G.R. No.

209324, December 09, 2015

REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE BUREAU OF

CUSTOMS, Petitioner, v. PILIPINAS SHELL PETROLEUM
CORPORATION, Respondent.

DECISION

VILLARAMA, JR., J.:

Assailed in this petition for review under Rule 45 are the Decision1 dated February 13,
2013 and Resolution2 dated June 3, 2013 of the Court of Appeals (CA) in CA-G.R. CV
No. 95436 which affirmed the Orders3 dated April 28, 2010 and July 2, 2010 of the
Regional Trial Court (RTC) of Manila, Branch 49 in Civil Case No. 02-103191.

Factual Antecedents

Pilipinas Shell Petroleum Corporation (PSPC), a domestic corporation registered with the
Board of Investments (BOI), is engaged in the importation, refining and sale of
petroleum products in the country. For its importations, PSPC was assessed and
required to pay customs duties and internal revenue taxes.

Under Deed of Assignment4 dated May 7, 1997, Filipino Way Industries (FWI) assigned
the following Tax Credit Certificates5 (TCCs) to PSPC:
TCC# 006889 P 2,542,918.00
TCC # 006977 2,573,422.00
TCC# 006978 2,559,493.00
TCC # 006979 2,413,079.00
TOTAL P10,088,912.006
On the belief that the TCCs were actually good and valid, the Bureau of Customs (BOC)
accepted and allowed PSPC to use the above TCCs to pay the customs duties and taxes
due on its oil importations.

The One-Stop Shop Inter-Agency Tax Credit and Duty Drawback Center7 ("center")
undertakes the processing of TCCs and approval of their transfers. It is composed of a
representative from the Department of Finance (DOF) as its chairperson; and the
members thereof are representatives of the BOI, BOC and Bureau of Internal Revenue
(BIR).

On November 3, 1999 the Center, through then Finance Secretary Edgardo B. Espiritu,
informed BIR Commissioner Beethoven L. Rualo that pursuant to EXCOM Resolution No.
03-05-99, it has cancelled various Tax Debit Memos (TDMs) issued to PSPC and Petron
Corporation against their TCCs which were found to have been fraudulently issued and
transferred. These include the subject TCCs sold by FWI to PSPC. The Center thus
advised that it will be demanding from the said oil companies payment corresponding to
the amount of the TCCs as evidenced by the TDMs, and accordingly directed the BIR to
collect the amount utilized on the TCCs, including the related penalties, surcharges and
interests.8 A similar letter was sent to Customs Commissioner Nelson Tan regarding the
cancellation of TDMs issued to PSPC based on the Center's finding that the TCCs utilized
by PSPC have been fraudulently issued and transferred.9

On April 3, 2002, the Republic of the Philippines represented by the BOC filed the
present collection suit in the RTC (Civil Case No. 02-103191) for the payment of
P10,088,912.00 still owed by PSPC after the invalidation of the subject TCCs.

Meanwhile, PSPC filed with the Court of Tax Appeals (CTA Case No. 6484) a petition for
review questioning the factual and legal bases of BOC's collection efforts.

Subsequently, PSPC moved to dismiss Civil Case No. 02-103191 on the ground that the
RTC had no jurisdiction over the subject matter and that the complaint for collection
was prematurely filed in view of its pending petition for review in the CTA. The RTC
denied the motion to dismiss and PSPC eventually filed its answer questioning the RTC's
jurisdiction. When the RTC issued a notice of pre-trial, PSPC moved for reconsideration
of the order denying its motion to dismiss. The RTC denied the motion for
reconsideration, prompting PSPC to elevate the matter to the CA via a petition for
certiorari (CA-G.R. SP No. 71756). On October 23, 2003, the CA rendered decision
denying PSPC's petition. With the denial of its motion for reconsideration, PSPC sought
recourse from this Court in a petition for review on certiorari (G.R. No. 161953). In a
Decision10 dated March 6, 2008, this Court denied PSPC's petition, viz.:
Inasmuch as the present case did not involve a decision of the Commissioner of
Customs in any of the instances enumerated in Section 7(2) of RA 1125, the CTA had
no jurisdiction over the subject matter. It was the RTC that had jurisdiction
under Section 19(6) of the Judiciary Reorganization Act of 1980, as
amended: chanRoblesvirtualLawlibrary

xxxx

In view of the foregoing, the RFC should forthwith proceed with Civil Case No. 02-
103191 and determine the extent of petitioner's liability.

We are not unmindful of petitioner's pending petition for review in the CTA where it is
questioning the validity of the cancellation of the TCCs. However, respondent cannot
and should not await the resolution of that case before it collects petitioner's
outstanding customs duties and taxes for such delay will unduly restrain the
performance of its functions. Moreover, if the ultimate outcome of the CTA case turns
out to be favorable to petitioner, the law affords it the adequate remedy of seeking a
refund.

WHEREFORE, this petition is hereby DENIED. The Regional Trial Court of Manila,

Branch 19 is ordered to proceed expeditiously with the pre-trial conference and trial of
Civil Case No. 02-103191.

Costs against petitioner.

SO ORDERED.11 (Emphasis supplied)
As to CTA Case No. 6484, the CTA denied BOC's motion to dismiss on the ground of
prescription. When the CTA denied the BOC's motion for reconsideration, the BOC
appealed to the CA, which reversed the questioned CTA resolutions. PSPC again sought
recourse from this Court via a petition for review on certiorari (G.R. No. 176380). By
Decision12 dated June 18, 2009, we denied the petition and held that the present case
does not involve a tax protest case within the jurisdiction of the CTA to resolve. Citing
our previous ruling in Pilipinas Shell Petroleum Corporation v. Republic 13 we ruled that
the appropriate forum to resolve the issues raised by PSPC before the CTA, which were
all related to the fact and efficacy of the payments made, should be the collection case
before the RTC where PSPC can put up the fact of its payment as a defense.

With the resumption of proceedings in the RTC, the BOC filed an Amended Complaint,
to which PSPC filed a Second Amended Answer. Pre-trial was terminated and the RTC
summarized the issues in its Pre-Trial Order14 dated September 9, 2009, to wit:
The following issues raised by the plaintiffs:

a. Whether or not plaintiff Republic has cause of action against defendants;

b. Whether or not defendant Pilipinas Shell is [a] transferee in good faith [of]
Tax Credit Certificates;

c. Whether or not defendants are liable to pay the Republic the amount of
Phpl0,088,912.00 represents unpaid taxes;

d. Whether or not the Tax Credit Certificate was spurious and fraudulent.

The following issues raised by the defendant Pilipinas Shell:

a. Whether the defendants PSPC is liable for the amount of

Php10,088,912.00 in customs duties and taxes covered by cancelled
subject Tax Credit Certificates, However, there are sub-issues. These are
include[d] in our pre-trial brief;

b. Whether or not plaintiff is liable for moral and exemplary and Attorney's
fees; and

c. Whether or not defendant Filipino Way is liable to defendant PSPC in case

of successful collection of customs taxes against PSPC.15

On November 16, 2009, PSPC filed a motion for summary judgment arguing that there
is no basis for the Republic's claims considering that the subject TCCs were already fully
utilized for the payment of PSPC's customs duties and taxes, and that EXCOM
Resolution No. 03-05-99, the basis of the cancellation of the TCCs, was declared void
and invalid in Pilipinas Shell Petroleum Corporation v. CIR,16 where this Court likewise
ruled that the subject TCCs cannot be cancelled on the basis of post-audit since a post-
audit is not allowed and not a suspensive condition. PSPC further contended that the
Republic's cause of action had already prescribed when it attempted to collect PSPC's
customs duties and taxes only four years later, beyond the one-year prescriptive period
to file a collection case. Lastly, PSPC asserted that even assuming the TCCs were
fraudulently obtained by FWI, an innocent purchaser for value like PSPC cannot be
prejudiced as held in the aforementioned case.
In its Comment/Opposition, BOC argued that rendition of summary judgment is
inappropriate in this case in view of disputed facts that necessitate a full-blown trial
where both parties can present evidence on their respective claims. BOC pointed out
that PSPC cannot rely on the Deed of Assignment as proof that it had no participation in
the issuance of the TCCs. PSPC should prove at the trial that there was a valid transfer
in good faith and for value of the subject TCCs. As to the rulings in the case of Pilipinas
Shell Petroleum Corporation v. CIR,17 these are inapplicable here because first, what is
involved therein are taxes owed to the BIR and there was no finding of fraud against
PSPC whereas in the present case the BOC can readily prove during trial that PSPC
committed fraud.

On February 22, 2010, the RTC denied the motion for summary judgment in view of
factual disputes which can only be resolved by trial on the merits. Specifically, it stated
that presentation of evidence is necessary to determine if PSPC is a mere transferee in
good faith and for value of the subject TCCs and that there was a valid
transfer/assignment between PSPC and FWI.18

However, on motion for reconsideration by PSPC, the RTC reversed its earlier ruling and
granted the motion for summary judgment under its Order19 dated April 28, 2010. The
RTC cited Pilipinas Shell Corporation v. Republic20 which supposedly settled factual and
legal issues raised by BOC in its pleadings and arguments, specifically PSPC's not
having committed fraud. As there are no more disputed matters, the RTC held that
there is no more need for a trial to prove that the subject TCCs have been fully utilized
by PSPC and that they were cancelled due to an invalid post-audit under the authority
of EXCOM Resolution No. 03-05-99.

The RTC thus decreed:

WHEREFORE, premises considered, the Order dated February 22, 2010 is hereby
REVERSED and SET ASIDE. The instant case against defendant PSPC is DISMISSED.
However, the case against defendant Filipino Way still SUBSISTS.

Let the trial of this case continue against the other Defendant namely, Filipino Way
Industries, as previously scheduled on May 19, 2010 at 1:00 o'clock in the afternoon.

SO ORDERED.21 ChanRoblesVirtualawlibrary

With the denial of its motion for reconsideration, BOC appealed to the CA. By Decision
dated February 13, 2013, the CA denied the appeal and affirmed the questioned orders
of the RTC. BOC's motion for reconsideration was likewise denied by the CA.

According to the CA, BOC adopted a wrong mode of appeal because whether the RTC
erred in rendering summary judgment is purely a legal issue, jurisdiction over which is
vested only in this Court. Even assuming that the CA can entertain BOC's appeal, the
CA said it found no genuine issues raised by the parties' pleadings and arguments that
necessitate a fullblown trial. The CA further held that the rule on stare decisis applies in
the present case considering that the legal and factual issues have been previously
discussed and resolved by this Court in Pilipinas Shell Petroleum Corporation v. CIR.22

Issues

The following issues clearly emerge from the present controversy: (1) Does the
Republic's (petitioner) appeal involve purely questions of law and hence a wrong
remedy from the assailed RTC orders?; (2) Wliether or not summary judgment is
proper; (3) Does the ruling in Pilipinas Shell Petroleum Corporation v. CIR 23 apply to
this case under the doctrine of stare decisis; and (4) Whether or not petitioner's claim
is barred by prescription.

Petitioner's Arguments

Citing the cases of Nocom v. Camerino24 and Heirs of Baldomero Roxas v.

Garcia25 petitioner argues that since a summary judgment has the effect of adjudication
on the merits, appeal under Rule 41 of the Rules of Court is the proper remedy.

As to the propriety of summary judgment rendered by the RTC, petitioner underscores

that the collection case it filed against PSPC is founded on the fact that the latter
utilized the fraudulently-secured TCCs for payment of customs duties and taxes that
arose from its various oil importations, and their cancellation did not extinguish its
liability to the government. The matter of whether or not PSPC is a transferee in good
faith and for value is a genuine issue to be resolved, and must be ventilated in a full
trial. The issue of whether or not PSPC is guilty of fraud likewise calls for the
presentation of evidence at the trial.

Petitioner mentions other factual inquiries which it said arose in this case, such as the
manner by which FWI acquired the subject TCCs; the legality of their transfer to PSPC;
the results of the post-audit conducted on the subject TCCs; whether PSPC claimed a
return of the consideration from FWI upon the cancellation of the TCCs; the veracity of
the letter from Equitable Banking Corporation stating that the credit memos,
supposedly used by FWI in securing the TCCs, do not conform to the bank's records;
and what are the company papers and export documents submitted for the claim of tax
credits.

Petitioner also argues that Pilipinas Shell Petroleum Corporation v. CIR26 is not

applicable as said case involves the assessment of deficiency taxes which was filed
before the CTA, hence a tax case, whereas here it is a civil case for collection of sum of
money which was filed in a regular court. More important, the facts in the aforesaid
case did not clearly establish the fraudulent acts committed by the original grantees of
tax credits in the procurement of TCCs from the Center, whereas in the present case,
petitioner can sufficiently prove that the documents submitted by the original grantee
(FWI) for the claim of tax credits were forgeries and the TCCs subsequently issued had
absolutely no monetary value to back up their issuance. Thus, where the facts in the
two cases under consideration are different, stare decisis finds no application.

On other legal issues that were previously settled in Pilipinas Shell Petroleum
Corporation v. CIR,27 petitioner submits there is an extreme urgency to revisit this
Court's ruling —
x x x because of the great danger and prejudice it had caused to the several collection
cases filed by the government which are pending before several regular courts involving
TCCs in the hundreds of millions of pesos. Most defendants in these cases assert to be
"buyers or transferees in good faith" and capitalize on the ruling of this Honorable Court
in the Shell case. However, if the only basis for finding good faith on the part of the
transferee of TCCs is the mere approval of the transfer by the DOF One Stop Shop
Center, then all these pending cases, as above-mentioned, must be dismissed, since all
the transfers of the TCCs were approved by the Center. This is precisely the very
reason why the government filed several cases before the Office of the Ombudsman
against the personnel and officers of the One Stop Shop Center, including private
individuals, because of the collusion and conspiracy they contrived in order to defraud
the government of several billions of pesos involving the issuance and transfers of
TCCs. This is now infamously known as the "tax credit scam" because it was committed
in grandiose style by a crime syndicate.

In the final analysis, the ultimate victim in this scheme is not the Republic but the
Filipino people who did not commit mistake or wrongdoing, but rather, its agents.
Hence, the State cannot be made to bear the loss of revenues on account of scheming
individuals or entities that are out to defraud the government or evade the payment of
tax liabilities.28
ChanRoblesVirtualawlibrary

Respondent's Arguments

PSPC contends that the assailed orders of the RTC granting summary judgment has
already attained finality since petitioner availed of the wrong remedy before the CA. It
asserts that the CA did not err in upholding the RTC's ruling that there exists no
genuine issues of fact in the present case.

On the alleged fraudulent issuance of the subject TCCs, PSPC maintains that it cannot
be prejudiced by such fraud which, by petitioner's own admission, was committed by
FWI. Being a transferee in good faith and for value of the subject TCCs, these matters
raised by petitioner are thus irrelevant. That PSPC is a transferee in good faith and for
value was admitted by petitioner during the pre-trial hearing held on September 9,
2009.

PSPC argues that, contrary to petitioner's claims, the CA correctly applied this Court's
rulings in Pilipinas Shell Petroleum Corporation v. CIR 29 under the doctrine of stare
decisis. In any event, it asserts that petitioner's cause of action had already prescribed
since the subject TCCs were already fully utilized as payment for PSPC's customs duties
and taxes on November 17, 1997, while petitioner attempted to collect only on
February 15, 2002 or four years later, beyond the one year period to file the present
case.

Our Ruling

The petition is meritorious.

Propriety of Summary Judgment a Question of Law, hence, the Remedy is a

Petition for Review Under Rule 45

Section 2, Rule 41 of the 1997 Rules of Civil Procedure, as amended, provides for two
remedies from the final orders or judgments of the RTC in the exercise of its original
jurisdiction, viz.:
Section 2. Modes of appeal. -

(a) Ordinary appeal. - The appeal to the Court of Appeals in cases decided by the
Regional Trial Court in the exercise of its original jurisdiction shall be taken by filing a
notice of appeal with the court which rendered the judgment or final order appealed
from and serving a copy thereof upon the adverse party. No record on appeal shall be
required except in special proceedings and other cases of multiple or separate appeals
where the law or these Rules so require. In such cases, the record on appeal shall be
filed and served in like manner.

(b) Petition for review. - The appeal to the Court of Appeals in cases decided by the
Regional Trial Court in the exercise of its appellate jurisdiction shall be by petition for
review in accordance with Rule 42.

(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.

(Emphasis supplied)
Thus, when an appeal raises only pure questions of law, it is this Court that has the sole
jurisdiction to entertain the same. On the other hand, appeals involving both questions
of law and fact fall within the exclusive appellate jurisdiction of the CA.30

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 the 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. Thus, the test of whether a
question is one of law or of fact is not the appellation given to such question by the
party raising the same; rather, it is whether the appellate court can determine the issue
raised without reviewing or evaluating the evidence, in which case, it is a question of
law; otherwise it is a question of fact.31

We have held that the question of whether the RTC erred in rendering summary
judgment is one of law, thus:
Any review by the appellate court of the propriety of the summary judgment rendered
by the trial court based on these pleadings would not involve an evaluation of the
probative value of any evidence, but would only limit itself to the inquiry of whether the
law was properly applied given the facts and these supporting documents. Therefore,
what would inevitably arise from such a review are pure questions of law, and not
questions of fact, which are not proper in an ordinary appeal under Rule 41, but should
be raised by way of a petition for review on certiorari under Rule 45.32 ChanRoblesVirtualawlibrary

Petitioner raised as sole issue in its brief filed with the CA the RTC's erroneous grant of
summary judgment in favor of PSPC based on its finding that there exists no genuine
factual issue. Obviously, it availed of the wrong mode of appeal when it filed a notice of
appeal in the RTC under Section 2(a), Rule 41, instead of a petition for review on
certiorari in this Court under Rule 45.

Relaxation of the Rule on Appeal

However, despite such lapse, a relaxation of the rule on appeal is justified under the
circumstances. The CA found no reversible error in the grant of summary judgment in
favor of PSPC. Accordingly, it affirmed the assailed orders of the RTC.

Considering the Republic's stake in the outcome of the proceedings in Civil Case No. 02-
103191, among the several collection suits it has instituted in the drive to recover huge
revenue losses from spurious tax credit certificates that proliferated in the 1990s, we
cannot accede to PSPC's contention that petitioner's erroneous appeal has rendered the
Orders dated April 28, 2010 and July 2, 2010 of the RTC final and executory.

In Barangay Sangalang v. Barangay Maguihan33 we ratiocinated:

In any case, as in the past, this Court has recognized the emerging trend towards a
liberal construction of the Rules of Court. In Ong him Sing, Jr. v. FEB Leasing and
Finance Corporation, this Court stated:
Courts have the prerogative to relax procedural rules of even the most mandatory
character, mindful of the duty to reconcile both the need to speedily put an end to
litigation and the parties' right to due process. In numerous cases, this Court has
allowed liberal construction of the rules when to do so would serve the demands of
substantial justice and equity. In Aguam v. Court of Appeals, the Court explained:
The court has the discretion to dismiss or not to dismiss an appellant's appeal. It is a
power conferred on the court, not a duty. The "discretion 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." Technicalities, however, must be avoided. The
law abhors technicalities that impede the cause of justice. The court's primary duty is to
render or dispense justice. "A litigation is not a game of technicalities." "Lawsuits,
unlike duels, are not to be won by a rapier's thrust. Technicality, when it deserts its
proper office as an aid to justice and becomes its great hindrance and chief enemy,
deserves scant consideration from courts." Litigations must be decided on their merits
and not on technicality. Every party-litigant must be afforded the amplest opportunity
for the proper and just determination of his cause, free from the unacceptable plea of
technicalities. Thus, dismissal of appeals purely on technical grounds is frowned upon
where the policy of the court is to encourage hearings of appeals on their merits and
the rules of procedure ought not to be applied in a very rigid, technical sense; rules of
procedure are used only to help secure, not override substantial justice. It is a far
better and more prudent course of action for the court to excuse a technical lapse and
afford the parties a review of the case on appeal to attain the ends ol" justice rather
than dispose of the case on technicality and cause a grave injustice to the parties,
giving a false impression of speedy disposal of cases while actually resulting in more
delay, if not a miscarriage of justice.
Thus, notwithstanding petitioner's wrong mode of appeal, the CA should not have so
easily dismissed the petition, considering that the parties involved are local government
units and that what is involved is the determination of their respective territorial
jurisdictions. x x x34
ChanRoblesVirtualawlibrary

Summary Judgment Not Proper

Under Rule 35 of the 1997 Rules of Civil Procedure, as amended, except as to the

amount of damages, when there is no genuine issue as to any material fact and the
moving party is entitled to a judgment as a matter of law, summary judgment may be
allowed:
Section 1. Summary Judgment for claimant. - A party seeking to recover upon a claim,
counterclaim, or cross-claim or to obtain a declaratory relief may, at any time after the
pleading in answer thereto has been served, move with supporting affidavits,
depositions or admissions for a summary judgment in his favor upon all or any part
thereof.
Summary judgment is a procedural device resorted to in order to avoid long drawn out
litigations and useless delays. When the pleadings on file show that there are no
genuine issues of fact to be tried, the Rules allow a party to obtain immediate relief by
way of summary judgment, that is, when the facts are not in dispute, the court is
allowed to decide the case summarily by applying the law to the material facts.35 Even if
on their face the pleadings appear to raise issues, when the affidavits, depositions and
admissions show that such issues are not genuine, then summary judgment as
prescribed by the Rules must ensue as a matter of law. The determinative factor,
therefore, in a motion for summary judgment, is the presence or absence of a genuine
issue as to any material fact.36

For a full-blown trial to be dispensed with, the party who moves for summary judgment
has the burden of demonstrating clearly the absence of genuine issues of fact, or that
the issue posed is patently insubstantial as to constitute a genuine issue. Genuine issue
means an issue of fact which calls for the presentation of evidence as distinguished
from an issue which is fictitious or contrived.37

Petitioner's complaint is premised mainly on the alleged fraudulent issuance and

transfer of the subject TCCs. As stated in the pre-trial order, petitioner submitted for
trial the issue of whether or not PSPC is a transferee in good faith.

In Pilipinas Shell Petroleum Corporation v. CIR,38 we ruled that "[t]he transferee in good
faith and for value may not be unjustly prejudiced by the fraud committed by the
claimant or transferor in the procurement or issuance of the TCC from the Center."
A transferee in good faith and for value of a TCC who has relied on the Center's
representation of the genuineness and validity of the TCC transferred to it may not be
legally required to pay again the tax covered by the TCC which has been belatedly
declared null and void, that is, after the TCCs have been fully utilized through
settlement of internal revenue tax liabilities. Conversely, when the transferee is party to
the fraud as when it did not obtain the TCC for value or was a party to or has
knowledge of its fraudulent issuance, said transferee is liable for the taxes and for the
fraud committed as provided for by law.39 ChanRoblesVirtualawlibrary

The RTC found no genuine factual issue as far as PSPC's status as innocent purchaser in
good faith and for value, relying on the following underlined portion of this Court's
decision in Pilipinas Shell Petroleum Corporation v. Republic 40 (March 6, 2008):
THE FILING OF THE COLLECTION CASE WAS A PROPER REMEDY

Assessments inform taxpayers of their tax liabilities. Under the TCCP, the assessment is
in the form of a liquidation made on the face of the import entry return and approved
by the Collector of Customs. Liquidation is the final computation and ascertainment
by the Collector of Customs of the duties due on imported merchandise based
on official reports as to the quantity, character and value thereof, and the Collector of
Customs' own finding as to the applicable rate of duty. A liquidation is considered to
have been made when the entry is officially stamped "liquidated."

Petitioner claims that it paid the duties due on its importations. Section 1603 of the old
TCCP stated:
Section 1603. Finality of Liquidation. When articles have been entered and passed free
of duty or final adjustments of duties made, with subsequent delivery, such entry and
passage free of duty or settlement of duties will, after the expiration of one year from
the date of the final payment of duties, in the absence of fraud or protest, be final and
conclusive upon all parties, unless the liquidation of the import entry was merely
tentative.
An assessment or liquidation by the BoC attains finality and conclusiveness one year
from the date of the final payment of duties except when:
(a) there was fraud;

(b) there is a pending protest or

(c) the liquidation of import entry was merely tentative.

None of the foregoing exceptions is present in this case. There was no fraud as
petitioner claimed (and was presumed) to be in good faith. Respondent does not,
dispute this. Moreover, records show that petitioner paid those duties without protest
using its TCCs. Finally, the liquidation was not a tentative one as the assessment had
long become final and incontestable. Consequently, pursuant to Yabes and because of
the cancellation of the TCCs, respondent had the right to file a collection case.
(Underscoring supplied)
Upon reading the entire text of the above decision, it can be gleaned that PSPC
(petitioner therein) had questioned the jurisdiction of the RTC, arguing that said court
has no jurisdiction over Civil Case No. 02-103191 (collection case) in view of the
pendency of PSPC's petition for review in the CTA challenging the BOC's assessment of
the customs duties and taxes covered by the same TCCs involved in this case.
Citing Yabes v. Flojo,41 PSPC contended that the RTC acquires jurisdiction over a
collection case only if an assessment made by the CIRhas become final and
incontestable.

Addressing the issue of prematurity of BOC's collection case in the RTC, we cited three
exceptions from the rule that an assessment becomes final and conclusive one year
from the date of final payment of duties: among which is when there is fraud. The
decision then declares that none of the cited exceptions are present, specifically stating
that there was no fraud as petitioner claimed (and was presumed) to be in good faith,
and the BOC does not dispute it. It is this statement which the RTC deemed as
establishing PSPC's status as transferee in good faith and for value of the subject TCCs.
However, we find the RTC's reliance on this statement in the earlier case involving the
issue of jurisdiction of the RTC as misplaced and erroneous. Such statement pertained
to fraud in the computation or accuracy of the customs duties and taxes due on the
subject importations, which concerns the correctness of the quantity and class of goods
declared by the importer PSPC as basis for the assessment by the BOC. There may
have been preconceived courses of action purposely adopted by importers to evade the
payment of the correct customs duties. Clearly, the fraud mentioned in the said
decision does not refer to the fraud in the issuance and transfer of TCCs for which the
petitioner seeks to recover unpaid customs duties and taxes, subject matter of the
present controversy. The latter has to do with presentation of spurious documents that
would render the TCCs worthless, resulting in non-payment of the assessed customs
duties and taxes.
It bears stressing also that the collection case is not based on any revised or new
assessment of customs duties and taxes on PSPC's oil importations. As we noted
in Pilipinas Shell Petroleum Corporation v. Commissioner of Customs 42 BOC's demand
letters to PSPC merely reissued the original assessments that were previously settled
by it with the use of the TCCs. But since the TCCs were cancelled, the tax liabilities of
PSPC under the original assessments were considered unpaid; hence, the demand
letters and actions for collection.

Moreover, it would be absurd to interpret such statement in our decision in Pilipinas

Shell Petroleum Corporation v. Republic 43 (March 6, 2008) as a judicial declaration of
PSPC's status as a transferee in good faith and for value of the subject TCCs when in
the same decision we ordered the case remanded to the RTC for proceeding with the
pre-trial where issues for trial still have to be determined by the parties. Neither should
such statement be regarded as an admission by petitioner because the latter's
complaint was anchored chiefly on the alleged fraud and irregularity in the issuance and
transfer of the TCCs, with both the transferee (PSPC) and transferor (FWI) impleaded
as defendants.

In its Comment, PSPC claims that during the pre-trial hearing, the Solicitor General's
representative admitted that PSPC had no participation in the issuance of the subject
TCCs. However, perusal of the transcript of stenographic notes (TSN) reveals that what
was admitted by petitioner was only the fact of issuance and eventual
transfer/assignment to PSPC of the TCCs. The succeeding portions of the TSN, omitted
in the Comment, clearly showed that Sr. State Solicitor Bustria repeatedly denied Atty.
Lopez's (PSPC's counsel) proposed stipulations on the valuable consideration for the
TCCs, the approval by the concerned agencies of the deed of the said
assignment/transfer and related matters.44

Fraud, in its general sense, is deemed to comprise anything calculated to deceive,

including all acts, omissions, and concealment involving a breach of legal or equitable
duty, trust or confidence justly reposed, resulting in the damage to another, or by
which an undue and unconscionable advantage is taken of another. It is a question of
fact and the circumstances constituting it must be alleged and proved in the court
below.45 Petitioner's allegations of fraud and irregularity in the issuance to FWI and
eventual transfer to PSPC of the subject TCCs require presentation of evidence in a full-
blown trial. PSPC, in turn, can present its own evidence to prove the status of a
purchaser or transferee in good faith and for value. The solidary liability of PSPC and
FWI for the amount covered by the TCCs depends on the good faith or lack of it on the
part of PSPC.

In ascertaining good faith, or the lack of it, which is a question of intention, courts are
necessarily controlled by the evidence as to the conduct and outward acts by which
alone the inward motive may, with safety, be determined.46 Good faith connotes an
honest intention to abstain from taking undue advantage of another, even though the
forms and technicalities of law, together with the absence of all information or belief of
facts, would render the transaction unconscientious.47 The ascertainment of good faith,
or lack of it, and the determination of whether due diligence and prudence were
exercised or not, are questions of fact.48

Trial courts have limited authority to render summary judgments and may do so only
when there is clearly no genuine issue as to any material fact. When the facts as
pleaded by the parties are disputed or contested, proceedings for summary judgment
cannot take the place of trial.49 As certain facts pleaded are contested by the parties in
this case, rendition of summary judgment is not proper.

Prescription

As already mentioned, BOC's collection suit is not based on any new or revised
assessment because the original assessments which had long become final and
uncontestable, were already settled by PSPC with the use of the subject TCCs.

With the cancellation of the TCCs, the tax liabilities of PSPC under the original
assessments were considered unpaid, hence BOC's demand letters and the action for
collection in the RTC. To repeat, these assessed customs duties and taxes were
previously assessed and paid by the taxpayer, only that the TCCs turned out to be
spurious and hence worthless certificates that did not extinguish PSPC's tax liabilities.

The applicable provision is Section 1204 of the Tariff and Customs Code, which states:
Section 1204. Liability of Importer for Duties. — Unless relieved by laws or
regulations, the liability for duties, taxes, fees and other charges attaching on
importation constitutes a personal debt due from the importer to the government
which can be discharged only by payment in full of all duties, taxes, fees and
other charges legally accruing. It also constitutes a lien upon the articles imported
which may be enforced while such articles are in the custody or subject to the control of
the government. (Emphasis supplied)
As we held in Pilipinas Shell Petroleum Corporation v. Republic 50:
Under this provision, import duties constitute a personal debt of the importer that must
be paid in full. The importer's liability therefore constitutes a lien on the article which
the government may choose to enforce while the imported articles are either in its
custody or under its control.

When respondent released petitioner's goods, its (respondent's) lien over the imported
goods was extinguished. Consequently, respondent could only enforce the payment of
petitioner's import duties in full by filing a case for collection against petitioner.51
ChanRoblesVirtualawlibrary

Stare Decisis

The doctrine of stare decisis is based on the principle that once a question of law has
been examined and decided, it should be deemed settled and closed to further
argument.52 Accordingly, when a court has laid down a principle of law as applicable to
a certain state of facts, it will adhere to that principle and apply it to all future cases in
which the facts are substantially the same. Thus, where the same questions relating to
the same event have been put forward by the parties similarly situated as in a previous
case litigated and decided by a competent court, the rule of stare decisis is a bar to any
attempt to relitigate the same issue.53

The RTC and CA both ruled that Pilipinas Shell Petroleum Corporation v. CIR 54 applies to
the present case, stating that the legal issues have already been settled by this Court
such as the ineffective cancellation by the Center of TCCs which have been fully utilized
by the importer/taxpayer and the sole responsibility under the Liability Clause in the
TCC of the original grantee for its fraudulent issuance by the Center.
We disagree.

Pilipinas Shell Petroleum Corporation v. CIR55 involved TCCs used by PSPC that were
also cancelled for alleged fraud in their issuance and transfer. However, in the said
case, there was a finding, on the basis of evidence presented before the CTA, that PSPC
is a transferee in good faith and for value and that no evidence was adduced that it
participated in any way in the issuance of the TCCs to the corporations who in turn
conveyed the same to PSPC.

PSPC's status as transferee in good faith of the TCCs assigned to it by FWI is yet to be
established or proven at the trial. In fact, this Court in upholding the jurisdiction of the
RTC directed it to proceed with the pre-trial and trial proper. Petitioner should be given
the opportunity to substantiate its allegations of fraud in the issuance and transfer of
the TCCs which PSPC used to pay for the customs duties and taxes due on its oil
importations. Whether Pilipinas Shell Petroleum Corporation v. CIR 56 applies squarely to
the present case may be determined only after such trial. If it is shown that PSPC was a
party to the fraud as when it did not obtain the TCC for value or has knowledge of its
fraudulent issuance, it will be liable for the taxes and for the fraud committed as
provided for by law.

As to the full utilization of the TCCs being claimed by PSPC, our ruling in Pilipinas Shell
Petroleum Corporation v. CIR is clear that the taxpayer must have no participation in
the fraud, viz.:
Sec. 3, letter 1. of AO 266, in relation to letters a. and g., does give ample authority to
the Center to cancel the TCCs it issued. Evidently, the Center cannot carry out its
mandate if it cannot cancel the TCCs it may have erroneously issued or those that were
fraudulently issued. It is axiomatic that when the law and its implementing rules are
silent on the matter of cancellation while granting explicit authority to issue, an
inherent and incidental power resides on the issuing authority to cancel that which was
issued. A caveat however is required in that while the Center has authority to do so, it
must bear in mind the nature of the TCCs immediate effectiveness and validity for
which cancellation may only be exercised before a transferred TCC has been
fully utilized or cancelled by the BIR after due application of the available tax credit to
the internal revenue tax liabilities of an innocent transferee for value, unless of
course the claimant or transferee was involved in the perpetration of the fraud
in the TCCs issuance, transfer, or utilization. The utilization of the TCC will not
shield a guilty party from the consequences of the fraud
committed.57 (Emphasis supplied)
In sum, the CA erred in affirming the RTC orders granting summary judgment in favor
of PSPC considering that there exists a genuine issue of fact and that stare decisis finds
no application in this case.

WHEREFORE, the petition is GRANTED. The Decision dated February 13, 2013 and
Resolution dated June 3, 2013 of the Court of Appeals in CA-G.R. CV No. 95436
are REVERSED and SET ASIDE.

The case is hereby REMANDED to the Regional Trial Court of Manila, Branch 49 for the
conduct of trial proceedings in Civil Case No. 02-103191 with utmost DELIBERATE
DISPATCH.
No pronouncement as to costs.

SO ORDERED. chanroblesvirt

uallawlibrary

SECOND DIVISION

February 1, 2017

G.R. No. 195450

DEVELOPMENT BANK OF THE PHILIPPINES, Petitioner

vs.
HON. EMMANUEL C. CARPIO, in his capacity as Presiding Judge, Regional Trial Court,
Branch 16, Davao City, COUNTRY BANKERS INSURANCE CORPORATION, DABAY ABAD,
HATAB ABAD, OMAR ABAS, HANAPI ABDULLAH, ROJEA AB ABDULLAH, ABDULLAH
ABEDIN, ALEX ABEDIN, et al., represented by their Attorney-in-Fact, MR. MANUEL L. TE,
Respondents

DECISION

MENDOZA, J.:

This is a petition for review on certiorari seeking to reverse and set aside the July 9, 2008
Decision  and the January 21, 2011 Resolution  of the Court of Appeals (CA) in CA-G.R. SP No.
1 2

85719, which dismissed the petition for certiorari and mandamus praying for the annulment of the
May 17, 2004 and July 9, 2004 Orders  of the Regional Trial Court, Branch 16, Davao City (RTC), in
3

Civil Case No. 28,721-01.

The Antecedents

On August 21, 2001, Dabay Abad, Hatab Abad, Omar Abas, Hanapi Abdullah, Rojea Ab Abdullah,
Abdullah Abedin, Alex Abedin, et al.(Abad, et al.), represented by their attorney-in-fact, Manuel L.
Te, filed a complaint for delivery of certificates of title, damages, and attorney's fees against
petitioner Development Bank of the Philippines (DBP) and Guarantee Fund for Small and Medium
Enterprise (GFSME) before the RTC. 4

In their, Complaint,  Abad, et al. prayed, among others, for the issuance of a writ of seizure, pending
5

hearing of the case, for delivery of their certificates of title they claimed to be unlawfully detained by
DBP and GFSME. They alleged that their certificates of title were submitted to DBP for safekeeping
pursuant to the loan agreement they entered into with DBP. The same certificates of title were
turned over by DBP to GFSME because of its call on GFSME's guarantee on their loan, which
became due and demandable, and pursuant to the guarantee agreement between DBP and
GFSME.

As prayed for, the RTC issued the Writ of Seizure  on August 24, 2001. The writ was accompanied
6

by Plaintiffs Bond for Manual Delivery of Personal Property  issued by Country Bankers Insurance
7

Corporation (CBIC).

On September 5, 2001, DBP filed its Omnibus Motion to Dismiss Complaint and to Quash Writ of
Seizure  on the ground of improper venue, among others. Abad, et al. filed their Opposition  and
8 9

later, their Supplemental Opposition,  to which they attached the Delivery Receipt  showing that the
10 11

court sheriff took possession of 228 certificates of title from GFSME.

In its Order,  dated September 25, 2001, the RTC granted DBP's omnibus motion and dismissed the
12

case for improper venue.

On December 20, 2001, DBP and GFSME filed their Joint Motion to Order Plaintiffs to Return Titles
to Defendants DBP and GFSME.  After Abad, et al. filed their opposition, the RTC issued the
13

Order,  dated January 27, 2003, directing Abad, et al. to return the 228 certificates of title.
14

Abad, et al. filed a petition for certiorari and prohibition with the Court praying, among others, for the
nullification and reversal of the January 27, 2003 Order of the RTC. The Court, however, in its June
9, 2003 Resolution,  dismissed the petition.
15

On September 18, 2003, DBP filed its Motion for Writ of Execution  of the January 27, 2003 Order
16

before the RTC. On December 16, 2003, the RTC issued the corresponding Writ of Execution.  The 17

Sheriffs Return of Service,  however, indicated that Abad, et al. failed to deliver the certificates of
18

title.

The Subject Motion against the Bond

Due to the non-delivery of the certificates of title by Abad, et al., DBP filed its Motion/Application to
Call on Plaintiff's Surety Bond,  dated February 3, 2004, praying for the release of the bond issued
19

by CBIC to answer for the damages it sustained as a result of the failure to return the 228 certificates
of title.

The RTC Ruling

In its Order, dated May 17, 2004, the RTC denied the subject motion explaining that the resolution of
the motion was no longer part of its residual power. It pointed out that although there was indeed an
order to return the 228 certificates of title to DBP, it was not made as a result of a trial of the case,
but as a consequence of the order of dismissal based on improper venue.

DBP moved for reconsideration. Nevertheless, in its July 9, 2004 Order, the RTC denied the motion.

Aggrieved, DBP filed a petition for certiorari and mandamus before the CA.

The CA Ruling

In its July 9, 2008 Decision, the CA dismissed the petition for certiorari and mandamus. It noted that
DBP did not move for reconsideration of the September 25, 2001 Order of dismissal. It considered
the RTC decision as final and executory. It added that Section 20, Rule 57 of the Rules of Court
provided that the claim for damages against the bond must be filed before trial or before appeal was
perfected or before the judgment became executory. 20

DBP moved for reconsideration, but its motion was denied by the CA in its January 21, 2011
Resolution.

Hence, this petition.

ISSUE

THE COURT OF APPEALS ERRED IN ITS BLIND ADHERENCE TO AND STRICT APPLICATION
OF SECTION 20, RULE 57 OF THE 1997 RULES OF CIVIL PROCEDURE. 21

Petitioner DBP argues that it could not have anticipated that Abad, et al. (respondents) would not
abide by the writ of execution; hence, prior to such failure of execution, it would be premature to
claim for damages against the bond because DBP had not yet suffered any consequential damages
with the implementation of the writ of seizure; and that Section 20, Rule 57 of the Rules of Court was
not applicable as the damages resulting from the improper issuance of the writ of seizure occurred
only after the unjustified refusal of respondents to return the titles despite the order from the RTC.

In its Comment,  dated August 11, 2011, respondent CBIC averred that Section 20, Rule 57 of the
22

Rules of Court specified that an application for damages on account of improper, irregular or
excessive attachment must be filed before the trial or before appeal is perfected or before the
judgment becomes executory; that the motion to call on plaintiff's surety bond was filed more than
two (2) years after the September 25, 2001 Order of the RTC, dismissing the case, became final and
executory; that, under Section 10, Rule 60 of the Rules of Court, the surety's liability under the
replevin bond should be included in the final judgment; that, there being no judgment as to who,
between the plaintiffs and the defendants, was entitled to the possession of the certificates of title,
the R TC properly denied the motion to call on plaintiff's surety bond; that, any claim for damages
against the bond was only proper with respect to any loss that DBP might have suffered by being
compelled to surrender the possession of the certificates of title pending trial of the action; that, in
this case, the motion to call on plaintiffs surety bond was filed after the trial was already terminated
with the issuance of the order of dismissal; and that, instead of moving to claim for damages, DBP
sought to quash the writ of seizure, even though it might already have some basis to claim for
damages at that time as could be gleaned from the wordings of their motion to dismiss the
complaint, based on, among others, improper venue and inapplicability of replevin as proper
remedy.

Respondents, on the other hand, failed to file their comment despite several opportunities granted to
them. Thus, their right to file a comment on the petition for review was deemed waived.

In its Consolidated Reply,  dated August 15, 2016, DPB asserted that Section 20, Rule 57 of the
23

Rules of Court did not cover a situation where there was an instantaneous dismissal of the case due
to improper venue; that the damages resulting from the improper issuance of the writ of seizure
occurred only after the unjustified refusal of respondents to return the titles despite order from the
RTC; and, that DBP could not resort to the surety prior to recovering the titles from respondents at
any time during the trial or before the judgment became final and executory.

The Court's Ruling

The petition lacks merit.

The trial court did not reach

the residual jurisdiction stage

Residual jurisdiction refers to the authority of the trial court to issue orders for the protection and
preservation of the rights of the parties which do not involve any matter litigated by the appeal; to
approve compromises; to permit appeals by indigent litigants; to order execution pending appeal in
accordance with Section 2, Rule 39; and to allow the withdrawal of the appeal, provided these are
done prior to the transmittal of the original record or the record on appeal, even if the appeal has
already been perfected or despite the approval of the record on appeal  or in case of a petition for
24

review under Rule 42, before the CA gives due course to the petition. 25

The "residual jurisdiction" of the trial court is available at a stage in which the court is normally
deemed to have lost jurisdiction over the case or the subject matter involved in the appeal. This
stage is reached upon the perfection of the appeals by the parties or upon the approval of the
records on appeal, but prior to the transmittal of the original records or the records on appeal. In
either instance, the trial court still retains its so-called residual jurisdiction to issue protective orders,
approve compromises, permit appeals of indigent litigants, order execution pending appeal, and
allow the withdrawal of the appeal. 26

From the foregoing, it is clear that before the trial court can be said to have residual jurisdiction over
a case, a trial on the merits must have been conducted; the court rendered judgment; and the
aggrieved party appealed therefrom.

In this case, there was no trial on the merits as the case was dismissed due to improper venue and
respondents could not have appealed the order of dismissal as the same was a dismissal, without
prejudice. Section 1 (h), Rule 41 of the Rules of Civil Procedure states that no appeal may be taken
from an order dismissing an action without prejudice. Indeed, there is no residual jurisdiction to
speak of where no appeal has even been filed. 27

In Strongworld Construction Corporation, et al. v. Hon. Perello, et al.,  the Court elucidated on the
28

difference between a dismissal with prejudice and one without prejudice:

We distinguish a dismissal with prejudice from a dismissal without prejudice. The former disallows

and bars the refiling of the complaint; whereas, the same cannot be said of a dismissal without
prejudice. Likewise, where the law permits, a dismissal with prejudice is subject to the right of
appeal. 1âwphi1

xxx

Section 1, Rule 16 of the 1997 Revised Rules of Civil Procedure enumerates the grounds for which
a motion to dismiss may be filed, viz.:

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

(a) That the court has no jurisdiction over the person of the defending party;

(b) That the court has no jurisdiction over the subject matter of the claim;
(c) That venue is improperly laid;

(d) That the plaintiff has no legal capacity to sue;

(e) That there is another action pending between the same parties for the same cause;

(f) That the cause of action is barred by a prior judgment or by the statute of limitations;

(g) That the pleading asserting the claim states no cause of action;

(h) That the claim or demand set forth in the plaintiffs pleading has been paid, waived, abandoned,
or otherwise extinguished;

(i) That the claim on which the action is founded is unenforceable under the provisions of the statute
of frauds; and

(j) That a condition precedent for filing the claim has not been complied with.

Section 5 of the same Rule, recites the effect of a dismissal under Sections 1(f), (h), and (i), thereof,
thus:

SEC. 5. Effect of dismissal. Subject to the right of appeal, an order granting a motion to dismiss
based on paragraphs (f), (h), and (i) of section 1 hereof shall bar the refiling of the same action or
claim.

Briefly stated, dismissals that are based on the following grounds, to wit: (1) that the cause of action
is barred by a prior judgment or by the statute of limitations; (2) that the claim or demand set forth in
the plaintiffs pleading has been paid, waived, abandoned or otherwise extinguished; and (3) that the
claim on which the action is founded is unenforceable under the provisions of the statute of frauds,
bar the refiling of the same action or claim. Logically, the nature of the dismissal founded on any of
the preceding grounds is with prejudice because the dismissal prevents the refiling of the same
action or claim. Ergo, dismissals based on the rest of the grounds enumerated are without prejudice
because they do not preclude the refiling of the same action.

xxx

As has been earlier quoted, Section 1(h), Rule 41 of the 1997 Revised Rules of Civil Procedure
mandates that no appeal may be taken from an order dismissing an action without prejudice. The
same section provides that in such an instant where the final order is not appealable, the aggrieved
party may file an appropriate special civil action under Rule 65. 29

Here, the RTC dismissed the replevin case on the ground of improper venue. Such dismissal is
one without prejudice and does not bar the refiling of the same action; hence, it is not appealable.
Clearly, the RTC did not reach, and could not have reached, the residual jurisdiction stage as the
case was dismissed due to improper venue, and such order of dismissal could not be the subject of
an appeal. Without the perfection of an appeal, let alone the unavailability of the remedy of appeal,
the RTC did not acquire residual jurisdiction. Hence, it is erroneous to conclude that the RTC may
rule on DBP's application for damages pursuant to its residual powers.

Equity cannot supersede the

Rules of Court
DBP admits that it filed the application for damages after the order of dismissal had become final
and executory. In seeking relief from this Court, however, it invokes equity and argues that a strict
application of Section 20, Rule 57 of the Rules of Court would prejudice its right to recover damages
arising from the improper attachment of the certificates of title.

DBP, however, must be reminded that equity, "which has been aptly described as a 'justice outside
legality,' is applied only in the absence of, and never against, statutory law or, as in this case, judicial
rules of procedure.  The pertinent positive rules being present here, they should preempt and prevail
30

over all abstract arguments based only on equity."  As the Court has stated in Lim Tupas v.
31

CA,  "[ e]motional appeals for justice, while they may wring the heart of the Court, cannot justify
32

disregard of the mandate of the law as long as it remains in force. The applicable maxim, which goes
back to the ancient days of the Roman jurists - and is now still reverently observed - is 'aequetas
nunquam contravenit legis.'" 33

Accordingly, the CA did not commit any reversible error when it applied the rules of procedure in
resolving the issue at hand.

The application for damages

was belatedly filed

Section 10, Rule 60 of the Rules of Court provides that in replevin cases, as in receivership and
injunction cases, the damages to be awarded to either party upon any bond filed by the other shall
be claimed, ascertained, and granted in accordance with Section 20 of Rule 57 which reads:

SEC. 20. Claimfor damages on account of illegal attachment. - If the judgment on the action be in
favor of the party against whom attachment was issued, he may recover, upon the bond given or
deposit made by the attaching creditor, any damages resulting from the attachment. Such damages
may be awarded only upon application and after proper hearing, and shall be included in the
final judgment. The application must be filed before the trial or before appeal is perfected or before
the judgment becomes executory, with due notice to the attaching creditor and his surety or sureties,
setting forth the facts showing his right to damages and the amount thereof.

If the judgment of the appellate court be favorable to the party against whom the attachment was
issued, he must claim damages sustained during the pendency of the appeal by filing an
application with notice to the party in whose favor the attachment was issued or his surety or
sureties, before the judgment of the appellate court becomes executory. The appellate court may
allow the application to be heard and decided by the trial court. [Emphases supplied]

In other words, to recover damages on a replevin bond (or on a bond for preliminary attachment,
injunction or receivership), it is necessary (1) that the defendant-claimant has secured a favorable
judgment in the main action, meaning that the plaintiff has no cause of action and was not, therefore,
entitled to the provisional remedy of replevin; (2) that the application for damages, showing
claimant's right thereto and the amount thereof, be filed in the same action before trial or before
appeal is perfected or before the judgment becomes executory; (3) that due notice be given to the
other party and his surety or sureties, notice to the principal not being sufficient; and (4) that there
should be a proper hearing and the award for damages should be included in the final judgment. 34

Likewise, to avoid multiplicity of suits, all incidents arising from the same controversy must be settled
in the same court having jurisdiction of the main action. Thus, the application for damages must be
filed in the court which took cognizance of the case, with due notice to the other parties. 35
In this case, DBP filed the application for damages long after the order of dismissal had become final
and executory. It explained that this belated filing was due to its recourse to other remedies, such as
the enforcement of the writ of execution. The Court, however, finds this reason to be wanting in
persuasiveness. To begin with, the filing of an application for damages does not preclude resort to
other remedies. Nowhere in the Rules of Court is it stated that an application for damages bars the
filing of a motion for a writ of seizure, a writ of execution or any other applicable remedy. DBP, from
the beginning, had already perceived the attachment to be improper; hence, it could have easily filed
an application before the judgment became executory.

In Jao v. Royal Financing Corporation,  the Court precluded the defendant therein from claiming
36

damages against the surety bond because it failed to file the application for damages before the
termination of the case, thus:

xxx The dismissal of the case filed by the plaintiffs-appellees on July 11, 1959, had become final
and executory before the defendant-appellee corporation filed its motion for judgment on the bond
on September 7, 1959. In the order of the trial court, dismissing the complaint, there appears no
pronouncement whatsoever against the surety bond. The appellee-corporation failed to file its
proper application for damages prior to the termination of the case against it. It is barred to do
so now. The prevailing party, if such would be the proper term for the appellee-corporation, having
failed to file its application for damages against the bond prior to the entry of final judgment, the
bondsman-appellant is relieved of further liability thereunder. [Emphases supplied] 37

Thus, the RTC has indeed no residual jurisdiction on DBP's claim for damages.

Remedies

The Court is not unmindful of the plight of DBP. Its chosen remedy, however, cannot be
countenanced as it disregards the Rules of Court and the settled jurisprudence on the matter.
Nevertheless, this is not to say that DBP has no other available remedies in order to recover
respondents' indebtedness.

First, DBP could enforce its guarantee agreement with GFSME. A contract of guaranty gives rise to
a subsidiary obligation on the part of the guarantor.  A guarantor agrees that the creditor, after
38

proceeding against the principal, may proceed against the guarantor if the principal is unable to pay.
Moreover, he contracts to pay if, by the use of due diligence, the debt cannot be made out of the
principal debtor.39

Further, it may file an action for damages based on Article 19 of the New Civil Code against
respondents for unlawfully taking the certificates of title, which served as security for their loan.
In Globe Mackay Cable and Radio Corporation v. Court of Appeals,  the Court held:
40

This article, known to contain what is commonly referred to as the principle of abuse of rights, sets
certain standards which must be observed not only in the exercise of one's rights, but also in the
performance of one's duties. These standards are the following: to act with justice; to give everyone
his due; and to observe honesty and good faith. The law, therefore, recognizes a primordial limitation
on all rights; that in their exercise, the norms of human conduct set forth in Article 19 must be
observed. A right, though by itself legal because recognized or granted by law as such, may
nevertheless become the source of some illegality. When a right is exercised in a manner which
does not conform with the norms enshrined in Article 19 and results in damage to another, a legal
wrong is thereby committed for which the wrongdoer must be held responsible. But while Article 19
lays down a rule of conduct for the government of human relations and for the maintenance of social
order, it does not provide a remedy for its violation. Generally, an action for damages under either
Article 20 or Article 21 would be proper.  [Emphasis supplied]
41

Finally, nothing precludes DBP from instituting an action for collection of sum of money against
respondents.  Besides, if the parcels of land covered by the certificates of title, which DBP sought to
1âwphi1

recover from respondents, were mortgaged to the former, then DBP, as mortgage-creditor, has the
option of either filing a personal action for collection of sum of money or instituting a real action to
foreclose on the mortgage security. The two remedies are alternative and each remedy is complete
by itself. If the mortgagee opts to foreclose the real estate mortgage, he waives the action for the
collection of the debt, and vice versa.
42

WHEREFORE, the petition is DENIED. The July 9, 2008 Decision and the January 21, 2011
Resolution of the Court of Appeals, in CA-G.R. SP No. 85719, are AFFIRMED in toto.

SO ORDERED.

FIRST DIVISION

G.R. No. 203918, December 02, 2015

SPOUSES AMADOR C. CAYAGO, JR. AND ERMALINDA B.

CAYAGO, Petitioners, v. SPOUSES EVELITO CANTARA AND SOLEDAD
CANTARA, Respondents.

RESOLUTION

PERLAS-BERNABE, J.:

Before the Court is a petition for review on certiorari1 assailing the Decision2 dated April
14, 2011 and the Resolution3 dated September 17, 2012 of the Court of Appeals (CA) in
CA-G.R. S.P. No. 05273, which dismissed the petition for review filed by herein
petitioners-spouses Amador C. Cayago, Jr. and Ermalinda B. Cayago (Sps. Cayago) for
having been belatedly filed.

The Facts

The instant case stemmed from a complaint4 for forcible entry with preliminary
mandatory injunction and damages filed by herein respondents-spouses Evelito and
Soledad Cantara (Sps. Cantara) against Sps. Cayago on January 17, 2008.

In their complaint, Sps. Cantara alleged that they are the rightful and legitimate owners
and actual possessors of a 1,722-square meter parcel of agricultural land (riceland)
located at So. Can-awak, Brgy. Surok, Borongan, Eastern Samar (subject land) covered
by Tax Declaration (TD) No. 105205 in the name of one Asteria Rubico
(Asteria).6 Sometime in 1993, they purchased the subject land from Asteria as
evidenced by a Deed of Absolute Sale7 dated November 1993. Asteria, in turn, acquired
it in 1979 from Justina Alegre, daughter of the original owner Simona Capito, as
evidenced by a Sale of Riceland8 dated June 11, 1979. Since then, Sps. Cantara have
been in actual possession thereof through their tenants, spouses Pedro Amoyo Segovia
(Pedro) and Leonila Segovia, who have been religiously cultivating the land,
planting palay, and delivering the produce to them.9

However, sometime during the second week of December 2007, Sps. Cayago, using
hired hands and without the knowledge of Sps. Cantara or their tenants, by means of
force, intimidation, strategy, threats, or stealth, entered the subject land, cleared it up,
and planted palay, effectively depriving the latter and their tenants of access
thereto.10 Hence, Sps. Cantara demanded that Sps. Cayago vacate and surrender
possession of the subject land, but to no avail, thus, prompting the filing of the present
complaint before the Municipal Trial Court of Borongan, Eastern Samar (MTC), docketed
as Civil Case No. (2008-02)764.11

In their defense,12 Sps. Cayago claimed to be the real owners of the subject land and
possessors thereof since 1948, as evidenced by TD No. 6816113 in the name of one
Sabina Cayago (Sabina), as well as Katibayan ng Orihinal na Titulo Blg. (OCT No.) P-
769414 issued on December 28, 2006 in the name of the Heirs of Amador P. Cayago,
Sr., represented by Sabina. Furthermore, they averred that the deed of sale presented
by Sps. Cantara to prove their ownership over the subject land was not registered,
hence, not binding or valid against them.15

During the preliminary conference on March 31, 2008, the parties agreed to conduct a
relocation survey with Engineer Roel M. Suyot (Engr. Suyot) as the appointed
commissioner.16 The Commissioner's Report dated May 27, 2008 stated, among others:
Lot 12224, Cad 434-D, a riceland, with OCT No. P-7694 in the name of Heirs of Amador
Cayago represented by Sabina Cayago with an area of 2,9333 (sic) sq. m. is the lot
being claimed by the defendant Mr. Jun Cayago. The southern portion of lot 12224, Cad
434-D is the portion being claimed by the plaintiff Soledad C. Cantara with an area
of 1,809 sq. m. (on site area) with a boundary line in green color dividing lot 12224,
Cad 434-D into two x x x the boundary owners appearing in the tax declaration of
appellees Jun Cayago are consistent with DENR records contrary to the tax declaration
of appellants. On the other hand, the names of adjoining owners appearing in the deed
of sale between Asteria A. Rubico (vendor) and Soledad C. Cantara (vendee) is
consistent on many parts of the southern portion of lot 12224, Cad 434-D x x x, that a
portion of this Lot 12224, Cad 434-D southern portion is also being claimed by the
plaintiff Soledad C. Cantara.17
ChanRoblesVirtualawlibrary

The MTC Ruling

In a Decision18 dated February 27, 2009, the MTC dismissed the complaint for lack of
merit, finding Sps. Cayago to have sufficiently proven, by a preponderance of evidence,
their ownership and prior physical possession of the subject land. It gave credence to
OCT No. P-7694, the Tax Declarations, and the Commissioner's Report which supported
Sps. Cayago's claim of ownership over the subject land. It likewise recognized that Sps.
Cayago underwent the tedious government process to be able to secure OCT No. P-
7694 under their name, which required actual and continuous possession of the subject
land.19
Dissatisfied, Sps. Cantara appealed the matter before the Regional Trial Court of
Borongan, Eastern Samar, Branch 1 (RTC), docketed as Civil Case No. 4134.

The RTC Ruling

In a Decision20 dated August 14, 2009, the RTC reversed the MTC's Decision declaring
Sps. Cantara to have the better right to possess the subject land over Sps. Cayago and,
accordingly, ordered the latter, their agents, and persons acting in their behalf to
surrender its possession and pay the amount of P500.00 per month as reasonable rent
for its use from December 2007 until its actual surrender.21

The RTC found that Sps. Cantara were able to discharge the burden of proving prior
physical possession of the subject land of which they were illegally deprived. It gave
probative weight to the notarized Deed of Sale between Sps. Cantara and Asteria which
proves that the former have been occupying the subject land since 1993, as
corroborated by the sworn statements of the present tenants thereof. On this score, the
RTC noted that Sps. Cayago failed to adduce evidence to discredit the validity of the
said Deed of Sale. Further, it observed that the MTC overlooked the finding of Engr.
Suyot in the Commissioner's Report that Sps. Cantara possess the southern portion of
Lot 12224 acquired by purchase since 1993.22

Finally, the RTC pointed out that the MTC erred in giving consideration and weight to
the documentary evidence submitted by Sps. Cayago, which included OCT No. P-7694
and the Tax Declarations in support of their claim, the same not having been formally
offered in the proceedings before it.23

Aggrieved, Sps. Cayago filed a motion for reconsideration24 on September 14,

2009,25 which was denied by the RTC in an Order26 dated July 6, 2010. Sps. Cayago,
through counsel, received such order of denial on July 15, 2010.27 Pursuant to Section
1,28 Rule 42 of the Rules of Court, Sps. Cayago had fifteen (15) days, or until July 30,
2010 within which to file a petition for review before the CA. On July 29, 2010,29 or a
day before the expiration of the period within which to file said petition, Sps. Cayago
filed a motion for extension of time30 praying for an additional period of fifteen (15)
days, or until August 14, 2010, within which to file their petition for review.

Since August 14, 2010 fell on a Saturday, Sps. Cayago filed their petition for
review31 with the CA on August 16, 2010.32

The CA Ruling

In a Decision33 dated April 14, 2011, the CA dismissed the petition outright for having
been filed out of time, ruling that motions for extension to file pleadings are not
granted as a matter of right but in the sound discretion of the court. In this regard, it
pronounced that lawyers should never presume that their motions for extension or
postponement will be granted.34

Moreover, it found that the petition suffered from the following infirmities: (1) the
notarial certificate on the Verification did not indicate the province or city where the
notary public was commissioned, the serial number of the commission and its office
address were likewise not indicated, in violation of Section 2 (b) and (c), Rule VIII of
the 2004 Rules on Notarial Practice; and (2) there was no explanation as to why
personal filing was not done.35

Dissatisfied, Sps. Cayago filed a motion for reconsideration,36 which was denied in a

Resolution37 dated September 27, 2012; hence, the instant petition.

The Issue Before the Court

The sole issue advanced for the Court's resolution is whether or not the CA erred in
dismissing the petition for review for failure of Sps. Cayago to file the same within the
reglementary period.

The Court's Ruling

The petition is meritorious.

As a general rule, appeals are perfected when it is filed within the period prescribed
under the Rules of Court. Specifically, Section 1,38 Rule 42 of the Rules of Court
provides that appeals to the CA taken from a decision of the RTC rendered in the
exercise of its appellate jurisdiction should be filed and served within fifteen (15) days,
counted from notice of the judgment appealed from or from the denial of petitioner's
motion for reconsideration. The original 15-day period to appeal is extendible for an
additional 15 days upon the filing of a proper motion and the payment of docket fees
within the reglementary period of appeal.39 Failure to successfully comply with the
aforementioned procedure, especially in filing the appeal within the prescribed period,
renders the petition for review dismissible.40

In dismissing Sps. Cayago's petition for review for being belatedly filed, the CA held
that the mere filing of a motion for extension to file a petition for review is not enough
as Sps. Cayago are obligated to exercise due diligence to verify from the Division Clerks
of Court of the appellate court the action on their motion for extension, considering that
time may run out on them, as it did in this case.41 It explained that the case was raffled
to the ponente on August 10, 2010 and the rollo or case record was forwarded to his
office only on January 5, 2011. As such, he could not have acted on the motion on or
before July 30, 2010, the last day for filing the petition for review.42

In the case of Heirs of Amado A. Zaulda v. Zaulda,43 the petitioners therein filed a

motion for extension of time to file their petition for review on August 24, 2010, a day
before the last day to appeal the decision of the RTC. However, the CA dismissed their
appeal, ratiocinating that the ponente's office received the motion for extension of time
only on January 5, 2011, at which time the period to appeal had long expired. In giving
due course to the petition for review and considering it to have been timely filed, the
Court ruled that it was the height of injustice for the CA to dismiss a petition just
because the motion for extension reached the ponente's office beyond the last date
prayed for. It found that the delay cannot be attributed to petitioners, who were
unreasonably deprived of their right to be heard on the merits and were fatally
prejudiced by the delay in the transmittal of records attributable to the court's inept or
irresponsible personnel.44
In light of the foregoing, the Court therefore finds that the CA committed reversible
error when it dismissed Sps. Cayago's petition on the ground that it was belatedly filed.

It bears stressing that Sps. Cayago's motion for extension of time, as well as their
petition for review, was physically in the CA's possession long before the issuance of its
Decision on April 14, 2011, but for reasons completely beyond their control, the motion
for extension of time to file their petition belatedly reached the ponente's office and was
therefore not timely acted upon. As a result, the same was unceremoniously dismissed
on procedural grounds. As in the Zaulda case, it is a travesty of justice to dismiss
outright a petition for review which complied with the rules only because of reasons not
attributable to the petitioners - Sps. Cayago in this case - such as delay on the part of
the personnel of the CA in transmitting case records to their respective ponentes.

Procedural rules were established primarily to provide order and prevent needless
delays for the orderly and speedy discharge of judicial business.45 The Court has long
declared that the right to appeal is merely a statutory privilege, subject to the court's
discretion by virtue of which no party can assume that its motion for extension would
be granted. Being discretionary in nature, it behooves upon the appellants to follow up
on their motions and ascertain its status,46 as the failure to strictly comply with the
provisions on reglementary periods renders the remedy of appeal unavailable. Further,
as a purely statutory right, the appellant must strictly comply with the requisites laid
down by the Rules of Court.47 However, where strong considerations of substantial
justice are present, the stringent application of technical rules could be relaxed in the
exercise of equity jurisdiction as in cases where petitioners showed no intent to delay
the final disposition of the case.48

Accordingly, in the interest of substantial justice, the Court holds that Sps. Cayago's
petition for review should be resolved on the merits, taking into consideration that the
findings of fact and conclusions of law by the RTC were in complete contrast to those of
the MTC.

WHEREFORE, the petition is GRANTED. The Decision dated April 14, 2011 and the
Resolution dated September 17, 2012 of the Court of Appeals (CA) in CA-G.R. S.P. No.
05273 dismissing petitioners-spouses Amador C. Cayago, Jr. and Ermalinda Cayago's
petition for review before the CA are hereby SET ASIDE. Accordingly, the case
is REMANDED to the CA for further proceedings.

SO ORDERED. chanroblesvirtuallawlibrar

FIRST DIVISION

G.R. NO. 191567 : March 20, 2013

 MARIE CALLO-CLARIDAD, Petitioner, v. PHILIP RONALD P. ESTEBAN and
TEODORA ALYN ESTEBAN, Respondents.

DECISION

BERSAMIN, J.:

The determination of probable cause to file a criminal complaint or information in court

is exclusively within the competence of the Executive Department, through the
Secretary of Justice. The courts cannot interfere in such determination, except upon a
clear showing that the Secretary of Justice committed grave abuse of discretion
amounting to lack or excess of jurisdiction.

The Case

Under review is the decision promulgated on November 20, 2009,1 whereby the Court
of Appeals (CA) upheld the resolution dated April 16, 2009 issued by the Secretary of
Justice dismissing for lack of probable cause the complaint for murder filed against the
respondents.2chanroblesvirtualawlibrary

Antecedents

The petitioner is the mother of the late Cheasare Armani "Chase" Callo Claridad, whose
lifeless but bloodied body was discovered in the evening of February 27, 2007 between
vehicles parked at the carport of a residential house located at No.10 Cedar Place,
Ferndale Homes, Quezon City. Allegedly, Chase had been last seen alive with
respondent Philip Ronald P. Esteban (Philip) less than an hour before the discovery of
his lifeless body.

Based on the petition, the following are the background facts.

Around 5:30 p.m. of February 27, 2007, Chase returned home from visiting his
girlfriend, Ramonna Liza "Monnel" Hernandez. Around 7:00 p.m., Chase's sister Ariane
was sitting at the porch of their house when she noticed a white Honda Civic car parked
along the street. Recognizing the driver to be Philip, Ariane waved her hand at him.
Philip appeared nonchalant and did not acknowledge her gesture. Ariane decided to
stay behind and leave with their house helpers, Marivic Guray and Michelle Corpus, only
after Chase had left on board the white Honda Civic car.

In the meanwhile, Chase exchanged text messages with his girlfriend Monnel starting at
7:09 p.m. and culminating at 7:31 p.m. Among the messages was: Ppnta n kunin
gulong yam iniisip k prn n d tyo magksma. sbrang lungkot k ngun (On the way to get
the tires' I still think about us not being together I m very sad right now)

Security Guard (SG) Rodolph Delos Reyes and SG Henry Solis, who were stationed at
the main gate of Ferndale Homes, logged the arrival at 7:26 p.m. on February 27, 2007
of Philip on board a white Honda Civic bearing plate CRD 999 with a male companion in
the passenger seat. It was determined later on that the white Honda Civic bearing plate
CRD 999 was owned by one Richard Joshua Ulit, who had entrusted the car to Philip
who had claimed to have found a buyer of the car. Ulit, Pamela Ann Que, and car shop
owner Edbert Ylo later attested that Philip and Chase were friends, and that they were
unaware of any rift between the two prior to the incident.

Marivic Rodriguez, a house helper of Shellane Yukoko, the resident of No. 9 Cedar
Place, Ferndale Homes, was with her co-employee nanny Jennylyn Buri and the latter's
ward, Joei Yukoko, when they heard somebody crying coming from the crime scene:
Help! Help! This was at about 7:30 p.m. Even so, neither of them bothered to check
who had been crying for help. It was noted, however, that No. 10 Cedar Place, which
was owned by one Mrs. Howard, was uninhabited at the time. Based on the initial
investigation report of the Megaforce Security and Allied Services, Inc.,3 the Estebans
were illegally parking their cars at Mrs. Howard's carport. The initial investigation report
stated that the SGs would regularly remind the Estebans to use their own parking
garage, which reminders had resulted in heated discussions and altercations. The SGs
kept records of all the illegal parking incidents, and maintained that only the Estebans
used the carport of No. 10 Cedar Place.

Around 7:45 p.m., respondent Teodora Alyn Esteban (Teodora) arrived at Ferndale
Homes on board a vehicle bearing plate XPN 733, as recorded in the subdivision SG's
logbook. At that time, three cars were parked at the carport of No. 10 Cedar place, to
wit: a Honda CRV with plate ZAE 135 parked parallel to the Honda Civic with plate CRD
999, and another Honda Civic with plate JTG 333, the car frequently used by Philip,
then parked diagonally behind the two cars. Some witnesses alleged that prior to the
discovery of the Chase's body, they had noticed a male and female inside the car
bearing plate JTG 333 engaged in a discussion.

At around 7:50 p.m., SG Abelardo Sarmiento Jr., while patrolling around the village,
noticed that the side of the Honda Civic with plate JTG 333 had red streaks, which
prompted him to move towards the parked cars. He inspected the then empty vehicle
and noticed that its radio was still turned on. He checked the cars and discovered that
the rear and side of the Honda Civic with plate CRD 999 were smeared with blood. He
saw on the passenger seat a cellular phone covered with blood. It was then that he
found the bloodied and lifeless body of Chase lying between the parallel cars. The body
was naked from the waist up, with a crumpled bloodied shirt on the chest, and with
only the socks on. SG Sarmiento called for back-up. SG Rene Fabe immediately
barricaded the crime scene.

Around 7:55 p.m., SG Solis received a phone call from an unidentified person who
reported that a "kid" had met an accident at Cedar Place. SG Solis later identified and
confirmed the caller to be "Mr. Esteban Larry" when the latter entered the village gate
and inquired whether the "kid" who had met an accident had been attended to.
Moreover, when SG Fabe and SG Sarmiento were securing the scene of the crime, they
overheard from the radio that somebody had reported about a "kid" who had been
involved in an accident at Cedar Place. SG Fabe thereafter searched the village
premises but did not find any such accident. When SG Fabe got back, there were
already several onlookers at the crime scene.

The Scene-of-the-Crime Operations (SOCO) team arrived. Its members prepared a

sketch and took photographs of the crime scene. They recovered and processed the
cadaver of Chase, a bloodstained t-shirt, blood smears, green nylon cord, fingerprints,
wristwatch, and a bloodied Nokia N90 mobile phone.

According to the National Bureau of Investigation (NBI) Medico-Legal Report No N-07-

163 signed by Dr. Valentin Bernales, Acting Medico-Legal Division Chief, and Dr. Cesar
B. Bisquera, Medico-Legal Officer, the victim sustained two stab wounds, to wit: one on
the left side of the lower chest wall with a depth of 9 cm., which fractured the 4th rib
and pierced the heart, and the other on the middle third of the forearm. The findings
corroborated the findings contained in Medico-Legal Report No. 131-07 of Police Chief
Insp. Filemon C. Porciuncula Jr.

Resolution of the
Office of the City Prosecutor

The Office of the City Prosecutor (OCP) of Quezon City dismissed the complaint in its
resolution dated December 18, 2007.4 chanroblesvirtualawlibrary

The OCP observed that there was lack of evidence, motive, and circumstantial evidence
sufficient to charge Philip with homicide, much less murder; that the circumstantial
evidence could not link Philip to the crime; that several possibilities would discount
Philip's presence at the time of the crime, including the possibility that there were more
than one suspect in the fatal stabbing of Chase; that Philip was not shown to have any
motive to kill Chase; that their common friends attested that the two had no ill-feelings
towards each other; that no sufficient evidence existed to charge Teodora with the
crime, whether as principal, accomplice, or accessory; and that the allegation that
Teodora could have been the female person engaged in a discussion with a male person
inside the car with plate JTG 333 was unreliable being mere hearsay.

The petitioner moved for the reconsideration of the dismissal, but the OCP denied the
motion on December 15, 2008.5 chanroblesvirtualawlibrary

Resolution by the Secretary of Justice

On petition for review,6 the Secretary of Justice affirmed the dismissal of the complaint
on April 16, 2009.7chanroblesvirtualawlibrary

The Secretary of Justice stated that the confluence of lack of an eyewitness, lack of
motive, insufficient circumstantial evidence, and the doubt as to the proper
identification of Philip by the witnesses resulted in the lack of probable cause to charge
Philip and Teodora with the crime alleged.

The Secretary of Justice held that the only circumstantial evidence connecting Philip to
the crime was the allegation that at between 7:00 to 7:30 o'clock of the evening in
question, Chase had boarded the white Honda Civic car driven by Philip; that the
witnesses' positive identification of Philip as the driver of the car was doubtful, however,
considering that Philip did not alight from the car, the windows of which were tinted;
and that the rest of the circumstances were pure suspicions, and did not indicate that
Philip had been with Chase at the time of the commission of the crime.
After her motion for reconsideration was denied by the Secretary of Justice on May 21,
2009,8 the petitioner elevated the matter to the CA by petition for review under Rule
43, Rules of Court.

Ruling of the CA

In her petition for review in the CA, the petitioner assigned to the Secretary of Justice
the following errors, to wit:
chanroblesvirtualawlibrary

I. THE HONORABLE SECRETARY OF JUSTICE MANIFESTLY ERRED IN DENYING THE

PETITION FOR REVIEW AND MOTION FOR RECONSIDERATION THEREOF FILED BY
PETITIONER CONSIDERING THAT PROBABLE CAUSE EXISTS AGAINST RESPONDENTS
FOR THE CRIME OF MURDER UNDER ARTICLE 248 OF THE REVISED PENAL CODE.

II. THE HONORABLE SECRETARY OF JUSTICE ERRED IN NOT FINDING THE NUMEROUS
PIECES OF CIRCUMSTANTIAL EVIDENCE PRESENTED AGAINST RESPONDENTS TO
HOLD THEM LIABLE FOR THE CRIME OF MURDER AS EXTANT IN THE RECORDS OF THE
CASE.

III. THE HONORABLE SECRETARY OF JUSTICE ERRED IN NOT FINDING THAT ALL THE
ELEMENTS OF THE CRIME OF MURDER ARE PRESENT IN THE INSTANT CASE.9 chanroblesvirtualawlibrary

On November 20, 2009, the CA promulgated its assailed decision,10 dismissing the

petition for review.

The petitioner filed a motion for reconsideration, but the CA denied the motion for its
lack of merit.

Hence, this appeal by petition for review on certiorari.

The petitioner prays that Philip and Teodora be charged with murder on the strength of
the several pieces of circumstantial evidence; that the qualifying aggravating
circumstances of evident premeditation and treachery be appreciated in the slaying of
her son, given the time, manner, and weapon used in the commission of the crime and
the location and degree of the wounds inflicted on the victim.

Issue

Whether the CA committed a reversible error in upholding the decision of the Secretary
of Justice finding that there was no probable cause to charge Philip and Teodora with
murder for the killing of Chase.

Ruling

We deny the petition for review, and sustain the decision of the CA.

We note, to start with, that the petitioner assailed the resolution of the Secretary of
Justice by filing in the CA a petition for review under Rule 43, Rules of Court. That was
a grave mistake that immediately called for the outright dismissal of the petition. The
filing of a petition for review under Rule 43 to review the Secretary of Justice's
resolution on the determination of probable cause was an improper remedy.11 Indeed,
the CA had no appellate jurisdiction vis-à-vis the Secretary of Justice.

A petition for review under Rule 43 is a mode of appeal to be taken only to review the
decisions, resolutions or awards by the quasi-judicial officers, agencies or bodies,
particularly those specified in Section 1 of Rule 43.12 In the matter before us, however,
the Secretary of Justice was not an officer performing a quasi-judicial function. In
reviewing the findings of the OCP of Quezon City on the matter of probable cause, the
Secretary of Justice performed an essentially executive function to determine whether
the crime alleged against the respondents was committed, and whether there was
probable cause to believe that the respondents were guilty thereof.13 chanroblesvirtualawlibrary

On the other hand, the courts could intervene in the Secretary of Justice's
determination of probable cause only through a special civil action for certiorari. That
happens when the Secretary of Justice acts in a limited sense like a quasi-judicial
officer of the executive department exercising powers akin to those of a court of
law.14 But the requirement for such intervention was still for the petitioner to
demonstrate clearly that the Secretary of Justice committed grave abuse of discretion
amounting to lack or excess of jurisdiction. Unless such a clear demonstration is made,
the intervention is disallowed in deference to the doctrine of separation of powers. As
the Court has postulated in Metropolitan Bank & Trust Co. (Metrobank) v. Tobias
III: 15
chanroblesvirtualawlibrary

Under the doctrine of separation of powers, the courts have no right to directly decide
matters over which full discretionary authority has been delegated to the Executive
Branch of the Government, or to substitute their own judgments for that of the
Executive Branch, represented in this case by the Department of Justice. The settled
policy is that the courts will not interfere with the executive determination of probable
cause for the purpose of filing an information, in the absence of grave abuse of
discretion. That abuse of discretion must be so patent and gross as to amount to an
evasion of a positive duty or a virtual refusal to perform a duty enjoined by law or to
act at all in contemplation of law, such as where the power is exercised in an arbitrary
and despotic manner by reason of passion or hostility. x x x

Secondly, even an examination of the CA's decision indicates that the CA correctly
concluded that the Secretary of Justice did not abuse his discretion in passing upon and
affirming the finding of probable cause by the OCP.

A preliminary investigation, according to Section 1, Rule 112 of the Rules of Court, is

"an inquiry or proceeding to determine whether there is sufficient ground to engender a
well-founded belief that a crime has been committed and the respondent is probably
guilty thereof, and should be held for trial." The investigation is advisedly called
preliminary, because it is yet to be followed by the trial proper in a court of law. The
occasion is not for the full and exhaustive display of the parties' evidence but for the
presentation only of such evidence as may engender a well-founded belief that an
offense has been committed and that the accused is probably guilty of the
offense.16 The role and object of preliminary investigation were "to secure the innocent
against hasty, malicious, and oppressive prosecutions, and to protect him from open
and public accusation of crime, from the trouble, expenses and anxiety of a public trial,
and also to protect the State from useless and expensive prosecutions."17 chanroblesvirtualawlibrary

In Arula vs. Espino,18 the Court rendered the three purposes of a preliminary

investigation, to wit: (1) to inquire concerning the commission of a crime and the
connection of the accused with it, in order that he may be informed of the nature and
character of the crime charged against him, and, if there is probable cause for believing
him guilty, that the State may take the necessary steps to bring him to trial; (2) to
preserve the evidence and keep the witnesses within the control of the State; and (3)
to determine the amount of bail, if the offense is bailable. The officer conducting the
examination investigates or inquires into facts concerning the commission of a crime
with the end in view of determining whether an information may be prepared against
the accused.

The determination of the existence of probable cause lies within the discretion of the
public prosecutor after conducting a preliminary investigation upon the complaint of an
offended party.19 Probable cause for purposes of filing a criminal information is defined
as such facts as are sufficient to engender a well-founded belief that a crime has been
committed and that the respondent is probably guilty thereof. A finding of probable
cause needs only to rest on evidence showing that more likely than not a crime has
been committed, and that it was committed by the accused. Probable cause, although it
requires less than evidence justifying a conviction, demands more than bare
suspicion.20
chanroblesvirtualawlibrary

A public prosecutor alone determines the sufficiency of evidence that establishes the
probable cause justifying the filing of a criminal information against the respondent
because the determination of existence of a probable cause is the function of the public
prosecutor.21 Generally, the public prosecutor is afforded a wide latitude of discretion in
the conduct of a preliminary investigation. Consequently, it is a sound judicial policy to
refrain from interfering in the conduct of preliminary investigations, and to just leave to
the Department of Justice the ample latitude of discretion in the determination of what
constitutes sufficient evidence to establish probable cause for the prosecution of
supposed offenders. Consistent with this policy, courts do not reverse the Secretary of
Justice's findings and conclusions on the matter of probable cause except in clear cases
of grave abuse of discretion.22 By way of exception, however, judicial review is
permitted where the respondent in the preliminary investigation clearly establishes that
the public prosecutor committed grave abuse of discretion, that is, when the public
prosecutor has exercised his discretion in an arbitrary, capricious, whimsical or despotic
manner by reason of passion or personal hostility, patent and gross enough as to
amount to an evasion of a positive duty or virtual refusal to perform a duty enjoined by
law.23 Moreover, the trial court may ultimately resolve the existence or non-existence of
probable cause by examining the records of the preliminary investigation when
necessary for the orderly administration of justice.24 Although policy considerations call
for the widest latitude of deference to the public prosecutor's findings, the courts should
never shirk from exercising their power, when the circumstances warrant, to determine
whether the public prosecutor's findings are supported by the facts, and by the law.25 chanroblesvirtualawlibrary

Under the circumstances presented, we conclude to be correct the CA's determination

that no prima facie evidence existed that sufficiently indicated the respondents'
involvement in the commission of the crime. It is clear that there was no eyewitness of
the actual killing of Chase; or that there was no evidence showing how Chase had been
killed, how many persons had killed him, and who had been the perpetrator or
perpetrators of his killing. There was also nothing that directly incriminated the
respondents in the commission of either homicide or murder.

Admittedly, the petitioner relies solely on circumstantial evidence, which she insists to
be enough to warrant the indictment of respondents for murder.

We disagree.

For circumstantial evidence to be sufficient to support a conviction, all the

circumstances must be consistent with one another and must constitute an unbroken
chain leading to one fair and reasonable conclusion that a crime has been committed
and that the respondents are probably guilty thereof. The pieces of evidence must be
consistent with the hypothesis that the respondents were probably guilty of the crime
and at the same time inconsistent with the hypothesis that they were innocent, and
with every rational hypothesis except that of guilt.26 Circumstantial evidence is
sufficient, therefore, if: (a) there is more than one circumstance, (b) the facts from
which the inferences are derived have been proven, and (c) the combination of all the
circumstances is such as to produce a conviction beyond reasonable doubt.27 chanroblesvirtualawlibrary

The records show that the circumstantial evidence linking Philip to the killing of Chase
derived from the bare recollections of Ariane (sister of Chase), and of Guray and Corpus
(respectively, the househelp and nanny in the household of a resident of the
subdivision) about seeing Chase board the white Honda Civic at around 7:00 p.m. of
February 27, 2007, and about Philip being the driver of the Honda Civic. But there was
nothing else after that, because the circumstances revealed by the other witnesses
could not even be regarded as circumstantial evidence against Philip. To be sure, some
of the affidavits were unsworn.28 The statements subscribed and sworn to before the
officers of the Philippine National Police (PNP) having the authority to administer oaths
upon matters connected with the performance of their official duties undeniably lacked
the requisite certifications to the effect that such administering officers had personally
examined the affiants, and that such administering officers were satisfied that the
affiants had voluntarily executed and understood their affidavits.29chanroblesvirtualawlibrary

The lack of the requisite certifications from the affidavits of most of the other witnesses
was in violation of Section 3, Rule 112 of the Rules of Court, which pertinently provides
thusly:chanroblesvirtualawlibrary

Section 3. Procedure. The preliminary investigation shall be conducted in the following

manner: chanroblesvirtualawlibrary

(a) The complaint shall state the address of the respondent and shall be accompanied
by the affidavits of the complainant and his witnesses, as well as other supporting
documents to establish probable cause. They shall be in such number of copies as there
are respondents, plus two (2) copies for the official file. The affidavits shall be
subscribed and sworn to before any prosecutor or government official authorized to
administer oath, or, in their absence or unavailability, before a notary public, each of
who must certify that he personally examined the affiants and that he is satisfied that
they voluntarily executed and understood their affidavits.
 xxx

The CA explained that the requirement for the certifications under the aforecited rule
was designed to avoid self-serving and unreliable evidence from being considered for
purposes of the preliminary investigation, the present rules for which do not require a
confrontation between the parties and their witnesses; hence, the certifications were
mandatory, to wit:chanroblesvirtualawlibrary

In Oporto, Jr. vs. Monserate, it was held that the requirement set forth under Section 3,
Rule 112 of the Revised Rules of Criminal Procedure is mandatory. This is so because
the rules on preliminary investigation does not require a confrontation between the
parties. Preliminary investigation is ordinarily conducted through submission of
affidavits and supporting documents, through submission of affidavits and supporting
documents, through the exchange of pleadings. Thus, it can be inferred that the
rationale for requiring the affidavits of witnesses to be sworn to before a competent
officer so as to ensure that the affidavits supporting the factual allegations in the
Complaint have been sworn before a competent officer and that the affiant has signed
the same in the former's presence declaring on oath the truth of the statement made
considering that this becomes part of the bases in finding probable guilt against the
respondent. Well-settled is the rule that persons, such as an employee, whose unsworn
declarations in behalf of a party, or the employee's employer in this case, are not
admissible in favor of the latter. Further, it has been held that unsworn statements or
declarations are self-serving and self-serving declarations are not admissible in
evidence as proof of the facts asserted, whether they arose by implication from acts
and conduct or were made orally or reduced in writing. The vital objection to the
admission to this kind of evidence is its hearsay character.

In the case at bar, a perusal of the statements/affidavits accompanying the complaint

shows that out of the total of 16 statements/affidavits corresponding to the respective
witnesses, only nine (9) thereof were sworn to before a competent officer. These were
the affidavits of the following: (1) SG Sarmiento; (2) SG Solis; (3) SG Fabe; (4) SG
Marivic Rodriguez; (5) Jennylyn Buri; (6) Richard Joshua Sulit; (7) Marites Navarro; (8)
Pamela-Ann Que; and (9) Edbert Ylo, which were sworn to or subscribed before a
competent officer.

Thus, it is imperative that the circumstantial evidence that the victim was last seen in
the company of respondent Philip must be established by competent evidence required
by the rules in preliminary investigation. Here, it was allegedly Chase's sister, Ariane,
and their two household helpers, Marivic Guray and Michelle Corpus, who saw
respondent Philip pick up Chase at around 7:00 o'clock in the evening of February 27,
2007. Yet, such fact from which the inference is derived was not duly proven. The
statements of Marivic and Michelle both executed on February 28, 2007 were not sworn
to before the proper officer. Neither was the affidavit dated July 3, 2009 of Ariane
Claridad duly notarized nor is there any explanation why the same was belatedly
executed.

It cannot thus be used to prove the circumstance that it was respondent Philip who
drove the white car parked in front of their house at around 7:00 o'clock in the evening
of February 27, 2007 and that the factual allegation that the car used bore the Plate no.
CRD-999. Further, since their affidavits were not in the nature of a public document, it
is incumbent upon the complainant to prove its due execution and authenticity before
the same is admitted in evidence. It is a well-settled rule that private documents must
be proved as to their due execution and authenticity before they may be received in
evidence.

Likewise, the circumstance that the victim sent a text message to his girlfriend Monet
that he was on his way to get the tires at around 7:09 o'clock in the evening of
February 27, 2007 is likewise inadmissible in evidence because Monet's affidavit was
not sworn to before a competent officer. There was also no evidence of the alleged text
message pursuant to the law on admissibility of electronic evidence. Besides, it cannot
be inferred therefrom who the victim was with at that time and where he was going to
get the tires.

Neither can the handwritten unsworn statement dated February 28, 2007 of SG
Rodolph delos Reyes and handwritten sworn statement dated March 8, 2008 of SG
Henry Solis be of any help in claiming that the victim was in the company of respondent
Philip when the latter entered the village at around 7:26 o'clock in the evening of
February 27, 2007. Suffice it to state that their statements only identified respondent
Philip driving the white Honda Civic bearing Plate No. CRD-999. However, both were
unsure if they saw respondent Philip with a passenger because it was already dark and
the car was tinted.30 chanroblesvirtualawlibrary

Also, the CA cited in its decision the further consequences of not complying with the
aforequoted rule, to wit: chanroblesvirtualawlibrary

It also follows that the succeeding pieces of circumstantial evidence relied upon by
complainant are not admissible for either being incompetent or hearsay evidence, to
wit:
chanroblesvirtualawlibrary

(a) that at around 7:45 p.m., respondent Teodora Alyn Esteban, on board a vehicle
bearing plate no. XPN-733 entered Ferndale Homes is inadmissible because it is not
supported by any sworn affidavit of a witness

(b) that at around the same time, two unidentified persons, a male and female were
heard talking inside Honda Civic bearing plate no. JTG-333 allegedly belonging to
respondent Philip, which was one of the vehicles parked at the carport of #10 Cedar
Place, inside Ferndale Homes is inadmissible because it is not supported by any sworn
affidavit of a witness; cralawlibrary

(c) that the Esteban family was temporarily using the carport of #10 Cedar Place as a
carpark for their vehicles at that time is inadmissible because it is not supported by any
sworn affidavit of a witness; cralawlibrary

(d) that when the guards went to the house of the Esteban family, the same was
unusually dark and dim is inadmissible because it is not supported by any sworn
affidavit of a witness; cralawlibrary

(e) that while the crime scene was being processed, Mr. Esteban sought assistance
from the police and requested that they escort his son, respondent Philip Esteban, to
St. Luke's Medical Center, as the latter also allegedly suffered injuries is inadmissible
because it is not supported by any sworn affidavit of a witness; cralawlibrary

(f) that during the investigation, Philip, Mrs. Teodora Alyn Esteban and their family
refused to talk and cooperate with the authorities and that they neither disclosed the
extent of Philip's alleged injuries nor disclosed as to how or why he sustained them is
inadmissible because it is not supported by any sworn affidavit of a witness; and

(g) Mrs. Edith Flores, speaking for respondents' family, reportedly communicated with
the family of the deceased on numerous occasions and offered to pay for the funeral
expenses is inadmissible because it is not supported by any sworn affidavit of a
witness.

This now leaves this Court with the remaining pieces of circumstantial evidence
supported by the sworn statement dated March 6, 2007 of Marivic Rodriguez,
handwritten sworn statement dated March 8, 2007 of SG Abelardo Sarmiento, Jr. and
handwritten sworn statement dated March 8, 2007 of SG Rene Fabe as follows: chanroblesvirtualawlibrary

(a) at around 7:30 p.m., Marivic Guray and Jennylyn Buri heard a commotion (loud
cries saying "Help! Help!) at No. 10, Cedar Place inside Ferndale Homes; cralawlibrary

(b) at around 7:50 p.m., the body of the deceased was discovered lying in a pool of
blood in the carport of #10 Cedar Place; cralawlibrary

(c) there was blood inside and outside the white Honda Civic bearing plate no. CRD-
999;cralawlibrary

(d) that at around 7:55 p.m., respondent Philip Esteban's father, Lauro Esteban, who
was then outside the village, called the security guard at the entrance gate of the
village to report the incident through his mobile phone; cralawlibrary

(e) that at around 9:09 p.m., Mr. Esteban entered the village and admitted that he was
the one who called for assistance regarding an incident that transpired at Cedar Place;
and

(f) as per Autopsy Report, the cause of Chase's death was a stab wound in the chest
and that the said wound was 9 centimeters deep, or around 3.6 inches and cut the
descending aorta of his heart.

The above pieces of circumstantial evidence, though duly supported by sworn

statements of witnesses, when taken as a whole, do not, however, lead to a finding of
probable cause that respondents committed the crime charged.

The factual allegations of the complaint merely show that at around 7:30 o'clock in the
evening of February 27, 2007, Marivic Rodriguez heard a male voice, coming from the
front of their employer's house, shouting "Help! Help!"; that at around 7:50 p.m., the
body of the deceased was discovered lying in a pool of blood in the carport of #10
Cedar Place; that there was blood inside and outside the white Honda Civic bearing
plate no. CRD-999; and, that as per Autopsy Report, the cause of Chase's death was a
stab wound in the chest and that the said wound was 9 centimeters deep, or around
3.6 inches and cut the descending aorta of his heart. However, all of these do not prove
the presence of respondents at the scene of the crime nor their participation therein.

We likewise agree with the DOJ Secretary that there was no motive on the part of the
respondents to kill the victim. This was supported by the sworn statement dated March
1, 2007 of Richard Joshua Ulit; the sworn statement dated March 10, 2007 of Pamela-
Ann Que; and, the sworn statement dated March 10, 2007 of Egbert Ylo, who all knew
the victim and respondent Philip and claimed that the two were good friends and that
they were not aware of any misunderstanding that occurred between the concerned
parties. Jurisprudence is replete that motive becomes of vital importance when there is
doubt as to the identity of the perpetrator.

In Preferred Home Specialties, Inc., et al. vs. Court of Appeals, et al., the Supreme
Court held that while probable cause should be determined in a summary manner,
there is a need to examine the evidence with care to prevent material damage to a
potential accused's constitutional right to liberty, the guarantees of freedom and fair
play, and to protect the State from the burden of unnecessary expenses in prosecuting
alleged offenses and holding trials arising from false, fraudulent or groundless
charges.31chanroblesvirtualawlibrary

It is clear from the foregoing disquisitions of the CA that the Secretary of Justice
reasonably reached the conclusion that the dismissal by the OCP of Quezon City of the
complaint for murder had been based on the lack of competent evidence to support a
finding of probable cause against the respondents. Accordingly, such finding of probable
cause by the Executive Department, through the Secretary of Justice, could not be
undone by the CA, in the absence of a clear showing that the Secretary of Justice had
gravely abused his discretion. Grave abuse of discretion means that the abuse of
discretion must be so patent and gross as to amount to an evasion of a positive duty or
a virtual refusal to perform a duty enjoined by law or to act at all in contemplation of
law, such as where the power is exercised in an arbitrary and despotic manner by
reason of passion or hostility.32 That showing was not made herein.

WHEREFORE, the Court DENIES the petition for review on certiorari, and AFFIRMS the
decision of the Court of Appeals promulgated on November 20, 2009.

The petitioner shall pay the costs of suit.

SO ORDERED.
 THIRD DIVISION

G.R. No. 208396, March 14, 2018

ARIEL A. EBUENGA, Petitioner, v. SOUTHFIELD AGENCIES, INC., WILHEMSEN

SHIP MANAGEMENT HOLDING LTD., AND CAPT. SONNY VALENCIA, Respondents.

DECISION

LEONEN, J.:

This Court is duty-bound to respect the consistent prior findings of the Labor Arbiter, of
the National Labor Relations Commission, and of the Court of Appeals. It must be
cautious not to substitute its own appreciation of the facts to those of the tribunals
which have previously weighed the parties' claims and personally perused the evidence.
It will not discard consistent prior findings and award disability benefits to a seafarer
who fails to adduce even an iota of evidence, let alone substantial evidence, and fails to
draw a causal connection between his or her alleged ailment and working conditions.

This resolves a Petition for Review on Certiorari1 under Rule 45 of the 1997 Rules of
Civil Procedure, praying that the April 29, 2013 Decision2 and July 26, 2013
Resolution3 of the Court of Appeals in CA-G.R. SP No. 126939 be reversed and set
aside.

The assailed Court of Appeals April 29, 2013 Decision affirmed the June 29, 2012
Decision4 of the National Labor Relations Commission which, in turn, affirmed Labor
Arbiter Lilia S. Savari's (Labor Arbiter Savari) October 12, 2011 Decision,5 dismissing
Ariel A. Ebuenga's (Ebuenga) complaint6 for permanent disability benefits. The assailed
Court of Appeals July 26, 2013 Resolution7 denied Ebuenga's Motion for
Reconsideration.

Ebuenga was hired by Southfield Agencies, Inc. (Southfield) as a chief cook aboard
respondent Wilhemsen Ship Management Holding Ltd.'s (Wilhemsen) vessel, MTV Super
Adventure.8 Ebuenga boarded the vessel on December 19, 2010.9

About two (2) months into his engagement, or on February 26, 2011, Ebuenga wrote a
letter to Southfield, Wilhemsen, and Captain Sonny Valencia (Capt.
Valencia)10 (collectively, respondents), asking that he be repatriated as soon as possible
"to attend to a family problem."11 Respondents acted favorably on this request and
Ebuenga was repatriated on March 5, 2011.12

Without consulting Southfield's designated physician, Ebuenga had himself checked at

St. Luke's Medical Center where he underwent Magnetic Resonance Imaging. The test
revealed that he was afflicted with "Multilevel Disk Dessication, from C2-C3 to C6-
C7."13 He was advised to undergo physical therapy.14

Ebuenga went back to his hometown in Bogtong, Legaspi City to undergo physical
therapy sessions. Thereafter, he consulted Dr. Misael Jonathan A. Ticman, who issued a
Disability Report, finding him to be permanently disabled and no longer fit to work as a
seafarer. Consequently, Ebuenga filed a complaint for permanent disability benefits.15
In his Position Paper, Ebuenga disavowed voluntarily seeking repatriation on account of
a family concern. He claimed instead that upon embarkation, a crew member died from
overfatigue. He reported this death to the International Transport Workers' Federation,
which took no action. Incensed at Ebuenga's actions, the captain of the vessel, Capt.
Jonathan B. Lecias, Sr. (Capt. Lecias), coerced him to sign a letter seeking immediate
repatriation. Ebuenga also claimed to have reported to Capt. Lecias that he was
suffering intense back pain but the latter refused to entertain this because of the
animosity between them. He added that upon repatriation, he sought medical
assistance from the company-designated physician, but was refused. Thus, he was
forced to seek treatment on his own.16

In their defense, respondents denied that there was ever an incident where Ebuenga
encountered medical problems while on board the vessel. However, they noted that
Ebuenga had been a delinquent crew member as he was always complaining and
agitating his colleagues about the lack of a washing machine. They added that
Ebuenga's claim for disability benefits could not be entertained as he failed to undergo
the requisite post-employment medical examination with the company-designated
physician.17

In her October 12, 2011 Decision,18 Labor Arbiter Savari dismissed Ebuenga's

complaint. Labor Arbiter Savari explained that Ebuenga failed to prove that he had
suffered an illness or injury while on board the M/V Super Adventure. She added that
Ebuenga may no longer claim disability benefits for failing to undergo a post-
employment medical examination with the company-designated physician.19

The National Labor Relations Commission denied Ebuenga's appeal in its June 29, 2012
Decision.20

On April 29, 2013, the Court of Appeals found no grave abuse of discretion on the part
of the National Labor Relations Commission. It also denied Ebuenga's Motion for
Reconsideration in its July 26, 2013 Resolution.21

Hence, Ebuenga filed the present Petition.22 He contends that he could not have
forfeited his claims as respondents refused to have the company-designated physician
examine him.23 He also insists on his version of events: that he came in conflict with
Capt. Lecias over the death of a co-worker, was forced to sign a letter recounting a
family emergency, and was denied assistance by Capt. Lecias when he fell ill while on
board the M/V Super Adventure.

For resolution is the issue of whether or not petitioner Ariel A. Ebuenga is entitled to
permanent disability benefits. Subsumed under this is the issue of whether or not his
failure to have himself examined by the company-designated physician bars him from
pursuing his claim.

The Petition lacks merit.

Section 20(B) of the Philippine Overseas Employment Administration-Standard

Employment Contract (POEA-SEC)24 established the procedures for assessing claims for
disability benefits. It mandates seafarers to see a company-designated physician for a
post-employment medical examination, which must be done within three (3) working
days from their arrival. Failure to comply shall result in the forfeiture of the right to
claim disability benefits:
B. COMPENSATION AND BENEFITS FOR INJURY OR ILLNESS

The liabilities of the employer when the seafarer suffers work-related injury or illness
during the term of his contract are as follows:

....

3. Upon sign-off from the vessel for medical treatment, the seafarer is
entitled to sickness allowance equivalent to his basic wage until he is
declared fit to work or the degree of permanent disability has been
assessed by the company-designated physician but in no case shall this
period exceed one hundred twenty (120) days.

For this purpose, the seafarer shall submit himself to a post-employment

medical examination by a company-designated physician within three
working days upon his return except when he is physically incapacitated
to do so, in which case, a written notice to the agency within the same
period is deemed as compliance. Failure of the seafarer to comply with
the mandatory reporting requirement shall result in his forfeiture of the
right to claim the above benefits.

If a doctor appointed by the seafarer disagrees with the assessment, a

third doctor may be agreed jointly between the Employer and the
seafarer. The third doctor's decision shall be final and binding on both
parties.25 (Emphasis supplied)

Kestrel Shipping Co., Inc. v. Munar,26 citing Vergara v. Hammonia Maritime Services,

Inc.27 clarified the rules and the period for reckoning a seafarer's permanent disability
for purposes of entitlement to disability benefits:
In Vergara v. Hammonia Maritime Services, Inc., this Court read the POEA-SEC in
harmony with the Labor Code and the AREC in interpreting in holding that: (a) the 120
days provided under Section 20-B (3) of the POEA-SEC is the period given to the
employer to determine fitness to work and when the seafarer is deemed to be in a state
of total and temporary disability; (b) the 120 days of total and temporary disability may
be extended up to a maximum of 240 days should the seafarer require further medical
treatment; and (c) a total and temporary disability becomes permanent when so
declared by the company-designated physician within 120 or 240 days, as the case may
be, or upon the expiration of the said periods without a declaration of either fitness to
work or permanent disability and the seafarer is still unable to resume his regular
seafaring duties....28
This Court's discussion on the same topic in Vergara29 read:
As these provisions operate, the seafarer, upon sign-off from his vessel, must report to
the company-designated physician within three (3) days from arrival for diagnosis and
treatment. For the duration of the treatment but in no case to exceed 120 days, the
seaman is on temporary total disability as he is totally unable to work. He receives his
basic wage during this period until he is declared fit to work or his temporary disability
is acknowledged by the company to be permanent, either partially or totally, as his
condition is defined under the POEA Standard Employment Contract and by applicable
Philippine laws. If the 120 days initial period is exceeded and no such declaration is
made because the seafarer requires further medical attention, then the temporary total
disability period may be extended up to a maximum of 240 days, subject to the right of
the employer to declare within this period that a permanent partial or total disability
already exists. The seaman may of course also be declared fit to work at any time such
declaration is justified by his medical condition.

....

As we outlined above, a temporary total disability only becomes

permanent when so declared by the company physician within the periods he
is allowed to do so, or upon the expiration of the maximum 240-day medical
treatment period without a declaration of either fitness to work or the
existence of a permanent disability. In the present case, while the initial 120-day
treatment or temporary total disability period was exceeded, the company-designated
doctor duly made a declaration well within the extended 240-day period that the
petitioner was fit to work. Viewed from this perspective, both the NLRC and CA were
legally correct when they refused to recognize any disability because the petitioner had
already been declared fit to resume his duties. In the absence of any disability after his
temporary total disability was addressed, any further discussion of permanent partial
and total disability, their existence, distinctions and consequences, becomes a
surplusage that serves no useful purpose.30 (Emphasis supplied, citations omitted)
Manota v. Avantgarde Shipping Corporation31 explained why the requisite three (3)-day
period for examination by the company-designated physician "must be strictly
observed":
The 3-day mandatory reporting requirement must be strictly observed since within 3
days from repatriation, it would be fairly manageable for the physician to identify
whether the disease . . . was contracted during the term of his employment or that his
working conditions increased the risk of contracting the ailment.

....

Moreover, the post-employment medical examination within 3 days from . . . arrival is

required in order to ascertain [the seafarer's] physical condition, since to ignore the
rule would set a precedent with negative repercussions because it would open the
floodgates to a limitless number of seafarers claiming disability benefits. It would
certainly be unfair to the employer who would have difficulty determining the cause of a
claimant's illness considering the passage of time. In such a case, the employers would
have no protection against unrelated disability claims.32
However, this Court has clarified that the conduct of post-employment medical
examination is not a unilateral burden on the part of the seafarer. Rather, it is a
reciprocal obligation where the seafarer is obliged to submit to an examination within
three (3) working days from his or her arrival, and the employer is correspondingly
obliged "to conduct a meaningful and timely examination of the seafarer":33
We note on this point that the obligation imposed by the mandatory reporting
requirement under Section 20 (B) (3) of the 1996 POEA-SEC is not solely on the
seafarer. It requires the employer to likewise act on the report, and in this sense
partakes of the nature of a reciprocal obligation. Reciprocal obligations are those which
arise from the same cause, and where each party is effectively a debtor and a creditor
of the other, such that the obligation of one is dependent upon the obligation of the
other. While the mandatory reporting requirement obliges the seafarer to be present for
the post-employment medical examination, which must be conducted within three (3)
working days upon the seafarer's return, it also poses the employer the implied
obligation to conduct a meaningful and timely examination of the seafarer.

The petitioners failed to perform their obligation of providing timely medical

examination, thus rendering meaningless Serna's compliance with the mandatory
reporting requirement. With his July 14, 1999 visit, Serna clearly lived up to his end of
the agreement; it was the petitioners who defaulted on theirs. They cannot now be
heard to claim that Serna should forfeit the right to claim disability benefits under the
POEA-SEC and their [Collective Bargaining Agreement].34
In cases where the employer refuses to have the seafarer examined, the seafarer's
claim for disability benefits is not hindered by his or her reliance on a physician of his or
her own choosing:
The Court has in the past, under unique circumstances, sustained the award of
disability benefits even if the seafarer's disability had been assessed by a personal
physician. In Philippine Transmarine Carriers, Inc. v. NLRC, we affirmed the grant by
the CA and by the NLRC of disability benefits to a claimant, based on the
recommendation of a physician not designated by the employer. The "claimant
consulted a physician of his choice when the company-designated physician refused to
examine him." In Cabuyoc v. Inter-Orient Navigation Shipmanagement, Inc., we
reinstated the NLRC's decision, affirmatory of that of the labor arbiter, which awarded
sickness wages to the petitioner therein even if his disability had been assessed by the
Philippine General Hospital, not by a company-designated hospital. Similar to the case
at bar, the seafarer in Cabuyoc initially sought medical assistance from the respondent
employer but it refused to extend him help.35 (Citations omitted)
II

It is petitioner's claim that respondents failed to deliver their part of the reciprocal
obligation by refusing to entertain him when he asked to have himself examined. He
insists that their refusal is allegedly an offshoot of his acrimony with them, which began
after his report of a colleague's death to the International Transport Workers'
Federation.

Petitioner weaves a curious narrative of indifference and oppression but, just as

curiously, has nothing more than bare allegations to back him up. He falls far too short
of the requisite quantum of proof in labor cases. He failed to discharge his burden to
prove his allegations by substantial evidence.36

In the first place, this Court is duty-bound to respect the uniform findings of Labor
Arbiter Savari, the National Labor Relations Commission, and the Court of Appeals. In
the context of the present Rule 45 Petition, this Court is limited to resolving pure
questions of law. It should be careful not to substitute its own appreciation of the facts
to those of the tribunals which have previously weighed the parties' claims and even
personally perused the evidence:
As a rule, only questions of law may be raised in a Rule 45 petition. In one case, we
discussed the particular parameters of a Rule 45 appeal from the CA's Rule 65 decision
on a labor case, as follows:
In a Rule 45 review, we consider the correctness of the assailed CA decision, in contrast
with the review for jurisdictional error that we undertake under Rule 65. Furthermore,
Rule 45 limits us to the review of questions of law raised against the assailed CA
decision. In ruling for legal correctness, we have to view the CA decision in the same
context that the petition for certiorari it ruled upon was presented to it; we have to
examine the CA decision from the prism of whether it correctly determined the
presence or absence of grave abuse of discretion in the NLRC decision before it, not on
the basis of whether the NLRC decision on the merits of the case was correct. In other
words, we have to be keenly aware that the CA undertook a Rule 65 review, not a
review on appeal, of the NLRC decision challenged before it.
Accordingly, we do not re-examine conflicting evidence, re-evaluate the credibility of
witnesses, or substitute the findings of fact of the NLRC, an administrative body that
has expertise in its specialized field. Nor do we substitute our "own judgment for that of
the tribunal in determining where the weight of evidence lies or what evidence is
credible." The factual findings of the NLRC, when affirmed by the CA, are generally
conclusive on this Court.37
Labor Arbiter Savari, the National Labor Relations Commission, and the Court of
Appeals are consistent in finding that petitioner's claim of presenting himself for
examination is direly unsupported by evidence. The Court of Appeals emphasized that
"petitioner's narration of facts is bereft of details as to the alleged report."38 Petitioner
could not even state when he actually wanted to have himself examined. He could
neither identify the person he approached for his request nor disclose the exact manner
and circumstances of his being rebuffed.39 Ultimately, petitioner has nothing more than
a scant, one-sentence story: he went to Southfield's office, was refused, and had to go
to another doctor.

Petitioner himself claims that respondents' refusal to have him medically examined was
only the last episode in a prolonged conflict. If indeed it was, petitioner must logically
be expected to adduce proof, not only of that terminal episode, but of his complete
narrative and its many incidents. In this regard, too, petitioner was grossly deficient.

Given petitioner's slew of allegations, coupled with his burden of repudiating the
uniform findings of the three (3) tribunals, it is glaring that petitioner annexed nothing
to his Petition and Reply40 except the assailed Court of Appeals Decision and Resolution.
His plea for this Court to overturn the uniform antecedent findings of the three (3)
tribunals demands more than attaching a copy of the immediately preceding
judgments. Attaching a copy of the assailed judgments to a Rule 45 Petition does not
even manage to accomplish any evidentiary purpose. One could hazard that petitioner's
scant annexes were included only out of conventional compliance with Rule 45, Section
441 of the 1997 Rules of Civil Procedure because his Petition would otherwise have been
denied outright.42

It is true that there are exceptions to the rule that Petitions for Review on Certiorari
may only be concerned with pure questions of law.43 But these exceptions are not
occasioned by their mere invocation. A party who files a Rule 45 Petition and asserts
that his or her case warrants this Court's review of factual questions bears the burden
of proving two (2) things. First is the basic exceptionality of his or her case such that
this Court must go out of its way to revisit the evidence. Second is the specific factual
conclusion that he or she wants this Court to adopt in place of that which was made by
the lower tribunals. This dual burden requires a party to not merely plead or aver. He or
she must demonstrate and prove. His or her evidentiary task persists before this Court
precisely because he or she pleads this Court to sustain different factual conclusions.

Petitioner's deficiencies manifest his failure to discharge this burden.

Petitioner's allegation of a deceased colleague could have been substantiated by official

records. He did not adduce these documents. Worse, he could not even name that co-
worker. The truth is that there is no certainty if someone actually died on board.
Likewise, while petitioner claims that respondents were so hostile to him, he claims to
have still managed to lodge a complaint while on mid-voyage to the International
Transport Workers' Federation. If he was so ingenious to do this mid-voyage despite
the belligerence of his superiors, nothing could have prevented him from adducing
proof that he made that report. A copy of any form of acknowledgment by the
International Transport Workers' Federation would have bolstered his cause. He must
certainly have access to an acknowledgment as he himself initiated and pursued the
purported complaint. He also claims that the M/V Super Adventure was arrested
specifically because of his complaint.44 Yet, he presented no record or attestation of this
occurrence.

If it is also true that Capt. Lecias was so hostile as to demand his repatriation and
downright abusive as to withhold medical attention to an ill crew member, petitioner
could have at least presented affidavits from colleagues to corroborate in whole or in
part his account. He must realize that his allegations are not mere assertions to further
his narrative; they are also grave accusations that a captain violated his most
important role in protecting his crew.45 This Court, lending its approval to claims such
as petitioner's, could potentially become the basis of punitive measures against
captains of vessels. As this Court's decisions set precedents, it has all the more reason
to not be swayed by bare allegations.

Petitioner would have this Court hang on to nothing but his word. He would have this
Court discard the consistent findings of the three (3) tribunals on nothing but faith in
what he asserts. This Court cannot act with blind credulity. With the utter dearth of
proof advancing petitioner's cause, this Court is constrained to sustain the consonant
findings of Labor Arbiter Savari, of the National Labor Relations Commission, and of the
Court of Appeals.

III

Even if this Court were to overlook petitioner's utter failure to substantiate his version
of events, no award of disability benefits is availing as petitioner has failed to
demonstrate that his affliction was work-related.

Tagud v. BSM Crew Service Centre Phils., Inc. 46 explained the twin requirements for
compensation of disability:
For disability to be compensable under Section 20 (B) of the 2000 POEA-SEC, two
elements must concur: (1) that the illness or injury must be work-related, and (2) that
the work-related illness or injury must have existed during the term of the seafarer's
employment contract.

The 2000 POEA-SEC defines "work-related injury" as injury resulting in disability or

death arising out of and in the course of employment and "work-related illness" as any
sickness resulting to disability or death as a result of an occupational disease listed
under Section 32-A of the 2000 POEA-SEC. Thus, the seafarer only has to prove that
his illness or injury was acquired during the term of employment to support his claim
for sickness allowance and disability benefits.47
To be "work-related" is to say that there is a "reasonable linkage between the disease
suffered by the employee and his work."48 Section 32-A, paragraph 1 of the POEA-SEC,
thus, requires the satisfaction of all of its listed general conditions "[f]or an
occupational disease and the resulting disability or death to be compensable":
Section 32-A. OCCUPATIONAL DISEASES

For an occupational disease and the resulting disability or death to be compensable, all
of the following conditions must be satisfied:

(1) The seafarer's work must involve the risks described herein;
(2) The disease was contracted as a result of the seafarer's exposure to the described risks;
(3) The disease was contracted within a period of exposure and under such other factors
necessary to contract it;
(4) There was no notorious negligence on the part of the seafarer.49
Petitioner himself wrote and submitted a letter requesting repatriation "to attend to a
family problem."50 Petitioner did not deny the existence of this letter but disavowed it as
having been made under duress. The preceding discussion demonstrated how
petitioner's attempts at disavowal are a folly. The declaration in that letter, therefore,
stands and amounts to an admission professing the true reasons for his repatriation,
belying his belated claim of suffering an injury while aboard M/V Super Adventure.

Petitioner's account concerning this letter is also laden with a fatal inconsistency.
According to him, his entire acrimonious relationship with respondents arose from his
report of a co-worker's death to the International Transport Workers' Federation. This
report allegedly made Capt. Lecias so indignant that he forced petitioner into fabricating
a letter requesting to be sent home. However, while petitioner himself claims this death
happened "upon embarkation,"51 his letter was made more than two (2) months after
embarkation, on February 26, 2011.52 Petitioner, too, would not be repatriated until
March 5, 2011.53

Petitioner's own account raises curious questions. If, indeed, Capt. Lecias was so
incensed at petitioner that he was made to immediately fabricate a repatriation
request, why was the letter made only on February 26, 2011? Why would a captain so
driven to discard a seafarer have to wait so long to effect his or her repatriation?

Medical literature underscores petitioner's affliction—disc desiccation—as a

degenerative change of intervertebral discs, the incidence of which climbs with age and
is a normal part of disc aging.54 Hence, it is not a condition peculiarly borne by
petitioner's occupation. Moreover, petitioner was engaged to serve, not merely as a
regular cook, but as chief cook. While his designation to this position does not
absolutely negate occasions of physical exertion, it can nevertheless be reasonably
inferred that his engagement did not principally entail intense physical labor, as would
have been the case with other seafarers such as deckhands. In any case, contrary to
Section 32-A of the POEA-SEC, petitioner failed to demonstrate how his work
necessarily "involve[d] the risks described" and how he contracted his affliction
specifically "as a result of [his] exposure to the described risks."

Likewise, petitioner needed to be repatriated merely two (2) months into his
engagement. This is not disputed, whether on the basis of petitioner's claims of falling
ill mid-voyage or on the basis of his letter request to respondents. Again, contrary to
Section 32-A of the POEA-SEC, the brevity of his engagement contradicts the likelihood
that his disc desiccation—a degenerative ailment requiring prolonged conditions—"was
contracted within a period of exposure and under such other factors necessary to
contract it."55

IV

Petitioner's cause is grossly deficient in several ways. First, he failed to undergo the
requisite examination, thereby creating a situation resulting in the forfeiture of his
claims. This alone suffices for the denial of his Petition. Second, he posited a narrative
of indifference and oppression but failed to adduce even the slightest substantiation of
it. He asked this Court to overturn the consistent findings of the three (3) tribunals but
offered nothing other than his word as proof. Finally, he averred a medical condition
from which no causal connection can be drawn to his brief engagement as chief cook.
He would have this Court sustain an imputation grounded on coincidence and
conjecture.

In this review, this Court is bound by basic logical parameters. First, as a court without
the opportunity to personally peruse the evidence, this Court cannot cavalierly
disregard the uniform anterior findings of the three (3) tribunals. Second, a factual
conclusion must be borne by substantial evidence. Finally, this Court should not award
disability benefits absent a causal relationship between a seafarer's work and ailment.
Petitioner's case fails in all of these parameters. Hence, his Petition must be denied.

WHEREFORE, the Petition for Review on Certiorari is DENIED. The assailed April 29,
2013 Decision and July 26, 2013 Resolution of the Court of Appeals in CA-G.R. SP No.
126939 are AFFIRMED.

SO ORDERED.
 FIRST DIVISION

APRIL 4, 2018

G.R. No. 198393

REPUBLIC OF THE PHILIPPINES, Petitioner

vs
RODOLFO M. CUENCA, FERDINAND E. MARCOS, IMELDA R. MARCOS, ROBERTO S.
CUENCA, MANUEL I. TINIO, VICTOR AFRICA, MARIO K. ALFELOR, DON M. FERRY and
OSCAR BELTRAN,, Respondents

DECISION

TIJAM, J.:

Petitioner Republic of the Philippines (Republic), represented by the Presidential Commission on

Good Government (PCGG), assails through this petition for review  under Rule 45, the
1

Decision  dated August 5, 2010 of the Sandiganbayan in Civil Case No. 0016 which dismissed, for
2

insufficiency of evidence, the Republic's complaint for reconveyance, reversion, accounting,

restitution and damages. Likewise assailed is the Sandiganbayan's Joint Resolution  dated August
3

31, 2011 dismissing the Republic's motion for reconsideration.

The Antecedents

On July 24, 1987, the Republic, through the PCGG and assisted by the Office of the Solicitor
General (OSG), filed a complaint  for reconveyance, reversion, accounting, restitution and damages
4

against respondents Rodolfo M. Cuenca, Ferdinand E. Marcos,  Imelda R. Marcos, Roberto S.

5

Cuenca, Manuel I. Tinio, Jose L. Africa, Mario K. Alfelor,  Don M. Ferry and Oscar P.
6

Beltran,  together with other individuals namely, Saul Y. Alfonso, Nora O. Vinluan, Panfilo O.
7

Domingo, Roberto V. Ongpin, Ricardo P. de Leon, Arturo Lazo, Arthur C. Balch, Rodolfo M.
Munsayac, and Antonio L. Carpio. The complaint was later amended to include corporate
defendants  alleged to be beneficially owned or controlled by respondent Rodolfo M. Cuenca.
8 9

Through its complaint and its amendments, the Republic sought to recover from respondents alleged
ill-gotten wealth which they acquired in unlawful concert with one another, in breach of trust, and
with grave abuse of right and power, which resulted to their unjust enrichment during Ferdinand E.
Marcos' rule from December 30, 1965 to February 25, 1986.  10

Specifically, the Republic enumerated the alleged illegal acts committed by respondents in this wise:
12. Defendant, Rodolfo M. Cuenca, by himself, and/or in unlawful concert with defendants Ferdinand
E. Marcos and Imelda R. Marcos, taking undue advantage of his influence and association and with
the active collaboration and willing participation of above defendant spouses, engaged in schemes,
devices and strategems designed to unjustly enrich themselves and to prevent disclosure and
discovery of ill-gotten assets, among others:

(a) created, organized and managed the Construction and Development Corporation
of the Philippines (CDCP), originally from a company known as "Cuenca
Construction" and, with the active collaboration, knowledge, assistance and willing
participation of defendants Jose L. Africa, Nora O. Vinluan, Roberto S. Cuenca, and
Panfilo 0. Domingo, obtained favored public works contracts amounting to billions of
pesos from the Department of Public Works which later became the Department of
Public Highways, and from the National Irrigation Administration, such as the
construction of sugar centrals, the Philippine Associated Smelting and Refining
Corporation (P ASAR), the Philippine Phosphate Fertilizer Corporation (PHILPHOS),
and the Light Railway Transit Project (LRT), among others, under terms and
conditions manifestly disadvantageous to Plaintiff and the Filipino people;

(b) secured loans and financial assistance fro[m] government financial institutions
without sufficient collateral, in contravention of banking laws and sound banking
practices, and other terms and conditions manifestly disadvantageous to said
government institutions, the plaintiff and the Filipino people. Defendant Panfilo O.
Domingo, as director and president of one of these government financial institutions -
the Philippine National Bank, abetted, facilitated and collaborated in the illegal
execution and release of such loans and financial assistance to CDCP, among other
corporations of defendant Rodolfo M. Cuenca, in violation of law, sound banking
practice and his duty of loyalty and due care to PNB, to its extreme damage and
prejudice and that of plaintiff and the Filipino people;

(c) secured a favored rescue arrangement at the behest of defendants Ferdinand E.

Marcos and Imelda R. Marcos in the form, among others, of conversion of
multimillion peso debt in favor of NDC into equity, release of collaterals to CDCP of
government funds in violation of the outstanding policy that no such funds shall be
paid to persons and/or corporations which have obligations with the government,
through the illegal and unconstitutional use of the Letters of Instructions, to the grave
damage and prejudice of plaintiff and the Filipino people;

(d) acquired, through Galleon Shipping Corporation, which was beneficially held
and/or controlled by defendant Rodolfo M. Cuenca, vessels with dollar loans from
abroad, on guarantee of the Development Bank of the Philippines (DBP), for clearly
overpriced consideration including improper payments, such as bribes, kickbacks
and commissions given to defendants, which loans remain unpaid to date, to the
gross disadvantage of plaintiff and the Filipino people;

(e) secured, after Galleon Shipping Corporation defaulted in its obligations, additional
financial assistance from government institutions, through the issuance of Letter of
Instruction No. 1155, which required the National Development Company (NDC) to
buy out the entire shareholdings in Galleon Shipping Corporation of defendant
Rodolfo M. Cuenca, Arthur C. Balch, Manuel I. Tinio, Mario K. Alfelor, Rodolfo
Munsayac and those of other stockholders for ₱46.7 Million and to provide the
required additional equity;
 (f) caused NDC to purchase worthless shares of defendant Rodolfo M. Cuenca in
CDCP at par value to the detriment of government institutions and plaintiff;

(g) conspired and executed with the help, cooperation and participation of the other
defendants, such other schemes and devices to defraud plaintiff and its agencies
millions of pesos for their personal benefit;

(h) willingly participating in defendants Rodolfo M. Cuenca, Ferdinand E. Marcos and

Imelda R. Marcos' scheme to enrich themselves at the expense of plaintiff and the
Filipino people, defendants Antonio L. Carpio, Manuel I. Tinio, Arthur C. Balch, Mario
K. Alfelor, Rodolfo Munsayac, Roberto V. Ongpin and Don M. Ferry unlawfully
caused NDC to release ₱46.7 Million to Galleon Shipping Corporation; allowed
defendant Rodolfo M. Cuenca to continue running the Galleon Shipping Corporation;
released defendant Rodolfo M. Cuenca's counter-guarantees for the security of the
loans guaranteed by the NOC and DBP and, released the first mortgage of DBP over
vessels owned by Galleon Shipping Corporation, thereby resulting in substantial loss
of government funds, to the prejudice and damage of plaintiff and the Filipino people;

(i) organized the Universal Holding Corporation, a holding company for CDCP, Sta.
Ines Melale, and Resort Hotels, all beneficially held and/or controlled by Ferdinand E.
Marcos, Imelda R. Marcos and Rodolfo M. Cuenca, which corporations with the help,
cooperation and participation of defendants Jose L. Africa, Roberto Cuenca, Manuel
Tinio, Mario Alfelor, Rodolfo Munsayac, Arthur Balch, Nora O. Vinluan, Ricardo de
Leon, among others as directors, officers and/or agents thereof, served as conduits
for deposit abroad of illegally obtained funds and property;

(j) transferred, through the Security Bank and Trust Company, US$8 Million to CDCP
International Bank account with Irving Trust, N.Y., which amount was utilized by
defendant Ferdinand E. Marcos m1d Imelda R. Marcos in the purchase of New York
properties.

13. Defendants Oscar P. Beltran and Saul Y. Alfonso of the Merchants Construction and
Development Corporation, Ricardo P. De Leon and Arturo Lazo of Tierra Factors Corporation,
participated and/or allowed themselves at one time or another to be used in achieving the schemes,
devises and strategems of defendants Ferdinand E. Marcos and Imelda R. Marcos to enrich
themselves at the expense of plaintiff and the Filipino people.

14. The acts of defendants, singly or collectively, and/or in unlawful concert with one another
constitute brazen abuse of right and power, unjust enrichment, flagrant breach of public trust and
fiduciary obligations, acquisition of position and authority, violation of the Constitution and laws of the
Republic of the Philippines, to the grave and irreparable damage of plaintiff and the Filipino people.  11

The Sandiganbayan dismissed the case as against Arturo Lazo and Ricardo P. de Leon for failure to
state a cause of action. Imelda R. Marcos was designated as Ferdinand E. Marcos' legal
representative upon the latter's death in 1989, while Arthur C. Balch's heirs   were substituted as
12

defendants. Saul Y. Alfonso, Mario K. Alfelor, Rodolfo M. Munsayac, Don M. Ferry and Sta. Ines
Melale Veneer and Plywood, Inc., filed their respective answers but did not participate in the
proceedings.  13

In support of its complaint, the Republic presented the testimonies of Ma. Lourdes O. Magno (PCGG
Records Officer II), Evelita E. Celis (Financial Analyst V of the PCGG's Research and Intelligence
Department), Evelyn R. Singson (Executive Vice-President of Security Bank and Trust Company),
Atty. Orlando L. Salvador (Coordinator and Legal Consultant of the Presidential Ad Hoc Fact-Finding
Committee on Behest Loans) and Stephen P. Tanchuling (Records Officer V of PCGG's Research
Department). 14

The testimonies of the witnesses for the Republic are summarized by the Sandiganbayan in its
assailed Decision as follows:

Ma. Lourdes O. Magno was Records Officer II of the PCGG from May 1992 up to the time of her
testimony in January 1999. Magno was custodian of the records for the PCGG, including the
documents in this case, marked as Exhibits "A" to "Y" for the [petitioner]. She testified that while
some of the records of the PCGG were turned over by the previous Chairman and Commissioners of
the PCGG and others came from its Research Department, she could not determine how each
particular document was obtained by the PCGG. .

Evelita E. Celis was Financial Analyst V of the Research and Intelligence Department of the PCGG
since February 17, 1992. She testified that the main function of their department was to conduct
research, gather, evaluate and analyze the data, and then to prepare a comprehensive report to be
submitted to the PCGG's Legal Department for verification reports. She prepared the report entitled,
"Executive Summary of Rodolfo M. Cuenca, SB Case No. 0016" after she had analyzed the
documents pertinent to this case. However, she stated that she had no personal knowledge of the
transactions involved in said documents. The documents were gathered by the staff of the
Intelligence Division from various sources such as the Presidential Library, the Asset Privatization
Trust, the Office of the Securities and Exchange Commission, and from the files of the Behest Loans
cases.

Evelyn R. Singson was Executive Vice President of Security Bank and Trust Company from 1980 to
1986. She testified that she executed an Affidavit on August 18, 1986 in co1mection with the efforts
of the government to recover the Marcos wealth.

Atty. Orlando L. Salvador was coordinator and legal consultant of the Presidential Ad Hoc Fact-
Finding Committee on Behest Loans. He testified that the said committee was created on October 8,
1992 by then President Fidel Ramos by virtue of his issuance of Administrative Order No. 30 (A.O.
No. 30). On November 9, 1992, President Ramos issued Memorandum Order No. 61 (M.O. No. 61),
which broadened the scope of the Ad Hoc Committee to include investigation, inventory and study of
all non-performing loans, both behest and non-behest. When the Committee had concluded its
investigation, including its review and examination of the account of the PNCC, Salvador made an
Executive Summary thereof and submitted it to then President Ramos. The same report was
attached to his complaint affidavit which was subsequently filed before the Ombudsman on May 18,
1994 against the defendants.

On cross-examination, Salvador claimed that although he sat in the deliberations of the Committee
as its consultant and was asked for his opinion on certain matters, he was not given the opportunity
to vote. However, he had no personal knowledge of the different transactions making up the account
and his participation was limited to summarizing the report which he digested into his Executive
Summary. He reiterated that he did not interview parties involved in the transactions of the behest
loans, but only reviewed the findings and reports submitted to him because his role was to ascertain
whether the reports faithfully reflected the circumstances of each account as stated in the
documents. Also, he alleged that he did not indict the Marcoses in his complaint affidavit despite
their participation in the form of marginal notes on the documents subject of his report because the
marginal notes were only favorable endorsements and did not qualify under the definition of behest
loans. He further reasoned that it was up to the Ombudsman to determine who should be the
defendants in a criminal case.
Stephen P. Tanchuling was Records Officer V of the Research Department of the PCGG for more
than four years at the time he gave his testimony. He testified that it was his job to secure
documents from the concerned agencies, then to collate the same upon order of the Legal
Department. He claimed that the Research Department prepared the official report entitled
"Executive Summary on Rodolfo Cuenca (SB Case No. 0016)" and that most of its supporting
documents came from the Presidential Library in Malacañang. While he attested that the supporting
documents were certified true copies, he admitted that he did not ask the Records Custodian if said
copies were based on actual originals existing in their departments. 15

The Republic then proceeded to formally offer its documentary evidence. Acting on the Republic's
formal offer of evidence, as well as the comments/oppositions filed by the respondents, the
Sandiganbayan resolved to admit only the following exhibits: 16

Exhibit Description Purpose

A-4 I PD No. 1112 dated 31 March To show that deposed
1997, Authorizing the president Marcos used vast
Establishment of Toll Facilities totalitarian powers to favor
on Public Improvements, cronies and herein defendants
Creating a Board for the for the purpose of perpetrating
Regulation Thereof and for ill-gotten wealth through
Other Purposes. conduit corporations including
CDCP, its subsidiaries, and
other corporations herein
involved.
A-5 PD No. 1113 dated 31 March -do-
1997, granting the CDCP a
Franchise to Operate,
Construct and Maintain Toll
Facilities in the North and
South Luzon Toll
Expressways and for other
purposes.
A-6 PD 1984 issued in 1983, -do-
extending the duration of the
franchise of CDCP for another
thirty (30) years.
A-14 LOI No. 1136 issued on 27 To show the indispensable
May 1981 by Pres. Marcos, cooperation of defendant
directing DBP and/or NDC to Antonio L. Carpio in his
guarantee a financial capacity as Chairman of the
restructuring of $150 million to NDC in siphoning and
$200 million for CDCP. manipulating government
funds, as part of the ill-gotten
wealth amassed by the
defendants.
A-18 LOI No. 1107 dated 16 To show how the late
February 1981 directing the President Marcos issued
government to determine the orders for his and his cronies'
need for an industrial personal gain and benefit.
 rehabilitation program to
assist financially distressed
companies.
A-20 LOI No. 1295 issued by To show that defendant
President Marcos on 23 Rodolfo Cuenca obtained a
February 1983, directing the favored rescue arrangement
DBP, PNB, GSIS, LBP, NDC at the behest of President
and Phil Guarantee to convert Marcos through the
the loan obligations of CDCP conversion of a multi-million
into shares of common stock. peso debt in favor of NDC and
other government :financial
institutions into equity, the
release of collaterals to
CDCP, its subsidiaries and
affiliates, notwithstanding that
it had unpaid obligations and
the security of payments to
CDCP of government funds in
violation of the standing policy
against such payments to
persons as firms having
obligations with the
government and to show the
involvement of the other
defendants who were officers
of the above government
financial institutions including
Antonio L. Carpio and the
codefendants mentioned
under Exhibit A-9.
A-60 LOI No. 1296 issued on 23 (a) To show that President
February 1981, which directed Marcos committed grave,
the PNB to release its security blatant, and open abuse of
interests on certain assets of authority and excesses and
CDCP and those of its two plundered the government
wholly owned subsidiaries funds to favor private interest
namely, the Marina Properties of CDCP;
Corp. (MPC), and the Manila
Land Corp. (MLC). (b) To show that the CDCP
and its affiliates are dummies
and conduit corporations of
President Marcos in amassing
ill-gotten wealth and plunder
of the national wealth and
treasury.
A-61 LOI No. 1297 issued on 23 To show the magnitude and
February 1981, directing all special favors given by Pres.
government · ministries, Marcos to CDCP, to the point
bureaus, agencies and of issuing an LOI in the
corporations with outstanding exercise of law-making power,
 payables to CDCP to expedite thus showing that CDCP and
payment of the same. its affiliates are dummies and
conduit corporations of Pres.
Marcos.
A-69 LOI No. 1155 dated 21 July a) To show the use of
1981, directing a rehabilitation totalitarian power by Pres.
plan for Galleon Shipping Marcos for the private
Corp. interests of Galleon Shipping
Corp.

b) To justify sequestration and

reversion of the prope1iies
herein involved to the state.
D Administrative Order No. 13 a) To lay the legal and factual
dated 8 October 1992 issued basis for the recovery of
by the president of the behest loans extended by
Philippines, creating a Pres. Marcos to his cronies,
Presidential Ad Hoc Fact relatives and friends.
Finding Committee on Behest
Loans. b) To criminally prosecute
officials and persons involved.
E Memorandum Order No. 61 -do-
dated 9 November 1992
issued by the President of the
Philippines, broadening the
scope of the Ad Hoc Fact-
Finding Committee on Behest
Loans.
G-1 Copy of Memorandum -do-

Order No. 91.

M I Decision dated July 10, 2000 To show that the SEC hearing
in SEC Case No. 05 96 5357, panel dismissed Rodolfo M.
entitled, Rodolfo M Cuenca v. Cuenca's complaint to annul
[PNCC}, et al. the shares of capital stocks
issued to therein defendants
GFIs pursuant to LOI 1295.
N Order dated August 8, 2000 in To show that the SEC En
SEC Case No. 807 Banc affirmed the July 10,
entitled, Rodolfo M Cuenca v. 2000 Decision of the SEC
Hon. Alberto P. Atas, et Hearing Panel, thus
al., issued by the SEC En dismissing Rodolfo Cuenca's
Banc. appeal of the July 10, 2000
Decision.
O Decision dated 29 November To show that the Court of
2000 of the Court of Appeals Appeals affirmed the 8 August
in CA- G.R. SP No. 60366, 2000 Order of the SEC En
entitled, Rodolfo M Cuenca v. Banc thus denying Rodolfo M.
 Hon. Alberto P. Atas, et al. Cuenca's appeal of the said
Order.
P Entry of Judgment in CA- To show that the Nov. 29,
G.R. SP No. 60366 entered in 2000 Decision of the Court of
the Book of Entries of Appeals denying Cuenca's
Judgments stating the Finality appeal of the Decision
of the 29 November dismissing his Complaint had
2000 Decision of the Court of become final and executory
Appeals. on December 29, 2000.
R Resolution dated 14 To show that the Supreme
Court denied Rodolfo
February 2001 of the Cuenca's petition in
its Resolution dated 14
Honorable Supreme Court February 2001.

in G.R. No. 146214.

T Resolution of the Supreme To show that the Supreme
Court dated 7 March 2001. Court granted
Cuenca's Motion for
Reconsideration thus
reinstating his petition.
U Complaint dated 29 May To show that Rodolfo Cuenca
filed a complaint to annul the
1996 filed before SEC shares issued to defendant
GFIs before the SEC.
SICD in SEC Case No. 0596
5357 by Rodolfo M. Cuenca.
U-1 Par. No. 3 of the Complaint. To show that Cuenca admitted
that he was and still is a
registered stockholder of
PNCC/CDCP although some
of his shares therein have
been sequestered by the
PCGG.
U-2 Par. No. 4.1, page 3 of To show that Cuenca admitted
the Complaint. that in 1982 he controlled the
management of PNCC/CDCP
and that he was its President
and Chief Executive Officer.
U-3 Signature of. Rodolfo M. To show the authenticity of
Cuenca on page 14 of the Complaint.
the Complaint.
V Amended Complaint dated -do-

20 March 1998
V-1 Pars. 3 and 4, page 3 of To show that Cuenca admitted
 the Amended Complaint. that he was and still is a
registered stockholder of
PNCC although some of his
shares have been
sequestered by the PCGG
and that he and the Cuenca
Investment Corporation has
3,254,148 shares in PNCC or
a percentage of 4.98%.
V-2 Par. 4.1 of the Amended To show that Cuenca admitted
Complaint that he controlled the
management of PNCC in
1982 and that he was its
President and Chairman.
V-3 Signature of Roberto S. To show the authenticity of the
Cuenca, Rodolfo M. Cuenca's amended complaint.
son on page 30 of
the Amended Complaint.
w Second Amended Same as in Exhibit U.
Complaint dated 19 June
2000.
W-1 Pars. 3 and 4, page 3 of To show that Cuenca admitted
the Second Amended that he was and still is a
Complaint. registered stockholder of
PNCC although some of his
shares have been
sequestered by the PCGG
and that he and his Cuenca
Investment Corp. owns 5% of
the shares; and that he
controlled management of
PNCC in 1982 and that he
was its President and Chief
Executive Officer.
W-2 Signature of Rodolfo M. To show the authenticity of
Cuenca on page 19 of the Second Amended
the Second Amended Complaint.
Complaint.
X Third Amended To show that Cuenca filed a
Complaint dated 5 May 1998 complaint praying that
filed in Civil Case No. 985 defendant GFIs be ordered to
1356 entitled, Rodolfo M. strictly comply with LOI 1295
Cuenca, for and in behalf of and to immediately convert all
the Philippine National their loan credits against
Construction Corp. v. Asset PNCC into shares of common
Privatization Trust, GSIS, stocks in PNCC.
PNB, DBP, NDC, LBP and P
EFLGC, before Branch 142,
RTC, Makati.
 X-1 Par. 1 of the Third Amended To show that Cuenca admitted
Complaint. that at all relevant times, he
was and still is a registered
stockholder of PNCC.
X-2 Signature of Rodolfo M. To show the authenticity of
Cuenca on page 12 of the Third Amended
the Third Amended Complaint.
Complaint.

Petitioner's other documentary evidence which were mere photocopies were excluded by the
Sandiganbayan pursuant to the best evidence rule under Section 3, Rule 130.  Subsequently, Nora
17

O. Vinluan, Panfilo O. Domingo, Antonio L. Carpio and Roberto V. Ongpin filed their respective
demurrers to evidence which were granted by the Sandiganbayan, and thus, the complaint as
against them was dismissed for insufficiency of evidence.  18

On the other hand, respondents Rodolfo M. Cuenca, Roberto S. Cuenca and Manuel I. Tinio
presented the testimonies of Rodolfo M. Cuenca and Atty. Cinderella B. Benitez (Securities Counsel
III of the Company Registration Monitoring Department of the Securities and Exchange
Commission).

Rodolfo M. Cuenca's testimony was offered for the following purposes:

That the defendant Rodolfo M. Cuenca would testify that there is no truth to any of the allegations
against him in the third amended complaint which stated that he and/or in unlawful concert with then
President and Mrs. Ferdinand E. Marcos, taking advantage of his influence and association with and
active collaboration of defendants spouses engaged in schemes, devices and stratagems designed
to unjustly enrich themselves and to prevent disclosure and discovery of ill-gotten assets; by among
others, a) organized and managed the CDCP by obtaining favored public work contracts under
conditions manifestly disadvantageous to the government; b) secured loans and favored assistance
from government financial institutions without sufficient collateral manifestly disadvantageous to said
institutions; c) secured favored financial assistance for CDCP from President and Mrs. Marcos; d)
government acquired the Galleon Shipping then owned by him on disadvantageous terms; e)
secured favored assistance from NDC, and the other charges therein; and to rebut whatever
evidence plaintiff adduced; to show that he was in fact and is a legitimate businessman who pursued
his profession with dedication and whatever assets he may have acquired are the fruits of his honest
labor and industry, and not thru any illegal means. 
19

Rodolfo M. Cuenca's testimony is summarized in the assailed Decision as follows:

Co-defendant Rodolfo, a businessman, denied having created the Construction and Development
Corporation of the Philippines (CDCP), now the Philippine National Construction Corporation
(PNCC), to obtain favored work contracts amounting to billions of pesos. He testified that he created
the CDCP along with other businessmen, contractors and bankers using their own finances, then
undertook projects in the Philippines and abroad, all of which were secured through public bidding.
He also claimed that they funded constructions by borrowing money from local and American banks,
government financial institutions, and by using the funds of their own shareholders.

On cross-examination, Rodolfo averred that he did not file a case for collection of a sum of money
against government agencies as he relied on good representation with the government to help him.
He also asserted that in 1981, the CDCP had no loan that was due or unpaid and, based on a study
previously conducted, the CDCP was in good financial condition before February 1983. 20
On the other hand, the testimony of Atty. Cinderella B. Benitez was offered for the purpose of
presenting and identifying certified copies of Construction Development Corporation of the
Philippines' (CDCP's) Articles of Incorporation, By Laws and Financial Statements from 1981. 21

Respondents then formally offered the following documentary evidence:

Exhibit Description Purpose

1 Certified machine copy of a) To prove that CDCP is a
CDCP's Articles of duly organized company for
Incorporation from SEC legitimate purposes under
consisting of several pages x Philippine Laws.
xx
b) To prove that defendant
Rodolfo M. Cuenca did not
organize and manage CDCP
to prevent disclosure and
discovery of ill-gotten assets
as Exhibit 1 is a public record,
easily accessible with the
SEC.
2 First three (3) paragraphs of a) To prove that the Philippine
P.D. 1113, Government's grant of
the Whereas clauses x x x. franchise to CDCP to operate,
construct and maintain toll
facilities in the North and
South Luzon Toll
Expressways realization was
for the of the Government's
legitimate developmental
goals.
3 First three (3) paragraphs of a) To prove that the LOI was
LOI 1136, issued for a legitimate reason
the Whereas clauses xxx this was that the rehabilitation
of CDCP was for the best
interest of the Philippine
Government.
4 Documents reflecting the a) To prove that CDCP is a
stockholdings of CDCP before duly organized company
and after the implementation under Philippine Laws.
of LOI 1295, given by LC Diaz
[&] Co., the transfer agent of b) To prove that defendant
CDCP, consisting of two (2) Rodolfo M. Cuenca did not
pages x x x organize and manage CDCP
to prevent disclosure and
discovery of ill-gotten assets
as Exhibits 4, 4-A and 5 will
show that it is a legitimate
publicly held corporation.
4-A Page 2 of Exhibit 4 -do-

5 Certification by L.C. Diaz & -do-

[Co.]. of the distribution of the
total voting and nonvoting
shares/ stockholdings of the
Philippine National
Construction Corporation
[formerly CDCP] as of 30 May
1991 xx x
6 Comparative Financial a) To show that at the time
Statements of CDCP/PNCC CDCP was being managed by
from 1981-2005, consisting of defendant Rodolfo M. Cuenca
four (4) pages x x x until the government took over
thereof in 1983 the business
was earning a profit but
thereafter, after the take over
of CDCP in 1983, PNCC
suffered losses. This goes to
show that the take over did
not serve to rehabilitate CDCP
as contemplated by LOI 1295
nor did it favor defendant
Rodolfo M. Cuenca.
7 Certified Machine Copy of the a) To prove that CDCP is a
Articles of Incorporation of duly organized company for
CDCP issued 22 November legitimate purposes under
1966, consisting of fourteen Philippine Laws.
(14) pages, including the
Certificate of Incorporation b) To prove that defendant
plus the attached Treasurer's Rodolfo M. Cuenca did not
Affidavit, consisting of sixteen organize and manage CDCP
(16) pages. to prevent disclosure and
discovery of ill-gotten assets
as Exhibits 7, 7-A, 8 and 8-
A are of public record, easily
accessible with the SEC.
7-A Certificate of Filing plus -do-
the Amended Articles of
Incorporation which was
approved 7 December 1983

8 By-Laws of the CDCP, -do-

consisting of fourteen (14)
  pages together with
 the Certtficate of Filing dated
29 November 1966
8-A Amended By-Laws approved -do-
in July 1982

9 Financial Statements of a) To prove that CDCP is a

CDCP for the period ending legitimate corporation, in
31 December 1982 and 1981 religious compliance with the
reportorial requirements of the
SEC.

b) To prove that defendant

Rodolfo M. Cuenca did not
organize and manage CDCP
to prevent disclosure and
discovery of ill-gotten assets.
9-A Financial Statement for the -do-
period ending 31 December
1996 and 1995

9-B Audit Report for the years -do-

ending 1996 and 1995

9-C Balance Sheet as of 31 -do-

December 1996

9-D Audit Report for the years -do-

1997 and 1996

9-E Audit Report for the period 31 -do-

December 1998 and 1997

9-F Audit Report for the years -do-

 ending 31 December 2001
and 2000

9-G Audit Report for the years -do-

ending 31 December 2000
and 1999

9-H Audit Report for the year -do-

-ending 31 December 2002

9-I Audit Report for the year -do-

ending 31 December 2005

10 LOI 1296 [Exhibit A-60] the a) To prove that LOI 129[5]

first three (3) paragraphs, was issued for a legitimate
the Whereas clauses xx x purpose, i.e., to expedite the
rehabilitation of CDCP for the
best interest of the Philippine
Government. 22

These documentary evidence were all admitted by the Sandiganbayan. Thereafter, the parties were
directed to submit their respective memoranda.  23

The Ruling of the Sandiganbayan

On August 5, 2010, the Sandiganbayan rendered its presently assailed Decision dismissing the
Republic's complaint for insufficiency of evidence. In analyzing the documentary evidence presented
by the Republic and which were admitted by the SC:1-ndiganbayan, the latter observed that the
same merely consisted of the executive issuances of then President Marcos and of court decisions
and resolutions. According to the Sandiganbayan, said executive issuances are not per se illegal
considering that every public official is entitled to presumption of good faith in the discharge of official
duties. The Sandiganbayan further declared that in the absence of bad faith and malice, the
presumption of regularity in the performance of official duties stands.  24

The Sandiganbayan also regarded the testimonial evidence presented by the Republic as
insufficient to establish that respondents engaged in "schemes, devices or stratagems" to acquire ill-
gotten assets. It observed that while witness Ma. Lourdes O. Magno attested that the excluded
documentary evidence came from the records of the PCGG, she herself admitted lack of personal
knowledge as to how these documents were obtained. Further, the Sandiganbayan emphasized that
witnesses Evelita E. Celis and Atty. Orlando L. Salvador, who prepared the summaries of the PCGG
documents and of the reports pertaining to PNCC's account, had no personal knowledge of the
transactions or of the contents of the reports submitted to them. Finally, the Sandiganbayan
assessed that witness Stephen P.Tanchuling simply testified that the supporting documents for the
summary prepared by witness Evelita E. Celis were sourced from the Presidential Library in
Malacañang. 25

In disposal, the Sandiganbayan held:

WHEREFORE, in view of the foregoing, this Complaint for Reconveyance, Reversion, Accounting,
Restitution and Damages is DISMISSED for insufficiency of evidence. The writs of sequestration and
freeze orders issued in this case are hereby LIFTED.

SO ORDERED. 26

Consequently, the Republic moved for reconsideration while respondents moved to exchange the
Republic's motion for reconsideration for lack of notice of hearing. Both motions were denied by the
Sandiganbayan in its Joint Resolution and disposed, thus:

WHEREFORE, the Motion for Reconsideration of the plaintiff, Republic of the Philippines, is

hereby DENIED for lack of merit.

SO ORDERED. 27

Hence, recourse to the instant petition.

The Issue

The Republic relies on this sole ground for review:

THE SANDIGANBAYAN ERRED IN DISMISSING PETITIONER'S COMPLAINT AGAINST

RESPONDENTS DESPITE HAVING ESTABLISHED A PRIMA FACIE CASEIN ITS FAVOR. 28

The Republic argues that Rodolfo M. Cuenca, in his answer dated July 3, 1989 and in his testimony,
admitted that CDCP obtained loans from local and American Banks and government financial
institutions. Thus, the Sandiganbayan should have only resolved whether or not said loans were
grossly disadvantageous to the government and to the Filipino people. 29

The Republic also assails the Sandiganbayan's exclusion of its documentary evidence on the ground
of the best evidence rule. It argues that by its exhibits, it has proven that the documents showing the
loans, financial assistance, guarantees and other favors bestowed upon Rodolfo M. Cuenca really
existed and were actually executed and that the contents thereof were established by Rodolfo M.
Cuenca's judicial admissions.  In any case, the Republic argues that the content, extent and quantity
30

of the Presidential issuances demonstrate obvious partiality to CDCP which are enough to arouse
suspicion that said issuances were made to advance a furtive design. 31

Respondents Rodolfo M. Cuenca, Roberto S. Cuenca and Manuel I. Tinio filed their comment  to the
32

petition reasoning that the Sandiganbayan did not err in excluding the documentary exhibits of the
Republic for being mere photocopies as the contents thereof and not merely their existence, were at
issue. This comment was adopted by respondent Imelda R. Marcos.   Respondent Don M.
33

Ferry,  on the other hand, insisted that the complaint as against him is dismissible as the acts
34

imputed to him were made in his official capacity as one of the Vice Chairmen of the Development
Bank of the Philippines (DBP) which bears the collective approval of DBP's Board of Governors and
as such, his actions were presumed to be regular, in the absence of evidence to the
contrary.  Respondent Mario K. Alfelor, through counsel, prayed that the complaint be dismissed as
35

to him in view of his death during the pendency of the petition. 36

The Republic's consolidated reply  to the comments were reiterative of the arguments contained in
37

its petition.

The Ruling of the Court

We deny the petition.

No error could be attributed to the Sandiganbayan when it dismissed the Republic's complaint for
insufficiency of evidence.

Appeal by certiorari is limited only to questions of law

Section 1, Rule 45 provides:

SECTION 1. Filing of petition with Supreme Court. - A party desiring to appeal by certiorari from a
judgment or final order or resolution of the Court of Appeals, the Sandiganbayan, the Court of Tax
Appeals, the Regional Trial Court or other courts whenever authorized by law, may file with the
Supreme Court a verified petition for review on certiorari. The petition may include an application for
a writ of preliminary injunction or other provisional remedies and shall raise only questions of law
which must be distinctly set forth. x x x (Emphasis ours)

As stated, Section 1, Rule 45 requires that only questions of law should be raised in an appeal
by certiorari. Subject to certain exceptions,  the factual findings of lower courts bind the Supreme
38

Court.   The limitation finds justification as this Court is not a trier of facts that undertakes the
39

reexamination and re-assessment of the evidence presented by the contending parties during the
trial. This Court thus receives with great respect the lower court's appreciation and resolution of
factual issues.

For a question to be one of law, the same must not involve an examination of the probative value of
the evidence presented.  There is a question of law in a given case when the doubt or difference
1âwphi1

arises as to what the law is on certain state of facts.  Contrariwise, the following questions relating to
40

issues of fact are not reviewable by this Court:

x x x [W]hether certain items of evidence should be accorded probative value or weight, or should be
rejected as feeble or spurious; or whether or not the proofs on one side or the other are clear and
convincing and adequate to establish a proposition in issue; whether or not the body of proofs
presented by a party, weighed and analyzed in relation to contrary evidence submitted by adverse
party, may be said to be strong, clear and convincing; whether or not certain documents presented
by one side should be accorded full faith and credit in the face of protests as to their spurious
character by the other side; whether or not inconsistencies in the body of proofs of a party are of
such gravity as to justify refusing to give said proofs weight - all these are questions of fact. 
41

In order to determine the veracity of the Republic's main contention that it has established a prima
facie case against respondents through its documentary and testimonial evidence, a reassessment
and reexamination of the evidence is necessary. Unfortunately, the limited and discretionary judicial
review allowed under Rule 45 does not envision a re-evaluation of the sufficiency of the evidence
upon which respondent court's action was predicated.

II.

Exclusion of documentary evidence under the best evidence rule

Except for the Presidential issuances and court decisions of which the Sandiganbayan took judicial
notice of, the remainder of the Republic's documentary evidence consisting of reports, sworn
statements, memoranda, board resolutions, letters of guarantee, deeds of undertaking, promissory
notes, letters and loan agreements  were excluded by the Sandiganbayan for being mere
42

photocopies. That these documentary exhibits were indeed mere photocopies were never disputed
by the Republic. What the Republic disputes is the exclusion thereof on the basis of Section 3, Rule
130, known in legalese parlance as the best evidence rule, which provides:

SEC. 3. Original document must be produced; exceptions.-When the subject of inquiry is the

contents of a documents, no evidence shall be admissible other than the original document itself,
except in the following cases:

(a) When the original has been lost or destroyed, or cannot be produced in court,
without bad faith on the part of the offeror;

(b) When the original is in the custody or under the control of the party against whom
the evidence is offered, and the latter fails to produce it after reasonable notice;

(c) When the original consists of numerous accounts or other documents which
cannot be examined in court without great loss of time and the fact sought to be
established from them is only the general result of the whole; and

(d) When the original is a public record in the custody of a public officer or is
recorded in a public office.

Thus, a photocopy, being merely secondary evidence, is not admissible unless it is shown that the
original is unavailable.  Section 5, Rule 130 provides:
43

SEC.5 When original document is unavailable. -When the original document has been lost or
destroyed, or cannot be produced in court, the offeror, upon proof of its execution or existence and
the cause of its unavailability without bad faith on his part, may prove its contents by a copy, or by a
recital of its contents in some authentic document, or by the testimony of witnesses in the order
stated.

Pursuant to the aforequoted section, before a party is allowed to adduce secondary evidence to
prove the contents of the original, it is imperative that the offeror must prove: (1) the existence or due
execution of the original; (2) the loss and destruction of the original or the reason for its non-
production in court; and (3) on the part of the offeror, the absence of bad faith to which the
unavailability of the original can be attributed. Hence, the correct order of proof is existence,
execution, loss, and contents. 44

In this case, the Sandiganbayan observed that the Republic failed to introduce either the original or
the certified true copies of the documents during its examination-in-chief for purposes of
identification, marking, authentication and comparison with the copies furnished the Sandiganbayan
and the adverse parties.  When the Sandiganbayan inquired as to whether the Republic will present
45

the original or certified true copies of its documentary exhibits, the Republic answered that it will do
so, if necessary, as the originals are kept in the Central Bank vault.  Despite knowledge of the
46

existence and whereabouts of the documents' originals, the Republic still failed to present the same
and contented itself with the presentation of mere photocopies. Neither was there any showing that
the Republic exerted diligent efforts to produce the original.

Further, despite the Republic's claim that the excluded documentary exhibits are public documents,
the Sandiganbayan is correct in observing that the Republic failed to show, in case of a public record
in the custody of a public officer or is recorded in a public office, an official publication thereof or a
copy attested by the officer having the legal custody of the record or by his deputy, and
accompanied, if the record is not kept in the Philippines, with a certification that such officer has the
custody, or in the case of a public record of a private document, the original record, or a copy thereof
attested by the legal custodian of the record, with an appropriate certificate that such officer has the
custody. 47

While witness Ma. Lourdes O. Magno testified that she is the custodian of PCGG's records, together
with the excluded documents, and that the PCGG's records were turned over by the previous
Chairman and Commissioners of the PCGG and from the PCGG's Research Department, such does
not make the documents public in character per se.

On this score, Republic of the Philippines v. Marcos-Manotoc, et al.,   which similarly upheld the
48

denial of the Republic's documentary exhibits for violating the best evidence rule, provides
elucidation:

The fact that these documents were collected by the PCGG in the course of its investigations does
not make them per se public records referred to in the quoted rule.

Petitioner presented as witness its records officer, Maria Lourdes Magno, who testified that these
public and private documents had been gathered by and taken into the custody of the PCGG in the
course of the Commission's investigation of the alleged ill-gotten wealth of the Marcoses. However,
given the purposes for which these documents were submitted, Magno was.not a credible witness
who could testify as to their contents. To reiterate, "[i]f the writings have subscribing witnesses to
them, they must be proved by those witnesses." Witnesses can testify only to those facts which are
of their personal knowledge; that is, those derived from their own perception. Thus, Magno could
only testify as to how she obtained custody of these documents, but not as to the contents of the
documents themselves.

Neither did petitioner present as witnesses the affiants of these Affidavits or Memoranda submitted
to the court. Basic is the rule that, while affidavits may be considered as public documents if they are
acknowledged before a notary public, these Affidavits are still classified as hearsay evidence. The
reason for this rule is that they are not generally prepared by the affiant, but by another one who
uses his or her own language in writing the affiant's statements, parts of which may thus be either
omitted or misunderstood by the one writing them. Moreover, the adverse party is deprived of the
opportunity to cross-examine the affiants. For this reason, affidavits are generally rejected for being
hearsay, unless the affiants themselves are placed on the witness stand to testify thereon. As to the
copy of the TSN of the proceedings before the PCGG, while it may be considered as a public
document since it was taken in the course of the PCGG's exercise of its mandate, it was not attested
to by the legal custodian to be a correct copy of the original. This omission falls short of the
requirement of Rule 132, Secs. 24 and 25 of the Rules of Court.  (Citations omitted)
49
The Republic seeks exception to the application of the best evidence rule by arguing that said
documents were presented to prove their existence and execution, and not their contents. The Court
is hard-pressed to give credence to such argument in the light of the purposes for which these
excluded documents were sought to be admitted, i.e., to show that Rodolfo M. Cuenca secured
loans from government financial institutions without sufficient collateral; to show that Rodolfo M.
Cuenca obtained favorable rescue arrangement at the behest of Ferdinand E. Marcos; to show that
the sequestered properties are part of the ill-gotten wealth; to show that respondents are dummies of
Ferdinand E. Marcos; and to show the complicity between respondents in amassing ill-gotten
wealth.  Clearly, no amount of legal hermeneutics could betray that what should be proven are the
50

contents, and not the mere existence, of the documents themselves.

In the same vein, neither can Rodolfo M. Cuenca's supposed judicial admissions excuse the
Republic's unexplained failure to produce the originals of its documentary evidence. There is no
contention that Rodolfo M. Cuenca, through the then CDCP, admits having incurred credit
obligations in the course of its operations. This, as much, was reiterated by Rodolfo M. Cuenca in his
comment  to the petition and which was an established fact in the case of Cuenca v. Hon. Atas. 
51 52

However, the admission that CDCP obtained loans from government financial institutions is not the
same as admitting that these were behest loans disadvantageous to the Filipino people or were
used to amass ill-gotten wealth in concert with the spouses Ferdinand E. Marcos and Imelda R.
Marcos. Even then, the judicial admissions referred to by the Republic found in Rodolfo M. Cuenca's
answer was a general statement to the effect that it, indeed, secured loans without, however,
specifying which loans these were and for what amounts. It will thus be unfounded, if not unduly
hasty, to conclude that Rodolfo M. Cuenca admits having obtained behest loans specifically averred
to in the complaint.

III.

The Republic failed to prove by preponderance of evidence the allegations in the complaint

To recover the unexplained or ill-gotten wealth reputedly amassed by then President Ferdinand E.
Marcos and Imelda R. Marcos, former President Corazon Aquino issued Executive Order No. l   and 53

thereby, gave birth to the PCGG with the task of recovering "all ill-gotten wealth accumulated by
former President Ferdinand E. Marcos, his immediate family, relatives, subordinates and close
associates, whether located in the Philippines or abroad, including the takeover or sequestration of
all business enterprises and entities owned or controlled by them during his administration, directly
or through nominees, by taking undue advantage of their public office and/or using their powers,
authority, influence, connections or relationship. "  The recovery of the reputed ill-gotten wealth was
54

both a matter of urgency and necessity  and the right of the State to recover unlawfully acquired
55

properties eventually found flesh under Section 15, Article XI of the Constitution. 56

Nevertheless, in as early as 1959, forfeiture in favor of the State of any property in an amount found
to have been manifestly out of proportion to a public officer or employee's salary or to the latter's
other lawful income and the income from legitimately acquired property, has been sanctioned under
Republic Act No. 1379 (R.A. 1379). Forfeiture proceedings under R.A. 1379 are civil in nature  and
57

actions for reconveyance, revision, accounting, restitution, and damages for ill-gotten wealth, as in
this case, are also called civil forfeiture proceedings.  Similar to civil cases, the quantum of evidence
58

required for forfeiture proceedings is preponderance of evidence.  59

Section 1, Rule 133 spells how preponderance of evidence is determined:

SECTION 1. Preponderance of evidence, how determined. - In civil cases, the party having the
burden of proof must establish his case by a preponderance of evidence. In determining where the
preponderance or superior weight of evidence on the issues involved lies, the court may consider all
the facts and circumstances of the case, the witnesses manner of testifying, their intelligence, their
means and opportunity of knowing the facts to which they are testifying, the nature of the facts to
which they testify, the probability or improbability of their testimony, their interest or want of interest,
and also their personal credibility so far as the same may legitimately appear upon the trial. The
court may also consider the nw11ber of witnesses, though the preponderance is not necessarily with
the greater number.

Expounding on the concept of preponderance of evidence, this Court held:

x x x. "Preponderance of evidence" is the weight, credit, and value of the aggregate evidence on
either side and is usually considered to be synonymous with the term greater weight of the evidence
or greater weight of the credible evidence. Preponderance of evidence is a phrase which, in the last
analysis, means probability of the truth. It is evidence which is more convincing to the court as
worthy of belief than that which is offered in opposition thereto. 60

Juxtaposing the specific allegations in the complaint with the Republic's documentary and
testimonial evidence and as against the respondents' documentary and testimonial evidence
showing the due organization and existence of CDCP, the Court agrees with the Sandiganbayan
that the weight of evidence fails to preponderate in the Republic's favor. Neither ·were the
Presidential issuances nor the witnesses' testimonies sufficient to prove the allegations in the
Republic's complaint.

The Court finds the Sandiganbayan's ruling to be apropos:

A careful examination of the afore-mentioned issuances yields that while it may be true that then
President Marcos gave instructions to certain government institutions to extend financial support to
the [CDCP before it was renamed Philippine National Construction Corporation (PNCC) to reflect the
government stockholding], there is nothing in them which would substantiate the [Republic's] claims
that Rodolfo [M. Cuenca], through the PNCC, enjoyed a magnitude of special favors to unjustly
enrich himself. Even if the Court were to take into consideration the testimonies of the [Republic's]
witnesses, it finds that these are not sufficient to establish that the [respondents] engaged in
"schemes, devices or stratagems" to acquire ill-gotten assets. While Magno attested that Exhibits "A"
to "A-70" of the [Republic's] evidence came from the records of the PCGG, she herself admitted that
she did not know how they were obtained. Further, the documents in question were rendered
inadmissible in evidence as they were only photocopies. Celis and Atty. Salvador, who prepared
Executive Summaries of the PCGG documents relevant to this case, and of the reports pertaining to
the account of the PNCC, respectively, both claimed that they had no personal knowledge of the
transactions or of the contents of the reports submitted to them. Lastly, Tanchuling simply testified
that the supporting documents for the Executive Summary prepared by Celis were gathered from the
Presidential Library in Malacañang.

[The Republic] having failed to present tangible evidence to prove that Rodolfo [M. Cuenca] indeed
amassed ill-gotten wealth to the detriment of the government, such claim is nothing but a mere
inference on its part. x x x
61

It bears stressing that it is upon the Republic to prove the allegations in its complaint. It is therefore
imperative that the operative act on how and in what manner the respondents participated in
amassing ill-gotten wealth be demonstrated through preponderance of evidence. In case of failure to
do so, the Republic's complaint will merit nothing but denial.
Notably, in the consolidated cases of Development Bank of the Philippines v. Sta. Ines Melale
Forest Products Corporation, et al., and National Development Corporation v. Sta. Ines Melale
Forest Products Corporation, et al.,   the Court had the opportunity to examine the contents of a
62

Memorandum of Agreement (MOA) dated August 10, 1981 between NDC and Galleon Shipping
Corporation where the parties undertook to prepare and sign a share purchase agreement covering
100% of Galleon's equity for ₱46,740,755.00. This arrangement appears to be one of the alleged
illegal acts committed by herein respondents. To recall, paragraph 12 (e) of the Republic's complaint
provides:

(e) secured, after Galleon Shipping Corporation defaulted in its obligations, additional financial
assistance from government institutions, through the issuance of Letter of Instruction No. 1155,
which required the National Development Company (NDC) to buy out the entire shareholdings in
Galleon Shipping Corporation of defendant Rodolfo M. Cuenca, Arthur C. Balch, Manuel I. Tinio,
Mario K. Alfelor, Rodolfo Munsayac and those of other stockholders for ₱46.7 Million and to provide
the required additional equity;

To emphasize, the original of the said MOA was not presented by the Republic before the
Sandiganbayan in the forfeiture proceeding. But even as the Court takes judicial notice of the
existence and contents of the said MOA, it was nonetheless established in the Sta. Ines
Me/ale cases that the MOA was a mere preliminary agreement that is separate and distinct from the
actual share purchase agreement but that due to NDC's delay, the execution of the share purchase
agreement is considered fulfilled with NDC as the new owner of 100% of Galleon's shares of stocks.
In making such pronouncement, the Court effectively recognized the validity and binding effect of the
MOA between the parties even when the MOA was admittedly the fruit of LOI No. 1155 issued by
former President Marcos. Given that the Court duly recognized the rights and obligations of NDC
and the stockholders of Galleon under the MOA, neither the said MOA nor the acts of the parties
thereto can be interpreted as tending to prove that respondents amassed ill-gotten wealth for
themselves, in concert with one another.

In closing, the Court finds it opportune to echo its concluding statement in the Marcos-Manatoc case
if only to emphasize the importance of a well-executed effort on the part of the government to
recover ill-gotten wealth and the dire consequences if done improperly, hastily and haphazardly:

x x x the best evidence rule has been recognized as an evidentiary standard since the 18th century.
For three centuries, it has been practiced as one of the most basic rules in law. It is difficult to
conceive that one could have finished law school and passed the bar examinations without knowing
such elementary rule. Thus, it is deeply disturbing that the PCGG and the Office of the Solicitor
General (OSG) - the very agencies sworn to protect the interest of the state and its people - could
conduct their prosecution in the manner that they did. To emphasize, the PCGG is a highly
specialized office focused on the recovery of ill-gotten wealth, while the OSG is the principal legal
defender of the government. The lawyers of these government agencies are expected to be the best
in the legal profession.

However, despite having the expansive resources of government, the members of the prosecution
did not even bother to provide any reason whatsoever for their failure to present the original
documents or the witnesses to support the government's claims. x x x

The public prosecutors should employ and use all government resources and powers efficiently,
effectively, honestly and economically, particularly to avoid wastage of public funds and revenues.
They should perform and discharge their duties with the highest degree of excellence,
professionalism, intelligence and skill.
The basic ideal of the legal profession is to render service and secure justice for those seeking its
aid. In order to do this, lawyers are required to observe and adhere to the highest ethical and
professional standards. The legal profession is so imbued with public interest that its practitioners
are accountable not only to their clients, but to the public as well.

The public prosecutors, aside from being representatives of the government and the state, are, first
and foremost, officers of the court. They took the oath to exert every effort and to consider it their
duty to assist in the speedy and efficient administration of justice. Lawyers owe fidelity to the cause
of the client and should be mindful of the trust and confidence reposed in them. Hence, should serve
with competence and diligence.   (Citations omitted)
63

In sum, absent preponderant evidence to hold otherwise, the Republic failed to prove that the
respondents by themselves or in unlawful concert with one another, accumulated or participated in
the accumulation of ill-gotten wealth insofar as the specific allegations in the subject complaint are
concerned.

WHEREFORE, the Decision dated August 5, 2010 and Joint Resolution dated August 31, 2011 of
the Sandiganbayan in Civil Case No. 0016 dismissing the Republic's complaint for reconveyance,
reversion, accounting, restitution and damages for insufficiency of evidence are AFFIRMED.

SO ORDERED.

SECOND DIVISION

G.R. No. 225199, July 09, 2018

ALLIED BANKING CORPORATION (NOW PHILIPPINE NATIONAL

BANK), Petitioner, v. EDUARDO DE GUZMAN, SR., IN HIS CAPACITY AS SURETY
TO THE VARIOUS CREDIT ACCOMMODATIONS GRANTED TO YESON
INTERNATIONAL PHILIPPINES, INC., Respondent.

DECISION

PERALTA, J.:

Before the Court is a petition for review on certiorari  under Rule 45 of the Rules of
Court seeking to reverse and set aside the Decision1 dated November 9, 2015 and the
Resolution2 dated June 23, 2016 of the Court of Appeals (CA) in CA-G.R. CR. CV No.
103347, which affirmed the Decision[3 dated January 28, 2013 of the Regional Trial
Court (RTC)  of Makati City, in Civil Case No. 97-915 dismissing petitioner's complaint
for lack of merit.
The antecedent facts are as follows:

On February 14, 1990, respondent Eduardo De Guzman, Sr., along with Dong Hee Kim,
Chul Ho Shin, and Bong Il Kim, all of whom were incorporators of Yeson International
Philippines, Inc., executed a Continuing Guaranty/Comprehensive Surety wherein they
bound themselves, jointly and severally, to pay any and all obligations, including all
accrued interest and charges, attorney's fees, and costs of litigation, obtained by the
company from petitioner Allied Banking Corporation (now Philippine National
Bank) (PNB). The agreement provides that "this is a continuing guaranty and shall
remain in full force and effect until written notice shall have been received by
you (PNB) that it has been revoked by the undersigned." In 1992, the company,
through its Import/Export Manager, Elizabeth Sy, and Bong Il Kim, executed six (6)
trust receipts, in the amounts of US$141,012.00, US$16,462.68, US$19,365.07,
US$59,597.56, US$27,485.26, and JPYen 2,875,000.00, to facilitate the acquisition
and/or purchase of several merchandise from its suppliers. On April 30, 1993, after the
company's obligation became past due, the same was repackaged and consolidated.
Consequently, it executed a Promissory Note in the amount of P12,500.00. Thereafter,
PNB required the company's directors to execute another contract of suretyship to
secure the repackaged loan. Thus, the incorporators Dong Hee Kim, Chul Ho Shin, and
Bong Il Kim, together with Antonio Katigbak, executed a new Continuing
Guaranty/Comprehensive Surety dated June 23, 1993. De Guzman, however, had no
participation thereon.4

On April 29, 1997, PNB filed a Complaint for Sum of Money before the Regional Trial
Court (RTC) of Makati City against De Guzman, Dong Hee Kim, Chul Ho Shin, Bong Il
Kim, and Antonio Katigbak (Katigbak),  as sureties of the company, contending that said
company failed to pay its outstanding loan of P7,335,809.99 and to return
P5,349,149.71 arising from the six (6) trust receipts, plus interests and penalties,
despite demand. In their Answer filed by their counsel Atty. Jonathan M. Polines, the
defendants admitted the company's indebtedness but pointed out that in 1996, due to
financial difficulties, it was constrained to file a Petition for Suspension of Payments and
Appointment of a Management Committee or Rehabilitation Receiver before the
Securities and Exchange Committee (SEC), which suspended all claims against it.5

In a Decision dated August 14, 2008, the RTC initially found all defendants liable as
sureties and ordered them to pay the indebtedness of the company, plus interest and
penalty charges. De Guzman, together with Dong Hee Kim, Chul Ho Shin, Bong Il Kim,
filed a Notice of Appeal. On October  21, 2008, however, De Guzman, assisted by a new
counsel, filed a Motion for Leave (1) To Withdraw Notice of Appeal and (2) To File
Motion for New Trial alleging that he had no knowledge of the complaint and that
summons was never personally served on his person, the jurisdiction over the same
being obtained by the court by his alleged voluntary appearance when he filed
responsive pleadings through Atty. Polines. But De Guzman never engaged his services
nor did he authorize him to file any pleadings on his behalf. De Guzman alleged that it
was only when a messenger came to his office in July 2000 asking him to sign a special
power of attorney appointing Atty. Polines as his representative that he learned of the
case. He was forced to sign the same because he was told that he would already be
declared in default if he refused. Moreover, apart from being difficult to get in touch
with, said Atty. Polines even filed a notice of appeal without De Guzman's consent.
Thus, due to the fact that De Guzman was denied his day in court, he prayed to be
allowed to withdraw said notice of appeal and in lieu thereof, admit the attached motion
for new trial.6

In the interest of substantial justice, the RTC issued an Order dated January 9, 2009,
granted De Guzman's motion, set aside the August 14, 2008 Decision, and set the case
for reception of evidence. Thereafter, De Guzman presented two (2) witnesses, namely,
himself and Elizabeth Sy, the former Import/Export Manager of the company. On the
one hand, De Guzman admitted to signing the first surety agreement dated February
14, 1991, during which time, he was still a stockholder and director of the company as
an accommodation to his friends, Dong Hee Kim, Chul Ho Shin, Bong Il Kim, Korean
nationals, who needed a Filipino businessman to establish their business. But later that
same year, Bong Il Kim acceded to his request and informed him that he was no longer
a board member nor a shareholder of the company, having been replaced by Katigbak.
Immediately thereafter, De Guzman exercised his right to revoke his obligation as
surety by sending a letter dated September 4, 1991 to PNB. Because of said revocation,
De Guzman asserts that PNB can no longer hold him liable as surety for the six (6) trust
receipts, the earliest of which was executed on November 7, 1991, or any other
obligation after the revocation. In support thereof, De Guzman presented an original
copy of the letter wherein he revoked his participation in the first surety agreement,
which he sent to PNB by registered mail. Unfortunately, De Guzman could not obtain a
certification from the Muntinlupa Post Office as to the delivery of the said letter because
all records of dispatches for the year 1991 were already disposed by said office due to
the fact that De Guzman's request in 2010 has already passed their retention period.
On the other hand, Elizabeth Sy testified that when the company failed to pay its
obligation to PNB, it applied that the same be repackaged and consolidated into a single
obligation. As a result thereof, and of the fact that De Guzman was no longer a
shareholder of the company, the first surety agreement was superseded and PNB
required the execution of the second surety agreement, but this time, without De
Guzman's participation.7

In a Decision dated January 28, 2013, the RTC affirmed its August 14, 2008 Decision,
finding Dong Hee Kim, Chul Ho Shin, Bong Il Kim liable as sureties but dismissed the
same as against Katigbak, who proved that his signature was a forgery, and as against
De Guzman, who proved to the court's satisfaction that before the execution of the
second surety agreement in June 23, 1993, he already revoked the first surety
agreement through his September 4, 1991 letter.

On November 9, 2015, the CA affirmed the trial court's ruling finding no cogent reason
to reverse the same. According to the appellate court, De Guzman was able to establish
that he had revoked his participation in the first surety agreement by presenting an
original copy of the September 4, 1991 letter of revocation and the register receipt
evidencing that he sent the same via registered mail. Besides, there was no reason nor
logic for De Guzman to remain as surety for the corporation when he was no longer a
stockholder of the same, and thus, is no longer in a position to ensure payment of the
obligation. Moreover, Elizabeth Sy's testimony sufficiently supported the fact that the
second surety agreement superseded the first one, that PNB was well aware of the
revocation for it would not have required the execution of a new surety agreement
otherwise.8

Furthermore, the CA held that there is no need for the postmaster to certify that the
registry notices were issued or sent to the addressee and that the latter received the
same for the absence of a certification would only mean that the presumption that a
letter duly directed and mailed was received in regular course of the mail would not
apply. De Guzman was still able to establish, to the court's satisfaction, that he sent a
letter of revocation to PNB. Moreover, the CA rejected PNB's contention that the trial
court should not have considered the pieces of evidence presented by De Guzman on
his belated claim of revocation since the same were never raised in the Motion to
Dismiss or in the Answer. It was the lack of vigilance on the part of PNB that made the
presentation of said evidence possible for as the records show, PNB failed to timely
object to the presentation of the same at the trial. After De Guzman testified that he
sent a letter of revocation, PNB proceeded to lengthily and exhaustively cross-examine
him. Thus, the trial court considered his defenses in accordance with Section 5, Rule 10
of the Rules of Court, which provides that when issues not raised by the pleadings are
tried with the express or implied consent of the parties, they shall be treated in all
respects as if they had been raised in the pleadings.9

On August 15, 2016, PNB filed the instant petition invoking several arguments. First, it
faults the CA for concluding that since De Guzman is no longer a stockholder of the
corporation, he can no longer be held liable under the surety agreement. This is
because as the first surety agreement states, De Guzman voluntarily executed the
same in his personal capacity, regardless of his status as stockholder or director of the
company. Second,  PNB claims that the RTC and the CA should not have considered
Elizabeth Sy's testimony for the execution of the second surety agreement does not
mean that the first had been superseded. This is due to the fact that under the rules on
evidence, a party is only allowed to add to the terms of an agreement if he has put in
issue in his pleading the additional matters presented by the additional evidence. Here,
De Guzman did not put said matters in his pleadings which consist only of a Motion for
Leave (1) To Withdraw Notice of Appeal and (2) To File Motion for New Trial with the
Motion for New Trial itself. Third, contrary to the findings of the RTC and the CA, PNB
insists that De Guzman failed to prove, by preponderance of evidence, that he sent the
notice of revocation and that the same was actually received by PNB. Thus, while the
PNB is mindful that the Court is not a trier of facts, the findings of the RTC and the CA
are not binding as they are not based on the evidence on record. Finally, PNB asserts
that the courts below should not have allowed De Guzman to present evidence to show
revocation when said defense was never raised in his pleadings.10

The petition is devoid of merit.

In essence, the issue invoked before the Court is basically the appreciation and
determination of the factual matter of whether it was sufficiently proven that the first
surety agreement was, indeed, revoked. Time and again, the Court has ruled that in
petitions for review on certiorari under Rule 45, only questions of law may be raised
before this Court as We are not a trier of facts. Our jurisdiction in such a proceeding is
limited to reviewing only errors of law that may have been committed by the lower
courts. Consequently, findings of fact of the trial court, especially when affirmed by the
CA, are final and conclusive, and cannot be reviewed on appeal. It is not the function of
this Court to reexamine or reevaluate evidence, whether testimonial or documentary,
adduced by the parties in the proceedings below.11

Petitioner insists, however, that the Court must relax the application of said general
rule and apply the exception thereto, namely, that the lower courts' findings were not
supported by the evidence on record, or were based on a misapprehension of facts, or
that certain relevant and undisputed facts were manifestly overlooked that, if properly
considered, would justify a different conclusion. Unfortunately, the Court does not find
merit in petitioner's contention for a cursory review of the findings of the RTC and CA
reveals that the same were duly supported by the evidence presented by the parties.

On the basis of Section 3(v),12 Rule 131, of the 1997 Rules of Court, the Court has
consistently ruled that when a mail matter was sent by registered mail, there arises a
disputable presumption that it was received in the regular course of mail. The facts to
be proved in order to raise this presumption are: (a) that the letter was properly
addressed with postage prepaid; and (b) that it was mailed.13 In Commissioner of
Internal Revenue v. Metro Star Superama, Inc.,14 citing Barcelon, Roxas Securities, Inc.
(now known as UBP Securities, Inc.) v. Commissioner of Internal Revenue, 15 the Court
had the occasion to stress that in order to prove the fact of mailing, the second
requisite above, it is important that a party proving the same present sufficient
evidence thereof, such as the registry receipt issued by the Bureau of Posts or the
registry return card which would have been signed by the petitioner or its authorized
representative, to wit:

On the matter of service of a tax assessment, a further perusal of our ruling in Barcelon
is instructive, viz.:

Jurisprudence is replete with cases holding that if the taxpayer denies ever having
received an assessment from the BIR, it is incumbent upon the latter to prove by
competent evidence that such notice was indeed received by the addressee. The onus
probandi  was shifted to respondent to prove by contrary evidence that the Petitioner
received the assessment in the due course of mail. The Supreme Court has consistently
held that while a mailed letter is deemed received by the addressee in the course of
mail, this is merely a disputable presumption subject to controversion and a direct
denial thereof shifts the burden to the party favored by the presumption to prove that
the mailed letter was indeed received by the addressee (Republic vs. Court of Appeals,
149 SCRA 351). Thus as held by the Supreme Court in Gonzalo P. Nava vs.
Commissioner of Internal Revenue, 13 SCRA 104, January 30, 1965:
The facts to be proved to raise this presumption are (a) that the letter was properly
addressed with postage prepaid, and (b) that it was mailed. Once these facts are
proved, the presumption is that the letter was received by the addressee as soon as it
could have been transmitted to him in the ordinary course of the mail. But if one of the
said facts fails to appear, the presumption does not lie. (VI, Moran, Comments on the
Rules of Court, 1963 ed, 56-57 citing Enriquez vs. Sunlife Assurance of Canada, 41 Phil
269).

x x x. What is essential to prove the fact of mailing is the registry receipt

issued by the Bureau of Posts or the Registry return card which would have
been signed by the Petitioner or its authorized representative. And if said
documents cannot be located, Respondent at the very least, should have
submitted to the Court a certification issued by the Bureau of Posts and any
other pertinent document which is executed with the intervention of the
Bureau of Posts. This Court does not put much credence to the self serving
documentations made by the BIR personnel especially if they are unsupported by
substantial evidence establishing the fact of mailing. Thus:

x x x.

The Court agrees with the CTA that the CIR failed to discharge its duty and
present any evidence to show that Metro Star indeed received the PAN dated
January 16, 2002. It could have simply presented the registry receipt or the
certification from the postmaster that it mailed the PAN, but failed. Neither did
it offer any explanation on why it failed to comply with the requirement of service of the
PAN. It merely accepted the letter of Metro Star's chairman dated April 29, 2002, that
stated that he had received the FAN dated April 3, 2002, but not the PAN; that he was
willing to pay the tax as computed by the CIR; and that he just wanted to clarify some
matters with the hope of lessening its tax liability.

Similarly, in Mangahas v. CA,16 the Court has given importance to the presentation of

the original registry receipt to prove the fact of mailing, even ruling that the same
would have constituted the best evidence thereof. In the instant case, the Court finds
that De Guzman sufficiently established the presence of the foregoing requisites
necessary to give rise to the presumption that the mail matter he sent by registered
mail was received in the regular course of mail. First, it is undisputed that his letter of
revocation was properly addressed to PNB. Second, in order to prove the fact of
mailing, De Guzman presented an original copy of the September 4, 1991 letter of
revocation, its corresponding registry receipt, as well as a Certification from the
Postmaster of Muntinlupa City that the letter was posted in the post office for mailing.
Undeniably, said registry receipt constitutes the piece of evidence required by the
pronouncements above. The presumption, therefore, arises that the De Guzman's letter
of revocation was received by PNB in the regular course of mail.

Unfortunately for PNB, moreover, it failed to overcome said presumption. The Court had
consistently ruled that when a document is shown to have been properly addressed and
actually mailed, there arises a presumption that the same was duly received by the
addressee, and it becomes the burden of the latter to prove otherwise.17 Here, PNB's
bare, self-serving denial, and nothing more, does little to persuade. To the Court, PNB's
mere denial cannot prevail over the records presented by De Guzman such as the letter
of revocation, registry receipt, and certification, which constitute documentary evidence
enjoying the presumption that, absent clear and convincing evidence to the contrary,
these were duly received in the regular course of mail. Thus, in view of PNB's failure to
discharge its burden to overcome the presumption by sufficient evidence, the courts
below correctly found that De Guzman had, indeed, already revoked the first surety
agreement. Consequently, PNB cannot hold De Guzman liable for the obligations of the
company thereunder, nor any other obligation thereafter.

Neither can PNB save his cause by asserting the procedural issue that the RTC and the
CA should not have allowed De Guzman to present additional evidence for under the
rules on evidence, a party is only allowed to add to the terms of an agreement if he has
put in issue in his pleading the additional matters presented by the additional evidence.
Since the matter of revocation was never raised in his pleadings, the courts below
should not have considered the same. As the appellate court held, PNB failed to timely
object to the presentation of said evidence at the trial. It noted that after De Guzman
testified that he sent a letter of revocation, PNB proceeded to lengthily and exhaustively
cross-examine him. Thus, by PNB's implied consent, said matter is treated in all
respects as if it had been raised in his pleadings in accordance with Section 5,18 Rule 10
of the Rules of Court.

WHEREFORE, premises considered, the instant petition is DENIED. The assailed

Decision dated November 9, 2015 and Resolution dated June 23, 2016 of the Court of
Appeals in CA-G.R. CR. CV No. 103347 are AFFIRMED.

SO ORDERED.

FIRST DIVISION

January 29, 2020

G.R. No. 227896

ROBERTO R. IGNACIO AND TERESA R. IGNACIO DOING BUSINESS UNDER THE NAME AND
STYLE TERESA R. IGNACIO ENTERPRISES, PETITIONERS, V. MYRNA P. RAGASA AND
AZUCENA B. ROA, RESPONDENTS.

DECISION

PERALTA, C.J.:

Before Us is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the
Decision1 dated September 30, 2015 and the Resolution2 dated October 21, 2016 of the Court of
Appeals (CA) in CA G.R. CV No. 102112, which affirmed the Decision of the Regional Trial Court,
Parañaque City, Branch 274, in favor of herein respondents.

The antecedent facts, as culled from the CA Decision, are as follows:

On January 11, 2000, petitioners engaged, on an exclusive basis, the services of the respondents,
who are both licensed real estate brokers, to look for and negotiate with a person or entity for a joint
venture project involving petitioners' undeveloped lands in Mindanao Avenue, Quezon City and the
developed subdivision sites in Las Piñas City, Parañaque City, and Bacoor.3 The contract was
embodied in the Authority to Look and Negotiate for a Joint Venture Partner,4 effective for six
months from January 10, 2000, or until July 10, 2000. The said Authority provided that the
petitioners will pay the respondents a commission equivalent to five percent (5%) of the price of the
properties.5
On January 13, 2000, respondents met with Mr. Porfirio Yusingbo, Jr. (Yusingbo), the General
Manager of Woodridge Properties, Inc. (Woodridge), and they presented to him the different
subdivisions and project sites available for investment. After inspecting the properties, Yusingbo
expressed Woodridge's interest in acquiring and developing the Krause Park and Teresa Park
properties.

As a result, Woodridge sent respondents a formal proposal dated January 21, 20006 for a joint
venture agreement with the petitioners covering the Teresa Park. The proposal was sent by the
respondents to the petitioners via facsimile. On January 25, 2000, the petitioners met with the
representatives of Woodridge to discuss the prices of the properties, and Woodridge likewise
intimated that it would develop both the Krause Park and the Teresa Park.

On February 4, 2000, respondents met again with Yusingbo and Mr. Elmer Loredo (Loredo),
Woodridge's broker, to discuss Woodridge's proposal for bulk purchase covering the Teresa Park,
including the terms of payment. On February 9, 2000, respondents presented Woodridge's offer to
petitioner Roberto Ignacio. They discussed the projected cash inflows and the advantages of the
scheme. Petitioner Ignacio said he wanted to sell the lots in batches at a lower volume, instead of in
bulk. Respondents communicated the offer to Woodridge and the latter intimated that it will make a
revised offer. On March 9, 2000,7 Woodridge, however, changed its offer from direct acquisition to
joint venture, covering 200 lots in Teresa Park, and sent the proposal to the respondents, who, in
turn, relayed it to the petitioners. In a meeting on March 13, 2000, petitioners and respondents
discussed the proposal for joint venture. Petitioners commented that Woodridge's offer was low, but
respondents reassured them that they could negotiate for a better price. After this March 13, 2000
meeting, however, petitioners stopped communicating with the respondents. Several attempts were
made by the respondents to contact the petitioners to follow-up on the proposal of Woodridge, but to
no avail.

Sometime thereafter, respondents learned that the petitioners continued to negotiate with
Woodridge, and this led to the execution of two joint venture agreements between the petitioners
and Woodridge, covering the Krause Park. The two joint venture agreements were notarized on
March 7, 2000 and October 16, 2000.8

For the Teresa Park, four joint venture agreements were executed between the petitioners and
Woodridge, and these were notarized on December 6, 2000, March 12, 2001, September 25, 2001,
and October 1, 2002.9 Aside from the joint venture agreements, several deeds of sale were also
executed between the petitioners and Woodridge, and these are dated September 24, 2001 and
August 25, 2003.10

Per respondents' estimate, petitioners earned P26,068,000.00 and P22,497,000.00 for the sale of
the Krause Park and Teresa Park projects, respectively. Respondents demanded payment of their
commission from the petitioners, contending that the joint venture agreements and the sales over
the Krause Park and Teresa Park were products of their successful negotiation with Woodridge.
Petitioners, however, refused to pay despite demand.11 Thus, respondents filed a complaint for sum
of money, damages, attorney's fees, and litigation expenses before the Regional Trial Court of
Parañaque City.12

In their Answer,13 petitioners denied that they have an obligation to pay the respondents. Petitioners
contend that the respondents offered their services as exclusive real estate brokers, but they were
never engaged. Petitioners further state that they were not looking for an exclusive agency and they
entertained brokers on a "first come, first served" basis. Petitioners, likewise, contend that they were
not agreeable with the respondents' proposal to sell the lots below the prevailing market value with
no escalation clause, and that the sale of the Krause Park and the Teresa Park was made through
the joint efforts of their consultants, Engr. Julius Aragon and Florence Cabansag. No sales
transaction was realized on account of the respondents.

Ruling of the RTC

After trial on the merits, the trial court rendered judgment in favor of herein respondents. It ruled that
herein respondents are entitled to brokers' fees and damages because the sale and development of
the Krause Park and the Teresa Park were made possible because of the efforts of the respondents.
The RTC Decision reads -

WHEREFORE, all the foregoing duly considered, judgment is hereby rendered for the plaintiffs and
against the defendants, as follows:

(1) Ordering the defendants solidarily to pay the plaintiffs the sum of P11,881,915.50 as
brokers' fee affecting Krause Park, Molino, Bacoor, Cavite, and Teresa Park, Almanza, Las
Piñas City, plus legal interest of 12% per annum to be computed thereon starting July 3,
2001, the date of the first demand letter of plaintiffs' counsel until the obligation shall be fully
paid;

(2) Ordering the defendants solidarily to pay the plaintiffs the sum of P200,000[.00] as moral
damages, the sum of P100,000[.00] as exemplary damages, the sum of P200,000[.00] as
attorney's fees, and costs of suit.

SO ORDERED.14

Aggrieved, petitioners filed an appeal before the Court of Appeals.

Ruling of the CA

In its Decision dated September 30, 2015, the CA denied the appeal and affirmed in toto the ruling of
the RTC.

The CA held that herein respondents are entitled to their commission because they were the
procuring cause of the joint venture agreements and sales between the petitioners and Woodridge.
Through the respondents' efforts, they held meetings with the officers of Woodridge in the year 2000,
started negotiating with them, and accompanied them during the ocular inspection. All these brought
the petitioners and Woodridge together and resulted in joint venture agreements and deeds of sale.

The CA did not find any credence in petitioner Ignacio's claim that it was Julius Aragon who brokered
the said transactions, particularly the March 7, 2000 joint venture agreement. This is because
respondents were already in active negotiation with Woodridge and, in fact, held meetings with them
on separate dates of January 13, 21, and 25, 2000, and February 4 2000, wherein they extensively
discussed about Teresa Park and Krause Park, and that Aragon had no participation in those
meetings.

A motion for reconsideration was filed by herein petitioners, but the same was denied by the CA in
its Resolution dated October 21, 2016.

Thus, this petition for review.

Issues
The petitioners raised the sole issue:

WHETHER OR NOT THE COURT OF APPEALS COMMITTED SERIOUS AND REVERSIBLE

ERROR IN RULING THAT RESPONDENTS ARE ENTITLED TO BROKERS' FEES.

Petitioners contend that the respondents are not entitled to commission or brokers' fees because
they are not the procuring cause for the successful business transactions between the petitioners
and Woodridge.

Petitioners anchored their position on the following: (1) respondents allegedly admitted that they did
not negotiate a successful joint venture agreement between the petitioners and Woodridge because,
according to the respondents, their sole responsibility was merely to look for or source potential
buyers and not to successfully negotiate a joint venture agreement; (2) respondents miserably failed
in their duty to negotiate a successful joint venture agreement between the petitioners and
Woodridge because respondents insisted on the bulk sale of the petitioners' properties instead of a
joint venture agreement; (3) respondents' authority already expired when the petitioners entered into
the joint venture agreements and deeds of sale with Woodridge for the development of the
properties in Teresa Park and Krause Park.

Our Ruling

The petition lacks merit.

The Rules of Court requires that only questions of law should be raised in petitions filed under Rule
45.15 This Court is not a trier of facts. It will not entertain questions of fact as the factual findings of
the appellate courts are "final, binding[,] or conclusive on the parties and upon this [c]ourt"16 when
supported by substantial evidence.17 Factual findings of the appellate courts will not be reviewed
nor disturbed on appeal to this court.18

However, these rules do admit exceptions. Over time, the exceptions to these rules have expanded.
At present, there are ten (10) recognized exceptions that were first listed in Medina v. Mayor Asistio,
Jr.:

(1) When the conclusion is a finding grounded entirely on speculation, surmises or conjectures; (2)
When the inference made is manifestly mistaken, 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 petitioner's 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.19

These exceptions similarly apply in petitions for review filed before this court involving
civil,20 labor,21 tax,22 or criminal cases.23

A question of fact requires this Court to review the truthfulness or falsity of the allegations of the
parties.24 This review includes assessment of the "probative value of the evidence
presented."25 There is also a question of fact when the issue presented before this Court is the
correctness of the lower courts' appreciation of the evidence presented by the parties.26
In this case, the issue raised by the petitioners obviously asks this Court to review the evidence
presented during the trial. Clearly, this is not the role of this Court because the issue presented is
factual in nature. None of the exceptions are present. The findings of the lower courts are supported
by substantial evidence. Thus, the present petition must fail.

Nevertheless, even if the Court were to look into the merits of the petitioners' main contention that
respondents are not entitled to commission or brokers' fees, the petition must still fail.

In Medrano v. Court of Appeals,27 We held that "when there is a close, proximate, and causal
connection between the broker's efforts and the principal's sale of his property - or joint venture
agreement, in this case the broker is entitled to a commission."

Here, as aptly ruled by the CA, the proximity in time between the meetings held by the respondents
and Woodridge and the subsequent execution of the joint venture agreements leads to a logical
conclusion that it was the respondents who brokered it. Likewise, it is inconsequential that the
authority of the respondents as brokers had already expired when the joint venture agreements over
the subject properties were executed. The negotiation for these transactions began during the
effectivity of the authority of the respondents, and these were carried out through their efforts. Thus,
the respondents are entitled to a commission.

We, however, agree with the petitioners that the interest rate should be at the prevailing rate of six
percent (6%) per annum, and not twelve percent (12%) per annum. In Nacar v. Gallery Frames, et
al.,28 We modified the guidelines laid down in the case of Eastern Shipping Lines, Inc. v. Court of
Appeals29 to embody BSP-MB Circular No. 799, as follows:

I. When an obligation, regardless of its source, i.e., law, contracts, quasi contracts, delicts or
quasi-delicts is breached, the contravenor can be held liable for damages. The provisions
under Title XVIII on "Damages" of the Civil Code govern in determining the measure of
recoverable damages.

II. With regard particularly to an award of interest in the concept of actual and compensatory
damages, the rate of interest, as well as the accrual thereof, is imposed, as follows:

1. When the obligation is breached, and it consists in the payment of a sum of

money, i.e., a loan or forbearance of money, the interest due should be that which
may have been stipulated in writing. Furthermore, the interest due shall itself earn
legal interest from the time it is judicially demanded. In the absence of stipulation, the
rate of interest shall be 6% per annum to be computed from default, i.e., from judicial
or extrajudicial demand under and subject to the provisions of Article 1169 of the
Civil Code.

2. When an obligation, not constituting a loan or forbearance of money, is breached,

an interest on the amount of damages awarded may be imposed at the discretion of
the court at the rate of 6% per annum. No interest, however, shall be adjudged on
unliquidated claims or damages, except when or until the demand can be established
with reasonable certainty. Accordingly, where the demand is established with
reasonable certainty, the interest shall begin to run from the time the claim is made
judicially or extra-judicially (Art. 1169, Civil Code), but when such certainty cannot be
so reasonably established at the time the demand is made, the interest shall begin to
run only from the date the judgment of the court is made (at which time the
quantification of damages may be deemed to have been reasonably ascertained).
 The actual base for the computation of legal interest shall, in any case, be on the
amount finally adjudged.

3. When the judgment of the court awarding a sum of money becomes final and
executory, the rate of legal interest, whether the case falls under paragraph 1 or
paragraph 2, above, shall be 6% per annum from such finality until its satisfaction,
this interim period being deemed to be by then an equivalent to a forbearance of
credit.

And, in addition to the above, judgments that have become final and executory prior to July 1, 2013,
shall not be disturbed and shall continue to be implemented applying the rate of interest fixed
therein.30

It should be noted, however, that the rate of six percent (6%) per annum could only be applied
prospectively and not retroactively. Consequently, the twelve percent (12%) per annum legal interest
shall apply only until June 30, 2013. Starting July 1, 2013, the rate of six percent (6%) per annum
shall be the prevailing rate of interest when applicable. Thus, the need to determine whether the
obligation involved herein is a loan and forbearance of money nonetheless exists.

The term "forbearance," within the context of usury law, has been described as a contractual
obligation of a lender or creditor to refrain, during a given period of time, from requiring the borrower
or debtor to repay the loan or debt then due and payable.31

Forbearance of money, goods or credits, therefore, refers to arrangements other than loan
agreements, where a person acquiesces to the temporary use of his money, goods or credits
pending the happening of certain events or fulfilment of certain conditions.32 Consequently, if those
conditions are breached, said person is entitled not only to the return of the principal amount paid,
but also to compensation for the use of his money which would be the same rate of legal interest
applicable to a loan since the use or deprivation of funds therein is similar to a loan.33

This case, however, does not involve an acquiescence to the temporary use of a party's money but
the performance of a brokerage service.

Thus, the matter of interest award arising from the dispute in this case falls under the paragraph II,
subparagraph 2, of the above-quoted modified guidelines, which necessitates the imposition of
interest at the rate of 6%, instead of the 12% imposed by the courts below.

WHEREFORE, premises considered, the instant petition is DENIED. The Decision dated September
30, 2015 and the Resolution dated October 21, 2016 of the Court of Appeals in CA-G.R. CV No.
102112 are hereby AFFIRMED with MODIFICATION. The interest rate of six percent (6%) per
annum, instead of twelve percent (12%), is imposed on all the monetary awards from the date of
finality of this Decision until full payment.

SO ORDERED.
 FIRST DIVISION

G.R. No. 142691            August 5, 2003

HEIRS OF AMADO CELESTIAL, as represented by his widow, FLORENCIA CELESTIAL, and

GLORIA AGUI, petitioners,
vs.
HEIRS OF EDITHA G. CELESTIAL, namely: EDWIN HERMINIGILDO CELESTIAL, JOCELYN
CELESTIAL-TENORIO, FERDINAND CELESTIAL, FREDERICK CELESTIAL, and GEORGE
CELESTIAL, represented by EDWIN CELESTIAL (Order of substitution of Deceased party; and
PRIMA B. CALINGACION, joined by her husband, CHUA CHIN, respondents.

YNARES-SANTIAGO, J.:

At the core of this petition is the authenticity of a Deed of Sale allegedly executed by Amado
Celestial, husband of petitioner Florencia Celestial, in favor of his sister-in-law, Editha G. Celestial,
involving Lot No. 4112, Ts-217, covering an area of 466 square meters situated at Dadiangas,
General Santos City.

Amado is the brother of co-petitioner Gloria C. Agui and Erlindo Celestial, husband of Editha.

Prior to 1962, Amado while still single, applied for a Miscellaneous Sales Patent over the 466 square
meter lot, pursuant to the provisions of Chapter IX of Commonwealth Act No. 141, as amended.1

On February 8, 1962, during the pendency of his application for a miscellaneous sales patent,
Amado got married to Florencia and they occupied the said 466-square meter lot. Their union was
blessed with the birth of their daughter, Helen.

On May 9, 1966, Amado’s application for a Miscellaneous Sales Patent was granted, resulting in the
issuance in his name of Original Certificate of Title (OCT) No. P-27090 of the Registry of Deeds for
General Santos City. Although the title to the land was issued on May 25, 1966, Amado’s civil status
was designated as "single" on the title. Petitioner Florencia and her husband did not bother to
correct the said mistake in the civil status of Amado to avoid the paper work it would entail.2

On October 10, 1975, Amado allegedly executed a Deed of Absolute Sale3 conveying to Editha the
466 square meter lot for P20,000.00. The deed described Amado, the vendor, as single when in fact
he was already married to Florencia for 13 years at the time of the sale. Likewise, petitioner
Florencia did not affix her signature on the deed of sale. Subsequently, the Register of Deed of
General Santos City cancelled OCT No. P-27090 and issued Transfer Certificate of Title No. T-9145
in favor of Editha.

On March 21, 1976, Amado died.

On July 10, 1978, Editha executed a Deed of Sale with Right to Repurchase4 conveying the property
covered by TCT No. 9145 in favor of respondent Prima Calingacion Chua for P30,000.00. This
notwithstanding, Editha caused the property covered by TCT No. 9145 to be subdivided into three
(3) lots, namely: Lot 4112-A, Lot 4112-B and Lot 4112-D. Thereafter, the corresponding Transfer
Certificates of Title (TCT Nos. T-14270, T-14271 and T-14272) were issued in the name of Editha.

On September 4, 1979, Erlindo and Editha executed a Deed of Sale of Three Parcels of Land5 over
the aforesaid subdivided lots in favor of respondent Chua. The consideration of the contract was
P110,000.00. Subsequently, on October 22, 1979, respondent Chua was issued TCT No. T-14819
for Lot 4112-A, TCT No. T-14820 for Lot 4112-B, and TCT No. T-14821 for Lot 4112-D.

After eleven years, or on February 15, 1990, respondent Chua, through his lawyer, Atty. Nilo J.
Flaviano, notified6 the petitioners and several other occupants of the subdivided lots to vacate the
aforesaid properties within ten (10) days from receipt of the notice. Subsequently, respondent Chua
filed a complaint for ejectment7 against the petitioners.

Believing that respondent Chua had no right to eject them from the properties they occupied,
petitioners, on February 23, 1990, filed a complaint against Editha and respondent Chua before the
Regional Trial Court of General Santos City, Branch 23, which was docketed as Civil Case No.
4401, for "Judicial Declaration of the nullity of the Deed of Sale Executed by the deceased Amado
G. Celestial in favor of Editha G. Celestial and likewise all deeds of Absolute Sale executed by said
Editha G. Celestial in favor of Prima B. Calingacion covering Lot No. 4112, TS 217, formerly covered
by Original Certificate of Title No. (P-27909) (P-10623) (P-1650), etc."8

On March 3, 1994,9 while the case was still pending before the trial court, Editha Celestial died and
she was substituted by the named respondents below.10

On April 27, 1995, a decision was rendered in favor of the petitioners, the dispositive portion of
which reads:

WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiffs

and against the defendants,

1. declaring the "Deed of Absolute Sale" dated October 10, 1975 marked Exhibit "L" for the
plaintiffs; Exhibit "1" for the defendants, as inexistent and void from the beginning for being a
product of forgery;

2. declaring the "Deed of Sale of Three Parcels of Land" dated September 4, 1979 (Exh. "3"
for the defendant) as inexistent and void from the beginning for being a simulated contract;

3. ordering Prima B. Calingacion upon finality of this judgment to reconvey to the Heirs of
Amado Celestial, by registrable deed of conveyance, the properties described and covered
by Transfer Certificate of Title Nos. T-14819, T-14820, and T-14821 covering Lot Nos. 4112-
A, 4112-B, and 4112-D, respectively, all of Psd-11-005479, and all registered in the name of
Prima B. Calingacion. In case defendant Prima B. Calingacion refused to execute the
necessary registrable deed of conveyance in favor of the Heirs of Amado Celestial,
represented by Florencia Celestial, reconveying the said properties covered by TCT Nos. T-
14819, T-14820, and T-14821, in favor of the Heirs of Amado Celestial, ordering the Clerk of
Court in his capacity as Provincial Sheriff ex-oficio to execute the necessary registrable deed
of conveyance in favor of the Heirs of Amado Celestial, represented by Florencia Celestial,
which shall have like force and effect as if done by the said defendant PRIMA B.
CALINGACION; ordering the Register of Deeds for General Santos City to accept the
 registration of the deed of conveyance executed by the sheriff, even without the presentation
or surrender of the Owner’s Duplicate copies of the aforesaid transfer of certificates of title to
the Office of the Register of Deeds;

4. ordering Prima B. Calingacion to surrender the Owner’s Duplicate copies of TCT Nos. T-
14819, T-14820, and T-14821 to the Provincial Sheriff;

5. ordering Prima B. Calingacion to vacate the premises of the lots covered by TCT Nos. T-
14819, T-14820, and T-14821, and surrender possession thereof to Florencia Celestial;

6. ordering Prima B. Calingacion and the Estate of Editha Celestial, jointly and severally, to
pay to plaintiff Florencia Celestial the following amounts:

a. P20,000.00 for attorney’s fees;

b. P30,000.00 for moral damages;

c. P20,000.00 for exemplary damages; and

d. Costs.

SO ORDERED.11

Instead of filing a motion for reconsideration, respondents filed a motion for new trial,12 which was
denied13 on November 29, 1995.

Respondents appealed to the Court of Appeals, which was docketed as CA-G.R. CV No. 53211. On
August 26, 1999, a decision was rendered reversing the aforesaid judgment of the trial court and
dismissing the complaint in Civil Case No. 4401.14 Petitioners’ motion for reconsideration was denied
for lack of merit.15

Hence, this petition for review, raising the following assigned errors:

THE HONORABLE COURT OF APPEALS GROSSLY MISAPPRECIATED THE EVIDENCE

AND COMMITTED SERIOUS AND MANIFEST ERROR WHEN IT REVERSED THE
DECISION OF THE TRIAL COURT DECLARING NULL AND VOID THE DEED OF
ABSOLUTE SALE DATED 10 OCTOBER 1975 IN A MANNER CONTRARY TO LAW AND
THE SETTLED PRONOUNCEMENTS OF THIS HONORABLE TRIBUNAL.

II

THE FINDINGS OF FACT OF THE HONORABLE COURT OF APPEALS ARE CONTRARY

TO THE FINDINGS OF THE TRIAL COURT AND ARE CONTRADICTED BY THE
EVIDENCE ON RECORD.

III
 THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN RENDERING A
DECISION ON THE BASIS OF CONJECTURES AND SURMISES AND HAS DEPARTED
FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS WHICH
URGENTLY CALL FOR AN EXERCISE OF THIS HONORABLE COURT’S SUPERVISION.16

When the trial court and the appellate court reached divergent factual assessments in their
respective decisions and the basis thereof refers to documents made available to the scrutiny of
both courts, the well settled rule that factual findings of trial courts deserve respect and even finality
will not apply.17 In the case at bar, the differing factual assessments revolved around the authenticity
of the signature of the late Amado Celestial on the questioned Deed of Sale dated October 10, 1975
conveying the 466 square meter lot in favor of Editha, his sister-in-law. There is therefore a need to
review the evidence on record to arrive at the correct findings.

Contrary to the finding of the Court of Appeals, the trial court did not solely rely on the testimony of
the NBI handwriting expert, Rhoda Flores, in holding that the deed of sale was a forgery.18 The
record shows that the trial court, in fact, made its own independent assessment on the authenticity of
the questioned signature of "Amado Celestial" on the Deed of Absolute Sale dated October 10, 1975
by comparing it with the sample signatures submitted by the petitioners. The testimony of the NBI
Document Examiner was merely utilized by the trial court in reaching its own judicious assessment
of the authenticity of the signatures of the late Amado Celestial, to wit:

The Court can see that the signatures "AMADO CELESTIAL" in the Deed of Absolute Sale
marked as Exhibits "L" and "L-2", compared to the signatures "AMADO CELESTIAL" marked
as Exhibit "M-1" on Exhibit "M"; Exh. "M-2-A" on exh. "M-2"; Exh. "M-3-A" on Exh. "M-3";
Exh. "M-4-A" on Exh. "M-4"; Exh. "M-5-A" on Exh. "M-5"; Exh. "M-6-A" on Exh. "M-6"; Exh.
"M-7-A" on Exh. "M-7"; and on Exh. "N", could not be the signatures of the real Amado
Celestial who was the husband of plaintiff Florencia Celestial. To the mind of the Court,
even an ordinary layman can see that there are significant differences between the
questioned signatures "AMADO CELESTIAL" on the questioned Deed of Absolute
Sale marked as Exhs. "L" and "L-2" and the eight (8) standard signatures "AMADO
CELESTIAL". Mrs. Rhoda B. Flores, the NBI Document Senior Examiner, was right when
she said that "xxx I think this Honorable Court would agree with me that even a layman can
see that there are significant differences even in the pictorial appearance." The court has
examined the standard signatures of Amado Celestial in the several instruments submitted to
the NBI to serve as basis for scientific comparative analysis with the questioned signatures,
and the Court is inclined to believe the findings of the handwriting expert Mrs. Rhoda Flores,
as contained in the Questioned Document Report No. 108-293 x x x which was
"APPROVED" by Arcadio Ramos, Chief, Questioned Document Division of the NBI, and
"NOTED" by Manuel Roura, Deputy director, Technical Services of the NBI, and as testified
to by her in court. The questioned Document Report No. 108-293 (Exhs. "P" and "P-1"),
which NBI Director Epimaco A. Velasco forwarded to this Court per letter of transmittal dated
March 1, 1993, (Exh. "O"), and the testimony of NBI Senior Document Examiner Rhoda
B. Flores have guided this Court in arriving at a judicious conclusion that the
signatures of "AMADO CELESTIAL" on the Deed of Absolute Sale marked as Exhibits
"L" and "L-2" are forgeries – that the signatures thereon were not the signatures of
Amado Celestial (Emphasis supplied).19

The fact that the trial court relied on the testimony of a single witness is of no moment. The trial court
has the peculiar advantage to determine the credibility of a witness because of its superior
advantage in observing the conduct and demeanor of the witness while testifying.20 Settled is the rule
that it is the quality, not the number of witnesses that will tilt the scale of evidence. Although the
number of witnesses may be considered a factor in the appreciation of evidence, preponderance
does not necessarily lie in the greatest number.21 Accordingly, absent any showing of a fact or
circumstance of weight and influence which would appear to have been overlooked and, if
considered, could affect the outcome of the case, the factual findings and assessment on the
credibility of a witness made by the trial court remain binding on an appellate tribunal.22 In the case at
bar, there appears no cogent reason to set aside the trial court’s reliance on the credibility of the
prosecution witness and its appreciation of the circumstantial evidence inasmuch as the evidence on
record amply supports its conclusion.

Moreover, the appellate court erred in holding that no accurate analysis and conclusion can be
reached since there is no closeness or proximity of the time between the specimen signatures and
the questioned signature.

Standing alone, the closeness or proximity of time in which these specimen signatures have been
written to the questioned signature is not an important factor in proving the genuineness of a
handwriting. If at all, the existence of such fact only bolsters proof of the authenticity of a
handwriting. For the purpose of proving the genuineness of a handwriting, Rule 132, Section 22 of
the Rules of Court provides:

SEC. 22. How genuineness of handwriting proved. – The handwriting of a person may be

proved by any witness who believes it to be the handwriting of such person because he has
seen the person write, or has seen writing purporting to be his upon which the witness has
acted or been charged, and has thus acquired knowledge of the handwriting of such person.
Evidence respecting the handwriting may also be given by a comparison, made by the
witness or the court, with writings admitted or treated as genuine by the party against whom
the evidence is offered, or proved to be genuine to the satisfaction of the judge.

Under the foregoing rule, the genuineness of a handwriting may be proved: 1) by any witness who
believes it to be the handwriting of such person because: (a) he has seen the person write; or
(b) he has seen writing purporting to be his upon which the witness has acted or been charged;
2) by a comparison, made by the witness or the court, with writings admitted or treated as
genuine by the party, against whom the evidence is offered, or proved to be genuine to the
satisfaction of the judge.

Although not all of the eight (8) standard specimen signatures23 were in close proximity to the time
when the questioned signatures were written, we cannot close our eyes to the stark differences the
questioned signatures show when placed vis-à-vis with the sample signatures. What is clear is that
all the eight (8) specimen signatures when placed side by side with each other indubitably show that
these were written by one and the same person whose name purports to be that of Amado Celestial.
However, when the specimen signatures were compared to the questioned signature, it clearly
shows that the latter was written by a person other than Amado Celestial. As correctly pointed out by
the NBI Senior Document Examiner Rhoda B. Flores in the Questioned Documents Report No. 108-
293, there were indeed notable variances between the questioned and sample signatures, to wit:

B. Significant differences in handwriting characteristics existing between the questioned and

the sample signatures; to wit:

-     Manner of execution of strokes;

-     Personalized proportion characteristics of letters;

-     Structural pattern of letters; and

 -     Other identifying minute details.24

Furthermore, Atty. Laurencio A. Oco, the notary public who notarized the Deed of Absolute Sale,
testified that he did not personally know Amado. Rather, he merely presumed that the person who
appeared before him to acknowledge the deed of sale was Amado Celestial, the vendor
therein.25 This falls short of what the law requires under Public Act No. 2103"26 which states that –

Sec. 1 (a) The acknowledgment shall be made before a notary public or an officer duly
authorized by law of the country to take acknowledgment of instruments or documents in the
place where the act is done. The notary public or the officer taking the acknowledgment shall
certify that the person acknowledging the instrument or document is known to him and that
he is the same person who executed it, and acknowledged that the same is his free act and
deed. The certificate shall be made under his official seal, if he is by law required to keep a
seal, and if not, his certificate shall so state (Emphasis supplied).

In Protacio v. Mendoza,27 it was held:

It is necessary that a party to any document notarized by a notary public appear in

person before the latter and affirm the contents and truth of what are stated in the
document. The importance of this requirement cannot be gainsaid. The acknowledgment of
a document is converted into a public document, making it admissible in court without further
proof of its authenticity. For this reason, it behooves every notary public to see to it that this
requirement is observed and that formalities for the acknowledgment of documents are
complied with (Emphasis supplied).

Likewise, aside from being required to appear before the notary public, "it is similarly incumbent
upon the person acknowledging the instrument to declare before the same Notary Public that the
execution of the instrument was done by him of his own free will".28 Accordingly, we find the
observation of the appellate court "that the parties appeared before Atty. Laureano Oco for the
preparation of the Deed of [Absolute] Sale", to be inaccurate and without evidentiary support in the
record.

The Deed of Absolute Sale, being a product of forgery, no valid conveyance can be said to have
been made by Amado in favor of Editha over the questioned 466 square meter lot.

As a necessary consequence of the foregoing, the question that must be resolved is whether the
conveyance made by Editha in favor of respondent Chua may be upheld on grounds of good faith?

We answer in the negative. The trial court correctly found that respondent Chua had knowledge or,
at the very least, notice that some other person had a right to or interest on the property in question
prior to her purchase from Editha.

For a buyer to be deemed a purchaser in good faith, the ruling in Heirs of Severa P. Gregorio v.
Court of Appeals29 is instructive:

A purchaser in good faith is one who buys the property of another without notice that some
other person has a right to or interest in such property and pays a full and fair price at the
time of purchase or before he has notice of the claim or interest of some other person in the
property. As good faith primarily refers to a state of mind and is always a question of
intention, evidence as to conduct and outward acts are usually resorted to in order to arrive
at a reasonable determination of the inward motive or intention.
The records show that respondent Chua knew for a fact that prior to 1962 and prior to the sale, there
were erected on the land in question an old wooden house and a semi-bungalow house which were
occupied by the father of Amado Celestial, Erlindo Celestial and their other relatives.30 Carmencita
Paradena, a witness for the petitioners, admitted residing with Amado and Florencia as their tenant
on the land in question since 1963. She also testified that the brothers and sisters of Amado resided
with them in the old wooden house.31 This contradicts what respondent Chua’s claim that prior to the
sale, only spouses Editha and Erlindo Celestial occupied the land in question and nobody
else.32 These facts alone should have put respondent Chua on guard that there were possible
defects in the title of the vendor. As enumerated in Mathay v. Court of Appeals,33 viz:

Although it is a recognized principle that a person dealing on a registered land need not go
beyond its certificate of title, it is also a firmly settled rule that where there are circumstances
which would put a party on guard and prompt him to investigate or inspect the property being
sold to him, such as the presence of occupants/tenants thereon, it is of course, expected
from the purchaser of a valued piece of land to inquire first into the status or nature of
possession of the occupants, i.e., whether or not the occupants possess the land en
concepto de dueño, in concept of owner. As is the common practice in the real estate
industry, an ocular inspection of the premises involved is a safeguard a cautious and prudent
purchaser usually takes. Should he find out that the land he intends to buy is occupied by
anybody else other than the seller x x x, it would then be incumbent upon the purchaser to
verify the extent of the occupant’s possessory rights. The failure of a prospective buyer to
take such precautionary steps would mean negligence on his part and would thereby
preclude him from claiming or invoking the rights of a ‘purchaser in good faith’.

In the case at bar, respondent Chua failed to make the necessary inquiry as to the possessory rights
of the relatives of Editha and Erlindo Celestial. The records show that respondent Chua failed to
inquire on the respective rights of petitioner Florencia and Carmencita Paradena, who were in actual
possession of the land in question, or of the other brothers and sisters of Erlindo Celestial, husband
of Editha, who also resided on the questioned land.34 No amount of good faith can therefore be
appreciated in favor of respondent Chua’s acquisition of the land in question.

WHEREFORE, in view of the foregoing, the instant petition is GRANTED. The decision of the Court
of Appeals in CA-G.R. CV No. 53211, dated August 26, 1999, is REVERSED and SET ASIDE. The
decision of the Regional Trial Court of General Santos City, Branch 23 in Civil Case No. 4401 is
REINSTATED. Accordingly, the "Deed of Absolute Sale" dated October 10, 1975 and the "Deed of
Sale of Three Parcels of Land" dated September 4, 1979 are declared NULL and VOID ab initio.
Respondent Prima B. Calingacion is ordered to RECONVEY to petitioners the properties described
in Transfer Certificates of Titles T-14819, T-14820 and T-14821, and to VACATE Lots Nos. 4112-A,
4112-B and 4112-D. Further, respondent Calingacion and the Estate of Editha Celestial are ordered
to pay, jointly and severally, petitioners the amounts of Twenty Thousand Pesos (P20,000.00) as
attorney’s fees, Thirty Thousand Pesos (P30,000.00) as moral damages and Twenty Thousand
Pesos (P20,000.00) as exemplary damages.

Costs against respondents.

SO ORDERED.