Civ Pro Cases
Civ Pro Cases
Civ Pro Cases
LUCERO, Judge of First Instance of The minority went farther than the majority and denied
Pampanga, Respondent. even any discretion on the part of the justice of the
peace or judge holding the preliminary investigation to
The petitioner herein, an accused in a criminal case, filed compel the complainant and his witnesses to testify
a motion with the Court of First Instance of Pampanga anew.
after he had been bound over to that court for trial,
praying that the record of the case be remanded to the Upon the foregoing considerations, the present petition
justice of the peace court of Masantol, the court of is dismissed with costs against the petitioner.
origin, in order that the petitioner might cross-examine
the complainant and her witnesses in connection with ---------------------------------------------------------------------------
their testimony, on the strength of which warrant was
issued for the arrest of the accused. The motion was FIRST LEPANTO CERAMICS, INC., petitioner, vs.THE
denied and that denial is the subject matter of this COURT OF APPEALS and MARIWASA MANUFACTURING,
proceeding.
INC., respondents.
According to the memorandum submitted by the Brought to fore in this petition for certiorari and
petitioner's attorney to the Court of First Instance in prohibition with application for preliminary injunction is
support of his motion, the accused, assisted by counsel,
the novel question of where and in what manner appeals
appeared at the preliminary investigation. In that
investigation, the justice of the peace informed him of from decisions of the Board of Investments (BOI) should
the charges and asked him if he pleaded guilty or not be filed. A thorough scrutiny of the conflicting provisions
guilty, upon which he entered the plea of not guilty. of Batas Pambansa Bilang 129, otherwise known as the
"Then his counsel moved that the complainant present "Judiciary Reorganization Act of 1980," Executive Order
her evidence so that she and her witnesses could be No. 226, also known as the Omnibus Investments Code
examined and cross-examined in the manner and form
of 1987 and Supreme Court Circular No. 1-91 is, thus,
provided by law." The fiscal and the private prosecutor
objected, invoking section 11 of rule 108, and the called for.
objection was sustained. "In view thereof, the accused's
counsel announced his intention to renounce his right to
present evidence," and the justice of the peace
Briefly, this question of law arose when BOI, in its
forwarded the case to the court of first
instance.chanroblesvirtualawlibrary decision dated December 10, 1992 in BOI Case No. 92-
005 granted petitioner First Lepanto Ceramics, Inc.'s
Leaving aside the question whether the accused, after application to amend its BOI certificate of registration by
renouncing his right to present evidence, and by reason changing the scope of its registered product from "glazed
of that waiver he was committed to the corresponding floor tiles" to "ceramic tiles." Eventually, oppositor
court for trial, is estopped, we are of the opinion that the Mariwasa filed a motion for reconsideration of the said
respondent judge did not act in excess of his jurisdiction
BOI decision while oppositor Fil-Hispano Ceramics, Inc.
or in abuse of discretion in refusing to grant the
did not move to reconsider the same nor appeal
accused's motion to return the record for the purpose
set out therein. In Dequito and Saling Buhay vs. Arellano, therefrom. Soon rebuffed in its bid for reconsideration,
G.R. No. L-1336, recently promulgated, in which case the Mariwasa filed a petition for review with respondent
respondent justice of the peace had allowed the accused, Court of Appeals pursuant to Circular 1-91.
over the complaint's objection, to recall the complainant
and her witnesses at the preliminary investigation so that Acting on the petition, respondent court required the
they might be cross-examined, we sustained the justice BOI and petitioner to comment on Mariwasa's petition
of the peace's order. We said that section 11 of Rule 108 and to show cause why no injunction should issue. On
does not curtail the sound discretion of the justice of the
February 17, 1993, respondent court temporarily
peace on the matter. We said that "while section 11 of
Rule 108 defines the bounds of the defendant's right in restrained the BOI from implementing its decision. This
the preliminary investigation, there is nothing in it or any temporary restraining order lapsed by its own terms on
other law restricting the authority, inherent in a court of March 9, 1993, twenty (20) days after its issuance,
justice, to pursue a course of action reasonably without respondent court issuing any preliminary
calculated to bring out the truth." injunction.
But we made it clear that the "defendant can not, as a On February 24, 1993, petitioner filed a "Motion to
matter of right, compel the complaint and his witnesses Dismiss Petition and to Lift Restraining Order" on the
to repeat in his presence what they had said at the ground that respondent court has no appellate
preliminary examination before the issuance of the order
jurisdiction over BOI Case No. 92-005, the same being
of arrest." We called attention to the fact that "the
constitutional right of an accused to be confronted by exclusively vested with the Supreme Court pursuant to
the witnesses against him does not apply to preliminary Article 82 of the Omnibus Investments Code of 1987.
hearings' nor will the absence of a preliminary
examination be an infringement of his right to confront On May 25, 1993, respondent court denied petitioner's
witnesses." As a matter of fact, preliminary investigation motion to dismiss, the dispositive portion of which reads
may be done away with entirely without infringing the as follows:
constitutional right of an accused under the due process
clause to a fair trial.
WHEREFORE, private respondent's motion to dismiss the 1. Scope. These rules shall apply to appeals
petition is hereby DENIED, for lack of merit. from final orders or decisions of the Court of Tax
Appeals. They shall also apply to appeals from final
Private respondent is hereby given an inextendible orders or decisions of any quasi-judicial agency from
period of ten (10) days from receipt hereof within which which an appeal is now allowed by statute to the Court
to file its comment to the petition.1 of Appeals or the Supreme Court. Among these agencies
are the Securities and Exchange Commission, Land
Upon receipt of a copy of the above resolution on June 4,
Registration Authority, Social Security Commission, Civil
1993, petitioner decided not to file any motion for
Aeronautics Board, Bureau of Patents, Trademarks and
reconsideration as the question involved is essentially
Technology Transfer, National Electrification
legal in nature and immediately filed a petition for
Administration, Energy Regulatory Board, National
certiorari and prohibition before this Court.
Telecommunications Commission, Secretary of Agrarian
Petitioner posits the view that respondent court acted Reform and Special Agrarian Courts under RA 6657,
without or in excess of its jurisdiction in issuing the Government Service Insurance System, Employees
questioned resolution of May 25, 1993, for the following Compensation Commission, Agricultural Inventions
reasons: Board, Insurance Commission and Philippine Atomic
Energy Commission.
I. Respondent court has no jurisdiction to
entertain Mariwasa's appeal from the BOI's decision in
BOI Case No. 92-005, which has become final.
2. Cases not covered. These rules shall not apply
II. The appellate jurisdiction conferred by statute to decisions and interlocutory orders of the National
upon this Honorable Court cannot be amended or Labor Relations Commission or the Secretary of Labor
superseded by Circular No. 1-91.2 and Employment under the Labor Code of the
Philippines, the Central Board of Assessment Appeals,
and other quasi-judicial agencies from which no appeal
to the courts is prescribed or allowed by statute.
Petitioner then concludes that:
Judicial relief. All orders or decisions of the Board It may be called that Section 9(3) of B.P. 129 vests
appellate jurisdiction over all final judgments, decisions,
(of Investments) in cases involving the provisions of this
resolutions, orders or awards of quasi-judicial agencies
Code shall immediately be executory. No appeal from the
on the Court of Appeals, to wit:
order or decision of the Board by the party adversely
affected shall stay such an order or decision; Provided,
that all appeals shall be filed directly with the Supreme
Court within thirty (30) days from receipt of the order or (3) Exclusive appellate jurisdiction over all final
decision. judgments, decisions, resolutions, orders, awards of
Regional Trial Courts and
On the other hand, Mariwasa maintains that whatever
"obvious inconsistency" or "irreconcilable repugnancy" quasi-judicial agencies, instrumentalities, boards or
there may have been between B.P. 129 and Article 82 of commissions, except those falling within the appellate
E.O. 226 on the question of venue for appeal has already jurisdiction of the Supreme Court in accordance with the
been resolved by Circular 1-91 of the Supreme Court, Constitution, the provisions of this Act, and of
which was promulgated on February 27, 1991 or four (4) subparagraph (1) of the third paragraph and
years after E.O. 226 was enacted. subparagraph (4) of the fourth paragraph of Section 17 of
the Judiciary Act of 1948.
Sections 1, 2 and 3 of Circular 1-91, is herein quoted
below:
The Intermediate Appellate Court shall have the power However, it cannot be denied that the lawmaking system
to try cases and conduct hearings, receive evidence and of the country is far from perfect. During the transitional
perform any and all acts necessary to resolve factual period after the country emerged from the Marcos
issues raised in cases falling within its original and regime, the lawmaking power was lodged on the
appellate jurisdiction, including the power to grant and Executive Department. The obvious lack of deliberation
conduct new trials or further proceedings. in the drafting of our laws could perhaps explain the
deviation of some of our laws from the goal of uniform
These provisions shall not apply to decisions and procedure which B.P. 129 sought to promote.
interlocutory orders issued under the Labor Code of the
Philippines and by the Central Board of Assessment In exempli gratia, Executive Order No. 226 or the
Appeals. Omnibus Investments Code of 1987 provides that all
appeals shall be filed directly with the Supreme Court
Clearly evident in the aforequoted provision of B.P. 129 is within thirty (30) days from receipt of the order or
the laudable objective of providing a uniform procedure decision.
of appeal from decisions of all quasi-judicial agencies for
the benefit of the bench and the bar. Equally laudable is Noteworthy is the fact that presently, the Supreme Court
the twin objective of B.P. 129 of unclogging the docket of entertains ordinary appeals only from decisions of the
this Court to enable it to attend to more important tasks, Regional Trial Courts in criminal cases where the penalty
which in the words of Dean Vicente G. Sinco, as quoted imposed is reclusion perpetua or higher. Judgments of
in our decision in Conde v. Intermediate Appellate Court4 regional trial courts may be appealed to the Supreme
is "less concerned with the decisions of cases that begin Court only by petition for review on certiorari within
and end with the transient rights and obligations of fifteen (15) days from notice of judgment in accordance
particular individuals but is more intertwined with the with Rule 45 of the Rules of Court in relation to Section
direction of national policies, momentous economic and 17 of the Judiciary Act of 1948, as amended, this being
social problems, the delimitation of governmental the clear intendment of the provision of the Interim
authority and its impact upon fundamental rights. Rules that "(a)ppeals to the Supreme Court shall be taken
by petition for certiorari which shall be governed by Rule
In Development Bank of the Philippines vs. Court of 45 of the Rules of Court." Thus, the right of appeal
Appeals,5 this Court noted that B.P. 129 did not deal only provided in E.O. 226 within thirty (30) days from receipt
with "changes in the rules on procedures" and that not of the order or decision is clearly not in consonance with
only was the Court of Appeals reorganized, but its the present procedure before this Court. Only decisions,
jurisdiction and powers were also broadened by Section orders or rulings of a Constitutional Commission (Civil
9 thereof. Explaining the changes, this Court said: Service Commission, Commission on Elections or
Commission on Audit), may be brought to the Supreme
. . . Its original jurisdiction to issue writs of mandamus,
Court on original petitions for certiorari under Rule 65 by
prohibition, certiorari and habeas corpus, which
the aggrieved party within thirty (30) days form receipt
theretofore could be exercised only in aid of its appellate
of a copy thereof.7
jurisdiction, was expanded by (1) extending it so as to
include the writ of quo warranto, and also (2) Under this contextual backdrop, this Court, pursuant to
empowering it to issue all said extraordinary writs its Constitutional power under Section 5(5), Article VIII of
"whether or not in aid of its appellate jurisdiction." Its the 1987 Constitution to promulgate rules concerning
appellate jurisdiction was also extended to cover not pleading, practice and procedure in all courts, and by
only final judgments of Regional Trial Courts, but also "all way of implementation of B.P. 129, issued Circular 1-91
final judgments, decisions, resolutions, orders or awards prescribing the rules governing appeals to the Court of
of . . . quasi-judicial agencies, instrumentalities, boards or Appeals from final orders or decisions of the Court of Tax
commissions, except those falling within the appellate Appeals and quasi-judicial agencies to eliminate
jurisdiction of the Supreme Court in accordance with the unnecessary contradictions and confusing rules of
Constitution, the provisions of this Act, and of sub- procedure.
paragraph (1) of the third paragraph and subparagraph
(4) of the fourth paragraph of Section 17 of the Judiciary Contrary to petitioner's contention, although a circular is
Act of 1948," it being noteworthy in this connection that not strictly a statute or law, it has, however, the force
the text of the law is broad and comprehensive, and the and effect of law according to settled jurisprudence.8 In
explicitly stated exceptions have no reference whatever Inciong v. de Guia,9 a circular of this Court was treated as
to the Court of Tax Appeals. Indeed, the intention to law. In adopting the recommendation of the
expand the original and appellate jurisdiction of the Investigating Judge to impose a sanction on a judge who
Court of Appeals over quasi-judicial agencies, violated Circular No. 7 of this Court dated
instrumentalities, boards, or commissions, is further
stressed by the last paragraph of Section 9 which September 23, 1974, as amended by Circular No. 3 dated
excludes from its provisions, only the "decisions and April 24, 1975 and Circular No. 20 dated October 4, 1979,
interlocutory orders issued under the Labor Code of the requiring raffling of cases, this Court quoted the
Philippines and by the Central Board of Assessment ratiocination of the Investigating Judge, brushing aside
Appeals."6 the contention of respondent judge that assigning cases
instead of raffling is a common practice and holding that
respondent could not go against the circular of this Court exclusions listed in Section 2 of the circular. Only the
until it is repealed or otherwise modified, as "(L)aws are following final decisions and interlocutory orders are
repealed only by subsequent ones, and their violation or expressly excluded from the circular, namely, those of:
non-observance shall not be excused by disuse, or (1) the National Labor Relations Commission; (2) the
customs or practice to the contrary."10 Secretary of Labor and Employment; (3) the Central
Board of Assessment Appeals and (4) other quasi-judicial
The argument that Article 82 of E.O. 226 cannot be agencies from which no appeal to the courts is
validly repealed by Circular 1-91 because the former prescribed or allowed by statute. Since in DBP v. CA13 we
grants a substantive right which, under the Constitution upheld the appellate jurisdiction of the Court of Appeals
cannot be modified, diminished or increased by this over the Court of Tax Appeals despite the fact that the
Court in the exercise of its rule-making powers is not same is not among the agencies reorganized by B.P. 129,
entirely defensible as it seems. Respondent correctly on the ground that B.P. 129 is broad and comprehensive,
argued that Article 82 of E.O. 226 grants the right of there is no reason why BOI should be excluded from
appeal from decisions or final orders of the BOI and in
granting such right, it also provided where and in what Circular 1-91, which is but implementary of said law.
manner such appeal can be brought. These latter
portions simply deal with procedural aspects which this Clearly, Circular 1-91 effectively repealed or superseded
Court has the power to regulate by virtue of its Article 82 of E.O. 226 insofar as the manner and method
constitutional rule-making powers. of enforcing the right to appeal from decisions of the BOI
are concerned. Appeals from decisions of the BOI, which
The case of Bustos v. Lucero11 distinguished between by statute was previously allowed to be filed directly with
rights created by a substantive law and those arising the Supreme Court, should now be brought to the Court
from procedural law: of Appeals.
Substantive law creates substantive rights . . . . WHEREFORE, in view of the foregoing reasons, the
Substantive rights is a term which includes those rights instant petition for certiorari and prohibition with
which one enjoys under the legal system prior to the application for temporary restraining order and
disturbance of normal relations (60 C.J., 980). preliminary injunction is hereby DISMISSED for lack of
Substantive law is that part of the law which creates, merit. The Temporary Restraining Order issued on July
defines and regulates rights, or which regulates rights 19, 1993 is hereby LIFTED.
and duties which give rise to a cause of action, as
oppossed to adjective or remedial law, which prescribes SO ORDERED.
the method of enforcing rights or obtains a redress for
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their invasion.12
MARIANO A. ALBERT, plaintiff-appellant, vs.UNIVERSITY
Indeed, the question of where and in what manner
PUBLISHING CO., INC., defendant-appellee.
appeals from decisions of the BOI should be brought
pertains only to procedure or the method of enforcing No less than three times have the parties here appealed
the substantive right to appeal granted by E.O. 226. In to this Court.
other words, the right to appeal from decisions or final
orders of the BOI under E.O. 226 remains and continues In Albert vs. University Publishing Co., Inc., L-9300, April
to be respected. Circular 1-91 simply transferred the 18, 1958, we found plaintiff entitled to damages (for
venue of appeals from decisions of this agency to breach of contract) but reduced the amount from
respondent Court of Appeals and provided a different P23,000.00 to P15,000.00.
period of appeal, i.e., fifteen (15) days from notice. It did
Then in Albert vs. University Publishing Co., Inc., L-15275,
not make an incursion into the substantive right to
October 24, 1960, we held that the judgment for
appeal.
P15,000.00 which had become final and executory,
The fact that BOI is not expressly included in the list of should be executed to its full amount, since in fixing it,
quasi-judicial agencies found in the third sentence of payment already made had been considered.
Section 1 of Circular 1-91 does not mean that said
Now we are asked whether the judgment may be
circular does not apply to appeals from final orders or
executed against Jose M. Aruego, supposed President of
decision of the BOI. The second sentence of Section 1
University Publishing Co., Inc., as the real defendant.
thereof expressly states that "(T)hey shall also apply to
appeals from final orders or decisions of any quasi- Fifteen years ago, on September 24, 1949, Mariano A.
judicial agency from which an appeal is now allowed by Albert sued University Publishing Co., Inc. Plaintiff
statute to the Court of Appeals or the Supreme Court." alleged inter alia that defendant was a corporation duly
E.O. 266 is one such statute. Besides, the enumeration is organized and existing under the laws of the Philippines;
preceded by the words "(A)mong these agencies are . . . that on July 19, 1948, defendant, through Jose M.
," strongly implying that there are other quasi-judicial Aruego, its President, entered into a contract with
agencies which are covered by the Circular but which plaintifif; that defendant had thereby agreed to pay
have not been expressly listed therein. More plaintiff P30,000.00 for the exclusive right to publish his
importantly, BOI does not fall within the purview of the
revised Commentaries on the Revised Penal Code and for been disputed. Defendant would only raise the point that
his share in previous sales of the book's first edition; that "University Publishing Co., Inc.," and not Jose M. Aruego,
defendant had undertaken to pay in eight quarterly is the party defendant; thereby assuming that "University
installments of P3,750.00 starting July 15, 1948; that per Publishing Co., Inc." is an existing corporation with an
contract failure to pay one installment would render the independent juridical personality. Precisely, however, on
rest due; and that defendant had failed to pay the account of the non-registration it cannot be considered a
second installment. corporation, not even a corporation de facto (Hall vs.
Piccio, 86 Phil. 603). It has therefore no personality
Defendant admitted plaintiff's allegation of defendant's separate from Jose M. Aruego; it cannot be sued
corporate existence; admitted the execution and terms independently.
of the contract dated July 19, 1948; but alleged that it
was plaintiff who breached their contract by failing to The corporation-by-estoppel doctrine has not been
deliver his manuscript. Furthermore, defendant invoked. At any rate, the same is inapplicable here.
counterclaimed for damages.1wph1.t Aruego represented a non-existent entity and induced
not only the plaintiff but even the court to believe in
Plaintiff died before trial and Justo R. Albert, his estate's such representation. He signed the contract as
administrator, was substituted for him. "President" of "University Publishing Co., Inc.," stating
that this was "a corporation duly organized and existing
The Court of First Instance of Manila, after trial, rendered
under the laws of the Philippines," and obviously misled
decision on April 26, 1954, stating in the dispositive
plaintiff (Mariano A. Albert) into believing the same. One
portion
who has induced another to act upon his wilful
IN VIEW OF ALL THE FOREGOING, the Court renders misrepresentation that a corporation was duly organized
judgment in favor of the plaintiff and against the and existing under the law, cannot thereafter set up
defendant the University Publishing Co., Inc., ordering against his victim the principle of corporation by estoppel
the defendant to pay the administrator Justo R. Albert, (Salvatiera vs. Garlitos, 56 O.G. 3069).
the sum of P23,000.00 with legal [rate] of interest from
the date of the filing of this complaint until the whole
amount shall have been fully paid. The defendant shall "University Publishing Co., Inc." purported to come to
also pay the costs. The counterclaim of the defendant is court, answering the complaint and litigating upon the
hereby dismissed for lack of evidence. merits. But as stated, "University Publishing Co., Inc." has
no independent personality; it is just a name. Jose M.
As aforesaid, we reduced the amount of damages to
Aruego was, in reality, the one who answered and
P15,000.00, to be executed in full. Thereafter, on July 22,
litigated, through his own law firm as counsel. He was in
1961, the court a quo ordered issuance of an execution
fact, if not, in name, the defendant.
writ against University Publishing Co., Inc. Plaintiff,
however, on August 10, 1961, petitioned for a writ of
execution against Jose M. Aruego, as the real defendant,
stating, "plaintiff's counsel and the Sheriff of Manila Even with regard to corporations duly organized and
discovered that there is no such entity as University existing under the law, we have in many a case pierced
Publishing Co., Inc." Plaintiff annexed to his petition a the veil of corporate fiction to administer the ends of
certification from the securities and Exchange justice. * And in Salvatiera vs. Garlitos, supra, p. 3073, we
Commission dated July 31, 1961, attesting: "The records ruled: "A person acting or purporting to act on behalf of
of this Commission do not show the registration of a corporation which has no valid existence assumes such
UNIVERSITY PUBLISHING CO., INC., either as a privileges and obligations and becomes personally liable
corporation or partnership." "University Publishing Co., for contracts entered into or for other acts performed as
Inc." countered by filing, through counsel (Jose M. such agent." Had Jose M. Aruego been named as party
Aruego's own law firm), a "manifestation" stating that defendant instead of, or together with, "University
"Jose M. Aruego is not a party to this case," and that, Publishing Co., Inc.," there would be no room for debate
therefore, plaintiff's petition should be denied. as to his personal liability. Since he was not so named,
the matters of "day in court" and "due process" have
Parenthetically, it is not hard to decipher why "University arisen.
Publishing Co., Inc.," through counsel, would not want
Jose M. Aruego to be considered a party to the present In this connection, it must be realized that parties to a
case: should a separate action be now instituted against suit are "persons who have a right to control the
Jose M. Aruego, the plaintiff will have to reckon with the proceedings, to make defense, to adduce and cross-
statute of limitations. examine witnesses, and to appeal from a decision" (67
C.J.S. 887) and Aruego was, in reality, the person who
The court a quo denied the petition by order of had and exercised these rights. Clearly, then, Aruego had
September 9, 1961, and from this, plaintiff has appealed. his day in court as the real defendant; and due process of
law has been substantially observed.
The fact of non-registration of University Publishing Co.,
Inc. in the Securities and Exchange Commission has not
By "due process of law" we mean " "a law which hears This is an original petition for certiorari filed in this court.
before it condemns; which proceeds upon inquiry, and
renders judgment only after trial. ... ." (4 Wheaton, U.S. The record shows that, on June 25, 1945, respondent
518, 581.)"; or, as this Court has said, " "Due process of Jose R. Victoriano had filed a complaint, in the Court of
law" contemplates notice and opportunity to be heard First Instance of the City of Manila, against petitioner
before judgment is rendered, affecting one's person or Fredesvindo S. Alvero and one Margarita Villarica,
property" (Lopez vs. Director of Lands, 47 Phil. 23, 32)." alleging two causes of action, to wit, (1) to declare in
(Sicat vs. Reyes, L-11023, Dec. 14, 1956.) And it may not force the contract of sale, made on October 1, 1940,
be amiss to mention here also that the "due process" between said Jose R. Victoriano and Margarita Villarica,
clause of the Constitution is designed to secure justice as of two (2) parcels of land in the Manotoc subdivision,
a living reality; not to sacrifice it by paying undue Balintawak, in the barrio of Calaanan, municipality of
homage to formality. For substance must prevail over Caloocan, Province of Rizal, with a combined area of 480
form. It may now be trite, but none the less apt, to quote square meters, which land was subsequently sold by said
what long ago we said in Alonso vs. Villamor, 16 Phil. Villarica, in favor of petitioner Fredesvindo S. Alvero, on
315, 321-322: December 31, 1944, for the sum of P100,000 in Japanese
military notes; and (2) to declare said subsequent sale
A litigation is not a game of technicalities in which one, null and void.
more deeply schooled and skilled in the subtle art of
movement and position, entraps and destroys the other. On July 7, 1945, Margarita Villarica filed an answer to
It is, rather, a contest in which each contending party said complaint, expressly admitting having sold said land
fully and fairly lays before the court the facts in issue and to Fresdesvindo S. Alvero, for P100,000, in December,
then, brushing side as wholly trivial and indecisive all 1944, due to the imperative necessity of raising funds
imperfections of form and technicalities of procedure, with which to provide for herself and family, and that she
asks that Justice be done upon the merits. Lawsuits, did not remember the previous sale; at the same time,
unlike duels, are not to be won by a rapier's thrust. offering to repurchase said land from Fredesvindo S.
Technicality, when it deserts its proper office as an aid to Alvero in the sum of P5,000, but that the latter refused
justice and becomes its great hindrance and chief enemy, to accept the offer.
deserves scant consideration from courts. There should
On July 13, 1945, Fredesvindo S. Alvero, in answering
be no vested rights in technicalities.
said complaint, denied the allegations made therein, and
The evidence is patently clear that Jose M. Aruego, acting claimed exclusive ownership of the land in question, and
as representative of a non-existent principal, was the real at the same time set up a counterclaim and crossclaim in
party to the contract sued upon; that he was the one his answer, demanding from Jose R. Victoriano a P200-
who reaped the benefits resulting from it, so much so monthly rent on said property, beginning from February,
that partial payments of the consideration were made by 1945, plus P2,000 as damages.
him; that he violated its terms, thereby precipitating the
On July 21, 1945, Jose R. Victoriano filed an answer to
suit in question; and that in the litigation he was the real
said counterclaim, denying Fredesvindo S. Alvero's
defendant. Perforce, in line with the ends of justice,
alleged ownership over said land, and the other
responsibility under the judgment falls on him.
allegations contained in Alvero's answer.
We need hardly state that should there be persons who
After the trial of the case before the Hon. Mariano L. de
under the law are liable to Aruego for reimbursement or
la Rosa, Judge of the Court of First Instance of the City of
contribution with respect to the payment he makes
Manila, one of the respondents in this case, on
under the judgment in question, he may, of course,
November 16, 1945, said respondent judge rendered his
proceed against them through proper remedial
decision, in which it was declared that the two (2) parcels
measures.
of land in question, with a combined area of 480 square
PREMISES CONSIDERED, the order appealed from is meters had been sold by Margarita Villarica to Jose R.
hereby set aside and the case remanded ordering the Victoriano, since October 1, 1940, for the sum of P6,000,
lower court to hold supplementary proceedings for the on the condition that the purchaser should make a down
purpose of carrying the judgment into effect against payment of P1,700, and a monthly payment of P76.86 in
University Publishing Co., Inc. and/or Jose M. Aruego. So 120 equal monthly installments; that Jose R. Victoriano
ordered. continued making said monthly payments until
December, 1941, but that owing to the war-time
----------------------------------------------------------------------- conditions then existing, Margarita Villarica agreed
verbally to suspend such payments until the restoration
FREDESVINDO S. ALVERO, petitioner, vs.M.L. DE LA of peace; that immediately after said sale of said land to
ROSA, Judge of First Instance of Manila, JOSE R. him, Jose R. Victoriano took possession thereof and
VICTORIANO, and MARGARITA VILLARICA, respondents. made improvements thereon to the amount of P800, and
continued occupying said property until December, 1944,
Revilla and Palma for petitioner.
when he abandoned the same to go to evacuation
Francisco Claravall for respondents. places, but returned thereto in February, 1945; that
Margarita Villarica, having forgotten the sale of said land
to Jose R. Victoriano, sold the same for P100,000 in for reconsideration was denied on January 29, 1946.
Japanese military notes, on December 31, 1944, to Hence, this petition for certiorari.
Fredesvindo S. Alvero, but afterwards offered to
repurchase said property from him, for the sum of On February 11, 1946, the respondents filed their answer
P8,000 in genuine Philippine currency, after liberation; to the petition for certiorari, alleging (1) that said
that Fredesvindo S. Alvero presented the deed of sale, petition is defective in form as well as in substance; (2)
executed in his favor, to the Register of Deeds of the City that there has been no excusable negligence, on the part
of Manila, on January 3, 1945, and took possession of of the petitioner, or grave abuse of discretion on the part
said property in December, 1944, but afterwards found of the respondent judge, in the instant case.
Jose R. Victoriano in the premises in February, 1945; that
As already stated, the decision rendered by the
in the contract of sale executed by Margarita Villarica, in
respondent judge, Hon. Mariano L. de la Rosa, was dated
favor of Jose R. Victoriano, it was agreed that, upon
November 16, 1945, of which counsel for Fredesvindo S.
failure of the purchaser to make payments of three (3)
Alvero was notified on November 28, 1945; that his
successive mothly installments, the vendor would be free
motion for reconsideration and new trial was filed on
to sell the property again, forfeiting the payments made,
December 27, 1945, and denied on January 3, 1946, and
except in the case of force majeure; that there was really
that said counsel for Alvero was notified of said order on
a verbal agreement between Margarita Villarica and Jose
January 7, 1946; and that he filed his notice of appeal
Victoriano, made in February, 1942, for the suspension of
and record on appeal the following day, to wit, January 8,
the payment of the monthly installments until the
1946, and that the P60-appeal bond was filed only on
restoration of peace; and that although Jose R.
January 15, 1946.
Victoriano had presented the deed of sale, executed in
his favor, to the Register of Deeds, in Pasig, Rizal, like According to the computation erroneously made by the
Fredesvindo S. Alvero, he had also failed to secure the court, the last day for filing and perfecting the appeal, in
transfer of title to his name. And considering that Jose R. this case, was January 8, 1946, or which date,
Victoriano's document was older than that of Fredesvindo S. Alvero should have filed his (1) notice of
Fredesvindo S. Alvero, and that he had taken possession appeal, (2) record on appeal, and (3) appeal bond. But
of said property, since October 1, 1940, the respondent the P60-appeal bond was filed only on January 15, 1946.
judge rendered his decision in favor of Jose R. Victoriano,
adjudging to him the title over the property in question, Failure to perfect the appeal, within the time prescribed
including all the improvements existing thereon, and by the rules of court, will cause the judgment to become
dismissed the counterclaim. final, and the certification of the record on appeal
thereafter, cannot restore the jurisdiction which has
On November 28, 1945, Fredesvindo S. Alvero was been lost. (Roman Catholic Bishop of Tuguegarao vs.
notified of said decision; and on December 27, 1945, he Director of Lands, 34 Phil., 623; Estate of Cordoba and
filed a petition for reconsideration and new trial, which Zarate vs. Alabado, 34 Phil., 920; and Bermudez vs.
was denied on January 3, 1946; and of said order he was Director of Lands, 36 Phil., 774.)
notified on January 7, 1946.
The period within which the record on appeal and appeal
On January 8, 1946, Fredesvindo S. Alvero filed his notice bond should be perfected and filed may, however, be
of appeal and record on appeal simultaneously in the extended by order of the court, upon application made,
lower court, without filing the P60-appeal bond. prior to the expiration of the original period. (Layda vs.
Legaspi, 39 Phil., 83.)
On January 14, 1946, Jose R. Victoriano filed a petition to
dismiss the appeal, and at the same time, asked for the Rules of courts, promulgated by authority of law, have
execution of the judgment. the force and effect of law; and rules of court prescribing
the time within which certain acts must be done, or
On January 15, 1946, Fredesvindo S. Alvero filed an
certain proceedings taken, are considered absolutely
opposition to said motion to dismiss, alleging that on the
indispensable to the prevention of needless delays and
very same day, January 15, 1946, said appeal bond for
to the orderly and speedy discharge of judicial business.
P60 had been actually filed, and allege as an excuse, for
(Shioji vs. Harvey, 43 Phil., 333.)
not filing the said appeal bond, in due time, the illness of
his lawyer's wife, who died on January 10, 1946, and Strict compliance with the rules of court has been held
buried the following day. mandatory and imperative, so that failure to pay the
docket fee in the Supreme Court, within the period fixed
On January 17, 1946, the respondent judge, Hon.
for that purpose, will cause the dismissal of the appeal.
Mariano L. de la Rosa, ordered the dismissal of the
(Salaveria vs. Albindo, 39Phil., 922.) In the same manner,
appeal, declaring that, although the notice of appeal and
on failure of the appellant in a civil case to serve his brief,
record on appeal had been filed in due time, the P60-
within the time prescribed by said rules, on motion of the
appeal bond was filed too late.
appellee and notice to the appellant, or on its own
On January 23, 1946, Fredesvindo S. Alvero filed a motion, the court may dismiss the appeal. (Shioji vs.
petition for the reconsideration of the said order dated Harvey, 43 Phil., 333.)
January 17, 1946, dismissing his appeal; and said petition
Counsel for the petitioner Fredesvindo Alvero alleges as The attorney for petitioner Fredesvindo S. Alvero could
an excuse, for his failure to perfect and file his appeal, in have asked for an extension of time, within which to file
due time, the illness of his wife, which ended in her and perfect his appeal, in the court below; but he had
death on January 10, 1946, and by which he was greatly failed to do so, and he must bear the consequences of his
affected. act. A strict observance of the rules of court, which have
been considered indispensable to the prevention of
How little, indeed, does one realize that in life he lives in needless delays and to the orderly and speedy dispatch
the midst of death; and that every that passes in a step of judicial business, is an imperative necessity.
nearer towards eternity. Yet, notwithstanding the
inexorable laws of human destiny, every mortal fears It may not be amiss to state in this connection that no
death, and such fear is worse than death itself. That is irreparable damage has been caused to the petitioner
perhaps the reason why those feeling its approach, in Fredesvindo S. Alvero, as Margarita Villarica, the vendor
their last moments, want to be surrounded by the ones to the two, of the land in question, has shown readiness
dearest to their heart, to hear from them words of to repair the damage done.
tenderness and eternal truth, and thus receive as balm
their love and the cheering influence of the traditional No showing having been made that there had been
faith, and the consolation of religious hope. merely excusable negligece, on the part of the attorney
for petitioner Fredesvindo S. Alvero, and that there had
The virtuous and loving wife is the peculiar gift of been gave abuse of sound judicial discretion, on the part
heaven, and Mother is the name for God in the innocent of the respondent judge, the petition for certiorari filed
lips and hearts of adoring children. "She looketh well to in this case, is, therefore, hereby dismissed, without
the ways of her household, and eateth not the bread of costs. So ordered.
idleness." "And her daughters arise up and call her
blessed." And when she dies in the bosom of God, her ----------------------------------------------------------------------------
children find solace in the contemplation of her eternal
PRISCILLA ALMA JOSE, Petitioner RAMON C.
bliss, as mirrored in her tranquil beauty. JAVELLANA, ET AL.,
It is not, therefore, difficult to understand the state of G.R. No. 158239. January 25, 2012
mind of the attorney, and his intense devotion and
ardent affection towards his dying wife. The denial of a motion for reconsideration of an
order granting the defending partys motion to
Unfortunately, counsel for petitioner has created a
dismiss is not an interlocutory but a final order
difficult situation. In his motion for reconsideration and because it puts an end to the particular matter
new trial, dated December 27, 1945, he did not point out involved, or settles definitely the matter therein
specifically the findings or conclusions in the judgment, disposed of, as to leave nothing for the trial
are not supported by the evidence or which are contrary court to do other than to execute the order.
to law, making express reference to the pertinent Accordingly, the claiming party has a fresh
evidence or legal provisions, as expressly required by period of 15 days from notice of the denial
Rule 37, section 2, paragraph (c) of the Rules of Court. within which to appeal the denial.
Motions of that kind have been considered as motions
First of all, the denial of Javellanas motion for
pro forma intended merely to delay the proceeding, and,
reconsideration left nothing more to be done by
as such, they cannot and will not interrupt or suspend the RTC because it confirmed the dismissal of
the period of time for the perfection of the appeal. Civil Case No. 79-M-97. It was clearly a final
(Valdez vs. Jugo, 74 Phil., 49, and Reyes vs. Court of order, not an interlocutory one. The Court has
Appeals and Bautista, 74 Phil., 235.) Hence, the period distinguished between final and interlocutory
for perfecting herein petitioner's appeal commenced orders in Pahila-Garrido v. Tortogo, thuswise:
from November 28, 1945, when he was notified of the
judgment rendered in the case, and expired on The distinction between a final order and an
December 28, 1945; and, therefore, his notice of appeal
interlocutory order is well known. The first
disposes of the subject matter in its entirety or
and record on appeal filed on January 8, 1946, were filed
terminates a particular proceeding or action,
out of time, and much more so his appeal bond, which leaving nothing more to be done except to
was only filed on January 15, 1946. enforce by execution what the court has
determined, but the latter does not completely
It is futile to speak of hospitals, doctors and nurses to dispose of the case but leaves something else
minister alone to the needs of the sick and the dying, to be decided upon. An interlocutory order
who are dearest to us, for our reasoning powers are of deals with preliminary matters and the trial on
little avail when sorrow or despair rages within. the merits is yet to be held and the judgment
rendered. The test to ascertain whether or
But human laws are inflexible and no personal not an order or a judgment is
consideration should stand in the way of performing a
legal duty. interlocutory or final is: does the order or
judgment leave something to be done in the
trial court with respect to the merits of the case?
If it does, the order or judgment is interlocutory;
otherwise, it is final.
There is no dispute as to the following facts that gave rise
to the claim for refund of MPC, as found by the CTA5
And, secondly, whether an order is final or
interlocutory determines whether appeal is the
correct remedy or not. A final order is
appealable, to accord with the final judgment [MPC] is a domestic corporation duly organized and
rule enunciated in Section 1, Rule 41 of the existing under and by virtue of the laws of the Philippines
Rules of Court to the effect that appeal may be with principal office address in Pagbilao Grande Island,
taken from a judgment or final order that Pagbilao, Quezon. It is licensed by the Securities and
completely disposes of the case, or of a Exchange Commission to principally engage in the
particular matter therein when declared by business of power generation and subsequent sale
these Rules to be appealable;[23] but the thereof (Exh. A). It is registered with the Bureau of
remedy from an interlocutory one is not an
Internal Revenue as a VAT registered entity with
appeal but a special civil action for certiorari.
The explanation for the differentiation of Certificate of Registration bearing RDO Control No. 96-
remedies given in Pahila-Garrido v. Tortogo is 600-002498, dated January 26, 1996.
apt:
b. Per CTA's examination Refusing to give up his cause, the BIR Commissioner filed
the present Petition before this Court on the ground that
875.45 the Court of Appeals committed reversible error in
affirming the Decision of the CTA holding respondent
10,585,873.90
entitled to the refund of the amount of P28,744,626.95,
P28,744,626.956 allegedly representing input VAT on capital goods and
services for the period 1 April 1996 to 31 December
Thus, the dispositive portion of the CTA Decision,7 dated 1996. He argues that (1) The observance of procedural
11 July 2000, reads - rules may be relaxed considering that technicalities are
not ends in themselves but exist to protect and promote
WHEREFORE, in view of the foregoing, [MPC]'s claim for
the substantive rights of the parties; and (2) A tax refund
refund is hereby partially GRANTED. [The BIR
is in the nature of a tax exemption which must be
Commissioner] is ORDERED to ISSUE A TAX CREDIT
construed strictly against the taxpayer. He reiterates his
position before the Court of Appeals that MPC, as a up before the tax court, an actuality which the BIR
public utility, is exempt from VAT, subject instead to Commissioner himself does not deny, but he argues that
franchise tax and, thus, not entitled to a refund of input he should be allowed to do so as an exception to the
VAT on its purchase of capital goods and services. technical rules of procedure and in the interest of
substantial justice.
This Court finds no merit in the Petition at bar.
It is already well-settled in this jurisdiction that a party
The general rule is that a party cannot change his theory may not change his theory of the case on appeal.13 Such
of the case on appeal. a rule has been expressly adopted in Rule 44, Section 15
of the 1997 Rules of Civil Procedure, which provides
To recall, the BIR Commissioner raised in its Answer12
before the CTA the following special and affirmative SEC. 15. Questions that may be raised on appeal.
defenses Whether or not the appellant has filed a motion for new
trial in the court below, he may include in his assignment
3. [MPC]'s claim for refund is still pending investigation
of errors any question of law or fact that has been raised
and consideration before the office of [the BIR
in the court below and which is within the issues framed
Commissioner]. Accordingly, the present petition is
by the parties.
premature;
Thus, in Carantes v. Court of Appeals,14 this Court
4. Well-settled is the doctrine that provisions in tax
emphasized that
refund and credit are construed strictly against the
taxpayer as they are in the nature of a tax exemption; The settled rule is that defenses not pleaded in the
answer may not be raised for the first time on appeal. A
5. In an action for refund or tax credit, the taxpayer has
party cannot, on appeal, change fundamentally the
the burden to show that the taxes paid were erroneously
nature of the issue in the case. When a party deliberately
or illegally paid and failure to sustain the said burden is
adopts a certain theory and the case is decided upon that
fatal to the action for refund;
theory in the court below, he will not be permitted to
6. It is incumbent upon [MPC] to show that the claim for change the same on appeal, because to permit him to do
tax credit has been filed within the prescriptive period so would be unfair to the adverse party.
under the tax code;
In the more recent case of Mon v. Court of Appeals,15
7. The taxes allegedly paid by [MPC] are presumed to this Court again pronounced that, in this jurisdiction, the
have been collected and received in accordance with law settled rule is that a party cannot change his theory of
and revenue regulations. the case or his cause of action on appeal. It affirms that
"courts of justice have no jurisdiction or power to decide
These appear to be general and standard arguments a question not in issue." Thus, a judgment that goes
used by the BIR to oppose any claim by a taxpayer for beyond the issues and purports to adjudicate something
refund. The Answer did not posit any allegation or on which the court did not hear the parties, is not only
contention that would defeat the particular claim for irregular but also extrajudicial and invalid. The rule rests
refund of MPC. Trial proper ensued before the CTA, on the fundamental tenets of fair play.
during which the MPC presented evidence of its
entitlement to the refund and in negation of the afore- The BIR Commissioner pleads with this Court not to apply
cited defenses of the BIR Commissioner. It was only after the foregoing rule to the instant case, for a rule on
the CTA promulgated its Decision on 11 July 2000, which technicality should not defeat substantive justice. The
was favorable to MPC and adverse to the BIR BIR Commissioner apparently forgets that there are
Commissioner, that the latter filed his Petition for Review specific reasons why technical or procedural rules are
before the Court of Appeals on 4 October 2000, averring, imposed upon the courts, and that compliance with
for the very first time, that MPC was a public utility, these rules, should still be the general course of action.
subject to franchise tax and not VAT; and since it was not Hence, this Court has expounded that
paying VAT, it could not claim the refund of input VAT on
Procedural rules, we must stress, should be treated with
its purchase of capital goods and services.
utmost respect and due regard since they are designed
There is a palpable shift in the BIR Commissioner's to facilitate the adjudication of cases to remedy the
defense against the claim for refund of MPC and an worsening problem of delay in the resolution of rival
evident change of theory. Before the CTA, the BIR claims and in the administration of justice. The
Commissioner admitted that the MPC is a VAT-registered requirement is in pursuance to the bill of rights inscribed
taxpayer, but charged it with the burden of proving its in the Constitution which guarantees that "all persons
entitlement to refund. However, before the Court of shall have a right to the speedy disposition of their cases
Appeals, the BIR Commissioner, in effect denied that the before all judicial, quasi-judicial and administrative
MPC is subject to VAT, making an affirmative allegation bodies." The adjudicatory bodies and the parties to a
that it is a public utility liable, instead, for franchise tax. case are thus enjoined to abide strictly by the rules.
Irrefragably, the BIR Commissioner raised for the first While it is true that a litigation is not a game of
time on appeal questions of both fact and law not taken technicalities, it is equally true that every case must be
prosecuted in accordance with the prescribed procedure marriage instituted by the therein petitioner Filipina Sy
to ensure an orderly and speedy administration of before the Regional Trial Court (RTC) on the basis of the
justice. There have been some instances wherein this alleged psychological incapacity of her husband,
Court allowed a relaxation in the application of the rules, Fernando Sy. Her petition was denied by the RTC because
but this flexibility was "never intended to forge a bastion it found that Fernando's acts did not constitute
for erring litigants to violate the rules with impunity." A psychological incapacity, a finding later affirmed by the
liberal interpretation and application of the rules of Court of Appeals. In an appeal by certiorari before this
procedure can be resorted to only in proper cases and Court, Filipina raised the issue that her marriage to
under justifiable causes and circumstances.16 Fernando was void from the very beginning for lack of a
marriage license at the time of the ceremony. This Court
The courts have the power to relax or suspend technical took cognizance of the said issue, reversed the RTC and
or procedural rules or to except a case from their the Court of Appeals, and ruled in favor of Filipina. Its
operation when compelling reasons so warrant or when ratiocination on the matter is reproduced in full below
the purpose of justice requires it. What constitutes good
and sufficient cause that would merit suspension of the
rules is discretionary upon the courts.17
Petitioner, for the first time, raises the issue of the
In his Petition and Memorandum before this Court, the marriage being void for lack of a valid marriage license at
BIR Commissioner made no attempt to provide the time of its celebration. It appears that, according to
reasonable explanation for his failure to raise before the her, the date of the actual celebration of their marriage
CTA the issue of MPC being a public utility subject to and the date of issuance of their marriage certificate and
franchise tax rather than VAT. The BIR Commissioner marriage license are different and incongruous.
argues, in a singular paragraph in his Petition,18
subsequently reproduced in his Memorandum,19 that Although we have repeatedly ruled that litigants cannot
the Court of Appeals should have taken cognizance of the raise an issue for the first time on appeal, as this would
said issue, although it was raised for the first time on contravene the basic rules of fair play and justice, in a
appeal, entirely on the basis of this Court's ruling in Sy v. number of instances, we have relaxed observance of
Court of Appeals.20 He contends that procedural rules, noting that technicalities are not ends
in themselves but exist to protect and promote
The submission fails to take into account that although substantive rights of litigants. We said that certain rules
this Honorable Court has repeatedly ruled that litigants ought not to be applied with severity and rigidity if by so
cannot raise an issue for the first time on appeal, as this doing, the very reason for their existence would be
would contravene the basic rules of justice and fair play, defeated. Hence, when substantial justice plainly
the observance of procedural rules may be relaxed, requires, exempting a particular case from the operation
noting that technicalities are not ends in themselves but of technicalities should not be subject to cavil. In our
exist to protect and promote the substantive rights of the view, the case at bar requires that we address the issue
litigants (Sy v. Court of Appeals, 330 SCRA 570 [2000]). of the validity of the marriage between Filipina and
Fernando which petitioner claims is void from the
This Court is unconvinced. There is no sufficient cause to beginning for lack of a marriage license, in order to arrive
warrant the relaxation of technical or procedural rules in at a just resolution of a deeply seated and violent conflict
the instant case. The general rules of procedure still between the parties. Note, however, that here the
apply and the BIR Commissioner cannot be allowed to pertinent facts are not disputed; and what is required
raise an issue for the first time on appeal. now is a declaration of their effects according to existing
law.21 [Emphasis supplied.]
It should be emphasized that the BIR Commissioner is
invoking a suspension of the general rules of procedure In the instant case, the conflict between the MPC and the
or an exception thereto, thus, it is incumbent upon him BIR Commissioner could be hardly described as "deeply
to present sufficient cause or justifiable circumstance seated and violent," it remaining on a professional level.
that would qualify his case for such a suspension or
exception. That this Court had previously allowed in Moreover, this Court pointed out in the Sy case that the
another case such suspension of or exception to pertinent facts, i.e., the dates of actual celebration of the
technical or procedural rules does not necessarily mean marriage, issuance of the marriage certificate, and
that the same shall also be allowed in the present case. issuance of the marriage license, were undisputed. The
The BIR Commissioner has the burden of persuading this same cannot be said in the case at bar. That MPC is a
Court that the same causes or circumstances that public utility is not an undisputed fact; on the contrary,
justified the suspension of or exception to the technical the determination thereof gives rise to a multitude of
or procedural rules in the other case are also present in other questions of fact and law. It is a mere deduction on
the case at bar. the part of the BIR Commissioner that since the MPC is
engaged in the generation of power, it is a public utility.
The Sy case, on which the BIR Commissioner fully The MPC contests this arguing that it is not a public utility
anchored his claim for suspension of or exception to the because it sells its generated power to NAPOCOR
technical or procedural rules, is not even on all fours with exclusively, and not to the general public. It asserts that
his case. It involves a petition for declaration of nullity of
it is subject to VAT and that its sale of generated than one year and which are treated as depreciable
electricity to NAPOCOR is subject to zero-rated VAT. assets under Section 29(f), used directly or indirectly in
the production or sale of taxable goods or services."25
Substantial justice, in such a case, requires not the
allowance of issues raised for the first time on appeal, Contrary to the argument of the BIR Commissioner, input
but that the issue of whether MPC is a public utility, and VAT on capital goods is among those expressly
the correlated issue of whether MPC is subject to VAT or recognized as creditable input tax by Section 104(a) of
franchise tax, be raised and threshed out in the first the Tax Code of 1986, as amended by Rep. Act No.
opportunity before the CTA so that either party would 7716,26 to wit
have fully presented its evidence and legal arguments in
support of its position and to contravene or rebut those Sec. 104. Tax Credits. - (a) Creditable input tax. - Any
of the opposing party. input tax evidenced by a VAT invoice or official receipt
issued in accordance with Section 108 hereof on the
In Atlas Consolidated Mining & Development Corp. v. following transactions shall be creditable against the
Commissioner of Internal Revenue,22 this Court held output tax:
that it was too late for the BIR Commissioner to raise an
issue of fact of payment for the first time in his (1) Purchase or importation of goods:
memorandum in the CTA and in his appeal to this Court.
(A) For sale; or
If raised earlier, the matter ought to have been seriously
delved into by the CTA. On this ground, this Court was of (B) For conversion into or intended to form part of a
the opinion that under all the attendant circumstances of finished product for sale including packing materials; or
the case, substantial justice would be served if the BIR
Commissioner be held as precluded from attempting to (C) For use as supplies in the course of business; or
raise the issue at this stage. Failure to assert a question
(D) For use as materials supplied in the sale of service; or
within a reasonable time warrants a presumption that
the party entitled to assert it either has abandoned or (E) For use in trade or business for which deduction for
declined to assert it. depreciation or amortization is allowed under this Code,
except automobiles, aircraft and yachts. [Emphasis
Therefore, the Court of Appeals correctly refused to
supplied.]
consider the issues raised by the BIR Commissioner for
the first time on appeal. Its discussion on whether the Thus, goods and properties used by the taxpayer in its
MPC is a public utility and whether it is subject to VAT or VAT-taxable business, subject to depreciation or
franchise tax is nothing more than obiter dictum. It is amortization in accordance with the Tax Code, are
best not at all to discuss these issues for they do not considered capital goods. Input VAT on the purchase of
simply involve questions of law, but also closely-related such capital goods is creditable against the taxpayer's
questions of fact23 which neither the Court of Appeals output VAT. The taxpayer is further given the option,
nor this Court could presume or garner from the under Section 106(b) of the Tax Code of 1986, as
evidence on record. amended by Republic Act No. 7716, to claim refund of
the input VAT on its capital goods, but only to the extent
II
that the said input VAT has not been applied to its output
Input VAT on capital goods and services may be the VAT.
subject of a claim for refund.
This Court, likewise, will not give credence to the BIR
The MPC bases its claim for refund of its input VAT on Commissioner's contention that the claim for refund of
Section 106(b) of the Tax Code of 1986, as amended by input VAT on capital goods by the MPC should be denied
Republic Act No. 7716,24 which provides for the latter's failure to comply with the requirements
for the refund of input VAT credits on zero-rated sales
Sec. 106. Refunds or tax credits of creditable input tax. provided in Section 16 of Revenue Regulations No. 5-87,
as amended by Revenue Regulations No. 3-88. The BIR
xxxx
Commissioner is apparently confused. MPC is claiming
(b) Capital goods. - A VAT-registered person may apply refund of the input VAT it has paid on the purchase of
for the issuance of a tax credit certificate or refund of capital goods, it is not claiming refund of its input VAT
input taxes paid on capital goods imported or locally credits attributable to its zero-rated sales. These are two
purchased, to the extent that such input taxes have not different input VAT credits, arising from distinct
been applied against output taxes. The application may transactions, although both may be the subject of claims
be made only within two (2) years, after the close of the for refund by the taxpayer.27 Indeed, the very same
taxable quarter when the importation or purchase was regulation invoked by the BIR Commissioner, Revenue
made. Regulations No. 5-87, as amended, distinguishes
between these two refundable input VAT credits and
Capital goods or properties, as defined in Revenue discusses them in two separate paragraphs: Section 16(a)
Regulations No. 7-95, the implementing rules on VAT, are on zero-rated sales of goods and services, and Section
"goods and properties with estimated useful life greater 16(b) on capital goods. It is also worth noting that
Revenue Regulations No. 7-95, issued on 9 December Another well-settled principle in this jurisdiction is that
1995, which consolidated all VAT regulations, already this Court is bound by the findings of fact of the CTA.
superseded Revenue Regulations No. 5-87. Still, Revenue Only errors of law, and not rulings on the weight of
Regulations No. 7-95 maintains the distinction between evidence, are reviewable by this Court. Findings of fact of
these two input VAT credits, discussing the zero-rated the CTA are not to be disturbed unless clearly shown to
sales of goods or properties or services in Section 4.106- be unsupported by substantial evidence.29 Quite the
1(a), and capital goods in Section 4.106-1(b). reverse, the claim of MPC for refund of input VAT on its
purchase of capital goods and services in the present
Hence, the present claim for refund of input VAT on case is found to be supported by substantial evidence,
capital goods filed by MPC need not comply with the not just by the CTA, but also by the Court of Appeals. The
requirements for refund of input VAT attributable to BIR Commissioner failed to convince this Court
zero-rated sales. otherwise.
III IV
There is no reason for this Court to disturb the findings of The BIR should seriously study and consider each and
fact of the CTA, as affirmed by the Court of Appeals. every application for claim for refund pending before it.
While it is true, as the BIR Commissioner alleges, that the As a final point, this Court would like to call the attention
MPC has the burden of proving that it is entitled to the of the BIR Commissioner, as well as the responsible BIR
refund it is claiming for, both the CTA and Court of officers, to seriously study and consider each and every
Appeals had ruled that the MPC presented substantial application for claim for refund filed before their office. It
evidence to support its claim for refund of its input VAT is very obvious to this Court that the Answer filed by the
on capital goods and services in the amount of BIR Commissioner before the Court of Appeals, which it
P28,744,626.95. essentially reproduced as its Memorandum before the
same court, presented general and pro forma arguments.
The CTA found that MPC is registered as a VAT-taxpayer,
The BIR Commissioner only raised belatedly before the
as evidenced by its Certificate of Registration, issued by
Court of Appeals the issues of whether MPC is a public
the BIR Revenue District Office (RDO) No. 60, on 26
utility and whether it is subject to franchise tax and not
January 1996. The BIR Commissioner does not contest
VAT. Even then, his Petition for Review before the
this fact, and does not offer any explanation as to why
appellate court, numbering only six pages, with only one
the BIR RDO had approved the registration of MPC as a
page devoted to a discussion of the merits of his Petition,
VAT-taxpayer when, as the BIR Commissioner is now
left much to be desired and would hardly persuade any
asserting, the MPC is not subject to VAT but to franchise
court. Since he represents the interest of the
tax. The MPC had been filing its VAT Quarterly Returns,
government in tax cases, the BIR Commissioner should
including those for the period covered by its claim for
exert more effort and exercise more diligence in
refund, 1 April 1996 to 31 December 1996, reporting and
preparing his pleadings before any court; he should not
reflecting therein the input VAT it had paid on its
wait to do so only upon appeal of his case to the higher
purchase of capital goods and services. These capital
court. This Court may not always be inclined to allow him
goods and services were necessary in the construction of
to remedy his past laxity.
the power plant facilities used by MPC in electric power
generation. IN VIEW OF THE FOREGOING, the instant Petition is
hereby DENIED. The Decision, dated 30 July 2003, of the
The VAT invoices and receipts submitted by MPC, in
Court of Appeals in CA-G.R. SP No. 60783, which affirmed
support of its claim for refund, had been examined and
in toto the Decision, dated 11 July 2000, of the CTA in
evaluated by an independent auditor, as well as by the
CTA Case No. 5658, is hereby AFFIRMED. The BIR
CTA itself. Thus, from the original amount of
Commissioner is hereby ORDERED to issue in favor of
P39,330,500.85 claimed by MPC for refund, the
MPC a tax credit certificate in the amount of
independent auditor, SGV & Co., found only the sum of
P28,744,626.95 representing input VAT paid on capital
P28,745,502.40 sufficiently supported by valid invoices
goods and services for the period of 1 April 1996 to 31
and/or official receipts. Following its own examination
December 1996. No pronouncement as to costs.
and evaluation of the evidence submitted, the CTA
further reduced the amount refundable to SO ORDERED.
P28,744,626.95 after disallowing the input VAT on the
purchase of "xerox and office supplies which cannot be ----------------------------------------------------------------------------
capitalized and not necessary in the construction of
power plant facilities."28 GLICERIA SARMIENTO, Petitioner,
vs.
It is worth noting that the foregoing findings by the CTA EMERITA ZARATAN, Respondent.
were affirmed in totality by the Court of Appeals.
Likewise, this Court finds no reason to disturb the This petition for Review on Certiorari under
foregoing findings of the tax court. Rule 45 of the Rules of Court seeks to nullify
the Court of Appeals Decision1 in CA-G.R. SP
No. 79001 entitled, "Emerita Zaratan v. Hon. computers because the wirings got wet.6 But
Ramon A. Cruz, as Presiding Judge of RTC, the motion remained unacted.
Quezon City, Branch 223, and Gliceria
Sarmiento," dated 17 August 2004, which On 9 June 2003, respondent filed her
reversed and set side the Orders dated 19 Memorandum. On 19 June 2003, the RTC
June 2003 and 31 July 2003 of the Regional dismissed the appeal as follows:
Trial Court (RTC) of Quezon City in Civil
Case No. Q-03-49437, dismissing Record shows that defendant-appellant
respondents appeal for failure to file the received the Notice of Appealed Case,
memorandum within the period provided for through counsel, on May 19, 2003 (Registry
by law. Return Receipt dated May 12, 2003, Record,
back of p. 298). Thus, under Section 7(b),
On 2 September 2002, petitioner Gliceria Rule 40 of the 1997 Rules of Civil Procedure,
Sarmiento filed an ejectment case2 against she had fifteen (15) days or until June 3, 2003
respondent Emerita Zaratan, in the within which to submit a memorandum on
Metropolitan Trial Court (MeTC) of Quezon appeal. As further appears on record,
City, Branch 36, docketed as Civil Case No. however, the required Memorandum was filed
29109. by defendant-appellant only on June 9, 2003
(Record, p. 623), or six (6) days beyond the
On 31 March 2003, the MeTC rendered a expiration of the aforesaid fifteen day period.
decision in favor of petitioner, the dispositive
portion of which reads: It should be stressed that while the rules
should be liberally construed, the provisions
WHEREFORE, the Court finds that plaintiff on reglemenatry periods are strictly applied
has sufficiently established her causes as they are "deemed indispensable to the
against the defendant and hereby order the prevention of needless delays and necessary
defendant and all persons claiming rights to the orderly and speedy discharge of judicial
under her: business" (Legaspi-Santos vs. Court of
Appeals, G.R. No. 60577, October 11, 1983)
1. to pay plaintiff the monthly rentals of and strict compliance therewith is mandatory
3,500.00 for the said premises from and imperative (FJR Garments Industries vs.
August 1, 2002 until defendant Court of Appeals, G.R. No. L-49329, June 29,
vacates the premises; 1984). The same is true with respect to the
rules on the manner and periods for
2. to pay plaintiff the sum of perfecting appeals (Gutierrez vs. Court of
20,000.00 plus 1,500.00 per Appeals, L-25972, November 26, 1968).
appearance of counsel in court, as
and for attorneys fees; and Premises considered, the instant appeal is
hereby DISMISSED. This renders academic
to pay the cost of suit.3 defendant-appellants application for a writ of
preliminary injunction.71aw phi 1.net
ground that all the war losses sustained by It is not disputed that the losses in question could
the Petitioner should have been claimed as only be charged off in the income tax return for the
deduction for the year 1945 when the said losses year 1945, unless compensated for by insurance or
were actually sustained, pursuant to Section 30(d) otherwise. Petitioner maintains that said losses
(2) of the National Internal Revenue Code; were so compensated for by insurance or
otherwise; that the said losses were not
13. That by reason of the said disallowance by
chan roblesvirtualawlibrary
Deduction from gross income. In computing net authorized to and shall empower the War Damage
income there shall be allowed as deductions Corporation to use its funds to provide, through
xxx xxx xxx insurance, reinsurance, or otherwise, reasonable
protection against loss of or damage to property,
(d) Losses: chanroblesvirtuallawlibrary
risk of loss on all property of such type in the United and (2) protection without requiring a contract
roblesvirtualawlibrary
States. Such protection shall be applicable only (1) of insurance or the payment of premium or other
to such property situated in the United States charge. In order to come under subsection (a),
(including the several States and the District of there must be (1) insurance, reinsurance or
Columbia), the Philippine Islands, the Canal Zone, otherwise and (2) payment of such premium or
the Territories and possessions of the United States, other charge as the War Damage Corporation may cralaw cralaw
and in such other places as may be determined by establish. Admittedly, neither requirement is
the President to be under the dominion and control present in the case at bar. Hence, Petitioner is not
of the United States, Provided, That such
cralaw entitled to the benefits of said subsection (a).
protection shall not be applicable after the date
It claims, however, to be within the purview of
determined by the Secretary of Commerce under
subsection (b), but the same is applicable only to
this subsection to property in transit upon which
losses or damages sustained subsequent to
the United States Maritime Commission is
December 6, 1941, and prior to the date
authorized to provide marine war-risk insurance.
determined by the Secretary of Commerce under
The War Damage Commission, with the approval of
subsection (a), pursuant to which the protection
the Secretary of Commerce, may suspend, restrict,
under said Act of Congress shall be made
or otherwise limit such protection in any area to the
available on and after a date to be determined by
extent that it may determine to be necessary or
cralaw cralaw
if a policy covering such property was in fact in Mr. GOODLOE. Further, in the opinion of counsel
force at the time of such loss or damage. (U.S. for the RFC and for the War Damage Corporation,
Statutes at Large, Vol. 56, Part I, pp. 175-176.) the United States Government and War Damage
(Emphasis supplied.) Corporation are morally committed to the payment
of war damages that occurred in the Philippine
It will be noted that subsection (a) of said section
Islands after December 6, 1941, and prior to July 1,
5(g), authorized the Reconstruction Finance
1942, to the extent of reasonable protection for
Corporation to empower the War Damage
all such damages, but not in excess of
Corporation to use its funds to provide, through
approximately $99,000,000 which represents the
insurance, reinsurance or otherwise, reasonable
limitation of $100,000,000 stated in the press
protection against loss of, or damage to, property
release of December 13, 1941, less disbursements
which may result from enemy attack; and that
made and hereafter to be made on account of war
chan roblesvirtualawlibrary
Pursuant to subsection (b) of said section 5(g), any Islands. (Emphasis supplied.)
loss or damage to any such property referred to in
Summarizing the view of Mr. Goodloe, the
subsection (a), sustained subsequent to December
Chairman of the Committee used the following
6, 1941, and prior to the date determined by the
language:
Secretary of Commerce under subsection (a), may
chanroblesvirtuallawlibrary
be compensated by the quoted War Damage The CHAIRMAN. Let me recapitulate what you
Corporation without requiring a contract of have said for the benefit of those who have just
insurance or the payment of premium or other come in.
charge. We are not legally bound to pay any damages to
Thus, the above quoted subsections of said Public the Philippine Island inhabitants for war damages in
Law 506 77th Congress of the United States, the opinion of the War Damage Corporation.
grant the benefits of the protection therein We are morally bound because of certain press
provided for in two cases, namely: (1) protection
chanroblesvirtuallawlibrary
concurred in said view. We quote from a statement on December 13, 1941, the Federal Loan Agency of
submitted by him to said Committee on October 30, the United States announced, 1 with the approval
1945:chanroble svirtuallawlibrary of the President of the United States, that the
Rehabilitation Finance Corporation had created the
The act of March 27, 1942, terminated on July 1,
War Insurance Corporation (later War Damage
1942, the free insurance protection of the War
Corporation) with a capital of $100,000,000, to
Insurance Corporation announced in the press
provide protection against losses resulting from
releases issued by the Secretary of Commerce on
enemy attack which might be sustained by owners
December 12 and 22, 1941. Under the act,
of property in continental United States; (2) on
however, the War Damage Corporation was
chan roblesvirtualawlibrary
chan roblesvirtualawlibrary
(b) Subject to the authorization and limitations Jesse Jones, the Federal Loan Administrator of the
prescribed in subsection (a), any loss or damage to United States declared that said announcements
any such property sustained subsequent to were intended as insurance policy; and (5) chan roblesvirtualawlibrary
December 6, 1941, and prior to the date compliance therewith, according to Senator Millard
determined by the Secretary of Commerce under Tydings, was a legal obligation on the part of the
subsection (a), may be compensated by the War United States.
Damage Corporation without requiring a contract of
Petitioner admits (p. 14 of its brief ), however, that
insurance or the payment of premium or other
to fulfill the commitments made in the
charge, and such loss or damage may be adjusted as
aforementioned announcements, the 77th
if a policy covering such property was in fact in
Congress of the United States passed said Public
force at the time of such loss or damage.
Law No. 506, which, as above stated, does not cover
Under this provision of the War Damage Act, losses sustained later than July 1, 1942.
property losses sustained in the Philippines during Moreover, said announcements admittedly
the period from December 7, 1941 to June 30, specified that protection would be given against
1942, can thus be paid under the automatic loss due to enemy attack. 4 Accordingly, section 5g
insurance provision of the War Damage of said Act of Congress provided, in subsections (a)
corporation. It is, therefore, clear that Filipino and and (b) thereof, for protection against loss or
American property owners in the Philippines whose damage to property which may result from enemy
cralaw
properties suffered damage during the period from attack (including any action taken by military, naval
December 7, 1941 to June 30, 1942, can receive or air forces of United States in resisting enemy
compensation from War Damage Corporation attack).
under the present law.
Petitioner herein suffered its aforementioned losses
xxx xxx xxx in 1945, during the battle for the liberation of the
Summarizing, it is submitted Philippines by the Allied, especially American
Forces. Those losses were not the result of enemy
1. That property losses in the Philippines sustained attack, or of action by the armed forces of the
through enemy attack subsequently to December 6, United States in resisting enemy attack. The main
1941, and prior to July 1, 1942, are automatically enemy, in this theater of War, was Japan, and
covered by the War Insurance Corporation neither Japan, nor any of its associates in the facist
according to press release issued by the Secretary Axis, was then attacking in the Philippines. On the
of Commerce on December 13 and December 22, contrary the members of the Axis were, early in
1941, and validated by the War Damage Act of 1945 and subsequently thereto, in the defensive in
March 27, 1942; all fronts, including the Philippines. They were
2. That property losses in the Philippines sustained desperately and hopelessly resisting the relentless
subsequent to July 1, 1942, cannot come under the attacks of the allied democratic powers,
insurance protection provided by the act of March particularly, in these Islands, the American forces of
27, 1942, because of loss of control of the liberation. In the words of the amici curiae the
Philippines by the United States, making it properties of the Petitioners herein were cralaw
impractical for effecting insurance coverage on such destroyed or damaged as a result of military action
properties; by the armed forces of the United States . (pages cralaw
expectation, that their war losses would be In other words, the vocable otherwise in the
compensated for. This reasonable expectation, it clause compensated for by insurance or
is said, sufficed to place the losses of otherwise (in section 30 of our National Internal
herein Petitioner, during 1945, within the purview Revenue Code) should be construed to refer to
of the phrase compensated for otherwise than cralaw compensation due under a title analogous or similar
by insurance in section 30 of our National Internal to insurance. Inasmuch as the latter is a contract
Revenue Code. establishing a legal obligation (Sec. 2, Art. No.
2427), it follows that in order to be deemed
Upon careful consideration of the reasons adduced,
compensated for otherwise, the losses sustained
and the authorities cited, by counsel for
cralaw
York Life Insurance Co., D.C. Md., 14 F Supp. 721, The term or otherwise is broad enough to cover
cralaw
726). However, when said term is immediately any form of off-setting benefit as well as acutal
preceded by an enumeration, it should receive an recoupment. However, there must be a measurable
ejusdem generis interpretation, or be limited in its right to compensation for the loss with ultimate
application by the rule noscitur a sociis. In this collection reasonably clear. (Emphasis supplied.)
connection, words and phrases uses the following
Thus, deduction may not be claimed when the
language:
taxpayer is indemnified against loss by a third
chanroblesvirtuallawlibrary
Under the ejusdem generis rule, a clean-up partys guaranty (Dunne vs. Commissioner of
phrase, such as the term otherwise with respect to Internal Revenue, 75 F. 2d 255; Lewellyn vs. chan roblesvirtualawlibrary
a classification which immediately precedes it, Electric Reduction Co., 275 U.S. 243) or by an
includes only things of a like or similar kind, and insurance policy (Allied Turriers Corporation vs.
nothing of a higher class than that which it Commissioner, 24 BTA 457; Harwick vs. chan roblesvirtualawlibrary
immediately follows. Hodgson vs. Mountain & Gulf Commissioner, TC Memo, October 4, 1949 affd 184
Oil Co., D. C. Wyo. 297 F. 269, 272. F. 2d 825; the case of Rose Licht, 37 BTA 1096); chan roblesvirtualawlibrary chan
found guilty of attempting to rob from the person S. 445; Louisville Trust Co. vs. Glen. 33 F. Supp.
chan roblesvirtualawlibrary
by cutting or tearing the clothes, or thrusting the 403, affd 124 F. 2d 418; Bernard Schulenklooper, chan roblesvirtualawlibra ry
hand into the pockets, or otherwise, is intended T. C. Memo. Par. 47203, P. H.); or when the chan roblesvirtualawlibrary
to include all similar acts to those specified, damages resulting from one phase of a given
resorted to in an attempt to rob. State vs. West, 30 transaction are offset by the benefits derived from
So. 848, 106 La. 274. another phase of the same transaction (Taylor vs.
xxx xxx xxx MacLaughlin, 30 F. Supp. 19). In these cases, there
was a legal right to be indemnified and, hence,
The words or otherwise in law, when used as a compensated.
general phrase following an enumeration of
particulars, are commonly interpreted in a Even, however, if there were such right, the loss
restricted sense, as referring to such other matters would be deductible in the year in which it took
as are kindred to the classes before mentioned, place materially, when the possibility of recovery is
receiving an ejusdem generis interpretation. New remote (E. R. Hawks, 35 BTA 784). For this reason, it
York Life Ins. Co. vs. McDearmon, 114 S. W. 57, 59, was held in Commissioner of Internal Revenue vs.
133 Mo. App. 671; Fleming vs. City of Rome, 61 S. chan roblesvirtualawlibrary
Thalcher & Son, 76 F. 2d 900 (CCA 2nd, 1935) that a
E. 5, 6, 130 Ga. 383. (30 Words & Phrases, pp. 495, general contractors claim against a defaulting
496; emphasis supplied.)
chan roblesvirtualawlibrary
subcontractor for damages was too contingent and
uncertain to be regarded as compensated for in the
The word otherwise in provision of Revenue Act year in which the default took place. Similarly, in U.
for allowance of losses, sustained by corporation S. vs. White Dental Manufacturing Co. (274 U. S.
398, 71 L. ed. 1120, 47 S. Ct. 598), the losses 1942. Such decision was affirmed by the United
sustained by a Pennsylvania Corporation, on States Court of Appeals (Third Circuit). In the case at
account of the mismanagement of its properties, in bar, it is admitted that Petitioners property were
Berlin, by the German Government, which seized physically lost or damaged in 1945. The issue is
those properties in March, 1918, were deductible whether said losses were then compensated for by
from the gross income in that year. In this insurance or otherwise which is a question both
connection, we should bear in mind that the rules of law and fact, although more of law.
of international law expressly forbid the
It is not contended that indemnity was due
confiscation of private property owned by an
to Petitioner herein by reason of tort, crime or
enemy (see Arts. 46 and 47 of the Hague
quasi-contract. Upon the other
Regulations; Haw Pia vs. China Banking
hand, Petitioner had, in 1945, no right to indemnity
chan roblesvirtualawlibrary
was created by law and entered into the statute S. 227; Juragua Iron Co. vs. U. S., 212 U. S. 297).
chan roble svirtualawlibrary
book (p. 39, Petitioners Brief). Hence, it could have Consequently, the indemnity provided for in the
no legal recognition, much less any juridical effect, Philippine Rehabilitation Act of 1946 was purely an
prior to April 30, 1946, when said legislation was obligation voluntarily assumed solely for moral
approved and became effective. considerations, and did not exist as a legal
obligation prior to the approval of said Act on April
Thus, in the aforementioned hearings before the
30, 1946.
Committee on Territories and Insular Affairs of the
Senate of the United States, counsel for the War Evidently, Petitioner shared this view in 1945, 1946
Damage Corporation expressed the following and 1947, for its conduct during those years clearly
view:chanroblesvirtuallawlibrary indicates that it did not believe its war losses in
1945 were then compensated for by insurance or
In the opinion of Counsel for the Reconstruction
otherwise. This is borne out by the fact that it
Finance Corporation and War Damage Corporation
deducted part of said losses (P22,492.50) from its
neither the United States Government nor the War
gross income of P56,430.21 in 1945. 5 In other
Damage Corporation is legally committed to make
words, it thus regarded its war losses as closed and
payment on account of war damages in the
completed transactions during the year 1945. It
Philippine Islands either by reason of the press
likewise, charged off said losses, partly (P37,875.00)
release of December 22, 1941, or the Act of March
in 1946 (when its gross income amounted to
27, 1942.
P129,778.20) 6 and partly (P194,315.25) in 1947
In our opinion, the United States Government and (when its gross income amounted to P324,512.50).
War Damage Corporation are morally committed to 7 Thus Petitioner, in effect, represented to the
the payment of war damages that occurred in the Government that it did not consider the question
Philippine Island after December 6, 1941, and relative to its war losses as having been left open, in
before July 1, 1942, to the extent of reasonable 1945, by the statements of officers of the
protection for all such damages, but not in excess Government of the United States, above referred
of approximately $99,000,000, which represents the to, by the introduction of the bill which later on
limitation of $100,000,000 stated in the press became the Philippine Rehabilitation Act of 1946,
release of December 13, 1941, less disbursements and by the approval thereof, and that said question
made and hereafter to be made on account of war was closed prior to receipt of the aforementioned
damage which occurred between December 6, notice of the Philippine War Damage Commission in
1941, and July 1, 1942, in the United States or its November, 1950. In fact, 8 Petitioner did not
territories and possessions, exclusive of the include in his income tax return for 1950 any
Philippine Islands. deduction for war losses, although the same were
xxx xxx xxx not fully covered by the indemnity paid by said
Commission. Consequently, Petitioner is now
In our opinion, we are not legally or morally estopped from maintaining that said war losses
committed to pay for war damages which occurred were compensated for by insurance or otherwise
in the Philippine Islands before December 6, 1941, in 1945.
or after July 1, 1942.
Wherefore, the decision appealed from is hereby
The feeling that the United States had no legal affirmed, with costs against the Petitioner. It is SO
obligation to indemnify war losses like those ORDERED.
sustained by herein Petitioner was such that,
--------------------------------------------------------------------------
speaking before the same Committee, as member
of the Philippine Rehabilitation Commission, Tomas
L. Cabili, said: chanroblesvirtuallawlibrary
G.R. No. 170354 June 30, 2006
I was more impressed by the fact that while it is EDGARDO PINGA, Petitioner,
claimed that there is no legal obligation on the part vs.
of the United States to compensate the Philippines THE HEIRS OF GERMAN, SANTIAGO
for the destruction caused by this war, yet it is represented by FERNANDO
recognized that a moral obligation exists. To me SANTIAGO, Respondents.
moral obligations are more binding, as legal
obligations might be circumvented. It is to the great DECISION
credit of the American people that they should
approach this problem from the moral standpoint. TINGA, J.:
Needless to say, the Government of the United
States was under no legal obligation to pay The constitutional faculty of the Court to
indemnity for losses caused by the enemy in the promulgate rules of practice and
Philippines. Neither was it liable for damages procedure1 necessarily carries the power to
caused by the American forces during its war overturn judicial precedents on points of
remedial law through the amendment of the sought the postponement of the hearing
Rules of Court. One of the notable changes scheduled then.10 However, the order of
introduced in the 1997 Rules of Civil dismissal was subsequently reconsidered by
Procedure is the explicit proviso that if a the RTC in an Order dated 9 June 2005,
complaint is dismissed due to fault of the which took into account the assurance of
plaintiff, such dismissal is "without prejudice respondents counsel that he would give
to the right of the defendant to prosecute his priority to that case.11
counterclaim in the same or in a separate
action."2 The innovation was instituted in spite At the hearing of 27 July 2005, plaintiffs
of previous jurisprudence holding that the fact counsel on record failed to appear, sending in
of the dismissal of the complaint was his stead a representative who sought the
sufficient to justify the dismissal as well of the postponement of the hearing. Counsel for
compulsory counterclaim.3 defendants (who include herein petitioner)
opposed the move for postponement and
In granting this petition, the Court recognizes moved instead for the dismissal of the case.
that the former jurisprudential rule can no The RTC noted that it was obvious that
longer stand in light of Section 3, Rule 17 of respondents had failed to prosecute the case
the 1997 Rules of Civil Procedure. for an unreasonable length of time, in fact not
having presented their evidence yet. On that
The relevant facts are simple enough. ground, the complaint was dismissed. At the
Petitioner Eduardo Pinga was named as one same time, the RTC allowed defendants "to
of two defendants in a complaint for present their evidence ex-parte."12
injunction4 filed with Branch 29 of the
Regional Trial Court (RTC)5 of San Miguel, Respondents filed a Motion for
Zamboanga del Sur, by respondent Heirs of Reconsideration13 of the order issued in open
German Santiago, represented by Fernando court on 27 July 2005, opting however not to
Santiago. The Complaint6 dated 28 May 1998 seek that their complaint be reinstated, but
alleged in essence that petitioner and co- praying instead that the entire action be
defendant Vicente Saavedra had been dismissed and petitioner be disallowed from
unlawfully entering the coco lands of the presenting evidence ex-parte. Respondents
respondent, cutting wood and bamboos and claimed that the order of the RTC allowing
harvesting the fruits of the coconut trees petitioner to present evidence ex-parte was
therein. Respondents prayed that petitioner not in accord with established jurisprudence.
and Saavedra be enjoined from committing They cited cases, particularly City of Manila v.
"acts of depredation" on their properties, and Ruymann14 and Domingo v. Santos,15 which
ordered to pay damages. noted those instances in which a
counterclaim could not remain pending for
In their Amended Answer with independent adjudication.
Counterclaim,7 petitioner and his co-
defendant disputed respondents ownership On 9 August 2005, the RTC promulgated an
of the properties in question, asserting that order granting respondents Motion for
petitioners father, Edmundo Pinga, from Reconsideration and dismissing the
whom defendants derived their interest in the counterclaim, citing as the only ground
properties, had been in possession thereof therefor that "there is no opposition to the
since the 1930s.8 They alleged that as far Motion for Reconsideration of the
back as 1968, respondents had already been [respondents]."16 Petitioner filed a Motion for
ordered ejected from the properties after a Reconsideration, but the same was denied by
complaint for forcible entry was filed by the the RTC in an Order dated 10 October
heirs of Edmundo Pinga. It was further 2005.17 Notably, respondents filed an
claimed that respondents application for free Opposition to Defendants Urgent Motion for
patent over the properties was rejected by the Reconsideration, wherein they argued that
Office of the President in 1971. Defendants in the prevailing jurisprudential rule18 is that
turn prayed that owing to respondents "compulsory counterclaims cannot be
forcible re-entry in the properties and the adjudicated independently of plaintiffs cause
irresponsible and reckless filing of the case, of action," and "a conversu, the dismissal of
they be awarded various types of damages the complaint carries with it the dismissal of
instead in amounts totaling P2,100,000 plus the compulsory counterclaims."19
costs of suit.9
The matter was elevated to this Court directly
By July of 2005, the trial of the case had not by way of a Petition for Review under Rule 45
yet been completed. Moreover, respondents, on a pure question of law, the most relevant
as plaintiffs, had failed to present their being whether the dismissal of the complaint
evidence. It appears that on 25 October 2004, necessarily carries the dismissal of the
the RTC already ordered the dismissal of the compulsory counterclaim.
complaint after respondents counsel had
We hold that under Section 3, Rule 17 of the the effect of an adjudication upon the merits,
1997 Rules of Civil Procedure, the dismissal unless otherwise declared by the court.
of the complaint due to the fault of plaintiff
does not necessarily carry with it the The express qualification in the provision that
dismissal of the counterclaim, compulsory or the dismissal of the complaint due to the
otherwise. In fact, the dismissal of the plaintiffs fault, as in the case for failure to
complaint is without prejudice to the right of prosecute, is without prejudice to the right of
defendants to prosecute the counterclaim. the defendant to prosecute his counterclaim
in the same or separate action. This stands in
On a prefatory note, the RTC, in dismissing marked contrast to the provisions under Rule
the counterclaim, did not expressly adopt 17 of the 1964 Rules of Court which were
respondents argument that the dismissal of superseded by the 1997 amendments. In the
their complaint extended as well to the 1964 Rules, dismissals due to failure to
counterclaim. Instead, the RTC justified the prosecute were governed by Section 3, Rule
dismissal of the counterclaim on the ground 17, to wit:
that "there is no opposition to [plaintiffs]
Motion for Reconsideration [seeking the SEC. 3. Failure to prosecute. If plaintiff
dismissal of the counterclaim]."20 This fails to appear at the time of the trial, or to
explanation is hollow, considering that there prosecute his action for an unreasonable
is no mandatory rule requiring that an length of time, or to comply with these rules
opposition be filed to a motion for or any order of the court, the action may be
reconsideration without need for a court order dismissed upon motion of the defendant or
to that effect; and, as posited by petitioner, upon the courts own motion. This dismissal
the "failure to file an opposition to the shall have the effect of an adjudication upon
Plaintiffs Motion for Reconsideration is the merits, unless otherwise provided by
definitely not one among the established court.
grounds for dismissal [of the
counterclaim]."21 Still, the dismissal of the Evidently, the old rule was silent on the effect
counterclaim by the RTC betrays at very least of such dismissal due to failure to prosecute
a tacit recognition of respondents argument on the pending counterclaims. As a result,
that the counterclaim did not survive the there arose what one authority on remedial
dismissal of the complaint. At most, the law characterized as "the nagging question of
dismissal of the counterclaim over the whether or not the dismissal of the complaint
objection of the defendant (herein petitioner) carries with it the dismissal of the
on grounds other than the merits of the counterclaim."22 Jurisprudence construing the
counterclaim, despite the provisions under previous Rules was hardly silent on the
Rule 17 of the 1997 Rules of Civil Procedure, matter.
constitutes a debatable question of law,
presently meriting justiciability through the In their arguments before the RTC on the
instant action. Indeed, in reviewing the dismissal of the counterclaim, respondents
assailed orders of the RTC, it is inevitable cited in support City of Manila v.
that the Court consider whether the dismissal
of the complaint, upon motion of the Ruymann,23 Domingo v. Santos,24 Belleza v.
defendant, on the ground of the failure to Huntington,25 and Froilan v. Pan Oriental
prosecute on plaintiffs part precipitates or Shipping Co.,26 all of which were decided
carries with it the dismissal of the pending more than five decades ago. Notably though,
counterclaims. none of the complaints in these four cases
were dismissed either due to the fault of the
Our core discussion begins with Section 3, plaintiff or upon the instance of the
Rule 17 of the 1997 Rules of Civil Procedure, defendant.27
which states:
The distinction is relevant, for under the
SEC. 3. Dismissal due to fault of plaintiff.If, previous and current incarnations of the
for no justifiable cause, the plaintiff fails to Rules of Civil Procedure, it is Section 3, Rule
appear on the date of the presentation of his 17 that governs the dismissals due to the
evidence in chief on the complaint, or to failure of the plaintiff to prosecute the
prosecute his action for an unreasonable complaint, as had happened in the case at
length of time, or to comply with these Rules bar. Otherwise, it is Section 2, Rule 17, which
or any order of the court, the complaint may then, and still is now, covered dismissals
be dismissed upon motion of defendant or ordered by the trial court upon the instance of
upon the court's own motion, without the plaintiff.28 Yet, as will be seen in the
prejudice to the right of the defendant to foregoing discussion, a discussion of Section
prosecute his counterclaim in the same or in 2 cannot be avoided as the postulate behind
a separate action. This dismissal shall have that provision was eventually extended as
well in cases that should have properly been dismissal of the counterclaim upon dismissal
governed by Section 3. of the complaint applied regardless of the
cause of the complaints dismissal.35
Even though the cases cited by respondents
involved different factual antecedents, there Notably, the qualification concerning
exists more appropriate precedents which compulsory counterclaims was provided in
they could have cited in support of their claim Section 2, Rule 17 of the 1964 Rules, the
that the counterclaim should have been provision governing dismissals by order of the
dismissed even if the dismissal of the court, and not Section 3, Rule 17. As stated
complaint was upon the defendants motion earlier, Section 3, which covered dismissals
and was predicated on the plaintiffs fault. BA for failure to prosecute upon motion of the
Finance Corp. v. Co29 particularly stands out defendant or upon motu proprioaction of the
in that regard, although that ruling is itself trial court, was silent on the effect on the
grounded on other precedents as well. counterclaim of dismissals of such nature.
Elucidation of these cases is in order.
Spouses Sta. Maria, Jr. v. Court of
On the general effect of the dismissal of a Appeals,36 decided in 1972, ostensibly
complaint, regardless of cause, on the supplied the gap on the effect on the
pending counterclaims, previous counterclaim of complaints dismissed under
jurisprudence laid emphasis on whether the Section 3. The defendants therein
counterclaim was compulsory or permissive successfully moved before the trial court for
in character. The necessity of such distinction the dismissal of the complaint without
was provided in the 1964 Rules itself, prejudice and their declaration in default on
particularly Section 2, Rule 17, which stated the counterclaim after plaintiffs therein failed
that in instances wherein the plaintiff seeks to attend the pre-trial. After favorable
the dismissal of the complaint, "if a judgment was rendered on the counterclaim,
counterclaim has been pleaded by a plaintiffs interposed an appeal, citing among
defendant prior to the service upon him of the other grounds, that the counterclaim could no
plaintiffs motion to dismiss, the action shall longer have been heard after the dismissal of
not be dismissed against the defendants the complaint. While the Court noted that the
objection unless the counterclaim can remain adjudication of the counterclaim in question
pending for independent adjudication by the "does not depend upon the adjudication of
court."30The the claims made in the complaint since they
were virtually abandoned by the non-
vaunted commentaries of Chief Justice appearance of the plaintiffs themselves," it
Moran, remarking on Section 2, Rule 17, was also added that "[t]he doctrine invoked is
noted that "[t]here are instances in which a not available to plaintiffs like the petitioners,
counterclaim cannot remain pending for who prevent or delay the hearing of their own
independent adjudication, as, where it arises claims and allegations."37 The Court, through
out of, or is necessarily connected with, the Justice JBL Reyes, noted:
transaction or occurrence which is the subject
matter of the opposing partys claim."31 The doctrine that the complaint may not
be dismissed if the counterclaim cannot
This view expressed in Morans be independently adjudicated is not
Commentaries was adopted by the Court in available to, and was not intended for the
cases where the application of Section 2, benefit of, a plaintiff who prevents or
Rule 17 of the 1964 Rules of Court was called delays the prosecution of his own
for, such as in Lim Tanhu v. complaint. Otherwise, the trial of
Ramolete,32 and Dalman v. City Court of counterclaims would be made to depend
Dipolog City.33 The latter case warrants brief upon the maneuvers of the plaintiff, and the
elaboration. Therein, the plaintiff in a civil rule would offer a premium to vexing or
case for damages moved for the withdrawal delaying tactics to the prejudice of the
of her own case on the ground that the counterclaimants. It is in the same spirit that
dispute had not been referred to the we have ruled that a complaint may not be
barangay council as required by law. Over the withdrawn over the opposition of the
objection of the defendant, who feared that defendant where the counterclaim is one that
her own counterclaim would be prejudiced by arises from, or is necessarily connected with,
the dismissal, plaintiffs motion was granted, the plaintiffs action and cannot remain
the complaint and the counterclaim pending for independent adjudication.38
accordingly dismissed by the trial court. The
Court refused to reinstate the counterclaim, There is no doubt that under the 1964 Rules,
opining without elaboration, "[i]f the civil case the dismissal of a complaint due to the failure
is dismissed, so also is the counterclaim filed of the plaintiff to appear during pre-trial, as
therein."34 The broad nature of that statement what had happened in Sta. Maria, fell within
gave rise to the notion that the mandatory the coverage of Section 3, Rule 17. On the
other hand, Section 2 was clearly limited in Then in 1993, a divided Court ruled in BA
scope to those dismissals sustained at the Finance that the dismissal of the complaint for
instance of the plaintiff.39Nonetheless, by the nonappearance of plaintiff at the pre-trial,
early 1990s, jurisprudence was settling on a upon motion of the defendants, carried with it
rule that compulsory counterclaims were the dismissal of their compulsory
necessarily terminated upon the dismissal of counterclaim.47 The Court reiterated the rule
the complaint not only if such dismissal was that "a compulsory counterclaim cannot
upon motion of the plaintiff, but at the remain pending for independent adjudication
instance of the defendant as well. Two by the court as it is auxiliary to the
decisions from that period stand out in this proceeding in the original suit and merely
regard, Metals Engineering Resources Corp. derives its jurisdictional support
v. Court of Appeals40 and International therefrom."48 Express reliance was made
Container Terminal Services v. Court of on Metals, International Container, and
Appeals.41 even Dalman in support of the majoritys
thesis. BA Finance likewise advised that the
In Metals, the complaint was expunged from proper remedy for defendants desirous that
the record after the defendant had filed a their counterclaims not be dismissed along
motion for reconsideration of a trial court with the main complaint was for them to move
order allowing the filing of an amended to declare the plaintiffs to be "non-suited" on
complaint that corrected a jurisdictional error their complaint and "as in default" on their
in the original complaint pertaining to the compulsory counterclaim, instead of moving
specification of the amount of damages for the dismissal of the complaint.49
sought. When the defendant was nonetheless
allowed to present evidence on the Justice Regalado, joined by Chief Justice
counterclaim, the plaintiff assailed such Narvasa, registered a strong objection to the
allowance on the ground that the theory of the majority. They agreed that the
counterclaim was compulsory and could no trial court could no longer hear the
longer remain pending for independent counterclaim, but only on the ground that
adjudication. The Court, in finding for the defendants motion to be allowed to present
plaintiff, noted that the counterclaim was evidence on the counterclaim was filed after
indeed compulsory in nature, and as such, the order dismissing the complaint had
was auxiliary to the proceeding in the original already become final. They disagreed
suit and derived its jurisdictional support however that the compulsory counterclaim
therefrom.42 It was further explained that the was necessarily dismissed along with the
doctrine was in consonance with the primary main complaint, pointing out that a situation
objective of a counterclaim, which was to wherein the dismissal of the complaint was
avoid and prevent circuitry of action by occasioned by plaintiffs failure to appear
allowing the entire controversy between the during pre-trial was governed under Section
parties to be litigated and finally determined in 3, Rule 17, and not Section 2 of the same
one action, and to discourage multiplicity of rule. Justice Regalado, who ironically penned
suits.43 Also, the Court noted that since the the decision in Metals cited by the majority,
complaint was dismissed for lack of explained:
jurisdiction, it was as if no claim was filed
against the defendant, and there was thus no Turning back to Rule 17, it is readily apparent
more leg for the complaint to stand on.44 that Sections 2 and 3 thereof envisage
different factual and adjective situations. The
In International Container, the defendant filed dismissal of the complaint under Section 2 is
a motion to dismiss which was granted by the at the instance of plaintiff, for whatever
trial court. The defendants counterclaim was reason he is minded to move for such
dismissed as well. The Court summarized the dismissal, and, as a matter of procedure, is
key question as "what is the effect of the without prejudice unless otherwise stated in
dismissal of a complaint ordered at the the order of the court or, for that matter, in
instance of the defendant upon a compulsory plaintiff's motion to dismiss his own
counterclaim duly raised in its complaint. By reason thereof, to curb any
answer."45 Then it ruled that the counterclaim dubious or frivolous strategy of plaintiff for his
did not survive such dismissal. After benefit or to obviate possible prejudice to
classifying the counterclaim therein as defendant, the former may not dismiss his
compulsory, the Court noted that "[i]t is complaint over the defendant's objection if the
obvious from the very nature of the latter has a compulsory counterclaim since
counterclaim that it could not remain pending said counterclaim would necessarily be
for independent adjudication, that is, without divested of juridical basis and defendant
adjudication by the court of the complaint would be deprived of possible recovery
itself on which the counterclaim was based."46 thereon in that same judicial proceeding.
Section 3, on the other hand, contemplates a [Justice Regalado] then proposed that after
dismissal not procured by plaintiff, albeit the words "upon the courts own motion" in
justified by causes imputable to him and the 6th line of the draft in Sec. 3 of Rule 17,
which, in the present case, was petitioner's the following provision be inserted: "without
failure to appear at the pre-trial. This situation prejudice to the right of the defendant to
is also covered by Section 3, as extended by prosecute his counterclaim in the same or
judicial interpretation, and is ordered upon in a separate action." The Committee
motion of defendant or motu proprio by the agreed with the proposed amendment of
court. Here, the issue of whether defendant Justice Regalado.
has a pending counterclaim, permissive or
compulsory, is not of determinative Justice Herrera observed that under Secs. 1
significance. The dismissal of plaintiff's to 3 of Rule 17, it is not the action that is
complaint is evidently a confirmation of the dismissed but the complaint. He asked
failure of evidence to prove his cause of whether there is any distinction between
action outlined therein, hence the dismissal is "complaint" and "action." Justice Regalado
considered, as a matter of evidence, an opined that the action of the plaintiff is
adjudication on the merits. This does not, initiated by his complaint.
however, mean that there is likewise such
absence of evidence to prove defendant's Justice Feria then suggested that the
counterclaim although the same arises out of dismissal be limited to the complaint[.]
the subject matter of the complaint which was Thus, in the 1st line of Sec. 1, the words
merely terminated for lack of proof. To hold "An action" will be changed to "a
otherwise would not only work injustice to complaint"; in the 2nd line of Sec. 2, the
defendant but would be reading a further words "an action" will be changed to "a
provision into Section 3 and wresting a complaint" and in Sec. 3, the word
meaning therefrom although neither exists "action" on the 5th line of the draft will be
even by mere implication. Thus understood, changed to "complaint." The Committee
the complaint can accordingly be dismissed, agreed with Justice Ferias suggested
but relief can nevertheless be granted as a amendments.
matter of course to defendant on his
counterclaim as alleged and proved, with or CA Pao believed that there is a need to
without any reservation therefor on his part, clarify the counterclaim that the defendant
unless from his conduct, express or implied, will prosecute, whether it is permissive or
he has virtually consented to the concomitant compulsory or all kinds of counterclaims.
dismissal of his counterclaim.50
Justice Regalado opined that there is no
Justice Regalado also adverted to Sta. need of making a clarification because it is
Maria and noted that the objections raised already understood that it covers both
and rejected by the Court therein were the counterclaims.52
same as those now relied upon by the
plaintiff. He pointed out It is apparent from these minutes that the
that Dalman and International Container, both survival of the counterclaim despite the
relied upon by the majority, involved the dismissal of the complaint under Section 3
application of Section 2, Rule 17 and not stood irrespective of whether the
Section 3, which he insisted as the applicable counterclaim was permissive or compulsory.
provision in the case at bar.51 Moreover, when the Court itself approved the
revisions now contained in the 1997 Rules of
The partial dissent of Justice Regalado in BA Civil Procedure, not only did Justice
Finance proved opportune, as he happened Regalados amendment to Section 3, Rule 17
then to be a member of the Rules of Court remain intact, but the final version likewise
Revision Committee tasked with the revision eliminated the qualification formerly offered
of the 1964 Rules of Court. Just a few months under Section 2 on "counterclaims that can
after BA Finance was decided, Justice remain pending for independent adjudication
Regalado proposed before the Committee an by the court."53 At present, even Section 2,
amendment to Section 3, Rule 17 that would concerning dismissals on motion of the
explicitly provide that the dismissal of the plaintiff, now recognizes the right of the
complaint due to the fault of the plaintiff shall defendant to prosecute the counterclaim
be "without prejudice to the right of the either in the same or separate action
defendant to prosecute his counterclaim in notwithstanding the dismissal of the
the same or in a separate action." The complaint, and without regard as to the
amendment, which was approved by the permissive or compulsory nature of the
Committee, is reflected in the minutes of the counterclaim.
meeting of the Committee held on 12 October
1993:
In his commentaries on the 1997 Rules of Section 3, Rule 17 settles that "nagging
Civil Procedure, Justice Regalado expounds question" whether the dismissal of the
on the effects of the amendments to Section complaint carries with it the dismissal of the
2 and 3 of Rule 17: counterclaim, and opines that by reason of
the amendments, the rulings
2. Under this revised section [2], where in Metals Engineering, International
the plaintiff moves for the dismissal of his Container, and BA Finance "may be deemed
complaint to which a counterclaim has been abandoned."56 On the effect of amendment to
interposed, the dismissal shall be limited to Section 3, Rule 17, the commentators are in
the complaint. Such dismissal shall be without general agreement,57 although there is less
prejudice to the right of the defendant to unanimity of views insofar as Section 2, Rule
either prosecute his counterclaim in a 17 is concerned.58
separate action or to have the same resolved
in the same action. Should he opt for the first To be certain, when the Court promulgated
alternative, the court should render the the 1997 Rules of Civil Procedure, including
corresponding order granting and reserving the amended Rule 17, those previous jural
his right to prosecute his claim in a separate doctrines that were inconsistent with the new
complaint. Should he choose to have his rules incorporated in the 1997 Rules of Civil
counterclaim disposed of in the same action Procedure were implicitly abandoned insofar
wherein the complaint had been dismissed, as incidents arising after the effectivity of the
he must manifest such preference to the trial new procedural rules on 1 July 1997. BA
court within 15 days from notice to him of Finance, or even the doctrine that a
plaintiffs motion to dismiss. These counterclaim may be necessarily dismissed
alternative remedies of the defendant are along with the complaint, clearly conflicts with
available to him regardless of whether his the 1997 Rules of Civil Procedure. The
counterclaim is compulsory or abandonment of BA Finance as doctrine
permissive. A similar alternative procedure, extends as far back as 1997, when the Court
with the same underlying reason therefor, is adopted the new Rules of Civil Procedure. If,
adopted in Sec. 6, Rule 16 and Sec. 3 of this since then, such abandonment has not been
Rule, wherein the complaint is dismissed on affirmed in jurisprudence, it is only because
the motion of the defendant or, in the latter no proper case has arisen that would warrant
instance, also by the court motu proprio. express confirmation of the new rule. That
opportunity is here and now, and we thus rule
xxxx that the dismissal of a complaint due to fault
of the plaintiff is without prejudice to the right
2. The second substantial amendment to of the defendant to prosecute any pending
[Section 3] is with respect to the disposition of counterclaims of whatever nature in the same
the defendants counterclaim in the event the or separate action. We confirm that BA
plaintiffs complaint is dismissed. As already Finance and all previous rulings of the Court
observed, he is here granted the choice to that are inconsistent with this present holding
prosecute that counterclaim in either the are now abandoned.
same or a separate action. x x x x
Accordingly, the RTC clearly erred when it
3. With the aforestated amendments in ordered the dismissal of the counterclaim,
Secs. 2 and 3 laying down specific rules since Section 3, Rule 17 mandates that the
on the disposition of counterclaims dismissal of the complaint is without prejudice
involved in the dismissal actions, the to the right of the defendant to prosecute the
controversial doctrine in BA Finance counterclaim in the same or separate action.
Corporation vs. Co, et al., (G.R. No. If the RTC were to dismiss the counterclaim,
105751, June 30, 1993) has been it should be on the merits of such
abandoned, together with the apparent counterclaim. Reversal of the RTC is in order,
confusion on the proper application of and a remand is necessary for trial on the
said Secs. 2 and 3. Said sections were merits of the counterclaim.
distinguished and discussed in the authors
separate opinion in that case, even before It would be perfectly satisfactory for the Court
they were clarified by the present to leave this matter at that. Still, an
amendments x x x.54 explanation of the reason behind the new rule
is called for, considering that the rationale
Similarly, Justice Feria notes that "the present behind the previous rule was frequently
rule reaffirms the right of the defendant to elaborated upon.
move for the dismissal of the complaint and to
prosecute his counterclaim, as stated in the Under Act No. 190, or the Code of Procedure
separate opinion [of Justice Regalado in BA in Civil Actions promulgated in 1901, it was
Finance.]"55 Retired Court of Appeals Justice recognized in Section 127(1) that the plaintiff
Herrera pronounces that the amendment to had the right to seek the dismissal of the
complaint at any time before trial, "provided a proceeds from the following fundamental
counterclaim has not been made, or premisesa compulsory counterclaim must
affirmative relief sought by the cross- be set up in the same proceeding or would
complaint or answer of the defendant."59Note otherwise be abated or barred in a separate
that no qualification was made then as to the or subsequent litigation on the ground
nature of the counterclaim, whether it be of auter action pendant, litis pendentia or res
compulsory or permissive. The protection of judicata; a compulsory counterclaim is
the defendants right to prosecute the auxiliary to the main suit and derives its
counterclaim was indeed unqualified. In City jurisdictional support therefrom as it arises
of Manila, decided in 1918, the Court out of or is necessarily connected with the
explained: transaction or occurrence that is the subject
matter of the complaint;65 and that if the court
By paragraph 1 [of Section 127], it will be dismisses the complaint on the ground of lack
seen that, where the defendant has of jurisdiction, the compulsory counterclaim
interposed a counterclaim, or is seeking must also be dismissed as it is merely
affirmative relief by a cross-complaint, that ancilliary to the main action and no
then, and in that case, the plaintiff cannot jurisdiction remained for any grant of relief
dismiss the action so as to affect the right of under the counterclaim.
the defendant in his counterclaim or prayer
for affirmative relief. The reason for that The first point is derived from Section 4, Rule
exception is clear. When the answer sets up 9, of the 1964 Rules of Court, while the two
an independent action against the plaintiff, latter points are sourced from American
it then becomes an action by the jurisprudence. There is no disputing the
defendant against the plaintiff, and, of theoretical viability of these three points. In
course, the plaintiff has no right to ask for fact, the requirement that the compulsory
a dismissal of the defendants action.60 counterclaim must be set up in the same
proceeding remains extant under the 1997
Nonetheless, a new rule was introduced Rules of Civil Procedure.66 At the same time,
when Act No. 190 was replaced by the 1940 other considerations rooted in actual practice
Rules of Court. Section 2, Rule 30 of the provide a counterbalance to the above-cited
1940 Rules specified that if a counterclaim is rationales.
pleaded by a defendant prior to the service of
the plaintiffs motion to dismiss, the action Whatever the nature of the counterclaim, it
shall not be dismissed against the bears the same integral characteristics as a
defendants objection unless the counterclaim complaint; namely a cause (or causes) of
can remain pending for independent action constituting an act or omission by
adjudication by the court. This qualification which a party violates the right of another.
remained intact when the 1964 Rules of Court The main difference lies in that the cause of
was introduced.61 The rule referred only to action in the counterclaim is maintained by
compulsory counterclaims, or counterclaims the defendant against the plaintiff, while the
which arise out of or are necessarily converse holds true with the complaint. Yet,
connected with the transaction or occurrence as with a complaint, a counterclaim without a
that is the subject matter of the plaintiffs cause of action cannot survive.
claim, since the rights of the parties arising
out of the same transaction should be settled It would then seemingly follow that if the
at the same time.62 As was evident dismissal of the complaint somehow
in Metals, International Container and BA eliminates the cause(s) of the counterclaim,
Finance, the rule was eventually extended to then the counterclaim cannot survive. Yet that
instances wherein it was the defendant with hardly is the case, especially as a general
the pending counterclaim, and not the rule. More often than not, the allegations
plaintiff, that moved for the dismissal of the that form the counterclaim are rooted in
complaint. an act or omission of the plaintiff other
than the plaintiffs very act of filing the
We should not ignore the theoretical bases of complaint. Moreover, such acts or
the rule distinguishing compulsory omissions imputed to the plaintiff are
counterclaims from permissive counterclaims often claimed to have occurred prior to the
insofar as the dismissal of the action is filing of the complaint itself. The only
concerned. There is a particular school of apparent exception to this circumstance is
thought that informs the broad proposition if it is alleged in the counterclaim that the
in Dalman that "if the civil case is dismissed, very act of the plaintiff in filing the
so also is the counterclaim filed therein,"63 or complaint precisely causes the violation
the more nuanced discussions offered of the defendants rights. Yet even in such
in Metals, International Container, and BA an instance, it remains debatable whether
Finance. The most potent statement of the the dismissal or withdrawal of the
theory may be found in Metals,64 which complaint is sufficient to obviate the
pending cause of action maintained by the distinction is necessary as a means to
defendant against the plaintiff.67 facilitate order and clarity in the rules of
procedure, it should be remembered that the
These considerations persist whether the primordial purpose of procedural rules is to
counterclaim in question is permissive or provide the means for the vindication of
compulsory. A compulsory counterclaim rights. A party with a valid cause of action
arises out of or is connected with the against another party cannot be denied the
transaction or occurrence constituting the right to relief simply because the opposing
subject matter of the opposing partys claim, side had the good fortune of filing the case
does not require for its adjudication the first. Yet this in effect was what had
presence of third parties, and stands within happened under the previous procedural rule
the jurisdiction of the court both as to the and correspondent doctrine, which under their
amount involved and the nature of the final permutation, prescribed the automatic
claim.68 The fact that the culpable acts on dismissal of the compulsory counterclaim
which the counterclaim is based are founded upon the dismissal of the complaint, whether
within the same transaction or occurrence as upon the initiative of the plaintiff or of the
the complaint, is insufficient causation to defendant.
negate the counterclaim together with the
complaint. The dismissal or withdrawal of the Thus, the present rule embodied in Sections
complaint does not traverse the boundaries of 2 and 3 of Rule 17 ordains a more equitable
time to undo the act or omission of the disposition of the counterclaims by ensuring
plaintiff against the defendant, or vice versa. that any judgment thereon is based on the
While such dismissal or withdrawal precludes merit of the counterclaim itself and not on the
the pursuit of litigation survival of the main complaint. Certainly, if
the counterclaim is palpably without merit or
by the plaintiff, either through his/her own suffers jurisdictional flaws which stand
initiative or fault, it would be iniquitous to independent of the complaint, the trial court is
similarly encumber the defendant who not precluded from dismissing it under the
maintained no such initiative or fault. If the amended rules, provided that the judgment or
defendant similarly moves for the dismissal of order dismissing the counterclaim is premised
the counterclaim or neglects to timely pursue on those defects. At the same time, if the
such action, let the dismissal of the counterclaim is justified, the amended rules
counterclaim be premised on those grounds now unequivocally protect such counterclaim
imputable to the defendant, and not on the from peremptory dismissal by reason of the
actuations of the plaintiff. dismissal of the complaint.
Soon, respondents received a letter7 dated On February 1, 2008, the Office of the
February 9, 1999 from Digna D. Torres, the Solicitor General (OSG), as counsel for
Zone Administrator of the Philippine petitioner PEZA, filed a Motion to
Economic Zone Authority (PEZA), informing Admit13 petition, with the present
them that the house they built had overlapped Petition14 attached. Petitioner challenges the
PEZAs territorial boundary. Torres advised CA decision on two (2) issues:
respondents to demolish the same within
sixty (60) days from notice. Otherwise, PEZA I.
would undertake its demolition at
respondents expense. WHETHER OR NOT IT IS THE PETITIONER
OR THE CITY ENGINEER OF BAGUIO CITY
Without answering PEZAs letter, WHO HAS THE LEGAL AUTHORITY TO
respondents filed a petition for injunction, with ISSUE BUILDING AND FENCING PERMITS
prayer for the issuance of a temporary FOR CONSTRUCTIONS WITHIN THE
restraining order (TRO) and writ of PEZA-BCEZ.
preliminary injunction before the RTC of
Baguio City. By Order8 dated April 8, 1999, II.
the RTC of Baguio City issued a TRO, which
enjoined PEZA to cease and desist from WHETHER OR NOT RESPONDENTS CALC
threatening respondents with the demolition IS SUFFICIENT TO DISREGARD THE
of their house before respondents prayer for PROVISIONS OF THE NATIONAL
a writ of preliminary injunction can be heard. BUILDING CODE OF THE PHILIPPINES.15
On September 19, 2001, the RTC likewise
issued an Order,9 which directed the parties Amplified, the issue for our determination is
to maintain the status quo pending resolution whether petitioner can require respondents to
of the case. demolish the structures they had built within
the territory of PEZA-BCEZ (Baguio City
On October 2, 2001, the RTC granted Economic Zone).
respondents petition and ordered the
issuance of a writ of injunction against PEZA, The OSG, at the outset, explains the delay in
thus: appealing the CA decision. It attributes the
delay to the inadvertence of Senior State
Solicitor Rodolfo Geronimo M. Pineda, the XV in overlooking that the CA decision was
temporarily-designated officer-in-charge adverse to PEZA.
(OIC) of Division XV, who took over the case
when State Solicitor Maricar S.A. Prudon- While the Court realizes the OSGs difficulty
Sison went on maternity leave. Pineda in having only three (3) lawyers working full
allegedly merely noted receipt of the CA time on its cases, the OSG could have easily
decision without noticing that it was adverse asked for an extension of time within which to
to PEZA. The OSG adds that the sparse file the petition. More importantly, as the
complement of three (3) lawyers left at the government agency tasked to represent the
time could not tackle at once the horde of government in litigations, the OSG should
cases assigned to the division. perform its duty with promptness and utmost
diligence.
On substantive grounds, petitioner claims
exclusive authority to issue building and However, upon careful consideration of the
fencing permits within ecozones under merits of this case, the Court is inclined to
Section 616 of Presidential Decree (P.D.) No. overlook this procedural lapse in the interest
1716,17 amending P.D. No. 66.18 Alongside, of substantial justice. Although a party is
petitioner asserts concurrent authority to bound by the acts of its counsel, including the
require owners of structures without said latters mistakes and negligence, a departure
permits to remove or demolish such from this rule is warranted where such
structures under Section 14 (i)19 of R.A. No. mistake or neglect would result in serious
7916.20 injustice to the client. Indeed, procedural rules
may be relaxed for persuasive reasons to
For their part, respondents rely on CAR- relieve a litigant of an injustice not
CALC-022 for their right to fence the lots and commensurate with his failure to comply with
build a house thereon. They insist that the the prescribed procedure.22 More so, when to
function of issuing building and fencing allow the assailed decision to go unchecked
permits, even within the Baguio City would set a precedent that will sanction a
Economic Zone, pertains to the Office of the violation of substantive law. Such is the
City Mayor and the Building Official of Baguio situation in this case.
City, respectively. Respondents likewise
assail the petition for being filed late, Injunction is a judicial writ, process or
stressing that it was filed only after almost proceeding whereby a party is directed either
three (3) months from petitioners receipt of to do a particular act, in which case it is called
the CA decision. a mandatory injunction or to refrain from
doing a particular act, in which case it is
We grant the petition. called a prohibitory injunction. As a main
action, injunction seeks to permanently enjoin
It is settled that an appeal must be perfected the defendant through a final injunction
within the reglementary period provided by issued by the court and contained in the
law; otherwise, the decision becomes final judgment. Section 9, Rule 58 of the 1997
and executory.21 Before the Supreme Court, a Rules of Civil Procedure, as amended,
petition for review on certiorari under Rule 45 provides,
of the 1997 Rules of Civil Procedure, as
amended, must be filed within fifteen (15) SEC. 9. When final injunction granted. If
days from notice of the judgment or final after the trial of the action it appears that the
order or resolution appealed from, or of the applicant is entitled to have the act or acts
denial of the petitioners motion for new trial complained of permanently enjoined, the
or reconsideration filed in due time after court shall grant a final injunction perpetually
notice of the judgment. Even then, review is restraining the party or person enjoined from
not a matter of right, but of sound judicial the commission or continuance of the act or
discretion, and may be granted only when acts or confirming the preliminary mandatory
there are special and important reasons injunction.
therefor.
Two (2) requisites must concur for injunction
In the case at bar, the Docket Division of the to issue: (1) there must be a right to be
OSG received a copy of the CA decision on protected and (2) the acts against which the
November 7, 2007. It was not until February injunction is to be directed are violative of
1, 2008 or almost three (3) months however, said right.23 Particularly, in actions involving
that the OSG, for petitioner, filed a petition for realty, preliminary injunction will lie only after
review on certiorari with this Court. The OSG the plaintiff has fully established his title or
pleads for understanding considering the right thereto by a proper action for the
scarcity of its lawyers and the inadvertence of purpose. To authorize a temporary injunction,
the temporarily-designated OIC of Division the complainant must make out at least a
prima facie showing of a right to the final
relief. Preliminary injunction will not issue to land subject to these rules as well as
protect a right not in esse.24 These principles customary laws. (Emphasis supplied.)
are equally relevant to actions seeking
permanent injunction. Respondents being holders of a mere CALC,
their right to possess the subject land is
At the onset, we must stress that petitioner limited to occupation in relation to cultivation.
does not pose an adverse claim over the Unlike No. 1,26 Par. 1, Section 1, Article VII of
subject land. Neither does petitioner dispute the same DENR DAO, which expressly
that respondents hold building and fencing allows ancestral domain claimants to reside
permits over the lots. For petitioner, the peacefully within the domain, nothing in
question that must be answered is whether Section 2 grants ancestral land claimants a
respondents may build structures within the similar right, much less the right to build
Baguio City Economic Zone on the basis of permanent structures on ancestral lands an
their CAR-CALC-022, and the building and act of ownership that pertains to one (1) who
fencing permits issued by the City Building has a recognized right by virtue of a
Official. Certificate of Ancestral Land Title. On this
score alone, respondents action for injunction
We rule in the negative. must fail.
In the parallel case of Philippine Economic Yet, even if respondents had established
Zone Authority (PEZA) v. Borreta,25 Benedicto ownership of the land, they cannot simply put
Carantes invoked CAR-CALC-022, the same up fences or build structures thereon without
CALC invoked by respondents in this case, to complying with applicable laws, rules and
put up structures in the land subject of said regulations. In particular, Section 301 of P.D.
case. The Court, speaking through Justice No. 1096, otherwise known as the National
Angelina Sandoval-Gutierrez, refused to Building Code of the Philippines mandates:
recall the writ of demolition issued by the trial
court therein. We held that Carantes is a SECTION 301. Building Permits
mere applicant for the issuance of a
certificate of ownership of an ancestral land No person, firm or corporation, including any
who has yet to acquire a vested right as agency or instrumentality of the government
owner thereof so as to exclude the land from shall erect, construct, alter, repair, move,
the areas under PEZA. We perceive no good convert or demolish any building or structure
reason to depart from this ruling as we find or cause the same to be done without first
respondents herein to be similarly situated. obtaining a building permit therefor from the
Building Official assigned in the place where
As holders of a CALC, respondents possess the subject building is located or the building
no greater rights than those enumerated in work is to be done.
Par. 1, Section 2, Article VII of DENR
Department Administrative Order (DAO) No. Supplementary to a building permit, a fencing
02, Series of 1993: permit must also be secured from the Building
Official concerned before fences may be
SECTION 2. Rights and Responsibilities of installed in the premises.
Ancestral Land Claimants
In the present case, petitioner refuses to
1. Rights honor the building and fencing permits issued
by the City Building Official to respondents.
1. The right to peacefully occupy and Petitioner PEZA maintains that the function of
cultivate the land, and utilize the administering and enforcing the provisions of
natural resources therein, subject to P.D. No. 1096 within the areas owned and
existing laws, rules and regulations administered by it, pertains to PEZA. Hence,
applicable thereto; it is PEZA, and not the local Building Official
of Baguio City, which may properly issue
2. The right of the heirs to succeed to building and fencing permits within PEZA.
the claims subject to existing rules and
regulations; On this point, Section 205 of P.D. No. 1096 is
pertinent:
3. The right to exclude from the claim
any other person who does not belong SECTION 205. Building Officials
to the family or clan; and
Except as otherwise provided herein, the
4. The right to utilize trees and other Building Official shall be responsible for
forest products inside the ancestral carrying out the provisions of this Code in the
field as well as the enforcement of orders and Officials under the National Building Code
decisions made pursuant thereto. shall accrue to the Authority. (Emphasis
supplied.)
Due to the exigencies of the service, the
Secretary may designate incumbent Public This function, which has not been repealed
Works District Engineers, City Engineers and and does not appear to be inconsistent with
Municipal Engineers to act as Building any of the powers and functions of PEZA
Officials in their respective areas of under R.A. No. 7916, subsists.
jurisdiction. Complimentary thereto, Section 14 (i) of R.A.
No. 7916 states:
The designation made by the Secretary under
this Section shall continue until regular SEC. 14. Powers and Functions of the
positions of Building Official are provided or Director General. - The director general shall
unless sooner terminated for causes provided be the overall [coordinator] of the policies,
by law or decree.1avv phi1 plans and programs of the ECOZONES. As
such, he shall provide overall supervision
The position of Building Official is a regular over and general direction to the development
item in the organizational structure of the and operations of these ECOZONES. He
local government. Only in case of urgent shall determine the structure and the staffing
necessity may the Secretary of Public Works pattern and personnel complement of the
designate the incumbent District Engineer, PEZA and establish regional offices, when
Municipal Engineer or City Engineer, as the necessary, subject to the approval of the
case may be. This was the applicable law PEZA Board.
even for areas covered by the Export
Processing Zone Authority (EPZA) until P.D. In addition, he shall have the following
No. 1716 was enacted on August 21, 1980. specific powers and responsibilities:
SEC. 12. The Regional Land Management An Information was filed before the MeTC
Services or the CENROs, through their charging Erlinda Mapagay with violating Batas
respective Provincial Environment and Pambansa Blg. 22.Said accused well knowing at
Natural Resources Officer (PENRO), shall the time of issue did not have sufficient funds in
prepare and submit to the Special Task Force or credit with the bank for payment in full of the
a report on each and every application amount of such check upon its presentment
surveyed and delineated. Thereafter, the which check when presented for payment within
Special Task Force after evaluating the ninety (90) days from the date thereto, was
reports, shall endorse valid ancestral land
subsequently dishonored by the drawee bank for
claims to the Secretary through the
the reason "Account Closed" and despite receipt
Indigenous Community Affairs Division,
Special Concerns Office for the issuance of a of notice of such dishonor, the accused failed to
Certificate of Ancestral Land Claim. As soon pay said payee the face amount of said check or
as ancestral land claim is found to be valid to make arrangement for full payment thereof
and in meritorious cases, the Special Task within five (5) banking days after receiving said
Force may recommend to the City/Municipal notice.
Mayors Office the issuance of a fencing
permit to the applicant over areas actually When arraigned, she pleaded "Not Guilty" to the
occupied at the time of filing. (Emphasis charge. The MeTC provisionally dismissed the
supplied.) instant case on the basis of an amicable
settlement between her and the private
This is the general rule. Considering, complainant Relindia dela Cruz. However,
however, that in this case, a fencing permit is private complainant moved for the revival of the
issued complementary to a building permit present case claiming that petitioner failed to
and that within the premises of PEZA, it is the comply with the terms of their agreement. Said
Authority that may properly issue a building motion was granted by the MeTC and ordered
permit, it is only fitting that fencing permits be the parties to prepare for trial. Trial on the
issued by the Authority. merits thereafter ensued. The prosecution
presented private complainant as its sole
From the foregoing disquisition, it clearly witness.
appears that respondents likewise failed to
satisfy the second requisite in order that an MeTC rendered a Decision finding the accused
injunction may issue: that the acts against guilty of violating Batas Pambansa Blg. 22.
which the injunction is to be directed, are Petitioner was sentenced to one-year
violative of said right. PEZA acted well within
imprisonment and was ordered to pay private
its functions when it demanded the demolition
complainant P40,000.00.
of the structures which respondents had put
up without first securing building and fencing
permits from the Authority. Mapagay filed a Notice of Appeal and pursuant
thereto, the MeTC forwarded the records of the
WHEREFORE, the Petition is GRANTED. instant case to the RTC for disposition.
The Decision dated October 26, 2007 of the Mapagay then submitted her "Appellant's Brief"
Court of Appeals in CA-G.R. CV No. 73230 with the RTC. The RTC promulgated its
affirming the Order dated October 2, 2001 of Decision affirming in toto the MeTC Decision.
the court a quo in Civil Case No. 4339-R Mapagay filed a Motion for Reconsideration but
is REVERSED and SET ASIDE. this was denied by the RTC for being filed
Respondents are hereby DIRECTED to beyond the reglementary period. Aggrieved, she
demolish the residential building they had appealed to the Court of Appeals. The Court of
built within the premises of PEZA within sixty Appeals rendered its Decision dismissing the
(60) days from notice. appeal. It sustained the RTC's ruling that the
motion for reconsideration with the RTC was
No costs. filed out of time. Hence, it held that the RTC
Decision had become final and unalterable.
SO ORDERED. Mapagay filed a Motion for Reconsideration of
the Court of Appeals' Decision, but this was
------------------------------------------------------------------------- denied. Hence, this instant petition maintaining
that the Court of Appeals erred in denying due
ERLINDA MAPAGAY, PETITIONER, VS. course to her appeal. Mapagay argues that the
PEOPLE OF THE PHILIPPINES, technical rules of procedure should be relaxed in
the interest of substantial justice, so as to afford
her opportunity to present her case. However, the motion for reconsideration was
filed only on 3 November 2004, or on the 43rd
ISSUE: day, which was obviously way beyond the 15-
day reglementary period. Consequently, the
Whether or not the CA erred in not giving due RTC Decision dated 14 September 2004 has
course to Mapagays appeal even in the face of become final and executory.
invoking the relaxation of rules of procedure in
the interest of substantial justice. Mapagay alleges that she learned of the RTC
Decision only on 20 October 2004 when she
RULING: asked a friend to check on the status of the case
and that Atty. Ballena did not inform her of the
Mapagays contention is unmeritorious. SC has RTC Decision.The rule is that when a party is
invariably pronounced that the bare invocation represented by counsel, notices of all kinds,
of "the interest of substantial justice" is not a including motions, pleadings and orders, must
magic wand that will automatically compel this be served on the counsel. Notice to counsel of
Court to suspend procedural rules. Rules of record is binding on the client, and the neglect
Procedure are tools designed to promote or failure of counsel to inform him of an adverse
efficiency and orderliness, as well as to facilitate judgment resulting in the loss of his right to
the attainment of justice, such that strict appeal is not a ground for setting aside a
adherence thereto is required. Procedural rules judgment, valid and regular on its face. It is
are not to be belittled or dismissed, simply indeed settled that the omission or negligence of
because their non-observance may have resulted counsel binds the client. This is more true if the
in prejudice to a party's substantive rights. Like client did not make a periodic check on the
all rules, they are required to be followed except progress of her case. Otherwise, there would be
only for the most persuasive reasons, when they no end to a suit, so long as a new counsel could
may be relaxed to relieve a litigant of an be employed who would allege and show that
injustice not commensurate with the degree of the prior counsel had not been sufficiently
his thoughtlessness in not complying with the diligent, experienced, or learned.
procedure prescribed. Rules of Procedure,
especially those prescribing the time within In the case at bar, there is no showing that
which certain acts must be done, are absolutely Mapagay had constantly followed up her case
indispensable to the prevention of needless with Atty. Ballena. She did not even bother to
delays and to the orderly and speedy discharge call or personally go to the RTC to verify the
of justice. SC has held that the rules may be progress of her case. Clearly, Mapagay did not
relaxed only in "exceptionally meritorious exercise diligence in pursuing her case.
cases." In the instant case, there is no persuasive
or exceptionally meritorious reason to justify the ----------------------------------------------------------------------------
relaxation of the rules. The circumstances
THE UNITED STATES, Plaintiff-Appellee, v.
obtaining in the instant case show that Mapagay
JOSE TAMPARONG ET AL., Defendants-
was accorded opportunity to settle her liability
Appellants.
to private complainant and to present her case
during the proceedings. As earlier recounted, the The defendants were convicted by the justice of
MTC, upon motion of Mapagay herself, the peace of Baguio for having played the game of
provisionally dismissed the case on the basis of chance called "monte" in violation of Ordinance No.
an amicable settlement between her and private 35. They appealed to the Court of First Instance,
complainant. However, the case was revived, where they were again tried and convicted upon
the same charge. An appeal was allowed to this
because she failed to comply with the
court because the validity of Ordinance No, 35 was
settlement. Petitioner was given several
drawn in question during the trial of the cause in
opportunities during the trial to present evidence the court below.
in her defense. Nonetheless, despite being duly
notified and subpoenaed, she did not appear Two questions are raised by this appeal: (1) Is
during the trial proper and promulgation of Ordinance No. 35 valid, and (2) is this court
judgment. required under the law to examine the evidence for
the purpose of determining the guilt or innocence
As to her counsel, record shows that Atty. of the defendants?
Antonio J. Ballena received on 21 September
The first question is answered in the affirmative by
2004 a copy of the RTC Decision dated 14
this court in the case of the United States v. Joson
September 2004, which affirms his clients
(26 Phil. Rep., 1). The cases are on all fours, and a
conviction for violation of Batas Pambansa Blg. further discussion of this branch of the case is
22. Hence, a motion for reconsideration may be unnecessary.
filed within 15 days from such date of receipt,
which must be on or before 6 October 2004. With reference to the second question, it is said
that by reason of the defendants having in the through another person at his request.
lower court questioned the legality of Ordinance
No. 35, for the violation of which they have been "ART. 406. When the complaint is oral, it shall be
convicted, this case has been brought to us in all reduced to writing by the authority or official who
its details of law and fact, including the evidence receives it, wherein, in the form of a declaration,
taken at the trial, on which the Court of First shall be set forth such information as the
Instance founded its judgment touching the guilt complainant may have regarding the act
and condemning the defendants. While, on the complained of and the circumstances thereof, and
other hand, it is contended that the questions of both shall sign it at the bottom. If the complainant
fact, which we are [not] authorized to examine, cannot sign his name, some other person shall do
are those which are essential to be examined for so at his request." cra law virt ua1aw lib ra ry
At the outset it may be well to briefly outline the The oral trial referred to in Rule 2 was held within
criminal procedure in force in this jurisdiction prior three days next following the date when the justice
to the promulgation on the 23d day of April, 1900, of the peace or the gobernadorcillo received
of General Orders No. 58. information that the offense had been committed
(Rule 4), the procedure being that provided for in
The royal order dated December 17, 1886, Rule 9, which reads: "The trial shall be public,
directing the execution of the royal decree of beginning with the reading of the complaint, if any
September 4, 1884, wherein it was ordered that there be, followed by the examination of the
the Penal Code in force in the Peninsula, as witnesses summoned and the introduction of such
amended in accordance with the recommendations other evidence as the complainant, accuser, and
of the code committee, be published and applied in public prosecutor, if he take part, may request and
the Philippine Islands, as well as the Provisional the justice of the peace or the gobernadorcillo may
Law of Criminal Procedure which accompanied it. regard as pertinent. Immediately thereafter the
These two laws, having been published in the accused shall be given a hearing, the witnesses
Official Gazette of Manila on March 13 and 14, who appear in his defense shall be examined, and
1887, became effective four months thereafter. such other evidence as the justice or the
gobernadorcillo may declare to be admissible shall
According to the provisions of Rule 1 of the above- be adduced. The parties shall forthwith make such
mentioned provisional law, the justices of the pleas as they think expedient in support of their
peace, or gobernadorcillos, had original jurisdiction respective contentions, the first to speak being the
over the offenses set forth in Book 3 of the Penal public prosecutor, if he take part, then the private
Code. complainant, and finally the accused.
Rule 2 provided that "when the justice of the peace "The representative of the public prosecutor shall
or the gobernadorcillo receives notice that there attend the trial for misdemeanors, whenever he is
has been committed any one of the offenses cited thereto, in accordance with Rule 2." c ralaw vi rtua 1aw lib rary
[5]
and have the necessaryinformation or complaint Through a Decision on Zoning dated January 20,
2010, the Municipal Zoning Administrator denied
prepared or made against the persons accused. xxx
petitioners application on the ground that the
(emphasis supplied)It is undisputed that the alleged acts proposed construction site was within the no build
of libel were committed in Iloilo City. Who then had zone demarcated in Municipal Ordinance 2000-
theauthority to file and sign the new informations 131 (Ordinance).3 As provided in the
against petitioner and his co-accused? The Charter of the Ordinance: chanRoble svirtual Lawli bra ry
On May 13, 2010, petitioner followed up his appeal Petitioner sought reconsideration but this was
through a letter but no action was ever taken by denied by the CA on February 3, 2014 through the
the respondent mayor. On April 5, 2011, however, challenged Resolution. Hence, the instant petition
a Notice of Assessment was sent to petitioner raising arguments on both procedure and
asking for the settlement of Boracay West Coves substance.
unpaid taxes and other liabilities under pain of a
recommendation for closure in view of its
continuous commercial operation since 2009 sans The Issues
the necessary zoning clearance, building permit,
and business and mayors permit. In reply, Stripped to the essentials, the pivotal issues in the
petitioner expressed willingness to settle the extant case are as follows:
companys obligations, but the municipal treasurer
ch anRoblesvi rtua lLawl ibra ry
refused to accept the tendered payment. The propriety under the premises of the filing
Meanwhile, petitioner continued with the of a petition for certiorari instead of a petition
construction, expansion, and operation of the for declaratory relief;
resort hotel.
SECTION 1. Who may file petition. Any person 3. There is no appeal or any plain speedy,
interested under a deed, will, contract or other and adequate remedy in the ordinary
written instrument, whose rights are affected by a course of law.5
statute, executive order or regulation, ordinance or
any other governmental regulation may, before
breach or violation thereof, bring an action in Guilty of reiteration, the CA immediately dismissed
the appropriate Regional Trial Court to determine the Petition for Certiorari upon determining that
any question of construction or validity arising, and the first element is wantingthat respondent
for a declaration of his rights or duties, thereunder. mayor was allegedly not exercising judicial or
x x x (emphasis added) quasi-judicial functions when he issued EO 10.
Before applying this doctrine, it must first be borne reason, may be abated summarily under the
in mind that respondents in this case have already undefined law of necessity. The second is that
taken measures towards implementing EO 10. In which depends upon certain conditions and
fact, substantial segments of the hotel have circumstances, and its existence being a question
already been demolished pursuant to the mayors of fact, it cannot be abated without due hearing
directive. It is then understandable why petitioner thereon in a tribunal authorized to decide whether
prayed for the issuance of an injunctive writa such a thing does in law constitute a nuisance.14 cralawlaw lib rary
Article 694 of the Civil Code defines nuisance as is a nuisance per se.16 So it was held in AC
any act, omission, establishment, business, Enterprises v. Frabelle Properties Corp:17 cralawlawlib rary
x x x x
Endorsement.
(3) Initiate and maximize the generation of
resources and revenues, and apply the same to the
implementation of development plans, program (b)Only buildings/structures which
objectives and priorities as provided for under has complied with all the
Section 18 of this Code, particularly those requirements for its construction as
resources and revenues programmed for agro-
industrial development and country-wide growth verified to by the Building
and progress, and relative thereto, shall: chanro blesvi rt uallawl ibra ry Inspector and the Sangguniang
x x x x Bayan shall be issued a Certificate
(vi) Require owners of illegally constructed of Occupancy by the Office of the
houses, buildings or other structures to Municipal Engineer.
obtain the necessary permit, subject to such (c) No Business or Mayors Permit
fines and penalties as may be imposed by law
or ordinance, or to make necessary changes shall be issued to businesses
in the construction of the same when said being undertaken on buildings
construction violates any law or ordinance, or or structures which were not
to order the demolition or removal of said
house, building or structure within the period issued a certificate of
prescribed by law or ordinance. (emphasis Occupancy beginning January
supplied) 2001 and thereafter.
c. Requirements for the exercise of the x x x x
power are present
SECTION 10. Penalties.
i. Illegality of structures
x x x x
In the case at bar, petitioner admittedly failed to
secure the necessary permits, clearances, and (e) Any building, structure, or contraption erected
exemptions before the construction, expansion, in any public place within the Municipality of Malay
and operation of Boracay Wet Coves hotel in such as but not limited to streets, thoroughfares,
Malay, Aklan. To recall, petitioner declared that the sidewalks, plazas, beaches or in any other public
application for zoning compliance was still pending place are hereby declared as nuisance and illegal
with the office of the mayor even though structure. Such building structure or
construction and operation were already ongoing contraption shall be demolished by the owner
thereof or any of his authorized performance of their duties.22 The burden is on
representative within ten (10) days from the petitioner herein to prove that Boracay West
receipt of the notice to demolish. Failure or Cove was deprived of the opportunity to be heard
refusal on the part of the owner or any of his before EO 10 was issued. Regrettably, copies of
authorized representative to demolish the the Cease and Desist Order issued by the LGU and
illegal structure within the period herein of the assailed EO 10 itself were never attached to
above specified shall automatically authorize the petition before this Court, which documents
the government of the Municipality of Malay could have readily shed light on whether or not
to demolish the same, gather and keep the petitioner has been accorded the 10-day grace
construction materials of the demolished period provided in Section 10 of the Ordinance. In
structure. (emphasis supplied) view of this fact, the presumption of regularity
must be sustained. Second, as quoted by
Petitioner cannot justify his position by passing the petitioner in his petition before the CA, the assailed
blame onto the respondent mayor and the latters EO 10 states that petitioner received notices from
failure to act on his appeal for this does not, in any the municipality government on March 7 and 28,
way, imply that petitioner can proceed with his 2011, requiring Boracay West Cove to comply with
infrastructure projects. On the contrary, this only
means that the decision of the zoning the zoning ordinance and yet it failed to do so.23
administrator denying the application still If such was the case, the grace period can be
stands and that petitioner acquired no right deemed observed and the establishment was
to construct on the no build zone. The illegality already ripe for closure and demolition by the time
of the construction cannot be cured by merely EO 10 was issued in June. Third, the observance of
tendering payment for the necessary fees and the 10-day allowance for the owner to demolish
permits since the LGUs refusal rests on valid the hotel was never questioned by petitioner so
grounds. there is no need to discuss the same. Verily, the
only grounds invoked by petitioner in crying due
Instead of taking the law into his own hands, process violation are (1) the absence of a court
petitioner could have filed, as an alternative, a order prior to demolition and (2) the municipal
petition for mandamus to compel the respondent governments exercise of jurisdiction over the
mayor to exercise discretion and resolve the controversy instead of the DENR. Therefore, it can
controversy pending before his office. There is no longer be belatedly argued that the 10-day
indeed an exception to the rule that matters grace period was not observed because to
involving judgment and discretion are beyond the entertain the same would result in the violation of
reach of a writ of mandamus, for such writ may be the respondents own due process rights.
issued to compel action in those matters, when
refused. Whether or not the decision would be for Given the presence of the requirements under Sec.
or against petitioner would be for the respondent 444 (b)(3)(vi) of the LGC, whether the building
mayor to decide, for while mandamus may be constituted a nuisance per se or a nuisance per
invoked to compel the exercise of discretion, it accidens becomes immaterial. The hotel was
cannot compel such discretion to be exercised in a demolished not exactly because it is a nuisance but
because it failed to comply with the legal
particular way.21 What would have been important requirements prior to construction. It just so
was for the respondent mayor to immediately happened that, in the case at bar, the hotels
resolve the case for petitioner to be able to go incident that qualified it as a nuisance per
through the motions that the zoning clearance accidensits being constructed within the no build
application process entailed. zonefurther resulted in the non-issuance of the
necessary permits and clearances, which is a
Alas, petitioner opted to defy the zoning ground for demolition under the LGC. Under the
administrators ruling. He consciously chose to premises, a court order that is required under
violate not only the Ordinance but also Sec. 301 of normal circumstances is hereby dispensed with.
PD 1096, laying down the requirement of building
permits, which provides: chanRoblesvi rtua lLa wlibra ry
Section 301. Building Permits. No person, firm or Petitioner next directs our attention to the
corporation, including any agency or following FLAgT provision: chanRoblesvi rtual Lawli bra ry
ii. Observance of procedural due process Taken in conjunction with the exceptions laid down
rights in Sections 6 and 8 of the Ordinance, petitioner
In the case at bench, the due process requirement argues that Boracay West Cove is exempted from
is deemed to have been sufficiently complied securing permits from the LGU. Said exceptions
with. First, basic is the rule that public officers read: chanRoblesvi rtua lLawl ibra ry
three-storey hotel.
The argument does not persuade. Section 17. Basic Services and Facilities.
x x x x
Furthermore, the conditions set forth in the FLAgT
and the limitations circumscribed in the ordinance (ii) Pursuant to national policies and subject to
are not mutually exclusive and are, in fact, supervision, control and review of the DENR,
cumulative. As sourced from Sec. 447 (a)(5)(i) of implementation of community-based forestry
the LGC: chanRob lesvi rtua lLawl ibra ry projects which include integrated social forestry
programs and similar projects; management and
control of communal forests with an area not
Section 447. Powers, Duties, Functions and exceeding fifty (50) square kilometers;
Compensation. establishment of tree parks, greenbelts, and
similar forest development projects. (emphasis
(a) The sangguniang bayan, as the legislative body added)
of the municipality, shall enact ordinances,
approve resolutions and appropriate funds for the Petitioner has made much of the fact that in line
general welfare of the municipality and its with this provision, the DENR Region 6 had issued
inhabitants pursuant to Section 16 of this Code and
an opinion favourable to petitioner.25 To
in the proper exercise of the corporate powers of
the municipality as provided for under Section 22 petitioner, the adverted opinion effectively
of this Code, and shall: cha nrob lesvi rtua llawli bra ry
reversed the findings of the respondent mayor that
x x x x the structure introduced was illegally constructed.
SO ORDERED.
oiy
--------------------------