, 2013 to file its Reply.44 However, Sindophil failed to file its Reply within the required period and its counsel was required to show cause45 why he should not be disciplinarily dealt with and was again required to file a Reply. On May 15, 2014, Sindophil filed its Reply46 with its counsel apologizing for failing to file it within the required period "because he honestly believed that the filing of one is optional and not mandatory."47 This Court noted the Reply in its July 7, 2014 Resolution.48 The parties raise both procedural and substantive issues for resolution of this Court. The procedural issues in this case are: First, whether or not the Court of Appeals erred in dismissing Sindophil's appeal for failure to file an appeal brief within the required period; and Second, whether or not the Regional Trial Court erred in deciding the case despite Sindophil's filing of a Motion to Re-Open Case.

The

substantive

issues

are:

First, whether or not the certificates of title emanating from TCT No. 10354 are null and void; and Second, whether or not the Regional Trial Court erred in not awarding Sindophil, compensation from the Assurance Fund. On the procedural issues, Sindophil mainly argues that it was deprived of the right to "genuine" due process both by the Regional Trial Court and the Court of Appeals. According to Sindophil, its failure to present evidence during trial and its failure to file the appeal brief within the required period are "technical grounds"49 that the Regional Trial Court and the Court of Appeals could have excused in the interest of substantial justice. On the merits, Sindophil maintains that when it bought the Tramo property from Ty, it was a buyer in good faith and had no notice of any infirmities in his title.50 Considering that under the Torrens System, "[a] purchaser is not bound by the original certificate of title but only by the certificate of title of the person from whom he purchased the property[,]"51 the Regional Trial Court erred in voiding its title to the Tramo property because of the supposed

anomalies surrounding the issuance of TCT No. 10354 to Teodoro. Assuming that its title is indeed void, Sindophil nevertheless argues that it should have been awarded compensation from the Assurance Fund per Section 9552 of the Property Registration Decree, as amended.53 As for respondent, it argues that there was no deprivation of due process because Sindophil was given more than enough opportunity to present its case but repeatedly and unjustifiably failed to do so. Its reasons for failing to file the appeal brief-the Resolution directing the filing of the brief was lost either because of its counsel's transfer of office from Pasig City to Las Piñas City or because it might have been disposed by the counsel's house helpers-are inexcusable and are all due to the negligence of its counsel. With appeal being a mere statutory privilege, respondent argues that the Court of Appeals did not err in dismissing Sindophil's appeal for failure to comply with the Rules ofCourt.54 Furthermore, respondent maintains that the issue of whether a buyer is in good faith is a question of fact. The issue of whether Sindophil is entitled to compensation from the Assurance Fund is likewise a question of fact as entitlement to compensation

presupposes that the claimant is a buyer in good faith. These issues being questions of fact, respondent argues that this Court may not resolve them because only questions of law may be brought before this Court on a petition for review on certiorari under Rule 45 of the Rules of Court.55 In any case, even if the case is resolved on the merits, respondent avers that Sindophil still had the burden of proving that it was a buyer in good faith, an assertion that Sindophil miserably failed to establish. According to respondent, it was error for Sindophil to rely solely on the presumption of good faith without proving its case.56 This Petition must be denied. I Rule 50, Section 1(e) of the Rules of Court is the basis for dismissing an appeal for failure to file the appellant's brief within the required period: RULE 50 Dismissal of Appeal Section 1. Grounds for Dismissal of Appeal. - An appeal may be dismissed by the Court of Appeals, on its own motion or on that of the appellee, on the following grounds:     

 .

.

.

. 

(e)

Failure of the appellant to serve and file the required number of copies of his brief or memorandum within the time provided by these Rules[.] With the use of the permissive "may," it has been held that the dismissal is directory, not mandatory, with the discretion to be exercised soundly and "in accordance with the tenets of justice and fair play"57 and "having in mind the circumstances obtaining in each case."58 In Bigornia v. Court of Appeals:59 Technically, the Court of Appeals may dismiss an appeal for failure of the appellant to file the appellants' brief on time. But, the dismissal is directory, not mandatory. Hence, the court has discretion to dismiss or not to dismiss the appeal. It is a power conferred on the court, not a duty. The discretion, however, must be a sound one, to be exercised in accordance with the tenets of justice and fair play, having in mind the circumstances obtaining in each case.60 (Emphasis in the original, citation omitted) In Bigornia, this Court ordered the reinstatement of the appeal despite the late filing of the appellant's brief. The petitioners in Bigornia were police officers who, this Court said, "receive meager salaries for risking life and limb."61 With the police officers having been adjudged liable for substantial

amounts in damages, this Court said that "[i]t is but fair that [petitioners] be heard on the merits of their case before being made to pay damages, for what could be, a faithful performance of duty."62 The appeal was likewise reinstated in Aguam v. Court of Appeals,63 where a motion for extension of time to file appellant's brief was denied by the Court of Appeals for having been filed nine (9) days64 beyond the period for filing the appellant's brief. The motion for reconsideration with attached appellant's brief was likewise denied.65 However, it was established that the notice to file appellant's brief was received by an employee of the realty firm with whom the appellant's lawyer was sharing office, not by the appellant's lawyer who was a solo practitioner.66 Thus, this Court ordered the Court of Appeals to admit the appellant's brief in the higher interest of justice.67 The same extraordinary circumstances similar to Bigornia and Aguam are not present here. In Sindophil's Motion for Reconsideration68 before the Court of Appeals, Sindophil's counsel, Atty. Obligar, explained that his law office used to be located in Pasig City. However, when two (2) of his staff left due to "family reasons,"69 he had to

transfer his office to Las Piñas City, which was near Parañaque City where he resided. He then speculated that in the course of the transfer, the Court of Appeals' resolution directing Sindophil to file its appeal brief might have been one of the files lost or inadvertently disposed of by his house helpers.70 Atty. Obligar's excuse is unacceptable. While he is not prohibited from hiring clerks and other staff to help him in his law practice, it is still, first and foremost, his duty to monitor the receipt of notices such as the Court of Appeals' resolution directing the filing of the appellant's brief. He cannot blame his staff or house helpers as it is already settled that the negligence of the clerks and employees of a lawyer binds the latter.71 That he is not even sure what happened to the Resolution shows his carelessness, and this negligence is one that ordinary diligence could have guarded against. He should have devised a system in his law office whereby his clerks are to immediately route the notices they receive to the handling lawyer because the reglementary period for filing an appeal brief runs from their receipt.72 Under the circumstances, the Court of Appeals exercised its discretion soundly by deeming Sindophil's appeal as abandoned and, consequently, dismissing the appeal.

II

them;

Neither did the Regional Trial Comi err in deciding the case despite Sindophil's filing of a Motion to Re-Open Case. The order of trial is governed by Rule 30, Section 5 of the Rules of Court, with item (f) specifically governing the reopening of a case to introduce new evidence, thus: Section 5. Order of trial. - Subject to the provisions of Section 2 of Rule 31, and unless the court for special reasons otherwise directs, the trial shall be limited to the issues stated in the pre-trial order and shall proceed as follows: (a)

The plaintiff shall adduce evidence in support of his complaint;

(b)

The defendant shall then adduce evidence in support of his defense, counterclaim, cross-claim and third-party complaint;

(c)

The third-party defendant, if any, shall adduce evidence of his defense, counterclaim, cross-claim and fourthparty complaint;

(d)

The fourth-party, and so forth, if any, shall adduce evidence of the material facts pleaded by

(e)

(f)

The parties against whom any counterclaim or crossclaim has been pleaded, shall adduce evidence in support of their defense, in the order to be prescribed by the court; The parties may then respectively adduce rebutting evidence only, unless the court, for good reasons and in the furtherance of justice, permits them to adduce evidence upon their original case; and

(g)

Upon admission of the evidence, the case shall be deemed submitted for decision, unless the court directs the parties to argue or to submit their respective memoranda or any further pleadings. If several defendants or third-party defendants, and so forth, having separate defenses appear by different counsel, the court shall determine the relative order of presentation of their evidence. (Underscoring provided) Republic v. Sandiganbayan73 explained Rule 30, Section 5 in this wise: Under this rule, a party who has the burden of proof must introduce, at the first instance, all the evidence he relies upon and such evidence cannot be given piecemeal. The obvious rationale

of the requirement is to avoid injurious surprises to the other party and the consequent delay in the administration of justice. A party's declaration of the completion of the presentation of his evidence prevents him from introducing further evidence; but where the evidence is rebuttal in character, whose necessity, for instance, arose from the shifting of the burden of evidence from one party to the other; or where the evidence sought to be presented is in the nature of newly discovered evidence, the party's right to introduce further evidence must be recognized. Otherwise, the aggrieved party may avail of the remedy of certiorari. Largely, the exercise of the court's discretion under the exception of Section 5 (f), Rule 30 of the Ru1es of Court depends on the attendant facts i.e., on whether the evidence would qualify as a "good reason" and be in furtherance of "the interest of justice." For a reviewing court to properly interfere with the lower court's exercise of discretion, the petitioner must show that the lower court's action was attended by grave abuse of discretion. Settled jurisprudence has defined this term as the capricious and whimsical exercise of judgment, equivalent to

lack of jurisdiction; or, the exercise of power in an arbitrary manner by reason of passion, prejudice, or personal hostility, so patent or so gross as to amount to an evasion of a positive duty, to a virtual refusal to perform the mandated duty, or to act at all in contemplation of the law. Grave abuse of discretion goes beyond the bare and unsupported imputation of caprice, whimsicality or arbitrariness, and beyond allegations that merely constitute errors of judgment or mere abuse of discretion. In Lopez v. Liboro, we had occasion to make the following pronouncement: After the parties have produced their respective direct proofs, they are allowed to offer rebutting evidence only, but, it has been held, the court, for good reasons, in the furtherance of justice, may permit them to offer evidence upon their original case, and its ruling will not be disturbed in the appellate court where no abuse of discretion appears. So, generally, additional evidence is allowed when it is newly discovered, or where it has been omitted through inadvertence or mistake, or where the purpose of the evidence is to correct evidence previously offered. The omission to present evidence on the testator's knowledge of Spanish had not been

deliberate. It was due misapprehension or oversight.

to

a

Likewise, in Director of Lands v. Roman Archbishop of Manila, we ruled: The strict rule is that the plaintiff must try his case out when he commences. Nevertheless, a relaxation of the rule is permitted in the sound discretion of the court. "The proper rule for the exercise of this discretion," it has been said by an eminent author, "is, that material testimony should not be excluded because offered by the plaintiff after the defendant has rested, although not in rebuttal, unless it has been kept back by a trick, and for the purpose of deceiving the defendant and affecting his case injuriously." These principles find their echo in Philippine remedial law. While the general rule is rightly recognized, the Code of Civil Procedure authorizes the judge "for special reasons," to change the order of the trial, and "for good reason, in the furtherance of justice," to permit the parties "to offer evidence upon their original case." . . . In his commentaries, Chief Justice Moran had this to say: However, the court for good reasons, may, in the furtherance of justice, permit the parties to offer evidence upon their original case, and its ruling will not be disturbed where no abuse of discretion appears, Generally,

additional evidence is allowed when . . .; but it may be properly disallowed where it was withheld deliberately and without justification.74 (Emphasis in the original, citations omitted) The introduction of new evidence even after a party has rested its case may, therefore, be done but only if the court finds that it is for good reasons and in the furtherance of justice. The admission is discretionary on the part of the court and, as explained in Republic, may only be set aside if the admission was done with grave abuse of discretion or: [T]he capricious and whimsical exercise of judgment, equivalent to lack of jurisdiction; or, the exercise of power in an arbitrary manner by reason of passion, prejudice, or personal hostility, so patent or so gross as to amount to an evasion of a positive duty, to a virtual refusal to perform the mandated duty, or to act at all in contemplation of the law.75 (citation omitted) To recall, Sindophil filed an Urgent Motion to Reset Hearing with Notice of Change of Address one (1) day before its scheduled initial presentation of evidence. On motion by the Solicitor General, representing the Republic, the Regional Trial Court denied the Motion to Reset Hearing for having been filed on short notice and deemed as waived

Sindophil's right to present evidence. The parties were then ordered to file their respective memoranda thirty (30) days from notice, after which the case would be deemed submitted for decision.76 Thereafter, Sindophil filed a motion for extension, praying for an additional fifteen (15) days or until February 26, 2009, to file its memorandum.77 The Regional Trial Court granted the motion in its February 24, 2009 Order.78 However, despite the grant of extension, Sindophil did not file the required memorandum. Instead, it filed the Motion to Re-Open Case79 more than a month later or on March 31, 2009. In its Motion to Re-Open Case, Sindophil alleged that its witness, Sindophil President Chalid, had previously suffered a stroke that rendered her indisposed to take the stand.80 The stroke suffered by Sindophil's President was not a good reason to reopen the case. In its Pre-Trial Brief, Sindophil indicated the Register of Deeds of Pasay City as its other witness.81 It could have very well presented the Register of Deeds first while Chalid recovered from her stroke. Why it did not do so is only known to Sindophil.

Furthermore, while illness is a valid ground for postponing a hearing,82 it does not appear that Sindophil raised Chalid's stroke as a ground to postpone its initial presentation of defense evidence. The illness was only alleged in the Motion to Re-Open Case filed on March 31, 2009, more than three (3) months after the scheduled presentation of evidence on December 10, 2008. The excuse, therefore, appears to be an afterthought. Neither can Sindophil claim that it was not given equal opportunity to present its case. Atty. Obligar, counsel for Sindophil, admitted that he never objected to the motions for extension to file formal offer of evidence filed by the Republic.83 Even if this Court believes that he did not object to the extensions "as a gesture of consideration bearing in mind the work load and bulk of cases being attended to by the [Office of the Solicitor General],"84 he was still not entitled to expect that the Office of the Solicitor General would grant him the same leniency by not objecting to the Motion to Reset the initial presentation of defense evidence. Litigation is primarily an adversarial proceeding. Counsels are to take every opportunity, so long as it is within the bounds of the law, to advocate their clients' causes.

Furthermore, contrary to Sindophil's claim, the Regional Trial Court entertained the Motion to Re-Open Case that it even set the Motion for clarificatory hearing and oral argument.85 However, Atty. Obligar again absented himself during the scheduled hearing. Given the foregoing, the Regional Trial Court did not gravely abuse its discretion in deciding the case despite the filing of the Motion to ReOpen Case. III Sindophil insists that it bought the Tramo property from Ty in good faith and that it was an innocent purchaser for value. However, the presumption of good faith and that a holder of a title is an innocent purchaser for value may be overcome by contrary evidence. Here, the Republic presented evidence that TCT No. 10354, from which Sindophil's TCT No. 132440 was derived, was void. As found by the Regional Trial Court: Record shows that Certificate of Title No. 6735, wherein the lot claimed by defendant, Marcelo R. Teodoro, lot 3270-B, is derived therefrom, is under the name of the Republic of the Philippines, dated October 17, 1913. Nothing in the subsequent annotations

was under the name of any of the defendants and neither the subject TCT No. 10354.86 With the Republic having put forward evidence that the Tramo property claimed by Sindophil belongs to the Republic, the burden of evidence shifted to Sindophil to prove that its title to it was valid. Concomitantly, it had the burden of proving that it was indeed a buyer in good faith and for value. As this Court said in Baltazar v. Court of Appeals,87 "the burden of proving the status of a purchaser in good faith and for value lies upon him who asserts that status"88 and "[i]n discharging that burden, it is not enough to invoke the ordinary presumption of good faith, i.e., that everyone is presumed to act in good faith. The good faith that is [essential here] is integral with the very status which must be proved."89 Unfortunately for Sindophil, it utterly failed to discharge the burden of evidence because its counsel failed to attend the scheduled initial presentation of evidence. Further, looking at the records, the defects in Sindophil's title could be inferred from the annotations in TCT No. 129957, the certificate of title held by Sindophil's immediate predecessor, Ty. A certain Antonio C. Mercado had

filed an adverse claim against Ty because the Tramo property had been previously sold to him by Puma, Ty's predecessor.90 The alleged double sale should have prompted Sindophil to look into Puma's title, TCT No. 128358, where it can be gleaned that Teodoro likewise filed an adverse claim.91 These annotations show that the Tramo property is controversial and has been the subject of several adverse claims, belying Sindophil's contention that it acquired the property in good faith.

G.R. No. 205409, June 13, 2018 CITIGROUP, INC., Petitioner, v. CITYSTATE SAVINGS BANK, INC. Respondent.

With Sindophil failing to prove that it was a buyer in good faith, it cannot recover damages to be paid out of the Assurance Fund under Section 9592 of the Property Registration Decree. In La Urbana v. Bernardo,93 this Court held that "it is a condition sine qua non that the person who brings an action for damages against the assurance fund be the registered owner, and, as to holders of transfer certificates of title, that they be innocent purchasers in good faith and for value."94

DECISION

WHEREFORE, the Petition for Review on Certiorari is DENIED. The June 19, 2012 Resolution and November 23, 2012 Resolution of the Court of Appeals in CA-G.R. CV No. 96660 are AFFIRMED.

Petitioner Citigroup, Inc. is a corporation duly organized under the laws of the State of Delaware engaged in banking and financial services.

SO ORDERED.

LEONEN, J.: This resolves a Petition for Review on Certiorari1 assailing the August 29, 2012 Decision2 and the January 15, 2013 Resolution3 of the Court of Appeals in CA-G.R. SP No. 109679. The facts which led to the controversy before this Court, as summarized by the Court of Appeals, are as follows:

In the late 1970s, Citibank N.A., a wholly-owned subsidiary of petitioner, installed its first automated teller

machines in over a hundred New York City branches. In 1984, Citibank N.A., Philippine Branch, began the development of its domestic Automated Teller Machine (ATM) network, and started operating ATMs and issuing ATM cards in the Philippines. Citibank N.A., Philippine Branch then joined Bancnet Inc. ("Bancnet") in 1990, the first year Bancnet commenced operations. To date, Citibank N.A., Philippine Branch has six branches and 22 ATMs in the Philippines. In 2005, Citibank Savings, Inc. became an indirect wholly-owned subsidiary of Citibank, N.A. As a pre-existing thrift bank, it offered ATM services in the Philippines in 1995 and joined Bancnet in 2005. Citibank Savings, Inc. now has 36 branches and 27 ATMs in the Philippines. Combining the branches and ATMs of Citibank N.A., Philippine Branch and Citibank Savings, Inc., there are a total of 42 branches and 29 ATMs in the Philippines marketed and identified to the public under the CITI family of marks. The ATM cards issued by Citibank N.A., Philippine Branch and Citibank Savings, Inc. are labelled "CITICARD". The trademark CITICARD is owned by

Citibank N.A. and is registered in the [Intellectual Property Office] of the Philippines on 27 September 1995 under Registration Number 34731. In addition, petitioner or Citibank N.A., a wholly-owned subsidiary of petitioner, owns the following other trademarks currently registered with the Philippine [Intellectual Property Office], to wit: "CITI and arc design", "CITIBANK", "CITIBANK PAYLINK", "CITIBANK SPEEDCOLLECT", "CITIBANKING", "CITICARD", "CITICORP", "CITIFINANCIAL", "CITIGOLD", "CITIGROUP", "CITIPHONE BANKING'', and "CITISERVICE". On the other hand, sometime in the mid-nineties, a group of Filipinos and Singaporean companies formed a consortium to establish respondent Citystate Savings Bank, Inc. The consortium included established Singaporean companies, specifically Citystate Insurance Group and Citystate Management Group Holdings Pte, Ltd. Respondent's registered mark has in its name affixed a lion's head, which is likened to the national symbol of Singapore, the Merlion. On 08 August 1997, respondent opened its initial branch in Makati City. From then on, it endeavored to expand its branch

network. At present it has 19 branches in key cities and municipalities including 3 branches in the province of Bulacan and 1 in Cebu City. Respondent had also established off site ATMs in key locations in the Philippines as one of its banking products and services. In line with this, respondent filed an application for registration with the [Intellectual Property Office] on 21 June 2005 of the trademark "CITY CASH WITH GOLDEN LION'S HEAD" for its ATM service, under Application Serial No. 42005005673.4 After respondent Citystate Savings Bank, Inc. (Citystate) applied for registration of its trademark "CITY CASH WITH GOLDEN LION'S HEAD" with the Intellectual Property Office, Citigroup, Inc. (Citigroup) filed an opposition to Citystate's application. Citigroup claimed that the "CITY CASH WITH GOLDEN LION'S HEAD" mark is confusingly similar to its own "CITI" marks.5 After an exchange of pleadings, the Director of the Bureau of Legal Affairs of the Intellectual Property Office rendered a Decision6 dated November 20, 2008. The Intellectual Property Office concluded that the dominant features of the marks were the words "CITI" and "CITY," which were almost the same in all aspects. It further ratiocinated that Citigroup had

the better right over the mark, considering that 'its "CITI" and "CITI"related marks have been registered with the Intellectual Property Office, as well as with the United States Patent and Trademark Office, covering "financial services" under Class 36 of the International Classification of Goods.7 Thus, applying the dominancy test and considering that Citystate's dominant feature of the applicant's mark was identical or confusingly similar to a registered trademark, the Intellectual Property Office ruled that approving it would be contrary to Section 138 of the Intellectual Property Code and Citigroup's exclusive right to use its marks.

confusion was likely. Director General Cristobal found plausible Citystate's explanation for choosing "CITYSTATE," i.e., that its name was based on the country of Singapore, which was referred to as "city-state," and that the golden lion head device was similar to the national symbol of Singapore, the merlion.9 He appreciated that availing of the products and services related to the parties' marks would entail very detailed procedures, like sales representatives explaining the products and clients filling up and submitting application forms, such that customers would necessarily be well informed and not confused.10

This was appealed to the Office of the Director General of the Intellectual Property Office. In a Decision8 dated July 3, 2009, Director General Adrian S. Cristobal, Jr. (Director General Cristobal) reversed the November 20, 2008 Decision of the Director of the Bureau of Legal Affairs and gave due course to Citystate's trademark application. He made a visual comparison of the parties' respective marks and considered the golden lion head device to be the prominent or dominant feature of Citystate's mark, and not the word "CITY." Thus, Citystate's mark did not resemble Citigroup's mark such that deception or

Thus, Citigroup filed a Petition for Review11 before the Court of Appeals, which dismissed the petition. The Court of Appeals found that Director General Cristobal did not act with grave abuse of discretion in ruling that the parties' trademarks were not confusingly similar, and in giving due course to Citystate's trademark application.12 It found that Citystate's mark was not confusingly or deceptively similar to Citigroup's marks: [Citystate's] trademark is the entire "CITY CASH WITH GOLDEN LION'S HEAD". Although the words "CITY CASH" are prominent, the entirety of

the trademark must be considered, and focus should not be made solely on the phonetic similarity of the words "CITY" and "CITI". The dissimilarities between the two marks are noticeable and substantial. [Citystate's] mark, "CITY CASH WITH GOLDEN LION'S HEAD", has an insignia of a golden lion's head at the left side of the words "CITY CASH", while [Citigroup's] "CITI" mark usually has an arc between the two I's. A further scrutiny of the other "CITI" marks of [Citigroup] would show that their font type, font size, and color schemes of the said "CITI" marks vary for each product or service. Most of the time, [Citigroup's] "CITI" mark is joined with another term to form a single word, with each product or service having different font types and color schemes. On the contrary, the trademark of [Citystate] consists of the words "CITY CASH", with a golden lion's head emblem on the left side. It is, therefore, improbable that the public would immediately and naturally conclude that [Citystate's] "CITY CASH WITH GOLDEN LION'S HEAD" is but another variation under [Citigroup's] "CITI" marks. Verily, the variations in the appearance of the "CITI" marks by [Citigroup], when conjoined with other words,

would dissolve the alleged similarity between them and the trademark of [Citystate]. These dissimilarities, and the insignia of a golden lion's head before the words "CITY CASH" in the mark of [Citystate] would sufficiently acquaint and apprise the public that [Citystate's] trademark "CITY CASH WITH GOLDEN LION'S HEAD" is not connected with the "CITI" marks of [Citigroup]. Moreover, more credit should be given to the "ordinary purchaser." Cast in this particular controversy, the ordinary purchaser is not the "completely unwary consumer" but is the "ordinarily intelligent buyer" considering the type of product involved. It bears to emphasize that the mark "CITY CASH WITH GOLDEN LION'S HEAD" is a mark of [Citystate] for its ATM services which it offers to the public. It cannot be gainsaid that an ATM service is not an ordinary product which could be obtained at any store without the public noticing its association with the banking institution that provides said service. Naturally, the customer must first open an account with a bank before it could avail of its ATM service. Moreover, the name of the banking institution is written and posted either inside or outside the ATM booth, not to mention the fact that the name of the bank that operates the ATM is

constantly flashed at the screen of the ATM itself. With this, the public would accordingly be apprised that [Citystate's] "CITY CASH" is an ATM service of [Citystate], and not that of [Citigroup's].13 (Citation omitted) Thus, the Court of Appeals quoted Director General Cristobal: In evaluating the relevance of the prefix "CITI", due attention should be given not only to the other features of the competing marks but also to the attendant circumstances of the case. Otherwise, a blind adherence to [Citigroup's] claim over the prefix CITI is tantamount to handing it a monopoly of all marks with such prefix or with a prefix that sounds alike but with a different spelling like the word "city". Accordingly, the kind of products and services involved should likewise be scrutinized. .... Thus, this Court finds no cogent reason to believe [Citigroup's] contention that consumers may confuse the products and services covered by the competing trademarks as coming from the same source of origin. The fear that the consumer may mistake the products as to the source or origin, or that the consumers seeking its products and services will be redirected or diverted to [Citystate], is unfounded. The

products or services involved are not the ordinary everyday products that one can just pick up in a supermarket or grocery stores (sic). These products generally require sales representatives explaining to their prospective customers the features of and entitlements thereto. Availing the products and services involved follows certain procedures that ordinarily and routinely gives the prospective customers or clients opportunity to know exactly with whom they are dealing with (sic). The procedures usually include the clients filling-up and submitting a pro-forma application form and other documentary requirements, which means that the person is wel[l]informed and thus, cannot be misled into believing that the product or service is that of [Citystate] when in fact it is different from [Citigroup's]. The likelihood of confusion between two marks should be taken from the viewpoint of the prospective buyer. In Emerald Garment Manufacturing Corp. vs. Court of Appeals, et al., the Supreme Court ruled that: "Finally, in line with the foregoing discussions, more credit should be given to the 'ordinary purchaser.' Cast in this particular controversy, the ordinary purchaser is not the 'completely unwary consumer' but is the 'ordinarily intelligent buyer'

considering involved.

the

type

of

product

The definition laid down in Dy Buncio v. Tan Tiao Bok is better suited to the present case. There, the 'ordinary purchaser' was defined as one 'accustomed to buy, and therefore to some extent familiar with, the goods in question. The test of fraudulent simulation is to be found in the likelihood of the deception of some persons in some measure acquainted with an established design and desirous of purchasing the commodity with which that design has been associated. The test is not found in the deception, or the possibility of deception, of the person who knows nothing about the design which has been counterfeited, and who must be indifferent between that and the other. The simulation, in order to be objectionable, must be such as appears likely to mislead the ordinary intelligent buyer who has a need to supply and is familiar with the article that he seeks to purchase."14 Citigroup filed a Motion for Reconsideration,15 which the Court of Appeals denied in its January 15, 2013 Resolution.16 Thus, Citigroup filed a Petition for Review17 against Citystate before this Court. After respondent filed its

Comment/Opposition18 and petitioner filed its Reply,19 respondent filed its Memorandum.20 Petitioner claims that the Court of Appeals erred in finding that there was no confusing similarity between the trademark that respondent applied for and petitioner's own trademarks.21 It avers that Emerald Manufacturing Company v. Court of Appeals22 is not applicable to this case.23 Contrary to the Court of Appeals' finding, the arc design is not an integral part of petitioner's "CITI" family of marks.24 Petitioner asserts that when the dominancy test is applied to the Court of Appeals' findings of fact, the necessary result is a finding of confusing similarity.25 It points out that the Court of Appeals found that "CITY CASH" is the dominant feature of respondent's applied trademark. However, because the word "CASH" was disclaimed in respondent's trademark application, only "CITY" may be considered the dominant part of the mark. "'CITY' ... appears nearly identical to 'CITI'."26 Further, petitioner argues that the Court of Appeals did not understand the services offered in relation to respondent's mark when it said that the mark is to be applied only in relation to

respondent's ATMs and within the bank premises. It insists that in actuality, the mark could be used outside the bank premises, such as in radio, newspapers, and the internet, where there would not necessarily be a "GOLDEN LION'S HEAD" symbol to disambiguate the mark from any of petitioner's marks. It argues that the Court of Appeals should have appreciated the difference between basic financial services on one hand, which include ATM services, and sophisticated financial services on the other hand. It avers that customers do not select ATM services after cautious evaluation, and that ATM services are marketed to ordinary consumers. Thus, petitioner claims that the Court of Appeals erred when it concluded that customers are intelligent purchasers, and failed to consider ordinary purchasers who have not yet used the financial services of petitioner and respondent.27 It further holds that it is not claiming a monopoly of all marks prefixed by words sounding like "city." It stresses that it opposes only marks which are registered under class 36 used in products directly related and in competition with its "CITI" family of marks, sold under the same business channels, and sold to the same group of consumers.28

Respondent argues that its mark is not confusingly similar to petitioner's29 and that petitioner's fears are purely speculative.30 It claims that the phonetic similarity between "CITY" and "CITI" is not sufficient to deny its registration, asserting that this Court has ruled that idem sonans alone is insufficient basis for a determination of the existence of confusing similarity. As for petitioner's arguments on possible confusion due to advertising, respondent states that advertisement aims to inform the public of a certain entity's product and that not mentioning a supplier's trade name in its advertisement defeats the purpose of advertisement. It disputes petitioner's claims on ATM services and the kind of caution exercised prior to obtaining an ATM card, asserting that before customers may avail of ATM services, they have to open an account with the bank offering them.31 This

Court

denies

the

Petition.

The sole issue for this Court's resolution is whether or not the Court of Appeals committed an error of law in finding that there exists no confusing similarity between petitioner Citigroup, Inc.'s and respondent Citystate Savings Bank, Inc.'s marks.

In La Chemise Lacoste, S.A. v. Fernandez,32 this Court explained why trademarks are protected in the market: The purpose of the law protecting a trademark cannot be overemphasized. They are to point out distinctly the origin or ownership of the article to which it is affixed, to secure to him, who has been instrumental in bringing into market a superior article of merchandise, the fruit of his industry and skill, and to prevent fraud and imposition (Etepha v. Director of Patents, 16 SCRA 495). The legislature has enacted laws to regulate the use of trademarks and provide for the protection thereof. Modem trade and commerce demands that depredations on legitimate trade marks of non-nationals including those who have not shown prior registration thereof should not be countenanced. The law against such depredations is not only for the protection of the owner of the trademark but also, and more importantly, for the protection of purchasers from confusion, mistake, or deception as to the goods they are buying. (Asari Yoko Co., Ltd. v. Kee Boc, 1 SCRA 1; General Garments Corporation v. Director of Patents, 41 SCRA 50). The

law

on

trademarks

and

tradenames is based on the principle of business integrity and common justice. This law, both in letter and spirit, is laid upon the premise that, while it encourages fair trade in every way and aims to foster, and not to hamper, competition, no one, especially a trader, is justified in damaging or jeopardizing another's business by fraud, deceit, trickery or unfair methods of any sort. This necessarily precludes the trading by one dealer upon the good name and reputation built up by another (Baltimore v. Moses, 182 Md 229, 34 A (2d) 338).33 In Mirpuri v. Court of Appeals,34 this Court traced the historical development of trademark law: A "trademark" is defined under R.A. 166, the Trademark Law, as including "any word, name, symbol, emblem, sign or device or any combination thereof adopted and used by a manufacturer or merchant to identify his goods and distinguish them from those manufactured, sold or dealt in by others." This definition has been simplified in R.A. No. 8293, the Intellectual Property Code of the Philippines, which defines a "trademark" as "any visible sign capable of distinguishing goods." In Philippine jurisprudence, the function of a trademark is to point out distinctly the origin or ownership of the goods to which it is affixed; to secure to him,

who has been instrumental in bringing into the market a superior article of merchandise, the fruit of his industry and skill; to assure the public that they are procuring the genuine article; to prevent fraud and imposition; and to protect the manufacturer against substitution and sale of an inferior and different article as his product. Modern authorities on trademark law view trademarks as performing three distinct functions: ( 1) they indicate origin or ownership of the articles to which they are attached; (2) they guarantee that those articles come up to a certain standard of quality; and (3) they advertise the articles they symbolize. Symbols have been used to identify the ownership or origin of articles for several centuries. As early as 5,000 B.C., markings on pottery have been found by archaeologists. Cave drawings in southwestern Europe show bison with symbols on their flanks. Archaeological discoveries of ancient Greek and Roman inscriptions on sculptural works, paintings, vases, precious stones, glassworks, bricks, etc. reveal some features which are thought to be marks or symbols. These marks were affixed by the creator or maker of the article, or by public authorities as indicators for the

payment of tax, for disclosing state monopoly, or devices for the settlement of accounts between an entrepreneur and his workmen. In the Middle Ages, the use of many kinds of marks on a variety of goods was commonplace. Fifteenth century England saw the compulsory use of identifying marks in certain trades. There were the baker's mark on bread, bottlemaker's marks, smith's marks, tanner's marks, watermarks on paper, etc. Every guild had its own mark and every master belonging to it had a special mark of his own. The marks were not trademarks but police marks compulsorily imposed by the sovereign to let the public know that the goods were not "foreign" goods smuggled into an area where the guild had a monopoly, as well as to aid in tracing defective work or poor craftsmanship to the artisan. For a similar reason, merchants also used merchants' marks. Merchants dealt in goods acquired from many sources and the marks enabled them to identify and reclaim their goods upon recovery after shipwreck or piracy. With constant use, the mark acquired popularity and became voluntarily adopted. It was not intended to create or continue monopoly but to give the customer an index or guarantee of

quality. It was in the late 18th century when the industrial revolution gave rise to mass production and distribution of consumer goods that the mark became an important instrumentality of trade and commerce. By this time, trademarks did not merely identify the goods; they also indicated the goods to be of satisfactory quality, and thereby stimulated further purchases by the consuming public. Eventually, they came to symbolize the goodwill and business reputation of the owner of the product and became a property right protected by law. The common law developed the doctrine of trademarks and tradenames "to prevent a person from palming off his goods as another's, from getting another's business or injuring his reputation by unfair means, and, from defrauding the public." Subsequently, England and the United States enacted national legislation on trademarks as part of the law regulating unfair trade. It became the right of the trademark owner to exclude others from the use of his mark, or of a confusingly similar mark where confusion resulted in diversion of trade or financial injury. At the same time, the trademark served as a warning against the imitation or faking of products to prevent the imposition of fraud upon the public. Today, the trademark is not merely a

symbol of origin and goodwill; it is often the most effective agent for the actual creation and protection of goodwill. It imprints upon the public mind an anonymous and impersonal guaranty of satisfaction, creating a desire for further satisfaction. In other words, the mark actually sells the goods. The mark has become the "silent salesman," the conduit through which direct contact between the trademark owner and the consumer is assured. It has invaded popular culture in ways never anticipated that it has become a more convincing selling point than even the quality of the article to which it refers. In the last half century, the unparalleled growth of industry and the rapid development of communications technology have enabled trademarks, tradenames and other distinctive signs of a product to penetrate regions where the owner does not actually manufacture or sell the product itself. Goodwill is no longer confined to the territory of actual market penetration; it extends to zones where the marked article has been fixed in the public mind through advertising. Whether in the print, broadcast or electronic communications medium, particularly on the Internet, advertising has paved the way for growth and expansion of the product by creating and earning a reputation that crosses over borders, virtually turning the whole world into

one vast omitted)

marketplace.35 (Citations

There is also an underlying economic justification for the protection of trademarks: an effective trademark system helps bridge the information gap between producers and consumers, and thus, lowers the costs incurred by consumers in searching for and deciding what products to purchase. As summarized in a report of the World Intellectual Property Organization: Economic research has shown that brands play an important role in bridging so-called asymmetries of information between producers and consumers. In many modem markets, product offerings differ across a wide range of quality characteristics. Consumers, in turn, cannot always discern these characteristics at the moment of purchase; they spend time and money researching different offerings before deciding which product to buy. Brand reputation helps consumers to reduce these search costs. It enables them to draw on their past experience and other information about products such as advertisements and third party consumer reviews. However, the reputation mechanism only works if consumers are confident that they will purchase what they intend to purchase. The trademark system provides the

legal framework underpinning this confidence. It does so by granting exclusive rights to names, signs and other identifiers in commerce. In addition, by employing trademarks, producers and sellers create concise identifiers for specific goods and services, thereby improving communication about those goods and services.36 Recognizing the significance, and to further the effectivity of our trademark system,37 our legislators proscribed the registration of marks under certain circumstances: Section 123. Registrability. - 123.1. A mark cannot be registered if it: (a) Consists of immoral, deceptive or scandalous matter, or matter which may disparage or falsely suggest a connection with persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt or disrepute; (b) Consists of the flag or coat of arms or other insignia of the Philippines or any of its political subdivisions, or of any foreign nation, or any simulation thereof; (c) Consists of a name, portrait or signature identifying a particular living individual except by his written consent, or the name, signature, or

portrait of a deceased President of the Philippines, during the life of his widow, if any, except by written consent of the widow; (d) Is identical with a registered mark belonging to a different proprietor or a mark with an earlier filing or priority date, in respect of: (i) The same goods or services, or (ii) Closely related goods or services, or (iii) If it nearly resembles such a mark as to be likely to deceive or cause confusion; (e) Is identical with, or confusingly similar to, or constitutes a translation of a mark which is considered by the competent authority of the Philippines to be well-known internationally and in the Philippines, whether or not it is registered here, as being already the mark of a person other than the applicant for registration, and used for identical or similar goods or services: Provided, That in determining whether a mark is well known, account shall be taken of the knowledge of the relevant sector of the public, rather than of the public at large, including knowledge in the Philippines which has been obtained as a result of the promotion of the mark;

(f) Is identical with, or confusingly similar to, or constitutes a translation of a mark considered well-known in accordance with the preceding paragraph, which is registered in the Philippines with respect to goods or services which are not similar to those with respect to which registration is applied for: Provided, That use of the mark in relation to those goods or services would indicate a connection between those goods or services, and the owner of the registered mark: Provided, further, That the interests of the owner of the registered mark are likely to be damaged by such use; (g) Is likely to mislead the public, particularly as to the nature, quality, characteristics or geographical origin of the goods or services; (h) Consists exclusively of signs that are generic for the goods or services that they seek to identify; (i) Consists exclusively of signs or of indications that have become customary or usual to designate the goods or services in everyday language or in bona fide and established trade practice; (j) Consists exclusively of signs or of indications that may serve in trade to

designate the kind, quality, quantity, intended purpose, value, geographical origin, time or production of the goods or rendering of the services, or other characteristics of the goods or services; (k) Consists of shapes that may be necessitated by technical factors or by the nature of the goods themselves or factors that affect their intrinsic value; (l) Consists of color alone, unless defined by a given form; or (m) Is contrary to public order or morality. Based on this proscription, petitioner insists that respondent's mark cannot be registered because it is confusingly similar to its own set of marks. Thus, granting the petition rests solely on the question of likelihood of confusion between petitioner's and respondent's respective marks. There is no objective test for determining whether the confusion is likely. Likelihood of confusion must be determined according to the particular circumstances of each case.38 To aid in determining the similarity and likelihood of confusion between marks, our jurisprudence has developed two (2) tests: the dominancy test and the holistic test. This Court explained these

tests in Coffee Partners, Inc. v. San Francisco Coffee & Roastery, Inc.39: The dominancy test focuses on the similarity of the prevalent features of the competing trademarks that might cause confusion and deception, thus constituting infringement. If the competing trademark contains the main, essential, and dominant features of another, and confusion or deception is likely to result, infringement occurs. Exact duplication or imitation is not required. The question is whether the use of the marks involved is likely to cause confusion or mistake in the mind of the public or to deceive consumers. In contrast, the holistic test entails a consideration of the entirety of the marks as applied to the products, including the labels and packaging, in determining confusing similarity. The discerning eye of the observer must focus not only on the predominant words but also on the other features appearing on both marks in order that the observer may draw his conclusion whether one is confusingly similar to the other.40 (Citations omitted) With these guidelines in mind, this Court considered "the main, essential, and dominant features" of the marks in this case, as well as the contexts in which the marks are to be used. This Court finds that the use of the "CITY CASH WITH GOLDEN LION'S HEAD"

mark will not result in the likelihood of confusion in the minds of customers. A visual comparison of the marks reveals no likelihood of confusion. Respondent's (See

mark

is: image)

This Court agrees with the observation of Director General Cristobal that the most noticeable part of this mark is the golden lion's head device,41 and finds that after noticing the image of the lion's head, the words "CITY" and "CASH" are equally prominent. On the other hand, petitioner's marks, as noted by the Court of Appeals, often include the red arc device: (See

image)

Petitioner's other registered marks which do not contain the red arc device include the following: (See

image)

Examining these marks, this Court finds that petitioner's marks can best be described as consisting of the prefix "CITI" added to other words. Applying the dominancy test, this Court

sees that the prevalent feature of respondent's mark, the golden lion's head device, is not present at all in any of petitioner's marks. The only similar feature between respondent's mark and petitioner's collection of marks is the word "CITY" in the former, and the "CITI" prefix found in the latter. This Court agrees with the findings of the Court of Appeals that this similarity alone is not enough to create a likelihood of confusion. The dis[s]imilarities between the two marks are noticeable and substantial. Respondent's mark, "CITY CASH WITH GOLDEN LION'S HEAD", has an insignia of a golden lion's head at the left side of the words "CITY CASH", while petitioner's "CITI" mark usually has an arc between the two I's. A further scrutiny of the other "CITI" marks of petitioner would show that their font type, font size, and color schemes of the said "CITI" marks vary for each product or service. Most of the time, petitioner's "CITI" mark is joined with another term to form a single word, with each product or service having different font types and color schemes. On the contrary, the trademark of respondent consists of the words "CITY CASH", with a golden lion's head emblem on the left side. It is, therefore, improbable that the public would immediately and naturally conclude that respondent's "CITY

CASH WITH GOLDEN LION'S HEAD" is but another variation under petitioner's "CITI" marks. Verily, the variations in the appearance of the "CITI" marks by petitioner, when conjoined with other words, would dissolve the alleged similarity between them and the trademark of respondent. These dissimilarities, and the insignia of a golden lion's head before the words "CITY CASH" in the mark of the respondent would sufficiently acquaint and apprise the public that respondent's trademark "CITY CASH WITH GOLDEN LION'S HEAD" is not connected with the "CITI" marks of petitioner.42 This Court also agrees with the Court of Appeals that the context where respondent's mark is to be used, namely, for its ATM services, which could only be secured at respondent's premises and not in an open market of ATM services, further diminishes the possibility of confusion on the part of prospective customers. Thus, this Court quotes with approval the Court of Appeals, which made reference to Emerald Manufacturing: Moreover, more credit should be given to the "ordinary purchaser." Cast in this particular controversy, the ordinary purchaser is not the "completely unwary consumer" but is the "ordinarily intelligent buyer" considering the type

of product involved. It bears to emphasize that the mark "CITY CASH WITH GOLDEN LION'S HEAD" is a mark of respondent for its ATM services which it offers to the public. It cannot be gainsaid that an ATM service is not an ordinary product which could be obtained at any store without the public noticing its association with the banking institution that provides said service. Naturally, the customer must first open an account with a bank before it could avail of its ATM service. Moreover, the name of the banking institution is written and posted either inside or outside the ATM booth, not to mention the fact that the name of the bank that operates the ATM is constantly flashed at the screen of the ATM itself. With this, the public would accordingly be apprised that respondent's "CITY CASH" is an ATM service of the respondent bank, and not of the petitioner's.43 Petitioner argues that Emerald Manufacturing is distinguishable from this case, insisting that ATM services are more akin to ordinary household items than they are akin to brand name jeans, in terms of how their customers choose their providers: 73. The Emerald Manufacturing case involved the marks "Lee" and "Stylistic Mr. Lee", and the Supreme Court focused on the nature of the products

as "not the ordinary household items", pointing to the fact that, "the average Filipino consumer generally buys his jeans by brand. He does not ask the sales clerk for his generic jeans but for, say a Levis, Guess, Wrangler or even an Armani." 74. In contrast, when an ordinary consumer of ATM services wishes to withdraw cash, more often than not he will simply locate the nearest ATM, without reference to brand as long as the ATM accepts his card. When dealing with banks that belong to an ATM network such as Bancnet, which both parties do, the cards are almost universally and interchangeably accepted.44 This scenario is unclear, and thus, unconvincing and insufficient to support a finding of error on the part of the Court of Appeals. Petitioner hypothesizes that there could be some confusion because ATM users "simply locate the nearest ATM, without reference to brand as long as the ATM accepts [their] card."45 This Court is at a loss to see how this supports petitioner's claims that ATM users locate the nearest ATMs and use them without reference to brand as long as the ATM accepts their cards. If petitioner's speculation is true, then bank branding is wholly irrelevant after the ATM service has been secured.

This Court is hard pressed to accept this assumption. In any case, this Court simply cannot agree that a bank or ATM service is more akin to ordinary household items than it is to brand name Jeans. More relevant than the scenario discussed by petitioner is the stage when a bank is trying to attract customers to avail of its services. Petitioner points out that in advertisements, such as in radio, newspapers, and the internet, which are shown beyond the bank premises, there may be no golden lion's head device to disambiguate "CITY CASH" from any of petitioner's own marks and services.46 This Court finds this unconvincing. ATM services, like other bank services, are generally not marketed as independent products. Indeed, as pointed out by petitioner itself, ATM cards accompany the basic deposit product in most banks.47 They are generally adjunct to the main deposit service provided by a bank. Since ATM services must be secured and contracted for at the offering bank's premises, any marketing campaign for an ATM service must focus first and foremost on the offering bank. Hence, any effective internet and newspaper advertisement for respondent would include and emphasize the golden lion's head

device. Indeed, a radio advertisement would not have it. It should not be forgotten, however, that a mark is a question of visuals, by statutory definition.48 Thus, the similarity between the sounds of "CITI" and "CITY" in a radio advertisement alone neither is sufficient for this Court to conclude that there is a likelihood that a customer would be confused nor can operate to bar respondent from registering its mark. This Court notes that any confusion that may arise from using "CITY CASH" in a radio advertisement would be the same confusion that might arise from using respondent's own trade name. Aurally, respondent's very trade name, which is not questioned, could be mistaken as "CITISTATE SAVINGS BANK," and all of petitioner's fears of possible confusion would be just as likely. This Court agrees with Director General Cristobal's recognition of respondent's history and of "Citystate" as part of its name.49 Upon consideration, it notes that it may have been more aligned with the purpose of trademark protection for respondent to have chosen the trademark "CITYSTATE CASH" instead of "CITY CASH" to create a stronger association between its trade name and the service provided. Nonetheless, there is no law requiring that trademarks match the

offeror's trade name precisely to be registrable. The only relevant issue is the likelihood of confusion. This Court also recognizes that there could be other situations involving a combination of the word "city" and another word that could result in confusion among customers. However, it is not convinced that this is one of those situations. Thus, having examined the particularities of this case, this Court affirms the Court of Appeals' finding that Director General Cristobal of the Intellectual Property Office did not commit any grave abuse of discretion in allowing the registration of respondent's trademark. WHEREFORE, the petition is DENIED. The Court of Appeals August 29, 2012 Decision and January 15, 2013 Resolution in CA-G.R. SP No. 109679 are AFFIRMED. SO ORDERED.

G.R. No. 185484, June 27, 2018

FRANCISCO CHAVEZ, Petitioner, v. IMELDA MARCOS, Respondent.

I. R.

DECISION LEONEN, J.: This Court will not require a judge to inhibit himself in the absence of clear and convincing evidence to overcome the presumption that he will dispense justice in accordance with law and evidence.1 This Court will also not allow itself to become an instrument to paper over fatal errors done by the petitioner and the prosecution in the lower court. This is a Petition for Review on Certiorari,2 assailing the Court of Appeals February 28, 2008 Decision3 and November 24, 2008 Resolution4 in CA-G.R. SP No. 98799, dismissing Francisco I. Chavez's (Chavez) Petition for Certiorari5 and affirming the Regional Trial Court order, which denied the prosecution's motion for inhibition.6 This case involves 33 consolidated criminal cases, namely, Criminal Case Nos. 91-101732-39, 91-101879-83, 91101884-92, and 92-101959-69,7 filed against Imelda R. Marcos (Imelda), among others, for violations of Section

4 of Central Bank Circular No. 960,8 in relation to Section 34 of Republic Act No. 265,9 or the Central Bank Act.10 The Information in Criminal Case No. 91-101732 read, in part: That from 1973 up to December 26, 1985, both dates inclusive, and for sometime thereafter, the above-named accused, in conspiracy with her late husband, then President Ferdinand E. Marcos, while both residing in Malacanang Palace in the City of Manila, Philippines, and within the jurisdiction of this Honorable Court, did then and there wilfully, unlawfully and feloniously open and maintain foreign exchange accounts abroad, particularly in Banque de Paris et des Pays-Bas (also known as Banque Paribas) in Geneva, Switzerland, later transferred to another bank known as LOMBARD, ODIER ET CIE also in Geneva, in the names of several establishments organized by their dummy or attorneyin-fact identified as Stephane A. Cattaui, among which were accounts 036-517 J, Establishment BULLSEYE; 037-973 R, Establishment MABARI; 038-150 L, Establishment GLADIATOR: 038-489Z, Establishment VOLUBILIS, 32.529 X, INTERNATIONAL INTELLIGENCE FUND; PRETORIEN created under the name INTELLIGENCE; Establishment

GARDENIA; Establishment GLADIATOR; Establishment CESAR; Establishment ESG; account numbers 23-0734H, 22-98SC, 23-285; 3652IN; and 073 043 P in the name of accused who executed a power of attorney in favour of her husband on September 29, 1980 giving the latter the authority to do anything with respect to her accounts; which accounts were reduced to five, namely; 036 517 J; 037-973 R; 038 150 L; 038 489 Z, and 036 521 N which were later on transferred to LOMBARD, ODIER ET CIE for credit to the account COGES 00777 per instruction on May 17, 1984 of the accused's husband and attorneyin-fact to their dummy and duly appointed administrator Stephane Cattaui who also transferred to said Lombard Odier et Cie in order to continue managing for them their hidden accounts, including the investment of $15-million in Philippine issued dollar-denominated treasury notes which was fully paid together with the interests on December 26, 1985 and which payment was remitted to LOMBARD, ODIER ET CIE for the credit of Account COGES 00777 of the accused and her late husband, which act of maintaining said foreign exchange accounts abroad was not pem1itted under the Central Bank regulations.

CONTRARY TO LAW.11 The informations for Criminal Case Nos. 91-101733-39 read similarly, except for the dates of the offense, the name/s of the dummy/ies used, the amounts maintained in the foreign exchange accounts, and the names of the foreign banks where the accounts were allegedly held by the accused.12 The Information in Criminal Case No. 91-101888 read, in part: That from September 1, 1983 up to 1987, both dates inclusive, and for sometime thereafter, both accused, conspiring and confederating with each other and with the late President Ferdinand E. Marcos, all residents of Manila, Philippines, and within the jurisdiction of this Honorable Court, did then and there wilfully, unlawfully and feloniously fail to submit reports in the prescribed form and/or register with the Foreign Exchange Department of the Central Bank within 90 days from October 21, 1983 as required of them being residents habitually/customarily earning, acquiring or receiving foreign exchange from whatever source or from invisibles locally or from abroad, despite the fact they actually earned interests regularly every six (6) months for the first two years and then quarterly thereafter for their investment of $50-million, later reduced to $25-

million in December 1985, in Philippine-issued dollar denominated treasury notes with floating rates and in bearer form, in the name of Bank Hofmann, AG, Zurich, Switzerland, for the benefit of Avertina Foundation, their front organization established for economic advancement purposes with secret foreign exchange account Category (Rubric) C.A.R. No. 211 92502 in Swiss Credit Bank (also known as SKA) in Zurich, Switzerland, which earned, acquired or received for the accused Imelda Romualdez Marcos and her late husband an interest of $2,267,892 as of December 16, 1985 which was remitted to Bank Hofmann, AG, through Citibank, New York, United States of America, for the credit of said Avertina account on December 19, 1985, aside from the redemption of $25 million (one-half of the original $50-M) as of December 16, 1985 and outwardly remitted from the Philippines in the amounts of $7,495,297.49 and $17,489,062.50 on December 18, 1985 for further investment outside the Philippines without first complying with the Central Bank reporting/registering requirements. CONTRARY TO LAW.13 The Information in Criminal Case No. 91-1 01879 read, in part: That from September 21, 1983 up to December 26, 1985, both dates

inclusive, and for sometime thereafter, all accused, conspiring and confederating with one another and with the late President Ferdinand E. Marcos, all residing and/or doing business in Manila, Philippines, and within the jurisdiction of this Honorable Court, and assisted by their foreign agent or attorney-in-fact Stephane G. Cattaui, did then and there wilfully, unlawfully and feloniously fail to submit reports in the prescribed form and/or register with the Foreign Exchange Department of the Central Bank within 90 days from October 21, 1983 as required of them being residents habitually/customarily earning, acquiring/receiving foreign exchange from whatever source or from invisibles locally or from abroad, despite the fact that they actually earned interests regularly for their investment of FIFTEEN MILLION ($15-million) DOLLARS, U.S. currency, in Philippine-issued dollar-denominated treasury notes with floating rates and in bearer form, in the name of Banque de Paris et des Pays-Bas (also known as Banque Paribas) in Geneva, Switzerland but which was transferred on May 17, 1984 to Lombard, Odier et Cie, a bank also in Geneva, for the account of COGES 00777 being managed by Mr. Stephane Cattaui for the Marcoses who also arranged the said investment of $15-million through

respondents Roberto S. Benedicto and Hector T. Rivera by using the Royal Traders Bank in Manila as the custodian of the said dollardenominated treasury notes, which earned, acquired or received for the accused Imelda Romualdez Marcos and her late husband an interest of $876,875.00 as of June 15, 1984 which was remitted to Banque Paribas through Chemical Bank in New York, United States of America, for the Credit of said Account COGES 00777 of the Marcoses for further investment outside the Philippines without first complying with the reporting/registering requirements of the Central Bank. CONTRARY TO LAW.14 The other charges in the other informations read substantially the same, save for the dates of the offense, the name/s of the dummy/ies used, the amounts maintained in the foreign exchange accounts, and the names of the foreign banks where the accounts were allegedly held by the accused.15 The prosecution's version of facts leading to the filing of the informations was summarized as follows: In September 1983, the Central Bank of the Philippines issued dollardenominated treasury notes (dollar tnotes for brevity) in the total amount of

$125-million, U.S. currency. $75-million of these notes were purchased by three Swiss banks holding the hidden wealth of then President Ferdinand E. Marcos and his wife Imelda Romualdez Marcos (the Marcoses, for brevity). The purchases were recorded in the Central Bank under the name of the Marcoses' front man, then Ambassador Roberto S. Benedicto.

Avertina's $50-million investment earned an interest of $13,623,540.77 from 1983 to 1986; Maler I and Maler II's $10-million investment earned $3,369,479.18 in interest from 1984 to 1987; and Banque Paribas/Lombard Odier et Cie's $15-million investment earned $3,579,479.16 from 1984 to 1985.

Of this $75-million, $50-million came from Bank Hofmann, $10-million from the Swiss Bank Corporation (SBC), and $15-million from Banque Paribas. The purchases by Bank Hofmann and SBC were made through accounts owned by foundations called Avertina, Maler I, and Maler II, which were owned by the Marcoses, and which act of opening and maintaining foreign exchange accounts abroad without CB authorization is a violation of Sec. 4 of the CB's Foreign Exchange Restrictions as consolidated in 1983 in CB Circular No. 960.

Total interest earned by the Marcoses out of the dollar t-notes amounted to $20,572,499.11 from 1984 to 1987. All of these interest [illegible] department in violation of Sec. 10 of CB Circular No. 960.

The purchase by Banque Paribas (later transferred to Lombard, Odier et Cie) was arranged by the Marcoses' attorney-in-fact Stephane Cattaui through Traders Royal Bank (TRB) which acted as custodian of the securities. The contact person at TRB was Hector T. Rivera, vice president of the bank's Trust Department.

The Malacanang documents revealed that the Marcoses maintained a number of Swiss bank accounts, among them:

The transactions came to light only after the so-called EDSA People Power Revolution in February 1986 when documents relating to the Marcoses' Swiss bank accounts and dollar t-note purchases were found in Malacanang Palace after the Marcos family had fled.

A. In Banque de Paris et des Pays-Bas (also known as Banque Paribas) in Geneva, Switzerland, later transferred to another bank known as LOMBARD,

ODIER ET CIE also in Geneva, in the names of several establishments organized by the Marcoses' attorneyin-fact identified as Stephane A. Cattaui 1. Account 036-517 J, Establishment BULLSEYE; 2. Account 037-973 R, Establishment MABARI; 3. Account 038[illegible], Establishment GLADIATOR; 4. Account 038-489 Z, Establishment VOLUBILIS; 5. Account 32.529 X, INTERNATIONA L INTELLIGENCE FUND; 6. Account PRETORIEN created under the name INTELLIGENCE; 7. Establishment GARDENIA; 8. Establishment GLADIATOR; 9. Establishment CESAR;

10. Establishment ESG; 11. Accounts 230734H, 2298SC, 23-285; 3652IN; and 073 043 P in the name of Mrs. Marcos who executed a power of attorney in favour of her husband on September 29, 1980 giving the latter the authority to do anything with respect to her accounts, which accounts were reduced to five, namely; 036 517 J; 037-973 R; 038 150 L; 038 489 Z, and 036 521 N which were later on transferred to LOMBARD, ODIER ET CIE for credit to the account COGES 00777;

B. In Swiss Credit Bank (also known as SKA) in Switzerland in the names of foundations which were organized successively or one after the other by the Marcoses' nominees, fronts, agents or duly appointed administrators 1. Charis Foundation which was succeeded by Azio Foundation on June 11, 1971, renamed Verso Foundation on August 29, 1978, which was dissolved on June 25, 1981 and the funds transferred to Fides Trust Company in Bank Hofmann, which transferred the same to Vibur Foundation under the account "Reference OSER" on September 10, 1981;

2. Trinidad Foundation, succeeded by Rayby Foundation on June 22, 1973, which was dissolved on March 10, 1981 and whose funds were transferred to Bank Hofmann in favor of Fides Trust Company under account "Reference DIDO" which organized Palmy Foundation; 3. Xandy Foundation, which was renamed Wintrop Foundation on August 29, 1978, whose assets and/or funds were transferred on May 10, 1981 to Fides Trust Company under the account "Reference OMAL" in Bank Hofmann, which

effected the transfer of said assets and/or funds to Avertina Foundation;

1981, but which also transferred the funds to Avertina Foundation;

4. Charis Foundation, which was renamed Scolari Foundation on December 13, 1974 and then renamed Valamo Foundation on August 29, 1978, which was dissolved on June 25, 1981 and its assets and/or funds transferred to Fides Trust Company under the account "Reference OMAL" in Bank Hofmann, which effected the transfer of said assets and/or funds to Spinus Foundation which opened an account with SKA on September 10,

C. In Swiss Bank Corporation (SBC) in Geneva, Switzerland: Establishment, later transformed into Maler Foundation, which was organized by the Marcoses' nominees, fronts, agents or duly appointed administrators, among them Jean Louis Sunier 1. Maler I; 2. Account No. 98929 NY under Maler II; 3. Rosalys Foundation, which was dissolved on December 19, 1985, and its assets and/or funds transferred to Aguamina Corporation's (Panama) Account No. 53300 with SBC. The newly-installed government of President Corazon Aquino represented by then Solicitor General Sedfrey Ordonez lost no time in filing an

application with the Swiss authorities for mutual assistance in the matter of the Marcos dollar deposits in Switzerland. The request for assistance was eventually granted by Swiss investigating magistrate Peter Cosenday. Cosenday issued a freeze order on all the Swiss banks where the Marcoses and their foundations had accounts, and he further required these banks and the foundations to submit relevant documents and information concerning the accounts. The Marcoses and the foundations appealed Cosenday's decision. The result of the appeals was that on December 21, 1990, the Federal Supreme Court of Switzerland rendered twin decisions sustaining the position of the Philippine government and giving it a one-year deadline to file the appropriate cases against the Marcoses and their cronies, otherwise the freeze order covering the Marcos bank accounts in Switzerland would be lifted. The Presidential Commission on Good Government (PCGG) thereupon decided to request the Solicitor General (now Francisco Chavez) to file the appropriate cases against the estate of the late President Marcos,

Mrs. Marcos, and other members of their family based on documents already turned over and still to be turned over by the Swiss authorities.16 During the trial, the prosecution presented only two (2) witnesses. Its first witness was former Assistant Solicitor General and Presidential Commission on Good Government Commissioner Caesario Del Rosario (Del Rosario). He identified Swiss bank documents and testified that they were personally received by petitioner Chavez before they were referred to him for study, evaluation, and determination of probative value. He also identified several documents signed by the late President Ferdinand Marcos and respondent Imelda. He averred that he assisted in drafting the complaints connected to the recovery of the Marcos' properties.17 As its second witness, the prosecution presented petitioner Chavez. He was presented as an expert witness in the field of law, and he corroborated Del Rosario's testimony. He testified on the formation of the task force, of which Del Rosario was a member and which prepared the criminal complaints against the Marcoses and their cronies.18 However, petitioner's presentation as a witness was hampered by a series of scheduling issues, which resulted in several

postponements and absences. Chavez's claim of bias was based largely on his perception of how Regional Trial Court Presiding Judge Silvino T. Pampilo, Jr. (Judge Pampilo) scheduled his testimony, combined with what transpired when he failed to testify on April 24, 2007. Thus, the relevant facts from the record shall be set forth in detail. On the matter of scheduling, the Regional Trial issued its January 10, 2007 Order, requiring Chavez to appear in court on January 16, 17, 23, 24, 30, 31, and February 6, 7, 13, 14, 20, 21, 27, and 28, 2007 to testify. This Order stated further that the hearings were "intransferrable in character."19 In his January 11, 2007 letter, Chavez advised the Regional Trial Court that his entire calendar for January and the beginning of February 2007 were full, and requested later dates for his testimony, including February 20, 21, 27, and 28.20 The Regional Trial Court reconsidered its January 10, 2007 Order and reset Chavez's examination to February 21, 27, and 28, again with the warning that these trial dates were not transferable.21 On March 6, 2007, a day that was set for the continuation of the direct examination of Chavez, the prosecution moved that the March 6 and 7 hearings be moved on the ground that Chavez was unavailable,

for he would be attending to his detained clients in Camp Capinpin, Tanay, Riza1.22 The Regional Trial Court granted this as well with the following warning: [I]f the former Solicitor General failed to testify on the next scheduled hearing, all his testimonies will be stricken off the record and the prosecution be directed to formally offer its exhibits.23 On March 20, 2007, Prosecutor George H. Yarte, Jr. (Prosecutor Yarte) filed a Motion to Cancel Hearing of April 11, 2007, on the ground that he would be attending the National Prosecutors League of the Philippines' Annual Convention in Boracay Island from April 11 to 13. Thereafter, in a letter dated March 21, 2007, Chavez asked to be excused from attending the April 10, 2007 hearing due to an intransferrable Court Martial setting in Camp Capinpin, Tanay, Rizal,24 but advised the Regional Trial Court that he would be available to testify on the April 11 and 24, 2007 25 hearings.  Judge Pampilo denied Chavez's request in a letter dated March 22, 2007 and the prosecution's Motion to Cancel the April 11, 2007 hearing.26 Thereafter, Chavez pleaded that Judge Pampilo reconsider the denial and made a commitment that he would no longer request for further postponements.27

Thus, Chavez did not attend the April 10, 2007 hearing. He attended the succeeding hearing on April 11, 2007. However, he was unable to testify as the documents he was supposed to identify were with Prosecutor Yarte, who was attending the prosecutors' annual convention in Boracay.28 Subsequently, Chavez was scheduled to continue his direct testimony on April 24, 2007. However, the prosecution filed a Motion to Inhibit,29 seeking Judge Pampilo's inhibition, and set it to be heard on April 24, 2007.30 Reacting to the Motion to Inhibit, Chavez explained in a letter dated April 23, 200731 that he would not appear in court on April 24, 2007: I would have decided to go to court to continue my direct testimony on April 24, 2007 at 1:00 p.m. were it not for the receipt of this motion to inhibit. As a witness, I cannot presume that the motion to inhibit, which is set for hearing also on April 24, 2007 at 2:00 p.m., will be outrightly denied by this Honorable Court who would then direct the prosecution to continue with the presentation of its evidence. In line with due process, I proceed along the assumption that at the hearing of the motion to inhibit, Your Honor will give the accused an opportunity to submit their comment thereon, thus

necessarily resulting in the cancellation of the April 24, 2007 setting. I say that the cancellation of the April 24, 2007 setting follows as a necessary consequence of the motion to inhibit because such motion raises a question of first priority which must be first resolved by Your Honor before further proceedings are undertaken. .

.

.

.

In view of the foregoing considerations, I most respectfully submit that my presence at the April 24, 2007 setting would no longer be necessary. I hasten to reaffirm my commitment to continue my direct testimony once the issue of Your Honor's inhibition shall have been resolved with finality.32 (Emphasis in the original) Thus, Chavez did not attend the hearing on April 24, 2007 despite being scheduled for direct examination.33 Atty. Napoleon Uy Galit (Atty. Galit), a lawyer from the Presidential Commission on Good Government, appeared before the court with a memorandum from then Secretary of Justice Raul Gonzales, authorizing him to prosecute the consolidated cases. As Chavez took issue with Atty. Galit's appearance, this Court shall quote extensively from the transcript of

stenographic notes of the trial on April 24, 2007: Atty. Galit: Good afternoon, your Honor, Attorney Napoleon Uy Galit for the PCGG. Your Honor, just a brief manifestation before the start of the proceedings. A while ago your Honor, before this Honorable Court convened the proceedings, I showed this memorandum to Prosecutor Yarte dated April 17, 2007 signed by Honorable Secretary Raul Gonzales which your Honor the wordings is quite, probably this letter will state for itself, your Honor, and I am showing this to Prosecutor Yarte and for an eventual filing into the records of this Honorable Court. This Memorandum simply designates this humble representation authorizing, your Honor, to prosecute this case even in the presence or without the presence of any public prosecutor. Court:

confirm or deny the truthfulness or the authenticity of this memorandum.

If your Honor, into the records, I am submitting this April 17, 2007 Memorandum.

Court: You mean to say you are not familiar with the signature of your boss?

Court: Yes, place it on the record and that you are from DOJ then understood . . .

Pros. Yarte: I am familiar with the signature of my boss, your Honor, but since this appears to be a xeroxed copy, I cannot yet confirm or deny. In any case your Honor, this representation will not contradict the wishes of my boss. I will accept the contents of this memorandum your Honor after the manifestation of Atty. Galit. Court: Proceed Atty. Galit because I will no longer allow Atty. Yarte to speak for and behalf of the DOJ as well as the PCGG.

So even without Prosecutor Yarte, you can proceed with the presentation of that memorandum with or without the prosecutor. What can you say prosecutor?

Pros. Yarte:

Pros. Yarte:

Go ahead Atty. Galit.

Well your Honor, I still have to check with the office. As of now, I cannot

Atty. Galit:

If your Honor please (interrupted) Court:

Atty. Galit: Without prejudice to the authority given to this humble representation, may I be allowed your Honor that prosecutor Yarte be given the courtesy to speak. Court: Go ahead, Atty. Yarte. Pros. Yarte: Your Honor please, we have a pending Motion to Inhibit and I think it is a matter of preferential . . . that this Motion to Inhibit be first ruled upon by this Honorable Court. Court: It's ok with me, I can rule it today. Considering that there is already an opposition and/or summary filed by (interrupted) Pros. Yarte: Your Honor please, I haven't received a copy of that opposition.   Court: Can you furnish him a copy of that today?

Atty. Sison: Yes, your Honor. Pros. Yarte: Your Honor please again, I would like that my copy be formally served with the office as an official receipt. In the first place your Honor, this is not a receiving clerk of the office and I suggest that I receive it officially, your Honor. Court: There is a proof of service that it was sent in your office.   Pros. Yarte:

counsel. As a matter of fact, that can be very well made at this moment in time if the defense counsel your Honor, has an extra copy, I suggest that he give it to Prosecutor Yarte, your Honor.

that this Memorandum is authentic, your Honor.

Pros. Yarte:

Having resolved the issue of the authenticity of the Memorandum authorizing Atty. Galit to prosecute the case, the Regional Trial Court proceeded to resolve the other pending incidents: Court:

I vehemently object to that, in the first place your Honor, I manifested a while ago that I still have to check on the authenticity of the memorandum your Honor but it seems that this Honorable Court has egged Atty. Gal it to proceed and take over my function as the public prosecutor your Honor. I haven't seen or checked with the office whether or not Atty. Galit was sent a copy of this (interrupted)

Pros. Yarte: Okay, your Honor.34

There are two (2) pending incidents, one is the oral motion citing for contempt and the other one is a Motion to Inhibit the Honorable Judge as well as the opposition. You can now argue.

Court:

Pros. Yarte:

Okay, we will have a 10 minutes recess we will call the office of the Secretary. I will ask my clerk of court to call the office of the Secretary to confirm.

Yes, your Honor, with respect to the first I have filed an explanation yesterday and I have confirmed with the Clerk of Court if they received the copy of the explanation.

(Recess for 10 minutes)

Court:

Atty. Galit:

-session resumed-

Your Honor, I have so much respect to the distinguished public prosecutor but it is of judicial notice that furnishing a copy is not limited to furnishing the copy that the office of any particular

Clerk of Court:

Do you want to counter argue the explanation? Did you give him a copy of that explanation?

Yes, your Honor, I still have to receive it in the office.   Court: What is your comment Atty. Galit being the lead prosecutor?

Your Honor, I have called already the Office of the Secretary and she said

Pros. Yarte:

I sent a copy through registry receipt, your Honor, and if he would like your Honor I can give him a copy of the explanation. I have a copy, I have it photocopied. Atty. Sison: I don't need, your Honor. I will just submit, your Honor. Court: Okay, second incident is the Motion to Excuse (interrupted) Pros. Yarte: Your Honor please, as stated by the counsel for the accused, he has filed an opposition or comment to the Motion and this representation would humbly request only for a period within which to reply on it and then it will be up to the counsel for the accused whether or not he will Answer to that Reply and we can submit it for resolution. That is my request, your Honor. Court: He is already authorized because there is already a Memorandum.   Atty. Galit:

May I say something, your Honor. Atty. Sison: Court: You are no longer authorized by the DOJ to represent. Pros. Yarte: With the kind permission of Atty. Galit, your Honor. Atty. Galit: Your Honor, may we hear your Honor that position of the (interrupted) Atty. Sison: Your Honor, I understand today we have another incident. We have a hearing set today based on the previous order by the Honorable Court for the presentation of the last witness. This is supposed to be the continuation of his direct testimony your Honor and I recall the Order of April 11 that today's hearing is intransferrable and that was said in the presence of the distinguished witness your Honor, the former Solicitor General Frank Chavez. Court: Yes, I received a copy of the letter coming from the witness. You want to read it?

Your Honor, as I gathered from the record that there was no Motion to Reset the hearing set today so I don't think the Court should be bound by the letter of a witness because this is merely a request but the Order dated April 11 was very clear and intransferrable and that in the event the prosecution failed to present the said witness in today's hearing, your Honor, the direct testimony of the said witness be stricken off the record. Now, in so far as the second incident which is a Motion to Inhibit this Honorable Court, I also gathered from the Motion that it was set for hearing today in order to allow the parties, the prosecution especially to err out or to further elaborate the allegations or averment in the said motion your Honor. This representation received only yesterday a copy of the said Motion and in this we managed to prepare an opposition and filed it early this morning your Honor. And in view of that, we are submitting that Motion to Inhibit together with our opposition thereto to the sound discretion of the Honorable Court. Court: How about you from the PCGG?

Atty. Galit: Your Honor, I . . . to Prosecutor Yarte that he confirm the authority designation of this humble representation as authorized by the Honorable Justice Secretary. Now on the first incident with regards to the Motion to cite for indirect contempt the good prosecutor Honorable Prosecutor George H. Yarte, your Honor, my proposition is this, your Honor. I do believe that oral Motion of defense counsel Atty. Roberto Sison may be procedural. The said Motion your Honor, by the express provision of Rule 71 should be filed separately and be properly . . . Indirect contempt proceedings should be filed in [a] separate petition and I have come to the rescue, your Honor, of good prosecutor Yarte in so far concerned. Now on the second incident of the Inhibition, the Motion for Inhibition is part of the proceedings, part of the prosecution of this particular case and this representation having been so authorized by the Justice Secretary, your Honor, I humbly submit that the same should also be addressed under my control and supervision. Earlier, giving courtesy to Prosecutor Yarte, I requested this Honorable Court that he be allowed to be heard in so far as his position but that suggestion is without prejudice to this humble representation

whatever position I may have. Your Honor, in fairness to this Honorable Court, I may not take the stand . . . by the public prosecutor considering the fact that I have read in this Motion the grounds cited thereon . . . Nonetheless your Honor considering the fact that the defense counsel had already filed its opposition, it is this Honorable Court's call now to resolve the same without any further proceedings. And so as your Honor, not to be accused any further of delaying this case, it has been the position of the defense counsel, it is my humble submission that the subject motion for Inhibition be now resolved. Atty. Sison: This is something on the issue of citing in contempt of Court. I recall during the previous hearing, your Honor, that I just asked the Court that Prosecutor Yarte be asked to explain why he was absent and it was the witness your Honor who suggested that it was contempt and he asked me if it was direct or indirect and I answered him that it was direct contempt and he said it is wrong. There should be a proper procedure which has to be followed. You are referring to an indirect contempt that is what he said, your Honor and believing and thinking that he was correct although now I realized it is wrong your Honor. I mentioned

also indirect contempt but I wasn't . . . that the public prosecutor be cited indirect contempt. I did not say that, your Honor. .... Pros. Yarte: In my case your Honor, I have filed my explanation and I think the matter can now be resolved in respect to the manifestation of Atty. Galit, your Honor. In the terms of Atty. Galit, your Honor, we would like the matter of Motion to Inhibit be resolved with or without the earlier request of this representation that it be given a period within which to reply, your Honor. Again, your Honor, since the Motion to Inhibit was a product and a toil of this representation, your Honor, and was actually based on his personal observations, may I still request that I still be given a period within which to react on the opposition, your Honor, filed by the defense counsel. Court: If you want, you can argue now because according to the lead prosecutor now, Atty. Galit, he moves that the two (2) incidents be submitted for resolution today. Atty. Sison:

We are willing to argue in open court. Pros. Yarte: Your Honor, I cannot argue on it because I haven't read the copy of the opposition. Atty. Sison: I can make an oral manifestation, your Honor. Pros. Yarte: And besides, your Honor, I think it is wiser for me to read it and think it over rather than just stand here and argue based on what I will hear, your Honor. Court: You ask the authorized prosecutor. .... Atty. Galit: Your Honor, in the continuation of my statement regarding the incident of the Motion for Inhibition, my position is clear on that matter . . . as the designated lead prosecutor in this case, your Honor, it is my proposition that the subject incident be considered submitted for resolution your Honor because the very ground are very

simple. The defense counsel was already heard. On the third incident and this is the very important one because probably the Department of Justice is alarmed by the barrage of accusations coming from the defense counsel that this case has been delaying for several years and it is part of the records, your Honor. As a matter of fact, this humble representation brought a letter to Judge del Rosario suggesting that we should always be prepared with all the exhibits or fees . . . that we lose this case by technicality and I have written a letter to that duly filed with the legal office, your Honor. Now this is now the pending incident where the Solicitor General Frank Chavez would have to continue his testimony with regards to some other areas not yet testified to. Now Atty. Chavez is not around. Likewise the records your Honor are not brought by Public Prosecutor Yarte, your Honor. So, that is now the dilemma of the Honorable Court. Now the defense counsel is firm on its stand that the prosecution be deemed the right to have waived to complete the testimony of Frank Chavez. To settle the issue, your Honor, in the presence of Judge del Rosario your Honor who has been handling this case and Prosecutor Yarte. There are several documents which the object of the continuation of testimony of Solicitor

General Frank Chavez. I have been vocal enough challenging your Honor the defense counsel to just admit the existence of these documents. If he has the nerved to show and admit the same, probably your Honor there is no reason, your Honor, why we cannot proceed with the formal offer of documentary exhibits and I challenge this, your Honor, in this appropriate proceedings to the defense counsel.35 (Grammatical errors in the original) Thereafter, the exchange which led to the termination of presentation of evidence for the prosecution commenced, thus: Atty. Sison: May I know what these documents are because if I recall it right, as early as late last year your Honor the said witness would be presented for the purpose of identifying only three (3) documents which are the . . . Affidavit and the newspaper clipping which mentioned his name your Honor. It was an article about him. So I cannot understand why this representation is being asked again to admit on the truthfulness or existence for several documents that agreed upon to be marked and identified in the course of the direct examination of said witness. Atty. Galit:

Judge del Rosario is present your Honor, and with that memorandum he is still designated subject to his physical condition and even in the presence of Public Prosecutor Yarte. The defense counsel is talking of three (3) documents: The two (2) affidavits of Solicitor General Frank Chavez and the subject newspaper clipping. Now if that would be the case, would the defense counsel stipulate the said two (2) affidavits and the newspaper clippings your Honor has existent and the contents of the two (2) affidavits to form part your Honor of the testimony of Solicitor General Frank Chavez. Court: Yes, what can you say Attorney? Atty. Sison: Your Honor, I think this representation was very clear on that matter if only to dispense with the presence of that witness, we already agreed as early as before last December to the existence of the documents, your Honor and however, unfortunately for this representation, the prosecution insisted in presenting the witness despite the admission that we already made in so far as the existence of these documents. Court:

What are these two (2) documents? Atty. Galit: The two (2) affidavits, your Honor, Supplemental Affidavit and / Supplement to the Supplement Affidavit. Three (3) Affidavits, your Honor. Court: Another one?   Atty. Galit:

part and parcel of the testimony already adduced before this Honorable Court by the said witness Frank Chavez. If defense counsel would stipulate on that. Atty. Sison: Yes, your Honor, but not on the truthfulness of the contents. Only on the existence. Court:

Newspaper clipping.

You will only stipulate on the existence of the three (3) affidavits as well as the newspaper clipping?

Court:

Atty. Sison:

So three (3) Affidavits as well as the newspaper clipping?

Two Affidavits, your Honor.

Atty. Galit: Yes, your Honor.

.... Pros. Yarte:

....

Three (3) annexes.

affidavits

with

several

Atty. Galit:

Atty. Galit:

If the defense counsel would like to stipulate, your Honor, first, my request for stipulation is this. The existence of those documents as I have mentioned. Second, your Honor, the contents of this Affidavit should be considered as

The reason why I am doing this is I would like to emphasized [sic] before this Honorable Court that it is only the defense who is much willing to the early disposition of this case. Only the prosecution is so circumstance your

Honor that there is a need for the continuance of the testimony of Solicitor General Frank Chavez to further identify those documents. Now if he is not willing, we are willing to proceed with the form[al] offer of exhibits.36 (Grammatical errors in the original) At this point, the Regional Trial Court returned to the Issue of the Motion for Inhibition: Court: There is a pending oral motion that based on the letter of former Solicitor General Frank Chavez that he requested that he will not attend for today's hearing because the Court first resolves the Motion for Inhibition. Atty. Sison: Yes, your Honor, but I think the witness is too presumptuous that the Motion will not be resolved today. May I say something your Honor in so far as the Motion to Inhibit is concerned because this representation would want to avert further delays in the administration of this case. In lieu of the opposition that this representation filed today, may I be allowed to just withdraw that and make my opposition oral today to give counsel or the public prosecutor to orally argue out also on what I have to

say in so far as the Motion to Inhibit is concerned. Court: You mean to say that you will withdraw your written opposition? Atty. Sison: Because the contention of the public prosecutor your Honor is that they will be asking for ten (10) days from receipt of that and there is no telling when they will receive that your Honor and there is also no telling when Frank Chavez will be available again, your Honor, and as shown by the records, he has been asking for resetting not on a weekly basis but on a monthly, your Honor. Court: As prayed for, the written opposition is now withdrawn from the records of this case. You can argue your opposition. Atty. Sison: Your Honor, we would like to oppose the Motion filed by the prosecution as showing the records of this case as early as November or December of 2006, the prosecution was already ready to rest their case and on the last minute they made an effort to defer the filing of the formal offer, your Honor,

and despite the objection of this representation, the prosecution was granted the request and they were allowed to present their witness Mr. Frank Chavez your Honor and during the course of this hearing, it was agreed by the parties in open Court that the said witness will only be asked to identify two (2) affidavits and a newspaper clipping which he has done already your Honor. And in succeeding hearings . . . over the objection of this representation despite all these objections, the Motion to reset at the instance of the prosecution was granted by this Honorable Court and it should be noted also your Honor that the settings were suggested by the witness. In other words, your Honor, they were done in coordination with the schedule of the witness and in all these instances, the prosecution was granted their request. Now in so far as the allegation giving suspicion on the impartiality of the Honorable Judge when it said that all hearings are intransferrable in . . ., I think it is normal in any jurisdiction in the most courts your Honor because if we will not have that, the case will not come to an end, your Honor. Also your Honor, in so far as the allegation here in this Motion that my client will be running based on the newspaper clipping, your Honor, in the Manila Times dated February 12, 2007, this representation your Honor,

obtained from the Commission on Elections a Certification that my client did not file any Certificate of Candidacy for the coming elections, your Honor. So . . . the suspicion of the prosecution that the Motion to Inhibit should be granted because my client is running for public in this jurisdiction, your Honor. Court: Okay, you want to argue the comment/opposition on the Motion to Inhibit? Pros. Yarte: Your Honor, everything has been fully ventilated with that Motion. If your Honor please, I have to fetch my daughter in Makati at 2:30 and it[']s now 2:30. May I be allowed to be excused, your Honor. Atty. Galit is here, I have to go to Makati to fetch my daughter. May I be allowed to be excused? Atty. Galit: It is alright. Court: So what is now the pleasure of the counsels present? You want that the Motion now submitted for resolution?

Atty. Galit:

Court:

Submitted, your Honor.

That is why I show you the letter coming from the former Solicitor General the reason behind why he did not attend in today's hearing.

Court: Order. As prayed for by both parties and after consideration of the written motion for inhibition as well as the oral comment/opposition thereto, this Court resolves to deny the same and considering that the Judge has not manifested any partiality or exhibited bias in favor of the accused. Wherefore, the Motion for Inhibition is Denied. So likewise the manifestation and explanation of prosecutor Yarte about the show cause order, this Court is satisfied with the explanation of Prosecutor George Yarte. So ordered.37 (Grammatical errors in the original) Having resolved the Motion for Inhibition, the Regional Trial Court continued to the next incident and the issue of Chavez's absence: Atty. Sison: Your Honor, the incident today is supposed to be continuation of direct examination of the witness for the prosecution and I don't see him around your Honor, despite that he should be present for today's hearing.

Atty. Sison: Yes your Honor, as I said also, the witness is too presumptuous that the Motion to Inhibit will not be resolved immediately your Honor so in view of that, we will move that the testimonial evidence given by the said witness be stricken off the record . . . of the Order of this Honorable Court dated April 11. Atty. Galit: Your Honor, it is too much on the part of the defense counsel to move for the striking out of the testimony of the said witness. As I have said, the issues are simple. The witness has already testified and the witness is still very much willing to continue his testimony. Your Honor, to continue testifying on those three (3) affidavits with all those annexes, rather than strike the testimonies of the witness from the records of this case which would amount your Honor to issue of technicality not favor by jurisprudential authorities, I would like to challenge the defense counsel to allow us, your

Honor, to have those testimonies stay on the record and . . . on the contents of those three (3) affidavits as well as those annexes at least as to the existence your Honor and allow the prosecution to wind up your Honor their evidence by filing the complete formal offer of exhibits. In that way, your Honor, any technicality will be avoided. Atty. Sison: Your Honor, I said that if only to give teeth to the order of the Honorable Court last April 11, in any event, your Honor, this representation has maintained as early as five months ago that he is willing to stipulate your Honor on the existence of the affidavits of Atty. Chavez as well as the existence of the newspaper clippings but not as to the truth and veracity thereof, your Honor. Atty. Galit: Including annexes of those three (3) affidavits, I would like to call the attention of this Honorable Court that Prosecutor Sulit is around and now if the position of the defense counsel would be to stipulate on the existence of these documents, then we will be willing enough to wind up our presentation of evidence and submit the formal offer of evidence . . .

Atty. Galit:

Court:

The pending Motion to strike out seems to have been super[s]eded, your Honor, by the defense counsel himself when he entered into stipulation regarding the existence of these documents, your Honor, whom those annexes in the affidavit of Frank Chavez and as a matter of act without waiving the stipulations made by the defense counsel, the Sandigan Prosecutor Wendell Barreras Sulit is showing your Honor to the defense counsel the original of those documents.

So the testimony of former Solicitor General Frank Chavez is now deemed terminated, correct me if I'm wrong.

Court:

I will like to ask for one setting to cross examine him, your Honor / and that one said setting I will be presenting my first witness.

Is that correct Atty. Sison that the testimony of former Solicitor General Frank Chavez remains in the records considering the existence of three (3) affidavits as well as the newspaper clipping and the annexes?

Atty. Galit: Yes, your Honor. Court: You want to cross Solicitor General?

Court: How about formal offer of exhibits? Atty. Galit:

Yes, your Honor. Only as to the existence of these documents, it is subject to our cross examination.

We will exhibits.

So the affidavit dated October 6, 1999.

the

Atty. Sison:

Atty. Sison:

Atty. Galit:

examine

be

formally

offering

our

Court: Is that correct, is it procedural Prosecutor Sulit that (interrupted)

.... Prosecutor Sulit: At the same time you will cross examine? Atty. Galit: We will file our formal offer of exhibits ten (10) days from today.

Do you want to formally offer orally or in writing? Atty. Galit: I could not do that, your Honor. Court:

Court:

How many days prosecutor?

But you will cross examine the witness Frank Chavez after the cross examination, you will file your formal offer after the cross examination.

Pros. Sulit:

Atty. Sison: Your Honor, I will not cross examine anymore. Court: Okay[.] Order. Considering the manifestation of both counsels, the testimony of the former Solicitor General Frank Chavez is now deemed terminated and that the defense counsel manifested that he is no longer cross examining the witness. So ordered.38 Thereafter, the formal offer of the prosecution was discussed: Court:

Your Honor, I thought your Honor that I am here for the comparison of the records and I brought with me the authenticated and may I show to the Honorable Court for the Honorable Court's appreciation of the originals of the annexes of Solicitor General Frank Chavez' affidavit of October 9, 1999. Court: I will just delegate my clerk of court. Pros. Sulit: Yes, your Honor, but I would wish that the Honorable Judge himself will go over a sample of the authenticated copies from our consulate in Berne, Switzerland. These documents, your Honor, were released to us by the District Magistrate of Zurich, Peter

Consandey, and the process is that: He had these documents authenticated by their own judges and thereafter authenticated by our own Consular [O]fficer Fe Pangilinan Klinger in Berne, Switzerland. And afterwards, these documents were again sent to the Solicitor General Frank Chavez who was then the Solicitor General who initiated these complaints via diplomatic vouch, your Honor, thru Ambassador Aschalon who was then our Ambassador in Switzerland. Court: Okay, noted. Pros. Sulit: The marked of authentications are all there, your Honor. Atty. Galit: May we put on the records, your Honor, that the Honorable Court was handed by Prosecutor Wendell, an original of the said document. Court: Okay. Pros. Sulit:

Your Honor, we have several of those documents all made attachments to the affidavit of former Solicitor General Frank Chavez which I believe he has testified already and identified in the course of his direct testimony in your previous trial. We are now in the process of comparing these documents your Honor, in the presence of the defense counsel. Court: Can you make a manifestation whether or not faithful reproduction of the original? Pros. Sulit:

Atty. Sison: Exhibit "I" and "H" earlier identified by the witness are faithful reproduction of the original kept by Prosecutor Sulit, however, your Honor I would like to make an additional manifestation that the translations attached to the originals are unofficial borne by the very documents, your Honor which I quote unofficial translation by M. R. Aguinaldo. Pros. Sulit:

Court:

Pros. Sulit:

So what is your manifestation Atty. Sison?

As explained to me by Atty. Chavez, at the time that they were crafting these complaints against the Marcoses, there were documents in the foreign languages like French, German and Swiss documents that need to be translated into English and they form a task force Umungos and I think two (2) of the ladies or maybe four (4) of them came from the Department of Foreign Affairs and they were the Official translators and so they did the unofficial although it is called there

....

I will note your Prosecutor Sulit.

manifestation

Atty. Sison: Can we make an understanding with the prosecution your Honor that the translators are the translators designated by the prosecution alone? Pros. Sulit:

Court: Yes, go ahead.

Well in so far as exhibits "A-F" and submarkings are concerned, your Honor, they appear to be faithful reproduction of the documents identified by the witness.

Court:

May I be allowed to speak, your Honor.

Yes, your Honor, we are now in exhibit "G".

Atty. Sison:

unofficial translations, we made it included them to form part of the record for our clearer understanding of the foreign document.

By the Department of Justice. Judge del Rosario is here, he would know your Honor, because he was part of the Task Force Umungos. Court: Department of Justice or Department of Foreign Affairs? Judge del Rosario: Department of Foreign Affairs. Atty. Sison: Without the participation accused, your Honor.

of

the

Court: I will note your manifestation. Atty. Sison: Thank you, your Honor. The document identified as exhibit "J" by the witness in his Affidavit is a faithful reproduction of the original which is with Prosecutor Sulit and I make the same manifestation in so far as the translation is concerned that it was clone in the instance of the prosecution, your Honor, without the participation of the accused. Atty. Sulit: I think there is no translation here, your Honor. This is an original document. Your Honor, this was signed by Martin Grossman in English language this time. Atty. Sison:

Government, this is a certified true copy and duplicate photocopy are faithful reproduction of the documents on file with the PCGG under the custodian Lourdes Magno your Honor. Atty. Sison: Without indicating that this was derived out of an original copy that is kept with the PCGG.

Court: Anyway, I will note both manifestations made by Prosecutor Sulit, Atty. Galit and Atty. Sison. Atty. Galit:

I will note both manifestations. Next exhibit.

Your Honor, we hereby manifest that the custodian of subject document in the person of Lourdes Magno will be available in these coming days to present the original of these documents from which source the said documents were certified.

Atty. Sison:

Court:

I would like to manifest, your Honor, that these documents identified by the witness marked as exhibit "K-Q" are faithful reproduction of the photocopies brought along by Prosecutor Sulit. In other words, your Honor, these documents are also photocopied, your Honor.

Okay, noted.

Court:

Atty. Sison: Is counsel telling this representation that they have the original of exhibit "Q6"? Pros. Sulit:

Yes, your Honor, I stand corrected your Honor but I would like to manifest that this Certificate of Authenticity marked as exhibit "J- 2" is also a photocopy.

Atty. Galit: This are certified true copy by the PCGG office, your Honor.

I saw them, your Honor, only that they cannot give that to me and I don't know why. They kept it in their files.

Atty. Sulit:

Atty. Sison:

Court:

A photocopy certified true by the Presidential Commission on Good

Yes, your Honor, but I don't think the witness was ever presented.

The originals are with the PCGG?

Next exhibit? Pros. Sulit: Yes, your Honor. I think those documents were sent to them directly, I don't know how but they are not willing to . . . with the original but I saw the original. Atty. Galit: These documents were only marked as certified true copy of the original from the PCGG.

Atty. Sison: Exhibit "R". The documents presented by the prosecution except that exhibit "R" is concerned, the best document is a certified true copy correct photocopy of the document on file which does not say if it is original or not. Pros. Sulit: How about the other documents, do you want me to bring it?

Atty. Sison: Anyway, I would like to manifest that I think the parties should not lost track of the fact that this is a case of dollar salting your Honor. (off the record)39 (Grammatical errors in the original) The parties then proceeded to the comparison of the exhibits intended to prove the existence of the foundations, the names of which were used to create the bank accounts: Atty. Sulit: We are now going to the documents that will prove the existence of the foundations, Trinidad, Palmy, Maler, Rayby and any other documents. Court:

How about the second supplemental affidavit on the Trinidad foundation dated February 16, 2001? Atty. Sison: The existence again, your Honor. Pros. Sulit: And how about the attached documents which were also certified Xerox copy of the PCGG under the same person Ma. Lourdes Magno. Atty. Sison:

Court: So no more?

May we browse to the original of these documents.

Pros. Sulit:

Pros. Sulit:

No, there is another your Honor. The original copies, compliance dated February 16, 2001 and the attached First Supplemental Affidavit of Francisco Chavez dated February 15, 2001.

Okay.

Atty. Sison: We admit the existence of that already, your Honor. Pros. Sulit:

Atty. Sison: The records will tell out they are certified Xerox copies. I don't know what that means by the records custodian of the PCGG. Atty. Galit: Your Honor these are being certified Xerox copy as indicated in the subject document.

Court:

Pros. Sulit:

I will note both manifestations.

And there are document number. This document were given serial numbers from Switzerland.

Pros. Sulit: Statement of Account of Trinidad Foundation and they are all certified Xerox copy on the one filed at the PCGG. They were sent to the PCGG.

Court:

Atty. Galit:

No objection?

Trinidad Foundation 010101.

Atty. Sison:

Pros. Sulit: Judge del Rosario: Yes, statement Marcoses.

of

accounts

of

Those are the control number when they were sent to the Philippines.

We are willing to stipulate that the existence of the annexes of the supplemental affidavit of the witnesses, your Honor, existence as contained part of the annexes of the supplemental affidavit. Atty. Galit: Your Honor, we would like to put it on record that the document bears the stamped of Certified Xerox copy and under the name of Ma. Lourdes Magno of the PCGG, your Honor. Court: Noted.

Second supplemental February 16, 2001.

We leave it to the sound discretion of the Honorable Court. Court:

Atty. Galit: Pros. Sulit:

with the DOJ, the original 10 days is allocated to the prosecution may we ask that we be given additional five (5) days to make a total of fifteen (15) days.

affidavit

of

Pros. Sulit: We stipulate that they do exist as part of the annex of the second supplemental affidavit of Frank Chavez. Court: Noted. So how many days you will formally offer your exhibits? Atty. Galit: Considering your Honor the predicament that the records are still

Fifteen days from today to formally offer your exhibits. How many days to file your comment? You want it orally or written? Atty. Sison: I will just ask for two (2) days to file your written comment/opposition. Atty. Galit: I undertake to furnish the defense counsel on a personal basis. Court: I will now set the case for initial presentation of defense evidence. Can you set it on several dates?

Atty. Galit: Yes, your Honor.40 (Grammatical errors in the original) After the April 24, 2007 hearing, Chavez filed a Petition for Certiorari, Prohibition, and Mandamus41 dated May 3, 2007 with the Court of Appeals, docketed as C.A.-G.R. No. 98799, praying that the Court of Appeals declare null and void Judge Pampilo's order in open court denying the motion to inhibit. Chavez also asked that the Court of Appeals issue a temporary restraining order or a writ of preliminary injunction, ex-parte, and that it enjoin Judge Pampilo from further proceeding with, hearing, and deciding the criminal cases against Imelda. Finally, he prayed that Judge Pampilo be mandated to inhibit himself in the criminal cases against Imelda.42 In its May 22, 2007 Resolution, the Court of Appeals granted the prayer for the issuance of a writ of preliminary injunction.43 The Court of Appeals resolved the petition in its February 28, 2008 Decision44 and denied Chavez's petition for certiorari, on the basis that Judge Pampilo's alleged bias was not sufficiently substantiated. It found that none of the grounds for mandatory

inhibition of Judge Pampilo was present in this case. Further, there was insufficient showing of bias to substantiate Chavez's claim of bias on the part of Judge Pampilo. The Court of Appeals found that the prosecution's own acts delayed its presentation of evidence and that the prosecution had been granted a six (6)-month extension to complete its presentation of evidence. Thus, the Court of Appeals ratiocinated that there was no undue haste on the part of Judge Pampilo when he ordered that the prosecution rest its case. It further found that the claims of prejudice against Prosecutor Yarte were likewise unsubstantiated.45 The dispositive portion of the Court of Appeals February 28, 2008 Decision read: WHEREFORE, in view of the foregoing, the petition for certiorari is hereby DISMISSED.46 47

Thus, on March 10, 2008,  the Regional Trial Court rendered its May 28, 2007 Decision, acquitting accused Imelda and Hector T. Rivera on the ground of reasonable doubt. It found the prosecution evidence wanting and did not mince words in describing the various failures of the prosecution. It noted that only two (2) witnesses

were presented and that the prosecution's evidence was based on hearsay.48 It found that the prosecution's case was anchored on documents secured from the Swiss authorities, but that the only witness presented to identify the documents was former Assistant Solicitor General and Presidential Commission on Good Government Commissioner Del Rosario.49 It quoted the transcript of stenographic notes to illustrate that Del Rosario had no personal knowledge about the documents which he testified on: Atty. Sison: Q: Now, Mr. Witness the documents that you attached in your main affidavit and supplemental affidavits may I know where you obtained these documents all of them Mr. Witness? A: Well, I obtained them from the PCGG and the OSG . . . Q: Did you come to know where the PCGG or the OSG derived these documents? A: It came from Switzerland all these documents, Swiss bank documents. Q: So in other words Mr. Witness all of the documents which you identified in the proceedings in this case were

derived A:

from Yes,

Switzerland? sir.

Q: There is not any document that you identified that was derived from any other source Mr. Witness? A: Yes, sir . . .50 (Grammatical errors in the original) The Regional Trial Court faulted the prosecution's reliance on hearsay testimony. It held: To give weight to hearsay testimony gravely violates the constitutional right of the accused to meet the witnesses face-to-face and to subject the source of the information to the rigid test of crossexamination, which is the only effective means to test their truthfulness, memory, and intelligence. Furthermore, the prosecution in this case presented as evidence voluminous documents purporting to be authentic records of the Marcos accounts in Swiss banks yet not one of the bank officers who had personal knowledge of said accounts was ever presented in Court to identify the documents and attest to the veracity of their contents. Even assuming that the said bank officers could not possibly make the trip to the Philippines, there was no reason why their testimonies could not have been taken in

Switzerland

by

deposition.

Del Rosario himself admitted during the course of his testimony in these cases that he was authorized to take depositions of witnesses, and again the Court quotes from the stenographic notes . . . "ACSP Mariano Q: Judge, you stated in your previous statement that you are now special counsel or legal consultant of PCGG. What are your main functions as such special counsel or legal consultant? (Del

Rosario)

A: My special function as consultant of PCGG, I am tasked to assist in the prosecution of all criminal cases against Mrs. Imelda Marcos all in the Regional Trial Court and in the Sandiganbayan and I am also tasked to take depositions of witnesses, rather evaluate additional evidence for the purpose of effectively prosecuting these cases against Mrs. Marcos . . . During the course of the trial in these cases, Del Rosario revealed that he had been to Switzerland in connection with his investigation of these cases, and that sometimes he went alone and at other times he went with Solicitor General Chavez, which this Court takes to mean that he (Del Rosario)

had been to Switzerland many times. Yet he never bothered to communicate with, let alone take depositions, of the bank officers who could have identified the Swiss bank documents presented by the prosecution as evidence in these cases. Even assuming that Del Rosario was too busy with his investigative functions that he simply did not have time to take depositions, there were other persons available in Switzerland who could have legally taken such depositions if only Solicitor General Chavez, or any of his agents like Del Rosario had the foresight and the good sense to request it.51 The Regional Trial Court named several witnesses that the prosecution should have presented: 1. Peter Cosandey, the magistrate who examined the bank documents; 2. Dr. Theo Bertheau of Zurich, who, according to Del Rosario, was instructed by the Marcoses to arrange for a lawyer in Liechtenstein to create Azio Foundation;

3. The alleged Marcos trustees in Switzerland: Mr. C. Walter Fessler, Cusnach Souviron, Jr., Mr. Ernest Scheller, and Dr. Helmuth Merlin; 4. Martin Grossman who signed the Certificate of Authentication of 52 Business Records[.]

(Del

Rosario)

A: Yes, your honor, I found out after investigation that this contract really signed by Imelda Romualdez Marcos, this belongs to her, this contract opening of account in Swiss Credit Bank . . . Q: Do you know who this Imelda Marcos referred to in that document?

A: The very usual and familiar signature of the late President Ferdinand E. Marcos. SP Carretas: May I request that the signature of Ferdinand E. Marcos appearing on the lower right hand margin of page 2 of Exhibit WCommon be marked as Exhibit "W-2." Court:

The Regional Trial Court noted that the prosecution repeatedly asked Del Rosario to identify signatures that he was not competent to identify: Many times during the course of the trial in these cases, the prosecution asked Del Rosario to identify signatures of persons whose handwriting he was not competent to testify on and despite his own admission that he was not a handwriting expert. And again, the Court quotes from its own stenographic records. (TSN, June 10, 2003, page 17-19): "(State prosecutor) Q: Now on page 2 of this Exh. "XCommon" appears a legible signature of Imelda Romualdez Marcos. In the course of your investigation, were you able to determine the person who affixed that signature?

Atty. Parungao: Excuse me, your honor, may we be allowed to see the document first? Your honor, may I just manifest that the signature has no print or any indication that the signature belongs to a certain person. It is just a signature which if read, reads Imelda Romualdez Marcos but there is no indication whose signature this is. Court:

No

printed

SP

it. Carretas

Q: And on the lower left hand margin of page 2 of the same exhibit appears a signature below the printed words Swiss Credit Bank. Were you able to find out in the course of your investigation the person who affixed this signature?

name.

Atty. Parungao: Yes, your honor." And in another instance . . . "SP

Mark

Carretas

Q: Now on the lower right hand margin of page 2 of Exhibit "W-Common" appear a signature below the printed word the Depositor. In the course of your investigation, were you able to identify or know the signature affixed in this document below the printed words the Depositor?

A: I do not know the name of the person who affixed the signature but this could be the authorized representative of Swiss Credit Bank. Q:

Why

do

you

say

so?

A: Because it appear below the words Swiss Credit Bank and it is a contract, sir." Similar exchanges between the state prosecutor and star witness Del Rosario were repeated many times

during the course of the trial with respect to the signatures of the late President Marcos and Mrs. Marcos. But the most absurd of all was when on cross-examination, Del Rosario could not identify the signature of Martin Grossman, the person who issued the Certificate of Authenticity of the Swiss bank documents used by the prosecution in these cases, to wit (TSN, Oct. 10, 2006): "Q: Now Mr. Witness in this Certificate of Authenticity of Business Records, appears a signature above the printed name Martin Grossman. Do you recognize that signature? A: I am not familiar with the signature, sir. Q: You are not familiar. So in other words, you do not know if this is the signature of Mr. Martin Grossman, whose printed name appears below that? A: Yes, but I Certification . . ."53

rely

on

the

The Regional Trial Court also noted that the documents presented were photocopies and that the prosecution had not established any basis for presenting them instead of the original documents.54 Thus, the Regional Trial Court found

that the prosecution failed to present competent proof of the alleged offense and of the conspiracy among the accused. Regarding the prosecution's attempt to establish the conspiracy, the Regional Trial Court held: The prosecution merely presented documentary evidence that Roberto S. Benedicto invested in the Philippineissued dollar-denominated treasury notes. It did not say that Mr. Benedicto did the transaction for herein accused. He did it for himself alone. In fact, under the Compromise Agreement executed in November 1990 between the government and Mr. Benedicto, there was no mention about the above alleged investments of Mr. Benedicto in behalf of herein accused. Otherwise, Mr. Benedicto would have made his being the alleged dummy a part of the Compromise Agreement. Furthermore, neither did the prosecution submit any documentary proof that the three Swiss banks from where the alleged dollar remittances emanated, namely, Bank Hofmann, SBC and Banque Paribas, held the dollar notes for accused Marcos . . . The Court is cognizant of the fact that the government has expended untold time, effort and money in the prosecution of these cases, but the accused has the Constitutional

presumption of innocence. The prosecution in these cases failed to discharge the burden of proof required in criminal cases. This court cannot in all conscience convict the accused on the basis of mere hearsay and on the basis of documents which were not authenticated and proved in the proper manner.55 The dispositive portion of the Regional Trial Court Decision read: WHEREFORE, foregoing premises considered and pursuant to applicable jurisprudence and law on the matter, the accused IMELDA ROMUALDEZ MARCOS and HECTOR T. RIVERA are hereby ACQUITTED on the ground of reasonable doubt.56 Chavez filed a Motion for Reconsideration57 of the Court of Appeals February 28, 2008 Decision. As the Regional Trial Court Decision was promulgated soon thereafter, on March 10, 2008,58 and within Chavez's period for filing a motion for reconsideration with the Court of Appeals, Chavez included in his motion a prayer for nullification of the Regional Trial Court's judgment of acquittal. In support of this prayer, Chavez argued that the acquittal was in violation of the Court of Appeals injunction, pointing out that the injunction dated July 20, 2007 stated that it would subsist "pending final

resolution of the present petition or unless a contrary order is hereafter issued by this Court."59 He insisted that his case before the Court of Appeals was still pending final resolution because of his motion for reconsideration and that there had been no order dissolving the injunction.60 In its November 24, 2008 Resolution, the Court of Appeals denied the Motion for Reconsideration and the prayer for nullification of the Regional Trial Court March 10, 2008 Decision. It held that the prayer for nullification was improper considering that it was not covered in the original petition for certiorari. It also noted that the assailed Regional Trial Court Decision was rendered after the Court of Appeals had already denied the petition for certiorari. The dissolution of the writ of injunction was deemed carried with the dismissal of the petition for certiorari.61 Thus, Chavez filed this Petition for Review on Certiorari before this Court. After Imelda filed her Comment62 and Chavez filed his Reply,63 this Court gave due course to the petition.64 Chavez filed his Memorandum,65 and Imelda, after seeking four (4) extensions of time to file,66 finally filed her Memorandum67 by mail on January 4, 2010. On October

3, 2016, this Court required the parties to move in the premises and to inform this Court of pertinent developments which may be of help in the disposition of this case, or which may have rendered it moot and academic.68 On November 18, 2016, counsel for petitioner informed this Court that petitioner Chavez passed away on September 11, 2013.69 Thereafter, counsel for petitioner filed a Motion for Resolution70 arguing that petitioner's action survives his death as it involves an issue not personal to him, namely, the national coffers, and that his death does not render the remedies prayed for moot and academic, or impossible.71 Petitioner claims that the Court of Appeals should have appreciated Judge Pampilo's demeanor and overeagerness to decide the case as evidence of grave abuse of discretion.72 He characterized Judge Pampilo's scheduling of the prosecution's witness as a "noosetightening tactic."73 He claimed that due to the unreasonableness of the schedule for his testimonies, it was inevitable that the prosecution would have to request for adjustments, and thereafter accept any resetting with the warning that its presentation of evidence would be deemed terminated.74 Judge Pampilo made it

impossible for petitioner or for Department of Justice State Prosecutor Yarte to appear at the hearing dates set by the court.75 By orally denying the Motion to Inhibit on April 24, 2007, Judge Pampilo essentially forced the prosecution to present its evidence on the very same day, or end its presentation of evidence.76 Petitioner also claims that Judge Pampilo, Atty. Galit, and Atty. Robert Sison (Atty. Sison) all acted with a common objective of railroading the cases. He insists that this common objective is evident from what transpired on April 24, 2007.77 In particular, petitioner points out the fact that Judge Pampilo interpreted the Department of Justice Memorandum dated April 17, 2007 as designating Atty. Galit as the lead prosecutor and refused to allow Prosecutor Yarte to argue as the lead prosecutor. This is despite the fact that the Department of Justice Memorandum did not designate Atty. Galit as the lead prosecutor or exclude Prosecutor Yarte from arguing before the court. Petitioner alleges that the Department of Justice Memorandum stated: [A] directive is hereby made authorizing and/or designating PCGG Special Counsel, Atty. Napoleon Uy Galit with or without the presence of any public prosecutors to prosecute the above-referred cases . . .78

Petitioner maintains that it was revealing that Judge Pampilo swept aside the arguments of Prosecutor Yarte.79 He also faulted Judge Pampilo for orally deciding the Motion to Inhibit,80 averring that it was hastily done.81 He believes that Atty. Galit acted as if he were Prosecutor Yarte's adversary instead of a fellow prosecutor82 and that because of this concerted action among Judge Pampilo, Atty. Sison, and Atty. Galit, Prosecutor Yarte had to walk out of the hearing.83 Petitioner asserts that the commonality of purpose was also shown by the risky procedure resorted to by Atty. Sison, who, in one hearing, waived his written opposition to the Motion to Inhibit, the cross-examination of petitioner, and the presentation of evidence: 17. Also, the conduct of counsel for Imelda Marcos provides yet another glimpse into a sort of "commonality of purpose" shared by Judge Pampilo and Imelda Marcos. When Prosecutor Yarte insisted on his right to file a reply to Atty. Sison's opposition to the Motion to Inhibit, the latter conveniently withdrew his written opposition. When Judge Pampilo realized that he could not proceed with the presentation of evidence for the accused without first requiring the prosecution to submit its formal offer of

evidence, Atty. Sison, who had earlier sought a single setting for petitioner's cross-examination and the presentation of Imelda Marcos' evidence, suddenly relinquished his intention to cross-examine the petitioner. Then, later, when it was already time for him to present evidence for the accused (Imelda Marcos), Atty. Sison merely bracketed and marked a solitary statement in the testimony of Atty. Cesario del Rosario and then waived further presentation of evidence. He resorted to this risky procedure instead of being more cautious by filing a Demurrer to Evidence.84 Petitioner also assails the circumstances surrounding the promulgation of Judge Pampilo's decision. He suggests that there must have been a direct liaison between Judge Pampilo and Atty. Sison, because without one, under the circumstances, respondent Imelda would not have been able to file an Urgent Motion to Lift Temporary Restraining Order Ad Cautelam in time for the original scheduled promulgation to proceed.85 Further, he alleges that Judge Pampilo told reporters that promulgation would proceed on May 23, 2007 despite the issuance of the Temporary Restraining Order because respondent Imelda was working on

having the Temporary Restraining Order lifted: 25.  . . . On 23 May 2007, Judge Pampilo went to court ready to promulgate his decision despite the fact that he was already served with the trial court's TRO in the afternoon of 22 May 2007. When Judge o was approached by news reporters if the promulgation would push through, Judge Pampilo answered in the affirmative since Imelda Marcos is supposedly working out a way to have the TRO lifted, obviously referring to Imelda Marcos' Motion to Lift TRO dated 23 May 2007. When no order from the Court of Appeals came, Judge Pampilo asked the reporters to come back by 2:00 p.m. of that same day, since according to him, by that time, Imelda Marcos might be able to secure the lifting of the TRO. Having failed in his expectations, Judge Pampilo rescheduled the promulgation of judgment to 30 May 2007 as may be gleaned from page 43 of his Decision. He just would not give up in his attempts to grant Imelda Marcos an early acquittal despite orders from the Court of Appeals. How can such a conduct be explained? 26. Then, finally, as mentioned earlier, Judge Pampilo did not even await final resolution of the instant case when he promulgated on 10 March 2008 his

judgment of acquittal. Again, consistent with the Rules of Court, it must be stressed that petitioner was permitted to file and had in fact filed - his Motion for Reconsideration of the Court of Appeals' 28 February 2008 Decision. Therefore, the 28 February 2008 Decision is not yet final. As such, the writ of preliminary injunction issued by the Court of Appeals is still effective because the Court of Appeals' 20 July 2007 Resolution clearly states that the writ of preliminary injunction shall subsist "pending final resolution of the present petition or unless a contrary order is hereafter issued by this Court." Judge Pampilo's apparent fervor to exculpate Imelda Marcos even in violation of the Court of Appeals' injunction is only consistent with something glaringly obvious from the very beginning: his bias and partiality.86 Petitioner further argues that Judge Pampilo acted with grave abuse of discretion for promulgating his decision in violation of a subsisting 87 injunction,  and for abruptly terminating petitioner's testimony.88 He insists that his testimony would have been sufficient to render admissible the documents which Judge Pampilo found inadmissible as evidence.89 Respondent Imelda argues that the petition should be dismissed for raising questions of fact. Further, the

undisputed facts on record constitute sufficient justification for Judge Pampilo's decision to tenninate the prosecution's presentation of evidence.90 This Court issues:

resolves

the

following

First, whether or not the petition should be dismissed for raising questions of fact; Second, whether or not the Regional Trial Court May 28, 2007 Decision acquitting respondent Imelda R. Marcos was issued in violation of a subsisting injunction; and Finally, whether or not the records show that Judge Silvino T. Pampilo, Jr. acted with bias in favor of respondent Imelda R. Marcos. This Court denies the Petition. I A petition for review on certiorari under Rule 45 shall only pertain to questions of law. Further, the Rules of Court mandate that petitions for review distinctly set forth the questions of law raised.91 This petition for review on certiorari

attributes the following errors to the Court of Appeals: a. The Court of Appeals committed reversible error by refusing to consider Judge Pampilo's demeanor and overeagerness to decide the criminal cases against Imelda Marcos intended to culminate in a judgment of acquittal as clear evidence of grave abuse of discretion warranting the issuance of a Writ of Certiorari. b. The Court of Appeals committed reversible error by refusing to consider Judge Pampilo's flagrant violation of a subsisting writ of preliminary injunction and, ultimately, the prosecution's constitutional right to due process.92 Essentially, petitioner takes issue with how the Court of Appeals interpreted the acts of Judge Pampilo and found no manifest partiality, which are clearly not questions of law. He did not even attempt to frame the issues as questions of law. By claiming that Judge Pampilo violated a writ of injunction, petitioner attempts to cloak the second alleged error with some semblance of being a question of law. However, petitioner does not provide any legal basis or coherent legal argument to support the claim that a writ of injunction was violated, and this claim is totally specious. Although this Court may, in exceptional

cases, delve into questions of fact, these exceptions must be alleged, substantiated, and proved by the parties before this Court may evaluate and review facts of the case.93 Petitioner having failed to establish the basis for this Court to evaluate and review the facts in this case, the petition may be dismissed on this ground. II The Regional Trial Court Decision dated May 28, 2007 and promulgated on March 10, 2008 was not issued in violation of the Court of Appeals writ of injunction. When this Regional Trial Court Decision was promulgated, the writ of injunction had already been dissolved. As stated by the Court of Appeals in its November 24, 2008 Resolution, the denial of the petition for certiorari carried with it the dissolution of the writ of injunction.94 Petitioner makes much ado of the fact that the text of the injunction stated that it subsisted "pending final resolution" of the petition, ignoring the rest of the text which provided that it would be dissolved if a contrary order was issued by the Court of 95 Appeals.  Indeed, the Court of

Appeals, in its November 24, 2008 Resolution, resolved this issue, stating: [I]t should also be considered that at the time of the rendition of the said RTC decision, the Decision of this Court denying the petition for certiorari had already been issued. Although the said Decision itself did not expressly provide for the dissolution of the writ of injunction the same is deemed carried with the dismissal of the petition for certiorari.96 In other words, the Court of Appeals' decision denying the petition for certiorari carried with it a contrary order dissolving the injunction. Petitioner fails to address this point and does not show how it is an error of law. Thus, the argument that a subsisting injunction was violated is clearly frivolous, if not misleading, and intended only to make it appear as though the petition has some semblance of basis. III Whether or not to voluntarily inhibit from hearing a case is a matter within the judge's discretion. Absent clear and convincing evidence to overcome the presumption that the judge will dispense justice in accordance with law and evidence, this Court will not interfere.97

On the inhibition of judges, Rule 137 of the Rules of Court provides: Section 1. Disqualification of judges. No judge or judicial officer shall sit in any case in which he, or his wife or child, is pecuniarily interested as heir, legatee, creditor or otherwise, or in which he is related to either party within the sixth degree of consanguinity or affinity, or to counsel within the fourth degree, computed according to the rules of the civil law, or in which he has been executor, administrator, guardian, trustee or counsel, or in which he has presided in any inferior court when his ruling or decision is the subject of review, without the written consent of all parties in interest, signed by them and entered upon the record. A judge may, in the exercise of his sound discretion, disqualify himself from sitting in a case, for just or valid reasons other than those mentioned above. The import of Rule 137, Section 1 of the Rules of Court was explained in Pimentel v. Salanga:98 Thus, the genesis of the provision (paragraph 2, Section 1, Rule 137), not to say the letter thereof, clearly illumines the course of construction we should take. The exercise of sound discretion - mentioned in the rule-has reference exclusively to a situation where a judge disqualifies himself, not

when he goes forward with the case. For, the permissive authority given a judge in the second paragraph of Section 1, Rule 137, is only in the matter of disqualification, not otherwise. Better stated yet, when a judge does not inhibit himself, and he is not legally disqualified by the first paragraph of Section 1, Rule 137, the rule remains as it has been he has to continue with the case.

decision," We there discoursed on the "principle of impartiality, disinterestedness, and fairness on the part of the judge" which "is as old as the history of court." We followed this with the pronouncement that, upon the circumstances obtaining, we did not feel assured that the trial judge's findings were not influenced by bias or prejudice. Accordingly, we set aside the judgment and directed a new trial.

So it is, that the state of the law, with respect to the situation before us, is unaffected by the amendment (paragraph 2 of Section I, Rule 137) introduced in the 1964 Rules. And it is this: A judge cannot be disqualified by a litigant or his lawyer for grounds other than those specified in the first paragraph of Section I, Rule 137.

Efforts to attain fair, just and impartial trial and decision, have a natural and alluring appeal. But, we are not licensed to indulge in unjustified assumptions, or make a speculative approach to this ideal. It ill behooves this Court to tar and feather a judge as biased or prejudiced, simply because counsel for a party litigant happens to complain against him. As applied here, respondent judge has not as yet crossed the line that divides partiality and impartiality. He has not thus far stepped to one side of the fulcrum. No act or conduct of his would show arbitrariness or prejudice. Therefore, we are not to assume what respondent judge, not otherwise legally disqualified, will do in a case before him. We have had occasion to rule in a criminal case that a charge made before trial that a party "will not be given a fair, impartial and just hearing" is "premature." Prejudice is not to be

This is not to say that all avenues of relief are closed to a party properly aggrieved. If a litigant is denied a fair and impartial trial, induced by the judge's bias or prejudice, we will not hesitate to order a new trial, if necessary, in the interest of justice. Such was the view taken by this Court in Dais vs. Torres, 57 Phil. 897, 902904. In that case, we found that the filing of charges by a party against a judge generated "resentment" on the judge's part that led to his "bias or prejudice which is reflected in the

presumed. Especially if weighed against a judge's legal obligation under his oath to administer justice, "without respect to person and do equal right to the poor and the rich." To disqualify or not to disqualify himself then, as far as respondent judge is concerned, is a matter of conscience. All the foregoing notwithstanding, this should be a good occasion as any to draw attention of all judges to appropriate guidelines in a situation where their capacity to try and decide a case fairly and judiciously comes to the force by way of challenge from any one of the parties. A judge may not be legally prohibited from sitting in a litigation. But when suggestion is made of record that he might be induced to act in favor of one party or with bias or prejudice against a litigant arising out of circumstances reasonably capable of inciting such a state of mind, he should conduct a careful selfexamination. He should exercise his discretion in a way that the people's faith in the courts of justice is not impaired. A salutary norm is that he reflect on the probability that a losing party might nurture at the back of his mind the thought that the judge had unmeritoriously tilted the scales of justice against him. That passion on the part of a judge may be generated because of serious charges of

misconduct against him by a suitor or his counsel, is not altogether remote. He should, therefore, exercise great care and caution before making up his mind to act in or withdraw from a suit where that party or counsel is involved. He could in good grace inhibit himself where that case could be heard by another judge and where no appreciable prejudice would be occasioned to others involved therein. On the result of his decision to sit or not to sit may depend to a great extent the all-important confidence in the impartiality of the judiciary. If after reflection he should resolve to voluntarily desist from sitting in a case where his motives or fairness might be seriously impugned, his action is to be interpreted as giving meaning and substances to the second paragraph of Section 1, Rule 137. He serves the cause of the law who forestalls miscarriage of justice.99 (Emphasis in the original) Thus, since the second paragraph of Rule 137, Section 1 was introduced, this Court has periodically repeated that it shall always presume that a judge will decide on the merits of the case without bias. Allowing a judge to inhibit without concrete proof of personal interest or any showing that his bias stems from an extrajudicial source will open the floodgates to abuse.100

No concrete proof of Judge Pampilo's personal interest in the case was presented. There was no showing that his bias stems from an extrajudicial source. Not only that, but none of his acts, as shown on the record, was characterized by any error. Petitioner finds fault in the scheduling of his testimony but fails to show how it was irregular. He characterizes the scheduling as "noose-tightening," for being scheduled on "unreasonably proximate" dates.101 Far from the scheduling being evidence of partiality, it was aligned with this Court's rules on expeditious disposition of cases and the mandatory continuous trial system. Supreme Court Administrative Circular No. 3-90 requires all trial courts to adopt the mandatory continuous trial system pursuant to Administrative Circular No. 4 and Circular No. 1-89. On trials for civil and criminal cases, Supreme Court Circular No. 1-89 provides, in part: II. TRIAL (Civil, Criminal) .

.

.

.

4. The issuance and services of subpoenas shall be done in accordance with Administrative

Circular No. 4 dated September 22, 1988. 5. A strict policy on postponements shall be observed. 6. The judge shall conduct the trial with utmost dispatch, with judicious exercise of the court's power to control the trial to avoid delay. 7. The trial shall be terminated within ninety (90) days from initial hearing. Appropriate disciplinary sanctions may be imposed on the judge and the lawyers for failure to comply with this requirement due to causes attributable to them. 8. Each party is bound to complete the presentation of his evidence within the trial dates assigned to him. After the lapse of said dates, the party is deemed to have completed his evidence presentation. However, upon verified motion based on serious reasons, the judge may allow a party additional trial dates in the afternoon; provided that said extension will not go beyond the three-month limit computed from the first trial date. Thus, the dates provided for petitioner's testimony were in accordance with the rules and guidelines issued by this Court. Petitioner

also

claims

that

Judge

Pampilo could have accommodated the prosecution's requests for postponement, but he did not. However, Judge Pampilo's reluctance in sanctioning further delays and in denying motions to postpone hearings was also in accordance with the rules on the expeditious resolution of cases. This Court cannot assume bias or arbitrariness based on the denial of requests of postponement.102 There was nothing remarkable about the denial of the Motion to Inhibit. It was not hasty, and whether to deny it orally in court is the prerogative of the judge, who could have decided it as soon as its factual basis had been clearly laid.103 Further, counsel for the prosecution expressly agreed that the motion be submitted for resolution.104 Petitioner's claims that Atty. Galit acted as an adversary instead of co counsel for Prosecutor Yarte are outlandish. The transcript reveals that Atty. Galit was nothing if not courteous to Prosecutor Yarte. Petitioner also avers that Prosecutor Yarte had to walk out of the hearing because of the concerted action taken against him.105 However, the transcript shows that he asked permission from Judge Pampilo to allow him to pick up his daughter in Makati.106 This incident was not the first questionable act taken by

Prosecutor Yarte as it appears that he chose to attend an event in Boracay instead of the April 11, 2007 hearing, despite the denial of his motion to cancel it. In no way can these actions be attributed to bias on the part of Judge Pampilo.

Motion to Inhibit will not be resolved immediately your Honor so in view of that, we will move that the testimonial evidence given by the said witness be stricken off the record . . . of the Order of this Honorable Court dated April 11. Atty. Galit:

Petitioner Chavez believes that respondent Imelda would not have been acquitted had he been allowed to testify. However, Judge Pampilo did not even have to decide on whether to allow petitioner Chavez to continue his testimony because both parties agreed that his testimony would be terminated during the April 24, 2007 hearing: Atty. Sison: Your Honor, the incident today is supposed to be continuation of direct examination of the witness for the prosecution and I don't see him around your Honor, despite that he should be present for today's hearing. Court: That is why I show you the letter coming from the former Solicitor General the reason behind why he did not attend in today's hearing. Atty. Sison: Yes your Honor, as I said also, the witness is too presumptuous that the

Your Honor, it is too much on the part of the defense counsel to move for the striking out of the testimony of the said witness. As I have said, the issues are simple. The witness has already testified and the witness is still very much willing to continue his testimony. Your Honor, to continue testifying on those three (3) affidavits with all those annexes, rather than strike the testimonies of the witness from the records of this case which would amount your Honor to issue of technicality not favor by jurisprudential authorities, I would like to challenge the defense counsel to allow us, your Honor, to have those testimonies stay on the record and . . . on the contents of those three (3) affidavits as well as those annexes at least as to the existence your Honor and allow the prosecution to wind up your Honor their evidence by filing the complete formal offer of exhibits. In that way, your Honor, any technicality will be avoided. Atty. Sison:

Your Honor, I said that if only to give teeth to the order of the Honorable Court last April 11, in any event, your Honor, this representation has maintained as early as five months ago that he is willing to stipulate your Honor on the existence of the affidavits of Atty. Chavez as well as the existence of the newspaper clippings but not as to the truth and veracity thereof, your Honor. Atty. Galit: Including annexes of those three (3) affidavits, I would like to call the attention of this Honorable Court that Prosecutor Sulit is around and now if the position of the defense counsel would be to stipulate on the existence of these documents, then we will be willing enough to wind up our presentation of evidence and submit the formal offer of evidence . . . Atty. Galit: The pending Motion to strike out seems to have been super[s]eded, your Honor, by the defense counsel himself when he entered into stipulation regarding the existence of these documents, your Honor, whom those annexes in the affidavit of Frank Chavez and as a matter of fact without waiving the stipulations made by the defense counsel, the Sandigan

Prosecutor Wendell Barreras Sulit is showing your Honor to the defense counsel the original of those documents.

But you will cross examine the witness Frank Chavez after the cross examination, you will file your formal offer after the cross examination.

Court:

Atty. Sison:

Is that correct Atty. Sison that the testimony of former Solicitor General Frank Chavez remains in the records considering the existence of three (3) affidavits as well as the newspaper clipping and the annexes?

Your Honor, I will not cross examine anymore.

Atty. Sison: Yes, your Honor. Only as to the existence of these documents, it is subject to our cross examination. Atty. Galit: So the affidavit dated October 6, 1999. Court: So the testimony of former Solicitor General Frank Chavez is now deemed terminated, correct me if I'm wrong. Atty. Galit: Yes, your Honor. .... Court:

Court: Okay[.] Order. Considering the manifestation of both counsels, the testimony of the former Solicitor General Frank Chavez is now deemed terminated and that the defense counsel manifested that he is no longer cross examining the witness. So ordered.107 As is apparent from the records, petitioner's testimony was not terminated abruptly by Judge Pampilo. Rather, the termination of his testimony was expressly agreed to by the prosecution, having obtained a stipulation from the defense counsel on the existence of the documents which petitioner was to identify. Petitioner's claim that respondent Imelda would not have been acquitted had petitioner been allowed to continue his testimony is not only wildly speculative, but it is also devoid of basis. What he would have identified

was a Certification of Swiss banking documents, addressed to petitioner in his capacity as Solicitor General of the Philippines, stating, in part: There is no disposition in any of the criminal proceedings applicable in Switzerland providing for the certification of banking documents. If a witness or a bank submits Xerox copies to a criminal authority, these documents become automatically and without any certification conclusive evidence. In legal assistance proceedings, the acts of investigation are performed according to the applicable law of the requested State, in casu of Switzerland. In international legal assistance proceedings, the requesting State usually recognizes the evidence collected according to the dispositions of the law of the requested State. Art. 92 of the Federal Law on international legal assistance in criminal matters of March 20, 1981 (EIMP) indicates that all the acts of investigation performed by the authorities of a foreign State according to its law have the same value in the proceeding as the corresponding Swiss acts of investigation. We know that especially in AngloSaxon law countries there are very

strict rules concerning the formal constitution of conclusive evidence. Art. 65 litt. b EIMP therefore provides that in order to permit the formal admission of other evidence (especially of documents) the express desiderata of the requesting authority must be considered. In the Treaty between the Confederation of Switzerland and the United States of American mutual legal assistance in criminal matters of May 25, 1973 the certification of documents is specifically provided for. Practically, this certification is in the form of two certificates. Through the "Certificate of Authenticity of Business Records", the holder of the documents certifies their authenticity; the competent examining magistrate issues the "Certificate of the Swiss Authority executing Request for Documents" to attest that he checked himself the documents and is convinced that they are "genuine, authenticated and certified true copies". The American Courts admit without further formalities Swiss banking documents so certified. Concerning the documents of Swiss Credit Bank collected in Zurich, I gave you during your visit of August 13, 1991 two such certificates for each document which authenticated the banking documents. To my knowledge, the examining magistrate of Geneva, Vladimir Sternberger, also prepared

similar certificates. In my opinion, these Swiss certificates of the genuine character of the documents are sufficient to present the evidence obtained in Switzerland in the Philippine Courts. A further certification of each of the several thousand documents is therefore neither necessary nor proportionate.108 Petitioner claims that his testimony would controvert Judge Pampilo's conclusion that the bank documents are private documents, and that they were, thus, inadmissible as 109 hearsay.  However, he failed to lay the legal basis to justify the conclusion that his testimony would have established that the bank records are public documents. In People v. Patamama:110 Also of little evidentiary value is the PAGASA certification presented by the defense respecting the rising and setting of the moon on the night in question; and this, because it is clearly hearsay, having been prepared and signed by a certain Carmelito Calimbas, allegedly the Officer in Charge of the Astronomy Research and Development Section of PAGASA. Calimbas was not presented in court for identification and to show that he was technically qualified to make and issue such certification. The rules of evidence properly exclude the testimony of witnesses demonstrably

incompetent, as well as evidence that can not be tested by crossexamination.111 (Citations omitted) In this case, petitioner would have identified a certification which was not issued by him, but by a certain Peter Cosandey, who, as properly noted by the Regional Trial Court, was not presented in court. Thus, considering that petitioner was not the one who prepared the certificate, his testimony would have been of little evidentiary value. The claim that his testimony would have saved the prosecution's case is baseless. Finally, petitioner's speculations regarding the strategy employed by respondent Imelda's counsel are wild and baseless. Respondent Imelda's counsel may have filed an Urgent Motion to Lift Temporary Restraining Order Ad Cautelam very quickly, but timeliness alone cannot and should not be viewed with suspicion. Counsel for respondent did not need a direct liaison to manage this, and filing pleadings in a timely manner should not be so out of the ordinary that it suggests misdeeds. There is one allegation which, if true, might suggest some bias on the part of Judge Pampilo. In particular, petitioner alleges that Judge Pampilo told news reporters that the promulgation would

proceed despite the subsisting Court of Appeals Temporary Restraining Order because respondent Imelda was working on lifting said injunction: 25. Petitioner also submits that he made manifestations before the Court of Appeals during the 25 July 2007 hearing, which manifestations were not denied by counsel for Imelda Marcos. On 23 May 2007, Judge Pampilo went to court ready to promulgate his decision despite the fact that he was already served with the trial court's TRO in the afternoon of 22 May 2007. When Judge Pampilo was approached by news reporters if the promulgation would push through, Judge Pampilo answered in the affirmative since Imelda Marcos is supposedly working out a way to have the TRO lifted, obviously referring to Imelda Marcos' Motion to Lift TRO dated 23 May 2007. When no order from the Court of Appeals came, Judge Pampilo asked the reporters to come back by 2:00 p.m. ofthat same / day, since according to him, by that time, Imelda Marcos might be able to secure the lifting of the TRO. Having failed in his expectations, Judge Pampilo rescheduled the promulgation of judgment to 30 May 2007 as may be gleaned from page 43 of his Decision. He just would not give up in his attempts to grant Imelda Marcos an early acquittal despite orders from the

Court of Appeals. How can such a conduct be explained?112 (Emphasis in the original) If it is true that Judge Pampilo told news reporters that he was expecting the Court of Appeals Temporary Restraining Order to be lifted within the day, this could suggest that Judge Pampilo was coordinating with respondent Imelda's lawyers. However, no evidence was presented to support this allegation. Allegation does not substitute proof, so this claim must be rejected. This petition arose from what appears to have been such an important case for the government, which involves accountability for millions of pesos spirited away by respondent, filed in the lower court. Yet, it appears that the government's resolve to prosecute has been lackadaisical, to say the least. The prosecution and their witness appear to have requested several postponements on grounds which, to this Court, do not outweigh the grave public interest suggested by the various Informations filed against respondent. The lower court's liberality in granting the various continuances does not seem to have been met by the presentation of evidence with a depth and quality that would have shown the

diligence and prosecution.

seriousness

of

the

Prosecutors for the government should always remember that their work does not end with public announcements relating to the filing of informations against those who have committed nefarious raids on our public coffers. Their work is to professionally present the evidence marshalled through painstaking and fastidious investigation. Prosecutors should avoid the soundbite that will land them the headlines in all forms of media. Instead, they should do their work and attain justice and reparations for our people wronged by selfish conniving politicians who do not deserve their public offices. Apathetic prosecution allows impunity. It is difficult as enough as it is to discover wrongdoing, protect key witnesses, preserve the evidence, and guard against the machinations of powerful and moneyed individuals. Prosecutors must not only be courageous but must also show their dedication to public interest through their competence. Otherwise, the system will invite suspicion that there had been unholy collusion. Fatal errors that should have been avoided by veteran litigators, such as a

habit of postponements and a lack of preparation, cannot be papered over by a labyrinth of appeals that reaches this Court. That is a fool's strategy that will only contribute to increasing the dockets of this Court, thereby denying time and resources from deserving petitioners. The prosecution could have done better in this case. Sadly, it failed. WHEREFORE, the Petition for Review on Certiorari is DENIED. The Court of Appeals February 28, 2008 Decision and November 24, 2008 Resolution in CA-GR. SP No. 98799 are hereby AFFIRMED. SO ORDERED.

G.R. No. 201414, April 18, 2018 PEDRO PEREZ, Petitioner, v. PEOPLE OF THE PHILIPPINES, Respondent. DECISION LEONEN, J.:

Inserting a finger in a 12-year-old girl's vagina and mashing her breasts are not only acts of lasciviousness but also amount to child abuse punished under Republic Act No. 7610. This is a Petition for Review on Certiorari1 under Rule 45 of the 1997 Rules of Civil Procedure, praying that the September 30, 2011 Decision2 and April 10, 2012 Resolution3 of the Court of Appeals in CA-G.R. CR No. 33290 be reversed and set aside.4 The Court of Appeals affirmed the March 8, 2010 Judgment5 of the Regional Trial Court, which found Pedro Perez (Perez) guilty beyond reasonable doubt of violation of Section S(b) of Republic Act No. 7610. On March 29, 1999, an Information was filed against Perez, charging him with violation of Section S(b) of Republic Act No. 7610 or the Special Protection of Children against Child Abuse, Exploitation and Discrimination Act:6 [T]hat on or about the 7th day of November 1998, in Quezon City, Philippines, the said accused, with lewd design, did, then and there willfully, unlawfully, feloniously commit an act of sexual abuse upon the person of [AAA], a minor, 12 years of age, by then and there inserting his finger [into] her private organ while

mashing her breast against her will and without her consent which act debases, degrades or demeans the intrinsic worth and dignity of complainant as a human being, to the damage and prejudice of the said offended party.

birthday party. The next day, November 7, 1998, she saw Perez again when she visited her friend CCC at her house. Aside from her, Perez, and CCC, their other companions inside the house were BBB, DDD, and EEE.13

CONTRARY TO LAW.7 Perez pleaded not guilty during arraignment.8 Pre-trial was held, wherein the prosecution and the defense stipulated the following: 1. That at the time of the commission of the crime, the minor, the victim in this case was only 12 years of age; and 2. That the accused was residing at that time at No. 4, Pangasinan Street, Luzviminda Street, Brgy. Batasan Hills, Quezon City.9 Thereafter, trial on the merits ensued.10 The prosecution presented AAA,11 SPO4 Mila Billones (SPO4 Billones), and Dr. Winston Tan (Dr. Tan) as its witnesses.12 AAA testified that she met Perez for the first time on November 6, 1998 when she attended her cousin BBB's

AAA recalled that she was wearing a sleeveless blouse, a skirt, and cycling shorts under her skirt that day.14 AAA narrated that she "went to the kitchen to drink water."15 She saw Perez following her.16 After drinking, Perez "kissed her on the nape and simultaneously told her to keep silent."17 Then, Perez slid his finger in her vagina while mashing her breasts. AAA stated that it was painful when Perez inserted his finger. She attempted to remove his hands but he forced himself. Because she was very afraid, she failed to fight back. Perez succeeded in his sexual advances, which lasted for around ten seconds. He then told her not to tell anybody about what happened.18 AAA later narrated what happened to her other cousin FFF, who disclosed the incident to AAA's parents. Her parents reported the incident to the barangay officials, who eventually referred the matter to the police for investigation.19

SPO4 Billones testified that she was the women's desk officer who interviewed AAA. At first, AAA hesitated to answer the questions but eventually disclosed what happened. SPO4 Billones observed that AAA almost cried when she narrated that Perez inserted his finger into her vagina. After the interview, she prepared AAA's statement and thereafter filed the case. She also recommended AAA to undergo further medical examination.20 Dr. Tan testified that he was a MedicoLegal Officer of the Philippine National Police Crime Laboratory in Camp Crame, Quezon City.21 He examined AAA and stated in his Medico Legal Report that there were "signs of physical abuse, particularly, deep healed laceration at three (3) o'clock on the hymen of [AAA] and ecchymosis in the right mammary region."22 He noted that the laceration was consistent with AAA's allegation of sexual abuse and that the ecchymosis or bruising matched with the date of the alleged incident.23 However, he also testified that the "injuries can likewise be inflicted in a consensual relationship."24 Meanwhile, he defense presented Perez; his sister, Alma Perez (Alma); and CCC as its witnesses.25

At the time of his testimony on May 23, 2005, Perez mentioned that he was 26 years old. Thus, he was about 19 years old in 1998 when the offense was committed.26 Perez denied abusing AAA. He stated that he first met AAA on October 17, 1998. AAA purportedly infonned him that she was already 16 years old. He testified that he was not romantically involved with AAA. However, AAA supposedly gave him a love letter through Alma but he did not reciprocate her affection. He admitted that he met AAA again at BBB's birthday on November 6, 1998.27 Perez narrated that on the day of the alleged incident, he and his aunt, Nena Rodrigo, went to a school in New Manila. He left her aunt around 6:00p.m. and went straight home.28 Perez added that on November 11, 1998, AAA filed a complaint against him for slander before the barangay. They were able to settle the matter, and their agreement was put in writing.29 Alma testified that she noticed that AAA liked her brother Perez. She was also surprised when AAA gave her a

love letter for her brother. She stated that AAA went to their place frequently and that she talked to her at BBB 's party.30 CCC testified that she, AAA, and BBB were together on the day of the alleged incident. However, she swore that she did not see Perez enter her house. She also did not see anything unusual with AAA that day. She claimed that they just slept for five (5) hours the whole time they were together.31 On March 8, 2010, the Regional Trial Court rendered a Judgment,32 finding Perez guilty beyond reasonable doubt of violation of Section S(b) of Republic Act No. 7610, in relation to Article 336 of the Revised Penal Code.33 It held that the prosecution was able to establish the presence of all elements of violation of Section S(b). Perez likewise failed to provide proof of his alibi.34 Lastly, it noted that "the location as well as the presence of other persons [are] not a barometer that a rapist will be deterred in his lustful intentions to commit the crime of rape if and when his urgings call for it."35 The dispositive portion of the trial court Judgment provided: WHEREFORE, judgment is hereby rendered finding accused Pedro Perez GUILTY beyond reasonable

doubt of Violation of R.A. 7610, otherwise known as the "Special Protection of Children Against Child Abuse, Exploitation and Discrimination Act in relation to Article 336 of the Revised Penal Code, as amended, and is sentenced to suffer an indeterminate penalty of EIGHT (8) YEARS and ONE (1) DAY OF PRISION MAYOR IN ITS MEDIUM PERIOD AS MINIMUM TO FOURTEEN (14) YEARS and EIGHT (8) MONTHS OF RECLUSION TEMPORAL IN ITS MINIMUM PERIOD AS MAXIMUM. Accused Pedro Perez is likewise ordered to pay FIFTY THOUSAND PESOS (P50,000.00) as moral damages and TWENTY[]FIVE THOUSAND PESOS (P25,000.00) as exemplary damages plus costs of suit. SO ORDERED.36 (Emphasis in the original) Perez filed an appeal37 before the Court of Appeals.38 On September 30, 2011, the Court of Appeals promulgated a Decision,39 dismissing the appeal and affirming the trial court's Judgment.40 The dispositive portion of this Decision provided: WHEREFORE, premises considered, the instant appeal is hereby DISMISSED. Accordingly, the

assailed Judgment of the Regional Trial Court of Quezon City (RTC), Branch 94, dated March 8, 2010 is AFFIRMED in toto. SO ORDERED.41 (Emphasis in the original) Perez moved for 42 reconsideration,  which was denied by the Court of Appeals in its April 10, 2012 Resolution.43 On May 30, 2012, Perez filed a Petition for Review44 before this Court. Respondent People of the Philippines, through the Office of the Solicitor General, filed its Comment45 on September 6, 2013. Meanwhile, petitioner filed a Manifestation and Motion (In Lieu of Reply)46 on September 30, 2013. On April 7, 2014, this Court issued a Resolution47 giving due course to the petition. The parties subsequently submitted their respective 48 Memoranda. In his pleadings, petitioner asserts that the situation created by AAA is improbable and not in line with common human experience, given her tight fitting clothes at the time of the incident. Although not impenetrable, her attire was restricting and the time needed to consummate the alleged act

was enough for her to ask for help from her companions. AAA likewise fails to mention how petitioner subdued her in spite of her resistance. Petitioner stresses that the alleged crime occurred in close proximity of other persons. It is then impossible that nobody noticed what was happening.49 Petitioner points out that the medicolegal officer testified that there was a possibility that the injuries sustained by AAA were inflicted with her consent in a sexual relationship.50 In addition to his denial of any romantic relationship with AAA,51 he claims that "the medicolegal report did not conclusively prove that [he] was responsible for [AAA's] vaginal laceration."52 Finally, petitioner contends that assuming a crime was committed, it should only be acts of lasciviousness under Article 336 of the Revised Penal Code since the prosecution failed to prove beyond reasonable doubt the presence of the elements of child abuse.53 Petitioner explains: [B]efore an accused may be convicted of child abuse through lascivious conduct involving a minor below twelve (12) years of age, the requisites for acts of lasciviousness under Article 336 of the Revised Penal Code must be met IN ADDITION to the requisites for sexual abuse under Section 5 of

R.A. No. 7610. The elements of the offense aforementioned, are as follows: "1.

The accused commits the acts of sexual intercourse or lascivious conduct.

2.

The said act is performed with a child exploited in prostitution or subjected to other sexual abuse.

3.

The child, whether male or female, is below 18 years of age."54 (Emphasis in the original, citations omitted) Petitioner claims that the prosecution failed to allege the second element either in the Complaint or in the Information. According to petitioner, the prosecution must also prove that AAA was "exploited in prostitution or subjected to other sexual abuse" aside from being subjected to acts of lasciviousness since these are separate and distinct elements.55 On the other hand, respondent avers that petitioner tried to challenge the credibility of the prosecution's witnesses when he raised the matter of the attire worn by AAA and when he questioned her reaction during the incident. However, respondent pointed out that the trial court already found its witnesses credible. Hence, the trial court's findings should be given great

weight considering that it did not commit any misappreciation of facts.56 Respondent maintains that AAA's garment, no matter how tight-fitting as petitioner claims, is not unpiercable and petitioner could have easily slid his hand inside it. AAA's inaction is also understandable since she was only 12 years old when the incident happened and fear already overcame her when petitioner threatened her not to speak or shout.57 In addition, the medico-legal report verifies AAA's claim that she was sexually assaulted. This report and Dr. Tan's testimony corroborate AAA's allegation that it was petitioner who committed the crime.58 Respondent also counters that petitioner failed to timely question the nature of his indictment since he only raised it for the first time on appeal. Moreover, the allegations contained in the Information sufficiently support a conviction for Child Abuse under Section 5(b) of Republic Act No. 7610 in relation to Article 336 of the Revised Penal Code.59 There are two (2) issues for this Court's resolution: First, whether the evidence sufficiently

establishes

AAA's

narrative;

and

Second, whether all the elements charged m the Information are sufficiently proven beyond reasonable doubt. I Petitioner advances the seeming impossibility of AAA's allegation of child abuse considering AAA's outfit that day, her inaction during and after the commission of the alleged act, and the presence of other persons in the house where it happened. Petitioner's contention has no merit. This Court cannot accept this reasoning of petitioner. As correctly found by the Court of Appeals: This type of reasoning borders on the preposterous in that the accused literally made it sound like the victim's cycling shorts were made of impenetrable steel like a chastity belt. That, or he is trying to portray himself as a hapless human being with wispy cotton for arms such that the act of lifting a child's blouse or adjusting her undergarment's waistband (to accommodate his hand) pose a serious physical challenge that a man of his age and built cannot hope to accomplish. This, at all, does not run afoul with hurr1an experience as the

accused so conveniently puts it. On the contrary, this particular act of indecency is easily attainable given the disparity in his strength and that of the child's, the unique access by which the accused succeeded in his dastardly act and, for good measure, the customary ascendancy that adults have over children. As so clearly described by the victim, the manner by which the accused committed lasciviousness against her is not far removed from the [other victims of acts of lasciviousness] before her. She stated that the accused sneaked in after her when she walked toward the kitchen to fetch herself a glass of water. There, hidden from everyone else (the living room and the kitchen [were] separated by a room), the accused took advantage of the situation by inserting his fingers from behind her and fumbled her breast that visibly resulted in a bruise. Young as she is, she struggled as best as she could to remove herself from his grip but the accused warned her not to scream or shout for help. For a child of tenders (sic) age, such a stern warning from a fully grown man was enough to kill off whatever courage she might have had to scream for the others for assistance.60 In Awas v. People,61 the 10-year-old victim likewise failed to shout for help

when the accused touched her vagina.62 This Court held that "[t]here is no standard behavior for a victim of a crime against chastity."63 Moreover, "[b]ehavioral psychology teaches that people react to similar situations dissimilarly."64 In People v. Lomaque,65 the accused sexually abused the victim since she was eight (8) years old until she was 14 years old.66 The accused inserted either his penis or his finger in the victim's vagina in more than 10 instances.67 The victim also failed to cry for help.68 This Court held: Neither the failure of "AAA" to struggle nor at least offer resistance during the rape incidents would tarnish her credibility. "Physical resistance need not be established when intimidation is brought to bear on the victim and the latter submits herself out of fear. As has been held, the failure to shout or offer tenuous resistance does not make voluntary the victim's submission to the criminal acts of the accused." Rape is subjective and not everyone responds in the same way to an attack by a sexual fiend. Although an older person may have shouted for help under similar circumstances, a young victim such as "AAA" is easily overcome by fear and may not be able to cry for help.

We have consistently ruled that "no standard form of behavior can be anticipated of a rape victim following her defilement, particularly a child who could not be expected to fully comprehend the ways of an adult. People react differently to emotional stress and rape victims are no different from them."69 (Citations omitted) People v. Barcela70 further elucidated the reaction of a minor when something extremely and unexpectedly dreadful happens to him or her: Behavioral psychology teaches us that, even among adults, people react to similar situations differently, and there is no standard form of human behavioral response when one is confronted with a startling or frightful experience. Let it be underscored that these cases involve victims of tender years, and with their simple, unsophisticated minds, they must not have fully understood and realized at first the repercussions of the contemptible nature of the acts committed against them. This Court has repeatedly stated that no standard form of behavior could be anticipated of a rape victim following her defilement, particularly a child who could not be expected to fully comprehend the ways of an adult.71 (Citations omitted) It is also not impossible for petitioner to commit the crime even if there were

other people nearby. In Barcela, the accused was able to insert his finger inside the vagina of his 14-year-old stepdaughter while the victim's mother and her other sister were sleeping in the same room.72 In People v. Divinagracia, Sr.,73 the accused inserted his finger in the vagina of his eight (8)-year-old daughter and raped her afterwards while his nine (9)yearold daughter was lying beside her.74 In People v. Gaduyon,75 the accused inserted his finger into the vagina of his 12-year-old daughter who was then sleeping on the upper portion of a double-deck bed while his other daughter was on the lower portion.76 This Court cannot emphasize enough that "lust is no respecter of time and place."77 Thus, "rape can be committed even in places where people congregate, in parks, along the roadside, within school premises and even inside a house where there are other occupants or where other members of the family are also sleeping."78 Furthermore, the victim in this case was able to positively identify her assailant. She made a clear and categorical statement that petitioner was the person who committed the crime against her. Aside from petitioner's denial, he failed to present

his aunt as a witness or other documentary evidence to corroborate his alibi that he went to a school on the day of the incident. In light of AAA's positive declaration, petitioner's unsubstantiated defense must fail following the doctrine that "positive identification prevails over denial and alibi."79 In People v. Amarela,80 this Court had occasion to correct a generalization of all women, which amounted to a stereotype, thus: More often than not, where the alleged victim survives to tell her story of sexual depredation, rape cases are solely decided based on the credibility of the testimony of the private complainant. In doing so, we have hinged on the impression that no young Filipina of decent repute would publicly admit that she has been sexually abused, unless that is the truth, for it is her natural instinct to protect her honor. However, this misconception, particularly in this day and age, not only puts the accused at an unfair disadvantage, but creates a travesty of justice. The "women's honor" doctrine surfaced in our jurisprudence sometime in 1960. In the case of People v. Taño, the Court affirmed the conviction of three (3) armed robbers who took turns

raping a person named Herminigilda Domingo. The Court, speaking through Justice Alejo Labrador, said: It is a well-known fact that women, especially Filipinos, would not admit that they have been abused unless that abuse had actually happened. This is due to their natural instinct to protect their honor. We cannot believe that the offended party would have positively stated that intercourse took place unless it did actually take place. This opinion borders on the fallacy of non sequitor. And while the factual setting back then would have been appropriate to say it is natural for a woman to be reluctant in disclosing a sexual assault[,] today, we simply cannot be stuck to the Maria Clara stereotype of a demure and reserved Filipino woman. We, should stay away from such mindset and accept the realities of a woman's dynamic role in society today; she who has over the years transformed into a strong and confidently intelligent and beautiful person, willing to fight for her rights.81 (Emphasis in the original, citations omitted) This Court then found the alleged victim's statement as less credible than the inferences from the other established evidence and proceeded to acquit the accused. This Court in Amarela, however, did

not go as far as denying the existence of patriarchal dominance in many social relationships. Courts must continue to be sensitive to the power relations that come clothed in gender roles. In many instances, it does take courage for girls or women to come forward and testify against the boys or men in their lives who, perhaps due to cultural roles, dominate them. Courts must continue to acknowledge that the dastardly illicit and lustful acts of men are often veiled in either the power of coercive threat or the inconvenience inherent in patriarchy as a culture. Even if it were true that AAA was infatuated with the accused, it did not justify the indignity done to her. At the tender age of 12, adolescents will nonnally be misled by their hormones and mistake regard or adoration for love. The aggressive expression of infatuation from a 12-year-old girl is never an invitation for sexual indignities. Certainly, it does not deserve the accused's mashing of her breasts or the insertion of his finger into her vagina. Consistent with our pronouncement in Amarela, AAA was no Maria Clara. Not being the fictitious and generalized demure girl, it does not make her testimony less credible especially when

supported by the other pieces of evidence presented in this case. II Petitioner asserts that even assuming that he is liable, he is only liable for acts of lasciviousness since the prosecution failed to prove all elements of child abuse under Section S(b) of Republic Act No. 7610. Petitioner

is

mistaken.

Article III, Section S(b) of Republic Act No. 7610 provides: ARTICLE III CHILD PROSTITUTION AND OTHER SEXUAL ABUSE Section 5. Child Prostitution and Other Sexual Abuse. - Children, whether male or female, who for money, profit, or any other consideration or due to the coercion or influence of any adult, syndicate or group, indulge in sexual intercourse or lascivious conduct, are deemed to be children exploited in prostitution and other sexual abuse. The penalty of reclusion temporal in its medium period to reclusion perpetua shall be imposed upon the following: ....

(b) Those who commit the act of sexual intercourse or lascivious conduct with a child exploited in prostitution or subjected to other sexual abuse; Provided, That when the victim is under twelve (12) years of age, the perpetrators shall be prosecuted under Article 335, paragraph 3, for rape and Article 336 of Act No. 3815, as amended, the Revised Penal Code, for rape or lascivious conduct, as the case may be: Provided, That the penalty for lascivious conduct when the victim is under twelve (12) years of age shall be reclusion temporal in its medium period[.] (Emphasis supplied) Under Section 5(b), the elements of sexual abuse are: (1) The accused commits the act of sexual intercourse or lascivious conduct[;] (2) The said act is performed with a child exploited in prostitution or subjected to other sexual abuse[; and] (3) The child, whether male or female, is below 18 years of age.82 The presence of the first and third elements is already established. Petitioner admits in the pre-trial that AAA was only 12 years old at the commission of the crime. He also concedes that if ever he is liable, he is liable only for acts of lasciviousness.

However, petitioner claims that the second element is wanting. For petitioner, the prosecution must show that AAA was "exploited in prostitution or subjected to other sexual abuse." A thorough review of the records reveals that the second element is present in this case. This Court in People v. Villacampa83 explained: [T]he second element is that the act is performed with a child exploited in prostitution or subjected to other sexual abuse. To meet this element, the child victim must either be exploited in prostitution or subjected to other sexual abuse. In Quimvel v. People, the Court held that the fact that a child is under the coercion and influence of an adult is sufficient to satisfy this second element and will classify the child victim as one subjected to other sexual abuse. The Court held: To the mind of the Court, the allegations are sufficient to classify the victim as one "exploited in prostitution or subject to other sexual abuse." This is anchored on the very definition of the phrase in Sec. 5 of RA 7610, which encompasses children who indulge in sexual intercourse or lascivious conduct (a) for money, profit, or any other consideration; or (b) under the coercion or influence of any adult,

syndicate

or

group.

Correlatively, Sec. S(a) of RA 7610 punishes acts pertaining to or connected with child prostitution wherein the child is abused primarily for profit. On the other hand, paragraph (b) punishes sexual intercourse or lascivious conduct committed on a child subjected to other sexual abuse. It covers not only a situation where a child is abused for profit but also one in which a child, through coercior., intimidation or influence, engages in sexual intercourse or lascivious conduct. Hence, the law punishes not only child prostitution but also other forms of sexual abuse against children....84 (Emphasis supplied, citations omitted) In Ricalde v. People,85 this Court clarified: The first paragraph of Article III, Section 5 of Republic Act No. 7610 clearly provides that "children ... who ... due to the coercion ... of any adult ... indulge in sexual intercourse ... are deemed to be children exploited in prostitution and other sexual abuse." The label "children exploited in ... other sexual abuse" inheres in a child who has been the subject of coercion and sexual intercourse. Thus, paragraph (b) refers to a specification only as to who is liable

and the penalty to be imposed. The person who engages in sexual intercourse with a child already coerced is liable.86 (Underscoring in the original) By analogy with the ruling in Ricalde, children who are likewise coerced in lascivious conduct are "deemed to be children exploited in prostitution and other sexual abuse." When petitioner inserted his finger into the vagina of AAA, a minor, with the use of threat and coercion, he is already liable for sexual abuse. III This Court affirms the finding of guilt beyond reasonable doubt of petitioner for the charge of child abuse under Section 5(b) of Republic Act No. 7610. However, this Court modifies the penalty imposed by the trial court, as affirmed by the Court of Appeals. Under Section 5(b), "the penalty for lascivious conduct when the victim is under twelve (12) years of age shall be reclusion temporal in its medium period." Reclusion temporal in its medium period is fourteen (14) years, eight (8) months, and one (1) day to seventeen (17) years and four (4) months. In People

v.

Pusing,87 this

Court

imposed the indeterminate penalty of fourteen (14) years, eight (8) months, and one (1) day of reclusion temporal as minimum, to seventeen (17) years and four (4) months of reclusion temporal as maximum for the criminal case of child abuse.88 This Court also awarded P50,000.00 as civil indemnity, P50,000.00 as moral damages, and P30,000.00 as exemplary damages.89 Additionally, "interest at the legal rate of 6% per annum [was imposed on all damages awarded] from the date of finality of [the] judgment until fully paid."90 WHEREFORE, this Court ADOPTS the findings of fact and conclusions of law of the Court of Appeals September 30, 2011 Decision in CA-G.R. CR No. 33290, with MODIFICATION as follows: WHEREFORE, judgment is hereby rendered finding accused Pedro Perez GUILTY beyond reasonable doubt of violation of R.A. 7610, otherwise known as the "Special Protection of Children Against Child Abuse, Exploitation and Discrimination Act in relation to Article 336 of the Revised Penal Code, as amended, and is sentenced to suffer an indeterminate penalty of FOURTEEN (14) YEARS, EIGHT (8) MONTHS, and ONE (1) DAY OF RECLUSION TEMPORAL AS MINIMUM TO SEVENTEEN (17)

YEARS and FOUR (4) MONTHS OF RECLUSION TEMPORAL AS MAXIMUM. Accused Pedro Perez is likewise ordered to pay FIFTY THOUSAND PESOS (P50,000.00) as civil indemnity, FIFTY THOUSAND PESOS (P50,000.00) as moral damages, and THIRTY THOUSAND PESOS (P30,000.00) as exemplary damages plus costs of suit. All awards for damages shall earn interest at the legal rate of six percent (6%) per annum from the date of finality of this judgment until fully paid. SO ORDERED. SO ORDERED.

G.R. No. 2018

196795,

March

07,

INTRAMUROS ADMINISTRATION, Petitioner, v.  OFFSHORE CONSTRUCTION DEVELOPMENT COMPANY, Respondent. DECISION

LEONEN, J.: The sole issue in ejectment proceedings is determining which of the parties has the better right to physical possession of a piece of property. The defendant's claims and allegations in its answer or motion to dismiss do not oust a trial court's jurisdiction to resolve this issue. This is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Court, assailing the April 14, 2011 Decision2 of Branch 173, Regional Trial Court, Manila in Civil Case No. 10-124740. The Regional Trial Court affirmed in toto the October 19, 2010 Order3 of Branch 24, Metropolitan Trial Court, Manila in Civil Case No. 186955-CV, dismissing Intramuros Administration's (Intramuros) Complaint for Ejectment against Offshore Construction and Development Company (Offshore Construction) on the grounds of forum shopping and lack of jurisdiction. In 1998, Intramuros leased certain real properties of the national government, which it administered to Offshore Construction. Three (3) properties were subjects of

Contracts of Lease: Baluarte De San Andres, with an area of 2,793 sq. m.;4 Baluarte De San Francisco De Dilao, with an area of 1,880 sq. m.;5 and Revellin De Recoletos, with an area of 1,036 sq. m.6  All three (3) properties were leased for five (5) years, from September 1, 1998 to August 31, 2003. All their lease contracts also made reference to an August 20, 1998 memorandum of stipulations, which included a provision for lease renewals every five (5) years upon the parties' mutual agreement.7 Offshore Construction occupied and introduced improvements in the leased premises. However, Intramuros and the Department of Tourism halted the projects due to Offshore Construction's nonconformity with Presidential Decree No. 1616, which required 16th to 19th centuries' Philippine-Spanish architecture in the area.8 Consequently, Offshore Construction filed a complaint with prayer for preliminary injunction and temporary restraining order against Intramuros and the Department of Tourism before the Manila Regional Trial Court,9 which was docketed as Civil Case No. 9891587.10

Eventually, the parties executed a Compromise Agreement on July 26, 1999,11which the Manila Regional Trial Court approved on February 8, 2000.12 In the Compromise Agreement, the parties affirmed the validity of the two (2) lease contracts but terminated the one over Revellin de Recoletos.[13 The Compromise Agreement retained the five (5)-year period of the existing lease contracts and stated the areas that may be occupied by Offshore Construction:

Terraza de la Reyna with an aggregate area of twenty (20) square meters; (c)

(d) One (1) restaurant at Fort Santiago American Barracks. Subject to IA Guidelines, the maximum floor area will be the perimeter walls of the old existing building;

FROM: (1) Baluarte de San Andres TO:

(1)

Only the stable house, the gun powder room and two (2) Chambers with comfort rooms, will be utilized for restaurants. All other structures built and introduced including trellises shall be transferred/relocated to: (a)

Two (2) restaurants as Asean Garden. Each will have an aggregate area of two hundred square meters (200 sq. mtrs.);

(b) One (1) kiosk at Puerta Isabel Garden fronting

Three (3) restaurants at the chambers of Puerta Isabel II with an aggregate area of 1,180.5 sq.m.;

FROM: (2) Baluarte De San Francisco Dilao TO:

(2)

All seven (7) structures including the [Offshore Construction] Administration Building and Trellises shall be transferred [t]o Cuartel de Sta. Lucia, [O]therwise known as the PC Barracks[.]14

During the lease period, Offshore Construction failed to pay its utility bills and rental fees, despite several demand letters.15 Intramuros

tolerated the continuing occupation, hoping that Offshore Construction would pay its arrears. As of July 31, 2004, these arrears allegedly totaled P6,762,153.70.16 To settle its arrears, Offshore Construction proposed to pay the Department of Tourism's monthly operational expenses for lights and sound equipment, electricity, and performers at the Baluarte Plano Luneta de Sta. Isabel. Intramuros and the Department of Tourism accepted the offer, and the parties executed a Memorandum of Agreement covering the period of August 15, 2004 to August 25, 2005.17 However, Offshore Construction continued to fail to pay its arrears, which amounted to P13,448,867.45 as of December 31, 2009. On March 26, 2010, Offshore Construction received Intramuros' latest demand letter.18 Intramuros filed a Complaint for Ejectment before the Manila Metropolitan Trial Court on April 28, 2010.19 Offshore Construction filed its Answer with Special and Affirmative Defenses and Compulsory Counterclaim.20

On July 12, 2010, Offshore Construction filed a Very Urgent Motion,21 praying that Intramuros' complaint be dismissed on the grounds of violation of the rule on non-forum shopping, lack of jurisdiction over the case, and litis pendentia. First, it claimed that Intramuros failed to inform the Metropolitan Trial Court that there were two (2) pending cases with the Manila Regional Trial Court over Puerta de Isabel II.22 Second, it argued that the Metropolitan Trial Court did not acquire jurisdiction over the case since the relationship between the parties was not one of lessor-lessee but governed by a concession agreement.23 Finally, it contended that Intramuros' cause of action was barred by litis pendentia, since the pending Regional Trial Court cases were over the same rights, claims, and interests of the parties.24 In its October 19, 2010 Order,25 the Metropolitan Trial Court granted the motion and dismissed the case. Preliminarily, it found that while a motion to dismiss is a prohibited pleading under the Rule on Summary Procedure, Offshore Construction's motion was grounded on the lack of jurisdiction

over

the

subject

matter.26

The Metropolitan Trial Court found that Intramuros committed forum shopping and that it had no jurisdiction over the case.27 First, it pointed out that there were two (2) pending cases at the time Intramuros filed its complaint: Civil Case No. 08-119138 for specific performance filed by Offshore Construction against Intramuros, and SP CA No. 10-123257 for interpleader against Offshore Construction and Intramuros filed by 4H Intramuros, Inc. (4H Intramuros),28 which claimed to be a group of respondent's tenants.29 The Metropolitan Trial Court found that the specific performance case was anchored on Offshore Construction's rights under the Compromise Agreement. In that case, Offshore Construction claimed that it complied with its undertakings, but Intramuros failed to perform its obligations when it refused to offset Offshore Construction's expenses with the alleged unpaid rentals. The interpleader case, on the other hand, dealt with Offshore Construction's threats to evict the tenants of Puerta de Isabel II. 4H

Intramuros prayed that the Regional Trial Court determine which between Offshore Construction and Intramuros was the rightful lessor of Puerta de Isabel II.30 The Metropolitan Trial Court found that the cause of action in Intramuros' complaint was similar with those in the specific performance and interpleader cases. Any judgment in any of those cases would affect the resolution or outcome in the ejectment case, since they would involve Offshore Construction's right to have its expenses offset from the rentals it owed Intramuros, and the determination of the rightful lessor of Puerta de Isabel II. The Metropolitan Trial Court pointed to the arrears in rentals that Intramuros prayed for as part of its complaint. Further, Intramuros failed to disclose the specific performance and interpleader cases in its certification against forum shopping.31 Second, the Metropolitan Trial Court held that it had no jurisdiction over the complaint. While there were lease contracts between the parties, the existence of the other contracts between them made Intramuros

and Offshore Construction's relationship as one of concession. Under this concession agreement, Offshore Construction undertook to develop several areas of the Intramuros District, for which it incurred expenses. The trial court found that the issues could not be mere possession and rentals only.32 Intramuros appealed the October 19, 2010 Order with the Regional Trial Court. On April 14, 2011, the Regional Trial Court affirmed the Municipal Trial Court October 19, 2010 Order in toto.33 On May 25, 2011, Intramuros, through the Office of the Solicitor General, filed a Motion for Extension of Time to File Petition for Review on Certiorari (Motion for Extension) before this Court. It prayed for an additional 30 days, or until June 16, 2011, within which to file its petition for review on solely on questions of law.34 On June 16, 2011, Intramuros filed its Petition for Review on Certiorari,35 assailing the April 14, 2011 Decision of the Regional Trial Court. In its Petition for Review, Intramuros argues that the

Regional Trial Court erred in upholding the Metropolitan Trial Court findings that it had no jurisdiction over Intramuros' ejectment complaint36 and that it committed forum shopping.37 First, Intramuros argues that Offshore Construction's Very Urgent Motion should not have been entertained by the Metropolitan Trial Court as it was a motion to dismiss, which was prohibited under the Rule on Summary Procedure.38 It claims that the Metropolitan Trial Court could have determined the issue of jurisdiction based on the allegations in its complaint. It points out that "jurisdiction over the subject matter is determined by the allegations [in] the complaint" and that the trial court's jurisdiction is not lost "just because the defendant makes a contrary allegation" in its defense.39 In ejectment cases, courts do not lose jurisdiction by a defendant's mere allegation that it has ownership over the  litigated property. It holds that the Metropolitan Trial Court did not lose jurisdiction when Offshore Construction alleged that its relationship with Intramuros is one of concession, that the cause of action accrued in 2003, and that

there was litis pendentia  and forum shopping. It contends that the sole issue in an ejectment suit is the summary restoration of possession of a piece of land or building to the party that was deprived of it.40 Thus, the Metropolitan Trial Court gravely erred in granting Offshore Construction's motion to dismiss despite having jurisdiction over the subject matter of Intramuros' complaint.41 Second, Intramuros avers that it did not commit forum shopping as to warrant the dismissal of its complaint. It claims that while there were pending specific performance and interpleader cases related to the ejectment case, Intramuros was not guilty of forum shopping since it instituted neither action and did not seek a favorable ruling as a result of an earlier adverse opinion in these cases.42 Intramuros points out that it was Offshore Construction and 4H Intramuros which filed the specific performance and interpleader cases, respectively.43 In both cases, Intramuros was the defendant and did not seek possession of Puerta de Isabel II as a relief in its answers to the 44 complaints.  Moreover, the issues raised in these earlier cases were

different from the issue of possession in the ejectment case. The issue in the specific performance case was whether or not Intramuros should offset the rentals in arrears from Offshore Construction's expenses in continuing the WOW Philippines Project.45 Meanwhile, the issue in the interpleader case was to determine which between Intramuros and Offshore Construction was the rightful lessor of Puerta de Isabel II.46 Finally, Intramuros maintains that there is no concession agreement between the parties, only lease contracts that have already expired and are not renewed. It argues that there is no basis for alleging the existence of a concession agreement. It points out that in the Contracts of Lease and Memorandum of Agreement entered into by Intramuros and Offshore Construction, the expiry of the leases would be on August 31, 2003. Afterwards, Intramuros tolerated Offshore Construction's continued occupation of its properties in hopes that it would pay its arrears in due course. 47 On July 20, 2011, this Court issued its Resolution48 granting the Motion

for Extension and requiring Offshore Construction to comment on the Petition for Review. On October 10, 2011, Offshore Construction filed its Comment49 to the Petition for Review. In its Comment, Offshore Construction argues that the Petition for Review should be dismissed because it violates the principle of hierarchy of courts and raises questions of fact.50 It points out that Intramuros did not move for the reconsideration of the Regional Trial Court April 14, 2011 Decision. Instead of directly filing with this Court, Intramuros should have filed a Petition for Review with the Court of Appeals, in accordance with Rule 42 of the Rules of Court.51 It claims that Intramuros raises questions of fact in its Petition for Review, namely, the expiration of the Contracts of Lease and the business concession in favor of Offshore Construction.52 In its November 21, 2011 Resolution, this Court noted the Comment and required Intramuros to file its Reply.53 On March 12, 2012, Intramuros filed its Reply54 to the Comment. It argues that direct resort to this

Court is proper because the issues it raises in its Petition for Review do not require review of evidence to resolve, and the facts of the case are undisputed.55 It claims that the nature of Intramuros and Offshore Construction's relationship is never an tssue because all the documents referenced and relied upon by the parties were lease agreements.56 On August 23, 2012, this Court gave due course to the Petition for Review and ordered both parties to submit their memoranda.57 On January 7, 2013, Intramuros filed its Memorandum,58 while Offshore Construction filed its Memorandum59  on August 16, 2013. In its Memorandum, Offshore Construction claims that it occupies Puerta de Isabel II by virtue of a legal concession based not only on the parties' contracts but also on the contemporaneous and subsequent acts of Intramuros and Offshore Construction. It argues that under the Contracts of Lease, Offshore Construction was required to invest around P20,000,000.00 worth of investments in the leased properties and that it lost its initial investments, which were

demolished due to adverse criticism by then- Intramuros Administrator Anna Maria L. Harper. Under the Compromise Agreement, Offshore Construction was again required to make new developments, again worth millions of pesos. Offshore Construction claims that these conditions make their relationship not one of mere lessor and lessee.60 Further, it attests that Intramuros committed illegal and inhuman acts, and injustice against it and its sublessees, allegedly because the Contracts of Lease had expired.61 Moreover, it points out that Intramuros only filed the ejectment complaint in 2010, even though the Contracts of Lease expired on August 31, 2003. It argues that Intramuros was guilty of estoppel in pais, since it continued to accept rental payments as late as July 10, 2009.62 Assuming that the lease contracts had expired, these contracts were impliedly renewed by the mutual and voluntary acts of the parties, in accordance with Article 1670 of the Civil Code.63 Offshore Construction claims that there is now novation of the Contracts of Lease, and the courts may fix a period for them, [64  pursuant to Article 1687 of the

Civil Code.65 It reiterates its prayer that the Petition for Review be dismissed, due to questions of fact more properly cognizable by the Court of Appeals.66 The issues to be resolved by this Court are: First, whether or not direct resort to this Court is proper; Second, whether or not the Metropolitan Trial Court had jurisdiction over the ejectment complaint filed by Intramuros Administration; Third, whether or not Intramuros Administration committed forum shopping when it filed its ejectment complaint despite the pending cases for specific performance and interpleader; and Finally, whether or not Intramuros Administration is entitled to possess the leased premises and to collect unpaid rentals. I At the outset, petitioner should have filed a petition for review under Rule 42 of the Rules of Court

to assail the Regional Trial Court's ruling upholding the Metropolitan Trial Court October 19, 2010 Order instead of filing a petition for review on certiorari under Rule 45 with this Court. Under Rule 42, Section 1 of the Rules of Court, the remedy from an adverse decision rendered by a Regional Trial Court exercising its appellate jurisdiction is to file a verified petition for review with the Court of Appeals: Section 1. How appeal taken; time for filing. — A party desiring to appeal from a decision of the Regional Trial Court rendered in the exercise of its appellate jurisdiction may file a verified petition for review with the Court of Appeals, paying at the same time to the clerk of said court the corresponding docket and other lawful fees, depositing the amount of P500.00 for costs, and furnishing the Regional Trial Court and the adverse party with a copy of the petition. The petition shall be filed and served within fifteen (15) days from notice of the decision sought to be reviewed or of the denial of petitioner's motion for new trial or reconsideration filed in due time after judgment. Upon proper

motion and the payment of the full amount of the docket and other lawful fees and the deposit for costs before the expiration of the reglementary period, the Court of Appeals may grant an additional period of fifteen (15) days only within which to file the petition for review. No further extension shall be granted except for the most compelling reason and in no case to exceed fifteen (15) days.

Petitioner puts in issue before this Court the findings of the Metropolitan Trial Court that it has no jurisdiction over the ejectment complaint and that petitioner committed forum shopping when it failed to disclose two (2) pending cases, one filed by respondent Offshore Construction and the other filed by respondent's group of tenants, 4H Intramuros. Both of these cases raise questions of law, which are cognizable by the Court of Appeals in a petition for review under Rule 42. "A question of law exists when the law applicable to a particular set of facts is not settled, whereas a question of fact arises when the truth or falsehood of alleged facts is in doubt."67 This Court has ruled

that the jurisdiction of a court over the subject matter of a 68 complaint  and the existence of forum shopping69 are questions of law. A petition for review under Rule 42 may include questions of fact, of law, or mixed questions of fact and law.70 This Court has recognized that the power to hear cases on appeal in which only questions of law are raised is not vested exclusively in this Court.71 As provided in Rule 42, Section 2, errors of fact or law, or both, allegedly committed by the Regional Trial Court in its decision must be specified in the petition for review: Section 2. Form and Contents. — The petition shall be filed in seven (7) legible copies, with the original copy intended for the court being indicated as such by the petitioner, and shall (a) state the full names of the parties to the case, without impleading the lower courts or judges thereof either as petitioners or respondents; (b) indicate the specific material dates showing that it was filed on time; (c) set forth concisely a statement of the matters involved, the issues raised, the specification of errors of

fact or law, or both, allegedly committed by the Regional Trial Court,  and the reasons or arguments relied upon for the allowance of the appeal; (d) be accompanied by clearly legible duplicate originals or true copies of the judgments or final orders of both lower courts, certified correct by the clerk of court of the Regional Trial Court, the requisite number of plain copies thereof and of the pleadings and other material portions of the record as would support the allegations of the petition. The petitioner shall also submit together with the petition a certification under oath that he has not theretofore commenced any other action involving the same issues in the Supreme Court, the Court of Appeals or different divisions thereof, or any other tribunal or agency; if there is such other action or proceeding, he must state the status of the same; and if he should thereafter learn that a similar action or proceeding has been filed or is pending before the Supreme Court, the Court of Appeals, or different divisions thereof, or any other tribunal or agency, he undertakes to promptly inform the aforesaid courts and

other tribunal or agency thereof within five (5) days therefrom. (Emphasis supplied)

Petitioner's direct resort to this Court, instead of to the Court of Appeals for intermediate review as sanctioned by the rules, violates the principle of hierarchy of courts.72 In Diocese of Bacolod v. Commission on Elections:73 The doctrine that requires respect for the hierarchy of courts was created by this court to ensure that every level of the judiciary performs its designated roles in an effective and efficient manner. Trial courts do not only determine the facts from the evaluation of the evidence presented before them. They are likewise competent to determine issues of law which may include the validity of an ordinance, statute, or even an executive issuance in relation to the Constitution. To effectively perform these functions, they are territorially organized into regions and then into branches. Their writs generally reach within those territorial boundaries. Necessarily, they mostly perform the all-important task of inferring the facts from the evidence as these are physically presented

before them. In many instances, the facts occur within their territorial jurisdiction, which properly present the 'actual case' that makes ripe a determination of the constitutionality of such action. The consequences, of course, would be national in scope. There are, however, some cases where resort to courts at their level would not be practical considering their decisions could still be appealed before the higher courts, such as the Court of Appeals.74 (Citation omitted)

Nonetheless, the doctrine of hierarchy of courts is not inviolable, and this Court has provided several exceptions to the doctrine.75 One of these exceptions is the exigency of the situation being litigated.76 Here, the controversy between the parties has been dragging on since 2010, which should not be the case when the initial dispute—an ejectment case—is, by nature and design, a summary procedure and should have been resolved with expediency. Moreover, this Court's rules of procedure permit the direct resort to this Court from a decision of the Regional Trial Court upon questions of law, such as those which

petitioner raises in this case. In Barcenas v. Spouses Tomas and Caliboso:77 Nonetheless, a direct recourse to this Court can be taken for a review of the decisions, final orders or resolutions of the RTC, but only on questions of law. Under Section 5 of Article VIII of the Constitution, the Supreme Court has the power to (2) Review, revise, reverse, modify, or affirm on appeal or certiorari as the law or the Rules of Court may provide, final judgments and orders of lower courts in: .... (e) All cases in which only an error or question of law is involved. This kind of direct appeal to this Court of RTC judgments, final orders or resolutions is provided for in Section 2(c) of Rule 41, which reads: SEC. 2. Modes of appeal. — .... (c) Appeal by certiorari. — In all cases where only questions of law are raised or involved, the appeal shall be to the Supreme Court by

petition for review on certiorari in accordance with Rule 45. Procedurally then, petitioners could have appealed the RTC Decision affirming the MTC (1) to this Court on questions oflaw only; or (2) if there are factual questions involved, to the CA — as they in fact did.78

Thus, petitioner's resort to this Court is proper and warranted under the circumstances. II In dismissing the complaint, the Metropolitan Trial Court found that "[t]he issues . . . between the parties cannot be limited to a simple determination of who has the better right of possession of the subject premises or whether or not [petitioner] is entitled [to] rentals in arrears."79 It held that the relationship between the parties was a "more complicated situation where jurisdiction is better lodged with the regional trial court,"80 upon a finding that there was a concession, rather than a lease relationship between the parties.81

It is settled that the only issue that must be settled in an ejectment proceeding is physical possession of the property involved.82 Specifically, action for unlawful detainer is brought against a possessor who unlawfully withholds possession after the termination and expiration of the right to hold possession.83 To determine the nature of the action and the jurisdiction of the court, the allegations in the complaint must be examined. The jurisdictional facts must be evident on the face of the complaint.84 There is a case for unlawful detainer if the complaint states the following: (1) initially, possession of property by the defendant was by contract with or by tolerance of the plaintiff; (2) eventually, such possession became illegal upon notice by plaintiff to defendant of the termination of the latter's right of possession; (3) thereafter, the defendant remained in possession of the property and deprived the plaintiff of the enjoyment thereof; and

(4) within one year from the last demand on defendant to vacate the property, the plaintiff instituted the complaint for ejectment.85 (Citation omitted)

A review of petitioner's Complaint for Ejectment shows that all of these allegations were made. First, petitioner alleges that respondent is its lessee by virtue of three (3) Contracts of Lease. The validity of these contracts was later affirmed in a Compromise Agreement, which modified certain provisions of the previous leases but retained the original lease period. Respondent does not dispute these contracts' existence or their validity. Second, following respondent's failure to pay rentals, petitioner alleges that it has demanded that respondent vacate the leased premises. Third, respondent continues to occupy and possess the leased premises despite petitioner's demand. This is admitted by respondent, which seeks to retain possession and use of the properties to "recoup its multi-

million pesos investment."86

worth

of

Fourth, petitioner filed its Complaint for Ejectment on April 28, 2010,87 within one (1) year of its last written demand to respondent, made on March 18, 2010 and received by respondent on March 26, 2010.88 Contrary to respondent's claim, the one (1)year period to file the complaint must be reckoned from the date of last demand, in instances when there has been more than one (1) demand to vacate.89 The Metropolitan Trial Court seriously erred in finding that it did not have jurisdiction over petitioner's complaint because the parties' situation has allegedly become "more complicated"90 than one of lease. Respondent's defense that its relationship with petitioner is one of concession rather than lease does not determine whether or not the Metropolitan Trial Court has jurisdiction over petitioner's complaint. The pleas or theories set up by a defendant in its answer or motion to dismiss do not affect the court's jurisdiction.91 In Morta v. Occidental:92

It is axiomatic that what determines the nature of an action as well as which court has jurisdiction over it, are the allegations in the complaint and the character of the relief sought. "Jurisdiction over the subject matter is determined upon the allegations made in the complaint, irrespective of whether the plaintiff is entitled to recover upon a claim asserted therein — a matter resolved only after and as a result of the trial. Neither can the jurisdiction of the court be made to depend upon the defenses made by the defendant in his answer or motion to dismiss. If such were the rule, the question of jurisdiction would depend almost entirely upon the defendant."93 (Citations omitted)

Not even the claim that there is an implied new lease or tacita reconduccion will remove the Metropolitan Trial Court's jurisdiction over the complaint.94 To emphasize, physical possession, or de facto possession, is the sole issue to be resolved in ejectment proceedings. Regardless of the claims or defenses raised by a defendant, a Metropolitan Trial Court has jurisdiction over an ejectment complaint once it has

been shown that the requisite jurisdictional facts have been alleged, such as in this case. Courts are reminded not to abdicate their jurisdiction to resolve the issue of physical possession, as there is a public need to prevent a breach of the peace by requiring parties to resort to legal means to recover possession of real property.95 III In its October 19, 2010 Order, the Metropolitan Trial Court found that petitioner committed forum shopping when it failed to disclose that there were two (2) pending cases in other trial courts concerning the same parties and similar causes of action. These two (2) cases were Civil Case No. 08119138 for specific performance filed by respondent against petitioner; and SP CA Case No. 10123257 for interpleader filed by 4H Intramuros. Both cases were pending with the Manila Regional Trial Court. The Metropolitan Trial Court found that if it decides petitioner's Complaint for Ejectment, its ruling would conflict with any resolution in the specific performance and interpleader cases, since the same contracts

were involved in all three (3) cases. It found that the parties were the same and the reliefs prayed for were the same. Forum shopping is the practice of resorting to multiple fora for the same relief, to increase the chances of obtaining a favorable judgment.96 In Spouses Reyes v. Spouses Chung:97 It has been jurisprudentially established that forum shopping exists when a party avails himself 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 courts. The test to determine whether a party violated the rule against forum shopping is whether the elements of litis pendentia are present, or whether a final judgment in one case will amount to res judicata  in another. Simply put, when litis pendentia  or res judicata  does not exist, neither can forum shopping exist.

The requisites of litis pendentia are: (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 of which party is successful, would amount to res judicata  in the other. On the other hand, the elements of res judicata,  also known as bar by prior judgment, are: (a) the former judgment must be final; (b) the court which rendered it had jurisdiction over the subject matter and the parties; (c) it must be a judgment on the merits; and (d) there must be, between the first and second actions, identity of parties, subject matter, and causes of action.98 (Citation omitted)

As observed by the Metropolitan Trial Court, there is an identity of parties in the specific performance and interpleader cases, and the Complaint for Ejectment. However, there is no identity of asserted rights or reliefs prayed for, and a judgment in any of the three (3) cases will not amount to res judicata in the two others.

In respondent's amended complaint for specific performance, it prays that petitioner be compelled to offset respondent's unpaid rentals, with the expenses that respondent supposedly incurred due to the Department of Tourism's WOW Philippines project,99 pursuant to a July 27, 2004 Memorandum of Agreement. Concededly, one of respondent's reliefs prayed for is for petitioner to respect respondent's lease over Puerta de Isabel II, Asean Garden and Revellin de Recoletos: 2. Order [Department of Tourism], [Intramuros Administration] and [Anna Maria L. Harper] to perform their obligation under the "Memorandum of Agreement" dated 27 July 2004 by OFFSETTING the rentals in arrears from the expenses incurred by Offshore in the continuance of the Department of Tourism's WOW Philippines Project and to allow Offshore to recover their investment at Intramuros by respecting their lease over Puerta Isabel II, Asean Garden and Revellin de Recoletos[.]100

Nevertheless, the Memorandum of Agreement expressly stated that its

purpose was for respondent to pay petitioner and the Department of Tourism rentals in arrears as of July 31, 2004: WHEREAS, [respondent] has been indebted to [petitioner] in the form of rental and utility consumption arrears for the occupancy of Puerta Isabel Chambers, Asean Gardens and Baluarte de San Andres (Stable House) in the amount of Six Million Seven Hundred Sixty[-]Two Thousand One Hundred Fifty[-]Three and 70/100 (P6,762,153.70) as of July 31, 2004 and as a way of settling said arrears, [respondent] had proposed to pay its obligations with [petitioner] as shown in the breakdown in "Annex A" hereof through [respondent's] assumption of [Department of Tourism's] monthly operational expenses for lights and sound equipment, electricity, and performers at the Baluarte Plano Luneta de Sta. Isabel in Intramuros, Manila[.][101

This was affirmed in petitioner's May 29, 2005 letter to respondent, in which petitioner stated: During our meeting last May 5, 2005 with Mr. Rico Cordova, it was

reiterated that the subject of the [Memorandum of Agreement] for the lights and sound at Plano Luneta de Sta. Isabel was your accumulated account as of July 2004. Subsequent rentals have to be remitted to [Intramuros] as they become due and demandable. We have emphasized this concern in our letter of November 12, 2004.102

A final judgment in the specific performance case will not affect the outcome of the ejectment case. As pointed out by petitioner, respondent's right to possess the leased premises is founded initially on the Contracts of Lease and, upon their expiration, on petitioner's tolerance in hopes of payment of outstanding arrears. The July 27, 2004 Memorandum of Agreement subject of the specific performance case cannot be the source of respondent's continuing right of possession, as it expressly stated there that the offsetting was only for respondent's outstanding arrears as of July 31, 2004. Any favorable judgment compelling petitioner to comply with its obligation under this agreement will not give new life to the expired Contracts of Lease, such as would repel petitioner's unlawful detainer

complaint. In its Amended Answer in the specific performance case, petitioner sets up the counterclaim that "[respondent] be ordered to pay its arrears of (P13,448,867.45) as of December 31, 2009 plus such rent and surcharges as may be incurred until [respondent] has completely vacated the [leased] premises."103 This counterclaim is exactly the same as one of petitioner's prayers in its ejectment complaint: WHEREFORE, premises considered, it is most respectfully prayed that JUDGMENT be rendered ORDERING: .... (2) DEFENDANT [OFFSHORE CONSTRUCTION] TO PAY ITS ARREARS OF THIRTEEN MILLION FOUR HUNDRED FORTY-EIGHT THOUSAND, EIGHT HUNDRED SIXTY-SEVEN PESOS AND FORTYFIVE CENTAVOS (P13,448,867.45), PLUS INTEREST OF 1% PER MONTH AS STIPULATED IN THE LEASE CONTRACTS[.]104

A compulsory counterclaim is a defendant's claim for money or other relief which arises out of, or is

necessarily connected with, the subject matter of the complaint. In Spouses Ponciano v. Hon. Parentela, Jr.:105 A compulsory counterclaim is any claim for money or other relief which a defending party may have against an opposing party, which at the time of suit arises out of, or is necessarily connected with, the same transaction or occurrence that is the subject matter of plaintiff's complaint. It is compulsory in the sense that if it is within the jurisdiction of the court, and does not require for its adjudication the presence of third parties over whom the court cannot acquire jurisdiction, it must be set up therein, and will be barred in the future if not set up.106 (Citation omitted)

In its complaint for specific performance, respondent claimed that petitioner should offset its outstanding rentals and that it was petitioner which had an outstanding debt to respondent: 16. In compliance with the Memorandum of Agreement, Offshore incurred expenses amounting to Seven Million Eight

Hundred Twenty[-]Five Thousand Pesos (P7,825,000.00) by way of Expenses for Rentals of Lights & Sound System, Electrical Bill and Performers Fees. This amount is excluding the expenses incurred during the period Offshore supplied the Light & Sound System, as well as Performers, aforementioned started in October 2004. A copy of the Statement of Account is hereto appended as ANNEX "H" to "H-4"; 17. Based on Offshore's records, upon re-computation of Actual Area used during all these period[s] from July 2001 to March 30, 2008, copy of Statement of Accounts has been sent to Intramuros Administration for reconciliation, Offshore's total obligation by way of back and current rentals up to March 30, 2008 is only in the amount of Six Million Four Hundred Three Thousand Three Hundred Sixty[-]Four Pesos (P6,403,364.00); 18. Obviously, when both accounts are offset, it will clearly show that [Intramuros] still owes Offshore the amount of One Million Four Hundred Twenty[-]One Thousand Six Hundred Thirty[-]Six Pesos (P1,421,636.00) as of March 2008;

19. Unfortunately, despite this glaring fact that [Intramuros] owes Offshore, Defendant [Anna Maria L.] Harper (who has already showed sour and adverse treatment of Offshore in the past), being the new Administrator of Intramuros Administration, sent a Letter dated 09 April 2008 demanding from Offshore to pay [Intramuros] alleged rentals in arrears in the amount of P12,478[,]461.74, within seven (7) days from receipt. A copy of the Letter is hereto attached and marked as Annex "I" to "I-1"; 20. It can be deduced from the attachment to the aforementioned letter that [Intramuros] did not honor the obligations imposed in the Memorandum of Agreement because the monthly expenses incurred by Offshore for the payment of the Lights and Sound System, Electricity and Performers Fees for the continuance of the Department of Tourism WOW Project at Baluarte Plano, Luneta de Sta. Isabel which were duly furnished [Intramuros] in the amount of Seven Million Eight Hundred Twenty[-]Five Thousand Pesos (P7,825,000.00) as expressly agreed by [Department of Tourism], [Intramuros] and Offshore in the Memorandum of

Agreement were NOT deducted from the rentals due[.] 107

Petitioner's counterclaim in its Amended Answer was set up to defend itself against such a claim: 26. [Offshore Construction] has not established its right, or the reality is, [Offshore Constructioin] has been delinquent in the payment of its financial obligations which are specifically provided in its contract with defendant [Intramuros], such as rental fees. 27. [Offshore Construction] has to pay rent for being still in possession of Puerta Isabel II and Asean Garden. Moreover, plaintiff has enjoyed the fruits of subleasing these premises for years and yet it has continuously failed to remit all rental fees and surcharges despite repeated demands from defendants. It bears stressing that as of December 31, 2009, [Offshore Construction's] arrears has already ballooned to thirteen million four hundred and forty[-]eight thousand eight hundred and sixty[-]seven pesos and forty[-]five centavos (P13,448,867.45). 28.

Glaringly,

[Offshore

Construction] has been remiss in performing its obligations stated in the Lease Contracts (Annexes A to A-15; B to B-14 and C to C-14 of the Complaint), Compromise Agreement (Annexes E to E-17 of the Complaint) and Memorandum of Agreement (Annexes F to F-16 of the Complaint). [Intramuros and Anna Maria L. Harper] are therefore constrained to demand payment from [Offshore Construction] for the latter's failure or refusal to honor its just and valid obligations. Necessarily, [Intramuros and Anna Maria L. Harper] will not hesitate to seek legal remedies if [Offshore Construction] continues to be delinquent. 29. Essentially, [Offshore Construction] is protesting the computation of its arrears (P12,478,461.74) in the demand letter sent by Administrator [Anna Maria L.] Harper on April 9, 2008. [Offshore Construction] also asserts that it only owes defendant [Intramuros] six million four hundred three thousand and three hundred sixty[-]four pesos (P6,403,364.00). 30. [Offshore Construction] is misguided. The [Memorandum of Agreement] dated July 27, 2004

was executed because [Offshore Construction], at that time, had been indebted to defendant [Intramuros] in the form of rental and utility consumption arrears for the occupancy of Puerta Isabel Chambers, Asean Gardens and Baluarte de San Andres in the amount of six million seven hundred sixty[-]two thousand one hundred fifty[-]three and seventy centavos (P6,762,153.70).... .... 32. Even after July 27, 2004, and up to this time, [Offshore Construction] remained in possession of, used and/or subleased the subject premises. As such, [Offshore Construction] still has to pay rental fees, aside from the aforesaid arrears. The rental fees continued to pile up and triggered the imposition of surcharges as [Offshore Construction] again failed to remit payments thereon. This explains the demandable amount of P13,448,867.45 (Annex I to I1 of Complaint). [Offshore Construction] is therefore mistaken in believing that it only owes defendant [Intramuros] the arrears subject of the [Memorandum of Agreement] of July 27, 2004 and nothing more.108

Clearly, petitioner's counterclaim is compulsory, arising as it did out of, and being necessarily connected with, the parties' respective obligations under the July 27, 2004 Memorandum of Agreement. Petitioner cannot be faulted for raising the issue of unpaid rentals in the specific performance case or for raising the same issue in the present ejectment case, since it appears that respondent's alleged failure to pay the rent led to the non-renewal of the Contracts of Lease. However, it must be emphasized that any recovery made by petitioner of unpaid rentals in either its ejectment case or in the specific performance case must bar recovery in the other, pursuant to the principle of unjust enrichment.109 A judgment in the Complaint for Interpleader will likewise not be res judicata against the ejectment complaint. The plaintiff in the interpleader case, 4H Intramuros, allegedly representing the tenants occupying Puerta de Isabel II, does not expressly disclose in its Complaint110 for Interpleader the source of its right to occupy those premises. However, it can be

determined from petitioner's Answer111 and from respondent's Memorandum112 that the members of 4H Intramuros are respondent's sublessees. A sublessee cannot invoke a superior right over that of the sublessor.113 A judgment of eviction against respondent will affect its sublessees since the latter's right of possession depends entirely on that of the former.114 A complaint for interpleader by sublessees cannot bar the recovery by the rightful possessor of physical possession of the leased premises. Since neither the specific performance case nor the interpleader case constituted forum shopping by petitioner, the Metropolitan Trial Court erred in dismissing its Complaint for Ejectment. IV Ordinarily, this case would now be remanded to the Metropolitan Trial Court for the determination of the rightful possessor of the leased premises. However, this would cause needless delay inconsistent with the summary nature of

ejectment proceedings.115 Given that there appears sufficient evidence on record to make this determination, judicial economy dictates that this Court now resolve the issue of possession.116 It is undisputed that respondent's occupation and use of Baluarte de San Andres, Baluarte de San Francisco de Dilao, and Revellin de Recoletos started on September 1, 1998 by virtue of Contracts of Lease all dated August 20, 1998.117 The Contracts of Lease were modified through Addendums to the Contracts likewise dated August 20, 1998.118 Then, to amicably settle Civil Case No. 98-91587 entitled Offshore Construction and Development Company v. Hon. Gemma CruzAraneta and Hon. Dominador Ferrer, Jr., then pending before Branch 47, Regional Trial Court, Manila,119 the parties and the Department of Tourism entered into a July 26, 1999 Compromise Agreement. In the Compromise Agreement, the parties affirmed the validity of the lease contracts, but agreed to transfer the areas to be occupied and used by respondent in Baluarte de San Andres and Baluarte de San Francisco de Dilao

due to improvements that it had introduced to the leased 120 premises.  The lease over Revellin de Recoletos was terminated.121 It appears that under this Compromise Agreement, the original five (5)-year period of the Contracts of Lease were 122 retained,  such that the leases would expire on August 31, 2003, and renewable for another five (5) years upon the parties' mutual agreement.123 Thereafter, the Contracts of Lease expired. Respondent does not concede this, but there is no proof that there has been any contract mutually agreed upon by the parties for any extensions of the leases. Respondent can only argue that petitioner's continuing tolerance of respondent's possession and acceptance of respondent's rental payments impliedly renewed the Contracts of Lease.124 But petitioner's tolerance of respondent's occupation and use of the leased premises after the end of the lease contracts does not give the latter a permanent and indefeasible right of possession in its favor. When a demand to vacate has been made, as what petitioner

had done, respondent's possession became illegal and it should have left the leased premises. In Cañiza v. Court of Appeals:125 The Estradas' first proffered defense derives from a literal construction of Section 1, Rule 70 of the Rules of Court which inter alia authorizes the institution of an unlawful detainer suit when "the possession of any land or building is unlawfully withheld after the expiration or termination of the right to hold possession, by virtue of any contract, express or implied." They contend that since they did not acquire possession of the property in question "by virtue of any contract, express or implied" — they having been, to repeat, "allowed to live temporarily ... (therein) for free, out of ... (Cañiza's) kindness" — in no sense could there be an "expiration or termination of ... (their) right to hold possession, by virtue of any contract, express or implied." Nor would an action for forcible entry lie against them, since there is no claim that they had "deprived (Cañiza) of the possession of ... (her property) by force, intimidation, threat, strategy, or stealth."

The argument is arrant sophistry. Cañiza's act of allowing the Estradas to occupy her house, rentfree, did not create a permanent and indefeasible right of possession in the latter's favor. Common sense, and the most rudimentary sense of fairness clearly require that act of liberality be implicitly, but no less certainly, accompanied by the necessary burden on the Estradas of returning the house to Cañiza upon her demand. More than once has this Court adjudged that a person who occupies the land of another at the latter's tolerance or permission without any contract between them is necessarily bound by an implied promise that he will vacate upon demand, failing which a summary action for ejectment is the proper remedy against him. The situation is not much different from that of a tenant whose lease expires but who continues in occupancy by tolerance of the owner, in which case there is deemed to be an unlawful deprivation or withholding of possession as of the date of the demand to vacate. In other words, one whose stay is merely tolerated becomes a deforciant illegally occupying the land or property the moment he is required to leave. Thus, in Asset Privatization

Trust vs. Court of Appeals, where a company, having lawfully obtained possession of a plant upon its undertaking to buy the same, refused to return it after failing to fulfill its promise of payment despite demands, this Court held that "(a)fter demand and its repudiation, ... (its) continuing possession ... became illegal and the complaint for unlawful detainer filed by the ... (plant's owner) was its proper remedy."126 (Emphasis supplied, citations omitted)

The existence of an alleged concession agreement between petitioner and respondent is unsupported by the evidence on record. The Metropolitan Trial Court found that a concession agreement existed due to the agreements entered into by the parties: This Court agrees with the defendant. The various contracts of lease between the parties notwithstanding, the existence of the other agreements involved herein cannot escape the scrutiny of this Court. Although couched in such words as "contracts of lease", the relationship between the parties has evolved into another kind – that of a concession agreement whereby

defendant [Offshore Construction] undertook to develop several areas of the Intramuros District, defendant [Offshore Construction] actually commenced the development of the subject premises and incurred expenses for the said development, effectively making the relationship more than an ordinary lessor-lessee but one governed by concession whereby both parties undertook other obligations in addition to their basic obligations under the contracts of lease. Consensus facit legem (The parties make their own law by their agreement). It behooves this Court to respect the parties' contracts, including the memoranda of agreement that ensued after it....127

Respondent claims that the parties' agreement was for it to operate the leased premises to recover its investments and to make profits. However, a review of the Contracts of Lease show that they are lease contracts, as defined in Article 1643 of the Civil Code: Article 1643. In the lease of things, one of the parties binds himself to give to another the enjoyment or use of a thing for a price certain, and for a period which may be

definite or indefinite. However, no lease for more than ninety-nine years shall be valid.

The restrictions and limitations on respondent's use of the leased premises are consistent with petitioner's right as lessor to stipulate the use of the properties being leased.128 Neither the Contracts of Lease nor their respective Addendums to the Contract contain any stipulation that respondent may occupy and use the leased premises until it recovers the expenses it incurred for improvements it introduced there. Instead, the lease period was fixed at five (5) years, renewable for another five (5) years upon mutual agreement: 3. CONTRACT TERM. (Leased Period) This lease shall be for a period of FIVE YEARS (5 YRS) commencing from September 1, 1998 to August 31, 2003, renewable for another period of FIVE YEARS (5 YRS) under such terms and condition that may be mutually agreed upon

in writing parties[.]129

by

the

The subsequent contracts, namely, the July 26, 1999 Compromise Agreement and the July 27, 2004 Memorandum of Agreement, also do not point to any creation of a "concession" in favor of respondent. The Compromise Agreement affirms the validity of the lease contracts, while the Memorandum of Agreement was for the payment of respondent's arrears until July 2004. However, this Court cannot award unpaid rentals to petitioner pursuant to the ejectment proceeding, since the issue of rentals in Civil Case No. 08-119138 is currently pending with Branch 37, Regional Trial Court, Manila, by virtue of petitioner's counterclaim. As the parties dispute the amounts to be offset under the July 27, 2004 Memorandum of Agreement and respondent's actual back and current rentals due,130 the resolution of that case is better left to the Regional Trial Court for trial on the merits. WHEREFORE, the

Petition

for

Review on Certiorari is GRANTED. The April 14, 2011 Decision of Branch 173, Regional Trial Court, Manila in Civil Case No. 10-124740 is REVERSED AND SET ASIDE, and a new decision is hereby rendered ordering respondent Offshore Construction and Development Company and any and all its sublessees and successors-in-interest to vacate the leased premises immediately. Branch 37, Regional Trial Court, Manila is DIRECTED to resolve Civil Case No. 08-119138 with dispatch. SO ORDERED.

G.R. No. 208185, September 06, 2017 PRISCILLA ZAFRA ORBE, Petitioner, v. FILINVEST LAND, INC., Respondent. DECISION LEONEN, J.:

When Republic Act No. 6552 or the Maceda Law speaks of paying "at least two years of installments" in order for the benefits under its Section 31 to become available, it refers to the buyer's payment of two (2) years' worth of the stipulated fractional, periodic payments due to the seller. When the buyer's payments fall short of the equivalent of two (2) years' worth of installments, the benefits that the buyer may avail of are limited to those under Section 4.2 Should the buyer still fail to make payments within Section 4's grace period, the seller may cancel the contract. Any such cancellation is ineffectual, however, unless it is made through a valid notarial act. This resolves a Petition for Review on Certiorari3 under Rule 45 of the 1997 Rules of Civil Procedure praying that the assailed October 11, 2012 Decision4 and July 3, 2013 Resolution5 of the Court of Appeals in CA-G.R. SP No. 118285 be reversed and set aside. The assailed Court of Appeals October 11, 2012 Decision reversed the prior rulings of the Office of the President, the Board of Commissioners of the Housing and Land Use Regulator; Board (HLURB

Board of Commissioners), and of Housing and Land Use Arbiter Leonard Jacinto A. Soriano (Arbiter Soriano) of the Expanded National Capital Region Field Office of the Housing and Land Use Regulatory Board (HLURB Field Office). It held that petitioner Priscilla Zafra Orbe (Orbe) is entitled to the benefits of Section 3 of Republic Act No. 6552.6 The assailed Court of Appeals July 3, 2013 Resolution denied Orbe's Motion for 7 Reconsideration. Sometime in June 2001, Orbe entered into a purchase agreement with respondent Filinvest Land, Inc. (Filinvest) over a 385-square-meter lot identified as Lot 1, Block 10, Phase 1, Highlands Pointe, Taytay, Rizal. The total contract price was P2,566,795.00, payable on installment basis8 under the following terms:

Total Contract Price

 

:

Payable on   installme nts  

from 8/4/014/4/02

Balance

 

 

year :

[P]54,818.0 0 monthly

 

From June 17, 2001 to July 14, 2004, Orbe paid a total of P608,648.20. These were mainly through several Metrobank checks, for which Filinvest issued official receipts.10 Check payments were made as follows:

[P]2,053,43 6.00

Payable on installme nts

METROB ANK DA CHECK TE NO.

 

 

 

for a period of 7 years

 

Metro June Bank 17, [P]20,000.00 Check No. 2001 0306533

 

 

from 5/8/024/8 /09

Metro July Bank 29, [P]54,818.00 Check No. 2001 0306544 Metro Aug. Bank 29, [P]54,818.00 Check No. 2001 0306545

 

Metro Sept Bank . 29, [P]54,818.00 Check No. 2001 0306546

 

:

 

First year  

[P]27,936.8 : 4 monthly

[P]2,566,79 5.00

Second year

 

:

[P]39,758.8 4 monthly

 

:

[P]41,394.8 4 monthly

Reservati   on Fee

:

[P]20,000.0 0

Third year

Down   Payments

:

[P]493,357. 00

Fourth   year to Seventh

: [P]42,138.8 4 monthly9

Metro Bank

                        AMOUNT

May [P]100,000.00 8,

 

PRISCILLA Z. ORBE #107 Morena St. Villaverde Homes Novaliches, Q,C.

Check No. 2002 032()243 Metro May Bank 22, [P]100,000.00 Check No. 2002 0320244 Metro Bank Check No. 0370882

 

Mar ch [P]80,000.00 26, 2003

 

Metro Apri Bank l 26, [P]75,789.00 Check No. 2003 0370883

 

Metro Feb. Bank 12, [P]37,811.00 Check No. 2004 0401000

 

Metro July Bank 14, [P]30,000.0011 Check No. 2004 0531301

 

                Re: Account No.    6181426                       Project             HIGH                       Phase               1                       Block               10                       Lot                   1 Gentlemen

(sic):

Our records show that your account remains unpaid despite our written request for your payment. We have in fact given you sixty (60) days to update but you failed to settle your account. Accordingly, please be informed that we are now hereby canceling your account effective thirty (30) days from receipt hereof, Very

truly

yours,

Orbe was unable to make further payments allegedly on account of financial difficulties.12

COLLECTION

DEPARTMENT

On October 4, 2004, Filinvest sent a notice of cancellation,13 which was received by Orbe on October 18, 2004.14 The notice and its accompanying jurat read:

_________________(sgd.)_______ __________                  MA. LOUELLA D. SENIA

By:

Republic

of

the

Philippines

)

Makati

City                     

)S.S.

SUBSCRIBED AND SWORN to before me this OCT 06 2004, affiant exhibiting to me Community Tax Certificate No. 05465460 issued on February 09, 2004 at Manila.              (sgd.) AVELIO L. SALCEDO     NOTARY PUBLIC UNTIL DECEMBER 31, 2004 PTR NO. 3703389 3/01/04 SAN JUAN IBP N0.609984 2/04/04 PASIG CITY Doc. No. Page No. Book No. Series of 200415

314 64 XVIII

Noting that "efforts . . . to seek for a reconsideration of said cancellation . . . proved futile," and that the parcel had since been sold by Filinvest to a certain Ruel Ymana "in evident bad faith,"16 Orbe filed against Filinvest a Complaint for refund with damages dated November 13, 2007 before the HLURB Field Office.17 Orbe emphasized that she had made payments "beginning June, 2001 up to October, 2004."18 She further asserted that the October 4, 2004 Notice did not amount to an "effective cancellation by notarial

act."19 In its Answer with Counterclaim, Filinvest asserted that Orbe failed to make 24 monthly amortization payments on her account, and thus, could not benefit from Section 3 of Republic Act No. 6552. According to Filinvest, the P608,648.20 paid by Orbe from June 17, 2001 to July 14, 2004 covered only the reservation fee, down payment, and late payment charges, exclusive of the monthly amortization payments stipulated in the Purchase Agreement.20 In his July 25, 2008 21 Decision,  Arbiter Soriano of the HLURB Field Office ruled in favor of Orbe. He held that since Orbe made payments "from 17 June 2001 to 14 July 2004, or a period of more than two years,"22 all of which should be credited to the principal,23 she was entitled to a refund of the cash surrender value equivalent to 50% of the total payments she had made, pursuant to Section 3 of Republic Act No. 6552.24 Filinvest appealed to the HLURB Board of Commissioners.25 In its April 15, 2009 Decision,26 the HLURB Board of Commissioners

affirmed Arbiter Soriano's Decision.27 It disagreed with Arbiter Soriano's conclusion that Orbe had paid two (2) years' installments. It specifically noted rather, that the buyer's payments fell two (2) months short of the equivalent of two years of installments.28 It added, however, that "[e]quity . . . should come in especially where, as here, the payment period is relatively short and the monthly installment is relatively of 29 substantial amounts."  Thus, it concluded that Orbe was still entitled to a 50% refund.30

the Court of Appeals,34 arguing that: [W]hat [Republic Act No. 6552] requires for refund of the cash surrender value is not the length of time of at least two years from the first payment to the last payment, but the number of installments paid, that is, at least two ears of installments or twenty[-]four (24) monthly installments paid.35

Filinvest then appealed to the Office of the President.31

In its assailed October 11, 2012 Decision,37 the Court of Appeals reversed the prior rulings of the Office of the President, of the HLURB Board of Commissioners, and of Arbiter Soriano; and dismissed Orbe's Complaint.38

In its February 4, 2011 Decision,32 the Office of the President sustained the conclusion that Orbe was entitled to a 50% refund. It disagreed with the HLURB Board of Commissioners' finding that Section 3's benefits were available to Orbe purely as a matter of equity. It agreed instead with Arbiter Soriano's reliance on how Orbe "ha[d] made installment payments for more than two (2) years."33 Filinvest made another appeal to

Thus, Section 3, which requires the refund of the cash surrender value, will only apply when the buyer has made at least 24 installment payments.36

The Court of Appeals reasoned that the phrase "two years of installments" under Section 3 means that total payments made should at least be equivalent to two years' worth of installments.39 Considering that Orbe's total payment of P608,648.20 was short of the required two (2) years' worth of installments, she could not avail of

the benefits of Section 3.40 What applied instead was Section 4, enabling a grace period of 60 days from the day the installment became due and further enabling the seller to cancel or rescind the contract through a notarial act, should the buyer still fail to pay within the grace period.41 It found Filinvest to have sent Orbe a valid, notarized notice of cancellation thereby precluding any further relief.42 In its assailed July 3, 2013 Resolution,43 the Court of Appeals denied Orbe's Motion for Reconsideration. Hence, the present petition was filed.44 For resolution is the issue of whether or not petitioner Priscilla Zafra Orbe is entitled to a refund or to any other benefit under Republic Act No. 6552. The Court of Appeals correctly held that petitioner was not entitled to benefits under Section 3 of Republic Act No. 6552 as she had failed to pay two (2) years' worth of installments pursuant to the terms of her original agreement with respondent. It also correctly held

that with the shortage in petitioner's payment, what applies is Section 4, instead of Section 3. This means that respondent could cancel the contract since petitioner failed to pay within the 60-day grace period. The Court of Appeals, however, failed to realize that the notice of cancellation made by respondent was an invalid notarial act. Failing to satisfy all of Section 4's requisites for a valid cancellation, respondent's cancellation was ineffectual. The contract between petitioner and respondent should then be deemed valid and 45 subsisting.  Considering however, that respondent ha.s since sold the lot to another person, an equitable ruling is proper. Therefore, this Court rules in a manner consistent with how it resolved Olympia Housing v. Panasiatic Travel,46Pagtalunan v. Vda. de Manzano,47Active Realty and Development v. Daroya,48Associated Marine Officers and Seamen's Union of the Philippines PTGWO-ITF v. Decena,49 and Gatchalian Realty v. Angeles.50 I

Republic Act No. 6552, the Realty Installment Buyer Act or more popularly reffered to as the Maceda Law, named after its author, the late Sen. Ernesto Maceda, was adopted with the purpose of "protect[ing] buyers of real estate on installment payments against onerous and oppressive conditions."51 It "delineat[es] the rights and remedies of . . . buyers and protect[s] them from one-sided and pernicious contract stipulations":52 Its declared public policy is to protect buyers of real estate on installment basis against onerous and oppressive conditions. The law seeks to address the acute housing shortage problem in our country that has prompted thousands of middle and lower class buyers of houses, lots and condominium units to enter into all sorts of contracts with private housing developers involving installment schemes. Lot buyers, mostly low income earners eager to acquire a lot upon which to build their homes, readily affix their signatures on these contracts, without an opportunity to question the onerous provisions therein as the contract is offered to them on a "take it or leave it" basis. Most of these contracts of adhesion, drawn

exclusively by the developers, entrap innocent buyers by requiring cash deposits for reservation agreements which often times include, in fine print, onerous default clauses where all the installment payments made will be forfeited upon failure to pay any installment due even if the buyers had made payments for several years. Real estate developers thus enjoy an unnecessary advantage over lot buyers who[m] they often exploit with iniquitous results. They get to forfeit all the installment payments of defaulting buyers and resell the same lot to another buyer with the same exigent conditions. To help especially the low income lot buyers, the legislature enacted R.A. No. 6552 delineating the rights and remedies of lot buyers and protect[ing] them from one-sided and pernicious contract 53 stipulations. Having been adopted with the explicit objective of protecting buyers against what it recognizes to be disadvantageous and onerous conditions, the Maceda Law's provisions must be liberally construed in favor of buyers. Within the bounds of reason, fairness, and justice, doubts in its interpretation must be resolved in a manner that

will afford buyers the fullest extent of its benefits.

earned by him, which is hereby fixed at the rate of one month grace period for every one year of installment payments made: Provided, That this right shall be exercised by the buyer only once in every five years of the life of the contract and its extensions, if any.

II Sections 3 and 4 of the Maceda Law spell out the rights of defaulting buyers on installment payments, depending on the extent of payments made. Section 3 governs situations in which a buyer "has paid at least two years of installments": Section 3. In all transactions or contracts involving the sale or financing of real estate on installment payments, including residential condominium apartments but excluding industrial lots, commercial buildings and sales to tenants under Republic Act Numbered Thirty eight hundred forty-four, as amended by Republic Act Numbered Sixty-three hundred eighty-nine, where the buyer has paid at least two years of installments, the buyer is entitled to the following rights in case he defaults in the payment of succeeding installments:

(a)

To pay, without additional interest, the unpaid installments due within the total grace period

(b)

If the contract is cancelled, the seller shall refund to the buyer the cash surrender value of the payments on the property equivalent to fifty per cent of the total payments made and, after five years of installments, an additional five per cent every year but not to exceed ninety per cent of the total payments made: Provided, That the actual cancellation of the contract shall take place after thirty days from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act and upon full payment of the cash surrender value to the buyer.

Down payments, deposits or options on the contract shall be included in the computation of the

total number payments made.

of

installment

Section 4 governs situations "where less than two years of installments were paid": Section 4, In case where less than two years of installments were paid, the seller shall give the buyer a grace period of not less than sixty days from the date the installment became due. If the buyer fails to pay the installments due at the expiration of the grace period, the seller may cancel the contract after thirty days from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act. In both Sections 3 and 4, defaulting buyers are afforded grace periods in which they may pay the installments due. Should they fail to make payment within the applicable period, cancellation of their agreement with the seller may ensue. III Contrary to petitioner's allegations, she did not pay "at least two years of installments" as to fall within the protection of Section 3. In a sale by installment, a buyer

defers full payment of the purchase price and ratably apportions payment across a period. It is typified by regular, fractional payments. It is these regular, fractional payments that are referred to as "installments."54 Thus, when Section 3 speaks of paying "at least two years of installments," it refers to the equivalent of the totality of payments diligently or consistently made throughout a period of two (2) years. Accordingly, where installments are to be paid on a monthly basis, paying "at least two years of installments" pertains to the aggregate value of 24 monthly installments. As explained in Gatchalian Realty v. Angeles:55 It should be noted that Section 3 of R.A. 6552 and paragraph six of Contract Nos. 2271 and 2272, speak of "two years of installments." The basis for computation of the term refers to the installments that correspond to the number of months of payments, and not to the number of months that the contract is in effect as well as any grace period that has been given. Both the law and the contracts thus prevent any buyer who has not been diligent in paying his monthly installments tom

unduly claiming the rights provided in Section 3 of R.A. 56 6552.  (Emphasis supplied) The phrase "at least two years of installments" refers to value and time. It does not only refer to the period when the buyer has been making payments, with total disregard for the value that the buyer has actually conveyed.57 It refers to the proportionate value of the installments made, as well as payments having been made for at least two (2) years. Laws should never be so interpreted as to produce results that are absurd or unreasonable.58 Sustaining petitioner's contention that spe falls within Section 3's protection just because she has been paying for more than two (2) years goes beyond a justified, liberal construction of the Maceda Law. It facilitates arbitrariness, as intermittent payments of fluctuating amounts would become permissible, so long as they stretch for two (2) years. Worse, it condones an absurdity. It sets a precedent that would endorse minimal, token payments that extend for two (2) years. A buyer could, then, literally pay loose change for two (2) years and still

come under Section 3's protection. Reckoning payment of "at least two years of installments" on the basis of the regular, factional payments due from the buyer was demonstrated in Marina Properties Corp. v. Court of Appeals.59 There, the monthly amortization of P67,024.22 was considered in determining the validity of the cancellation of the contract by the seller: We likewise uphold the finding that MARINA's cancellation of the Contract To Buy and To Sell was clearly illegal. Prior to MARINA's unilateral act of rescission, H.L. CARLOS had already paid P1,810,330.70, or more than 50% of the contract price of P3,614,000.00. Moreover, the sum H.L. CARLOS had disbursed amounted to more than the total of 24 installments, i.e., two years' worth of installments computed at a monthly installment rate of P67,024.22, inclusive of the downpayment.60 In Jestra Development and Management Corporation v. Pacifico,61 where down payment was itself payable in portions, this Court reckoned the monthly installment payment for the down payment amounting to

P121,666.66, rather than the monthly amortization. This Court justified this by referencing Section 3's injunction that "[d]own payments, deposits or options on the contract shall be included in the computation of the total number of installment payments made": The total purchase price of the property is P2,500,000. As provided in the Reservation Application, the 30% down payment on the purchase price or P750,000 was to be paid in six monthly installments of P121,666.66. Under the Contract to Sell, the 70% balance of P1,750,000.00 on the purchase price was to be paid in 10 years through monthly installments of P34,983, which was later increased to P39,468 in accordance with the agreement to restructure the same. While, under the above-quoted Section 3 of R.A. No. 6552, the down payment is included in computing the total number of installment payments made, the proper divisor is neither P34,983 nor P39,468, but P121,666.66, the monthly installment on the down payment. The P750,000 down payment was to be paid in six monthly installments. If the down payment

of P750,000 is to be deducted from the total payment of P846,600, the remainder is only P96,600. Since respondent was able to pay the down payment in full eleven (11) months after the last monthly installment was due, and the sum of P76,600 representing penalty for delay of payment is deducted from the remaining P96,600, only a balance of P20,000 remains. As respondent failed to pay at least two years of installments, he is not, under above-quoted Section 3 of R.A. No. 6552, entitled to a refund of the cash surrender value of his payments.62 Jestra was wrong to use the installment payments on the down payment as divisor. It is an error to reckon the payment of two (2) years' worth of installments on the apportionment of the down payment because, even in cases where the down payment is broken down into smaller, more affordable portions, payments for it still do not embody the ratable apportionment of the contract price throughout the entire duration of the contract term. Rather than the partial payments for the down payment, it is the partition of the contract price into monthly amortizations that manifests the ratable

apportionment across a complete contract term that is the essence of sales on installment. The correct standard is that which was used in Marina, not in Jestra. Marina also correctly demonstrated how Section 3's injunction that "[d]own payments, deposits or options on the contract shall be included in the computation of the total number of installment payments made" should operate. In Marina, the total amount of P1,810,330.70 paid by the buyer was inclusive of payments for down payment worth P1,034,200.00 and cash deposit worth P50,000.00. In concluding that the buyer in Marina had paid more than two (2) years' or 24 months' worth of installments, what this Court considered was the total amount of P1,810,330.70 and not merely the payments on amortizations. Following Marina, this Court reckons petitioner's satisfaction of the requisite two (2) years' or 24 months' worth of installments using as divisor the monthly amortizations due from petitioner. However, this Court notes that the mon1hly amortizations due from petitioner were stipulated to escalate on a yearly basis. In

keeping with the need to construe the Maceda Law in a manner favorable to the buyer, this Court uses as basis the monthly amortizations set for the first year, i.e., P27,936.84. With this as the divisor, it shall appear that petitioner has only paid 21.786 months' worth of installments. This falls short of the requisite two (2) years' or 24 months' worth of installments. IV Failing to satisfy Section 3's threshold, petitioner's case is governed by Section 4 of the Maceda Law. Thus, she was "entitled to a grace period of not less than sixty (60) days from the due date within which to make [her] installment payment. [Respondent], on the other hand, ha[d] the right to cancel the contract after thirty (30) days from receipt by [petitioner] of the notice of cancellation."63 For cancellations under Section 4 to be valid, three (3) requisites must concur, First, the buyer must have been given a 60-day grace period but failed to utilize it. Second, the seller must have sent a notice of

cancellation or demand for rescission by notarial act And third, the cancellation shall take effect only after 30 days of the buyer's receipt of the notice of cancellation: Essentially, the said provision provides for three (3) requisites before the seller may actually cancel the subject contract: first, the seller shall give the buyer a 60day grace period to be reckoned from the date the installment became due; second, the seller must give the buyer a notice of cancellation/demand for rescission by notarial act if the buyer fails to pay the installments due at the expiration of the said grace period; and third, the seller may actually cancel the contract only after thirty (30) days from the buyer's receipt of the said notice of cancellation/demand for rescission by notarial act.64 (Emphasis in the original) Respondent's October 4, 2004 notice indicates that petitioner failed to utilize the 60-day grace period. It also indicates that cancellation was to take effect "thirty (30) days from [its] receipt": Our records show that your account remains unpaid despite our written request for your payment. We have in fact given you sixty (60) days to update but you failed to settle your

account. Accordingly, please be informed that we are now hereby canceling your account effective thirty (30) days from receipt hereof.65 The notice of cancellation was also accompanied by a jurat; thereby making it appear to have been a valid notarial act: SUBSCRIBED AND SWORN to before me this OCT 06 2004, affiant exhibiting to me Community Tax Certificate No. 05465460 issued on February 09, 2004 at lvfanila.66 (Emphasis supplied) This is not, however, the valid notarial act contemplated by the Maceda Law. In ordinary circumstances, "[n]otarization of a private document converts the document into a public one making it admissible in court without further proof of its authenticity."67 To enable this conversion, Rule 132, Section 19 of the Revised Rules of Evidence specifically requires that a document be "acknowledged before a notary public."68 Rule II, Section 1 of A.M. No. 02-813-SC, the 2004 Rules on Notarial Practice, defines an acknowledgement, as follows:

SECTION 1. Acknowledgment. "Acknowledgment" refers to an act in which an individual on a single occasion:

(a)

appears in person before the notary public and presents an integrally complete instrument or document;

(b)

is attested to be personally known to the notary public or identified by the notary public through competent evidence of identity as defined by these Rules; and

(c)

represents to the notary public that the signature on the instrument or document was voluntarily affixed by him for the purposes stated in the instrument or document, declares that he has executed the instrument or document as his free and voluntary act and deed, and, if he acts in a particular representative capacity, that he has the authority to sign in that capacity.

Notarization under the Maceda Law extends beyond converting private documents into public ones. Under Sections 3 and 4, notarization enables the exercise of the

statutory right of unilateral cancellation by the seller of a perfected contract. If an acknowledgement is necessary in the customary rendition of public documents, with greater reason should an acknowledgement be imperative in notices of cancellation or demands for rescission made under Sections 3 and 4 of the Maceda Law. Through an acknowledgement, individuals acting as representatives declare that they are authorized to act as such representatives. This is particularly crucial with respect to signatories to notices of cancellation or demands for rescission under Sections 3 and 4 of the Maceda Law. In a great number of cases, the sellers of real property shall be juridical persons acting through representatives. In these cases, it is imperative that the officer signing for the seller indicate that he or she is duly authorized to effect the cancellation of an otherwise perfected contract. Not all personnel are capacitated to effect these cancellations; individuals purporting to do so must demonstrate their specific authority. In the case of corporations, this authority is vested through board resolutions,

or by stipulations in the articles of incorporation or by-laws.

before the notary public as to such instrument or document.

Respondent's notice of cancellation here was executed by an individual identified only as belonging to respondent's Collection Department. It was also accompanied not by an acknowledgement, but by a jurat.

Even if respondent's notarization by jurat and not by acknowledgement were to be condoned, respondent's jurat was not even a valid jurat executed according to the requirements of the 2004 Rules on Notarial Practice.

A jurat is a distinct notarial act, which makes no averment concerning the authority of a representative. It is defined by Rule II, Section 6 of the 2004 Rules on Notarial Practice, as follows: SECTION 6. Jurat. - "Jurat" refers to an act in which an individual on a single occasion:

The 2004 Rules on Notarial Practice took effect on August 1, 2004.69 It governed respondent's October 4, 2004 notice, which was notarized on October 6, 2004. As Rule II, Section 6 of these Rules clearly states, the person signing the document must be "personally known to the notary public or identified by the notary public through competent evidence of identity."

(a)

(b)

appears in person before the notary public and presents an instrument or document; is personally known to the notary public or identified by the notary public through competent evidence of identity as defined by these Rules;

(c)

signs the instrument or document in the presence of the notary; and

(d)

takes an oath or affirmation

Rule II, Section 12, in turn, defines "competent evidence of identity." As originally worded, when the 2004 Rules on Notarial Practice came into effect on August 1, 2004, Rule II, Section 12 read: Section 12. Competent Evidence of Identity. - The phrase "competent evidence of identity" refers to the identification of an individual based on:

(a)

at least one current identification document issued by an official agency bearing the photograph and signature of the individual; or

(b)

the oath or affirmation of one credible witness not privy to the instrument, document or transaction who is personally known to the notary public and who personally knows the individual, or of two credible witnesses neither of whom is privy to the instrument, document or transaction who each personally knows the individual and shows to the notary public documentary identification.

The proof of identity used by the signatory to respondent's notice of cancellation was a community tax certificate, which no longer satisfies this requirement. Rule II, Section 12 was eventually amended by A.M. No. 02-8-13-SC. As amended, it specifically rebukes the validity of a community tax certificate as a competent evidence of identity: Section 12. Competent Evidence of Identity. - The phrase "competent

evidence of identity" refers to the identification of an individual based on: a. at least one current identification document issued by an official agency bearing the photograph and signature of the individual, such as but not limited to, passport, driver's license, Professional Regulations Commission ID, National Bureau of Investigation clearance, police clearance, postal ID, voter's ID, Barangay certification, Government Service and Insurance System (GSIS) e-card, Social Security System (SSS) card, Philhealth card, senior citizen card, Overseas Workers Welfare Administration (OWWA) ID, OFW ID, seaman's book, alien certificate of registration/immigrant

certificate of registration, government office ID, certification from the National Council for the Welfare of Disabled Persons (NCWDP), Department of Social Welfare and Development (DSWD) certification; or b. the oath or affirmation of one credible witness not privy to the instrument, document or transaction who is personally known to the notary public and who personally knows the individual, or of two credible witnesses neither of whom is privy to the instrument, document or transaction who each personally knows the individual and shows to the notary public documentary identification. Baylon v. community

Almo70 explained why tax certificates were

specifically excluded as a permissible proof of identity: As a matter of fact, recognizing the established unreliability of a community tax certificate in proving the identity of a person who wishes to have his document notarized, we did not include it in the list of competent evidence of identity that notaries public should use in ascertaining the identity of persons appearing before them to have their documents notarized.71 Marina Properties v. Court of Appeals72 was unequivocal: "[I]n order to effect the cancellation of a contract, a notarial cancellation must first be had."73Realty Exchange Venture Corp. v. Sendino74 explained, "Since R.A. 6552 mandates cancellation by notarial act among other requirements before any cancellation of a contract may be effected, petitioners' precipitate cancellation of its contract with private respondent without observing the conditions imposed by the said law was invalid and improper."75 In Active Realty and Development v. Daroya,76 where the seller "failed to send a notarized notice of cancellation,"77 this Court decried the iniquity foisted upon a buyer. "[W]e find it illegal and iniquitous that petitioner, without

complying with the mandatory legal requirements for canceling the contract, forfeited both respondent's land and hard-earned money."78

This Court is mindful of jurisprudence in which it has been lenient with the requirement of presenting a competent evidence of identity before a notary public.

In ordinary circumstances, where notarization serves merely to convert a private document into a public document, notaries public have been admonished about faithfully observing the rules governing notarial acts: "Faithful observance and utmost respect of the legal solemnity of an oath in an acknowledgment or jurat is sacrosanct."79 It is with greater reason that the diligent observance of notarial rules should be impressed in cases concerned with a seller's exercise of a statutory privilege through cancellations under the Maceda Law.

Galicto v. Aquino,80Coca Cola Bottlers Philippines, Inc. v. Dela Cruz,81Victorio-Aquino v. Pacific Plans, Inc.,82 and Reyes v. Glaucoma

infractions. In contrast, this case concerns Section 4's definite precondition for the seller's exercise of its option to repudiate a contract. At stake in Galicto, Coca-Cola, Victorio-Aquino, and Reyes was the right to be heard in judicial proceedings, a cognate of due process. What is at stake here is different: the grant of a statutory privilege relating to a civil contract.

Research Foundation, 83 Inc.  concerned verifications and certifications of non-forum shopping in which jurats did not indicate the required competent evidence of identity. In these cases, this Court overlooked the defects considering that "defective jurat in the Verification/Certification of NonForum Shopping is not a fatal defect . . . The verification is only a formal, not a jurisdictional, requirement that the Court may waive."84 Likewise, this Court considered it more appropriate to not hinder the consideration of pleadings in order that partylitigants may exhaustively plead their cases.85

To be effective, sellers' cancellations under the Maceda Law must strictly comply with the requirements of Sections 3 and 4. This Court clarifies here that with respect to notices of cancellation or demands for rescission by notarial act, an acknowledgement is imperative. Moreover, when these are made through representatives of juridical persons selling real property, the authority of these representatives must be duly demonstrated. For corporations, the representative's authority must have either been granted by a board resolution or existing in the seller's articles of incorporation or by-laws.

Galicto, Coca-Cola, Victorio-Aquino, and Reyes are markedly different from the present controversy. They merely concerned formal

With the Maceda Law's avowed purpose of extending benefits to disadvantaged buyers and liberating them from onerous and

Respondent's failure to diligently satisfy the imperatives of the 2004 Rules on Notarial Practice constrains this Court to consider its notice as an invalid notarial act. This amounts to respondent's failure to satisfy the second requisite for valid cancellations under Section 4, ultimately rendering its cancellation of the purchase agreement ineffectual.

oppressive conditions, it necessarily follows that the Maceda Law's permission for sellers to cancel contracts becomes available only when its conditions are heedfully satisfied. No liberal construction of the Maceda Law can be made in favor of the seller and at the same time burdening the buyer. V There being no valid cancellation, the purchase agreement between petitioner and respondent "remains valid and subsisting."86 However, respondent has already sold the lot purchased by petitioner to a certain Ruel Ymana.87 Gatchalian Realty v. Angeles88 confronted a similar predicament. In determining the most judicious manner of disposing of the controversy, this Court considered the analogous cases of Olympia Housing v. Panasiatic Travel,89Pagtalunan v. Vda. de Manzano,90Active Realty and Development v. 91 Daroya,  and Associated Marine Officers and Seamen's Union of the Philippines PTGWO-ITF v. Decena:92 In Olympia, this Court dismissed the complaint for recovery of possession for having been

prematurely filed without complying with the mandate of R.A. 6552. We ordered the defaulting buyer to pay the developer the balance as of the date of the filing of the complaint plus 18% interest per annum computed from the day after the date of the filing of the complaint, but within 60 days from the receipt of a copy of the decision. Upon payment, the developer shall issue the corresponding certificate of title in favor of the defaulting buyer, If the defaulting buyer fails to pay the full amount, then the defaulting buyer shall vacate the subject property without need of demand and all payments will be charged as rentals to the property. There was no award for damages and attorney's fees, and no costs were charged to the parties. In Pagtalunan, this Court dismissed the complaint for unlawful detainer. We also ordered the defaulting buyer to pay the developer the balance of the purchase price plus interest at 6% per annum from the date of filing of the complaint up to the finality of judgment, and thereafter, at the rate of 12% per annum. Upon payment, the developer shall issue a Deed of Absolute Sale of the subject property and deliver the

corresponding certificate of title in favor of the defaulting buyer. If the defaulting buyer fails to pay the full amount within 60 days from finality of the decision, then the defaulting buyer should vacate the subject property without need of demand and all payments will be charged as rentals to the property. No costs were charged to the parties. In Active, this Court held that the Contract to Sell between the parties remained valid because of the developer's failure to send a notarized notice of cancellation and to refund the cash surrender value. The defaulting buyer thus had the right to offer to pay the balance of the purchase price, and the developer had no choice but to accept payment. However,  the defaulting buyer was unable to exercise this right because the developer sold the subject lot. This Court ordered the developer to refund to the defaulting buyer the actual value of the lot with 12% interest per annum computedfrom the date of the filing of the complaint until fully paid, or to deliver a substitute lot at the option of the defaulting buyer. In Associated, this Court dismissed the complaint for unlawful detainer.

We held that the Contract to Sell between the parties remained valid because the developer failed to send to the defaulting buyer a notarized notice of cancellation and to refund the cash surrender value. We ordered the MeTC to conduct a hearing within 30 days from receipt of the decision to determine the unpaid balance of the full value of the subject properties as well as the current reasonable amount of rent for the subject properties. We ordered the defaulting buyer to pay, within 60 days from the trial court's determination of the amounts, the unpaid balance of the full value of the subject properties with interest at 6% per annum computed from the date of sending of the notice of final demand up to the date of actual payment. Upon payment, we ordered the developer to execute a Deed of Absolute Sale over the subject properties and deliver the transfer certificate of title to the defaulting buyer. In case of failure to pay within the mandated 60 day period, we ordered the defaulting buyer to immediately vacate the premises without need for further demand. The developer should also pay the defaulting buyer the cash surrender value, and the contract should be deemed cancelled 30 days after the

defaulting buyer's receipt of the full payment of the cash surrender value. If the defaulting buyer failed to vacate the premises, he should be charged reasonable rental in the amount determined by the trial court.93 (Emphasis supplied) Gatchalian proceeded to, first, assert the propriety of equitably resolving the controversy, and second, consider the options available to the buyer. It specifical1y noted that in the event that its subject properties were no longer available, only two (2) options remained: a refund or an offer of substitute properties. It was exclusively for the buyer to choose between these options: We observe that this case has, from the institution of the complaint, been pending with the courts for 10 years. As both parties prayed for the issuance of reliefs that are just and equitable under the premises, and in the exercise of our discretion, we resolve to dispose of this case in an equitable manner. Considering that GRI did not validly rescind Contracts to Sell Nos. 2271 and 2272, Angeles has two options: 1. The option to pay, within 60 days from the MeTC's determination of the proper amounts, the unpaid balance of the full value of the

purchase price of the subject properties plus interest at 6% per annum from 11 November 2003, the date of filing of the complaint, up to the finality of this Decision, and thereafter, at the rate of 6% per annum. Upon payment of the full amount, GRI shall immediately execute Deeds of Absolute Sale over the subject properties and deliver the corresponding transfer certificate of title to Angeles. In the event that the subject properties are no longer available, GRI should offer substitute properties of equal value. Acceptance the suitability of the substitute properties is Angeles' sole prerogative. Should Angeles refuse the substitute properties, GRI shall refund to Angeles the actual value of the subject properties with 6% interest per annum computed from 11 November 2003, the date of the filing of the complaint, until fully paid; and 2. The option to accept from GRI P574,148.40, the cash surrender value of the subject properties, with interest at 6% per annum, computed from 11 November 2003, the date of the filing of the complaint, until fully paid. Contracts

to Sell Nos. 2271 and 2272 shall be deemed cancelled 30 days after Angeles' receipt of GRI's full payment of the cash surrender value. No rent is further charged upon Angeles as GRI already had possession of the subject properties on 10 October 2006.94 (Emphasis supplied) This case is most akin to Active. There, as in this case, the subject property was actually sold by the seller to a third person. Gatchalian mirrored Active i n discerning an equitable ruling in the event that its subject properties had been sold by the seller to another person. It was Active that originally identified two (2) options where a seller wrongly cancelled a contract with a buyer and had since sold that property to a third person, refunding the actual95 value of the lot sold plus interest or delivering a substitute lot to the buyer: Thus, for failure to cancel the contract in accordance with the procedure provided by law, we hold that the contract to sell between the parties remains valid and subsisting. Following Section 3(a) of R.A. No. 6552, respondent has the right to offer to pay for the balance of the purchase price, without

interest, which she did in this case. Ordinarily, petitioner would have had no other recourse but to accept payment. However, respondent can no longer exercise this right as the subject lot was already sold by the petitioner to another buyer which lot, as admitted by the petitioner, was valued at P1,700.00 per square meter. As respondent lost her chance to pay for the balance of the P875,000.00 lot, it is only just and equitable that the petitioner be ordered to refund to respondent the actual value of the lot resold, i.e., P875,000.00, with 12% interest per annum computed from August 26, 1991 until fully paid or to deliver a substitute lot at the option of the respondent.96 (Emphasis supplied) In Active, the buyer managed to pay the full price of the principal value of the lot but was still short of the total contract price net of interest.97 Unlike the buyer in Active, petitioner here has only made partial payments. Thus, a full refund of the actual value of the lot, as Active and Gatchalian ordered, is improper. In addition, petitioner has disavowed any interest in proceeding with the purchase.98 She has even admitted to not having the financial capacity for this.99 The antecedents, too, demonstrate that

petitioner made no further attempt at proceeding with the purchase. Therefore, this Court follows Active's precedent, as it did in Gatchalian, but makes adjustments in consideration of the peculiarities of this case. Considering that it did not validly cancel its contract with petitioner and has also sold the lot to another person, it is proper that respondent be ordered to refund petitioner. This refund shall not be the full, actual value of the lot resold, as was ordered in Active and Gatchalian, lest petitioner be unjustly enriched. Rather, it shall only be the amount actually paid by petitioner to respondent, i.e., P608,648.20. In view of Nacar v. Gallery Frames, this amount shall be subject to legal interest at the rate of twelve percent (12%) per annum reckoned from the filing of petitioner's Complaint100 until June 30, 2013; and six percent (6%) per annum from July 1, 2013 until fully paid.101 WHEREFORE, the Petition for Review on Certiorari is GRANTED. The assailed October 11, 2012 Decision and July 3, 2013 Resolution of the Court of Appeals

in CA-G.R. SP No. are REVERSED and SET

118285 ASIDE.

Respondent Filinvest Land, Inc. is ordered to refund petitioner Priscilla Zafra Orbe the amount of P608,648.20. This refund shall earn legal interest at twelve percent (12%) per annum from November 17, 2004 to June 30, 2013, and six percent (6%) per annum, reckoned from July 1, 2013 until fully paid. This case is REMANDED to the Housing and Land Use Regulatory Board Expanded National Capital Regional Field Office FOR PROPER EXECUTION. SO ORDERED.

G.R. No. 202364, August 30, 2017 ARTURO C. CALUBAD, Petitioner, v. RICARCE N DEVELOPMENT CORPORATION, Respondent. DECISION LEONEN, J.:

When a corporation intentionally or negligently clothes its agent with apparent authority to act in its behalf, it is estopped from denying its agent's apparent authority as to innocent third parties who dealt with this agent in good faith.1 This resolves the Petition for Review on Certiorari2 filed by petitioner Arturo C. Calubad (Calubad), assailing the January 25, 2012 Decision3 and June 20, 2012 4 Resolution  of the Court of Appeals in CA-GR. CV No. 93185, which upheld the January 6, 2009 Decision5 of Branch 218, Regional Trial Court, Quezon City in Civil Case No. Q-03-50584. Respondent Ricarcen Development Corporation (Ricarcen) was a domestic corporation engaged in renting out real estate. It was the registered owner of a parcel of land located at 53 Linaw St., Sta. Mesa Heights, Quezon City.6 This parcel of land was covered by Transfer Certificate of Title (TCT) No. RT84937 (166018)7 and was subdivided into two (2) lots.8 Ricarcen was a family corporation. Marilyn R. Soliman (Marilyn) was its president from 2001 to August 2003. The other members of the

board of directors during that time were Marilyn's mother, Erlinda Villanueva (Erlinda), her brother, Josefelix R. Villanueva (Josefelix), her aunt, Maura Rico, and her sisters, Ma. Elizabeth V. Chamorro (Elizabeth), Ma. Theresa R. Villanueva, and Annabelle R. 9 Villanueva. On October 15, 2001, Marilyn, acting on Ricarcen's behalf as its president, took out a P4,000,000.00 loan from Calubad. This loan was secured by a real estate mortgage over Ricarcen's Quezon City property covered by TCT No. RT84937 (166018), as evidenced by a Deed of Real Estate Mortgage. 10 The terms of the loan provided that Ricarcen would pay the P4,000,000.00 loan within a period of six (6) months with "a compounded interest at the rate of FIVE (5%) percent for the first month and THREE (3%) percent for [the] succeeding months and a penalty of ONE (1%) percent per month on the principal sum in case of delay in payment."11 The terms of the loan also provided that the first monthly interest payment of P200,000.00 would be deducted from the loan proceeds.12

On December 6, 2001, Ricarcen, through Marilyn, and Calubad amended and increased the loan to P5,000,000.00 in the Amendment of Deed of Mortgage (Additional Loan of P1,000,000.00),13 with the same property used as security and under the same terms and conditions as those of the original Deed of Real Estate Mortgage.

failed to pay its loan, Calubad initiated extrajudicial foreclosure proceedings on the real estate mortgage. The auction sale was set on March 19, 2003.18

On May 8, 2002, Ricarcen, again acting through Marilyn, took out an additional loan of 2,000,000.00 from Calubad, as evidenced by the executed Second Amendment of Deed of Mortgage (Additional Loan of P2,000,000.00).14

On April 10, 2003, the Certificate of Sale was annotated on TCT No. RT84937 (166018).20

To prove her authority to execute the three (3) mortgage contracts in Ricarcen's behalf, Marilyn presented Calubad with a Board Resolution dated October 15, 2001.15 This Resolution empowered her to borrow money and use the Quezon City property covered by TCT No. RT-84937 (166018) as collateral for the loans. Marilyn also presented two (2) Secretary's Certificates dated December 6, 200116 and May 8, 2002,17 executed by Marilyn's sister and Ricarcen's corporate secretary, Elizabeth. Sometime in 2003, after Ricarcen

Calubad was the highest bidder during the scheduled auction sale; thus, on March 27, 2003, he was issued a Certificate of Sale.19

Ricarcen claimed that it only learned of Marilyn's transactions with Calubad sometime in July 2003.21 Upon confirming that the Quezon City property had indeed been mortgaged, foreclosed, and sold to Calubad as a result of Marilyn's actions, Ricarcen's board of directors removed her as president and appointed Josefelix as its new president. Josefelix was also authorized to initiate the necessary court actions to protect Ricarcen's interests over the Quezon City property.22 On September 9, 2003, Ricarcen filed its Complaint for Annulment of Real Estate Mortgage and

Extrajudicial Foreclosure of Mortgage and Sale with Damages against Marilyn, Calubad, and employees of the Registry of Deeds of Quezon City and of the Regional Trial Court of Quezon City.23 On October 9, 2003, the Clerk of Court and Ex-Officio Sheriff of the Regional Trial Court of Quezon City. Atty. Mercedes S. Gatmaytan, was discharged as party-defendant.24 In its Complaint, Ricarcen claimed that it never authorized its former president Marilyn to obtain loans from Calubad or use the Quezon City property as collateral for the loans.25 On the other hand, Calubad insisted that the incidents which led to the foreclosure and sale of the Quezon City property were all above board and were not marked with irregularity. Furthermore, he asserted that he exercised the necessary diligence required under the circumstances by requiring Marilyn to submit the necessary documents to prove her authority from Ricarcen. Calubad likewise argued that even if Ricarcen did not authorize Marilyn, it was already estopped from denying her authority since the loan proceeds

had been released and Ricarcen had benefited from them.26 For their part, spouses Marilyn and Napoleon Soliman denied any knowledge of or participation in the allegedly falsified documents and claimed that the falsification was perpetrated by their broker, Nena leo, and Calubad's broker, a certain Malou, without their permission.27 On January 6, 2009, the Regional Trial Court28 granted Ricarcen's complaint and annulled the mortgage contracts, extrajudicial foreclosure, and sale by public auction. The Regional Trial Court held that Marilyn failed to present a special power of attorney as evidence of her authority from Ricarcen. The lack of a special power of attorney should have been enough for Calubad to be put on guard and to require further evidence of Marilyn's authority from Ricarcen.29 The Regional Trial Court also ruled that the Board Resolution and Secretary's Certificates, which were supposedly executed by Ricarcen's Board of Directors, had been unmasked to be merely fabricated. Furthermore, Atty. William S.

Merginio, who purportedly notarized the Board Resolution and Secretary's Certificates, denied that he notarized those documents since they did not appear in his notarial register.30 The Regional Trial Court then dismissed the complaint against the Registry of Deeds employees for Ricarcen's failure to show any irregularity in the performance of their duties.31 The dispositive portion of the Regional Trial Court Decision read: WHEREFORE, premises considered, judgment is hereby rendered in favor of plaintiff Ricarcen Development Corporation and further: 1. Declaring as null and void the following: 

Deed of Real Estate Mortgage dated 15 October 2001;



Amendment of Real Estate Mortgage dated 06 December 2001;



Second Amendment of Deed of Mortgage

dated 08 2002;and 

May

Extrajudicial Foreclosure of Mortgage and Sale by public auction in favor of Arturo Calubad[;]

2. Canceling TCT No. 261881 in the name of Arturo Calubad and reinstating TCT No. RT-84937 (166018), both by the Regist[ry] of Deeds of Quezon City; and 3. Ordering defendants spouses Solimans and Calubad to pay jointly and severally damages in the amount of Two Hundred Fifty Thousand Pesos (Php250,000.00) as attorney's fees and costs of litigation. SO ORDERED.32 Only Calubad appealed the Regional Trial Court Decision to the Court of Appeals. On January 25, 2012, the Court of Appeals dismissed Calubad's appeal and affirmed the Regional Trial Court Decision. The Court of Appeals emphasized that the rule on the presumption of validity of a notarized board resolution and of a secretary's certificate is not

absolute and may be validly overcome by contrary 33 evidence;  thus: In order to defeat the presumption, it is incumbent upon RICARCEN to prove "with clear, convincing, strong and irrefutable proof' that the board resolution and secretary's certificates purportedly authorizing Marilyn Soliman to secure a loan and mortgage the subject property in behalf of the corporation are, in fact, invalid. In the case at bench, RICARCEN was able to discharge this burden. The truth of the contents of the board resolution and secretary's certificates relied upon by Calubad had been overthrown by the records of this case which clearly show that such documents were not in fact executed by the board of directors of RICARCEN, and are, therefore, fabricated.34 The Court of Appeals also disregarded Calubad's argument that Ricarcen was guilty of laches, ruling that Ricarcen's board of directors only found out about the mortgage contracts in July 2003, when they received a copy of the notice of foreclosure of mortage. Upon verifying with the Registry of Deeds of Quezon City, Ricarcen took immediate action by removing

Marilyn as president and instituting a case for annulment and cancellation of mortgage against Calubad and Marilyn.35 The Court of Appeals likewise set aside Calubad's argument that Ricarcen was estopped from denying the contracts. The Court of Appeals held that since Ricarcen did not know about the existence of the contracts of mortgage between Caluband and Marilyn, it could not have ratified them or knowingly accepted any benefits from the loan proceeds.36 The dispositive portion of the Court of Appeals Decision read: WHEREFORE, in view of the foregoing premises, the instant appeal is hereby ordered DISMISSED, and the appealed decision is AFFIRMED in toto. SO ORDERED.37 (Emphasis in the original) On August 10, 2012, Calubad filed his Petition38 before this Court. Petitioner claims that Ricarcen is barred by estoppel from denying Marilyn's authority to enter into a contract of loan and mortgage with Calubad for several reasons. He

argues that Ricarcen clothed Marilyn in apparent authority to act in its behalf.39 that it benefited from the loans proceeds,40 and that it impliedly agreed to the mortgage loans by paying the monthly interest payments.41 Petitioner avers that Elizabeth executed four (4) separate document which gave Marilyn the authority to secure loans, use the Quezon City property as collateral, and execute all documents needed for those purposes.42 The four (4) documents which petitioner claimed to have proved Marilyn's authority to act in behalf of Ricarcen were: a) Board Resolution dated October 15, 2001, which read: RESOLVED, AS IT IS HEREBY RESOLVED, that the President MARILYN R. SOLIMAN, is the authorized signatory of the corporation to transact any and all documents necessary for the purpose of securing monetary loan using a parcel of land owned by the corporation located at No. 53 Linaw St., Quezon City covered by TCT No. RT 84937 (166018) of the Registry of Deeds of [Quezon City] with a total area of 840 square

meters more or collateral/security.

less,

as

RESOLVED FURTHER, AS IT IS HEREBY RESOLVED, that she is authorized to sign all documents required for the monetary loan for and in behalf of the corporation.43 b) Secretary's Certificate dated October 15, 2001, which read: BE IT RESOLVED, AS IT IS HEREBY RESOLVED, that the corporation will borrow from ARTURO CALUBAD, Filipino, of legal age, and residing at 89 East Maya Philam Homes Village, Quezon City. FURTHERMORE, BE IT RESOLVED, that the corporation is authorizing MARILYN R. SOLIMAN, President, to sign for and in behalf of the corporation.44 c) Secretary's Certificate dated December 6, 2001, which read: RESOLVED, as it is hereby resolved that the President, MARILYN R. SOLIMAN, is hereby authorized to secure ADDITIONAL LOAN OF [P]1,000,000.00 from MR. ARTURO CALUBAD, using as collateral two (2) parcels of land with the improvements existing thereon, situated in Quezon City, Metro Manila, covered and embraced by Transfer Certificate of Title No. RT-

84937 (166018) of the Registry of Deeds of Quezon City, Metro Manila, and in such amount that she deems it most proper and beneficial to the corporation. RESOLVED FINALLY, that the President is hereby authorized to sign Amendment of Deed of Real Estate Mortgage, Acknowledgment Receipt and other pertinent documents and get and receive the loan either in cash or check/s with any bank lawfully doing business in the Philippines for and in behalf of the corporation.45 d) Secretary's Certificate dated May 8, 2002, which read: BE IT RESOLVED, AS IT IS HEREBY RESOLVED, that the corporation will secure additional monetary loan of P2,000,000.00 from ARTURO CALUBAD, Filipino, of legal age, and residing at 89 East Maya Philam Homes Village, Quezon City, using a parcel of land owned by the corporation located at No. 53 Linaw St., Quezon City covered by TCT No. RT-84937 (166018) of the Registry of Deeds of [Quezon City] with a total area of 840 square meters more or less, as collateral/security. FURTHERMORE, BE IT RESOLVED, that the corporation is authorizing

MARILYN R. SOLIMAN, President, to sign for and in behalf of the corporation.46 All these four (4) documents were signed by Elizabeth in her capacity as Ricarcen's corporate secretary. Elizabeth later on denied signing any of these four (4) documents cited by petitioner, saying that she regularly signed blank documents and left them with her sister Marilyn. She opined that the Board Resolution and Secretary's Certificates, which purportedly gave Marilyn the authority to transact with petitioner in Ricarcen's behalf, might have been some of the blank documents she had earlier signed.47 However, petitioner asserts that the fact that Elizabeth entrusted signed, blank documents to Marilyn proved that Ricarcen authorized her to secure loans and use its properties as collateral for the loans.48 Petitioner also points out that Marilyn had possession of the owner's duplicate copy of TCT No. RT-84937 (166018), and thus, he had no reason but to believe that she was authorized by Ricarcen to deal and transact in its behalf. 49 Additionally, the loan proceeds were

issued through checks payable to Ricarcen, which were deposited in its bank account and were cleared. As further evidence of Ricarcen's receipt of the loan proceeds, petitioner presented several checks drawn and issued by Elizabeth or Erlinda, jointly with Marilyn, representing loan payments.50 Petitioner also presented several withdrawal slips signed by either Elizabeth or Erlinda, jointly with Marilyn, authorizing a certain Lilydale Ombina to repeatedly withdraw from Ricarcen's bank account.51 Petitioner likewise presented several checks drawn from Ricarcen's bank account, issued by Elizabeth or Erlinda, jointly with Marilyn, payable to third persons or to cash.52 Petitioner maintains that the foregoing evidence is indubitable proof that the loan proceeds have been used by Ricarcen.53 Petitioner then claims that Ricarcen, in a check drawn and issued by Erlinda and Marilyn, paid the 3% monthly interest for the first loan of P4,000,000.00. This bolstered his belief that Ricarcen and its officers knew of and approved that loan,

and induced him to grant Ricarcen, through Marilyn, additional loans.54 Petitioner asserts that the acts of Elizabeth and Erlinda are equivalent to clothing Marilyn with apparent authority to deal with him and use the Quezon City property as collateral: Their acts are also a manifestation of their acquiescence to Marilyn Soliman's availment of loans and execution of real estate mortgage with petitioner. Thus, even if Marilyn Soliman had acted without or in excess of her actual authority, if she acted within the scope of an apparent authority with which [Ricarcen] has clothed her by holding her out or permitting her to appear as having such authority, [Ricarcen] is bound thereby in favor of petitioner who in good faith relied on such apparent authority.55 On November 12, 2012, this Court required Ricarcen to comment on the Petition.56 On February 4, 2013, Ricarcen filed its Comment,57 where it claims that the Petition raised questions of fact, which are not proper in a petition for review on certiorari. It also avers that petitioner failed to raise

any exceptional circumstances, and thus, should be dismissed 58 outright. Ricarcen asserts that while the documents it purportedly issued enjoy the presumption of validity, this presumption is not absolute and it has shown convincing evidence as to the invalidity of the Board Resolution and of the Secretary's Certificates.59 Ricarcen points out that Marilyn clearly acted without authority when she entered into a loan and mortgage agreement with petitioner. Being void, the contracts of loan and mortgage can never be ratified.60 Ricarcen also denied that it was guilty of laches since it only learned about Marilyn's loan with Calubad in July 2003, when it received a notice of foreclosure. Upon lean1ing of the extrajudicial foreclosure and sale by public auction, it immediately removed Marilyn as president and authorized Josefelix to file the necessary actions to protect Ricarcen's interests.61 Ricarcen likewise claims that it cannot be held guilty of estoppel in pais since it never induced nor led

petitioner to believe that Marilyn was duly authorized to take out a loan and to mortgage the Quezon City property as collateral. Additionally, "it did not knowingly accept any benefit" from the loan proceeds.62 Ricarcen declares that petitioner either connived with Marilyn or, at the very least, failed to exercise reasonable diligence and prudence in ascertaining Marilyn's supposed agency from Ricarcen.63 On March 11, 2013, this Court noted Ricarcen's Comment and required Calubad to reply to the Comment,64 On May 9, 2013, Calubad filed his Reply,65 where he denied that he raised purely questions of fact in his Petition since the issue raised was "the law and jurisprudence applicable to the facts of this case, or whether the conclusion drawn by the Court of Appeals from those facts is correct or not."66 Petitioner likewise claims that the findings of the Court of Appeals were contradicted by the evidence on record, and hence, were not conclusive or binding on the parties.67

On April 6, 2016, this Court noted Calubad's motion for early decision dated March 21, 2016.68 The only issue presented for this Court's resolution is whether or not Ricarcen Development Corporation is estopped from denying or disowning the authority of Marilyn R. Soliman, its former President, from entering into a contract of loan and mortgage with Arturo C. Calubad. The petition is meritorious. I The Rules of Court categorically state that a review of appeals filed before this Court is "not a matter of right, but of sound judicial discretion."69 The Rules of Court further require that only questions of law should be raised in petitions filed under Rule 4570 since factual questions are not the proper subject of an appeal by certiorari. It is not this Court's function to analyze or weigh all over again evidence that has already been considered in the lower courts.71 However, these exceptions. Medina

rules v.

admit Mayor

Asistio, Jr.72 listed down 10 recognized exceptions: (1) When the conclusion is a finding grounded entirely on speculation, surmises or conjectures . . .; (2) When the inference made is manifestly mist en, absurd or impossible . . .; (3) Where there is a grave abuse of discretion . . .; (4) When the judgment is based on a misapprehension of facts . . .; (5) When the findings of fact are conflicting . . .; (6) When the Court of Appeals, in making its findings, went beyond the issues of the case and the same is contrary to the admissions of both appellant and appellee . . .; (7) The findings of the Court of Appeals are contrary to those of the trial court . . .; (8) When the findings of fact are conclusions without citation of specific evidence on which they are based . . .; (9) When the facts set forth in the petition as well as in the petitioners' main and reply briefs are not disputed by the respondents . . .; and (10) The finding of fact of the Court of Appeals is premised on the supposed absence of evidence and is contradicted by the evidence on record...73 Pascual v. Burgos74 instructed that parties must demonstrate by convincing evidence that the case

clearly falls under the exceptions to the rule: Parties praying that this court review the factual findings of the Court of Appeals must demonstrate and prove that the case clearly falls under the exceptions to the rule. They have the burden of proving to this court that a review of the factual findings is necessary. Mere assertion and claim that the case falls under the exceptions do not suffice.75

powers of all corporations formed under this Code shall be exercised, all business conducted and all property of such corporations controlled and held by the board of directors or trustees to be elected from among the holders of stocks, or where there is no stock, from among the members of the corporation, who shall hold office for one (1) year until their successors are elected and qualified.

Petitioner claims that his case falls under the exceptions to the general rule on a Rule 45 appeal since the findings of the lower courts are contradicted by the evidence on record.76 After a careful study of the records, this Court is convinced that this case falls under the exceptions cited in Medina, particularly in that "the inference made is manifestly mistaken," making a Rule 45 appeal proper.

However, the board of directors may validly delegate its functions and powers to its officers or agents. The authority to bind the corporation is derived from law, its corporate by-laws, or directly from the board of directors, "either expressly or impliedly by habit, custom or acquiescence in the general course of business."77

II As a corporation, Ricarcen exercises its powers and conducts its business through its board of directors, as provided for by Section 23 of the Corporation Code: Section 23. The board of directors or trustees. - Unless otherwise provided in this Code, the corporate

The general principles of agency govern the relationship between a corporation and its representatives.78 Article 131779 of the Civil Code similarly provides that the principal must delegate the necessary authority before anyone can act on his or her behalf. Nonetheless, law and jurisprudence recognize actual authority and apparent authority as the two (2)

types of authorities conferred upon a corporate officer or agent in dealing with third persons.80 Actual authority can either be express or implied. Express actual authority refers to the power delegated to the agent by the corporation, while an agent's implied authority can be measured by his or her prior acts which have been ratified by the corporation or whose benefits have been accepted by the corporation.81 On the other hand, apparent authority is based on the principle of estoppel. The Civil Code provides: Article 1431. Through estoppel an admission or representation is rendered conclusive upon the person making it, and cannot be denied or disproved as against the person relying thereon. .

.

.

.

Article 1869. Agency may be express, or implied from the acts of the principal, from his silence or lack of action, or his failure to repudiate the agency, knowing that another person is acting on his behalf without authority.

Agency may be oral, unless the law requires a specific form. Yao Ka Sin Trading v. Court of Appeals82 instructed that an agent's apparent authority from the principal may also be ascertained through: (1) the general manner by which the corporation holds out an officer or agent as having power to act or, in other words, the apparent authority with which it clothes him to act in general, or (2) the acquiescence in his acts of a particular nature, with actual or constructive knowledge thereof, whether within or without the scope of his ordinary powers. The doctrine of apparent authority provides that even if no actual authority has been conferred on an agent, his or her acts, as long as they are within his or her apparent scope of authority, bind the principal. However, the principal's liability is limited to third persons who are reasonably led to believe that the agent was authorized to act for the principal due to the principal's conduct.83 Apparent authority is determined by the acts of the principal and not by the acts of the agent.84 Thus, it is incumbent upon Calubad to prove

how Ricarcen's acts led him to believe that Marilyn was duly authorized to represent it. III As the former president of Ricarcen, it was within Marilyn's scope of authority to act for and enter into contracts in Ricarcen's behalf. Her broad authority from Ricarcen can be seen with how the corporate secretary entrusted her with blank yet signed sheets of paper to be used at her discretion.85 She also had possession of the owner's duplicate copy of the land title covering the property mortgaged to Calubad, further proving her authority from Ricarcen.86 The records show that on October 15, 2001, Calubad drew and issued two (2) checks payable to Ricarcen representing the loan proceeds for the first mortgage. The first check was Equitable PCI Bank check number 0024416 for P2,920,000.00 and the second check was Equitable PCI Bank check number 0000461 for P600,000.00. Both checks were deposited in Ricarcen 's bank account with Banco de Oro, Banawe Branch, and were honored by the drawee bank.87

On December 6, 2001, Marilyn negotiated for an additional P1,000,000.00 loan with Calubad, under the same terms and conditions.88 From December 15, 2001 to April 15, 2002, Ricarcen paid and issued several checks payable to Calubad, which he claimed were the monthly interest payments of the mortgage loans. The following checks were drawn by Erlinda and Marilyn for Ricarcen:

(a)

Banco de Oro check number 0000067624 dated December 15, 2001 for P120,000.00;

(b)

Banco de Oro check number 0000067622 dated January 15, 2002 for P120,000.00;

(c)

Banco de Oro check number 000067626 dated February 15, 2002 for P120,000.00;

(d)

Banco de Oro check number 0000067673 dated March 6, 2002 for P30,000.00;

(e)

Banco de Oro check number 0000067625 dated March 15, 2002 for P120,000.00;

(f)

Banco de Oro check number

0000067674 dated April 6, 2002 for P30,000.00; and (g)

Banco de Oro check number 0002422 dated April 15, 2002 for P120,000.00.89

Calubad deposited the January 15, 2002 check into his Metrobank, EDSA-Caloocan Branch account, while the rest of the checks were deposited in his bank account with Equitable PCI Bank, A. De JesusEDSA Branch. All the checks from Ricarcen cleared.90 For the additional loan of P2,000,000.00 obtained on May 8, 2002, Ricarcen again issued several Banco de Oro checks dated June 15, 2002 to December 6, 2002 as payments for this loan and its monthly interest. These checks were made to Calubad's order and were drawn by either Erlinda or Elizabeth with Marilyn.91 However, Banco de Oro check number 0082424 dated June 15, 2002 for P120,000.00, Banco de Oro check number 0082425 dated July 15, 2002 for P120,000.00, and Banco de Oro check number 0082426 dated August 15, 2002 for P120,000 were all dishonored by the drawee bank for insufficiency of

funds.92

(h)

Calubad states that he no longer deposited the following checks from Ricarcen upon Marilyn's request, since she claimed that Ricarcen's funds were by then insufficient to pay the issued checks:

Banco de Oro check number 0082471 dated November 6, 2002 for P30,000.00; and

(i)

Banco de Oro check number 0082472 dated December 6, 2002 for P1,000,000.00.93

(a)

Banco de Oro check number 0082467 dated July 6, 2002 for P30,000.00;

(b)

Banco de Oro check number 0082447 dated July 8, 2002 for P60,000.00;

(c)

Banco de Oro check number 0082448 dated August 8, 2002 for P2,000,000.00;

(d)

Banco de Oro check number 0082469 dated September 6, 2002 for P30,000.00;

(e)

Banco de Oro check number 0082427 dated September 15, 2002 for P120,000.00;

(f)

Banco de Oro check number 0082470 dated October 6, 2002 for P30,000.00;

(g)

Banco de Oro check number 0082428 dated October 15, 2002 for P4,000,000.00;

Calubad could not be faulted for continuing to transact with Marilyn, even agreeing to give out additional loans, because Ricarcen clearly clothed her with apparent authority. Likewise, it reasonably appeared that Ricarcen's officers knew of the mortgage contracts entered into by Marilyn in Ricarcen's behalf as proven by the issued Banco De Oro checks as payments for the monthly interest and the principal loan. Ricarcen claimed that it never granted Marilyn authority to transact with Calubad or use the Quezon City property as collateral for the loans, but its actuations say otherwise. It appears as if Ricarcen and its officers gravely erred in putting too much trust in Marilyn. However, Calubad, as an innocent third party dealing in good faith with Marilyn, should not be made to suffer because of Ricarcen's negligence in conducting its own business affairs. This finds support in Yao Ka Sin Trading:94

Also, "if a private corporation intentionally or negligently clothes its officers or agents with apparent power to perform acts for it, the corporation will be estopped to deny that such apparent authority is real, as to innocent third persons dealing in good faith with such officers or agents."95 IV Nonetheless, petitioner's prayer for the award of damages must be denied for failing to provide factual or legal basis for the award. Moral damages are not automatically awarded when there is a breach of contract. It must also be proven that the party who breached the contract acted fraudulently or in bad faith, in wanton disregard of the contracted obligation.96 In addition, the following conditions must be met before moral damages may be awarded: (1) first, there must be an injury, whether physical, mental or psychological, clearly sustained by the claimant; (2) second, there must be culpable act or omission factually established; (3) third, the wrongful act or omission of the defendant is the proximate cause of the injury sustained by the

claimant; and (4) fourth, the award of damages is predicated on any of the cases stated in Article 2219 of the Civil Code.97 (Emphasis supplied) Petitioner failed to allege that Ricarcen acted fraudulently or wantonly when it breached the loan Md mortgage contract. Neither is this Court convinced that fraud, bad faith, or wanton disregard of its obligation can be imputed to Ricarcen due to its bad business judgment and negligence in putting too much trust in Marilyn. It was not sufficiently shown that Ricarcn was spurred by a dishonest purpose or was motivated by ill will or fraud when it assailed the contract entered into by Marilyn and Calubad. In the same manner, exemplary damages98 cannot be awarded in the absence of evidence that Ricarcen acted fraudulently or wantonly. Finally, in the absence of exemplary damages, attorney's fees, and costs of suit also cannot be recovered.99 VHEREFORE, the Petition is GRANTED. The assailed January 25, 2012 Decision and June 20, 2012 Resolution of the Court of Appeals in CA-GR. CV No. 93185

are REVERSED and SET ASIDE. Ricarcen Development Corporation's Amended Complaint in. Civil Case No. Q-03-50584 before Branch 218, Regional Trial Court, Quezon City is hereby DISMISSED for lack of merit. SO ORDERED.

[ G.R. No. 192725, August 09, 2017 ] CE CONSTRUCTION CORPORATION, PETITIONER, VS. ARANETA CENTER INC., RESPONDENT.

DECISION LEONEN, J.:

A tribunal confronted not only with ambiguous contractual terms but also with the total absence of an instrument which definitively articulates the contracting parties' agreement does not act in excess of jurisdiction when it employs aids in interpretation, such as those articulated in Articles 1370 to

1379 of the Civil Code. In so doing, a tribunal does not conjure its own contractual terms and force them upon the parties.

In addressing an iniquitous predicament of a contractor that actually renders services but remains inadequately compensated, arbitral tribunals of the Construction Industry Arbitration Commission (CIAC) enjoy a wide latitude consistent with their technical expertise and the arbitral process' inherent inclination to afford the most exhaustive means for dispute resolution. When their awards become the subject of judicial review, courts must defer to the factual findings borne by arbitral tribunals' technical expertise and irreplaceable experience of presiding over the arbitral process. Exceptions may be availing but only in instances when the integrity of the arbitral tribunal itself has been put in jeopardy. These grounds are more exceptional than those which are regularly sanctioned in Rule 45 petitions.

This resolves a Petition for Review on Certiorari[1] under Rule 45 of the 1997 Rules of Civil Procedure, praying that

the assailed April 28, 2008 Decision[2] and July 1, 2010 Amended Decision[3] of the Court of Appeals in CA-G.R. SP No. 96834 be reversed and set aside. It likewise prays that the October 25, 2006 Decision[4] of the CIAC Arbitral Tribunal be reinstated.

The CIAC Arbitral Tribunal October 25, 2006 Decision awarded a total sum of P217,428,155.75 in favor of petitioner CE Construction Corporation (CECON). This sum represented adjustments in unit costs plus interest, variance in take-out costs, change orders, time extensions, attendance fees, contractor-supplied equipment, and costs of arbitration. This amount was net of the countervailing awards in favor of respondent Araneta Center, Inc. (ACI), for defective and incomplete works, permits, licenses and other advances.[5]

The assailed Court of Appeals April 28, 2008 Decision modified the CIAC Arbitral Tribunal October 25, 2006 Decision by awarding a net amount of P82,758,358.80 in favor of CECON.[6] The Court of Appeals July 1, 2010 Amended Decision adjusted this amount to P93,896,335.71.[7]

Petitioner CECON was a construction contractor, which, for more than 25 years, had been doing business with respondent ACI, the developer of Araneta Center, Cubao, Quezon City. [8]

In June 2002, ACI sent invitations to different construction companies, including CECON, for them to bid on a project identified as "Package #4 Structure/Mechanical, Electrical, and Plumbing/Finishes (excluding Part A Substructure)," a part of its redevelopment plan for Araneta Center Complex.[9] The project would eventually be the Gateway Mall. As described by ACI, "[t]he Project involved the design, coordination, construction and completion of all architectural and structural portions of Part B of the Works[;] and the construction of the architectural and structural portions of Part A of the Works known as Package 4 of the Araneta Center Redevelopment Project."[10]

As part of its invitation to prospective contractors, ACI furnished bidders with Tender Documents, consisting of:

Volume I: Tender Invitation, Project Description, Instructions to Tenderers, Form of Tender, Dayworks, Preliminaries and General Requirements, and Conditions of Contract;

Volume II: Technical Specifications for the Architectural, Structural, Mechanical, Plumbing, Fire Protection and Electrical Works; and

This is a Lump Sum Contract and the price is a fixed price not subject to measurement or recalculation should the actual quantities of work and materials differ from any estimate available at the time of contracting, except in regard to Cost-Bearing Changes which may be ordered by the Owner which shall be valued under the terms of the Contract in accordance with the Schedule of Rates, and with regard to the Value Engineering Proposals under Clause 27. The Contract Sum shall not be adjusted for changes in the cost of labour, materials or other matters.[12]

TENDER AND CONTRACT Addenda Nos. 1, 2, 3, and 4 relating to modifications to portions of the Tender Documents.[11]

Fixed Price Contract

The Tender Documents described the project's contract sum to be a "lump sum" or "lump sum fixed price" and restricted cost adjustments, as follows:

The Contract Sum payable to the Contactor is a Lump Sum Fixed Price and will not be subject to adjustment, save only where expressly provided for within the Contract Documents and the Form of Agreement.

6 TYPE OF CONTRACT

6.1

The Contract Sum shall not be subject to any adjustment "in respect of rise and fall in the cost of materials[,] labor,

plant, equipment, exchange rates or any other matters affecting the cost of execution of Contract, save only where expressly provided for within the Contract Documents or the Form of Agreement.

The Contract Sum shall further not be subject to any change in subsequent legislation, which causes additional or reduced costs to the Contractor.[13] The bidders' proposals for the project were submitted on August 30, 2002. These were based on "design and construct" bidding.[14]

CECON submitted its bid, indicating a tender amount of P1,449,089,174.00. This amount was inclusive of "both the act of designing the building and executing its construction." Its bid and tender were based on schematic drawings, i.e., conceptual designs and suppositions culled from ACI's Tender Documents. CECON's proposal "specifically stated that its bid was valid for only ninety (90) days, or only until 29 November 2002." This tender proposed a total of 400 days, or until January 10, 2004, for the

implementation and completion of the project.[15]

CECON offered the lowest tender amount. However, ACI did not award the project to any bidder, even as the validity of CECON's proposal lapsed on November 29, 2002. ACI only subsequently informed CECON that the contract was being awarded to it. ACI elected to inform CECON verbally and not in writing.[16]

In a phone call on December 7, 2002, ACI instructed CECON to proceed with excavation works on the project. ACI, however, was unable to deliver to CECON the entire project site. Only half, identified as the Malvar-to-Roxas portion, was immediately available. The other half, identified as the Roxas to-Coliseum portion, was delivered only about five (5) months later.[17]

As the details of the project had yet to be finalized, ACI and CECON pursued further negotiations. ACI and CECON subsequently agreed to include in the project the construction of an office tower atop the portion identified as Part

A of the project. This escalated CECON's project cost to P1,582,810,525.00.[18]

After further negotiations, the project cost was again adjusted to P1,613,615,244.00. Still later, CECON extended to ACI a P73,615,244.00 discount, thereby"reducing its offered project cost to P1,540,000.00.[19]

Despite these developments, ACI still failed to formally award the project to CECON. The parties had yet to execute a formal contract. This prompted CECON to write a letter to ACI, dated December 27, 2002,[20] emphasizing that the project cost quoted to ACI was "based upon the prices prevailing at December 26, 2002" price levels.[21]

By January 2003 and with the project yet to be formally awarded, the prices of steel products had increased by 5% and of cement by P5.00 per bag. On January 8, 2003, CECON again wrote ACI notifying it of these increasing costs and specifically stating that

further delays may affect the contract sum.[22]

Still without a formal award, CECON again wrote to ACI on January 21, 2003[23] indicating cost and time adjustments to its original proposal. Specifically, it referred to an 11.52% increase for the cost of steel products, totalling P24,921,418.00 for the project; a P5.00 increase per bag of cement, totalling P3,698,540.00 for the project; and costs incurred because of changes to the project's structural framing, totalling P26,011,460.00. The contract sum, therefore, needed to be increased to P1,594,631,418.00. CECON also specifically stated that its tender relating to these adjusted prices were valid only until January 31, 2003, as further price changes may be forthcoming. CECON emphasized that its steel supplier had actually already advised it of a forthcoming 10% increase in steel prices by the first week of February 2003. CECON further impressed upon ACI the need to adjust the 400 days allotted for the completion of the project.[24]

On February 4, 2003, ACI delivered to CECON the initial tranche of its down

payment for the project. By then, prices of steel had been noted to have increased by 24% from December 2002 prices. This increase was validated by ACI.[25]

Subsequently, ACI informed CECON that it was taking upon itself the design component of the project, removing from CECON's scope of work the task of coming up with designs.[26]

On June 2, 2003, ACI finally wrote a letter[27] to CECON indicating its acceptance of CECON's August 30, 2002 tender for an adjusted contract sum of P1,540,000.00 only: Araneta Center, Inc. (ACI) hereby accepts the C-E Construction Corporation (CEC) tender dated August 30, 2002, submitted to ACI in the adjusted sum of One Billion Five Hundred Forty Million Pesos Only (P1,540,000,000.00), which sum includes all additionally quoted and accepted items within this acceptance letter and attachments, Appendix A, consisting of one (1) page, and Appendix B, consisting of seven (7) pages plus attachments, which sum of One Billion Five Hundred Forty Million

Pesos Only (P1,540,000,000.00) is inclusive of any Government Customs Duty and Taxes including Value Added Tax (VAT) and Expanded Value Added Tax (EVAD, and which sum is hereinafter referred to as the Contract Sum.[28] Item 4, Appendix B of this acceptance letter explicitly recognized that "all design except support to excavation sites, is now by ACI."[29] It thereby confirmed that the parties were not bound by a design-and-construct agreement, as initially contemplated in ACI's June 2002 invitation, but by a construct-only agreement. The letter stated that "[CECON] acknowledge[s] that a binding contract is now existing."[30] However, consistent with ACI's admitted changes, it also expressed ACI's corresponding undertaking: "This notwithstanding, formal contract documents embodying these positions will shortly be prepared and forwarded to you for execution."[31]

Despite ACI's undertaking, no formal contract documents were delivered to CECON or otherwise executed between ACI and CECON.[32]

As it assumed the design aspect of the project, ACI issued to CECON the construction drawings for the project. Unlike schematics, these drawings specified "the kind of work to be done and the kind of material to be used."[33] CECON laments, however, that "ACI issued the construction drawings in piece-meal fashion at times of its own choosing."[34] From the commencement of CECON's engagement until its turnover of the project to ACI, ACI issued some 1,675 construction drawings. CECON emphasized that many of these drawings were partial and frequently pertained to revisions of prior items of work.[35] Of these drawings, more than 600 were issued by ACI well after the intended completion date of January 10, 2004: Drawing No. 1040 was issued on January 12, 2004, and the latest, Drawing No. 1675, was issued on November 26, 2004.[36]

Apart from shifting its arrangement with CECON from design-and-construct to construct only, ACI introduced other changes to its arrangements with CECON. CECON underscored two (2) of the most notable of these changes which impelled it to seek legal relief.

First, on January 30, 2003, ACI issued Change Order No. 11,[37] which shifted the portion identified as Part B of the project from reinforced concrete framing to structural steel framing. Deleting the cost for reinforced concrete framing meant removing P380,560,300.00 from the contract sum. Nevertheless, replacing reinforced concrete framing with structural steel framing "entailed substitute cost of Php217,585,000, an additional Php44,281,100 for the additional steel frames due to revisions, and another Php1,950,000 for the additional pylon."[38]

Second, instead of leaving it to CECON, ACI opted to purchase on its own certain pieces of equipmentelevators, escalators, chillers, generator sets, indoor substations, cooling towers, pumps, and tankswhich were to be installed in the project. This entailed "take-out costs"; that is, the value of these pieces of equipment needed to be removed from the total amount due to CECON. ACI considered a sum totalling P251,443,749.00 to have been removed from the contract sum due to

CECON. This amount of P251,443,749.00 was broken down, as follows: (a) For elevators/escalators, PhP106,000,000; (b) For Chillers, PhP41,152,900; (c) For Generator PhP53,040,000; (d) For Indoor PhP23,024,150;

Sets,

Substation,

(e) For Cooling Towers, PhP5,472,809; and (f) For Pumps PhP22,753,890.[39]

and

costs claimed by ACI. It instead claimed P26,892,019.00 by way of compensation for the work that it rendered.[41]

With many changes to the project and ACI's delays in delivering drawings and specifications, CECON increasingly found itself unable to complete the project on January 10, 2004. It noted that it had to file a total of 15 Requests for Time Extension from June 10, 2003 to December 15, 2003, all of which ACI failed to timely act on.[42]

Tanks,

CECON avers that in removing the sum of P251,443,749.00, ACI "simply deleted the amount in the cost breakdown corresponding to each of the items taken out in the contract documents."[40] ACI thereby disregarded that the corresponding stipulated costs pertained not only to the acquisition cost of these pieces of equipment but also to so-called "builder's works" and other costs relating to their preparation for and installation in the project. Finding it unjust to be performing auxiliary services practically for free, CECON proposed a reduction in the take-out

Exasperated, CECON served notice upon ACI that it would avail of arbitration. On January 29, 2004, it filed with the CIAC its Request for Adjudication.[43] It prayed that a total sum of P183,910,176.92 representing adjusted project costs be awarded in its favor.[44]

On March 31, 2004, CECON and ACI filed before the CIAC a Joint Manifestation[45] indicating that some issues between them had already been settled. Proceedings before the CIAC were then suspended to enable

CECON and ACI to arrive at an amicable settlement.[46] On October 14, 2004, ACI filed a motion before the CIAC noting that it has validated P85,000,000.00 of the total amount claimed by CECON. It prayed for more time to arrive at a settlement.[47]

In the meantime, CECON completed the project and turned over Gateway Mall to ACI.[48] It had its blessing on November 26, 2004.[49]

As negotiations seemed futile, on December 29, 2004, CECON filed with the CIAC a Motion to Proceed with arbitration proceedings. ACI filed an Opposition.[50]

After its Opposition was denied, ACI filed its Answer dated January 26, 2005.[51] It attributed liability for delays to CECON and sought to recover counterclaims totalling P180,752 297.84. This amount covered liquidated damages for CECON's supposed delays, the cost of defective works which had to be rectified, the cost of procuring permits and licenses, and ACI's other advances.[52]

On February 8, 2005, ACI filed a Manifestation and Motion seeking the CIAC's clearance for the parties to enter into mediation. Mediation was then instituted with Atty. Sedfrey Ordonez acting as mediator.[53]

After mediation failed, an arbitral tribunal was constituted through a March 16, 2005 Order of the CIAC. It was to be composed of Dr. Ernesto S. De Castro, who acted as Chairperson with Engr. Reynaldo T. Viray and Atty. James S. Villafranca as members.[54]

ACI filed a Motion for Reconsideration of the CIAC March 16, 2005 Order. This was denied in the Order dated March 30, 2005.[55]

In the Order dated April 1, 2005, the CIAC Arbitral Tribunal set the preliminary conference on April 13, 2005.[56]

At the preliminary conference, CECON indicated that, the total sum it was entitled to recover from ACI needed to

be adjusted to P324,113,410.08. The CIAC Arbitral Tribunal, thus, directed CECON to file an Amended Request for Adjudication/Amended Complaint. [57]

Following the filing of CECON's Amended Request for Adjudication/Amended Complaint and the ensuing responsive pleadings, another preliminary conference was set on May 13, 2005. The initial hearing of the case was then set on June 10, 2005.[58]

At the initial hearing, the CIAC Arbitral Tribunal resolved to exclude the amount of P20,483,505.12 from CECON's claims as these pertained to unpaid accomplishments that did not relate to the issue of cost adjustments attributed to ACI, as originally pleaded by CECON.[59]

Following the conduct of hearings, the submission of the parties' memoranda and offers of exhibits, the CIAC Arbitral Tribunal rendered its Decision on October 25, 2006. It awarded a total of P229,223,318.69 to CECON, inclusive

of the costs of arbitration. It completely denied ACI's claims for liquidated damages, but awarded to ACI a total of P11,795,162.93 on account of defective and rectification works, as well as permits, licenses, and other advances.[60] Thus, the net amount due to CECON was determined to be P217,428,155.75.

The CIAC Arbitral Tribunal noted that while ACI's initial invitation to bidders was for a lump-sum design-andconstruct arrangement, the way that events actually unfolded clearly indicated a shift to an arrangement where the designs were contingent upon ACI itself. Considering that the premise for CECON's August 30, 2002 lump-sum offer of P1,540,000.00 was no longer availing, CECON was no longer bound by its representations in respect of that lump-sum amount. It may then claim cost adjustments totalling P16,429,630.74, as well as values accruing to the various change orders issued by ACI, totalling P159,827,046.94.[61]

The CIAC Arbitral Tribunal found ACI liable for the delays. This entitled CECON to extended overhead costs

and the ensuing extension cost of its Contractor's All Risk Insurance. For these costs, the CIAC Arbitral Tribunal awarded CECON the total amount of P16,289,623.08. As it was ACI that was liable for the delays, the CIAC Arbitral Tribunal ruled that ACI was not entitled to liquidated damages.[62]

The CIAC Arbitral Tribunal ruled that CECON was entitled to a differential in take out costs representing builder's works and related costs with respect to the equipment purchased by ACI. This differential cost was in the amount of P15,332,091.47.[63] The CIAC Arbitral Tribunal further noted that while ACI initially opted to purchase by itself pumps, tanks, and cooling towers and removed these from CECON's scope of work, it subsequently elected to still obtain these through CECON. Considering that the corresponding amount deducted as take-out costs did not encompass the overhead costs and profits under day work, which should have accrued to CECON because of these equipment, the CIAC Arbitral Tribunal ruled that CECON was entitled to 18% day work rate or a total of P21,267,908.00.[64]

The CIAC Arbitral Tribunal also found that, apart from adjusted costs incurred on account of ACI's own activities, it also became necessary for CECON, as main contractor, to continue extending auxiliary services to the project's subcontractors because of the delays. Thus, the CIAC Arbitral Tribunal awarded CECON attendance fees-the main contractor's mark-up for auxiliary services extended to subcontractors totalling P14,335,674.88. This amount was lower than the original amount prayed for by CECON (i.e., P19,544,667.81)[65] as the CIAC Arbitral Tribunal ruled that CECON may not claim attendance fees pertaining to subcontractors which directly dealt with ACI.[66]

Considering that CECON's predicament was borne by ACI's fault, the CIAC Arbitral Tribunal saw it fit to award to CECON the costs of arbitration totalling P1,083,802.58.[67]

While mainly ruling in CECON's favor, the CIAC Arbitral Tribunal found CECON liable for discolored and mismatched tiles. It noted that CECON had engaged the services of a subcontractor for the installation of

tiles, for which it claimed attendance fees. Thus, it awarded P7,980,000.00 to ACI.[68] In addition, it found CECON liable to ACI for amounts paid in advance for permits and licenses for the additional office tower, electrical consumption, and garbage collection. Thus, it awarded another P3,815,162.93 to ACI.[69]

The dispositive portion of the CIAC Arbitral Tribunal Decision read: WHEREFORE, Respondent is hereby ordered to pay the Claimant the amount of PESOS TWO HUNDRED SEVENTEEN MILLION, FOUR HUNDRED TWENTY-EIGHT THOUSAND, ONE HUNDRED FIFTY[-]FIVE PESOS AND SEVENTY[-]FIVE CENTAVOS (Php217,428,155.75) within thirty (30) days upon promulgation of the award. Interest 6% per annum shall be imposed on the award for any balance remaining from the promulgation of the award up to the time the award becomes final and executory. Thereafter, interest of 12% per annum shall be imposed on any balance of the award until fully paid.

SO ORDERED.[70]

On December 4, 2006, ACI filed before the Court of Appeals a Petition for Review[71] under Rule 43 of the 1997 Rules of Civil Procedure.

In the meantime, on December 28, 2006, the CIAC Arbitral Tribunal issued an Order[72] acknowledging arithmetical errors in its October 25, 2006 Decision, Thus, it modified its October 25, 2006 Decision, indicating that the net amount due to CECON was P231,357,136.72, rather than P217,428,155.75.[73]

In its assailed April28, 2008 Decision, [74] the Court of Appeals reduced the award in favor of CECON to P114,324,605.00 and increased the award to ACI to P31,566,246.20.[75]

The Court of Appeals held as inviolable the lump-sum fixed price arrangement between ACI and CECON. It faulted the CIAC Arbitral Tribunal for acting in excess of jurisdiction as it supposedly took it upon itself to unilaterally modify the arrangement between ACI and CECON.[76]

Thus, the Court of Appeals deleted the CIAC Arbitral Tribunal's award representing cost adjustments. However, the Court of Appeals also noted that in ACI's and CECON's March 30, 2004 Joint Ma11ifestation before CIAC, ACI conceded that P10,266,628.00 worth of cost adjustments was due to CECON and undertook to pay CECON that amount. The Court of Appeals, hence, maintained a P10,266,628.00 award of cost adjustment in favor of CECON. [77]

On the cost increases borne by Change Order No. 11-the shift from reinforced concrete to structural steel framing-and by transitions from schematic diagrams to construction drawings, the Court of Appeals dismissed the CIAC Arbitral Tribunals award to CECON as arising from "pity" and unwarranted by the lump-sum, fixed-price arrangement.[78]

The Court of Appeals held ACI liable to CECON for the sum of P12,672,488.36 for miscellaneous change orders, which it construed to be "separate contracts that have been entered into at the time [ACI] required them."[79] It

likewise held ACI liable for P1,132,946.17 representing the balance of 12 other partially paid change orders.[80]

The Court of Appeals noted that CECON was not entitled to time extensions because the arrangement between ACI and CECON had never been altered. Consequently, it was not entitled to acceleration co ts, additional overhead, ru1d reimbursement for extending the Contractor's All Risk Insurance.[81] Conversely, the Court of Appeals held CECON liable for delays thereby entitling ACI to liquidated damages corresponding to 10% of the supposed contract sum of P1,540,000,000.00, or P15,400,000.00.[82]

Also on account of the supposed lumpsum arrangement, the Court of Appeals held that CECON was not entitled to attendance fees on contract amounts increased by change order works.[83] It also stated that the rate for attendance fees, overhead, and profit for subcontractors' works remained subject to the original contract documents based on ACI's

original invitation to bidders and had never been altered.[84]

pertaining "only to 'materials' and not to equipment."[87]

Regarding attendance fees, the Court of Appeals proffered that the work attributed to subcontractors was merely work done by CECON itself, thereby negating the need for attendance fees. [85]

Finally, the Court of Appeals held that CECON was not entitled to costs of litigation considering that "no premium is to be placed on the right to litigate"[88] and since ACI could not be faulted for delays.

Concerning take-out costs, the Court of Appeals stated that CECON was in no position to propose its own take-out costs as the tender documents issued along with ACI's invitation to bidders stated that take-out costs must be based exclusively on the rates provided in the Contract Cost Breakdown. Nevertheless, as ACI had previously undertaken to pay the variance in takeout costs amounting to P3,811,289.70, the Court of Appeals concluded that an award for take-out costs in that amount was proper.[86]

The dispositive portion of the assailed Court of Appeals April 28, 2008 Decision read: WHEREFORE, based on all the foregoing, the Decision of the Arbitral Tribunal is modified as follows:

a. AWARD TO CECON NO. ISSUE

Pesos (PHP) On the CIAC Arbitral Tribunal's award for overhead costs and profits under day work, the Court of Appeals held that it was improper to grant this award based on stipulations on day works

1 Cost Adjustment

10,266,628.00 2

d. Change Order No. 11

Bookmarking Granite Tiles

Take Out Cost of Equipment

5,205,004.02

6,980,000.00 [7]

3,811,289.70

[4]

Permits, Licenses and Other Advances

3

Equipment Supplied by Owner 6,186,246.23

Change Orders 1,127,486.50 99,119,200.09

Total

a. Approved Change Orders

114,324,605.00 (sic)

1,132,946.17

b. AWARD TO ARANETA NO.

b. [Schematic Drawings] [Construction Drawings] 80,108,761.60

In addition, CECON is directed to submit all required. close-out documents within thirty (30) days from receipt of this Decision.

The parties shall bear their own costs of arbitration and litigation.

Pesos (PHP)

SO ORDERED.[89]

[5]

Acting on CECON's Motion for Reconsideration, the Court of Appeals issued its Amended Decision on July 1, 2010.[90] This Amended Decision increased the award for miscellaneous change orders to P27,601,469.32; reinstated awards for undervalued works in supplying and installing G.I.

to

15,400,000.00 12,672,488.30

31,566,246.20 (sic)

ISSUE

Liquidated Damages c. Miscellaneous Change Orders

Total

[6] Defective and Incomplete Works 3,000,000.00

sheets worth P1,209,782.50[91] and for the drilling of holes and application of epoxy worth P4,543,456.00;[92] and deleted the award for takeout costs. [93]

Increase in the costs of cement and formworks falling under cost-bearing change. 5,205,004.02 3

The dispositive portion of the assailed Court of Appeals July 1, 2010 Amended Decision read: WHEREFORE, Our Decision dated 28 April 2008 is hereby modified as follows:

I - AWARD:

Representing undervaluation of respondent's works in the supply and installation of G.I. sheets.

NO. ISSUE

130,062,581.94 b. AWARD TO ARANETA CENTER, INC. 1 Liquidated Damage (sic)

1,209,782.50

20,000,000.00

4

2

Representing Miscellaneous Change Orders.

Defective and Incomplete Works

27,601,469.32 5

a. AWARD TO CE CONSTRUCTION, INC.

TOTAL

Drilling of Holes 4,543,450.00 6

3,000,000.00 3 Bookmarking Granite Tiles 6,980,000.00 4 Permits, Licenses and other Advances

PESOS (PhP)

[Schematic Drawings] to [Construction Drawings]

1

80,108,761.60

Additional costs spent on rebars.

[7]

TOTAL

10,266,628.00

Installation of equipment supplied by owner.

36,166,246.23

2

1,127,486.50

6,186,246.23

II - COMPUTATION:

AWARD TO CE CONSTRUCTION, INC. 130,062,581.94 LESS

AWARD TO ARANETA CENTER, INC. 36,166,246.23 BALANCE PAYABLE BY ARANETA TO CECON 93,896,335.71

SO ORDERED.[94] Aggrieved at the Court of Appeals' ruling, CECON tiled the present Petition insisting on the propriety of the CIAC Arbitral Tribunal's conclusions and findings.[95] It prays that the assailed Court of Appeals decisions be reversed and that the CIAC Arbitral Tribunal October 25, 2006 Decision, as modified by its December 28, 2006 Order, be reinstated.[96]

ACI counters that the Court of Appeals July 1, 2010 Amended Decision must be upheld.[97]

ACI insists on the inviolability of its supposed agreement with CECON, as embodied in the contract documents delivered to contractors alongside the original offer to bid. It cites specific provisions of these documents such as valuation rules and required notices for extensions and changes, reckoning of losses and expenses, the ensuing liquidated damages for defects, costbearing changes and provisional sums, [98] which define parameters for permissible changes and for reckoning corresponding costs and liabilities. However, it did not attach any of these documents to its Comment or Memorandum. It also cites statutory provisions-Articles 1715[99] and 1724[100] of the Civil Code-on CECON's liabilities and the primacy of stipulated contract prices.[101]

By the inviolability their agreement, ACI insists on the supposed immutability of the stipulated contract sum and on the impropriety of the CIAC Arbitral Tribunal in writing its own terms for ACI and CECON to follow.[102] It faults the CIAC Arbitral Tribunal for erroneously reckoning the sums due to CECON, particularly in relying on factual

considerations that run afoul of contractual stipulations and on bases such as industry practices and standards, which supposedly should not have even been considered as the parties have already adduced their respective evidence.[103] It insists upon CECON's fault for delays and defects, making it liable for liquidated damages.[104]

Though nominally modifying the CIAC Arbitral Tribunal October 25, 2006 Decision, the Court of Appeals actually reversed it on the pivotal matter of the characterization of the contract between CECON and ACI. Upon its characterization of the contract as one for a lump-sum fixed price, the Court of Appeals deleted much of the CIAC Arbitral Tribunal's monetary awards to CECON and awarded liquidated damages to ACI.

On initial impression, what demands resolution is the issue of whether or not the Court of Appeals erred in characterizing the contractual arrangement between petitioner CE Construction Corporation and respondent Araneta Center, Inc. as

immutably one for a lump-sum fixed price.

However, this is not merely a matter of applying and deriving conclusions from cut and dried contractual provisions. More accurately, what is on issue is whether or not the Court of Appeals correctly held that the CIAC Arbitral Tribunal acted beyond its jurisdiction in holding that the price of P1,540,000,000.00 did not bind the parties as an immutable lump-sum. Subsumed in this issue is the matter of whether or not the Court of Appeals correctly ruled that CECON was rightfully entitled to time extensions and that intervening circumstances had made ACI liable for cost adjustments, increases borne by change orders, additional overhead costs, extended contractor's all risk insurance coverage, increased attendance fees vis-a-vis subcontractors, and arbitration costs which it awarded to CECON.

This Court limits itself to the legal question of the CIAC Arbitral Tribunal's competence. Unless any of the exceptional circumstances that warrant revisiting the factual matter of the accuracy of the particulars of every

item awarded to the parties is availing, this Court shall not embark on its own audit of the amounts owing to each.

settlement of disputes"[109] cognizant of the exceptional role of construction to "the furtherance of national development goals."[110]

I

This Court begins by demarcating the jurisdictional and technical competence of the CIAC and of its arbitral tribunals.

I.A

The Construction Industry Arbitration Commission was a creation of Executive Order No. 1008, otherwise known as the Construction Industry Arbitration Law.[105] At inception, it was under the administrative supervision of the Philippine Domestic Construction Board[106] which, in turn, was an implementing agency of the Construction Industry Authority of the Philippines (CIAP).[107] The CIAP is presently attached to the Department of Trade and Industry.[108]

The CIAC was created with the specific purpose of an "early and expeditious

Section 4 of the Construction Industry Arbitration Law spells out the jurisdiction of the CIAC: Section 4. Jurisdiction. - The CIAC shall have original and exclusive jurisdiction over disputes arising from, or connected with, contracts entered into by parties involved in construction in the Philippines, whether the dispute arises before or after the completion of the contract, or after the abandonment or breach thereof. These disputes may involve government or private contracts. For the Board to acquire jurisdiction, the parties to a dispute must agree to submit the same to voluntary arbitration.

The jurisdiction of the CIAC may include but is not limited to violation of specifications for materials and workmanship; violation of the terms of agreement; interpretation and/or application of contractual time and delays; maintenance and defects; payment, default of employer or

contractor and changes in contract cost.

Excluded from the coverage of this law are disputes arising from employeremployee relationships which shall continue to be covered by the Labor Code of the Philippines. Though created by the act of a Chief Executive who then exercised legislative powers concurrently with the Batasang Pambansa, the creation, continuing existence, and competence of the CIAC have since been validated by acts of Congress,

Republic Act No. 9184 or the Government Procurement Reform Act, enacted on January 10, 2003, explicitly recognized and confirmed the competence of the CIAC: Section 59. Arbitration. - Any and all disputes arising from the implementation of a contract covered by this Act shall be submitted to arbitration in the Philippines according to the provisions of Republic Act No. 876, otherwise known as the "Arbitration Law": Provided, however, That, disputes that are within the

competence of the Construction Industry Arbitration Commission to resolve shall be referred thereto. The process of arbitration shall be incorporated as a provision in the contract that will be executed pursuant to the provisions of this Act: Provided, That by mutual agreement, the patties may agree in writing to resort to alternative modes of dispute resolution. (Emphasis supplied) Arbitration of construction disputes through the CIAC was formally incorporated into the general statutory framework on alternative dispute resolution through Republic Act No. 9285, the Alternative Dispute Resolution Act of 2004 (ADR Law). Chapter 6, Section 34 of ADR Law made specific reference to the Construction Industry Arbitration Law, while Section 35 confirmed the CIAC's jurisdiction: CHAPTER 6 ARBITRATION OF CONSTRUCTION DISPUTES

Section 34. Arbitration of Construction Disputes: Governing Law. - The arbitration of construction disputes shall be governed by Executive Order

No. 1008, otherwise known as the Construction Industry Arbitration Law.

Section 35. Coverage of the Law. Construction disputes which fall within the original and exclusive jurisdiction of the Construction Industry Arbitration Commission (the "Commission") shall include those between or among parties to, or who are otherwise bound by, an arbitration agreement, directly or by reference whether such parties are project owner, contractor, subcontractor, fabricator, project manager, design professional, consultant, quantity surveyor, bondsman or issuer of an insurance policy in a construction project.

The Commission shall continue to exercise original and exclusive jurisdiction over construction disputes although the arbitration is "commercial" pursuant to Section 21 of this Act. I.B

The CIAC does not only serve the interest of speedy dispute resolution, it also facilitates authoritative dispute resolution. Its authority proceeds not

only from juridical legitimacy but equally from technical expertise. The creation of a special adjudicatory body for construction disputes presupposes distinctive and nuanced competence on matters that are conceded to be outside the innate expertise of regular courts and adjudicatory bodies concerned with other specialized fields. The CIAC has the state's confidence concerning the entire technical expanse of construction, defined in jurisprudence as "referring to all on-site works on buildings or altering structures, from land clearance through completion including excavation, erection and assembly and installation of components and equipment."[111]

Jurisprudence has characterized the CIAC as a quasi-judicial, administrative agency equipped with technical proficiency that enables it to efficiently and promptly resolve conflicts; [The CIAC] is a quasi-judicial agency. A quasi-judicial agency or body has been defined as an organ of government other than a court and other than a legislature, which affects the rights of private parties through either adjudication or rule-making. The very definition of an administrative

agency includes its being vested with quasi-judicial powers. The ever increasing variety of powers and functions given to administrative agencies recognizes the need for the active intervention of administrative agencies in matters calling for technical knowledge and speed in countless controversies which cannot possibly be handled by regular courts. The CIAC's primary function is that of a quasijudicial agency, which is to adjudicate claims and/or determine rights in accordance with procedures set forth in E.O. No. 1008.[112] The most recent jurisprudence maintains that the CIAC is a quasijudicial body. This Court's November 23, 2016 Decision in Fruehauf Electronics v. Technology Electronics Assembly and Management Pacific[113] distinguished construction arbitration, as well as voluntary arbitration pursuant to Article 219(14) of the Labor Code,[114] from commercial arbitration. It ruled that commercial arbitral tribunals are not quasi-judicial agencies, as they are purely ad hoc bodies operating through contractual consent and as they intend to serve private, proprietary interests. [115] In contrast, voluntary arbitration under the Labor Code and construction

arbitration operate through the statutorily vested jurisdiction of government instrumentalities that exist independently of the will of contracting parties and to which these parties submit. They proceed from the public interest imbuing their respective spheres: Voluntary Arbitrators resolve labor disputes and grievances arising from the interpretation of Collective Bargaining Agreements. These disputes were specifically excluded from the coverage of both the Arbitration Law and the ADR Law.

Unlike purely commercial relationships, the relationship between capital and labor are heavily impressed with public interest. Because of this. Voluntary Arbitrators authorized to resolve labor disputes have been clothed with quasijudicial authority.

On the other hand, commercial relationships covered by our commercial arbitratjon laws are purely private and contractual in nature. Unlike labor relationships, they do not possess the same compelling state interest that would justify state

interference into the autonomy of contracts. Hence, commercial arbitration is a purely private system of adjudication facilitated by private citizens instead of government instrumentalities wielding quasi-judicial powers.

Moreover, judicial or quasi-judicial jurisdiction cannot be conferred upon a tribunal by the parties alone. The Labor Code itself confers subject-matter jurisdiction to Voluntary Arbitrators.

Notably, the other arbitration body listed in Rule 43 the Construction Industry Arbitration Commission (CIAC) - is also a government agency attached to the Department of Trade and Industry. Its jurisdiction is likewise conferred by statute. By contrast, the subject matter urisdiction of commercial arbitrators is stipulated by the parties.[116] (Emphasis supplied, citations omitted) Consistent with the primacy of technical mastery, Section 14 of the Construction Industry Arbitration Law on the qualification of arbitrators provides:

Section 14. Arbitrators. - A sole arbitrator or three arbitrators may settle a dispute.

....

Arbitrators shall be men of distinction in whom the business sector and the government can have confidence. They shall not be permanently employed with the CIAC. Instead, thy shall render services only when called to arbitrate. For each dispute they settle, they shall be given fees. Section 8.1 of the Revised Rules of Procedure Governing Construction Arbitration establishes that the foremost qualification of arbitrators shall be technical proficiency. It explicitly enables not only lawyers but also "engineers, architects, construction managers, engineering consultants, and businessmen familiar with the construction industry" to serve as arbitrators: Section 8.1 General Qualification of Arbitrators. - The Arbitrators shall be men of distinction in whom the business sector and the government can have confidence. They shall be

technically qualified to resolve any construction dispute expeditiously and equitably. The Arbitrators shall come from different professions. They may include engineers, architects, construction managers, engineering consultants, and businessmen familiar with the construction industry and lawyers who are experienced in construction disputes. (Emphasis supplied) Of the 87 CIAC accredited arbitrators as of January 2017, only 33 are lawyers. The majority are experts from construction-related professions or engaged in related fields.[117]

Apart from arbitrators, technical experts aid the CIAC in dispute resolution. Section 15 of the Construction Industry Arbitration Law provides: Section 15. Appointment of Experts. The services of technical or legal experts may be utilized in the settlement of disputes if requested by any of the parties or by the Arbitral Tribunal. If the request for an expert is done by either or by both of the parties, it is necessary that the appointment of the expert be confirmed by the Arbitral Tribunal.

Whenever the parties request for the services of an expert, they shall equally shoulder the expert's fees and expenses, half of which shall be deposited with the Secretariat before the expert renders service. When only one party makes the request, it shall deposit the whole amount required.

quasi-judicial agencies.[118] Rule 43, Section 1 explicitly lists CIAC as among the quasi judicial agencies covered by Rule 43.[119] Section 3 indicates that appeals through Petitions for Review under Rule 43 are to "be taken to the Court of Appeals ... whether the affoeal involves questions of fact, of law, or mixed questions of fact and law."[120]

II

Consistent with CIAC's technical expertise is the primacy and deference accorded to its decisions. There is only a very narrow room for assailing its rulings.

Section 19 of the Construction Industry Arbitration Law establishes that CIAC arbitral awards may not be assailed, except on pure questions of law: Section 19. Finality of Awards. - The arbitral award shall be binding upon the parties. It shall be final and inappealable except on questions of law which shall be appealable to the Supreme Court. Rule 43 of the 1997 Rules of Civil Procedure standardizes appeals from

This is not to say that factual findings of CIAC arbitral tribunals may now be assailed before the Court of Appeals. Section 3's statement "whether the appeal involves questions of fact, of law, or mixed questions of fact and law" merely recognizes variances in the disparate modes of appeal that Rule 43 standardizes: there were those that enabled questions of fact; there were those that enabled questions of law, and there were those that enabled mixed questions fact and law. Rule 43 emphasizes that though there may have been variances, all appeals under its scope are to be brought before the Court of Appeals. However, in keeping with the Construction Industry Arbitration Law, any appeal from CIAC arbitral tribunals must remain limited to questions of law.

Hi-Precision Steel Center, Inc. v. Lim Kim Steel Builders, Inc.[121] explained the wisdom underlying the limitation of appeals to pure questions of law: Section 19 makes it crystal clear that questions of fact cannot be raised in proceedings before the Supreme Court - which is not a trier of facts - in respect of an arbitral award rendered under the aegis of the CIAC. Consideration of the animating purpose of voluntary arbitration in generaland arbitration under the aegis of the CIAC in particular, requires us to apply rigorously the above principle embodied in Section 19 that the Arbitral Tribunal's findings of fact shall be final and unappealable.

Voluntary arbitration involves the reference of a dispute to an impartial body, the members of which are chosen by the parties themselves, which parties freely consent in advance to abide by the arbitral award issued after proceedings where both parties had the opportunity to be heard. The basic objective is to provide a speedy and inexpensive method of settling disputes by allowing the parties to avoid the formalities, delay, expense

and aggravation which commonly accompany ordinary litigation, especially litigation which goes through the entire hierarchy of courts. [The Construction Industry Arbitration Law] created an arbitration facility to which the construction industry in the Philippines can have recourse. The [Construction Industry Arbitration Law] was enacted to encourage the early and expeditious settlement of disputes in the construction industry, a public policy the implementation of which is necessa and important for the realization of national development goals.[122] Consistent with this restrictive approach, this Court is duty-bound to be extremely watchful and to ensure that an appeal does not become an ingenious means for und rmining the integrity of arbitration or for conveniently setting aside the conclusions arbitral processes make. An appeal is not an artifice for the parties to undermine the process they voluntarily elected to engage in. To prevent this Court from being a party to such perversion, this Court's primordial inclination must be to uphold the factual finqings of arbitral tribunals: Aware of the objective of voluntary arbitration in the labor field, in the

construction industry, and in any other area for that matter, the Court will not assist one or the other or even both parties in any effort to subvert or defeat that objective tbr their private purposes. The Court will not review the factual findings of an arbitral tribunal upon the artful allegation that such body had "misapprehended the facts" and will not pass upon issues which are, at bottom, issues of fact, no matter how cleverly disguised they might be as "legal questions." The parties here had recourse to arbitration and chose the arbitrators themselves; they must have had confidence in such arbitrators. The Court will not, therefore, permit the parties to relitigate before it the issues of facts previously presented and argued before the Arbitral Tribunal, save only where a very clear showing is made that, in reaching its factual conclusions, the Arbitral Tribunal committed an error so egregious and hurtful to one party as to constitute a grave abuse of discretion resulting in lack or loss of jurisdiction. Prototypical examples would be factual conclusions of the Tribunal which resulted in deprivation of one or the other party of a fair opportunity to present its position before the Arbitral Tribunal, and an award obtained through fraud or the corruption of

arbitrators. Any other, more relaxed, rule would result in setting at naught the basic objective of a voluntary arbitration and would reduce arbitration to a largely inutile institution.[123] (Emphasis supplied, citations omitted) Thus, even as exceptions to the highly restrictive nature of appeals may be contemplated, these exceptions are only on the nanowest of grounds. Factual findings of CIAC arbitral tribunals may be revisited not merely because arbitral tribunals may have erred, not even on the already exceptional grounds traditionally available in Rule 45 Petitions.[124] Rather, factual findings may be reviewed only in cases where the CIAC arbitral tribunals conducted their affairs in a haphazard, immodest manner that the most basic integrity of the arbitral process was imperiled. In Spouses David v. Construction Industry and Arbitration Commission:[125] We reiterate the rule that factual findings of construction arbitrators are final and conclusive and not reviewable by this Court on appeal, except when the petitioner proves affirmatively that: (1) the award was procured by corruption, fraud or other undue means; (2) there was evident partiality or corruption of the arbitrators or of any

of them; (3) the arbitrators were guilty of misconduct in refusing to postpone the hearing upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; (4) one or more of the arbitrators were disqualified to act as such under section nine of Republic Act No. 876 and willfully refrained from disclosing such disqualifications or of any other misbehavior by which the rights of any party have been materially prejudiced; or (5) the arbitrators exceeded their powers, or so imperfectly executed them, that a mutual, final and definite award upon the subject matter submitted to them was not made.[126] (Citation omitted) Guided by the primacy of CIAC's technical competence, in exercising this Court's limited power of judicial review, this Court proceeds to rule on whether or not the Court of Appeals erred in its assailed decisions.

III

Properly discerning the issues in this case reveals that what is involved is not a mere matter of contractual interpretation but a question of the

CIAC Arbitral Tribunal's exercise of its powers.

III.A

F.F. Cruz v. HR Construction[127] distinguished questions of law, properly cognizable in appeals from CIAC arbitral awards, from questions of fact: A question of law arises when there is doubt as to what the law is on a certain state of facts, while there is a question of fact when the doubt arises as to the truth or falsity of the alleged facts. For a question to be one of law, the same must not involve an examination of the probative value of the evidence presented by the litigants or any of them. The resolution of tbe issue must rest solely on what the law provides on the given set of circumstances. Once it is clear that the issue invites a review of the evidence presented, the question posed is one of fact.[128] It further explained that an inquiry into the true intention of the contracting parties is a legal, rather than a factual, issue: On the surface, the instant petition appears to merely raise factual

questions as it mainly appropriate amount HRCC. However, a analysis of the issues would show that it questions of law.

puts in issue the that is due to more thorough raised by FFCCl actually asserts

FFCCI primarily seeks from this Court a determination of whether [the] amount claimed by HRCC in its progress billing may be enforced against it in the absence of a joint measurement of the former's completed works. Otherwise stated, the main question advanced by FFCCI is this: in the absence of the joint measurement agreed upon in the Subcontract Agreement, how will the completed works of HRCC be verified and the amolfnt due thereon be computed?

The determination of the foregoing question entails an interpretation of the terms of the Subcontract Agreement vis-a-vis the respective rights of the parties herein. On this point, it should be stressed that where an interpretation of the true agreement between the parties is involved in an appeal, the appeal is in effect an inquiry of the law between the parties,

its interpretation necessarily involves a question of law.

meaning of its stipulations shall control. [131] Thus, this Court concluded:

Moreover, we are not called upon to examine the probative value of the evidence presented before the CIAC. Rather, what is actually sought from this Court is an interpretation of the terms of the Subcontract Agreement as it relates to the dispute between the parties.[129] (Emphasis supplied) Though similarly concerned with "an interpretation of the true agreement between the parties,"[130] this case is not entirely congruent with F.F. Cruz.

In F.F. Cruz, the parties' agreement had been clearly set out in writing. There was a definitive instrument which needed only to be consulted to ascertain the parties' intent: In resolving the dispute as to the proper valuation of the works accomplished by HRCC, the primordial consideration should be the terms of the Subcontract Agreement. It is basic that if the tem1s of a contract are clear and leave no doubt upon the intention of the contracting parties, the literal

Pursuant to the terms of payment agreed upon by the parties, FFCCI obliged itself to pay the monthly progress billings of HRCC within 30 days from receipt of the same. Additionally, the monthly progress billings of HRCC should indicate the extent of the works completed by it, the same beinff essential to the valuation of the amount that FFCCI would pay to HRCC.[132] III.B

In this case, there is no established contract that simply required interpretation and application.

The assailed Court of Appeals April 28, 2008 Decision implies that all that had to be done to resolve the present controversy was to apply the supposedly clear and unmistakable terms of the contract between ACI and CECON. It even echoes the words of F.F. Cruz:

It is a legal principle of long standing that when the language of the contract is explicit, leaving no doubt as to the intention of the parties, the courts may not read into it any other intention that would contradict its plain import. The clear terms of the contract should never be the subject matter of interpretation. Neither abstract justice nor the rule of liberal interpretation justifies the creation of a contract for the parties which they did not make themselves or the imposition upon one party to a contract or obligation not assumed simply or merely to avoid seeming hardships. Their true meaning must be enforced, as it is to be presumed that the contracting parties know their scope and effects.

....

The Contract Documents expressly characterize the construction contract between [ACI] and CECON as "lumpsum" and "fixed price" in nature. As a consequence, the Contract Documents expressly prohibit any adjustment of the contract sum due to any changes or fluctuations in the cost of labor, materials or other matters.[133] (Citations omitted)

Upon its characterization of the contract as one for the lump-sum, fixed price of P1,540,000,000.00, the Court of Appeals faulted the CIAC Arbitral Tribunal for acting in excess of jurisdiction as it supposedly countermanded the parties' agreement, or worse, conjured its own tenns for the parties' compliance.[134]

The Court of Appeals took the parties' contractual relation as a revealed and preordained starting point. Then, it dismissed every prior or subsequent detail that contradicted this assumption. It thereby conveniently terminated the discussion before it even began.

III.C It was the Court of Appeals, not the CIAC Arbitral Tribunal, that committed serious error.

To rule that the CIAC Arbitral Tribunal modified the parties' agreement because it was indisputably one for a lump-sum, fixed price of P1,540,000,000.00 is begging the question. The Court of Appeals used a conclusion as a premise to support itself. It erroneously jumped to a conclusion only to plead this conclusion in support of points that should have made up its anterior framework, points that would have been the ones to lead to a conclusion. It then used this abortive conclusion to injudiciously dispose of the case.

There was never a meeting of minds on the price of P1,540,000,000.00. Thus, that stipulation could not have been the basis of any obligation.

The only thing that ACI has in its favor is its initial delivery of tender documents to prospective bidders. Everything that transpired after this delivery militates against ACI's position.

Before proceeding to a consideration of the circumstances that negate a meeting of minds, this Court emphasizes that ACI would have this Court sustain claims premised on supposed inviolable documents. Yet, it

did not annex copies of these documents either to its Comment or to its Memorandwn.

ACI leaves this Court compelled to rely purely on their packaged presentation and in a bind, unable to verify even the accuracy of the syntax of its citations. This Court cannot approve of this predicament. To cursorily acquiesce to ACI's overtures without due diligence and substantiation is being overly solicitous, even manifestly partisan.

ACI and its counsel must have fully known the importance of equipping this Court with a reliable means of confirmation, especially in a case so steeped in the sway of circumstances. ACI's omission can only work against its cause.

By delivering tender documents to bidders, ACI made an offer. By these documents, it specitled its terms and defined the parameters within which bidders could operate. These tender documents, therefore, guided the bidders in formulating their own offers to ACI, or, even more fundamentally,

helped them make up their minds if they were even willing to consider undertaking the proposed project. In responding and submitting their bids, contractors, including CECON, did not peremptorily become subservient to ACI's terms. Rather, they made their own representations as to their own willingness and ability. They adduced their own counter offers, although these were already tailored to work within ACI's parameters.

These exchanges were in keeping with Article 1326 of the Civil Code: Article 1326. Advertisements for bidders are simply invitations to make proposals, and the advertiser is not bound to accept the highest or lowest bidder, unless the contrary appears. The mere occurrence of these exchanges of offers fails to satisfy the Civil Code's requirement of absolute and unqualified acceptance: Article 1319. Consent is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract. The offer must be certain and the acceptance absolute. A qualified acceptance constitutes a counter-offer.

Acceptance made by letter or telegram does not bind the offerer except from the time it came to his knowledge. The contract, in such a case, is presumed to have been entered into in the place where the offer was made. (Emphasis supplied) Subsequent events do not only show that there was no meeting of minds on CECON's initial offered contract sum of P1,449,089,174.00 as stated in its August 30, 2002 bid. They also show that there was never any meeting of minds on the contract sum at all.

In accordance with Article 1321 of the Civil Code,[135] an offeror may fix the time of acceptance. Thus, CECON's August 30, 2002 offer of P1,449,089,174.00 "specifically stated that its bid was valid for only ninety (90) days, or only until 29 November 2002."[136] November 29, 2002 lapsed and ACI failed to manifest its acceptance of CECON's offered contract sum.

It was only sometime after November 29, 2002 that ACI verbally informed

CECON that the contract was being awarded to it. Through a telephone call on December 7, 2002, ACI informed CECON that it may commence excavation works. However, there is no indication that an agreement was reached on the contract sum in any of these conversations. ACI, CECON, the CIAC Arbitral Tribunal, and the Court of Appeals all concede that negotiations persisted.

Still without settling on a contract sum, even the object of the contract was subjected to multiple modifications. Absent a concurrence of consent and object, no contract was perfected.[137]

An office tower atop Part A was included in CECON's scope of works and the contract sum increased to P1,582,810,525.00. Price fluctuations were conceded after this and the project cost was again adjusted to P1,613,615,244.00. Thereafter, CECON agreed to extend a discount and reduced its offered project cost to P1,540,000,000.00.[138]

After all these, ACI demurred on the tenns of its own tender documents and changed the project from one encompassing both design and construction to one that was limited to construction.

Though not pertaining to the object of the contract itself but only to one (1) of its many facets, ACI also removed from CECON's scope of works the acquisition of elevators, escalators, chillers, generator sets, indoor substations, cooling towers, pumps, and tanks. However, much later, ACI reneged on its own and opted to still obtain pumps, tanks, and cooling towers through CECON.

It is ACI's contention that the offered project cost of P1,540,000,000.00 is what binds the parties because its June 2, 2003 letter indicated acceptance of this offered amount.

This is plain error.

CECON was never remiss in impressing upon ACI that the

P1,540,000,000.00 offer was not perpetually availing. WithoutACI's timely acceptance, on December 27, 2002, CECON wrote to ACI emphasizing that the quoted sum of P1,540,000,000.00 was "based [only] upon the prices prevailing at December 26, 2002" levels.[139] On January 8, 2003, CECON notified ACI of further increases in costs and specifically stated that "[f]urther delay in the acceptance of the revised offer and release of the down payment may affect the revised lump sum amount."[140] Finally, on January 21, 2003, CECON wrote again to ACI,[141] stating that the contract sum had to be increased to P1,594,631,418.00. CECON also specifically stated, consistent with Article 1321 of the Civil Code, that its tender of this adjusted price was valid only until January 31, 2003, as further price changes may be forthcoming. CECON also impressed upon ACI that the 400 days allotted for the completion of the project had to be adjusted.[142]

(4) months. Apparently totally misinformed, ACI's acceptance letter did not even realize or remotely reference CECON's most recent P1,594,631,418.00 stipulation but insisted on the passe offer of P1,540,000,000.00 from the past year.

When ACI indicated acceptance, CECON's P1,540,000,000.00 offer had been superseded. Even CECON's subsequent offer of P1,594,631,418.00 had, by then, lapsed by more than four

ACI's delivery CECON's review, and both parties' final act of formalizing their respective consent and affixing their respective signatures would have

ACI's supposed acceptance was not an effective, unqualified acceptance, as contemplated by Article 1319 of the Civil Code. At most, it was a counteroffer to revert to P1,540,000,000.00.

ACI's June 2, 2003 letter stated an undertaking: "This notwithstanding, formal contract documents embodying these positions will shortly be prepared and forwarded to you for execution."[143] Through this letter, ACI not only undertook to deliver documents, it also admitted that the final, definitive terms between the parties had yet to be articulated in writing.

established a clear point in which the contract between ACI and CECON has been perfected. These points, i.e. ACI's delivery, CECON's review, and parties' formalization, too, would have validated the Court of Appeals' assertion that all that remained to be done was to apply unequivocal contractual provisions.

ACI would fail on its own undertaking.

lacunae confronting it, whether or not the CIAC Arbitral Tribunal acted within its jurisdiction.

IV

Section 4. Jurisdiction. - .... The CIAC Arbitral Tribunal did not act in excess of its jurisdiction. Contrary to the Court of Appeals' and ACI's assertions, it did not draw up its own tenns and force these terms upon ACI and CECON.

III.D IV.A Without properly executed contract documents, what would have been a straightforward exercise, akin to the experience in F.F. Cruz, became a drawn-out fact-finding affair. The situation that ACI engendered made it necessary for the CIAC Arbitral Tribunal to unravel the terms binding ACI to CECON from sources other than definitive documents.

It is these actions of the CIAC Arbitral Tribunal that raise an issue, purely as a matter of law, now the subject of this Court's review; that is, faced with the

This task was well within its jurisdiction. This determination entailed the full range of subjects expressly stipulated by Section 4 of the Construction Industry Arbitration Law to be within the CIAC's subject matter jurisdiction.

The CIAC Arbitral Tribunal was not confronted with a barefaced controversy for which a fom1ulaic resolution sufficed. More pressingly, it was confronted with a state of affairs where CECON rendered services to ACI, with neither definitive governing instrwnents nor a confirmed, fixed remuneration for its services. Thus, did the CIAC Arbitral Tribunal go about the task of asce1taining the sum properly due to CECON.

The jurisdiction of the CIAC may include but is not limited to violation of specifications for materials and workmanship; violation of the terms of agreement; interpretation and/or application of contractual time and delays; maintenance and defects; payment, default of employer or contractor and changes in contract cost. CECON raised the principal issue of the payment due to it on account, not only of fluctuating project costs but more so because of ACI's inability to timely act on many contingencies, despite proper notice and communication from and by CECON. Theretbre, at the heart of the controversy was the "interpretation and/or application of contractual time and delays." ACI's counter-arguments, too, directly appealed to CIAC's subject matter jurisdiction. ACI countered by asserting that sanctioning CECON's

claims was tantamount to violating the tem1s of their agreement. It further claimed liability on CECON's part for "maintenance and defects," and for "violation of specifications for materials and workmanship."

ACI and CECON voluntarily submitted themselves to the CIAC Arbitral Tribunal's jurisdiction. The contending parties' own volition is at the inception of every construction arbitration proceeding.[144] Common sense dictates that by the parties' voluntary submission, they acknowledge that an arbitral tribunal constituted under the CIAC has full competence to rule on the dispute presented to it. They concede this not only with respect to the literal issues recited in their terms of reference, as ACI suggests,[145] but also with respect to their necessary incidents. Accordingly, in delineating the authority of arbitrators, the CIAC Rules of Procedure speak not only of the literally recited issues but also of "related matters": SECTION 21.3 Extent of power of arbitrator - The Arbitral Tribunal shall decide only such issues and related matters as are submitted to them for adjudication. They have no power to

add, to subtract from, modify, or amend any of the terms of the contract or any supplementary agreement thereto, or any rule, regulation or policy promulgated by the CIAC. To otherwise be puritanical about cognizable issues would be to cripple CIAC arbitral tribunals. It would potentially be to condone the parties' efforts at tying the hands of tribunals through circuitous, trivial recitals that fail to address the complete extent of their claims and which are ultimately ineffectual in dispensing an exhaustive and dependable resolution. Construction arbitration is not a game of guile which may be left to ingenious textual or technical acrobatics, but an endeavor to ascertain the tluth and to dispense justice "by every and all reasonable means without regard to technicalities of law or proc.edure."[146]

IV.B

Two (2) guiding principles steered the CIAC Arbitral Tribunal in going about its task. First was the basic matter of fairness. Second was effective dispute resolution or the overarching principle

of arbitration as a mechanism relieved of the encumbrances of litigation. In Section 1.1 of the CIAC Rules of Procedure: SECTION 1.1 Statement of policy and objectives - It is the policy and objective of these Rules to provide a fair and expeditious resolution of construction disputes as an altemative to judicial proceedings, which may restore the disrupted harmonious and friendly relationships between or among the parties. (Emphasis supplied) CECON's predicament demanded compensation. The precise extent may yet to have been settled; yet, as the exigencies that prompted CECON to request for arbitration unraveled, it became clear that it was not for the CIAC Arbitral Tribunal to turn a blind eye to CECON's just entitlement to compensation.

Jurisprudence has settled that even in cases where parties enter into contracts which do not strictly confmm to standard formalities or to the typifying provisions of nominate contracts, when one renders services to another, the latter must compensate the fonner for the reasonable value of

the services rendered. This amount shall be fixed by a court. This is a matter so basic, this Court has once characterized it as one that "springs from the fountain of good conscience": As early as 1903, in Perez v. Pomar, this Court mled that where one has rendered services to another, and these services are accepted by the latter, in the absence of proof that the service was rendered gratuitously, it is but just that he should pay a reasonable remuneration therefore because "it is a well known principle of law, that no one should be permitted to enrich himself to the damage of another." Similary in 1914, this Court declared that in this jurisdiction, even in the absence of statute, ". . . under the general principle that one person may not enrich himself at the expense of another, a judgment creditor would not be permitted to retain the purchase price of land sold as the property of the judgment debtor after it has been made to appear that the judgment debtor had no title to the land and that the purchaser had failed to secure title thereto . . ." The foregoing equitable principle which springs from the fountain of good conscience are applicable to the case at bar.[147]

Consistent with the Construction Industry Arbitration Law's declared policy,[148] the CIAC Arbitral Tribunal was specifically charged with "ascertain[ing] the facts in each case by every and all reasonable means."[149] In discharging its task, it was permitted to even transcend technical rules on admissibility of evidence.[150]

IV.C

contractual interpretation, even those where the need for interpretation arises outside of court proceedings: Article 1379. The principles interpretation stated in Rule 123 of Rules of Court shall likewise observed in the construction contracts.

of the be of

As with Article 1371, therefore, the following principles from the Revised Rules on Evidence equally governed the CIAC Arbitral Tribunal's affairs: 4. Interpretation of Documents

The reality of a vacuum where there were no definite contractual terms, coupled with the demands of a "fair and expeditious resolution" of a dispute centered on contractual interpretation, called into operation Article 1371 of the Civil Code: Article 1371. In order to judge the intention of the contracting parties, their contemporaneous and subsequent acts shall be principally considered. (Emphasis supplled) Article 1379 of the Civil Code invokes principles from the Revised Rules on Evidence. By invoking these principles, Article 1379 makes them properly applicable in every instance of

Section 12. Interpretation according to intention; general and particular provisions. - In the construction of an instrument, the intention of the parties is to be pursued; and when a general and a particular provision are inconsistent, the latter is paramount to the former. So a particular intent will control a general one that is inconsistent with it.

Section 13. Interpretation according to circumstances. - For the proper construction of an instrument, the circumstances under which it was made, including the situation of the

subject thereof and of the parties to it, may be shown, so that the judge may be placed in the position of those whose language he is to interpret. Within its competence and in keeping with basic principles on contractual interpretation, the CIAC Arbitral Tribunal ascertained the trqe and just terms governing ACI and CECON. Thus, the CIAC Arbitral Tribunal did not conjure its own contractual creature out of nothing. In keeping with this, the CIAC Arbitral Tribtmal found it proper to sustain CECON's position. There having been no meeting of minds on the contract sum, the amount due to CECON became susceptible to reasonable adjustment, subject to proof of legitimate costs that CECON can adduce.

V

Unravelling the CIAC Arbitral Tribunal's competence and establishing how it acted consistent with law resolves the principal legal issue before us. From this threshold, the inquiry transitions to the matter of whether or not the conclusions made by the CIAC Arbitral Tribunal were warranted.

They were. Far from being capricious, the CIAC Arbitral Tribunal's conclusions find solid basis in law and evidence.

V.A

The tender documents may have characterized the contract sum as fixed and lump-sum, but the premises for this arrangement have undoubtedly been repudiated by intervening circumstances.

When CECON made its offer of P1,540,000,000.00, it proceeded from several premises. First, ACI would timely respond to the representations made in its bid. Second, CECON could act on the basis of prices prevailing then. Third, the subject matter of the contract was the entire expanse of design and construction covering all elements disclosed in the tender documents, nothing more and nothing less. Fourth, the basic specifications for designing and building the Gateway Mall, as stated in the tender documents, would remain consistent.

Lastly, ACI would timely deliver on its concomitant obligations.

Contrary to CECON's reasonable expectations, ACI failed to timely act either on CECON's bid or on those of its competitors. Negotiations persisted for the better part of two (2) calendar years, during which the quoted contract sum had to be revised at least five (5) times. The object of the contract and CECON's scope of work widely varied. There were radical changes like the addition of an entire office tower to the project and the change in the project's structural framing. There was also the undoing of CECON's freedom to design, thereby rendering it entirely dependent on configurations that ACI was to unilaterally resolve, It turned out that ACI took its time in delivering construction drawings to CECON, with almost 38% of construction drawings being delivered after the intended completion date. There were many other less expansive changes to the project, such as ACI's fickleness on which equipment it would acquire by itself. ACI even failed to immediately deliver the project site to CECON so that CECON may commence excavation, the most basic task in setting up a structure's foundation. ACI

also failed to produce definite instruments articulating its agreement with CECON, the final contract documents.

P5.00 per bag respectively by January 21, 2003. The Tribunal finds agreement with the Claimant that it is fairer to award the price increase.

With the withering of the premises upon which a lump-sum, fixed price arrangement would have been founded, such an arrangement must have certainly been negated:

....

[T]he contract is fixed and lump sum when it was tendered and contracted as a design and constmct package. The contract scope and character significantly changed when the design was taken over by the Respondent. At the time of the negotiation and agreement of the amount of Php1.54 billion, there were no final plans for the change to structural steel, and all the [mechanical, electrical and plumbing] drawings were all schematics.

[I]t is apparent to the Tribunal that the quantity and materials at the time of the P1.54B agreement are significantly different from the original plans to the finally implemented plans. The price increases in the steel products and cement were established to have already increased by 11.52% and by

It should also be mentioned that Respondent had changed the scope and character of the agreement. First, there were major changes in the plans and specifications. Originally, the contract was for design and construct. The design was deleted from the scope of the Claimant. It was changed to a straight construction contract. As a straight construction contract, there were no final plans to speak of at the time of the instructions to change. Then there was a verbal change to structural steel frame. No plans were available upon this instruction to change. Next, the [mechanical, electrical and plumbing] plans were all schematics. It is therefore expected that changes of plans are forthcoming, and that changes in costs would follow ...

....

It has been established that the original tender, request for proposal and award is for a design and construct contract. The contract documents are therefore associated for said system of construction. When Respondent decided to change and take over the design, such as the change from concrete to structural steel framing, "take-out" equipment from the contract and modify the [mechanical, electrical and plumbing w]orks, the original scope of work had been drastically changed. To tie down the Claimant to the tmit prices for the proposal for a different scope of work would be grossly unfair. This Tribunal will hold that unit price adjustment could be allowed but only for change orders that were not in the original scope of work, such as the change order from concrete to structural framing, the [mechanical, electrical and plumbing w]orks, [schematic drawings to construction drawings] and the Miscellaneous Change Order Works. [151] V.B

Contrary to argument,[152]

ACI's oft-repeated the CIAC Arbitral

Tribunal correctly found that ACI had gained no solace in statutory provisions on the immutability of prices stipulated between a contractor and a landowner. Article 1724 of the Civil Code reads: Article 1724. The contractor who undertakes to build a structure or any other work for a stipulated price, in conformity with plans and specifications agreed upon with the land-owner, can neither withdraw from the contract nor demand an increase in the price on account of the higher cost of labor or materials, save when there has been a change in the plans and specifications, provided:

Neither requisite avails in this case. Yet again, ACI is begging the question. It is precisely the crux of the controversy that no price has been set. Article 1724 does not work to entrench a disputed price and make it sacrosanct. Moreover, it was ACI which thn1st itself upon a situation where no plans and specifications were immediately agreed upon and from which no deviation could be made. It was ACI, not CECON, which made, revised, and deviated from designs and specifications.

V.C (1) Such change has been authorized by the proprietor in writing; and

(2) The additional price to be paid to the contractor has been determined in writing by both parties. Article 1724 demands two (2) requisites in order that a price may become immutable: first, there must be an actual, stipulated price; and second, plans and specifications must have definitely been agreed upon.

The CIAC Arbitral Tribunal also merely held ACI to account for its voluntarily admitted adjustments. The CIAC Rules of Procedure pennit deviations from technical rules on evidence, including those on admissions. Still, common sense dictates that the principle that "[t]he act, declaration or omission of a party as to a relevant fact may be given in evidence against him"[153] must equally hold true in administrative or quasi-judicial proceedings as they do in court actions. Certainly, each must be

held to account for his or her own voluntary declarations. It would have been plainly absurd to disregard ACI's reneging on its own admissions: Respondent has agreed to the price increase in structural steel and after some negotiation paid the agreed amount. Respondent also agreed to the price increase in the reinforcing bars and instructed the Claimant to bill it accordingly. To the Tribunal, such action is an acknowledgment of the price increase. Respondent can make the case that said agreement is conditional, i.e., the Complaint must be withdrawn. To the Tribunal, the conditionality falls both ways. The Claimant has as much interest to agree to a negotiated price increase so that it can collect payments for the claims. The conditionalities do not change the basis for the quantity and the amotmt. The process of the negotiation has arrived at the price difference and quantities. The Tribunal finds the process in arriving at the Joint Manifestation, a fair determination of the unit price increase. This holding will render the discussions on Exhibit JJJJ, and the demand of the burden of proof of the Respondent superfluous.[154] This absurdity is so patent that the Court of Appeals was still compelled to

uphold awards premised on ACI's admissions, even as it reversed the CIAC Arbitral Tribunal decision on the primordial issue of the characterization of the contractual arrangement between CECON and ACI: As stated, the contract between [ACI] and CECON has not been amended or revised. The Arbitral Tribunal had no power to amend the contract to provide that there be allowed price and/or cost adjustment removing the express stipulation that the Project is for a lump sum or fixed price consideration. Accordingly, this Court removes the award for additional costs spent by CECON on cement and formworks due to price increases or removing the award for these items in the total amount of PhP5,598,338.20. Since CECON is not entitled to its claim for price increase, it is likewise not entitled to the award of the interest rate of 6% per annum.

With regard however to the additional costs for the rebars due to price increases. this Court finds that CECON is entitled to the amount of PhP10,266,628.00 representing the additional costs spent by CECON for rebars due to price increases,

notwithstanding the Arbitral Tribunal's excess of jurisdiction in amending the contract between the parties because [ACI] and CECON had in fact agreed that CECON was entitled to such an amount and that [ACI] would pay the same. This agreement was made in the parties' Joint Manifestation of Compliance dated March 30, 2004 which they filed with th Arbitral Tribunal ("Joint Manifestation").[155] No extraordinary technical or legal proficiency is required to see that it would be the height of absurdity and injustice to insist on the payment of an amount the consideration of which has been reduced to a distant memory. ACI's invocation of Article 1724 is useless as the premises for its application are absent. ACI's position is an invitation for this Court to lend its imprimatur to unjust enrichment enabled by the gradual wilting of what should have been a reliable contractual relation. Basic decency impels this Court to not give in to ACI's advances and instead sustain the CIAC Arbitral Tribunal's conclusion that the amount due to CECON has become susceptible to reasonable adjustment.

VI

The Arbitral Tribunal's award must be reinstated.

VI.A

With the undoing of the foundation for the Court of Appeal's fallacious, circular reasoning, its monetary awards must also necessarily give way to the reinstatement of the CIAC Arbitral Tribunal's awards.

The inevitable changes borne by ACI's own trifling actions justify, as a consequence, compensation for cost adjustments and the ensuing change orders, additional overhead costs for the period of extension, extended coverage for contractor's all-risk insurance, and attendance fees for auxiliary services to subcontractors whose functions were also necessarily prolonged. ACI's frivolity on the acquisition of elevators, escalators, chillers, generator sets, indoor substations, cooling towers, pumps, and tanlcs also vindicates compensation for the works that remained under CECON's account.

ACI's authorship of the causes of delay supports time extensions favoring CECON and, conversely, discredits liquidated damages benefitting ACI.

This Court upholds the Arbitral Tribunal's awards on each of the items due to CECON, as well as on its findings relating to CECON's countervailing liabilities.

In fulfilling its task, the CIAC Arbitral Tribunal was equipped with its technical competence, adhered to the rigors demanded by the CIAC Rules of Procedure, and was endowed with the experience of exclusively presiding over 19 months of arbitral proceedings, examining object and documentary evidence, and probing witnesses.

VI.B

Within the CIAC Arbitral Tribunal's technical competence was its reference to prevailing industry practices, a much-bewailed point by ACI.[156] This reference was made not only desirable but even necessary by

the absence of definitive governing instruments. Moreover, this reference was made feasible by the CIAC Arbitral Tribunars inherent expertise in the construction industry.

This reference was not only borne by practical contingencies and buttressed by recognized proficiency, it was also sanctioned by the statutory framework of contractual interpretation within which the CIAC Arbitral Tribunal operated. Thus, the following principles governed the interpretation of the change orders, requests, and other communications, which had effectively been surrogates of a single definite instrument executed by the parties.

From the Civil Code: Article 1375. Words which may have different significations shall be understood in that which is most in keeping with the nature and object of the contract.

Article 1376. The usage or custom of the place shall be borne in mind in the interpretation of the ambiguities of a contract, and shall fill the omission of

stipulations established.

which

are

ordinarily

From the Revised Rules on Evidence, the following have been made applicable even outside regular litigation by Article 1379 of the Civil Code: Section 14. Peculiar signification of terms. - The terms of a writing are presumed to have been used in their primary and general acceptation, but evidence is admissible to show that they have a local, technical, or otherwise peculiar signification, and were so used and understood in the particular instance, in which case the agreement must be construed accordingly.

....

Section 19. Interpretation according to usage. - An instrument may be construed according to usage, in order to determine its true character.[157] (Emphasis supplied) Equally availing is the following principle. This is especially tlue of the remuneration due to CECON, considering that stipulations for

remuneration are devised for the benefit of the person rendering the service: Section 17. Of two constn.1ctions, which preferred. - When the terms of an agreement have been intended in a different sense by the different parties to it, that sense is to prevail against either party in which he supposed the other understood it, and when different constructions of a provision are otherwise equally proper, that is to be taken which is the most favorable to the party in whose favor the provision was made.[158] VI.C

In appraising the CIAC Arbitral Tribunal's awards, it is not the province of the present Rule 45 Petition to supplant this Court's wisdom for the inherent technical competence of and the insights drawn by the CIAC Arbitral Tribunal throughout the protracted proceedings before it. The CIAC Arbitral Tribunal perused each of the parties' voluminous pieces of evidence. [159] Its members personally heard, observed, tested, and propounded questions to each of the witnesses. Having been constituted solely and precisely for the purpose of resolving

the dispute between ACI and CECON for 19 months, the CIAC Arbitral Tribunal devoted itself to no other task than resolving that controversy. This Court has the benefit neither of the CIAC Arbitral Tribunal's technical competence nor of its irreplaceable experience of hearing the case, scrutinizing every piece of evidence, and probing the witnesses.

Arbitral Tribunal extended every possible opportunity for each of the parties to not only plead their case but also to arrive at a mutually beneficial settlement. This Court has ruled, precisely, that the arbitrators acted in keeping with their lawful competencies. This enabled them to come up with an otherwise definite and reliable award on the controversy before it.

True, the inhibition that impels this Court admits of exceptions enabling it to embark on its own factual inquiry. Yet, none of these exceptions, which are all anchored on considerations of the CIAC Arbitral Tribunal's integrity and not merely on mistake, doubt, or conflict, is availing.

Inventive, hair-splitting recitals of the supposed imperfections in the CIAC Arbitral Tribunal's execution of its tasks will not compel this Court to supplant itself as a fact-finding, technical expert.

This Court finds no basis for casting aspersions on the integrity of the CIAC Arbitral TribunaL There does not appear to have been an undisclosed disqualification for any of its three (3) members or proof of any prejudicial misdemeanor. There is nothing to sustain an allegation that the parties' voluntarily selected arbitrators were conupt, fraudulent, manifestly partial, or otherwise abusive. From all indications, it appears that the CIAC

ACI's refutations on each of the specific items claimed by CECON and its counterclaims of sums call for the point by point appraisal of work, progress, defects and rectifications, and delays and their causes. They are, in truth, invitations for this Court to engage in its own audit of works and corresponding financial consequences. In the alternative, its refutations insist on the application of rates, schedules, and other stipulations in the same tender documents, copies of which ACI never adduced and the efficacy of

which this Court has previously discussed to be, at best, doubtful.

cracks with epoxy sealants, or even unpaid sums for garbage collection.

than in effecting a voluntary settlement.

This Court now rectifies the error made by the Court of Appeals. By this rectification, this Court does not open the doors to an inordinate and overzealous display of this Court's authority as a final arbiter.

The CIAC Arbitral Tribunal acted in keeping with the law, its competence, and the adduced evidence; thus, this Court upholds and reinstates the CIAC Arbitral Tribunal's monetary awards.

The CIAC Arbitral Tribunal October 25, 2006 Decision should have long brought this matter to an end. This Court does not fault ACI for availing of remedies. Yet, this Court also notes that even in proceedings outside of the CIAC Arbitral Tribunal, ACI seems to not have been sufficiently conscientious of time.

VII Without a showing of any of the exceptional circumstances justifying factual review, it is neither this Court's business nor in this Court's competence to pontificate on technical matters. These include things such as fluctuations in prices of materials from 2002 to 2004, the architectural and engineering consequences - with their ensuing financial effects - of shifting from reinforced concrete to structural steel, the feasibility of rectification works for defective installations and fixtures, the viability of a given schedule of rates as against another, the audit of changes for every schematic drawing as revised by construction drawings, the proper mechanism for examining discolored and mismatched tiles, the minutiae of installing G.I. sheets and sealing

It does not escape this Court's attention that this controversy has dragged on for more than 13 years since CECON initially sought to avail of arbitration.

The CIAC Arbitral Tribunal noted that ACI consumed a total of 840 days filing several motions and manifestations, including at least eight (8) posturings at pursuing settlement.[160] It added, however, that ACI repeatedly failed to respond to CECON's claims during meetings thereby constraining CECON to file motions to proceed after repeatedly being dangled hope of an early resolution.[161] It appeared that ACI was more interested in buying time

consummate

In this Court alone, ACI extensions to file its Comment than five (5) times.[162] It several other extensions in the its Memorandum.[163]

sought no less sought filing of

It also does not escape this Court's attention that while ACI's arguments have perennially pleaded the supposed primacy and itnmutability of stipulations originally articulated in the tender documents, it never bothered to annex any of these documents either to its Comment or to its Memorandum. Without these and other supporting materials, this Court is left in the uneasy predicament of merely relying

on ACI's self-stated assertions and without means of verifying even the syntax of its citations.

While presumptions of good faith may be indulged, the repercussions of ACI's vacillation cannot be denied.

Even if this Court were to ignore the delays borne by ACI's procedural posturing, this Court is compelled to hearken to ACI's original faults. These are, after all, what begot these proceedings. These are the same original faults which so exasperated CECON; it was left with no recourse but to seek the intervention of CIAC.

These faults began as soon as bidders responded to ACI's invitation. In CECON's case, its communicated time for the validity of its offer lapsed without confinnation from ACI. ACI only verbally responded and only after CECON's communicated timeframe. It told CECON to commence excavation works but failed to completely deliver the project site until five (5) months later. It engaged in protracted negotiations, never confirming

acceptance until the tenth month, after bidders had submitted their offers. By then, ACI's supposed acceptance could not even identify CECON's most recent quoted price. It undertook to process and deliver formal documents, yet this controversy already reached this Court and not a single page of those documents has seen the light of day. It has repeatedly added and taken from CECONs scope of works but vigorously opposed adjustments that should have at least been given reasonable consideration, only to admit and partially stipulate on thern. In taking upon itself the task of designing, it took its time in delivering as many as 1,675 construction drawings to CECON, more than 600 of which were not delivered until well after the project's intended completion date.

This Court commenced its discussion by underscoring that arbitration primarily serves the need of expeditious dispute resolution. This interest takes on an even greater urgency in the context of construction projects and the national interest so intimately tied with them. ACI's actions have so bogged down its contractor. Nearing 13 years after the Gateway Mall's completion, its contractor has yet

to be fully and properly compensated. Not only have ACI's actions begotten this dispute, they have hyper-extended arbitration proceedings and dragged courts into the controversy. The delays have virtually bastardized the hopes at expeditious and effective dispute resolution which are supposedly the hallmarks of arbitration proceedings.

For these, in addition to sustaining each of the awards due to CECON arising from the facets of the project, this Court also sustains the CIAC Arbitral Tribunal's award to CECON of arbitration costs. Further, this Court imposes upon respondent Araneta Corporation, Inc. the burden of bearing the costs of what have mutated into a full-fledged litigation before this Court and the Court of Appeals.

WHEREFORE, the Petition is GRANTED. The assailed April 28, 2008 Decision and July 1, 2010 Amended Decision of the Court of Appeals in CA-G.R. SP No. 96834 are REVERSED and SET ASIDE. The Construction Industry Arbitration Commission Arbitral Tribunal October 25, 2006 Decision in CIAC Case No. 01-2004 is REINSTATED.

Legal interest at the rate of six percent (6%) per annum is imposed on the award from the finality of this Decision until its full satisfaction.

Costs against respondent.

SO ORDERED.

G.R. No. 214300, July 26, 2017 PEOPLE OF THE PHILIPPINES, Petitioner, v. MAN UEL ESCOBAR, Respondent. DECISION LEONEN, J.: This Rule 45 Petition assails the Court of Appeals Decision to grant the accused's second petition for bail. Res judicata applies only in a final judgment in a civil case,1 not in an interlocutory order in a criminal case.2 An order disposing a petition for bail is interlocutory.3 This order does not attain finality when a new matter

warrants a second look on the application for bail. Respondent Manuel Escobar (Escobar) filed a petition for bail (First Bail Petition), which was denied by the Regional Trial Court in the Order4 dated October 6, 2008 and by the Court of Appeals in the Decision5 dated March 8, 2011. A subsequent development in the accused's case6 compelled him to file a second petition for bail (Second Bail Petition). On April 26, 2012, the Regional Trial Court denied7 this on the ground of res judicata. In the Decision8 dated March 24, 2014, the Court of Appeals overturned the Regional Trial Court Order and granted the Second Bail Petition. Escobar was suspected of conspiring in the kidnap for ransom of Mary Grace Cheng-Rosagas (Mary Grace), daughter of FilipinoChinese businessman Robert G. Cheng (Robert), and two (2) other victims.9 Robert was the owner of Uratex Foam, Philippines,10 a manufacturing company of foams and mattresses.11 On June 18, 2001 at 7:40 a.m., Mary Grace, her bodyguard Valentin B. Torres (Torres), and her driver

Dionisio F. Burca (Burca) were passing by the front of Malcolm Hall, University of the Philippines, Diliman, Quezon City when a vehicle blocked their way.12 Another group of suspects helped as lookouts.13 Clad in police uniform, four (4) armed men forced Mary Grace, Burca, and Torres inside the vehicle.14 The incident happened in broad daylight. Alleged group leader Rolando Villaver (Villaver) and some of the suspects then travelled and detained Mary Grace, Burca, and Torres in an undisclosed location in Batangas.15 Afterwards, the group headed to Club Solvento, a resort16 in Calamba, Laguna owned by Escobar,17 who personally served them food.18 Some of the accused19 stayed in Club Solvento to rest or sleep while the others, namely, Villaver, Cesar Olimpiada, a certain Cholo, and Biboy Lugnasin, left to negotiate the price for the victims' release.20 Cheng paid the ransom of P15,000,000.00.21 At 7:00 p.m. on the same day, Villaver's group returned to Club

Solvento,22 followed by co-accused brothers Rolando and Harold Fajardo (the Fajardo brothers), who were alleged advisers of Villaver.23 The group then locked themselves in a room where Villaver partitioned the ransom money.24 Cancio Cubillas (Cubillas), the group's driver,25 confessed to have received a total of P1,250,000.00 for the kidnapping operation.26 At 10:30 p.m. on the same day, Mary Grace, Burca, and Torres were finally released.27 They were freed somewhere in Alaminos, Laguna, more than 12 hours since they were abducted.28 Cubillas became a state witness.29 On June 3, 2002, he executed an extrajudicial confession and implicated respondent Escobar as an adviser for Villaver.30 Cubillas believed that Escobar was involved after he saw Escobar talk to Villaver while they were in Club Solvento.31 In his extrajudicial confession, Cubillas also claimed that Escobar received a portion of the ransom money from Villaver.32 On February 17, 2004, an Amended Information was filed before the Regional Trial Court charging

Escobar as a co-conspirator33 in the kidnapping for ransom.34 The charging portion stated: That on or about June 18, 2001 at around 7:40 in the morning, at Quezon City, Philippines, and within the jurisdiction of this Honorable Court, the above-named accused, conspiring, confederating and mutually helping one another and grouping themselves together, with others not present during the actual kidnapping but performing some other peculiarly contributory roles, did, then and there, by force and intimidation, with the use of long firearms and clad in police uniform, willfully, unlawfully and feloniously take, carry away and thereafter detain at some undisclosed place, after having blocked their car in front of Malcolm Hall, Osmena Avenue, UP Campus, Diliman, Quezon City, MARY GRACE CHENGROSAGAS, her driver DIONISIO F. BURCA and her bodyguard VALENTIN B. TORRES, against their will and consent thereby depriving them of their liberty for more than twelve (12) hours for the purpose of extorting ransom for their release in the amount of FIFTEEN MILLION PESOS (P15,000,000.00), and which amount was in fact paid by Mary Grace's father, Mr. Robert

Cheng, owner of Uratex Foam, Philippines, and have the same delivered at E. Rodriguez Compound, Calamba, Laguna thereby resulting to the release of the kidnap victims somewhere in Alaminos, Laguna at about 10:30 p.m. of the same day all to the damage and prejudice of the three (3) victims and their families in such amount as may be awarded to them and their families under the provisions of the Civil Code. CONTRARY TO LAW.35 Escobar was arrested on February 14, 2008.36 On June 3, 2008, Escobar filed the First Bail Petition before the Regional Trial Court.37 During the hearing on Escobar's bail application, Cubillas testified that Escobar and the Fajardo brothers were Villaver's advisers.38 In the Order dated October 6, 2008, the Regional Trial Court denied39 Escobar's First Bail Petition. The dispositive portion read: The Petition for Bail filed by accused Manny Escobar is denied for lack of merit considering that state witness Cancio Cubillas positively identified said accused as the owner of Club chanRoblesvirtualLawlibrary

Solvento located in Calamba, Laguna; that he was the one who served food to the group of Rolando Villaver, Jun Jun Villaver, Ning Ning Villaver, Danny Velasquez, Cholo, Cesar Olimpiada, Mike, Alan Celebre, Biboy Lugnasin and witness himself, Cancio Cubillas; that it was also in said Club Solvento where Cancio Cubillas, Jun Jun Villaver, Ning Ning Villaver, Danny Velasquez, Mike and Alan Celebre rested and slept after Rolando Villaver, Cholo, Biboy Lugnasin and Cesar Olimpiada left to negotiate for the ransom of kidnap victim Mary Grace Cheng Rosagas, and that on the night of June 18, 2001, Cubillas saw accused Rolando Villaver gave part of the ransom money to him. SO ORDERED.40 Escobar appealed before the Court of Appeals.41 On March 8, 2011, the Court of Appeals affirmed42 the denial of the First Bail Petition. It recognized that Cubillas' extrajudicial confession was generally incompetent evidence against his co-accused and was admissible against himself only43 for being hearsay and for violating the res inter alios acta rule.44 Nevertheless, the Court of Appeals invoked an exception to

this rule and held that the Regional Trial Court "did not rely solely on the extrajudicial confession of Cubillas"; rather, the trial court also relied on Cubillas' testimony during the bail hearing.45 Escobar moved to reconsider the Court of Appeals March 8, 2011 Decision.46 Pending the proceedings on Escobar's case, the police arrested one (1) of the co-accused Fajardo brothers, Rolando Fajardo (Rolando),47 who applied for bail before the Regional Trial Court.48 As in Escobar's bail hearing, the prosecution relied solely on Cubillas' statements to establish the strength of Fajardo's guilt.49 In an Order dated September 13, 2011, the Regional Trial Court denied Rolando's petition for bail.50 However, in an Order dated October 14, 2011, the Regional Trial Court reversed its previous order and granted Rolando's bail application.51 The Regional Trial Court stated: To summarize, the evidence for the prosecution does not establish that accused Rolando Fajardo participated during the actual chanRoblesvirtualLawlibrary

abduction of Rosagas, Burca and Torres or that during the actual abduction, accused Rolando Fajardo gave advice or instruction to the other accused herein. The evidence for the prosecution likewise does not establish that accused Rolando Fajardo acted as adviser to accused Rolando Villaver and his group in connection with the kidnapping of the victims herein. There is no testimony as to what advice or instructions were made by accused Rolando Fajardo in connection with the kidnapping of the victims herein. There is thus a paucity of evidence establishing the participation of accused Rolando Fajardo in the kidnapping of Rosagas, Burca and Torres.52 (Emphasis supplied) The reversal came about after the trial court considered that, according to Cubillas, "[Rolando] was not present before, during and after the kidnapping."53 There was paucity of evidence on Rolando's alleged participation.54 Meanwhile, on October 27, 2011, the Court of Appeals denied Escobar's motion for reconsideration.55 He no longer appealed before this Court.56 By January 2012, only Escobar was

denied."64

left in detention pending the final judgment on the merits of the case as all the other accused who had active participation in the kidnapping had been granted bail.57 Escobar saw Rolando's release on bail as a new "development which warrant[ed] a different view" on his own bail application.58

necessarily

Thus, on January 27, 2012, Escobar filed another petition for bail (Second Bail Petition) before the Regional Trial Court.59 He noted that Cubillas could not explain how either Rolando or Escobar advised Villaver and that both Rolando and Escobar were absent before, during, and after the kidnapping.60 Hence, if Rolando's petition for bail was granted based on the unreliability of Cubillas' testimony, Escobar reasoned that the trial court should likewise grant him provisional release.61

In the Decision dated March 24, 2014, the Court of Appeals 67 granted  the petition for certiorari and ordered the Regional Trial Court to determine the appropriate bail for Escobar's provisional liberty. The dispositive portion read: WHEREFORE, the petition is GRANTED. The April 26, 2012, September 14, 2012, September 17, 2012 and November 6, 2012 Orders, are SET ASIDE. The trial court is directed to determine the appropriate bail for the provisional liberty of the petitioner, Manuel Escobar, with dispatch.

On April 26, 2012, the Regional Trial Court denied62 Escobar's Second Bail Petition on the ground of res judicata,63 reasoning thus: "[i]n deference to the Decision of the Court of Appeals which has already attained finality, accused's Petition for Bail which is actually a second petition for bail[,] must be

Escobar moved for reconsideration but this was denied by the Regional Trial Court.65 On January 14, 2013, he appealed before the Court of Appeals via Rule 65, arguing that the trial court committed grave abuse of discretion in denying his Second Bail Petition.66

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SO ORDERED.68 The Court of Appeals denied the prosecution's Motion for Reconsideration.69 According to the Court of Appeals, Escobar's Second Bail Petition was not barred by res judicata, which applies only if the former judgment is a final order or

judgment and not an interlocutory order.70 An order denying a petition for bail is interlocutory in nature.71 On April 4, 2014, the Regional Trial Court fixed72 Escobar's bail at P300,000.00. The dispositive portion read: In view of the Decision rendered by the Court of Appeals on 24 March 2014, the bail for the provisional liberty of accused Manuel Escobar is hereby fixed at Three Hundred Thousand Pesos (Php300,000.00). chanRoblesvirtualLawlibrary

SO ORDERED.73 In the Resolution dated September 11, 2014, the Court of Appeals denied74 the prosecution's Motion for Reconsideration. On November 6, 2014, the prosecution, through the Office of the Solicitor General, filed a Petition for Review75 via Rule 45 before this Court. In its Petition, the prosecution does not pray for the issuance of a temporary restraining order of the Court of Appeals Decision;76 rather, in assailing the grant of Escobar's Second Bail Petition, the prosecution avers that the doctrine of res judicata must be respected.77 On October 19, 2015, Escobar filed

his Comment,78 arguing that res judicata did not apply here,79 that there was no strong evidence of his guilt,80 and that the Court of Appeals could rectify errors of judgment in the greater interest of justice.81 According to Escobar: 13. Due to this sudden development of the grant of bail to his co-accused, [Rolando], and considering that both [Rolando] and [Escobar]'s alleged participation in the crime are based on the same court-declared unreliable "speculations" of the state witness Cubillas, who even admitted he was lying when questioned during [Escobar]'s own bail hearings, it was in the interest of justice and fairness to re-open the matter of bail with respect to [Escobar] and thereby grant the same. And the Honorable Court of Appeals agreed.82 chanRoblesvirtualLawlibrary

This Court's program to decongest holding jails led City Jail Warden Randel H. Latoza (City Jail Warden Latoza) to review Escobar's 83 case.  In his manifestation dated August 18, 2016, City Jail Warden Latoza informed this Court that there was no temporary restraining order against the Regional Trial Court April 4, 2014 Order, which fixed Escobar's provisional liberty at P300,000.00. He also acknowledged

the Court of Appeals March 24, 2014 Decision granting Escobar the right to bail.84 He mentioned that Escobar had posted the P300,000.00 bail, as ordered by the trial court.85 Thus, he moved to allow Escobar's provisional release on bail.86 City Jail Warden Latoza alleged that Escobar had paid the necessary surety bond87 and attached a copy of Traveller's Insurance Surety Corporation's surety bond undertaking to his manifestation.88 However, the attached surety bond undertaking was neither notarized nor approved by the Regional Trial Court judge.89 In a Letter dated May 15, 2017, the Commission on Human Rights wrote to Associate Justice Antonio T. Carpio to ask for the speedy resolution of the case as Escobar was already 78 years old.90 For resolution issues:

are

the

following

First, whether Manuel Escobar's second petition for bail is barred by res judicata; and Finally, whether respondent should be granted bail.

I Bail is the security given for the temporary release of a person who has been arrested and detained but "whose guilt has not yet been proven" in court beyond reasonable doubt.91 The right to bail is cognate to the fundamental right to be presumed innocent. In People v. Fitzgerald:92 The right to bail emanates from the [accused's constitutional] right to be presumed innocent. It is accorded to a person in the custody of the law who may, by reason of the presumption of innocence he [or she] enjoys, be allowed provisional liberty upon filing of a security to guarantee his [or her] appearance before any court, as required under specified conditions.93 (Citations omitted) Bail may be a matter of right or judicial discretion. The accused has the right to bail if the offense charged is "not punishable by death, reclusion perpetua or life imprisonment" before conviction by the Regional Trial Court.94 However, if the accused is charged with an offense the penalty of which is death, reclusion perpetua, or life imprisonment—"regardless of the stage of the criminal prosecution"— and when evidence of one's guilt is

not strong, then the accused's prayer for bail is subject to the discretion of the trial court.95 In this case, the imposable penalty for kidnapping for ransom is death,96 reduced to reclusion perpetua.97 Escobar's bail is, thus, a matter of judicial discretion, provided that the evidence of his guilt is not strong.98 Rule 114 of the Revised Rules on Criminal Procedure states: Section 4. Bail, a matter of right; exception. - All persons in custody shall be admitted to bail as a matter of right, with sufficient sureties, or released on recognizance as prescribed by law or this Rule (a) before or after conviction by the Metropolitan Trial Court, Municipal Trial Court, Municipal Trial Court in Cities, or Municipal Circuit Trial Court, and (b) before conviction by the Regional Trial Court of an offense not punishable by death, reclusion perpetua, or life imprisonment.

capital offense, or an offense punishable by reclusion perpetua or life imprisonment, shall be admitted to bail when evidence of guilt is strong, regardless of the stage of the criminal prosecution. The Regional Trial Court denied99 Escobar's Second Bail Petition on the ground of res judicata. The Court of Appeals overturned100 this and correctly ruled that his Second Bail Petition was not barred by res judicata.

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.... Section 7. Capital offense or an offense punishable by reclusion perpetua or life imprisonment, not bailable. - No person charged with a

In its literal meaning, res judicata refers to "a matter adjudged."101 This doctrine bars the re-litigation of the same claim between the parties, also known as claim preclusion or bar by former judgment.102 It likewise bars the relitigation of the same issue on a different claim between the same parties, also known as issue preclusion or conclusiveness of judgement.103 It "exists as an obvious rule of reason, justice, fairness, expediency, practical necessity, and public tranquillity."104 Degayo v. MagbanuaDinglasan105 held that "[t]he doctrine of res judicata is set forth in Section 47 of Rule 39"106 of the Revised Rules of Civil Procedure, thus: chanRoblesvirtualLawlibrary

Sec. 47. Effect of Judgments or Final Orders. — The effect of a judgment or final order rendered by a court of the Philippines, having jurisdiction to pronounce the judgment or final order, may be as follows: .... (b) [T]he judgment or final order is, with respect to the matter directly adjudged or as to any other matter that could have been raised in relation thereto, conclusive between the parties and their successors in interest by title subsequent to the commencement of the action or special proceeding, litigating for the same thing and under the same title and in the same capacity; and (c) In any other litigation between the same parties or their successors in interest, that only is deemed to have been adjudged in a former judgment or final order which appears upon its face to have been so adjudged, or which was actually and necessarily included therein or necessary thereto. Escobar's Second Bail Petition is not barred by res judicata as this doctrine is not recognized in criminal proceedings.107

Expressly applicable in civil cases, res judicata settles with finality the dispute between the parties or their successors-ininterest.108Trinidad v. Marcelo109 declares that res judicata, as found in Rule 39 of the Rules of Civil Procedure, is a principle in civil law and "has no bearing on criminal proceedings."110 Rule 124, Section 18 of the Rules of Criminal Procedure states: Section 18. Application of certain rules in civil procedure to criminal cases. - The provisions of Rules 42, 44 to 46 and 48 to 56 relating to procedure in the Court of Appeals and in the Supreme Court in original and appealed civil cases shall be applied to criminal cases insofar as they are applicable and not inconsistent with the provisions of this Rule. chanRoblesvirtualLawlibrary

Indeed, while certain provisions of the Rules of Civil Procedure may be applied in criminal cases,111 Rule 39 of the Rules of Civil Procedure is excluded from the enumeration under Rule 124 of the Rules of Criminal Procedure. In Trinidad:112 Petitioner's arguments — that res judicata applies since the Office of the Ombudsman twice found no sufficient basis to indict him in similar cases earlier filed against

him, and that the Agan cases cannot be a supervening event or evidence per se to warrant a reinvestigation on the same set of facts and circumstances — do not lie.

without his express consent.115 Here, while there was an initial ruling on Escobar's First Bail Petition, Escobar has not been convicted, acquitted, or has had his case dismissed or terminated.

Res judicata is a doctrine of civil law and thus has no bearing on criminal proceedings.

Even assuming that this case allows for res judicata as applied in civil cases, Escobar's Second Bail Petition cannot be barred as there is no final judgment on the merits.

But even if petitioner's arguments] were to be expanded to contemplate "res judicata in prison grey" or the criminal law concept of double jeopardy, this Court still finds it inapplicable to bar the reinvestigation conducted by the Office of the Ombudsman.113 (Emphasis supplied, citations omitted). An interlocutory order denying an application for bail, in this case being criminal in nature, does not give rise to res judicata. As in Trinidad, even if we are to expand the argument of the prosecution in this case to contemplate "res judicata in prison grey" or double jeopardy, the same will still not apply.114 Double jeopardy requires that the accused has been convicted or acquitted or that the case against him or her has been dismissed or terminated

Res judicata requires the concurrence of the following elements: chanRoblesvirtualLawlibrary

1. The judgment sought to bar the new action must be final; 2. The decision must have been rendered by a court having jurisdiction over the parties and the subject matter; 3. The disposition of the case must be a judgment on the merits; and 4. There must be between the first and second actions,

identity of parties, of subject matter, and of causes of action.116 In deciding on a matter before it, a court issues either a final judgment or an interlocutory order. A final judgment "leaves nothing else to be done" because the period to appeal has expired or the highest tribunal has already ruled on the case.117 In contrast, an order is considered interlocutory if, between the beginning and the termination of a case, the court decides on a point or matter that is not yet a final judgment on the entire 118 controversy. An interlocutory order "settles only some incidental, subsidiary or collateral matter arising in an action";119 in other words, something else still needs to be done in the primary case—the rendition of the final judgment.120Res judicata applies only when there is a final judgment on the merits of a case; it cannot be availed of in an interlocutory order even if this order is not appealed.121 In Macahilig v. Heirs of Magalit:122 Citing Section 49 of Rule 39, Rules of Court, petitioner insists that the September 17, 1997 [interlocutory]

Order of the trial court in Civil Case No. 3517 bars it from rehearing questions on the ownership of Lot 4417. She insists that said Order has become final and executory, because Dr. Magalit did not appeal it. We disagree. Final, in the phrase judgments or final orders found in Section 49 of Rule 39, has two accepted interpretations. In the first sense, it is an order that one can no longer appeal because the period to do so has expired, or because the order has been affirmed by the highest possible tribunal involved. The second sense connotes that it is an order that leaves nothing else to be done, as distinguished from one that is interlocutory. The phrase refers to a. final determination as opposed to a judgment or an order that settles only some incidental, subsidiary or collateral matter arising in an action; for example, an order postponing a trial, denying a motion to dismiss or allowing intervention. Orders that give rise to  res judicata  and conclusiveness of judgment apply only to those falling under the second category. ....

For example, an Order overruling a motion to dismiss does not give rise to res adjudicata [sic] that will bar a subsequent action, because such order is merely interlocutory and is subject to amendments until the rendition of the final judgment.123 (Emphasis supplied, citations omitted) A decision denying a petition for bail settles only a collateral matter124—whether accused is entitled to provisional liberty—and is not a final judgment on accused's guilt or innocence. Unlike in a fullblown trial, a hearing for bail is summary in nature: it deliberately "avoid[s] unnecessary thoroughness" and does not try the merits of the case.125 Thus: Summary hearing means such brief and speedy method of receiving and considering the evidence of guilt as is practicable and consistent with the purpose of the hearing which is merely to determine the weight of the evidence for purposes of bail. The course of the inquiry may be left to the discretion of the court which may confine itself to receiving such evidence as has reference to substantial matters avoiding unnecessary thoroughness in the examination and cross-examination of witnesses and reducing to a chanRoblesvirtualLawlibrary

reasonable minimum the amount of corroboration particularly on details that are not essential to the purpose of the hearing.126 (Emphasis in the original) Here, the prosecution itself has acknowledged that "the first order denying bail is an interlocutory order."127 The merits of the case for kidnapping must still be threshed out in a full-blown proceeding. Being an interlocutory order, the March 8, 2011 Court of Appeals Decision denying Escobar's First Bail Petition did not have the effect of res judicata. The kidnapping case itself has not attained finality. Since res judicata has not attached to the March 8, 2011 Court of Appeals Decision, the Regional Trial Court should have taken cognizance of Escobar's Second Bail Petition and weighed the strength of the evidence of guilt against him. In any case, the Court of Appeals may still reverse its Decision, notwithstanding its denial of the First Bail Petition on March 8, 2011. Rules of procedure should not be interpreted as to disadvantage a party and deprive him or her of fundamental rights and liberties. A

judgment or order may be modified where executing it in its present form is impossible or unjust in view of intervening facts or circumstances:128 [W]here facts and circumstances transpire which render [the] execution [of a judgment] impossible or unjust and it therefore becomes necessary, "in the interest of justice, to direct its modification in order to harmonize the disposition with the prevailing circumstances."129 (Emphasis supplied, citation omitted) Appellate courts may correct "errors of judgment if blind and stubborn adherence to the doctrine of immutability of final judgments would involve the sacrifice of justice for technicality."130 Thus, an accused may file a second petition for bail, particularly if there are sudden developments or a "new matter or fact which warrants a different view."131 Rolando's release on bail is a new development in Escobar's case.132 The Court of Appeals has pointed out that the other alleged co-conspirators are already out on bail: Rolando, in particular, was granted bail because Cubillas' testimony against him was weak.133 "[Escobar] and [Rolando]

participated in the same way, but [Escobar]'s bail was 134 denied."  Escobar's fundamental rights and liberty are being deprived in the meantime. Article III, Section 13 of the 1987 Constitution states: Section 13. All persons, except those charged with offenses punishable by reclusion perpetua when evidence of guilt is strong, shall, before conviction, be bailable . . . (Emphasis supplied) chanRoblesvirtualLawlibrary

The same evidence used by the trial court to grant bail to Rolando was not used similarly in Escobar's favor. As the Court of Appeals found:135 We cannot ignore the allegation of conspiracy and that the other accused were all granted bail except him. Specifically, [Rolando] was granted bail due to the weakness of Cubillas' testimony against him.136 In light of the circumstances after the denial of Escobar's First Bail Petition, his Second Bail Petition should have been given due course. It should not be denied on the technical ground of res judicata. II

The Court of Appeals already approved Escobar's bail petition. Meanwhile, City Jail Warden Latoza has informed this Court of the absence of any temporary restraining order against the Court of Appeals Decision granting the Second Bail Petition, as well as the Regional Trial Court Order fixing his bail at P300,000.00.137 Thus, the Court of Appeals March 24, 2014 Decision granting Escobar's provisional liberty can be executed upon the approval of his bail bond, if he has indeed paid the surety bond. In closing, no part of this Decision should prejudice the submission of additional evidence for the prosecution to prove Escobar's guilt in the main case. "[A] grant of bail does not prevent the trier of facts . . . from making a final assessment of the evidence after full trial on the merits."138 As the Court of Appeals correctly ruled: [T]his determination is only for the purpose of bail[;] it is without prejudice for the prosecution to submit additional evidence to prove [Escobar]'s guilt in the course of the proceedings in the primary case.139 chanRoblesvirtualLawlibrary

WHEREFORE, the is DENIED. The Court of Decision dated March 24, CA-G.R. SP No. is AFFIRMED.

Petition Appeals 2014 in 128189

Escobar may be provisionally released if he indeed has paid the surety bond that must be contained in a public document and approved by the Regional Trial Court judge. Otherwise, he is directed to post bail. SO ORDERED.