Fede Rem

G.R. No.
170598 October 9, 2013
FAR EAST BANK TRUST COMPANY, Petitioner,

vs.
ROBERTO MAR CHANTE, a.k.a. ROBERT MAR G. CHAN, Respondents.
DECISION
BERSAMIN, J.:
In this dispute between a. bank and its depositor over liability for several supposedly fraudulent withdrawals from the latter s account through an
automated tellering machine (ATM), we hereby resolve the issue of liability against the bank because of the intervention of a system bug that facilitated
the purported withdrawals.
The Case
Under review on certiorari is the decision promulgated on August l, 2005,1 whereby the Court of Appeals (CA) reversed the judgment the Regional Trial
Court, Branch 51, in Manila (RTC) rendered in favor of the petitioner on May 14, 1998 in Civil Case No. 92-61706. 2 Thereby, the CA relieved the
depositor of any liability for the supposedly fraudulent withdrawals.
Antecedents
Robert Mar Chante, also known as Robert Mar G. Chan (Chan), was a current account depositor of petitioner Far East Bank & Trust Co. (FEBTC) at its
Ongpin Branch (Current Account No. 5012-00340-3). FEBTC issued to him Far East Card No. 05-01120-5-0 with July 1993 as the expiry date. The
card, known as a "Do-It-All" card to handle credit card and ATM transactions, was tagged in his current account. As a security feature, a personal
identification number (PIN), known only to Chan as the depositor, was required in order to gain access to the account. Upon the card’s issuance,
FEBTC required him as the depositor to key in the six-digit PIN. Thus, with the use of his card and the PIN, he could then deposit and withdraw funds
from his current account from any FEBTC ATM facility, including the MEGALINK facilities of other member banks that included the Philippine National
Bank (PNB).
Civil Case No. 92-61706 sprang from the complaint brought by petitioner Far East Bank & Trust Co. (FEBTC) on July 1, 1992 in the RTC, 3 to recover
from Chan the principal sum of ₱770,488.30 representing the unpaid balance of the amount fraudulently withdrawn from Chan’s Current Account No.
5012-00340-3 with the use of Far East Card No. 05-01120-5-0.
FEBTC alleged that between 8:52 p.m. of May 4, 1992 and 4:06 a.m. of May 5, 1992, Chan had used Far East Card No. 05-01120-5-0 to withdraw
funds totaling ₱967,000.00 from the PNB-MEGALINK ATM facility at the Manila Pavilion Hotel in Manila; that the withdrawals were done in a series of
242 transactions with the use of the same machine, at ₱4,000.00/withdrawal, except for transaction No. 108 at 3:51 a.m. of May 5, 1992, when the
machine dispensed only ₱3,000.00; that MEGALINK’S journal tapes showed that Far East Card No. 05-01120-5-0 had been used in all the 242
transactions; and that the transactions were processed and recorded by the respective computer systems of PNB and MEGALINK despite the following
circumstances, namely: (a) the offline status of the branch of account (FEBTC Ongpin Branch); (b) Chan’s account balance being only ₱198,511.70 at
the time, as shown in the bank statement; (c) the maximum withdrawal limit of the ATM facility being ₱50,000.00/day; and (d) his withdrawal
transactions not being reflected in his account, and no debits or deductions from his current account with the FEBTC Ongpin Branch being recorded.
FEBTC added that at the time of the ATM withdrawal transactions, there was an error in its computer system known as "system bug" whose nature had
allowed Chan to successfully withdraw funds in excess of his current credit balance of ₱198,511.70; and that Chan had taken advantage of the system
bug to do the withdrawal transactions.
On his part, Chan denied liability. Although admitting his physical possession of Far East Card No. 05-01120-5-0 on May 4 and May 5, 1992, he denied
making the ATM withdrawals totaling ₱967,000.00, and instead insisted that he had been actually home at the time of the withdrawals. He alluded to a
possible "inside job" as the cause of the supposed withdrawals, citing a newspaper report to the effect that an employee of FEBTC’s had admitted
having debited accounts of its depositors by using his knowledge of computers as well as information available to him. Chan claimed that it would be
physically impossible for any human being like him to stand long hours in front of the ATM facility just to withdraw funds. He contested the debiting of
his account, stating that the debiting had affected his business and had caused him to suffer great humiliation after the dishonor of his sufficiently-
funded checks by FEBTC.
The records show that FEBTC discovered the system bug only after its routine reconciliation of the ATM-MEGALINK transactions on May 7, 1992; that
it immediately adopted remedial and corrective measures to protect its interest in order to avoid incurring further damage as well as to prevent a
recurrence of the incident; that one of the measures it adopted pursuant to its ATM Service Agreement with Chan was to program its computer system
to repossess his ATM card; that his ATM card was repossessed at the Ermita Branch of FEBTC when he again attempted to withdraw at the ATM
facility there; that the ATM facility retained his ATM card until its recovery by the bank; and that FEBTC conducted an in-depth investigation and a time-
and-motion study of the withdrawals in question.
On May 14, 1992, FEBTC debited his current account in the amount of ₱192,517.20 pursuant to Chan’s ATM Service Agreement. It debited the further
sum of ₱3,000.00 on May 18, 1992, leaving the unrecovered portion of the funds allegedly withdrawn by him at ₱770,488.30. Thus, on May 14 and
May 18, 1992, FEBTC sent to Chan letters demanding the reimbursement of the unrecovered balance of ₱770,488.30, but he turned a deaf ear to the
demands, impelling it to bring this case on July 1, 1992.4
Ruling of the RTC
As reflected in the pre-trial order of October 19, 1992, the issues to be resolved were, firstly, whether or not Chan had himself withdrawn the total sum
of ₱967,000.00 with the use of his Far East Card No. 05-01120-5-0 at the PNB-MEGALINK ATM facility; and, secondly, if the answer to the first issue
was that he did, whether or not he was liable to reimburse to FEBTC the amount of ₱770,488.30 as actual damages, plus interest.5
On May 14, 1998, the RTC rendered judgment in favor of FEBTC, pertinently holding and ruling as follows:6
In the instant case, what happened was that the defendant who was at the U.N. Branch of the PNB used his card. He entered his PIN to have access
to a withdrawal transaction from his account in Far East Bank, Ongpin Branch. However, after recognizing the card and went to the path of his account
it could not get a signal to proceed with the transaction so it proceeded to the other path who gave the signal to go on and dispense money. But there
was a computer error as it did not only dispense the money limit for the day buty it continued to dispense a lot more until it reached the amount of
₱967,000.00 which took the defendant till the hours of the morning to obtain. But defendant says he did not use his card. He alleges that it could be an
inside job just like what happened to the said bank which was published in the newspaper wherein the bank employee admitted having done the theft
through his knowledge of the computer. Could this be true?
The Court opines that it is not far-fetched. However why did this Court state that plaintiff’s cause of action will survive? The action of the defendant after
the incident gave him away. Merely two days after the heavy withdrawal, the defendant returned not at the exact scene of the incident but at a nearby
branch which is also in Ermita and tried again to withdraw. But at this time the bank already knew what happened so it blocked the card and retained it
being a hot card. The defendant was not successful this time so what he did was to issue a check almost for the whole amount of his balance in his
account leaving only a minimal amount. This incident puzzles the Court. Maybe the defendant was hoping that the machine nearby may likewise
dispense so much amount without being detected. He will not definitely go back to the U.N. branch as he may think that it is being watched and so he
went to a nearby branch. Unfortunately, luck was not with him this time and his card was taken by the bank. The fact that he hastily withdrew the
balance of his account after his card was retained by the bank only showed his knowledge that the bank may debit his account. It also showed his
intent to do something further other than first inquire why his card was considered a hot card if he is really innocent. When he went to the Ermita branch
to withdraw from the ATM booth he was intending to withdraw not more than ₱50,000.00 as it is the bank’s limit for the day and if ever he needed a
bigger amount than ₱50,000.00 immediately he should have gone to the branch for an over the counter transaction but he did not do so and instead
issued a check for ₱190,000.00 dated May 7, 1992 and another check for ₱5,000.00 dated May 13, 1992. To the mind of the Court, to take advantage
of a computer error, to gain sudden and undeserved amount of money should be condemned in the strongest terms.
There are no available precedents in this case regarding computer errors, but the Court feels that defendant should be held liable for the mistaken
amount he was able to get from the machine based on the following provisions of the law.
Articles 19, 21, 22 and 23 of the Civil Code x x x.
xxxx
There is likewise one point that the Court would like to discuss about the allegation of the defendant that it was impossible for him to withdraw the
money in such long period and almost minute after minute. This Court believes that money is the least of all, a person may give priority in life. There
are many who would sacrifice a lot just to have lots of it, so it would not be impossible for one to take time, stand for several hours and just enter some
items in the computer if the return would be something like a million or close to a million. In fact, the effort exerted was just peanuts compared to other
legitimate ways of earning a living as the only capital or means used to obtain it was the defendant’s loss of sleep and the time spent in withdrawing the
same. Moreover, though the cause of action in this case may be the erroneous dispensation of money due to computer bug which is not of defendant’s
wrong doing, the Court sees that what was wrong was the failure to return the amount in excess of what was legally his. There is such a thing as
JUSTICE. Justice means rendering to others their due. A person is just when he is careful about respecting the rights of others, and who knows too,
how to claim what he rightfully deserves as a consequence of fulfilling his duties.
From the foregoing, the conclusion is manifest that plaintiff is within its right in initiating the instant suit, as defendant’s refusal to pay the claim
constitutes the cause of action for sum of money.
xxxx
WHEREFORE, judgment is hereby rendered in favor of the plaintiff Far East Bank and Trust Company and against the defendant Robert Mar Chante
a.k.a. Robert Mar G. Chan ordering the latter to pay the former the following:
1. the amount of ₱770,488.30 as actual damages representing the unrecovered balance of the amounts withdrawn by defendant;
2. interest of 24% per annum on the actual damages from July 1, 1992, the date of the filing of the complaint until fully paid;
3. the amount of ₱100,000.00 as exemplary damages;
4. the sum of ₱30,000.00 as and for attorney’s fees; and
5. the costs of the suit. Defendant’s counterclaim is hereby dismissed for lack of merit.
SO ORDERED.
Ruling of the CA
Chan appealed,7 assigning the following errors to the RTC, to wit:
1. THE TRIAL COURT ERRED IN HOLDING DEFENDANT-APPELLANT LIABLE FOR THE ALLEGED WITHDRAWAL OF THE AMOUNT
OF ₱967,000.00 WITH INTEREST AT THE RATE OF 24% PER ANNUM BASED MERELY ON CONJECTURES AND SUSPICIONS NOT
ESTABLISHED BY SOLID EVIDENCE;
2. THE TRIAL COURT ERRED IN AWARDING IN FAVOR OF APPELLEE EXEMPLARY DAMAGES IN THE AMOUNT OF ₱100,000.00
AND ATTORNEY’S FEES IN THE AMOUNT OF ₱30,000.00;
3. THE TRIAL COURT ERRED IN NOT ORDERING THE RESTITUTION OF THE AMOUNT OF ₱196,521.30 ILLEGALLY DEBITED BY
APPELLEE FROM APPELLANT’S ACCOUNT.
On August 1, 2005, the CA promulgated the assailed decision, reversing the RTC’s judgment, to wit:
x x x. The issues really before us are issues of contract application and issues of fact that would require an examination and appreciation of the
evidence presented. The first order therefore in our review of the trial court’s decision is to take stock of the established and undisputed facts, and of
the evidence the parties have presented. We say this at the outset as we believe that it was in this respect that the lower court failed in its consideration
and appreciation of the case.
xxxx
An evidentiary dilemma we face in this case is the fact that there is no direct evidence on the issue of who made the actual withdrawals. Chan correctly
claims that the bank failed to present any witness testifying that he (Chan) made the actual withdrawals. At the same time, Chan can only rely on his
own uncorroborated testimony that he was at home on the night that withdrawals were made. We recognize that the bank can claim that no other
evidence of actual withdrawal is necessary because the PIN unique to Chan is already evidence that only Chan or his authorized representative – and
none other – could have accessed his account. But at the same time, we cannot close our eyes to the fact that computers and the ATM system is not
perfect as shown by an incident cited by Chan involving the FEBTC itself. Aside from the vulnerability to inside staff members, we take judicial notice
that no less than our own Central Bank has publicly warned banks about other nefarious schemes involving ATM machines. In a March 7, 2003 letter,
the Central Bank stated:
March 7, 2003
BSP CIRCULAR LETTER
TO : All Banks
SUBJECT : Technology Fraud on ATM Systems
Please be advised that there were incidents in other countries regarding technology fraud in ATM systems perpetrated by unscrupulous individuals
and/ or syndicates.
These acts are carried out by:
1. A specialized scanner attached to the ATM card slot, and;
2. A pinhole camera
xxxx
In light of the absence of conclusive direct evidence of actual withdrawal that we can rely upon, we have to depend on evidence "other than direct" to
reach verdict in this case.
xxxx
WHEREFORE , premises considered, we hereby GRANT the appeal and accordingly REVERSE and SET ASIDE the Decision dated May 14, 1998 of
the Regional Trial Court of Manila, Branch 51, in Civil Case No. 92-61706. We accordingly ORDER plaintiff-appellee Far East Bank and Trust
Company (FEBTC) to return to Chan the amount of Php196,571.30 plus 12% interest per annum computed from August 7, 1992 – the time Chan filed
his counterclaim – until the obligation is satisfied. Costs against the plaintiff-appellee FEBTC.
SO ORDERED.8
FEBTC moved for reconsideration, but the CA denied its motion on November 24, 2005.9
Issues
Hence, FEBTC has appealed, urging the reversal of the CA’s adverse decision, and praying that Chan be held liable for the withdrawals made from his
account on May 4 and May 5, 1992; and that it should not be held liable to return to Chan the sum of ₱196,571.30 debited from his account.
Ruling
The appeal lacks merit.
FEBTC would want us to hold that Chan had authored the May 4 and May 5, 1992 ATM withdrawals based on the following attendant factors, namely:
(a) ATM transactions were processed and identified by the PIN, among others; (b) the PIN was exclusive and known only to the account holder; (c) the
ATM was tagged in the cardholder’s account where the ATM transactions were debited or credited; (d) the account number tagged in the ATM card
identified the cardholder; (e) the ATM withdrawals were documented transactions; and (f) the transactions were strictly monitored and recorded not
only by FEBTC as the bank of account but also by the ATM machine and MEGALINK. In other words, the ATM transactions in question would not be
processed unless the PIN, which was known only to Chan as the cardholder, had been correctly entered, an indication both that it was his ATM card
that had been used, and that all the transactions had been processed successfully by the PNB-MEGALINK ATM facility at the Manila Pavilion Hotel
with the use of the correct PIN.
We disagree with FEBTC.
Although there was no question that Chan had the physical possession of Far East Card No. 05-01120-5-0 at the time of the withdrawals, the exclusive
possession of the card alone did not suffice to preponderantly establish that he had himself made the withdrawals, or that he had caused the
withdrawals to be made. In his answer, he denied using the card to withdraw funds from his account on the dates in question, and averred that the
withdrawals had been an "inside job." His denial effectively traversed FEBTC’s claim of his direct and personal liability for the withdrawals, that it would
lose the case unless it competently and sufficiently established that he had personally made the withdrawals himself, or that he had caused the
withdrawals. In other words, it carried the burden of proof.
Burden of proof is a term that refers to two separate and quite different concepts, namely: (a) the risk of non-persuasion, or the burden of persuasion,
or simply persuasion burden; and (b) the duty of producing evidence, or the burden of going forward with the evidence, or simply the production burden
or the burden of evidence.10 In its first concept, it is the duty to establish the truth of a given proposition or issue by such a quantum of evidence as the
law demands in the case at which the issue arises.11 In its other concept, it is the duty of producing evidence at the beginning or at any subsequent
stage of trial in order to make or meet a prima facie case. Generally speaking, burden of proof in its second concept passes from party to party as the
case progresses, while in its first concept it rests throughout upon the party asserting the affirmative of the issue.12
The party who alleges an affirmative fact has the burden of proving it because mere allegation of the fact is not evidence of it. 13 Verily, the party who
asserts, not he who denies, must prove.14
In civil cases, the burden of proof is on the party who would be defeated if no evidence is given on either side.15 This is because our system frees the
trier of facts from the responsibility of investigating and presenting the facts and arguments, placing that responsibility entirely upon the respective
parties.16 The burden of proof, which may either be on the plaintiff or the defendant, is on the plaintiff if the defendant denies the factual allegations of
the complaint in the manner required by the Rules of Court; or on the defendant if he admits expressly or impliedly the essential allegations but raises
an affirmative defense or defenses, that, if proved, would exculpate him from liability.17
Section 1, Rule 133 of the Rules of Court sets the quantum of evidence for civil actions, and delineates how preponderance of evidence is determined,
viz :
Section 1. In civil cases, the party having the burden of proof must establish his case by a preponderance of evidence. In determining where the
preponderance or superior weight of evidence on the issues involved lies, the court may consider all the facts and circumstances of the case, the
witnesses’ manner of testifying, their intelligence, their means and opportunity of knowing the facts to which they are testifying, the nature of the facts to
which they testify, the probability or improbability of their testimony, their interest or want of interest, and also their personal credibility so far as the
same may legitimately appear upon the trial. The court may also consider the number of witnesses, though the preponderance is not necessarily with
the greater number. (Emphasis supplied)
As the rule indicates, preponderant evidence refers to evidence that is of greater weight, or more convincing, than the evidence offered in opposition to
it.18 It is proof that leads the trier of facts to find that the existence of the contested fact is more probable than its nonexistence.19
Being the plaintiff, FEBTC must rely on the strength of its own evidence instead of upon the weakness of Chan’s evidence. Its burden of proof thus
required it to preponderantly demonstrate that his ATM card had been used to make the withdrawals, and that he had used the ATM card and PIN by
himself or by another person to make the fraudulent withdrawals. Otherwise, it could not recover from him any funds supposedly improperly withdrawn
from the ATM account. We remind that as a banking institution, FEBTC had the duty and responsibility to ensure the safety of the funds it held in trust
for its depositors. It could not avoid the duty or evade the responsibility because it alone should bear the price for the fraud resulting from the system
bug on account of its exclusive control of its computer system.
Did FEBTC discharge its burden of proof?
The CA ruled that FEBTC did not because –
After a review of the records of this case, we find the totality of evidence submitted by FEBTC insufficient to establish the crucial facts that would justify
a judgment in its favor.
To our mind, the fact that Chan’s account number and ATM card number were the ones used for the withdrawals, by itself, is not sufficient to support
the conclusion that he should be deemed to have made the withdrawals.
FEBTC offers in this regard the PNB ATM’s journal tapes to prove the withdrawals and their details – the time of the transactions; the account number
used; the ATM card number; and the amount withdrawn – and at the same time declared that these tapes are authentic and genuine. These tapes,
however, are not as reliable as FEBTC represented them to be as they are not even internally consistent. A disturbing internal discrepancy we note
relates to the amounts reflected as "ledger balance" and "available balance". We find it strange that for every 4,000.00 pesos allegedly withdrawn by
Chan, the available balance increased rather than diminished. Worse, the amount of available balance as reflected in the tapes was way above the
actual available balance of less than Php200,000.00 that Chan’s current account had at that time. These discrepancies must inevitably reflect on the
integrity of the journal tapes; the proven inconsistencies in some aspects of these tapes leave the other aspects suspect and uncertain.
But more than this, we are not convinced that the tapes lead us to the inevitable conclusion that Chan’s card, rather than a replacement card containing
Chan’s PIN and card number or some other equivalent scheme, was used. To our mind, we cannot discount this possibility given the available
technology making computer fraud a possibility, the cited instances of computer security breaches, the admitted system bug, and – most notably – the
fact that the withdrawals were made under circumstances that took advantage of the system bug. System errors of this kind, when taken advantage of
to the extent that had happened in this case, are planned for. Indeed, prior preparation must take place to avoid suspicion and attention where the
withdrawal was made for seven (7) long hours in a place frequented by hundreds of guests, over 242 transactions where the physical volume of the
money withdrawn was not insignificant. To say that this was done by the owner of the account based solely on the records of the transactions, is a
convenient but not a convincing explanation.20
In our view, the CA’s ruling was correct.
To start with, Edgar Munarriz, FEBTC’s very own Systems Analyst, admitted that the bug infecting the bank’s computer system had facilitated the
fraudulent withdrawals.21 This admission impelled the CA to thoroughly dissect the situation in order to determine the consequences of the intervention
of the system bug in FEBTC’s computer system. It ultimately determined thusly:
Significantly, FEBTC made the admission that there was a program bug in its computer system. To digress, computers are run based on specific pre-
arranged instructions or "programs" that act on data or information that computer users input. Computers can only process these inputted data or
information according to the installed programs. Thus, computers are as efficient, as accurate and as convenient to use as the instructions in their
installed programs. They can count, sort, compute and arrive at decisions but they do so only and strictly in accordance with the programs that make
them work. To cite an easy example, a computer can be programmed to sort a stack of cards prepared by male and female clients, into male and
female stacks, respectively. To do this, the computer will first scan a card and look at the place ("a field") where the male/female information can be
found. This information may be in an appropriate box which the bank client checks or shades to indicate if he/she is male or female. The computer will
check if the box beside the word "Female" is shaded. If it is, it will send the card to the "Female" bin. If the box beside the "male" is shaded, it will send
the card to the "Male" bin. If both the squares are shaded or none is shaded or the card cannot be read, it will send the card to the "Unknown" bin. This
way, the female cards and the male cards can be sorted efficiently. However, the program instructions can be written in such a way that the computer
can only make two decisions, that is, if the Female box is shaded, then the card goes to the "Female" bin; otherwise, the card goes to the "Male" bin. In
this program, all the Female cards will be sorted correctly but the Male bin will contain all the other cards, that is, the Male cards, the cards with no
shading at all, and all the other cards that cannot be classified.
The imperfect results arose from the imperfect program instructions or from a program "bug". Something very close to this example happened in the
present case.
According to the testimony of the FEBTC’s systems analyst, there were two computer programs that were involved in the transactions: CAPDROTH
and SCPUP 900. CAPDROTH is the program that validates if the account exists in the FEBTC files, if the transaction is valid, and if the branch where
the account is maintained is ON-LINE (i.e. continuously sending data). When the Chan transaction entered the system, it was validated by CAPDROTH
which, on seeing that the FEBTC-Ongpin branch was off-line, returned a decision code passing on the decision to authorize the transaction to the
SCPUP 900, another module. However, SCPUP 900 was not expecting this type of response or decision code. As the SCPUP 900 program was
originally written, it will send back an error message and abort a requested transaction if it receives an error message from any other module;
otherwise, it will send a message authorizing the transaction. In other words, SCPUP 900 had only two decisions to make: check if the message is an
error message, if not then, authorize. Since what it received in the disputed transactions were not error messages and were not also authorizations, it
sent back authorization messages allowing the cash withdrawals. It kept on sending authorization messages for the 242 cash withdrawal transactions
made from Chan’s account between the evening of May 4 and early morning of May 5, 1992. This program bug was the reason the 242 cash
withdrawals were allowed by the PNB ATM-Megalink machine.
The program bug occurred because of the simultaneous presence of three conditions that allowed it to happen: (1) the withdrawal transactions involved
a current account; (2) the current account was with a branch that at that time was off-line; and (3) the transaction originated from MEGALINK (i.e.,
through MEGALINK through a member bank other than FEBTC). Because of the bug, Chan’s account was not accessed at the time of the transactions
so that withdrawals in excess of what the account contained were allowed. Additionally, FEBTC’s rule that only a maximum withdrawable amount per
day (in the present case ₱50,000.00 per day) can be made from an ATM account, was by-passed. Thus, 242 withdrawals were made over an eight
hour period, in the total amount of ₱967,000.00.22
Secondly, the RTC’s deductions on the cause of the withdrawals were faulty. In holding against Chan, the RTC chiefly relied on inferences drawn from
his acts subsequent to the series of withdrawals, specifically his attempt to withdraw funds from his account at an FEBTC ATM facility in Ermita, Manila
barely two days after the questioned withdrawals; his issuance of a check for ₱190,000.00 immediately after the capture of his ATM card by the ATM
facility; his failure to immediately report the capture of his ATM card to FEBTC; and his going to FEBTC only after the dishonor of the check he had
issued following the freezing of his account. The inferences were not warranted, however, because the subsequent acts would not persuasively
establish his actual participation in the withdrawals due to their being actually susceptible of other interpretations consistent with his innocence.
We join the CA’s observation that Chan’s subsequent acts "could have been impelled by so many reasons and motivations, and cannot simply be
given the meaning that the lower court attributed to them," and, instead, were even consistent with the purpose and nature of his maintaining the
current account deposit with FEBTC, rendering the acts "not unusual nor … illegal."23 Although he was expected to forthwith bring his card’s capture to
FEBTC’s attention, that he did not do so could have other plausible explanations consistent with good faith, among them his being constantly occupied
as a businessman to attend to the multifarious activities of his business. He might have also honestly believed that he still had the sufficient funds in his
current account, as borne out by his issuance of a check instead after the capture of the card so as not for him to undermine any financial obligation
then becoming due. Nor should his opting to withdraw funds from his account at the ATM facility in Ermita in less than two days after the questioned
withdrawals manifest responsibility on his part, for he could also be properly presumed to be then still unaware of the situation involving his account.
We note that his letters24 written in response to FEBTC’s written demands to him disclosed honest intentions rather than malice.
Thirdly, the RTC ignored the likelihood that somebody other than Chan familiar with the bug infection of FEBTC’s computer system at the time of the
withdrawals and adept with the workings of the computer system had committed the fraud. This likelihood was not far-fetched considering that FEBTC
had immediately adopted corrective measures upon its discovery of the system bug, by which FEBTC admitted its negligence in ensuring an error-free
computer system; and that the system bug had affected only the account of Chan.25 Truly, the trial court misapprehended the extent to which the
system bug had made the computer system of FEBTC stumble in serious error.
Fourthly, and perhaps the most damaging lapse, was that FEBTC failed to establish that the PNB-MEGALINK’s ATM facility at the Manila Pavilion
Hotel had actually dispensed cash in the very significantly large amount alleged during the series of questioned withdrawals. For sure, FEBTC should
have proved the actual dispensing of funds from the ATM facility as the factual basis for its claim against Chan. It did require PNB to furnish a validated
showing of the exact level of cash then carried by the latter’s ATM facility in the Manila Pavilion Hotel on May 4, 1992. 26 Yet, when PNB employee
Erwin Arellano stood as a witness for FEBTC, he confirmed the authenticity of the journal tapes that had recorded Chan’s May 4 and May 5, 1992
supposed ATM transactions but did not categorically state how much funds PNB-MEGALINK’s ATM facility at the Manila Pavilion Hotel had exactly
carried at the time of the withdrawals, particularly the amounts immediately preceding and immediately following the series of withdrawals. The
omission left a yawning gap in the evidence against Chan.
And lastly, Chan’s allegation of an "inside job" accounting for the anomalous withdrawals should not be quickly dismissed as unworthy of credence or
weight. FEBTC employee Manuel Del Castillo, another witness for FEBTC, revealed that FEBTC had previously encountered problems of bank
accounts being debited despite the absence of any withdrawal transactions by their owners. He attributed the problems to the erroneous tagging of the
affected accounts as somebody else’s account, allowing the latter to withdraw from the affected accounts with the use of the latter’s own ATM card,
and to the former’s account being debited.27 The revelation of Del Castillo tended to support Chan’s denial of liability, as it showed the possibility of
withdrawals being made by another person despite the PIN being an exclusive access number known only to the cardholder.28
It is true that Del Castillo also declared that FEBTC did not store the PINs of its clients’ ATM cards.1âwphi1 However, he mentioned that FEBTC had
stored the opposite numbers corresponding to the PINs, which meant that the PINs did not remain entirely irretrievable at all times and in all cases by
any of its officers or employees with access to the bank’s computer system. Accordingly, Del Castillo’s assertion that the PINs were rendered useless
upon being entered in the bank’s computer system did not entirely disclose how the information on the PINs of the depositors was stored or discarded
as to become useless for any purpose.
In view of the foregoing, FEBTC did not present preponderant evidence proving Chan’s liability for the supposedly fraudulent withdrawals. It thus failed
in discharging its burden of persuasion.
WHEREFORE, the Court AFFIRMS the decision of the Court of Appeals; and DIRECTS the petitioner to pay the costs of suit.
SO ORDERED.
G.R. No. 181892 September 8, 2015
REPUBLIC OF THE PHILIPPINES, represented by Executive Secretary Eduardo R. Ermita, the DEPARTMENT OF TRANSPORTATION AND
COMMUNICATIONS, AND MANILA INTERNATIONAL AIRPORT AUTHORITY, Petitioners,
vs.
HON. JESUS M. MUPAS, in his capacity as Acting Presiding Judge of the Regional Trial Court, National Capital Judicial Region, Branch 117,
Pasay City, AND PHILIPPINE INTERNATIONAL AIR TERMINALS CO., INC., Respondents.
x-----------------------x
G.R. No. 209917
REPUBLIC OF THE PHILIPPINES, represented by Executive Secretary Eduardo Ermita, DEPARTMENT OF TRANSPORTATION AND
COMMUNICATIONS, AND MANILA INTERNATIONAL AIRPORT AUTHORITY, Petitioners,
vs.
PHILIPPINE INTERNATIONAL AIR TERMINALS COMPANY, INC., TAKENAKA CORPORATION AND ASAHIKOSAN
CORPORATION, Respondents.
x-----------------------x
G.R. No. 209696
TAKENAKA CORPORATION AND ASAHIKOSAN CORPORATION, Petitioners,

vs.
REPUBLIC OF THE PHILIPPINES, represented by Executive Secretary Eduardo Ermita, DEPARTMENT OF TRANSPORTATION AND
COMMUNICATIONS, MANILA INTERNATIONAL AIRPORT AUTHORITY, AND PHILIPPINE INTERNATIONAL AIR TERMINALS COMPANY,
INC. Respondents.
x-----------------------x
G.R. No. 209731
PHILIPPINE INTERNATIONAL AIR TERMINALS CO., INC. Petitioner,

vs.
REPUBLIC OF THE PHILIPPINES, as represented by EXECUTIVE SECRETARY EDUARDO ERMITA, DEPARTMENT OF TRANSPORTATION
AND COMMUNICATIONS, MANILA INTERNATIONAL AIRPORT AUTHORITY, TAKENAKA CORPORATION, AND ASAHIKOSAN
CORPORATION, Respondents.
DECISION
BRION, J.:
Before the Court are the consolidated petitions for review on certiorari assailing the Decision dated August 22, 2013, and the Resolution dated October
29, 2013, of the Court of Appeals (CA) in CA-G.R. CV No. 98029; and the petition for certiorari assailing the May 3, 2007; May 18, 2008; and January
7, 2008 Decision of the Regional Trial Court (RTC) of Pasay City, Branch 117, in Civil Case No. 04-0876.1
In CA-G.R. CV No. 98029, the CA ordered petitioners Republic of the Philippines, Department of Transportation and Communications, and Manila
International Airport Authority (Government for brevity) to pay the Philippine International Airport Terminals Co., Inc. (PIATCO) the amount of
$371,426,688.24 with interest at 6%per annum as just compensation for the expropriation of the Ninoy Aquino International Airport Passenger Terminal
III (NAIA-IPT III).2
In Civil Case No. 04-0876, the RTC appointed DG Jones and Partners as an independent appraiser of the NAIA-IPT III, and ordered the Government
to submit a Certificate of Availability of Funds to cover DG Jones and Partners' appraisal fee of $1,900,000.00.
For ease of presentation, the Court's discussion shall be under the following structure:
I. The Factual Antecedents
A. The NAIA-IPT IIII Contract and PIATCO
1. The NAIA-IPT III Contract
2. PIATCO
3. PIATCO and the Services of Takenaka and Asahikosan
B. The Agan v. PIATCO Case, G.R. No. 155001
1. The Case and the Decision dated May 5, 2003
2. The Motion for Reconsideration and the Resolution dated January 21, 2004
C. The Expropriation Case, Civil Case No. 04-0876
D. The Republic v. Gingoyon Case, G.R. No. 166429
1. The Case and the Decision dated December 19, 2005

2. The Motion for Reconsideration and the Resolution dated February 1, 2006
E. Proceedings in Civil Case No. 04-0876 after the Finality of the Gingoyon Case
1. The Appointment of DG Jones and Partners as an Independent Appraiser
2. The BOC's Expenses
F. The Parties and the BOC's Appraisal of the NAIA-IPT III
1. The Government's Appraisal
2. PIATCO's Appraisal
3. Takenaka and Asahikosan's Appraisal
4. The BOC's Appraisal
II. The RTC Rulings in Civil Case No. 04-0876
A. The Main Decision
B. The RTC's Interlocutory Order on the Validity of the Escrow Account
1. The Government and the Creation of an Escrow Account for the Payment of Just Compensation
2. The Omnibus Order dated October 11, 2011
III. The CA Rulings
A. CA-G.R. CV No. 98029
B. CA-G.R. SP. No. 123221
IV. The Action to Enforce the London Awards, Civil Case No. 06-171
V. The Parties' Positions
A. The Government's Position
B. PIATCO's Position
C. Takenaka and Asahikosan's Position
VI. The Issues
VII. The Court's Rulings
A. G.R. Nos. 209917, 209696, and 209731
1. The parties were afforded procedural due process despite their non-receipt of the BOC Final Report prior to the
promulgation of the May 23, 2011 Decision in Civil Case No. 04-0876.
2. Framework: Eminent domain is an inherent power of the State
2.a. The power of eminent domain is a fundamental state power that is inseparable from sovereignty
2.b. Just compensation is the full and fair equivalent of the property taken from the owner by the
condemn or
2.b.1. Fair market value is the general standard of value in determining just compensation
2.b.2 Replacement cost is a different standard of value from fair market value
2.b.3. Replacement cost is only one of the standards that the Court should consider in
appraising the NAIA-IPT III
2.b.4. The use of depreciated replacement cost method is consistent with the principle that
the property owner should be compensated for his actual loss
3. Construction cost of the NAIA-IPT III
3.a. The base valuation of the NAIA-IPT III

3.b. Structural defects on the NAIA-IPT III
3.b.1. The Court cannot consider the additional evidence submitted by Takenaka and
Asahikosan before the Court of Appeals
3.b.2. Equiponderance of evidence on the alleged structural defects of the NAIA-IPT III
favors PIATCO, Takenaka, and Asahikosan
3.c. The unnecessary areas
4. Attendant cost of the NAIA-IPT III
4.a. PIATCO's attendant cost
4.b. The BOC and the RTC's attendant cost
4.c. The Government's attendant cost
5. Deductions to the Replacement Cost of the NAIA-IPT III
5.a. Depreciation should be deducted from the replacement cost
5.b. Rectification for contract compliance should not be deducted from the replacement cost
6. Adjustments to the Replacement Cost
6.a. The replacement cost should be adjusted to December 2004 values
7. Interests, Fruits, and Income
7.a. Computation of Interests
7.b. PIATCO is not entitled to the fruits and income of the NAIA-IPT III
8.a. Takenaka and Asahikosan should not share in the BOC's expenses
9. PIATCO as the Proper Recipient of Just Compensation
9.a. Takenaka and Asahikosan's intervention in the case as unpaid subcontractors is proper
9.b. The property owner is entitled to just compensation
9.c. A final disposition in the eminent domain case with respect to the order of payment to a particular
person shall be final and executory
9.d. The determination of whether the NAIA-IPT III shall be burdened by liens and mortgages even after
the full payment of just compensation is premature
10. The exercise of eminent domain from the perspective of "taking."
10.a. The Government may take the property for public purpose or public use upon the issuance and
effectivity of the writ of possession
B. G.R. No. 181892
1. The issue on the appointment of an independent appraiser is already moot and academic
I. The Factual Antecedents
A. The NAIA-IPT III Contract and PIATCO
1. The NAIA-IPT III Contract
On October 5, 1994, Asia's Emerging Dragon Corp. (AEDC) submitted an unsolicited proposal to the Government - through the Department
of Transportation and Communications (DOTC)and the Manila International Airport Authority (MIAA)- for the construction and development
of the NAIA-IPT III under a build-operate-and-transfer (BOT) arrangement. The DOTC and the MIAA invited the public to submit competitive
and comparative proposals to AEDC's unsolicited proposal in accordance with the BOT Law3 and its implementing rules.4
2. PIATCO
On September 20, 1996, Paircargo Consortium - composed of People's Air Cargo and Warehousing Co., Inc. (Paircargo), Philippine Air
and Grounds Services, Inc.(PAGS), and Security Bank Corporation (Security Bank)- submitted its competitive proposal to the
Prequalification Bids and Awards Committee (PBAC).5
Both AEDC and Paircargo Consortium offered to build the NAIA-IPT III for at least $350 million at no cost to the Government and to pay the
Government: 5% share in gross revenues for the first five years of operation, 7.5% share in gross revenues for the next ten years of
operation, and 10% share in gross revenues for the last ten years of operation. However, Paircargo Consortium offered to pay the
Government a total of ₱17.75 billion as guaranteed payment for 27 years while AEDC offered to pay the Government a total of ₱135 million
for the same period.6
After finding that Paircargo Consortium submitted a bid superior to the AEDC's unsolicited proposal and after the AEDC's failure to match
the competitive bid, the DOTC awarded, through a notice of award, the NAIA-IPT III project to the Paircargo Consortium (that later
organized itself as PIATCO).7
On July 12, 1997, the Government executed a Concession Agreement with PIATCO for the construction, development, and operation of the
NAIA-IPT III under a build-operate-transfer scheme. On November 26, 1998, the Amended and Restated Concession Agreement (ARCA)
superseded the 1997 Concession Agreement. The Government and PIATCO likewise entered into a series of supplemental agreements,
namely: the First Supplement signed on August 27, 1999; the Second Supplement signed on September 4, 2000; and the Third
Supplement signed on June 22, 2001.8
Under the 1997 Concession Agreement, the ARCA and the Supplemental Agreement (for brevity, PIATCO contracts), the Government
authorized PIATCO to build, operate, and maintain the NAIA-IPT III during the concession period of twenty-five (25) years.9
3. PIATCO and the Services of Takenaka and Asahikosan
On March 31, 2000, PIATCO engaged the services of Takenaka, a local branch of a foreign corporation duly organized under the laws of
Japan and doing business in the Philippines, for the construction of the NAIA-IPT III under an Onshore Construction Contract.10
On the same date, PIATCO, through an Offshore Procurement Contract, 11 likewise contracted the services of Asahikosan, a foreign
corporation duly organized under the laws of Japan, for the design, manufacture, purchase, test and delivery of the Plant 12 in the NAIA-IPT
III.
In May 2002, PIATCO defaulted on its obligation to pay Takenaka and Asahikosan pursuant to their respective contracts. To settle the
problem, Takenaka and Asahikosan agreed to defer PIATCO's payments until June 2003, conditioned on their receipt of adequate security
from PIATCO as stipulated in the Fourth Supplemental Agreement (relating to the Onshore Construction Contract)13 and the Fourth
Supplement Agreement (relating to the Offshore Procurement Contract), respectively.14
On November 29, 2002, President Gloria Macapagal Arroyo declared in her speech that the Government would not honor the PIATCO
contracts. On the same day, Takenaka and Asahikosan notified PIATCO that they were suspending the construction of the NAIA-IPT III for
PIATCO's failure to provide adequate security.15
B. The Agan v. PIATCO Case, G.R. No. 155001
1. The Case and the Decision dated May 5, 2003
On September 17, 2002, petitioners Demosthenes Agan, et al., asked the Court to nullify the PIATCO contracts, and to prohibit the DOTC
and the MIAA from implementing these contracts for being contrary to law. The case, entitled Agan v. PIATCO, was docketed as G.R. No.
155001.16
On May 5, 2003, the Court nullified the PIATCO contracts after finding that Paircargo Consortium (that later incorporated into PIATCO) was
not a duly pre-qualified bidder for failure to meet the minimum equity requirements for the NAIA-IPT III project, as required under the BOT
Law and the Bid Documents. The Court also ruled that Security Bank(member of the Paircargo Consortium) invested its entire net worth in
a single undertaking or enterprise in gross violation of Section 21-B of the General Banking Act(which limits a commercial bank's equity
investment, whether allied or non-allied, to fifteen percent (15%) of its net worth). 17 The Court further found that the PIATCO contracts
contained provisions that substantially departed from the draft Concession Agreement. These substantial modification of the PIATCO
contracts violated the public policy for being repugnant to the principle that all bidders must be on equal footing during the public bidding.18
2. The Motion for Reconsideration and the Resolution dated January 21, 2004
We denied PIATCO, et al.'s motion for reconsideration in our January 21, 2004 resolution.19 Significantly, we stated in the resolution that
the Government should first pay PIATCO as a prerequisite before taking over the NAIA-IPT III, to wit:
This Court, however, is not unmindful of the reality that the structures comprising the NAIA-IPT III facility are almost complete and that
funds have been spent by PIATCO in their construction. For the Government to take over the said facility, it has to compensate respondent
PIATCO as builder of the said structures. The compensation must be just and in accordance with law and equity for the Government cannot
unjustly enrich itself at the expense of PIATCO and its investors.20 (Underlines and emphases ours)
C. The Expropriation Case, Civil Case No. 04-087621
On December 21, 2004, the Government filed a complaint for expropriation of the NAIA-IPT III before the RTC of Pasay, Branch 117. The
Government informed the RTC that it had deposited with the Land Bank of the Philippines (Land Bank)the amount of ₱3,002,125,000.00,
representing the NAIA-IPT III's assessed value.22
On the same day, the RTC issued a writ of possession in favor of the Government. Citing City of Manila v. Serrano,23 the RTC held that that
it had the ministerial duty to issue a writ of possession upon: (1) the filing of the complaint for expropriation sufficient in form and substance,
and (2) the Government's deposit of the amount equivalent to the property's assessed value, pursuant to Rule 67 of the Rules of Court.24
On January 4, 2005, the RTC modified its December 21, 2004 order and directed: (1) the Land Bank to immediately release to PIATCO the
amount of US$62,343,175.7725 that would be deducted from the just compensation; (2) the Government to submit to the RTC a Certificate
of Availability of Funds for the payment of just compensation; and (3) the Government to maintain and preserve the NAIA-IPT III pending
the expropriation proceedings and the full payment of just compensation. The RTC likewise prohibited the Government from performing
acts of ownership over the NAIA-IPT III such as awarding concessions or leasing any part of the NAIA-IPT III to other parties.26
The Government sought reconsideration of the January 4, 2005 Order, arguing that Rule 67 of the Rules of Court, and not RA 8974,applied
to the case since the NAIA-IPT III was not a national government infrastructure project.27
RA 8974 is otherwise known as "An Act To Facilitate The Acquisition Of Right-Of-Way, Site Or Location For National Government
Infrastructure Projects And For Other Purposes."
The Government argued that under Section 2, Rule 67 of the Rules of Court, it shall have the right to a writ of possession upon deposit with
the authorized government depositary of an amount equivalent to the assessed value of the property for purposes of taxation, which
amount shall be held by the depositary subject to the orders of the court. In contrast, Section 4 of RA 8974, as a rule, requires the
Government to immediately pay the property owner the amount equivalent to100% of the value of the property based on the BIR's relevant
zonal valuation and the value of the improvements/and or structures, upon the filing of the complaint and after due notice to the defendant.
On January 7, 2005, the RTC appointed three Commissioners28 to determine just compensation without consulting the Government and
PIATCO.29 Due to these successive adverse rulings, the Government sought to inhibit Judge Henrick F. Gingoyon, the RTC's presiding
judge, from hearing the case.30 (The judge was ambushed and killed on December 31, 2005.)31
On January 10, 2005, the RTC denied the Government's urgent motion for reconsideration and motion for inhibition.32
On December 14, 2005, Asahikosan filed a motion for leave to intervene in Civil Case No. 04-0876 (the expropriation case).33 On the other
hand, Takenaka filed a Manifestation dated December 15, 2005,34 with the attached Manifestation and Motion dated December 14,
2005.35 Takenaka alleged that the Government impleaded it as an additional defendant in an amended complaint for expropriation of the
NAIA-IPT III, but was not served summons. Takenaka thus manifested its voluntary appearance before the RTC.36
Takenaka and Asahikosan informed the RTC that they had previously filed two collection cases against PIATCO, docketed as Claim Nos.
HT-04-248 and HT-05-269, before the High Court of Justice, Queen's Bench Division, Technology and Construction Court in London,
England, (London Court) on August 9, 2004.
In both instances, the London Court ruled in their favor. The dispositive part of the judgment award in Claim No. HT-04-248 provides:
IT IS ORDERED THAT:
1. Judgment be entered for the First Claimant37 in the sum of 6,602,971.00 United States dollars, together with interest in the
sum of 116,825,365.34 Philippine pesos up to and including 18 February 2005.
2. Judgment be entered for the Second Claimant 38 in the sum of 8,224,236.00 United States dollars, together with interest in the
sum of 2,947,564.87 United States dollars up to and including 18 February 2005, being a total of 11,171,800.87 United States
dollars.
3. Save for the costs of and caused by the amendment of the particulars of claim, which will be the subject of a separate Order,
the Defendant do pay the First Claimant's and the Second Claimant's costs in the action, to be subject to detailed assessment if
not agreed.
DATED this 18th day of February 2005.39
On the other hand, the dispositive part of the judgment award in Claim No. HT-05-269 states:
IT IS ORDERED THAT:
1. Judgment be entered for the First Claimant in the sum of 21,688,012.18 United States dollars, together with interest in the
sum of 6,052,805.83 United States dollars.
2. Judgment be entered for the Second Claimant in the sum of 30,319,284.36 United States dollars, together with interest in the
sum of 5,442,628.26 United States dollars.
3. The defendant to pay the Claimants' costs in the action, to be subject to detailed assessment if not agreed.
DATED this 2 (sic) day of December 2005.40
Takenaka and Asahikosan asked the RTC to: (a) hold in abeyance the release of just compensation to PIATCO until the London awards
are recognized and enforced in the Philippines; and (b) order that the just compensation be deposited with the RTC for the benefit of
PIATCO's creditors.41
During the hearing of the motions, the Government clarified that it neither filed an amended complaint for expropriation nor impleaded
Takenaka as a necessary party in the case.42
The RTC initially denied Takenaka and Asahikosan's respective Motions43 in the August 8, 2006 Order, but subsequently reconsidered its
ruling.44 In a March 12, 2007 Order, the RTC treated Takenaka's Manifestation with the attached Manifestation and Motion as a motion to
intervene and allowed Takenaka and Asahikosan to intervene in the case as PIATCO's creditors.45
Pending the RTC's resolution of Takenaka and Asahikosan's motions for leave to intervene in the expropriation case, the Government went
directly to the Court seeking Judge Gingoyon's inhibition from the case; the nullification of the order of release of the sum of $62.3 million to
PIATCO; and the nullification as well of the appointment of the commissioners.
D. The Republic v. Gingoyon Case, G.R. No. 166429
1. The Case and the Decision dated December 19, 2005

On January 12, 2005, the Government, et al., filed a petition for certiorari with the Court assailing the validity of the January 4, 7,
and 10, 2005 orders of the RTC in the expropriation case.46 The case, entitled Republic v. Gingoyon, was docketed as G.R. No.
166429.
The Government argued that the RTC should not have ordered the release of $62.3 Million since the NAIA-IPT III's assessed
value was only ₱3 billion. Moreover, the RTC's prohibition against the Government to perform acts of ownership on the NAIA-
IPT III was contrary to the essence of a writ of possession. It47 asserted that Rule 67 of the Rules of Court governed the
expropriation of the NAIA-IPT III since it was not a national government infrastructure project. The Government likewise
contended that the commissioners' appointment was void. It claimed that it had been deprived of due process since it was not
given the opportunity to contest the appointment of the commissioners. The Government likewise sought Judge Gingoyon's
inhibition from the case due to his alleged manifest partiality to PIATCO.48
The Court partly granted the petition and rendered the following rulings:
First, under the 2004 Resolution in Agan: (a) PIATCO must receive payment of just compensation determined in accordance
with law and equity; and (b) the Government is barred from taking over the NAIA-IPT III until just compensation is paid.
Second, RA 8974 applies in the expropriation case insofar as the law: (a) requires the Government to immediately pay PIATCO
at least the proffered value of the NAIA-IPT III; and (b) provides valuation standards in determining the amount of just
compensation.
RA 8974 is the governing law in cases where the national government expropriates property for the purpose of commencing
national government infrastructure projects such as the construction of the NAIA-IPT III. However, Rule 67 of the Rules of Court
applies in determining the assessed value and the mode of deposit of just compensation if the national government initiates the
expropriation complaint for purposes other than national infrastructure projects.
Under both Rule 67 of the Rules of Court and RA 8974, the Government initiates the expropriation by filing an expropriation
complaint. However, the rules on the mode of deposit differ because Rule 67 of the Rules of Court merely requires the
Government to deposit the assessed value of the property sought to be expropriated with an authorized government depositary
before the issuance of a writ of possession.
In contrast, RA 8974 commands the Government to make a direct payment to the property owner prior to the issuance of a writ
of possession. Under RA 8974, the payment shall be based on: (a) the BIR's zonal valuation in case of land; and (b)the value of
the improvements or structures under the replacement cost method. If the completion of a government infrastructure project is
of utmost urgency and importance and if there is no existing valuation of the property, the implementing agency shall
immediately pay the proffered value of the property.49
We thus observed that Section 2, Rule 67 of the Rules of Court is contrary to our January 21, 2004 Resolution which required
the Government to make prior payment of just compensation to PIATCO before it could take over the NAIA-IPT III.
The Court at the same time qualified the applicability of RA 8974 to the expropriation of the NAIA-IPT III. We held that the
Congress may legislate on the valuation standards of just compensation and the manner of its payment since these are
substantive matters. We made clear, however, that the Congress cannot legislate on the procedural aspects of expropriation
since this power lies with the Court. In fact, Section 14 of RA 8974 IRR provides that Rule 67 of the Rules of Court shall apply to
"all matters regarding defenses and objections to the complaint, issues on uncertain ownership and conflicting claims, effects of
appeal on the rights of the parties, and such other incidents affecting the complaint."
Third, we held in abeyance the implementation of the writ of possession until the Government directly pays to PIATCO the
proffered value of ₱3 billion. The zonal valuation method under Section 4 of RA 8974 shall not apply since the Government
owns the land on which the NAIA-IPT III stands. Consequently, PIATCO should only be paid the value of the improvements
and/or structures using the replacement cost method.50 Pending the determination of just compensation, the Government shall
pay the sum of ₱3 billion as the provisional amount of just compensation because there was no expedited means by which the
Government could immediately take possession of the NAIA-IPT III.
We also stated that the replacement cost method is only one of the factors to be considered in determining just compensation.
Equity should likewise be considered in determining just compensation.
Fourth, we authorized the Government to perform acts essential to the operation of the NAIA-IPT III as an international airport
terminal once the writ of possession becomes effective. This authority covers the repair, reconditioning, and improvement of the
complex; maintenance of the existing facilities and equipment; installation of new facilities and equipment; provision of services
and facilities pertaining to the facilitation of air traffic and transport; and other services that are integral to a modern-day
international airport. This is consistent with Section 4 of RA 8974 which provides that "the court shall immediately issue to the
implementing agency an order to take possession of the property and start the implementation of the project" upon fulfillment of
certain conditions.
This ruling qualified the Court's statement in its January 21, 2004 Resolution that "[f]or the Government to take over the said
facility, it has to compensate respondent PIATCO as builder of the said structures." Nonetheless, we clarified that the title to the
NAIA-IPT III shall pass to the Government only upon full payment of the just compensation since the proffered value is merely a
provisional determination of just compensation.
Fifth, we ordered the RTC to complete its determination of just compensation within sixty (60) days from finality of our decision
since it was no longer possible for the RTC to determine just compensation within sixty (60) days from the filing of the complaint
under Section 4 of RA 8974. Sixth, the RTC did not gravely abuse its discretion in appointing the commissioners. Neither Rule
67 of the Rules of Court nor RA 8974 requires the RTC to consult the parties in the expropriation case prior to the appointment
of commissioners. We also stated that Rule 67 of the Rules of Court shall apply insofar as it is consistent with RA 8974, the
IRR, and the Court's rulings in Agan.
Considering that the expropriation proceedings were effectively suspended seven days after the appointment of the
commissioners, the parties may file their objections with the RTC within five days from finality of the decision in accordance with
Section 5, Rule 67 of the Rules of Court. Seventh, there was no ground to order Judge Gingoyon's inhibition since the
Government failed to show his alleged partiality.51
The dispositive portion of the Decision states:

WHEREFORE, the Petition is GRANTED in PART with respect to the orders dated 4 January 2005 and 10 January
2005 of the lower court. Said orders are AFFIRMED with the following MODIFICATIONS:
1) The implementation of the Writ of Possession dated 21 December 2005 is HELD IN ABEYANCE,
pending payment by petitioners to PIATCO of the amount of Three Billion Two Million One Hundred
Twenty Five Thousand Pesos (₱3,002,125,000.00), representing the proffered value of the NAIA-IPT III
facilities;
2) Petitioners, upon the effectivity of the Writ of Possession, are authorized [to] start the implementation
of the Ninoy Aquino International Airport Pasenger Terminal III project by performing the acts that are
essential to the operation of the said International Airport Passenger Terminal project;
3) RTC Branch 117 is hereby directed, within sixty (60) days from finality of this Decision, to determine
the just compensation to be paid to PIATCO by the Government.
The Order dated 7 January 2005 is AFFIRMED in all respects subject to the qualification that the parties are given
ten (10) days from finality of this Decision to file, if they so choose, objections to the appointment of the
commissioners decreed therein.
The Temporary Restraining Order dated 14 January 2005 is hereby LIFTED.
No pronouncement as to costs.52
2. The Motion for Reconsideration and the Resolution dated February 1, 2006
On January 2, 2006, the Government, et al., filed a motion for partial reconsideration of the Court's December 19, 2005
Decision.53 Asahikosan, Takenaka, and Rep. Salacnib F. Baterina also filed a motion for leave to intervene and asked the Court's
reconsideration of its December 19, 2005 Decision.54
The Government raised the question of who between PIATCO, on the one hand, and Takenaka and Asahikosan, on the other was the
NAIAIPT III's builder. The Government informed the Court that Takenaka and Asahikosan, as the unpaid contractors in the NAIA-IPT III
project, claimed significant liens on the NAIA-IPT III. The Government opined that it would end up expropriating the NAIA-IPT III with liens
and claims in excess of its actual value if the proffered value would be directly released to PIATCO.
As PIATCO's unpaid creditors, Takenaka and Asahikosan intervened in the case. They relied on Mago v. Court of Appeals55 as basis for
their intervention. In that case, the Court took the extraordinary step of allowing the motion for intervention even after the challenged order
of the trial court had already become final. On the other hand, Rep. Baterina invoked his prerogative as legislator and taxpayer to curtail the
payment of just compensation without any appropriation in PIATCO's favor.
The Court denied the motions and held that the alleged liens over the NAIA-IPT III have not been judicially established.Takenaka and
Asahikosan were not parties to Gingoyon and did not present their claims before the Court. The Court did not make any declaration
regarding Takenaka and Asahikosan's rights to any form of compensation for the construction of the NAIA-IPT III.
Moreover, the Court did not recognize the London awards in favor of Takenaka and Asahikosan. Under Section 48, Rule 39 of the Rules of
Court, a foreign judgment would not bind Philippine courts unless the judgment is recognized and enforced in this jurisdiction. Philippine
courts may annul a foreign judgment for lack of jurisdiction, lack of notice to the party, collusion, fraud, clear mistake of law or fact, or when
the foreign judgment is contrary to public policy. Even assuming that PIATCO is indeed liable to other parties, the creditors have other
judicial avenues to ventilate and prove their claims against PIATCO.
The Court also categorically stated that PIATCO, as builder of the NAIA-IPT III, must first receive just compensation in
accordance with law and equity before the Government may take over the NAIA-IPT III.
The Court likewise denied the motions for intervention for serious procedural errors. Under Section 2, Rule 19 of the Rules of Court, the
motion to intervene should be filed before the court's rendition of judgment, and not after the resolution of the case. Moreover, Takenaka
and Asahikosan failed to establish their legal interest in the case since their claims against PIATCO have not been conclusively established
in this jurisdiction.56
E. Proceedings in Civil Case No. 04-0876 after the Finality of the Gingoyon Case
1. The Appointment of DG Jones and Partners as an Independent Appraiser
On April 11, 2006, the RTC ordered the BOC to resume its duties. In compliance, the BOC submitted its Inception Report and Inception
Framework to the RTC. On April 24, 2007, the parties and the BOC conferred to set the ground rules and procedure in determining the just
compensation due to the NAIA-IPT III.
On April 26, 2006, the Government asked the RTC to stop the payment of ₱3 billion proffered value in view of an alleged supervening event
- the collapse of the ceiling of the arrival lobby section of the north side of the NAIA-IPT III on March 27, 2006. The Government claimed
that the collapse created a 100-square foot hole in the ceiling and caused heavy asbestos pipes to fall on the floor of the NAIA-IPT III. The
Government likewise informed the Court that the MIAA requested the Association of Structural Engineers of the Philippines (ASEP)to
investigate the cause of the collapse.57 In its Final Report dated June2006, the ASEP identified the following factors that contributed to the
collapse:
a. Incomplete design coordination as shown by the absence of detailed shop drawings during the construction, an absence
described as "unusual" for a BOT project of this size
b. Wrong choice of ceiling and wall components and fixing materials, e.g., use of rivets instead of clips, screws or wire; use of
furring channels instead of stronger C channels; use of wall angles thinner than required; and
c. Poor workmanship, e.g., uneven distribution and improper attachment of rivets, lack of ceiling supports in the presence of
mechanical fixtures.58
The ASEP concluded that the likely cause of the collapse was the "syncretic effect of all these factors working over time since the
construction of the ceiling."59
Upon the BOC's request,60 on May 5, 2006, the RTC ordered the engagement of the services of an internationally accepted independent
appraiser who shall conduct the valuation of the NAIA-IPT III.61
On May 23, 2006, the Government manifested that it engaged the services of: (a) TCGI Engineer to determine the structural integrity of
NAIA-IPT III; (b) Ove Arup & Partners Massachusetts, Inc. (Ove Arup)to conduct a design and technical review of the NAIA-IPT III and to
conduct a peer review of TCGI Engineer's methodology and test results; and (c) Gleeds International to determine the value of the NAIA-
IPT III.62
On June 20, 2006, the RTC ordered Land Bank to immediately release the amount of ₱3 billion to PIATCO. The RTC ruled that the
collapse of a portion of the NAIA-IPT III was not a supervening event that would hinder the payment of the proffered value to PIATCO. In
compliance with this order, the Government tendered to PIATCO a ₱3 billion check on September 11, 2006. On the same day, the RTC
reinstated the writ of possession in favor of the Government.63
Thereafter, the Government and PIATCO submitted their list of nominees for the appointment of an independent appraiser.64 On May 3,
2007,the RTC appointed DG Jones and Partners as independent appraiser.65
On May 18, 2007, the RTC directed the Government to submit a Certificate of Availability of Funds to cover DG Jones and Partners' $1.9
Million appraisal fee.66
The Government sought the reconsideration of the May 3 and 18, 2007 orders. The Government complained that the appointment of an
appraiser apart from those hired by the Government would result in the unnecessary depletion of its funds since it would be compelled to
pay two appraisers.67
In response, PIATCO argued that the RTC has the inherent power to appoint an independent appraiser pursuant to Section 5 (g), Rule 135
of the Rules of Court. The RTC has wide discretion on how it shall carry its mandate under RA 8974 and Rule67 of the Rules of Court.68
In an order dated January 7, 2008, the RTC sustained the appointment of DG Jones and Partners. The RTC ruled that its power to appoint
the members of the BOC under Section 5, Rule 67 of the Rules of Court includes the power to appoint an independent appraiser.69
The Government directly challenged before the Court the May 3, May 18, and January 7, 2008 orders in a petition for certiorari with prayer
for the issuance of a temporary restraining order and/or a writ of preliminary injunction. The case was docketed as G.R. No. 181892.70
On January 9, 2008, the Court issued a temporary restraining order against the implementation of the May 3 and 18, 2007 Orders as well
as the January 7, 2008 Order.71
On June 15, 2006, the BOC filed a request for the release of a mobilization fund of ₱1,600,000.00 to support the discharge of its
functions.72 The RTC approved the request and directed the Government and PIATCO to equally share the BOC's expenses. 73 The
Government and PIATCO complied with this order and tendered the sum of ₱1,600,000.00 to the BOC.74
On November 24, 2009, the BOC requested additional funds in the amount of ₱5,250,000.00. 75 On December 7, 2010, the RTC directed
the Government and PIATCO to equally defray the BOC's expenses. 76 The Government contested this order and insisted that Takenaka
and Asahikosan should likewise shoulder the BOC's expenses as intervenors in the case.77
In an order dated March 11, 2011,the RTC ordered Takenaka and Asahikosan to share in the BOC's expenses. The RTC thus ordered
each party to pay ₱1,750,000.00. PIATCO complied with this order and paid the amount of ₱1,750,000.00 to the BOC.78
Takenaka and Asahikosan sought the partial reconsideration of this order.1âwphi1 They argued that they should not be made to pay the
BOC's expenses since "their prayer to defer the release of a portion of the just compensation pending the conclusion of the enforcement
proceedings was addressed to the RTC [,] and not to the BOC."79
F. The Parties and the BOC's Appraisal of the NAIA-IPT III
After the Court issued the January 9, 2008 temporary restraining order, the parties and the BOC conducted a preliminary conference on April 22,
2010, to adopt an alternative course of action to avoid further delay in the determination of just compensation.80
The Government manifested that it was ready to present its own valuation of the NAIA-IPT III and other supporting evidence. PIATCO, Takenaka, and
Asahikosan did not object to this manifestation.81
On August 5, 2010, the RTC ordered the parties to submit their appraisal reports of NAIA-IPT III with supporting documents and affidavits.82 The
Government appraised the NAIA-IPT III at $149,448,037.00while PIATCO concluded that its replacement cost was $905,867,549.47. On the other
hand, Takenaka and Asahikosan claimed that the NAIA-IPT III's construction cost amounted to $360,969,790.82.
1. The Government's Appraisal
Based on the Gleeds Report dated November 15, 2010, the Government computed the valuation of the NAIA-IPT III as follows:83
December 2002 December 2004

CCV CCV
Base valuation $USD @3Q01 $300,206,693 $300,206,693
Deterioration $USD @2Q09 $0 $1,738,318
Depreciation $USD 3Q01 $0 $35,076,295

Total Base CCVs $USD $300,206,693 $263,392,081
Rectification for Contract Compliance

$USD@2Q09
Not compliant with bid documents -$30,670,894 -$30,670,894
Inferior quality -$7,702,640 -$7,702,640
Additional areas to be built (63,490m2) -$75,570,510 -$75,570,510
Total Contract Compliance -$113,944,044 -$113,944,044
Deductions $USD
Total CCVs $USD $186,262,649 $149,448,037
▪ $300,206,693.00 as base current cost valuation(CCV). Based on the Gleeds report, the construction cost of the NAIA-IPT III
as of December 2002 was $300,206,693.00, consisting of the cost of constructing the terminal building, aprons, car park,
elevated roadways, and other related items.
Gleeds appraised the NAIA-IPT III by "multiplying the structure's dimensions (i.e., quantities) by a price (i.e., rate) for
constructing the works at a designated time and specific location, adding the cost of works in, on, and around the structure, and
then accounting for inferior and nonperforming works, and rectification of those works."84
▪ Gleeds arrived at the CCV by considering the rates and prices for the third quarter of 2001, which represented the midpoint of
the construction period from June 2000 (the commencement of construction) to December2002 (the suspension of
construction). It claimed that calculating the cost of construction based on its midpoint was a recognized standard practice in the
construction industry. The base CCV excluded the following items:
1. Failed structural elements of the Terminal, as identified in the Arup Seismic Evaluation Report and Gravity
Loading and Element Capacity Assessment;
2. The inferior quality of material used and works, including floor tiling, plasterboard wall finishes and ceilings,
internal and external metal paneling;
3. Constructed areas that are unnecessary to the functioning of an international aiport terminal and therefore of no
benefit to the Republic. These areas identified in the Arup Site Observation Report include areas where the
requirements stated in the Bid Documents have been grossly overprovided. They also include the multilevel retail
mall that, with its own internal circulation, is functionally separate from the Terminal and accessible only through the
multi-storey car park (20,465 m2), and excess retail concession space (1,727 m2);
4. The cost of seismic and gravity load structural retrofits for the failed elements in the terminal buildings and multi-
storey car park structures, as those retrofits are described in Arup's Drawings listed in Appendix 'B' Drawing List 2
and other rectification works required to bring the terminal to compliance with applicable building and airport codes
(as indicated in the Appendices of Arup's Site Observation Report);
5. The cost of completing the items listed in the JAC project status summary report of 28 February 2003;85 and
6. The cost of seismic and gravity load structural retrofits for the failed elements in the elevated roadway structures
as those retrofits were described in Arup's Drawings listed in Appendix 'B' Drawing List 3, Arup Review on 'TCGI
Report of Civil Design Review and Evaluation' - Elevated Roadway, dated March 2009, and other rectification works
required to bring the elevated roadways to compliance with applicable building and airport codes (as indicated in the
Appendices of Arup's Site Observation Report).86
▪ $263,392,081 as total base CCV as of December 2004. The Government asserted that the NAIA-IPT III suffered from
depreciation and deterioration in the sum of US$36,814,612.00 from December 2002 until December2004. The base value CCV
at the time of expropriation should be US$263,392,081.00 after deducting depreciation and deterioration.
▪ $113,944,044 as total contract compliance deductions. The Government further deducted items which were non-compliant
with bid documents, including, among others:
a. FIDS monitors not flat screen
b. Moving walkways under provision
c. Sun shading to external glazing d. Lack of 400hz PC air to loading bridges
e. Completion of testing, commissioning, and operation of the facility
f. Provision of as-built documentation
The Government likewise deducted the replacement cost of inferior quality items and additional areas that the Government had
to build to finish the NAIA-IPT III project.87
2. PIATCO's Appraisal
PIATCO claimed that the total replacement value of the NAIAIPT III as of December 31, 2010 amounted to $905,867,550.00.
Actual Inflation Base

Costs @ Rate Valuation
2002 @ 2004
I. Materials, Equipment and Labor Engineering & Procurement 360,969,791 1.0971 396,019,958
II. Attendant Costs
Engineering and Architecture 19,372,539 1.0971 21,253,613
Quality Assurance 6,923,720 1.0971 7,596,013
Construction Supervision 4,302,227 1.0971 4,719,973
Construction Insurance 4,329,272 1.0971 4,749,644
Site Development 8,358,169 1.0971 9,169,747
Other Costs 308,985 1.0971 338,987
Attendant Costs exclusive of 43,594,911 1.0971 47,827,977

Financing Costs
Financing Costs 26,602,890 26,602,890
Total Attendant Costs 70,197,802 74,430,868
TOTAL 431,167,593 470,450,825
In US Dollars
REPLACEMENT COST 470,450,825
Add:
Interest from 21 Dec 2004 to11 Sept 2006 104,014,531
Interest from 12 Sept 2006 to 31 Dec 2010 331,402,193
Total Interests 435,416,724
Total Replacement Value 905,867,550
Less: Payment on 11 Sept 2006 59,438,604
Amount Still Due 846,428,946
Computation of Interest in US Dollars
Period Interest No. of Days Amount in

Rates USD
Replacement (a) 470,450,825

Cost
Interests
From takeover December 21 12% 11 1,724,986

of NAIA T3 on to December
21 Dec 2004 31, 2004
January 1 to December 31, 12% 365 57,448,057

2005
January 1 to September 11, 12% 254 44,881,488

2006
Total Interest from 21 December 2004 to (1) 104,014,531

11 September 2006
TOTAL AMOUNT DUE AS OF 11 (a) + (1) 574,465,356

SEPTEMBER 2006
Less: Amount Paid on 11 September 2006 (Php 3,002,125,000/50.508) 59,438,604
NET AMOUNT STILL DUE AS OF 11 SEPTEMBER 2006 (b) 515,026,752
Additional September 12 to 12% 112 19,227,665

Interests December 31,
2006

2007

2008

2009

2010
Additional Interests up to 31 December 2010 (2) 331,402,193
AMOUNT STILL DUE AS REPLACEMENT VALUE (b) + (2) 846,428,946
Replacement 470,450,825
Cost
Total Interests 435,416,724

(1+2)
TOTAL 905,867,550
AMOUNT OF
REPLACEMENT
VALUE
▪ $360,969,791 as base value. PIATCO adopted Takenaka and Asahikosan's actual construction cost of $360,969,791 which is
supported by As-Built Drawings and Bills of Quantities. PIATCO stated that the Japanese Airport Consultants (JAC), the quality
assurance inspector for the NAIA-IPT III project, validated the works of Takenaka and Asahikosan. PIATCO alleged that the
Government and PIATCO entered into a Quality Assurance Agreement with JAC.88
▪ Attendant costs. Under RA 6957 IRR, the replacement cost includes the "overhead and all other attendant costs associated
with the acquisition and installation in place of the affected improvements/structures." The items under the attendant costs
correspond to these "overhead and other attendant costs" which are necessary to construct an airport project.89
It is necessary to hire quality assurance surveyors to check and monitor the work of Takenaka. PIATCO hired Pacific
Consultants, Inc. as construction supervisor in the NAIA-IPT III project. PIATCO claimed that the planning and design
consultancy fees are even below the international norms which are in the range of 8.5% to 11.5% of the Construction Contract
cost.90 Financing costs are also "attendant costs" because loans and guarantees were obtained to finance the NAIA-IPT III
project.91
▪ Conversion to 2004 values. Since the NAIA-IPT III shall be appraised at the time of taking, the total construction cost shall be
converted to December 21, 2004 values by considering the inflation rate of 1.0971. 92 Inflation was computed using the
Consumer Price Index (CPI) from 2002 to 2005. The reckoning period was from November 29, 2002, when Takenaka and
Asahikosan suspended their works in the NAIA-IPT III project, until December 21, 2004, when the Government filed a complaint
for expropriation.93
▪ Interests on replacement cost. The twelve (12%) interest rate shall be added to the replacement cost pursuant to the principles
of law and equity.94 In Benguet Consolidated v. Republic of the Philippines,95 the Court ruled that the property owner is entitled
to the payment of interest where the payment of compensation does not accompany the taking of property for public use but is
postponed to a later date. The interest shall compensate for the Government's delay in the payment of just compensation.96
3. Takenaka and Asahikosan's Appraisal
On the other hand, Takenaka and Asahikosan, computed the NAIAIPT III's replacement cost as follows:
In US dollars
Total payments of PIATCO 275,119,807.88

Add: Awards by the London Court 84,035,974.44
Award by the Makati Court 1,814,008.50
Total Construction Cost 360,969,790.82
▪ $360,969,790.82 as total construction cost. Takenaka and Asahikosan claimed that the initial contract price for the
construction of the NAIA-IPT III was $323,753,238.11.
Thereafter, changes were made in the course of the construction that increased its construction contract price. Pursuant to the
Onshore Construction and Offshore Procurement Contracts, PIATCO paid Takenaka and Asahikosan the amounts of
$231,312,441.28 and ₱1,796,102,030.84 (a total of $275,119,807.88).
After PIATCO defaulted on its payments, Takenaka and Asahikosan instituted Claim Nos. HT-04-248 and HT-05-269 in
England. The London court ruled in their favor and awarded them the amounts of $81,277,502.50, ₱116,825,365.34 and
£65,000.00 or a total of $ 84,035,974.44. Thereafter, they filed an action to enforce Claim Nos. HT-04-248 and HT-05-269
before the RTC of Makati which awarded them the sum of $1,814,008.50.97
4. The BOC's Appraisal
On March 31, 2011, the BOC submitted its Final Report recommending the payment of just compensation of $376,149,742.56
with interest at the rate of 12% per annum computed from the time of the taking of the property until the amount is fully paid,
plus commissioner's fees equivalent to 1% of the amount fixed as part of the costs of the proceedings.
In arriving at the replacement cost of the NAIA-IPT III, the BOC proposed the following computation:
Formula In US dollars
Amount paid by PIATCO to Takenaka and Asahikosan 275,119,807.88

Add:
Award in Claim No. HT-04-248 Relating to the 14,827,207.0098
Construction Cost of NAIA-IPT III
Award in Claim No. HT-05-269 Relating to the
Construction Cost of NAIA-IPT III 52,007,296.5499
Construction Cost of NAIA-IPT III 341,954,311.42
Add:
Attendant Cost (10% of the Construction Cost) 34,195,431.14
Replacement Cost of NAIA-IPT III 376,149,742.56
▪ $341,954,311.42. In computing the construction cost, all actual, relevant and attendant costs for the construction of the NAIA-
IPT III, including its market price, shall be considered. The BOC divided the construction cost into: (a) the amount paid by
PIATCO to Takenaka and Asahikosan for the construction of NAIA-IPT III; and (b) the awards by the London Court in Claim
Nos. HT-04-248 and HT-05-269 relating solely to construction cost, excluding interest, attorney's fees, and costs of the suit. The
BOC relied on Takenaka and Asahikosan's construction cost since these corporations shouldered the actual cost of
constructing the NAIA-IPT III.
▪ $34,195,431.14. According to the BOC, PIATCO failed to substantiate its attendant costs. In pegging the attendant cost at
10% of the construction cost, the BOC relied on the Scott Wilson Report, which states that the accepted industry range for
architecture, civil and structural, electrical and mechanical, quantity surveyor and project management cost is 8.5% to 11.5% of
the construction cost.
▪ Depreciation shall not be deducted from the construction cost. The BOC explained that the inventory of materials comprising
the NAIA-IPT III does not reflect its replacement cost. Rather, it is the actual cost of replacing an existing structure with an
identical structure that is considered in the replacement cost method. For this reason, depreciation shall not be deducted from
the construction cost; otherwise, the NAIAIPT III would have been fully depreciated since the Government estimated that the
NAIA-IPT III's useful life was only ten years.
▪ The replacement cost shall earn interest at 12% per annum from December 21, 2004, until full payment. The BOC stated that
legal interests shall accrue from the time of taking of the property until actual payment of just compensation. The delay in the
payment of just compensation is equivalent to a forbearance of money.
▪ The commissioner's fees shall be equivalent to 1% of just compensation. According to the BOC, the commissioner's fees shall
be equivalent to 1% of just compensation, similar to the arbitrators' fees. Commissioners and arbitrators perform similar
responsibilities since both act as independent and uninterested third parties in resolving difficult factual issues.100
II. The RTC Rulings in Civil Case No. 04-0876
A. The Main Decision
In a decision dated May 23, 2011, the RTC directed the Government, Takenaka, and Asahikosan to pay the commissioners' fees in the amount of
₱1,750,000.00 each; and ordered the Government to pay PIATCO just compensation in the amount of $116,348,641.10. In determining the amount of
just compensation, the RTC adopted the following computation:
Formula In US dollars
Just compensation as determined by the Republic 149,448,037.00

Add: Attendant cost (10% of $263,992,081.00, CCV as of
December 21, 2004) 26,339,208.10
Just Compensation 175,787,245.10
Less: Proffered value paid to PIATCO (59,438,604.00)
Net Just Compensation 116,348,641.10
▪ $149,448,037.00. The RTC adopted the Government's computed just compensation of $149,448,037.00, and ruled that the Government
should not pay for the portions of the NAIAIPT III that were defective. The RTC thus excluded the following from the computation of the
CCV:
(a) failed structural elements in the NAIA-IPT III;
(b) inferior quality of material works;
(c) constructed areas that are unnecessary to the use of an international airport terminal;
(d) cost of seismic and gravity load structural retrofits for the failed elements;
(e) cost of completing the items listed in the JAC project status summary report of February 28, 2003; and
(f) cost of seismic and gravity load structural retrofits for the failed elements in the elevated roadway structures.
The RTC rejected PIATCO, Takenaka, Asahikosan, and the BOC's computation for lack of factual and legal basis. The court criticized the
BOC's computation of construction cost and stated that the BOC erroneously relied on the amounts allegedly paid by PIATCO to Takenaka
and Asahikosan. The RTC pointed out that PIATCO failed to present proof that it had indeed paid Takenaka and Asahikosan the sum of
$275,119,807.88. The RTC further posited that the BOC did not take into account the actual cost of the NAIA-IPT III at the time of taking
which was in a state of collapse and deterioration.
The RTC stated that just compensation is limited to the value of the improvement at the time of the filing of the expropriation complaint. The
payment of just compensation does not include the right to be compensated of the franchise to operate the airport, and the increased value
of improvements due to inflation rate.
▪ $26,339,208.10. Similar to the BOC, the RTC pegged the attendant cost at 10% of the CCV at the time of the filing of the expropriation
complaint. The RTC agreed with the BOC that the computation of the attendant cost based on the 10% of the CCV was an accepted
industry practice.
▪ $59,438,604.00. After deducting the proffered value of $59,438,604.00, the RTC fixed the net compensation at $116,348,641.10, without
interest. The RTC stated that no interest shall accrue on the net just compensation since the Concession Agreement was nullified by the
Court in Agan.
The dispositive portion of the decision states:
IN THE LIGHT OF THE FOREGOING, Plaintiffs are hereby ordered to pay respondent PIATCO the amount of US$175,787,245.10 less the
proffered value (₱3,002,125,000.00) actually paid to and received by defendant, as the just compensation for the improvements of NAIA-
IPT III. Moreover, both plaintiff Republic and intervenors Takenaka and Asahikosan Corporations are directed to pay their proportionate
shares of the Commissioners' Fees in the amount of ₱1,750,000.00 each with dispatch.
Finally, insofar as both intervenors Takenaka and Asahikosan Corporations are concerned, resolution of their claim before this Court is held
in abeyance owing to the pendency of the outcome of the appeal on certiorari before the CA, and in any of their claims, as contractors are
solely as against defendant PIATCO.
SO ORDERED.101
PIATCO, Takenaka, and Asahikosan immediately appealed the RTC's decision before the CA while the Government opted to seek partial
reconsideration of the attendant costs awarded to PIATCO.102
PIATCO, Takenaka, and Asahikosan sought to nullify the RTC decision for alleged violation of their right to due process. They complained
that they were only furnished copies of the BOC Final Report only after the promulgation of the May 23, 2011 decision. 103 They averred that
the RTC violated Sections 7 and 8, Rule 67 of the Rules of Court which provide that the clerk of court shall serve copies of the
commissioners' report on all interested parties, with notice that they be allowed ten days within which to file objections to the findings of the
report, if they so desire.104
The Government subsequently partially appealed the case to the CA after the RTC denied its motion for partial reconsideration.105
B. The RTC's Interlocutory Order on the Validity of the Escrow Accounts
1. The Government and the Creation of an Escrow Account for the Payment of Just Compensation
On July 8, 2011, the Government filed a Manifestation and Motion 106 with the RTC stating that it was ready and willing to pay PIATCO,
through an escrow account, the amount of $175,787,245.10less the proffered value of ₱3 billion.
The Government expressed its desire to exercise full ownership rights over the NAIA-IPT III. However, it could not directly pay PIATCO
who had various creditors - Takenaka, Asahikosan, and Fraport, among them. The Government asserted that just compensation should
only be paid to claimants who are legally entitled to receive just compensation.
The Government thus asked the RTC's leave to deposit the just compensation due in an escrow account that shall be subject to the
following conditions:
8.1. The claimant(s) shall have been held to be entitled to receive the sum claimed from the "Just Compensation (NAIA
Terminal 3) Fund" in accordance with Philippine law and regulation, by a final, binding and executory order or award of the
expropriation court;
8.2. The claimant(s) shall have been held to have accepted or otherwise become subject to the jurisdiction of the expropriation
court and other relevant courts of the Republic of the Philippines, by reason of or in connection with the expropriation of NAIA
Terminal 3 by the ROP, directly or indirectly;
8.3. The claimant(s) shall have executed a valid and effective quitclaim in favor of the Republic of the Philippines
acknowledging that claimant(s) against the ROP or any agency or instrumentality or corporation of the ROP, by reason of, or in
connection with, the expropriation of NAIA Terminal 3 by the ROP, directly or indirectly, in any capacity whatsoever;
8.4. The claimant(s) has complied within good faith any condition or undertaking required from it/him/her by the expropriation
court by reason of or in connection with the expropriation of NAIA Terminal 3 by the ROP, directly or indirectly, in any capacity
whatsoever.107
The Government thus prayed:
1. Pending determination of the entitled claimants, to allow the Government to deposit just compensation less the proffered
value in an escrow account with a reputable bank whose senior unsecured obligations are rated at least 'BBB' by Standard and
Poor's Investors Service, Inc.or 'Baa2' by Moody's Service Investors Service, Inc. to be designated by the RTC;
2. After depositing the amount in an escrow account, to confirm the Government's right to fully exercise any and all acts of
ownership over the NAIA-IPT III; and
3. To order the release of just compensation, or of any portion thereof from the escrow account to the entitled claimants
provided that the entitled claimants have fully complied with all the conditions and requirements set forth under paragraphs 8.1
to 8.4 of the Manifestation and Motion.108
PIATCO opposed the Manifestation and Motion and argued that the Government could not vary the terms of the May 23, 2011 Decision as
well as the Court's rulings in Agan and Gingoyon commanding the Government to make a direct payment of just compensation to PIATCO.
It insisted that the offer to pay through an escrow account is not equivalent to direct payment. PIATCO further denied the Government's
allegations that there were several claimants on the just compensation.109
On the other hand, Takenaka and Asahikosan agreed with the Government that just compensation should only be paid to entitled
claimants. They posited that the Court's directive in Agan (with respect to the direct payment to PIATCO) was premised on the erroneous
assumption that PIATCO was the builder of the NAIA-IPT III. Takenaka and Asahikosan insisted that they were the actual builders of the
NAIA-IPT III. Nonetheless, they contended that the RTC had no jurisdiction over the Manifestation and Motion because the parties already
filed their respective Notices of Appeal before the CA.110
2. The Omnibus Order dated October 11, 2011
In an Omnibus Order dated October 11, 2011, the RTC granted the Manifestation and Motion. The RTC ruled that it has residual jurisdiction
to adjudicate the Government's Manifestation and Motion considering that the motion was filed prior to the parties' filing of the Notice of
Appeal. The RTC opined that the Manifestation and Motion was akin to a motion for execution pending appeal. The Manifestation and
Motion showed the Government's intent to voluntarily comply with the May 23, 2011 decision which was pending appeal before the CA.
Under Section 9,Rule 41 of the Rules of Court, the RTC has the residual power to issue orders for the protection and preservation of the
parties' rights, and to order the execution of a decision pending appeal. Furthermore, Section 6, Rule 136 of the Rules of Court provides
that courts have incidental power to issue orders that are necessary to effectuate their judgments.
The RTC held that the creation of an escrow account conforms with the Court's rulings in Gingoyon that just compensation shall be paid in
accordance with law and equity. Since the Government had no legal obligation to create an escrow account, it could impose conditions for
the release of just compensation in the escrow account, including: (a) PIATCO's submission of a warranty that the NAIA-IPT III shall not be
burdened by liens and encumbrances and an undertaking that PIATCO shall be solely liable for any claims from third persons involving the
NAIA-IPT III; and (b) PIATCO's execution of a Deed of Conveyance of the NAIA-IPT III in favor of the Government. Equity dictated that the
Government's payment of just compensation should free the NAIA-IPTIII from liens and encumbrances. The Deed of Conveyance should
be without prejudice to the appellate court's determination of just compensation.
Conversely, PIATCO had likewise no legal obligation to accept or reject the Government's offer of payment.
The RTC clarified that PIATCO is the sole entity entitled to receive the payment from the Government. The RTC pointed out that
the Court has remanded the Gingoyon case for the sole purpose of determining the amount of just compensation to be paid to
PIATCO.
Moreover, the Government did not raise the alleged dispute in the ownership of the NAIA-IPT III during the expropriation proceedings. The
RTC stated that it could not take judicial notice of the allegation that PIATCO was indebted to various creditors, apart from Takenaka and
Asahikosan, since these alleged creditors were not impleaded in the expropriation complaint.
The RTC likewise observed that compliance with the Government's conditions under 8.1 and 8.3 for the release of just compensation from
the escrow account pending appeal was legally impossible. For this reason, the payment through an escrow account was not the payment
that would transfer the title of the NAIA-IPT III to the Government.
The RTC lastly ruled that the payment of just compensation through an escrow account shall be payment of just compensation within a
reasonable time. Consequently, the Government may exercise full rights of ownership over the NAIA-IPT III upon the creation of an escrow
account.111
The dispositive portion of this order provides:
IN THE LIGHT OF THE FOREGOING, plaintiffs' Manifestation and Motion is GRANTED in part:
1. Plaintiffs' prayer for the court to determine who is/are legally entitled to receive just compensation is DENIED for
lack of merit.
2. Plaintiffs' prayer that they be allowed to deposit the payment of just compensation (less the proffered value) to an
escrow account is hereby GRANTED, provided that only the following conditions may be imposed for the release of
the money deposited:
a. PIATCO must submit a Warranty that the structures and facilities of NAIA IPT III are free from all liens
and encumbrances;
b. PIATCO must submit an Undertaking that it is assuming sole responsibility for any claims from third
persons arising from or relating to the design or construction of any structure or facility of NAIA IPT III
structures, if any; and
c. PIATCO must submit a duly executed Deed transferring the title of the NAIA IPT III structures and
facilities to the Republic of the Philippines, without however, prejudice to the amount which will finally be
awarded to PIATCO by the appellate court;
The Land Bank of the Philippines and the Development Bank of the Philippines are hereby jointly appointed [a]s the
Escrow Agents for the above purpose.
Upon payment of the plaintiffs of the said just compensation in an escrow account, this court recognizes the
Republic of the Philippines' right to exercise full rights of ownership over the NAIA IPT III structures and facilities in
accordance [with] 2 (c).
3. Plaintiffs' Formal Offer of Evidence and defendant PIATCO's Comment and Opposition thereto are NOTED.
4. Defendant PIATCO's motion for reconsideration with plaintiffs' comment/opposition of the order of this court
denying the motion for inhibition is hereby denied.
SO ORDERED.112
The RTC subsequently denied PIATCO's as well as Takenaka and Asahikosan's respective motions for partial reconsideration of the
above-quoted order,113 opening the way for PIATCO's petition for certiorari with prayer for the issuance of a temporary restraining order
and/or a writ of preliminary injunction, filed with the CA.114 This petition was docketed as CA-G.R. SP. No. 123221.
III. The CA Rulings
A. CA-G.R. CV No. 98029
In a decision dated August 7, 2013,115 the CA upheld the validity of the RTC's May 23, 2011 decision. The CA ruled that the parties did not need to be
furnished the BOC Final Report since RA 8974 is silent on the appointment of the BOC, as held in Gingoyon.
However, the CA modified the RTC rulings and arrived at its own formula of the NAIA-IPT III's replacement cost, to wit:
Construction Cost
Add:Attendant Cost
= Replacement Cost
Add: Equity
Just Compensation
Substituting:
Replacement Cost = $300,206,693.00 + 0 (because

attendant cost already imputed in
construction cost)
= $300,206,693.00 + 6% interest from

December 21, 2004 to September 11,
2006 less $59,438,604.00 + 6%
interest from September 12, 2006
until finality of judgment
In US dollars
Replacement Cost 300,206,693.00

Less: Proffered value paid to PIATCO (59,438,604.00)
Just Compensation as of September 11, 2006 240,768,035.00
Add: Interest Due as of July 31, 2013 130,658,653.24
Just Compensation as of July 31, 2013 371,426,742.24
The CA justified its computation as follows:
▪ $300,206,693.00 as Replacement Cost. Under Section 10 of RA 8974 IRR, replacement cost shall consist of the construction and
attendant costs.
$300,206,693.00 as construction cost. The CA relied on the Gleeds Report which it characterized as more "particularized, calculable and
precise."116 The Government's construction cost did not vastly differ from the BOC and PIATCO's computed construction costs of
$341,954,311.42 and $360,969,791.00, respectively. But the BOC and PIATCO's computed construction costs were unreliable since they
lacked detailed proof that the quoted amounts were directly related to the construction of NAIA-IPT III.
$0 as attendant cost. The CA stated that there was no need to award additional attendant costs since these costs had already been
included in the Government's computations under the heading "General Requirements and Conditions." The inclusion of attendant cost in
the construction cost was justified since the attendant cost becomes part of the total construction cost once the construction of a project is
completed. Based on the Bills of Quantities, the Government provided the following detailed list of attendant costs in the construction of the
NAIA-IPT III:
Attendant Cost In US Dollars
Design 6,439,680
Staff and labour 10,491,139.54
Insurance 925,210.78
PI Insurance 2,200,000.00
Consequential Loss 800,000.00
Setting out 364,647.00
Health and safety 403,224.00
Enviro Management 176,490.00
Design 2,631,100.00
Staff and labour 2,590,774.19
Insurance 71,109.77
total 25,293,376.28117
The CA likewise observed that PIATCO's summarized computation of attendant costs was self-serving and unsubstantiated by relevant
evidence. On the other hand, the BOC and the RTC's computation of attendant costs at 10% of the construction cost lacked factual and
legal support. Pegging attendant costs at 10% of the construction cost was only relevant during the pre-construction stage since the costs
of the construction at that time could only be estimated. This estimate carried no relevance at the post-construction stage since the total
construction costs, including the attendant costs, could already be determined.
▪ Depreciation, costs for noncompliance with contract specifications, and unnecessary areas of NAIA-IPT III shall not be deducted from the
replacement cost. The CA reversed the RTC's finding that the NAIA-IPT III suffered from massive structural defect. The CA opined that the
collapse of the portion of the NAIA-IPT III merely relates to "finishing" rather than to "structural" defects. In construction lingo, "finishing"
pertains to aesthetics, convenience, and functionality of a built structure while "structural" refers to the very integrity and stability of the built
structure. The CA disagreed with the RTC's conclusion that depreciation, costs for non-compliance with contract specifications, and
unnecessary areas of the NAIA-IPTIII, shall be excluded from the computation of construction cost. Depreciation should not be deducted
since it merely measures the book value of the property or the extent of use of the property. Depreciation is inconsistent with the
replacement cost method since the replacement cost merely measures the cost of replacing the structure at current market price at the time
of taking.
Furthermore, the market price of a building increases over time; thus, if the construction cost of NAIA-IPT III in 2002 was $300,206,693.00,
its replacement cost in 2004 should be equal to or higher than $300,206,693.00.
▪ Interest. The CA further held that interest shall be added to just compensation as of September 11, 2006. Citing Gingoyon, the CA
explained that law and equity dictated that the Government shall be liable for legal interests as a result of the delay in the payment of just
compensation to PIATCO. Since there was no stipulation on interests, the CA fixed the interest rate at 6%.
Upon finality of the judgment, the interest shall be 6% until fully paid. As of July 31, 2013, the CA computed the interest as follows:
In US Dollars
Interest from December 21, 2004 18,012,401.58

to December 21, 2005
$300,206,693*6%
Interest from December 22, 2005 13,225,544.17

to September 11, 2006
$300,206,693*6%*268 days/365
days
Interest from September 12, 2006 86,676,492.60

to September 12, 2012
$240,768,035*6%*6 years
Interest from September 13, 2012 12,744,214.89

to July 31, 2013
$240,768,035*6%*322 days/365
days
Total Interest as of July 31, 130,658,653.24

2013
The CA further ordered Takenaka and Asahikosan to share in the expenses of the BOC. Since Takenaka and Asahikosan's inputs on the
construction costs of the NAIA-IPT III were heard by the RTC, they should share in the expenses of the BOC.
The CA likewise denied Takenaka and Asahikosan's prayer to set aside in an escrow account a portion ofthe just compensation
corresponding to the amounts owed them by PIATCO. RA 8974 expressly provides that the Government shall directly pay the property
owner upon the filing of the complaint as a prerequisite to the issuance of a writ of possession.
The dispositive portion of the CA decision provides:
WHEREFORE, the decision appealed from is MODIFIED. Just compensation is fixed at US$300,206,639.00 less US
$59,438,604.00 paid in September 2006 or the net sum of US$240,768,035.00 with legal interest at 6% computed as above.
The Republic is thus ordered to pay PIATCO just compensation as herein determined and which sum has reached the total of
US $371,426,688.24 as of 31 July 2014.
Upon finality of judgment, interest on the sum due by then shall be at 12% until fully paid.
IT IS SO ORDERED.118
On August 22, 2013, the CA amended its decision in view of the BSP's recent issuance, BSP Circular No. 799, series of 2013, which took
effect on July 1, 2013. BSP Circular No. 799 lowered the legal interest rate on loan or forbearance of money, goods or credit to 6% per
annum.119 The CA amended decision provides:
WHEREFORE, the decision appealed from is MODIFIED. Just compensation is fixed at US $300,206,639.00 less US $
59,438,604.00 paid in September 2006 or the net sum of US$240,768,035.00with legal interest at 6% computed as above. The
Republic is thus ordered to pay PIATCO just compensation as herein determined and which sum has reached the total of
$371,426,688.24 as of 31 July 2013.
Upon finality of judgment, interest on the sum due by then shall be at 6% per annum until fully paid pursuant to BSP Circular
No. 799, series of 2013 which took effect on 01 July 2013, and which effectively modified the interest rate rulings in Eastern
Shipping Lines, Inc. v. Court of Appeals.1awp++i1 Eastern Shipping was the basis of the Court's earlier imposition of a 12%
interest from finality of judgment.
IT IS SO ORDERED.120 [Emphasis supplied]
The CA likewise denied the Government's, PIATCO's, Takenaka's, and Asahikosan's motions for partial reconsideration in a resolution
dated October 29, 2013.121
The CA's denial of their motions cleared the way for the elevation of CA-G.R. CV No. 98029 to this Court through a petition for review on
certiorari. The Government, PIATCO, and Takenaka and Asahikosan's consolidated petitions are docketed as G.R. Nos. 209917, 209731,
and 209696, respectively.
B. CA-G.R. SP No. 123221
In a decision dated October 18, 2014,the CA reversed the Omnibus Order dated October 11, 2011, for having been issued with grave abuse of
discretion. The dispositive portion of the decision states:
WHEREFORE, in view of the foregoing, the instant Petition is Hereby GRANTED. Parenthetically, the Omnibus Order dated 11 October 2011 and
Order dated 5 December 2011 of the Pasay City RTC, Branch 117, in Civil Case No. 04-0876-CFM for Expropriation, are hereby NULLIFIED and SET
ASIDE for having been issued with grave abuse of discretion amounting to lack or excess of jurisdiction.
SO ORDERED.122
IV. The Action to Enforce the London Awards, Civil Case No. 06-171
On February 27, 2006, Takenaka and Asahikosan filed an action to enforce the London awards in Claim Nos. HT-04-248 and HT-05-269 before the
RTC of Makati, Branch143. The case was docketed as Civil Case No. 06-171.123
In a decision dated September 6, 2010, the RTC recognized the validity of the London awards in Claim Nos. HT-04-248 and HT-05-269 and declared
these awards as enforceable in the Philippine jurisdiction. The RTC thus ordered PIATCO to pay Takenaka and Asahikosan the sum of $85.7 million.124
PIATCO appealed the case to the CA 125 which affirmed the RTC rulings in a decision dated March 13, 2012. 126 The CA likewise denied PIATCO's
motion for reconsideration in a resolution dated May 31, 2012.127
PIATCO responded by filing a petition for review on certiorari with this Court assailing the CA's ruling. The case was docketed as G.R. No. 202166and
is still pending before the Court separately from the present petitions.
To summarize, the cases pending before the Court are the consolidated cases: G.R. Nos. 209917, 209696, 209731,and 181892, and G.R. No. 202166
as a separate case.
G.R. No. 209917 is the Government's petition for review on Certiorari 128 to partially reverse the CA's August 22, 2013 Amended Decision 129 and its
October 29, 2013 Resolution130 in CA-G.R. CV No. 98029.
G.R. No. 209696 is a petition for review on certiorari filed by Takenaka and Asahikosan to partially reverse the CA's August 22, 2013 Amended
Decision and its October 29, 2013 Resolution in CA-G.R. CV No. 98029.131
G.R. No. 209731 is PIATCO's petition for review on certiorari to reverse the CA's August 22, 2013 Amended Decision, and October 29, 2013
Resolution in CA-G.R. CV No. 98029.132 G.R. Nos. 209917, 209696 & 209731 originally arose from the Government's complaint for expropriation of the
NAIA-IPT III filed with the RTC of Pasay, Branch117 in Civil Case No. 04-0876. The main issue before the Court in these petitions is the valuation of
the just compensation due for the Government's expropriation of the NAIA-IPT III.
G.R. No. 181892 is the Government's petition for certiorari with prayer for the issuance of a temporary restraining order, 133 assailing the May 3, 2007,
May 18, 2008;and January 7, 2008 orders of the RTC of Pasay City, Branch 117 in Civil Case No. 04-0876.134
This petition likewise arose from the Government's complaint for expropriation of the NAIA-IPT III. The main issue in this petition is the propriety of the
appointment of DG Jones and Partners as an independent appraiser of the NAIA-IPT III.1âwphi1
G.R. No. 202166 is PIATCO's petition for review on certiorari 135 to assail the CA's March 13, 2012 decision 136 and May 31, 2012 Resolution137 in CA-
G.R. CV No. 96502. The petition arose from Takenaka and Asahikosan's action to enforce the London awards before the RTC of Makati, Branch 143 in
Civil Case No. 06-171. As previously mentioned, this case was not consolidated with the four(4) cases above and shall thus be separately ruled upon
by the Court.
V. The Parties' Positions
A. The Government's Position (G.R. Nos. 209917, 209731, and 209696)
G.R. No. 209917
In G.R. No. 209917, the Government asks the Court to partially reverse the CA rulings and to deduct from the replacement cost of
US$300,206,693.00the following items: (a) depreciation in the amount of US$36,814,612.00; and (b) PIATCO's non-compliance with contract
specifications in the amount of US$113,944,044.00. The Government also refutes the CA's imposition of a legal interest on just compensation.
The Government asserts that the CA did not consider equity in computing the replacement cost of the NAIA-IPT III. Contrary to the Court's
pronouncement in Gingoyon, the CA computed just compensation based solely on RA 8974 and its IRR. The CCV of $300,206,639.00 only reflects the
valuation of the NAIA-IPTIII as of November 2002 when PIATCO stopped the construction of the terminal, and did not take into account other factors
that lowered its valuation as of December 2004.
The Government posits that there are two standards in measuring the replacement cost. The implementing rules of RA 8974 failed to provide a
complete formula to arrive at the replacement cost of an expropriated property.
The first and common standard is the depreciated replacement cost method which measures the cost of replacing an asset at current prices but in its
actual condition, i.e., adjusted for age, wear and tear. The Chartered Institute of Public Finance and Accounting defines depreciated replacement cost
as "a method of valuation which provides the current cost of replacing an asset with its modern equivalent asset less deductions for all physical
deterioration and all relevant forms of obsolescence and optimization" and as "the replacement value of property minus physical depreciation and
obsolescence; insurance adjusters estimate the actual cash value of property based on its depreciated replacement cost."138
In other words, depreciated replacement cost adjusts the cost of replacing the actual asset in accordance with the asset's age in order to take into
account the lower economic utility of an asset that is not brand new. As an asset ages, higher economic cost is required to maintain that asset to the
level of utility of a brand new one.
The second and less common standard is the new replacement cost method which measures the cost of replacing an asset at current prices with no
adjustment for age, wear, and tear. It refers to "the cost to replace damaged property with like property of the same functional utility without regard to
depreciation (physical wear and tear) and obsolescence."139
The Government asks the Court to adopt the depreciated replacement cost method where depreciation is deducted from the replacement cost. The
Government asserts that it is an internationally accepted practice to consider depreciation and other forms of obsolescence and optimization in
measuring the replacement cost of an asset.
The Government argues that the new replacement cost method usually applies in cases where the property must be rebuilt. For example, an insurance
policy for a house would usually use the new replacement cost method because a house, which was destroyed by fire or other natural disaster, must
be rebuilt. On the other hand, an insurance policy for an automobile would use the depreciated replacement cost because it presupposes that a new
automobile must be purchased to replace the old automobile that suffered from wear and tear.
The Government disputes the CA's opinion that the replacement cost cannot be lower than the actual construction because market prices tend to move
upward over time. The Government contends that the replacement cost may be lower than the construction cost if the price of the materials such as
steel, cement, and copper used during the construction stage decreases after the construction of the improvement. Moreover, labor productivity and
technological advancements affect the replacement cost since these counterbalance inflation. The depreciated replacement cost method is utilized "in
setting user rates for public utilities precisely because this standard of value will tend to result in lower prices over time, not higher prices."140
The Government likewise disagrees with the CA that the depreciation adjustment "would irrationally result in[a] book value which continues to be lower
and lower over time." Since an asset must be maintained, the cost of performing maintenance and repairs increases the asset's replacement cost.
Consequently, repairs and maintenance cost counter-balance depreciation. The recognition that an asset depreciates impliedly acknowledges that the
owner will spend more costs in maintaining the asset's utility than on a brand new asset.
The Government agrees with the CA that depreciation is a cost allocation method and not a valuation method. However, the Government stresses that
depreciation is also an economic cost; depreciation thus recognizes that an asset suffers from wear and tear and would require higher cost to maintain
an asset's economic utility. Depreciation, as both economic and accounting concepts, represents cost adjustments to reflect the fair value of the asset
due to age, wear, and tear.
The Government adds that the premise of the replacement cost method is "to measure the cost of replacing an asset at current prices with an asset
that has the same economic utility."141 Thus, the CA erred when it held that the depreciation adjustment was inconsistent with the replacement cost
method for the reason that this method factors in the current market price to measure the cost of replacing an asset.
For instance, if the Government would expropriate a ten-year-old automobile, the new replacement cost method would compensate the owner the
amount of an asset that has more economic utility than the ten-year-old automobile. On the other hand, if the Government would use the depreciated
replacement cost method, it would only pay the value of an asset that has economic utility of a ten-year-old automobile.
The Government likewise insists that the CA erred in not deducting from the replacement cost the construction costs for deviations from the original
contract, the inappropriate and defective structures, and structures that were built in violation of international standards. It asserts that the
NAIA-IPT III suffers from structural defects, as evidenced by the following:
(a) In the August 2007 Site Observation Report, Ove Arup found that the NAIA-IPT III suffered from structural defects.
(b) In its Scott Wilson Report, PIATCO admitted that the NAIAIPT III suffered from structural defects. The relevant portions of
the Report provide:
Section 3.3.23. The cracking noted in the 2004 report at the upper storey beam/column interface appears to have worsened particularly in the outer
faces of a number of columns at high level adjacent to the internal ramps.
Section 3.3.37. As far as the building structure is concerned the outstanding issues are the Taking Over Inspection Defects List, outstanding Quality
Observation Report issues and the Non-Compliance Schedule x x x.142
(c) The ASEP made the following observation in its June 23, 2006 Report:
● Results of material tests carried out identified that the materials used were adequate and meet or exceed the ER
specification. However, the thickness of the wall angle used (0.4 mm) does not meet the minimum plate thickness
for metals to be fastened by power-actuated anchors, which requires a minimum of 0.6 mm (Hilti Catalogue). ASEP
recommended further tests.
● ASEP considered that the quality of workmanship of the installation is not considered to be within minimum
acceptable practice.
● Structural design of the ceiling system provided by Takenaka and independently assessed by ASEP concluded
that the factor of safety of individual components is high. However, ASEP stated that the overall factor of safety of
the total ceiling system is expected to be lower due to poor workmanship of the connections. The positioning of the
air-conditioning ducts, fire protection system pipes, and other systems above the ceiling has affected the standard
spacing of the ceiling hangers and may have contributed to the uneven distribution of loads to the various ceiling
components, although without some of the riveted joints failing, the ceiling hangers are still adequate.
● ASEP concluded that a combination of poor workmanship and wrong choice of system in some areas particularly
if repeated access is required for inspection and maintenance.143
(d) In its June 23, 2006 Report, the ASEP opined that the NAIA-IPT III may be partially opened provided that retrofitting works
are done prior to its full operation. Thus, the MIAA initiated the structural remediation program of the NAIA-IPT III.144
(e) TCGI documented the "heaving of homogenous tiles and cracks underneath the slabs in the head house airline lounges
(Level 3, Sector 4)," 145 attributable to the 5.4 magnitude earthquake that hit Lingayen, Pangasinan, on November 27, 2008. The
earthquake was felt in Pasay with a 3.0 magnitude. PIATCO failed to refute TCGI's findings.146
The Government insists that the operation of the NAIA-IPT III is not an implied admission of the nonexistence of structural defects. The Government
clarifies that the structurally defective sectors of the NAIA-IPT III remain unoccupied. Out of the 10 Sectors of the NAIA-IPT III, the MIAA fully occupies
Sectors 1, 3, 5, and 6, and partially occupies Sectors 2 and 4. The MIAA did not occupy Sections7, 8, 9, and the car park due to structural issues.
That the Court declared the PIATCO contracts as null and void should not impede the deductibility of construction costs for deviations from the original
contract, the inappropriate and defective structures, and structures that were built in violation of international standards. The Government emphasizes
that when the Court nullified the PIATCO contracts, the NAIAIPT III was almost complete. Consequently, the Government had every reason to expect
that PIATCO would build the NAIA-IPT III according to the agreed specifications. PIATCO, however, acted in bad faith in not complying with the
nullified PIATCO contracts. PIATCO should not benefit from its violation of the concession agreements and the gross deviations from the original
design of the NAIA-IPT III.
The Government maintains that the imposition of legal interest on just compensation is erroneous.
First, the present expropriation case is sui generis. The Government was forced to expropriate the NAIA-IPT III due to PIATCO's violation of the
Constitution and the law. To award legal interest to PIATCO is to condone its illegal acts. In Hulst v. PR Builders, Inc., 147 the Court held that the
illegality should not be rewarded. In Valderama v. Macalde,148 the Court deleted the payment of interest on the ground that a person should not be
allowed to profit from an illegal act. As between two parties, he who, by his acts, caused the loss shall bear the same. He, who comes to court for
equity must do so with clean hands.
Second, PIATCO itself caused the delay of the expropriation proceedings before the RTC. PIATCO did not produce the vouchers, purchase orders,
and as-built documents which were in its possession despite the Government's filing of a Motion for Production and Inspection of Documents dated
May 25,2006, before the RTC.149
Third, in Eastern Shipping Lines v. CA,150 the Court pronounced that unliquidated claims are not subject to legal interest, such as the present case.
Fourth, the law and jurisprudence on the imposition of interest does not address the peculiar situation where the NAIA-IPT III is being expropriated as a
direct result of the nullification of the PIATCO contracts. The application of the law and jurisprudence on the imposition of interest would not result in a
fair and equitable judgment for the Government. The Court must apply equity in the absence of a specific law applicable in a particular case or when
the remedy afforded by the law would be inadequate to address the injury suffered by a party.
The Government additionally complains that, since November 2002, "long before the institution of the expropriation [complaint] in December 2004,"
Takenaka and Asahikosan prevented it from entering the NAIA-IPT III.151
G.R. No. 209696
The Government alleges that it is willing to pay just compensation to the lawful claimant. However, just compensation should not be set aside in favor
of Takenaka and Asahikosan since their claim against PIATCO has not yet been resolved with finality.
The Government disputes the applicability of Calvo v. Zandueta 152 in the present case. In that case, the Court allowed Juana Ordoñez to be subrogated
to Aquilino Calvo as defendant because Ordoñez obtained a final judgment in her favor which entitled her to levy the land sought to be expropriated.
Furthermore, Ordoñez was not a party to the expropriation case.
The Government asserts that Takenaka and Asahikosan should share in the BOC's expenses. Under Section 12, Rule 67 of the Rules of Court, the
rival claimants should shoulder their costs in litigating their claim while the property owner should shoulder the costs of the appeal if he appeals the
case and the appellate court affirms the lower court's judgment.
To divide the BOC's expenses between the Government and PIATCO would result in unjust enrichment. Under Section 1, Rule 142 of the Rules of
Court, the court shall have the power to divide the costs of an action as may be equitable.
Furthermore, Takenaka and Asahikosan actively participated in and benefited from the proceedings before the BOC, which included the London
awards in the computation of just compensation. Takenaka and Asahikosan likewise relied on the Final Report in their Appellant's Brief dated October
3, 2012, and in their Reply Brief dated January 20, 2013.
The Government contends that Takenaka and Asahikosan's computations of actual construction cost of the NAIA-IPT III are conflicting.
In their Manifestation dated December 9, 2010, Takenaka and Asahikosan stated that the actual construction cost amounted to $360,969,790.82.
However, in his report, Mr. Gary Taylor appraised the actual construction cost at US$323 million, "plus other costs that were incurred by various parties
during its conception and construction plus any property appreciation."153 Mr. Gary Taylor further stated that the "true value of the NAIA-IPT III facility is
nearer to US$408 million, given the fact that the Republic's expert, Gleeds, failed to recognize or include any values for [the] design and other
consultants (10%) or property inflation based on GRP schedules (15%)." 154 However, Mr. Taylor did not explain how he arrived at the amount of $408
million.
The Government adds that Takenaka and Asahikosan's actual construction cost of $360,969,790.82 is erroneous as the London and Makati awards
include interests, attorney's fees and costs of litigation. Furthermore, Takenaka and Asahikosan's "as-built" drawings are not truly "as-built." The
drawings do not reflect the quality and exact detail of the built portions of the NAIA-IPT III.155
G.R. No. 209731
The Government disputes PIATCO's claim that it was denied due process when it was not furnished a copy of the Final Report. The Government
points out that all the parties in the case were not given a copy of the Final Report. Furthermore, PIATCO belatedly raised this issue; it was brought for
the first time on appeal before this Court.
The Government also emphasizes that PIATCO immediately filed a notice of appeal a day after its receipt of the RTC decision. This is contrary to
PIATCO's claim that it wanted to secure a copy of the Final Report and subject it to clarificatory hearing.
Even assuming that the RTC erred in not furnishing the parties copies of the Final Report, the lapse is merely an "innocuous" technicality that should
not nullify the RTC rulings.
The Government claims that PIATCO failed to substantiate the attendant costs. The documents attached to the Compliance dated December 14, 2010,
are mostly summary of payments that PIATCO allegedly paid to the consultants. However, PIATCO failed to prove that the alleged consultants
rendered actual service related to the construction of the NAIAIPT III. Reyes Tacandong & Co. merely verified the mathematical accuracy of the
schedules, including the computation of the inflation rate. Furthermore, the receipts that PIATCO submitted are not enough to cover its claimed just
compensation.156
G.R. No. 181892
The Government disputes the RTC's appointment of an independent appraiser of the NAIA-IPT III. It claims that Section 11 of RA 8974 IRR solely
authorizes the implementing agency to engage the services of an appraiser in the valuation of the expropriated property, while under Section 10 of RA
8974 IRR, it is the implementing agency that shall determine the valuation of the improvements and/or structures on the land to be acquired using the
replacement cost method. Pursuant to these provisions, the Government engaged the services of Gleeds, Ove Arup and Gensler for purposes of
appraising the NAIA-IPT III.
The Government also argues that the appointment of an independent appraiser would only duplicate the efforts of the existing appraisers. A court
appointed appraiser and the existing appraisers would perform the same task of determining the just compensation for the NAIA-IPT III. Thus, the RTC
should have relied instead on the opinion of the internationally-renowned appraisers that the Government hired.
The Government likewise avers that the appointment of an independent appraiser would only render the expropriation proceedings more costly. The
Government would be forced to pay for the services of two appraisers, which is not the intention of RA 8974. The court-appointed appraiser, too, would
render the BOC's functions useless. Under Rule 67 of the Rules of Court, it is the BOC that is required to receive evidence in the determination of just
compensation. Rule 67 of the Rules of Court does not require the appointment of an appraiser in eminent domain cases.
Lastly, the Government complains that the RTC order requiring it to submit a Certificate of Availability of Funds is vague because the RTC did not
specify the costs of the expropriation proceeding.157
B. PIATCO's Position
G.R. No. 209731

PIATCO argues that the RTC rulings are null and void for the failure of the RTC clerk of court to furnish them copies of the BOC Final Report. Sections
7 and 8, Rule 67 of the Rules of Court require that the parties be given ten days within which to file their objections to the findings of the
commissioners.
On its base value of $360,969,790.82, PIATCO insists that its valuation is supported by a preponderance of evidence, particularly by the As-Built
Drawings and the Bills of Quantities submitted by Takenaka and Asahikosan. The CA should not have relied on the Government's self-serving
evidence in computing the base value of the NAIA-IPT III.
PIATCO also cites the CA's failure to include the attendant costs in the valuation of the NAIA-IPT III as an omission; the CA merely recognized the
construction cost valuation of the terminal pursuant to the Gleeds Report. PIATCO alleges that it incurred attendant costs of $70,197,802.00 apart from
the construction cost of $360,969,790.82. It also emphasizes that its consultancy fees are even below the international norms, as shown in the Scott
Wilson Report. It also claims that site preparation costs, legal costs in planning and constructing the development, and financing costs form part of
attendant costs since these costs are indispensable in completing a complex infrastructure project.
PIATCO further alleges that its attendant costs are supported by the attachments in its Compliance dated December 14, 2010, including the summary
of payments for incurred attendant costs, official receipts, statements of account, sales invoices, endorsements, insurance policies and other related
documents, acknowledgement receipts, agreements, invoices, and bonds. It claims that Reyes Tacandong & Co examined these documents and
confirmed that the attendant costs amount to $70,197,802.00 in its Report of Factual Findings dated December 14, 2010.
PIATCO asserts that its submission of the summary computation is justified under Section 3 (c), Rule 130 of the Rules of Court which allows the party
to submit non-original copies if the original consist of numerous accounts or other documents that the court cannot examine without great loss of time;
the fact sought to be established from these, after all, is only the general result of the whole.
PIATCO likewise argues that the total construction cost of $431,167,593.00 - which is the sum of $360,969,791.00 and $70,197,802.00 - should be
converted to 2004 values since the reckoning period of just compensation is the date of taking or the date when the complaint was filed, whichever is
earlier. It posits that the amount of $431,167,593.00 should thus be multiplied by 1.0971 - the prevailing inflation rate from November 29, 2002, to
December 21, 2004 - for a total amount of $470,450,825.00.
The sum of $470,450,825.00 should further earn an interest rate of 12% per annum beginning December 21,2004, until full payment. PIATCO
maintains that the Government's deposit in an escrow account of a portion of just compensation is not equivalent to payment; hence, interest on the full
amount of just compensation shall continue to apply.
PIATCO contends that the CA's reduction of interest rate to 6% is erroneous because the Court, in numerous cases, has consistently imposed 12%
interest per annum on just compensation. PIATCO emphasizes that the imposition of interest on just compensation is not based on contract, but on the
owner's right to be immediately paid just compensation.
Finally, PIATCO prays that it be paid all income generated from the operations of the NAIA-IPT III, from the date of taking up to the present.158
G.R. No. 209917
PIATCO asserts that the NAIA-IPTIII does not suffer from massive structural defects; that the Government's reliance on the Ove Arup Report is self-
serving. The Government would not have expropriated the NAIA-IPT III if it truly believed that the terminal suffered from massive structural defects.
Furthermore, the MIAA's Project Management Office oversaw the construction of the NAIA-IPT III to ensure that the terminal complied with the agreed
specifications under the relevant contracts between PIATCO and the Government.
PIATCO contends that the depreciation, deterioration, and costs for non-compliance with contract specifications should not be deducted from the base
value of the NAIA-IPT III. The base value of $300,206,693.00 should be the least amount that the Government should pay. The measure of just
compensation is the fair and full equivalent for the loss sustained by the property owner, not the gain that would accrue to the condemnor.
PIATCO also asks this Court to strike from the record the affidavit of Kaczmarek and other attachments in the Government's motion for partial
reconsideration dated August 22, 2013. The Government should not be allowed to present new evidence on the valuation of the NAIA-IPT III before the
CA. PIATCO points out that Kaczmarek was not cross-examined and his identity, knowledge, and credibility were not established before the trial court.
The Government is estopped from introducing new evidence before the appellate court since it objected to Takenaka and Asahikosan's introduction of
new and additional evidence before the CA.
As its last point, PIATCO posits that Section 10 of RA 8974 IRR does not allow the deduction of depreciation, deterioration, and costs for non-
compliance with contract specifications from the replacement cost.
Depreciation is merely an accounting concept that facilitates the standard of decreasing asset values in the books of accounts. It is not a method of
valuation, but of cost allocation; an asset may still be valuable and yet appear fully depreciated in the financial statements. If at all, depreciation was
only relevant after the Government took possession and operated the NAIA-IPT III.159
G.R. No. 209696
PIATCO agrees with the CA that just compensation must be directly paid to it as the owner of the NAIA-IPTIII. It stresses that RA 8974 and its
implementing rules clearly provide that the owner of the expropriated property shall receive the entire amount of just compensation.
PIATCO insists that it would be erroneous to create an escrow account in favor of Takenaka and Asahikosan since the enforceability of Claim Nos. HT-
04-248 and HT-05-269 in Philippine jurisdiction has yet to be decided by the Court in G.R. No. 202166. It points out that the main issue in G.R. Nos.
209731, 209917, and 209696 is the amount of just compensation, not the determination of Takenaka and Asahikosan's money claims against PIATCO.
Takenaka and Asahikosan's insistence to enforce their money claims against PIATCO in G.R. Nos. 209731, 209917 & 209696 constitutes forum
shopping and is still premature.
PIATCO contends that Takenaka and Asahikosan have no standing to demand the creation of an escrow account in their favor. Section 9, Rule 67 of
the Rules of Court does not apply in this case because there are no conflicting claims regarding the ownership of the NAIA-IPT III. Furthermore, the
Court categorically stated in Gingoyon that PIATCO owns the NAIA-IPT III. PIATCO further argues that the rules on preliminary attachment do not
apply to this case. Mere apprehension that PIATCO would abscond from its financial liabilities is not a ground for the attachment of the creditor's
assets. Moreover, an artificial entity cannot abscond. PIATCO likewise denies that it refuses to pay Takenaka and Asahikosan's money claims.
PIATCO posits that the eminent domain case is not the proper venue for the adjudication of Takenaka and Asahikosan's money claims.160
G.R. No. 181892

PIATCO agrees with the RTC's appointment of DG Jones and Partners as an independent appraiser. The determination of just compensation is
essentially a judicial function. The trial court's power to appoint commissioners is broad enough to include the power to appoint an appraiser who shall
assist the commissioners in ascertaining the amount of just compensation. The latter power is inherent in the court's task to receive evidence and to
arrive at a fair valuation of the expropriated property.
Section 5 (g), Rule 135 of the Rules of Court allows the court to amend and control its processes and orders so as to make them consistent with law
and justice. Furthermore, nothing in RA 8974 IRR that prohibits the trial court from appointing an independent appraiser.
Section 6, Rule 67 of the Rules of Court provides that all parties may introduce evidence on the valuation of the property sought to be expropriated.
The trial court is not bound by the report of the commissioners and of the independent appraisers, much less of the findings of the Government-hired
appraisers.
PIATCO asserts that the Government is estopped from assailing the appointment of an independent appraiser. The Government voluntarily
participated in the nomination of an independent appraiser, and in fact, submitted its own nominees before the trial court.
Contrary to the Government's claim, the RTC did not arbitrarily appoint DG Jones and Partners as an independent appraiser. The RTC in fact required
the nominees to submit their written proposals and invited them to personally appear before the commissioners and the trial court prior to the issuance
of the May 3, May 18,and January 7, 2008 orders.
PIATCO argues that the Government should solely bear the expenses of DG Jones and Partners. Section 12, Rule 67 of the Rules of Court provides
that all costs, except those of rival claimants litigating their claims, shall be paid by the plaintiff, unless an appeal is taken by the owner of the property
and the judgment is affirmed, in which event the costs of the appeal shall be paid by the owner.161
C. Takenaka and Asahikosan's Positions
G.R. No. 209696 and G.R. No. 209731
Takenaka and Asahikosan argue that law and equity dictate that just compensation of at least $85,700,000.00 should be set aside to answer for their
money claims against PIATCO.RA 8974 does not prohibit the creation of an escrow account pending the determination of the parties' conflicting claims
on the property and on the just compensation.
Takenaka and Asahikosan allege that PIATCO is a shell corporation with no significant assets, that has repeatedly defaulted on its monetary
obligations. They emphasize that PIATCO did not pay Takenaka and Asahikosan despite its receipt of the ₱3 billion proffered value from the
Government. Takenaka and Asahikosan seek the creation of an escrow account to preserve their property rights against PIATCO. They posit that
PIATCO may abscond after its receipt of the remaining just compensation from the Government.
PIATCO would profit by at least $155,000,000.00 if it solely receives the entire amount of $431,167,593,000.00 (PIATCO's claimed just compensation
as of December 2002). PIATCO has judicially admitted that it has paid Takenakaand Asahikosan only $275,000,000.00.
Takenaka and Asahikosan assert that the interest of justice will be served if the Court allows the creation of an escrow account in their favor. They
point out that the lower courts already ruled on the enforceability of Claim Nos. HT-04-248 and HT-05-269.Furthermore, the Court, in Gingoyon, merely
ordered the direct payment of just compensation to PIATCO in order to ensure that the builder of the NAIA-IPT III is compensated by the Government
as a matter of justice and equity. Takenaka and Asahikosan underscore that they are the real builders of the NAIA-IPT III as PIATCO's subcontractors.
Takenaka and Asahikosan maintain that Section 9, Rule 67 of the Rules of Court apply with respect to the adjudication of the parties' conflicting just
compensation claims. The Court did not declare in Gingoyon that Rule 67 of the Rules of Court shall not apply to the payment of final just
compensation. The Court merely applied RA 8974 in Gingoyon insofar as the law prescribes direct payment as a prerequisite for the issuance of a writ
of possession in eminent domain cases.
Under Section 9, Rule 67 of the Rules of Court, if there are conflicting claims on the property, the court may order the just compensation to be paid to
the court for the benefit of the person adjudged in the same proceeding to be entitled thereto. Takenaka and Asahikosan argue that they are the lawful
recipients of just compensation as the real builders of the NAIA-IPT III and as the prevailing parties in Claim Nos. HT-04-248 and HT-05-269.
Even assuming that PIATCO is the owner of the NAIA-IPT III, the owner of the expropriated property is not solely entitled to the full amount of just
compensation.
In Republic v. Mangotara,162 citing de Knecht v. CA,163 the Court held that just compensation is not due to the property owner alone; the term "owner"
likewise includes those who have lawful interest in the property such as a mortgagee, a lessee, and a vendee in possession under an executory
contract. In Philippine Veterans Bank v. Bases Conversion Development Authority, 164 the Court held that just compensation may be deposited with the
court when there are questions regarding the ownership of the expropriated property. In Calvo v. Zandueta, 165 the Court deferred the release of just
compensation pending the determination of the ownership of the expropriated property, despite the finality of the order allowing the release of just
compensation.
Takenaka and Asahikosan refuse to share in the expenses of the BOC. Under Section 12, Rule 67 of the Rules of Court, the costs of the expropriation
suit shall be shouldered by the Government. The Government would be unjustly enriched if other parties are required to shoulder the costs of the suit.
It would also be unfair to require Takenaka and Asahikosan to share in the expenses of the BOC since they were not furnished copies of the BOC Final
Report, in violation of their right to due process.166
G.R. No. 209917
Takenaka and Asahikosan argue that deductions for depreciation and deterioration are inconsistent with the concept of replacement cost as a measure
of appraising the actual value of the NAIA-IPT III. In exercising the power of eminent domain, the Government takes the property on "as is, where is"
basis. Takenaka and Asahikosan point out that the Government has the option not to expropriate the terminal. Consequently, the Government cannot
base the value of the building on whether or not the building caters to the Government's needs.
Furthermore, RA 8974 IRR provides that only the costs necessary to replace the expropriated property should be considered in appraising the terminal.
Statutes authorizing the deprivation of private property, as in expropriation cases, must be strictly complied with because these are in derogation of
private rights. The Court's intent in Agan when it declared that equity should likewise be considered in appraising the NAIA-IPT III is to prevent the
Government from undervaluing the property and enriching itself at the expense of private parties.
Takenaka and Asahikosan also insist that a multi-level retail mall is not an unnecessary area. They point out that modern airports are subsidized by
income from retail malls and cannot operate profitably without this additional income.
Takenaka and Asahikosan agree with the CA's finding that the NAIAIPT III is structurally sound. There is no clear evidence that the collapse of the
ceiling of the NAIA-IPT III was caused by the terminal's structural defects. The CA correctly concluded that the ceiling's collapse is merely a finishing
and aesthetic issue.
They emphasize that Mr. Gary Taylor, their hired appraiser, assailed the qualifications, the methodology, and the findings of Ove Arup in its August
2007 Site Observation Report. Furthermore, Ove Arup made several conflicting findings on the structural soundness of the NAIA-IPT III. Ove Arup
concluded that the number of structural members failing the Demand Capacity Rate (DCR)/m.1.10 criteria was more than those used for the retrofit
design. The DCR measures the capacity of a portion of the NAIANAIA-IPT III to carry the load it was designed to bear, with an optimal rate being less
than 1.0. It likewise opined that the distance of the gap between the NAIA-IPT III's bridge and building structure had a potential for seismic pounding.
Takenaka and Asahikosan posit that all the structural members of the NAIA-IPT III have a DCR of less than 1.0based on the 1992 National Structural
Code of the Philippines (NSCP), the code applicable when the NAIA-IPT III was designed and constructed. Takenaka and Asahikosan opine that Ove
Arup did not use the 1992 NSCP in the August 2007 Site Observation Report. Ove Arup's finding that the NAIA-IPT III has a potential for seismic
pounding is baseless. The terminal is designed and built to address the possibility of seismic pounding, taking into consideration that the NAIA-IPT III is
built on Type I soil. Takenaka and Asahikosan claim that Ove Arup's finding was not based on the AASHTO Standard Specification for Highway
Bridges (16th Ed., 1996), the code applicable at the time the NAIA-IPT III was designed and built. Takenaka and Asahikosan likewise argue that Scott
Wilson did not admit that the NAIA-IPT III suffered from structural defects. They clarify that the statements in the Scott Wilson report "were merely
intended to accommodate [the] changes that the client wished to effect." 167 They also point out that the Government stated in its petition (in G.R. No.
209917) that "additional work is required to complete the terminal structure to make it compliant with the standards of Takenaka and Asahikosan."168
To lay the structural issue to rest, Takenaka and Asahikosan consulted Meinhardst (Singapore) Pte Ltd., their Structural Design Consultant, to rebut
TCGI's findings. They also hired disinterested American experts in the construction industry - Mr. S.K. Ghosh of S.K. Ghosh Associates, Inc.; Mr.
Robert F. Mast, PE, SE of Berger/Abram Engineers, Inc.; and Mr. Mete A. Sozen - to validate Meinhardst's conclusions. These experts unanimously
concluded that the NAIA-IPT III's design is structurally sound because it complied with the 1992 NSCP, thus, effectively negating the Government's
claim that the NAIA-IPT III suffers from structural defects. Takenaka and Asahikosan impugn the ASEP Report. They reiterate that they constructed the
NAIA-IPT III in accordance with the Onshore Construction and Offshore Procurement Contracts and the prevailing building code at the time of the
design and construction of the NAIA-IPT III. The statement in the ASEP Report that "the NAIA-IPT III may be partially opened provided that retrofitting
works are done prior to its full operation" does not mean that the terminal is defective. The remediation works were solely to ensure that the NAIA-IPT
III structures are compliant with the current standards, which were not yet in effect when the construction of the NAIA-IPT III took place.
Messrs. Meinhardt opined that the scope of the proposed retrofitting works shows that the structural design of the NAIA-IPT III is not defective because
the proposed retrofitting works are not related to the alleged structural defects of the NAIA-IPT III vis-à-vis the 1992 NSCP. He also stated that the
proposed retrofitting works are meant to reinforce the NAIA-IPT III which is already compliant with the 1992 NSCP.
Takenaka and Asahikosan likewise engaged the services of AECOM Australia Pty. Ltd. to conduct a technical review of the Review on TCGI Report of
Civil Design Review and Evaluation (Elevated Roadway prepared by Ove Arup & Partners HK Ltd. Philippines Branch). AECOM criticized the Ove
Arup's review as follows:
a. Ove Arup valuated the NAIA-IPT's Elevated Roadway using the AASHTO Manual of Bridge Evaluation and the FHA Bridge
Inspectors Reference Manual, which are irrelevant to any discussion of its design;
b. Ove Arup evaluated the NAIA-IPT III's Elevated Roadway using the Seismic Retrofitting Manual for Highway Structures,
which is irrelevant because there is no need for a seismic retrofit of the NAIA-IPT III's Elevated Roadway;
c. Ove Arup's suggestion that an in-situ measurement of the geometry data of key structural components be undertaken is
unnecessary and irrelevant to a peer review of the design of the NAIA-IPT III's Elevated Roadway;
d. Ove Arup made an incorrect assessment of the type of foundation material with respect to soil bearing capacity;
e. Ove Arup used inappropriate codes for the assessment of the bearings of the NAIA-IPT III's Elevated Roadway;
f. Ove Arup's analysis suggests that 36 pier columns of the NAIA-IPT III's Elevated Roadway are allegedly under strength, but
fails to quantify the ratio of the column effect to the corresponding capacity;
g. AECOM objects to Ove Arup's criticism that the value of the soil-bearing capacity used for the length of the bridge of the
NAIA-IPT III's Elevated Roadway needs to be justified, since the design of the NAIA-IPT III's Elevated Roadway must be judged
on the geotechnical information available to AECOM at the time the bridge was made. No foundation could have been built
without the foundation bearing capacity results having been submitted to the relevant overseeing authority and approved
thereby;
h. Ove Arup used an incorrect site coefficient for the site's soil type, which resulted in seriously erroneous input data, thus, any
conclusions or recommendations derived from these data are rendered invalid;
i. Ove Arup's claim that there are "failures" in the elastomeric bearings/bearing pads is based on an Australian design code
which did not exist at the time the NAIA-IPT III's Elevated Roadway was designed;
j. Takenaka and Asahikosan were never provided a copy of the TCGI Report that was used as basis for the ARUP Report;
k. There are serious discrepancies between the Ove Arup Report and the referenced, yet unseen TCGI Report;
l. The NAIA-IPT III's Elevated Roadway complies with the project design codes in force at the time it was designed; and
m. AECOM refutes Ove Arup and TCGI's suggestion that the NAIA-IPT III's Elevated Roadway requires retrofitting or any
remedial work.
Takenaka and Asahikosan aver that the Government would be able to lessen its expenses, operate the NAIA-IPT III, and earn revenues sooner as
there is, in fact, no need to perform retrofitting works on the terminal.
Takenaka and Asahikosan point out that the design of the NAIA-IPT III is bilaterally symmetrical which means the structural system of one area is
virtually identical to others. Since the Government opened certain areas of the NAIA-IPT III to the public, it follows that the unused areas are also
structurally sound considering that majority of the terminal building share the same structural design.
They also deny that they employed armed guards to prevent the MIAA and DOTC officials from entering the premises of the NAIA-IPT III. They point
out that the Government did not raise this issue before the lower courts. They also state that they have provided the parties all documentary evidence
necessary in appraising the NAIA-IPT III, such as the Bills of Quantities.169
VI. The Issues
In G.R. Nos. 209917, 209696, and 209731, we resolve the following issues:
(1) Whether the RTC's May 23, 2011 decision in Civil Case No. 04-0876 is null and void for violation of PIATCO, Takenaka and
Asahikosan's right to procedural due process;
(2) Whether the CA legally erred in computing just compensation in the expropriation of the NAIA-IPT III;
(a) Whether "fair market value" and "replacement cost" are similar eminent domain standards of property valuation;
(b) Whether the depreciated replacement cost approach or the new replacement cost approach shall be used in the appraisal of
the NAIA-IPT III;
(c) With respect to the computation of construction costs, the issues are:
1. Whether the Government's computation of construction cost is supported by a preponderance of evidence;
2. Whether the NAIA-IPT III suffered/suffers from massive structural defects;
3. Whether the alleged unnecessary areas should be excluded from the computation of construction cost;
(d) With respect to the computation of attendant costs, the issues are:
1. Whether PIATCO's claimed attendant cost is supported by a preponderance of evidence;
a) Whether the Court may accord probative value to photocopied voluminous documents allegedly
proving PIATCO's attendant costs;
b) Whether the Court may accord probative value to the summary report prepared by Reyes Tacandong
& Co., which validated PIATCO's computation of attendant costs;
2. Whether attendant cost may be pegged at 10% of the construction cost;
3. Whether the Government included the attendant cost in its valuation of the NAIA-IPT III;
(e) Whether depreciation may be deducted from the replacement cost of the NAIA-IPT III;
(f) Whether rectification for contract compliance (for failure to comply with bid documents; for inferior quality; and for the
additional areas to be built)may be deducted from the replacement cost of the NAIA-IPT III;
(g) Whether the replacement cost of the NAIA-IPT III shall be adjusted to December 2004 values based on inflation;
(h) Whether the CA erred in imposing an interest rate of 6% per annum on the replacement cost of the NAIA-IPT III;
(i) Whether PIATCO shall be entitled to the fruits and income of the NAIA-IPT III;
(3) Whether Takenaka and Asahikosan shall share in the expenses of the BOC;
(4) Whether the owner of the property sought to be expropriated shall solely receive the just compensation due; and
(5) Whether the Government may take property for public purpose or public use upon the issuance and the effectivity of the writ of
possession;
In G.R. No. 181892, the following issues are relevant:
(1) Whether the appointment of an independent appraiser issue has been rendered moot and academic by the RTC's
promulgation of its rulings in Civil Case No. 04-0876; and
(2) Whether the issue of who shall pay the independent appraiser's fees has been rendered moot and academic by the RTC's
promulgation of its rulings in Civil Case No. 04-0876.
VII. Our Ruling
A. G.R. Nos. 209917, 209696 & 209731
1. The parties were afforded procedural

due process despite their non-receipt
of the BOC Final Report prior to the
promulgation of the RTC's May 23,
2011 Decision.
Before ruling on the substantive issues posed, we first resolve the issue of whether the CA erred in ruling that the RTC's May 23, 2011
decision is valid.
PIATCO, Takenaka and Asahikosan challenge the validity of the RTC's decision for alleged violation of their right to due process. They
point out that the RTC promulgated its decision in Civil Case No. 04-0876 on May 23, 2011, immediately after the release of the BOC's
Final Report
on March 31, 2011. They complain that since the RTC's clerk of court did not furnish the parties copies of the Final Report, the trial court
violated Sections 7 and 8, Rule 67 of the Rules of Court as they failed to object to the Final Report's contents.
Rule 67 of the Rules of Court provides that the clerk of court shall serve copies of the commissioners' final report on all interested parties
upon the filing of the report. Each party shall have ten days within which to file their objections to the report's findings.170
Upon the expiration of the ten-day period or after all the parties have filed their objections and after hearing, the trial court may: (a) accept
the report and render judgment in accordance therewith; (b) for cause shown, recommit the report to the commissioners for further report of
facts; (c) set aside the report and appoint new commissioners; (d) partially accept the report; and (e) make such order or render such
judgment as shall secure to the plaintiff the property essential to the exercise of his right of expropriation; and to the defendant, the just
compensation for the property so taken.171
We rule that the parties' failure to receive the Final Report did not render the May 23, 2011 Decision null and void.
The essence of procedural due process is the right to be heard. 172 The procedural due process requirements in an eminent domain case
are satisfied if the parties are given the opportunity to present their evidence before the commissioners whose findings (together with the
pleadings, evidence of the parties, and the entire record of the case) are reviewed and considered by the expropriation court. It is the
parties' total failure to present evidence on just compensation that renders the trial court's ruling void. The opportunity to present evidence
during the trial remains to be the vital requirement in the observance of due process.173
The record will show that the parties exhaustively discussed their positions in this case before the BOC, the trial court, the appellate court,
and this Court.
They had ample opportunity to refute and respond to each other's positions with the aid of their own appraisers and experts. Each party, in
fact, submitted countervailing evidence on the valuation of the NAIA-IPT III. They also filed numerous and voluminous pleadings and
motions before the lower courts and before this Court. The mere failure of the RTC's clerk of court to send the parties copies of the BOC
Final Report is not substantial enough under the attendant circumstances to affect and nullify the whole proceedings. Litigation is not a
game of technicalities. Strong public interests require that this Court judiciously and decisively settle the amount of just compensation in the
expropriation of the NAIA-IPT III. We cannot further delay this more-than a-decade case and let interests accrue on just compensation by
remanding the case once more to the trial court.
2. Framework: Eminent domain is an

inherent power of the State
2.a. The power of eminent domain is a fundamental state power that is inseparable from sovereignty.
Eminent domain is a fundamental state power that is inseparable from sovereignty. It is the power of a sovereign state to
appropriate private property within its territorial sovereignty to promote public welfare. The exercise of this power is based on
the State's primary duty to serve the common need and advance the general welfare. 174 It is an inherent power and is not
conferred by the Constitution. 175 It is inalienable and no legislative act or agreement can serve to abrogate the power of eminent
domain when public necessity and convenience require its exercise.176
The decision to exercise the power of eminent domain rests with the legislature which has the exclusive power to prescribe how
and by whom the power of eminent domain is to be exercised. Thus, the Executive Department cannot condemn properties for
its own use without direct authority from the Congress.177
The exercise of eminent domain necessarily derogates against private rights which must yield to demand of the public good and
the common welfare.178 However, it does not confer on the State the authority to wantonly disregard and violate the individual's
fundamental rights.
2.b. Just compensation is the full and fair equivalent of the property taken from the owner by the condemnor.
The 1987 Constitution embodies two constitutional safeguards against the arbitrary exercise of eminent domain: first, private
property shall not be taken for public use without just compensation;179 and second, no person shall be deprived of life, liberty,
or property without due process of law.180
Just compensation is defined as "the full and fair equivalent of the property taken from its owner by the expropriator." The word
"just" is used to qualify the meaning of the word "compensation" and to convey the idea that the amount to be tendered for the
property to be taken shall be real, substantial, full and ample. 181 On the other hand, the word "compensation" means "a full
indemnity or remuneration for the loss or damage sustained by the owner of property taken or injured for public use."182
Simply stated, just compensation means that the former owner must be returned to the monetary equivalent of the position that
the owner had when the taking occurred.183 To achieve this monetary equivalent, we use the standard value of "fair market
value" of the property at the time of the filing of the complaint for expropriation or at the time of the taking of property, whichever
is earlier.
2.b.1. Fair market value is the general standard of value in determining just compensation.
Jurisprudence broadly defines "fair market value" as the sum of money that a person desirous but not compelled to
buy, and an owner willing but not compelled to sell, would agree on as a price to be given and received for a
property.184
Fair market value is not limited to the assessed value of the property or to the schedule of market values determined
by the provincial or city appraisal committee. However, these values may serve as factors to be considered in the
judicial valuation of the property.185
Among the factors to be considered in arriving at the fair market value of the property are the cost of acquisition, the
current value of like properties, its actual or potential uses, and in the particular case of lands, their size, shape,
location, and the tax declarations. The measure is not the taker's gain but the owner's loss.186 To be just, the
compensation must be fair not only to the owner but also to the taker.187
While jurisprudence requires the "fair market value" to be the measure of recovery in expropriation cases, it is not an
absolute and exclusive standard or method of valuation.188 There are exceptional cases where the property has no
fair market value or where the fair market value of the property is difficult to determine.
Examples of properties with no or with scant data of their fair market values are specialized properties or buildings
designed for unique purposes.189 These specialized properties bear these characteristics because they are "rarely x
x x sold in the market, except by way of sale of the business or entity of which it is part, due to the uniqueness
arising from its specialized nature and design, its configuration, size, location, or otherwise."190
Examples of specialized properties are churches, colleges, cemeteries, and clubhouses.191 These also include
airport terminals that are specifically built as "a place where aircrafts land and take off and where there are buildings
for passengers to wait in and for aircraft to be sheltered." 192 They are all specialized properties because they are not
usually sold in the ordinary course of trade or business.
In the Tengson Report dated December 1, 2010, Gary Taylor characterized the NAIA-IPT III as a specialized
asset.193 Tim Lunt also stated in the Reply to Tengson International Ltd. Report and Response from Takenaka &
Asahikosan dated December 7, 2010 that the market value of an airport will not be the same as the market value of
other commercial, industrial, and residential buildings within the Metro Manila region.194
In cases where the fair market value of the property is difficult to ascertain, the court may use other just and
equitable market methods of valuation in order to estimate the fair market value of a property.
In the United States, the methods employed include: (1) the cost of replacing the condemned property, less
depreciation; (2) capitalization of the income the property might reasonably have produced; (3) the fair rental value
of the property during a temporary taking; (4) the gross rental value of an item over its depreciable lifetime; (5) the
value which the owner's equity could have returned, had the owner invested in monetary instruments; (6) the cost of
repair or the capitalized cost of inconvenience, whichever is less; and (7) the loss of investment expenses actually
incurred.195 The primary consideration, however, remains the same - to determine the compensation that is just, both
to the owner whose property is taken and to the public that will shoulder the cost of expropriation.
2.b.2. Replacement cost is a different standard of value from fair market value.
In Gingoyon, we held that the construction of the NAIA-IPT III involves the implementation of a national
infrastructure project. Thus, for purposes of determining the just compensation of the NAIA-IPT III, RA 8974 and its
implementing rules shall be the governing law.
Under Section 10 of the RA 8974 IRR, the improvements and/or structures on the land to be acquired for the
purpose of implementing national infrastructure projects shall be appraised using the replacement cost method.
Replacement cost is a different standard of valuation from the fair market value. As we previously stated, fair market
value is the price at which a property may be sold by a seller who is not compelled to sell and bought by a buyer
who is not compelled to buy. In contrast, replacement cost is "the amount necessary to replace the
improvements/structures, based on the current market prices for materials, equipment, labor, contractor's profit and
overhead, and all other attendant costs associated with the acquisition and installation in place of the affected
improvements/structures." 196 We use the replacement cost method to determine just compensation if the
expropriated property has no market based evidence of its value.
2.b.3. Replacement cost is only one of the standards that the Court shall consider in appraising the NAIA-IPT III.
In using the replacement cost method to ascertain the value of improvements that shall be expropriated for
purposes of implementing national infrastructure projects, Section 10 of RA 8974 IRR requires the implementing
agency to consider the kinds and quantities of materials/equipment used, the location, configuration and other
physical features of the properties, and the prevailing construction prices, among other things.
Section 5 of RA 8974 in this regard provides that the court may consider the following relevant standards in eminent
domain cases:
(a) The classification and use for which the property is suited;
(b) The developmental costs for improving the land;
(c) The value declared by the owners;
(d) The current selling price of similar lands in the vicinity;
(e) The reasonable disturbance compensation for the removal and/or demolition of certain improvement
on the land and for the value of improvements thereon;
(f) The size, shape or location, tax declaration and zonal valuation of the land;
(g) The price of the land as manifested in the ocular findings, oral as well as documentary evidence
presented; and
(h) Such facts and events as to enable the affected property owners to have sufficient funds to acquire
similarly situated lands of approximate areas as those required from them by the government, and
thereby rehabilitate themselves as early as possible.
The Court explained in Agan and Gingoyon that the replacement cost method is only one of the factors to be
considered in determining the just compensation of the NAIA-IPT III. The Court added that the payment of just
compensation should be in accordance with equity as well.
In Agan, we stated:
This Court, however, is not unmindful of the reality that the structures comprising the NAIA IPT III facility
are almost complete and that funds have been spent by PIATCO in their construction. For the
government to take over the said facility, it has to compensate respondent PIATCO as builder of the said
structures. The compensation must be just and in accordance with law and equity for the government
cannot unjustly enrich itself at the expense of PIATCO and its investors.(emphasis supplied)197
We also declared in Gingoyon that:
Under RA 8974, the Government is required to "immediately pay" the owner of the property the amount
equivalent to the sum of (1) one hundred percent (100%) of the value of the property based on the
current relevant zonal valuation of the [BIR]; and (2) the value of the improvements and/or structures as
determined under Section 7. As stated above, the BIR zonal valuation cannot apply in this case, thus the
amount subject to immediate payment should be limited to "the value of the improvements and/or
structures as determined under Section 7," with Section 7 referring to the "implementing rules and
regulations for the equitable valuation of the improvements and/or structures on the land." Under the
present implementing rules in place, the valuation of the improvements/structures are to be based using
"the replacement cost method." However, the replacement cost is only one of the factors to be
considered in determining the just compensation.
In addition to RA 8974, the 2004 Resolution in Agan also mandated that the payment of just
compensation should be in accordance with equity as well. Thus, in ascertaining the ultimate amount of
just compensation, the duty of the trial court is to ensure that such amount conforms not only to the law,
such as RA 8974, but to principles of equity as well.(Emphasis supplied)198
The Court's pronouncements in Agan and Gingoyon are consistent with the principle that "eminent domain is a
concept of equity and fairness that attempts to make the landowner whole. It is not the amount of the owner's
investment, but the 'value of the interest' in land taken by eminent domain, that is guaranteed to the owner."199
In sum, in estimating the fair market value of the NAIA-IPT III, the Court shall use(1) the replacement cost method
and(2) the standards laid down in Section 5 of RA 8974 and Section 10 of RA 8974 IRR. Furthermore, we shall
likewise consider(3) equity in the appraisal of NAIA-IPT III based on the Agan and Gingoyon cases.
2.b.4. The use of depreciated replacement cost method is consistent with the principle that the property owner shall
be compensated for his actual loss.
The present case confronts us with the question of the specific replacement cost method that we should use in
appraising the NAIA-IPT III. The Government advocates the depreciated replacement cost method formula while
PIATCO argues for the new replacement cost method formula.
The replacement cost method is a cost approach in appraising real estate for purposes of expropriation. This
approach is premised on the principle of substitution which means that "all things being equal, a rational, informed
purchaser would pay no more for a property than the cost of building an acceptable substitute with like utility."200
The cost approach considers the principles of substitution, supply and demand, contribution and
externalities.201 "The value of the land and the value of improvements are determined separately according to their
highest and best use."202 "Buyers assess the value of a piece of property not only based on the existing condition of
the property, but also in terms of the cost to alter or improve the property to make it functional specifically for the
purposes of the buyer's use. This may include building new structures, renovating existing structures, or changing
the components of an existing structure to maximize its utility."203
There are various methods of appraising a property using the cost approach: among them are the reproduction cost,
the replacement cost new, and the depreciated replacement cost. Reproduction cost is the "estimated current cost
to construct an exact replica of the subject building, using the same materials, construction standards, design,
layout, and quality of workmanship; and incorporating all the deficiencies, superadequacies, and obsolescence of
the subject building."204 It is the cost of duplicating the subject property at current prices205 or the current cost of
reproducing a new replica of the property being appraised using the same, or closely similar, materials.206
In the United States, the recognized and used method in eminent domain cases in appraising specialized properties
is the reproduction cost less depreciation approach.
According to AmJur, this valuation method requires the inclusion of all expenditures that reasonably and necessarily
are to be expected in the recreation of the structure, including not only the construction itself but also collateral
costs, such as the costs of financing the reproduction. "Historical associations and architectural values may enhance
the market worth of a property by rendering it a specialty property; if so, the property may fairly be worth the market
price for similar properties, plus a premium for its unique aspects. The premium value in such a case may also be
determined by the cost of reproduction, minus depreciation. The value assigned has also been described as the
total of the land value, plus the specialized value of the improvements, minus depreciation."207
Alfred Jahr explains the procedure in appraising a specialized property using this method:
In the valuation of the improvement or plant, however, market value is no criterion because they have no
market value. It is specialty property. The improvements are therefore valued on several properties.
First, consideration is given tothe original book cost of the improvements, that is, the original cash
expenditure paid by the company for making the physical structures and appurtenances. Its purpose is
to act as some guide; it is not value, however, and the courts recognize the fact that it is not a value of
the physical structures. Second, evidence of reproduction cost new is then considered, for it is an
element of value of specialty property. In figuring this cost, all overhead expenses are included. These
expenses include engineering, construction, management fees, insurance, legal expenses, office
overhead, and interest during construction period. Third, from the reproduction cost new an allowance
for depreciation of the improvements must be made. This depreciation is a matter of opinion, formed
after a physical examination of the improvements as a whole and is generally not based on a straight-
line depreciation according to age. Some authorities, however, have not accepted such an item of
depreciation and prefer the straight-line method, at so much per year. Obsolescence and functional
depreciation are sometimes deducted in addition to physical depreciation depending on the type of utility
involved.208
Replacement cost new is "the estimated cost to construct a building with utility equivalent to the appraised building
using modern materials and current standards, design, and layout" 209 or "the current cost of a similar new property
having the nearest equivalent utility as the property being valued." 210 It is the cost of acquiring a modern, functional
equivalent of the subject property and "views the building as if reconstructed with modern methods, design and
materials that would most closely replace the use of the appraised building but provide the same
utility."211 Replacement cost does not consider the most common forms of functional obsolescence.212
Depreciated replacement cost approach is the "method of valuation which provides the current cost of replacing an
asset with its modern equivalent asset less deductions for all physical deterioration and all relevant forms of
obsolescence and optimisation."213 Depreciated replacement cost is a method of appraising assets that are usually
not exposed to the open market.214 A general formula of this method is as follows:
Cost of constructing the building (s) (including fees)

Plus: Cost of the land (including fees)
= Total Costs
Less: Allowance for age and depreciation
= Depreciated Replacement Cost 215
Under this method, the appraiser assesses the current gross replacement of the assets, usually comprised of the
land and the building. If the asset is an improvement, the appraiser assesses the cost of its replacement with a
modern equivalent and deducts depreciation to reflect the differences between the hypothetical modern equivalent
and the actual asset. The appraiser has to "establish the size and specification that the hypothetical buyer ideally
requires at the date of valuation in order to provide the same level of productive output or an equivalent
service."216 In appraising the improvement using the cost approach, the appraiser considers the construction cost,
and attendant cost.
Construction costs are "the costs that are normally and directly incurred in the purchase and installation of an asset,
or group of assets, into functional use." On the other hand, attendant costs are "the costs that are normally required
to purchase and install a property but that are not usually included in the vendor invoice."217
Under Section 10 of the RA 8974 IRR, construction cost is the current market price of materials, equipment, labor,
the contractor's profit and overhead, while the attendant cost is the cost associated with the acquisition and
installation in place of the affected improvement.
Once the gross replacement cost or the sum of construction and attendant costs is derived, depreciation shall be
deducted.218 Depreciation is classified into three categories: physical depreciation, functional obsolescence, and
external obsolescence.
Physical obsolescence refers to the "wear and tear over the years, which might be combined with a lack of
maintenance."219
Physical depreciation is curable if "capital investment can bring the building to a state in which the degree of
obsolescence is mitigated (e.g., standards of finishes and services)." 220 It is incurable if "no amount of capital
investment can rectify the [depreciation] (for example, building structural flexibility)." 221 Curable physical depreciation
is measured by the cost to cure or retrofitting which could extend the life of the building. 222 Incurable depreciation or
deterioration is estimated by a variety of age-life or economic-age calculation methods. 223 Functional obsolescence
"reflects the advances in technology which allow for a more efficient delivery of services and goods from a building
of different designs and specifications."224 "Functional obsolescence arises where the design or specification of the
asset no longer fulfills the function for which it was originally designed."225
It is "usually related to operational inefficiencies that typically involve either inadequacies or superadequacies. An
inadequacy occurs when the asset is not enough (e.g., the asset is too small) for it to operate efficiently. A
superadequacy occurs when there is too much of an asset (e.g., the asset is too large) for it to operate
efficiently."226 "To be feasible, the cost of replacing the obsolete item or design fault must be equal to or less than the
anticipated increase in value due to its cure. Curable functional obsolescence may require abatement by adding or
remodelling or by removing a superadequacy."227
Economic obsolescence results from "the impact of changing external macro- and micro-economic conditions on the
property and should not include internal factors which affect the profitability of the occupying business, the writing
down of such factors to reflect the profitability of the business being a matter for the occupier. Within economic
obsolescence, the prospect of extending the life of the building by capital investment should be considered, as well
as the fact that lack of maintenance can accelerate the rate of depreciation."228
In these consolidated cases, we rule that the depreciated replacement cost method, rather than the new
replacement cost method, is the more appropriate method to use in appraising NAIA-IPT III.
Injustice would result if we award PIATCO just compensation based on the new replacement cost of the NAIA-IPT
III, and disregard the fact that the Government expropriated a terminal that is not brand new; the NAIAIPT III simply
does not have the full economic and functional utility of a brand new airport.
Adjustments for depreciation should be made to reflect the differences between the modern equivalent asset and
the actual asset or the NAIA-IPT III. The reason is that depreciation involves the loss of value caused by the
property's reduced utility as a result of damage, advancement of technology, current trends and tastes, or
environmental changes.229
This conclusion is consistent with Section 10 of RA 8974 IRR which allows us - and under the NAIA-IPT-III's
circumstances effectively direct us - to consider the kinds and quantities of materials/equipments used, configuration
and other physical features of the properties, among other things, in determining the replacement cost of a building.
To quote Section 10:
Section 10. Valuation of Improvements and/or Structures - Pursuant to Section 7 of the Act, the Implementing
Agency shall determine the valuation of the improvements and/or structures on the land to be acquired using the
replacement cost method. The replacement cost of the improvements/structures is defined as the amount necessary
to replacement improvements/structures, based on the current market prices for materials, equipment, labor,
contractor's profit and overhead, and all other attendant costs associated with the acquisition and installation in
place of the affected improvements/structures. In the valuation of the affected improvements/structures, the
Implementing Agency shall consider, among other things, the kinds and quantities of materials/equipment used, the
location, configuration and other physical features of the properties, and prevailing construction prices. (Emphasis
supplied)
Depreciation should be deducted because modern materials and design are assumed in the replacement cost
method. In using the depreciated replacement cost method, "[t]he intent is to provide a functionally similar
improvement in order to apply a meaningful level of depreciation."230
If we adopt the new replacement cost method, PIATCO would be compensated for more than what it had actually
lost. We must remember that the concept of just compensation does not imply fairness to the property owner alone.
In an eminent domain situation, compensation must likewise be just to the public which ultimately bears the cost of
expropriation. The property owner is entitled to compensation only for what he actually loses; what he loses is only
the actual value of the property at the time of the taking.231
Just compensation must not extend beyond the property owner's loss or injury. This is the only way for the
compensation paid to be truly just, not only to the individual whose property is taken, but also to the public who will
shoulder the cost of expropriation. Even as under valuation would deprive the owner of his property without due
process, so too would its overvaluation unduly favor him to the prejudice of the public.232
In using the depreciated replacement cost method of valuation, we do not rely on Kaczmarek's affidavit and other
documents not presented before the trial court, and which were belatedly attached to the Government's motion for
partial reconsideration dated August 22, 2013.
This Court exercises its judicial function to fix just compensation in eminent domain cases on the basis of the law,
the rules, and the evidence - including the appraisal reports and the embedded formula on how the parties arrived at
the amounts of just compensation - presented by the parties before the trial court and the entire record of the
consolidated cases.
The determination of just compensation in eminent domain cases is essentially and exclusively a judicial function.
Fixing the formula with definitiveness and particularity in just compensation is not the function of the executive nor of
the legislative branches, much less of the parties in this case. Any valuation for just compensation laid down in the
statutes may not replace the court's own judgment as to what amount should be awarded and how this amount
should be arrived at. Legislative enactments, as well as executive issuances, providing the method of computing just
compensation are treated as mere guidelines in ascertaining the amount of just compensation. When acting within
the parameters set by the law itself, courts are not strictly bound to apply the formula to its minutest detail,
particularly when faced with situations that do not warrant the formula's strict application. The courts may, in the
exercise of their discretion, relax the formula's application to fit the factual situations before them.233
We clarify, however, that this Court is not confined to the use of the depreciated replacement cost method in
determining the just compensation in these cases. Valuation is not exclusively a technical matter used in arriving at
a numerical measure of compensation. Rather, valuation in eminent domain is a judicial question based on
equitable principles. Thus, this Court shall likewise endeavor to weigh the justness and fairness of compensation
between the condemnor and the condemnee, considering the factual circumstances of this case.234
3. Construction cost of the NAIA-IPT III
3.a. The base valuation of the NAIA-IPT III
The Government claims that the construction cost or the base valuation of the NAIA-IPT III amounts to $300,206,693.00,
itemized as follows:235
Total $USD in Manila

@3Q01
General Requirements and Conditions $ 36,279,033
Site Development $ 3,293,967
Terminal North Concourse $ 6,847,663
Terminal South Concourse $ 11,169,979
Terminal Head House $ 60,763,798
Terminal Building Services $ 54,982,628
Multi Storey Car Park $ 8,791,857
Special Systems $ 69,321,503
Airside Infrastructure Works $ 31,065,288
Landside Infrastructure Works $ 11,496,552
Terminal Support Facilities $ 6,194,425
Office Fit-out $0
Builder's Work in Connection with Included
Services
Total $ USD $ 300,206,693

On the other hand, PIATCO, Takenaka, and Asahikosan argue that the construction cost amounts to $360,969,791.00, viz:
In US dollars
total payments of piaTCO 275,119,807.88

Add: Awards by the London Court 84,035,974.44
Award by the Makati Court 1,814,008.50
Total Construction Cost 360,969,790.82
As we had earlier explained, construction cost is the amount necessary to replace the improvements/structures, based on the current
market prices for materials, equipment, labor, contractor's profit and overhead. Construction or direct costs is also defined as the costs that
are "normally and directly incurred in the purchase and installation of an asset or group of assets into functional use." Construction costs
generally take into account the labor used to construct buildings; materials, products, and equipment; contractor's profit and overhead,
including job supervision, workers' compensation, fire and liability insurance, and unemployment insurance; performance bonds, surveys,
and permits; use of equipment; watchmen; contractor's shack and temporary fencing; materials storage facilities; and power-line installation
and utility costs.236 We find the Government's computation of construction cost to be more realistic and appropriate. As the CA aptly
observed, the Gleeds Report is more "particularized, calculable and precise." Tim Lunt sufficiently explained how he arrived at the value of
$300,206,693.00:
2.2 Methodology
2.2.1 Stated simply, valuation of any given structure is derived by multiplying the structure's dimensions, i.e.,
quantities by a price (i.e., rate) for constructing the works at a designated time and specific location, adding the cost
of works in, on, and around the structure, and then accounting for inferior and non-performing works, and
rectification of those works.
2.2.2 I have arrived at the CCVs by carrying out the following sequence of tasks:
1) Understanding the project as bid and as eventually constructed.
2) Preparing measured quantities for the major elements of the completed works.
3) Establishing appropriate rates and prices for carrying out the works at that time in Manila, Philippines.
4) Adjusting the quantities and/or rates and prices to take into account the extent of non-performing
and/or inferior quality works, the extent of rectification and remediation of the Terminal to bring it to Code
and making it structurally safe, and 22,193 m2 of 'Unnecessary Areas' that was built in the Terminal.
5) Making provision for the cost of remediation on items which deteriorated between December 2002
and December 2004.
6) Making provision for the value of depreciation of Terminal 3 between December 2002 and December
2004.
7) Deducting the cost of rectification to otherwise bring the Terminal to the standards in the Bid
Documents, including the cost of building some 63,490 m2 of 'Necessary Operational Areas' that was
not built in the Terminal.237
2.3 Understanding the Project
2.3.1 I visited the Terminal 3 site between May 9, 2006 and May 12, 2006; May 30, 2006 and June 2,
2006; and June 20 and June 25, 2006, when I held meetings with the Office of the Solicitor General,
White & Case, MIAA, Arup, TCGI, and Gensler. I based myself at the Terminal 3 complex during my
visits in May and June 2006 and made a number of visits to various areas both internal and external to
Terminal 3 to gain a full understanding of the scope of the works performed.
2.3.2 Members of my staff visited the Terminal 3 site between May 30, 2006 and June 25, 2006, and
based themselves in the Terminal 3 complex to prepare quantities from construction drawings made
available by Takenaka, which, as noted, are not properly designated 'As-built' drawings. To safeguard
against error or outdated dimensional information in the drawings, my staff checked certain major
dimensions against the structures as constructed and found the dimensions to be substantially accurate.
We did not check the drawings for detailed accuracy of the contents in the drawings (i.e., what is within
the dimensions).
2.3.3 Members of my staff also visited the Terminal 3 site between February 26, 2008 and March 11,
2007. During that time, they gathered pricing information from local construction contractors to assist
with the pricing of the CCVs.
2.3.4 I have examined all of the documents listed in Appendix 'B' and had discussions with each of the
Republic's airport architectural and engineering experts on the content of their reports to gain a full
understanding of the main issues affecting Terminal 3 and the CCVs.238
2.4. Preparing the Quantities
Bills of Quantities
2.4.1 Construction projects are generally priced by construction contractors for the purpose of
competitive tendering using a Bill (or Bills) of quantities. Bills of Quantities are defined as:
A list of numbered items, each of which describes the work to be done in a civil engineering or building
contract. Each item shows the quantity or work involved. When the procedure of tendering is adopted
(as is usual), the Bill is sent out to contractors. Those contractors who wish to do the work return the bill,
with an extended price opposite each item. This priced bill constitutes the contractors' offer (or tender to
bid) to do the work.239
2.4.5 As noted, it was apparent from commencement of preparation of the CCVs that it was doubtful that
the set of drawings listed in Appendix "B" that Takenaka provided were "As-built" or approved.
Accordingly, because of uncertainty over the accuracy of the "As-built" drawings, and to avoid preparing
Bills of Quantities based on potentially inaccurate information, I opted not to produce full Bills of
Quantities to form the basis of the CCVs. Instead, I relied on a "Principle Quantities" type approach.240
Principle Quantities
2.4.6 The "Principle Quantities" type approach is common in the cost planning and cost estimating of
construction projects. CESMM3 describes Principle Quantities as "a list of principle components of the
works with their approximated estimated quantities x x x given solely to assist surveyors and estimators
in making rapid assessment of the general scale and character of the proposed works prior to the
examination of the remainder of the bills of quantities and other contract documents on which
construction estimates or tenders will be based." This methodology involves the preparation of quantities
for the major elements of the construction works where the costs cannot be estimated accurately from
historical data, or for those areas which are known to vary in cost due to the quality or nature of the
works. The quantities produced by adopting this approach are what I term "Principle Quantities."241
2.4.7 Given the serious concerns over the accuracy of the so called "As-built" drawings, and in order to
make some assessment of the dimensional accuracy of the Takenaka drawings, we carried out a
number of checks of the plan dimensions against our measurement of the physical dimensions of the
structures. Overall dimensions (length and width) were checked for a single floor plate in each of the
Terminal North Concourse, the Terminal South Concourse and the Terminal Head House buildings. Our
checks revealed no major discrepancies in respect of the physical plan dimensions of the drawings
against the actual dimensions of the overall building floor plans. We therefore decided to use the
drawings provided by Takenaka to produce the "Principle Quantities" dimensions required for us to
prepare the CCVs.
2.4.8 The 'Principle Quantities' dimensions produced by Gleeds from the drawings made available by
Takenaka (listed in Appendix 'B' Drawing List 1) are included in Appendix "G."
2.4.9 It is standard good practice for quantities produced as part of the measurement process to be
checked by another member of the team who is not connected to the particular project. The quantities
we produced were technically checked by another member of Gleeds for consistency among inter-
related items, e.g., consistency between floors and ceilings, and to identify any major items not
measured. Another member of Gleeds also checked the accuracy of the gross floor area, or "GFA,"
calculations for each of the buildings and no significant errors were identified.242
2.5. Arriving at the Rates and Prices
2.5.1 In order to derive the rates by which the quantities are produced to arrive at the CCV figures for
this project, it is necessary to establish:
● The period of construction;
● The geographical location of the works;
● Access to the site;
● Any physical restrictions that might impede construction of the works;
● The duration for carrying out construction;
● Database of costs;
● The specification of the works;
● The quality of the works as constructed; and
● The extent of works requiring remediation and rectification
2.5.2 All of the above factors have an effect on the CCVs and it is necessary to consider the implications
of each to arrive at the CCV figures. General guidance including a number of the above items are
referred to in the document titled "Guide to Carrying Out Reinstatement Cost Assessments' published by
the Royal Institution of Chartered Surveyors in September 1999.243
3. CCV CALCULATIONS
3.1 Calculation of Rates and Prices
3.1.1 The CCVs have been calculated in £UK costs converted to $USD in Manila. x x x
3.1.2 The basic approach to producing the CCV figures entails the following steps:
1) Establish UK pricing levels at 2nd Quarter 2006 (£UK @ 2Q06) (the date when
the pricing exercise was initially carried out);
2) Convert the £UK @ 2Q06 prices into £UK at 3rd Quarter 2001 prices (£UK @
3Q01) (the mid point of construction) using published and recognized indices;
3) Convert the £UK @3Q01 prices into US dollars at 3rd Quarter ($USD @3Q01)
(the currency of the Termianl 3 Concession Contract) using published currency
exchange rates;
4) Convert the $USD @3Q01 prices to reflect local levels of pricing by applying a
Location Adjustment using various methods and sources of information to check
the accuracy of the conversion.
Each of these steps is described below.
3.1.3 First, the quantities produced for Terminal 3 were priced using a mixture of current data
in Gleeds' Database of costs and published cost data, including Spons, and are priced at
2Q06 prices. These costs are shown in the CCVs as £UK @ 2Q06. The rates used are
included in Appendix "D." Support in respect of the reference to the source derivation of each
of the rates and prices included in the CCVs are also included in Appendix 'D' in the column
headed "Rate Source."244
3.1.4 Second, it was necessary to adjust the prices to the midpoint of construction. As such
the "£UK @ 3Q01" levels to align them with required base costs for inclusion in both CCVs.
This conversion is made by using the BCIS All-in Tender Price Indices published by the
Royal Institution of Chartered surveyors. These costs are shown in the CCV as "£UK @
3Q01."
3.1.5 Third, the "£UK @ 3Q01" costs were converted from UK pounds to US dollars using an
exchange rate of UK£1 = ISD$1.4540. This exchange rate is obtained by averaging the
exchange rates recorded for October 1, November 1 and December 3, 2001 (i.e., 3Q01)
using historical data from the xrates.com website. These particular dates represent the
midpoint of construction which I refer to earlier in this report. The result of this conversion is
shown in the column marked "£UK @ 3Q01" in Appendix "D."
3.1.6 Fourth, a "Location Adjustment" of the "$USD @ 3Q01" cost is necessary to account
for the local cost of constructing in Manila. Local cost data gathered in Manila by members of
my team in February and March 2007 was compared directly with UK prices to establish a
ratio between the UK and the Philippines. The cost data gathered in Manila was compared
on a like for like basis with 1st Quarter 2007 UK prices. The results of this comparison of
rates result in the "Location Adjustment." The Location Adjustments resulting from this
calculation which are applied to the CCV are UK£1=$USD0.7576 for the mechanical,
electrical and plant elements. The average conversion rate across the CCVs is
UK£1=$USD0.5370 or 53.70%.245
3.1.7 I double-checked my calculations of the Philippine prices by considering what the

conditions in the Philippines construction market were at the time the project would have
been bid, and how these conditions changed through to the end of 2002 when works
stopped on site. During the period of 1995 to 2002 the "Construction Materials Wholesale
Price Index" ("CMWPI") published by the 'Economic Indices and Indicators Division, Industry
and Trade Statistics Department, Philippine National Statistics Office, Manila, Philippines'
showed an average increase of 2.8% per annum.
During the periods 2000 to 2001 and 2001 to 2002 the increases where 2.1% and 3.4%
respectively. The increases are seen to be at similar levels both in the period during which
the works were priced, contracts executed and during construction and in my opinion this
would have resulted in no material difference to the pricing level of the onshore works
submitted at tender stage when compared with the actual cost incurred.
3.1.8 I also have gathered information from other Chartered Surveyors' published data which
also indicate that the Location Adjustment for the Philippines is in the region of 45%. This
percentage is in line with the more detailed results obtained as part of my own
calculations.246
We thus rule in favor of the Government's position and reject PIATCO's claimed construction cost. For one, PIATCO
made inconsistent statements with respect to the construction cost of the NAIA-IPT III. The Scott Wilson report
states that the construction cost of the NAIA-IPT III amounted to US$338.83 million, exclusive of attorney's fees,
cost of the suit, interest rates, etc. This amount is inconsistent with PIATCO's claimed construction cost of
$360,969,790.82 in its pleadings. The relevant portion of the Scott Wilson report states:
2.1.4 When Scott Wilson was providing Lenders Technical Advice to the Asian Development Bank in
September 2002, the total value of the construction contracts, estimated by PCI at that time, was as
follows:
On-Shore Contract: US$132.35 million
Off-Shore Contract: US$190.08 million
Total US$322.43 million, excluding VAT
2.1.5 The contract priceS under the EPC Contracts are as follows:
On-Shore Contract. US$133,715,911
Off-Shore Contract. US$190,037,328

Total US$323,753,239 excluding VAT
2.1.6 The amounts certified for the costs of construction up to 23 June 2004 in payment certificate no 35
which is the last payment certificate that has been certified by PIATCO, are as follows:
On-Shore US$133.64 Million
Off-Shore US$189.83 Million
VAT US$11.43 Million
ER Changes US $3.93 Million
TOTAL US$338.83 Million
2.2.13 Based on the certified IPC no. 35 for both Takenaka and Asahikosan, the cost of the completed
and certified works (as of IPC No. 35) are as follows:
On-Shore US$133.64 Million
Off-Shore US$189.83 Million
VAT US$11.43 Million
ER Changes US $3.93 Million
TOTAL US$338.83 Million
2.2.14 The construction cost stated above x x x is at 2002 prices (no adjustments for inflation/escalation)
and are exclusive for all other attendant costs, such as the engineering and architectural service fees,
quality assurance service fees, construction supervision service fees, construction insurance, site
development costs, financing costs and other associated costs. 2.2.15 We would conclude that the
certified cost of construction of US$338 million and the other attendant costs are fair and reasonable.
We note that the Gleeds' estimate is close to the figure in 2.2.13 above.
2.2.16 It is noted that in the Gleeds Report entitled Construction Cost Valuation for NAIA IPT3 dated
15th November 2010 the project Base Case CCV is valued at a gross amount of US$334.61 million
(US$300.21 million + US$34.6 million deductions).247
Furthermore, PIATCO did not present detailed supporting information on how the certified construction cost of
US$338.83 million was arrived at.248
PIATCO's statement that the total sum of $360,969,791.00 is evidenced by the As-Built Drawings is misleading.
Takenaka and Asahikosan's computation of construction cost includes items which do not pertain to the construction
of the NAIA-IPT III. PIATCO, Takenaka, and Asahikosan erroneously included in the construction cost the costs of
the action, interest rates on the judgment award of $14,827,207.00 and $52,008,296.54, attorney's fees, and
litigation expenses.
These items were not directly incurred in the construction of the NAIA-IPT III. In Claim No. HT-04-248, only
$6,602,971.00 and $8,224,236.00 or the sum of $14,827,207.00 can possibly relate to the construction cost of the
NAIA-IPT III. On the other hand, in Claim No. HT-05-269, only the amounts of $21, 688,012.18 and $30,319,284.36
or the total sum of $52,008,296.54 can be possibly imputed to the construction cost of the terminal.
In any case, we cannot consider the London awards as evidence of the construction cost of the NAIA-IPT III. Todo
so in this case is to recognize Claim No. HT-04-248 and Claim No. HT-05-269 when their recognition and
enforcement have yet to be decided by this Court in G.R. No. 202166. It is a basic rule that Philippine courts cannot
take judicial notice of a foreign judgment or order.249
We can only recognize and/or enforce a foreign judgment or order after a conclusive and a final finding by Philippine
courts that: (1) the foreign court or tribunal has jurisdiction over the case, (2) the parties were properly notified, and
(3) there was no collusion, fraud, or clear mistake of law or fact.250
PIATCO, Takenaka, and Asahikosan alleged that PIATCO paid Takenaka and Asahikosan the sum of
$275,119,807.88 pursuant to the Onshore Construction and Offshore Procurement Contracts. According to the RTC
(whose ruling the CA did not reverse), these parties failed to prove the fact of payment of $275,119,807.88.
We add that the alleged payment of $275,119,807.88 does not support their allegations that this amount pertains to
the construction cost of the NAIA-IPT III. Takenaka and Asahikosan's admission that the sum of $275,119,807.88
were paid by PIATCO does not bind the Government who is not a party to the Onshore Construction and Offshore
Procurement Contracts. If at all, the Court can only recognize the sum of $66,834,503.54 from PIATCO, Takenaka,
and Asahikosan's computation of construction cost, which is much lower than the Government's computed
construction cost of $300,206,693.00.
Lastly, we note that Takenaka and Asahikosan's claimed construction cost is different from the amount reflected in
the Tengson Report. In this Report, Gary Taylor stated the "true value of the NAIA-IPT III facility is nearer to US$408
million, given the fact that Gleeds failed to recognize or include any values for design & other consultants (10%) or
property inflation based on GRP schedules (15%)."251
3.b. Structural defects on the NAIA-IPT III

The Government contends that that the NAIA-IPT III suffers from structural defects, as follows:
1. Failed structural elements of the NAIA-IPT III, as identified in the Arup Seismic Evaluation Report and Gravity
Loading and Element Capacity Assessment;
2. The inferior quality of material used and works, including, for example, floor tiling, plasterboard wall finishes and
ceilings, and the internal and external metal paneling;
3. The cost of seismic and gravity load structural retrofits for the failed elements in the terminal buildings and multi-
storey car park structures, as described in Arup's Drawings listed in Appendix "B" Drawing List 2 and other
rectification works required to bring the Terminal to compliance with applicable building and airport codes as
indicated in the Appendices of Arup's Site Observation Report; and
4. The cost of seismic and gravity load structural retrofits for the failed elements in the elevated roadway structures,
as described in Arup's Drawings listed in Appendix "B" Drawing List 3, Arup Review on "TCGI Report of Civil Design
Review and Evaluation" - Elevated Roadway, dated March 2009; and other rectification works required to bring the
elevated roadways to compliance with applicable building and airport codes, as indicated in the Appendices of
Arup's Site Observation Report.252
Scott Wilson argued that no structural elements of the NAIA-IPT III actually failed.253 He emphasized that there were varying
opinions regarding the integrity of the NAIA-IPT III:
3.3.7 The adequacy of the structural frame, individual load bearing elements and foundations under "normal" gravity loads
should be able to be readily evaluated. However, there are clearly differences of opinion between all 3 parties who have carried
out design and assessments in this regard in terms of the extent of 'apparent failed elements' under the design appraisal which
ranges from:
● Meinhardt - zero failures
● Arup reports under gravity loading - 4% of superstructure elements and less than 1% of all substructure elements
● Arup reports under seismic loading - less than 1% of all primary RC and composite columns, around 3% of all
primary RC beams, around 6% of all shear walls, around 8% of piles (mostly at shearwalls) and around 1% of mat
footing locations. Differential settlements are considered insignificant to cause any additional distress in the
buildings. Pounding between floors of adjacent sectors is not an issue.
● TCGI - extent not readily identifiable from documents reviewed although within Section 2.0 of the TCGI July 2008
report it states that the evaluation did not yield results pointing to foundation instability as a cause for concern.
3.3.8 On the basis of discussion in 3.3.6 above it would be reasonable to follow the assessment of the original designer
(Meinhardt) who also provided a Letter of Guarantee confirming the adequacy of their design, (ref para 3.3.30).
He also disputed the Government's allegations that some portions of the NAIA-IPT III would not be able to sustain strong
earthquakes and that some areas of the NAIA-IPT III were built using materials with inferior quality:
c. Seismic Activity (Terminal and Multi-Storey Carpark)
3.3.12 It is understood from press reports that, since substantial completion of the airport in 2002, Manila has been
subjected to a number of earthquakes. It has been reported that on25 March 2010 a strong earthquake measuring
6.2 on the Richter scale hit Metro Manila according to the government seismology institute. It was further reported
that in July 2010 "intense seismic activity persists in the Philippines and Manila continues to be struck by moderate
to strong earthquakes of 6.5 to 7.6 magnitude." We can find no record relating to any damage being reported in
terms of the structure, finishes or services associated with NAIA Terminal 3 as a result of these occurrences.
xxxx
3.3.14 Inferior quality of materials used, for example internal finishes.
3.3.15 Gleeds do (sic) not define exactly what areas they mean by this. There is a number of finished items where
deductions in excess of US$800,000 have been made but the rational for the quantification of the deduction is not
explained. If the works were inferior to that specified then this would be reflected in the payments made to Takenaka
under the EPC contract.
Scott Wilson likewise supported Takenaka and Asahikosan position that the Government's experts examined the structural
integrity of the NAIA-IPT III using the recent building codes, which were not yet in place at the time the NAIA-IPT III was
designed and built.
3.3.18 Seismic and gravity load retrofit and other rectification works required to bring the building to compliance with
applicable building and airport codes.
3.3.22 TCGI also provided an option titled "A Government Prerogative" which states:
Research in earthquake engineering has rapidly progressed to the extent that seismic design provisions for the
design of new buildings and procedures for the evaluation of existing ones have drastically evolved. The current
edition of the National Structural Code of the Philippines (NSCP) is dated 2001, whereas Meinhardt used the 1992
edition which was applicable at the time the Terminal was designed.
There are new published guidelines for the structural safety assessment of existing buildings from such
organizations as the Federal Emergency Management Agency (FEMA) which have evolved into published
documents for the structural rehabilitation of existing buildings. TCGI have therefore suggested that MIAA and the
Philippine Government may wish to use the more recent published documents to enhance/upgrade the facility.
3.3.23 It would appear from the Arup documents reviewed that they have taken this approach in their assessment of
design i.e., consideration of updated documents (NSCP 2001 and UBC 1997) whilst Meinhardt used the relevant
codes at the time of design which was NSCP 1992. Consequently any results from assessments carried out to later
published codes has no direct bearing on the design of the facility which was carried out prior to the issue of these
later standards. As such any assessment and proposed strengthening/retrofit works in this regard is considered to
be an enhancement of the design and has no relevance on the value of the NAIA Terminal 3 facility as constructed
under the original contract.
On the other hand, the relevant portions of the Tengson Report dated December 2010254 states:
In addition, we should note herein that Takenaka's structural designer, Messrs. Meinhardt, concluded that its check
on the structural ductility requirements (as questioned by TCGI & Ove Arup) on elements which do not resist lateral
forces, is in full compliance of the Philippine Code NSCP 1992 and its originating design code ACI-318 (1989), and
this is supported by several members of the American Concrete Institute (ACI). Both Takenaka and other parties
(including Meinhardt and members of the ACI), have concluded that TCGI & Ove Arup reports use several
conflicting and misunderstood mathematical models. These include but are not limited to the following:
(i) TCGI used larger loadings than those specified in the "Design & Load Schedule Plan."
(ii) Their modeling for "sector 3" uses incorrect storey elevations and the slab thickness did not match
those on the "as built" plans.
(iii) Beam section sizes do not match those shown on the "as built" plans.
(iv) TCGI used "Dynamic Analysis" in their modeling, whereas there is no requirement for such an
analysis in the Philippine Structural Code - NSCP 1992.
(v) TCGI & Ove Arup used the updated NSCP 2001 (and UBC1997) Philipine Codes, yet Takenaka's
design was based upon the NSCP 1992 code because the 2001 updated was not available when the
NAIA 3 designs were completed in 2000.
(vi) TCGI & Ove Arup reports were based upon a system which incorporates frame beams and columns
as primary structural element, whereas the Takenaka design used a building frame system (Sheer Wall
System). Two differing design methods will lead to different results.255
PIATCO also argued that it is not the sole entity responsible for the completion of and/or compliance with the outstanding items
in the JAC project status summary report dated February 28, 2003. The summary report shows that some outstanding items
should be performed by the Government.256
While Scott Wilson stated that only retrofit works actually undertaken should be taken into consideration in the valuation of the
NAIA-IPT III,257 Takenaka and Asahikosan insisted that subsequent rectification works in the NAIA-IPT III were only intended to
ensure that the terminal would be compliant with the current building laws and standards.258 They reiterated that the design of
the NAIA-IPT III was compliant with the NSCP 1992, the effective building code when the terminal was designed and built.259
3.b.1. The Court cannot consider

the additional evidence submitted
by Takenaka and Asahikosan
before the Court of Appeals
At the outset, we rule that we cannot consider Takenaka and Asahikosan's attachments in their (1) Motion for Submission of
Additional Documents dated July 30, 2013;260 (2) Supplemental Motion for Submission of Additional Documents dated October
3, 2012;261 and (3) Second Supplemental Motion for Submission of Additional Documents dated April 11, 2013 in CA G.R. No.
CV-98029.262 These attachments sought to refute the Government's position that the NAIA-IPT III suffered from massive
structural defects.
Takenaka and Asahikosan posit that they could have submitted reports before the trial court to show that the design of the
NAIA-IPT III was structurally sound if the RTC had only furnished the parties copies of the BOC Final Report and afforded them
the opportunity to file a Comment on
the Final Report.
Under Section 3, Rule 6 of the Internal Rules of the CA, the CA may receive evidence in the following cases:
(a) In actions falling within its original jurisdiction, such as (1) certiorari, prohibition and mandamus, (2) annulment of
judgment or final order, (3) quo warranto, (4) habeas corpus, (5) amparo, (6) habeas data, (7) anti-money
laundering, and (8) application for judicial authorization under the Human Security Act of 2007;
(b) In appeals in civil cases where the Court grants a new trial on the ground of newly discovered evidence,
pursuant to Sec. 12, Rule 53 of the Rules of Court;
(c) In appeals in criminal cases where the Court grants a new trial on the ground of newly discovered evidence,
pursuant to Sec. 12, Rule 124 of the rules of Court; and
(d) In appeals involving claims for damages arising from provisional remedies. (Emphasis supplied)
This provision qualifies the CA's power to receive evidence in the exercise of its original and appellate jurisdiction under Section
9 of BP 129, as amended:
Sec. 9. Jurisdiction. - The Court of Appeals shall exercise:
xxxx
The Court of Appeals shall have the power to try cases and conduct hearings, receive evidence, and perform any and all acts
necessary to resolve factual issues raised in cases falling within its original and appellate jurisdiction, including the power to
grant and conduct new trials or further proceedings. Trials or hearings in the Court of Appeals must be continuous and must be
completed within three (3) months, unless extended by the Chief Justice.
Since Takenaka and Asahikosan filed an ordinary appeal pursuant to Rule 41 in relation to Rule 44 of the Rules of Court, the
CA could only have admitted newly discovered evidence. Contrary to Takenaka and Asahikosan's claim, the attachments to the
motions are not newly discovered evidence. Newly discovered evidence is evidence that could not, with reasonable diligence,
have been discovered and produced at the trial, and which, if presented, would probably alter the result.263
We find it hard to believe that Takenaka and Asahikosan could only have possibly secured the attachments after the trial court
had rendered its decision. With the exercise of reasonable diligence, Takenaka and Asahikosan could have produced these
documents before the BOC since they were fully aware that the Government presented evidence on the alleged structural
defects of the NAIA-IPT III.
In fact, in their Manifestation/Submission dated November 3, 2009, Takenaka and Asahikosan attached the "Report and
Response from Takenaka & Asahikosan, Contactors for the NAIA 3 Facility and Intervenors in the Expropriation case between
the GRP and PIATCO - October 2009" to refute the allegations of structural defects. Moreover, Takenaka and Asahikosan
manifested that they were reserving their right to submit additional reports, comments, and memoranda with respect to this
issue. The relevant portions of the Manifestation/Submission dated November 3, 2009 provides:
1. The record[s] of this case will show that to date, plaintiffs have submitted various reports prepared by TCGI
Engineers, Ove Arup & Partners Massachusetts, Inc. and Gleeds (Bristol) Partnership to this Honorable Court. The
TCGI and Ove Arup Reports point out alleged defects on the IPT 3, while Gleeds made an attempt to establish the
value of the IPT 3, taking into account the findings of the TCGI and Ove Arup. Intervenors have not given their
comments on these reports since they have not been required to do so by this Court.
2. With the RTC's permission, intervenors respectfully submit the attached "Report and Response from Takenaka &
Asahikosan, Contactors for the NAIA 3 Facility and Intervenors in the Expropriation case between the GRP and
PIATCO - October 2009" prepared by Mr. Gary Taylor, in response to the above mentioned reports. Intervenors
respectfully manifest that they are reserving their right to submit additional reports, comments and memoranda in
support of this submission and to aid this Honorable Court in determining the true value of the IPT 3.264 (Emphasis
supplied)
3.b.2. Equiponderance of evidence on the alleged structural defects of the NAIA-IPT III favors PIATCO, Takenaka and
Asahikosan. Nonetheless, even without considering and/or giving probative value to the additional evidence presented by
Takenaka and Asahikosan before the CA, this Court finds that the Government failed to establish by preponderance of evidence
that the NAIA-IPT III suffered from structural defects.
Under Section 3, Rule 131 of the Rules of Court, it is presumed that a person is innocent of wrong;265 that a person takes
ordinary care of his concerns;266 that private transactions have been fair and regular; 267 and that the ordinary course of business
has been followed.268
Based on these presumptions, we presume that Takenaka and Asahikosan built the NAIA-IPT III in accordance with the
specifications required under the Onshore Construction Contract and Offshore Procurement Contract. We also presume that the
NAIA-IPT III is structurally sound and compliant with the applicable building codes and other laws at the time it was designed
and built. However, these presumptions are merely disputable presumptions and may be overcome by contradicting evidence.
The burden of proof lies with the Government to prove by preponderance of evidence that the NAIAIPT III suffered from
structural defects. "Preponderance of evidence" is the weight, credit, and value of the aggregate evidence on either side and is
usually considered to be synonymous with the term "greater weight of evidence" or "greater weight of credible evidence."269
In determining where the preponderance of evidence or superior weight of evidence on the issues involved lies, the court may
consider all the facts and circumstances of the case, the witness' manner of testifying, their intelligence, their means and
opportunity of knowing the facts to which they are testifying, the nature of the facts to which they testify, the probability of their
testimony, their interest or want of interest, and also their personal credibility in so far as the same may legitimately appear
during trial. The court may also consider the number of witnesses, although preponderance does not necessarily lie with the
greater number.270
The Government's burden of proof to show that the NAIA-IPT III is indeed defective does not shift to its adverse parties. The
burden of proof remains throughout the trial with the party upon whom it is imposed.
It is the burden of evidence that shifts from party to party during trial. 271 This means that the burden of going forward with the
evidence is met by the countervailing evidence of PIATCO, Takenaka and Asahikosan which, in turn, balances the evidence
introduced by the Government. Thereafter, the burden of evidence shifts back to the Government.
In the present case, the experts and consultants of the Government, PIATCO, Takenaka and Asahikosa arrived at conflicting
findings regarding the structural integrity of the NAIA-IPT III. The Government's experts detailed with particularity the alleged
defects of the NAIA-IPT III, which allegations the experts of PIATCO, Takenaka and Asahikosan refuted with particularity.
Under the equiponderance of evidence rule, when the scale of justice shall stand on equipoise and nothing in the evidence
inclines a conclusion to one side or the other, the court will find for the defendant.272
If the facts and circumstances are capable of two or more explanations, one of which is consistent with the allegations of the
plaintiff and the other consistent with the defense of the defendant, the evidence does not fulfill the requirement of
preponderance of evidence. When the evidence of the parties is in equipoise, or when there is a doubt as to where the
preponderance of evidence lies, the party with the burden of proof fails.273
The reason for this rule is that the plaintiff must rely on the strength of his evidence and not on the weakness of the defendant's
claim. Thus, even if the evidence of the plaintiff may be stronger than that of the defendant, there is no preponderance of
evidence on his side when this evidence is insufficient in itself to establish his cause of action.274
In the present case, PIATCO, Takenaka and Asahikosan, met the Government's allegations regarding the structural integrity of
the NAIA-IPT III.
A reading of the reports of the parties' respective experts shows that each party presented an equally persuasive case
regarding the structural soundness or defect of the NAIA-IPTIII. The Government's case on the alleged structural defect of the
NAIA-IPT III has been met by equally persuasive refutations by the experts of PIATCO, Takenaka and Asahikosan.
As a matter of law and evidence, the Government's case regarding this matter must fail. Since PIATCO, Takenaka and
Asahikosan presented equally relevant and sufficient countervailing evidence on the structural soundness of the NAIA-IPT III,
the scales of justice tilt in their favor. Neither party successfully established a case by preponderance of evidence in its favor;
neither side was able to establish its cause of action and prevail with the evidence it had. As a consequence, we can only leave
them as they are.275
We thus add to the construction cost the sum of $20,713,901, itemized below:276
Item In Dollars
Surface demolition 1,971,500
Structural retrofit 6,860,660
Elevated road 2,443,276
Miscellaneous
Alarms 154,460
Defective Ceiling 479,626
CUTE not working 2,774,563
Inferior FIDS 22,020
BHS Inferior Screening Software 957,881
Fire Protection Inferior coverage 924,851
Civil and HV
Apron Civil 829,619
Taxiway Civil 439,280
Storm Water 2,604,081
HV 252,084
Total 20,713,901
Admittedly, the Government did not open to the public certain areas of the NAIA-IPT III because of uncertainties on their
structural integrity.277 The Scott Wilson Report also recognized that some retrofit works should also be undertaken in some of
the areas of the NAIA-IPT III. It stated that only retrofit works actually undertaken in the building should be taken into
consideration in appraising the NAIA-IPT III.278
On August 14, 2012, the DOTC invited construction firms to participate in the ₱212.3 million NAIA-IPT III structural retrofit
project. The structural retrofit of the NAIA-IPT III that was offered for bidding had eleven components: shear wall thickening;
slab thickening; application of FRPs to columns, beams and slabs; thickening of flat slab drop; enlarging of column size;
enlarging pile cap and footings; steel jacketing; providing shear blocks to pier headstock (elevated access roadway); enlarging
of pier footings (elevated access roadway); application of FRP to piers (elevated access roadway); and increasing seismic gap
between the elevated access roadway and adjacent structures (sector 1, 2, car park).279 The Official Gazette further stated:
Shear wall thickening is meant to fortify the reinforced concrete wall to increase its capacity against horizontal structure
movement. At the same time, thickened slabs will increase their bending capacity and resistance against heavy superimposed
loadings.
Applying fiber-reinforced polymer (FRP) to columns, beams, and slabs will increase their strength and resistance against
excess loads and combined forces of elements. A thicker flat slab drop is meant to strengthen the slab-column connection.
Bigger -sized columns will also increase their capacity against combined stresses, while enlarged pile cap and footings will
increase foundation capacity under compression. They also prevent movement of the foundation during earthquakes.
Steel jacketing is meant to resist the additional loads. Shear blocks to pier headstock will provide a bridge interlock is meant to
distribute excess load along the carriage way.
Enlarged pier footings will prevent foundation overturning during earthquake events.
Application of FRP to piers will also increase the column capacity and ductility against combined stresses due to earthquake
forces.
Increased seismic gap between the elevated access roadway and adjacent structures will reduce the risk of pounding between
the bridge and building structure.280
However, no documents regarding the retrofit project exist as part of the record of the case. The retrofit bid took place in 2012,
or after the promulgation of the trial court's ruling. Hence, we have to disregard Government claims pertaining to the retrofit
project.
3.c. The unnecessary areas

Gleeds excluded "unnecessary areas" from the computation of the base value. These unnecessary areas are the multi-level
retail mall that is accessible only through the multi-storey car park (20,465 m2), and the excess retail concession space(1,727
m2).281
We find the exclusion of the unnecessary areas from the base value unjustified. Since the Government would expropriate the
entire NAIA-IPT III, the Government should pay for the replacement cost of the retail mall and the excess retail concession
space. The Government cannot avoid payment simply because it deems the retail mall and the retail concession space as
unnecessary in its operation of the NAIA-IPT III. To reiterate, the measure of just compensation is not the taker's gain, but the
owner's loss.282
Consequently, we include in the computation of construction costs the excess concession space in the amount of
$1,081,272.00, and the four-level retail complex in the sum of $12,809,485.00.283
4. Attendant costs of the NAIA-IPT III
Scott Wilson criticized the Gleeds Report for excluding the attendant costs in the construction cost valuation. He stated:
3.1.13 Gleeds do (sic) not show any costs for planning and design consultancy fees preconstruction. In our experience the following percentage ranges
of the construction cost would typically be the international norms for these fees.
● Attendant Costs Percentage Range
● Architecture 3.0 to 4.0 %
● Civil and Structural 1.0 to 4.0 %
● Electrical and Mechanical 2.5 to 3.5 %
● Quantity Surveyor 1.0 %
● Project Management 1.0 %
Total 8.5 to 11.5 %
3.1.14 On the basis of a construction cost valuation of the order of US$322 million we would expect planning and design consultancy fees
preconstruction to be a minimum of US$27 million, based on typical international norms.
3.1.15 Some preliminary design was carried out by Takenaka prior to the EPC tender design so slight lower planning and design consultancy fees
could be expected. It is understood that PIATCO have paid US$19.3 million to the designers PCI, SOM, PACICON and JGC (architect of record) and
this therefore appears a fair and reasonable fee.
3.1.16. In addition there is also the cost of site supervision. In this case there was the independent QA role undertaken by Japan Airport Consultants
and construction supervision by PCI. It is noted that the Bid Document suggested that up to 3% of the construction cost should be allowed for the
independent QA role. In our experience we would expect QA and construction supervision to cost between 3% and 5% of the construction cost.
3.1.17 On the basis of a construction cost valuation of the order of US$322 million we would expect the cost of construction supervision to be a
minimum of US$9.5 million. It is understood that PIATCO have paid US$7.9 million to the QA Inspectors (JAC) and US$4.2 million to PCI, SOM,
PACICON and JGC and this therefore appears not reasonable.
3.1.18 In summary, PIATCO have paid the following consultancy fees:
● Planning and design consultancy US$19.3 million

fees
preconstruction
● QA Inspectors US$7.9 Million
● Construction supervision US$4.2 Million
Total US$31.4 million
3.1.19 In our opinion these fees are in reasonable range.
Site Preparation Costs
3.1.20 We understand that PIATCO has incurred costs of US$10.3 million for relocation of PAF existing facilities, removal of subterranean structures
and site preparation which the Gleeds Base Case CCV has not included.
Legal Costs
3.1.21 We assume that in addition to the above fees PIATCO has incurred legal costs in planning and constructing the development and this is quite
normal on BOT concession contracts where contract agreements and responsibilities have to be agreed between a number of different parties.
Overall Summary
3.1.21 PIATCO has incurred consultancy fees and site preparation costs of US$41.7 million (US$31.4 plusUS$10.3 million) not included by
Gleeds in the Base Case CCV.284
In response, Tim Lunt asserted that its CCV of US$300,206,693.00 already includes the attendant costs of US$36,279,033 under the heading "General
Requirements and Conditions." The sum of US$36,279,033 represents the General Requirements Section of the Takenaka Bill of Quantities. The
"General Requirements and Conditions" is composed of engineering and architectural services fees, quality assurance services fees, construction
supervision services fees, construction insurance, and site. Tim Lunt, however, admitted that the "General Requirements and Conditions" exclude
financing costs, and other associated costs. He likewise stated that PIATCO's attendant costs have no evidentiary support.
On December 14, 2010, PIATCO attached to its Compliance documentary evidence of its claimed attendant costs of US$70,197,802.00. These include
photocopies of summary of payments for architecture & engineering, quality assurance, construction supervision, construction insurance, site
development, other costs and financing costs, official receipts, statements of account, sales invoices, endorsements, insurance policies and other
related documents, acknowledgement receipts, agreements, invoices, and bonds.
PIATCO claims that the following entities rendered services in the construction of the NAIA-IPT III:
Services Rendered Entities that Rendered the

Services
Engineering and Architecture Pacific Consultants International Asia, Inc. Pacicon Philippines, Inc.
Architect J. G. Cheng RMJM Philippines, Inc.
Quality Assurance Japan Airport Consultants I.A. Campbell & Associates
Construction Supervision Pacific Consultants International Asia, Inc.
Construction Insurance Gotuaco del Rosario
Site Development Bases Conversion Development Corporation Skidmore, Owings &

Merrill Pacific Consultants International Asia, Inc. Natural Resource
Development Corporation Serclan Enterprises Geodesy Services, Inc.
Geotechnics Philippines, Inc. Revalu Constructions & Supply N.O.
Mercado Construction, Inc. Lopez Drilling Enterprises Monark
Constructions Illustrious Security and Investigation Agency, Inc. Core
Watchmen, Security and Detective Agency Corp.
Other Services Laguna Lake Development Authority National Telecommunications

Commission Prudential Guarantee and Assurance, Inc. Manila
Electric Company, Inc. Maynilad Philippine Long Distance
Telecommunications, Inc. Myrtle Intergen Exchange Corp.
Financing Services Dresdner / Kfw / Helaba Banks Fraport AG/FAG Deutsche Bank
Reyes Tacandong & Co. checked the mathematical accuracy of the attendant costs. PIATCO asserts that it engaged the services of various
consultants in the construction of the NAIA-IPT III and incurred the following attendant costs:
Attendant Costs Amount
Engineering and Architecture US$19,372,539
Quality Assurance US$6,923,720
Construction Supervision US$4,302,227
Construction Insurance US$4,329,272
Site Development US$8,358,169
Other Costs US$ 308,985
Financing Costs US$26,602,890
Total US$70,197,802
The BOC, the RTC, and the CA uniformly found that PIATCO failed to substantiate its attendant costs. The CA observed that PIATCO's summarized
computation of attendant costs was self-serving and unsupported by relevant evidence.
Unlike the BOC and the RTC which pegged the attendant cost at 10% of the construction cost as an accepted industry practice, the CA made a finding
that the "General Requirements and Conditions" in the Gleeds' Appraisal Report constitutes the attendant costs. The CA stated that there is no need to
further recognize and award separate attendant costs because these were already included in the construction cost valuation of US$300,206,693.00.
The CA explained that the attendant cost becomes part of the total construction cost once the construction is completed.285
4.a. PIATCO's attendant costs
Under the best evidence rule, when the subject of inquiry relates to the contents of a document, no evidence shall be admissible other than the original
document itself. In proving the terms of a written document, the original of the document must be produced in court.
The best evidence rule ensures that the exact contents of a document are brought before the court. In deeds, wills, and contracts, a slight variation in
words may mean a great difference in the rights and obligations of the parties. A substantial hazard of inaccuracy exists in the human process of
making a copy by handwriting or typewriting. Moreover, with respect to oral testimony purporting to give the terms of a document from memory, a
special risk of error is present, greater than in the case of attempts at describing other situations generally.286
The best evidence rule likewise acts as an insurance against fraud. If a party is in the possession of the best evidence and withholds it, and seeks to
substitute inferior evidence in its place, the presumption naturally arises that the better evidence is withheld for fraudulent purposes that its production
would expose and defeat. The rule likewise protects against misleading inferences resulting from the intentional or unintentional introduction of
selected portions of a larger set of writings.287
As exceptions to the best evidence rule, Section 3, Rule 130 of the Rules of Court provides that non-original documents may be produced in court in
the following cases:
(a) When the original has been lost or destroyed, or cannot be produced in court, without bad faith on the part of the offeror;
(b) When the original is in the custody or under control of the party against whom the evidence is offered, and the latter fails to produce it
after reasonable notice;
(c) When the original consists of numerous accounts or other documents which cannot be examined in court without great loss of time and
the fact sought to be established from them is only the general result of the whole; and
(d) When the original is a public record in the custody of a public officer or is recorded in a public office. (Emphasis supplied)
Secondary evidence of the contents of writings is admitted on the theory that the original cannot be produced by the party who offers the evidence
within a reasonable time by the exercise of reasonable diligence.288
PIATCO argues that its non-submission of original documents before the trial court is justified under Section 3 (c), Rule 130 of the Rules of Court. It
points out that a party need not submit the original when it consists of numerous accounts or other documents which cannot be examined in court
without great loss of time and the fact sought to be established from them is only the general result of the whole. PIATCO insists that the lower courts
erred in not giving probative value to the report prepared by Reyes Tacandong & Co., an auditing firm, validating PIATCO's computation of attendant
costs. Significantly, Reyes Tacandong & Co. failed to state that it examined the original documents in validating PIATCO's computation of attendant
costs.
We agree with PIATCO that it need not submit numerous and voluminous invoices, official receipts, and other relevant documents before the trial court
to prove the attendant costs that it incurred in the construction of the NAIA-IPT III. The trial court may admit a summary of voluminous original
documents, in lieu of original documents, if the party has shown that the underlying writings are numerous and that an in-court examination of these
documents would be inconvenient. In other words, Section 3 (c), Rule 130 of the Rules of Court does away with the item-by-item court identification
and authentication of voluminous exhibits which would only be burdensome and tedious for the parties and the court.
However, as a condition precedent to the admission of a summary of numerous documents, the proponent must lay a proper foundation for the
admission of the original documents on which the summary is based. The proponent must prove that the source documents being summarized are also
admissible if presented in court.289
In concrete terms, the source documents must be shown to be original, and not secondary. Furthermore, the source documents must likewise be
accessible to the opposing party so that the correctness of the summary of the voluminous records may be tested on cross-examination and/or may be
refuted in pleadings. In ordinary trial-type proceedings, a proper foundation for the introduction of a summary may be established through the
"testimony of the person who is responsible for the summary's preparation, or the person who supervised the preparation of the summary." 290
The primary reason for these procedural foundations is that the summary of numerous documents is, in strict terms, hearsay evidence. The trial court
should not haphazardly allow a party to present a summary of numerous documents and immediately admit and give probative value to such summary
without sufficiently laying these foundations. If the source documents of the summary are non-original, the trial court would commit a grave error in
admitting and/or giving probative value to the summary of non-original documents; the evidence admitted would be double hearsay.291
Furthermore, when a party invokes Section 3 (c), Rule 130 of the Rules of Court, he does not similarly invoke Section 3 (a), (b), and/or (d), Rule 130 of
the Rules of Court. He does not likewise claim that the original documents have been lost or destroyed. The party merely asserts that the numerous
documents cannot be examined in court without great loss of time and that the fact sought to be established from these documents is only the general
result of the whole. Whenever a party seeks an exemption under the best evidence rule pursuant to Section 3 (c), Rule 130 of the Rules of Court, he
asks permission from the trial court to produce a summary of numerous documents, whose originals are available to the adverse party for inspection.
He does not ask permission from the trial court to present in evidence the numerous non-original documents. Otherwise, the very purpose of Section 3
(c), Rule 130 of the Rules of Court would be defeated. In that case, every exhibit of non-original documents would be identified, authenticated, and
cross-examined, leading to a tedious and protracted litigation.
Thus, if a party desires to present photocopies of the original documents, he must first establish that the presentation of photocopies is justified under
Section 3 (a), (b), and/or (d), Rule 130 of the Rules of Court. He must establish the presence of all the elements under these provisions. In the case of
lost or destroyed documents, the offeror of non-original documents must first prove the following elements before secondary evidence is admitted
before the court: (a) the existence or due execution of the original; (b) the loss and destruction of the original, or the reason for its non-production in
court; and (c) the absence of bad faith on the part of the offeror to which the unavailability of the original can be attributed. To conclude otherwise is to
allow the party to circumvent the best evidence rule and the requirements under Section 3 (a), (b), and (d), Rule 130 of the Rules of Court by merely
invoking Section 3 (c), Rule 130 of the Rules of Court.
In the present case, PIATCO attached to its Compliance dated December 14, 2010, the photocopies of numerous documents, and the validation of
PIATCO's computation of attendant costs prepared by Reyes Tacandong & Co., among others. PIATCO justifies the non-presentment of original
documents pursuant to Section 3 (c), Rule 130 of the Rules of Court.
We affirm the lower courts' uniform findings that PIATCO failed to establish its attendant costs. PIATCO failed to establish that the photocopied
documents fall under Section 3 (a), (b), and/or (d), Rule 130 of the Rules of Court. These photocopied documents are hearsay evidence. They are
mere scraps of paper and have no weight as basis for the attendant costs of the NAIA-IPT III. We likewise cannot give weight to the summary prepared
by Reyes Tacandong & Co. for being double hearsay. Reyes Tacandong & Co., whose letter was addressed to PIATCO and not to the trial court, did
not state in its report that it examined the original documents allegedly proving attendant costs. Moreover, in a letter dated December 14, 2010, Reyes
Tacandong & Co stated it does not "express any assurance on the attendant costs:"
We have performed the procedures agreed with Philippine International Air Terminals, Co., ("the Company") with respect to the Company's attendant
costs incurred in building NAIA Terminal 3 from 1997 to 2004. Our engagement was undertaken in accordance with the Philippine Standard on Related
Services applicable to agreed-upon procedures engagements.
xxxx
The sufficiency of the procedures is solely the responsibility of the specified users of the report. Consequently, we make no representation regarding
the sufficiency of the procedures either for the purpose for which this report has been requested or for any other purpose.
Because the procedures do not constitute either an audit or a review of financial statements made in accordance with Philippine Standards on Auditing,
we do not express any assurance on the attendant costs. (Emphasis supplied)
4.b. The BOC and the RTC's

attendant cost
The CA correctly disregarded the BOC and the RTC's computation of attendant costs, which both pegged the attendant cost at 10% of the construction
cost. The BOC and the RTC relied on the mean percentage range of attendant cost which appears in the Scott Wilson Report as follows:292
Attendant Costs Percentage Range
Architecture 3.0 to 4.0 %
Civil and Structural 1.0 to 4.0 %
Electrical and Mechanical 2.5 to 3.5 %
Quantity Surveyor 1.0 %
Project Management 1.0 %
Total 8.5 to 11.5 %
The BOC and the RTC computed the mean percentage range by adding 8.5% and 11.5% and dividing the result by 2, thus:
(8.5 + 11.5)/2 = 10%
The mean percentage range is highly speculative and devoid of any factual basis. As a court of law, we should only measure just compensation using
relevant and actual evidence as basis in fixing the value of the condemned property. Just compensation must be duly proven by preponderance of
evidence or greater weight of credible evidence.293 Bare allegations, unsubstantiated by evidence, are not equivalent to proof.294
In a case for damages, we allow the party to receive temperate damages in the absence of competent proof on the amount of actual damages.
Temperate or moderate damages, which are more than nominal but less than compensatory damages, may be recovered when the court finds that
some pecuniary loss has been suffered but its amount cannot, from the nature of the case, be proved with certainty.295
We cannot adopt the same liberal attitude in an eminent domain case and merely estimate the attendant cost in the total absence of evidence of
construction costs. The amount of just compensation must be substantiated by a preponderance of evidence.
An eminent domain case is different from a complaint for damages. A complaint for damages is based on tort and emanates from the transgression of
a right. A complaint for damages seeks to vindicate a legal wrong through damages, which may be actual, moral, nominal, temperate, liquidated, or
exemplary. When a right is exercised in a manner not conformable with Article 19 of the Civil Code and other provisions on human relations in the Civil
Code, and the exercise results in the damage of another, a legal wrong is committed and the wrongdoer is held responsible.296
In contrast, an eminent domain case arises from the State's exercise of its power to expropriate private property for public use. The Constitution
mandates that the property owner shall only receive just compensation which, of course, should be based on preponderance of evidence. Moreover,
the determination of eminent domain being a judicial function, there is no constitutional or statutory provision giving the courts unfettered discretion to
determine just compensation based on estimates and conjectures.
4.c. The Government's attendant cost
We affirm the CA's factual finding that the Government's computation of construction cost valuation already includes the attendant costs. In the Gleeds
Report dated December 22, 2010, Tim Lunt sufficiently explained:
9. I consider that Engineering and Architecture, Quality Assurance, Construction Supervision, Construction Insurance and Site Development are clearly
costs which are included for in the CCV. The CCV includes costs associated with the General Requirements (see Appendix D - Summary). The costs
of Site Development are also included (see CCV Appendix D - Part 2, page 5 of 38).
xxxx
25. Scott Wilson states at paragraph 2.2.14 that the constructions costs "are exclusive of all other attendant costs, such as the engineering and
architectural services fees, quality assurance services fees, construction supervision services fees, construction insurance, site development costs,
financing costs and other associated costs." This statement is incorrect. It is clear on the inspection of the General Requirements sections of the
Takenaka Bills of Quantities that some if not all of these items are included in the assessment of the construction costs made by PIATCO with the
exception of 1) financing costs and 2) other associated costs, for which there is no definition. Scott Wilson makes no reference to the Takenaka Bills of
Quantities nor do they use them as documents which they have reviewed in paragraph 1.4.1 of their report. I do not understand how Scott Wilson can
ignore the items which are included in the Bills of Quantities under the heading General Requirements and make the suggestion that they are
additional costs which should be considered.
xxxx
36. In respect of the Engineering Consultancy Fees set out by Scott Wilson, it is clear to me on inspection of the General Requirements section of the
On shore and Off shore Bills of Quantities that an element of design fees included as Costs has also been included in the CCVs and should not
therefore be included as an addition. Scott Wilson has not provided any specific information on the actual cost or extent of service provided in respect
of engineering consultancy.
xxxx
39. The cost associated with the Independent QA role referred to by Scott Wilson is included in the General Requirements section of the CCV.
(Emphasis supplied)
The Government's CCV already includes attendant costs which are incorporated in the "General Requirements and Conditions." On the basis of the
Bills of Quantities, Gleeds took into account indirect costs in constructing the NAIA-IPT III, summarized below:
Attendant Costs under General Requirements and Conditions
Design $6,439,680.00297
Staff and labour $10,491,139.54298

Insurance $925,210.78299
Professional Indemnity Insurance $2,200,000.00300
Consequential Loss Insurance $800,000.00301
Setting out $364,647.00302
Health and Safety $403,224.00303
Environmental management $176,490.00304
Design $2,631,100.00305
Staff and labour $2,590,774.19306
Insurance $71,109.77307
Total $27,093,375.28
5. Deductions from the replacement cost of the NAIA-IPT III
5.a. Depreciation should be

deducted from the replacement
cost.
In eminent domain cases, it is acceptable that a "deduction should be made to the extent to which the improvement or fixture has depreciated. The cost
of the buildings and fixtures, minus depreciation, is a reasonable test of the amount by which they enhance the market value of the land even where
the market value of the land itself is not readily quantifiable."308
In order for this Court to arrive at a valid indication of the market value of the NAIA-IPT III, we must consider accrued depreciation, which is the loss in
value of the terminal.
Contrary to the CA's position, "depreciation" is used in different contexts in valuation and financial accounting. As earlier discussed, in appraisal,
depreciation "refers to the reduction or writing down of the cost of a modern equivalent asset to reflect the obsolescence and relative disabilities
affecting the actual asset"309 or "loss in value from any cause."310 It is further defined as "the reduction or writing down of the cost of a modern
equivalent asset to reflect the obsolescence and relative disabilities affecting the actual asset."311
In contrast, depreciation in accounting refers to "a charge made against an entity's income to reflect the consumption of an asset over a particular
accounting period."312 It is the "process of allocating to expense the cost of a plant asset over its useful (service) life in a rational and systematic
manner."313 Accumulated depreciation is reported as a deduction from plant assets and affects the income statement through depreciation expenses.
Thus, the cost allocation is designed to match expenses with revenues.
In financial accounting, "depreciation is a process of cost allocation, not a process of asset valuation. No attempt is made to measure the change in an
asset's market value during ownership because" it is assumed that plant assets are not held for resale.314 Book depreciation refers to "the amount of
capital recapture written off an owner's books"; it is not market derived.315 Thus, the book value - original cost less accumulated depreciation - of an
asset may be different from the market value.
Consequently, an asset can have zero book value but still have a significant market value.316
Simply put, book depreciation is measured against the book value or original cost of the property and is the amount of capital recapture written off an
owner's books.317 Accrued depreciation is measured against the current market value of the property.318
Under the depreciated replacement cost method, accrued depreciation is the difference between the "replacement cost of the improvements on the
effective date of the appraisal and the market value of the improvements on the same date."319
In the Gleeds Report, Tim Lunt stated:
Deterioration
3.2.7 The Arup Site Observation Report identifies a number of items which have deteriorated since suspension of the construction of Terminal 3 in
December 2002.
3.2.8 A provisional value has been assessed against the items identified in the Arup report at $1,738,318.
The deterioration items have been costed with a base date of 2Q09. Calculation of this amount is contained in Appendix 'E.' Further examination and
costing of each of the identified items are required and, therefore, the costs of these items will require adjustment based on the actual date when the
rectification works are carried out.
Depreciation
3.2.0 An Assessment has been made of the depreciated value of the assets from December 2002 when construction was suspended to December
2004 when Terminal 3 was expropriated by the Republic.
3.2.10 A depreciation value has been assessed at $USD35,076,294 in 3Q01 Manila prices. Calculation of this amount showing the various asset lives
assumed is included in Appendix "J."
3.2.11 Based on the deductions for deterioration and depreciation between December 2002 and December 2004, the Base Value CCV at the time of
expropriation is $USD263,392,081.320
In the Scott Wilson report, he stated:

3.7.1 We consider the question of depreciation in this instance to be a financial and legal issue which has to be dealt with in accordance with Philippine
law.
3.7.2 We therefore do not feel qualified to comment on the legal issue except that we do not understand how deterioration in section 3.6 and
depreciation can both be applied as surely this means that Gleeds (sic) have double counted the effect of any deterioration. (emphasis supplied)321
In response, Tim Lunt argued:
14. With respect to PIATCO's hypothetical inclusion of inflation, I do not consider that inflation should be applied to the base value as the replacement
cost method establishes the cost of construction when completed in December 2002.
15. The base values included in the CCVs are the same for the December 2002 and December 2004. The December 2004 base value is not adjusted
to account for inflation because the items which make up the construction of NAIA3, i.e., the labour, plant, materials, systems and equipment installed
should not be paid for at a higher rate (that takes into account inflation) than the rate which would have been paid when they were purchased at the
earlier date. Put simply, it makes no sense to apply December 2004 prices to items bought and used in the construction of NAIA3 sometime between
June 2000 and December 2002.
16. PIATCO do (sic) not consider depreciation. Having explained above why inflation should not be included, it is the application of a similar logic which
demonstrates why depreciation should be included. In the case of NAIA3 the materials, systems and equipment installed are at least two years older as
at December 2004 than at the time they were incorporated into the construction of NAIA3. Their value should therefore be less. The method used for
assessing this reduced value is that of depreciation.322
66. Scott Wilson provide a "Summary of Conclusions on deductions at section 3.11 and my responses to each of the items contained in their
"comment" column are as follows:
xxxx
● Deterioration - "Major deduction for baggage system not justified" - The deterioration in the baggage systems is clearly set out in the Arup
(and Gensler) Site Observation Report dated August 2007, at section 9.2. The cost deduction is set out in Appendix to the previous CCV
report which Scott Wilson do (sic) not appear to have reviewed.
● Depreciation - Scott Wilson states" This issue appears to be a legal issue and should be commented on by legal expert" and offers no
technical or cost related comments relevant to the CCV.
On the other hand, Gary Taylor commented:
Gleeds have (sic) assessed a depreciation value of US$35,076,294 (11.68%) to conclude its 4Q04 value. This concept of depreciation is contrary to
the GRP's own statistics which shows a Consumer Price Index for Manila ("CPI") increase from107.8 (Aug 01) to 125.1 (Nov. 04), a 16% increase over
the period. The CPI is a conglomerate of all consumer prices in the Manila region and includes property values and is published by the GRP on a
monthly basis. In assessing such a depreciation value, Gleeds have (sic) taken an arbitrary life cycle of the building and assumed a write off of asset
over that period, then assessed the two (2) year depreciation over the period 3Q01 to 4Q04. Whilst we acknowledge that an airport terminal building is
something of a specialized asset and appreciation of value is not always in line with the area's general value assessments, it is still a major structure
and appreciation before depreciation (which should be limited to equipment and fittings within the building) should not be discounted. The concept of
long term value of an asset on a similar concept is proven out by NAIA Terminal 1, which since its construction more than 30 years ago has maintained
a value to this date.323
We uphold the Government's computed extent of deterioration and depreciation. In the Reply to Tengson International Ltd. Report and Response from
Takenaka and Asahikosan dated December 7, 2010, Tim Lunt explained that "[t]he asset lives are taken specifically from experience in preparing
Asset Revaluations for Airport properties which are used as an input for annual published accounts, which are in turn audited by appointed
Accountants."324 Takenaka and Asahikosan should have provided for contrary assumptions with respect to the useful lives of the subject assets if they
did not agree with the Government's assumptions. Instead, Gary Taylor merely referred to the valuation of the NAIA Terminal I without any factual
basis to support his claim. Moreover, Scott Wilson did not question the assumed useful life of the NAIA-IPT III, but agreed that the question of whether
depreciation should be deducted is a legal issue.
Since PIATCO, Takenaka, and Asahikosan failed to present contrary assumptions or estimates with respect to the NAIA-IPT III's useful life, we adopt
Tim Lunt's computations with respect to deterioration and depreciation.
5.b. Rectification for contract

compliance should not be
deducted from the replacement
cost.
However, we hold that the cost for "rectification for contract compliance" should not be deducted from the base value, as the contract, being void,
cannot be ratified.325
In the present case, the Court already nullified the PIATCO contracts for being contrary to public policy in Agan. A substantial amendment to a contract
awarded through public bidding, when such subsequent amendment was made without a new public bidding, is null and void. The PIATCO contracts
contain material and substantial amendments that substantially departed from the bidded contract. If at all, the declaration of nullity of a contract only
operates to restore things to their state and condition before the contract's execution.326
Moreover, Takenaka and Asahikosan, as subcontractors in the NAIA- IPT III project, were not bound by the nullified PIATCO contracts. Takenaka and
Asahikosan were only bound to perform their contractual obligations under the Onshore Construction Contract and Offshore Procurement Contract,
respectively. They were not bound by the nullified PIATCO contracts.
If there had indeed been variations from the Onshore Construction Contract and Offshore Procurement Contract, the cause of action for breach of
contract and damages lies with PIATCO. For purposes of determining just compensation, the Government cannot rely on the specifications in the Bid
Documents precisely because the concession agreement between PIATCO and the Government had already been nullified. The Government cannot
complain of contract noncompliance in an eminent domain case, whose cause of action is not based on a breach of contract, but on the peremptory
power of the State to take private property for public use.
Consequently, deductions from the base value of the cost of noncompliance with bid documents as well as inferior quality items have no legal basis.
Gleeds' reliance on the NAIA-IPT III bid documents is misplaced.
As Scott Wilson correctly pointed out, the decisive factor of the deductibility of items under "noncompliance with bid documents" is whether they are
functional. The Scott Wilson report shows that, except for the nonprovision of moving walkway, the alleged noncompliant items are functional. 327 Also,
the nonprovision of a moving walkway should not be deducted from the base value. The only consequence of the failure to provide a moving walkway
is the need to construct one, which would only increase the construction cost. 328 The increase in the construction cost, however, should not be included
as part of just compensation as this Court is
only tasked to determine the construction cost of the NAIA-IPT III as of December 21, 2004.
For these same reasons, we cannot allow the deduction in the amount of $75,570,510.00 "additional areas to be built." These are "areas where the
minimum requirements stated in the Bid Documents have not been met and are necessary for the operation" of the NAIA-IPT III. These areas include:
● Departure hall 22,462 m2
● Meeter/greeter hall 14,696 m2
● Ramp operations 13,640 m2
● Offices 4,370 m2
● Hold rooms 3,729 m2
● Public toilets 2,351 m2
● Hardstand hold rooms 1,442 m2
● Delayed flight restaurant 620 m2329
6. Adjustments to the Replacement Cost
6.a. The replacement cost

should be adjusted to
December 2004 values.
Gleeds used the Principle Quantities approach in determining the gross replacement cost of the NAIA-IPT III. 330 Gleeds calculated the cost of
construction based on the midpoint between June 2000 and December 2002 to arrive at the December 2002 CCV. According to Gleeds, the cost of
construction based on its midpoint or the third quarter of 2001 is a recognized standard practice in the construction industry.331
Gleeds did not adjust the base valuation of $300,206,693.00 as of December 2002 to reflect the current gross replacement cost as of December 2004.
It merely assumed that the gross replacement cost as of December 2002 is the same as the gross replacement cost as of December 2004. It stated
that it did not consider inflation in determining the base valuation of the NAIA-IPT III as of December 2004:
14. With respect to PIATCO's hypothetical inclusion of inflation, I do not consider that inflation should be applied to the base value as the replacement
cost method establishes the cost of construction when completed in December 2002.
15. The base values included in the CCVs are the same for December 2002 and December 2004. The December 2004 is not adjusted to account for
inflation because the items which make up the construction of NAIA3, i.e., the labour, plant, materials, systems and equipment installed should not be
paid for at a higher rate (that takes into account inflation) than the rate which would have been paid when they were purchased at the earlier date. Put
simply, it makes no sense to apply December 2004 prices to items bought and used in the construction of NAIA3 sometime between June 2000 and
December 2002.332 (Emphasis supplied)
Section 10 of RA 8974 IRR provides that the replacement cost shall be based on the current market prices of construction and attendant costs. Under
the depreciated replacement cost method, the replacement cost shall be based on the current gross replacement cost of the asset. In its pleadings, the
Government itself explained that the cost of replacing an asset under both depreciated replacement cost and new replacement cost methods should be
measured at its current prices.
In our jurisdiction, the word "current" should be equated with the date of the taking of the property or the filing of the complaint, whichever came first. In
the present case, the word "current" should necessarily refer to December 21, 2004, the filing of the complaint for expropriation.
In National Power Corporation v. Co,333 the Court suppletorily applied Section 4, Rule 67 of the Rules of Court in determining the value of the property
sought to be expropriated for purposes of implementing national infrastructure projects. Under the Rules of Court, just compensation shall be
determined from the date of the taking of the property or the filing of the complaint, whichever came first. Thus, where the filing of an action precedes
the taking of the property, just compensation shall be computed as of the time of the filing of the complaint. 334 The relevant valuation date when we
shall reckon the current gross replacement cost is December 21, 2004, or the date of filing of the complaint for expropriation.
The Government's base valuation of $300,206,693.00 is only a measurement of the current gross replacement cost as of December 2002. We agree
with PIATCO that the gross replacement cost of the NAIA-IPT III as of December 2002 should be adjusted to its cost as of December 2004 for the plain
reason that the Government's computed gross replacement cost is not current, as required by the Rules of Court and jurisprudence.
Equity dictates that we should adjust the replacement cost at December 2004 values using the Consumer Price Index (CPI). 335 This Court should not
be confined and restricted by the use of the depreciated replacement cost method, especially in this case where the calculated base valuation as of
December 2004 appears to be not truly reflective of the current gross replacement cost of the NAIA-IPT III at the time of the filing of the complaint for
expropriation.
In adjusting the gross replacement cost to December 2004 values, this Court takes cognizance of the fact that the cost of goods and services in the
Philippines increased from 2002 until 2004. This is shown by the CPI which is used in calculating the inflation rate and the purchasing power of the
peso.336 PIATCO correctly arrived at the inflation rate of 1.0971 using the prevailing CPI from November 29, 2002, or the date of the suspension of
works in the NAIA-IPT III until December 21, 2004, or the date when the Government filed the expropriation complaint.337
7. Interests, Fruits and Income

7.a. Computation of Interests
To avoid confusion in computing interests, we first distinguish three interrelated concepts in just compensation: (1) the valuation period of just
compensation under Rule 67 of the Rules of Court; (2) the reckoning period of interest in eminent domain cases pursuant to Section 9, Article 3 of the
1987 Constitution; and (3) the initial and final payments of just compensation under RA 8974.
Under Section 4, Rule 67 of the Rules of Court, the property sought to be expropriated shall be appraised as of the date of taking of the property or the
filing of the complaint for expropriation, whichever is earlier, thus:
Section 4. Order of expropriation. - If the objections to and the defenses against the right of the plaintiff to expropriate the property are overruled, or
when no party appears to defend as required by this Rule, the court may issue an order of expropriation declaring that the plaintiff has a lawful right to
take the property sought to be expropriated, for the public use or purpose described in the complaint, upon the payment of just compensation to be
determined as of the date of the taking of the property or the filing of the complaint, whichever came first.
A final order sustaining the right to expropriate the property may be appealed by any party aggrieved thereby. Such appeal, however, shall not prevent
the court from determining the just compensation to be paid.
After the rendition of such an order, the plaintiff shall not be permitted to dismiss or discontinue the proceeding except on such terms as the court
deems just and equitable. (4a) (Emphasis supplied)
On the other hand, Section 9, Article 3 of the 1987 Constitution provides that "[n]o private property shall be taken for public use without just
compensation." The 1987 Constitution thus commands the condemnor to pay the property owner the full and fair equivalent of the property from the
date of taking. This provision likewise presupposes that the condemnor incurs delay if it does not pay the property owner the full amount of just
compensation on the date of taking.338
The reason is that just compensation would not be "just" if the State does not pay the property owner interest on the just compensation from the date of
the taking of the property. Without prompt payment, the property owner suffers the immediate deprivation of both his land and its fruits or income. The
owner's loss, of course, is not only his property but also its income-generating potential.339
Ideally, just compensation should be immediately made available to the property owner so that he may derive income from this compensation, in the
same manner that he would have derived income from his expropriated property.
However, if full compensation is not paid for the property taken, then the State must pay for the shortfall in the earning potential immediately lost due to
the taking, and the absence of replacement property from which income can be derived. Interest on the unpaid compensation becomes due as
compliance with the constitutional mandate on eminent domain and as a basic measure of fairness.340
Thus, interest in eminent domain cases "runs as a matter of law and follows as a matter of course from the right of the landowner to be placed in as
good a position as money can accomplish, as of the date of taking."341
Lastly, RA 8974 requires the Government to pay just compensation twice: (1) immediately upon the filing of the complaint, when the amount to be paid
is 100% of the value of the property based on the current relevant zonal valuation of the BIR, and the value of the improvements and/or structures
sought to be expropriated (initial payment); and (2) when the decision of the court in the determination of just compensation becomes final and
executory, in which case the implementing agency shall pay the owner the difference between the amount already paid and the just compensation as
determined by the court (final payment).
In case the completion of a government infrastructure project is of utmost urgency and importance, and there is no existing valuation of the area
concerned, the initial payment shall be the proffered value of the property. Section 4 of RA 8974 also states that the initial payment of just
compensation is a prerequisite for the trial court's issuance of a writ of possession, to wit: Section 4. Guidelines for Expropriation Proceedings. -
Whenever it is necessary to acquire real property for the right-of-way or location for any national government infrastructure project through
expropriation, the appropriate implementing agency shall initiate the expropriation proceedings before the proper court under the following guidelines:
(a) Upon the filing of the complaint, and after due notice to the defendant, the implementing agency shall immediately pay the owner of the
property the amount equivalent to the sum of (1) one hundred percent (100%) of the value of the property based on the current relevant
zonal valuation of the Bureau of Internal Revenue (BIR); and (2) the value of the improvements and/or structures as determined under
Section 7 hereof;
(b) In provinces, cities, municipalities and other areas where there is no zonal valuation, the BIR is hereby mandated within the period of
sixty (60) days from the date of the expropriation case, to come up with a zonal valuation for said area; and
(c) In case the completion of a government infrastructure project is of utmost urgency and importance, and there is no existing valuation of
the area concerned, the implementing agency shall immediately pay the owner of the property its proffered value taking into consideration
the standards prescribed in Section 5 hereof.
Upon compliance with the guidelines abovementioned, the court shall immediately issue to the implementing agency an order to take possession of the
property and start the implementation of the project.
Before the court can issue a Writ of Possession, the implementing agency shall present to the court a certificate of availability of funds from the proper
official concerned.
In the event that the owner of the property contests the implementing agency's proffered value, the court shall determine the just compensation to be
paid the owner within sixty (60)days from the date of filing of the expropriation case. When the decision of the court becomes final and executory, the
implementing agency shall pay the owner the difference between the amount already paid and the just compensation as determined by the court.
(Emphasis supplied)
The Government's initial payment of just compensation does not excuse it from avoiding payment of interest on the difference between the adjudged
amount of just compensation and the initial payment.
The initial payment scheme as a prerequisite for the issuance of the writ of possession under RA 8974 only provides the Government flexibility to
immediately take the property for public purpose or public use pending the court's final determination of just compensation. Section 4 (a) of RA 8974
only addresses the Government's need to immediately enter the privately owned property in order to avoid delay in the implementation of national
infrastructure projects.
Otherwise, Section 4 of RA 8974 would be repugnant to Section 9, Article 3 of the 1987 Constitution which mandates that private property shall not be
taken for public use without just compensation. To reiterate, the Constitution commands the Government to pay the property owner no less than the full
and fair equivalent of the property from the date of taking.
In the present case, the Government avers that PIATCO is not entitled to recover interest. According to the Government, PIATCO should not be
allowed to profit from the void contracts. This contention, however, stems from a mistaken understanding of interest in expropriation cases.
Contrary to the Government's opinion, the interest award is not anchored either on the law of contracts or damages; it is based on the owner's
constitutional right to just compensation. The difference in the amount between the final payment and the initial payment - in the interim or before the
judgment on just compensation becomes final and executory - is not unliquidated damages which do not earn interest until the amount of damages is
established with reasonable certainty. The difference between final and initial payments forms part of the just compensation that the property owner is
entitled from the date of taking of the property.
Thus, when the taking of the property precedes the filing of the complaint for expropriation, the Court orders the condemnor to pay the full amount of
just compensation from the date of taking whose interest shall likewise commence on the same date. The Court does not rule that the interest on just
compensation shall commence the date when the amount of just compensation becomes certain, e.g., from the promulgation of the Court's decision or
the finality of the eminent domain case.
With respect to the amount of interest on just compensation, we decisively ruled in Republic v. Court of Appeals 342 that the just compensation due to
the property owner is effectively a forbearance of money, and not indemnity for damages.343 Citing Eastern Shipping Lines, Inc. v. Court of
Appeals,344 we awarded a legal interest of 12% per annum on just compensation. The Court upheld the imposition of the 12% interest rate in just
compensation cases, as ruled in Republic, in Reyes v. National Housing Authority, 345 Land Bank of the Philippines v. Wycoco, 346 Republic v. Court of
Appeals,347 Land Bank of the Philippines v. Imperial,348 Philippine Ports Authority v. Rosales-Bondoc,349 and Curata v. Philippine Ports Authority. 350 The
Court reiterated the Republic ruling in Apo Fruits Corporation and Hijo Plantation, Inc. v. Land Bank of the Philippines, 351 Land Bank of the Philippines
v. Rivera,352 Department of Agrarian Reform v. Goduco,353 and Land Bank of the Philippines v. Santiago, Jr.354
On June 21, 2013, the BSP issued Circular No. 799, 355 pursuant to MB Resolution No. 796 dated May 16,2013, reducing the legal interest on loans and
forbearance of money from 12% to 6% per annum. BSP Circular No. 799 took effect on July 1, 2013.
In the present case, the Government filed a complaint for expropriation of the NAIA-IPT III on December 21, 2004. On the same day, the RTC issued a
writ of possession in favor of the Government upon the deposit of ₱3,002,125,000.00 with the Land Bank. In Gingoyon, the Court held in abeyance the
implementation of the writ of possession pending the direct payment of the proffered value of ₱3,002,125,000.00 to PIATCO.
On September 11, 2006, the RTC reinstated the writ of possession after the Government tendered PIATCO a check in this amount.
On April 11, 2012, the MIAA and the Land Bank entered into an escrow agreement in the amount of $82,157,716.73. On the same date, the MIAA and
the DBP likewise executed an escrow agreement in the amount of $34,190,924.59.
Based on these factual circumstances, interest shall accrue as follows:
1. The principal amount of just compensation shall be appraised on the date of the filing of the complaint for expropriation or on December 21, 2004.
The just compensation shall not earn interest from December 21, 2004, until September 10, 2006, since the Government did not take possession of the
NAIA-IPT III during this period.
2. The difference between the principal amount of just compensation and the proffered value of ₱3,002,125,000.00 shall earn legal interest of 12% per
annum from the date of taking or September 11, 2006 until June 30, 2013.
3. The difference between the principal amount of just compensation and the proffered value of ₱3,002,125,000.00 shall earn legal interest of 6% per
annum from July 1, 2013, until the finality of the Court's ruling.
4. The total amount of just compensation shall earn legal interest of 6% per annum from the finality of the Court's ruling until full payment.
The execution of the escrow agreements shall not affect the accrual of interest in this case. In its Manifestation and Motion dated July 8, 2011, the
Government stated that the escrow accounts shall be subject to the condition that "[t]he claimant(s) shall have been held to be entitled to receive the
sum claimed from the 'Just Compensation (NAIA Terminal 3) Fund' in accordance with Philippine law and regulation, by a final, binding and executory
order or award of the expropriation court."356
Clearly, the Government does not intend to pay the just compensation due to either PIATCO or Takenaka and Asahikosan during the pendency of the
expropriation case or until the finality of the Court's rulings in G.R. Nos. 209917, 209696 & 209731.
7.b. PIATCO is not entitled to

the fruits and income of the
NAIA-IPT III.
PIATCO insists that aside from the interest on just compensation, it is also entitled to all income generated from the operations of the NAIA-IPT III, from
the date of taking up to the present.
PIATCO's claim is unmeritorious. The State, by way of interest, makes up for the shortfall in the owners' earning potential and the absence of
replacement property from which income can be derived. This is because the interest awarded by the expropriation court is, in reality, the equivalent of
the fruits or income of the seized property. 357 In fact, PIATCO itself admitted in its petition in G.R. No. 209731 that the interest on just compensation
already answers for the loss of income that the owner suffered as a result of the State's deprivation of the ordinary use of his property.358
Thus, we cannot allow PIATCO to profit from the operation of the NAIA-IPT III whose funds are sourced from the public coffers. Otherwise, PIATCO
would be doubly compensated and unjustly enriched to the detriment of the taxpayers.
8.a. Takenaka and

Asahikosan should not
share in the BOC's
expenses.
Takenaka and Asahikosan refuse to share in the expenses of the BOC. They argue that pursuant to Section 12,Rule 6 of the Rules of Court, the
Government should solely shoulder the costs incurred in the expropriation case.
The Government, on the other hand, asserts that Section 1, Rule 142 of the Rules of Court explicitly authorizes the expropriation court to order the
parties to equally share the costs of an action. Hence, the court can require third-party intervenors, i.e., Takenaka and Asahikosan, to share in the
expenses of the BOC. It points out that PIATCO already shared in the expenses of the BOC and tendered the sum of ₱2,550,000.00 to the RTC.
We find no merit in the Government's assertion.
The relevant rule is found in Section 12, Rule 67 of the Rules of Court which provides:
SEC. 12. Costs, by whom paid. - The fees of the commissioners shall be taxed as a part of the costs of the proceedings. All costs, except those of rival
claimants litigating their claims, shall be paid by the plaintiff, unless an appeal is taken by the owner of the property and the judgment is affirmed, in
which event the costs of the appeal shall be paid by the owner. [Emphasis supplied] This provision specifically deals with the costs of eminent domain
cases. Hence, we find that Section 1, Rule 142 of the Rules of Court, more specifically, the statement allowing the court to divide the costs of an action
to either party to the case, is inapplicable to the present case.
Based on the clear terms of Section 12, Rule 67, it is the plaintiff - in this case, the Government - not the property owner or third-party intervenors, i.e.,
Takenaka and Asahikosan, who shall shoulder the costs of the expropriation before the court of origin. Since the expenses of the BOC form part of the
costs of the suit - as these are expenses necessary in prosecuting or defending an action or a distinct proceeding within an action - the Government
solely bears the expenses of the BOC. The property owner shall only bear the costs of the appeal if he loses in his appeal.
PIATCO, in its pleading, has not questioned its share in the expenses of the BOC before the Court. PIATCO's voluntary sharing in the expenses of the
BOC and its non-objection to its payment amount to a waiver of its right not to share in the expenses of the BOC.
In sum, just compensation shall be computed as shown below:
Base Current Cost Valuation (Inclusive of Attendant Cost) $ 300,206,693.00
ADD:
Excess Concession Space $ 1,081,272.00
Four-Level Retail Complex $ 12,809,485.00
Exclusions due to Structural Issues $ 20,713,901.00
LESS:
Depreciation $ 1,738,318.00
Deterioration $ 35,076,295.00
REPLACEMENT COST AS OF DECEMBER 2002 $ 297,996,738.00
MULTIPLY:
Inflation Rate of 1.0971
REPLACEMENT COST AS OF DECEMBER 21, 2004 $ 326,932,221.26
ADD:
Interests from September 11, 2006 to December 2014 $ 242,810,918.54
LESS:
Proffered Value $ 59,438,604.00
JUST COMPENSATION AS OF DECEMBER 31, 2014 $ 510,304,535.80
Interest
Period Formula Number of Days Principal Amount Straight Interest
Rate
September 11, 2006 principal*rate 113 days 12% $267,493,617.26 $9,937,571.10

to December 31, 2006 *(113/365)
January 1, 2007 to principal*rate 365 days 12% $267,493,617.26 $32,099,234.07

December 31, 2007

December 31, 2008

December 31, 2009

December 31, 2010
January 1, 2011 to December 31, 2011 principal*rate 365 days 12% $267,493,617.26 $32,099,234.07

December 31, 2012
January 1, 2013 to principal * 181 days 12% $267,493,617.2 $15,917,702.38

June 30, 2013 rate *
(181/365)
July 1, 2013 to principal*rate 189 days 6% $267,493,617.26 $8,310,623.62

December 31, 2013 *(189/365)

December 31, 2014
Total $242,810,918.54
Total Interest from September 11, 2006 to Just Compensation as of

Formula Principal Amount
December 31, 2014 December 31, 2014
Principal $267,493,617.26 $ 242,810,918.54 $510,304,535.80

Amount +
Interest
9. PIATCO as the Lawful Recipient of Just Compensation.
After determining the amount of just compensation, we next resolve the question of who shall receive the full amount of just compensation.
Takenaka and Asahikosan contend that as actual builders of the NAIA-IPT III, they are lawfully entitled to receive just compensation. They pray that
just compensation of at least $85,700,000.00 be set aside through an escrow account or other means, in their favor, to answer for their pending money
claims against PIATCO in G.R. No. 202166.
PIATCO, on the other hand, bases its claim for just compensation on its ownership of the NAIA-IPT III and on the ruling in Agan and Gingoyon that
PIATCO should be fully compensated as the builder and owner of the NAIA-IPT III.
For its part, the Government refuses to make further payments to PIATCO. Instead, it created an escrow account in favor of the "entitled claimants" of
just compensation. The Government fears that the NAIA-IPT III would still be burdened with liens and mortgages - as a result of PIATCO's
indebtedness to other entities - even after it pays PIATCO the full amount of just compensation.
9.a. Takenaka and Asahikosan's

intervention in the case as
unpaid subcontractors is proper.
The defendants in an expropriation case are not limited to the owners of the property condemned. They include all other persons owning, occupying, or
claiming to own the property. Under Sections 8 and 14 of RA 8974 IRR, in relation with Section 9, Rule 67 of the Rules of Court, all persons who claim
to have lawful interest in the property to be condemned should be included as defendants in the complaint for expropriation:
Section 8 of RA 8974 IRR. Expropriation. - If the owner of a private property needed by the government implementing agency does not agree to convey
his property to the government by any of the foregoing modes of acquiring and/or transferring ownership of the property, then the government shall
exercise its right of eminent domain by filing a complaint with the proper Court for the expropriation for the private property.
The verified complaint shall state with certainty the right and purpose of expropriation, describe the real or personal property sought to be expropriated,
and join as defendants all persons owning or claiming to own, or occupying, any part thereof or interest therein, showing as far as practicable, the
interest of each defendant separately. If the title to any property sought to be condemned appears to be in the name of the Republic of the Philippines,
although occupied by private individuals, or if the title is otherwise obscure or doubtful so that the plaintiff cannot with accuracy or certainty specify the
real owners, averment to that effect may be made in the complaint.
Section 14 of RA 8974 IRR. Trial Proceedings. - Within sixty (60)-day period prescribed by the Act, all matters regarding defences and objections to the
complaint, issues on uncertain ownership and conflicting claims, effects of appeal on the rights of the parties, and such other incidents affecting the
complaint shall be resolved under the provisions on expropriation of Rule 67 of the Rules of Court.
Section 9, Rule 67 of the Rules of Court. Uncertain ownership; conflicting claims. - If the ownership of the property taken is uncertain, or there are
conflicting claims to any part thereof, the court may order any sum or sums awarded as compensation for the property to be paid to the court for the
benefit of the person adjudged in the same proceeding to be entitled thereto. But the judgment shall require the payment of the sum or sums awarded
to either the defendant or the court before the plaintiff can enter upon the property, or retain it for the public use or purpose if entry has already been
made. (9a) (Emphasis supplied)
All persons who have lawful interest in the property sought to be expropriated should be impleaded in the complaint for purposes of determining who
shall be entitled to just compensation. If a known owner is not joined as defendant, he may intervene in the proceeding. If the owner is joined but not
served with process and the proceeding is already closed before he came to know of the condemnation, he may maintain an independent suit for
damages. Consequently, Takenaka and Asahikosan are correct in invoking Section 9, Rule 67 of the Rules of Court for purposes of determining who
shall be entitled to just compensation in this case. This rule is likewise their proper basis of intervention in the RTC's March 12, 2007 order in Civil Case
No. 04-0876.
Our ruling on this point does not contradict Section 4 (a) of RA 8974 which provides for a scheme of direct and immediate initial payment to the
property owner in cases involving national government infrastructure projects.
Section 4 (a) of RA 8974 applies only to cases where the issue of ownership of the expropriated property is not disputed. In cases where the ownership
is contested; where conflicting claims or interests over the expropriated property exist; or where there are other incidents affecting the complaint for
expropriation, the governing rule is Section 9, Rule 67 of the Rules of Court. By creating a separate provision applicable only to the latter cases,
Section 14 of RA 8974 IRR359 necessarily acknowledged that the scheme of immediate and direct initial payment is not an absolute and all-
encompassing rule applicable in all circumstances.
We are aware of our pronouncement in the December 19, 2005 Gingoyon decision directing the Government to directly and immediately pay PIATCO
the proffered value of ₱3billion. We rendered the December 19, 2005 Decision based on the fact that Takenaka and Asahikosan were not yet parties to
G.R. No. 166429 and Civil Case No. 04-0876 at that time. The Court denied Takenaka and Asahikosan's motions for leave to intervene in our February
1, 2006 Resolution in Gingoyon for palpable violation of Section 2, Rule 19 of the Rules of Court which only allows intervention before the rendition of
judgment by the court. Moreover, Takenaka and Asahikosan had not yet instituted Civil Case No. 06-171 (the enforcement case) when we promulgated
our rulings in Gingoyon.
The RTC's issuance of the March 12, 2007 order, which is binding on the parties and which allows Takenaka and Asahikosan to intervene in the case,
changed the factual circumstances of this case. As an incident in our determination of the just compensation, we necessarily should resolve the issue
of NAIA-IPT III's ownership and the question of who the recipient of the just compensation should be.
9.b. The property owner is

entitled to just compensation.
Citing Agan, Takenaka and Asahikosan argue that the Court intended that the real builders of the NAIA-IPT III should be paid just compensation.
Takenaka and Asahikosan assert that they are the entities who actually built the NAIA-IPT III pursuant to the Onshore Construction and Offshore
Procurement Contracts. In Agan, the Court declared that PIATCO is the builder of the NAIA-IPT III. The Court stated:
This Court, however, is not unmindful of the reality that the structures comprising the NAIA IPT III facility are almost complete and that funds have been
spent by PIATCO in their construction. For the government to take over the said facility, it has to compensate respondent PIATCO as builder of the
said structures. The compensation must be just and in accordance with law and equity for the government cannot unjustly enrich itself at the expense
of PIATCO and its investors.360
This finding is likewise affirmed in our February 1, 2006 Resolution in Gingoyon where we declared:
The Court is not wont to reverse its previous rulings based on factual premises that are not yet conclusive or judicially established. Certainly, whatever
claims or purported liens Takenaka and Asahikosan against PIATCO or over the NAIA 3 have not been judicially established. Neither Takenaka nor
Asahikosan are parties to the present action, and thus have not presented any claim which could be acted upon by this Court. The earlier adjudications
in Agan v. PIATCO made no mention of either Takenaka or Asahikosan, and certainly made no declaration as to their rights to any form of
compensation. If there is indeed any right to remuneration due to these two entities arising from NAIA 3, they have not yet been established by the
courts of the land.
It must be emphasized that the conclusive ruling in the Resolution dated 21 January 2004 in Agan v. PIATCO (Agan 2004) is that PIATCO, as builder
of the facilities, must first be justly compensated in accordance with law and equity for the Government to take over the facilities. It is on that premise
that the Court adjudicated this case in its 19 December 2005 Decision.
While the Government refers to a judgment rendered by a London court in favor of Takenaka and Asahikosan against PIATCO in the amount of US$82
Million, it should be noted that this foreign judgment is not yet binding on Philippine courts. It is entrenched in Section 48, Rule 39 of the Rules of Civil
Procedure that a foreign judgment on the mere strength of its promulgation is not yet conclusive, as it can be annulled on the grounds of want of
jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or fact. It is likewise recognized in Philippine jurisprudence and
international law that a foreign judgment may be barred from recognition if it runs counter to public policy.
Assuming that PIATCO indeed has corresponding obligations to other parties relating to NAIA 3, the Court does not see how such obligations, yet
unproven, could serve to overturn the Decision mandating that the Government first pay PIATCO the amount of 3.02 Million Pesos before it may
acquire physical possession over the facilities. This directive enjoining payment is in accordance with Republic Act No. 8974, and under the
mechanism established by the law the amount to be initially paid is that which is provisionally determined as just compensation. The provisional
character of this payment means that it is not yet final, yet sufficient under the law to entitle the Government to the writ of possession over the
expropriated property.
There are other judicial avenues outside of this Motion for Reconsideration wherein all other claims relating to the airport facilities may be ventilated,
proved and determined. Since such claims involve factual issues, they must first be established by the appropriate trier of facts before they can be
accorded any respect by or binding force on this Court.361 [Emphasis supplied]
Contrary to Takenaka and Asahikosan's position, in the Philippine jurisdiction, the person who is solely entitled to just compensation is the owner of the
property at the time of the taking.362 As shown below, the test of who shall receive just compensation is not who built the terminal, but rather who its
true owner is.
From the express provision of Section 4 of RA 8974, just compensation shall only be paid to the property owner. We implead persons with lawful
interests in the property in order to determine the person who shall receive just compensation. Note that the last paragraph, Section 4 of RA 8974
states: "When the decision of the court becomes final and executory, the implementing agency shall pay the owner the difference between the amount
already paid and the just compensation as determined by the court." This provision thus envisions a situation where the court determines with finality,
for purposes of payment of just compensation, the conflicting claims of the defendants and intervenors.
The cases cited by Takenaka and Asahikosan are inapplicable to justify their right to receive just compensation. The Court did not award just
compensation to a non-owner in De Knecht v. Court of Appeals. 363 The Court held in that case that a person who had no legal interest in the property at
the time of the filing of a complaint for expropriation had no right to intervene in the case. The Court ruled that only persons who have lawful interests in
the property may be impleaded as defendants or may intervene in the expropriation case under Section 1, Rule 67 of the Rules of Court. This case
thus, at most, support their right to intervene.
In Calvo v. Zandueta,364 the Court stayed the execution of the trial court's judgment ordering the provincial treasurer of Pangasinan to pay Aquilino
Calvo just compensation due to the pendency of the interpleader that Juana Ordoñez brought based on her own claim of ownership of the expropriated
land. Ordoñez asserted that she acquired all rights and interests on the subject land when she purchased it during the execution sale while the
expropriation proceedings were still pending.
Philippine Veterans Bank v. Bases Conversion Development Authority365 further affirms the rule that just compensation shall only be paid to the owner
of the expropriated property at the time of taking. In that case, the Court held that the trial court may order the payment of just compensation to itself
pending the adjudication of the issue of ownership in other proceedings pursuant to Section 9, Rule 67 of the Rules of Court.
The Court likewise did not award just compensation to a non-owner in Republic v. Mangotara. 366 The Court held that the filing of a supplemental
complaint for expropriation impleading private parties does not necessarily amount to an admission that the parcels of land sought to be expropriated
are privately owned. The Republic merely acknowledged that there are private persons also claiming ownership of the parcels of land. The Republic
can still consistently assert, in both actions for expropriation and reversion, that the subject parcels of land are part of the public domain.
The record of the present case show that PIATCO has been the original contracting party commissioned by the Government to construct the NAIA-IPT
III based on a build-operate-transfer arrangement and who, in this capacity, contracted out the actual construction to Takenaka and Asahikosan. Thus,
when the NAIA-IPT III was built, it was in PIATCO's name and account, although it subsequently owed sums to subcontractors, incurred in the course
of the construction. From this perspective, PIATCO has been the owner recognized as such by the Government although the basis of its contractual
relationship with the Government was later on nullified. Takenaka and Asahikosan, on the other hand, had always been subcontractors with whom the
Government did not have any formal link. These facts indubitably show that PIATCO has been the owner of the NAIA-IPT III entitled to receive the just
compensation due. Takenaka and Asahikosan for their part, have not shown that they possess legal title or colorable title to the NAIA-IPT III that would
defeat PIATCO's ownership.
To recap and expound on the matter:
First, Takenaka and Asahikosan were mere subcontractors in the nullified NAIA-IPT III project. That Takenaka and Asahikosan actually built the NAIA-
IPT III does not make them the owner of the terminal building.
We carefully point out that our finding in this case that Takenaka and Asahikosan are the actual builders of the NAIA-IPT III does not contravene our
rulings in Agan and Gingoyon that PIATCO is the builder of the NAIAIPT III. The word "builder" is broad enough to include the contractor, PIATCO, and
the subcontractors, Takenaka and Asahikosan, in the nullified NAIA-IPT III project. Republic Act No. 4566367 defines a "builder" as follows:
Section 9 (b) of RA 4566. "Contractor" is deemed synonymous with the term "builder" and, hence, any person who undertakes or offers to undertake or
purports to have the capacity to undertake or submits a bid to, or does himself or by or through others, construct, alter, repair, add to, subtract from,
improve, move, wreckor demolish any building, highway, road, railroad, excavation or other structure, project, development or improvement, or to do
any part thereof, including the erection of scaffolding or other structures or works in connection therewith. The term contractor includes subcontractor
and specialty contractor.
In Gingoyon, the Court loosely used the word "builder" and "owner" interchangeably. We clarify, however, that a builder is different from the owner of
the property. As we stated above, a builder includes the contractor and the subcontractor. On the other hand, the "owner" who is constitutionally
entitled to just compensation is the person who has legal title to the property. Logically, a builder is not necessarily the owner of the property and vice-
versa.
Second, we cannot recognize Takenaka and Asahikosan's claimed liens over the NAIA-IPT III in this just compensation case. Since G.R. No. 202166
is still pending before the Court, we cannot conclusively rule that Takenaka and Asahikosan are unpaid creditors of PIATCO without preempting the
Court's ruling in the enforcement case.
Even assuming that Takenaka and Asahikosan - as unpaid contractors in the botched NAIA-IPT III construction contract - indeed have liens over the
NAIA-IPT III, PIATCO is still the property owner who, as such, should directly receive just compensation from the Government.
We clarify that the expropriation court's determination of the lawful property owner is merely provisional. By filing an action for expropriation, the
condemnor merely serves notice that it is taking title to and possession of the property, and that the defendant is asserting title to or interest in the
property, not to prove a right to possession, but to prove a right to compensation for the taking. The Court's disposition with respect to the ownership of
the property is not conclusive, and it remains open to challenge through proper actions. The court's resolution of the title to the land at the time of
taking has no legal consequences beyond the eminent domain proceedings. The court's decision cannot be pleaded as a defense of res judicataor
collateral estoppel in any action to determine title to the property.
As we explained in Republic of the Philippines v. Samson-Tatad:368
However, the authority to resolve ownership should be taken in the proper context. The discussion in Republic was anchored on the question of who
among the respondents claiming ownership of the property must be indemnified by the Government:
Now, to determine the person who is to be indemnified for the expropriation of Lot 6, Block 6, Psd-2017, the court taking cognizance of the
expropriation must necessarily determine if the sale to the Punzalan spouses by Antonio Feliciano is valid or not. For if valid, said spouses must be the
ones to be paid by the condemnor; but if invalid, the money will be paid to someone else. x x x
Thus, such findings of ownership in an expropriation proceeding should not be construed as final and binding on the parties. By filing an action for
expropriation, the condemnor (petitioner), merely serves notice that it is taking title to and possession of the property, and that the defendant is
asserting title to or interest in the property, not to prove a right to possession, but to prove a right to compensation for the taking.
If at all, this situation is akin to ejectment cases in which a court is temporarily authorized to determine ownership, if only to determine who is entitled to
possession. This is not conclusive, and it remains open to challenge through proper actions. The consequences of Sec. 9, Rule 67 cannot be avoided,
as they are due to the intimate relationship of the issue of ownership with the claim for the expropriation payment. (Emphasis supplied)
9.c. A final disposition in the eminent

domain case with respect to the order
of payment to a particular person shall
be final and executory.
To avoid future litigation, we emphasize that a final disposition in the eminent domain case with respect to the order to pay a particular person shall be
final and executory upon the lapse of relevant periods under Rule 39 of the Rules of Court. The recourse of the person claiming ownership over the
expropriated property in any subsequent case is against the adjudged property owner in the expropriation case.
The principle of res judicata applies in this particular matter because the issues on the amount of just compensation and the person to be paid just
compensation are the central issues in the second phase of expropriation. Based on this principle, a final judgment or decree on the merits by a court
of competent jurisdiction is conclusive of the rights of the parties or their privies in all later suits on points and matters determined in the former suit.369
There would be no end to litigation in an eminent domain case if we rule otherwise; we would only foment mockery of the judicial proceedings as the
order of payment in the eminent domain case would never be truly final and executory. Furthermore, to the detriment of the public, interest would
continue to accrue on just compensation if we rule that the order of payment to a particular recipient can be reversed in the subsequent judicial
proceedings and is, indeed, reversed in the subsequent case. This would be unfair to the State (and the public) that merely
exercised its immutable right to exercise the power of eminent domain.
Contrary to Takenaka and Asahikosan's claim, in Calvo v. Zandueta, 370 the Court did not stay the execution of a final and executory ruling in the
eminent domain case during the pendency of the interpleader case.
A close reading of Calvo shows that the order of payment of just compensation in that case was not yet final and executory.
In November 1924, the municipality of San Quintin, Pangasinan filed an action for expropriation of a parcel of land owned by Aquilino Calvo and with a
Certificate of Title No. 25100.
On November 25, 1925, the Court of First Instance (CFI) approved the commissioners' valuation of the subject land in the sum of ₱6,943.25. The
municipality of San Quintin appealed the case but subsequently withdrew the appeal on June 23, 1926. The CFI approved the withdrawal of appeal on
July 20, 1926.
In the meantime, Juana Ordoñez levied on the subject land after she obtained a favorable judgment against Calvo. The levy was recorded on the
certificate of title on December 23, 1925. Thereafter, the sheriff sold the subject land to Ordoñez inan execution sale. On January 23, 1926, the sale
was duly entered by memorandum on the certificate of title. On the same date, Ordoñez filed a motion for substitution as a defendant in the
expropriation case on the ground that she acquired all the rights and interests of Calvo on the subject land.
On June 29, 1926, the CFI declared the November 25, 1925 decision final and ordered the provincial treasurer of Pangasinan to pay Calvo a part of
just compensation. The following day, Ordoñez filed a motion praying for the revocation of the June 29, 1926 order and for the provincial treasurer of
Pangasinan to retain the award of just compensation.
On July 20, 1926, the CFI revoked the June 29, 1926 order and ordered the provincial treasurer of Pangasinan to retain the money until further orders
of the court. After the CFI denied Calvo et al.'s motion for reconsideration, they filed a petition for certiorari before the Court.
The Court denied the petition. The Court ruled that "assuming that the judgment of November 25, 1925, constituted a final determination of the
petitioners' right to receive the award," Ordoñez was not a party to the expropriation case and, therefore, could not be bound by the judgment.
Ordoñez' claim that she stands subrogated to Calvo's right to just compensation has the appearance of validity. The judicial determination of her claim
may be adjudicated in an action for interpleader which was then pending when the motion for substitution was filed. Consequently, the trial court
correctly stayed the execution of the judgment in the expropriation case. Whenever necessary to promote the ends of justice, courts have the power to
temporarily stay executions of judgments rendered by them."
Clearly, the November 25, 1925 decision in Calvo was not yet final and executory when the Court suspended the execution of that ruling. The July 29,
1926 order revoked the June 29, 1926 order which in turn declared the finality of the November 25, 1925 decision of the CFI. Ordoñez filed a motion for
the reversal of the June 29, 1926 order prior to the CFI's withdrawal of appeal on July 20, 1926. Significantly, the CFI approved the withdrawal of
appeal on the same date that the CFI revoked the June 29, 1926 order and ordered the provincial treasurer of Pangasinan to withhold the just
compensation. There is thus no basis to Takenaka and Asahikosan's claim that the execution of a final and executory judgment on just compensation
may be suspended if there is still a subsisting case regarding the disputed ownership of the expropriated property.
9.d. The determination of whether the

NAIA-IPT III shall be burdened by liens
and mortgages even after the full
payment of just compensation is still
premature.
The determination of whether the NAIA-IPT III shall be burdened by liens and mortgages even after the full payment of just compensation is still
premature. The enforceability of Claim Nos. HT-04-248 and HT-05-269 in this jurisdiction has yet to be decided by the Court in G.R. No. 202166.
Furthermore, the application of Article 2242 of the Civil Code 371 presupposes that PIATCO declared insolvency or has been declared insolvent. This, of
course, should be litigated in insolvency proceedings, not in the present eminent domain case.
The Court cannot pass upon the validity and enforceability of civil claims against PIATCO by creditor/s in an expropriation case or the existence of liens
on the NAIA-IPT III. Section 114 of Republic Act No. 10142372 provides:
Section 114. Rights of Secured Creditors. - The Liquidation Order shall not affect the right of a secured creditor to enforce his lien in accordance with
the applicable contract or law. A secured creditor may:
(a) waive his right under the security or lien, prove his claim in the liquidation proceedings and share in the distribution of the assets of the
debtor; or
(b) maintain his rights under the security or lien:
If the secured creditor maintains his rights under the security or lien:
(1) the value of the property may be fixed in a manner agreed upon by the creditor and the liquidator. When the value of the property is less
than the claim it secures, the liquidator may convey the property to the secured creditor and the latter will be admitted in the liquidation
proceedings as a creditor for the balance. If its value exceeds the claim secured, the liquidator may convey the property to the creditor and
waive the debtor's right of redemption upon receiving the excess from the creditor;
(2) the liquidator may sell the property and satisfy the secured creditor's entire claim from the proceeds of the sale; or
(3) the secure creditor may enforce the lien or foreclose on the property pursuant to applicable laws.
10. The exercise of eminent

domain from the perspective of
"taking."
10.a. The Government may take

the property for public
purpose or public use upon
the issuance and effectivity
of the writ of possession.
To clarify and to avoid confusion in the implementation of our judgment, the full payment of just compensation is not a prerequisite for the
Government's effective taking of the property. As discussed above, RA 8974 allows the Government to enter the property and implement national
infrastructure projects upon the issuance of the writ of possession. When the taking of the property precedes the payment of just compensation, the
Government shall indemnify the property owner by way of interest.
"Taking" under the power of eminent domain means entering upon private property for more than a momentary period, and under the warrant or color
of legal authority, devoting it to public use, or otherwise informally appropriating or injuriously affecting it in such a way as substantially to oust the
owner and deprive him of all beneficial enjoyment thereof.373
"Taking" of property takes place when: (1) the owner is actually deprived or dispossessed of his property;(2) there is a practical destruction or a
material impairment of the value of his property; (3) the owner is deprived of the ordinary use of the property, or (4) when he is deprived of the
jurisdiction, supervision and control of his property.374
The taking of property is different from the transfer of the property title from the private owner to the Government. Under Rule 67 of the Rules of Court,
there are two phases of expropriation: (a) the condemnation of the property after it is determined that its acquisition will be for a public purpose or
public use; and (b) the determination of just compensation to be paid for the taking of private property to be made by the court with the assistance of
not more than three commissioners.
The first phase is concerned with the determination of the Government's authority to exercise the power of eminent domain and the propriety of its
exercise in the context of the facts involved in the suit. The court declares that the Government has a lawful right to take the property sought to be
condemned, for the public use or purpose described in the complaint.375
The second phase relates to the just amount that the Government shall compensate the property owner.376
Whenever the court affirms the condemnation of private property in the first phase of the proceedings, it merely confirms the Government's lawful right
to take the private property for public purpose or public use. The court does not necessarily rule that the title to the private property likewise vests on
the Government.
The transfer of property title from the property owner to the Government is not a condition precedent to the taking of property. The State may take
private property prior to the eventual transfer of title of the expropriated property to the State.
In fact, there are instances when the State takes the property prior to the filing of the complaint for expropriation or without involving the transfer of
title.377 In People v. Fajardo,378 the Court ruled that the municipal mayor's refusal to give the property owner the permission to build a house on his own
land on the ground that the structure would destroy the beauty of the public plaza amounts to the taking of the property requiring just compensation.
In National Power Corporation (NPC) v. Spouses Malit,379 the NPC's transmission lines had to pass the Spouses Malit's property. The Court ruled that
the NPC's easement of right-of-wayon the land was equivalent to the taking of property. The limitation imposed by the NPC against the use of the land
for an indefinite period deprived the Spouses Malit of the lot's ordinary use. Consequently, the NPC shall give the Spouses Malit just compensation.
The reckoning period, however, of the valuation of just compensation is the date of taking or the filing of the complaint for expropriation, whichever is
earlier. In either case, it is only after the finality of the second stage and after the payment of just compensation that the title shall pass to the
Government. As we have ruled in Gingoyon, the title to the property does not pass to the condemnor until just compensation is paid.
Under Section 4 of RA 8974, the Government is only entitled to a writ of possession upon initial payment of just compensation to the defendant, and
upon presentment to the court of a certificate of availability of funds.
A writ of possession does not transfer title to the Government; it is "a writ of execution employed to enforce a judgment to recover the possession of
land. It commands the sheriff to enter the land and give its possession to the person entitled under the judgment."380 Section 4 of RA 8974 further
states that the writ of possession is an order to take possession of the property and to start the implementation of the project, to wit:
Section 4. Guidelines for Expropriation Proceedings. - Whenever it is necessary to acquire real property for the right-of-way or location for any national
government infrastructure project through expropriation, the appropriate implementing agency shall initiate the expropriation proceedings before the
proper court under the following guidelines:
(a) Upon the filing of the complaint, and after due notice to the defendant, the implementing agency shall immediately pay the owner of the
property the amount equivalent to the sum of (1) one hundred percent (100%) of the value of the property based on the current relevant
zonal valuation of the Bureau of Internal Revenue (BIR); and (2) the value of the improvements and/or structures as determined under
Section 7 hereof;
(b) In provinces, cities, municipalities and other areas where there is no zonal valuation, the BIR is hereby mandated within the period of
sixty (60) days from the date of the expropriation case, to come up with a zonal valuation for said area; and
(c) In case the completion of a government infrastructure project is of utmost urgency and importance, and there is no existing valuation of
the area concerned, the implementing agency shall immediately pay the owner of the property its proffered value taking into consideration
the standards prescribed in Section 5 hereof.
Upon compliance with the guidelines abovementioned, the court shall immediately issue to the implementing agency an order to take possession of the
property and start the implementation of the project.
Before the court can issue a Writ of Possession, the implementing agency shall present to the court a certificate of availability of funds from the proper
official concerned.
In the event that the owner of the property contests the implementing agency's proffered value, the court shall determine the just compensation to be
paid the owner within sixty (60)days from the date of filing of the expropriation case. When the decision of the court becomes final and executory, the
implementing agency shall pay the owner the difference between the amount already paid and the just compensation as determined by the court.
(Emphasis supplied)
The Government is provisionally authorized to take the property for public purpose or public use whenever the court issues a writ of possession in favor
of the Government. It may take possession of the property or effectively deprive the property owner of the ordinary use of the property. If the court,
however, later on determines that the State has no right of expropriation, then the State shall immediately restore the defendant of the possession of
the property and pay the property owner damages that he sustained. Section 11, Rule 67 of the Rules of Court: Section 11. Entry not delayed by
appeal; effect of reversal. - The right of the plaintiff to enter upon the property of the defendant and appropriate the same for public use or purpose shall
not be delayed by an appeal from the judgment. But if the appellate court determines that plaintiff has no right of expropriation, judgment shall be
rendered ordering the Regional Trial Court to forthwith enforce the restoration to the defendant of the possession of the property, and to determine the
damages which the defendant sustained and may recover by reason of the possession taken by the plaintiff. (11a)
The State's taking of the property is not based on trust or contract, but is founded on its inherent power to appropriate private property for public use. It
is also for this reason - to compensate the property owner for the deprivation of his right to enjoy the ordinary use of his property until the naked title to
the property passed to the State - that the State pays interest from the time of the taking of the property until full payment of just compensation.
This conclusion is consistent with the dispositive portion of our ruling in Gingoyon where we authorized the Government to perform acts that are
essential to the operation of the NAIA-IPT III as an international airport terminal upon the effectivity of the writ of possession. The authority granted to
the Government encompasses "the repair, reconditioning and improvement of the complex, maintenance of the existing facilities and equipment,
installation of new facilities and equipment, provision of services and facilities pertaining to the facilitation of air traffic and transport, and other services
that are integral to a modern-day international airport."
The present case involves the second stage of expropriation or the determination of replacement cost of the NAIA-IPT III. The first stage has become
final after the promulgation of the December 19, 2005 decision and the February 1, 2006 resolution in Gingoyon where we affirmed the Government's
power to expropriate the NAIA-IPT III and where we ordered the issuance of a writ of possession upon the Government's direct payment of the
proffered value of ₱3 billion to PIATCO. Thus, the reinstatement of the writ of possession on September 11, 2006, empowered the Government to take
the property for public use, and to effectively deprive PIATCO of the ordinary use of the NAIA-IPT III.
B. G.R. No. 181892
1. The issue on the appointment of

an independent appraiser is
already moot and academic.
In G.R. No. 181892, the RTC, in its order dated May 5,2006, ordered the appointment of an independent appraiser to conduct the valuation of the
NAIA-IPT III upon the BOC's request. Thereafter, the Government and PIATCO submitted their lists of nominees to this position. On May 3, 2007, the
RTC engaged the services of DG Jones and Partners as an independent appraiser. On May 18, 2007, the RTC directed the Government to submit a
Certificate of Availability of Funds to cover DG Jones and Partners' $1.9 Million appraisal fee.
The Government disputed the May 3 and 18, 2007 orders and argued that the RTC had no power to appoint an independent appraiser. The
Government insisted that the RTC should exclusively choose among its nominees pursuant to Section 7 of RA 8974 as well as Sections 10 and 11 of
RA 8974 IRR.
The RTC sustained the appointment of DG Jones and Partners in an order dated January 7, 2008.The RTC ruled that its power to appoint the
members of the BOC under Section 5, Rule 67 of the Rules of Court was broad enough as to include the appointment of an independent appraiser.
On February 6, 2008, the Government filed a petition for certiorari with prayer for the issuance of a temporary restraining order and/or a writ of
preliminary injunction before the Court assailing the May 3, 2007; May 18, 2007; and January 7, 2008 orders (G.R. No. 181892).
On January 9, 2008, the Court issued a temporary restraining order against the implementation of the May 3, May 18, and January 7, 2008 orders.
On August 5, 2010, the RTC ordered the parties to submit their appraisal reports of the NAIA-IPTIII. The Government, PIATCO, Takenaka and
Asahikosan separately hired their own appraisers who came up with their different valuations of the NAIA-IPT III.
On March 31, 2011, the BOC submitted its Final Report recommending the payment of just compensation in the amount of $376,149,742.56. On May
23, 2011, the RTC rendered a decision ordering the Government to pay PIATCO just compensation in the amount of $116,348,641.10. The CA
modified the RTC ruling and held that the just compensation as of July 31, 2013, amounts to $371,426,742.24.
These developments render the appointment of DG Jones and Partners as an independent appraiser of the NAIA-IPT III ineffective. An appraiser is a
person selected or appointed by competent authority to ascertain and state the true value of goods or real estate. 381 The purpose of appointing DG
Jones and Partners as an independent appraiser was to assist the BOC in appraising the NAIA-IPT III. In fact, the BOC requested the RTC to engage
the services of an independent appraiser because the BOC had no technical expertise to conduct the valuation of the NAIA-IPT III. In turn, the BOC
was to recommend to the RTC the replacement cost of the NAIA-IPT III. Under Section 8, Rule 67 of the Rules of Court, the RTC may accept or reject,
whether in whole or in part, the BOC's report which is merely advisory and recommendatory in character.
We find, under the given circumstances, that the propriety of the appointment of DG Jones and Partners and the corollary issue of who should shoulder
the independent appraiser's fees moot and academic.
An actual case or controversy exists when there is a conflict of legal rights or an assertion of opposite legal claims between the parties that is
susceptible or ripe for judicial resolution.382 A justiciable controversy must not be moot and academic or have no practical use or value. In other words,
there must be a definite and concrete dispute touching on the legal relations of the parties who have adverse legal interests. Otherwise, the Court
would simply render an advisory opinion on what the law would be on a hypothetical state of facts. The disposition of the case would not have any
practical use or value as there is no actual substantial relief to which the applicant would be entitled to and which would be negated by the dismissal or
denial of the petition.383
After the BOC submitted its Final Report on the replacement cost of the NAIA-IPT III based on the appraisal reports and other evidence submitted by
the parties, the appointment of DG Jones and Partners ceased to serve any purpose. Any subsequent findings of DG Jones and Partners regarding the
appraisal of the NAIA-IPT III would cease to have any practical materiality since the RTC proceedings on the amount of just compensation had already
been terminated. As with the BOC, the independent appraiser's valuation of the NAIAIPT III was advisory and recommendatory in character. DG Jones
and Partners' valuation was only preliminary and was not by any means meant to be final and conclusive on the parties. In the exercise of its judicial
functions, it is the expropriation court who has the final say on the amount of just compensation. Since the RTC has already made a factual finding on
the valuation of the NAIA-IPT III, there is no point in appointing DG Jones and Partners as an independent appraiser. To reiterate, valuation involves a
factual question that is within the province of the expropriation court, and not the BOC or the independent appraiser. DG Jones and Partners' rule has
simply been overtaken by events.
As a final note, while we stated in Gingoyon that the RTC may validly appoint commissioners in the appraisal of the NAIA-IPT III, the trial court should
have appointed commission members who possessed technical expertise in the appraisal of a complex terminal building. Under Section 5, Rule 67 of
the Rules of Court, the BOC's main functions are to ascertain and report to the court the just compensation for the property sought to be taken. The
appointment of technical experts as commissioners would have avoided the DG Jones aspect of the controversy as there would have been no need for
the trial court to hire an independent appraiser. This would have avoided the duplication of tasks and delay in the proceedings.
To summarize, we rule that:
(1) The May 23, 2011 decision of the RTC in Civil Case No. 04-0876 is valid. The parties were afforded procedural due process since their
respective positions, counter-positions, and evidence were considered by the trial court in rendering the decision.
(2) Replacement cost is a different standard of valuation from fair market value. Fair market value is the price at which a property may be
sold by a seller who is not compelled to sell and bought by a buyer who is not compelled to buy. In contrast, replacement cost is the amount
necessary to replace the improvements/structures, based on the current market prices for materials, equipment, labor, contractor's profit
and overhead, and all other attendant costs associated with the acquisition and installation in place of the affected
improvements/structures. (3) In computing just compensation, the Court shall use the replacement cost method and the standards laid
down in Section 5 of RA 8974 as well as Section 10 of RA 8974. The Court shall likewise consider equity in the determination of the just
compensation due for NAIA-IPT III.
(4) The use of depreciated replacement cost method is consistent with the principle that the property owner shall be compensated for his
actual loss. It is consistent as well with Section 10 of RA 8974 IRR which provides that the courts shall consider the kinds and quantities of
materials/equipment used and the configuration and other physical features of the property, among other things, in the valuation of the
NAIAIPT III. The Government should not compensate PIATCO based on the value of a modern equivalent asset that has the full functional
utility of a brand new asset.
(5) The amount of just compensation as of the filing of the complaint for expropriation on December 21, 2004, is $326,932,221.26. From
this sum shall be deducted the proffered value of $59,438,604.00. The resulting difference of $267,493,617.26 shall earn a straight interest
of 12% per annum from September 11, 2006 until June 30, 2013, and a straight interest of 6% per annum from July 1, 2013, until full
payment.
(6) PIATCO, as the owner of the NAIA-IPT III, shall solely receive the just compensation. Based on the last paragraph, Section 4 of RA
8974 and the prevailing jurisprudence, it is the owner of the expropriated property who is constitutionally entitled to just compensation.
Other claimants should be impleaded or may intervene in the eminent domain case if the ownership of the property is uncertain or there are
conflicting claims on the property pursuant to Section 9, Rule 67 of the Rules of Court.
(7) The Government may deprive PIATCO of the ordinary use of the NAIA-IPT III upon the issuance and effectivity of the writ of possession
on September 11, 2006. However, the Government shall only have ownership of the NAIA-IPT III after it fully pays PIATCO the just
compensation due.
(8) The expenses of the BOC, which are part of the costs, shall be shouldered by the Government as the condemn or of the property
pursuant to Section 12,Rule 67 of the Rules of Court. Consequently, Takenaka and Asahikosan shall not share in the expenses of the
BOC. PIATCO is deemed to have waived its right not to share in the expenses of the BOC since it voluntarily shared in the expenses of the
BOC.
(9) The issues of the propriety of the appointment of DG Jones and Partners as an independent appraiser in the valuation of the NAIA-IPT
III and who should shoulder DG Jones and Partners' appraisal fee are already moot and academic. The purpose of appointing DG Jones
and Partners as an independent appraiser was to assist the BOC in the appraisal of NAIA-IPT III. As with the BOC, the independent
appraiser's recommendation to the RTC was merely recommendatory and advisory in character. Since the RTC has already ruled on the
just compensation in Civil Case No. 04-0876, the appointment of an independent appraiser no longer serves any practical purpose.
WHEREFORE, premises considered, we PARTIALLY REVERSE the August 22, 2013 amended Decision and the October 19, 2013 Resolution of the
Court of Appeals.
1) The principal amount of just compensation is fixed at $326,932,221.26 as of December 21, 2004. Thereafter, the amount of
$267,493,617.26, which is the difference between $326,932,221.26 and the proffered value of $59,438,604.00, shall earn a straight interest
of 12% per annum from September 11, 2006 until June 30, 2013, and a straight interest of 6% per annum from July 1, 2013 until full
payment;
2) The Government is hereby ordered to make direct payment of the just compensation due to PIATCO; and
3) The Government is hereby ordered to defray the expenses of the BOC in the sum of ₱3,500,000.00.
We DECLARE the issue of the appointment of DG Jones and Partners as an independent appraiser of the Ninoy Aquino International Airport
Passenger Terminal III MOOT AND ACADEMIC. The temporary restraining order issued on January 9,2008, against the implementation of the May 3,
2007; May 18, 2007; and January 7, 2008 orders of the Regional Trial Court of Pasay City, Branch 117 is hereby made PERMANENT.
SO ORDERED.
G.R. No. 123817 December 17, 1999
IBAAN RURAL BANK INC., petitioner,

vs.
THE COURT OF APPEALS and MR. and MRS. RAMON TARNATE, respondents.
QUISUMBING, J.:
This petition for review under Rule 45 of the Rules of Court seeks to set aside the decision of the Court of Appeals in CA-G.R. CV No. 32984 affirming
with modification the decision of the Regional Trial Court of Batangas, Branch 2, in Civil Case No. 534, as well as the resolution of the Court of Appeals
denying petitioner's motion for reconsideration.
The facts are as follows:
Spouses Cesar and Leonila Reyes were the owners of three (3) lots covered by Transfer Certificate of Title (TCT) Nos. 33206, 33207 and 33208 of the
Register of Deeds of Lipa City. On March 21, 1976, the spouses mortgaged these lots to Ibaan Rural Bank, Inc. [herein petitioner]. On June 11, 1976,
with the knowledge and consent of the petitioner, the spouses as sellers, and Mr. and Mrs. Ramon Tarnate [herein private respondents] as buyers,
entered into a Deed of Absolute Sale with Assumption of Mortgage of the lots in question. Private respondents failed to pay the loan and the bank
extra-judicially foreclosed on the mortgaged lots. The Provincial Sheriff conducted a public auction of the lots and awarded the lots to the bank, the sole
bidder. On December 13, 1978, the Provincial Sheriff issued a Certificate of Sale which was registered on October 16, 1979. The certificate stated that
the redemption period expires two (2) years from the registration of the sale. No notice of the extrajudicial foreclosure was given to the private
respondents. On September 23, 1981, private respondents offered to redeem the foreclosed lots and tendered the redemption amount of P77,737.45.
However, petitioner Bank refused the redemption on the ground that it had consolidated its titles over the lots. The Provincial Sheriff also denied the
redemption on the ground that private respondents did not appear on the title to be the owners of the lots.
Private respondents filed a complaint to compel the bank to allow their redemption of the foreclosed lots. They alleged that the extra-judicial foreclosure
was null and void for lack of valid notice and demand upon them. They further argued that they were entitled to redeem the foreclosed lots because
they offered to redeem and tendered the redemption price before October 16, 1981, the deadline of the 2-year redemption period.
The bank opposed the redemption, contending that the private respondents had no right to redeem the lots because they were not the real parties in
interest; that at the time they offered to redeem on September 23, 1981, the right to redeem had prescribed, as more than one year had elapsed from
the registration of the Certificate of Sale on October 16, 1979; that there was no need of personal notice to them because under Section 3 of Act 3135,
only the posting of notice of sale at three public places of the municipality where the properties are located was required. 1
After trial on the merits, the lower court ruled in favor of herein private respondents and against the petitioner, thus:
WHEREFORE, in view of the foregoing, the Court renders judgment in favor of the plaintiffs and against the defendants, to wit:
(a) Ordering the defendant Ibaan Rural Bank Inc., and Provincial Sheriff of Batangas for the redemption of the foreclosed
properties covered by Transfer Certificate of Title Nos. T-33206, T-33207 and T-33208 of the Registry of Deeds, Lipa City by
the plaintiffs by paying the mortgaged obligation.
(b) Ordering the Provincial Sheriff of Batangas to cancel the Transfer Certificate of Titles issued to defendant Ibaan Rural Bank,
Inc. and its successors-in-interest and to issue the corresponding Transfer of Certificate of Titles to plaintiffs upon payment of
the required legal fees.
(c) Ordering the defendant Ibaan Rural Bank, Inc., to pay plaintiffs moral damages in the amount of P200,000.00, and attorney's
fees in the sum of P20,000.00.
All other claims not having been duly proved are ordered DISMISSED.
Without pronouncement as to costs.
SO ORDERED. 2
On appeal, the Court of Appeals affirmed with modification the decision of the lower court. The dispositive portion of the CA decision reads:
WHEREFORE, the decision appealed from is hereby AFFIRMED with the following modifications:
1. The register of Deeds of Lipa City is hereby ordered to cancel the Certificate of Titles issued to defendant Ibaan Rural Bank,
Inc. and its successor-in-interest and to issue the corresponding Transfer Certificate of Title to plaintiffs-appellees upon proper
redemption of the properties and payment of the required legal fees.
2. Defendant Ibaan Rural bank, is hereby ordered to pay to plaintiffs the amount of P15,000.00 as attorney's fees.
3. The moral damages awarded in favor of plaintiffs is hereby ordered deleted.
SO ORDERED. 3
A timely Motion for Reconsideration was filed by the petitioner but the same was denied in a Resolution dated February 14, 1996. Hence, this petition.
Petitioner assigns the following errors:

1. THE RESPONDENT COURT ERRED AND, ACCORDINGLY, THE PETITIONER IS ENTITLED TO A REVIEW OF ITS
DECISION, WHEN IT SUSTAINED AVAILABILITY OF REDEMPTION DESPITE THE LAPSE OF ONE YEAR FROM DATE OF
REGISTRATION OF THE CERTIFICATE OF SALE.
2. THE RESPONDENT COURT ERRED AND, ACCORDINGLY, THE PETITIONER IS ENTITLED TO A REVIEW OF ITS
DECISION, WHEN THE RESPONDENT COURT ALLOWED RECOVERY OF ATTORNEY'S FEES SIMPLY BECAUSE THE
PETITIONER DID NOT ALLOW THE PRIVATE RESPONDENTS TO EXERCISE BELATEDLY REDEMPTION OF THE
FORECLOSED PROPERTY. 4
Essentially, two issues are raised for resolution. What was the period of redemption: two years as unilaterally fixed by the sheriff in the contract, or one
year as fixed by law? May respondent court properly award attorney's fees solely on the basis of the refusal of the bank to allow redemption?
We now resolve these issues.
When petitioner received a copy of the Certificate of Sale registered in the Office of the Register of Deeds of Lipa City, it had actual and constructive
knowledge of the certificate and its contents. 5 For two years, it did not object to the two-year redemption period provided in the certificate. Thus, it
could be said that petitioner consented to the two-year redemption period specially since it had time to object and did not. When circumstances imply a
duty to speak on the part of the person for whom an obligation is proposed, his silence can be construed as consent. 6 By its silence and inaction,
petitioner misled private respondents to believe that they had two years within which to redeem the mortgage. After the lapse of two years, petitioner is
estopped from asserting that the period for redemption was only one year and that the period had already lapsed. Estoppel in pais arises when one, by
his acts, representations or admissions, or by his own silence when he ought to speak out, intentionally or through culpable negligence, induces
another to believe certain facts to exist and such other rightfully relies and acts on such belief, so that he will be prejudiced if the former is permitted to
deny the existence of such facts. 7
In affirming the decision of the trial court, the Court of Appeals relied on Lazo vs. Republic Surety and Insurance Co., Inc., 8 where the court held that
the one year period of redemption provided in Act No. 3135 is only directory and can be extended by agreement of the parties. True, but it bears noting
that in Lazo the parties voluntarily agreed to extend the redemption period. Thus, the concept of legal redemption was converted by the parties in Lazo
into conventional redemption. This is not so in the instant case. There was no voluntary agreement. In fact, the sheriff unilaterally and arbitrarily
extended the period of redemption to two (2) years in the Certificate of Sale. The parties were not even privy to the extension made by the sheriff.
Nonetheless, as above discussed, the bank can not after the lapse of two years insist that the redemption period was one year only.
Additionally, the rule on redemption is liberally interpreted in favor of the original owner of a property. The fact alone that he is allowed the right to
redeem clearly demonstrates the solicitousness of the law in giving him another opportunity, should his fortune improve, to recover his lost property. 9
Lastly, petitioner is a banking institution on whom the public expects diligence, meticulousness and mastery of its transactions. Had petitioner diligently
reviewed the Certificate of Sale it could have easily discovered that the period was extended one year beyond the usual period for redemption. Banks,
being greatly affected with public interest, are expected to exercise a degree of diligence in the handling of its affairs higher than that expected of an
ordinary business firm. 10
On the second issue, the award of attorney's fees must be disallowed for lack of legal basis. The fact that private respondents were compelled to
litigate and incur expenses to protect and enforce their claim does not justify the award of attorney's fees. The general rule is that attorney's fees
cannot be recovered as part of damages because of the public policy that no premium should be placed on the right to litigate. 11 The award of
attorney's fees must be deleted where the award of moral and exemplary damages are eliminated. 12
WHEREFORE, the decision of the Court of Appeals in CA-G.R. CV No. 32984 is AFFIRMED, with the MODIFICATION that the award of attorney's
fees is deleted. No pronouncement as to costs.
SO ORDERED.
G.R. No. 128568 April 9, 2003
SPOUSES REYNALDO ALCARAZ and ESMERALDA ALCARAZ, petitioners,

vs.
PEDRO M. TANGGA-AN, MENAS R. TANGGA-AN, VIRGINIA III YVETTE R. TANGGA-AN, CECIL T. VILLAFLOR, HERMES R. TANGGA-AN,
VENUS R. TANGGA-AN, JUPITER R. TANGGA-AN, YVONNE T. FRI, VIVIEN R. TANGGA-AN and HON. JUDGE P. BURGOS and THE COURT
OF APPEALS, respondents.
CORONA, J.:
Before us is a petition for review of the decision1 dated January 10, 1997 of the Court of Appeals2 affirming the decision3 dated June 26, 1995 of the
Regional Trial Court (RTC) of Cebu City, Branch 17, which in turn upheld the decision 4 dated January 5, 1995 of the Municipal Trial Court (MTC) of
Cebu City, Branch 2, ordering the ejectment of the petitioner spouses from the house they were renting from respondents.
On October 4, 1994, respondents Pedro Tangga-an, Menas Tangga-an, Virginia III Yvette Tangga-an, Cecil Villaflor, Hermes Tangga-an, Venus
Tangga-an, Jupiter Tangga-an, Yvonne Fri and Vivien Tangga-an filed a complaint for unlawful detainer, with damages, docketed as Civil Case No. R-
33928, against petitioner spouses Reynaldo Alcaraz and Esmeralda Alcaraz.
The complaint alleged that the late Virginia Tangga-an (the spouse of respondent Pedro Tangaa-an and mother of the rest of the respondents) leased
a residential building (house) located at Premier Street, Hipodromo, Cebu City to the petitioner spouses. The lease contract was limited to the use and
occupancy of the said residential building and did not include the lot on which it was constructed because the said lot was then owned by the National
Housing Authority (NHA). Under the contract, the petitioner spouses bound themselves for five years to pay Virginia a monthly rental of P4,000
beginning November 22, 1991. However, since November 1993, they failed to pay rent. Thus, as of October, 1994, they were in arrears in the amount
of P48,000. Despite repeated demands by respondents to pay the rentals in arrears and to surrender the possession of the residential building, the
petitioner spouses refused to vacate the same. Respondents sought to repossess the property for their own use and benefit.
On the other hand, the petitioner spouses alleged that, on July 23, 1993, the ownership of the lot on which the house stood was transferred by the NHA
to Virgilio and Angelita D. Tangga-an. Virgilio Tangga-an is the son of the late Virgilia Tangga-an and respondent Pedro Tangga-an, and the brother of
the other respondents. Transfer Certificate of Title No. 125657 was consequently issued in the name of Virgilio Tangga-an. According to the petitioner
spouses, the subsequent change in ownership of the lot and the house resulted in the cancellation of the contract of lease between respondents and
petitioner spouses. Thereafter, they paid the rent to the new owners of the lot (Virgilio and Angelita) and not to respondents since the latter supposedly
no longer had the legal right to collect rentals.
On January 5, 1995, the MTC rendered a decision, the dispositive portion of which read:
WHEREFORE, Judgment is entered by way of preponderance of evidence in favor of plaintiffs and against the defendants, Ordering the
latter to vacate the premises immediately, including all those who are occupying the subject house in relation to them; They are also jointly
ordered to pay the sum of P48,000 representing rental payment in arrears from November, 1993 up to October, 1994 and to update
monthly payment of P4,000 thereafter until their vacation therefrom; They are saddled to pay attorney’s fees in the sum of P5,000 and
litigation costs in the amount of P1,000.
SO ORDERED.5
In ruling in favor of the respondents, the MTC held that the petitioner spouses clearly violated the contract of lease due to non-payment of rent. They
failed to show that the subject house belonged to Virgilio alone. On the other hand, the respondents proved that, after the death of Virgilia, they
registered said house in the name of their trustees, co-respondents Hermes Tangga-an and his wife. Furthermore, considering that Virgilio’s claim of
ownership over the lot was the subject of a pending litigation for annulment of deed of sale and reconveyance of property involving the Tangga-ans, the
MTC ruled that it "cannot usurp to pass judgment on the issues, as well as the conflicting claims of the parties therein."6
On appeal, the RTC affirmed the decision of the MTC, and held that:
xxx [D]efendants failed to present any documentary evidence modifying or amending the contract of lease (Annex "C", complaint) to justify
the transfer of payment of the monthly rental to Virgilio Tanga-an who claims only as the registered owner of the lot on which the leased
house is located. It appears that Virgilio Tanga-an does not possess any proof of ownership of the rented house. Clearly, defendants had
violated the lease agreement executed between them and the deceased lessor Virginia R. Tangga-an (sic) the predecessor in interest of
Hermes Tangaa-an and his wife as shown in the Tax Declaration of the said spouses (Annex "A", complaint) whose name appears under
the space for previous owner by stopping payment of rental to the present owner despite the existence of the contract of lease which
expires on November 22, 1996. The law on contracts basically states:
"Obligations arising fro contracts have the force of law between the contracting parties and should be complied with in good
faith." (Article 1159, New Civil Code of the Philippines).
xxx xxx xxx7
In denying the petition for review and affirming the judgments of the courts a quo, the Court of Appeals ruled that:
We also concur with the holding of both courts that as heirs of Virginia Tangga-an, private respondents have the right to institute the action
for ejectment, in accordance with Article 487 of the Civil Code; and that the claim of petitioner – that Virgilio Tangga-an owns the lot where
the leased residential building stands and occupied by petitioners – is still the subject of a civil action for annulment of the sale of the lot
before the Regional Trial Court of Cebu. It does not follow as a matter of course that whoever owns the lot owns the building in question.
Ownership of the lot cannot change the nature and ownership of the building, which belongs to the plaintiffs as heirs of the late Virginia
Tangga-an through Ernest Tangga-an and his wife. Respondent court correctly reasoned out that "xxx defendants cannot hide over the
cloak of Virgilio Tangga-an, his claim of ownership over the lot as far as the Court is concerned being irrelevant to this case xxx." Most
importantly, the action involving the question of ownership of the lot is not a lawful ground to suspend/abate the ejectment proceeding. The
rationale of the rule being that an ejecment suit involves only the issue of material possession or possession de facto (San Pedro vs. Court
of Appeals, 235 SCRA 145, 150, and cases cited).8
Hence, this petition on the following assignments of error:
THE LEASE CONTRACT EXECUTED BY PETITIONERS WITH VIRGINIA TANGGA-AN, PLAINTIFFS’ PREDECESSOR-IN-INTEREST,
COVERED NOT ONLY THE LAND, BUT ALSO THE IMPROVEMENT THEREON, INCLUDING THE BUILDING.
II
VIRGILIO TANGGA-AN, AS ONE OF THE HEIRS OF VIRGINIA, HAD THE SAME RIGHTS OVER THE PROPERTY AS THOSE OF THE
OTHER HEIRS, THE PLAINTIFFS. HENCE, VIRGILIO MAY NOT BE EXCLUDED UNILATERALLY BY THE OTHER HEIRS IN HIS
ENJOYMENT OF HIS HEREDITARY RIGHTS.
III
THE REGISTRATION OF THE LAND, INCLUDING THE IMPROVEMENTS THEREON, IN THE NAME OF VIRGILIO TANGGA-AN
UNDER THE TORRENS SYSTEM IS INDEFEASIBLE AND MAY NOT BE ATTACKED COLLATERALLY IN THE PRESENT ILLEGAL
DETAINER CASE.9
We rule in favor of the respondents.
Section 16 of the 1997 Revised Rules of Civil Procedure provides that:
SEC. 16. Resolving defense of ownership. - When the defendant raises the defense of ownership in his pleadings and the question of
possession cannot be resolved without deciding the issue of ownership, the issue of ownership shall be resolved only to determine the
issue of possession.
The issue of ownership is precisely what the petitioner spouses raised to justify their non-payment of rent and to resist eviction from the house they
leased from respondents. Being indispensable to the resolution of the issue of possession, we herein render a provisional ruling on ownership.
Petitioner spouses seek a dismissal of the case for lack of jurisdiction claiming that the only issue to be resolved is ownership over the house which is
improper in an ejectment case. We disagree. The issue in the case at bar is whether the petitioner spouses, as lessees, were excused from paying the
rent because of the change in the ownership of the land on which the rented house was built. The main question therefore is still the lawful possession
of the subject premises by the petitioner spouses. To resolve it, a discussion of the ownership issue is necessary.
The petitioner spouses insist that the courts a quo erred in not finding that Virgilio Tangga-an became the new owner not only of the lot but also of the
residential house. They claim that, before she died, Virginia, the original owner of the subject house, waived and ceded her rights over the land in favor
of Virgilio. The said transfer allegedly included the subject house because, pursuant to Article 440 of the Civil Code, "the ownership of the property
gives the right of accession to everything which is produced thereby, or which is incorporated or attached thereto, either naturally or artificially." They
also maintain that the NHA executed a deed of sale of both the house and the lot in favor of Virgilio. According to the petitioner spouses, the tax
declaration over the house in the name of respondent Hermes Tangga-an, as trustee of the other respondents, was self-serving and had no probative
value compared to the certificate of title over the lot in the name of Virgilio Tangga-an.
We find no merit in petitioners’ arguments.
Pursuant to Section 1, Rule 45 of the 1997 Revised Rules of Civil Procedure, a petition for review before this Court should only raise questions of law.
In the absence of showing that the case falls under one of the exceptions,10 factual findings of the Court of Appeals are conclusive on the parties and
not reviewable by this Court. And they carry even more weight when the Court of Appeals affirms the factual findings of the trial court. As such, this
Court is not duty-bound to analyze and weigh all over again the evidence already considered in the proceedings below.11
The courts a quo were unanimous in holding that the petitioner spouses failed to substantiate their factual averment that Virgilio not only acquired the
lot but also the house. After examining the records, we found nothing to disprove the facts determined by the lower courts. All the petitioner spouses
presented was Virgilio’s uncertified xerox copy of the certificate of title over the lot. No document was ever shown evidencing cession of the subject
house in Virgilio’s favor. Virgilio’s title could not be used to prove ownership over the house built on said lot as it carried no reference at all to the
house. A building by itself is a real or immovable property distinct from the land on which it is constructed 12 and therefore can be a separate subject of
contracts.
On the other hand, the respondents proved that, as compulsory heirs of Virginia, they were the rightful owners of the subject house. They presented a
tax declaration in the name of their trustees, co-respondent Hermes Tangga-an and his wife, which tax declaration sufficiently evidences their co-
ownership and acquisition of title following the death of the decedent Virginia. We have ruled that:
Although tax declarations or realty tax payment of property are not conclusive evidence of ownership, nevertheless, they are good indicia of
possession in the concept of owner for no one in his right mind would be paying taxes for a property that is not in his actual or at least
constructive possession. They constitute at least proof that the holder has a claim of title over the property. The voluntary declaration of a
piece of property for taxation purposes manifests not only one’s sincere and honest desire to obtain title to the property and announces his
adverse claim against the State and all other interested parties, but also the intention to contribute needed revenues to the Government.
Such an act strengthens one’s bona fide claim of acquisition of ownership.13
One of the factual issues raised by the petitioner spouses concerns the alleged waiver and cession of Virginia’s rights over the house and lot to Virgilio.
But the petitioner spouses did not mention any consideration received by Virginia for the waiver of the house, in effect making said waiver a donation
thereof to Virgilio. However, in order for a donation of real property like a house to be valid, a public instrument duly signed by the donor and accepted
by the donee (which acceptance must be known to the donor while alive) must be executed. 14 Moreover, said donation must not impair the legitime of
the forced heirs of the donor in order for the same not to be inofficious.15 In the case at bar, no such public instrument was presented. Neither was it
explained why said waiver did not impair the rights of the other compulsory heirs of Virginia.
To support their argument that the house necessarily became Virgilio’s property as a result of the acquisition of the lot on which the same was built, the
petitioner spouses invoke the principle that the accessory follows the principal. Being an accessory, the house is necessarily owned by the owner of the
lot on which it is built.
There is no need, however, to disturb and analyze the applicability of this well-entrenched principle because the petitioner spouses are estopped from
raising the same. Both parties knew that their contract pertained only to the lease of the house, without including the land. The contract states: "1. That
the lessor is the owner of a building of mixed materials situated at Premier St., Mabolo, Hipodromo, Cebu City." 16 At the time of the perfection of the
contract, the petitioner spouses, as lessees, were aware that the NHA, and not Virginia, the lessor, owned the land on which the rented house stood
yet they signed the same, obliged themselves to comply with the terms thereof for five years and performed their obligations as lessees for two years.
Now they assume a completely different legal position. They claim that the lease contract ceased to be effective because Virgilio’s assumption of
ownership of the land stripped the respondents of ownership of the building. They argue that, under Article 440 of the Civil Code, Virgilio’s title over the
lot necessarily included the house on the said lot, thus automatically canceling the contract.
Section 2, Rule 131 of the Rules of Court provides as a conclusive presumption that:
Sec. 2. Conclusive presumptions. – The following are instances of conclusive presumptions:
(a) Whenever a party has, by his own declaration, act, or omission, intentionally and deliberately led another to believe a
particular thing true, and to act upon such belief, he cannot, in any litigation arising out of such declaration, act or omission, be
permitted to falsify it;
xxx xxx xxx
After recognizing the validity of the lease contract for two years, the petitioner spouses are barred from alleging the automatic cancellation of the
contract on the ground that the respondents lost ownership of the house after Virgilio acquired title over the lot.
We also note that the petitioner spouses rescinded the contract of lease without judicial approval. Due to the change in ownership of the land, the
petitioner spouses decided to unilaterally cancel the contract because Virgilio supposedly became the new owner of the house after acquiring title to
the lot. They alleged that there was no reason anymore to perform their obligations as lessees because the lessor had ceased to be the owner of the
house. But there is nothing in their lease contract that allows the parties to extrajudicially rescind the same in case of violation of the terms thereof.
Extrajudicial rescission of a contract is not possible without an express stipulation to that effect. 17 What the petitioner spouses should have done was to
file a special civil action for interpleader for the claimants to litigate their claims and to deposit the rentals in court.
The petitioner spouses aver that their payments to Virgilio beginning November, 1993 were payments made in good faith to a person in possession of
the credit, in consonance with Article 1242 of the Civil Code.18 This therefore released them from their obligation. They claim that Virgilio collected the
rentals in his capacity as a co-owner. Being a son of Virginia, he was also entitled to the rent of the subject house. We disagree. Virgilio collected the
rentals not as a co-owner but as the alleged sole owner of the subject house. The petitioner spouses themselves admitted that Virgilio claimed sole
ownership of the house and lot. It would be incongruous for them to now assert payment in good faith to a person they believed was collecting in behalf
of his co-heirs after admitting that they paid rent to Virgilio as the sole owner thereof.
Hence, for violating of the terms of the lease contract, i.e., payment of rent, respondents can legally demand the ejectment of the petitioner spouses.
WHEREFORE, the decision dated January 10, 1997 of the Court of Appeals is hereby AFFIRMED. With costs against the petitioners.
SO ORDERED.
G.R. No. 189061 August 6, 2014
MIDWAY MARITIME AND TECHNOLOGICAL FOUNDATION, represented by its Chairman/President PhD in Education DR. SABINO M.
MANGLICMOT, Petitioner,
vs.
MARISSA E. CASTRO, ET AL., Respondents.
DECISION
REYES, J.:
The petitioner Midway Maritime and Technological Foundation (petitioner) is the lessee of two parcels of land in Cabanatuan City. Its president, Dr.
Sabino Manglicmot (Manglicmot), is married to Adoracion Cloma (Adoracion), who is the registered owner of the property under Transfer Certificate of
Title (TCT) Nos. T-71321 and T-71322. Inside said property stands a residential building, which is now the subject matter of the dispute, owned by the
respondents.
The two parcels of land, on a portion of which the residential building stand, were originally owned by the respondents’ father Louis Castro, Sr. The
elder Castro was also the president of Cabanatuan City Colleges (CCC). On August 15, 1974, Castro mortgaged the property to Bancom Development
Corporation (Bancom) to secure a loan. During the subsistence of the mortgage, CCC’s board of directors agreed to a 15-year lease of a portion of the
property to the Castrochildren, herein respondents, who subsequently built the residential house nowin dispute. The lease was to expire in 1992.
When CCC failed to pay its obligation, Bancom foreclosed the mortgage and the property was sold at public auction in 1979, with Bancom as the
highest bidder. Bancom thereafter assigned the credit to Union Bank of the Philippines (Union Bank), and later on, Union Bank consolidated its
ownership over the properties in 1984 due to CCC’s failure to redeem the property. When Union Bank sought the issuance of a writ of possession over
the properties, which included the residential building, respondents opposed the same. The case reached the Court in G.R. No. 97401 entitled, Castro,
Jr. v. CA,1 and in a Decision dated December 6, 1995, the Court ruled that the residential house owned by the respondents should not have been
included in the writ of possession issued by the trial court as CCC has no title over it.
In the meantime, Adoracion’s father, Tomas Cloma (Tomas), bought the two parcels of land from Union Bank in an auction sale conducted on July 13,
1993. Tomas subsequently leased the property to the petitioner and thereafter, sold the same to Adoracion.Several suits were brought by the
respondents against the petitioner, including the case at bench, which is an action for Ownership, Recovery of Possession and Damages, docketed as
Civil Case No. 3700 (AF).
In their Amended Complaint2 dated April 19, 2000, the respondents alleged that: (1) they are the owners ofthe residential building subject of the
dispute, which they used from 1977 to 1985 when they left for the United States of America and instituted their uncle, Josefino C. Castro (Josefino), as
the caretaker; (2) Manglicmot, who was the President of the petitioner Midway Maritime and Technological Foundation, leased the building (except for
the portion occupied by Josefino) from Lourdes Castro, mother of the respondents, in June 1993 withmonthly rent of ₱6,000.00, which was later to be
increased to ₱10,000.00 in October 1995 after Josefino vacates his occupied portion; (3) the petitioner failed to pay rent starting August 1995, thus
prompting the respondents to file the action. The respondents prayed that they be declared as the owners of the residential building, and that the
petitioner be ordered to vacate the same and pay rent arrearages and damages.3
The petitioner, however, denied respondents’ ownership of the residential building and claimed that Adoracion owns the building, having bought the
same together with the land on which it stands.4
In a Decision5 dated July 2, 2001, the Regional Trial Court (RTC) of Cabanatuan City, Branch 28, rendered judgment in favor of the respondents,
declared them as the absolute owners of the residential building and ordered petitioner to pay the respondents unpaidrentals from August 1995 until
fully paid. The dispositive portion of the RTC decision reads:
WHEREFORE, judgment is hereby rendered:
1. Declaring the [respondents] asthe absolute owners of the building in question described as follows:
xxxx
2. Ordering the [petitioner] topay the [respondents] the sum of [P]672,000.00 by way of unpaid rentals from August 1995 at [P]6,000.00 and
from October 1995 at [P]10,000.00 until fully paid.
3. The claim for moral damages,other litigation expenses and attorney’s fees are dismissed for lack of merit.
SO ORDERED.6
The Court of Appeals (CA) dismissed the petitioner’s appeal and affirmed the RTC decision in the assailed Decision 7 dated October 29, 2008 and
Resolution8 dated August 3, 2009. Hence, this petition.
The petitioner contests the award ofrentals made by the RTC, which was affirmed by the CA, contending that when Tomas bought the two parcels of
land from Union Bank in 1993, the sale included the improvements thereon, one of which was the residential house in dispute. The petitioner also
argues that the lease between CCC and the respondents already expired at the time of the sale and they are now the current lessees of the property,
albeit the residential house is still standing inside the school compound.9 The petitioner relies on a decision rendered by the RTC of Cabanatuan City,
Branch 26, in Civil Case No. 2939 (AF),which was an appeal from the trial court’s dismissal of the complaint for Ejectment with Damages filed by the
respondents against the petitioner. In said decision, the RTC stated that "in the advertised sale of the lots covered by TCT Nos. T-45816 and [T-45817]
of the land records of Cabanatuan City, all improvements were included, hence, the instant case has no factual and legal basis."10 Ruling of the Court
The first issue to be resolved iswhether there was a lease agreement between the petitioner and the respondents as regards the residential building.
Such issue, it must beemphasized, is a question of fact11 that has been resolved by the RTC in the affirmative, towit: "from June 1993 to July 25, 1995
or for a period of 26 months, the [petitioner] has been paying rentals for the building in question and paid a rental of [P]156,000.00 which rental was
increasedto ₱10,000.00 beginning October 1995 when the caretaker of the [respondents] Mr. Josefino Castro was ejected therefrom and the entire
building was leased to the [petitioner], represented by Dr. Sabino Manglicmot." 12 Such finding is borne by the records of this case. Exhibit "J"13 for the
respondents is a cash disbursement voucher issued by the petitioner to Mrs. Lourdes Castro. The voucher contained the statement "payment of
building rentals x x x from June 01 to December 01, 1993" in the total amount of ₱36,000.00. The petitioner’s payment of the foregoing rentals confirms
the existence of its agreement to lease the residential building from the respondents.
Given the existence of the lease,the petitioner’s claim denying the respondents’ ownership of the residential house must be
rejected.1âwphi1 According to the petitioner, it is Adoracion who actually owns the residential building having bought the same, together withthe two
parcels of land, from her father Tomas, who, in turn, bought it in an auction sale.
It is settled that "[o]nce a contact of lease is shown to exist between the parties, the lessee cannot by any proof, however strong, overturn the
conclusive presumption that the lessor has a valid title to or a better right of possession to the subject premises than the lessee." 14 Section 2(b), Rule
131 of the Rules of Court prohibits a tenant from denying the title of his landlord at the time of the commencement of the relation of landlord and tenant
between them.15 In Santos v. National Statistics Office, 16 the Court expounded on the rule on estoppel against a tenant and further clarified that what a
tenant is estopped from denying is the title of his landlord at the time of the commencement of the landlord-tenant relation. If the title asserted is one
that is alleged to have been acquired subsequent to the commencement of that relation, the presumption will not apply.17
In this case, the petitioner’s basis for insisting on Adoracion’s ownership dates back to the latter’s purchase of the two parcels of land from her father,
Tomas. It was Tomas who bought the property in an auction sale by Union Bank in 1993 and leased the same to the petitioner in the same year. Note
must be madethat the petitioner’s president, Manglicmot, is the husband of Adoracion and son-in-law of Tomas. It is not improbable that at the time the
petitioner leased the residential building from the respondents’ mother in 1993, it was aware of the circumstances surrounding the sale of the two
parcels of land and the natureof the respondents’ claim over the residential house. Yet, the petitioner still chose to lease the building. Consequently,
the petitioner is now estopped from denying the respondents’ title over the residential building.
More importantly, the respondents’ownership of the residential building is already an established fact.
"Nemo dat quod non habet. One can sell only what one owns or is authorized to sell, and the buyer can acquire no more right than what the seller can
transfer legally."18 It must be pointed out that what Tomas bought from Union Bank in the auction sale werethe two parcels of land originally owned and
mortgaged by CCC to Bancom, and which mortgage was later assigned by Bancom to Union Bank. Contrary to the petitioner’s assertion, the property
subject of the mortgage and consequently the auction sale pertains only to these two parcels of land and did not include the residential house. This
was precisely the tenor of Castro, Jr. v. CA19 where the Court nullified the writ of possession issued by the trial court insofar as it affected the residential
house constructed by the respondents on the mortgaged property as it was not owned by CCC, which was the mortgagor. The Court ruled:
[Article 2127 of the Civil Code] extends the effects of the real estate mortgage to accessions and accessories found on the hypothecated property
when the secured obligation becomes due. The law is predicated on an assumption that the ownership of such accessions and accessories also
belongs to the mortgagor as the owner of the principal. The provision has thus been seen by the Court, x x x, to mean that all improvements
subsequently introduced or owned by the mortgagor on the encumbered property are deemed to form part of the mortgage. That the improvements are
to be considered so incorporated only if so owned by the mortgagor is a rule that can hardly be debated since a contract of security, whether real or
personal, needs as an indispensable element thereof the ownership by the pledgor ormortgagor of the property pledged or mortgaged. The rationale
shouldbe clear enough — in the event of default on the secured obligation, the foreclosure sale of the property would naturally be the next step that can
expectedly follow. A sale would result in the transmission of title to the buyer which is feasible only if the seller can be in a position to convey ownership
of the thing sold (Article 1458, Civil Code). It is to say, in the instant case, that a foreclosure would be ineffective unless the mortgagor has title to the
property to be foreclosed.20 (Citations omitted and emphasis ours) The rule is that "when a decision becomes final and executory, it becomes valid and
binding upon the parties and their successors in interest." 21 Such being the case, Castro, which already determined with finality the respondents’
ownership of the residential house in question, is applicable and binding in this case and the petitioner cannotbe allowed to challenge the same. Thus,
as correctlyruled by the CA, "[t]o our mind, the pronouncement resolving the said issue necessarily touches also the issue on the ownership of the
building. x x x The finding of the Court [in Castro], now being final and executory, is no longer open for inquiry and therefore, has attained its
immutability."22
As regards the ruling of the RTC of Cabanatuan City, Branch 26, in Civil Case No. 2939 (AF) that the advertised sale of the property included allthe
improvements thereon,23 suffice it to say that said case involved an action for ejectment and any resolution by the RTC on the matter of the ownership
of the improvements of the property is merely provisional and cannot surpass the Court’s pronouncement in Castro and in the present case. The
petitioner should be reminded that "in ejectment suits, the only issue for resolution is the physical or materialpossession of the property involved,
independent of any claim of ownership by any of the party litigants. However, the issue of ownership may be provisionally ruled upon for the sole
purpose of determining who is entitled to possession de facto." 24 The MTC and RTC’s adjudication of ownership is merely provisionaland would not bar
or prejudice an action between the same parties involving title to the property.25
Also, Adoracion’s subsequent acquisition of the two parcels of land from her father does not necessarily entail the acquisition of the residential building.
"A building by itself is a realor immovable property distinct from the land on which it is constructed and therefore can be a separate subject of
contracts."26 Whatever Adoracion acquired from her father is still subject to the limitation pronounced by the Court in Castro, and the sale between
Adoracion and Tomas is confined only to the two parcels of land and excluded the residential building owned by the respondents. It is beyond question
that Tomas, and subsequently, Adoracion, could nothave acquired a right greater than what their predecessors-in-interest – CCC and later, Union Bank
– had.27
The petitioner also insists thatthe lease between CCC and the respondents already expired whenAdoracion bought the property from Tomas. The
foregoing issue, however, cannot be considered in the present action. As established from the facts ofthis case, the residential house is located on a
portion of the property that was leased by CCC to the respondents. Disputing the lease between CCC and the respondents, in effect, goes into the right
of the respondents to maintain the residential house in question and eventually, their right to have the same leased to the petitioner. Such argument,
obviously, is a disguised effort to contest the title of the respondents over the residential house leased to the petitioner, which, as the Court previously
discussed, cannot be allowed since they are estopped from denying the same.
There is also nothing on record that will prove the petitioner’s claim that the lease between CCC and the respondents already expired. The fact that
Adoracion subsequently bought the property did not ipso facto terminate the lease. While the lease between CCC and the respondents contained a 15-
year period, to end in 1992, the petitioner failed to show that the subsequent transferors/purchasers of the two parcels of land opted to terminate the
lease or instituted any action for its termination. Bancom bought the property at an auction sale in 1979; Union Bank, in 1984; Tomas, and later,
Adoracion, acquired the property in 1993.
Article 1676 of the Civil Code provides:
The purchaser of a piece of land which is under a lease that is not recorded in the Registry of property may terminate the lease, save when there is a
stipulation to the contrary in the contract of sale, or when the purchaser knows of the existence of the lease.
x x x x.
It cannot be denied that the transferors/purchasers of the property all had knowledge of the lease between CCC and the respondents; yet, not any of
the transferors/purchasers moved to terminate the lease. In Bernabe v. Judge Luna,28 the Court stated:
[P]etitioners are in error when they say that because they are the buyers of the lot involved herein, they ipso facto have the right to terminate an
existing lease. They can do so but only if the lease itself is not recorded, and they, as buyers, are not aware of the lease's existence and duration, thus
Art. 1676 of the Civil Code says:
xxxx
In the present case, the lease is not recorded, and although petitioner knew of its existence, there was no fixed period for its duration - hence the lease
was generally terminable at the will of the buyerspetitioners. But of course they had to make a demand for its termination. x x x. 29 (Citation omitted and
emphasis ours)
This was, in fact, the significance of the Court's statement in Castro, that –
[I]n respect of the lease on the foreclosed property, the buyer at the foreclosure sale merely succeeds to the rights and obligations of the pledgor-
mortgagor subject, however, to the fcrovisions of Article 1676 of the Civil Code on its possible termination. 30 (Citation omitted, emphasis and
underscoring ours)
Given, however, the lack of substantiation, the petitioner's insistence on the expiry of the lease between CCC and the respondents, at this point, must
fail.
WHEREFORE, the petition is DENIED for lack of merit.
SO ORDERED.
A.M. No. MTJ-08-1698 March 3, 2008
(Formerly OCA I.P.I. No. 04-1523-MTJ)
JAIME RACINES, Complainant,
vs.
JUDGE JOSE P. MORALLOS and SHERIFF III BENJAMIN CABUSAO, JR., Respondents.
RESOLUTION
AUSTRIA-MARTINEZ, J.:
Complainant Jaime Racines (Racines) was required by the Court in its Resolution dated November 22, 2007 to show cause why he should not be held
in contempt of court for filing a baseless and unfounded administrative case.
Racines filed on December 17, 2003, a Complaint against Judge Jose P. Morallos (Judge Morallos) and Sheriff Benjamin Cabusao, Jr. (Sheriff
Cabusao) of the Metropolitan Trial Court (MTC), Branch 68 of Pasig City, for knowingly rendering an unjust judgment, 1 other deceits,2 violation of the
Anti-Graft and Corrupt Practices Act,3 violation of Article 32 of the New Civil Code, Section 1, Article III of the 1987 Constitution, and the Code of
Judicial Conduct.4 The Court, finding the evaluation of the Office of the Court Administrator (OCA) to be in accord with law and the facts on record,
affirmed its recommendation and dismissed Racines’s complaint in the Resolution dated November 22, 2004. The Court held that there was nothing in
the records to show that Judge Morallos was moved by improper motive when he rendered the decision in Civil Case No. 9681; 5 neither was there
anything to show that Sheriff Cabusao used his position to influence the outcome of the decision; and in any event, the proper recourse was to elevate
the case to a higher court for review, and not through an administrative case. The Court, in the said resolution also directed Racines to show cause
within 10 days from receipt thereof, why he should not be held in contempt of court for filing an utterly baseless and unfounded administrative case.6
Racines through counsel, Atty. Onofre D. Manalad, filed a Motion for Reconsideration, 7 which the Court denied with finality in the Resolution dated
March 2, 2005 for lack of substantial argument. The Resolution likewise admonished Racines and his counsel to desist from initiating baseless
complaints.8
On March 29, 2005, the OCA received an Earnest Motion for Clarification9 filed by Racines through Atty. Manalad which the Court treated as a second
motion for reconsideration in the Resolution dated May 25, 2005. The Court denied the motion for being a prohibited pleading and directed that no
further pleadings or motions shall be entertained in the case.10
On June 19, 2007, Racines by himself, filed a Pagpapaliwanag claiming: He received the Court’s Resolution dated November 22, 2004 only on March
30, 2007 and he was able to file his explanation only at this time since he had to look for a lawyer who would explain it to him. The complaint and the
other documents which Atty. Manalad prepared were all written in English and because he fully trusted Atty. Manalad, he immediately signed the same
even though Atty. Manalad did not explain it to him. Had Atty. Manalad fully explained the documents to him, he would not have signed the same, as
he had no intention of filing a baseless administrative case against respondents. If there was anyone who should be punished, it was Atty. Manalad
because he deceived him into filing a baseless administrative case.11
The Court required Atty. Manalad to comment on Racines’s Pagpapaliwanag.12
In his Comment, Atty. Manalad avers that Racines is being used by Gerry Chua, lessor of the Viajeros Market and Chua’s lawyer Atty. Edgardo Galvez
against him (Atty. Manalad), since he is assisting the officers of the Pasig Fruits & Vegetables Vendors Association (PFVVA) in their cases against
Chua. Racines, who was for several years a sergeant-at-arms of the PFVVA, was pirated by Chua to lead a group of goons to harass his co-vendors
into giving up their stalls. Atty. Manalad claims that he would not have initiated an action against an incumbent trial court judge had no grievous
correctible error been committed in bad faith at the expense of truth and justice. He also asserts that the allegations in the complaint against Judge
Morallos are substantiated by the admission of the parties in their pleadings, and that he filed the charges against respondents at the instance of
Racines who was even crying when he was pleading before Atty. Manalad for legal assistance.13
The Court finds both Racines and Atty. Manalad guilty of indirect contempt.
Persons guilty of any improper conduct tending, directly or indirectly, to impede, obstruct, or degrade the administration of justice may be punished for
indirect contempt.14 The Court, in the exercise of its inherent power to control, in furtherance of justice, the conduct of its ministerial officers and of all
other persons in any manner connected with a case before it, may motu proprio initiate proceedings therefor.15
The Court has held that unsubstantiated charges serve no purpose other than to harass judges and cast doubt on the integrity of the entire
judiciary.16 The filing of clearly unfounded or malicious complaints seriously affects the efficiency of the members of the judiciary in administering fair,
speedy and impartial justice.17 The Court, mindful of the proliferation of unfounded or malicious administrative or criminal cases filed by losing litigants
and disgruntled lawyers against members of the judiciary, therefore issued A.M. No. 03-10-01-SC 18 which took effect on November 4, 2003 with the
aim of preventing or at least discouraging the filing of such cases to protect the orderly administration of justice. 19 It provides in paragraph 1 thereof that
if upon informal preliminary inquiry it is found that the complaint is unfounded, baseless and merely intended to harass respondent, complainant may
be required to show cause why he should not be held in contempt of court. And if the complainant is a lawyer, he may be further required to show
cause why he or she should not be administratively sanctioned as a member of the Bar and as an officer of the court.1avvphi1
In the present case, Racines, through his lawyer Atty. Manalad filed a case against Judge Morallos and Sheriff Cabusao, imputing to them corrupt and
criminal acts on the mere basis of Judge Morallos’s decision. The complaint stated that Judge Morallos "distorted the facts" in his "anomalous decision"
and committed the crimes of knowingly rendering an unjust judgment, causing undue injury to Racines, violation of the Anti-Graft and Corrupt Practices
Act, and estafa by means of other deceits. 20 The complaint also questioned Judge Morallos’s integrity, impartiality and professional competence, all on
the basis of his decision on the ejectment favoring the plaintiff therein, Jellicom Manpower and Transport Services owned by Sheriff Cabusao, with
Racines as defendant. The complaint also claims that Sheriff Cabusao, Judge Morallos and Gerry Chua, lessor of the property, conspired with one
another in commiting the wrongful acts for which they are liable to pay damages.21
Unfazed by the order of the Court directing Racines to show cause why he should not be held in contempt for filing a baseless complaint, Racines,
through Atty. Manalad even filed two motions for reconsideration, reiterating their baseless claims.
Racines tries to escape liability by saying that Atty. Manald did not explain the contents of the pleadings to him, because if Atty. Manalad did, he would
not have signed the same.
The Court is not convinced. It is presumed that a person intends the ordinary consequences of his voluntary act 22 and unless the requirements for
proper substitution were made, a lawyer enjoys the presumption of authority given him by his client. 23 Racines does not deny that the signatures in the
pleadings were his. He also does not claim that he was prevented by Atty. Manalad from reading the contents thereof. He only said that since he fully
trusted Atty. Manalad he immediately signed the documents. From the foregoing, it is clear that Racines acquiesced and gave his stamp of approval to
the pleadings filed in court. Considering however that he is not learned in the intricacies of law, the Court finds the penalty of reprimand with warning to
be sufficient in his case.24
As to Atty. Manalad, the Court finds that a greater penalty is in order. As a member of the bar, he should know better than to file an unfounded
administrative complaint.25 He is bound by the Code of Professional Responsibility, and Rule 11.04 thereof states that a lawyer shall not attribute to a
judge motives not supported by the records. Canon 11 also enjoins lawyers to observe and maintain the respect due to courts and to judicial officers
and should insist on similar conduct by others. 26 His claim that he filed the charges against respondent at the instance of Racines cannot free him from
liability. As the Court has pronounced, a client’s cause does not permit an attorney to cross the line between liberty and license. Lawyers must always
keep in perspective that since they are administrators of justice, oath-bound servants of society, their first duty is not to their clients, as many suppose,
but to the administration of justice. 27 As a lawyer, he is an officer of the court with the duty to uphold its dignity and authority and not promote distrust in
the administration of justice. For violating Section 3, Rule 71 of the 1997 Rules of Civil Procedure, the Court finds that a fine of five thousand pesos is
proper in his case.28
WHEREFORE, the Court finds Jaime Racines and Atty. Onofre D. Manalad guilty of Indirect Contempt under Section 3, Rule 71 of the 1997 Rules of
Civil Procedure. Atty. Onofre D. Manalad is ordered to pay a FINE of FIVE THOUSAND PESOS within ten (10) days from finality of herein Resolution,
while Jaime Racines is REPRIMANDED. Both are STERNLY WARNED that a repetition of a similar act may warrant a more severe action by this
Court.
SO ORDERED.
G.R. No. 194846 June 19, 2013
*HOSPICIO D. ROSAROSO, ANTONIO D. ROSAROSO, MANUEL D. ROSAROSO, ALGERICA D. ROSAROSO, and CLEOFE R.
LABINDAO, Petitioners,
vs.
LUCILA LABORTE SORIA, SPOUSES HAM SOLUTAN and **LAILA SOLUTAN, and MERIDIAN REALTY CORPORATION, Respondents.
DECISION
MENDOZA, J.:
This is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the December 4, 2009 Decision 1 of the Court of Appeals (CA). in
CA G.R. CV No. 00351, which reversed and set aside the July 30, 2004 Decision 2 of the Regional Trial Court, Branch 8, 7th Judicial Region, Cebu City
(RTC), in Civil Case No. CEB-16957, an action for declaration of nullity of documents.
The Facts
Spouses Luis Rosaroso (Luis) and Honorata Duazo (Honorata) acquired several real properties in Daan Bantayan, Cebu City, including the subject
properties. The couple had nine (9) children namely: Hospicio, Arturo, Florita, Lucila, Eduardo, Manuel, Cleofe, Antonio, and Angelica. On April 25,
1952, Honorata died. Later on, Luis married Lourdes Pastor Rosaroso (Lourdes).
On January 16, 1995, a complaint for Declaration of Nullity of Documents with Damages was filed by Luis, as one of the plaintiffs, against his daughter,
Lucila R. Soria (Lucila); Lucila’s daughter, Laila S. Solutan (Laila); and Meridian Realty Corporation (Meridian). Due to Luis’ untimely death, however,
an amended complaint was filed on January 6, 1996, with the spouse of Laila, Ham Solutan (Ham); and Luis’ second wife, Lourdes, included as
defendants.3
In the Amended Complaint, it was alleged by petitioners Hospicio D. Rosaroso, Antonio D. Rosaroso (Antonio), Angelica D. Rosaroso (Angelica), and
Cleofe R. Labindao (petitioners) that on November 4, 1991, Luis, with the full knowledge and consent of his second wife, Lourdes, executed the Deed
of Absolute Sale4 (First Sale) covering the properties with Transfer Certificate of Title (TCT) No. 31852 (Lot No. 8); TCT. No. 11155 (Lot 19); TCT No.
10885 (Lot No. 22); TCT No. 10886 (Lot No. 23); and Lot Nos. 5665 and 7967, all located at Daanbantayan, Cebu, in their favor.5
They also alleged that, despite the fact that the said properties had already been sold to them, respondent Laila, in conspiracy with her mother, Lucila,
obtained the Special Power of Attorney (SPA),6 dated April 3, 1993, from Luis (First SPA); that Luis was then sick, infirm, blind, and of unsound mind;
that Lucila and Laila accomplished this by affixing Luis’ thumb mark on the SPA which purportedly authorized Laila to sell and convey, among others,
Lot Nos. 8, 22 and 23, which had already been sold to them; and that on the strength of another SPA 7 by Luis, dated July 21, 1993 (Second SPA),
respondents Laila and Ham mortgaged Lot No. 19 to Vital Lending Investors, Inc. for and in consideration of the amount of ₱150,000.00 with the
concurrence of Lourdes.8
Petitioners further averred that a second sale took place on August 23, 1994, when the respondents made Luis sign the Deed of Absolute
Sale9 conveying to Meridian three (3) parcels of residential land for ₱960,500.00 (Second Sale); that Meridian was in bad faith when it did not make
any inquiry as to who were the occupants and owners of said lots; and that if Meridian had only investigated, it would have been informed as to the true
status of the subject properties and would have desisted in pursuing their acquisition.
Petitioners, thus, prayed that they be awarded moral damages, exemplary damages, attorney’s fees, actual damages, and litigation expenses and that
the two SPAs and the deed of sale in favor of Meridian be declared null and void ab initio.10
On their part, respondents Lucila and Laila contested the First Sale in favor of petitioners. They submitted that even assuming that it was valid,
petitioners were estopped from questioning the Second Sale in favor of Meridian because they failed not only in effecting the necessary transfer of the
title, but also in annotating their interests on the titles of the questioned properties. With respect to the assailed SPAs and the deed of absolute sale
executed by Luis, they claimed that the documents were valid because he was conscious and of sound mind and body when he executed them. In fact,
it was Luis together with his wife who received the check payment issued by Meridian where a big part of it was used to foot his hospital and medical
expenses.11
Respondent Meridian, in its Answer with Compulsory Counterclaim, averred that Luis was fully aware of the conveyances he made. In fact, Sophia
Sanchez (Sanchez), Vice-President of the corporation, personally witnessed Luis affix his thumb mark on the deed of sale in its favor. As to petitioners’
contention that Meridian acted in bad faith when it did not endeavor to make some inquiries as to the status of the properties in question, it countered
that before purchasing the properties, it checked the titles of the said lots with the Register of Deeds of Cebu and discovered therein that the First Sale
purportedly executed in favor of the plaintiffs was not registered with the said Register of Deeds. Finally, it argued that the suit against it was filed in
bad faith.12
On her part, Lourdes posited that her signature as well as that of Luis appearing on the deed of sale in favor of petitioners, was obtained through fraud,
deceit and trickery. She explained that they signed the prepared deed out of pity because petitioners told them that it was necessary for a loan
application. In fact, there was no consideration involved in the First Sale. With respect to the Second Sale, she never encouraged the same and neither
did she participate in it. It was purely her husband’s own volition that the Second Sale materialized. She, however, affirmed that she received
Meridian’s payment on behalf of her husband who was then bedridden.13
RTC Ruling
After the case was submitted for decision, the RTC ruled in favor of petitioners. It held that when Luis executed the second deed of sale in favor of
Meridian, he was no longer the owner of Lot Nos. 19, 22 and 23 as he had already sold them to his children by his first marriage. In fact, the subject
properties had already been delivered to the vendees who had been living there since birth and so had been in actual possession of the said
properties. The trial court stated that although the deed of sale was not registered, this fact was not prejudicial to their interest. It was of the view that
the actual registration of the deed of sale was not necessary to render a contract valid and effective because where the vendor delivered the
possession of the parcel of land to the vendee and no superior rights of third persons had intervened, the efficacy of said deed was not destroyed. In
other words, Luis lost his right to dispose of the said properties to Meridian from the time he executed the first deed of sale in favor of petitioners. The
same held true with his alleged sale of Lot 8 to Lucila Soria.14 Specifically, the dispositive portion of the RTC decision reads:
IN VIEW OF THE FOREGOING, the Court finds that a preponderance of evidence exists in favor of the plaintiffs and against the defendants. Judgment
is hereby rendered:
a. Declaring that the Special Power of Attorney, Exhibit "K," for the plaintiffs and Exhibit "3" for the defendants null and void including all
transactions subsequent thereto and all proceedings arising therefrom;
b. Declaring the Deed of Sale marked as Exhibit "E" valid and binding;
c. Declaring the Deed of Absolute Sale of Three (3) Parcels of Residential Land marked as Exhibit "F" null and void from the beginning;
d. Declaring the Deed of Sale, Exhibit "16" (Solutan) or Exhibit "FF," null and void from the beginning;
e. Declaring the vendees named in the Deed of Sale marked as Exhibit "E" to be the lawful, exclusive and absolute owners and possessors
of Lots Nos. 8, 19, 22, and 23;
f. Ordering the defendants to pay jointly and severally each plaintiff ₱50,000.00 as moral damages; and
g. Ordering the defendants to pay plaintiffs ₱50,000.00 as attorney’s fees; and ₱20,000.00 as litigation expenses.
The crossclaim made by defendant Meridian Realty Corporation against defendants Soria and Solutan is ordered dismissed for lack of sufficient
evidentiary basis.
SO ORDERED."15
Ruling of the Court of Appeals
On appeal, the CA reversed and set aside the RTC decision. The CA ruled that the first deed of sale in favor of petitioners was void because they failed
to prove that they indeed tendered a consideration for the four (4) parcels of land. It relied on the testimony of Lourdes that petitioners did not pay her
husband. The price or consideration for the sale was simulated to make it appear that payment had been tendered when in fact no payment was made
at all.16
With respect to the validity of the Second Sale, the CA stated that it was valid because the documents were notarized and, as such, they enjoyed the
presumption of regularity. Although petitioners alleged that Luis was manipulated into signing the SPAs, the CA opined that evidence was wanting in
this regard. Dr. Arlene Letigio Pesquira, the attending physician of Luis, testified that while the latter was physically infirmed, he was of sound mind
when he executed the first SPA.17
With regard to petitioners’ assertion that the First SPA was revoked by Luis when he executed the affidavit, dated November 24, 1994, the CA ruled
that the Second Sale remained valid. The Second Sale was transacted on August 23, 1994, before the First SPA was revoked. In other words, when
the Second Sale was consummated, the First SPA was still valid and subsisting. Thus, "Meridian had all the reasons to rely on the said SPA during the
time of its validity until the time of its actual filing with the Register of Deeds considering that constructive notice of the revocation of the SPA only came
into effect upon the filing of the Adverse Claim and the aforementioned Letters addressed to the Register of Deeds on 17 December 1994 and 25
November 1994, respectively, informing the Register of Deeds of the revocation of the first SPA."18 Moreover, the CA observed that the affidavit
revoking the first SPA was also revoked by Luis on December 12, 1994.19
Furthermore, although Luis revoked the First SPA, he did not revoke the Second SPA which authorized respondent Laila to sell, convey and mortgage,
among others, the property covered by TCT T-11155 (Lot No. 19). The CA opined that had it been the intention of Luis to discredit the
Second Sale, he should have revoked not only the First SPA but also the Second SPA. The latter being valid, all transactions emanating from it,
particularly the mortgage of Lot 19, its subsequent redemption and its second sale, were valid.20 Thus, the CA disposed in this wise:
WHEREFORE, the appeal is hereby GRANTED. The Decision dated 30 July 2004 is hereby REVERSED AND SET ASIDE, and in its stead a new
decision is hereby rendered:
1. DECLARING the Special Power of Attorney, dated 21 July 1993, as valid;
2. DECLARING the Special Power of Attorney, dated 03 April 1993, as valid up to the time of its revocation on 24 November 1994;
3. DECLARING the Deed of Absolute sale, dated 04 November 1991, as ineffective and without any force and effect;
4. DECLARING the Deed of Absolute Sale of Three (3) Parcels of Residential Land, dated 23 August 1994, valid and binding from the very
beginning;
5. DECLARING the Deed of Absolute Sale, dated 27 September 1994, also valid and binding from the very beginning;
6. ORDERING the substituted plaintiffs to pay jointly and severally the defendant-appellant Meridian Realty Corporation the sum of
Php100,000.00 as moral damages, Php100,000.00 as attorney’s fee and Php100,000.00 as litigation expenses; and
7. ORDERING the substituted plaintiffs to pay jointly and severally the defendant-appellants Leila Solutan et al., the sum of Php50,000.00
as moral damages.
SO ORDERED.21
Petitioners filed a motion for reconsideration, but it was denied in the CA Resolution,22 dated November 18, 2010. Consequently, they filed the present
petition with the following ASSIGNMENT OF ERRORS
I.
THE HONORABLE COURT OF APPEALS (19TH DIVISION) GRAVELY ERRED WHEN IT DECLARED AS VOID THE FIRST SALE EXECUTED BY
THE LATE LUIS ROSAROSO IN FAVOR OF HIS CHILDREN OF HIS FIRST MARRIAGE.
II.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT SUSTAINING AND AFFIRMING THE RULING OF THE TRIAL COURT
DECLARING THE MERIDIAN REALTY CORPORATION A BUYER IN BAD FAITH, DESPITE THE TRIAL COURT’S FINDINGS THAT THE DEED OF
SALE (First Sale), IS GENUINE AND HAD FULLY COMPLIED WITH ALL THE LEGAL FORMALITIES.
III.
THE HONORABLE COURT OF APPEALS FURTHER ERRED IN NOT HOLDING THE SALE (DATED 27 SEPTEMBER 1994), NULL AND VOID
FROM THE VERY BEGINNING SINCE LUIS ROSAROSO ON NOVEMBER 4, 1991 WAS NO LONGER THE OWNER OF LOTS 8, 19, 22 AND 23 AS
HE HAD EARLIER DISPOSED SAID LOTS IN FAVOR OF THE CHILDREN OF HIS (LUIS ROSAROSO) FIRST MARRIAGE.23
Petitioners argue that the second deed of sale was null and void because Luis could not have validly transferred the ownership of the subject
properties to Meridian, he being no longer the owner after selling them to his children. No less than Atty. William Boco, the lawyer who notarized the
first deed of sale, appeared and testified in court that the said deed was the one he notarized and that Luis and his second wife, Lourdes, signed the
same before him. He also identified the signatures of the subscribing witnesses.24 Thus, they invoke the finding of the RTC which wrote:
In the case of Heirs of Joaquin Teves, Ricardo Teves versus Court of Appeals, et al., G.R. No. 109963, October 13, 1999, the Supreme Court held that
a public document executed [with] all the legal formalities is entitled to a presumption of truth as to the recitals contained therein. In order to overthrow
a certificate of a notary public to the effect that a grantor executed a certain document and acknowledged the fact of its execution before him, mere
preponderance of evidence will not suffice. Rather, the evidence must (be) so clear, strong and convincing as to exclude all reasonable dispute as to
the falsity of the certificate. When the evidence is conflicting, the certificate will be upheld x x x .
A notarial document is by law entitled to full faith and credit upon its face. (Ramirez vs. Ner, 21 SCRA 207). As such it … must be sustained in full force
and effect so long as he who impugns it shall not have presented strong, complete and conclusive proof of its falsity or nullity on account of some flaw
or defect provided against by law (Robinson vs. Villafuerte, 18 Phil. 171, 189-190).25
Furthermore, petitioners aver that it was erroneous for the CA to say that the records of the case were bereft of evidence that they paid the price of the
lots sold to them. In fact, a perusal of the records would reveal that during the cross-examination of Antonio Rosaroso, when asked if there was a
monetary consideration, he testified that they indeed paid their father and their payment helped him sustain his daily needs.26
Petitioners also assert that Meridian was a buyer in bad faith because when its representative visited the site, she did not make the necessary
inquiries. The fact that there were already houses on the said lots should have put Meridian on its guard and, for said reason, should have made
inquiries as to who owned those houses and what their rights were over the same.27
Meridian’s assertion that the Second Sale was registered in the Register of Deeds was a falsity. The subject titles, namely: TCT No. 11155 for Lot 19,
TCT No. 10885 for Lot 22, and TCT No. 10886 for Lot 23 were free from any annotation of the alleged sale.28
After an assiduous assessment of the records, the Court finds for the petitioners.
The First Deed Of Sale Was Valid
The fact that the first deed of sale was executed, conveying the subject properties in favor of petitioners, was never contested by the respondents.
What they vehemently insist, though, is that the said sale was simulated because the purported sale was made without a valid consideration.
Under Section 3, Rule 131 of the Rules of Court, the following are disputable presumptions: (1) private transactions have been fair and regular; (2) the
ordinary course of business has been followed; and (3) there was sufficient consideration for a contract.29 These presumptions operate against an
adversary who has not introduced proof to rebut them. They create the necessity of presenting evidence to rebut the prima facie case they created,
and which, if no proof to the contrary is presented and offered, will prevail. The burden of proof remains where it is but, by the presumption, the one
who has that burden is relieved for the time being from introducing evidence in support of the averment, because the presumption stands in the place
of evidence unless rebutted.30
In this case, the respondents failed to trounce the said presumption. Aside from their bare allegation that the sale was made without a consideration,
they failed to supply clear and convincing evidence to back up this claim. It is elementary in procedural law that bare allegations, unsubstantiated by
evidence, are not equivalent to proof under the Rules of Court.31
The CA decision ran counter to this established rule regarding disputable presumption. It relied heavily on the account of Lourdes who testified that the
children of Luis approached him and convinced him to sign the deed of sale, explaining that it was necessary for a loan application, but they did not pay
the purchase price for the subject properties. 32 This testimony, however, is self-serving and would not amount to a clear and convincing evidence
required by law to dispute the said presumption. As such, the presumption that there was sufficient consideration will not be disturbed.
Granting that there was no delivery of the consideration, the seller would have no right to sell again what he no longer owned. His remedy would be to
rescind the sale for failure on the part of the buyer to perform his part of their obligation pursuant to Article 1191 of the New Civil Code. In the case of
Clara M. Balatbat v. Court Of Appeals and Spouses Jose Repuyan and Aurora Repuyan,33 it was written:
The failure of the buyer to make good the price does not, in law, cause the ownership to revest to the seller unless the bilateral contract of sale is first
rescinded or resolved pursuant to Article 1191 of the New Civil Code. Non-payment only creates a right to demand the fulfillment of the obligation or to
rescind the contract. [Emphases supplied]
Meridian is Not a
Buyer in Good Faith
Respondents Meridian and Lucila argue that, granting that the First Sale was valid, the properties belong to them as they acquired these in good faith
and had them first recorded in the Registry of Property, as they were unaware of the First Sale.34
Again, the Court is not persuaded.
The fact that Meridian had them first registered will not help its cause. In case of double sale, Article 1544 of the Civil Code provides:
ART. 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first
possession thereof in good faith, if it should be movable property.
Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who in good faith was first in possession; and, in the absence thereof; to the
person who presents the oldest title, provided there is good faith.
Otherwise stated, ownership of an immovable property which is the subject of a double sale shall be transferred: (1) to the person acquiring it who in
good faith first recorded it in the Registry of Property; (2) in default thereof, to the person who in good faith was first in possession; and (3) in default
thereof, to the person who presents the oldest title, provided there is good faith. The requirement of the law then is two-fold: acquisition in good faith
and registration in good faith. Good faith must concur with the registration. If it would be shown that a buyer was in bad faith, the alleged registration
they have made amounted to no registration at all.
The principle of primus tempore, potior jure (first in time, stronger in right) gains greater significance in case of a double sale of immovable property.
When the thing sold twice is an immovable, the one who acquires it and first records it in the Registry of Property, both made in good faith, shall be
deemed the owner. Verily, the act of registration must be coupled with good faith— that is, the registrant must have no knowledge of the defect or lack
of title of his vendor or must not have been aware of facts which should have put him upon such inquiry and investigation as might be necessary to
acquaint him with the defects in the title of his vendor.)35 [Emphases and underlining supplied]
When a piece of land is in the actual possession of persons other than the seller, the buyer must be wary and should investigate the rights of those in
possession. Without making such inquiry, one cannot claim that he is a buyer in good faith. When a man proposes to buy or deal with realty, his duty is
to read the public manuscript, that is, to look and see who is there upon it and what his rights are. A want of caution and diligence, which an honest
man of ordinary prudence is accustomed to exercise in making purchases, is in contemplation of law, a want of good faith. The buyer who has failed to
know or discover that the land sold to him is in adverse possession of another is a buyer in bad faith. 36 In the case of Spouses Sarmiento v. Court of
Appeals,37 it was written:
Verily, every person dealing with registered land may safely rely on the correctness of the certificate of title issued therefor and the law will in no way
oblige him to go behind the certificate to determine the condition of the property. Thus, the general rule is that a purchaser may be considered a
purchaser in good faith when he has examined the latest certificate of title. An exception to this rule is when there exist important facts that would
create suspicion in an otherwise reasonable man to go beyond the present title and to investigate those that preceded it. Thus, it has been said that a
person who deliberately ignores a significant fact which would create suspicion in an otherwise reasonable man is not an innocent purchaser for value.
A purchaser cannot close his eyes to facts which should put a reasonable man upon his guard, and then claim that he acted in good faith under the
belief that there was no defect in the title of the vendor. As we have held:
The failure of appellees to take the ordinary precautions which a prudent man would have taken under the circumstances, specially in buying a piece of
land in the actual, visible and public possession of another person, other than the vendor, constitutes gross negligence amounting to bad faith.
In this connection, it has been held that where, as in this case, the land sold is in the possession of a person other than the vendor, the purchaser is
required to go beyond the certificate of title to make inquiries concerning the rights of the actual possessor. Failure to do so would make him a
purchaser in bad faith. (Citations omitted).
One who purchases real property which is in the actual possession of another should, at least make some inquiry concerning the right of those in
possession. The actual possession by other than the vendor should, at least put the purchaser upon inquiry. He can scarely, in the absence of such
inquiry, be regarded as a bona fide purchaser as against such possessors. (Emphases supplied)
Prescinding from the foregoing, the fact that private respondent RRC did not investigate the Sarmiento spouses' claim over the subject land despite its
knowledge that Pedro Ogsiner, as their overseer, was in actual possession thereof means that it was not an innocent purchaser for value upon said
land. Article 524 of the Civil Code directs that possession may be exercised in one's name or in that of another. In herein case, Pedro Ogsiner had
informed RRC that he was occupying the subject land on behalf of the Sarmiento spouses. Being a corporation engaged in the business of buying and
selling real estate, it was gross negligence on its part to merely rely on Mr. Puzon's assurance that the occupants of the property were mere squatters
considering the invaluable information it acquired from Pedro Ogsiner and considering further that it had the means and the opportunity to investigate
for itself the accuracy of such information. [Emphases supplied]
In another case, it was held that if a vendee in a double sale registers the sale after he has acquired knowledge of a previous sale, the registration
constitutes a registration in bad faith and does not confer upon him any right. If the registration is done in bad faith, it is as if there is no registration at
all, and the buyer who has first taken possession of the property in good faith shall be preferred.38
In the case at bench, the fact that the subject properties were already in the possession of persons other than Luis was never disputed. Sanchez,
representative and witness for Meridian, even testified as follows:
x x x; that she together with the two agents, defendant Laila Solutan and Corazon Lua, the president of Meridian Realty Corporation, went immediately
to site of the lots; that the agents brought with them the three titles of the lots and Laila Solutan brought with her a special power of attorney executed
by Luis B. Rosaroso in her favor but she went instead directly to Luis Rosaroso to be sure; that the lots were pointed to them and she saw that there
were houses on it but she did not have any interest of the houses because her interest was on the lots; that Luis Rosaroso said that the houses
belonged to him; that he owns the property and that he will sell the same because he is very sickly and he wanted to buy medicines; that she requested
someone to check the records of the lots in the Register of Deeds; that one of the titles was mortgaged and she told them to redeem the mortgage
because the corporation will buy the property; that the registered owner of the lots was Luis Rosaroso; that in more or less three months, the
encumbrance was cancelled and she told the prospective sellers to prepare the deed of sale; that there were no encumbrances or liens in the title; that
when the deed of absolute sale was prepared it was signed by the vendor Luis Rosaroso in their house in Opra x x x.39 (Underscoring supplied)
From the above testimony, it is clear that Meridian, through its agent, knew that the subject properties were in possession of persons other than the
seller. Instead of investigating the rights and interests of the persons occupying the said lots, however, it chose to just believe that Luis still owned
them. Simply, Meridian Realty failed to exercise the due diligence required by law of purchasers in acquiring a piece of land in the possession of
person or persons other than the seller.
In this regard, great weight is accorded to the findings of fact of the RTC. Basic is the rule that the trial court is in a better position to examine real
evidence as well as to observe the demeanor of witnesses who testify in the case.40
WHEREFORE, the petition is GRANTED. The December 4, 2009 Decision and the November 18, 201 0 Resolution of the Court of Appeals, in CA-G.R.
CV No. 00351, are REVERSED and SET ASIDE. The July 30, 2004 Decision of the Regional Trial Court, Branch 8, 7th Judicial Region, Cebu City, in
Civil Case No. CEB-16957, is hereby REINSTATED.
SO ORDERED.
G.R. No. 175874 December 11, 2013
HEIRS OF CIPRIANO TRAZONA, Namely: FRANCISCA T. MATBAGON, NATIVIDAD T. ABADIANO, CARLITO C. TRAZONA; and Heirs of
EDELBERTO C. TRAZONA represented by his daughter DOMICINA T. ARANAS, ELADIA T. ALICAMEN (Now Deceased) Substituted by
DOMINGO ALICAMEN, LUPECIO ALICAMEN, REBECCA ALICAMEN-BALBUTIN, ELSEI ALICAMEN, GLENN ALICAMEN, LENNEI ALICAMEN-
GEONZON, DANILO ALICAMEN, JOVELYN ALICAMEN-VILLETA, JIMBIE ALICAMEN and HERMOGENES C. TRAZONA (Now Deceased)
Substituted by LILYBETH TRAZONA-MANGILA, GEMMA TRAZONA, ELIZALDE TRAZONA, BOBBY TRAZONA, and PALABIANA B.
TRAZONA, Petitioners,
vs.
HEIRS OF DIONISIO CANADA, Namely: ROSITA C. GERSALINA, CONCEPTION C. GEONZON, DANIEL CANADA, GORGONIO CANADA,
LEOPOLDO CANADA, SUSANA C. DUNGOG, LUZVIMINDA C. TABUADA, AND CEFERINA CANADA; PROVINCIAL ASSESSOR of Cebu and
MUNICIPAL ASSESSOR of Minglanilla, Cebu, Respondents.
DECISION
SERENO, CJ.:
This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court assailing the Decision1 and Resolution2 of the Court of Appeals Cebu City
(CA) in CA-G.R. CV No. 00099. The CA reversed the Decision 3 of the Regional Trial Court of Cebu City, Branch 57 (RTC) in Civil Case No. CEB-
20620, which annulled the Deed of Absolute Sale dated 27 June 1956 and ordered the cancellation of Tax Declaration No. 23959 in the name of
Dionisio Cañada (Dionisio), predecessor of respondents.
Petitioners are heirs of Cipriano Trazona (Cipriano), who owned an untitled parcel of land referred to as Lot No. 5053-H. The property, located in
Minglanilla, Cebu, is covered by Tax Declaration No. 07764 and has an area of 9,515 square meters.4 The land was purchased from the government in
1940.5 Since then, Cipriano had taken possession of the land, cultivated it and diligently paid taxes thereon.6
In 1949, Dionisio bought the adjacent parcel of land from Pilar Diaz.7 It was later found that he had encroached on a small portion of Lot No. 5053-H.
He was then summoned by Cipriano for a confrontation before the barangay captain in 1952.8 Dionisio offered to buy the encroached portion, but
Cipriano refused the offer.9 In 1956, the latter gave Dionisio permission to temporarily build a house on said portion, where it still stands. 10 No action for
ejectment was filed against Dionisio during the lifetime of Cipriano,11 who eventually died on 18 May 1982.12 The latter’s son Hermogenes, one of the
petitioners herein who had cultivated the lot since 1972, took over.13 On 24 March 1992, Dionisio died.14
The present controversy arose in 1997. Petitioners went to the Office of the Municipal Assessor to secure a copy of Tax Declaration No. 07764, as they
intended to sell Lot No. 5053-H to an interested buyer.15 To their surprise, they were informed that Tax Declaration No. 07764 had been cancelled and,
in lieu thereof, Tax Declaration No. 23959 was issued on 24 June 1996 in the name of Dionisio.16 Apparently, respondents had caused the issuance of
Tax Declaration No. 23959 by submitting a Deed of Absolute Sale dated 27 June 1956 supposedly executed by Cipriano in favor of Dionisio. 17 That
sale involved a portion of Lot No. 5053-H described as follows:
x x x that portion of land of Lot No. FIVE THOUSAND FIFTY THREE-H (5053-H) under subdivision plan FLR-133 approved by the Director of Lands
Jose P. Dans on September 5, 1953, covered by monuments No. 7, 8, 9, 10, 11, of said Lot No. 5053 bounded on the North by Lot No. 5954 & portion
of Lot 5053-H; East by portion of Lot 5053-H; South by Lot no. 5053-J of Domingo Ababon; West by Lot no. 9479; x x x.18
Petitioners summoned respondents before the Lupon Tagapamayapa, but the conciliation was not successful.19 On 28 July 1997, petitioners filed a
Complaint20 against respondents for quieting of title, annulment of deed of sale, cancellation of Tax Declaration No. 23959, recovery of possession and
ownership, damages, and payment of attorney’s fees. Petitioners alleged therein that the Deed of Absolute Sale dated 27 June 1956 was a forgery.
Respondents, in their Answer,21 alleged that the assailed deed was a genuine document and asked for the payment of moral and exemplary damages,
and attorney’s fees, as counterclaims.
During trial, among the witnesses presented by petitioners was Romeo O. Varona, document examiner of the Philippine National Police Crime
Laboratory, Region VII. He testified that according to his comparative analysis of Cipriano’s signature on the assailed deed and standard signatures on
other documents, Cipriano’s signature on the deed in question was a forgery.22
For their part, respondents presented Dionisio’s son Gorgonio, who testified that he was present when the assailed deed was executed. 23 He also
stated that they had enjoyed the fruits of the lot in question from 1956 until 1960, when they were confronted by petitioners. Respondents were asked
to show proof of ownership, but could not present any.24 Thus, from 1960 onwards, petitioners enjoyed the fruits of the property.25 Later, respondents
were able to find a copy of the assailed deed in the National Archives, thereby enabling them to cause the issuance of Tax Declaration No. 23959.26
In the presentation of their rebuttal evidence, petitioners presented a Deed of Absolute Sale dated 11 April 1953,27 executed by Pilar Diaz in favor of
Dionisio.1âwphi1 This prior sale involved the exact same portion allegedly sold to him by Cipriano – except that in the date of approval of the
subdivision plan by the Director of Lands, two figures were interchanged. Whereas the assailed deed showed the date as "September 5, 1953," the
Deed of Absolute Sale dated 11 April 1953 showed the date as "September 5, 1935."
In its Decision dated 6 April 2004, the RTC annulled the assailed deed and ordered the cancellation of Tax Declaration No. 23959, as well as the
reinstatement of Tax Declaration No. 07764.28 Respondents were also ordered to demolish their residential house on Lot No. 5053-H and to pay
petitioners attorney’s fees and litigation expenses.29
The RTC found that respondents’ failure to present the deed for 40 years from its alleged execution had not been satisfactorily and convincingly
explained.30 It also found that the assailed deed was indeed a forgery for the following reasons:
1. It would have been pointless for Dionisio to buy the same property twice from different owners.
2. Cipriano’s residence certificate, whose number was indicated in the assailed deed, as well as in the notarial register where the deed was
recorded, was allegedly issued in Minglanilla, Cebu. The other persons’ residence certificates, whose numbers were indicated on the same
page of the notarial register, appear to have come from the same booklet as the residence certificate of Cipriano, judging from their
numerical sequence. However, the residence certificates of these other persons had been issued in Sogod, Cebu.
3. There was indeed a glaring difference between the alleged signature of Cipriano in the assailed deed and in his standard signatures in
10 other documents submitted by plaintiffs.
Respondents filed a Notice of Appeal dated 30 April 2004.
RULING OF THE CA
On 25 May 2006, the CA issued a Decision reversing that of the RTC. The appellate court ruled that petitioners had failed to prove by requisite
evidence their allegation that the assailed deed was a forgery. 31 The deed, being a notarized document, enjoyed the presumption of authenticity and
due execution. Also, the fact that it was an ancient document that "remained unaltered after so many years, bodes well for its authenticity."32
The CA also concluded that the document examiner was not able to determine the forgery with certainty. What he had examined was a mere machine
copy of the assailed deed.33 Furthermore, even he admitted that the standard signatures of Cipriano had shown variations among themselves.
Finally, the CA ruled that respondents were the actual possessors of Lot No. 5053-H, since it was their house that was standing on the
property.34 Thus, the CA granted the appeal and consequently dismissed the Complaint of petitioners.
ISSUES
Petitioners come before us on a Petition for Review on Certiorari35
alleging that the CA erred as follows:
1. Ruling that petitioners were not able to overturn the presumption of regularity of the assailed deed;
2. Finding that the document examiner was not able to establish the forgery with certainty;
3. Finding that respondents were in actual possession of Lot No. 5053-H;
4. Ruling that there was no merit in petitioners’ prayer for the award of attorney’s fees and litigation expenses.
OUR RULING
Petitioners presented clear and convincing
evidence that the assailed deed is a forgery.
Well-settled is the rule that petitions for review on certiorari under Rule 45 before this Court should involve only questions of law.36 A reading of the
issues raised by petitioners readily show that they are questions of fact, which are generally not within the purview of this Court. When a question
involves facts, the findings of the CA, including the probative weight accorded to certain pieces of evidence, are binding on this Court. Also well-settled,
however, are exceptions to this rule,37 such as when the findings of fact of the CA are contrary to those of the RTC, as in this case.
We sustain the findings of the RTC.
At the outset, it is worth pointing out that the sale of a mere portion of Lot No. 5053-H was what brought about the cancellation of Tax Declaration No.
07764 and the consequent issuance of Tax Declaration No. 23959, each of which covered the entire lot. The fact that the assailed deed covers only a
portion of Lot No. 5053-H becomes clearer still when one considers that it was bounded on the north and the east by portions of Lot No. 5053-H itself.
As will be shown below, the assailed deed is a forgery. Assuming it were genuine, petitioners have a right to the rest of the property not covered by the
purported sale. If the procedure for the issuance of tax declarations was followed – if care had been observed to make sure that all papers were in
order and understood – this irregularity would not have taken place.
It is true that notarized documents are accorded evidentiary weight as regards their due execution.38 Nevertheless, while notarized documents enjoy
the presumption of regularity, this presumption is disputable. They can be contradicted by evidence that is clear, convincing, and more than merely
preponderant.39 Here, contrary to the conclusion of the CA, we find clear and convincing evidence that is enough to overturn the presumption of
regularity of the assailed deed.
First, the document examiner determined that the signature of Cipriano in the assailed deed had been forged. No issue has been raised about his
expertise. The finding of the CA that he had examined a mere machine copy of the assailed deed was erroneous. The pertinent portion of his testimony
clearly shows otherwise, to wit:
ATTY. DURANO:
Q: Now you made mention of the standard documents, could you kindly tell the Honorable Court what is [the] questioned document stated in your
report?
[ROMEO O. VARONA]
[A]: The questioned document is the Deed of Absolute Sale dated June 27, 1956.
Q: Do you have a copy of that Deed of Sale as examined by you?
A: Well, I have a machine copy. I have examined the original copy at the archive’s office, Mandaue City.40 (Emphasis supplied)
In concluding that the signature of Cipriano in the assailed deed was a forgery, the document examiner found that there were "significant differences in
letter formation, construction and other individual handwriting characteristics" between the assailed and the standard signatures of Cipriano.41
The fact that the document examiner himself admitted that even the standard signatures of Cipriano showed variations among themselves does not
make the former’s determination any less convincing. He explained that while every signature of the same person varies, the individual handwriting
characteristics of the person remain the same. 42 In Cesar v. Sandiganbayan,43 we recognized that there is bound to be some variation in the different
samples of genuine signatures of the same person.
Second, the RTC did not just rely on expert testimony in ruling that the signature was forged. It likewise supported its finding that the signature was
forged through independent observation:
Finally, a scrutiny of the signature on the questioned deed of sale compared to the eleven (11) signatures on the ten (10) standard documents there
exists a glaring difference in the letter formation of capital letters "C" in Cipriano and "T" in Trazona. The capital C in questioned signature, the initial
stroke stopped at the upper curve of the letter C while in the standard signatures, it overlaps from the upper curve. In the word Trazona, the capital T in
the questioned signature is disconnected from the T bar to the body of the questioned signature whereas, in the standard signatures, the capital T is
connected. These discrepancies can easily be noticed by mere physical appearance that the letters C and T were written.44
Third, the existence of the Deed of Absolute Sale dated 11 April 1953 brings into question the regularity of the assailed deed. This deed was never
disputed by respondents at any stage of the proceedings, and was in fact admitted by them in their Comments to Plaintiffs’ Additional Formal Offer of
Exhibits.45 Indeed, the RTC was correct in its observation that no one in complete possession of one’s mental faculties would buy the same property
twice from different owners. Respondents never provided any explanation for this anomalous situation. In any case, it has been established that Lot
No. 5053-H is in the name of Cipriano, who bought it from the government in 1940. Thus, only Cipriano had the right to dispose of the property, or
portions thereof.
Fourth, Cipriano had cultivated the property and paid taxes thereon since the time he acquired it from the government, and even after its purported sale
to Dionisio, until his death.46 Petitioners continued paying the taxes thereon even after Cipriano had died.47 Respondents started paying taxes on the
property only after Tax Declaration No. 23959 was issued in Dionisio’s name in 1997.48 It would be absurd for petitioners to pay taxes on a property
they do not own.
Fifth, as admitted by Gorgonio himself, petitioners were the ones enjoying the fruits of the property from 1960 until the present controversy. 49 Again, it is
incongruous for petitioners to enjoy the fruits if respondents owned the property.
Sixth, as the RTC noted, there was an irregularity regarding the place of issuance of Cipriano’s residence certificate indicated in the assailed deed, as
compared with the residence certificates of the other persons indicated on the same page of the notarial register.
Finally, when the record management analyst from the Bureau of Archives presented the assailed deed, the paper was noted to be white, while its
supposed contemporaries in the bunch from where it was taken had turned yellow with age. 50 Further, when the analyst was asked the question of
when- the assailed deed was received by the Bureau of Archives, she answered that it was forwarded to them only on 28 September 1987 by RTC
Region 7, Notarial Division.51
Clearly, the evidence adduced fully supports the position of petitioners that the assailed deed of sale is forged and that they are the owners of the
property. Having been forced to litigate in order to protect their interest therein, the award of attorney's fees and litigation expenses to them is in order.
The actual possession of Lot No. 5053-H by petitioners has been properly ruled on by the RTC.1âwphi1 Much has been made by the CA of the fact
that respondents' house was standing on the property. However, petitioners have explained that the house was erected only after Cipriano permitted it.
Dionisio was then well aware that this temporary arrangement may be terminated at any time. Respondents cannot now refuse to vacate the property
or eventually demand reimbursement of necessary and useful expenses under Articles 448 and 546 of the New Civil Code, because the provisions
apply only to a possessor in good faith, i.e., one who builds on land with the belief that he is the owner thereof. 52 Persons who occupy land by virtue of
tolerance of the owners are not possessors in good faith. 53 Thus, the directive of the RTC for respondents to demolish their residential house on Lot
No. 5053-H was also proper.
WHEREFORE, the Decision and Resolution of the Court of Appeals Cebu City in CA-G.R. CV No. 00099 are REVERSED and SET ASIDE. The
Decision of the Regional Trial Court of Cebu City, Branch 57, in Civil Case No. CEB-20620 is REINSTATED in all respects.
SO ORDERED.
MARIA LOURDES P. A. SERENO
.R. No. 208113, December 02, 2015
DOLORES DIAZ, Petitioner, v. PEOPLE OF THE PHILIPPINES AND LETICIA S. ARCILLA, Respondents.
DECISION
PERLAS-BERNABE, J.:
Before the Court is a petition for review on certiorari1 assailing the Decision 2 dated January 30, 2013 and the Resolution 3 dated July
10, 2013 of the Court of Appeals (CA) in CA-G.R. CV No. 97571, which directed petitioner Dolores Diaz (petitioner) to pay
respondent Leticia S. Arcilla, (respondent) the amount of P32,000.00, with legal interest at the rate of six percent (6%) per annum
(p.a.) from July 28, 1998 until finality of the decision and thereafter, interest at the rate of twelve percent (12%) p.a. on the
outstanding balance until full satisfaction.
The Facts
On March 11, 1999, an Information4 for estafa was filed against petitioner before the Regional Trial Court of Manila, Branch 5 (RTC)
for her alleged failure to return or remit the proceeds from various merchandise valued at P32,000.00 received by her in trust - i.e.,
on consignment basis from respondent.5 During arraignment, petitioner entered a negative plea. Thereafter, trial on the merits
ensued.6
The prosecution anchored its case on the testimony of respondent who claimed to be a businesswoman engaged in the business of
selling goods/merchandise through agents (one of whom is petitioner) under the condition that the latter shall turn over the
proceeds or return the unsold items to her a month after they were entrusted. Respondent averred that on February 20, 1996, she
entrusted merchandise consisting of umbrellas and bath towels worth P35,300.00 to petitioner7 as evidenced by an
acknowledgment receipt8 dated February 20, 1996 duly signed by the latter. However, on March 20, 1996, petitioner was only able
to remit the amount of P3,300.009 and thereafter, failed to make further remittances and ignored respondent's demands to remit
the proceeds or return the goods.10
In her defense, petitioner admitted having previous business dealings with respondent but not as an agent. She clarified that she
was a client who used to buy purchase order cards (POCs) and gift checks (GCs) from respondent on installment basis and that,
during each deal, she was made to sign a blank sheet of paper prior to the issuance of POCs and GCs. She further claimed that
their last transaction was conducted in 1995, which had long been settled. However, she denied having received P32,000.00 worth
of merchandise from respondent on February 20, 1996.11
The RTC Ruling
In a Decision12 dated June 29, 2011, the RTC acquitted petitioner of the charge of estafa but held her civilly liable to pay respondent
the amount of P32,000.00, with interest from the filing of the Information on March 11, 1999 until fully paid, and to pay the costs.
The RTC found that the prosecution failed to establish any intent on the part of the petitioner to defraud respondent and, thus,
could not be held criminally liable.13 However, it adjudged petitioner civilly liable "having admitted that she received the [GCs] in
the amount of P32,000.00." In this relation, it further considered the relationship of respondent and petitioner as in the nature of a
principal-agent which renders the agent civilly liable only for damages which the principal may suffer due to the non-performance of
his duty under the agency. 14
With the foregoing pronouncement, petitioner elevated the civil aspect of the case before the CA on appeal, docketed as CA-G.R. CV
No. 97571.
The CA Ruling
In a Decision 15 dated January 30, 2013, the CA upheld petitioner's civil liability.
It ruled that respondent was able to establish by preponderance of evidence her transaction with petitioner, as well as the latter's
failure to remit the proceeds of the sale of the merchandise worth P32,000.00, or to return the same to respondent in case the
items were not sold, the fact of which having been substantiated by the acknowledgment receipt dated February 20, 1996. 16 To
this, the CA rejected petitioner's attempt to discredit the said receipt which she denied executing on the ground that she was only
made to sign blank documents, finding that even if petitioner was indeed made to sign such blank documents, such was merely a
safety precaution employed by respondent in the event the former reneges on her obligation.17
However, the CA modified the award of interests by reckoning the same from the time of extrajudicial demand on July 28,
1998.18 Accordingly, it directed petitioner to pay respondent the amount of P32,000.00 with legal interest at the rate of 6% p.a.
from July 28, 1998 until finality of the decision and thereafter, at the rate of 12% p.a. on the outstanding balance until full
satisfaction.
Dissatisfied, petitioner filed a motion for reconsideration19 which was denied in a Resolution20 dated July 10, 2013; hence, this
petition.
The Issue Before the Court
The essential issue for the Court's resolution is whether or not the CA committed reversible error in finding petitioner civilly liable to
respondent.
The Court's Ruling
The petition lacks merit.
At the outset, it is noteworthy to mention that the extinction of the penal action does not carry with it the extinction of the civil
liability where the acquittal is based on reasonable doubt as only preponderance of evidence, or "greater weight of the credible
evidence," is required.21 Thus, an accused acquitted of estafa may still be held civilly liable where the facts established by the
evidence so warrant,22 as in this case.
In upholding the civil liability of petitioner, the CA did not dwell into the purported admission of petitioner anent her receipt of GCs
in the amount of P32,000.00 as found by the RTC. Instead, the CA hinged its ruling23 on the acknowledgment receipt24 dated
February 20, 1996, the documentary evidence that respondent had duly identified25 and formally offered26 in the course of these
proceedings.
For her part, petitioner denied having entered into the subject transaction with respondent, claiming that she: (a) had not
transacted with respondent as to other goods, except GCs27 and POCs;28 (b) was made to sign two (2) one-half sheets of paper and
a trust receipt in blank prior to the issuance of the GCs and POCs,29 and (c) was not able to retrieve the same after paying her
obligation to respondent.30
The Court agrees with the CA.
Petitioner's claim that she was required to sign two (2) one-half sheets of paper and a trust receipt in blank 31 during her
transactions with respondent, which she allegedly failed to retrieve after paying her obligations, 32 is a bare allegation that cannot be
given credence. It is well-settled that "[h]e who alleges a fact has the burden of proving it and a mere allegation is not evidence." 33
On the contrary, the CA correctly found that respondent was able to prove by preponderance of evidence the fact of the
transaction, as well as petitioner's failure to remit the proceeds of the sale of the merchandise worth P32,000.00, or to return the
same to respondent in case such merchandise were not sold. This was established through the presentation of the acknowledgment
receipt34 dated February 20, 1996, which, as the document's name connotes, shows that petitioner acknowledged receipt from
respondent of the listed items with their corresponding values, and assumed the obligation to return the same on March 20, 1996 if
not sold.35
In this relation, it should be pointed out that under Section 3 (d), Rule 131 of the Rules of Court, the legal presumption is that a
person takes ordinary care of his concerns. To this, case law dictates that the natural presumption is that one does not sign a
document without first informing himself of its contents and consequences.36 Further, under Section 3 (p) of the same Rule, it is
equally presumed that private transactions have been fair and regular.37 This behooves every contracting party to learn and know
the contents of a document before he signs and delivers it.38 The effect of a presumption upon the burden of proof is to create the
need of presenting evidence to overcome the prima facie case created, thereby which, if no contrary proof is offered, will
prevail.39 In this case, petitioner failed to present any evidence to controvert these presumptions. Also, respondent's possession of
the document pertaining to the obligation strongly buttresses her claim that the same has not been extinguished.40 Preponderance
of evidence only requires that evidence be greater or more convincing than the opposing evidence.41 All things considered, the
evidence in this case clearly preponderates in respondent's favor.
In fine, the CA's ruling on petitioner's civil liability is hereby sustained. In line, however, with the amendment introduced by the
Bangko Sentral ng Pilipinas Monetary Board in BSP-MB Circular No. 799,42 series of 2013, there is a need to partially modify the
same in that the interest accruing from the time of the finality of this Decision should be imposed at the lower rate of six percent
(6%) p.a., and not twelve percent (12%) p.a. as imposed by the CA.
WHEREFORE, the petition is DENIED. The Decision dated January 30, 2013 and the Resolution dated July 10, 2013 of the Court of
Appeals in CA-G.R. CV No. 97571 are hereby AFFIRMED with MODIFICATION, directing petitioner Dolores Diaz to pay
respondent Leticia S. Arcilla the amount of P32,000.00 with legal interest at the rate of six percent (6%) per annum from July 28,
1998 until full payment.
SO ORDERED.chanroblesvirtuallawlibrary
G.R. No. 209137 July 1, 2015
EDUARDO CELEDONIO, Petitioner,
vs.
PEOPLE OF THE PHILIPPINES, Respondent.
DECISION
MENDOZA, J.:
This petition for review on certiorari under Rule 45 of the Rules of Court filed by Eduardo Celedonio (Celedonio) assails the April 8, 2013 Decision 1 and
the September 17, 2013 Resolution 2 of the Court of Appeals (CA), in CA-G.R. CR No. 34472, affirming the August 18, 2011 Decision 3 of the Regional
Trial Court, Branch 73, Malabon City (RTC), in Criminal Case No. 35668-MN.
The Information,4 dated April 25, 2007, charged Celedonio with the crime of Robbery with Force Upon Things, the accusatory portion of which reads:
That on or about the 22nd day of April 2007, in the Municipality of Navotas, Metro Manila, Philippines and within the jurisdiction of this Honorable Court,
the above-named accused, with intent to gain and by means of force upon things, and without the consent of the owner, did then and there, wilfully,
unlawfully and feloniously enter the house of the herein complainant by destroying the backdoor of said house, and once inside, take, rob and carry
away the following:
(1) one gold bracelet 24K Php8,000.00
(3) necklace (1) one 24K and (2) two 18K Php42,000.00
(2) two digicam Sony player Php22,000.00
(1) one DVD portable Php5,000.00
(1) one wrist watch Tagheur Php30,000.00
(1) one sun glass Guess Php5,000.00
(1) one camera Canon Php2,500.00
(1) one Gameboy advance Php5,000.00
(1) one calculator Php1,500.00
(1) one discman Sony Php3,000.00
(2) two pcs. 100.00 US dollar bills
(22) twenty two pcs. Php500.00 bills
(2) two necklace 18K worth Php30,000.00
(2) two bracelet worth Php11,500.00
(2) two gold ring worth Php8,000.00
(1) one wedding ring worth 14K worth Php1,500.00
(1) one wrist watch swiss military worth Php10,000.00
(1) one cellphone NOKIA 8250 worth Php3,000.00
(3) three pairs of earrings worth Php15,000.00
(3) three pcs. of 100.00 US dollars worth Php15,000.00
(60) sixty pcs. of Php50.00 bills worth Php3,000.00
(100) one hundred pcs. of Php20.00 bills worth Php2,000.00
(15) fifteen pcs. of Php100.00 bills worth Php1,500.00 owned and belonging to CARMENCITA DE GUZMAN y SERRANO, to the damage
and prejudice of the herein complainant, in the aforementioned amount of Php223,000.00.
Contrary to law.5
Version of the Prosecution

The evidence for the prosecution shows that on the evening of April 21, 2007, a certain Adriano Marquez (Marquez)witnessed the robbery perpetrated
in the house of Carmencita De Guzman (De Guzman)while she was away to attend to the wake of her deceased husband. No one was left in the
house. Marquez, whose house was opposite the house of De Guzman and Celedonio, which were adjacent to each other, identified Celedonio as the
culprit. Upon learning of the incident, De Guzman reported it to the police and requested that Celedonio be investigated for possibly having committed
the crime, based on the account of Marquez.
Later, a follow-up operation was conducted by PO1 Rommel Roque (PO1 Roque)and SPO2 Adrian Sugui (SPO2 Sugui), accompanied by Marquez.
They proceeded to Raja Humabon St., Navotas, to survey the area for the possible identification and apprehension of the suspect. On their way,
Marquez pointed to a man on a motorcycle and said, "Sir, siya po si Eduardo Celedonio." The police immediately flagged down Celedonio. PO1 Roque
asked him if he was Eduardo Celedonio, but he did not reply and just bowed his head.
SPO2 Sugui informed Celedonio of a complaint for robbery against him. Celedonio still remained silent and just bowed his head. SPO2 Sugui asked
him, "Where [were] the stolen items?" Celedonio then alighted from his motorcycle and opened its compartment where PO1 Roque saw some of the
stolen items, as per report of the incident, such as the portable DVD player and a wristwatch, among others.6
PO1 Roque asked Celedonio if the same were stolen, to which the latter answered, "Iyan po." 7 Thus, Celedonio was arrested and was informed of his
constitutional rights. More itemswere seized from Celedonio at the police station.
Version of the Accused
After the prosecution rested its case, Celedonio filed his Demurrer to Evidence (with leave of court) citing as his ground the alleged illegality of his
arrest and the illegal search on his motorcycle. The RTC denied the demurrer, stating that the question of the legality of Celedonio’s arrest had been
mooted by his arraignment and his active participation in the trial of the case. It considered the seizure of the stolen items as legal not only because of
Celedonio’s apparent consent to it, but also because the subject items were in a moving vehicle.8
In his defense, Celedonio claimed that he was at home with his wife, sleeping, at the time of the incident. His wife corroborated his statement.
In its Decision, dated August 18,2011, the RTC found Celedonio guilty beyond reasonable doubt of the crime of Robbery with Force Upon Things. The
dispositive portion of the RTC decision9 reads:
WHEREFORE, finding the accused EDUARDO CELEDONIO y MONIS GUILTY beyond reasonable doubt for the offense of Robbery with Force Upon
Things as defined and penalized under Article 299 (a)2 of the Revised Penal Code, he is therefore sentenced to an indeterminate penalty of 4 years
and 2 months of prision correccional as minimum to 8 years and 1 day of prision mayor as maximum. He is also ordered to pay private complainant the
amount of Php105,000.00 which is the worth of what has not been recovered from the loss she suffered by reason of the robbery.
SO ORDERED.10
The trial court was convinced that the prosecution clearly established that: 1) a robbery had been committed; 2) it was committed recently; 3) several of
the stolen items including cash were found in Celedonio’s possession; and 4) Celedonio had no valid explanation for his possession of the stolen
goods.11
Insisting on his innocence, Celedonio appealed to the Court of Appeals (CA), arguing that the RTC erred: 1) in convicting him of the crime despite the
insufficiency of the circumstantial evidence; 2) in not finding that the search was illegal, rendering the articles recovered inadmissible; and 3) in not
finding that the prosecution witness Marquez was ill-motivated in testifying against him.12
The CA, however, affirmed the RTC in toto. It found that the totality of circumstances warranted the finding that Celedonio was solely and directly
responsible for the crime.13
In addition, the CA brushed aside Celedonio’s argument that he was illegally arrested and that the items seized should be excluded as evidence. It
stressed that Celedonio was not arrested when he voluntarily opened the compartment of his motorcycle. He was only brought to the police for
investigation after some of the stolen items were found in his motorcycle compartment.14 Further, Celedonio’s failure to raise the issue before his
arraignment constituted a waiver on his part to question the legality of his arrest.15
Celedonio moved for reconsideration, but his motion was denied.
Hence, the present petition.
ISSUES
WHETHER THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE TRIAL COURT’S RULING THAT THE PETITIONER’S
GUILT WAS PROVEN BASED ON CIRCUMSTANTIAL EVIDENCE.
II
WHETHER THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT FINDING THAT THE SEARCH CONDUCTED ON THE
PETITIONER WAS ILLEGAL, RENDERING THE ARTICLES RECOVERED INADMISSIBLE.
III
WHETHER THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT FINDING THAT THE PROSECUTION WITNESS ADRIANO
MARQUEZ WAS ILL-MOTIVATED IN TESTIFYING AGAINST THE PETITIONER.
The petition lacks merit.
Jurisprudence tells us that direct evidence of the crime is not the only matrix from which a trial court may draw its conclusion and finding of guilt. The
rules on evidence allow a trial court to rely on circumstantial evidence to support its conclusion of guilt. The lack of direct evidence does not ipso facto
bar the finding of guilt against the appellant. As long as the prosecution establishes the accused-appellant’s participation in the crime through credible
and sufficient circumstantial evidence that leads to the inescapable conclusion that he committed the imputed crime, the latter should be convicted.16
Circumstantial evidence is sufficient for conviction if: 1) there is more than one circumstance; 2) the facts from which the inferences are derived are
proven; and 3) the combination of all the circumstances is such as to produce a conviction beyond reasonable doubt.17
In this case, the prosecution sufficiently laid down the circumstances that, when taken together, constituted an unbroken chain that led to a reasonable
conclusion that Celedonio was the perpetrator. The CA opined that:
xxx As correctly pointed out by the trial court, these circumstances are: accused was a next door neighbor of private complainant; he was seen by
another neighbor going over the concrete fence separating their houses and ransacking a room in complainant’s house; during the time, no one was
inside complainant’s house as all of them were at the wake of private complainant’s recently demised husband; two (2) days after, most of the items
discovered to have been stolen that night were found in the compartment of the accused’s motorcycle which he was riding on when accosted by the
police; the items recovered from him were identified by the complainant as her stolen property; during the trial accused denied that the stolen items
were found in his possession and claimed that they were "planted" by the police investigators to frame him up of the robbery. In short, the accused
could not explain his possession of the recently stolen items found in his sole possession.
xxxx
We find the conviction of accused-appellant based on circumstantial evidence factually and legally tenable, as the facts from which the aforementioned
circumstances arose have been proved through the positive testimony of Adriano Marquez, PO1 Rommel Roque and Carmencita de Guzman.18
The defense does not refute the existence of the commission of robbery. In fact, Celedionio himself acknowledged that the prosecution’s circumstantial
evidence, although weak, ambiguous and inconclusive, established that 1) a robbery had been committed; 2) it was committed recently; 3) several of
the stolen items including cash were found in his possession; and 4) he had no valid explanation for his possession of the stolen goods.19 Celedonio,
however, still insisted that he cannot be convicted of the crime of robbery because 1) he was not caught in exclusive possession of the stolen items; 2)
the search conducted on him was illegal thereby rendering the seized articles inadmissible; and 3) the witness Marquez was ill-motivated in testifying
against him.
These arguments, however, do not hold water.
First, Celedonio was, in fact, caught in exclusive possession of some of the stolen items when the police officers flagged down his motorcycle during
their follow-up operation. He failed to give a reasonable explanation as to his possession of the said items. Section 3(j), Rule 131 of the Revised Rules
of Court provides that a person found in possession of a thing taken in the doing of a recent wrongful act is the taker and the doer of the whole act;
otherwise, that thing which a person possesses, or exercises acts of ownership over, is owned by him.
Celedonio never claimed ownership of the subject items. When the alleged stolen items were found in his motorcycle compartment which he had
control over, the disputable presumption of being the taker of the stolen items arose. He could have overcome the presumption, but he failed to give a
justifiable and logical explanation. Thus, the only plausible scenario that could be inferred therefrom was that he took the items.
Second, no illegal search was made upon Celedonio. When the police officers asked where the stolen items were, they merely made a general inquiry,
and not a search, as part of their follow-up operation. Records did not show that the police officers even had the slightest hint that the stolen items were
in Celedonio’s motorcycle compartment. Neither was there any showing that the police officers frisked Celedonio or rummaged over his motorcycle.
There was no showing either of any force or intimidation on the part of the police officers when they made the inquiry. Celedonio himself voluntarily
opened his motorcycle compartment. Worse, when he was asked if the items were the stolen ones, he actually confirmed it. 20 The police officers,
therefore, were left without any recourse but to take him into custody for further investigation. At that instance, the police officers had probable cause
that he could be the culprit of the robbery. He did not have any explanation as to how he got hold of the items. Moreover, taking into consideration that
the stolen items were in a moving vehicle, the police had to immediately act on it.
Third, contrary to Celedonio’s argument, Marquez was a credible witness. Jurisprudence also tells us that where there is no evidence that the
witnesses of the prosecution were actuated by ill motive, it is presumed that they were not so actuated and their testimony is entitled to full faith and
credit.21
In this case, if only to discredit Marquez, Celedonio claimed that they once had a fight over a water meter. As correctly observed by the CA, however,
such allegation was too insignificant that it could not destroy whatever credibility Marquez possessed as a witness. The CA, thus, posited:
xxx It is true that under the Rules of Court, a witness may be impeached by evidence that his general reputation for truth, honesty or integrity is
bad.1âwphi1 However, a witness cannot be impeached by evidence of particular wrongful acts, unless there is a showing of previous conviction by final
judgment such that not even the existence of pending information maybe shown to impeach him.
More so, in this case, wherein no information was filed against the witness, but only the mere say so of the accused on Marquez' alleged involvement
in a quarrel with him over a water meter. Furthermore, no testimony was presented to show that the reputation of Marquez for truth, honesty or integrity
is bad; no evil motive has been established against prosecution witness Marquez that might prompt him to testify falsely against accused-appellant
Celedonio.22
Alibi and denial were the only defenses of Celedonio. Unless he can strongly support his claims that the items were "planted" and that it was physically
impossible for him to be in De Guzman's house other than the mere averment that he was asleep at the time, his defenses cannot prevail over the
strong circumstantial evidence.23
Having established the sufficiency of the prosecution's evidence, the CA did not commit any reversible error in upholding the RTC. In the absence of
any indication that the R TC and the CA overlooked facts or circumstances that would result in a different ruling in this case, the Court will not disturb
their factual findings.24
WHEREFORE, the petition is DENIED.
SO ORDERED.
JOSE CATRAL MENDOZA

Associate Justice
431 Phil. 661
YNARES-SANTIAGO, J.:
Roberto Padrigone a.k.a. Roberto San Miguel, Michael San Antonio, Jocel Ibaneta and Abelardo Triumpante were charged with rape in an amended
information which reads:
That on or about the 3rd day of January, 1995, in Salvacion, Buhi, Camarines Sur, Philippines and within the jurisdiction of this Honorable Court, the
above-named accused, conspiring, confederating together and mutually helping each other and by means of force and intimidation, did then and there
willfully, unlawfully and feloniously have carnal knowledge with (sic) Rowena Contridas against her will, to her damage and prejudice in the amount
that may be proven in court.
Acts contrary to law.[1]

All the accused pleaded "not guilty." Trial on the merits thereafter ensued.
The antecedent facts are as follows:
It appears that at 3:00 in the morning of January 3, 1995, appellant Roberto Padrigone and the other accused broke into the house of Rowena
Contridas, then 16 years old, situated in San Benito, Salvacion, Buhi, Camarines Sur. Appellant Roberto Padrigone and accused Jocel Ibaneta poked a
knife at Rowena and her fourteen year-old sister, Nimfa, [2] and threatened to kill them if they reported the incident to others. They gagged Rowena with
a handkerchief and Nimfa with a handtowel. Then, appellant undressed Rowena, forced her to lie down and sexually violated her while his co-accused
watched with glee. Accused Jocel Ibanita tried to rape Nimfa but failed because she was able to elude him.
After appellant satisfied his lust on Rowena, the other accused took their turns. Every one of the accused raped Rowena. Before they left, they warned
the sisters not to report the incident or else they will kill them.
Despite the threats, Rowena and Nimfa reported the incident to the police and identified appellant and his co-accused as the perpetrators. However,
based on the police blotter, Rowena stated that it was only appellant who raped her.
Dr. Damiana Claveria, Municipal Health Officer, conducted a medical examination on Rowena and found the following:
patient very talkative, incoherent as to questions asked.
PE no signs of external injury
IE hymenal tear, recent 6", 9" don't bleed on manipulation, but complained of tenderness upon insertion of 1 finger, copious vaginal discharge. [3]
According to Dr. Claveria, there is a possibility that the fluids found inside Rowena's vagina may be semen. She added that it was possible for Rowena
to have only two hymenal tears even if four men had sexual intercourse with her.
Dr. Chona C. Belmonte, a psychiatrist of Cadlan Mental Hospital in Pili, Camarines Sur, testified that while she interviewed Rowena, the latter was
crying, incoherent and had shouting episodes. She was confined at the Cadlan Mental Hospital for further treatment. Upon further medical
consultation, Dr. Belmonte observed thus:
Rowena was in a depressed mood and at the same time overactive. She was combative, violent, and was experiencing auditory hallucination, meaning,
she heard things that only she could hear. She was also grandiously deluded, falsely believing that she could do things others could not do. By that
time, according to Dr. Belmonte, Rowena had already lost touch with reality. [4]
Dr. Belmonte diagnosed her illness as "Acute Psychotic Depressive Condition." [5] She found that her mental disorder was not hereditary because before
the incident took place, she did not exhibit any unusual behavior. She concluded that her mental illness was strongly related to a traumatic experience.
She noted that at one point in the treatment, Rowena confided to her that "she was raped." [6]
All the accused, including appellant Roberto Padrigone, interposed the defense of denial and alibi. Appellant claimed that in the evening of January 2,
1995, he and his companions, Jocel Ibanita and Michael San Antonio, visited Rowena at her house. According to him, Rowena was crying when they
arrived. When appellant asked her what was wrong, she told him that she wanted to elope with him. He replied that he was not ready as he was still
studying. Rowena snapped, "it's up to him but he might regret it." [7] While appellant and Rowena were talking, Jocel Ibanita and Michael San Antonio
were in the kitchen cooking noodles. Later, a certain Ismeraldo Quirante, in the presence of several barangay watchmen patrolling the area, passed by
the Contridas' house and advised the accused to go home because it was getting late. They heeded the advice and left the Contridas' house at around
11:30 p.m.
The trial court gave credence to the prosecution evidence and rendered a decision, the dispositive portion of which reads:
WHEREFORE, in view of the foregoing considerations, this Court finds the accused, ROBERTO PADRIGONE a.k.a. ROBERTO SAN MIGUEL, GUILTY
of the crime of Rape, under Article 335 of the Revised Penal Code (as amended by Section 11, R.A. 7659) and hereby sentences him to suffer
imprisonment of RECLUSION PERPETUA, considering the mitigating circumstance of voluntary surrender. He is likewise directed to indemnify the
offended party, Rowena Contridas, the amount of Fifty thousand Pesos (P50,000.00) as moral damages and to pay the costs of this suit. Accused
JOCEL IBANITA, MICHAEL SAN ANTONIO and ABELARDO TRIUMPANTE are ACQUITTED for insufficiency of evidence. It being shown that the
three accused are presently detained at the Municipal Jail at PNP, Buhi, Camarines Sur, their immediate release is hereby ordered.
SO ORDERED.[8]
Appellant interposed the instant appeal based on the following arguments:
THE TRIAL COURT GRAVELY ERRED IN CONVICTING ACCUSED-APPELLANT OF THE CRIME OF RAPE INSPITE OF THE INHERENT
WEAKNESSES AND INSUFFICIENCY OF PROSECUTION'S EVIDENCE.
II
THE TRIAL COURT GRAVELY ERRED IN DECIDING THE INSTANT CASE NOT IN ACCORDANCE WITH THE ESTABLISHED PRINCIPLE IN
CRIMINAL LAW THAT THE PROSECUTION MUST RELY ON THE STRENGTH OF ITS EVIDENCE AND NOT ON THE WEAKNESS OF THAT OF
THE DEFENSE.
Appellant contends that the prosecution evidence was insufficient to prove his guilt beyond reasonable doubt.
Appellant argues that according to the prosecution witness, Nimfa, he and his co-accused Michael San Antonio, Abelardo Triumpante and Jocel
Ibanita, took turns in raping Rowena while Jocel Ibanita also attempted to rape her. However, after preliminary investigation, the Municipal Trial
Court of Buhi, Camarines Sur, dismissed Nimfa's complaint for attempted rape against Jocel Ibanita because of its findings that the latter committed
only acts of lasciviousness, considering his voluntary and spontaneous desistance from continuing to perform the acts leading to carnal knowledge.
Furthermore, the investigating Judge entertained doubts about the truth of her story, which was uncorroborated. [9]
We agree with the following observation of the Solicitor General:
[T]he dismissal of the complaint for attempted rape filed by Nimfa against one of the accused, Jocel Ibanita, during the preliminary investigation stage
should not detract from the credibility of her testimony. Even if the prosecution wanted to, the merits of the dismissal of Nimfa's complaint for
attempted rape could not be properly challenged in the criminal proceedings below since the said proceedings involved only the culpability of the four
accused for the crime of rape committed against Rowena, the sister of Nimfa. [10]
Appellant further claims that Nimfa's lack of credibility was underscored when the trial court acquitted appellant's co-accused. Appellant's claim is not
well taken. Evidence shows that the trial court acquitted appellant's co-accused because of doubt engendered on the extent of their participation in the
sexual assault committed against Rowena in light of Rowena's own statement as recorded in the police blotter. [11]
Appellant alleges that Nimfa's reactions after the rape of her sister are "unnatural, unexpected and mind-boggling," [12] specifically when she resumed
her sleep after having been raped and even reported for work the following day. The contention deserves scant consideration. It is an accepted maxim
that different people react differently to a given situation or type of situation and there is no standard form of behavioral response when one is
confronted with a strange or startling experience.[13]
Further, appellant argues that Nimfa admitted before the police that she did not recognize the rapists of Rowena. In this connection, we quote with
approval the observation of the Solicitor General, to wit:
Anent the portion of Nimfa's testimony wherein she admitted to the defense counsel that she told the Chief of Police that she was not able to recognize
the persons who raped her sister Rowena, the same is capable of explanation. Accused-appellant Roberto Padrigone was present when Nimfa uttered
the statement. Hence, she was afraid to tell the truth because of the earlier threat to her and sister Rowena's lives by accused-appellant Padrigone. [14]
We find that Nimfa's credibility has not been impaired despite rigorous cross-examination. In fact, defense counsel was not able to point to any
inconsistency in Nimfa's testimony. A perusal of the transcripts of stenographic notes reveals that she was steadfast in narrating the circumstances of
the rape and in pointing to appellant as one of the perpetrators.
Appellant likewise alleges that it was error for the trial court to have dismissed his "sweetheart" defense by the mere absence of love notes, mementos or
pictures.
In People v. Corea,[15] we held that:
x x x Moreover, even if such averment is true, it does not necessarily follow that no rape can be committed against one's sweetheart. Such a relationship
provides no license to explore and invade that which every virtuous woman holds so dearly and trample upon her honor and dignity. That relationship
is held sacred by many x x x. A sweetheart cannot be forced to engage in sexual intercourse against her will. As a matter of fact, proof even of a prior
history of a common-law marital relationship will not prevail over clear and positive evidence of copulation by the use of force or intimidation.
Regardless, the most telling indication that would belie appellant's "sweetheart theory" was the fact that he had carnal knowledge of Rowena in the
presence of Nimfa and his co-accused. It is most unnatural for lovers to engage in the ultimate expression of their love for each other in the presence of
other people.
Appellant assails the procedural irregularities committed by the prosecution and by the trial court. He claims that the prosecution suppressed evidence
by not presenting Rowena, the victim, when the latter should have had her sane moments. As a consequence, the trial court deprived appellant of the
opportunity to cross-examine her when she allegedly declared before the Chief of Police of Buhi that it was only appellant who raped her which
declaration became the basis for the latter's conviction.
Appellant's contention is misplaced if not misleading. The basis of his conviction was not Rowena's declaration before the Chief of Police but rather
Nimfa's testimony before the trial court that it was him who raped Rowena, among others. [16] In fact, the trial court found, thus:
x x x The evidence adduced by the parties in this case disclosed that accused Roberto Padrigone, a.k.a. Roberto San Miguel, Jocel Ibanita, Michael San
Antonio and Abel Triumpante entered the dwelling of the Contridas sisters at 3:00 a.m. of January 3, 1995, and at knifepoint successively raped
Rowena Contridas, a 16 year old lass. The victim became insane after the incident and was not able to testify in Court. Nimfa Contridas, her fourteen
year old sister, who was also present that time narrated the incident when her elder sister's innocence was forcibly violated. Accused interposed the
defense of denial and alibi. x x x
The prosecution has established beyond reasonable doubt that accused Roberto Padrigone ravished Rowena Contridas against her will and consent,
and with the use of a bladed weapon.[17]
Besides, the non-presentation of Rowena on the witness stand cannot be considered as suppression of evidence. Under Rule 131, Section 3(e) of the
Rules of Court, the rule that "evidence willfully suppressed would be adverse if produced" does not apply if (a) the evidence is at the disposal of both
parties; (b) the suppression was not willful; (c) it is merely corroborative or cumulative; and (d) the suppression is an exercise of a privilege. [18]
Plainly, there was no suppression of evidence in this case. First, the defense had the opportunity to subpoena Rowena even if the prosecution did not
present her as a witness. Instead, the defense failed to call her to the witness stand. Second, Rowena was certified to be suffering from "Acute
Psychotic Depressive Condition" and thus "cannot stand judicial proceedings yet." [19] The non-presentation, therefore, of Rowena was not
willful. Third, in any case, while Rowena was the victim, Nimfa was also present and in fact witnessed the violation committed on her sister.
Appellant cannot claim that the trial court erred in convicting him on the basis of Rowena's statement as recorded in the police blotter. His conviction
was based on the trial court's findings of facts and assessment of the witnesses' credibility. Well-settled is the rule that the findings of facts and
assessment of credibility of witnesses is a matter best left to the trial court because of its unique position of having observed that elusive and
incommunicable evidence of the witnesses' deportment on the stand while testifying, which opportunity is denied to the appellate courts. Only the trial
judge can observe the "furtive glance, blush of conscious shame, hesitation, flippant or sneering tone, calmness, sigh, or the scant or full realization of
an oath," all of which are useful aids for an accurate determination of a witness' honesty and sincerity. The trial court's findings are accorded finality,
unless there appears in the record some fact or circumstance of weight which the lower court may have overlooked, misunderstood or misappreciated
and which, if properly considered, would alter the results of the case. [20]
Besides, in rape cases where the offended parties are young and immature girls from the ages of twelve to sixteen, we have consistently held that the
victim's version of what transpired deserves credence, considering not only their relative vulnerability but also the shame and embarrassment to which
such a grueling experience as a court trial, where they are called upon to lay bare what perhaps should be shrouded in secrecy, exposed them to. This is
not to say that an uncritical acceptance should be the rule. It is only to emphasize that skepticism should be kept under control. [21]
Nonetheless, no young and decent Filipina would publicly admit that she was ravished and her honor tainted unless the same were true, for it would be
instinctive on her part to protect her honor and obtain justice for the wicked acts committed upon her. [22] Not to be overlooked is the complainant's
willingness to face police investigators and to submit to a physical examination which are eloquent and sufficient affirmations of the truth of her charge.
[23]
As regards the matter of damages, the trial court ordered accused-appellant "to indemnify the offended party, Rowena Contridas, the amount of Fifty
Thousand Pesos (P50,000.00) as moral damages." [24] In People v. Belga,[25] it was held that civil indemnity is mandatory upon the finding of the fact of
rape; it is distinct from and should not be denominated as moral damages which are based on different jural foundations and assessed by the court in
the exercise of sound discretion. Thus, consistently with present case law which treats the imposition of civil indemnity as mandatory upon a finding of
rape, accused-appellant is ordered to pay the additional amount of fifty thousand (P50,000.00) pesos as civil indemnity ex delicto.[26]
WHEREFORE, based on the foregoing, the assailed Decision, finding accused-appellant Roberto Padrigone a.k.a. Roberto San Miguel guilty beyond
reasonable doubt of the crime of rape and sentencing him to suffer the penalty of reclusion perpetua, is AFFIRMED with the MODIFICATION that
he is ordered to pay Rowena Contridas civil indemnity in the amount of P50,000.00 in addition to moral damages in the amount of P50,000.00.
Costs de oficio.
SO ORDERED.
G.R. No. 122899 June 8, 2000
METROPOLITAN BANK & TRUST COMPANY, petitioner,

vs.
COURT OF APPEALS and G.T.P. DEVELOPMENT CORPORATION, respondents.
BUENA, J.
This petition for review on certiorari under Rule 45 of the Rules of Court assails (1) the amended decision of public respondent Court of Appeals 1 dated
03 July 1995 in CA-GR CV No. 33395 affirming the trial court's judgment ordering herein petitioner Metropolitan Bank and Trust Company (hereafter,
METROBANK) to release/cancel the real estate mortgage constituted over the subject property, and (2) the respondent court's resolution dated 04
December 1995 denying petitioner METROBANK's motion for reconsideration.
The subject property is a parcel of land in Diliman, Quezon City consisting of six hundred ninety (690) square meters originally owned by businessman
Tomas Chia under Transfer Certificate of Title No. RT-16753 (106901) of the Registry of Deeds for Quezon City. Saddled with debts and business
reverses, Mr. Chia offered the subject property for sale to private respondent G.T.P. Development Corporation (hereafter, GTP), with assumption of the
mortgage indebtedness in favor of petitioner METROBANK secured by the subject property.
Pending negotiations for the proposed sale, Atty. Bernardo Atienza, acting in behalf of respondent GTP, went to the METROBANK branch in Quiapo,
Manila sometime in the last week of August 1980 to inquire on Mr. Chia's remaining balance on the real estate mortgage. METROBANK obliged with a
statement of account of Mr. Chia amounting to about P115,000.00 as of August, 1980.
The deed of sale 2 and the memorandum of agreement 3 between Mr. Chia and respondent GTP were eventually executed and signed on 04
September 1980 in the office of Atty. Atienza. Twelve (12) days later, or on 16 September 1980, Atty. Atienza went to METROBANK Quiapo Branch
and paid one hundred sixteen thousand four hundred sixteen pesos and seventy-one centavos (P116,416.71), 4 for which METROBANK issued an
official receipt acknowledging payment.
This notwithstanding, petitioner METROBANK refused to release the real estate mortgage on the subject property despite repeated requests from Atty.
Atienza, thus prompting respondent GTP to file on October 17, 1980 an action for specific performance against petitioner METROBANK and Mr. Chia.
In answer to the complaint, Mr. Chia denied having executed any deed of sale in favor of respondent GTP involving the subject property. Petitioner for
its part justified its non-release of the real estate mortgage (1) upon the advise of Mr. Chia that he never executed any sales agreement with
respondent GTP, and (2) by the fact that there are other loans incurred by Mr. Chia which are also secured by the subject property.
After trial, judgment was rendered by the regional trial court on 11 December 1990 granting the reliefs prayed for by respondent GTP as plaintiff, viz:
WHEREFORE, after a careful and thorough study of the record, this Court holds that in view of the facts contained in the records, judgment
is hereby rendered in favor of plaintiff and against defendants, ordering —
1. Defendant Metropolitan Bank & Trust Co. to execute the release or cancellation of the real estate mortgages executed by the
deceased defendant Tomas Chia and his wife, defendant Vicenta Chia, over the property described in TCT No. 106901 of the
registry of deeds for Quezon City;
2. Defendants to surrender or deliver the owner's duplicate copy of said TCT No. 106991; and,
3. Defendants to pay, jointly and severally, the sum of P10,000.00 as and for attorney's fees, plus costs of suit.
The counterclaims set up by both defendants are dismissed.
IT IS SO ORDERED. 5
On appeal, respondent Court of Appeals rendered a Decision dated 24 October 1994 6 reversing the trial court's 11 December 1990 judgment, ruling in
the main that the one hundred sixteen thousand four hundred sixteen pesos and seventy-one centavos (P116,416.71) paid by respondent GTP to
petitioner METROBANK did not extinguish the real estate mortgage inasmuch as there are other unliquidated past due loans secured by the subject
property.
With this unfavorable turn of events, respondent GTP, on 07 November 1994, 7 filed before respondent Court of Appeals a "motion for reconsideration
with alternative prayer to require METROBANK to furnish appellee (GTP) of the alleged unpaid balance of Mr. Chia." At the re-scheduled date of oral
arguments on 08 March 1995 where METROBANK was supposed to bring before the respondent Court the current statement of the mortgage debt of
Mr. Chia secured by the deeds of mortgage sought to be released, METROBANK's counsel did not appear; only the lawyers of respondent GTP and
Mr. Chia appeared. Thus, the Court required GTP's counsel to file a memorandum in lieu of oral arguments in support of its motion for
reconsideration. 8 GTP filed its memorandum on March 17, 1995 9 to which a reply memorandum was filed by METROBANK on April 10, 1995. 10
On 03 July 1995, 11 the now assailed amended decision was rendered reconsidering the original 24 October 1994 Decision and thus affirming the 11
December 1990 judgment of the regional trial court. Respondent Court of Appeals took a second hard look at the evidence on hand and seriously
considered METROBANK's refusal to specify any unpaid debt secured by the subject property, in concluding anew that "the present case for specific
performance is well-grounded, absent indubitable showing that the aforesaid amount of P116,416.71 paid by appellee on September 16, 1980 did not
suffice to pay in full the mortgage debt assumed under the Deed of Absolute Sale, with assumption of mortgage, it inked with the late Tomas Chia.
There is therefore merit in its motion for reconsideration at bench." Petitioner METROBANK is now before us after its motion for reconsideration of the
03 July 1995 amended decision was denied by respondent Court of Appeals per Resolution of 04 December 1995. 12
We find no compelling reasons to disturb the assailed decision.
We quote with favor the following pronouncements of respondent Court of Appeals in the Amended Decision, thus:
. . . . In the case under scrutiny, we are convinced that We erred in reversing the appealed judgment despite the finding that subject
property covered by TCT 106901 — Quezon City had been sold, in a manner absolute and irrevocable, by the spouses, Tomas Chia and
Vicenta Chan, to plaintiff-appellee, and on September 16, 1980, the latter complied with its contractual obligation thereunder by paying the
total mortgage debt it assumed, amounting according to Metrobank itself, to P116,416.71, as of September 16, 1980.
All things studiedly viewed in proper perspective, we are of the opinion, and so rule, that whatever debts or loans mortgagor Chia
contracted with Metrobank after September 4, 1980, without the conformity of plaintiff-appellee, could not be adjudged as part of the
mortgage debt the latter so assumed. We are persuaded that the contrary ruling on this point in Our October 24, 1994 decision would be
unfair and unjust to plaintiff-appellee because, before buying subject property and assuming the mortgage debt thereon, the latter inquired
from Metrobank about the exact amount of the mortgage debt involved.
The stipulation in subject Deeds of Mortgage that mortgagors' debts subsequently obtained would be covered by the same security became
inapplicable, when mortgagor sold to appellee the mortgaged property with the knowledge of the mortgagee bank. Thus, since September
4, 1980, it was obvious that whatever additional loan mortgagor got from Metrobank, the same was not chargeable to and collectible from
plaintiff-appellee. It is then decisively clear that Metrobank is without any valid cause or ground not to release the Deeds of Mortgage in
question, despite full payment of the mortgage debt assumed by appellee. 13
Petitioner METROBANK is estopped from refusing the discharge of the real estate mortgage on the claim that the subject property still secures "other
unliquidated past due loans." In Maneclang vs. Baun, 14 this Court enumerated the requisites for estoppel by conduct to operate, to wit:
1. there must have been a representation or concealment of material facts;
2. the representation must have been with knowledge of the facts;
3. the party to whom it was made must have been ignorant of the truth of the matter; and
4. it must have been with the intention that the other party would act upon it.
Respondent GTP, thru Atty. Atienza, requested from METROBANK that he be furnished a copy of the full indebtedness secured by the real estate
mortgage. 15 In response thereto, petitioner METROBANK issued a statement of account as of September 15, 1980 16 which amount was immediately
settled and paid the next day amounting to P116,416.71. Petitioner METROBANK is thus barred from taking a stand inconsistent with its representation
upon which respondent GTP, as an innocent third person to the real mortgage agreement, placed exclusive reliance. Respondent GTP had the
reasonable right to rely upon such representations as true, considering that it had no participation whatsoever in the mortgage agreement and the
preparation of the statement of account, coupled with the expectation that a reputable banking institution such as petitioner METROBANK do conduct
their business concerns in the highest standards of efficiency and professionalism. For an admission or representation is rendered conclusive upon the
person making it, and cannot be denied or disproved as against a person relying thereon. A party may not go back on his own acts and representations
to the prejudice of the other party who relied upon them. In the law of evidence, whenever a party has, by his own declaration, act or omission,
intentionally and deliberately led another to believe a particular thing true, and to act upon such belief, he cannot, in any litigation arising out of such
declaration, act, or omission, be permitted to falsify it. 17
Just as decisive is petitioner METROBANK's failure to bring before respondent Court of Appeals the current statement evidencing what it claims as
"other unliquidated past due loans" at the scheduled hearing of 8 March 1995. It was a golden opportunity, so to speak, lost for petitioner
METROBANK to defend its non-release of the real estate mortgage. Thus, the following pronouncements of this Court in Manila Bay Club Corporation
vs. Court of Appeals et. al, 18 speaking thru Mr. Justice Ricardo Francisco, 19 find rightful application, viz. —
It is a well-settled rule that when the evidence tends to prove a material fact which imposes a liability on a party, and he has it in his power
to produce evidence which from its very nature must overthrow the case made against him if it is not founded on fact, and he refuses to
produce such evidence, the presumption arises that the evidence, if produced would operate to his prejudice, and support the case of his
adversary. . . .
No rule of law is better settled than that a party having it in his power to prove a fact, if it exists, which, if proved, would benefit him, his
failure to prove it must be taken as conclusive that the fact does not exist.
x x x x x x x x x
Where facts are in evidence affording legitimate inferences going to establish the ultimate fact that the evidence is designed to prove, and
the party to be affected by the proof, with an opportunity to do so, fails to deny or explain them, they may well be taken as admitted with all
the effect of the inferences afforded. . . .
The ordinary rule is that one who has knowledge peculiarly within his own control, and refuses to divulge it, cannot complain if the court
puts the most unfavorable construction upon his silence, and infers that a disclosure would have shown the fact to be as claimed by the
opposing party.
Verily, petitioner METROBANK's omission to present its evidence only created an adverse inference against its cause. Therefore, it cannot now be
heard to complain since respondent Court extended a reasonable opportunity to petitioner METROBANK that it did not avail.1avvphi1
WHEREFORE, the petition is DENIED. The amended decision of respondent Court of Appeals dated 3 July 1995 as well as its resolution of 4
December 1995 is AFFIRMED, with costs against petitioner.
SO ORDERED.
G.R. No. 198457, August 13, 2013
FILOMENA G. DELOS SANTOS, JOSEFA A. BACALTOS, NELANIE A. ANTONI, AND MAUREEN A.

BIEN, Petitioners, v. COMMISSION ON AUDIT, REPRESENTED BY ITS COMMISSIONERS, Respondent.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for certiorari1 under Rule 64 in relation to Rule 65 of the Rules of Court are Decision Nos. 2010-051 2 and
2011-045,3 dated April 8, 2010 and August 8, 2011, respectively, of respondent Commission on Audit (CoA) which affirmed Notice
of Disallowance (ND) No. 2008-09-01 (SAT)4 dated September 8, 2008 for the amount of P3,386,697.10 and thereby held
petitioners Filomena G. Delos Santos, Josefa A. Bacaltos, Nelanie A. Antoni, and Maureen A. Bien (petitioners), inter alia, solidarily
liable therefor.
The Facts
Sometime in October 2001, then Congressman Antonio V. Cuenco (Cuenco) of the Second District of Cebu City entered into a
Memorandum of Agreement5 (MOA) with the Vicente Sotto Memorial Medical Center (VSMMC or hospital), represented by Dr.
Eusebio M. Alquizalas (Dr. Alquizalas), Medical Center Chief, appropriating to the hospital the amount of P1,500,000.00 from his
Priority Development Assistance Fund (PDAF) to cover the medical assistance of indigent patients under the Tony N' Tommy (TNT)
Health Program (TNT Program).6 It was agreed, inter alia, that: (a) Cuenco shall identify and recommend the indigent patients who
may avail of the benefits of the TNT Program for an amount not exceeding P5,000.00 per patient, except those with major illnesses
for whom a separate limit may be specified; (b) an indigent patient who has been a beneficiary will be subsequently disqualified
from seeking further medical assistance; and (c) the hospital shall purchase medicines intended for the indigent patients from
outside sources if the same are not available in its pharmacy, subject to reimbursement when such expenses are supported by
official receipts and other documents.7 In line with this, Ma. Isabel Cuenco, Project Director of the TNT Program, wrote8 petitioner
Nelanie Antoni (Antoni), Pharmacist V of VSMMC, requesting the latter to purchase needed medicines not available at the hospital
pharmacy from Sacred Heart Pharmacy or Dell Pharmacy which were supposedly accredited suppliers of the Department of Health.
The said request was approved.9cralaw virtualaw library
The Audit Proceedings
Several years after the enforcement of the MOA, allegations of forgery and falsification of prescriptions and referrals for the
availment of medicines under the TNT Program surfaced. On December 14, 2004, petitioner Filomena G. Delos Santos (Delos
Santos), who succeeded10 Dr. Alquizalas, created, through Hospital Order No. 1112,11 a fact-finding committee to investigate the
matter.
Within the same month, Beatriz M. Booc (Booc), State Auditor IV, who was assigned to audit the hospital, came up with her own
review of the account for drugs and medicines charged to the PDAF of Cuenco. She furnished Delos Santos the results of her review
as contained in Audit Observation Memoranda (AOM) Nos. 2004-21,12 2004-21B,13 and 2004-21C,14 all dated December 29, 2004,
recommending the investigation of the following irregularities:
a. AOM No. 2004-21 x x x involving fictitious patients and falsified prescriptions for anti-rabies and drugs costing
P3,290,083.29;chanr0blesvirtualawlibrary
b. AOM No. 2004-21B x x x involving issuance of vitamins worth P138,964.80 mostly to the staff of VSMMC and TNT Office
covering the period January to April 2004; and
c. AOM No. 2004-21C x x x covering fictitious patients and falsified prescriptions for other drugs and medicines worth
P552,853.85 and unpaid falsified prescriptions and referral letters for drugs and medicines costing P602,063.50.15cralaw
virtualaw library
Meanwhile, the fact-finding committee created by Delos Santos submitted its Report 16 dated January 18, 2005 essentially affirming
the ï¿½unseen and unnoticeableï¿½ irregularities attendant to the availment of the TNT Program but pointing out, however, that:
(a) VSMMC was made an ï¿½unwilling tool to perpetuate a scandal involving government fundsï¿½;17 (b) the VSMMC management
was completely ï¿½blindedï¿½ as its participation involved merely ï¿½a routinary ministerial dutyï¿½ in issuing the checks upon
receipt of the referral slips, prescriptions, and delivery receipts that appeared on their faces to be regular and complete; 18 and (c)
the detection of the falsification and forgeries ï¿½could not be attained even in the exercise of the highest degree or form of
diligenceï¿½19 as the VSMMC personnel were not handwriting experts.
In the initial investigation conducted by the CoA, the results of which were reflected in AOM No. 2005-001 20 dated October 26,
2005, it was found that: (a) 133 prescriptions for vaccines, drugs and medicines for anti-rabies allegedly dispensed by Dell
Pharmacy costing P3,407,108.40, and already paid by VSMMC from the PDAF of Cuenco appeared to be falsified; 21 (b) 46
prescriptions for other drugs and medicines allegedly dispensed by Dell Pharmacy costing P705,750.50, and already paid by VSMMC
from the PDAF of Cuenco likewise appeared to be falsified;22 and (c) 25 prescriptions for drugs and medicines allegedly issued by
Dell Pharmacy costing P602,063.50 were also ascertained to be falsified and have not been paid by VSMMC. 23cralaw virtualaw
library
In her Comment/Reply24 to the aforementioned AOM No. 2005-001 addressed to Leonor D. Boado (Boado), Director of the CoA
Regional Office VII in Cebu City, Delos Santos explained that during the initial stage of the implementation of the MOA (i.e., from
2000 to 2002) the hospital screened, interviewed, and determined the qualifications of the patients-beneficiaries through the
hospitalï¿½s social worker.25 However, sometime in 2002, Cuenco put up the TNT Office in VSMMC, which was run by his own staff
who took all pro forma referral slips bearing the names of the social worker and the Medical Center Chief, as well as the
logbook.26 From then on, the hospital had no more participation in the said program and was relegated to a mere ï¿½bag
keeper.ï¿½27 Since the benefactor of the funds chose Dell Pharmacy as the sole supplier, anti-rabies medicines were purchased
from the said pharmacy and, by practice, no public bidding was anymore required.28cralaw virtualaw library
Consequently, a special audit team (SAT), led by Team Leader Atty. Federico E. Dinapo, Jr., State Auditor V, was formed pursuant
to Legal and Adjudication Office (LAO) Order Nos. 2005-019-A dated August 17, 2005 and 2005-019-B dated March 10, 2006 to
conduct a special audit investigation with respect to the findings of Booc and her team. 29 Due to time constraints, however, AOM
No. 2005-001 was no longer included in the SAT focus. 30 On October 15, 2007, the SAT reported31 the following findings and
observations:
1. The provision of National Budget Circular No. 476 dated September 20, 2001 prescribing the guidelines on the release of
funds for the PDAF authorized under Republic Act (R.A.) No. 8760, as Reenacted (GAA for CY 2001) were not
followed;32cralaw virtualaw library
2. Existing auditing law, rules and regulations governing procurement of medicines were not followed in the [program's]
implementation;33cralaw virtualaw library
3. The [program's] implementation did not follow the provisions of the MOA by and between [Congressman Cuenco] and the
Hospital;34 and
4. Acts committed in the implementation of the project were as follows:

a. There were [one hundred thirty-three (133)] falsified prescriptions for anti-rabies vaccines, drugs and
medicines [costing] P3,345,515.75 [allegedly] dispensed by Dell Pharmacy [were] paid by VSMMC from the
[PDAF of Congressman Cuenco];chanr0blesvirtualawlibrary
b. [Forty-six (46) falsified prescriptions] for other drugs and medicines costing P695,410.10 [were likewise
reportedly] dispensed by Dell Pharmacy and paid by VSMMC from the [said PDAF] x x x; and
c. [Twenty-five (25) prescriptions worth] P602,063.50 [were also claimed to have been] served by Dell Pharmacy
but still unpaid x x x.35cralaw virtualaw library
Examination by the SAT of the records and interviews with the personnel involved showed that the purported patients-beneficiaries
of the TNT Program were mostly non-existent and there was no actual procedure followed except for the mere preparation of
payment documents which were found to be falsified as evidenced by the following:
1. Thirteen (13) hospital surgeons disowned the signatures on the prescriptions supporting the claims. Surgeons do not
prescribe anti-rabies vaccines; they operate on patients.
2. Almost all of the patients named in the prescriptions were not treated or admitted at the Hospital or in its Out-patient
Department. Those whose names appeared on Hospital records were treated at different dates than those appearing on
the prescriptions:
PATIENT TREATED BILL DATE OF PRESCRIPTION

Leah Clamon
Nov. 12, 2003 11/11/03 11/03/03

Jean Caï¿½acao
Nov. 30, 2003 11/25/03 11/18/03

Felipe Sumalinog
Dec. 17, 2004 12/10/03 12/08/03

Vicente Perez
Mar. 12, 2004 11/26/03 11/17/03

Vincent Rabaya
Sept. 8, 2003 12/12/03 11/28/03

Rodulfo Caï¿½ete
July 24, 2004 01/16/04 01/12/04

3. Full dosages of anti-rabies vaccines were allegedly given to the patients although it is gross error to do so for these
medicines are highly perishable. These should be refrigerated and injected immediately and periodically. For instance:
a. Mr. Vicente Perez received the full dosage on November 26, 2003 and again on November 27, 2003. (Hospital
records showed that Mr. Perez was admitted in March 2003 for surgery.)
b. Mr. Maximo Buaya received the full dosage on January 25 and on February 29, 2004.
c. Mr. Gregorio Rabago received his full dosage on December 6, 2003.

4. The dates of 80 prescriptions for anti-rabies and 45 for other drugs and medicines are earlier than the dates of the
corresponding delivery receipts. The gaps in the dates ranged from 1 to 47 days. On the other hand, 33 prescriptions for
anti-rabies had later dates than the dates of the delivery receipts. The difference in the dates ranged from 1 to 22 days.
5. The Pharmacy Unit still prepared Purchase Request [PR] for the claims Dell [Pharmacy] submitted to that office when the
PR is no longer necessary as the medicines have already been taken by the patients.
6. Of the three South District residents personally interviewed by the Team, two denied having sought or received help from
the [TNT] Program or being hospitalized at VSMMC for dog bite.
7. The hospital social worker, Ms. Mergin Acido, declared that she was bypassed in the evaluation of the alleged patients for
the TNT Office has clerks who ï¿½evaluateï¿½ the eligibility of the patients. The prescriptions and referral slips were
directly forwarded to the Pharmacy Unit for stamping and submission to the Dell Pharmacy. She had no opportunity then
to see the patients personally.
8. Mr. Louies James S. Yrastorza has stated under oath the falsity of the claims for payment. He stated that he was ordered
to submit to the Pharmacy Unit falsified prescriptions accompanied by referral slips signed by Mr. James Cuenco for non-
existing patients. Subsequently, sometime in September 2007 Mr. Yrastorza ï¿½clarifiedï¿½ his statements effectively
recanting his first oath.
9. The Office of the Provincial Election Supervisor certified that out of the 30 names of the patients randomly selected, only
15 were found listed in the registered voters' database.
10. Prescriptions were stamped ï¿½VSMMCï¿½ signed/initialed by the Pharmacist who is off duty as shown by the attendance
record, e.g. Mesdames Arly Capuyan, Norma Chiong, Corazon Quiao, Rowena Rabillas, and Riza Sei[s]mundo. 36cralaw
virtualaw library
Subsequently, or on September 8, 2008, the SAT Team Supervisor, Boado, issued ND No. 2008-09-01,37 disallowing the amount of
P3,386,697.10 for the payment of drugs and medicines for anti-rabies with falsified prescription and documents, and holding
petitioners, together with other VSMMC officials, solidarily liable therefor.38 Petitionersï¿½ respective participations were detailed as
follows: (a) for Delos Santos, in her capacity as Medical Center Chief, for signing and approving the disbursement vouchers and
checks; (b) for petitioner Dr. Josefa A. Bacaltos, in her capacity as Chief Administrative Officer, for certifying in Box A that the
expenses were lawful, necessary and incurred in her direct supervision; (c) for Antoni, in her capacity as Chief of the Pharmacy
Unit, for approving the supporting documents when the imputed delivery of the medicines had already been consummated; (d) for
petitioner Maureen A. Bien, in her capacity as Hospital Accountant, for certifying in Box B of the disbursement voucher that the
supporting documents for the payment to Dell Pharmacy were complete and proper.39cralaw virtualaw library
Aggrieved, petitioners filed their respective appeals40 before the CoA which were denied through Decision No. 2010-05141 dated
April 8, 2010, maintaining their solidary liability, to wit:
WHEREFORE, premises considered, the appeal[s] of Dr. Filomena [G]. Delos Santos, Dr. Josefa A. Bacaltos, Ms. Nelanie A. Antoni
and Ms. Maureen A. Bien [are] hereby DENIED for lack of merit. However, the appeal of Ms. Corazon Quiao, Ms. Norma Chiong, Ms.
Rowena Rabillas and Ms. Riza Seismundo is hereby given due course. Likewise, Ms. Arly Capuyan who is similarly situated is
excluded although she did not file her appeal. ND No. 2008-09-01 (SAT) dated September 8, 2008 involving the amount of
P3,386,697.10 is hereby affirmed with the modification by excluding therein the names [of[ Ms. Corazon Quiao, Ms. Norma Chiong,
Ms. Rowena Rabillas, Ms. Riza Seismundo, and Ms. Arly Capuyan as persons liable. The other persons named liable
therein, i.e., Ma. Isabel Cuenco and Mr. James R. Cuenco, TNT Health Program Directors, and Mr. Sisinio Villacin, Jr., proprietor of
Dell Pharmacy, and herein appellants Delos Santos, Bacaltos, Antoni and Bien remain solidarily liable for the
disallowance.42 (Emphasis supplied)
The Motion for Reconsideration43 of the foregoing decision was further denied in Decision No. 2011-04544 dated August 8, 2011.
Hence, the instant petition.
The Issue Before the Court
The essential issue in this case is whether or not the CoA committed grave abuse of discretion in holding petitioners solidarily liable
for the disallowed amount of P3,386,697.10.
The Court's Ruling
At the outset, it must be emphasized that the CoA is endowed with enough latitude to determine, prevent, and disallow irregular,
unnecessary, excessive, extravagant or unconscionable expenditures of government funds. It is tasked to be vigilant and
conscientious in safeguarding the proper use of the government's, and ultimately the people's, property. The exercise of its general
audit power is among the constitutional mechanisms that gives life to the check and balance system inherent in our form of
government.45cralaw virtualaw library
Corollary thereto, it is the general policy of the Court to sustain the decisions of administrative authorities, especially one which is
constitutionally-created, such as the CoA, not only on the basis of the doctrine of separation of powers but also for their presumed
expertise in the laws they are entrusted to enforce. Findings of administrative agencies are accorded not only respect but also
finality when the decision and order are not tainted with unfairness or arbitrariness that would amount to grave abuse of discretion.
It is only when the CoA has acted without or in excess of jurisdiction, or with grave abuse of discretion amounting to lack or excess
of jurisdiction, that this Court entertains a petition questioning its rulings. There is grave abuse of discretion when there is an
evasion of a positive duty or a virtual refusal to perform a duty enjoined by law or to act in contemplation of law as when the
judgment rendered is not based on law and evidence but on caprice, whim, and despotism. 46 In this case, the Court finds no grave
abuse of discretion on the part of the CoA in issuing the assailed Decisions as will be discussed below.
The CoA correctly pointed out that VSMMC, through its officials, should have been deeply involved in the implementation of the TNT
Program as the hospital is a party to the MOA and, as such, has acted as custodian and disbursing agency of Cuencoï¿½s
PDAF.47 Further, under the MOA executed between VSMMC and Cuenco, the hospital represented itself as ï¿½willing to
cooperate/coordinate and monitor the implementation of a Medical Indigent Support Program.ï¿½48 More importantly, it undertook
to ascertain that ï¿½[a]ll payments and releases under [the] program x x x shall be made in accordance with existing government
accounting and auditing rules and regulations.ï¿½ 49 It is a standing rule that public officers who are custodians of government funds
shall be liable for their failure to ensure that such funds are safely guarded against loss or damage, and that they are expended,
utilized, disposed of or transferred in accordance with the law and existing regulations, and on the basis of prescribed documents
and necessary records.50 However, as pointed out by the SAT, provisions of the National Budget Circular No. (NBC) 476 51 dated
September 20, 2001 prescribing the guidelines on the release of funds for a congressmanï¿½s PDAF authorized under Republic Act
No. 876052 were not followed in the implementation of the TNT Program, as well as other existing auditing laws, rules and
regulations governing the procurement of medicines.
In particular, the TNT Program was not implemented by the appropriate implementing agency, i.e., the Department of Health, but
by the office set up by Cuenco. Further, the medicines purchased from Dell Pharmacy did not go through the required public bidding
in violation of the applicable procurement laws and rules.53 Similarly, specific provisions of the MOA itself setting standards for the
implementation of the same program were not observed. For instance, only seven of the 133 prescriptions served and paid were
within the maximum limit of P5,000.00 that an indigent patient can avail of from Cuencoï¿½s PDAF. Also, several indigent patients
availed of the benefits more than once, again in violation of the provisions of the MOA. 54 Clearly, by allowing the TNT Office and the
staff of Cuenco to take over the entire process of availing of the benefits of the TNT Program without proper monitoring and
observance of internal control safeguards, the hospital and its accountable officers reneged on their undertaking under the MOA to
ï¿½cooperate/coordinate and monitorï¿½ the implementation of the said health program. They likewise violated paragraph 555 of
NBC 476 which requires a ï¿½regular monitoring activityï¿½ of all programs and projects funded by the PDAF, as well as Sections
12356 and 12457 of Presidential Decree No. 1445,58 otherwise known as the ï¿½Government Auditing Code of the Philippinesï¿½
(Auditing Code), which mandates the installation, implementation, and monitoring of a ï¿½sound system of internal controlï¿½ to
safeguard assets and check the accuracy and reliability of the accounting data.
By way of defense, petitioners nonetheless argue that VSMMC was merely a passive entity in the disbursement of funds under the
TNT Program and, thus, invoke good faith in the performance of their respective duties, capitalizing on the failure of the assailed
Decisions of the CoA to show that their lapses in the implementation of the TNT Program were attended by malice or bad faith.
The Court is not persuaded.
Jurisprudence holds that, absent any showing of bad faith and malice, there is a presumption of regularity in the performance of
official duties. However, this presumption must fail in the presence of an explicit rule that was violated. 59 For instance, in Reyna v.
CoA60 (Reyna), the Court affirmed the liability of the public officers therein, notwithstanding their proffered claims of good faith,
since their actions violated an explicit rule in the Landbank of the Philippinesï¿½ Manual on Lending Operations. 61 In similar regard,
the Court, in Casal v. CoA62 (Casal), sustained the liability of certain officers of the National Museum who again, notwithstanding
their good faith participated in approving and authorizing the incentive award granted to its officials and employees in violation of
Administrative Order Nos. 268 and 29 which prohibit the grant of productivity incentive benefits or other allowances of similar
nature unless authorized by the Office of the President. 63 In Casal, it was held that, even if the grant of the incentive award was not
for a dishonest purpose, the patent disregard of the issuances of the President and the directives of the CoA amounts to gross
negligence, making the [ï¿½approving officersï¿½] liable for the refund [of the disallowed incentive award]. 64cralaw virtualaw
library
Just as the foregoing public officers in Reyna and Casal were not able to dispute their respective violations of the applicable rules in
those cases, the Court finds that the petitioners herein have equally failed to make a case justifying their non-observance of
existing auditing rules and regulations, and of their duties under the MOA. Evidently, petitionersï¿½ neglect to properly monitor the
disbursement of Cuenco's PDAF facilitated the validation and eventual payment of 133 falsified prescriptions and fictitious claims for
anti-rabies vaccines supplied by both the VSMMC and Dell Pharmacy, despite the patent irregularities borne out by the referral slips
and prescriptions related thereto.65 Had there been an internal control system installed by petitioners, the irregularities would have
been exposed, and the hospital would have been prevented from processing falsified claims and unlawfully disbursing funds from
the said PDAF. Verily, petitioners cannot escape liability for failing to monitor the procedures implemented by the TNT Office on the
ground that Cuenco always reminded them that it was his money. 66 Neither may deviations, from the usual procedure at the
hospital, such as the admitted bypassing of the VSMMC social worker in the qualification of the indigent-beneficiaries, 67 be justified
as ï¿½a welcome relief to the already overworked and undermanned section of the hospital.ï¿½ 68cralaw virtualaw library
In this relation, it bears stating that Delos Santosï¿½ argument that the practices of the TNT Office were already pre-existing when
she assumed her post and that she found no reason to change the same 69 remains highly untenable. Records clearly reveal that
she, in fact, admitted that when she was installed as the new Medical Center Chief of VSMMC sometime ï¿½in the late 2003,ï¿½
Antoni disclosed to her the irregularities occurring in the hospital specifically on pre-signed and forged prescriptions. 70 Hence,
having known this significant information, she and Antoni should have probed into the matter further, and, likewise, have taken
more stringent measures to correct the situation. Instead, Delos Santos contented herself with giving oral instructions to resident
doctors, training officers, and Chiefs of Clinics not to leave pre-signed prescriptions pads, which Antoni allegedly followed during the
orientations for new doctors.71 But, just the same, the falsification and forgeries continued, and it was only a year after, or in
December 2004, that Delos Santos ordered a formal investigation of the attendant irregularities. By then, too much damage had
already been done.
All told, petitionersï¿½ acts and/or omissions as detailed in the assailed CoA issuances 72 and as aforedescribed reasonably figure
into the finding that they failed to faithfully discharge their respective duties and to exercise the required diligence which resulted to
the irregular disbursements from Cuencoï¿½s PDAF. In this light, their liability pursuant to Sections 104 73 and 10574 of the Auditing
Code, as well as Section 16 of the 2009 Rules and Regulations on Settlement of Accounts, 75 as prescribed in CoA Circular No. 2009-
006, must perforce be upheld. Truly, the degree of their neglect in handling Cuencoï¿½s PDAF and the resulting detriment to the
public cannot pass unsanctioned, else the standard of public accountability be loosely protected and even rendered illusory.
WHEREFORE, the petition is hereby DISMISSED.
SO ORDERED.
[ G.R. No. 229209, February 12, 2020 ]
PEOPLE OF THE PHILIPPINES, PLAINTIFF-APPELLEE, VS. ZZZ, ACCUSED-APPELLANT.
DECISION
LEONEN, J.:
The lower court's determination of witness credibility will seldom be disturbed on appeal, unless significant matters have been overlooked. Reversal of
these findings becomes even more inappropriate when affirmed by the Court of Appeals.1
In determining a victim's credibility in rape cases, however, courts should be wary of adopting outdated notions of a victim's behavior based on gender
stereotypes. Regardless of such preconceptions, conviction may be warranted based "solely on the testimony of the victim, provided of course, that the
testimony is credible, natural, convincing, and consistent with human nature and the normal course of things."2
For this Court's resolution is an appeal filed by ZZZ. He questions the Decision3 of the Court of Appeals, which affirmed the Regional Trial Court's
finding4 that he was guilty beyond reasonable doubt of raping his granddaughter AAA. The Information charging him with the crime read:
That during the month of December 2010, at Sitio Anahaw. Barangay Otod, Municipality of San Fernando, Province of Romblon, Philippines, and within
the jurisdiction of this Honorable Court, the said accused, through force, threat and intimidation and by taking advantage of the minority and lack of
education of [AAA], did then and there willfully, unlawfully and feloniously had (sic) carnal knowledge of [AAA], a minor, 15 years of age, without her
consent and against her will and that the commission of this crime of rape demeans, debases and degrades the intrinsic worth and dignity of said [AAA]
as a human being.
That the accused is the grandfather of the victim [AAA].
CONTRARY TO LAW.5
ZZZ pleaded not guilty during his arraignment,6 initiating trial. The prosecution offered the testimonies of the victim AAA, Dr. Lolinie Celestial B.
Montojo (Dr. Montojo), Rosa Ravalo (Ravalo), and Barangay Captain Manuel Lotec (Barangay Captain Lotec).
AAA testified that she lived together with ZZZ, who was her grandfather, while her mother and other siblings lived separately. As she could neither read
nor write, she had to be assisted by an officer from the Department of Social Welfare and Development in executing her sworn statement with the
interviewing police officer.7
The incident, according to AAA, happened sometime in December 2010, before Christmas. She had been weeding grass near their house prior; it was
when she went home, she recalled, that her grandfather raped her. ZZZ placed himself on top of her and kissed her lips and genitals. Then, when he
had already undressed her, he turned her sideways and inserted his penis into her vagina. Finally, when the ordeal was over, AAA left the house, went
to the forest, and there slept.8
When AAA tried to come home the following day, ZZZ allegedly attacked her with a bolo.9 She was allegedly able to parry ZZZ's attacks, allowing her
to run and seek help from Lotec, the barangay captain.10
Although she could only recall the December 2010 incident, AAA testified that such incidents where ZZZ raped her would often happen. She was not
cross-examined by the defense.11
Barangay Captain Lotec testified that on January 9, 2011, he received a report from the barangay record keeper that a child was seeking help because
she "was being chased and raped by a certain ZZZ."12 He asked the record keeper to bring him the child, who turned out to be AAA. When the girl told
him that ZZZ had raped her, Barangay Captain Lotec brought her to the police station where a police officer and a local social worker attended to her.
Upon cross-examination, Barangay Captain Lotec described AAA during their conversation as "pale and trembling."13
Rosa Ravalo (Ravalo) testified that she was the social worker who acted as AAA's guardian when the case was filed at the police station. She assisted
AAA in executing her affidavit by translating the Tagalog statement, which AAA did not understand, to Visayan. She also interviewed AAA about the
rape and accompanied her to her medical exam. On crossexamination, Ravalo admitted that when she reached the station, AAA was already being
interviewed by a police officer. On re-direct examination, she identified her signature on AAA's affidavit.14
Dr. Montojo, AAA's examining physician, testified that she interviewed and examined the girl regarding the incident in December 2010. Dr. Montojo was
not cross-examined, as the parties stipulated on the existence and due execution of AAA's medical certificate.15
For the defense, only ZZZ was presented as witness. He denied the accusation that he raped his granddaughter, claiming that his advanced age has
long made him incapable of having an erection.16
After trial, the Regional Trial Court rendered a March 8, 2013 Decision17 finding ZZZ guilty beyond reasonable doubt of raping AAA. It disposed as
follows:
WHEREFORE, judgment is rendered finding accused [ZZZ] GUILTY beyond reasonable doubt of the crime of Rape, defined and penalized under
Article 266-A, par. 1 (a) or the Revised Penal Code and hereby sentence (sic) to suffer the penalty of reclusion perpetua pursuant to Art. 266-B of the
Revised Penal Code and to pay the complainant [AAA] the sums of P75,000.00 as indemnity and P50,000.00 as moral damages.
SO ORDERED.18
The trial court found AAA's testimony credible and sufficiently corroborated by the medico-legal certificate and the other witnesses' testimonies. It
likewise appreciated Barangay Captain Lotec's testimony of having seen AAA pale and trembling as corroborative proof that AAA was telling the truth
about her rape. It also noted that AAA's sworn statement was uncontroverted by the defense. To the trial court, her positive testimony prevailed over
ZZZ's defense of denial.19
However, the trial court did not appreciate AAA's alleged minority as the prosecution failed to present proof of her age at the time of her rape.20
ZZZ appealed to the Court of Appeals.21 He questioned AAA's credibility, particularly because her account of having parried his alleged hacking at her
with a bolo, without sustaining any injury, was supposedly unbelievable.22
ZZZ also discredited the other prosecution witnesses. He asserted that Barangay Captain Lotec's testimony was hearsay because it was based only on
what was told by their record keeper, who was not even presented as witness.23 As for Ravalo, ZZZ claimed that her participation was limited only to
translating AAA's affidavit to a language that AAA could understand. Moreover, ZZZ insisted that the medical certificate was "equivocal and
inconclusive"24 as it only indicated old , healed lacerations of AAA's hymen, without indication of whether it was caused by penile penetration, let alone
that it was done by ZZZ.25
Finally, ZZZ objected to the trial court's treatment of his denial and alibi as inherently weak in the face of AAA's positive identification. Citing
jurisprudence, he countered that "[a] lying witness can make as positive an identification as a truthful witness can."26
On the other hand, the Office of the Solicitor General argued in its Brief that the prosecution was able to establish all the elements of rape. It detailed
how AAA's testimony identified ZZZ as the person who had carnal knowledge of her while holding moral ascendancy over her as her grandfather and
father figure.27
The Office of the Solicitor General further argued that the testimonies of the prosecution's witnesses were credible. According to it, the victim's
statement "says in effect all that is necessary to show that rape has been committed,"28 which, if credible, warrants conviction. It pointed out that AAA
escaped from ZZZ's attack unscathed because she successfully parried his bladed weapon, and that during the interview, she appeared pale and
trembling-only normal behavior for one who escaped such an attack. It also posited that Barangay Captain Lotec's testimony corroborated AAA's
statement, as he was able to personally interview her.29
Further, the Office of the Solicitor General argued that the medical certificate did not need to conclude that AAA's injuries were caused by sexual abuse
to corroborate her testimony of rape. It maintains that a finding of old and healed lacerations has been deemed in jurisprudence as "compelling
physical proof of defloration."30
As to the impotency claim, the Office of the Solicitor General asserted that such defense was in vain. It argued that impotency should be proven with
certainty to overcome the presumption of potency-one that ZZZ failed to do, with only bare allegations as his proof.31
Finally, the Office of the Solicitor General reiterated the rule that denial and alibi cannot stand against the positive and credible witness testimony
identifying the accused as the perpetrator. It asserted that the prosecution witnesses' testimonies clearly established ZZZ's criminal liability.32
In any event, the Office of the Solicitor General maintained that, absent matters that were overlooked, the trial court's appreciation of the witnesses'
comportment was entitled to the highest respect, it having had the opportunity to observe the witnesses' demeanor during trial.33
In its November 3, 2015 Decision,34 the Court of Appeals affirmed the trial court's findings and declared ZZZ guilty beyond reasonable doubt of rape.
However, it modified the damages imposed:
WHEREFORE, in the light of the foregoing premises, the instant APPEAL is hereby DENIED and the Decision dated March 8, 2013 of the Regional
Trial Court of Romblon in Criminal Case No. 2919 on the guilt of accused-appellant [ZZZ] guilty beyond reasonable doubt of the crime of rape is
hereby AFFIRMED with MODIFICATION insofar as the award of P75,000.00 as civil indemnity which is reduced to P50,000.00. In addition to the
award of P50,000.00 as moral damages, the appellant is ordered to pay exemplary damages in the amount of P30,000.00, with legal rate of interest of
six (6) percent per annum on all monetary awards from the date of finality of this Judgment.
SO ORDERED.35
The Court of Appeals found AAA's testimony credible and sufficiently corroborated by the other prosecution witnesses' testimonies. According to it,
AAA "positively identified [ZZZ] as her abuser [and] did not waver on the material points of her testimony."36 Even if ZZZ's contentions on the absence
of corroboration were to be believed, the Court of Appeals held that "corroboration is not indispensable for condemnation[.]"37
The Court of Appeals also found no merit in ZZZ's argument that sexual intercourse was impossible as his advanced age allegedly rendered him
impotent. Not only did it find no proof of his supposed impotence, but it also held that "age is not a criterion taken alone in determining sexual interest
and capability of middle-aged and older people."38 On the contrary, the Court of Appeals cited the medical report finding lacerations in AAA's hymen,
which it took together with AAA's positive identification of ZZZ as assailant as proof of the rape.39
On November 13, 2015, ZZZ filed a Notice of Appeal, which the Court of Appeals gave due course to, later elevating the case records to this
Court.40 Upon noting receipt of the case records, this Court ordered the parties to submit supplemental briefs.41 Both parties manifested that their
Briefs before the Court of Appeals sufficiently discussed their arguments.42
The case presents the sole issue of whether or not the prosecution was able to prove beyond reasonable doubt the guilt of accused-appellant ZZZ for
the crime of rape.
The appeal is dismissed.
The Court of Appeals correctly affirmed the Regional Trial Court's Decision holding accused-appellant guilty beyond reasonable doubt of rape. Article
266-A of the Revised Penal Code prescribes rape, as follows:
Article 266-A. Rape: When and How Committed. - Rape is committed -
1) By a man who shall have carnal knowledge of a woman under any of the following circumstances:
a) Through force, threat, or intimidation;
b) When the offended party is deprived of reason or otherwise unconscious;
c) By means of fraudulent machination or grave abuse of authority; and

d) When the offended party is under twelve (12) years of age or is demented, even though none of the circumstances
mentioned above be present.
Here, as the lower courts found, accused-appellant had carnal knowledge of AAA without her consent and by using his moral ascendancy over her as
her grandfather and father figure.
While accused-appellant attempts to cast doubt on the credibility of the prosecution's witnesses, the settled rule is that the trial court's determination of
witness credibility will not be disturbed on appeal unless significant matters have been overlooked. Such determination is treated with respect, as the
trial court has the opportunity to observe the witnesses' demeanor during trial. Its findings assume even greater weight when they are affirmed by the
Court of Appeals.43
Here, the Regional Trial Court found AAA's testimony credible and sufficiently corroborated.44 Her straightforward and positive testimony that her
grandfather raped her, Barangay Captain Lotec's testimony stating that she was "pale and trembling," the medical certificate indicating lacerations to
her hymen, and accused-appellant's own admission of the paternal relationship between him and the victim were collectively deemed sufficient for
conviction. For its part, the defense did not even cross-examine AAA to test her credibility.45
These findings were then affirmed by the Court of Appeals, which found AAA to be unwavering in "the material points of her testimony."46 Therefore,
the lower courts' findings on AAA's credibility should be upheld, more so in view of accused-appellant's failure to raise any cogent reason for reversal.
Accused-appellant also assails AAA's credibility on her testimony that he attempted to kill her. He claims that it was dubious how AAA sustained no
physical injuries if he really did attack her with a bladed weapon. These matters, however, are irrelevant to the crime charged and do not deserve
consideration. People v. Nelmida47 teaches that "[a]n inconsistency, which has nothing to do with the elements of a crime, is not a ground to reverse a
conviction."48 In any event, the Court of Appeals correctly upheld the Office of the Solicitor General's argument that it was not impossible to escape
such an attack unscathed if AAA had successfully parried the bladed weapon.49
Nonetheless, at this juncture, this Court takes the opportunity to reify contemporary standards in rape cases. In assessing AAA's credibility, the Court
of Appeals held that "it is against human nature for a young girl to fabricate a story that would expose herself as well as her family to a lifetime of
shame"50-effectively reiterating an outdated standard for assessing witness credibility. Rather, this Court's discussion in People v. Amarela51 is more
timely and appropriate for this case:
More often than not, where the alleged victim survives to tell her story of sexual depredation, rape cases are solely decided based on the credibility of
the testimony of the private complainant. In doing so, we have hinged on the impression that no young Filipina of decent repute would publicly admit
that she has been sexually abused, unless that is the truth, for it is her natural instinct to protect her honor. However, this misconception, particularly in
this day and age, not only puts the accused at unfair disadvantage, but created a travesty of justice.
....
This opinion borders on the fallacy of non sequitur. And while the factual setting back then would have been appropriate to say it is natural for a woman
to be reluctant in disclosing a sexual assault; today, we simply cannot be stuck to the Maria Clara stereotype of a demure and reserved Filipino woman.
We, should stay away from such mindset and accept the realities of a woman's dynamic role in society today; she who has over the years transformed
info a strong and confidently intelligent and beautiful person, willing to fight for her rights.
In this way, we can evaluate the testimony of a private complainant of rape without gender bias or cultural misconception. It is important to weed out
these unnecessary notions because an accused may be convicted solely on the testimony of the victim, provided of course, that the testimony is
credible, natural, convincing, and consistent with human nature and the normal course of things. Thus, in order for us to affirm a conviction for rape, we
must believe beyond reasonable doubt the version of events narrated by the victim.52 (Emphasis supplied, citations omitted)
Thus, in Amarela, the accused was acquitted because the victim's account was improbable and marred by inconsistencies, regardless of the existing
preconception that a Filipino woman's honor would prevent her from lying about her ordeal.
Likewise, in People v. Perez,53 the victim had openly expressed infatuation for her assailant prior to being abused, contrary to the fictional Maria
Clara stereotype. However, the victim's digression from this stereotype neither diminished the heinousness of what was done to her. Nor did it detract
from her credibility, as her testimony was independently believable and sufficiently corroborated by other evidence adduced by the prosecution. This
Court stated:
This Court in Amarela, however, did not go as far as denying the existence of patriarchal dominance in many social relationships. Courts must continue
to be sensitive to the power relations that come clothed in gender roles. In many instances, it does take courage for girls or women to come forward
and testify against the boys or men in their lives who, perhaps due to cultural roles, dominate them. Courts must continue to acknowledge that the
dastardly illicit and lustful acts of men are often veiled in either the power of coercive threat or the inconvenience inherent in patriarchy as a culture.
Even if it were true that AAA was infatuated with the accused, it did not justify the indignity done to her. At the tender age of 12, adolescents will
normally be misled by their hormones and mistake regard or adoration for love. The aggressive expression of infatuation from a 12-year-old girl is
never an invitation for sexual indignities. Certainly, it does not deserve the accused's mashing of her breasts or the insertion of his finger into her
vagina.
Consistent with our pronouncement in Amarela. AAA was no Maria Clara. Not being the fictitious and generalized demure girl, it does not make her
testimony less credible especially when supported by the other pieces of evidence presented in this case.54 (Emphasis supplied, citations omitted)
Here, AAA's account of having been attacked by accused-appellant was sufficiently corroborated by Barangay Captain Lotec's testimony that he saw
AAA "pale and trembling." Such description is based on his personal knowledge, having actually observed and spoken to AAA regarding her ordeal.
This, taken with the prosecution's other corroborating evidence and AAA's straightforward identification of accused-appellant as the perpetrator, makes
AAA's testimony sufficiently credible-independent of her perceived propensity for truthfulness based on gender stereotypes.
Finally, accused-appellant attempts to cast doubt on his conviction by arguing that his advanced age made erection-and thus, sex-
impossible.1âшphi1 This argument is unmeritorious. Th e lower courts correctly held that impotence must be proven with certainty in order to overcome
the presumption of potency.55 As this Court has held:
Clearly, the presumption had always been in favor of potency. Stated differently, impotency-the physical inability to have sexual intercourse-is
considered an abnormal condition and should not be presumed ...
....
In rape cases, impotency as a defense must be proven with certainty to overcome the presumption in favor of potency. Under the present
circumstances, the evidence proffered by the defense failed to discharge such burden, inasmuch as the very testimony of Dr. Wilma Flores-Peralta
repudiates the claim that accused-appellant could not have performed the sexual act.56
The Court of Appeals did not find any reason to overturn the trial court's findings, and neither do we. This Court finds that AAA positively identified
accused-appellant as the assailant. The elements of simple rape that he had carnal knowledge of AAA without her consent and by using his moral
ascendancy over her given their paternal relationship-were duly established by AAA's testimony, admissions by accused-appellant, and the
prosecution's other corroborating evidence. Again, unless important matters have been overlooked, the trial court's determination of witness credibility
will seldom be disturbed on appeal-especially when they are affirmed by the Court of Appeals.57
However, the Court of Appeals' imposition of monetary liability on accused-appellant must be modified. People v. Jugueta58 provides:
When the circumstances surrounding the crime call for the imposition of reclusion perpetua only, there being no ordinary aggravating circumstance, the
Court rules that the proper amounts should be P75,000.00 as civil indemnity, P75,000.00 as moral damages and P75,000.00 exemplary damages,
regardless of the number of qualifying aggravating circumstances present.59
Since accused-appellant was meted the penalty of reclusion perpetua for raping AAA, accused-appellant must be held liable to the modified amounts
of P75,000.00 each as civil indemnity, moral damages, and exemplary damages.
WHEREFORE, this Court AFFIRMS with MODIFICATIONS the Court of Appeals' November 3, 2015 Decision in CA-G.R. CR-HC No. 06088. Accused-
appellant ZZZ is found GUILTY beyond reasonable doubt of rape under Article 266-A of the Revised Penal Code and is sentenced to suffer the penalty
of reclusion perpetua. He is ordered to pay the private complainant, AAA, as civil indemnity, moral damages, and exemplary damages worth
P75,000.00 each.
All damages awarded shall be subject to interest at the rate of six percent (6%) per annum from the finality of this Decision until full payment.60
SO ORDERED.
G.R. No. 165546 February 27, 2006
SOCIAL SECURITY SYSTEM, Petitioner,

vs.
ROSANNA H. AGUAS, JANET H. AGUAS, and minor JEYLNN H. AGUAS, represented by her Legal Guardian, ROSANNA H.
AGUAS, Respondents.
DECISION
CALLEJO, SR., J.:
Before us is a petition for review on certiorari of the Decision 1 of the Court of Appeals (CA) in CA-G.R. SP No. 66531 and its Resolution denying the
motion for reconsideration thereof.
The antecedents are as follows:
Pablo Aguas, a member of the Social Security System (SSS) and a pensioner, died on December 8, 1996. Pablo’s surviving spouse, Rosanna H.
Aguas, filed a claim with the SSS for death benefits on December 13, 1996. Rosanna indicated in her claim that Pablo was likewise survived by his
minor child, Jeylnn, who was born on October 29, 1991.2 Her claim for monthly pension was settled on February 13, 1997.3
Sometime in April 1997, the SSS received a sworn letter 4 dated April 2, 1997 from Leticia Aguas-Macapinlac, Pablo’s sister, contesting Rosanna’s
claim for death benefits. She alleged that Rosanna abandoned the family abode approximately more than six years before, and lived with another man
on whom she has been dependent for support. She further averred that Pablo had no legal children with Rosanna, but that the latter had several
children with a certain Romeo dela Peña. In support of her allegation, Leticia enclosed a notarized copy of the original birth certificate 5 of one Jefren H.
dela Peña, showing that the latter was born on November 15, 1996 to Rosanna Y. Hernandez and Romeo C. dela Peña, and that the two were married
on November 1, 1990.
As a result, the SSS suspended the payment of Rosanna and Jeylnn’s monthly pension in September 1997. It also conducted an investigation to verify
Leticia’s allegations. In a Memorandum6 dated November 18, 1997, the Social Security Officer who conducted the investigation reported that, based on
an interview with Mariquita D. Dizon, Pablo’s first cousin and neighbor, and Jessie Gonzales (also a neighbor). She learned that the deceased had no
legal children with Rosanna; Jenelyn7 and Jefren were Rosanna’s children with one Romeo C. dela Peña; and Rosanna left the deceased six years
before his death and lived with Romeo while she was still pregnant with Jenelyn, who was born on October 29, 1991. Mariquita also confirmed that
Pablo was not capable of having a child as he was under treatment.
On the basis of the report and an alleged confirmation by a certain Dr. Manuel Macapinlac that Pablo was infertile, the SSS denied Rosanna’s request
to resume the payment of their pensions. She was advised to refund to the SSS within 30 days the amount of ₱10,350.00 representing the total death
benefits released to her and Jenelyn from December 1996 to August 1997 at ₱1,150.00 per month.8
Rosanna and Jeylnn, through counsel, requested for a reconsideration of the said decision.9 However, in its Letter dated February 6, 1998, the SSS
denied the claim.10
This prompted Rosanna and Jeylnn to file a claim/petition for the Restoration/Payment of Pensions with the Social Security Commission (SSC) on
February 20, 1998.11 Janet H. Aguas, who also claimed to be the child of the deceased and Rosanna, now joined them as claimant. The case was
docketed as SSC Case No. 3-14769-98.
The claimants appended to their petition, among others, photocopies of the following: (1) Pablo and Rosanna’s marriage certificate; (2) Janet’s
certificate of live birth; (3) Jeylnn’s certificate of live birth; and (4) Pablo’s certificate of death.
In its Answer, the SSS averred that, based on the sworn testimonies and documentary evidence showing the disqualification of the petitioners as
primary beneficiaries, the claims were barren of factual and legal basis; as such, it was justified in denying their claims.12
In their Position Paper, the claimants averred that Jeylnn was a legitimate child of Pablo as evidenced by her birth certificate bearing Pablo’s signature
as Jeylnn’s father. They asserted that Rosanna never left Pablo and that they lived together as husband and wife under one roof. In support thereof,
they attached a Joint Affidavit13 executed by their neighbors, Vivencia Turla and Carmelita Yangu, where they declared that Rosanna and Pablo lived
together as husband and wife until the latter’s death. In Janet’s birth certificate, which was registered in the Civil Registry of San Fernando, it appears
that her father was Pablo and her mother was Rosanna. As to the alleged infertility of Pablo, the claimants averred that Dr. Macapinlac denied giving
the opinion precisely because he was not an expert on such matters, and that he treated the deceased only for tuberculosis. The claimant likewise
claimed that the information the SSS gathered from the doctor was privileged communication.14
In compliance with the SSC’s order, the SSS secured Confirmation Reports 15 signed by clerks from the corresponding civil registers confirming (1) the
fact of marriage between Pablo and Rosanna on December 4, 1977; (2) the fact of Jefren dela Peña’s birth on November 15, 1996; (3) the fact of
Jeylnn’s birth on October 29, 1991; and (4) the fact of Pablo’s death on December 8, 1996.
The SSC decided to set the case for hearing. It also directed the SSS to verify the authenticity of Pablo’s signature as appearing on Jeylnn’s birth
certificate from his claim records, particularly his SSS Form E-1 and retirement benefit application.16 The SSS complied with said directive and
manifested to the SSC that, based on the laboratory analysis conducted, Pablo’s signature in the birth certificate was made by the same person who
signed the member’s record and other similar documents submitted by Pablo.17
The SSC then summoned Vivencia Turla, Carmelita Yangu and Leticia Aguas-Macapinlac for clarificatory questions with regard to their respective
sworn affidavits.18 Vivencia testified that she had known Pablo and Rosanna for more than 30 years already; the couple were married and lived in
Macabacle, Dolores, San Fernando, Pampanga; she was a former neighbor of the spouses, but four years after their marriage, she (Vivencia) and her
family moved to Sto. Niño Triangulo, San Fernando, Pampanga; she would often visit the two, especially during Christmas or fiestas; the spouses’ real
child was Jeylnn; Janet was only an adopted child; the spouse later transferred residence, not far from their old house, and Janet, together with her
husband and son, remained in the old house.19
On the other hand, Carmelita testified that she had been a neighbor of Pablo and Rosanna for 15 years and that, up to the present, Rosanna and her
children, Janet, Jeylnn and Jefren, were still her neighbors; Janet and Jeylnn were the children of Pablo and Rosanna but she did not know whose
child Jefren is.20
According to Leticia, Janet was not the real child of Pablo and Rosanna; she was just taken in by the spouses because for a long time they could not
have children;21 however, there were no legal papers on Janet’s adoption. 22 Later on, Rosanna got pregnant with Jeylnn; after the latter’s baptism,
there was a commotion at the house because Romeo dela Peña was claiming that he was the father of the child and he got mad because the child was
named after Pablo; the latter also got mad and even attempted to shoot Rosanna; he drove them away from the house; since then, Pablo and Rosanna
separated;23 she knew about this because at that time their mother was sick, and she would often visit her at their ancestral home, where Pablo and
Rosanna were also staying; Rosanna was no longer living in their ancestral home but Janet resided therein; she did not know where Rosanna was
staying now but she knew that the latter and Romeo dela Peña were still living together.24
Subsequently, Mariquita Dizon and Jessie Gonzales were also summoned for clarificatory questions. 25 During the hearing, Mariquita brought with her
photocopies of two baptismal certificates: that of Jeylnn Aguas,26 child of Pablo Aguas and Rosanna Hernandez born on October 29, 1991, and that of
Jenelyn H. dela Peña,27 child of Romeo dela Peña and Rosanna Hernandez, born on January 29, 1992.
On March 14, 2001, the SSC rendered a decision denying the claims for lack of merit and ordering Rosanna to immediately refund to the SSS the
amount of ₱10,350.00 erroneously paid to her and Jeylnn as primary beneficiaries of the deceased. The SSC likewise directed the SSS to pay the
death benefit to qualified secondary beneficiaries of the deceased, and in their absence, to his legal heirs.28
The SSC ruled that Rosanna was no longer qualified as primary beneficiary, it appearing that she had contracted marriage with Romeo dela Peña
during the subsistence of her marriage to Pablo. The SSC based its conclusion on the birth certificate of Jefren dela Peña stating that his mother,
Rosanna, and father, Romeo dela Peña, were married on November 1, 1990. The SSC declared that Rosanna had a child with Romeo dela Peña while
she was still married to Pablo (as evidenced by the baptismal certificate of Jenelyn H. dela Peña showing that she was the child of Rosanna
Hernandez and Romeo dela Peña and that she was born on January 29, 1992). The SSC concluded that Rosanna was no longer entitled to support
from Pablo prior to his death because of her act of adultery. As for Jeylnn, the SSC ruled that, even if her birth certificate was signed by Pablo as her
father, there was more compelling evidence that Jeylnn was not his legitimate child. The SSC deduced from the records that Jeylnn and Jenelyn was
one and the same person and concluded, based on the latter’s baptismal certificate, that she was the daughter of Rosanna and Romeo dela Peña. It
also gave credence to the testimonies of Leticia and Mariquita that Jeylnn was the child of Rosanna and Romeo dela Peña. As for Janet, the SSC
relied on Leticia’s declaration that she was only adopted by Pablo and Rosanna.29
The claimants filed a motion for reconsideration of the said decision but their motion was denied by the SSC for lack of merit and for having been filed
out of time.30 The claimants then elevated the case to the CA via a petition for review under Rule 43 of the Rules of Court.
On September 9, 2003, the CA rendered a decision in favor of petitioners. The fallo of the decision reads:
WHEREFORE, the resolution and order appealed from are hereby REVERSED and SET ASIDE, and a new one is entered DECLARING petitioners as
ENTITLED to the SSS benefits accruing from the death of Pablo Aguas. The case is hereby REMANDED to public respondent for purposes of
computing the benefits that may have accrued in favor of petitioners after the same was cut and suspended in September 1997.
SO ORDERED.31
In so ruling, the CA relied on the birth certificates of Janet and Jeylnn showing that they were the children of the deceased. According to the appellate
court, for judicial purposes, these records were binding upon the parties, including the SSS. These entries made in public documents may only be
challenged through adversarial proceedings in courts of law, and may not be altered by mere testimonies of witnesses to the contrary. As for Rosanna,
the CA found no evidence to show that she ceased to receive support from Pablo before he died. Rosanna’s alleged affair with Romeo dela Peña was
not properly proven. In any case, even if Rosanna married Romeo dela Peña during her marriage to Pablo, the same would have been a void
marriage; it would not have ipso facto made her not dependent for support upon Pablo and negate the presumption that, as the surviving spouse, she
is entitled to support from her husband.32
The SSS filed a motion for reconsideration of the decision, which the CA denied for lack of merit.33 Hence, this petition.
Petitioner seeks a reversal of the decision of the appellate court, contending that it
GRAVELY ERRED IN HOLDING THAT ROSANNA AGUAS IS ACTUALLY DEPENDENT FOR SUPPORT UPON THE MEMBER DURING
HIS LIFETIME TO QUALIFY AS PRIMARY BENEFICIARY WITHIN THE INTENDMENT OF SECTION 8(e), IN RELATION TO SECTION
(k) OF THE SSS LAW, AS AMENDED.
II
ERRED IN HOLDING THAT JANET AGUAS AND JEYLNN AGUAS ARE ENTITLED TO THE PENSION BENEFIT ACCRUING FROM
THE DEATH OF PABLO AGUAS.34
Petitioner invokes Section 8 of Republic Act No. 1161, as amended by Presidential Decree No. 735, which defines a dependent spouse as "the
legitimate spouse dependent for support upon the employee." According to petitioner, Rosanna forfeited her right to be supported by Pablo when she
engaged in an intimate and illicit relationship with Romeo dela Peña and married the latter during her marriage to Pablo. Such act constitutes
abandonment, which divested her of the right to receive support from her husband. It asserts that her act of adultery is evident from the birth certificate
of Jefren H. dela Peña showing that he was born on November 15, 1996 to Rosanna and Romeo dela Peña. Petitioner submits that Rosanna cannot
be considered as a dependent spouse of Pablo; consequently, she is not a primary beneficiary.35
As for Janet and Jeylnn, petitioner maintains that they are not entitled to the pension because, based on the evidence on record, particularly the
testimonies of the witnesses, they are not the legitimate children of Pablo. It argues that, in the exercise of its quasi-judicial authority under Section 5(a)
of the Social Security Act, the SSC can pass upon the legitimacy of respondents’ relationship with the member to determine whether they are entitled
to the benefits, even without correcting their birth certificates.36
Respondents, for their part, assert that petitioner failed to prove that Rosanna committed acts of adultery or that she married another man after the
death of her husband. They contend that Janet and Jeylnn’s legitimacy may be impugned only on the grounds stated in Article 166 of the Family Code,
none of which were proven in this case.37
The issue to be resolved in this case is whether Rosanna, Jeylnn and Janet are entitled to the SSS death benefits accruing from the death of Pablo.
The petition is partly meritorious.
The general rule is that only questions of law may be raised by the parties and passed upon by the Court in petitions for review under Rule 45 of the
Rules of Court.38 In an appeal via certiorari, the Court may not review the factual findings of the CA. 39 It is not the Court’s function under Rule 45 to
review, examine, and evaluate or weigh the probative value of the evidence presented. 40 However, the Court may review findings of facts in some
instances, such as, when the judgment is based on a misapprehension of facts, when the findings of the CA are contrary to those of the trial court or
quasi-judicial agency, or when the findings of facts of the CA are premised on the absence of evidence and are contradicted by the evidence on
record.41 The Court finds these instances present in this case.
At the time of Pablo’s death, the prevailing law was Republic Act No. 1161, as amended by Presidential Decree No. 735. Section 13 of the law
enumerates those who are entitled to death benefits:
Sec.13. Death benefits. – Effective July 1, 1975, upon the covered employee’s death, (a) his primary beneficiaries shall be entitled to the basic monthly
pension, and his dependents to the dependent’s pension: Provided, That he has paid at least thirty-six monthly contributions prior to the semester of
death: Provided, further, That if the foregoing condition is not satisfied, or if he has no primary beneficiaries, his secondary beneficiaries shall be
entitled to a lump sum benefit equivalent to thirty times the basic monthly pension: Provided, however, That the death benefit shall not be less than the
total contributions paid by him and his employer on his behalf nor less than five hundred pesos: Provided, finally, That the covered employee who dies
in the month of coverage shall be entitled to the minimum benefit.
Section 8(k) and (e), in turn, defines dependents and primary beneficiaries of an SSS member as follows:
SECTION 8. Terms defined. – For the purposes of this Act the following terms shall, unless the context indicates otherwise, have the following
meanings:
xxxx
(e) Dependent. – The legitimate, legitimated, or legally adopted child who is unmarried, not gainfully employed, and not over twenty-one years of age
provided that he is congenitally incapacitated and incapable of self-support physically or mentally; the legitimate spouse dependent for support upon
the employee; and the legitimate parents wholly dependent upon the covered employee for regular support.
xxxx
(k) Beneficiaries. – The dependent spouse until he remarries and dependent children, who shall be the primary beneficiaries. In their absence, the
dependent parents and, subject to the restrictions imposed on dependent children, the legitimate descendants and illegitimate children who shall be the
secondary beneficiaries. In the absence of any of the foregoing, any other person designated by the covered employee as secondary beneficiary.
Whoever claims entitlement to such benefits should establish his or her right thereto by substantial evidence. Substantial evidence, the quantum of
evidence required to establish a fact in cases before administrative or quasi-judicial bodies, is that level of relevant evidence which a reasonable mind
might accept as adequate to justify a conclusion.42
The Court has reviewed the records of the case and finds that only Jeylnn has sufficiently established her right to a monthly pension.
Jeylnn’s claim is justified by the photocopy of her birth certificate which bears the signature of Pablo. Petitioner was able to authenticate the certification
from the Civil Registry showing that she was born on October 29, 1991. The records also show that Rosanna and Pablo were married on December 4,
1977 and the marriage subsisted until the latter’s death on December 8, 1996. It is therefore evident that Jeylnn was born during Rosanna and Pablo’s
marriage.
It bears stressing that under Article 164 of the Family Code, children conceived or born during the marriage of the parents are legitimate. This Court, in
De Jesus v. Estate of Decedent Juan Gamboa Dizon,43 extensively discussed this presumption –
There is perhaps no presumption of the law more firmly established and founded on sounder morality and more convincing reason than the
presumption that children born in wedlock are legitimate. This presumption indeed becomes conclusive in the absence of proof that there is physical
impossibility of access between the spouses during the first 120 days of the 300 days which immediately precedes the birth of the child due to (a) the
physical incapacity of the husband to have sexual intercourse with his wife; (b) the fact that the husband and wife are living separately in such way that
sexual intercourse is not possible; or (c) serious illness of the husband, which absolutely prevents sexual intercourse. Quite remarkably, upon the
expiration of the periods set forth in Article 170, 44 and in proper cases Article 171,45 of the Family Code (which took effect on 03 August 1988), the
action to impugn the legitimacy of the child would no longer be legally feasible and the status conferred by the presumption becomes fixed and
unassailable.46
Indeed, impugning the legitimacy of a child is a strictly personal right of the husband or, in exceptional cases, his heirs. 47 In this case, there is no
showing that Pablo challenged the legitimacy of Jeylnn during his lifetime. Hence, Jeylnn’s status as a legitimate child of Pablo can no longer be
contested.
The presumption that Jeylnn is a legitimate child is buttressed by her birth certificate bearing Pablo’s signature, which was verified from his specimen
signature on file with petitioner. A birth certificate signed by the father is a competent evidence of paternity.48
The presumption of legitimacy under Article 164, however, can not extend to Janet because her date of birth was not substantially proven. Such
presumption may be availed only upon convincing proof of the factual basis therefor, i.e., that the child’s parents were legally married and that his/her
conception or birth occurred during the subsistence of that marriage. 49 It should be noted that respondents likewise submitted a photocopy of Janet’s
alleged birth certificate. However, the Court cannot give said birth certificate the same probative weight as Jeylnn’s because it was not verified in any
way by the civil register. It stands as a mere photocopy, without probative weight. Unlike Jeylnn, there was no confirmation by the civil register of the
fact of Janet’s birth on the date stated in the certificate.
In any case, a record of birth is merely prima facie evidence of the facts contained therein.50 Here, the witnesses were unanimous in saying that Janet
was not the real child but merely adopted by Rosanna and Pablo. Leticia also testified that Janet’s adoption did not undergo any legal proceedings;
hence, there were no papers to prove it. Under Section 8(e) of Republic Act No. 1161, as amended, only "legally adopted" children are considered
dependent children. Absent any proof that the family has legally adopted Janet, the Court cannot consider her a dependent child of Pablo, hence, not a
primary beneficiary.
On the claims of Rosanna, it bears stressing that for her to qualify as a primary beneficiary, she must prove that she was "the legitimate spouse
dependent for support from the employee." The claimant-spouse must therefore establish two qualifying factors: (1) that she is the legitimate spouse,
and (2) that she is dependent upon the member for support. In this case, Rosanna presented proof to show that she is the legitimate spouse of Pablo,
that is, a copy of their marriage certificate which was verified with the civil register by petitioner. But whether or not Rosanna has sufficiently established
that she was still dependent on Pablo at the time of his death remains to be resolved. Indeed, a husband and wife are obliged to support each
other,51 but whether one is actually dependent for support upon the other is something that has to be shown; it cannot be presumed from the fact of
marriage alone.
In a parallel case52 involving a claim for benefits under the GSIS law, the Court defined a dependent as "one who derives his or her main support from
another. Meaning, relying on, or subject to, someone else for support; not able to exist or sustain oneself, or to perform anything without the will, power,
or aid of someone else." It should be noted that the GSIS law likewise defines a dependent spouse as "the legitimate spouse dependent for
support upon the member or pensioner." In that case, the Court found it obvious that a wife who abandoned the family for more than 17 years until her
husband died, and lived with other men, was not dependent on her husband for support, financial or otherwise, during that entire period. Hence, the
Court denied her claim for death benefits.
The obvious conclusion then is that a wife who is already separated de facto from her husband cannot be said to be "dependent for support" upon the
husband, absent any showing to the contrary. Conversely, if it is proved that the husband and wife were still living together at the time of his death, it
would be safe to presume that she was dependent on the husband for support, unless it is shown that she is capable of providing for herself.
Rosanna had the burden to prove that all the statutory requirements have been complied with, particularly her dependency on her husband for support
at the time of his death. Aside from her own testimony, the only evidence adduced by Rosanna to prove that she and Pablo lived together as husband
and wife until his death were the affidavits of Vivencia Turla and Carmelita Yangu where they made such declaration.
Still, the affidavits of Vivencia and Carmelita and their testimonies before the SSC will not prevail over the categorical and straightforward testimonies
of the other witnesses who testified that Rosanna and Pablo had already separated for almost six years before the latter died. Except for the bare
assertion of Carmelita that the couple never separated, there was no further statement regarding the witnesses’ assertion in their affidavits that the
couple lived together until Pablo’s death. On the contrary, Leticia narrated that the two separated after Jeylnn’s baptism as a result of an argument
regarding Romeo dela Peña. According to Leticia, there was a commotion at their ancestral house because Romeo dela Peña was grumbling why
Jeylnn was named after Pablo when he was the father, and as a result, Pablo drove them away. The SSC’s observation and conclusion on the two
baptismal certificates of Jeylnn and Jenelyn convinces this Court to further believe Leticia’s testimony on why Pablo and Rosanna separated. As noted
by the SSC:
It appears from the records that Jeylnn Aguas and Jenelyn H. dela Peña are one and the same person. Jeylnn Aguas, born on October 29, 1991 was
baptized at the Metropolitan Cathedral of San Fernando, Pampanga, on November 24, 1991 as the child of Pablo Aguas and Rosanna Hernandez.
Jenelyn H dela Peña, on the other hand, was born on January 29, 1992 to spouses Rosanna Hernandez and Romeo dela Peña and baptized on
February 9, 1992. It will be noted that Jenelyn dela Peña was born approximately three months after the birth of Jeylnn Aguas. It is physically
impossible for Rosanna to have given birth successively to two children in so short a time. x x x The testimony of Leticia Aguas-Macapinlac that
Rosanna was driven away by Pablo after the baptism of Jeylnn because of the commotion that was created by Romeo dela Peña who wanted Jeylnn
to be baptized using his name explains why Jeylnn was again baptized in the Parish of Sto. Niño in San Fernando using the name Jenelyn dela Peña.
They changed her date of birth also to make it appear in the record of the parish that she is another child of Rosanna.53
On the other hand, Mariquita categorically affirmed that Rosanna was no longer living at Pablo’s house even before he died, and that she is still living
with Romeo dela Peña up to the present. Mariquita testified as follows:
Hearing Officer:
Nagsama ba si Rosanna at Romeo?
Mrs. Dizon:
Ngayon at kahit na noon.
Hearing Officer:
Kailan namatay si Pablo?
Mrs. Dizon:
1996.
Hearing Officer:
Noong bago mamatay si Pablo?
Mrs. Dizon:
Nagsasama na sila Romeo at Rosanna noon.
Hearing Officer:
So, buhay pa si Pablo ……
Mrs. Dizon:
…. nagsasama na sila ni Romeo.
Hearing Officer:
Kailan nagkahiwalay si Romeo at Rosanna?
Mrs. Dizon:
Hindi na sila nagkahiwalay.
Hearing Officer:
Hindi, ibig ko sabihin si Pablo at Rosana?
Mrs. Dizon:
Hindi ko alam kasi hindi ako madalas pumunta sa kanila eh, dahil namatay na yung nanay ni Kuya Pabling, yung tiyahin ko, kapatid ng nanay ko. Noon
madalas ako noong buhay pa yung nanay ni Kuya Pabling dahil kami ang nag aalaga sa kanya.
Hearing Officer:
Bago namatay si Pablo, nagsasama ba sina Romeo at Rosanna?
Mrs. Dizon:
Oo.
Hearing Officer:
Sa ngayon, may alam ka pa ba kung nagsasama pa sila Romeo at Rosanna?
Mrs. Dizon:
Oo, nagsasama sila, may bahay sila.
Hearing Officer:
Saan naman?
Mrs. Dizon:
Doon sa malapit sa amin sa may riles ng tren.54
In conclusion, the Court finds that, among respondents, only Jeylnn is entitled to the SSS death benefits accruing from the death of Pablo, as it was
established that she is his legitimate child. On the other hand, the records show that Janet was merely "adopted" by the spouses, but there are no legal
papers to prove it; hence, she cannot qualify as a primary beneficiary. Finally, while Rosanna was the legitimate wife of Pablo, she is likewise not
qualified as a primary beneficiary since she failed to present any proof to show that at the time of his death, she was still dependent on him for support
even if they were already living separately.
IN LIGHT OF ALL THE FOREGOING, the petition is PARTIALLY GRANTED. The Decision and Resolution of the Court of Appeals are AFFIRMED
WITH MODIFICATION. Only Jeylnn H. Aguas is declared entitled to the SSS death benefits accruing from the death of Pablo Aguas.
SO ORDERED.
G.R. Nos. 115908-09 March 29, 1995
PEOPLE OF THE PHILIPPINES, plaintiff-appellee,

vs.
DANNY GODOY, accused-appellant.
JUDGE EUSTAQUIO Z. GACOTT, JR. complainant,

vs.
MAURICIO REYNOSO, JR. and EVA P. PONCE DE LEON, respondents.
RESOLUTION
REGALADO, J.:
For separate resolution, as an incident arising from these criminal cases under automatic review by the court, is a complaint 1 filed by judge Eustaquio
Z. Gacott, Jr. of the Regional Trial Court of Palawan and Puerto Princesa City, Branch 47, to cite for indirect contempt Mauricio Reynoso, Jr., a
columnist, and Eva P. Ponce de Leon, publisher and chairman of the editorial board, respectively, of the Palawan Times. His Honor's plaint is based on
an article written by respondent Reynoso, Jr. in his column, "On the Beat," and published in the July 20, 1994 issue of said newspaper which is of
general circulation in Puerto Princesa City.
The pertinent portions of the article complained of are hereunder reproduced, with the alleged contemptuous statements italicized for ready
identification as the particulars equivalent to the innuendo in a libel charge:
Isang maalab na issues (sic) pa ay ang DEATH THREATS laban kono kay Judge Eustaquio Gacott, Jr. ng mga pamilya ng
kanyang sinentensiyahan ng Double Death Penalty. Sinabi ni Wilmar Godoy sa DWRM programa na wala silang pagbabantang
ginawa umano, at hindi nila ito kailan man isinaisip. Umaasa na lamang sila sa magiging resulta ng review ng Korte Suprema.
Ayon naman kay Gacott sa kanyang interview sa DYPR ay totoong pinagbabantaan siya ng mga Godoy. Kaya ayon marami
siyang Security na armado, in full battle gear. Kung totoo ito, bakit hindi niya kasuhan ang mga ito? Ito rin ang katanungan ni
Mr. Tony Omaga Diaz, ang station manager ng DYPR. O bale ba gumawa siya ng sariling MULTO Pagkatapos ay takot na
takot siya sa multong kanyang ginawa.
Usap-usapan pa rin ang kaso ni Godoy. Ito raw ay isang open book maging sa kanyang mga co-teachers sa Pulot na nagli-live
in si Godoy at ang babaing si Mia Taha. Matagal na ang kanilang ugnayan. Meron ding "balita" ewan kung totoo, na noong si
Godoy daw ay nasa Provincial Jail pa ay dinadalaw siya ni Taha At kumakain pa sila sa labas kasama ang isang Provincial
Guard. Ito rin ang dahilan kung bakit ipinagpilitan ni Judge Gacott na madala kaagad sa Muntinlupa sa National Bilibid Prisons
si Godoy kahit na ang kaso ay naka-apela pa.
xxx xxx xxx
Pero mayroon payo si Atty. Telesforo Paredes, Jr. sa mga mamamayan ng Palawan, mag-ingat kayo sa paglalakad at baka
kung hindi kayo madapa ay madulas daw kayo. Dahil ayon daw kay Judge Gacott, base sa kanyang interview sa Magandang
Gabi Bayan, "Tagilid na raw and mundo. Maraming nagpapatunay daw dito, maski sa kapitolyo." Joke lang. Pero isang warning
din sa may mga nobya, na mag-ingat sa pag-break sa inyong girlfriend, dahil baka mademanda kayo at masentensyahan ng
double death penalty, lalo na kung kay Judge Gacott, dahil alam na ninyo, tagilid and laban diyan.
The complaint avers that the article tends to impede, obstruct, belittle, downgrade and degrade the administration of justice; that the article contains
averments which are disrespectful, discourteous, insulting, offensive and derogatory; that it does not only cast aspersions on the integrity and honesty
of complainant as a judge and on his ability to administer justice objectively and impartially, but is an imputation that he is biased and he prejudges the
cases filed before him; and that the article is sub judice because it is still pending automatic review.
Respondent Mauricio Reynoso, Jr. contends in his Comment2 that his article does not intend to impede nor obstruct the administration of justice
because the same was published after complainant had promulgated his decision in the case; that such publication will not affect or influence the
review by the Supreme Court of the criminal case, considering that the Palawan Times is circulated only in the City of Puerto Princess and some parts
of Palawan; that the comments made therein were made in good faith and in the exercise of the freedom of expression and of the press; that while the
article may contain unfavorable comments about complainant, it cannot be considered as having the tendency to degrade or impede the administration
of justice; and that the complaint, which is for contempt of a judge of a regional trial court, was erroneously filed with the Supreme Court contrary to
Section 4, Rule 71 of the rules of Court.
Respondent Eva P. Ponce de Leon, in her Comment 3 and Supplemental Comment,4 asserts that the article is merely in reaction to the television
interview given by complainant in the show, "Magandang Gabi Bayan," last June 18, 1994 wherein the latter defended his decision in Criminal Cases
Nos. 11640-41, entitled "People vs. Godoy;" that the article is no longer sub judice as the same was published only after complainant had rendered his
decision and had already lost jurisdiction over the case; that the article cannot be considered contemptuous and defamatory in the absence of a clear
and present danger that it will tend directly or indirectly to impede, obstruct, or ridicule the administration of justice; that it constitutes a valid exercise of
the constitutionally guaranteed freedom of the press; that a reading of the subject article in its entirety will show that the same does not constitute
contempt but, at most, is merely a fair criticism which did not intend to malign nor place him in disrepute in the performance of his functions; and that
respondent Ponce de Leon cannot be held liable for contempt because she did not have either actual knowledge of, or Personal connection with, the
authorship or publication of the allegedly contemptuous article, since she had just returned from the United States when the same was published.
On the issue of whether the specified statements complained of are contumacious in nature, we are inclined, based on an overall perusal and objective
analysis of the subject article, to hold in the negative. We have read and reread the article in its entirety and we are fully convinced that what is involved
here is a situation wherein the alleged disparaging statements have been taken out of context. If the statements claimed to be contumelious had been
read with contextual care, there would have been no reason for this contempt proceeding.
In our aforestated evaluation, we were sufficiently persuaded to favorably consider the following explanation of respondent Ponce de Leon in her
Supplemental Comment:
On the other hand, a reading of the subject article in its entirety will show that the same does not constitute contempt, but at
most, merely constitutes fair criticism.
The first portion of the article reads:

"Isang maalab na issues (sic) pa ay ang DEATH THREATS laban kono kay Judge Eustaquio Gacott, Jr.
ng mga pamilya ng kanyang sinentensiyahan ng Double Death Penalty. Sinabi ni Wilmar Godoy sa
DWRM programa na wala silang pagbabantang ginawa umano, at hindi nila ito kailan man isinaisip.
Ayon naman kay Gacott sa kanyang interview sa DYPR ay totoong pinagbabantaan siya ng mga Godoy.
Kaya ayon marami siyang Security na armado, in full battle gear. Kung totoo ito, bakit hindi niya
kasuhan ang mga ito? Ito rin ang katanungan ni Mr. Tony Omaga Diaz, ang station manager ng DYPR.
O bale ba gumawa siya ng sariling MULTO Pagkatapos ay takot na takot siya sa multong kanyang
ginawa."
The foregoing does not even deal with the merits of the case, but with the public accusations being made by complainant that
he is being given death threats by the family of the accused, Danny Godoy. The article only makes a justifiable query as to why
Complainant does not file the appropriate charges if his accusations are true.
"Usap-usapan pa rin ang kaso ni Godoy. Ito raw ay isang open book maging sa kanyang mga co-
teachers sa Pulot na nagli-live in si Godoy at ang babaing si Mia Taha. Matagal na ang kanilang
ugnayan. Meron ding ‘balita’ ewan kung totoo, na noong si Godoy daw ay nasa Provincial Jail pa ay
dinadalaw siya ni Taha At kumakain pa sila sa labas kasama ang isang Provincial Guard. Ito rin ang
dahilan kung bakit ipinagpilitan ni Judge Gacott na madala kaagad sa Muntinlupa sa National Bilibid
Prisons si Godoy kahit na ang kaso ay naka-apela pa." (Emphasis supplied)
The foregoing is merely a report of rumors regarding the accused Danny Godoy. They are not presented as facts by respondent
Mauricio Reynoso, Jr. In fact, he even goes to the extent of acknowledging that he himself does not know if the rumors are true
or not.
The subject article then offers the following analysis:
"Malaking epekto ang desisyon ng Korte Suprema sa dalawang tao, kay Danny Godoy at Judge Gacott.
Kung babaliktarin ng Supreme Court and decision ni Gacott, lalaya si Godoy, si Gacott naman ang
masisira, ang kanyang aspirations na maitaas sa Court of Appeals at eventually makasama sa mga
miyembro ng korte suprema ng bansa. Kung papaboran naman Gacott ay sigurado na ang kamatayan
ni Godoy, at double pa pero si Gacott maitataas pa ang puwesto. Tayo naman, hintay lamang tayo ng
ano mang magiging developments ng kaso."
The foregoing is nothing more than a fair analysis. For indeed, if the Honorable Court affirms the Decision of Complainant, the
accused Danny Godoy would be meted the death sentence. On the other hand, if the decision is reversed, this may adversely
affect the aspirations of Complainant to be promoted to the Court of Appeals, and eventually to the Honorable Court.
Finally, the subject article reads:
"Pero mayroon payo si Atty. Telesforo Paredes, Jr. sa mga mamamayan ng Palawan, mag-ingat kayo
sa paglalakad at baka kung hindi kayo madapa ay madulas daw kayo. Dahil ayon daw kay Judge
Gacott, base sa kanyang interview sa Magandang Gabi Bayan, 'Tagilid na raw and mundo. Maraming
nagpapatunay daw dito, maski sa kapitolyo.' Joke lang. Pero isang warning din sa may mga nobya, na
mag-ingat sa pag-break sa inyong girlfriend, dahil baka mademanda kayo at masentensyahan ng double
death penalty, lalo na kung kay Judge Gacott, dahil alam na ninyo, tagilid and laban diyan."
Again, the subject article merely reports what Atty. Telesforo Paredes, Jr. allegedly said. But more importantly, the foregoing is
merely a reaction not so much to Complainant's Decision, but to the public statements made by Complainant in the national
television show "Magandang Gabi Bayan."
Snide remarks or sarcastic innuendoes do not necessarily assume that level of contumely which is actionable under Rule 71 of the Rules of Court.
Neither do we believe that the publication in question was intended to influence this Court for it could not conceivably be capable of doing so. The
article has not transcended the legal limits for editorial comment and criticism. Besides, it has not been shown that there exists a substantive evil which
is extremely serious and that the degree of its imminence is so exceptionally high as to warrant punishment for contempt and sufficient to disregard the
constitutional guaranties of free speech and press.
It has been insightfully explained and suggested that a judge will generally and wisely pass unnoticed any mere hasty and unguarded expression of
passion, or at least pass it with simply a reproof. It is so that in every case where a judge decides for one party, he decides against another; and
oftentimes both parties are beforehand equally confident and sanguine. The disappointment, therefore, is great, and it is not in human nature that there
should be other than a bitter feeling, which often reaches to the judge as the cause of the supposed wrong. A judge, therefore, ought to be patient, and
tolerate everything which appears as but the momentary outbreak of disappointment. A second thought will generally make a party ashamed of such,
outbreak, and the dignity of the court will suffer none by passing it in silence.5
Prescinding from the foregoing adjudgment, the Court observes that there are two primary issues presented in this incident which deserve a more
extended disquisition, firstly, because of their importance and frequent involvement in contempt proceedings filed in the courts, and, secondly, by
reason of the fact that there are numerous and variant pronouncements on the subject of contempt which need to be clarified. The principal issues are
(1) whether or not there can be contempt of court in case of post-litigation statements or publications; and (2) which court has jurisdiction over a
contempt committed against the trial court while the case is pending on appeal. Other cognate and related issues must also be discussed so as to
provide judicial guidance on the present state of our statutory and case laws thereon.
Before we go into a more intensive analysis of said issues, however, it may be beneficial for purposes thereof to preliminarily revisit and expound on
the nature and implications of a special civil action for contempt or of any initiatory pleading therefor filed as an incident in the main case. That exercise
will further explain and justify our disposition of the contempt charge herein.
Prefatorial Considerations
The exercise of the power to punish for contempt has a dual aspect, primarily, the proper punishment of the guilty party for his disrespect to the court,
and, secondarily, his compulsory performance of some act or duty required of him by the court and which he refuses to perform. Due perhaps to this
two fold aspect of the exercise of the power to punish them, contempts are classified as civil or criminal.6 However, the line of demarcation between
acts constituting criminal contempt, as distinguished from civil contempt, is quite indistinct. The confusion in attempts to classify civil and criminal
contempts is due to the fact that there are contempts in which both elements appear; or there are contempts which are neither wholly civil nor
altogether criminal, but partake of the characteristics of both; or it is also possible that the same act may constitute both a civil and criminal contempt.
A. As to the Nature of the Offense
A criminal contempt is conduct that is directed against the dignity and authority of the court or a judge acting judicially; it is an act obstructing the
administration of justice which tends to bring the court into disrepute or disrespect.7 On the other hand, civil contempt consists in failing to do something
ordered to be done by a court in a civil action for the benefit of the opposing party therein and is, therefore, an offense against the party in whose behalf
the violated order is made.8
A criminal contempt, being directed against the dignity and authority of the court, is an offense against organized society and, in addition, is also held to
be an offense against public justice which raises an issue between the public and the accused, and the proceedings to punish it are punitive. On the
other hand, the proceedings to punish a civil contempt are remedial and for the purpose of the preservation of the right of private persons. It has been
held that civil contempt is neither a felony nor a misdemeanor, but a power of the court.9
It has further been stated that intent is a necessary element in criminal contempt, and that no one can be punished for a criminal contempt unless the
evidence makes it clear that he intended to commit it. On the contrary, there is authority indicating that since the purpose of civil contempt proceedings
is remedial, the defendant's intent in committing the contempt is immaterial. Hence, good faith or the absence of intent to violate the court's order is not
a defense in civil contempt. 10
B. As to the Purpose for which the Power is Exercised
A major factor in determining whether a contempt is civil or criminal is the purpose for which the power is exercised. Where the primary purpose is to
preserve the court’s authority and to punish for disobedience of its orders, the contempt is criminal. Where the primary purpose is to provide a remedy
for an injured suitor and to coerce compliance with an order, the contempt is civil. A criminal contempt involves no element of personal injury. It is
directed against the power and dignity of the court; private parties have little, if any, interest in the proceedings for punishment. Conversely, if the
contempt consists in the refusal of a person to do an act that the court has ordered him to do for the benefit or advantage of a party to an action
pending before the court, and the contemnor is committed until he complies with the order, the commitment is in the nature of an execution to enforce
the judgment of the court; the party in whose favor that judgment was rendered is the real party in interest in the proceedings. Civil contempt
proceedings look only to the future. And it is said that in civil contempt proceedings, the contemnor must be in a position to purge himself. 11
C. As to the Character of the Contempt Proceeding
It has been said that the real character of the proceedings is to be determined by the relief sought, or the dominant purpose, and the proceedings are
to be regarded as criminal when the purpose is primarily punishment, and civil when the purpose is primarily compensatory or remedial. 12
Criminal contempt proceedings are generally held to be in the nature of criminal or quasi-criminal actions. They are punitive in nature, and the
Government, the courts, and the people are interested in their prosecution. Their purpose is to preserve the power and vindicate the authority and
dignity of the court, and to punish for disobedience of its orders. Strictly speaking, however, they are not criminal proceedings or prosecutions, even
though the contemptuous act involved is also a crime. The proceeding has been characterized as sui generis, partaking of some of the elements of
both a civil and criminal proceeding, but really constituting neither. In general, criminal contempt proceedings should be conducted in accordance with
the principles and rules applicable to criminal cases, in so far as such procedure is consistent with the summary nature of contempt proceedings. So it
has been held that the strict rules that govern criminal prosecutions apply to a prosecution for criminal contempt, that the accused is to be afforded
many of the protections provided in regular criminal cases, and that proceedings under statutes governing them are to be strictly construed. However,
criminal proceedings are not required to take any particular form so long as the substantial rights of the accused are preserved. 13
Civil contempt proceedings are generally held to be remedial and civil in their nature; that is, they are proceedings for the enforcement of some duty,
and essentially a remedy for coercing a person to do the thing required. As otherwise expressed, a proceeding for civil contempt is one instituted to
preserve and enforce the rights of a private party to an action and to compel obedience to a judgment or decree intended to benefit such a party
litigant. So a proceeding is one for civil contempt, regardless of its form, if the act charged is wholly the disobedience, by one party to a suit, of a
special order made in behalf of the other party and the disobeyed order may still be obeyed, and the purpose of the punishment is to aid in an
enforcement of obedience. The rules of procedure governing criminal contempt proceedings, or criminal prosecutions, ordinarily are inapplicable to civil
contempt proceedings. It has been held that a proceeding for contempt to enforce a remedy in a civil action is a proceeding in that action. Accordingly,
where there has been a violation of a court order in a civil action, it is not necessary to docket an independent action in contempt or proceed in an
independent prosecution to enforce the order. It has been held, however, that while the proceeding is auxiliary to the main case in that it proceeds out
of the original case, it is essentially a new and independent proceeding in that it involves new issues and must be initiated by the issuance and service
of new process. 14
In general, civil contempt proceedings should be instituted by an aggrieved party, or his successor, or someone who has a pecuniary interest in the
right to be protected. In criminal contempt proceedings, it is generally held that the State is the real prosecutor. 15
Contempt is not presumed. In proceedings for criminal contempt, the defendant is presumed innocent and the burden is on the prosecution to prove
the charges beyond reasonable doubt. In proceedings for civil contempt, there is no presumption, although the burden of proof is on the complainant,
and while the proof need not be beyond reasonable doubt, it must amount to more than a mere preponderance of evidence. It has been said that the
burden of proof in a civil contempt proceeding lies somewhere between the criminal "reasonable doubt" burden and the civil "fair preponderance"
burden. 16
On the basis of the foregoing legal principles which are now well settled, it can be safely concluded that under paragraph (d) of Section 3, Rule 71 of
the Rules of Court on indirect contempt, any improper conduct tending, directly or indirectly, to impede, obstruct, or degrade the administration of
justice, constitutes criminal contempt.
II
Whether or not Post-Litigation Publications can be the Subject of Contempt Proceedings
A. Effect of Freedom of Speech and Press Guaranties
In the case of In re Sotto, 17 this Court had the opportunity to define the relation between the courts and the press, quoting there in the statements
made by Judge Holmes in U.S. vs. Sullen, 18 thus:
The administration of justice and the freedom of the press, though separate and distinct, are equally sacred, and neither should
be violated by the other. The press and the courts have correlative rights and duties and should cooperate uphold the principles
of the Constitution and laws, from which the former receives its prerogative and the latter its jurisdiction. The right of legitimate
publicity must be scrupulously recognized and care taken at all times to avoid impinging upon it. In a clear case where it is
necessary in order to dispose of judicial business unhampered by publications which reasonably tend to impair the impartiality
of verdicts, or otherwise obstruct the administration of justice, this Court will not hesitate to exercise its undoubted power to
punish for contempt. This Court must be permitted to proceed with the disposition of its business in an orderly manner free from
outside interference obstructive of its constitutional functions. This right will be insisted upon as vital to an impartial court, and,
as a last resort, as an individual exercises the right of self-defense, it will act to preserve its existence as an unprejudiced
tribunal.
Hence, a person charged with contempt of court for making certain utterances or publishing writings which are clearly opprobrious may not, ordinarily,
escape liability therefor by merely invoking the constitutional guaranties of freedom of speech and press. Liberty of speech and the press must not be
confused with an abuse of such liberties. Obstructing, by means of the spoken or written word, the administration of justice by the courts has been
described as an abuse of the liberty of speech or the press such as will subject the abuser to punishment for contempt of court.
Guaranties of free speech and a free press, as they appear in the Constitution, are frequently couched so as to impute responsibility for any abuse of
the privilege, and it is sometimes recognized that with respect to whether an allegedly scandalous publication or utterance is to be treated as a
contempt, a line must be drawn between those speeches or writings which are protected by the privilege of free speech and a free press and those
which constitute an abuse of it.
The right of freedom of the press is only a specific instance of the general right of freedom of speech; persons engaged in the newspaper business
cannot claim any other or greater right than that possessed by persons not in that business. 19
B. Different Doctrines or Schools of Thought
In the case of In re Francisco Brillantes, 20 Justice Perfecto explained in his dissenting opinion that "as to whether contempt may be committed for
criticizing a tribunal after the same has rendered decision or taken final action on a matter which is the subject of criticism, there are two schools of
thought represented, respectively, by what we may call the English doctrine and the American doctrine, the first for the affirmative and the last one for
the negative. The question now is to determine which of the two doctrines is more conformable to reason and justice and, therefore, should be,
adopted and applied by our tribunals."
1. The English Doctrine
According to Justice Perfecto, the rule in England is that there can be contempt of court even after the case has been terminated. He then proceeded
to ramify:
In England comments upon the court's action in a concluded case, where libelous or calculated to bring the court into disrepute,
were freely punishable as contempt under the early common law. Distinction between pending and concluded matters does not
seem to have been made. Any comment impairing the dignity of the court was punishable as contempt regardless of the time at
which made.
xxx xxx xxx
The whole theory of the early common law of contempt is admirably delivered by Wilmot, J., in King vs. Almon, . . . . The
publication there complained of was a volume containing a diatribe against Lord Mansfield for allowing an amendment of
pleading as of course, and apparently from corrupt motives, in a concluded case, and further charging him with having
introduced a practice to defeat the efficacy of the writ of habeas corpus. It is there said: "The arraignment of the justice of the
judges is arraigning the King's justice; it is an impeachment of his wisdom and goodness in the choice of his judges, and excites
in the mind of the people a general dissatisfaction with all judicial determinations, and indisposes their minds to obey them; and,
whenever men's allegiance to the laws is so fundamentally shaken, it is the most fatal and most dangerous obstruction of
justice, and, in my opinion, calls for a more rapid and immediate redress than any other obstruction whatever — not for the sake
of the judges as private individuals, but because they are the channels by which the Kings' justice is conveyed to the people. To
be impartial, and to be universally thought so, are both absolutely necessary for giving justice that free, open, and uninterrupted
current which it has for many ages found all over this Kingdom, and which so eminently distinguishes and exalts it above all
nations upon the earth . . . . The constitution has provided very apt and proper remedies for correcting and rectifying the
involuntary mistakes of judges, and for punishing and removing them for any voluntary perversions of justice. But, if their
authority is to be trampled upon by pamphleteers and newswriters, and the people are to be told that the power given to the
judges for their protection is prostituted to their destruction, the court may retain its power some little time; but I am sure it will
instantly lose all its authority, and the power of the court will not long survive the authority of it: Is it possible to stab that
authority more fatally than by charging the court, and more particularly the chief justice, with having introduced a rule to subvert
the constitutional liberty of the people? A greater scandal could not be published . . . . It is conceded that an act of violence
upon his person when he was making such an order would be contempt punishable by attachment. Upon what principle? For
striking a judge in walking along the streets would not be a contempt of the court. The reason, therefore, must be, that he is in
the exercise of his office, and discharging the function of a judge of this court; and, if his person is under this protection, why
should not his character be under the same protection? It is not for the sake of the individual, but for the sake of the public, that
his person is under such protection; and, in respect of the public, the imputing of corruption and the perversion of justice to him,
in an order made by him at his chambers, is attended with much more mischievous consequences than a blow; and therefore
the reason of proceeding in this summary manner applies with equal, if not superior, force, to one case as well as the other.
There is no greater obstruction to the execution of justice from the striking a judge than from the abusing him, because his order
lies open to be enforced or discharged, whether the judge is struck or abused for making it.
2. The American Doctrine
In American jurisprudence, the general rule is that defamatory comments on the conduct of a judge with respect to past cases or matters finally
disposed of do not constitute contempt, even though libelous and reflecting on the integrity of the judge and the court. 21 It has been said that the power
to punish as a contempt a criticism concerning a case made after its termination is denied under the theory that such a power is not necessary as a
safeguard to the proper functioning of the court as a judicial tribunal. And it has been said that comments, however stringent, relating to judicial
proceedings which are past and ended are not contempt of court even though they may be a libel against the judge or some other officer of the court.
There is even the view that when a case is finished, the courts and judges are subject to the same criticisms as other people and that no comment
published in connection with a completed case, however libelous or unjust, is punishable as contempt of court. Thus it is said that the remedies of a
judge who suffers abuse at the hands of the press, not amounting to contempt, are the same as those available to persons outside the judiciary. 22
To the same effect was the holding in People ex rel. Supreme Court vs. Albertson, 23 where it was declared that —
The great weight of authority is to the effect that — in so far as proceedings to punish for contempt are concerned — comment
upon the behavior of the court in cases fully determined in the particular court criticized is unrestricted under our constitutional
guaranty of liberty of the press and free speech, especially in the absence of a statute of direct application to the contrary. This
view in brief is based upon the theory
that — keeping our constitutional guaranties in mind — libelous publications which bear upon the proceedings of a court while
they are pending may in some way affect their correct determination, and are properly the subject of contempt proceedings. On
the other hand, such publications or oral utterances of entirely retrospective bearing come within the sphere of authorized
comment unless they affect a judge personally, when he has his remedy in an action of libel or slander, as does any other
individual thus offended. He has the right to bring an action at law before a jury of his peers.
Along similar lines, in Ex Parte Mcleod, 24 the court ruled that:
The right of a court to punish, as for contempts, criticisms of its acts, or even libels upon its officers, not going to the extent, by
improper publications, of influencing a pending trial, . . . would not only be dangerous to the rights of the people, but its exercise
would drag down the dignity and moral influence of these tribunals. Such criticism is the right of the citizen, and essential not
only to the proper administration of justice, but to the public tranquility and contentment. Withdrawing power from courts to
summarily interfere with such exercise of the right of the press and freedom of speech deprives them of no useful power.
Likewise, the State Supreme Court of Montana in State ex rel. Metcalf vs. District Court, 25 pointed out that the legal proceeding involved therein was
not pending when the alleged libelous article was published, then referred to the guaranty of freedom of speech and the press, and eventually held that
the publication involved was not punishable as contempt. It declared that so long as the published criticism does not impede the due administration of
the law, it is better to maintain the guaranty of the Constitution than to undertake to compel respect or punish libel by the summary process of
contempt.
Finally, in holding that persons who had published newspaper articles alleging that a designated judge had been intentionally partial and corrupt in the
trial of certain causes which had been decided and were not pending when the publication occurred could not be punished as for contempt the court,
in State ex rel. Attorney General vs. Circuit Court, 26 cited a number of cases supporting the view that libelous newspaper comments upon the acts of a
court in actions past and ended do not constitute contempt. It pointed out that some of such decisions took the position that to punish such publications
would constitute a serious invasion of constitutional guaranties of free speech and a free press.
It ratiocinated in this manner: "Important as it is that courts should perform their grave public duties unimpeded and unprejudiced by illegitimate
influences, there are other rights guaranteed to all citizens by our Constitution and form of government, either expressly or impliedly, which are fully as
important, and which must be guarded with an equally zealous care. These rights are the rights of free speech and of free publication of the citizens'
sentiments on all subjects. It seems clear to us that so extreme a power as to punish for contempt because of libelous publications as to past litigation,
is inconsistent with, and would materially impair, the constitutional rights of free speech and free press."
However, even under American jurisprudence, as shall hereafter be demonstrated, the aforesaid rulings are not without exceptions. There is ample
authority that, under proper circumstances, constitutional guaranties of freedom of speech and liberty of the press do not protect contemptuous
publications relating to court proceedings even though such publications are not made until after the pendency of the litigation in question.27
3. The Philippine Doctrine
In the Philippine setting, as we have noted, there are conflicting views on this issue which have to be analyzed and, if possible, reconciled. On that
exordial indication, we have digressed into these aspects of the law on contempt and seized upon this incident in the criminal cases at bar in order to
essay a rapprochement of such views into what we may call the Philippine doctrine.
In the early cases decided by this Court involving contempts through newspaper publications, the rule was that contemptuous publications were
actionable only if committed with respect to pending suits. Apparently, the weight of authority then was to the effect that criticism of the conduct of a
judge or a court with regard to matters finally disposed of does not constitute contempt, even though it may be libelous.
That rule first found application in the case of In re Lozano, et al. 28 and was reiterated in the subsequent cases of In re Abistado, 29 and People
vs. Alarcon, et al, 30 where this Court, speaking through Justice Malcolm, tersely stated:
The rule is well established that newspaper publications tending to impede, obstruct, embarrass, or influence the courts in
administering justice in a pending suit proceeding constitute criminal contempt which is summarily punishable by the courts.
The rule is otherwise after the cause is ended. . . . (6 R.C.L., pp. 508-515).
It will be noted that the aforequoted conclusion was arrived at after a short discourse presented by the ponente on the existing divergence of opinions
on the matter between the English and American courts. But the learned justice, notwithstanding his preference for and application of the American
doctrine, nonetheless thereafter made the recommendatory observation that "(w)ith reference to the applicability of the above authorities, it should be
remarked first of all that this court is not bound to accept any of them absolutely and unqualifiedly. What is best for the maintenance of the judiciary in
the Philippines should be the criterion."
It seems that this view was shared by then Associate Justice Moran when he dissented from the majority opinion in the aforecited case of People
vs. Alarcon, et al., which upheld the doctrine enunciated in Lozano and Abistado, in this wise: "I know that in the United States, publications about
courts, after the conclusion of a pending case, no matter how perverse or scandalous, are in many instances brought within the constitutional
protection of the liberty of the press. But while this rule may find justification in that country, considering the American temper and psychology and the
stability of its political institutions, it is doubtful whether here a similar toleration of gross misuse of liberty of the press would, under our circumstances,
result in no untoward consequences to our structure of democracy yet in the process of healthful development and growth."
Such perception could have probably impelled Justice Moran to deviate from the then accepted doctrine, with this rationalization:
Contempt, by reason of publications relating to courts and to court proceedings, are of two kinds. A publication which tends to
impede, obstruct, embarrass or influence the courts in administering justice in a pending suit or proceeding, constitutes criminal
contempt which is summarily punishable by courts. This is the rule announced in the cases relied upon by the majority. A
publication which tends to degrade the courts and to destroy public confidence in them or that which tends to bring them in any
way into disrepute, constitutes likewise criminal contempt, and is equally punishable by courts. In the language of the majority,
what is sought, in the language of the majority, what is sought, in the first kind of contempt, to be shielded against the influenced
of newspaper comments, is the all-important duty of the courts to administer justice in the decision of a pending case. In the
second kind of contempt, the punitive hand of justice is extended to vindicate the courts from any act or conduct calculated to
bring them into disfavor or to destroy public confidence in them. In the first, there is no contempt where there is no action
pending, as there is no decision which might in any way be influenced by the newspaper publication. In the second, the
contempt exists, with or without a pending case, as what is sought to be protected is the court itself and its dignity. Courts would
lose their utility if public confidence in them is destroyed.
That dissenting opinion was impliedly adopted in the subsequent case of In re Brillantes, 31 where the editor of the Manila Guardian was declared in
contempt of court for publishing an editorial, stating that the 1944 Bar Examinations were conducted in a farcical manner, even after the case involving
the validity of said examinations had been terminated. This was followed by In re Almacen 32 where the Court stated categorically that the rule that bars
contempt after a judicial proceeding has terminated had lost much of its validity, invoking therein the ruling in Brillantes and quoting with approval the
dissenting opinion in Alarcon.
It appears, therefore, that in the two latest cases decided by this Court, the general rule that there can be no contempt in post-litigation publications is
not necessarily all-embracing under certain situations. From the shift in judicial approach in Brillantes to the position announced in Almacen, it can
inevitably be concluded that the termination of the case is not a guaranty of immunity from a contempt charge for publications or utterances which are
defamatory or libelous, depending on the purpose and effects thereof. In other words, one may still be cited for contempt of court even after a case has
ended, where such punitive action is necessary to protect the court and its dignity and to vindicate it from acts or conduct intended or calculated to
degrade, ridicule or bring the court into disfavor and thereby erode or destroy public confidence in that court.
This qualified distinction is not without justification and, in fact, was also foreshadowed by the concurring opinion of Justice Briones
in Brillantes wherein, after noting the conflicting views on the amenability of the contemnor during the pendency or after the termination of the judicial
proceeding in the court involved as illustrated by the English and American doctrines thereon, he advanced the proposition that —
. . . esta distincion no tiene mucha importancia. Lo importante para mi es ver si la critica lanzada por el recurrido es falsa y esta
concebida en terminos tales que "tiende directamente a degradar la administracion de justicia," . . . es indiferente si versa sobre
un asunto o negociacion totalmente terminada o no; el desacato existe entonces y debe ser castigado.
. . . Se trata simplemente de la facultad inherente en los tribunales de reprimir y castigar todo acto que tiende a ambarazarles y
obstruirles en su funcion de administrar justicia, . . . .
The rationale for making a qualification to the rule generally considered as the American doctrine, which rule as herein qualified we now adopt and
refer to as the Philippine doctrine on this issue, is profoundly and eloquently explicated by Justice Moran in Alarcon, to wit:
It is true that the Constitution guarantees the freedom of speech and of the press. But license or abuse of that freedom should
not be confused with freedom in its true sense. Well-ordered liberty demands no less unrelaxing vigilance against abuse of the
sacred guaranties of the Constitution than the fullest protection of their legitimate exercise. As important as is the maintenance
of a free press and the free exercise of the rights of the citizens is the maintenance of a judiciary unhampered in its
administration of justice and secure in its continuous enjoyment of public confidence. "The administration of justice and freedom
of the press, though separate and distinct are equally sacred, and neither should be violated by the other. The press and the
courts have correlative rights and duties and should cooperate to uphold the principles of the Constitution and the laws, from
which the former receives its prerogatives and the latter its jurisdiction." (U.S. vs. Su liens, 38 Fed., 2d., 230.) Democracy
cannot long endure in a country where liberty is grossly misused any more than where liberty is illegitimately abridged.
xxx xxx xxx
If the contemptuous publication made by the respondent herein were directed to this Court in connection with a case already
decided, the effect of the rule laid down by the majority is to deny this court the power to vindicate its dignity. The mischievous
consequences that will follow from the situation thus sought to be permitted, are both too obvious and odious to be stated. The
administration of Justice, no matter how righteous, may be identified with all sorts of fancied scandal and corruption. Litigants,
discontented for having lost their cases, will have every way to give vent to their resentment. Respect and obedience to Law will
ultimately be shattered, and, as a consequence, the utility of the courts will completely disappear.
It may be said that respect to courts cannot be compelled and that public confidence should be a tribute to judicial worth, virtue
and intelligence. But compelling respect to courts is one thing and denying the courts the power to vindicate themselves when
outraged is another. I know of no principle of law that authorizes with impunity a discontented citizen to unleash, by newspaper
publications, the avalanche of his wrath and venom upon courts and judges. If he believes that a judge is corrupt and that
justice has somewhere been perverted, law and order require that he follow the processes provided by the Constitution and the
statutes by instituting the corresponding proceedings for impeachment or otherwise. As Mr. Justice Palmer, in speaking of the
duty of courts and court officers, has wisely said:
Would it be just to the persons who are called upon to exercise these powers to compel them to do so,
and at the same time allow them to be maltreated or libeled because they did so? How would a suitor
like a juryman trying his case who might expect he would be assaulted, beaten, his property destroyed,
or his reputation blasted, in case he decided against his opponent? Apply the same thing to judges, or
the sheriff, and how long could organized society hold together? With reference to a judge, if he has
acted corruptly, it is worse than a mere contempt. But it is apparent it would not be right that the court of
which he is a member should determine this, and consequently the law has provided a plain and easy
method of bringing him to justice by a petition to Parliament; but, while the law authorizes this, it does
not allow infamous charges to be made against him by persons, either in the newspapers or otherwise,
with reference to how he has or shall discharge the duties of his office. It must be apparent to all right
thinking men that, if such were allowed to be indulged in, it must end in the usefulness of the court itself
being destroyed, however righteous its judges may act. From what I have said it must not be supposed
that I think that the decisions of the court, or the actions of the judges, or other persons composing the
court, are not to be discussed; on the contrary, I would allow the freest criticism of all such acts if done in
a fair spirit, only stopping at what must injure or destroy the court itself and bring the administration of
the law into disrepute, or be an outrage on the persons whose acts are discussed, or when such
discussion would interfere with the right decision of the cause before the court.
We do not hesitate to hereby give our imprimatur to the aforequoted opinion which, we fully believe, conforms to basic dogmatic teachings on judicial
and professional conduct requiring respect for and the giving of due deference to the judicial system and its members — ethical standards which this
Court has, time and again, been trying to inculcate in the minds of every member of the Bar and the public in general.
4. Cautela on the Balancing of Interests
On the bases of the foregoing authorities, it is evident that a line has to be drawn between those utterances or writings which are protected by the
privileges of free speech and a free press and those which constitute an abuse thereof, in determining whether an allegedly scurrilous publication or
statement is to be treated as contempt of court. But to find the line where the permissible right of free speech ends and its reprehensible abuse begins
is not always an easy task. In contempt proceedings, it was held that this line must usually be defined by the courts themselves, and in such cases its
location is to be established with special care and caution. 33
In so doing, it becomes necessary to give the subject that careful examination commensurate with its importance, mindful that, on the one hand, the
dignity and authority of the courts must be maintained, while, on the other, free speech, a free press, and the liberty of the citizen must be preserved.
Both are equally valuable rights. If the court is shorn of its power to punish for contempt in all proper cases, it cannot preserve its authority, so that even
without any constitutional or statutory guaranty this power is inherent in the court. But the Constitution itself, in the Bill of Rights, guarantees free
speech and liberty of the press. Of course, it was never intended, under the guise of these constitutional guaranties, that the power of the court should
be trenched upon. 34
How to determine whether an act or utterance is covered by the protective mantle of the constitutional guaranty of liberty of the press or whether it is
already outside or an abuse thereof, is an altogether different matter. We have perforce to draw from tenets in American jurisprudence, although with
discriminating choice, since after all our present doctrines on contempt vis-a-vis constitutional limitations trace their roots in the main to the lessons laid
down and born of the social and judicial experience in that jurisdiction.
The liberty of the press consists in the right to publish with impunity the truth, with good motives and for justifiable ends, whether it respects
governments individuals; the right freely to publish whatever the citizen may please and to be protected against any responsibility for so doing, except
in so far as such publications, from their blasphemy, obscenity, or scandalous character, may be a public offense, are as by their falsehood and malice
they may injuriously affect the standing, reputation, or pecuniary interests of individuals. The true liberty of the press is amply secured by permitting
every man to publish his opinion; but it is due to the peace and dignity of society to inquire into the motives of such publications, and to distinguish
between those which are meant for use and reformation, and with an eye solely to the public good, and those which are intended merely to delude and
defame. To the latter description, it is impossible that any good government should afford protection and impunity.
The liberty of the press means that anyone can publish anything he pleases, but he is liable for the abuse of this liberty. If he does this by scandalizing
the courts of his country, he is liable to be punished for contempt. In other words, the abuse of the privilege consists principally in not telling the truth.
There is a right to publish the truth, but no right to publish falsehood to the injury of others with impunity. It, therefore, does not include the right to
malign the courts, to libel and slander and utter the most flagrant and indecent calumnies about the court and its officers, nor to invade the sanctuaries
of the temples. Such practices and such miscreants ought to be condemned, and the courts would deserve condemnation and abolition if they did not
vigorously and fearlessly punish such offenders. Such practices are an abuse of the liberty of the press, and if the slander relates to the courts, it
concerns the whole public and is consequently punishable summarily as a criminal contempt. It is therefore the liberty of the press that is guaranteed,
not the licentiousness. It is the right to speak the truth, not the right to bear false witness against your neighbor. 35
This brings to fore the need to make a distinction between adverse criticism of the court's decision after the case is ended and "scandalizing the court
itself." The latter is not criticism; it is personal and scurrilous abuse of a judge as such, in which case it shall be dealt with as a case of contempt. 36
It must be clearly understood and always borne in mind that there is a vast difference between criticism or fair comment on the one side and
defamation on the other. Where defamation commences, true criticism ends. True criticism differs from defamation in the following particulars; (1)
Criticism deals only with such things as invite public attention or call for public comment. (2) Criticism never attacks the individual but only his work. In
every case the attack is on a man's acts, or on some thing, and not upon the man himself. A true critic never indulges in personalities. (3) True criticism
never imputes or insinuates dishonorable motives, unless justice absolutely requires it, and then only on the clearest proofs. (4) The critic never takes
advantage of the occasion to gratify private malice, or to attain any other object beyond the fair discussion of matters of public interest, and the
judicious guidance of the public taste. 37
Generally, criticism of a court's rulings or decisions is not improper, and may not be restricted after a case has been finally disposed of and has ceased
to be pending. So long as critics confine their criticisms to facts and base them on the decisions of the court, they commit no contempt no matter how
severe the criticism may be; but when they pass beyond that line and charge that judicial conduct was influenced by improper, corrupt, or selfish
motives, or that such conduct was affected by political prejudice or interest, the tendency is to create distrust and destroy the confidence of the people
in their courts. 38
Moreover, it has been held that criticism of courts after a case is finally disposed of, does not constitute contempt and, to this effect, a case may be
said to be pending so long as there is still something for the court to do therein. But criticism should be distinguished from insult. A criticism after a case
has been disposed of can no longer influence the court, and on that ground it does not constitute contempt. On the other hand, an insult hurled to the
court, even after a case is decided, can under no circumstance be justified. Mere criticism or comment on the correctness or wrongness, soundness or
unsoundness of the decision of the court in a pending case made in good faith may be tolerated; but to hurl the false charge that the Supreme Court
has been committing deliberately so many blunders and injustices would tend necessarily to undermine the confidence of the people in the honesty
and integrity of its members, and consequently to lower or degrade the administration of justice, and it constitutes contempt. 39
The Philippine rule, therefore, is that in case of a post-litigation newspaper publication, fair criticism of the court, its proceedings and its members, are
allowed. However, there may be a contempt of court, even though the case has been terminated, if the publication is attended by either of these two
circumstances: (1) where it tends to bring the court into disrespect or, in other words, to scandalize the court; 40 or (2) where there is a clear and
present danger that the administration of justice would be impeded. And this brings us to the familiar invocation of freedom of expression usually
resorted to as a defense in contempt proceedings.
On the first ground, it has been said that the right of free speech is guaranteed by the Constitution and must be sacredly guarded, but that an abuse
thereof is expressly prohibited by that instrument and must not be permitted to destroy or impair the efficiency of the courts or the public respect
therefor and the confidence therein. 41
Thus, in State vs. Morril, 42 the court said that any citizen has the right to publish the proceedings and decisions of the court, and if he deems it
necessary for the public good, to comment upon them freely, discuss their correctness, the fitness or unfitness of the judges for their stations, and the
fidelity with which they perform the important public trusts reposed in them; but he has no right to attempt, by defamatory publications, to degrade the
tribunal, destroy public confidence in it, and dispose the community to disregard and set at naught its orders, judgments and decrees. Such
publications are an abuse of the liberty of the press; and tend to sap the very foundation of good order and well-being in society by obstructing the
course of justice. Courts possess the power to punish for contempt libelous publications regarding their proceedings, present or past, upon the ground
that they tend to degrade the tribunals, destroy public confidence and respect for their judgments and decrees, so essentially necessary to the good
order and well-being of society, and most effectually obstruct the free course of justice.
Then, in In re Hayes, 43 it was said that publishers of newspapers have the right, but no higher right than others, to bring to public notice the conduct of
the courts, provided the publications are true and fair in spirit. The liberty of the press secures the privilege of discussing in a decent and temperate
manner the decisions and judgments of a court of justice; but the language should be that of fair and honorable criticism, and should not go to the
extent of assigning to any party or the court false or dishonest motives. There is no law to restrain or punish the freest expressions of disapprobation
that any person may entertain of what is done in or by the courts. Under the right of freedom of speech and of the press the public has a right to know
and discuss all judicial proceedings, but this does not include the right to attempt, by wanton defamation, groundless charges of unfairness and
stubborn partisanship, to degrade the tribunal and impair its efficiency.
Finally, in Weston vs. Commonwealth, 44 it was ruled that the freedom of speech may not be exercise in such a manner as to destroy respect for the
courts, the very institution which is the guardian of that right. The dignity of the courts and the duty of the citizens to respect them are necessary
adjuncts to the administration of justice. Denigrating the court by libelous attacks upon judicial conduct in an ended case, as well as one which is
pending before it, may seriously interfere with the administration of justice. While such an attack may not affect the particular litigation which has been
terminated, it may very well affect the course of justice in future litigation and impair, if not destroy, the judicial efficiency of the court or judge subjected
to the attack.
Anent the second ground, the rule in American jurisprudence is that false and libelous utterances present a clear and present danger to the
administration of justice. 45 To constitute contempt, criticism of a past action of the court must pose a clear and present danger to a fair administration
of justice, that is, the publication must have an inherent tendency to influence, intimidate, impede, embarrass, or obstruct the court's administration of
justice. 46 It is not merely a private wrong against the rights of litigants and judges, but a public wrong, a crime against the State, to undertake by libel or
slander to impair confidence in the judicial functions. 47
Elucidating on the matter, this Court, in Cabansag vs. Fernandez,

et al., 48 held as follows:
. . . The first, as interpreted in a number of cases, means that the evil consequence of the comment or utterance must be
''extremely serious and the degree of imminence extremely high" before the utterance can be punished. The danger to be
guarded against is the "substantive evil" sought to be prevented. And this evil is primarily the "disorderly and unfair
administration of justice." This test establishes a definite rule in constitutional law. It provides the criterion as to what words may
be published. Under this rule, the advocacy of ideas cannot constitutionally be abridged unless there is a clear and present
danger that such advocacy will harm the administration of Justice.
xxx xxx xxx
Thus, speaking of the extent and scope of the application of this rule, the Supreme Court of the United States said: "Clear and
present danger of substantive evils as a result of indiscriminate publications regarding judicial proceedings justifies an
impairment of the constitutional right of freedom of speech and press only if the evils are extremely serious and the degree of
imminence extremely high. . . . The possibility of engendering disrespect for the judiciary as a result of the published criticism of
a judge is not such a substantive evil as will justify impairment of the constitutional right of freedom of speech and press." . . .
No less important is the ruling on the power of the court to punish for contempt in relation to the freedom of speech and press.
We quote: "Freedom of speech and press should not be impaired through the exercise of the power to punish for contempt of
court unless there is no doubt that the utterances in question are a serious and imminent threat to the administration of justice.
A judge may not hold in contempt one who ventures to publish anything that tends to make him unpopular or to belittle him. The
vehemence of the language used in newspaper publications concerning a judge's decision is not alone the measure of the
power to punish for contempt . The fires which it kindles must constitute an imminent, not merely a likely, threat to the
administration of justice." . . .
And in weighing the danger of possible interference with the courts by newspaper criticism against the free speech to determine
whether such may constitutionally be punished as contempt, it was ruled that "freedom of public comment should in borderline
instances weigh heavily against a possible tendency to influence pending cases." . . .
The question in every case, according to Justice Holmes, is whether the words used are used in such circumstances and are of
such a nature as to create a clear and present danger that they will bring about the substantive evils that congress has a right to
prevent. It is a question of proximity and degree. . . .
Although Cabansag involved a contempt committed during the pendency of a case, no compelling reason exists why the doctrines enunciated therein
should not be made applicable to vituperative publications made after the termination of the case. Whether a case is pending or not, there is the
constant and ever growing need to protect the courts from a substantive evil, such as invective conduct or utterances which tend to impede or degrade
the administration of justice, or which calumniate the courts and their judges. At any rate, in the case of In re Bozorth, 49 it was there expressly and
categorically ruled that the clear and present danger rule equally applies to publications made after the determination of a case, with the court declaring
that a curtailment of criticism of the conduct of finally concluded litigation, to be justified, must be in terms of some serious substantive evil which it is
designed to avert.
Adverting again to what was further said in State vs. Shepherd, supra, let it here be emphasized that the protection and safety of life, liberty, property
and character, the peace of society, the proper administration of justice and even the perpetuity of our institutions and form of government, imperatively
demand that everyone — lawyer, layman, citizen, stranger, newspaperman, friend or foe — shall treat the courts with proper respect and shall not
attempt to degrade them, or impair the respect of the people, or destroy the faith of the people in them. When the temples of justice become polluted or
are not kept pure and clean, the foundations of free government are undermined, and the institution itself threatened.
III
Jurisdiction in Contempt Proceedings where the Alleged Contumely is Committed Against a Lower Court while the Case is Pending in the
Appellate or Higher Court
In whatever context it may arise, contempt of court involves the doing of an act, or the failure to do an act, in such a manner as to create an affront to
the court and the sovereign dignity with which it is clothed. As a matter of practical judicial administration, jurisdiction has been felt properly to rest in
only one tribunal at a time with respect to a given controversy. Partly because of administrative considerations, and partly to visit the full personal effect
of the punishment on a contemnor, the rule has been that no other court than the one contemned will punish a given contempt. 50
The rationale that is usually advanced for the general rule that the power to punish for contempt rests with the court contemned is that contempt
proceedings are sui generis and are triable only by the court against whose authority the contempt are charged; 51 the power to punish for contempt
exists for the purpose of enabling a court to compel due decorum and respect in its presence and due obedience to its judgments, orders and
processes: 52 and in order that a court may compel obedience to its orders, it must have the right to inquire whether there has been any disobedience
thereof, for to submit the question of disobedience to another tribunal would operate to deprive the proceeding of half its efficiency. 53
There are, however, several jurisprudentially and statutorily recognized exceptions to the general rule, both under Philippine and American
jurisprudence, viz.:
1. Indirect contempt committed against inferior court may also be tried by the proper regional trial court, regardless of the imposable penalty. 54
2. Indirect contempt against the Supreme Court may be caused to be investigated by a prosecuting officer and the charge may be filed in and tried by
the regional trial court, or the case may be referred to it for hearing and recommendation where the charge involves questions of fact. 55
3. In People vs. Alarcon, et al., supra, this Court ruled that "in the interrelation of the different courts forming our integrated judicial system, one court is
not an agent or representative of another and may not, for this reason, punish contempts in vindication of the authority and decorum which are not its
own. The appeal transfers the proceedings to the appellate court , and this last court becomes thereby charged with the authority to deal with
contempts committed after the perfection of the appeal." The apparent reason is that both the moral and legal effect of a punishment for contempt
would be missed if it were regarded as the resentment of personal affronts offered to judges. Contempts are punished as offenses against the
administration of justice, and the offense of violating a judicial order is punishable by the court which is charged with its enforcement, regardless of the
court which may have made the order. 56 However, the rule presupposes a complete transfer of jurisdiction to the appellate court, and there is authority
that where the contempt does not relate
to the subject matter of the appeal, jurisdiction to punish remains in the trial court. 57
4. A court may punish contempts committed against a court or judge constituting one of its parts or agencies, as in the case of a court composed of
several coordinate branches or divisions. 58
5. The biggest factor accounting for the exceptions is where the singular jurisdiction of a given matter has been transferred from the contemned court to
another court. One of the most common reasons for a transfer of jurisdiction among courts is improper venue. The cases involving venue deal primarily
with the question whether a change of venue is available after a contempt proceeding has been begun. While generally a change of venue is not
available in a contempt proceeding, some jurisdictions allow such a change in proper circumstances. 59
6. A new court wholly replacing a prior court has jurisdiction to punish for violations of orders entered by its predecessor, although where the successor
court is created by a statute which does not extinguish jurisdiction in the predecessor, an affirmative transfer of jurisdiction before the contempt occurs
is necessary to empower the successor court to act. 60
7. Transfers of jurisdiction by appellate review have produced numerous instances where contempt against the trial court has been punished in the
appellate court, and vice versa. Some appellate courts have taken the view that a contempt committed after an appeal is taken is particularly
contemptuous of the appellate court because of the tendency of such contempts to upset the status quo or otherwise interfere with the jurisdiction of
such court. 61
8. A judge may disqualify himself, or be disqualified, on a contempt hearing or in the main case, which circumstance may require a transfer of
jurisdiction, but where a judge is disqualified only in the main case, because of matters which do not disqualify him in a contempt proceeding, the
regular judge should sit in the contempt proceeding. Likewise, where the regular judge, is absent or otherwise unavailable and an order is entered by
another judge and made returnable to the proper court, the regular judge may punish for violations of orders so entered. 62
9. Where the same act is a contempt against two or more courts, it is no bar to contempt proceedings in one of them that there is also a contempt
against the other. 63
10. While professional disciplinary proceedings have been resorted to as a punishment for contempt, the more recent view is that punishment is of
secondary importance to the need to protect the courts and the people from improper professional practice. To the substantial extent that disciplinary
action remains a punishment, disciplinary measures imposed by another court than the one contemned furnish an exception to the rule against
punishing for contempt of another court. 64
11. Some contemptuous acts are also crime, usually misdemeanors, which are often punishable in other courts than those against which the
contemptuous act was done. 65
12. Finally, a conviction for contempt against another court has been allowed to stand on the basis that the failure of the defendant to make timely
objection operated as a waiver of the right to be tried before the court actually contemned. 66
The rule, as now accepted and deemed applicable to the present incident, is that where the entire case has already been appealed, jurisdiction to
punish for contempt rests with the appellate court where the appeal completely transfers the proceedings thereto or where there is a tendency to affect
the status quo or otherwise interfere with the jurisdiction of the appellate court. Accordingly, this Court having acquired jurisdiction over the complaint
for indirect contempt against herein respondents, it has taken judicial cognizance thereof and has accordingly resolved the same.
IV
Appropriate Remedies where the Alleged Contemptuous Statement is also Claimed to be Libelous
Under the American doctrine, to repeat, the great weight of authority is that in so far as proceedings to punish for contempt are concerned, critical
comment upon the behavior of the court in cases fully determined by it is unrestricted, under the constitutional guaranties of the liberty of the press and
freedom of speech. Thus, comments, however stringent, which have relation to judicial proceedings which are past and ended, are not contemptuous
of the authority of the court to which reference is made. Such comments may constitute a libel against the judge, but it cannot be treated as in
contempt of the court's authority.
On this score, it is said that prosecution for libel is usually the most appropriate and effective remedy. 67 The force of American public opinion has
greatly restrained the courts in the exercise of the power to punish one as in contempt for making disrespectful or injurious remarks, and it has been
said that the remedy of a judge is the same as that given to a private citizen. 68 In such a case, therefore. the remedy of a criminal action for libel is
available to a judge who has been derogated in a newspaper publication made after the termination aid a case tried by him, since such publication can
no longer be made subject of contempt proceedings.
The rule, however, is different in instances under the Philippine doctrine earlier discussed wherein there may still be a contempt of court even after a
case has been decided and terminated. In such case, the offender may be cited for contempt for uttering libelous remarks against the court or the
judge. The availability, however, of the power to punish for contempt does not and will not prevent a prosecution for libel, either before, during, or after
the institution of contempt proceedings. In other words, the fact that certain contemptuous conduct likewise constitutes an indictable libel against the
judge of the court contemned does not necessarily require him to bring a libel action, rather than relying on contempt Proceedings. 69
The fact that an act constituting a contempt is also criminal and punishable by indictment. or other method of criminal prosecution does not prevent the
outraged Court from punishing the contempt. 70 This principle stems from the fundamental doctrine that an act may be punished as a contempt even
though it has been punished as a criminal offense. 71 The defense of having once been in jeopardy, based on a conviction for the criminal offense,
would not lie in bar of the contempt proceedings, on the proposition that a contempt may be an offense against the dignity of a court and, at the same
time, an offense against the peace and dignity of the people of the State. 72 But more importantly. adherence to the American doctrine by insisting that
a judge should instead file an action fur libel will definitely give rise to an absurd situation and may even cause more harm than good.
Drawing also from American jurisprudence, to compel the judge to descend from the plane of his judicial office to the level of the contemnor, pass over
the matter of contempt, and instead attack him by a civil action to satisfy the judge in damages for a libel, would be a still greater humiliation of a court.
That conduct would be personal; the court is impersonal. In our jurisdiction, the judicial status is fixed to such a point that our courts and the judges
thereof should be protected from the improper consequences of their discharge of duties so much so that judicial officers have always been shielded,
on the highest considerations of the public good, from being called for questioning in civil actions for things done in their judicial capacity.
Whenever we subject the established courts of the and to the degradation of private prosecution, we subdue their independence, and destroy their
authority. instead of being venerable before the public, they become contemptible; and we thereby embolden the licentious to trample upon everything
sacred in society, and to overturn those institutions which have hitherto been deemed the best guardians of civil liberty. 73
Hence, the suggestion that judges who are unjustly attacked have a remedy in an action for libel, has been assailed as being without rational basis in
principle. In the first place, the outrage is not directed to the judge as a private individual but to the judge as such or to the court as an organ of the
administration of justice. In the second place, public interests will gravely suffer where the judge, as such, will, from time to time, be pulled down and
disrobed of his judicial authority to face his assailant on equal grounds and prosecute cases in his behalf as a private individual. The same reasons of
public policy which exempt a judge from civil liability in the exercise of his judicial functions, most fundamental of which is the policy to confine his time
exclusively to the discharge of his public duties, applies here with equal, if not superior, force. 74
Whether or not the Same Contemptuous Conduct of a Member of the Bar can be the Subject of both a Contempt Proceeding and an
Administrative Disciplinary Action
With the foregoing discussion of the appropriate remedies available to a judge, we feel that this issue with respect to proper remedies against an erring
member or the Bar should consequentially be addressed, by way of reiteration, since conflicting and erroneous remedies are sometimes resorted to by
aggrieved tribunals or parties.
The basic rule here is that the power to punish for contempt and the power to disbar are separate and distinct, and that the exercise of one does not
exclude the exercise of the other. 75 A contempt proceeding for misbehavior in court is designed to vindicate the authority of the court; on the other
hand, the object of a disciplinary proceeding is to deal with the fitness of the court's officer to continue in that office, to preserve and protect the court
and the public from the official ministrations of persons unfit or unworthy to hold such
office. 76 The principal purpose of the exercise of the power to cite for contempt is to safeguard the functions of the court and should thus be used
sparingly on a preservative and not, on the vindictive principle. The principal purpose of the exercise of disciplinary authority by the Supreme Court is
77
to assure respect for orders of such court by attorneys who, as much as judges, are responsible for the orderly administration of justice. 78
Moreover, it has been held that the imposition a fine as a penalty in a contempt proceeding is not considered res judicata to a subsequent charge for
unprofessional conduct. 79 In the same manner an attorney's conviction for contempt was not collaterally estopped by reason of a subsequent
disbarment proceeding in which the court found in his favor on essentially the same facts leading to conviction. 80 It has likewise been the rule that a
notice to a lawyer to show cause why he should not be punished for contempt cannot be considered as a notice to show cause why he should not be
suspended from the practice of law, considering that they have distinct objects and for each of them a different procedure is established. Contempt of
court is governed by the procedures laid down under Rule 71 of the Rules of Court, whereas disciplinary actions in the Practice of law are governed by
file 138 and 139 thereof. 81
Although apparently different in legal bases, the authority to punish for contempt and to discipline lawyers are both inherent in the Supreme Court and
are equally incidents of the court's basic power to oversee the proper administration of justice and the orderly discharge of judicial functions. As was
succinctly expounded in Zaldivar vs. Sandiganbayan, et al.: 82
There are, in other words, two (2) related powers which come into play in cases like that before us here: the Court's inherent
power to discipline attorneys and the contempt power. The disciplinary authority of the Court over members of the Bar is
broader than the power to punish for contempt. Contempt of court may be committed both by lawyers and non-lawyers, both in
and out of court. Frequently, where the contemnor is a lawyer, the contumacious conduct also constitutes professional
misconduct which calls into play the disciplinary authority of the Supreme Court. Where the respondent is a lawyer, however,
the Supreme Court's disciplinary authority over lawyers may come into play whether or not the misconduct with which the
respondent is charged also constitutes contempt of court. The power to punish for contempt of court does not exhaust the
scope of disciplinary authority of the Court over lawyers. The disciplinary authority of the Court over members of the Bar is but
corollary to the court's exclusive power of admission to the bar. A lawyer is not merely a professional but also an officer of the
court and as such, he is called upon to share in the task and responsibilities of dispensing justice and resolving disputes in
society. Any act on his part which visibly tends to obstruct, pervert, or impede and degrade the administration of justice
constitutes both professional misconduct calling for the exercise of disciplinary action against him, and contumacious conduct
warranting application of the contempt power.
With this rounding out of the subordinate and principal issues in resolving the incident, we feel that the guidelines we have laid down will provide
assertive references for the lower courts in disciplinary matters arising before them. Coming back to the incident fore resolution, arising as a spin-off
from the criminal cases at bar, we reiterate what we have declared at the outset, absolving judge for the reasons therein stated.
WHEREFORE, on the foregoing premises, the complaint for indirect contempt against herein respondents Mauricio Reynoso, Jr. and Eva P. Ponce de
Leon is hereby DISMISSED.
SO ORDERED.
G.R. No. 177861 July 13, 2010
IN RE: PETITION FOR CANCELLATION AND CORRECTION OF ENTRIES IN THE RECORD OF BIRTH,
EMMA K. LEE, Petitioner,
vs.
COURT OF APPEALS, RITA K. LEE, LEONCIO K. LEE, LUCIA K. LEE-ONG, JULIAN K. LEE, MARTIN K. LEE, ROSA LEE-VANDERLEK,
MELODY LEE-CHIN, HENRY K. LEE, NATIVIDAD LEE-MIGUEL, VICTORIANO K. LEE, and THOMAS K. LEE, represented by RITA K. LEE, as
Attorney-in-Fact, Respondents.
DECISION
ABAD, J.:
This case is about the grounds for quashing a subpoena ad testificandum and a parent’s right not to testify in a case against his children.
The Facts and the Case
Spouses Lee Tek Sheng (Lee) and Keh Shiok Cheng (Keh) entered the Philippines in the 1930s as immigrants from China. They had 11 children,
namely, Rita K. Lee, Leoncio K. Lee, Lucia K. Lee-Ong, Julian K. Lee, Martin K. Lee, Rosa Lee-Vanderlek, Melody Lee-Chin, Henry K. Lee, Natividad
Lee-Miguel, Victoriano K. Lee, and Thomas K. Lee (collectively, the Lee-Keh children).
In 1948, Lee brought from China a young woman named Tiu Chuan (Tiu), supposedly to serve as housemaid. The respondent Lee-Keh children
believe that Tiu left the Lee-Keh household, moved into another property of Lee nearby, and had a relation with him.
Shortly after Keh died in 1989, the Lee-Keh children learned that Tiu’s children with Lee (collectively, the Lee’s other children) claimed that they, too,
were children of Lee and Keh. This prompted the Lee-Keh children to request the National Bureau of Investigation (NBI) to investigate the matter. After
conducting such an investigation, the NBI concluded in its report:
[I]t is very obvious that the mother of these 8 children is certainly not KEH SHIOK CHENG, but a much younger woman, most probably TIU CHUAN.
Upon further evaluation and analysis by these Agents, LEE TEK SHENG is in a quandary in fixing the age of KEH SHIOK CHENG possibly to conform
with his grand design of making his 8 children as their own legitimate children, consequently elevating the status of his second family and secure their
future. The doctor lamented that this complaint would not have been necessary had not the father and his second family kept on insisting that the 8
children are the legitimate children of KEH SHIOK CHENG.1
The NBI found, for example, that in the hospital records, the eldest of the Lee’s other children, Marcelo Lee (who was recorded as the 12th child of Lee
and Keh), was born of a 17-year-old mother, when Keh was already 38 years old at the time. Another of the Lee’s other children, Mariano Lee, was
born of a 23-year-old mother, when Keh was then already 40 years old, and so forth. In other words, by the hospital records of the Lee’s other children,
Keh’s declared age did not coincide with her actual age when she supposedly gave birth to such other children, numbering eight.
On the basis of this report, the respondent Lee-Keh children filed two separate petitions, one of them before the Regional Trial Court (RTC) of
Caloocan City2 in Special Proceeding C-1674 for the deletion from the certificate of live birth of the petitioner Emma Lee, one of Lee’s other children,
the name Keh and replace the same with the name Tiu to indicate her true mother’s name.
In April 2005 the Lee-Keh children filed with the RTC an ex parte request for the issuance of a subpoena ad testificandum to compel Tiu, Emma Lee’s
presumed mother, to testify in the case. The RTC granted the motion but Tiu moved to quash the subpoena, claiming that it was oppressive and
violated Section 25, Rule 130 of the Rules of Court, the rule on parental privilege, she being Emma Lee’s stepmother. 3 On August 5, 2005 the RTC
quashed the subpoena it issued for being unreasonable and oppressive considering that Tiu was already very old and that the obvious object of the
subpoena was to badger her into admitting that she was Emma Lee’s mother.
Because the RTC denied the Lee-Keh children’s motion for reconsideration, they filed a special civil action of certiorari before the Court of Appeals
(CA) in CA-G.R. SP 92555. On December 29, 2006 the CA rendered a decision, 4 setting aside the RTC’s August 5, 2005 Order. The CA ruled that only
a subpoena duces tecum, not a subpoena ad testificandum, may be quashed for being oppressive or unreasonable under Section 4, Rule 21 of the
Rules of Civil Procedure. The CA also held that Tiu’s advanced age alone does not render her incapable of testifying. The party seeking to quash the
subpoena for that reason must prove that she would be unable to withstand the rigors of trial, something that petitioner Emma Lee failed to do.
Since the CA denied Emma Lee’s motion for reconsideration by resolution of May 8, 2007,5 she filed the present petition with this Court.
The Question Presented
The only question presented in this case is whether or not the CA erred in ruling that the trial court may compel Tiu to testify in the correction of entry
case that respondent Lee-Keh children filed for the correction of the certificate of birth of petitioner Emma Lee to show that she is not Keh’s daughter.
The Ruling of the Court
Petitioner Emma Lee claims that the RTC correctly quashed the subpoena ad testificandum it issued against Tiu on the ground that it was
unreasonable and oppressive, given the likelihood that the latter would be badgered on oral examination concerning the Lee-Keh children’s theory that
she had illicit relation with Lee and gave birth to the other Lee children.
But, as the CA correctly ruled, the grounds cited—unreasonable and oppressive—are proper for subpoena ad duces tecum or for the production of
documents and things in the possession of the witness, a command that has a tendency to infringe on the right against invasion of privacy. Section 4,
Rule 21 of the Rules of Civil Procedure, thus provides:
SECTION 4. Quashing a subpoena. — The court may quash a subpoena duces tecum upon motion promptly made and, in any event, at or before the
time specified therein if it is unreasonable and oppressive, or the relevancy of the books, documents or things does not appear, or if the person in
whose behalf the subpoena is issued fails to advance the reasonable cost of the production thereof.
Notably, the Court previously decided in the related case of Lee v. Court of Appeals 6 that the Lee-Keh children have the right to file the action for
correction of entries in the certificates of birth of Lee’s other children, Emma Lee included. The Court recognized that the ultimate object of the suit was
to establish the fact that Lee’s other children were not children of Keh. Thus:
It is precisely the province of a special proceeding such as the one outlined under Rule 108 of the Revised Rules of Court to establish the status or
right of a party, or a particular fact. The petitions filed by private respondents for the correction of entries in the petitioners' records of birth
were intended to establish that for physical and/or biological reasons it was impossible for Keh Shiok Cheng to have conceived and given
birth to the petitioners as shown in their birth records. Contrary to petitioners' contention that the petitions before the lower courts were
actually actions to impugn legitimacy, the prayer therein is not to declare that petitioners are illegitimate children of Keh Shiok Cheng, but to
establish that the former are not the latter's children. There is nothing to impugn as there is no blood relation at all between Keh Shiok
Cheng and petitioners.7 (Underscoring supplied)
Taking in mind the ultimate purpose of the Lee-Keh children’s action, obviously, they would want Tiu to testify or admit that she is the mother of Lee’s
other children, including petitioner Emma Lee. Keh had died and so could not give testimony that Lee’s other children were not hers. The Lee-Keh
children have, therefore, a legitimate reason for seeking Tiu’s testimony and, normally, the RTC cannot deprive them of their right to compel the
attendance of such a material witness.
But petitioner Emma Lee raises two other objections to requiring Tiu to come to court and testify: a) considering her advance age, testifying in court
would subject her to harsh physical and emotional stresses; and b) it would violate her parental right not to be compelled to testify against her
stepdaughter.
1. Regarding the physical and emotional punishment that would be inflicted on Tiu if she were compelled at her age and condition to come
to court to testify, petitioner Emma Lee must establish this claim to the satisfaction of the trial court. About five years have passed from the
time the Lee-Keh children sought the issuance of a subpoena for Tiu to appear before the trial court. The RTC would have to update itself
and determine if Tiu’s current physical condition makes her fit to undergo the ordeal of coming to court and being questioned. If she is fit,
she must obey the subpoena issued to her.
Tiu has no need to worry that the oral examination might subject her to badgering by adverse counsel. The trial court’s duty is to protect
every witness against oppressive behavior of an examiner and this is especially true where the witness is of advanced age.8
2. Tiu claimed before the trial court the right not to testify against her stepdaughter, petitioner Emma Lee, invoking Section 25, Rule 130 of
the Rules of Evidence, which reads:
SECTION 25. Parental and filial privilege.- No person may be compelled to testify against his parents, other direct ascendants, children or other direct
descendants.
The above is an adaptation from a similar provision in Article 315 of the Civil Code that applies only in criminal cases. But those who revised the Rules
of Civil Procedure chose to extend the prohibition to all kinds of actions, whether civil, criminal, or administrative, filed against parents and other direct
ascendants or descendants.
But here Tiu, who invokes the filial privilege, claims that she is the stepmother of petitioner Emma Lee. The privilege cannot apply to them because the
rule applies only to "direct" ascendants and descendants, a family tie connected by a common ancestry.1avvphi1 A stepdaughter has no common
ancestry by her stepmother. Article 965 thus provides:
Art. 965. The direct line is either descending or ascending. The former unites the head of the family with those who descend from him. The latter binds
a person with those from whom he descends.
Consequently, Tiu can be compelled to testify against petitioner Emma Lee.
WHEREFORE, the Court DENIES the petition and AFFIRMS the decision and resolution of the Court of Appeals in CA-G.R. SP 92555.
SO ORDERED.
ROBERTO A. ABAD
Associate Justice
G.R. No. 146697 July 23, 2002

vs.
LEONARDO FABRE y VICENTE, accused-appellant.
VITUG, J.:
Leonardo Fabre was adjudged guilty by the Regional Trial Court, Br. VI, of Prosperidad, Agusan del Sur, of raping his own daughter Marilou Fabre, and
he was sentenced to suffer the extreme penalty of death.
Fabre was indicted in an Information that read:1
"That on or about 4:00 o'clock in the afternoon of April 26, 1995 in the house of the accused located at Manat, Trento, Agusan del Sur,
Philippines and within the jurisdiction of this Honorable Court, the above-named accused by force, threats and intimidation, with lewd
design, did then and there willfully, unlawfully and feloniously succeed in having sexual intercourse with his own daughter MARILOU
FABRE, a girl thirteen (13) years of age, of good reputation, against her will and consent to the damage and prejudice of the said victim
consisting of moral, actual and compensatory damages."
Accused pleaded not guilty to the crime charged. At the trial, the prosecution presented the testimony of Marilou, that of Adela Fabre, her mother and
the wife of the accused, and that of Dr. Reinerio Jalalon, the doctor who examined Marilou, along with the medico-legal certificate issued by Dr.
Jalalon, the sworn statement of Adela, and the criminal complaint signed by both Marilou and Adela. The defense, during its turn in the presentation of
evidence, countered with the testimony of the accused himself. It also called Adela Fabre back to the witness stand.
The trial court gave credence to the evidence given by the prosecution, particularly to the narration of the young complainant, expressing a quote from
an observation once made by this Tribunal in one of its decision that "even when consumed with revenge, it (would) take a certain amount of
psychological depravity for a young woman to concoct a story which (could) put her own father for the rest of his remaining life in jail and drag herself
and the rest of her family to a lifetime of shame." 2 Convinced that the accused committed the crime of rape on his own daughter, the trial judge
disposed of the case thusly:
"WHEREFORE, the Court finds accused LEONARDO FABRE y VICENTE alias Nardo, GUILTY beyond reasonable doubt as principal of
the crime of RAPE as defined and penalized under Article 335 of the Revised Penal Code as amended by R.A. No. 7659 Section 11 thereof
and hereby imposes upon the accused Leonardo Fabre y Vicente alias Nardo the penalty of DEATH; to pay the victim Marilou Fabre civil
indemnity in the amount of FIFTY THOUSAND (P50,000.00) PESOS and the costs."3
In this automatic review, the convicted accused assigned the following alleged errors committed by the court a quo.
"I
"THE TRIAL COURT GRAVELY ERRED IN NOT GIVING CREDENCE TO ACCUSED-APPELLANT'S DEFENSE OF ALIBI AND DENIAL.
"II
"ASSUMING IN ARGUENDO THAT ACCUSED-APPELLANT IS GUILTY, THE TRIAL COURT GRAVELY ERRED IN IMPOSING THE
DEATH SENTENCE UPON ACCUSED-APPELLANT DESPITE THE FAILURE OF THE PROSECUTION TO ESTABLISH THE ACTUAL
AGE OF MARILOU FABRE AT THE TIME OF THE COMMISSION OF THE ALLEGED RAPE."4
The defense argues, rather desperately, that the testimony of appellant should acquire added strength for the failure of the prosecution to conduct
cross-examination on him and to present any rebuttal evidence. The cross-examination of a witness is a prerogative of the party against whom the
witness is called.5 The purpose of cross-examination is to test the truth or accuracy of the statements of a witness made on direct examination. 6 The
party against whom the witness testifies may deem any further examination unnecessary and instead rely on any other evidence theretofore adduced
or thereafter to be adduced or on what would be believed is the perception of the court thereon. Certainly, the trial court is not bound to give full weight
to the testimony of a witness on direct examination merely because he is not cross-examined by the other party.
The alibi of appellant itself would not appear to be deserving of serious consideration. His account that at the time of the alleged rape he was working
at a coconut plantation, just about one kilometer away from the place of the crime, hardly would amount to much. Nor would the testimony of Adela
Fabre, his wife, merit any better regard. At first, she testified that on the day of the rape incident, she had left their house at four o'clock in the
afternoon. Later, however, she changed her story by saying that she had left the house in the morning and returned only at ten o'clock that same
morning, staying home the whole day thereafter. In any event, in order that alibi might prosper, it would not be enough for an accused to prove that he
was somewhere else when the crime was committed; he would have to demonstrate likewise that he could not have been physically present at the
place of the crime or in its immediate vicinity at the time of its commission.7 Clearly, in the instant case, it was not at all impossible nor even improbable
for appellant to have been at the crime scene.
Upon the other hand, the evidently candid and straightforward testimony of Marilou should be more than enough to rebut the claim of innocence made
by appellant.8
On 26 April 1995, around four o'clock in the afternoon, Marilou Fabre was alone in their house in Barangay Manat, Trento, Agusan del Sur. Adela
Fabre, her mother, had gone to Purok 4 to buy fish while her siblings were out strolling. After cleaning their yard, Marilou went to the adjacent palm
plantation, about fourteen to fifteen meters away from their house, to gather palm oil. Marilou had been gathering palm oil for about a minute when her
father, appellant Leonardo Fabre, arrived. He suddenly gripped Marilou's hands and forcibly dragged her towards the house. He closed the door and
removed his daughter's underwear. He took off his pants and asked Marilou to hold his sex organ. In tears, Marilou obeyed her father. He then began
touching the girl's breasts and vagina. He forced her to lie down, mounted her and sought to insert his penis into her organ. Marilou cried in pain. When
after some time he still could not insert his penis into Marilou's vagina, he applied coconut oil to lubricate his and his daughter's sexual organs. He was
finally able to penetrate her. Once inside her, appellant made push and pull movements until he was through with her. Appellant threatened to kill her if
she would tell anybody about the sexual encounter. The young girl's mother, Adela Fabre, arrived home about five o'clock that afternoon but,
remembering her father's threats, she kept mum about her ordeal.
The credibility of Marilou would not be all that difficult to discern from her narration that, as so described by the prosecution, "was full of graphic details
which a young provincial girl could not possibly have concocted and which could only have come from someone who must have personally
experienced a brutal rape assault." She testified:
"PROS. ENRIQUEZ:
"Q Now, Miss Marilou, can you recall where were you on April 26, 1995 at about 4:00 o'clock in the afternoon?
"A Yes, sir.
"Q Where were you that time?
"A In our house, sir.
"Q What were you doing in your house?
"A I was cleaning our yard, sir.
"Q How far is your yard where you were doing some works from your house?
"A (Witness pointing a distance of around 2 to 3 meters.)
"Q Now, while you were doing your work in your yard, can you recall if there was an incident that occurred?
"A Yes, sir.
"Q What was that incident that occurred?
"A While I was gathering a palm oil my father arrived and suddenly dragged me to our house, sir.
"COURT:
"Q Where is your house located?
"A At Purok 4, Manat, Trento, Agusan del Sur, Your Honor.
"PROS. ENRIQUEZ:
"Q What did you do when your father dragged you to your house?
"A Because I was dragged by my father to our house I just went with him, sir.
"Q While you were in your house after having been dragged by your father, what happened if any?
"A He closed our house and he removed my panty, sir.
"Q And after removing your panty, what did your father do next?
"A He removed his pants and he let me hold his penis, sir.
"Q And what did you do next after holding his penis?
"A I was crying, sir.
"Q While you were crying what did your father do?
"A He was touching my breast and my vagina, sir.
"Q After that what did he do next?
"A He let me lie down, sir.
"Q And while lying down, what did your father do?
"A He mounted me and he inserted his penis, to my vagina, sir.
"Q And what did you feel while your father was inserting his penis to your vagina?
"A Very painful, sir.
"Q And what did you do while your father was inserting his penis to your vagina?
"A I was crying, sir.
"Q And while you were crying what did your father do if any?
"A He told me not to tell anybody because if I will do it he will kill me, sir.
"Q Now, did your father find it easy to insert his penis to your vagina?
"A It [took] a long time, sir.
"Q And did he use anything to facilitate the insertion of his penis to your vagina?
"A Yes, sir.
"Q What was that?
"A He used coconut oil in his penis and also in my vagina so that his penis can easily insert my vagina, sir.
"Q Now, while his penis was in your vagina, can you tell this Honorable Court if he did anything also on top of you and while his penis
was inside your vagina?
"A None, sir.
"Q Did he make any movement?
"A Yes, sir.
"Q What was that movement?
"A He made a push and pull movement on my body, sir.
"Q Now, while your father was doing it to you where was your mother that time?
"A She was in Purok 4, Manat, Trento, Agusan del Sur, sir.
"Q And did you report this incident to your mother?
"A Not yet sir because he told me not to tell anybody.
"Q So when did you had a chance to tell your mother about this incident?
"A On May 1, 1995, sir.
"Q And what did your mother do after you reported to her this incident?
"A She reported [the matter] to the Kagawad, sir."9
It has been stressed quite often enough that the testimony of a rape victim, who is young and still immature, deserves faith and credence 10 for it simply
would be unnatural for a young and innocent girl to invent a story of defloration, allow an examination of her private parts and thereafter subject herself
and her family to the trauma of a public trial unless she indeed has spoken the truth. 11 Most especially, a daughter would not accuse her own father of
such a serious offense or allow herself to be perverted if she were not truly motivated by a desire to seek a just retribution for a violation brazenly
committed against her.12
Confirming Marilou's story was the medical report and testimony of Dr. Reinerio Jalalon, the government physician stationed at the Bunawan District
Hospital in Agusan del Sur, who examined Marilou. Dr. Jalalon made these findings; viz:
"Abrasion at (L) labia minora at 3:00 o'clock position.
"Vaginal smear (-) negative for spermatozoa."13
The doctor concluded that it was possible that genital penetration on the victim did occur and that a penis could have caused the abrasion on the
victim's labia minora.
There is merit, however, in the plea of the defense, seconded by the prosecution, that the penalty of death imposed by the trial court should be reduced
to the penalty of reclusion perpetua. Article 335 of the Revised Penal Code, as amended by Section 11 of Republic Act No. 7659, provides:
"The death penalty shall also be imposed if the crime of rape is committed with any of the following attendant circumstances:
1. when the victim is under eighteen (18) years of age and the offender is a parent, ascendant, stepparent, guardian, relative by
consanguinity or affinity within the third civil degree, or the common-law-spouse of the parent of the victim."
While the father-daughter relationship between appellant and private complainant has been sufficiently established, the fact of minority of the victim,
although specifically averred in the information, has not been equally shown in evidence. These qualifying circumstances of relationship and minority
are twin requirements that should be both alleged in the information and established beyond reasonable doubt during trial in order to sustain an
imposition of the death penalty.14 Neither an obvious minority of the victim nor the failure of the defense to contest her real age always excuse the
prosecution from the desired proof required by law. 15 Judicial notice of the issue of age without the requisite hearing conducted under Section 3, Rule
129, of the Rules of Court, would not be considered sufficient compliance with the law. The birth certificate of the victim or, in lieu thereof, any other
documentary evidence, like a baptismal certificate, school records and documents of similar nature, or credible testimonial evidence, that can help
establish the age of the victim should be presented. 16 While the declaration of a victim as to her age, being an exception to the hearsay proscription,
would be admissible under the rule on pedigree, the question on the relative weight that may be accorded to it is a totally different matter.17
In the case at bar, the complainant claimed that she was 13 years old at the time of the incident. 18 Her mother stated, however, that she was 14. 19 The
birth certificate of the victim, at least already in her teens, was not presented to ascertain her true age on the bare allegation that the document was lost
when their house burned down.20 No other document that could somehow help establish the real age of the victim was submitted.
The Court, in sum, upholds the decision of the trial court convicting Leonardo Fabre of the crime of rape but must reduce, on account of insufficiency of
proof on the qualifying circumstance of minority of the victim, the penalty of death to reclusion perpetua. With respect to the civil liability, the Court
sustains the award of P50,000.00 civil indemnity but, in keeping with prevailing jurisprudence, must additionally order the payment of P50,000.00 moral
damages21 and P20,000.00 exemplary damages.22
WHEREFORE, the judgment of the court a quo finding LEONARDO FABRE guilty of rape is AFFIRMED but the sentence of death therein imposed
should be, as it is hereby so, reduced to reclusion perpetua. The award of P50,000.00 civil liability in favor of victim, Marilou Fabre, is sustained;
however, appellant is further ordered to pay to the victim the amounts of P50,000.00 moral damages and P20,000.00 exemplary damages.
SO ORDERED.
G.R. No. 142556 February 5, 2003

vs.
JESUS PEREZ y SEBUNGA, accused-appellant.
DECISION
PER CURIAM:
For automatic review is the Decision1 dated October 26, 1999 of the Regional Trial Court of Iba, Zambales, Branch 69, in Criminal Case No. RTC-2116-
I, finding appellant Jesus S. Perez ("appellant" for brevity), guilty of raping Mayia P. Ponseca ("Mayia" for brevity) and imposing on appellant the death
penalty.
On January 22, 1997, the Second Assistant Provincial Prosecutor 2 of Zambales filed an Information 3 charging appellant with the crime of rape
"penalized under Article 335 of the Revised Penal Code in relation to Section 5 (b), Article III of Republic Act No. 7610," committed as follows:
"That on or about the 17th day of January, 1997 at 12:00 noon at Sitio Baco, Brgy. Macarang, in the Municipality of Palauig, Province of Zambales,
Philippines, and within the jurisdiction of this Honorable Court, the said accused, with lewd design and by means of coercion, inducement and other
consideration, did then and there, wilfully (sic), unlawfully and feloniously have sexual intercourse with one Mayia P. Ponseca, a minor of 6 years old,
without her consent and against her will, to the damage and prejudice of the latter."
Upon arraignment, appellant, assisted by counsel de officio Atty. Genaro N. Montefalcon, pleaded not guilty to the offense charged. 4 Subsequently, the
trial court allowed the withdrawal of Atty. Montefalcon as counsel for health reasons. The trial court appointed Atty. Roberto Blanco as appellant’s
counsel de oficio.5
At the pre-trial, the prosecution and defense stipulated on the following facts:
"1. The identity of the accused;
2. The accused was at the time of the incident in the vicinity thereof;
3. The victim in this case, Mayia P. Ponseca, was born on 23 May 1990 as evidenced by her birth certificate;
4. That after the incident, the child was subjected to a medico-legal examination to which a medico-legal certificate was issued by Dr.
Editha Divino.
The prosecution marked in evidence the birth certificate of the victim Mayia O. Ponseca as Exhibit ‘A’, and the medico-legal certificate issued by Dr.
Editha Divino as Exhibit ‘B’."6
Thereafter, trial ensued. The prosecution presented the following witnesses: the victim, Mayia Ponseca; the victim’s mother, Hermie Ponseca; the
victim’s father, Osias Ponseca; Virginia Espejo Giron; and Dr. Editha dela Cruz Divino. On the other hand, the defense presented appellant and his
employer, Bartolome Tolentino.
The Office of the Solicitor General ("OSG" for brevity) summarized the prosecution’s version of the incident in the appellee’s brief, to wit:
"On January 17, 1997, about noontime, in Sitio Baco, Barangay Macarang, Palauig, Zambales, six-year old Mayia Ponseca was walking along Sulok
on her way to her house in Sitio Camiling when appellant Jesus Sebunga Perez approached her (pp. 7-8, TSN, December 15, 1998). Appellant
introduced himself as "Johnny" and immediately afterwards, strangled her neck and boxed her abdomen (p. 10, TSN, December 15, 1998). Still in
shock, Mayia fell down (id.). At that point, a dog arrived and barked at them.
Appellant then proceeded to lower his black denim pants while simultaneously removing Mayia’s panty. He then inserted his penis inside Mayia’s
vagina (p. 11, id.). Mayia felt excruciating pain in her private parts (sic) but was not able to repel her aggressor whose strength and weight totally
engulfed her. Her only recourse was to cry while her young body was being ravished (p. 13, id.).
After satisfying his beastly desires, appellant raised his pants and ran away (p. 14, id.). Notwithstanding that her vagina was bleeding profusely and her
dress now covered with her own blood, Mayia managed to stand up and seek help. She ran to the house of Virginia Giron, which was only fifty (50)
meters away from the scene of the crime. In fact, Giron was outside when she heard her dog barking (apparently, it was the same dog barking at
appellant while he was consummating his lust on Mayia, pp. 2-3, TSN, January 12, 1999; p. 11, TSN, December 15, 1998). Looking at the direction of
the noise, she saw a confused Mayia approaching her with blood dripping from her private parts and thighs. When Giron asked Mayia what happened,
the latter shouted "ni-rape ako, ni-rape ako" (p. 4, TSN, January 4, 1999). Giron then summoned her husband and other companions to look for
Mayia’s attacker but was unable to find him. Giron then proceeded to Hermie Ponseca and Osias Ponseca, Mayia’s parents, to inform them of what
happened (p. 5, TSN, January 5, 1999; p. 2, TSN, January 19, 1999).
When her parents asked Mayia if she knew her assailant, the latter answered the name "Johnny." (id.) The couple brought their daughter to the
President Ramon Magsaysay Memorial Hospital for medical examination (p. 2, TSN, February 24, 1999). She was examined by Dra. Editha Dela Cruz
Divino, who issued a medico-legal certificate dated January 23, 1997 stating the following:
a. Bleeding of genitalia coming from median laceration at the vaginal floor around four (4) centimeters in size. Possible cause, a fall and then hitting a
sharp object and also an alleged sexual assault (p. 4, TSN, February 24, 1999).
b. Genitalia had hymenal lacerations at 3, 6, 9 and 12 o’clock positions.
(pp. 4-6 id.)
Because of the extent of the damage on her genitals, Mayia undertook an IV sedation operation to repair her lacerations (p. 6, id.) During her
confinement at the hospital, the Ponseca couple reported the incident to the Palauig PNP Police Station and recounted their daughter’s narration
including the name of the culprit as "Johnny" who, according to their neighbors, was a worker at the fishpond of Bartolome Tolentino (pp. 11-12, TSN,
January 5, 1999). Police operatives then proceeded to the said fishpond and arrested appellant. After her discharge from the hospital, Mayia learned
that appellant was already apprehended (pp. 3-8, TSN, January 5, 1999). In the police station, she was able to positively identify the appellant as the
person who sexually assaulted her (p. 18, TSN, December 15, 1998)."7
Appellant denied raping Mayia. Appellant testified that on the date of the alleged rape incident, he was working at a fishpond at Macarang, Zambales.
He heard of the rape of a young girl from his manager, Bartolome Tolentino ("Tolentino" for brevity). 8 Appellant further testified that on January 25,
1997, policemen went to the fishpond where he worked. The policemen arrested appellant and brought him to the police station at Palauig. Later, the
policemen took him to the municipal jail of Palauig.
On cross-examination, appellant testified that his nickname is not "Johnny" but "Jessie." 9 He testified that on January 17, 1997, at around 12 o’clock
noon, he left the fishpond and walked home to Barangay Alwa which was about thirty meters from the fishpond.10
The defense formally offered the testimony of witness Tolentino to prove that appellant was employed as caretaker of Tolentino’s fishpond for almost
two years before the alleged rape incident. Appellant was purportedly of good moral character while employed as a fishpond caretaker. The
prosecution admitted the offer of testimony. Hence, the trial court dispensed with the testimony of Tolentino in open court.11
After trial, the court a quo rendered judgment12 on October 26, 1999, the dispositive portion of which reads:
"WHEREFORE, foregoing considered, accused Jesus Perez y Sabung (SIC) is found GUILTY beyond reasonable doubt of the crime of Statutore
Rape, defined and penalized under Article 335 of the Revised Penal Code with the qualifying circumstance that the victim was only 6 years old at the
time of the commission of the offense, in relation to Section 5 (b), Article III, Republic Act 7610, and is sentenced to suffer the penalty of DEATH. Jesus
Perez is directed to pay to the private complainant the amount of Seventy-Five Thousand Pesos (P75,000.00) as and by way of civil indemnity and
Fifty Thousand (P50,000.00) as and by way of moral damages."
Hence, this automatic review.
In his brief, appellant raises the following lone assignment of error:
"THE COURT A QUO GRAVELY ERRED IN FINDING THAT THE GUILT OF THE APPELLANT HAS BEEN PROVEN BEYOND REASONABLE
DOUBT."
Appellant contends that his identification in open court by Mayia was highly irregular.l^vvphi1.net Appellant points out that the prosecutor had already
identified him as the man wearing an orange t-shirt when the prosecutor asked Mayia to identify her alleged rapist. Appellant stresses that when Mayia
identified him in open court, she referred to him as a man named "Johnny" and did not give any description or any identifying mark. Moreover,
appellant claims he was alone in the cell when Mayia identified him after the police arrested him. Appellant bewails that the identification was not done
with the usual police line-up.
Appellant’s contention is untenable.
As a rule, leading questions are not allowed. However, the rules provide for exceptions when the witness is a child of tender years 13 as it is usually
difficult for such child to state facts without prompting or suggestion. 14 Leading questions are necessary to coax the truth out of their reluctant lips. 15 In
the case at bar, the trial court was justified in allowing leading questions to Mayia as she was evidently young and unlettered, making the recall of
events difficult, if not uncertain.16 As explained in People v. Rodito Dagamos:17
"The trend in procedural law is to give wide latitude to the courts in exercising control over the questioning of a child witness. The reasons are spelled
out in our Rule on Examination of a Child Witness, which took effect on December 15, 2000, namely, (1) to facilitate the ascertainment of the truth, (2)
to ensure that questions are stated in a form appropriate to the developmental level of the child, (3) to protect children from harassment or undue
embarrassment, and (4) avoid waste of time. Leading questions in all stages of examination of a child are allowed if the same will further the interests
of justice."
The Court has repeatedly stated that it is highly inconceivable for a child of tender age, inexperienced in the ways of the world, to fabricate a charge of
defloration, undergo a medical examination of her private part, subject herself to public trial, and tarnish her family’s honor and reputation, unless she
was motivated by a strong desire to seek justice for the wrong committed against her.18
Mayia recounted her harrowing experience, thus:
"Q What time was this when Johnny introduced himself to you?
A I do not recall, ma’m.
Q Was it in the morning, noontime or in the afternoon or in the evening?
A Noontime, ma’m.
Q So, when Johnny said, ‘Ako si Johnny,’ what did you do?
A None, ma’m.
Q After that when Johnny said, ‘Ako si Johnny’, what happened?
A He strangled (sinakal) me.
Q Were there persons around in the place when Johnny strangled you?
A None, ma’m.
Q So, what did he do then after he strangled you?
A He boxed me on my stomach, ma’m.
Q When he boxed you on your stomach, what happened to you?

A I was shocked, ma’m.
Q Did you fall down?
A Before that, I was already lying down, so when he boxed me, I was shocked.
Q You said that you were already lying down. Who made you lie down?
A The person, ma’m.
Q Why were you shocked, Mayia?
A Because he strangled me and boxed me.
Q After he boxed you on your abdomen, what happened? What else did he do to you?
A There was a dog that arrived in the place and it barked at us. Then Johnny moved in a hurry by penetrating my private part and after he
dressing (SIC) me, he ran away.
Q You said that Johnny penetrated your private part. With what instrument did he use in penetrating your private part?
A His penis, ma’m.
Q What was he wearing at that time?
A A black denim, ma’m.
Q When he used his penis in entering your private part, did he remove his pants?
A No, ma’m.
Q What did he do with his pants?
A He brought out his penis, ma’m.
Q You mean to say Mayia, he lowered his pants?
A Yes, ma’m.
Q What about you, were you wearing any panty?
A Yes, ma’m.
Q What was your clothes at that time?
A A dress, ma’m.
Q When his penis entered your vagina Mayia, did he remove your panty?
A Yes, ma’m."19
The identity of appellant as the rapist has been established by the clear, convincing and straightforward testimony of Mayia. During the trial,
she testified as follows:
"Q Mayia, there is a man sitting wearing orange t-shirt, do you know this man?
A Yes, ma’m.
Q Do you know his name?
A Yes, ma’m.
Q What is his name?
A Johnny, ma’m.
Q Why do you know him?
A Because he introduced himself to me.
Q Where did he introduced himself to you?

A At Sulok, ma’m.
Q Sulok is a place?
A Yes, ma’m.
Q Do you have any companion when this man introduced himself to you?
A None, ma’m.
Q How did he introduce himself to you?
A The man introduced himself to me by saying, ‘Kilala mo ba ako? Hindi po. Ako si Johnny.’"20
The trial court further asked Mayia:
"Q You were talking of a certain Johnny. s this Johnny in court now?
A Yes, sir.
Q Can you point to him?
A Yes, sir.
Q Point to him.
A (Witness pointing to the person sitting at the accused bench and when asked of his name answered Jesus Perez)
Q Is this Johnny whom you point to the person whom you saw in that ‘Sulok?’
A Yes, sir." 21
Mayia’s simple, positive and straightforward recounting on the witness stand of her harrowing experience lends credence to her accusation. Her tender
age belies any allegation that her accusation was a mere invention impelled by some ill-motive. As the Court has stressed in numerous cases, when a
woman or a child victim says that she has been raped, she in effect says all that is necessary to show that rape was indeed committed.22
Mayia had a clear sight of appellant’s face since the rape occurred at "noontime." 23 Her proximity to appellant during the sexual assault leaves no doubt
as to the correctness of her identification for a man and woman cannot be physically closer to each other than during the sexual act. 24 Thus, even if
Mayia did not give the identifying marks of appellant, her positive identification of appellant sufficed to establish clearly the identity of her sexual
assailant.
Appellant’s claim that the police improperly suggested to Mayia to identify appellant is without basis. True, Mayia did not identify appellant in a police
line-up when Mayia identified appellant in his cell. However, appellant, in his testimony admitted that he had two other companions in his
cell.25 Moreover, the Court has held that there is no law requiring a police line-up as essential to a proper identification. Even without a police line-up,
there could still be a proper identification as long as the police did not suggest such identification to the witnesses. 26 The records are bereft of any
indication that the police suggested to Mayia to identify appellant as the rapist.
Mayia’s identification in open court of appellant as her rapist dispels any doubt as to the proper identification of appellant. Mayia positively identified
and pointed to appellant as her rapist. We are satisfied that her testimony, by itself, is sufficient identification of her rapist. As held in People v.
Marquez:27
"xxx. Indeed, the revelation of an innocent child whose chastity was abused deserves full credit, as the willingness of complainant to face police
investigation and to undergo the trouble and humiliation of a public trial is eloquent testimony of the truth of her complaint. Stated differently, it is most
improbable for a five-year old girl of tender years, so innocent and so guileless as the herein offended party, to brazenly impute a crime so serious as
rape to any man if it were not true."
In his Reply Brief, appellant contends that even assuming that the guilt of appellant has been proven beyond reasonable doubt, the trial court erred in
imposing the death penalty. Appellant maintains that the death penalty cannot be imposed on him for failure of the prosecution to prove Mayia’s age by
independent evidence. Appellant points out that while Mayia’s birth certificate was duly marked during the pre-trial, it was not presented and identified
during the trial. Appellant asserts that Mayia’s minority must not only be specifically alleged in the Information but must also be established beyond
reasonable doubt during the trial.1awphi1.nét
Appellant’s argument deserves scant consideration.
At the pre-trial, the parties mutually worked out a satisfactory disposition of the criminal case. Appellant, assisted by counsel, signed a Pre-Trial
Agreement28 which, as incorporated in the Pre-Trial Order, stated that:
"x x x.
3. The victim in this case, Mayia P. Ponseca was born on 23 May 1990 as evidenced by her birth certificate;
x x x." (Emphasis supplied)
During the pre-trial, the prosecution marked in evidence Mayia’s birth certificate as Exhibit "A".29 The prosecution submitted its Offer of Evidence30 which
included Exhibit "A", a certified true copy of Mayia’s birth certificate. The trial court admitted Exhibit "A"31 without any objection from the defense.
The purpose of pre-trial is to consider the following: (a) plea bargaining; (b) stipulation of facts; (c) marking for identification of evidence of the parties;
(d) waiver of objections to admissibility of evidence; (e) modification of the order of trial if the accused admits the charge but interposes lawful
defenses; and (f) such matters as will promote a fair and expeditious trial of the criminal and civil aspects of the case. 32 Facts stipulated and evidence
admitted during pre-trial bind the parties. Section 4, Rule 118 of the Revised Rules of Criminal Procedure33 provides:
"SEC. 4. Pre-trial order. - After the pre-trial conference, the court shall issue an order reciting the actions taken, the facts stipulated, and evidence
marked. Such order shall bind the parties, limit the trial to matters not disposed of, and control the course of the action during the trial, unless
modified by the court to prevent manifest injustice." (Emphasis supplied)
Moreover, Mayia herself testified in open court as to her age. During the trial on December 15, 1998, which was about twenty-three (23) months after
the rape incident occurred on January 17, 1997, Mayia testified on cross-examination that she was "8 years old last May 23."34 Thus, by deduction,
since Mayia was born on May 23, 1990 as shown in her birth certificate, she was about six (6) years and seven (7) months old on January 17, 1997,
the day the crime took place. We rule that the prosecution has indisputably proven that Mayia was below seven years old at the time appellant raped
her.1a\^/phi1.net
Finally, the trial court was correct in imposing the death penalty on appellant. Under Article 335 35 of the Revised Penal Code, as amended by Section
11 of Republic Act No. 7659,36 the death penalty shall be imposed if the crime of rape is committed against a child below seven (7) years old. Mayia
was six (6) years and seven (7) months old when appellant raped her.
If rape is qualified by any of the circumstances 37 warranting the imposition of the death penalty, the civil indemnity for actual or compensatory damages
is mandatory.38 Following prevailing jurisprudence, the civil indemnity is fixed at P75,000.00. In addition, moral damages of P50,000.00 should also be
awarded to the rape victim without need for pleading or proving it.39
WHEREFORE, the Decision dated October 26, 1999 of the Regional Trial Court of Iba, Zambales, Branch 69, in Criminal Case No. RTC-2116-I, finding
appellant Jesus S. Perez guilty beyond reasonable doubt of the crime of qualified rape, sentencing him to suffer the death penalty, 40 and ordering him
to pay the victim Mayia P. Ponseca the amount of P75,000.00 as civil indemnity and P50,000.00 as moral damages, is AFFIRMED in toto.
In accordance with Article 83 of the Revised Penal Code, as amended by Section 25 of the Republic Act No. 7659, upon the finality of this Decision, let
the records of this case be forthwith forwarded to the Office of the President of the Philippines for possible exercise of the pardoning power.
SO ORDERED.
Davide, Jr., C.J., Bellosillo, Puno, Vitug, Mendoza, Panganiban, Quisumbing, Sandoval-Gutierrez, Carpio, Austria-Martinez, Corona, Carpio-Morales,
Callejo, Sr., and Azcuna, JJ., concur.
Ynares-Santiago, J., on leave.

G.R. No. 206294
PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee,

vs.
CERILO "ILOY" ILOGON, Accused-Appellant.
RESOLUTION
PEREZ, J.:
Before us is an appeal from the Decision 1 of the Court of Appeals, Cagayan de Oro City, Twenty-Second Division, in CA-G.R. CR-HC No. 00837-MIN
dated 24 February 2012, which dismissed the appeal of appellant Cerilo "Iloy" Ilogon and affirmed with modification the Judgment 2 dated 12 May 2010
of the Regional Trial Court (RTC) of Cagayan de Oro City, Branch 37, in Criminal Case No. 2003-324, finding appellant guilty beyond reasonable doubt
of the crime of Qualified Rape.
The real name and identity of the rape victim, as well as the members of her immediate family, including other identifying information, shall not be
disclosed pursuant to the Court's ruling in People v. Cabalquinto.3 We shall refer to the rape victim as AAA, her mother as BBB. The rest of AAA's
relatives shall be called by their initials.
The prosecution established that in the afternoon of 15 December 2002, six (6) year-old AAA was at her aunt L's house, playing with her cousins J and
P. They climbed up the roof of the house where AAA was left behind crying because she could not go down after the others. Appellant, nicknamed
"Iloy" and her aunt's neighbor, helped AAA by carrying her down but towards his own house. There, appellant removed his clothes, covered AAA's
mouth, kissed her and had carnal knowledge of her. AAA felt pain and cried. Afterwards, nearing nighttime, AAA ran away and went home.4
Around nine o'clock in the evening of the same day, AAA complained to her mother of bodily ache and pain and that she could not urinate as her
female organ was painful. BBB examined and found it to be reddish in appearance. The next day, BBB found out about the incident from AAA's
cousins J and P which AAA confirmed. BBB searched for appellant to no avail. BBB thus reported the incident to the police and thereafter, BBB
brought AAA to the Northern Mindanao Medical Center (NMMC) for physical examination.5
AAA was physically examined by Dr. Harry L. Rodriguez, Medical Officer III of NMMC who reported in the Living Case Report that AAA's hymen had
healed lacerations at three o'clock and six o'clock positions.6
Appellant was charged with the crime of rape in an Information, the accusatory portion of which reads as follows:
That on or about December 15, 2002, at x x x, x x x, Philippines, and within the jurisdiction of this Honorable Court, the above-named accused, did then
and there willfully, unlawfully and feloniously committed an act of sexual assault upon AAA, a 6-year old minor, by inserting his penis into her genital,
against her will, thereby causing the following on the genital of AAA, to wit:
Hymen- with healed laceration at 3 & 6 o'clock positions;
Contrary to and in violation of Article 266-A of the Revised Penal Code.7
Upon arraignment, appellant pleaded not guilty to the crime charged. During pre-trial, the parties stipulated, among others, that: (1) the nickname of the
accused is Iloy; (2) AAA and appellant are neighbors; (3) AAA is the daughter of BBB and that (4) AAA is a minor.8
Appellant interposed the defense of denial. He admitted having helped carry AAA down the roof but denied the rape charge. 9 Three (3) neighbors were
presented as witnesses to corroborate appellant's story.10 Appellant's wife likewise took the witness stand to support her husband's version of the
incident.11
After trial, the RTC on 12 May 2010 found appellant guilty beyond reasonable doubt of qualified rape. The RTC found no reason not to lend credence to
the positive and consistent testimony of AAA. The dispositive portion of the RTC Decision reads:
WHEREFORE, the [c]ourt finds accused Cerilo "Iloy" Ilogon guilty beyond reasonable doubt of the crime of rape defined and penalized under A1iicle
266-A and 266-B of the Revised Penal Code, as amended, and the said accused is hereby sentenced to suffer the penalty of reclusion perpetua.
Moreover, the accused is sentenced to pay the victim the sum of FIFTY THOUSAND PESOS (P50,000.00) by way of moral damages and another sum
of FIFTY THOUSAND PESOS (P50,000.00) by way of civil indemnity.12
The Court of Appeals affirmed the RTC's evaluation of AAA's credibility and found no misapprehension or misappreciation of facts. The Court of
Appeals however modified the section on damages, to wit:
WHEREFORE, the May 12, 2010 Judgment rendered by the Regional Trial Court[,] Branch 37, Cagayan de Oro City in Criminal Case No. 2003-324
finding accused-appellant Cerilo Ilogon guilty beyond reasonable doubt of Rape and sentencing him to suffer the penalty of reclusion perpetua with all
the accessory penalties is AFFIRMED with MODIFICATION as to damages.
Accused-appellant is ORDERED to pay the victim the sum of:
1. PhP75,000 as moral damages;
2. Civil Indemnity or P75,000.00; and
3. Exemplary damages or P30,000.00 with simple interest on the above damages accruing at the rate of six percent (6%) per annum from the finality or
this decision until fully paid. 13
Now before the Court for final review, we affirm appellant's conviction.
The law, in Articles 266-A and 266-B of the Revised Penal Code, as amended by Republic Act No. 8353, 14 defines and punishes rape as follows:
Article 266-A. Rape; When and How committed. - Rape is committed -

1. By a man who shall have carnal knowledge of a woman under any of the following circumstances:
a. Through force, threat or intimidation;
b. When the offended party is deprived of reason or otherwise unconscious;
c. By means of fraudulent machination or grave abuse of authority; and
d. When the woman is under twelve (12) years of age or is demented, even though none of the circumstances mentioned above be
present.
Article 266-B. Penalties- Rape under paragraph 1 of the next preceding article shall be punished by reclusion perpetua.
xxxx
The death penalty shall also be imposed if the crime of rape is committed with any of the following attendant circumstances:
xxxx
5) When the victim is a child below seven (7) years old;
xxxx
Statutory rape is committed by sexual intercourse with a woman below twelve (12) years of age regardless of her consent, or the lack of it to the sexual
act. Proof of force, intimidation, or consent is unnecessary. The absence of free consent is conclusively presumed when the victim is below the age of
twelve (12). Sexual congress with a girl under twelve (12) years old is always rape. At that age, the law presumes that the victim does not possess
discernment and is incapable of giving intelligent consent to the sexual act. To convict an accused of the crime of statutory rape, the prosecution
should prove: (l) the age of the complainant; (2) the identity of the accused; and (3) the sexual intercourse between the accused and the complainant.15
Of primary importance in rape cases is the credibility of the victim's testimony because the accused may be convicted solely on said testimony
provided it is credible, natural, convincing and consistent with human nature and the normal course of things. 16 Testimonies of child victims are given
full weight and credit, for when a woman or a girl-child says that she has been raped, she says in effect all that is necessary to show that rape was
indeed committed. Youth and maturity are generally badges of truth and sincerity. 17
The prosecution presented proof of the required elements of statutory rape. AAA's age, only six (6) years old at the time of the crime, was evidenced
by her Birth Certificate; 18 she was born on 19 May 1996, while the alleged rape was committed on 15 December 2002. AAA, as a ten (10) year old,
positively identified in court appellant as the perpetrator of the crime. 19 AAA, in open court, also related the painful ordeal of her sexual abuse by
appellant down to the sordid details. The trial court, which had the better position to evaluate and appreciate testimonial evidence found AAA's
testimony to be more credible than that of the defense. 20 We quote the pertinent portions of AAA's testimony:
Q: By the way do you know Cerilo Ilogon or Iloy?
A: Yes, Ma'am.
Q: And are you neighbors with "Iloy"?
A: Yes, Ma'am.
xxxx
Q: Where were you when Iloy removed his clothes in his house?
A: I was on the floor.
Q: On the floor of' Iloy's house?
A: Yes, Ma'am.
Q: And when Iloy removed his clothes and you were on the floor, what did he do to you if any?
A: He covered my mouth.
Q: After he covered your mouth, what did he do next?
A: He kissed my mouth.
xxxx
Q: What did he use to prick your vagina AAA?
A: His penis.
Q: Did you sec lloy used (sic) his penis to prick your vagina [AAA]?
A: Yes, Ma'am.
xxxx
Q: When Iloy pricked your vagina with his penis what did you feel?
A: I felt pain.
Q: And considering that you felt pain, didn't you shout?
A: But he covered my mouth.
Q: And after he pricked your vagina with his penis, what if any did Iloy do?
A: He also inserted his finger into my vagina.
Q: What did you feel when Iloy directed his finger into your vagina?
A: It's painful.
Q: And did you cry because of the pain?
A: Yes, Ma’am.21
Some leading questions were warranted given the circumstances. A child of tender years may be asked leading questions under Section 10(c), Rule
132 of the Rules of Court. Section 20 of the 2000 Rule on Examination of a Child Witness also provides that the court may allow leading questions in
all stages of examination of a child if the same will further the interests of justice. This rule was formulated to allow children to give reliable and
complete evidence, minimize trauma to children, encourage them to testify in legal proceedings and facilitate the ascertainment of truth.22
The medical report of the physician confirms the truthfulness of the charge. 23 While indeed the physician was not presented in court, it bears
underscoring however that medical examinations are merely corroborative in character and not an indispensable element for conviction in rape.
Primordial is the clear, unequivocal and credible testimony of private complainant which the Court, together with both the trial and appellate courts, so
finds. 24
The Court rejects appellant's defense of denial. Being a negative defense, if the defense of denial is not substantiated by clear and convincing
evidence, as is the case herein, it merits no weight in law and cannot be given greater evidentiary value than the testimony of credible witnesses who
testified on affirmative matters. 25 It has been ruled that between categorical testimonies that ring of truth on one hand and bare denial on the other, the
former must prevail. Positive identification of the appellant, when categorical and consistent and without any ill motive on the part of the eyewitnesses
testifying on the matter, prevails over alibi and denial. 26 Significantly, one of the defense witnesses, Merlinda Gongob, confessed her dislike of and ill
feelings towards BBB, reason to consider her not an unbiased witness.27
Further, although the rape incident in the case at bar was reported to the police eighteen (18) days after, such delay does not affect the truthfulness of
the charge in the absence of other circumstances that show the same to be a mere concoction or impelled by some ill motive.28
In sum, the prosecution was able to establish appellant's guilt of the crime charged beyond reasonable doubt.
Statutory rape, penalized under Article 266 A (1), paragraph (d) of the Revised Penal Code, as amended by Republic Act No. 8353 or the Anti-Rape
Law of 1997, carries the penalty of reclusion perpetua unless attended by qualifying circumstances defined under Article 266-B. In the instant case, as
the victim, AAA is below seven (7) years old, specifically six (6) years old at the time of the crime, the imposable penalty is death. The passage of
Republic Act No. 9346 debars the imposition of the death penalty without declassifying the crime of qualified rape as heinous. Thus, we affirm the
penalties imposed by the RTC and the Court of Appeals. 29 However, in view of Republic Act No. 9346, the penalty of reclusion perpetua should be
imposed without the eligibility of parole.
The award of damages on the other hand should be modified and increased as follows: Pl00,000.00 as civil indemnity, P100,000.00 as moral
damages, and P100,000.00 as exemplary damages pursuant to prevailing jurisprudence.30 Further, the amount of damages awarded should earn
interest at the rate of six percent (6%) per annum from the finality of this judgment until said amounts are fully paid.31
WHEREFORE, premises considered, the Decision dated 24 February 2012 of the Court of Appeals of Cagayan de Oro City, Twenty-Second Division,
in CA-GR. CR-HC No. 00837-MIN, finding appellant Cerilo "Iloy" Ilogon guilty beyond reasonable doubt of the crime of qualified rape in Criminal Case
No. 2003-324, is hereby AFFIRMED with MODIFICATIONS that appellant is not eligible for parole.1âwphi1 Appellant is also ORDERED to pay the
private offended party as follows: P100,000.00 as civil indemnity, P-100,000.00 as moral damages, and P100,000.00 as exemplary damages. He
is FURTHER ordered to pay interest on all damages awarded at the legal rate of six percent (6%) per annum from the date of finality of this judgment
until fully paid.
No pronouncement as to costs.
SO ORDERED.
G.R. No. 160855 April 16, 2008
CONCEPCION CHUA GAW, petitioner,

vs.
SUY BEN CHUA and FELISA CHUA, respondents.
DECISION
NACHURA, J.:
This is a Petition for Review on Certiorari from the Decision1 of the Court of Appeals (CA) in CA-G.R. CV No. 66790 and Resolution 2 denying the
motion for reconsideration. The assailed decision affirmed the ruling of the Regional Trial Court (RTC) in a Complaint for Sum of Money in favor of the
plaintiff.
The antecedents are as follows:
Spouses Chua Chin and Chan Chi were the founders of three business enterprises 3 namely: Hagonoy Lumber, Capitol Sawmill Corporation, and
Columbia Wood Industries. The couple had seven children, namely, Santos Chua; Concepcion Chua; Suy Ben Chua; Chua Suy Phen; Chua Sioc
Huan; Chua Suy Lu; and Julita Chua. On June 19, 1986, Chua Chin died, leaving his wife Chan Chi and his seven children as his only surviving heirs.
At the time of Chua Chin’s death, the net worth of Hagonoy Lumber was P415,487.20.4
On December 8, 1986, his surviving heirs executed a Deed of Extra-Judicial Partition and Renunciation of Hereditary Rights in Favor of a Co-
Heir5 (Deed of Partition, for brevity), wherein the heirs settled their interest in Hagonoy Lumber as follows: one-half (1/2) thereof will pertain to the
surviving spouse, Chan Chi, as her share in the conjugal partnership; and the other half, equivalent to P207,743.60, will be divided among Chan Chi
and the seven children in equal pro indiviso shares equivalent to P25,967.00 each.6 In said document, Chan Chi and the six children likewise agreed to
voluntarily renounce and waive their shares over Hagonoy Lumber in favor of their co-heir, Chua Sioc Huan.
In May 1988, petitioner Concepcion Chua Gaw and her husband, Antonio Gaw, asked respondent, Suy Ben Chua, to lend them P200,000.00 which
they will use for the construction of their house in Marilao, Bulacan. The parties agreed that the loan will be payable within six (6) months without
interest.7 On June 7, 1988, respondent issued in their favor China Banking Corporation Check No. 240810 8 for P200,000.00 which he delivered to the
couple’s house in Marilao, Bulacan. Antonio later encashed the check.
On August 1, 1990, their sister, Chua Sioc Huan, executed a Deed of Sale over all her rights and interests in Hagonoy Lumber for a consideration
of P255,000.00 in favor of respondent.9
Meantime, the spouses Gaw failed to pay the amount they borrowed from respondent within the designated period. Respondent sent the couple a
demand letter,10 dated March 25, 1991, requesting them to settle their obligation with the warning that he will be constrained to take the appropriate
legal action if they fail to do so.
Failing to heed his demand, respondent filed a Complaint for Sum of Money against the spouses Gaw with the RTC. The complaint alleged that on
June 7, 1988, he extended a loan to the spouses Gaw for P200,000.00, payable within six months without interest, but despite several demands, the
couple failed to pay their obligation.11
In their Answer (with Compulsory Counterclaim), the spouses Gaw contended that the P200,000.00 was not a loan but petitioner’s share in the profits
of Hagonoy Lumber, one of her family’s businesses. According to the spouses, when they transferred residence to Marilao, Bulacan, petitioner asked
respondent for an accounting, and payment of her share in the profits, of Capital Sawmills Corporation, Columbia Wood Industries Corporation, and
Hagonoy Lumber. They claimed that respondent persuaded petitioner to temporarily forego her demand as it would offend their mother who still wanted
to remain in control of the family businesses. To insure that she will defer her demand, respondent allegedly gave her P200,000.00 as her share in the
profits of Hagonoy Lumber.12
In his Reply, respondent averred that the spouses Gaw did not demand from him an accounting of Capitol Sawmills Corporation, Columbia Wood
Industries, and Hagonoy Lumber. He asserted that the spouses Gaw, in fact, have no right whatsoever in these businesses that would entitle them to
an accounting thereof. Respondent insisted that the P200,000.00 was given to and accepted by them as a loan and not as their share in Hagonoy
Lumber.13
With leave of court, the spouses Gaw filed an Answer (with Amended Compulsory Counterclaim) wherein they insisted that petitioner, as one of the
compulsory heirs, is entitled to one-sixth (1/6) of Hagonoy Lumber, which the respondent has arrogated to himself. They claimed that, despite repeated
demands, respondent has failed and refused to account for the operations of Hagonoy Lumber and to deliver her share therein. They then prayed that
respondent make an accounting of the operations of Hagonoy Lumber and to deliver to petitioner her one-sixth (1/6) share thereof, which was
estimated to be worth not less than P500,000.00.14
In his Answer to Amended Counterclaim, respondent explained that his sister, Chua Sioc Huan, became the sole owner of Hagonoy Lumber when the
heirs executed the Deed of Partition on December 8, 1986. In turn, he became the sole owner of Hagonoy Lumber when he bought it from Chua Sioc
Huan, as evidenced by the Deed of Sale dated August 1, 1990.15
Defendants, in their reply,16 countered that the documents on which plaintiff anchors his claim of ownership over Hagonoy Lumber were not true and
valid agreements and do not express the real intention of the parties. They claimed that these documents are mere paper arrangements which were
prepared only upon the advice of a counsel until all the heirs could reach and sign a final and binding agreement, which, up to such time, has not been
executed by the heirs.17
During trial, the spouses Gaw called the respondent to testify as adverse witness under Section 10, Rule 132. On direct examination, respondent
testified that Hagonoy Lumber was the conjugal property of his parents Chua Chin and Chan Chi, who were both Chinese citizens. He narrated that,
initially, his father leased the lots where Hagonoy Lumber is presently located from his godfather, Lu Pieng, and that his father constructed the two-
storey concrete building standing thereon. According to respondent, when he was in high school, it was his father who managed the business but he
and his other siblings were helping him. Later, his sister, Chua Sioc Huan, managed Hogonoy Lumber together with their other brothers and sisters. He
stated that he also managed Hagonoy Lumber when he was in high school, but he stopped when he got married and found another job. He said that
he now owns the lots where Hagonoy Lumber is operating.18
On cross-examination, respondent explained that he ceased to be a stockholder of Capitol Sawmill when he sold his shares of stock to the other
stockholders on January 1, 1991. He further testified that Chua Sioc Huan acquired Hagonoy Lumber by virtue of a Deed of Partition, executed by the
heirs of Chua Chin. He, in turn, became the owner of Hagonoy Lumber when he bought the same from Chua Sioc Huan through a Deed of Sale dated
August 1, 1990. 19
On re-direct examination, respondent stated that he sold his shares of stock in Capitol Sawmill for P254,000.00, which payment he received in cash.
He also paid the purchase price of P255,000.00 for Hagonoy Lumber in cash, which payment was not covered by a separate receipt as he merely
delivered the same to Chua Sioc Huan at her house in Paso de Blas, Valenzuela. Although he maintains several accounts at Planters Bank,
Paluwagan ng Bayan, and China Bank, the amount he paid to Chua Sioc Huan was not taken from any of them. He kept the amount in the house
because he was engaged in rediscounting checks of people from the public market. 20
On December 10, 1998, Antonio Gaw died due to cardio vascular and respiratory failure.21
On February 11, 2000, the RTC rendered a Decision in favor of the respondent, thus:
WHEREFORE, in the light of all the foregoing, the Court hereby renders judgement ordering defendant Concepcion Chua Gaw to pay the
[respondent] the following:
1. P200,000.00 representing the principal obligation with legal interest from judicial demand or the institution of the complaint on November
19, 1991;
2. P50,000.00 as attorney’s fees; and
3. Costs of suit.
The defendants’ counterclaim is hereby dismissed for being devoid of merit.
SO ORDERED.22
The RTC held that respondent is entitled to the payment of the amount of P200,000.00 with interest. It noted that respondent personally issued Check
No. 240810 to petitioner and her husband upon their request to lend them the aforesaid amount. The trial court concluded that the P200,000.00 was a
loan advanced by the respondent from his own funds and not remunerations for services rendered to Hagonoy Lumber nor petitioner’s advance share
in the profits of their parents’ businesses.
The trial court further held that the validity and due execution of the Deed of Partition and the Deed of Sale, evidencing transfer of ownership of
Hagonoy Lumber from Chua Sioc Huan to respondent, was never impugned. Although respondent failed to produce the originals of the documents,
petitioner judicially admitted the due execution of the Deed of Partition, and even acknowledged her signature thereon, thus constitutes an exception to
the best evidence rule. As for the Deed of Sale, since the contents thereof have not been put in issue, the non-presentation of the original document is
not fatal so as to affect its authenticity as well as the truth of its contents. Also, the parties to the documents themselves do not contest their validity.
Ultimately, petitioner failed to establish her right to demand an accounting of the operations of Hagonoy Lumber nor the delivery of her 1/6 share
therein.
As for petitioner’s claim that an accounting be done on Capitol Sawmill Corporation and Columbia Wood Industries, the trial court held that respondent
is under no obligation to make such an accounting since he is not charged with operating these enterprises.23
Aggrieved, petitioner appealed to the CA, alleging that the trial court erred (1) when it considered the amount of P200,000.00 as a loan obligation and
not Concepcion’s share in the profits of Hagonoy Lumber; (2) when it considered as evidence for the defendant, plaintiff’s testimony when he was
called to testify as an adverse party under Section 10 (e), Rule 132 of the Rules of Court; and (3) when it considered admissible mere copies of the
Deed of Partition and Deed of Sale to prove that respondent is now the owner of Hagonoy Lumber.24
On May 23, 2003, the CA affirmed the Decision of the RTC. 25 The appellate court found baseless the petitioner’s argument that the RTC should not
have included respondent’s testimony as part of petitioner’s evidence. The CA noted that the petitioner went on a fishing expedition, the taking of
respondent’s testimony having taken up a total of eleven hearings, and upon failing to obtain favorable information from the respondent, she now
disclaims the same. Moreover, the CA held that the petitioner failed to show that the inclusion of respondent’s testimony in the statement of facts in the
assailed decision unduly prejudiced her defense and counterclaims. In fact, the CA noted that the facts testified to by respondent were deducible from
the totality of the evidence presented.
The CA likewise found untenable petitioner’s claim that Exhibits "H" (Deed of Sale) and Exhibit "I" (Deed of Partition) were merely temporary paper
arrangements. The CA agreed with the RTC that the testimony of petitioner regarding the matter was uncorroborated — she should have presented the
other heirs to attest to the truth of her allegation. Instead, petitioner admitted the due execution of the said documents. Since petitioner did not dispute
the due execution and existence of Exhibits "H" and "I", there was no need to produce the originals of the documents in accordance with the best
evidence rule.26
On December 2, 2003, the CA denied the petitioner’s motion for reconsideration for lack of merit.27
Petitioner is before this Court in this petition for review on certiorari, raising the following errors:
I. THAT ON THE PRELIMINARY IMPORTANT RELATED ISSUE, CLEAR AND PALPABLE LEGAL ERROR HAS BEEN COMMITTED IN
THE APPLICATION AND LEGAL SIGNIFICANCE OF THE RULE ON EXAMINATION OF ADVERSE PARTY OR HOSTILE WITNESS
UNDER SECTION 10 (d) AND (e) OF RULE 132, CAUSING SERIOUS DOUBT ON THE LOWER COURT’S APPEALED DECISION’S
OBJECTIVITY, ANNEX "C".
II. THAT ON THE IMPORTANT LEGAL ISSUE RELATIVE TO THE AFORESAID TWO OPPOSING CLAIMS OF RESPONDENT AND
PETITIONER, CLEAR AND PALPABLE LEGAL ERROR HAS BEEN COMMITTED UNDER THE LOWER COURT’S DECISION ANNEX
"C" AND THE QUESTIONED DECISION OF MAY 23, 2003 (ANNEX "A") AND THE RESOLUTION OF DECEMBER 2, 2003, (ANNEX "B")
IN DEVIATING FROM AND DISREGARDING ESTABLISHED SUPREME COURT DECISIONS ENJOINING COURTS NOT TO
OVERLOOK OR MISINTERPRET IMPORTANT FACTS AND CIRCUMSTANCES, SUPPORTED BY CLEAR AND CONVINCING
EVIDENCE ON RECORD, AND WHICH ARE OF GREAT WEIGHT AND VALUE, WHICH WOULD CHANGE THE RESULT OF THE
CASE AND ARRIVE AT A JUST, FAIR AND OBJECTIVE DECISION. (Citations omitted)
III. THAT FINALLY, AS TO THE OTHER LEGAL IMPORTANT ISSUE RELATIVE TO CLAIM OR OWNERSHIP OF THE "Hagonoy
Lumber" FAMILY BUSINESS, CLEAR AND PALPABLE LEGAL ERROR HAS BEEN COMMITTED ON THE REQUIREMENTS AND
CORRECT APPLICATION OF THE "BEST EVIDENCE RULE" UNDER SECTION 3, RULE 130 OF THE REVISED RULES OF COURT.28
The petition is without merit.

Petitioner contends that her case was unduly prejudiced by the RTC’s treatment of the respondent’s testimony as adverse witness during cross-
examination by his own counsel as part of her evidence. Petitioner argues that the adverse witness’ testimony elicited during cross-examination should
not be considered as evidence of the calling party. She contends that the examination of respondent as adverse witness did not make him her witness
and she is not bound by his testimony, particularly during cross-examination by his own counsel. 29 In particular, the petitioner avers that the following
testimony of the respondent as adverse witness should not be considered as her evidence:
(11.a) That RESPONDENT-Appellee became owner of the "HAGONOY LUMBER" business when he bought the same from Chua Sioc
Huan through a Deed of Sale dated August 1, 1990 (EXH.H);
(11.b) That the "HAGONOY LUMBER," on the other hand, was acquired by the sister Chua Sioc Huan, by virtue of Extrajudicial Partition
and Renunciation of Hereditary Rights in favor of a Co-Heir (EXH. I);
(11.c) That the 3 lots on which the "HAGONOY LUMBER" business is located were acquired by Lu Pieng from the Santos family under the
Deed of Absolute Sale (EXH. J); that Lu Pieng sold the Lots to Chua Suy Lu in 1976 (EXHS. K, L, & M.); that Chua Siok Huan eventually
became owner of the 3 Lots; and in 1989 Chua Sioc Huan sold them to RESPONDENT-Appellee (EXHS. Q and P); that after he acquired
the 3 Lots, he has not sold them to anyone and he is the owner of the lots.30
We do not agree that petitioner’s case was prejudiced by the RTC’s treatment of the respondent’s testimony during cross-examination as her evidence.
If there was an error committed by the RTC in ascribing to the petitioner the respondent’s testimony as adverse witness during cross-examination by
his own counsel, it constitute a harmless error which would not, in any way, change the result of the case.
In the first place, the delineation of a piece of evidence as part of the evidence of one party or the other is only significant in determining whether the
party on whose shoulders lies the burden of proof was able to meet the quantum of evidence needed to discharge the burden. In civil cases, that
burden devolves upon the plaintiff who must establish her case by preponderance of evidence. The rule is that the plaintiff must rely on the strength of
his own evidence and not upon the weakness of the defendant’s evidence. Thus, it barely matters who with a piece of evidence is credited. In the end,
the court will have to consider the entirety of the evidence presented by both parties. Preponderance of evidence is then determined by considering all
the facts and circumstances of the case, culled from the evidence, regardless of who actually presented it.31
That the witness is the adverse party does not necessarily mean that the calling party will not be bound by the former’s testimony. The fact remains that
it was at his instance that his adversary was put on the witness stand. Unlike an ordinary witness, the calling party may impeach an adverse witness in
all respects as if he had been called by the adverse party, 32 except by evidence of his bad character. 33 Under a rule permitting the impeachment of an
adverse witness, although the calling party does not vouch for the witness’ veracity, he is nonetheless bound by his testimony if it is not contradicted or
remains unrebutted.34
A party who calls his adversary as a witness is, therefore, not bound by the latter’s testimony only in the sense that he may contradict him by
introducing other evidence to prove a state of facts contrary to what the witness testifies on. 35 A rule that provides that the party calling an adverse
witness shall not be bound by his testimony does not mean that such testimony may not be given its proper weight, but merely that the calling party
shall not be precluded from rebutting his testimony or from impeaching him.36 This, the petitioner failed to do.
In the present case, the petitioner, by her own testimony, failed to discredit the respondent’s testimony on how Hagonoy Lumber became his sole
property. The petitioner admitted having signed the Deed of Partition but she insisted that the transfer of the property to Chua Siok Huan was only
temporary. On cross-examination, she confessed that no other document was executed to indicate that the transfer of the business to Chua Siok Huan
was a temporary arrangement. She declared that, after their mother died in 1993, she did not initiate any action concerning Hagonoy Lumber, and it
was only in her counterclaim in the instant that, for the first time, she raised a claim over the business.
Due process requires that in reaching a decision, a tribunal must consider the entire evidence presented. 37 All the parties to the case, therefore, are
considered bound by the favorable or unfavorable effects resulting from the evidence.38 As already mentioned, in arriving at a decision, the entirety of
the evidence presented will be considered, regardless of the party who offered them in evidence. In this light, the more vital consideration is not
whether a piece of evidence was properly attributed to one party, but whether it was accorded the apposite probative weight by the court. The
testimony of an adverse witness is evidence in the case and should be given its proper weight, and such evidence becomes weightier if the other party
fails to impeach the witness or contradict his testimony.
Significantly, the RTC’s finding that the P200,000.00 was given to the petitioner and her husband as a loan is supported by the evidence on record.
Hence, we do not agree with the petitioner’s contention that the RTC has overlooked certain facts of great weight and value in arriving at its decision.
The RTC merely took into consideration evidence which it found to be more credible than the self-serving and uncorroborated testimony of the
petitioner.
At this juncture, we reiterate the well-entrenched doctrine that the findings of fact of the CA affirming those of the trial court are accorded great respect,
even finality, by this Court. Only errors of law, not of fact, may be reviewed by this Court in petitions for review on certiorari under Rule 45.39 A
departure from the general rule may be warranted where the findings of fact of the CA are contrary to the findings and conclusions of the trial court, or
when the same is unsupported by the evidence on record. 40 There is no reason to apply the exception in the instant case because the findings and
conclusions of the CA are in full accord with those of the trial court. These findings are buttressed by the evidence on record. Moreover, the issues and
errors alleged in this petition are substantially the very same questions of fact raised by petitioner in the appellate court.
On the issue of whether the P200,000.00 was really a loan, it is well to remember that a check may be evidence of indebtedness. 41 A check, the entries
of which are in writing, could prove a loan transaction. 42 It is pure naiveté to insist that an entrepreneur who has several sources of income and has
access to considerable bank credit, no longer has any reason to borrow any amount.
The petitioner’s allegation that the P200,000.00 was advance on her share in the profits of Hagonoy Lumber is implausible. It is true that Hagonoy
Lumber was originally owned by the parents of petitioner and respondent. However, on December 8, 1986, the heirs freely renounced and waived in
favor of their sister Chua Sioc Huan all their hereditary shares and interest therein, as shown by the Deed of Partition which the petitioner herself
signed. By virtue of this deed, Chua Sioc Huan became the sole owner and proprietor of Hagonoy Lumber. Thus, when the respondent delivered the
check for P200,000.00 to the petitioner on June 7, 1988, Chua Sioc Huan was already the sole owner of Hagonoy Lumber. At that time, both petitioner
and respondent no longer had any interest in the business enterprise; neither had a right to demand a share in the profits of the business. Respondent
became the sole owner of Hagonoy Lumber only after Chua Sioc Huan sold it to him on August 1, 1990. So, when the respondent delivered to the
petitioner the P200,000.00 check on June 7, 1988, it could not have been given as an advance on petitioner’s share in the business, because at that
moment in time both of them had no participation, interest or share in Hagonoy Lumber. Even assuming, arguendo, that the check was an advance on
the petitioner’s share in the profits of the business, it was highly unlikely that the respondent would deliver a check drawn against his personal, and not
against the business enterprise’s account.
It is also worthy to note that both the Deed of Partition and the Deed of Sale were acknowledged before a Notary Public. The notarization of a private
document converts it into a public document, and makes it admissible in court without further proof of its authenticity. 43 It is entitled to full faith and
credit upon its face.44 A notarized document carries evidentiary weight as to its due execution, and documents acknowledged before a notary public
have in their favor the presumption of regularity. Such a document must be given full force and effect absent a strong, complete and conclusive proof of
its falsity or nullity on account of some flaws or defects recognized by law. 45 A public document executed and attested through the intervention of a
notary public is, generally, evidence of the facts therein express in clear unequivocal manner.46
Petitioner, however, maintains that the RTC erred in admitting in evidence a mere copy of the Deed of Partition and the Deed of Sale in violation of the
best evidence rule. In addition, petitioner insists that the Deed of Sale was not the result of bona fide negotiations between a true seller and buyer.
The "best evidence rule" as encapsulated in Rule 130, Section 3, 47 of the Revised Rules of Civil Procedure applies only when the content of such
document is the subject of the inquiry. Where the issue is only as to whether such document was actually executed, or exists, or on the circumstances
relevant to or surrounding its execution, the best evidence rule does not apply and testimonial evidence is admissible. Any other substitutionary
evidence is likewise admissible without need to account for the original. 48 Moreover, production of the original may be dispensed with, in the trial court’s
discretion, whenever the opponent does not bona fide dispute the contents of the document and no other useful purpose will be served by requiring
production.49
Accordingly, we find that the best evidence rule is not applicable to the instant case. Here, there was no dispute as to the terms of either deed; hence,
the RTC correctly admitted in evidence mere copies of the two deeds. The petitioner never even denied their due execution and admitted that she
signed the Deed of Partition.50 As for the Deed of Sale, petitioner had, in effect, admitted its genuineness and due execution when she failed to
specifically deny it in the manner required by the rules. 51 The petitioner merely claimed that said documents do not express the true agreement and
intention of the parties since they were only provisional paper arrangements made upon the advice of counsel. 52 Apparently, the petitioner does not
contest the contents of these deeds but alleges that there was a contemporaneous agreement that the transfer of Hagonoy Lumber to Chua Sioc Huan
was only temporary.
An agreement or the contract between the parties is the formal expression of the parties’ rights, duties and obligations. It is the best evidence of the
intention of the parties.53 The parties’ intention is to be deciphered from the language used in the contract, not from the unilateral post facto assertions
of one of the parties, or of third parties who are strangers to the contract.54 Thus, when the terms of an agreement have been reduced to writing, it is
deemed to contain all the terms agreed upon and there can be, between the parties and their successors in interest, no evidence of such terms other
than the contents of the written agreement.55
WHEREFORE, premises considered, the petition is DENIED. The Decision of the Court of Appeals in CA-G.R. CV No. 66790 dated May 23, 2003 and
Resolution dated December 2, 2003 are AFFIRMED.
SO ORDERED.
G.R. No. 139412 April 2, 2003
THE PEOPLE OF THE PHILIPPINES, appellee,

vs.
JAIME CASTILLANO, SR. alias "Talino," RONALD CASTILLANO alias "Nono" and JAIME CASTILLANO, JR. alias "Junjun," accused,
RONALD CASTILLANO alias "Nono" and JAIME CASTILLANO, JR. alias "Junjun," appellants.
CALLEJO, SR., J.:
This is an appeal from the Decision1 of the Regional Trial Court of Pili, Camarines Sur, Branch 31, in Criminal Case No. P-2542, convicting appellants
Ronald Castillano alias "Nono" and Jaime Castillano, Jr. of murder, meting on each of them the penalty of reclusion perpetua and ordering them to pay,
jointly and severally, damages to the heirs of the victim Diosdado Volante.
The Evidence or the Prosecution
Diosdado Volante, who eked out a living as a farmer, his wife Luz, 2 and their four children lived in their farmland located in the outskirt of Sitio
Danawan, Barangay Sagrada, Bula, Camarines Sur.
About 200 meters away from Diosdado’s farmland was the farmhouse of Jaime Castillano, Sr. 3 He tasked his son, Jaime Castillano, Jr., to take care of
the farmhouse and allowed him to reside there. 4 Jaime, Sr., his wife Concepcion, their son Ronald (Nono) Castillano and other children lived at their
family residence in Sagrada, Bula, Camarines Sur, approximately three kilometers away from their farmhouse in Sitio Danawan.5
Sometime in the early part of June 1996,6 Jaime, Sr. fired his gun indiscriminately. Afraid that a stray bullet might hit any member of his family,
Diosdado accosted Jaime, Sr. and asked him to desist from firing his gun indiscriminately. Jaime, Sr. resented the intrusion. He remonstrated that
neighbors did not even complain about him firing his gun. A heated altercation ensued. Jaime, Sr. then fired his gun towards the house of Diosdado.
The incident germinated deep animosity between the two and their respective families.7 Jaime, Sr. always carried a bolo whenever he passed by the
house of Diosdado.
On July 8, 1996, between 5:00 p.m. to 6:00 p.m., Levy Avila, a teacher, was in his house doing some repairs. He noticed Jaime, Jr. and Ronald talking
by the roadside near the gate of his (Levy’s) house. Levy overheard the two planning to go to Diosdado’s house. Jaime, Jr. and Ronald even told Levy:
"Ayaw namin kasing inaasar." Suspecting that the two were intending to harm Diosdado, Levy urged them to amicably settle their differences with
Diosdado.
At around 8:00 p.m., Luz and Diosdado were about to retire for the night. Their children were already fast asleep. Diosdado was tired after a day’s work
of spraying chemicals at the rice field. He reclined on a bamboo bench near the main door of their house. A kerosene lamp lighted the house.
Suddenly, Luz heard voices near their house. She saw Jaime, Sr. holding a flashlight and his two sons, Jaime Jr. and Ronald, on their way to the
house. Luz immediately alerted her husband and told him that the Castillanos were in their yard. However, Diosdado was nonchalant and simply told
Luz not to mind them. All of a sudden, Jaime, Sr. fired his gun at Diosdado’s house. Terrified, Luz hastily carried her baby daughter Mary Jane, sought
cover and hid near the rear door. She was about five meters away from her husband when the Castillanos barged inside their house and ganged up on
Diosdado. Jaime, Jr. and Ronald, armed with bladed weapons, took turns in stabbing Diosdado. Ronald stabbed Diosdado on the right side of his
breast, right thigh and on the back. He also struck him with a one-meter long pipe. Not satisfied, Jaime, Sr. fired his gun hitting the right thigh of
Diosdado. Luz was so shocked by the sudden turn of events. To silence her one year old baby, she breastfed her. As soon as she could, Luz fled to
the rice paddies where she hid for a time. The Castillanos fled on board a jeep parked in the NIA road about 200 meters from the house of Diosdado.
When Luz returned to their house, she saw her husband sprawled on the ground in a pool of his own blood. Diosdado, at the point of death, asked her
for help. Not knowing what to do, Luz lost no time and ran to the house of their neighbor Celedonio Espiritu for help. Celedonio rushed to the Bula
Police Station and reported the incident.
A team composed of SPO4 Jaime Javier, SPO3 Jaime Bellano and SPO3 Nilo Fornillos, 8 the duty investigator,9 went to the crime scene10 to conduct
an on-the-spot investigation. Photographs were taken of the cadaver.11 SPO3 Fornillo drew rough sketch12 of the scene. The policemen saw a bolo at
the place where Diosdado was sprawled near the door of their house. A scabbard of a bolo was found a meter away from the house of Diosdado. 13 The
policemen also found a bullet hole on the wall of the house.14 Thereafter, the cadaver was placed on a hamak [hammock] brought to the police station.
The police investigators turned over the scabbard and bolo to the desk officer of the police station.15
From the police station, SPO4 Javier, SPO3 Bellano and Sgt. Rogelio Palacio boarded their mobile police car and set out a manhunt for the
malefactors. They proceeded towards the boundary in Sto. Domingo where they put up a checkpoint. The police officers inspected every vehicle that
passed by. At around 12:45 a.m., SPO4 Javier halted a passenger jeepney. On board were Jaime, Sr. and his two sons, Jaime Jr. and Ronald, each of
whom carried a bag containing their clothes. The policemen brought the Castillanos to the police station. 16 The bags of Jaime, Jr. and Ronald were
turned over to the police investigators. The three were placed under arrest for the killing of Diosdado. The policemen submitted their investigation
report.17
In the meantime, at 7:00 a.m., Dr. Evangeline Consolacion, the Municipal Health Officer of Bula, conducted an autopsy on the cadaver of Diosdado.
Her autopsy report revealed the following findings:
External Findings
1. Incise Wound 3 cm Superior pinna R ear
2. Incise woud (sic) 10 cm. from nasal bridge extending to mandible R
3. Stab wound 2 cm.x 5 cm. Epigastrium R
4. Stab wound 2 cm.x 4 cm. Epigastrium L
5. Stab wound 2.5 cm. Middle third Arm R
6. Stab wound 2cm x 5 cm. posterior Back.
7. Amputating middle third finger L
8. Hacked wound posterior ankle L
9. Gunshot wound POE 2 x 2cm. with contusion collar medial aspect middle third R thigh
No point of exit noted
Internal Findings:
Fracture femur with Foreign body bullet lodge in middle third femur with hematoma about about 100 cc R thigh
Cause of Death; Hypovolemia secondary to Multiple Stab Wound18
The doctor recovered a slug from the right thigh of Diosdado. She later signed the victim’s post-mortem certificate of death.19 Senior Inspector Edgardo
B. Sambo, Chief of Police of Bula Police Station, filed with the Municipal Trial Court of Bula, Camarines Sur, a criminal complaint 20 for murder against
the Castillano brothers.21 Judge Francisco O. Tolentino conducted the preliminary examination and thereafter issued an order of arrest against the
Castillanos.22 No bail was recommended for their provisional release. On July 9, 1996, Luz gave a sworn statement to the police investigators.23
On July 10, 1996, the accused were transferred to the Tinangis Penal Farm. Senior Inspector Sambo requested the PNP-CLRU5 Provincial Unit to
conduct a paraffin test on the Castillanos.24
On July 12, 1997, Major Lorlie Arroyo, the Head Forensic Chemist of PNP-Region 5, conducted the paraffin test on the Castillanos. Ronald was found
positive for gunpowder residue.25 Jaime, Sr. and Jaime, Jr. were found negative for gunpowder residue.
The MTC issued a subpoena requiring the accused to submit their counter-affidavits from notice thereof. However, the accused failed to submit any
counter-affidavit.26
On August 2, 1996, an Information for murder was filed against Jaime, Sr., Ronald and Jaime Jr. with the Regional Trial Court of Pili, Camarines Sur,
Branch 31. The accusatory portion of the Information reads:
That on or about the 8th day of July 1996 at about 8:00 o’clock in the evening at Barangay Sagrada, Municipality of Bula, Province of
Camarines Sur, Philippines, and within the jurisdiction of this Honorable Court, the above-named accused conspiring, confederating and
mutually helping one another with intent to kill with treachery and evident premeditation armed with a handgun, bladed weapon and piece of
wood did then and there wilfully, unlawfully and feloniously attack, assault and shot and stab one DIOSDADO VOLANTE y LOZANO
inflicting upon the latter several mortal wounds on the different parts of his body which caused his instantaneous death, to the damage and
prejudice of the heirs of said Diosdado Volante the amount of which to be proven in Court.
ACTS CONTRARY TO LAW.27
Upon their arraignment28 on August 29, 1996, accused Jaime Sr., Jaime, Jr and Ronald, duly assisted by counsel de parte, Atty. Avelino Sales Jr.,
pleaded not guilty to the offense charged. Thereafter, trial on the merits ensued.
Luz testified that when Diosdado was still alive, he had an annual income of over P65,000. She spent P18,000 for the funeral services, 29 P300 for
religious services,30 P9,111 for food and other expenses31 during her husband’s wake and funeral. She suffered sleepless nights and mental anguish
for his sudden death.
The Defenses and Evidence of the Accused
Ronald admitted when he testified that he killed Diosdado but insisted that he did so in self-defense and in defense of his brother Jaime, Jr. He
asserted that his father Jaime, Sr. and brother Jaime, Jr. had nothing to do with Diosdado’s death. Ronald alleged that on September 8, 1996, at about
7:30 p.m., he was driving a passenger jeepney on his way to the poblacion of Bula. Jaime, Jr. flagged down the jeepney. He boarded the jeepney and
told Ronald that he was instructed by their mother to go to the house of Jose del Socorro to ask the latter to accompany them to their farmhouse in
order to fetch Gilda Albes. Ronald was armed with a .38 paltik gun, while Jaime, Jr. was armed with a bolo sheathed in a scabbard. They fetched Jose
and then Ronald parked the jeepney at the NIA road. Jaime, Jr., who was holding a flashlight, walked along the footpath on top of a pilapil (a narrow
earthen barrier between two rice fields). Ronald and Jose walked behind Jaime, Jr. As they passed by the house of Diosdado, a man suddenly
shouted: "you shit, I have await (sic) for you for a while, why just now." Surprised, Jaime, Jr. forthwith focused his flashlight towards the man who
shouted. He was aghast when he saw Diosdado armed with a bolo running towards them and about to attack them with his bolo. Ronald shoved
Jaime, Jr. who fell on the muddy rice paddies below the pilapil. Ronald forthwith shot Diosdado. Diosdado took a step but fell on a kneeling position.
Diosdado brandished his bolo. Ronald shot Diosdado once more but his gun misfired. To defend himself, Ronald took Jaime, Jr.’s bolo and hacked
Diosdado to death.32 Ronald then fled from the scene and ran to the jeepney at the NIA road. Jaime, Jr. and Jose boarded the jeep and left the scene.
Ronald threw the bolo along the way. He threw his gun into a rice farm in Danawan.
Jaime, Jr. corroborated the testimony of his brother. He, however, testified that he did not see his brother hack and kill Diosdado. He claimed that when
Ronald got hold of his bolo, he ran away and proceeded to their jeepney which was then parked at the roadside. Minutes later, Ronald followed. They
then hastily went home to Sagrada and told their father Jaime, Sr. of the incident.33
Jose Del Socorro corroborated the testimony of Ronald. He testified that on July 8, 1996, at about 5:00 p.m. he was on his way home when he met
Diosdado whom he noticed to be inebriated and unruly Diosdado was throwing dried mud at the farmhouse of the Castillanos and challenging the
occupants of the farmhouse to a fight. He advised Diosdado to stop what he was doing and warned him that he was only inviting trouble. Diosdado told
him to mind his own business and not to intervene. Jose thereafter left Diosdado and went, home. 34 When Jose arrived home, Dominador Briña was
waiting for him. He and Dominador talked business for a while and subsequently had dinner. After some time, Jaime, Jr. and Ronald arrived at Jose’s
house.
Concepcion Castillano testified that on July 8, 1996 at around 5:00 a.m., her son Jaime, Jr. arrived home and told her that Diosdado threw stones at
their farmhouse and challenged everybody to a fight. She felt nervous and reported the incident to the police and caused the same to be entered in the
police blotter.35 Thereafter, she went home and told her sons Jaime, Jr. and Ronald to immediately fetch Gilda. She, likewise, instructed her sons to
first drop by the house of Jose so that the latter could accompany them to the farmhouse.
Jaime, Sr. vehemently denied any participation in the killing of Diosdado. He claimed that at the time of the alleged incident, he was at their house in
Sagrada, bedridden due to his debilitating diabetes. He narrated to the trial court his medical history and his confinement at the Mandaluyong Medical
Center sometime in 1994.36 He presented documents and receipts showing that he had been and is still under medication. 37 He declared that upon
learning from his son Ronald that the latter killed Diosdado, he advised his sons to look for a lawyer for legal representation. He told the trial court that
at around 11:30 p.m., he and his two sons had decided to go to Andangnan in order to meet a cousin of his who knew of a lawyer named Atty. Rotor.
As they traversed the road to Andangan, they were stopped by some policemen at a checkpoint and were invited to the police station where they were
investigated and eventually incarcerated.38
Gilda Abes, the last witness for the defense, affirmed that she was the girlfriend of Jaime, Jr. She told the trial court that on July 8, 1996 she was at the
farmhouse of the Castillanos. She corroborated the testimony of Jose that Diosdado was combative and drunk. According to Gilda, Jaime, Jr. left the
farmhouse before sundown to go to his parent’s place at Sagrada. Jaime, Jr. never returned to the farmhouse that night. Gilda learned of the incident
the next morning when she went home.39
The Verdict of the Trial Court
On December 22, 1998, the trial court rendered a decision convicting Jaime, Jr. and Ronald of murder qualified by evident premeditation and
treachery. The trial court exonerated Jaime, Sr. of the crime on reasonable doubt. The trial court gave no credence to Ronald’s claim that he acted in
self-defense. The decretal portion of the decision reads:
WHEREFORE, in view of all the foregoing, judgment is hereby rendered, finding the two (2) accused RONALD CASTILLANO and JAIME
CASTILLANO, JR. guilty beyond reasonable doubt of the offense of MURDER and they are hereby sentenced to suffer the penalty of
imprisonment of RECLUSION PERPETUA with all the accessory penalties imposed thereby. Further, as civil liability, the said two (2)
accused are hereby ordered to pay the legal heirs of the late Diosdado L. Volante, through his widow Luz R. Volante, the total sum of ONE
HUNDRED SEVENTY-SEVEN THOUSAND FOUR HUNDRED TWENTY ONE PESOS (P177,421.00) Philippine Currency as actual and
moral damages including death indemnity, with costs against both accused.
The accused Jaime Castillano, Sr. is hereby acquitted on the ground of reasonable doubt.
SO ORDERED.40
The accused, now appellants, interposed their appeal from the decision of the trial court contending that it committed reversible errors:
(a) in rejecting appellant Ronald’s plea of self-defense; and (b) in not acquitting appellant Jaime, Jr. of the crime charged for failure of the prosecution
to prove his guilt beyond reasonable doubt.
Anent the first issue, appellant Ronald posits that he adduced proof that he acted in self-defense when he stabbed the victim.
The Court disagrees with appellant Ronald. The Court has consistently held that like alibi, self-defense is inherently weak because it is easy to
fabricate.41 In a case where self-defense and defense of relatives is invoked by the accused, the burden of evidence is shifted to him to prove with clear
and convincing evidence the essential requisites of self-defense, namely (a) unlawful aggression on the part of the victim; (b) reasonable necessity of
the means employed to repel or prevent it; and (c) lack of sufficient provocation on the part of the person defending himself. There can be no complete
or incomplete self-defense or defense of relatives unless the accused proves unlawful aggression on the part of the victim.42 The accused must rely on
the strength of his evidence and not on the weakness of the evidence of the prosecution for by pleading self-defense, the accused thereby admits
having killed the victim and he can no longer be exonerated of the crime charged if he fails to prove the confluence of the essential requisites for self-
defense and defense of a relative.43
Appellant Ronald failed to discharge his burden.
First. After shooting and stabbing Diosdado, appellant Ronald fled from the situs criminis. Flight from the situs of the crime is a veritable badge of guilt
and negates his plea of self-defense.44
Second. Appellant Ronald threw away his paltik .38 gun and the bolo he used in hacking Diosdado as he fled from the scene of the crime instead of
surrendering the same to the police authorities. Appellant Ronald admitted that he had no license for the gun:
Q Where is that gun now that you use?
A I do not know, Your Honor, I think I was able to throw it away.
Q Where?
A At Danawan, Your Honor.
Q Danawan, is that a lake?
A No, Your Honor, it is a ricefarm.
Q What kind of gun is this?
A Paltik .38, Your Honor.45
ATTY. BALLEBAR:
Q By the way, where is that bolo that you used in hacking and stabbing Diosdado Volante?
A I do not know anymore because I was able to throw it away also when I ran away.
Q Where is that place where you throw it?
A It was by the NIA road.
Q You mentioned also a while ago that this gun that you said is a "paltik" and you throw it away also, is it not?
A Yes, Ma’am.
Q And that gun had been in your possession the whole day that you are driving up to the time you shot the victim, Diosdado Volante?
A Yes, Ma’am.
Q Do you have license to possess that firearm?
A None, Ma’am.46
The failure of appellant Ronald to surrender the bolo and his gun to the police authorities belies his claim of self-defense.
Third. Appellant Ronald failed to report the incident to the police authorities even when they arrested him. Curiously, he failed to inform the police
officers who arrested him that he acted in self-defense when he shot and stabbed the victim The resounding silence of the appellant is
another indicium of the incredibility of his defense.47 Moreover, the records show that the municipal trial court issued a subpoena on July 9, 1996
requiring appellant Ronald to submit his counter-affidavit but he refused and/or failed to submit the same despite service on him of the subpoena. It
was only during the trial that appellant Ronald, for the first time, invoked self-defense and defense of a relative.
Fourth. The cadaver of the victim was found inside his house when the police investigators arrived. 48 This belies appellant Ronald’s claim that he shot
the victim in the rice paddies, near his house and that he (appellant Ronald) took the bolo of appellant Jaime, Jr. and used it to stab the victim.
Appellant Ronald failed to prove his claim that when the police investigators arrived in the victim’s house, they carried his (the victim’s) body from the
rice paddies to the house. The only evidence adduced by appellant Ronald was his testimony which is hearsay, and besides being hearsay, it is
speculative and mere conjecture.
Fifth. Appellant Ronald hacked the victim no less than five times. Two of the stab wounds sustained by the victim were at his back and posterior portion
of his left ankle. The number and nature of the wounds of the victim negate the appellant’s claim that he shot the victim in self-defense. On the
contrary, they prove that appellant Ronald was determined to kill the victim.49
Appellant Jaime, Jr. avers that the prosecution failed to prove his guilt beyond reasonable doubt of the crime charged. He asserts that the testimony of
Luz Volante, the widow of Diosdado, was inconsistent with her testimony during the preliminary examination in the municipal trial court and her sworn
statement before the police investigators as well as the testimonies of SPO1 Fornillos and SPO4 Jaime Favier, and the physical evidence on record.
The appellant catalogued said inconsistencies, thus:
1. He was lying on the bench inside just upon entering. (Tsn p. 9, 2/17/97).
- I was lying down with my husband inside our house but we were still awake (9th Answer, Prel. Exam. MTC, 7/9/96).
2. JCS fired towards our house hitting the wall (Tsn p. 11, 2/17/96).
JCS fired twice (16th answer, Prel. Exam. MTC, 7/9/96).
JCS kept on firing the gun pointing towards the body of my husband (9th Answer, Sworn Statement, PNP, 7/9/96).
JCS shot my husband three (3) times (Tsn p. 16, 2/17/97)
3. My husband was shot and hit on the right thigh (Tsn p. 14, 2/17/97). He was hit on the left lap (23rd Answer, Prel. Exam. MTC,
7/9/96). He was hit on his side (Tsn p. 43, 2/17/97).
4. RC struck my husband with a 1-meter long Pipe (Tsn p. 13, 2/17/97). RC & JCJ smashed my husband with a hard object (5th Answer,
Sworn Statement, 7/9/96).
RC smashed my husband (22nd Answer, Prel. Exam. MTC, 7/9/96).
5. He was not able to fight back (Tsn p. 43, 2/17/97). He was standing and was trying to parry the attack of the accused (26th Answer,
Prel. Exam. 7/9/96).
6. When I went back to the house, he was still alive (Tsn p. 19, 2/17/97). - LV "Yes," the victim could have died instantly (Tsn p. 35,
2/3/97) With wounds sustained, he could have died instantly (p. 8, Complainant’s Memorandum).
7. It was bright inside our house with a kerosene and a bottle lamp (Tsn pp. 33-34, 2/17/97). Only one kerosene lamp - bottle of gin with
wick and light (Tsn p. 10, 4/1/97 - SPO1 Pornillos
Surrounding house, dark, total darkness (Tsn pp. 12-13, 4/1/97).
8. Scene Photography by Jaime Jornales (Tsn, p. 21, 2/17/97).
-do- by Mr. Lozano (Tsn., p. 12, 3/7/97).
9. SPO1 Nilo Pornillos learned of the incident at 8:00 o’clock of July 8, 1996 (page 5 of Complainant’s Memorandum.
SPO4 Jaime Javier received report at 9:00 o’clock P.M. of July 8, 1996 of Complainant’s Memorandum.
SPO4 Jaime Javier received report at 8:00 P.M. (page 7 of Complainant’s Memorandum).50
On the other hand, the Office of the Solicitor General asserts that the credibility of the testimony of Luz, the prosecution’s principal witness, cannot be
impeached via her testimony during the preliminary examination before the municipal trial court nor by her sworn statement given to the police
investigators for the reason that the transcripts and sworn statement were neither marked and offered in evidence by the appellants nor admitted in
evidence by the trial court. Moreover, the appellants did not confront Luz with her testimony during the preliminary examination and her sworn
statement to the police investigators. Luz was not, therefore, accorded a chance to explain the purported inconsistencies, as mandated by Section 13,
Rule 132 of the Revised Rules of Evidence which reads:
How witness is impeached by evidence of inconsistent statement. - Before a witness can be impeached by evidence that he has made at
other times statements inconsistent with his present testimony, the statements must be related to him, with the circumstances of the times
and places and the persons present, and he must be asked whether he made such statements, and if so, allowed to explain them. If the
statements be in writing they must be shown to the witness before any question is put to him concerning them.
The Court agrees with the Office of the Solicitor General. Before the credibility of a witness and the truthfulness of his testimony can be impeached by
evidence consisting of his prior statements which are inconsistent with his present testimony, the cross-examiner must lay the predicate or the
foundation for impeachment and thereby prevent an injustice to the witness being cross-examined. The witness must be given a chance to recollect
and to explain the apparent inconsistency between his two statements and state the circumstances under which they were made. 51 This Court held
in People v. Escosura52 that the statements of a witness prior to her present testimony cannot serve as basis for impeaching her credibility unless her
attention was directed to the inconsistencies or discrepancies and she was given an opportunity to explain said inconsistencies. In a case where the
cross-examiner tries to impeach the credibility and truthfulness of a witness via her testimony during a preliminary examination, this Court outlined the
procedure in United States vs. Baluyot,53 thus:
...For instance, if the attorney for the accused had information that a certain witness, say Pedro Gonzales, had made and signed a sworn
statement before the fiscal materially different from that given in his testimony before the court, it was incumbent upon the attorney when
cross-examining said witness to direct his attention to the discrepancy and to ask him if he did not make such and such statement before
the fiscal or if he did not there make a statement different from that delivered in court. If the witness admits the making of such contradictory
statement, the accused has the benefit of the admission, while the witness has the opportunity to explain the discrepancy, if he can. On the
other hand, if the witness denies making any such contradictory statement, the accused has the right to prove that the witness did make
such statement; and if the fiscal should refuse upon due notice to produce the document, secondary evidence of the contents thereof would
be admissible. This process of cross-examining a witness upon the point of prior contradictory statements is called in the practice of the
American courts "laying a predicate" for the introduction of contradictory statements. It is almost universally accepted that unless a ground
is thus laid upon cross-examination, evidence of contradictory statements are not admissible to impeach a witness; though undoubtedly the
matter is to a large extent in the discretion of the court.
In this case, the appellants never confronted Luz with her testimony during the preliminary examination and her sworn statement. She was not afforded
any chance to explain any discrepancies between her present testimony and her testimony during the preliminary examination and her sworn
statement. The appellants did not even mark and offer in evidence the said transcript and sworn statement for the specific purpose of impeaching her
credibility and her present testimony. Unless so marked and offered in evidence and accepted by the trial court, said transcript and sworn statement
cannot be considered by the court.54
On the purported inconsistencies or discrepancies catalogued by the appellants relating to the testimony of Luz during the preliminary examination and
her sworn statement, the Office of the Solicitor General posits that:
Sixth, Volante indeed testified that when she returned to their house from the ricefield, after the three accused had left the premises, her
husband was still alive (TSN, February 17, 1997, p. 19) as he was still able to ask for her assistance (Ibid, p. 20). But it is not inconsistent
with the expert opinion of Dr. Consolacion that by the nature of the wounds sustained by the victim, the latter could have died thereof
instantaneously (TSN, February 3, 1997, p. 35). It is clear that the said physician was merely stating a possibility and not what happened in
the instant case because in the first place, she was not present at the scene right after the incident.
Seventh, Volante was insistent in her testimony that at the time of the commission of the subject crime, it was bright inside their house
because they had a "kerosene lamp" and a "bottle lamp" both lighted up, one placed on the wall and the other on the ceiling ( Ibid, pp. 33,
52-53). While it may appear contradictory to SPO1 Pornillos’ testimony that there was only a kerosene lamp at the time, he could not have
been expected to notice all the things found inside the house, including the "bottle lamp", because he might not have been familiar with its
interiors. Or, he could have focused his attention primarily on the body of the fallen victim and the objects that may be used later as
evidence against the perpetrators of the crime.
Eight, it is admitted that the testimonies of Volante and SPO1 Pornillos as to who took pictures of the crime scene including the lifeless
body of the victim are contradictory. But again, such contradiction, being only minor and irrelevant, does not affect the credibility of their
testimonies.
And ninth, the apparently inconsistent statements of the prosecution witnesses (SPO1 Pornillos and SPO4 Javier) as to the exact time the
subject incident was reported to the police authorities are similarly irrelevant to the matters in issue. Of consequence here is the fact that on
the night the crime was committed, it was reported to the authorities who later effected the arrest of the perpetrators thereof.55
The Court fully agrees with the foregoing ruminations of the Office of the Solicitor General. The inconsistencies adverted to by the appellants pertained
only to minor and collateral matters and not to the elements of the crime charged; hence, they do not dilute the probative weight of the testimony. It
bears stressing that even the most truthful witness can make mistakes but such innocent lapses do not necessarily affect his credibility. The
testimonies of witnesses must be considered and calibrated in their entirety and not by their truncated portions or isolated passages. 56 And then again,
minor contradictions among several witnesses of a particular incident and aspect thereof which do not relate to the gravamen of the crime charged are
to be expected in view of their differences in impressions, memory, vantage points and other related factors.57
Contrary to appellant Jaime, Jr.’s claim, the prosecution adduced proof that he and appellant Ronald conspired to kill and did kill Diosdado by their
simultaneous acts of stabbing the victim. As narrated by Luz:
ATTY. BALLEBAR:
Q Now after Jaime Castillano Sr. fired at your house, what happened next if any?
A They entered our house.
Q Now, when you say they to whom are you referring to?
A Jaime Castillano Sr., Jaime Castillano, Jr., and Ronald Castillano.
Q Now, where did they enter?
A In the other door.
Q Now at the time they entered your house was the door of your house closed or opened?
A It was closed.
Q Now, after the accused entered your house what happened next, if any?
A Jaime Castillano Jr. stabbed my husband and also Ronal Castillano stabbed my husband.
Q Now, was your husband hit by the stabbing of Ronald Castillano, Jr. (sic)?
A Yes, sir.
Q Will you tell us on what part of his body was he hit?
A My husband was still struck by Ronald Castillano hitting him on his right side of his body including on his right thigh and also on his
back..
ATTY. BALLEBAR:
Q Now, you said Ronald Castillano struck your husband, now with what instrument did he use in strucking (sic) your husband?
ATTY. BERNALES:
We object, misleading, your Honor.
COURT:
Witness may answer.
WITNESS:
A A pipe.
ATTY. BALLEBAR:
Q Now, will you tell us more or less how long was that pipe that was used by Ronald Castillano?
A About one (1) meter, Maam.58
Luz was merely five meters away from where Diosado was attacked and stabbed by the appellants. Appellant Jaime, Jr. even tried to cut the ankle of
the victim:
ATTY. BALLEBAR:
Q Now during this incident, how far were you from the accused and your husband?
A From where I am sitting up to that window which is about five (5) meters.
Q Now after the accused strucked (sic) and shot your husband, what else happened if any?
A Jaime Castillano Jr. stabbed my husband on his breast (Witness is pointing to her breast).
ATTY. BERNALES:
We will move that the answer be striken off from the records because it is not responsive to the question. The question is after your
husband has been stabbed strucked (sic) and shot.
COURT:
Q Your are being asked what happened after the accused was already stabbed, strucked (sic) and shot, what happened next?
WITNESS:
Q Jaime Castillano Junior still stabbed my husband and try to cut his ankle, Your Honor.
COURT:
Strike our (sic) the previous answer of the witness.
ATTY. BALLEBAR:
Q By the way, will you tell us how many times did Ronald Castillano stab your husband?
A I cannot determine how many times he even stabbed my husband on his left eye.
Q How about Jaime Castillano Jr., how many times did he stab your husband?
A I cannot determine exactly how many times but he repeatedly stabbed my husband.59
The mere denial appellant Jaime, Jr. of the crime charged is but a negative self-serving which cannot prevail over the positive and straightforward
testimony of Luz and the physical evidence on record.60
The Crime Committed by Appellants
The trial court correctly convicted the appellants of murder, qualified by treachery, under Article 248 of the Revised Penal Code. The Court, however,
does not agree with the trial court’s finding that evident premeditation attended the commission of the crime.
Case law has it that the prosecution has the burden to prove beyond reasonable doubt qualifying circumstances in the commission of the crime. For
evident premeditation to qualify a crime, the prosecution must prove the confluence of the essential requites thereof: (a) the time when the offender has
determined to commit the crime; (b) an act manifestly indicating that the offender has clung to his determination; (c) an interval of time between the
determination and the execution of the crime enough to allow him to reflect upon the consequences of his act.61 There must be proof beyond cavil
when and how the offender planned to kill the victim and that sufficient time had elapsed between the time he had decided to kill the victim and the
actual killing of the victim, and that in the interim, the offender performed overt acts positively and conclusively showing his determination to commit the
said crime.62 In this case, the only evidence adduced by the prosecution to prove evident premeditation is the testimony of Levy Avila that between 5:00
p.m. and 6:00 p.m. on July 8, 1996, he heard the appellants planning to go to the house of Diosdado and that he heard them say: " Ayaw namin kasing
inaasar," and that at 8:00 p.m., the appellants arrived in the house of the victim and stabbed him to death. There is no evidence of any overt acts of the
appellants when they decided to kill Diosdado and how they would consummate the crime. There is no evidence of any overt acts perpetrated by the
appellants between 5:00 and 8:00 p.m. that they clung to their determination to kill Diosdado.
There is treachery in the commission of a crime when (a) at the time of attack, the victim was not in a position to defend himself; (b) the offender
consciously and deliberately adopted the particular means, methods and forms of attack employed by him. 63 Even a frontal attack may be treacherous
when unexpected on an unarmed victim who would not be in a position to repel the attack or avoid it.64 In this case, the victim was unarmed and was
supinely resting before sleeping after a hard day’s work. Although Luz warned the victim that the appellants were already approaching their house,
however, the victim remained unperturbed when the appellants barged into the victim’s house. They stabbed him repeatedly with diverse deadly
weapons. The victim had nary a chance to defend himself and avoid the fatal thrusts of the appellants.
The crime was committed in the house of the victim. There was no provocation on the part of the victim. Dwelling thus aggravated the crime. However,
dwelling was not alleged in the information, as mandated by Section 8, Rule 110 of the Revised Rules of Criminal Procedure:
Sec. 8. Designation of the offense. - The complaint or information shall state the designation of the offense given by the statute, aver the
acts or omissions constituting the offense, and specify its qualifying and aggravating circumstances. If there is no designation of the
offense, reference shall be made to the section or subsection of the statute punishing it.
The use by appellant Ronald of an unlicensed firearm to shoot Diosdado on the thigh is not an aggravating circumstance because (1) there is no
allegation in the information that said appellant had no license to possess the firearm. That appellant lacked the license to possess the firearm is an
essential element of the crime and must be alleged in the information. 65 Although the crime was committed before the new rule took effect on
December 1, 2002, the rule should, however, be applied retroactively as it is favorable to the appellants.66
The appellants are not entitled to the mitigating circumstance of voluntary surrender. The evidence shows that the appellants were arrested when the
police officers manning the checkpoint stopped the passenger jeepney driven by appellant Ronald and arrested the appellants. The fact that the
appellants did not resist but went peacefully with the peace officers does not mean that they surrendered voluntarily.67
There being no mitigating and aggravating circumstances in the commission of the crime, the appellants should be meted the penalty of reclusion
perpetua conformably with Article 63 of the Revised Penal Code.
The Civil Liabilities of the Appellants
The trial court awarded the total amount of P177,421 as civil indemnity, actual and moral damages in favor of the heirs of the victim Diosdado. The
Court has to modify the awards.
Appellants Ronald and Jaime, Jr. are obliged to pay jointly and severally the amount of P50,000 as civil indemnity; P50,000 as moral damages;
P25,000 as exemplary damages in view of the aggravating circumstance of dwelling; 68 and the amount of P18,300 for funeral and religious services.
The heirs of the victim failed to adduce in evidence any receipts or documentary evidence to prove their claim for food and other expenses during the
wake. However, they are entitled to temperate damages in the amount of P5,000, conformably with the ruling of the Court in People v. dela
Tongga.69 His wife Luz’s testimony that the victim had an annual income of more than P65,000 is not sufficient as basis for an award for unearned
income for being self-serving. There was no proof of the average expense of the victim and his family and his net income. In People v. Ereño,70 this
Court held that:
… It bears stress that compensation for lost income is in the nature of damages and as such requires due proof of the damage suffered;
there must be unbiased proof of the deceased’s average income. In the instant case, the victim’s mother, Lita Honrubia, gave only a self-
serving hence unreliable statement of her deceased daughter’s income. Moreover, the award for lost income refers to the net income of the
deceased, that is, her total income less her average expenses. No proof of the victim’s average expenses was presented. Hence, there can
be no reliable estimate of the deceased’s lost income.
IN LIGHT OF ALL THE FOREGOING, the Decision of the Regional Trial Court of Camarines Sur, Branch 31 in Criminal Case No. P-2542 is
AFFIRMED with MODIFICATION. Appellants Ronald Castillano alias "Nono" and Jaime Castillano, Jr. alias "Junjun" are found guilty beyond
reasonable doubt of murder, qualified by treachery, punishable by reclusion perpetua to death, under Article 248 of the Revised Penal Code. There
being no modifying circumstances in the commission of the crime, the appellants are sentenced to suffer the penalty of reclusion perpetua,
conformably with Article 63 of the Revised Penal Code. They are, likewise, ordered to pay jointly and severally to the heirs of the victim, Diosdado
Volante, the amounts of P50,000 as civil indemnity; P50,000 as moral damages; P18,300 as actual damages; P25,000 as exemplary damages; and
P5,000 as temperate damages. Costs against the appellants.
SO ORDERED.
G.R. No. 90198 November 7, 1995

vs.
ANTONIO PLASENCIA y DESAMPARADO alias "Tonying," ROBERTO DESCARTIN y PASICARAN alias "Ruby" and JOELITO (JULITO),
DESCARTIN y PASICARAN, accused-appellants.
VITUG, J.:
Antonio Plasencia, Roberto Descartin and Joelito (Julito) Descartin were accused of robbery with homicide in an information, dated 20 December 1984,
that read:
That on or about the 29th day of November, 1984 at around 3:00 o'clock in the afternoon, more or less, in sitio San Juan,
Barangay Patao, Municipality of Bantayan, Province of Cebu, Philippines, and within the jurisdiction of this Honorable Court, the
said accused conspiring and confederating together and mutually helping one another, did then and there wilfully, unlawfully
and feloniously, and with treachery, evident premeditation and taking advantage of their superior number and strength and with
intent to kill, treacherously attack, assault and use personal violence upon Herminio Mansueto, thereby inflicting upon him the
following physical injuries:
1. Stab wounds which was approximately two inches in length, parallel to the ribs and is located 1 1/2
inches below the right nipple on the right anterior axillary line and on the fifth intercostal space. On
probing the wound was penetrating immediately up to the left parasternal border approximately hitting
the heart;
2. Hacking wound 9 inches in length extending from the coracoid process of the left clavicle passing
between the left anterior and the left mid axillary line up to the left 4th intercostal space including all
muscle underlying the skin exposing the ribs.
Cause of death: Internal hemorrhage due to stab wound.
after which the body was placed inside a plastic bag and brought to an open sea by the pump boat owned by Roberto Descartin
y Pasicaran and operated by Joelito Descartin y Pasicaran and dumped to the water by herein accused, and as a result of
which said Herminio Mansueto died, herein accused, in pursuance of their conspiracy, wilfully, unlawfully and feloniously and
with intent to gain, took and carried away the personal property belonging to Herminio Mansueto, namely: one (1) Seiko 5 "Stop
Watch" valued at P3,000.00; one (1) Bicycle (standard size) valued at P1,000.00; and cash in the amount of P10,000.00, all in
the total amount of FOUR-TEEN THOUSAND PESOS (P14,000.00), Philippine Currency, to the damage and prejudice of said
oner (sic) in the said total sum.
All contrary to law, and with the qualifying circumstance of alevosia, and the generic aggravating circumstance of known
premeditation.
CONTRARY TO LAW. 1
When arraigned, all the accused entered a plea of "not guilty" to the charge; whereupon, trial commenced.
The prosecution sought to establish, as follows:
At around ten o'clock in the morning of 29 November 1984, Herminio Mansueto, wearing a blue and white striped t-shirt, maong pants, Seiko 5 stop
watch and a pandan hat, left on his bicycle for Barangay Patao, Bantayan, Cebu. He had with him P10,000.00 cash which he would use to purchase
hogs from a certain "Ruby."
In Patao, Francisca Espina, also known in the locality as Pansing and whose house was just across the street from the respective residences of the
three accused, saw at the roadside Herminio Mansueto and Roberto Descartin alias "Ruby" engaged in conversation. Pansing approached them and
asked Mansueto if he would be interested in buying two of her pigs for P1,400.00. Mansueto said "yes" and promised that he would be right back.
Mansueto and Ruby meantime proceeded to the latter's piggery. Joelito Descartin and his brother-in-law Rene were also seen going to the place. After
some time, Pansing noticed Joelito take Mansueto's bicycle. Believing that Mansueto was already preparing to leave and in her desire to catch up with
him, Pansing promptly walked towards the piggery which was around 100 meters away from her house. She could see Mansueto leaning on the pigsty
with Ruby on his right side and Antonio Plasencia alias "Tonying" on his left; behind was Joelito. 2 Midway, she was halted on her tracks; she suddenly
saw Antonio stab Mansueto. The latter staggered towards Ruby who himself then delivered another stab blow. Mansueto fell on his back. Joelito
started hitting Mansueto on the forehead while Rene held Mansueto's legs.3 Except for a coconut tree and some ipil-ipil trees around the area, nothing
obstructed Pansing's line of vision. Pansing rushed back home. The image of Antonio waving the weapon and the thought that she might herself be
killed kept her from revealing to anyone what she saw.4
The following day, in Kodia, Madridejos, Cebu, where Mansueto resided, his daughter Rosalinda reported to Francisca Tayo, the barangay captain,
that her father had not returned home. Tayo proceeded to Putian, which was in Mansueto's itinerary, and then to Ruby's piggery in Patao, where a
youngster, who turned out to be Ruby's son, innocently informed her that Mansueto's bicycle was taken by Joelito.5
The day after, Francisca Tayo, accompanied by police officers of Madridejos, Cebu, and some relatives of Mansueto, went back to Ruby's place. On a
railing of the pigpen, she saw blood stains. When she asked Ruby's father about it, he said that the stains had come from chicken blood. Going around
the piggery, she also saw blood stains on a bamboo pole, which Ruby's father once again so identified as chicken blood. At the back of the piggery,
Francisca noticed a digging which looked like an empty grave. The digging was measured and photos were taken. The police found a hat at the back of
a hut beside the piggery, which was later recognized to be that which belonged to Mansueto.6
In the morning of 30 November 1984, Patrolman Elpidio Desquitado of the Bantayan police went back to the piggery. This time, the police learned from
Pansing herself that Joelito took Mansueto's bicycle.7 Joelito was invited to the police headquarters to shed light on the case. Later, Joelito, waiving his
right to counsel, executed a "confession."8
Joelito narrated that, upon Ruby's instruction, he brought the bicycle to the piggery. Unexpectedly, he said, Tonying Plasencia stabbed Mansueto.
Stunned, Joelito tried to run away but Tonying stopped him. Tonying then dragged the victim to a nearby house. Threatened by Tonying, Joelito agreed
to later return to where the victim's body was dragged. At around eleven o'clock that evening, tonying and Joelito placed the body in a sack. Tonying
asked Ruby to allow the use of the latter's pumpboat to ferry the body. Tonying paddled the pumpboat to the island of Po-Po'o where he picked up
some pieces of stones. Then, again paddling the pumpboat farther away from the island, he ordered Joelito to start the engine of the boat. They
headed for the islet of Gilotongin (Hilotongan). On the way, Tonying filled the sack with stones and, using a rope, tied to it the body of the victim.
Tonying then unloaded their cargo into the sea.
Guided by Joelito, members of the Bantayan police force headed for the islet of Hilotongan on two pumpboats 9 in the area pinpointed to be the place
where the body was dumped. On the second day of the search, the group was informed that the body had already surfaced near the vicinity of the
search and delivered to the municipal building. 10
The municipal health officer of Bantayan, Dr. Oscar Quirante, examined the body and concluded that the victim died of internal hemorrhage due to stab
wounds. 11 The bloated body was in a late stage of decomposition and its skin had sloughed off. 12 He found the victim's face to be "beyond
recognition." There were "some rope signs in the body particularly in the waistline and in the knees." 13
The main defense interposed is one of alibi.
Antonio stated that on the whole day of 29 November 1984, he was out at sea fishing with his son. Joelito, on his part, asserted that he was in Barrio
Baod, about an hour's walk from his residence, at the house of his fiancee. He returned to his house, he said, only the day after. Roberto ("Ruby"),
Joelito's uncle, testified that on that fateful day, he was in Samoco Purok 2, Iligan City, and then left for Cebu on 06 December 1984 only after receiving
a telegraph that Joelito was implicated in the crime.
The Regional Trial Court 14 did not give credence to the defense of alibi. It convicted the three accused of murder (punishable under Article 248 of the
Revised Penal Code), instead of robbery with homicide, explaining that the term "homicide" was used in the information in its generic sense. 15 Finding
conspiracy, the trial court ruled that the killing was qualified by both treachery and abuse of superior strength with the latter, however, being absorbed
by the former. No other aggravating or mitigating circumstances being attendant in the commission of the crime, the trial court said, the penalty that
could be imposed upon each of the accused was reclusion perpetua with a joint and several civil liability for indemnification to the heirs of Herminio
Mansueto in the amount of P30,000.00.
The instant appeal was interposed by the three convicted appellants.
Appellant Antonio Plasencia attacks the credibility of the prosecution's lone eyewitness, Francisca Espina, alleging that she is a pejured witness who
has an axe to grind against him because his dog had once bitten Francisca's child. 16 He bewails the fact that it has taken Francisca until 29 December
1984 to reveal what she supposedly has seen to the police authorities. Contending that treachery has not been duly proven as "no wound was inflicted
at the back and as a matter of fact only one wound was fatal," 17 appellant argues that even if conspiracy were to be considered to have attended the
commission of the crime, he could be held liable with the others, if at all, only for homicide.
Appellant Roberto Descartin, likewise challenging Francisca Espina's credibility because of her alleged inconsistencies, faults the trial court for allowing
the witness to glance at the notes written on her palm while testifying. He also argues that his alibi, being corroborated, should have been given weight.
Appellant Joelito Descartin, in assailing the credibility of Francisca, has noted her "jittery actuation" while giving her testimony. He also questions the
findings of the ponente for not being the presiding judge during the examination of Francisca on the witness stand.
The focus of this appeal is clearly one of credibility. The initial assessment on the testimony of a witness is done by the trial court, and its findings still
deserve due regard notwithstanding that the presiding judge who pens the decision is not the one who personally may have heard the testimony. 18 The
reliance on the transcript of stenographic notes should not, for that reason alone, render the judgment subject to challenge. 19 The continuity of the
court and the efficacy of its decision are not affected by the cessation from the service of the judge presiding it 20 or by the fact that its writer merely
took over from a colleague who presided at the trial. 21
It is asserted that the testimony of Francisca Espina should not be given worth since, while testifying, she would at times be seen reading some notes
written on her left palm. Thus —
Q. May I see your left hand, may I see what is written there?
A. Witness showing to the court her left palm and the following words have been written in her palm in
ball pen handwritten words and number of the pumpboat No. 56 and there is another word "petsa" and
there are words which cannot be deciphered and all found in the palm of the left hand.
ATTY. MONTECLAR:
That is all.
ATTY. GONZALES: RE-CROSS
Q Mrs. witness, you cannot deny of what these physical evidences or writings on the palm of your left
hand. I want you to be honest, the law will not allow you to lie, you are subject to punishment and
penalty. My question is, who wrote this on the palm of your left hand?
A I was the one who wrote this.
Q Why did you write that down?
A I was the one who wrote this.
Q Why, what was your purpose of writing that in your palm?
A I wrote this in my palm because I wanted to be sure of what time the incident happened, was the same
as that I wrote in my palm.
Q And who furnished you the data in which you wrote in the palm of your hand?
A I was the one who made that.

ATTY. GONZALES:
Q You don't understand my question. You wrote that writing but where did you get that data?
A. This is just of what I know.
Q Since you claim to have all this knowledge of your mind, why did you find it necessary to write that in
the palm of your hand and I notice during the trial that you used to look in your palm, why, is that
necessary in your believe to testify here to what you knew about the incident.
A Because of the fact that I have an headache.
Q When did this headache occur?
A After I left my house because my sick child.
Q Now, knowing that you have an headache, did you not bring this to the attention of the Fiscal?
A No, I did not tell the Fiscal.
Q Do you know of your own that doing this is unfair and is not allowable while testifying in open court, do
you know that is illegal act?
A No, I did not, know.
Q And you did all of this claiming that you do not know about the incident for the purpose of giving here
testimony against the accused?
A Yes, sir. 22
The use of memory aids during an examination of a witness is not altogether proscribed. Section 16, Rule 132, of the Rules of Court states:
Sec. 16. When witness may refer to memorandum. — A witness may be allowed to refresh his memory respecting a fact, by
anything written or recorded by himself or under his direction at the time when the fact occurred, or immediately thereafter, or at
any other time when the fact was fresh in his memory and he knew that the same was correctly written or recorded ; but in such
case the writing or record must be produced and may be inspected by the adverse party, who may, if he chooses, cross-
examine the witness upon it and may read it in evidence. So, also, a witness may testify from such a writing or record, though
he retain no recollection of the particular facts, if he is able to swear that the writing or record correctly stated the transaction
when made; but such evidence must be received with caution. (Emphasis supplied.)
Allowing a witness to refer to her notes rests on the sound discretion of the trial court. 23 In this case, the exercise of that discretion has not
been abused; the witness herself has explained that she merely wanted to be accurate on dates and like details.
Appellants see inadvertency on Francisca's appearing to be "jittery" on the witness stand. Nervousness and anxiety of a witness is a natural reaction
particularly in the case of those who are called to testify for the first time. The real concern, in fact, should be when they show no such emotions.
Francisca did fail in immediately reporting the killing to the police authorities. Delay or vacillation, however, in making a criminal accusation does not
necessarily adulterate the credibility of the witness. 24 Francisca, in her case, has expressed fears for her life considering that the assailants, being her
neighbors, could easily exact retribution on her. 25 Also, the hesitancy in reporting the occurrence of a crime in rural areas is not unknown. 26
Francisca's inability to respond to the summons for another appearance in court for further questioning was satisfactorily explained by the prosecution.
Francisca at the time just had a miscarriage and was found to be too weak to travel. The recall of the witness was, after all, at the sound discretion of
the trial court. 27
The claim of appellant Roberto Descartin that Francisca and her husband, a tuba-gatherer, owed him P300.00, and the assertion made by appellant
Antonio Plasencia on the dog-biting story involving Francisca's son truly were too petty to consider. It would be absurd to think that Francisca, for such
trivial reasons was actually impelled to falsely implicate appellants for so grave an offense as murder.
Appellants questioned Francisca's ability to recognize them from a distance. Francisca knew appellants well; they all were her neighbors while Antonio
Plasencia himself was her cousin. 28 The crime occurred at around three o'clock in the afternoon only about fifty (50) meters away from her. With an
unobstructed view, Francisca's positive identification of the culprits should be a foregone matter. 29
The alleged inconsistencies in Francisca's testimony and in her sworn statement of 18 December 1984, cover matters of little significance. Minor
inconsistencies in the testimonies of witnesses do not detract from their credibility; 30 on the contrary, they serve to strengthen their credibility and are
taken as badges of truth rather than as indicia of falsehood 31 even as they also erase suspicion of rehearsed testimony.32
All considered, the case against the appellants has been proven beyond reasonable doubt even with the retracted extra-judicial admission of Joelito
Descartin. 33 The testimony of a single witness, if found to be credible, is adequate for conviction, 34 The defense of alibi hardly can overcome the
positive identification of an unprejudiced eyewitness. 35
Like the trial court, we are not persuaded that robbery has been proven to be the principal motive for the crime that can warrant the conviction of
appellants for the complex crime of robbery with homicide. 36 Appellants could only thus be held responsible for the killing of Mansueto. Conspiracy
among the appellants has been established beyond doubt by the sum of their deeds pointing to a joint purpose and design. 37
Three aggravating circumstances were alleged in the information, i.e., treachery, evident premeditation and abuse of superior strength. The trial court
disregarded the circumstance of evident premeditation and concluded that the attack upon Mansueto was committed with treachery and abuse of
superior strength. On its finding that the assault was unexpectedly perpetrated upon the unarmed victim to ensure its execution without risk to
themselves from the defense that the victim might make, the trial court appreciated treachery, which it deemed as having so absorbed abuse of
superior strength.
The trial court was correct when it concluded that the crime committed was murder, a crime technically lower than robbery with homicide, 38 not,
however, because of the attendance of treachery but of abuse of superior strength. Treachery, in our view, was not satisfactorily proven by the
prosecution. Francisca Espina simply testified that appellant Plasencia stabbed Mansueto while the latter and the appellants were in a huddle. There
was nothing adduced on whether or not the victim gave provocation, an indispensable issue in the proper appreciation of treachery. 39 The presence,
nonetheless, of the aggravating circumstance of abuse of superior strength qualified the killing to murder. 40 The three appellants utilized superiority in
numbers and employed deadly weapons in assaulting the unarmed Mansueto.
There being no other aggravating or mitigating circumstances to consider, the trial court aptly imposed the penalty of reclusion perpetua, the medium
period 41 of the penalty of reclusion temporal maximum to death prescribed by Article 248 of the Revised Penal Code. In conformity with prevailing
jurisprudential law, the heirs of the victim should be indemnified in the amount of P50,000.00. 42
WHEREFORE, the decision of the trial court convicting appellants Antonio Plasencia, Roberto Descartin and Joelito (Julito) Descartin of the crime of
murder and imposing on each of them the penalty of reclusion perpetua is hereby AFFIRMED with the modification that the indemnity to the heirs of the
victim, Herminio Mansueto, is raised to P50,000.00. Costs against appellants.
SO ORDERED.
G.R. No. 96202 April 13, 1999
ROSELLA D. CANQUE, petitioner,
vs.
THE COURT OF APPEALS and SOCOR CONSTRUCTION CORPORATION, respondents.
MENDOZA, J
This petition for review on certiorari seeks a reversal of the decision 1 of the Court of Appeals affirming the judgment 2 of the Regional Trial Court of
Cebu City ordering petitioner —
. . . to pay [private respondent] the principal sum of Two Hundred Ninety Nine Thousand Seven Hundred Seventeen Pesos and
Seventy Five Centavos (P299,717.75) plus interest thereon at 12% per annum from September 22, 1986, the date of the filing
of the complaint until fully paid; to pay [private respondent] the further sum of Ten Thousand Pesos (P10,000.00) for reasonable
attorney's fees; to pay the sum of Five Hundred Fifty Two Pesos and Eighty Six Centavos (P552.86) for filing fees and to pay
the costs of suit. Since [private respondent] withdrew its prayer for an alias writ of preliminary attachment vis-a-vis the
[petitioner's] counterbound, the incident on the alias writ of preliminary attachment has become moot and academic.
The facts are as follows:
Petitioner Rosella D. Canque is a contractor doing business under the name and style RDC Construction. At the time material to this case, she had
contracts with the government for (a) the restoration of Cebu-Toledo wharf road; (b) the asphalting of Lutopan access road; and (c) the asphalting of
Babag road in Lapulapu City. 3 In connection with these projects, petitioner entered into two contracts with private respondent Socor Construction
Corporation. The first contract (Exh. A), 4 dated April 26, 1985, provided:
The Sub-Contractor (SOCOR Corporation) and the Contractor (RDC Construction) for the consideration hereinafter named,
hereby agree as follows:
1. SCOPE OF WORK:
a. The Sub-Contractor agrees to perform and execute the

Supply, Lay and Compact Item 310 and Item 302;
b. That Contractor shall provide the labor and materials

needed to complete the project;
c. That the Contractor agrees to pay the Sub-Contractor

the price of One Thousand Pesos only (P1,000.00) per
Metric Ton of Item 310 and Eight Thousand Only
(P8,000.00) per Metric Ton of Item 302.
d. That the Contractor shall pay the Sub-Contractor the

volume of the supplied Item based on the actual weight in
Metric Tons delivered, laid and compacted and accepted
by the MPWH;
e. The construction will commence upon the acceptance

of the offer.
The second contract (Exh. B), 5 dated July 23, 1985, stated:
The Supplier (SOCOR Construction) and the Contractor (RDC Construction) for the consideration hereinafter named, hereby
agree as follows:
1. SCOPE OF WORK:
a. The Supplier agrees to perform and execute the

delivery of Item 310 and Item 302 to the jobsite for the
Asphalting of DAS Access Road and the Front Gate of
ACMDC, Toledo City;
b. That the Contractor should inform or give notice to the

Supplier two (2) days before the delivery of such items;
c. That the Contractor shall pay the Supplier the volume

of the supplied items on the actual weight in metric tons
delivered and accepted by the MPWH fifteen (15) days
after the submission of the bill;
d. The delivery will commence upon the acceptance of

the offer.
On May 28, 1986, private respondent sent petitioner a bill (Exh. C), containing a revised computation, 6 for P299,717.75, plus interest at rate of 3% a
month, representing the balance of petitioner's total account of P2,098,400.25 for materials delivered and services rendered by private respondent
under the two contracts. However, petitioner refused to pay the amount, claiming that private respondent failed to submit the delivery receipts showing
the actual weight in metric tons of the items delivered and the acceptance thereof by the government. 7
Hence, on September 22, 1986, private respondent brought suit in the Regional Trial Court of Cebu to recover from petitioner the sum of P299,717.75,
plus interest at the rate of 3% a month.
In her answer, petitioner admitted the existence of the contracts with private respondent as well as receipt of the billing (Exh. C), dated May 28, 1986.
However, she disputed the correctness of the bill —
. . . considering that the deliveries of [private respondent] were not signed and acknowledged by the checkers of [petitioner], the
bituminous tack coat it delivered to [petitioner] consisted of 60% water, and [petitioner] has already paid [private respondent]
about P1,400,000.00 but [private respondent] has not issued any receipt to [petitioner] for said payments and there is no
agreement that [private respondent] will charge 3% per month interest. 8
Petitioner subsequently amended her answer denying she had entered into sub-contracts with private respondent. 9
During the trial, private respondent, as plaintiff, presented its vice-president, Sofia O. Sanchez, and Dolores Aday, its bookkeeper.
Petitioner's evidence consisted of her lone testimony. 10
On June 22, 1988, the trial court rendered its decision ordering petitioner to pay private respondent the sum of P299,717.75 plus interest at 12% per
annum, and costs. It held:
. . . . [B]y analyzing the plaintiff's Book of Collectible Accounts particularly page 17 thereof (Exh. "K") this Court is convinced that
the entries (both payments and billings) recorded thereat are credible. Undeniably, the book contains a detailed account of
SOCOR's commercial transactions with RDC which were entered therein in the course of business. We cannot therefore
disregard the entries recorded under Exhibit "K" because the fact of their having been made in the course of business carries
with it some degree of trustworthiness. Besides, no proof was ever offered to demonstrate the irregularity of the said entries
thus, there is then no cogent reason for us to doubt their authenticity. 11
The trial court further ruled that in spite of the fact that the contracts did not have any stipulation on interest, interest may be awarded in the form of
damages under Article 2209 of the Civil Code. 12
On appeal, the Court of Appeals affirmed. It upheld the trial court's' reliance on private respondent's Book of Collectible Accounts (Exh. K) on the basis
of Rule 130, §37 13 of the Rules of Court.
Hence, this appeal. Petitioner contends that —
I. THE RESPONDENT COURT ERRED IN ADMITTING IN EVIDENCE AS ENTRIES IN THE COURSE

OF BUSINESS THE ENTRIES IN PRIVATE RESPONDENT'S BOOK OF COLLECTIBLE ACCOUNTS
CONSIDERING THAT THE PERSON WHO MADE SAID ENTRIES ACTUALLY TESTIFIED IN THIS
CASE BUT UNFORTUNATELY HAD NO PERSONAL KNOWLEDGE OF SAID ENTRIES.
II. THE DECISION OF THE RESPONDENT COURT SHOULD BE REVERSED AS IT HAS ONLY
INADMISSIBLE EVIDENCE TO SUPPORT IT.
First. Petitioner contends that the presentation of the delivery receipts duly accepted by the then Ministry of Public Works and Highways (MPWH) is
required under the contracts (Exhs. A and B) and is a condition precedent for her payment of the amount claimed by private respondent. Petitioner
argues that the entries in private respondent's Book of Collectible Accounts (Exh. K) cannot take the place of the delivery receipts and that such entries
are mere hearsay and, thus, inadmissible in evidence. 14
We agree with the appellate court that the stipulation in the two contracts requiring the submission of delivery receipts does not preclude proof of
delivery of materials by private respondent in some other way. The question is whether the entries in the Book of Collectible Accounts (Exh. K)
constitute competent evidence to show such delivery. Private respondent cites Rule 130, §37 of the Rules of Court and argues that the entries in
question constitute "entries in the course of business" sufficient to prove deliveries made for the government projects. This provision reads:
Entries in the course of business. — Entries made at, or near the time of the transactions to which they refer, by a person
deceased, outside of the Philippines or unable to testify, who was in a position to know the facts therein stated, may be received
as prima facie evidence, if such person made the entries in his professional capacity or in the performance of duty and in the
ordinary or regular course of business or duty. 15
The admission in evidence of entries in corporate books requires the satisfaction of the following conditions:
1. The person who made the entry must be dead, outside the country or unable to testify;
2. The entries were made at or near the time of the transactions to which they refer;
3. The entrant was in a position to know the facts stated in the entries;
4. The entries were made in his professional capacity or in the performance of a duty, whether legal, contractual, moral or
religious; and
5. The entries were made in the ordinary or regular course of business or duty. 16
As petitioner points out, the business entries in question (Exh. K) do not meet the first and third requisites. Dolores Aday, who made the entries, was
presented by private respondent to testify on the account of RDC Construction. It was in the course of her testimony that the entries were presented
and marked in evidence. There was, therefore, neither justification nor necessity for the presentation of the entries as the person who made them was
available to testify in court.
Necessity is given as a ground for admitting entries, in that they are the best available evidence. Said a learned judge: "What a
man has actually done and committed to writing when under obligation to do the act, it being in the course of the business he
has undertaken, and he being dead, there seems to be no danger in submitting to the consideration of the court." The person
who maybe called to court to testify on these entries being dead, there arises the necessity of their admission without the one
who made them being called to court be sworn and subjected to cross-examination. And this is permissible in order to prevent a
failure of justice. 17
Moreover, Aday admitted that she had no personal knowledge of the facts constituting the entry. She said she made the entries based on the bills
given to her. But she has no knowledge of the truth or falsity of the facts stated in the bills. The deliveries of the materials stated in the bills were
supervised by "an engineer for (such) functions." 18 The person, therefore, who has personal knowledge of the facts stated in the entries, i.e., that such
deliveries were made in the amounts and on the dates stated, was the company's project engineer. The entries made by Aday show only that the
billings had been submitted to her by the engineer and that she faithfully recorded the amounts stared therein in the books of account. Whether or not
the bills given to Aday correctly reflected the deliveries made in the amounts and on the dates indicated was a fact that could be established by the
project engineer alone who, however, was not presented during trial. The rule is stated by former Chief Justice Moran, thus:
[W]hen the witness had no personal knowledge of the facts entered by him, and the person who gave him the information is
individually known and may testify as to the facts stated in the entry which is not part of a system of entries where scores of
employees have intervened, such entry is not admissible without the testimony of the informer. 19
Second. It is nonetheless argued by private respondent that although the entries cannot be considered an exception to the hearsay rule, they may be
admitted under Rule 132, §10 20 of the Rules of Court which provides:
Sec. 10. When witness may refer to memorandum. — A witness may be allowed to refresh his memory respecting a fact, by
anything written by himself or under his direction at the time when the fact occurred, or immediately thereafter, or at any other
time when the fact was fresh in his memory and he knew that the same was correctly stated in the writing; but in such case the
writing must be produced and may be inspected by the adverse party, who may, if he chooses, cross-examine the witness upon
it, and may read it in evidence. So, also, a witness may testify from such a writing, though he retain no recollection of the
particular facts, if he is able to swear that the writing correctly stated the transaction when made; but such evidence must be
received with caution.
On the other hand, petitioner contends that evidence which is inadmissible for the purpose for which it was offered cannot be admitted for another
purpose. She cites the following from Chief Justice Moran's commentaries:
The purpose for which the evidence is offered must be specified. Where the offer is general, and the evidence is admissible for
one purpose and inadmissible for another, the evidence should be rejected. Likewise, where the offer is made for two or more
purposes and the evidence is incompetent for one of them, the evidence should be excluded. The reason for the rule is that "it
is the duty of a party to select the competent from the incompetent in offering testimony, and he cannot impose this duty upon
the trial court." Where the evidence is inadmissible for the purpose stated in the offer, it must be rejected, though the same may
be admissible for another purpose. The rule is stated thus: "If a party . . . opens the particular view with which he offers any part
of his evidence, or states the object to be attained by it, he precludes himself from insisting on its operation in any other
direction, or for any other object; and the reason is, that the opposite party is prevented from objecting to its competency in any
view different from the one proposed. 21
It should be noted, however, that Exh. K is not really being presented for another purpose. Private respondent's counsel offered it for the purpose of
showing the amount of petitioner's indebtedness. He said:
Exhibit "K," your Honor — faithful reproduction of page (17) of the book on Collectible
Accounts of the plaintiff, reflecting the principal indebtedness of defendant in the amount of
Two hundred ninety-nine thousand seven hundred seventeen pesos and seventy-five
centavos (P299,717.75) and reflecting as well the accumulated interest of three percent (3%)
monthly compounded such that as of December 11, 1987, the amount collectible from the
defendant by the plaintiff is Six hundred sixteen thousand four hundred thirty-five pesos and
seventy-two centavos (P616,435.72); 22
This is also the purpose for which its admission is sought as a memorandum to refresh the memory of Dolores Aday as a witness. In other
words, it is the nature of the evidence that is changed, not the purpose for which it is offered.
Be that as it may, considered as a memorandum, Exh. K does not itself constitute evidence. As explained in Borromeo v. Court of Appeals:23
Under the above provision (Rule 132, §10), the memorandum used to refresh the memory of the witness does not constitute
evidence, and may not be admitted as such, for the simple reason that the witness has just the same to testify on the basis of
refreshed memory. In other words, where the witness has testified independently of or after his testimony has been refreshed by
a memorandum of the events in dispute, such memorandum is not admissible as corroborative evidence. It is self-evident that a
witness may not be corroborated by any written statement prepared wholly by him. He cannot be more credible just because he
supports his open-court declaration with written statements of the same facts even if he did prepare them during the occasion in
dispute, unless the proper predicate of his failing memory is priorly laid down. What is more, even where this requirement has
been satisfied, the express injunction of the rule itself is that such evidence must be received with caution, if only because it is
not very difficult to conceive and fabricate evidence of this nature. This is doubly true when the witness stands to gain materially
or otherwise from the admission of such evidence . . . . 24
As the entries in question (Exh. K) were not made based on personal knowledge, they could only corroborate Dolores Aday's testimony that she made
the entries as she received the bills.
Third. Does this, therefore, mean there is no competent evidence of private respondent's claim as petitioner argues? 25 The answer is in the negative.
Aside from Exh. K, private respondent presented the following documents:
1) Exhibits A — Contract Agreement dated 26 April 1985 which contract covers both the Toledo wharf project and the Babag
Road project in Lapulapu City.
2) Exhibit B — Contract Agreement dated 23 July 1985 which covers the DAS Asphalting Project.
3) Exhibit C — Revised Computation of Billings submitted on May 28, 1986.
4) Exhibit D — an affidavit executed by [petitioner] to the effect that she has no more pending or unsettled obligations as far as
Toledo Wharf Road is concerned.
5) Exhibit D-1 — Statement of Work Accomplished on the Road Restoration of Cebu-Toledo wharf project.
6) Exhibit E — another affidavit executed by [petitioner] attesting that she has completely paid her laborers at the project located
at Babag, Lapulapu City
7) Exhibits F, G, G-1, G-2, G-3 — Premiums paid by [private respondent] together with the receipts for filing fees.
8) Exhibits H, I, J — certifications issued by OIC, MPWH, Regional Office; Lapulapu City, City Engineer; Toledo City Treasurer's
Office respectively, proving that RDC construction has no more collectibles with all the said government offices in connection
with its projects.
10) Exhibit L — Bill No. 057 under the account of RDC Construction in the amount of P153,382.75 dated August 24, 1985.
11) Exhibit M — Bill No. 069 (RDC's account), in the amount of P1,701,795.00 dated November 20, 1985.
12) Exhibit N — Bill No. 071 (RDC's account) in the amount of P47,250.00 dated November 22, 1985.
13) Exhibit O — Bill No. 079 (RDC's account) in the amount of P7,290.00 dated December 6, 1985.
As the trial court found:
The entries recorded under Exhibit "K" were supported by Exhibits "L", "M", "N", "O" which are all Socor Billings under the
account of RDC Construction. These billings were presented and duly received by the authorized representatives of defendant.
The circumstances obtaining in the case at bar clearly show that for a long period of time after receipt thereof, RDC never
manifested its dissatisfaction or objection to the aforestated billings submitted by plaintiff. Neither did defendant immediately
protest to plaintiff's alleged incomplete or irregular performance. In view of these facts, we believe Art. 1235 of the New Civil
Code is applicable.
Art. 1235. When the obligee accepts the performance, knowing its incompleteness and irregularity and
without expressing any protest or objection, the obligation is deemed complied with.
FINALLY, after a conscientious scrutiny of the records, we find Exhibit "D-1" (p. 85 record) to be a material proof of plaintiff's
complete fulfillment of its obligation.
There is no question that plaintiff supplied RDC Construction with Item 302 (Bitunimous Prime Coat), Item 303 (Bituminous
Tack Coat) and Item 310 (Bitunimous Concrete Surface Course) in all the three projects of the latter. The Lutopan Access Road
project, the Toledo wharf project and the Babag-Lapulapu Road project.
On the other hand, no proof was ever offered by defendant to show the presence of other contractors in those projects. We can
therefore conclude that it was Socor Construction Corp. ALONE who supplied RDC with Bituminous Prime Coat, Bituminous
Tack Coat and Bituminous Concrete Surface Course for all the aforenamed three projects. 26
Indeed, while petitioner had previously paid private respondent about P1,400,000.00 for deliveries made in the past, she did not show that she made
such payments only after the delivery receipts had been presented by private respondent. On the other hand, it appears that petitioner was able to
collect the full amount of project costs from the government, so that petitioner would be unjustly enriched at the expense of private respondent if she is
not made to pay what is her just obligation the contracts.
WHEREFORE, the decision of the Court of Appeals is AFFIRMED.1âwphi1.nêt
SO ORDERED.
G.R. No. 204169 September 11, 2013
YASUO IWASAWA, PETITIONER,
vs.
FELISA CUSTODIO GANGAN (A.K.A FELISA GANGAN ARAMBULO, AND FELISA GANGAN IWASAWA) AND THE LOCAL CIVIL REGISTRAR
1
OF PASAY CITY, RESPONDENTS.
DECISION
VILLARAMA, JR., J.:
Before us is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as amended, assailing the September 4, 2012
Decision2 and October 16, 2012 Order3 of the Regional Trial Court (RTC), Branch 43, of Manila in Civil Case No. 11-126203. The RTC denied the
petition for declaration of nullity of the marriage of petitioner Yasuo Iwasawa with private respondent Felisa Custodio Gangan due to insufficient
evidence.
The antecedents follow:
Petitioner, a Japanese national, met private respondent sometime in 2002 in one of his visits to the Philippines. Private respondent introduced herself
as "single" and "has never married before." Since then, the two became close to each other. Later that year, petitioner came back to the Philippines
and married private respondent on November 28, 2002 in Pasay City. After the wedding, the couple resided in Japan.4
In July 2009, petitioner noticed his wife become depressed. Suspecting that something might have happened in the Philippines, he confronted his wife
about it. To his shock, private respondent confessed to him that she received news that her previous husband passed away.5
Petitioner sought to confirm the truth of his wife’s confession and discovered that indeed, she was married to one Raymond Maglonzo Arambulo and
that their marriage took place on June 20, 1994.6 This prompted petitioner to file a petition 7 for the declaration of his marriage to private respondent as
null and void on the ground that their marriage is a bigamous one, based on Article 35(4) in relation to Article 41 of the Family Code of the Philippines.
During trial, aside from his testimony, petitioner also offered the following pieces of documentary evidence issued by the National Statistics Office
(NSO):
(1)
Certificate of Marriage8 between petitioner and private respondent marked as Exhibit "A" to prove the fact of marriage between the parties
on November 28, 2002;
(2)
Certificate of Marriage9 between private respondent and Raymond Maglonzo Arambulo marked as Exhibit "B" to prove the fact of marriage
between the parties on June 20, 1994;
(3)
Certificate of Death10 of Raymond Maglonzo Arambulo marked as Exhibits "C" and "C-1" to prove the fact of the latter’s death on July 14,
2009; and
(4)
Certification11 from the NSO to the effect that there are two entries of marriage recorded by the office pertaining to private respondent
marked as Exhibit "D" to prove that private respondent in fact contracted two marriages, the first one was to a Raymond Maglonzo
Arambulo on June 20, 1994, and second, to petitioner on November 28, 2002.
The prosecutor appearing on behalf of the Office of the Solicitor General (OSG) admitted the authenticity and due execution of the above documentary
exhibits during pre-trial.12
On September 4, 2012, the RTC rendered the assailed decision. It ruled that there was insufficient evidence to prove private respondent’s prior existing
valid marriage to another man. It held that while petitioner offered the certificate of marriage of private respondent to Arambulo, it was only petitioner
who testified about said marriage. The RTC ruled that petitioner’s testimony is unreliable because he has no personal knowledge of private
respondent’s prior marriage nor of Arambulo’s death which makes him a complete stranger to the marriage certificate between private respondent and
Arambulo and the latter’s death certificate. It further ruled that petitioner’s testimony about the NSO certification is likewise unreliable since he is a
stranger to the preparation of said document.
Petitioner filed a motion for reconsideration, but the same was denied by the RTC in an Order dated October 16, 2012.
Hence this petition raising the sole legal issue of whether the testimony of the NSO records custodian certifying the authenticity and due execution of
the public documents issued by said office was necessary before they could be accorded evidentiary weight.
Petitioner argues that the documentary evidence he presented are public documents which are considered self-authenticating and thus it was
unnecessary to call the NSO Records Custodian as witness. He cites Article 410 of the Civil Code which provides that books making up the civil
register and all documents relating thereto shall be considered public documents and shall be prima facie evidence of the facts stated therein.
Moreover, the trial prosecutor himself also admitted the authenticity of said documents.
The OSG, in its Comment, 13 submits that the findings of the RTC are not in accord with law and established jurisprudence. It contends that both
Republic Act No. 3753, otherwise known as the Law on Registry of Civil Status, and the Civil Code elaborated on the character of documents arising
from records and entries made by the civil registrar and categorically declared them as public documents. Being public documents, said documents are
admissible in evidence even without further proof of their due execution and genuineness and consequently, there was no need for the court to require
petitioner to present the records custodian or officer from the NSO to testify on them. The OSG further contends that public documents have probative
value since they are prima facie evidence of the facts stated therein as provided in the above-quoted provision of the Civil Code. Thus, the OSG
submits that the public documents presented by petitioner, considered together, completely establish the facts in issue.
In her letter14 dated March 19, 2013 to this Court, private respondent indicated that she is not against her husband’s petition to have their marriage
declared null and void. She likewise admitted therein that she contracted marriage with Arambulo on June 20, 1994 and contracted a second marriage
with petitioner on November 28, 2002. She further admitted that it was due to poverty and joblessness that she married petitioner without telling the
latter that she was previously married. Private respondent also confirmed that it was when she found out that Arambulo passed away on July 14, 2009
that she had the guts to confess to petitioner about her previous marriage. Thereafter, she and petitioner have separated.
We grant the petition.
There is no question that the documentary evidence submitted by petitioner are all public documents.1âwphi1 As provided in the Civil Code:
ART. 410. The books making up the civil register and all documents relating thereto shall be considered public documents and shall be prima facie
evidence of the facts therein contained.
As public documents, they are admissible in evidence even without further proof of their due execution and genuineness. 15 Thus, the RTC erred when it
disregarded said documents on the sole ground that the petitioner did not present the records custodian of the NSO who issued them to testify on their
authenticity and due execution since proof of authenticity and due execution was not anymore necessary. Moreover, not only are said documents
admissible, they deserve to be given evidentiary weight because they constitute prima facie evidence of the facts stated therein. And in the instant
case, the facts stated therein remain unrebutted since neither the private respondent nor the public prosecutor presented evidence to the contrary.
This Court has consistently held that a judicial declaration of nullity is required before a valid subsequent marriage can be contracted; or else, what
transpires is a bigamous marriage,16 which is void from the beginning as provided in Article 35(4) of the Family Code of the Philippines. And this is what
transpired in the instant case.
As correctly pointed out by the OSG, the documentary exhibits taken together concretely establish the nullity of the marriage of petitioner to private
respondent on the ground that their marriage is bigamous. The exhibits directly prove the following facts: (1) that private respondent married Arambulo
on June 20, 1994 in the City of Manila; (2) that private respondent contracted a second marriage this time with petitioner on November 28, 2002 in
Pasay City; (3) that there was no judicial declaration of nullity of the marriage of private respondent with Arambulo at the time she married petitioner;
(3) that Arambulo died on July 14, 2009 and that it was only on said date that private respondent’s marriage with Arambulo was deemed to have been
dissolved; and (4) that the second marriage of private respondent to petitioner is bigamous, hence null and void, since the first marriage was still valid
and subsisting when the second marriage was contracted.
WHEREFORE, the petition for review on certiorari is GRANTED. The September 4, 2012 Decision and October 16, 2012 Order of the Regional Trial
Court of Manila, Branch 43, in Civil Case No. 11-126203 are hereby SET ASIDE. The marriage of petitioner Yasuo Iwasawa and private respondent
Felisa Custodio Gangan is declared NULL and VOID.
The Local Civil Registrar of Pasay City and the National Statistics Office are hereby ORDERED to make proper entries into the records of the
abovementioned parties in accordance with this Decision.
No pronouncement as to costs.
SO ORDERED.
G.R. No. 181163 July 24, 2013
ASIAN TERMINALS, INC., Petitioner,

vs.
PHILAM INSURANCE CO., INC. (now Chartis Philippines Insurance, Inc.), Respondent.
x-----------------------x
G.R. No. 181262
PHILAM INSURANCE CO., INC. (now Chartis Philippines Insurance, Inc.), Petitioner,

vs.
WESTWIND SHIPPING CORPORATION and ASIAN TERMINALS, INC., Respondents.
x-----------------------x
G.R. No. 181319
WESTWIND SHIPPING CORPORATION, Petitioner,

vs.
PHILAM INSURANCE CO., INC. (now Chartis Philippines Insurance, Inc.) and ASIAN TERMINALS, INC., Respondents.
DECISION
VILLARAMA, JR., J.:
Before us are three consolidated petitions for review on certiorari assailing the Decision1 dated October 15, 2007 and the Resolution2 dated January
11, 2008 of the Court of Appeals (CA) which affirmed with modification the Decision 3 of the Regional Trial Court (RTC) of Makati City, Branch 148, in
Civil Case No. 96-062. The RTC had ordered Westwind Shipping Corporation (Westwind) and Asian Terminals, Inc. (ATI) to pay, jointly and severally,
Philam Insurance Co., Inc. (Philam) the sum of ₱633,957.15, with interest at 12% per annum from the date of judicial demand and ₱158,989.28 as
attorney’s fees.
The facts of the case follow:
On April 15, 1995, Nichimen Corporation shipped to Universal Motors Corporation (Universal Motors) 219 packages containing 120 units of brand new
Nissan Pickup Truck Double Cab 4x2 model, without engine, tires and batteries, on board the vessel S/S "Calayan Iris" from Japan to Manila. The
shipment, which had a declared value of US$81,368 or ₱29,400,000, was insured with Philam against all risks under Marine Policy No. 708-8006717-
4.4
The carrying vessel arrived at the port of Manila on April 20, 1995, and when the shipment was unloaded by the staff of ATI, it was found that the
package marked as 03-245-42K/1 was in bad order. 5 The Turn Over Survey of Bad Order Cargoes 6 dated April 21, 1995 identified two packages,
labeled 03-245-42K/1 and 03/237/7CK/2, as being dented and broken. Thereafter, the cargoes were stored for temporary safekeeping inside CFS
Warehouse in Pier No. 5.
On May 11, 1995, the shipment was withdrawn by R.F. Revilla Customs Brokerage, Inc., the authorized broker of Universal Motors, and delivered to
the latter’s warehouse in Mandaluyong City. Upon the request7 of Universal Motors, a bad order survey was conducted on the cargoes and it was found
that one Frame Axle Sub without LWR was deeply dented on the buffle plate while six Frame Assembly with Bush were deformed and
misaligned.8 Owing to the extent of the damage to said cargoes, Universal Motors declared them a total loss.
On August 4, 1995, Universal Motors filed a formal claim for damages in the amount of ₱643,963.84 against Westwind, 9 ATI10 and R.F. Revilla
Customs Brokerage, Inc.11 When Universal Motors’ demands remained unheeded, it sought reparation from and was compensated in the sum of
₱633,957.15 by Philam. Accordingly, Universal Motors issued a Subrogation Receipt12 dated November 15, 1995 in favor of Philam.
On January 18, 1996, Philam, as subrogee of Universal Motors, filed a Complaint 13 for damages against Westwind, ATI and R.F. Revilla Customs
Brokerage, Inc. before the RTC of Makati City, Branch 148.
On September 24, 1999, the RTC rendered judgment in favor of Philam and ordered Westwind and ATI to pay Philam, jointly and severally, the sum of
₱633,957.15 with interest at the rate of 12% per annum, ₱158,989.28 by way of attorney’s fees and expenses of litigation.
The court a quo ruled that there was sufficient evidence to establish the respective participation of Westwind and ATI in the discharge of and
consequent damage to the shipment. It found that the subject cargoes were compressed while being hoisted using a cable that was too short and taut.
The trial court observed that while the staff of ATI undertook the physical unloading of the cargoes from the carrying vessel, Westwind’s duty officer
exercised full supervision and control throughout the process. It held Westwind vicariously liable for failing to prove that it exercised extraordinary
diligence in the supervision of the ATI stevedores who unloaded the cargoes from the vessel. However, the court absolved R.F. Revilla Customs
Brokerage, Inc. from liability in light of its finding that the cargoes had been damaged before delivery to the consignee.
The trial court acknowledged the subrogation between Philam and Universal Motors on the strength of the Subrogation Receipt dated November 15,
1995. It likewise upheld Philam’s claim for the value of the alleged damaged vehicle parts contained in Case Nos. 03-245-42K/1 and 03-245-51K or
specifically for "7 pieces of Frame Axle Sub Without Lower and Frame Assembly with Bush."14
Westwind filed a Motion for Reconsideration15 which was, however, denied in an Order16 dated October 26, 2000.
On appeal, the CA affirmed with modification the ruling of the RTC. In a Decision dated October 15, 2007, the appellate court directed Westwind and
ATI to pay Philam, jointly and severally, the amount of ₱190,684.48 with interest at the rate of 12% per annum until fully paid, attorney’s fees of
₱47,671 and litigation expenses.
The CA stressed that Philam may not modify its allegations by claiming in its Appellee’s Brief17 that the six pieces of Frame Assembly with Bush, which
were purportedly damaged, were also inside Case No. 03-245-42K/1. The CA noted that in its Complaint, Philam alleged that "one (1) pc. FRAME
AXLE SUB W/O LWR from Case No. 03-245-42K/1 was completely deformed and misaligned, and six (6) other pcs. of FRAME ASSEMBLY WITH
BUSH from Case No. 03-245-51K were likewise completely deformed and misaligned."18
The appellate court accordingly affirmed Westwind and ATI’s joint and solidary liability for the damage to only one (1) unit of Frame Axle Sub without
Lower inside Case No. 03-245-42K/1. It also noted that when said cargo sustained damage, it was not yet in the custody of the consignee or the
person who had the right to receive it. The CA pointed out that Westwind’s duty to observe extraordinary diligence in the care of the cargoes subsisted
during unloading thereof by ATI’s personnel since the former exercised full control and supervision over the discharging operation.
Similarly, the appellate court held ATI liable for the negligence of its employees who carried out the offloading of cargoes from the ship to the pier. As
regards the extent of ATI’s liability, the CA ruled that ATI cannot limit its liability to ₱5,000 per damaged package. It explained that Section 7.01 19 of the
Contract for Cargo Handling Services20 does not apply in this case since ATI was not yet in custody and control of the cargoes when the Frame Axle
Sub without Lower suffered damage.
Citing Belgian Overseas Chartering and Shipping N.V. v. Philippine First Insurance Co., Inc., 21 the appellate court also held that Philam’s action for
damages had not prescribed notwithstanding the absence of a notice of claim.
All the parties moved for reconsideration, but their motions were denied in a Resolution dated January 11, 2008. Thus, they each filed a petition for
review on certiorari which were consolidated together by this Court considering that all three petitions assail the same CA decision and resolution and
involve the same parties.
Essentially, the issues posed by petitioner ATI in G.R. No. 181163, petitioner Philam in G.R. No. 181262 and petitioner Westwind in G.R. No. 181319
can be summed up into and resolved by addressing three questions: (1) Has Philam’s action for damages prescribed? (2) Who between Westwind and
ATI should be held liable for the damaged cargoes? and (3) What is the extent of their liability?
Petitioners’ Arguments
G.R. No. 181163
Petitioner ATI disowns liability for the damage to the Frame Axle Sub without Lower inside Case No. 03-245-42K/1. It shifts the blame to Westwind,
whom it charges with negligence in the supervision of the stevedores who unloaded the cargoes. ATI admits that the damage could have been averted
had Westwind observed extraordinary diligence in handling the goods. Even so, ATI suspects that Case No. 03-245-42K/1 is "weak and
defective"22 considering that it alone sustained damage out of the 219 packages.
Notwithstanding, petitioner ATI submits that, at most, it can be held liable to pay only ₱5,000 per package pursuant to its Contract for Cargo Handling
Services. ATI maintains that it was not properly notified of the actual value of the cargoes prior to their discharge from the vessel.
G.R. No. 181262
Petitioner Philam supports the CA in holding both Westwind and ATI liable for the deformed and misaligned Frame Axle Sub without Lower inside Case
No. 03-245-42K/1. It, however, faults the appellate court for disallowing its claim for the value of six Chassis Frame Assembly which were likewise
supposedly inside Case Nos. 03-245-51K and 03-245-42K/1. As to the latter container, Philam anchors its claim on the results of the Inspection/Survey
Report23 of Chartered Adjusters, Inc., which the court received without objection from Westwind and ATI. Petitioner believes that with the offer and
consequent admission of evidence to the effect that Case No. 03-245-42K/1 contains six pieces of dented Chassis Frame Assembly, Philam’s claim
thereon should be treated, in all respects, as if it has been raised in the pleadings. Thus, Philam insists on the reinstatement of the trial court’s award in
its favor for the payment of ₱633,957.15 plus legal interest, ₱158,989.28 as attorney’s fees and costs.
G.R. No. 181319
Petitioner Westwind denies joint liability with ATI for the value of the deformed Frame Axle Sub without Lower in Case No. 03-245-42K/1. Westwind
argues that the evidence shows that ATI was already in actual custody of said case when the Frame Axle Sub without Lower inside it was misaligned
from being compressed by the tight cable used to unload it. Accordingly, Westwind ceased to have responsibility over the cargoes as provided in
paragraph 4 of the Bill of Lading which provides that the responsibility of the carrier shall cease when the goods are taken into the custody of the
arrastre.
Westwind contends that sole liability for the damage rests on ATI since it was the latter’s stevedores who operated the ship’s gear to unload the
cargoes. Westwind reasons that ATI is an independent company, over whose employees and operations it does not exercise control. Moreover, it was
ATI’s employees who selected and used the wrong cable to lift the box containing the cargo which was damaged.
Westwind likewise believes that ATI is bound by its acceptance of the goods in good order despite a finding that Case No. 03-245-42K/1 was partly
torn and crumpled on one side. Westwind also notes that the discovery that a piece of Frame Axle Sub without Lower was completely deformed and
misaligned came only on May 12, 1995 or 22 days after the cargoes were turned over to ATI and after the same had been hauled by R.F. Revilla
Customs Brokerage, Inc.
Westwind further argues that the CA erred in holding it liable considering that Philam’s cause of action has prescribed since the latter filed a formal
claim with it only on August 17, 1995 or four months after the cargoes arrived on April 20, 1995. Westwind stresses that according to the provisions of
clause 20, paragraph 224 of the Bill of Lading as well as Article 36625 of the Code of Commerce, the consignee had until April 20, 1995 within which to
make a claim considering the readily apparent nature of the damage, or until April 27, 1995 at the latest, if it is assumed that the damage is not readily
apparent.
Lastly, petitioner Westwind contests the imposition of 12% interest on the award of damages to Philam reckoned from the time of extrajudicial demand.
Westwind asserts that, at most, it can only be charged with 6% interest since the damages claimed by Philam does not constitute a loan or forbearance
of money.
The Court’s Ruling
The three consolidated petitions before us call for a determination of who between ATI and Westwind is liable for the damage suffered by the subject
cargo and to what extent. However, the resolution of the issues raised by the present petitions is predicated on the appreciation of factual issues which
is beyond the scope of a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as amended. It is settled that in petitions
for review on certiorari, only questions of law may be put in issue. Questions of fact cannot be entertained.26
There is a question of law if the issue raised is capable of being resolved without need of reviewing the probative value of the evidence. The resolution
of the issue must rest solely on what the law provides on the given set of circumstances. Once it is clear that the issue invites a review of the evidence
presented, the question posed is one of fact. If the query requires a re-evaluation of the credibility of witnesses, or the existence or relevance of
surrounding circumstances and their relation to each other, the issue in that query is factual.27
In the present petitions, the resolution of the question as to who between Westwind and ATI should be liable for the damages to the cargo and to what
extent would have this Court pass upon the evidence on record. But while it is not our duty to review, examine and evaluate or weigh all over again the
probative value of the evidence presented,28 the Court may nonetheless resolve questions of fact when the case falls under any of the following
exceptions:
(1) when the findings are grounded entirely on speculation, surmises, or conjectures; (2) when the inference made is manifestly mistaken, absurd, or
impossible; (3) when there is grave abuse of discretion; (4) when the judgment is based on a misapprehension of facts; (5) when the findings of fact are
conflicting; (6) when in making its findings the Court of Appeals went beyond the issues of the case, or its findings are contrary to the admissions of
both the appellant and the appellee; (7) when the findings are contrary to those of the trial court; (8) when the findings are conclusions without citation
of specific evidence on which they are based; (9) when the facts set forth in the petition as well as in the petitioner’s main and reply briefs are not
disputed by the respondent; and (10) when the findings of fact are premised on the supposed absence of evidence and contradicted by the evidence
on record.29
In the cases at bar, the fifth and seventh exceptions apply. While the CA affirmed the joint liability of ATI and Westwind, it held them liable only for the
value of one unit of Frame Axle Sub without Lower inside Case No. 03-245-42K/1. The appellate court disallowed the award of damages for the six
pieces of Frame Assembly with Bush, which petitioner Philam alleged, for the first time in its Appellee’s Brief, to be likewise inside Case No. 03-245-
42K/1. Lastly, the CA reduced the award of attorney’s fees to ₱47,671.
Foremost, the Court holds that petitioner Philam has adequately established the basis of its claim against petitioners ATI and Westwind. Philam, as
insurer, was subrogated to the rights of the consignee, Universal Motors Corporation, pursuant to the Subrogation Receipt executed by the latter in
favor of the former. The right of subrogation accrues simply upon payment by the insurance company of the insurance claim. 30 Petitioner Philam’s
action finds support in Article 2207 of the Civil Code, which provides as follows:
Art. 2207. If the plaintiff’s property has been insured, and he has received indemnity from the insurance company for the injury or loss arising out of the
wrong or breach of contract complained of, the insurance company shall be subrogated to the rights of the insured against the wrongdoer or the person
who has violated the contract. x x x.
In their respective comments31 to Philam’s Formal Offer of Evidence,32 petitioners ATI and Westwind objected to the admission of Marine Certificate No.
708-8006717-4 and the Subrogation Receipt as documentary exhibits "B" and "P," respectively. Petitioner Westwind objects to the admission of both
documents for being hearsay as they were not authenticated by the persons who executed them. For the same reason, petitioner ATI assails the
admissibility of the Subrogation Receipt. As regards Marine Certificate No. 708-8006717-4, ATI makes issue of the fact that the same was issued only
on April 27, 1995 or 12 days after the shipment was loaded on and transported via S/S "Calayan Iris."
The nature of documents as either public or private determines how the documents may be presented as evidence in court. Public documents, as
enumerated under Section 19,33 Rule 132 of the Rules of Court, are self-authenticating and require no further authentication in order to be presented as
evidence in court.34
In contrast, a private document is any other writing, deed or instrument executed by a private person without the intervention of a notary or other
person legally authorized by which some disposition or agreement is proved or set forth. Lacking the official or sovereign character of a public
document, or the solemnities prescribed by law, a private document requires authentication 35 in the manner prescribed under Section 20, Rule 132 of
the Rules:
SEC. 20. Proof of private document. – Before any private document offered as authentic is received in evidence, its due execution and authenticity
must be proved either:
(a) By anyone who saw the document executed or written; or
(b) By evidence of the genuineness of the signature or handwriting of the maker.
Any other private document need only be identified as that which it is claimed to be.
The requirement of authentication of a private document is excused only in four instances, specifically: (a) when the document is an ancient one within
the context of Section 21,36 Rule 132 of the Rules; (b) when the genuineness and authenticity of the actionable document have not been specifically
denied under oath by the adverse party; (c) when the genuineness and authenticity of the document have been admitted; or (d) when the document is
not being offered as genuine.37
Indubitably, Marine Certificate No. 708-8006717-4 and the Subrogation Receipt are private documents which Philam and the consignee, respectively,
issue in the pursuit of their business. Since none of the exceptions to the requirement of authentication of a private document obtains in these cases,
said documents may not be admitted in evidence for Philam without being properly authenticated.
Contrary to the contention of petitioners ATI and Westwind, however, Philam presented its claims officer, Ricardo Ongchangco, Jr. to testify on the
execution of the Subrogation Receipt, as follows:
ATTY. PALACIOS
Q How were you able to get hold of this subrogation receipt?
A Because I personally delivered the claim check to consignee and have them receive the said check.
Q I see. Therefore, what you are saying is that you personally delivered the claim check of Universal Motors Corporation to that company and you have
the subrogation receipt signed by them personally?
A Yes, sir.
Q And it was signed in your presence?
A Yes, sir.38
Indeed, all that the Rules require to establish the authenticity of a document is the testimony of a person who saw the document executed or written.
Thus, the trial court did not err in admitting the Subrogation Receipt in evidence despite petitioners ATI and Westwind’s objections that it was not
authenticated by the person who signed it.
However, the same cannot be said about Marine Certificate No. 708-8006717-4 which Ongchangcho, Jr. merely identified in court. There is nothing in
Ongchangco, Jr.’s testimony which indicates that he saw Philam’s authorized representative sign said document, thus:
ATTY. PALACIOS
Q Now, I am presenting to you a copy of this marine certificate 708-8006717-4 issued by Philam Insurance Company, Inc. to Universal Motors
Corporation on April 15, 1995. Will you tell us what relation does it have to that policy risk claim mentioned in that letter?
A This is a photocopy of the said policy issued by the consignee Universal Motors Corporation.
ATTY. PALACIOS
I see. May I request, if Your Honor please, that this marine risk policy of the plaintiff as submitted by claimant Universal Motors Corporation be marked
as Exhibit B.
COURT
Mark it.39
As regards the issuance of Marine Certificate No. 708-8006717-4 after the fact of loss occurred, suffice it to say that said document simply certifies the
existence of an open insurance policy in favor of the consignee. Hence, the reference to an "Open Policy Number 9595093" in said certificate. The
Court finds it completely absurd to suppose that any insurance company, of sound business practice, would assume a loss that has already been
realized, when the profitability of its business rests precisely on the non-happening of the risk insured against.
Yet, even with the exclusion of Marine Certificate No. 708-8006717-4, the Subrogation Receipt, on its own, is adequate proof that petitioner Philam
paid the consignee’s claim on the damaged goods. Petitioners ATI and Westwind failed to offer any evidence to controvert the same. In Malayan
Insurance Co., Inc. v. Alberto,40 the Court explained the effect of payment by the insurer of the insurance claim in this wise:
We have held that payment by the insurer to the insured operates as an equitable assignment to the insurer of all the remedies that the insured may
have against the third party whose negligence or wrongful act caused the loss. The right of subrogation is not dependent upon, nor does it grow out of,
any privity of contract. It accrues simply upon payment by the insurance company of the insurance claim. The doctrine of subrogation has its roots in
equity. It is designed to promote and accomplish justice; and is the mode that equity adopts to compel the ultimate payment of a debt by one who, in
justice, equity, and good conscience, ought to pay.41
Neither do we find support in petitioner Westwind’s contention that Philam’s right of action has prescribed.
The Carriage of Goods by Sea Act (COGSA) or Public Act No. 521 of the 74th US Congress, was accepted to be made applicable to all contracts for
the carriage of goods by sea to and from Philippine ports in foreign trade by virtue of Commonwealth Act (C.A.) No. 65. 42 Section 1 of C.A. No. 65
states:
Section 1. That the provisions of Public Act Numbered Five hundred and twenty-one of the Seventy-fourth Congress of the United States, approved on
April sixteenth, nineteen hundred and thirty-six, be accepted, as it is hereby accepted to be made applicable to all contracts for the carriage of goods by
sea to and from Philippine ports in foreign trade: Provided, That nothing in the Act shall be construed as repealing any existing provision of the Code of
Commerce which is now in force, or as limiting its application.
The prescriptive period for filing an action for the loss or damage of the goods under the COGSA is found in paragraph (6), Section 3, thus:
(6) Unless notice of loss or damage and the general nature of such loss or damage be given in writing to the carrier or his agent at the port of discharge
before or at the time of the removal of the goods into the custody of the person entitled to delivery thereof under the contract of carriage, such removal
shall be prima facie evidence of the delivery by the carrier of the goods as described in the bill of lading. If the loss or damage is not apparent, the
notice must be given within three days of the delivery.
Said notice of loss or damage maybe endorsed upon the receipt for the goods given by the person taking delivery thereof.
The notice in writing need not be given if the state of the goods has at the time of their receipt been the subject of joint survey or inspection.
In any event the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after
delivery of the goods or the date when the goods should have been delivered: Provided, That if a notice of loss or damage, either apparent or
concealed, is not given as provided for in this section, that fact shall not affect or prejudice the right of the shipper to bring suit within one year after the
delivery of the goods or the date when the goods should have been delivered.
In the Bill of Lading43 dated April 15, 1995, Rizal Commercial Banking Corporation (RCBC) is indicated as the consignee while Universal Motors is
listed as the notify party. These designations are in line with the subject shipment being covered by Letter of Credit No. I501054, which RCBC issued
upon the request of Universal Motors.
A letter of credit is a financial device developed by merchants as a convenient and relatively safe mode of dealing with sales of goods to satisfy the
seemingly irreconcilable interests of a seller, who refuses to part with his goods before he is paid, and a buyer, who wants to have control of his goods
before paying.44 However, letters of credit are employed by the parties desiring to enter into commercial transactions, not for the benefit of the issuing
bank but mainly for the benefit of the parties to the original transaction, 45 in these cases, Nichimen Corporation as the seller and Universal Motors as
the buyer. Hence, the latter, as the buyer of the Nissan CKD parts, should be regarded as the person entitled to delivery of the goods. Accordingly, for
purposes of reckoning when notice of loss or damage should be given to the carrier or its agent, the date of delivery to Universal Motors is controlling.
S/S "Calayan Iris" arrived at the port of Manila on April 20, 1995, and the subject cargoes were discharged to the custody of ATI the next day. The
goods were then withdrawn from the CFS Warehouse on May 11, 1995 and the last of the packages delivered to Universal Motors on May 17, 1995.
Prior to this, the latter filed a Request for Bad Order Survey 46 on May 12,1995 following a joint inspection where it was discovered that six pieces of
Chassis Frame Assembly from two bundles were deformed and one Front Axle Sub without Lower from a steel case was dented. Yet, it was not until
August 4, 1995 that Universal Motors filed a formal claim for damages against petitioner Westwind.
Even so, we have held in Insurance Company of North America v. Asian Terminals, Inc. that a request for, and the result of a bad order examination,
done within the reglementary period for furnishing notice of loss or damage to the carrier or its agent, serves the purpose of a claim. A claim is required
to be filed within the reglementary period to afford the carrier or depositary reasonable opportunity and facilities to check the validity of the claims while
facts are still fresh in the minds of the persons who took part in the transaction and documents are still available. 47 Here, Universal Motors filed a
request for bad order survey on May 12, 1995, even before all the packages could be unloaded to its warehouse.
Moreover, paragraph (6), Section 3 of the COGSA clearly states that failure to comply with the notice requirement shall not affect or prejudice the right
of the shipper to bring suit within one year after delivery of the goods. Petitioner Philam, as subrogee of Universal Motors, filed the Complaint for
damages on January 18, 1996, just eight months after all the packages were delivered to its possession on May 17, 1995. Evidently, petitioner
Philam’s action against petitioners Westwind and ATI was seasonably filed.
This brings us to the question that must be resolved in these consolidated petitions. Who between Westwind and ATI should be liable for the damage
to the cargo?
It is undisputed that Steel Case No. 03-245-42K/1 was partly torn and crumpled on one side while it was being unloaded from the carrying vessel. The
damage to said container was noted in the Bad Order Cargo Receipt48 dated April 20, 1995 and Turn Over Survey of Bad Order Cargoes dated April
21, 1995. The Turn Over Survey of Bad Order Cargoes indicates that said steel case was not opened at the time of survey and was accepted by the
arrastre in good order. Meanwhile, the Bad Order Cargo Receipt bore a notation "B.O. not yet t/over to ATI." On the basis of these documents,
petitioner ATI claims that the contents of Steel Case No. 03-245-42K/1 were damaged while in the custody of petitioner Westwind.
We agree.
Common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence in the vigilance over
the goods transported by them. Subject to certain exceptions enumerated under Article 173449 of the Civil Code, common carriers are responsible for
the loss, destruction, or deterioration of the goods. The extraordinary responsibility of the common carrier lasts from the time the goods are
unconditionally placed in the possession of, and received by the carrier for transportation until the same are delivered, actually or constructively, by the
carrier to the consignee, or to the person who has a right to receive them.50
The court a quo, however, found both petitioners Westwind and ATI, jointly and severally, liable for the damage to the cargo. It observed that while the
staff of ATI undertook the physical unloading of the cargoes from the carrying vessel, Westwind’s duty officer exercised full supervision and control
over the entire process. The appellate court affirmed the solidary liability of Westwind and ATI, but only for the damage to one Frame Axle Sub without
Lower.
Upon a careful review of the records, the Court finds no reason to deviate from the finding that petitioners Westwind and ATI are concurrently
accountable for the damage to the content of Steel Case No. 03-245-42K/1.
Section 251 of the COGSA provides that under every contract of carriage of goods by the sea, the carrier in relation to the loading, handling, stowage,
carriage, custody, care and discharge of such goods, shall be subject to the responsibilities and liabilities and entitled to the rights and immunities set
forth in the Act. Section 3 (2)52 thereof then states that among the carrier’s responsibilities are to properly load, handle, stow, carry, keep, care for and
discharge the goods carried.53
At the trial, Westwind’s Operation Assistant, Menandro G. Ramirez, testified on the presence of a ship officer to supervise the unloading of the subject
cargoes.
ATTY. LLAMAS
Q Having been present during the entire discharging operation, do you remember who else were present at that time?
A Our surveyor and our checker the foreman of ATI.
Q Were there officials of the ship present also?
A Yes, sir there was an officer of the vessel on duty at that time.54
xxxx
Q Who selected the cable slink to be used?
A ATI Operation.
Q Are you aware of how they made that selection?
A Before the vessel arrived we issued a manifesto of the storage plan informing the ATI of what type of cargo and equipment will be utilitized in
discharging the cargo.55
xxxx
Q You testified that it was the ATI foremen who select the cable slink to be used in discharging, is that correct?
A Yes sir, because they are the one who select the slink and they know the kind of cargoes because they inspected it before the discharge of said
cargo.
Q Are you aware that the ship captain is consulted in the selection of the cable sling?
A Because the ship captain knows for a fact the equipment being utilized in the discharge of the cargoes because before the ship leave the port of
Japan the crew already utilized the proper equipment fitted to the cargo.56 (Emphasis supplied.)
It is settled in maritime law jurisprudence that cargoes while being unloaded generally remain under the custody of the carrier. 57 The Damage Survey
Report58 of the survey conducted by Phil. Navtech Services, Inc. from April 20-21, 1995 reveals that Case No. 03-245-42K/1 was damaged by ATI
stevedores due to overtightening of a cable sling hold during discharge from the vessel’s hatch to the pier. Since the damage to the cargo was incurred
during the discharge of the shipment and while under the supervision of the carrier, the latter is liable for the damage caused to the cargo.
This is not to say, however, that petitioner ATI is without liability for the damaged cargo.
The functions of an arrastre operator involve the handling of cargo deposited on the wharf or between the establishment of the consignee or shipper
and the ship’s tackle. Being the custodian of the goods discharged from a vessel, an arrastre operator’s duty is to take good care of the goods and to
turn them over to the party entitled to their possession.59
Handling cargo is mainly the arrastre operator’s principal work so its drivers/operators or employees should observe the standards and measures
necessary to prevent losses and damage to shipments under its custody.60
While it is true that an arrastre operator and a carrier may not be held solidarily liable at all times, 61 the facts of these cases show that apart from ATI’s
stevedores being directly in charge of the physical unloading of the cargo, its foreman picked the cable sling that was used to hoist the packages for
transfer to the dock. Moreover, the fact that 218 of the 219 packages were unloaded with the same sling unharmed is telling of the inadequate care
with which ATI’s stevedore handled and discharged Case No. 03-245-42K/1.
With respect to petitioners ATI and Westwind’s liability, we agree with the CA that the same should be confined to the value of the one piece Frame
Axle Sub without Lower.
In the Bad Order Inspection Report62 prepared by Universal Motors, the latter referred to Case No. 03-245-42K/1 as the source of said Frame Axle Sub
without Lower which suffered a deep dent on its buffle plate. Yet, it identified Case No. 03-245-51K as the container which bore the six pieces Frame
Assembly with Bush. Thus, in Philam’s Complaint, it alleged that "the entire shipment showed one (1) pc. FRAME AXLE SUB W/O LWR from Case No.
03-245-42K/1 was completely deformed and misaligned, and six (6) other pcs. of FRAME ASSEMBLY WITH BUSH from Case No. 03-245-51K were
likewise completely deformed and misaligned."63 Philam later claimed in its Appellee’s Brief that the six pieces of Frame Assembly with Bush were also
inside the damaged Case No. 03-245-42K/1.
However, there is nothing in the records to show conclusively that the six Frame Assembly with Bush were likewise contained in and damaged inside
Case No. 03-245-42K/1. In the Inspection Survey Report of Chartered Adjusters, Inc., it mentioned six pieces of chassis frame assembly with deformed
body mounting bracket. However, it merely noted the same as coming from two bundles with no identifying marks.
Lastly, we agree with petitioner Westwind that the CA erred in imposing an interest rate of 12% on the award of damages. Under Article 2209 of the
Civil Code, when an obligation not constituting a loan or forbearance of money is breached, an interest on the amount of damages awarded may be
imposed at the discretion of the court at the rate of 6% per annum. 64 In the similar case of Belgian Overseas Chartering and Shipping NV v. Philippine
First Insurance Co., lnc.,65 the Court reduced the rate of interest on the damages awarded to the carrier therein to 6% from the time of the filing of the
complaint until the finality of the decision.
WHEREFORE, the Court AFFIRMS with MODIFICATION the Decision dated October 15,2007 and the Resolution dated January 11, 2008 of the Court
of Appeals in CA-G.R. CV No. 69284 in that the interest rate on the award of ₱190,684.48 is reduced to 6% per annum from the date of extrajudicial
demand, until fully paid.
With costs against the petitioners in G.R. No. 181163 and G.R. No. 181319, respectively.
SO ORDERED.
G.R. No. 205681 July 1, 2015
JANET CARBONELL, Petitioner,
vs.
JULITA A. CARBONELL-MENDES, represented by her brother and attorney-in-fact, VIRGILIO A. CARBONELL, Respondent.
DECISION
CARPIO, J.:
This petition for review1 assails the 4 July 2012 Decision2 and the 16 January 2013 Resolution3
of the Court of Appeals in CA-G.R. CV No. 95816. The Court of Appeals affirmed the 26 June 2009 Decision 4 of the Regional Trial Court (RTC) of
Rosales, Pangasinan, Branch 53, in Civil Case No. 1374-R, declaring the Deed of Absolute Sale dated 2 April 1997 fictitious and of no force and effect,
and the Transfer Certificate of Title (TCT) No. T-51120 5 as invalid and restoring the efficacy of TCT No. T-45306.6
The Facts
Respondent Julita A. Carbonell-Mendes (respondent) filed a complaint for Declaration of Nullity of Documents, Annulment of Title,Reconveyance,
Recovery of Possession and Ownership, Declaration of Bad Faith of Mortgage Bank and Damages against Spouses Bonifacio and Janet Carbonell
(Spouses Carbonell) and the Rural Bank of Bayambang, Pangasinan (Rural Bank). Respondent is the sister of Bonifacio Carbonell (Bonifacio) and the
sister-in-law of petitioner Janet Carbonell (petitioner).Petitioner and Bonifacio are now separated.
Respondent alleged in the complaint that she is the owner of a residential land located in Barangay Carmen, Rosales, Pangasinan (property), covered
by TCT No. T-45 306 and registered under her maiden name, Julita Carbonell. TCT No. T-45306 was later cancelled and replaced by TCT No.51120 in
the name of the Spouses Carbonell. Respondent contended that TCT No. T-51120 should be annulled since it was issued on the basis of a simulated
and fictitious Deed of Absolute Sale dated 2 April 1997. Respondent, a permanent resident of Canada, was then in Canada when the fictitious Deed of
Absolute Sale was executed with her forged signature. She discovered the fictitious sale only in December 2005 during her vacation in the Philippines.
Rural Bank was also a defendant in the complaint because the Spouses Carbonell mortgaged the property to Rural Bank. Respondent accused Rural
Bank as a mortgagee in bad faith for failing to observe due diligence under the circumstances. The case against Rural Bank was later dismissed upon
its motion and manifestation that the Spouses Carbonell had already paid the ₱345,000 mortgage indebtedness, which terminated the encumbrance
on the property.
During the trial, respondent’s mother, Maria Carbonell (Maria) testified that the property is owned by respondent. The title to the property was in Maria’s
custody but when she left for Canada in 1995, the SpousesCarbonell requested custody of the title because they intended to purchase the property.
Respondent was displeased when she learned that her mother left the title with the Spouses Carbonell. Maria requested the Spouses Carbonell to
return the title but they ignored her request. On cross-examination, Maria stated that it was s the Spouses Carbonell who facilitated the purchase of the
property for respondent, using the money given by respondent for such purpose.
In her testimony, respondent averred that although the Deed of Absolute Sale dated 2 April 1997 stated that she was the seller, she insisted that she
was not the one who signed on the space above the name "Julita Carbonell." She testified that she married in 1996, resulting to her change of name to
Julita Carbonell-Mendes. She became a Canadian citizen in 1996. Respondent presented her passport to prove that she was in Canada when the
fictitious Deed of Absolute Sale was executed. Her passport, which still bore her maiden name, showed her signature when she was still using her
maiden name. Respondent’s signature on her passport was clearly different from the signature on the Deed of Absolute Sale. Respondent also
presented other documents, such as citizenship card, driver’s license, health insurance card, and SSS card, which contained d her genuine signature.
Respondent further testified that she had been living in Canada since 1989 and had acquired the property in 1994. She provided the purchase money
of P 210,000 to her parents, who bought the property on her behalf. The owner’s duplicate of TCT No. T-45306 was with her parents and she only had
the photocopy. When her mother went to Canada, she requested her to bring the original title but her mother failed to do so. Respondent tried to talk to
Boniface and petitioner regarding the title but they refused to talk to her, prompting respondent to file this case.
The Land Registration Examiner of the Register of Deeds of Tayug, Pangasinan, Menelio Imus, was also presented as a witness to present and
authenticate the certified true copies of the titles to the property, particularly TCT No. T-45306 and TCT No. T-51120. Menelio Imus testified that TCT
No. T-45306 was registered in respondent’s name and was cancelled by virtue of the Deed of Absolute Sale dated 2 April 1997, as evidenced by Entry
No. 170997 annotated at the back of TCT No. T-45306. The Deed of Absolute Sale stated that the property was sold by respondent to Spouses
Carbonell. Thus, the Register of Deeds issued a new title, TCT No. T-51120 in the name of Spouses Carbonell.
For the defense, petitioner testified that she and her husband bought the property from Juanita Tulio for P 200,000, and paid in installments. She stated
that they started paying for the property in 1994 and that in 1997, her husband gave her the title to the property which was already under their name.
However, other than TCT No. T-51120, petitioner failed to present any other document to prove that they purchased the property. On cross-
examination, petitioner stated that she could not remember the number of installment payments for the property.1awp++i1 She remembered paying
Juanita Tulio P 100,000 but she could not present any receipt evidencing payment for the property, alleging that all payment receipts were kept by her
now estranged husband. Neither could petitioner present any document evidencing the sale transaction because according to her, it was her husband
who dealt with Juanita Tulio. However, she admitted that she did not witness the transaction between her husband and Juanita Tulio.
Another defense witness, Julieta Sanchez Mariano testified that she sold the property for P 200,000 to the Spouses Carbonell, through Juanita Tulio.
She testified that the property was previously covered by TCT No. T- 44975.
The Ruling of the RTC
The RTC held that the Deed of Absolute Sale dated 2 April 1997 was fictitious and that the signature of respondent was forged. 1âwphi1 The RTC
found significant differences in the signature of respondent on the Deed of Absolute Sale and respondent’s original signature as found on her passport.
Furthermore, the RTC found that respondent was in Canada when the Deed of Absolute Sale was executed on 2 April 1997, a fact not disputed by
petitioner. Clearly, respondent could not have personally appeared before the Notary Public Ignacio Nacion when the Deed of Absolute Sale was
allegedly executed on 2 April 1997. Thus, the Deed of Absolute Sale is invalid and could not have affected the transfer of the property to the Spouses
Carbonell.
As regards the claim of petitioner that she and her husband bought the property from Juanita Tulio, the RTC ruled that such claim was not
substantiated by any documentary evidence. The RTC also found dubious the claim of Julieta Sanchez Mariano that she sold a portion of her property
to the Spouses Carbonell since the annotation Entry No. 150345, at the back of TCT No. T-44975 registered in her name, stated that the 300 sq.m.
Portion of her lot was sold to respondent and not to the Spouses Carbonell. This sale to respondent of the 300 sq .m. lots caused the issuance of TCT
No. T-45306, which also indicated that this title was a transfer from TCT No. T-44975. On 26 June 2009, the RTC rendered its decision, the dispositive
portion of which reads:
WHEREFORE, premises considered, judgment is hereby rendered as follows:
1. Declaring the Deed of Absolute Sale dated April 2, 1997 FICTITIOUS and of no force and effect;
2. Declaring T.C.T. No. T-51120 as INVALID and restoring the efficacy of T.C.T. No. T-45306. Upon the finality of this Decision, the Register of Deeds
of Tayug, Pangasinan is ordered to CANCEL T.C.T. NO. T-51120 and to REVIVE T.C.T. No. 45306 in the name of the plaintiff JULITA CARBONELL
MENDES.
3. Ordering the defendants-spouse s Bonifacio and Janel Carbonell:
a) To surrender the owner’s copy of T.C.T. No. T-51120 to theRegister of Deeds of Tayug, Pangasinan to effect its cancellation;
b) to reconvey to the plaintiff the possession of the subject property; and
c) To pay the plaintiff the amount of Twenty Five Thousand Pesos (P 25,000.00) as Attorney’s fees; a nd the costs of the suit.7
SO ORDERED.
On appeal, the Court of Appeals affirmed the ruling of the RTC. The Court of Appeals noted that petitioner did not directly deny the forgery of
respondent’s signature on the Deed of Absolute Sale, which was clearly alleged in respondent’s complaint. The Court of Appeals held that allegations
in the complaint which are not specifically denied are deemed admitted. Thus, petitioner was deemed to have admitted the alleged forgery on the Deed
of Absolute Sale. Besides, the forgery was clearly established by the evidence presented during trial, which petitioner was not able to dispute. Like the
RTC, the Court of Appeals found that the signature on the Deed of Absolute Sale is substantially different from respondent’s genuine signatures as
shown on her passport, citizenship card, SSS card, and the specimen signatures made by respondent in open court. Furthermore, respondent’s
absence in the Philippines when the Deed of Absolute Sale was supposedly executed, as proven by her passports, supported the conclusion that her
signature was forged on the Deed of Absolute Sale.
The Court of Appeals gave no credence to the testimony of Julieta Sanchez Mariano that she sold the property to the Spouses Carbonell, through
Juanita Tulio.1âwphi1 The Court of Appeals found her testimony lacking in credibility considering that her title to the property, TCT No. T-44975, was
cancelled through a Deed of Absolute Sale she executed in favor of respondent, which resulted in the issuance of respondent ’s title, TCT No. T-45306.
Thus, the Court of Appeals denied petitioner’s appeal and affirmed in toto the Decision dated 26 June 2009 of the RTC. Petitioner filed a motion for
reconsideration, which the Court of Appeals denied for lack of merit in its Resolution dated 16 January 2013.
The Issue
Petitioner submits that the Court of Appeals erred in affirming the RTC’s finding of forgery on the Deed of Absolute Sale.
We find the petition without merit.
Petitioner in this case is raising a question of fact: whether the signature of respondent was forged on the Deed of Absolute Sale, which would
invalidate TCT No. T-51120 issued in the name of Spouses Carbonell. The issue raised by petitioner is clearly a question of fact which requires a
review of the evidence presented. This Court is not a trier of facts, 8 and it is not its function to examine, review, or evaluate the evidence all over
again. 9
A petition for review on certiorari under Rule 45 of the Rules of Court should cover only questions of law, thus:
Section 1. Filing of petition with Supreme Court. – A party desiring to appeal by certiorari from a judgment or final order or resolution of the Court of
Appeals, the Sandiganbayan, the Regional Trial Court or other courts whenever authorized by law, may file with the Supreme Court a verified petition
for review on certiorari. The petition shall raise only questions of law which must be distinctly set forth. 10
(Emphasis supplied)
Thus, in a petition for review on certiorari under Rule 45, the Court is generally limited to reviewing only errors of law. Nevertheless, the Court has
enumerated several exceptions to this rule, such as when: (1) the conclusion is grounded on speculations, surmises or conjectures; (2) the inference is
manifestly mistaken, absurd or impossible; (3) there is grave abuse of discretion; (4) the judgment is based on misapprehension of facts; (5) the
findings of fact are conflicting; (6) there is no citation of specific evidence on which the factual findings are based; (7) the findings of absence of facts
are contradicted by the presence of evidence on record; (8) the findings of the Court of Appeals are contrary to those of the trial court; (9) the Court of
Appeals manifestly overlooked certain relevant and undisputed facts that, if properly considered, would justify a different conclusion; (10) the findings of
the Court of Appeals are beyond the issues of the case; and (11) such findings are contrary to the admissions of both parties. 11Petitioner failed to show
that this case falls under any of the exceptions. The finding of forgery by the RTC was upheld by the Court of Appeals. Well-settled is the rule that
factual findings of the trial court, when affirmed by the Court of Appeals, are deemed binding and conclusive. 12
Besides, the Court finds no justifiable reason to deviate from the finding of the RTC and the Court of Appeals that the signature of respondent was
forged on the Deed of Absolute Sale dated 2 April 1997, which was clearly established by the evidence presented during the trial. Under Section 22, 13
Rule 132 of the Rules of Court, among the methods of proving the genuineness of the handwriting are through a witness familiar with such handwriting
or a comparison by the court of the questioned handwriting and the admitted genuine specimens of the handwriting. In this case, respondent, the
purported writer or signatory to the Deed of Absolute Sale, testified that her signature was forged. To prove the forgery, respondent presented, among
others, her Canadian and Philippine passports, driver’s license, citizenship card, and health card, showing her genuine signature which was clearly
different from the signature on the Deed of Absolute Sale.14
Comparing the genuine signature of respondent on these documents with her purported signature on the Deed of Absolute Sale, the RTC found
"significant differences in terms of handwriting strokes, as well as the shapes and sizes of letters, fairly suggesting that the plaintiff [Julita A. Carbonell-
Mendes] was not the author of the questioned signature." 15 Signatures on a questioned document may be examined by the trial court judge and
compared with the admitted genuine signatures to determine the issue of authenticity of the contested document. As held in Spouses Estacio v. Dr.
Jaramillo: 16
It bears stressing that the trial court may validly determine forgery from its own independent examination of the documentary evidence at hand. This
the trial court judge can do without necessarily resorting to experts, especially when the question involved is mere handwriting similarity or dissimilarity,
which can be determined by a visual Comparison of specimen of the questioned signatures with those of the currently existing ones. Section 22 of Rule
132 of the Rules of Court explicitly authorizes the court, by itself, to make a comparison of the disputed handwriting "with writings admitted or treated
as genuine by the party against whom the evidence is offered, or proved to be genuine to the satisfaction of the judge."17
WHEREFORE, we DENY the petition. We AFFIRM the 4 July 2012 Decision and the 16 January 2013 Resolution of the Court of Appeals in CA-G.R.
CV No. 95816.
SO ORDERED.
G.R. No. 156330 November 19, 2014
NEDLLOYD LIJNEN B.V. ROTTERDAM and THE EAST ASIATIC CO., LTD., Petitioners,
vs.
GLOW LAKS ENTERPRISES, LTD., Respondent.
DECISION
PEREZ, J.:
This is a Petition for Review on Certiorari1 filed pursuant to Ruic 45 of the Revised Rules of Comi, primarily assailing the 11 December 2002 Resolution
rendered by the Special Former Sixteenth Division of the Court of Appeals in CA-G.R. CV No. 48277,2 the decretal portion of which states:
WHEREFORE, the appeal is GRANTED and the April 29. 1994 Decision of the Regional Trial Court of Manila, Branch 52 thereof' in Civil Case No. 88-
45595, SET ASIDE. Nedlloyd Lijncn B.V. Rotterdam and The East Asiatic Co., Ltd arc ordered to pay Glow l ,aks Enterprises, I ,td. the following:
1. The invoice value of the goodslost worth $53,640.00, or its equivalent in Philippine currency;
2. Attorney’s fees of ₱50,000.00; and
3. Costs.3
The Facts
Petitioner Nedlloyd Lijnen B.V. Rotterdam (Nedlloyd) is a foreign corporation engaged in the business of carrying goods by sea, whose vessels
regularly call at the port of Manila. It is doing business in the Philippines thru its local ship agent, co-petitioner East Asiatic Co., Ltd. (East Asiatic).
Respondent Glow Laks Enterprises,Ltd., is likewise a foreign corporation organized and existing under the laws of Hong Kong. It is not licensed to do,
and it is not doing business in, the Philippines.
On or about 14 September 1987, respondent loaded on board M/S Scandutch at the Port of Manila a total 343 cartoons of garments, complete and in
good order for pre-carriage tothe Port of Hong Kong. The goods covered by Bills of Lading Nos. MHONX-2 and MHONX-3 4 arrived in good condition in
Hong Kong and were transferred to M/S Amethyst for final carriage to Colon, Free Zone, Panama. Both vessels, M/S Scandutch and M/S Amethyst,
are owned by Nedlloyd represented in the Phlippines by its agent, East Asiatic. The goods which were valued at US$53,640.00 was agreed to be
released to the consignee, Pierre Kasem, International, S.A., upon presentation of the original copies of the covering bills of lading. 5 Upon arrival of the
vessel at the Port of Colon on 23 October 1987, petitioners purportedly notified the consignee of the arrival of the shipments, and its custody was
turned over tothe National Ports Authority in accordance with the laws, customs regulations and practice of trade in Panama. By an unfortunate turn
ofevents, however, unauthorized persons managed to forge the covering bills of lading and on the basis of the falsified documents, the ports authority
released the goods.
On 16 July 1988, respondent filed a formal claim with Nedlloyd for the recovery of the amount of US$53,640.00 representing the invoice value of the
shipment but to no avail.6 Claiming that petitioners are liable for the misdelivery of the goods, respondent initiated Civil Case No. 88-45595 before the
Regional Trial Court (RTC) of Manila, Branch 52, seeking for the recovery of the amount of US$53,640.00, including the legal interest from the date of
the first demand.7
In disclaiming liability for the misdelivery of the shipments, petitioners asserted in their Answer 8 that they were never remiss in their obligation as a
common carrier and the goods were discharged in good order and condition into the custody of the National Ports Authority of Panama in accordance
with the Panamanian law. They averred that they cannot be faulted for the release of the goods to unauthorized persons, their extraordinary
responsibility as a common carrier having ceased at the time the possession of the goods were turned over to the possession of the port authorities.
After the Pre-Trial Conference, trial on the merits ensued. Both parties offered testimonial and documentary evidence to support their respective
causes. On 29 April 2004, the RTC rendered a Decision 9 ordering the dismissal of the complaint but granted petitioners’ counterclaims. In effect,
respondent was directed to pay petitioners the amount of ₱120,000.00 as indemnification for the litigation expenses incurred by the latter. In releasing
the common carrier from liability for the misdelivery of the goods, the RTC ruled that Panama law was duly proven during the trial and pursuant to the
said statute, carriers of goods destined to any Panama port of entry have to discharge their loads into the custody of Panama Ports Authority to make
effective government collection of port dues, customs duties and taxes. The subsequent withdrawal effected by unauthorized persons on the strength
of falsified bills of lading does not constitute misdelivery arising from the fault of the common carrier. The decretal part of the RTC Decision reads:
WHEREFORE, judgment is renderedfor [petitioners] and against [Respondent], ordering the dismissal of the complaint and ordering the latter to pay
[petitioners] the amount of ONE HUNDRED TWENTY THOUSAND PESOS (₱120,000.00) on their counterclaims.
Cost against [Respondent].10
On appeal, the Court of Appeals reversed the findings of the RTC and held that foreign laws were not proven in the manner provided by Section 24,
Rule 132 of the Revised Rules of Court, and therefore, it cannot be given full faith and credit. 11 For failure to prove the foreign law and custom, it is
presumed that foreign laws are the sameas our local or domestic or internal law under the doctrine of processual presumption. Under the New Civil
Code, the discharge of the goods intothe custody of the ports authority therefore does not relieve the commoncarrier from liability because the
extraordinary responsibility of the common carriers lasts until actual or constructive delivery of the cargoes tothe consignee or to the person who has
the right to receive them. Absent any proof that the notify party or the consignee was informed of the arrival of the goods, the appellate court held that
the extraordinary responsibility of common carriers remains. Accordingly, the Court of Appeals directed petitioners to pay respondent the value of the
misdelivered goods in the amount of US$53,640.00.
The Issues
Dissatisfied with the foregoing disquisition, petitioners impugned the adverse Court of Appeals Decision before the Court on the following grounds:
I.
THERE IS ABSOLUTELY NO NEED TO PROVE PANAMANIAN LAWS BECAUSE THEYHAD BEEN JUDICIALLY ADMITTED. AN
ADMISSION BY A PARTY IN THE COURSE OF THE PROCEEDINGS DOES NOT REQUIRE PROOF.
II.
BY PRESENTING AS EVIDENCE THE [GACETA] OFFICIAL OF REPUBLICA DE PANAMA NO. 17.596 WHERE THE APPLICABLE
PANAMANIAN LAWS WERE OFFICIALLY PUBLISHED, AND THE TESTIMONY OF EXPERT WITNESSES, PETITIONERS WERE ABLE
TO PROVE THE LAWS OF PANAMA.
III.
IF WE HAVE TO CONCEDE TO THE COURT OF APPEALS’ FINDING THAT THERE WAS FAILURE OF PROOF, THE LEGAL
QUESTION PRESENTED TO THE HONORABLE COURT SHOULD BE RESOLVED FAVORABLY BECAUSE THE CARRIER
DISCHARGED ITS DUTY WHETHER UNDER THE PANAMANIAN LAW OR UNDER PHILIPPINE LAW.12
We find the petition bereft of merit.
It is well settled that foreign laws do not prove themselves in our jurisdiction and our courts are not authorized to take judicial notice of them. Like any
other fact, they must be alleged and proved. 13 To prove a foreign law, the party invoking it must present a copy thereof and comply with Sections 24
and 25 of Rule 132 of the Revised Rules of Court14 which read: SEC. 24. Proof of official record. — The record of public documents referred to in
paragraph (a) of Section 19, when admissible for any purpose, may be evidenced by an official publication thereof or by a copy attested by the officer
having the legal custody of the record, or by his deputy, and accompanied, if the record is not kept in the Philippines, with a certificate that such officer
has the custody. If the office in which the record is kept is in a foreigncountry, the certificate may be made by a secretary of the embassy or legation,
consul general, consul, vice- consul, or consular agent or by any officer in the foreign service of the Philippines stationed in the foreign country in which
the record is kept, and authenticated by the seal of his office.
SEC. 25. What attestation of copy must state. — Whenever a copy of a document or record is attested for the purpose of the evidence, the attestation
must state,in substance, that the copy is a correct copy of the original, or a specific part thereof, as the case may be. The attestation must be under the
official seal of the attesting officer, if there be any, or if he be the clerk of a court having a seal, under the seal of such court.
For a copy of a foreign public document to be admissible, the following requisites are mandatory: (1) itmust be attested by the officer having legal
custody of the records or by his deputy; and (2) it must be accompanied by a certificate by a secretary of the embassy or legation, consul general,
consul, vice-consular or consular agent or foreign service officer, and with the seal of his office.15 Such official publication or copy must be
accompanied, if the record is not kept in the Philippines, with a certificate that the attesting officer has the legal custody thereof.16 The certificate may
be issued by any of the authorized Philippine embassy or consular officials stationed in the foreign country in which the record is kept, and
authenticated by the seal of his office. 17 The attestation must state, in substance, that the copy is a correct copy of the original, or a specific part
thereof, as the case may be, and mustbe under the official seal of the attesting officer.18
Contrary to the contention of the petitioners, the Panamanian laws, particularly Law 42 and its Implementing Order No. 7, were not duly proven in
accordance with Rules of Evidence and as such, it cannot govern the rights and obligations of the parties in the case at bar. While a photocopy of the
Gaceta Official of the Republica de Panama No. 17.596, the Spanish text of Law 42 which is theforeign statute relied upon by the court a quoto relieve
the common carrier from liability, was presented as evidence during the trial of the case below, the same however was not accompanied by the
required attestation and certification.
It is explicitly required by Section 24, Rule 132 of the Revised Rules of Court that a copy of the statute must be accompanied by a certificate of the
officer who has legal custody of the records and a certificate made by the secretary of the embassy or legation, consul general, consul, vice-consular or
by any officer in the foreign service of the Philippines stationed in the foreign country, and authenticated by the seal of his office. The latter requirement
is not merely a technicality but is intended to justify the giving of full faith and credit to the genuineness of the document in a foreign
country.19 Certainly, the deposition of Mr. Enrique Cajigas, a maritime law practitioner in the Republic of Panama, before the Philippine Consulate in
Panama, is not the certificate contemplated by law. At best, the deposition can be considered as an opinion of an expert witness who possess the
required special knowledge on the Panamanian laws but could not be recognized as proof of a foreign law, the deponent not being the custodian of the
statute who can guarantee the genuineness of the document from a foreign country. To admit the deposition as proof of a foreign law is, likewise, a
disavowal of the rationaleof Section 24, Rule 132 of the Revised Rules of Court, which isto ensure authenticity of a foreign law and its existence so as
to justify its import and legal consequence on the event or transaction in issue. The above rule, however, admits exceptions, and the Court in certain
cases recognized that Section 25, Rule132 of the Revised Rules of Court does not exclude the presentation of other competent evidence to prove the
existence of foreign law. In Willamete Iron and Steel Works v. Muzzal20 for instance, we allowed the foreign law tobe established on the basis of the
testimony in open court during the trial in the Philippines of an attorney-atlaw in San Francisco, California, who quoted the particular foreign law sought
to be established.21 The ruling is peculiar to the facts. Petitioners cannot invoke the Willamete ruling to secure affirmative relief since their so called
expert witness never appeared during the trial below and his deposition, that was supposed to establish the existence of the foreign law, was obtained
ex-parte.
It is worth reiterating at this point that under the rules of private international law, a foreign law must be properly pleaded and proved as a fact. In the
absence of pleading and proof, the laws of the foreign country or state will be presumed to be the same as our local or domestic law. This is known as
processual presumption.22 While the foreign law was properly pleaded in the case at bar, it was,however, proven not in the manner provided by Section
24, Rule 132 of the Revised Rules of Court. The decision of the RTC, which proceeds from a disregard of specific rules cannot be recognized.
Having settled the issue on the applicable Rule, we now resolve the issue of whether or not petitioners are liable for the misdelivery of goods under
Philippine laws.
Under the New Civil Code, common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary
diligencein the vigilance over goods, according to the circumstances of each case. 23 Common carriers are responsible for loss, destruction or
deterioration of the goods unless the same is due to flood, storm, earthquake or other natural disaster or calamity. 24 Extraordinary diligence is that
extreme care and caution which persons of unusual prudence and circumspection use for securing or preserving their own property or rights. 25 This
expecting standardimposed on common carriers in contract of carrier of goods is intended to tilt the scales in favor of the shipper who is at the mercy of
the common carrier once the goods have been lodged for the shipment.26 Hence, in case of loss of goods in transit, the common carrier is presumed
under the law to have been in fault or negligent.27
While petitioners concede that, as a common carrier, they are bound to observe extraordinary diligence in the care and custody of the goods in their
possession, they insist that they cannot be held liable for the loss of the shipments, their extraordinary responsibility having ceased at the time the
goods were discharged into the custody of the customs arrastreoperator, who in turn took complete responsibility over the care, storage and delivery of
the cargoes.28
In contrast, respondent, submits that the fact that the shipments were not delivered to the consignee as statedin the bill of lading or to the party
designated or named by the consignee, constitutes misdelivery thereof, and under the law it is presumed that the common carrier is at fault or negligent
if the goods they transported, as in this case, fell into the hands of persons who have no right to receive them.
We sustain the position of the respondent.

Article 1736 and Article 1738 are the provisions in the New Civil Code which define the period when the common carrier is required to exercise
diligence lasts, viz:
Article 1736. The extraordinary responsibility of the common carrier lasts from the time the goodsare unconditionally placed in the possession of, and
received by the carrier for transportation until the same are delivered, actually or constructively, by the carrier to the consignee, or to the person who
has a right to receive them, without prejudice to the provisions of article 1738.
Article 1738. The extraordinary liability of the common carrier continues to be operative even during the time the goods are stored in a warehouse of
the carrier at the place of destination, until the consignee has been advised of the arrival of the goods and has had reasonable opportunity thereafter to
remove them or otherwise dispose of them.
Explicit is the rule under Article 1736 of the Civil Code that the extraordinary responsibility of the common carrier begins from the time the goods are
delivered to the carrier.29 This responsibility remains in full force and effect even when they are temporarily unloaded or stored in transit, unless the
shipper or owner exercises the right of stop page in transitu, and terminates only after the lapse of a reasonable time for the acceptance, of the goods
by the consignee or such other person entitled to receive them.30
It was further provided in the samestatute that the carrier may be relieved from the responsibility for loss or damage to the goods upon actual or
constructive delivery of the same by the carrier to the consignee or to the person who has the right to receive them. 31 In sales, actual delivery has been
defined as the ceding of the corporeal possession by the seller, and the actual apprehension of the corporeal possession by the buyer or by some
person authorized by him to receive the goods as his representative for the purpose of custody or disposal.32 By the same token, there is actual
delivery in contracts for the transport of goods when possession has been turned over to the consignee or to his duly authorized agent and a
reasonable time is given him to remove the goods.33
In this case, there is no dispute that the custody of the goods was never turned over to the consignee or his agents but was lost into the hands of
unauthorized persons who secured possession thereof on the strength of falsified documents. The loss or the misdelivery of the goods in the instant
case gave rise to the presumption that the common carrier is at fault or negligent.
A common carrier is presumed to have been negligent if it fails to prove that it exercised extraordinary vigilance over the goods it transported. 34 When
the goods shipped are either lost or arrived in damaged condition, a presumption arises against the carrier of its failure to observe that diligence, and
there need not be an express finding of negligence to hold it liable. 35 To overcome the presumption of negligence, the common carrier must establish
by adequateproof that it exercised extraordinary diligence over the goods.36 It must do more than merely show that some other party could be
responsible for the damage.37
In the present case, petitioners failed to prove that they did exercise the degree of diligence required by law over the goods they transported. Indeed,
aside from their persistent disavowal of liability by conveniently posing an excuse that their extraordinary responsibility isterminated upon release of the
goods to the Panamanian Ports Authority, petitioners failed to adduce sufficient evidence they exercised extraordinary care to prevent unauthorized
withdrawal of the shipments. Nothing in the New Civil Code, however, suggests, even remotely, that the common carriers’ responsibility over the goods
ceased upon delivery thereof to the custom authorities. To the mind of this Court, the contract of carriage remains in full force and effect even after the
delivery of the goods to the port authorities; the only delivery that releases it from their obligation to observe extraordinary care is the delivery to the
consignee or his agents. Even more telling of petitioners’ continuing liability for the goods transported to the fact that the original bills of lading up to this
time, remains in the possession of the notify party or consignee. Explicit on this point is the provision of Article 353 of the Code of Commerce which
provides:
Article 353. The legal evidence of the contract between the shipper and the carrier shall be the bills of lading, by the contents of which the disputes
which may arise regarding their execution and performance shall be decided, no exceptions being admissible other than those of falsity and material
error in the drafting.
After the contract has been complied with, the bill of lading which the carrier has issued shall be returned to him, and by virtue of the exchange of this
title with the thing transported, the respective obligations and actions shall be considered cancelled, unless in the same act the claim which the parties
may wish to reserve be reduced to writing, with the exception of that provided for in Article 366.
In case the consignee, upon receiving the goods, cannot return the bill of lading subscribed by the carrier, because of its loss or of any other cause, he
must give the latter a receiptfor the goods delivered, this receipt producing the same effects as the return of the bill of lading.
While surrender of the original bill of lading is not a condition precedent for the common carrier to bedischarged from its contractual obligation, there
must be, at the very least, an acknowledgement of the delivery by signing the delivery receipt, if surrender of the original of the bill of lading is not
possible.38 There was neither surrender of the original copies of the bills of lading nor was there acknowledgment of the delivery in the present case.
This leads to the conclusion that the contract of carriage still subsists and petitioners could be held liable for the breach thereof.
Petitioners could have offered evidence before the trial court to show that they exercised the highest degree of care and caution even after the goods
was turned over to the custom authorities, by promptly notifying the consignee of its arrival at the P01i of Cristobal in order to afford them ample
opportunity to remove the cargoes from the port of discharge. We have scoured the records and found that neither the consignee nor the notify paiiy
was informed by the petitioners of the arrival of the goods, a crucial fact indicative of petitioners' failure to observe extraordinary diligence in handling
the goods entrusted to their custody for transport. They could have presented proof to show that they exercised extraordinary care but they chose in
vain, full reliance to their cause on applicability of Panamanian law to local jurisdiction. It is for this reason that we find petitioners liable for the
misdelivery of the goods. It is evident from the review of the records and by the evidence adduced by the respondent that petitioners failed to rebut the
prima facie presumption of negligence. We find no compelling reason to depa1i from the ruling of the Court of Appeals that under the contract of
carriage, petitioners are liable for the value of the misdelivcred goods.
WHEREFORE, premises considered, the petition is hereby DENIED. The assailed Resolution of the Court of Appeals is hereby AFFIRMED.
SO ORDERED.
[ G.R. No. 223178, December 09, 2020 ]
VICENTE T. GUERRERO, PETITIONER, VS. PHIL. PHOENIX SURETY & INSURANCE, INC., RESPONDENT.
DECISION
CARANDANG, J.:
This is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Court assailing the Decision2 dated June 23, 2015 and the Resolution3 dated
January 20, 2016 of the Court of Appeals (CA) in CA-G.R. CV No. 101902. The Decision and the Resolution denied petitioner's appeal and affirmed
the Decision4 dated May 6, 2013 of the Regional Trial Court (RTC) of Manila, Branch 11 ordering petitioner Vicente T. Guerrero (Guerrero) and his co-
defendant, Rogelio Cordero (Cordero), to pay respondent Phil. Phoenix Surety & Insurance, Inc. (Phoenix) P425,100.00 representing the losses
incurred by Phoenix, the amount of P9,180.00 as reimbursement for the participation fee paid by a certain Atty. Joseph Agustin Gaticales (Gaticales),
attorney's fees, and cost of suit.
Facts of the Case
On December 31, 2008 at 6:30 p.m., an Isuzu Sportivo vehicle (Isuzu) owned by Gaticales figured in a vehicular accident along the National Highway,
Barangay Gines, Zarraga, Iloilo, with Guerrero's Chevrolet pick-up truck (Chevrolet). At the time, the Chevrolet was driven by Cordero.5 The left front
bumper, headlight, signal light, front fender, front door, rear door, rear fender, rear tire, rear bumper, and other parts of the Isuzu were damaged by the
incident. When the incident was reported to the nearest police station, i.e., Zarraga Municipal Police Station, a certain PO2 Jose Diestro (PO2 Diestro)
was sent to the place of the accident to investigate and make a police report on his findings. It was found that Guerrero's Chevrolet overlapped the
center line of the highway, encroaching the lane occupied by the Isuzu (which was moving in the opposite direction) and resulting in a head-on collision
between the two vehicles. It was also noted that Cordero fled after the incident. The incident was recorded in the police blotter under entry no. 1327
dated December 31, 2008 and entered at 7:30 p.m.6
Gaticales then filed an own damage claim with Phoenix — a corporation engaged in non-life insurance where Gaticales had the Isuzu insured - for the
amount of P810,000.00 and declared his Isuzu as a constructive total loss. After Phoenix paid the amount of P810,000.00 to Gaticales, Gaticales
executed a Release of Claim in favor of Phoenix subrogating the latter to all his rights to recover on all claims as a consequence of the
accident.7 Since Phoenix sold the Isuzu in a public auction for P399,050.00, it filed a Complaint8 for damages against Guerrero and Cordero for the
following amounts: (1) the balance of P425,100.00 (equivalent to the P810,000.00 Phoenix paid Cordero and P14,150.00 it paid its handling insurance
adjuster less P399,050.00 the Isuzu was sold for in the public auction); (2) P9,180.00 paid by Gaticales as his participation fee; (3) P42,500.00
attorney's fees plus P2,500.00 as appearance fee for its counsel; and (4) cost of suit.9
In the Complaint, Phoenix averred that the accident could have been avoided if Cordero exercised due care in driving the Chevrolet and if Guerrero
exercised the required diligence in supervising Cordero as Cordero's employer. Phoenix thus sought to have Guerrero solidarily liable with Cordero for
the abovementioned amounts.10
To prove its claim, Phoenix attached to the Complaint the following documents: (1) Gaticales' Insurance Policy with Phoenix;11 (2) the Zarraga
Municipal Police Station's Certification12 dated January 5, 2009 and issued by Police Inspector/Chief of Police Romar V. Peregil (PI Peregil); (3) two
pictures of the Isuzu showing the damages sustained by it;13 (4) Disbursement Voucher for the amount of P824,150.00;14 (5) Release of Claim (Loss
and Subrogation Receipt) signed by Gaticales in favor of Phoenix;15 (6) Demand Letter dated August 1, 2009 with its registry receipts;16 and (7)
engagement letter with Phoenix's counsel.17 The police certificate, certifying the contents of the police blotter issued by PO2 Diestro, states:
CERTIFICATION
Quoted hereunder is the record of event from the Police Blotter of Zarraga Municipal Police Station, Zarraga, Iloilo, in blotter entry No. 1327 dated 31
December 2008.
Entry No. 1327
31 December 2008, 7:30 P.M. - INFO - VEHICULAR ACCIDENT - A concerned citizen informed this Police Station thru telephone call informing that
there was a vehicular accident that transpired at Brgy. Gines, Zarraga, Iloilo. Immediately thereafter PNP team of this Police station led by PO2 Jose
Diestro proceeded at the scene of [the] incident. Investigation conducted disclosed that on or about 6:30 P.M. of this date, Joseph Agustin Gaticales y
Capawan, 41 years old, married, resident of San Mateo, St., Ledesco Village, Lapaz, Iloilo City, holder of Professional Driver's License no. F03-09-
049829 with expiry date 08-22-2009 while driving his Isuzu Sportivo with plate no. ZCZ-326 under OR No. 369927967 dated 06/15/2006 and CR No.
2502057-5 dated 06/15/2006 with registration valid for three (3) years, en route from north to south direction heading towards Iloilo City was
accidentally bumped by Chevrolet pick up with plate no. FAJ-877 under OR no. 652801166 dated 09/15/2008 and CR [n]o. 481593-5 dated
07/05/2005, owned by Vicente Guerrero, resident of 20 Lacson St., Bacolod City, Neg. Occ., upon reaching along the national highway of Brgy.
Gines, Zarraga Iloilo a collision appeared. The driver of the Chevrolet pick up fled away to unknown direction after the incident. Investigation
conducted disclosed that the Chevrolet pickup overlapped to the center line which resulted [in] the accident. That the Isuzu Sportive incurred damaged
(sic) on its left portion of bumper, head light, signal light, front fender, hood. Front door, rear door, rear fender, rear tire, rear bumper and other parts of
its body. While the Chevrolet pick up incurred also damages on its left portion of bumper, hood, headlight, signal light, front fender, front wheel and
broken windshield. That all the damaged (sic) of both vehicles could only be determined by an expert mechanic.
Entry No. 01
31 January 2009, 8:00 A.M. - INFO - ADDENDUM RE VEHICULAR ACCIDENT TRANSPIRED 6:30 PM OF DECMEBER 31, 2008 - Follow up
investigation conducted by this Police office, the driver of Chevrolet pick up late no. FAJ-877 was identified as Rogelio Cordero Jr. y Zurita, of legal
age, married, temporarily resides at Melliza St., Poblacion Ilaud, Zarraga Iloilo, a native of Bonifacio Ext., Silay City Neg. Occ. holder of professional
driver's license no. F01-05-000862 with expiry date 03-02-2010.
This certification is being issued upon the request of Atty. Joseph Gaticales for whatever legal purpose it may serve best.
(sgd)
ROMAR V. PEREGIL
Police Inspector
Chief of Police18
In his Answer with Compulsory Counterclaim,19 Guerrero denied any vicarious liability from the vehicular accident because he exercised due diligence
in the selection and supervisions of his employees. According to him, Cordero was not authorized to operate the Chevrolet because the car was
assigned to another employee. The business owned by Guerrero enforced a strict policy against the unauthorized use or possession of company
property. Despite this, Cordero opted to use Guerrero's Chevrolet on December 31, 2008 because of strong rains. Cordero, coming from a marketplace
near the construction site where the Chevrolet was parked, was soaking wet from riding a motorcycle. Thus, he took shelter in the said construction site
and drove the Chevrolet home without Guerrero's knowledge and consent. Cordero even picked up a friend along the way. Nevertheless, Guerrero
alleged that Cordero drove slowly along the national highway due to the rain while Gaticales was the one driving fast with his Isuzu's headlights at high
beam. Disoriented and confused, Cordero and his companion just fled the scene. Thus, Guerrero accused Gaticales of negligently hitting the
Chevrolet.20
Guerrero also questioned Phoenix's prayer that Guerrero reimburse Gaticales the latter's participation fee of P9,180.00 because Gaticales is not a
party to the suit.21
During trial, Phoenix presented as its lone witness its claims manager, Roberto Salaver (Salaver).LaW ㏗ iL Aside from identifying his judicial affidavit,
Salaver also identified the police certificate, which he also referred to as the police investigation report. Guerrero, on the other hand, testified on his
behalf and presented his legal staff, Salvador M. Acsay (Ascay), as his second witness. Acsay testified that (1) Guerrero's company issued a
Memorandum dated December 18, 2006 allowing only authorized or registered drivers of company vehicles to operate the same and only for the
company's transactions and operations; (2) Acsay made known and implemented the policy covered by the said memorandum; and (3) Cordero was
suspended for violating the said policy, as evidenced by a Memorandum dated January 6, 2009.22
Ruling of the Regional Trial Court
In a Decision23 dated May 6, 2013, the RTC granted Phoenix's complaint and declared Guerrero and Cordero solidarily liable to Phoenix, as follows:
WHEREFORE, foregoing premises considered, judgment is hereby rendered in favor of the plaintiff and against defendants as follows:
1. Defendants are directed, jointly and severally, to pay plaintiff the amount of P425,100.00 representing the subrogated loss incurred by
the plaintiff in settling the damages insured vehicle on a constructive total loss basis;
2. Defendants are directed jointly and severally, to pay plaintiffs assured, Atty. Joseph Agustin Gaticales, the sum of P9,180.00 as his
reimbursement of his participation in the settlement of his own damaged claim on a constructive total loss basis;
3. Defendants are directed, jointly and severally, to pay plaintiff attorney's fees in the amount of P42,500.00 plus an additional amount of
P2,500.00 per appearance every time plaintiffs counsel or his assistant appears in court to attend to the legal needs of the plaintiff; and
4. To pay the cost of the suit.
SO ORDERED.24
Using the principle of res ipsa loquitur, the trial court concluded that Cordero and Guerrero were solidarily liable because the accident was due to
Cordero's negligent driving of Guerrero's Chevrolet. The RTC declared that: (1) Guerrero's Chevrolet hit the front left portion of Gaticales' Isuzu
because of Cordero's negligence (as shown by the police report that the Chevrolet overlapped to the center line of the highway and that Cordero
immediately fled the scene after the accident); (2) the Chevrolet was under the exclusive control of Cordero; and (3) Gaticales is not guilty of
contributory negligence.25
In his Motion for Reconsideration,26 Guerrero alleged that the RTC improperly applied the doctrine of res ipsa loquitur because none of the requisites
for the doctrine's application are present. According to Guerrero: (1) it was never established that the accident does not ordinarily occur in the absence
of negligence; (2) Phoenix's sole witness never testified that Guerrero's Chevrolet was under Cordero's exclusive control since the witness's
knowledge is based only on the police report; and (3) it was never proven that Gaticales was not guilty of contributory negligence. Guerrero pointed out
that Phoenix failed to prove an additional requirement - i.e., Gaticales had no knowledge of or means of knowing the cause of the accident because he
was never presented as a witness. Furthermore, Guerrero claimed that res ipsa loquitur applies only when evidence establishing negligence is absent
or not readily available and that Phoenix could have obtained readily available evidence in the form of Gaticales' testimony.27
Guerrero also averred that the trial court should not.have given the police certificate any probative value because it was merely copied from a police
blotter, thus, falling short of the requirements set forth in Section 44 (now Section 46),28 Rule 130 of the Rules of Court. In particular, Phoenix did not
prove that the police report was prepared by a public officer who had sufficient knowledge of the facts, which he acquired personally or through official
information.29
However, the trial court denied Guerrero's motion for reconsideration in an Order30 dated September 12, 2013. This prompted Guerrero to file an
appeal with the CA.
Ruling of the Court of Appeals
In its Decision31 dated June 23, 2015, the appellate court affirmed the findings of the RTC, thus denying Guerrero's appeal.
The CA ruled that the police certificate is admissible and is an exception to the hearsay rule because it is an official record. Under Section 46 of the
Rules of Court, an official record is defined as:
Section 46. Entries in official records. — Entries in official records made in the performance of his or her duty by a public officer of the Philippines, or by
a person in the performance of a duty specially enjoined by law, are prima facie evidence of the facts therein stated.
Citing Malayan Insurance Co., Inc. v. Alberto,32 the appellate court found that the requisites for the admissibility of the police certificate were complied
with, namely: (1) the entry was made by a public officer specially enjoined by law to do so; (2) it was made by the public officer in the performance of
his duties; (3) the public officer had sufficient knowledge of the facts stated by him, which was acquired through official information based on the
investigation conducted by a police investigator (i.e., PO2 Diestro). The CA thus concluded that the police certificate, as well as the pictures of the
insured vehicle, established a rebuttable presumption of negligence on the part of Cordero.33
Even if the police certificate and blotter were declared inadmissible, the CA maintained that Cordero and Guerrero would still be found liable under the
doctrine of res ipsa loquitur. The appellate court held that the requirements for the operation of the said doctrine were met, i.e., (1) the accident is of a
kind which ordinarily does not occur in the absence of someone's negligence; (2) it is caused by an instrumentality within the exclusive control of
Cordero - the negligent party as pointed out by Phoenix; and (3) there is no possibility of contributory negligence on the part of Gaticales. Coupled with
Cordero's act of fleeing the scene of the accident, Cordero and Guerrero (as Cordero's employer) were found liable to Phoenix and Gaticales for the
amounts previously awarded by the trial court.34
Petitioner's Arguments
Undeterred, Guerrero filed the instant petition for review on certiorari. Guerrero alleged that he was denied his constitutional right to meet and cross-
examine PO2 Diestro, the police who investigated the accident and prepared the police report. He claimed that the police blotter is not conclusive proof
of the truth of its entry since the officer who prepared it was never presented in court. Guerrero also questioned the probative value of the pictures
presented by Phoenix because these do not show that they were taken at the scene of the accident and were not identified by the person who took the
said pictures. Guerrero now asks this Court to determine whether the doctrine of res ipsa loquitur applies based on a picture of the damaged vehicle
alone.35
Respondent's Comment
In its Comment,36 Phoenix sought to have the instant petition dismissed for raising a factual issue since it questions the probative value of Phoenix's
testimonial and documentary evidence.37 It also averred that the constitutional right of an accused to meet the witnesses face to face does not apply to
a civil complaint for damages.38 Lastly, Phoenix agreed with the RTC and CA when they applied the doctrine of res ipsa loquitur, citing the same
reasons used by the trial and appellate courts.39
Ruling of the Court
The strength of Phoenix's claim for damages mainly rests on the admissibility and probative value of the police certificate (embodying the contents of
the police blotter) and the pictures of the damaged Isuzu. The lower courts both concluded that the police blotter is an exception to the hearsay rule
because it is classified as an entry in official record, following Section 46, Rule 130 of the Rules of Court.40
A police blotter entry, or a certification thereof, is admissible in evidence as an exception to the hearsay rule under Section 46, Rule 130 of the Rules of
Court. In order for it to be admissible, the said evidence must be properly presented in evidence. What must have been presented in evidence was
either the police blotter itself or a copy thereof certified by its legal keeper.41
Otherwise stated, the nature of the evidence as admissible — being an exception to the hearsay rule - is different from how a party should introduce
the evidence to make it admissible.
The police blotter itself could have been presented to prove the existence of the blotter entry and a copy of the said entry made in order for the
opposing party to determine whether the copy is a faithful representation of the entry in the police blotter. The party offering the blotter entry may opt to
present secondary evidence in the form of a certified copy of the blotter entry since such is allowed under Section 8, Rule 130 of the Rules of Court.
Following Section 8, Rule 130 of the Rules of Court, "[w]hen the original of the document is in the custody of a public officer or is recorded in a public
office, its contents may be proved by a certified copy issued by the public officer in custody thereof."
Here, the Certification42 dated January 5, 2009 issued by Zarraga Municipal Police Station's Chief of Police, PI Peregil, did not state that PI Peregil
was the legal custodian of the police blotter.43 Even if We were to assume that PI Peregil had legal custody of the police blotter as Zarraga Municipal
Station's Chief of Police, the Certification should still be identified by PI Peregil himself or his representative to attest to the contents of the Certification,
as copied from the police blotter, and the authenticity of PI Peregil's signature. Salaver is incompetent to testify on the Certification's authenticity and
due execution because Salaver is not an authorized representative of PI Peregil or even a police officer assigned to the Zarraga Municipal Police
Station. Phoenix's failure to properly present the Certification does not extinguish any doubts on the genuineness of the said Certification.
With its inadmissibility, the lower courts erred in assigning any probative value to the Certification. ℒαwρhi ৷ Therefore, the Certification cannot be used
as basis for applying the doctrine of res ipsa loquitur.
This Court is now left to determine whether the pictures Phoenix presented during trial will suffice to prove Cordero's negligence under the principle
of res ipsa loquitur.
The pictures presented by Phoenix are likewise inadmissible in evidence for Phoenix's its failure to prove its due execution and authenticity. As this
Court held, "photographs, when presented in evidence, must be identified by the photographer as to its production and he must testify as to the
circumstances under which they were produced."44 This requirement for admissibility was similarly stated in Section 1, Rule 11 of the Rules on
Electronic Evidence when it required photographic evidence of events to be "identified, explained or authenticated by the person who made the
recording or by some other person competent to testify on the accuracy thereof." While We have allowed witnesses (other than the person who took
the photograph) to identify pictures presented in evidence, the said witness must be competent to identify the photograph as a faithful representation of
the object portrayed.45 A competent witness must be able to "assure the court that they know or are familiar with the scenes or objects shown in the
pictures and the photographs depict them correctly."46
Salaver is not competent to identify the pictures presented in evidence. Salaver was not at the scene of the crime. Therefore, he does not have
personal knowledge of the scene or objects shown in the pictures. More importantly, the said pictures do not depict the vehicular accident — i.e., the
position of the Isuzu and the Chevrolet along the National Highway at the time of the accident. The Chevrolet was not in any of the pictures presented
by Phoenix. It cannot be presumed that (1) the Chevrolet was the instrumentality that caused the accident; (2) Gaticales was the only injured party; and
(3) Gaticales was not guilty of any contributory negligence.
All told, Phoenix failed to discharge its burden of proving its case with preponderance of evidence.
Guerrero's prayer for P500,000.00 as moral damages, P200,000.00 as exemplary damages, and P150,000.00 as attorney's fees are denied for lack of
any factual or legal basis. Guerrero failed to justify why he should be awarded the abovementioned monetary claims as the instant petition focused
solely on the inadmissibility of the police certificate and pictures.
WHEREFORE, the petition is GRANTED. The Decision dated June 23, 2015 and the Resolution dated January 20, 2016 of the Court of Appeals in
CA-G.R. CV No. 101902 are REVERSED and SET ASIDE. The Complaint in Civil Case No. 09-122267 is DISMISSED.
SO ORDERED.
G.R. No. 183896 January 30, 2013
SYED AZHAR ABBAS, Petitioner,

vs.
GLORIA GOO ABBAS, Respondent.
DECISION
VELASCO, JR., J.:
This is a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil Procedure, questioning the Decision 1 of the Court of Appeals (CA)
dated March 11, 2008 in CA-G.R. CV No. 86760, which reversed the Decision 2 in Civil Case No. 03-0382-CFM dated October 5, 2005 of the Regional
Trial Court (RTC), Branch 109, Pasay City, and the CA Resolution dated July 24, 2008, denying petitioner's Motion for Reconsideration of the CA
Decision.
The present case stems from a petition filed by petitioner Syed Azhar Abbas (Syed) for the declaration of nullity of his marriage to Gloria Goo-Abbas
(Gloria) with the RTC of Pasay City, docketed as Civil Case No. 03-0382-CFM, and raffled to RTC Branch 109. Syed alleged the absence of a
marriage license, as provided for in Article 4, Chapter I, Title 1 of Executive Order No. 269, otherwise known as the Family Code of the Philippines, as
a ground for the annulment of his marriage to Gloria.
In the Marriage Contract3 of Gloria and Syed, it is stated that Marriage License No. 9969967, issued at Carmona, Cavite on January 8, 1993, was
presented to the solemnizing officer. It is this information that is crucial to the resolution of this case.
At the trial court, Syed, a Pakistani citizen, testified that he met Gloria, a Filipino citizen, in Taiwan in 1991, and they were married on August 9, 1992 at
the Taipei Mosque in Taiwan.4 He arrived in the Philippines in December of 1992. On January 9, 1993, at around 5 o’clock in the afternoon, he was at
his mother-in-law’s residence, located at 2676 F. Muñoz St., Malate, Manila, when his mother-in-law arrived with two men. He testified that he was told
that he was going to undergo some ceremony, one of the requirements for his stay in the Philippines, but was not told of the nature of said ceremony.
During the ceremony he and Gloria signed a document. He claimed that he did not know that the ceremony was a marriage until Gloria told him later.
He further testified that he did not go to Carmona, Cavite to apply for a marriage license, and that he had never resided in that area. In July of 2003, he
went to the Office of the Civil Registrar of Carmona, Cavite, to check on their marriage license, and was asked to show a copy of their marriage
contract wherein the marriage license number could be found. 5 The Municipal Civil Registrar, Leodivinia C. Encarnacion, issued a certification on July
11, 2003 to the effect that the marriage license number appearing in the marriage contract he submitted, Marriage License No. 9969967, was the
number of another marriage license issued to a certain Arlindo Getalado and Myra Mabilangan.6 Said certification reads as follows:
11 July 2003
TO WHOM IT MAY CONCERN:
This is to certify as per Registry Records of Marriage License filed in this office, Marriage License No. 9969967 was issued in favor of MR. ARLINDO
GETALADO and MISS MYRA MABILANGAN on January 19, 1993.
No Marriage License appear [sic] to have been issued to MR. SYED AZHAR ABBAS and MISS GLORIA F. GOO on January 8, 1993.
This certification is being issued to Mr. Syed Azhar Abbas for whatever legal purpose or intents it may serve.7
On cross-examination, Syed testified that Gloria had filed bigamy cases against him in 2001 and 2002, and that he had gone to the Municipal Civil
Registrar of Carmona, Cavite to get certification on whether or not there was a marriage license on advice of his counsel.8
Petitioner also presented Norberto Bagsic (Bagsic), an employee of the Municipal Civil Registrar of Carmona, Cavite. Bagsic appeared under a letter of
authority from the Municipal Civil Registrar of Carmona, Cavite, and brought documents pertaining to Marriage License No. 9969967, which was issued
to Arlindo Getalado and Myra Mabilangan on January 20, 1993.9
Bagsic testified that their office issues serial numbers for marriage licenses and that the numbers are issued chronologically. 10 He testified that the
certification dated July 11, 2003, was issued and signed by Leodivina Encarnacion, Registrar of the Municipality of Carmona, Cavite, certifying that
Marriage License No. 9969967 was issued for Arlindo Getalado and Myra Mabilangan on January 19, 1993, and that their office had not issued any
other license of the same serial number, namely 9969967, to any other person.11
For her part, Gloria testified on her own behalf, and presented Reverend Mario Dauz, Atty. Lorenzo Sanchez, Felicitas Goo and May Ann Ceriola.
Reverend Mario Dauz (Rev. Dauz) testified that he was a minister of the Gospel and a barangay captain, and that he is authorized to solemnize
marriages within the Philippines.12 He testified that he solemnized the marriage of Syed Azhar Abbas and Gloria Goo at the residence of the bride on
January 9, 1993.13 He stated that the witnesses were Atty. Lorenzo Sanchez (Atty. Sanchez) and Mary Ann Ceriola.14 He testified that he had been
solemnizing marriages since 1982, and that he is familiar with the requirements.15 Rev. Dauz further testified that Atty. Sanchez gave him the marriage
license the day before the actual wedding, and that the marriage contract was prepared by his secretary. 16 After the solemnization of the marriage, it
was registered with the Local Civil Registrar of Manila, and Rev. Dauz submitted the marriage contract and copy of the marriage license with that
office.17
Atty. Sanchez testified that he was asked to be the sponsor of the wedding of Syed Abbas and Gloria Goo by the mother of the bride, Felicitas
Goo.18 He testified that he requested a certain Qualin to secure the marriage license for the couple, and that this Qualin secured the license and gave
the same to him on January 8, 1993.19 He further testified that he did not know where the marriage license was obtained. 20 He attended the wedding
ceremony on January 9, 1993, signed the marriage contract as sponsor, and witnessed the signing of the marriage contract by the couple, the
solemnizing officer and the other witness, Mary Ann Ceriola.21
Felicitas Goo testified that Gloria Goo is her daughter and Syed Azhar Abbas is her son-in-law, and that she was present at the wedding ceremony
held on January 9, 1993 at her house.22 She testified that she sought the help of Atty. Sanchez at the Manila City Hall in securing the marriage license,
and that a week before the marriage was to take place, a male person went to their house with the application for marriage license. 23 Three days later,
the same person went back to their house, showed her the marriage license before returning it to Atty. Sanchez who then gave it to Rev. Dauz, the
solemnizing officer.24 She further testified that she did not read all of the contents of the marriage license, and that she was told that the marriage
license was obtained from Carmona.25 She also testified that a bigamy case had been filed by Gloria against Syed at the Regional Trial Court of
Manila, evidenced by an information for Bigamy dated January 10, 2003, pending before Branch 47 of the Regional Trial Court of Manila.26
As to Mary Ann Ceriola’s testimony, the counsels for both parties stipulated that: (a) she is one of the sponsors at the wedding of Gloria Goo and Syed
Abbas on January 9, 1993; (b) she was seen in the wedding photos and she could identify all the persons depicted in said photos; and (c) her
testimony corroborates that of Felicitas Goo and Atty. Sanchez.
The respondent, Gloria, testified that Syed is her husband, and presented the marriage contract bearing their signatures as proof. 27 She and her
mother sought the help of Atty. Sanchez in securing a marriage license, and asked him to be one of the sponsors. A certain Qualin went to their house
and said that he will get the marriage license for them, and after several days returned with an application for marriage license for them to sign, which
she and Syed did. After Qualin returned with the marriage license, they gave the license to Atty. Sanchez who gave it to Rev. Dauz, the solemnizing
officer. Gloria testified that she and Syed were married on January 9, 1993 at their residence.28
Gloria further testified that she has a daughter with Syed, born on June 15, 1993.29
Gloria also testified that she filed a bigamy case against Syed, who had married a certain Maria Corazon Buenaventura during the existence of the
previous marriage, and that the case was docketed as Criminal Case No. 02A-03408, with the RTC of Manila.30
Gloria stated that she and Syed had already been married on August 9, 1992 in Taiwan, but that she did not know if said marriage had been celebrated
under Muslim rites, because the one who celebrated their marriage was Chinese, and those around them at the time were Chinese.31
The Ruling of the RTC
In its October 5, 2005 Decision, the Pasay City RTC held that no valid marriage license was issued by the Municipal Civil Registrar of Carmona, Cavite
in favor of Gloria and Syed, as Marriage License No. 9969967 had been issued to Arlindo Getalado and Myra Mabilangan, and the Municipal Civil
Registrar of Carmona, Cavite had certified that no marriage license had been issued for Gloria and Syed.32 It also took into account the fact that neither
party was a resident of Carmona, Cavite, the place where Marriage License No. 9969967 was issued, in violation of Article 9 of the Family Code. 33 As
the marriage was not one of those exempt from the license requirement, and that the lack of a valid marriage license is an absence of a formal
requisite, the marriage of Gloria and Syed on January 9, 1993 was void ab initio.
The dispositive portion of the Decision reads as follows:
WHEREFORE, judgment is hereby rendered in favor of the petitioner, and against the respondent declaring as follows:
1. The marriage on January 9, 1993 between petitioner Syed Azhar Abbas and respondent Gloria Goo-Abbas is hereby annulled;
2. Terminating the community of property relations between the petitioner and the respondent even if no property was acquired during their
cohabitation by reason of the nullity of the marriage of the parties.
3. The Local Civil Registrar of Manila and the Civil Registrar General, National Statistics Office, are hereby ordered to cancel from their
respective civil registries the marriage contracted by petitioner Syed Azhar Abbas and respondent Gloria Goo-Abbas on January 9, 1993 in
Manila.
SO ORDERED.34
Gloria filed a Motion for Reconsideration dated November 7, 2005, but the RTC denied the same, prompting her to appeal the questioned decision to
the Court of Appeals.
The Ruling of the CA
In her appeal to the CA, Gloria submitted the following assignment of errors:
THE LOWER COURT ERRED IN DECLARING THE MARRIAGE BETWEEN THE PETITIONER AND RESPONDENT AS NULL AND
VOID DUE TO THE ABSENCE OF A MARRIAGE LICENSE DESPITE EVIDENCE CLEARLY SHOWING THAT THERE WAS ONE.
II
THE LOWER COURT ERRED IN NOT CONSIDERING, AS A REQUISITE OF A VALID MARRIAGE, THE OVERWHELMING EVIDENCE
SHOWING THAT A MARRIAGE CEREMONY TOOK PLACE WITH THE APPEARANCE OF THE CONTRACTING PARTIES BEFORE
THE SOLEMNIZING OFFICER AND THEIR PERSONAL DECLARATION THAT THEY TOOK EACH OTHER AS HUSBAND AND WIFE IN
THE PRESENCE OF NOT LESS THAN TWO WITNESSES OF LEGAL AGE.
III
THE LOWER COURT ERRED IN NOT RULING ON THE ISSUE OF ESTOPPEL BY LACHES ON THE PART OF THE PETITIONER, AN
ISSUE TIMELY RAISED IN THE COURT BELOW.35
The CA gave credence to Gloria’s arguments, and granted her appeal. It held that the certification of the Municipal Civil Registrar failed to categorically
state that a diligent search for the marriage license of Gloria and Syed was conducted, and thus held that said certification could not be accorded
probative value.36 The CA ruled that there was sufficient testimonial and documentary evidence that Gloria and Syed had been validly married and that
there was compliance with all the requisites laid down by law.37
It gave weight to the fact that Syed had admitted to having signed the marriage contract. The CA also considered that the parties had comported
themselves as husband and wife, and that Syed only instituted his petition after Gloria had filed a case against him for bigamy.38
The dispositive portion of the CA Decision reads as follows:
WHEREFORE, premises considered, the appeal is GRANTED. The Decision dated 05 October 2005 and Order dated 27 January 2006 of the Regional
Trial Court of Pasay City, Branch 109, in Civil Case No. 03-0382-CFM are REVERSED and SET ASIDE and the Petition for Declaration of Nullity of
Marriage is DISMISSED. The marriage between Shed [sic] Azhar Abbas and Gloria Goo Abbas contracted on 09 January 1993 remains valid and
subsisting. No costs.
SO ORDERED.39
Syed then filed a Motion for Reconsideration dated April 1, 200840 but the same was denied by the CA in a Resolution dated July 24, 2008.41
Hence, this petition.
Grounds in Support of Petition
THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW IN CITING REPUBLIC VS. COURT OF APPEALS
AS THE SAME IS DIAMETRICALLY INCONSISTENT AND CONTRARY TO THE COURT’S OWN FINDINGS AND CONCLUSIONS IN
THIS CASE.
II
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN REVERSING AND SETTING ASIDE, WITHOUT ANY FACTUAL AND
LEGAL BASIS, THE DECISION OF THE REGIONAL TRIAL COURT GRANTING THE PETITION FOR DECLARATION OF NULLITY OF
MARRIAGE.42
The Ruling of this Court
The petition is meritorious.
As the marriage of Gloria and Syed was solemnized on January 9, 1993, Executive Order No. 209, or the Family Code of the Philippines, is the
applicable law. The pertinent provisions that would apply to this particular case are Articles 3, 4 and 35(3), which read as follows:
Art. 3. The formal requisites of marriage are:
(1) Authority of the solemnizing officer;
(2) A valid marriage license except in the cases provided for in Chapter 2 of this Title; and
(3) A marriage ceremony which takes place with the appearance of the contracting parties before the solemnizing officer and their personal
declaration that they take each other as husband and wife in the presence of not less than two witnesses of legal age.
Art. 4. The absence of any of the essential or formal requisites shall render the marriage void ab initio, except as stated in Article 35(2).
A defect in any of the essential requisites shall render the marriage voidable as provided in Article 45.
An irregularity in the formal requisites shall not affect the validity of the marriage but the party or parties responsible for the irregularity shall be civilly,
criminally and administratively liable.
Art. 35. The following marriages shall be void from the beginning:
xxxx
(3) Those solemnized without a license, except those covered by the preceding Chapter.
There is no issue with the essential requisites under Art. 2 of the Family Code, nor with the formal requisites of the authority of the solemnizing officer
and the conduct of the marriage ceremony. Nor is the marriage one that is exempt from the requirement of a valid marriage license under Chapter 2,
Title I of the Family Code. The resolution of this case, thus, hinges on whether or not a valid marriage license had been issued for the couple. The RTC
held that no valid marriage license had been issued. The CA held that there was a valid marriage license.
We find the RTC to be correct in this instance.
Respondent Gloria failed to present the actual marriage license, or a copy thereof, and relied on the marriage contract as well as the testimonies of her
witnesses to prove the existence of said license. To prove that no such license was issued, Syed turned to the office of the Municipal Civil Registrar of
Carmona, Cavite which had allegedly issued said license. It was there that he requested certification that no such license was issued. In the case of
Republic v. Court of Appeals43 such certification was allowed, as permitted by Sec. 29, Rule 132 of the Rules of Court, which reads:
SEC. 28. Proof of lack of record. – A written statement signed by an officer having the custody of an official record or by his deputy that after diligent
search, no record or entry of a specified tenor is found to exist in the records of his office, accompanied by a certificate as above provided, is
admissible as evidence that the records of his office contain no such record or entry.
In the case of Republic, in allowing the certification of the Civil Registrar of Pasig to prove the non-issuance of a marriage license, the Court held:
The above Rule authorized the custodian of the documents to certify that despite diligent search, a particular document does not exist in his office or
that a particular entry of a specified tenor was not to be found in a register. As custodians of public documents, civil registrars are public officers
charged with the duty, inter alia, of maintaining a register book where they are required to enter all applications for marriage licenses, including the
names of the applicants, the date the marriage license was issued and such other relevant data.44
The Court held in that case that the certification issued by the civil registrar enjoyed probative value, as his duty was to maintain records of data relative
to the issuance of a marriage license.
The Municipal Civil Registrar of Carmona, Cavite, where the marriage license of Gloria and Syed was allegedly issued, issued a certification to the
effect that no such marriage license for Gloria and Syed was issued, and that the serial number of the marriage license pertained to another couple,
Arlindo Getalado and Myra Mabilangan. A certified machine copy of Marriage License No. 9969967 was presented, which was issued in Carmona,
Cavite, and indeed, the names of Gloria and Syed do not appear in the document.
In reversing the RTC, the CA focused on the wording of the certification, stating that it did not comply with Section 28, Rule 132 of the Rules of Court.
The CA deduced that from the absence of the words "despite diligent search" in the certification, and since the certification used stated that no
marriage license appears to have been issued, no diligent search had been conducted and thus the certification could not be given probative value.
To justify that deduction, the CA cited the case of Republic v. Court of Appeals. 45 It is worth noting that in that particular case, the Court, in sustaining
the finding of the lower court that a marriage license was lacking, relied on the Certification issued by the Civil Registrar of Pasig, which merely stated
that the alleged marriage license could not be located as the same did not appear in their records. Nowhere in the Certification was it categorically
stated that the officer involved conducted a diligent search, nor is a categorical declaration absolutely necessary for Sec. 28, Rule 132 of the Rules of
Court to apply.
Under Sec. 3(m), Rule 131 of the Rules of Court, it is a disputable presumption that an official duty has been regularly performed, absent contradiction
or other evidence to the contrary. We held, "The presumption of regularity of official acts may be rebutted by affirmative evidence of irregularity or
failure to perform a duty." 46 No such affirmative evidence was shown that the Municipal Civil Registrar was lax in performing her duty of checking the
records of their office, thus the presumption must stand. In fact, proof does exist of a diligent search having been conducted, as Marriage License No.
996967 was indeed located and submitted to the court. The fact that the names in said license do not correspond to those of Gloria and Syed does not
overturn the presumption that the registrar conducted a diligent search of the records of her office.
It is telling that Gloria failed to present their marriage license or a copy thereof to the court. She failed to explain why the marriage license was secured
in Carmona, Cavite, a location where, admittedly, neither party resided. She took no pains to apply for the license, so she is not the best witness to
testify to the validity and existence of said license. Neither could the other witnesses she presented prove the existence of the marriage license, as
none of them applied for the license in Carmona, Cavite. Her mother, Felicitas Goo, could not even testify as to the contents of the license, having
admitted to not reading all of its contents. Atty. Sanchez, one of the sponsors, whom Gloria and Felicitas Goo approached for assistance in securing
the license, admitted not knowing where the license came from. The task of applying for the license was delegated to a certain Qualin, who could have
testified as to how the license was secured and thus impeached the certification of the Municipal Civil Registrar as well as the testimony of her
representative. As Gloria failed to present this Qualin, the certification of the Municipal Civil Registrar still enjoys probative value.
It is also noted that the solemnizing officer testified that the marriage contract and a copy of the marriage license were submitted to the Local Civil
Registrar of Manila. Thus, a copy of the marriage license could have simply been secured from that office and submitted to the court. However, Gloria
inexplicably failed to do so, further weakening her claim that there was a valid marriage license issued for her and Syed.
In the case of Cariño v. Cariño, 47 following the case of Republic,48 it was held that the certification of the Local Civil Registrar that their office had no
record of a marriage license was adequate to prove the non-issuance of said license. The case of Cariño further held that the presumed validity of the
marriage of the parties had been overcome, and that it became the burden of the party alleging a valid marriage to prove that the marriage was valid,
and that the required marriage license had been secured. 49 Gloria has failed to discharge that burden, and the only conclusion that can be reached is
that no valid marriage license was issued. It cannot be said that there was a simple irregularity in the marriage license that would not affect the validity
of the marriage, as no license was presented by the respondent. No marriage license was proven to have been issued to Gloria and Syed, based on
the certification of the Municipal Civil Registrar of Carmona, Cavite and Gloria’s failure to produce a copy of the alleged marriage license.
To bolster its ruling, the CA cited other evidence to support its conclusion that Gloria and Syed were validly married. To quote the CA:
Moreover, the record is replete with evidence, testimonial and documentary, that appellant and appellee have been validly married and there was
compliance with all the requisites laid down by law. Both parties are legally capacitated to marry. A certificate of legal capacity was even issued by the
Embassy of Pakistan in favor of appellee. The parties herein gave their consent freely. Appellee admitted that the signature above his name in the
marriage contract was his. Several pictures were presented showing appellant and appellee, before the solemnizing officer, the witnesses and other
members of appellant’s family, taken during the marriage ceremony, as well as in the restaurant where the lunch was held after the marriage
ceremony. Most telling of all is Exhibit "5-C" which shows appellee signing the Marriage Contract.
xxxx
The parties have comported themselves as husband and wife and has [sic] one offspring, Aliea Fatima Goo Abbas, who was born on 15 June 1993. It
took appellee more than ten (10) years before he filed on 01 August 2003 his Petition for Declaration of Nullity of Marriage under Article 4 of the Family
Code. We take serious note that said Petition appears to have been instituted by him only after an Information for Bigamy (Exhibit "1") dated 10
January 2003 was filed against him for contracting a second or subsequent marriage with one Ma. Corazon (Maryam) T. Buenaventura. We are not
ready to reward (appellee) by declaring the nullity of his marriage and give him his freedom and in the process allow him to profit from his own deceit
and perfidy.50
All the evidence cited by the CA to show that a wedding ceremony was conducted and a marriage contract was signed does not operate to cure the
absence of a valid marriage license. Article 4 of the Family Code is clear when it says, "The absence of any of the essential or formal requisites shall
render the marriage void ab initio, except as stated in Article 35(2)." Article 35(3) of the Family Code also provides that a marriage solemnized without
a license is void from the beginning, except those exempt from the license requirement under Articles 27 to 34, Chapter 2, Title I of the same
Code.51 Again, this marriage cannot be characterized as among the exemptions, and thus, having been solemnized without a marriage license, is void
ab initio.1âwphi1
As to the motive of Syed in seeking to annul his marriage to Gloria, it may well be that his motives are less than pure, that he seeks to evade a bigamy
suit. Be that as it may, the same does not make up for the failure of the respondent to prove that they had a valid marriage license, given the weight of
evidence presented by petitioner. The lack of a valid marriage license cannot be attributed to him, as it was Gloria who took steps to procure the same.
The law must be applied. As the marriage license, a formal requisite, is clearly absent, the marriage of Gloria and Syed is void ab initio.
WHEREFORE, in light of the foregoing, the petition is hereby GRANTED. The assailed Decision dated March 11, 2008 and Resolution dated July 24,
2008 of the Court of Appeals in CA-G.R. CV No. 86760 are hereby REVERSED and SET ASIDE. The Decision of the Regional Trial Court, Branch
109, Pasay City dated October 5, 2005 in Civil Case No. 03-0382-CFM annulling the marriage of petitioner with respondent on January 9, 1993 is
hereby REINSTATED.
No costs.
G.R. No. 194128 December 7, 2011
WESTMONT INVESTMENT CORPORATION, Petitioner,

vs.
AMOS P. FRANCIA, JR., CECILIA ZAMORA, BENJAMIN FRANCIA, and PEARLBANK SECURITIES, INC., Respondents.
DECISION
MENDOZA, J.:
At bench is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the (1) July 27, 2010 Decision 1 of the Court of
Appeals (CA) in CA-G.R. CV No. 84725, which affirmed with modification the September 27, 2004 Decision 2 of the Regional Trial Court, Branch 56,
Makati City (RTC) in Civil Case No. 01-507; and (2) its October 14, 2010 Resolution,3 which denied the motion for the reconsideration thereof.
THE FACTS:
On March 27, 2001, respondents Amos P. Francia, Jr., Cecilia Zamora and Benjamin Francia (the Francias) filed a Complaint for Collection of Sum of
Money and Damages4 arising from their investments against petitioner Westmont Investment Corporation (Wincorp) and respondent Pearlbank
Securities Inc. (Pearlbank) before the RTC.
Wincorp and Pearlbank filed their separate motions to dismiss. 5 Both motions were anchored on the ground that the complaint of the Francias failed to
state a cause of action. On July 16, 2001, after several exchanges of pleadings, the RTC issued an order 6 dismissing the motions to dismiss of
Wincorp and Pearlbank for lack of merit.
Wincorp then filed its Answer,7 while Pearlbank filed its Answer with Counterclaim and Crossclaim (against Wincorp).8
The case was set for pre-trial but before pre-trial conference could be held, Wincorp filed its Motion to Dismiss Crossclaim 9 of Pearlbank to which the
latter filed an opposition.10 The RTC denied Wincorp’s motion to dismiss crossclaim.11
The pre-trial conference was later conducted after the parties had filed their respective pre-trial briefs. The parties agreed on the following stipulation of
facts, as contained in the Pre-Trial Order12 issued by the RTC on April 17, 2002:
1. The personal and juridical circumstances of the parties meaning, the plaintiffs and both corporate defendants;
2. That plaintiffs caused the service of a demand letter on Pearl Bank on February 13, 2001 marked as Exhibit E;
3. Plaintiffs do not have personal knowledge as to whether or not Pearl Bank indeed borrowed the funds allegedly invested by the
plaintiff from Wincorp; and
4. That the alleged confirmation advices which indicate Pearl Bank as alleged borrower of the funds allegedly invested by the
plaintiffs in Wincorp do not bear the signature or acknowledgment of Pearl Bank. (Emphases supplied)
After several postponements requested by Wincorp, trial on the merits finally ensued. The gist of the testimony of Amos Francia, Jr. (Amos) is as
follows:
1. Sometime in 1999, he was enticed by Ms. Lalaine Alcaraz, the bank manager of Westmont Bank, Meycauayan, Bulacan Branch, to
make an investment with Wincorp, the bank’s financial investment arm, as it was offering interest rates that were 3% to 5% higher than
regular bank interest rates. Due to the promise of a good return of investment, he was convinced to invest. He even invited his sister,
Cecilia Zamora and his brother, Benjamin Francia, to join him. Eventually, they placed their investment in the amounts of ₱ 1,420,352.72
and ₱ 2,522,745.34 with Wincorp in consideration of a net interest rate of 11% over a 43-day spread. Thereafter, Wincorp, through
Westmont Bank, issued Official Receipt Nos. 47084413 and 470845,14 both dated January 27, 2000, evidencing the said transactions.15
2. When the 43-day placement matured, the Francias wanted to retire their investments but they were told that Wincorp had no funds.
Instead, Wincorp "rolled-over" their placements and issued Confirmation Advices 16 extending their placements for another 34 days. The
said confirmation advices indicated the name of the borrower as Pearlbank. The maturity values were ₱ 1,435,108.61 and ₱ 2,548,953.86
with a due date of April 13, 2000.
3. On April 13, 2000, they again tried to get back the principal amount they invested plus interest but, again, they were frustrated.17
4. Constrained, they demanded from Pearlbank18 their investments. There were several attempts to settle the case, but all proved futile.
After the testimony of Amos Francia, Jr., the Francias filed their Formal Offer of Evidence.19 Pearlbank filed its Comment/Objection,20 while Wincorp did
not file any comment or objection. After all the exhibits of the Francias were admitted for the purposes they were offered, the Francias rested their
case.
Thereafter, the case was set for the presentation of the defense evidence of Wincorp. On March 7, 2003, three (3) days before the scheduled hearing,
Wincorp filed a written motion to postpone the hearing on even date, as its witness, Antonio T. Ong, was unavailable because he had to attend a
congressional hearing. Wincorp’s substitute witness, Atty. Nemesio Briones, was likewise unavailable due to a previous commitment in the Securities
and Exchange Commission.
The RTC denied Wincorp’s Motion to Postpone and considered it to have waived its right to present evidence. 21 The Motion for Reconsideration of
Wincorp was likewise denied.22
On August 14, 2003, Pearlbank filed its Demurrer to Evidence.23 The RTC granted the same in its Order24 dated January 12, 2004. Hence, the
complaint against Pearlbank was dismissed, while the case was considered submitted for decision insofar as Wincorp was concerned.
On September 27, 2004, the RTC rendered a decision25 in favor of the Francias and held Wincorp solely liable to them. The dispositive portion thereof
reads:
WHEREFORE, judgment is rendered ordering defendant Westmont Investment Corporation to pay the plaintiffs, the following amounts:
1. ₱ 3,984,062.47 representing the aggregate amount of investment placements made by plaintiffs, plus 11% per annum by way of
stipulated interest, to be counted from 10 March 2000 until fully paid; and
2. 10% of the above-mentioned amount as and for attorney’s fees and costs of suit.
SO ORDERED.
Wincorp then filed a motion for reconsideration, but it was denied by the RTC in its Order26 dated November 10, 2004.
Not in conformity with the pronouncement of the RTC, Wincorp interposed an appeal with the CA, alleging the following arguments:
I. THE REGIONAL TRIAL COURT ERRED WHEN IT HELD THAT WINCORP AS AGENT OF PLAINTIFFS-APPELLEES WAS LIABLE TO
THE LATTER NOTWITHSTANDING THE CLEAR WRITTEN AGREEMENT TO THE CONTRARY;
II. THE REGIONAL TRIAL COURT ALSO ERRED WHEN IT HELD THAT PEARLBANK, THE ACTUAL BORROWER AND RECIPIENT OF
THE MONEY INVOLVED IS NOT LIABLE TO THE PLAINTIFFS-APPELLEES; and
III. THE REGIONAL TRIAL COURT ERRED IN DISMISSING ALL TOGETHER THE CROSS-CLAIM OF WINCORP AGAINST
PEARLBANK.27
The CA affirmed with modification the ruling of the RTC in its July 27, 2010 Decision, the decretal portion of which reads:
WHEREFORE, premises considered, the present Appeal is DENIED. The Decision dated 27 September 2004 of the Regional Trial Court, Branch 56,
Makati City in Civil Case No. 01-507 is hereby AFFIRMED WITH MODIFICATION of the awards. Defendant-appellant Wincorp is hereby ordered to
pay plaintiffs-appellees the amounts of ₱ 3,984,062.47 plus 11% per annum by way of stipulated interest to be computed from 13 April 2000 until fully
paid and ₱ 100,000.00 as attorney’s fees and cost of suit."
SO ORDERED.
The CA explained:
After a careful and judicious scrutiny of the records of the present case, together with the applicable laws and jurisprudence, this Court finds defendant-
appellant Wincorp solely liable to pay the amount of ₱ 3,984,062.47 plus 11% interest per annum computed from 10 March 2000 to plaintiffs-appellees.
Preliminarily, the Court will rule on the procedural issues raised to know what pieces of evidence will be considered in this appeal.
Section 34, Rule 132 of the Rules on Evidence states that:
"The court shall consider no evidence which has not been formally offered. The purpose for which the evidence is offered must be specified."
A formal offer is necessary because judges are mandated to rest their findings of facts and their judgment only and strictly upon the evidence offered
by the parties at the trial. Its function is to enable the trial judge to know the purpose or purposes for which the proponent is presenting the evidence.
On the other hand, this allows opposing parties to examine the evidence and object to its admissibility. Moreover, it facilitates review as the appellate
court will not be required to review documents not previously scrutinized by the trial court. Evidence not formally offered during the trial can not be used
for or against a party litigant. Neither may it be taken into account on appeal.
The rule on formal offer of evidence is not a trivial matter. Failure to make a formal offer within a considerable period of time shall be deemed a waiver
to submit it. Consequently, any evidence that has not been offered shall be excluded and rejected.
Prescinding therefrom, the very glaring conclusion is that all the documents attached in the motion for reconsideration of the decision of the trial court
and all the documents attached in the defendant-appellant’s brief filed by defendant-appellant Wincorp cannot be given any probative weight or
credit for the sole reason that the said documents were not formally offered as evidence in the trial court because to consider them at this
stage will deny the other parties the right to rebut them.
The arguments of defendant-appellant Wincorp that the plaintiffs-appellees made an erroneous offer of evidence as the documents were offered to
prove what is contrary to its content and that they made a violation of the parol evidence rule do not hold water.
It is basic in the rule of evidence that objection to evidence must be made after the evidence is formally offered. In case of documentary evidence, offer
is made after all the witnesses of the party making the offer have testified, specifying the purpose for which the evidence is being offered. It is only at
this time, and not at any other, that objection to the documentary evidence may be made.
As to oral evidence, objection thereto must likewise be raised at the earliest possible time, that is, after the objectionable question is asked or after the
answer is given if the objectionable issue becomes apparent only after the answer was given.
xxx
In the case at bench, a perusal of the records shows that the plaintiffs-appellees have sufficiently established their cause of action by preponderance of
evidence. The fact that on 27 January 2000, plaintiffs-appellees placed their investment in the amounts of ₱ 1,420,352.72 and ₱ 2,522,754.34 with
defendant-appellant Wincorp to earn a net interest at the rate of 11% over a 43-day period was distinctly proved by the testimony of plaintiff-appellee
Amos Francia, Jr. and supported by Official Receipt Nos. 470844 and 470845 issued by defendant-appellant Wincorp through Westmont Bank. The
facts that plaintiffs-appellees failed to get back their investment after 43 days and that their investment was rolled over for another 34 days were also
established by their oral evidence and confirmed by the Confirmation Advices issued by defendant-appellant Wincorp, which indicate that their
investment already amounted to ₱ 1,435,108.61 and ₱ 2,548,953.86 upon its maturity on 13 April 2000. Likewise, the fact that plaintiffs-appellees’
investment was not returned to them until this date by defendant-appellant Wincorp was proved by their evidence. To top it all, defendant-appellant
Wincorp never negated these established facts because defendant-appellant Wincorp’s claim is that it received the money of plaintiffs-appellees but it
merely acted as an agent of plaintiffs-appellees and that the actual borrower of plaintiffs-appellees’ money is defendant-appellee PearlBank. Hence,
defendant-appellant Wincorp alleges that it should be the latter who must be held liable to the plaintiffs-appellees.
However, the contract of agency and the fact that defendant-appellee PearlBank actually received their money were never proven. The records are
bereft of any showing that defendant-appellee PearlBank is the actual borrower of the money invested by plaintiffs-appellees as defendant-appellant
Wincorp never presented any evidence to prove the same.
Moreover, the trial court did not err in dismissing defendant-appellant Wincorp’s crossclaim as nothing in the records supports its claim. And such was
solely due to defendant-appellant Wincorp because it failed to present any scintilla of evidence that would implicate defendant-appellee PearlBank to
the transactions involved in this case. The fact that the name of defendant-appellee PearlBank was printed in the Confirmation Advices as the actual
borrower does not automatically makes defendant-appellee PearlBank liable to the plaintiffs-appellees as nothing therein shows that defendant-
appellee PearlBank adhered or acknowledged that it is the actual borrower of the amount specified therein.
Clearly, the plaintiffs-appellees were able to establish their cause of action against defendant-appellant Wincorp, while the latter failed to establish its
cause of action against defendant-appellee PearlBank.
Hence, in view of all the foregoing, the Court finds defendant-appellant Wincorp solely liable to pay the amount of ₱ 3,984,062.47 representing the
matured value of the plaintiffs-appellees’ investment as of 13 April 2000 plus 11% interest per annum by way of stipulated interest counted from
maturity date (13 April 2000).
As to the award of attorney’s fees, this Court finds that the undeniable source of the present controversy is the failure of defendant-appellant Wincorp
to return the principal amount and the interest of the investment money of plaintiffs-appellees, thus, the latter was forced to engage the services of their
counsel to protect their right. It is elementary that when attorney’s fees is awarded, they are so adjudicated, because it is in the nature of actual
damages suffered by the party to whom it is awarded, as he was constrained to engage the services of a counsel to represent him for the protection of
his interest. Thus, although the award of attorney’s fees to plaintiffs-appellees was warranted by the circumstances obtained in this case, this Court
finds it equitable to reduce the same from 10% of the total award to a fixed amount of ₱ 100,000.00.28
Wincorp’s Motion for Reconsideration was likewise denied by the CA in its October 14, 2010 Resolution.29
Not in conformity, Wincorp seeks relief with this Court via this petition for review alleging that −
PLAINTIFFS-RESPONDENTS HAVE NO CAUSE OF ACTION AGAINST WINCORP AS THE EVIDENCE ON RECORD SHOWS THAT THE
ACTUAL BENEFICIARY OF THE PROCEEDS OF THE LOAN TRANSACTIONS WAS PEARLBANK
SUBSTANTIAL JUSTICE DICTATES THAT THE EVIDENCE PROFERRED BY WINCORP SHOULD BE CONSIDERED TO DETERMINE WHO,
AMONG THE PARTIES, ARE LIABLE TO PLAINTIFFS-RESPONDENTS 30
ISSUE
The core issue in this case is whether or not the CA is correct in finding Wincorp solely liable to pay the Francias the amount of ₱ 3,984,062.47 plus
interest of 11% per annum.
Quite clearly, the case at bench presents a factual issue.
As a rule, a petition for review under Rule 45 of the Rules of Court covers only questions of law. Questions of fact are not reviewable and cannot be
passed upon by this Court in the exercise of its power to review. The distinction between questions of law and questions of fact is established.
A question of law exists when the doubt or difference centers on what the law is on a certain state of facts. A question of fact, on the other hand, exists
if the doubt centers on the truth or falsity of the alleged facts. 31 This being so, the findings of fact of the CA are final and conclusive and this Court will
not review them on appeal.
While it goes without saying that only questions of law can be raised in a petition for review on certiorari under Rule 45, the same admits of exceptions,
namely: (1) when the findings are grounded entirely on speculations, surmises, or conjectures; (2) when the inference made is manifestly mistaken,
absurd, or impossible; (3) when there is a grave abuse of discretion; (4) when the judgment is based on misappreciation of facts; (5) when the findings
of fact are conflicting; (6) when in making its findings, the same are contrary to the admissions of both appellant and appellee; (7) when the findings are
contrary to those of the trial court; (8) when the findings are conclusions without citation of specific evidence on which they are based; (9) when the
facts set forth in the petition as well as in the petitioner’s main and reply briefs are not disputed by the respondent; and (10) when the findings of fact
are premised on the supposed absence of evidence and contradicted by the evidence on record.32
The Court finds that no cogent reason exists in this case to deviate from the general rule.
Wincorp insists that the CA should have based its decision on the express terms, stipulations, and agreements provided for in the documents offered
by the Francias as the legal relationship of the parties was clearly spelled out in the very documents introduced by them which indicated that it merely
brokered the loan transaction between the Francias and Pearlbank.33
Wincorp would want the Court to rule that there was a contract of agency between it and the Francias with the latter authorizing the former as their
agent to lend money to Pearlbank. According to Wincorp, the two Confirmation Advices presented as evidence by the Francias and admitted by the
court, were competent proof that the recipient of the loan proceeds was Pearlbank.34
The Court is not persuaded.
In a contract of agency, a person binds himself to render some service or to do something in representation or on behalf of another with the latter’s
consent.35 It is said that the underlying principle of the contract of agency is to accomplish results by using the services of others – to do a great variety
of things. Its aim is to extend the personality of the principal or the party for whom another acts and from whom he or she derives the authority to act.
Its basis is representation.36
Significantly, the elements of the contract of agency are: (1) consent, express or implied, of the parties to establish the relationship; (2) the object is the
execution of a juridical act in relation to a third person; (3) the agent acts as a representative and not for himself; (4) the agent acts within the scope of
his authority.37
In this case, the principal-agent relationship between the Francias and Wincorp was not duly established by evidence. The records are bereft of any
showing that Wincorp merely brokered the loan transactions between the Francias and Pearlbank and the latter was the actual recipient of the money
invested by the former. Pearlbank did not authorize Wincorp to borrow money for it. Neither was there a ratification, expressly or impliedly, that it had
authorized or consented to said transaction.
As to Pearlbank, records bear out that the Francias anchor their cause of action against it merely on the strength of the subject Confirmation Advices
bearing the name "PearlBank" as the supposed borrower of their investments. Apparently, the Francias ran after Pearlbank only after learning that
Wincorp was reportedly bankrupt.38 The Francias were consistent in saying that they only dealt with Wincorp and not with Pearlbank. It bears noting
that even in their Complaint and during the pre-trial conference, the Francias alleged that they did not have any personal knowledge if Pearlbank was
indeed the recipient/beneficiary of their investments.
Although the subject Confirmation Advices indicate the name of Pearlbank as the purported borrower of the said investments, said documents do not
bear the signature or acknowledgment of Pearlbank or any of its officers. This cannot prove the position of Wincorp that it was Pearlbank which
received and benefited from the investments made by the Francias. There was not even a promissory note validly and duly executed by Pearlbank
which would in any way serve as evidence of the said borrowing.
Another significant point which would support the stand of Pearlbank that it was not the borrower of whatever funds supposedly invested by the
Francias was the fact that it initiated, filed and pursued several cases against Wincorp, questioning, among others, the latter’s acts of naming it as
borrower of funds from investors.391avvphi1
It bears stressing too that all the documents attached by Wincorp to its pleadings before the CA cannot be given any weight or evidentiary value for the
sole reason that, as correctly observed by the CA, these documents were not formally offered as evidence in the trial court. To consider them now
would deny the other parties the right to examine and rebut them. Section 34, Rule 132 of the Rules of Court provides:
Section 34. Offer of evidence —The court shall consider no evidence which has not been formally offered. The purpose for which the evidence is
offered must be specified.
"The offer of evidence is necessary because it is the duty of the court to rest its findings of fact and its judgment only and strictly upon the evidence
offered by the parties. Unless and until admitted by the court in evidence for the purpose or purposes for which such document is offered, the same is
merely a scrap of paper barren of probative weight."40
The Court cannot, likewise, disturb the findings of the RTC and the CA as to the evidence presented by the Francias. It is elementary that objection to
evidence must be made after evidence is formally offered.41 It appears that Wincorp was given ample opportunity to file its Comment/Objection to the
formal offer of evidence of the Francias but it chose not to file any.
All told, the CA committed no reversible error in rendering the assailed July 27, 2010 Decision and in issuing the challenged October 14, 2010
Resolution.
WHEREFORE, the petition is DENIED.
SO ORDERED.
G.R. No. 165285 June 18, 2012
LOMISES ALUDOS, deceased, substituted by FLORA ALUDOS, Petitioner,

vs.
JOHNNY M. SUERTE,* Respondent.
DECISION
BRION, J.:
Before the Court is a petition for review on certiorari filed under Rule 45 of the Rules of Court by Lomises Aludos, through his wife Flora Aludos
(Lomises).1 Lomises seeks the reversal of the decision2 dated August 29, 2002 of the Court of Appeals (CA) in CA-G.R. CV No. 63113, as well as the
resolution3 dated August 17, 2004.
THE FACTS
Sometime in January 1969, Lomises acquired from the Baguio City Government the right to occupy two stalls in the Hangar Market in Baguio City, as
evidenced by a permit issued by the City Treasurer.4
On September 8, 1984, Lomises entered into an agreement with respondent Johnny M. Suerte for the transfer of all improvements and rights over the
two market stalls (Stall Nos. 9 and 10) for the amount of ₱260,000.00. Johnny gave a down payment of ₱45,000.00 to Lomises, who acknowledged
receipt of the amount in a document5 executed on the same date as the agreement:
RECEIPT
₱45,000.00 September 8, 1984
Received the Sum of Forty Five Thousand Pesos (₱45,000.00) from JOHNNY M. SUERTE, with postal address at Kamog, Sablan, Benguet Province,
Philippine Currency as an advance or partial downpayment of Improvements and Rights over Stall Nos. 9 and 10, situated at Refreshment Section,
Hangar Market Compound, Baguio City, and the said amount will be deducted from the agreed proceeds of the transaction in the amount of Two
Hundred Sixty Thousand Pesos (₱260,000.00), Philippine Currency and payable starting from September 1984 up to December 1985, and/or (16)
months.
This receipt will be formalise (sic) later, and the Deed of Absolute Transfer of Improvements and Rights over the said Stall be executed immediately
upon full payment of the balance stated in the above.
Right hand thumbmark:
[Thumbmark affixed]
LOMISES F. ALUDOS
(Registered Stall Holder)
With the Consent of the Wife:
[Signature affixed]
FLORA MENES
(Wife)
Witness to Thumbmark and/or

Paid in the presence of:
[Signature affixed] [Signature affixed]

Domes M. Suerte (witness) Agnes M. Boras (witness)

Ana Comnad (witness) Dolores Aludos (with
her consent/witness)
Johnny made a subsequent payment of ₱23,000.00; hence, a total of ₱68,000.00 of the ₱260,000.00 purchase price had been made as of 1984.
Before full payment could be made, however, Lomises backed out of the agreement and returned the ₱68,000.00 to Domes and Jaime Suerte, the
mother and the father of Johnny, respectively. The return of the ₱68,000.00 down payment was embodied in a handwritten receipt 6 dated October 9,
1985:
RECEIPT
₱68,000.00
Received from Mr. Lomises Aludos the sum of Sixty-eight thousand (₱68,000.00) Pesos as reimbursement of my money.
Baguio City, October 9, 1985.

JAIME SUERTE DOMES SUERTE
Witnesses
[Illegible signature] [Illegible signature]
Through a letter dated October 15, 1985, Johnny protested the return of his money, and insisted on the continuation and enforcement of his agreement
with Lomises. When Lomises refused Johnny’s protest, Johnny filed a complaint against Lomises before the Regional Trial Court (RTC), Branch 7,
Baguio City, for specific performance with damages, docketed as Civil Case No. 720-R. Johnny prayed that, after due proceedings, judgment be
rendered ordering Lomises to (1) accept the payment of the balance of ₱192,000.00; and (2) execute a final deed of sale and/or transfer the
improvements and rights over the two market stalls in his favor.
In a decision dated November 24, 1998,7 the RTC nullified the agreement between Johnny and Lomises for failure to secure the consent of the Baguio
City Government to the agreement. The RTC found that Lomises was a mere lessee of the market stalls, and the Baguio City Government was the
owner-lessor of the stalls. Under Article 1649 of the Civil Code, "[t]he lessee cannot assign the lease without the consent of the lessor, unless there is a
stipulation to the contrary." As the permit issued to Lomises did not contain any provision that the lease of the market stalls could further be assigned,
and in the absence of the consent of the Baguio City Government to the agreement, the RTC declared the agreement between Lomises and Johnny
null and void. The nullification of the agreement required the parties to return what had been received under the agreement; thus, the RTC ordered
Lomises to return the down payment made by Johnny, with interest of 12% per annum, computed from the time the complaint was filed until the
amount is fully paid. It dismissed the parties’ claims for damages.
Lomises appealed the RTC decision to the CA, arguing that the real agreement between the parties was merely one of loan, and not of sale; he further
claimed that the loan had been extinguished upon the return of the ₱68,000.00 to Johnny’s mother, Domes.
In a decision dated August 29, 2002,8 the CA rejected Lomises’ claim that the true agreement was one of loan. The CA found that there were two
agreements entered into between Johnny and Lomises: one was for the assignment of leasehold rights and the other was for the sale of the
improvements on the market stalls. The CA agreed with the RTC that the assignment of the leasehold rights was void for lack of consent of the lessor,
the Baguio City Government. The sale of the improvements, however, was valid because these were Lomises’ private properties. For this reason, the
CA remanded the case to the RTC to determine the value of the improvements on the two market stalls, existing at the time of the execution of the
agreement.
Lomises moved for the reconsideration of the CA ruling, contending that no valid sale of the improvements could be made because the lease contract,
dated May 1, 1985, between Lomises and the Baguio City Government, supposedly marked as Exh. "A," provided that "[a]ll improvements [introduced
shall] ipso facto become properties of the City of Baguio."9
In a resolution dated August 17, 2004, 10 the CA denied the motion after finding that Lomises’ lawyer, Atty. Rodolfo Lockey, misrepresented Exh. "A" as
the governing lease contract between Lomises and the Baguio City Government; the records reveal that Exh. "A" was merely a permit issued by the
City Treasurer in favor of Lomises. The contract of lease dated May 1, 1985 was never formally offered in evidence before the RTC and could thus not
be considered pursuant to the rules of evidence.
Lomises now appeals the CA rulings through the present petition for review on certiorari.
THE PARTIES’ ARGUMENTS
Lomises insists that the agreement was merely one of loan, not of sale of improvements and leasehold rights. Johnny could not afford to purchase from
Lomises the two market stalls for ₱260,000.00 because the former was a mere college student when the agreement was entered into in 1984 and was
dependent on his parents for support. The actual lender of the amount was Johnny’s mother, Domes; Johnny’s name was placed on the receipt dated
September 8, 1984 so that in case the loan was not paid, the rights over the market stalls would be transferred to Johnny’s name, not to Domes who
already had a market stall and was thus disqualified from acquiring another. The receipt dated September 8, 1984, Lomises pointed out, bears the
signature of Domes, not of Johnny.
Even assuming that Johnny was the real creditor, Lomises alleges that the loan had been fully paid when he turned over the amount of ₱68,000.00 to
Johnny’s parents, as evidenced by the receipt dated October 9, 1985. Domes’ claim – that she was pressured to accept the amount – is an implied
admission that payment had nonetheless been received. When Johnny died during the pendency of the case before the RTC, his parents became his
successors and inherited all his rights. For having received the full amount of the loan, Johnny’s parents can no longer enforce payment of the loan.
Lomises contends that there were no improvements made on the market stalls other than the stalls themselves, and these belong to the Baguio City
Government as the lessor. A transfer of the stalls cannot be made without a transfer of the leasehold rights, in which case, there would be an indirect
violation of the lease contract with the Baguio City Government. Lomises further alleges that, at present, the market stalls are leased by Flora and her
daughter who both obtained the lease in their own right and not as Lomises’ successors.
Johnny, through his remaining successor Domes (Johnny’s mother), opposed Lomises’ claim. The receipt dated September 8, 1984 clearly referred to
a contract of sale of the market stalls and not a contract of loan that Lomises alleges. Although Johnny conceded that the sale of leasehold rights to the
market stalls were void for lack of consent of the Baguio City Government, he alleged that the sale of the improvements should be upheld as valid, as
the CA did.
THE COURT’S RULING
The Court does not find the petition meritorious.
The Nature of the Agreement between the Parties
Lomises questions the nature of the agreement between him and Johnny, insisting that it was a contract of loan, not an assignment of leasehold rights
and sale of improvements. In other words, what existed was an equitable mortgage, as contemplated in Article 1602, in relation with Article 1604, of the
Civil Code. "An equitable mortgage has been defined ‘as one which although lacking in some formality, or form or words, or other requisites demanded
by a statute, nevertheless reveals the intention of the parties to charge real property as security for a debt, there being no impossibility nor anything
contrary to law in this intent.’"11 Article 1602 of the Civil Code lists down the circumstances that may indicate that a contract is an equitable mortgage:
Art. 1602. The contract shall be presumed to be an equitable mortgage, in any of the following cases:
(1) When the price of a sale with right to repurchase is unusually inadequate;
(2) When the vendor remains in possession as lessee or otherwise;

(3) When upon or after the expiration of the right to repurchase another instrument extending the period of redemption or granting a new
period is executed;
(4) When the purchaser retains for himself a part of the purchase price;
(5) When the vendor binds himself to pay the taxes on the thing sold;
(6) In any other case where it may be fairly inferred that the real intention of the parties is that the transaction shall secure the payment of a
debt or the performance of any other obligation.
In any of the foregoing cases, any money, fruits, or other benefit to be received by the vendee as rent or otherwise shall be considered as interest
which shall be subject to the usury laws. [Emphases ours.]
Based on Lomises’ allegations in his pleadings, we consider three circumstances to determine whether his claim is well-supported. First, Johnny was a
mere college student dependent on his parents for support when the agreement was executed, and it was Johnny’s mother, Domes, who was the party
actually interested in acquiring the market stalls. Second, Lomises received only ₱48,000.00 of the ₱68,000.00 that Johnny claimed he gave as down
payment; Lomises said that the ₱20,000.00 represented interests on the loan. Third, Lomises retained possession of the market stalls even after the
execution of the agreement.
Whether separately or taken together, these circumstances do not support a conclusion that the parties only intended to enter into a contract of loan.
That Johnny was a mere student when the agreement was executed does not indicate that he had no financial capacity to pay the purchase price of
₱260,000.00. At that time, Johnny was a 26-year old third year engineering student who operated as a businessman as a sideline activity and who
helped his family sell goods in the Hangar Market. 12 During trial, Johnny was asked where he was to get the funds to pay the ₱260,000.00 purchase
price, and he said he would get a loan from his grandfather. 13 That he did not have the full amount at the time the agreement was executed does not
necessarily negate his capacity to pay the purchase price, since he had 16 months to complete the payment. Apart from Lomises’ bare claim that it was
Johnny’s mother, Domes, who was interested in acquiring his market stalls, we find no other evidence supporting the claim that Johnny was merely
acting as a dummy for his mother.
Lomises contends that of the ₱68,000.00 given by Johnny, he only received ₱48,000.00, with the remaining ₱20,000.00 retained by Johnny as interest
on the loan. However, the testimonies of the witnesses presented during trial, including Lomises himself, negate this claim. Judge Rodolfo Rodrigo
(RTC of Baguio City, Branch VII) asked Lomises’ lawyer, Atty. Lockey, if they deny receipt of the ₱68,000.00; Atty. Lockey said that they were not
denying receipt, and added that they had in fact returned the same amount. 14 Judge Rodrigo accurately summarized their point by stating that "there is
no need to dispute whether the ₱68,000.00 was given, because if [Lomises] tried to return that x x x he had received that." 15 Witness Atty. Albert
Umaming said he counted the money before he drafted the October 9, 1985 receipt evidencing the return; he said that Lomises returned ₱68,000.00 in
total.16 Thus, if the transaction was indeed a loan and the ₱20,000.00 interest was already prepaid by Lomises, the return of the full amount of
₱68,000.00 by Lomises to Johnny (through his mother, Domes) would not make sense.
That Lomises retained possession of the market stalls even after the execution of his agreement with Johnny is also not an indication that the true
transaction between them was one of loan. Johnny had yet to complete his payment and, until Lomises decided to forego with their agreement, had
four more months to pay; until then, Lomises retained ownership and possession of the market stalls.17
Lomises cannot feign ignorance of the import of the terms of the receipt of September 8, 1984 by claiming that he was an illiterate old man. A witness
(Ana Comnad) testified not only of the fact of the sale, but also that Lomises’ daughter, Dolores, translated the terms of the agreement from English to
Ilocano for Lomises’ benefit;18 Lomises himself admitted this fact.19 If Lomises believed that the receipt of September 8, 1984 did not express the
parties’ true intent, he could have refused to sign it or subsequently requested for a reformation of its terms. Lomises rejected the agreement only after
Johnny sought to enforce it.
Hence, the CA was correct in characterizing the agreement between Johnny and Lomises as a sale of improvements and assignment of leasehold
rights.
The Validity of the Agreement
Both the RTC and the CA correctly declared that the assignment of the leasehold rights over the two market stalls was void since it was made without
the consent of the lessor, the Baguio City Government, as required under Article 1649 of the Civil Code. 20 Neither party appears to have contested this
ruling.
Lomises, however, objects to the CA ruling upholding the validity of the agreement insofar as it involved the sale of improvements on the stalls.
Lomises alleges that the sale of the improvements should similarly be voided because it was made without the consent of the Baguio City Government,
the owner of the improvements, pursuant to the May 1, 1985 lease contract. 21 Lomises further claims that the stalls themselves are the only
improvements on the property and a transfer of the stalls cannot be made without transferring the leasehold rights. Hence, both the assignment of
leasehold rights and the sale of improvements should be voided.
The CA has already rejected the evidentiary value of the May 1, 1985 lease contract between the Baguio City Government and Lomises, as it was not
formally offered in evidence before the RTC; in fact, the CA admonished Lomises’ lawyer, Atty. Lockey, for making it appear that it was part of the
records of the case. Under Section 34, Rule 132 of the Rules of Court, the court shall consider no evidence which has not been formally offered. "The
offer of evidence is necessary because it is the duty of the court to rest its findings of fact and its judgment only and strictly upon the evidence offered
by the parties. Unless and until admitted by the court in evidence for the purpose or purposes for which such document is offered, the same is merely a
scrap of paper barren of probative weight."22 Although the contract was referred to in Lomises’ answer to Johnny’s complaint23 and marked as Exhibit
"2" in his pre-trial brief,24 a copy of it was never attached. In fact, a copy of the May 1, 1985 lease contract "surfaced" only after Lomises filed a motion
for reconsideration of the CA decision. What was formally offered was the 1969 permit, which only stated that Lomises was permitted to occupy a stall
in the Baguio City market and nothing else.25 In other words, no evidence was presented and formally offered showing that any and all improvements in
the market stalls shall be owned by the Baguio City Government.
Likewise unsupported by evidence is Lomises’ claim that the stalls themselves were the only improvements. Hence, the CA found it proper to order the
remand of the case for the RTC to determine the value of the improvements on the market stalls existing as of September 8, 1984.26 We agree with the
CA’s order of remand. We note, however, that Lomises had already returned the ₱68,000.00 and receipt of the amount has been duly acknowledged
by Johnny’s mother, Domes. Johnny testified on October 6, 1986 that the money was still with his mother. 27 Thus, upon determination by the RTC of
the actual value of the improvements on the market stalls, the heirs of Johnny Suerte should pay the ascertained value of these improvements to
Lomises, who shall thereafter be required to execute the deed of sale over the improvements in favor of the heirs of Johnny.
WHEREFORE, under these premises, the Court hereby AFFIRMS the ruling of the Court of Appeals for the remand of the case to the Regional Trial
Court of Baguio City, Branch 7, for the determination of the value of the improvements on Stall Nos. 9 and 10 at the Refreshment Section of the Hangar
Market Compound, Baguio City as of September 8, 1984. After this determination, the Court ORDERS the heirs of Johnny M. Suerte to pay the amount
determined to the heirs of Lomises Aludos, who shall thereafter execute the deed of sale covering the improvements in favor of the heirs of Johnny M.
Suerte and deliver the deed to them. Costs against the petitioner.
SO ORDERED.
ARTURO D. BRION
G.R. No. 155483 April 27, 2007
HEIRS OF PEDRO PASAG, represented by EUFREMIO PASAG; HEIRS OF MARIA PASAG, represented by EPIFANIA LUMAGUI; HEIRS OF
JUANITA PASAG, represented by ASUNCION ORTIOLA; HEIRS OF ISIDRO PASAG, represented by VIRGINIA P. MENDOZA; HEIRS OF
BASILIO PASAG, represented by MILAGROSA P. NABOR; and HEIRS OF FORTUNATA PASAG, represented by FLORENTINA S.
MEMBRERE, Petitioners,
vs.
Sps. LORENZO and FLORENTINA PAROCHA, PRISCILLA P. ABELLERA, and MARIA VILORIA PASAG, Respondents.
DECISION
VELASCO, JR., J.:
The rule on formal offer of evidence is not a trivial matter. Failure to make a formal offer within a considerable period of time shall be deemed a waiver
to submit it. Consequently, as in this case, any evidence that has not been offered shall be excluded and rejected.
The Case
The present Petition for Review on Certiorari under Rule 45 seeks the annulment of the February 15, 2002 Decision 1 of the Court of Appeals (CA) in
CA-G.R. CV No. 68544, and its September 6, 2002 Resolution2 denying petitioners’ Motion for Reconsideration. In effect, petitioners entreat this Court
to nullify the February 24, 2000 Resolution of the Urdaneta City Regional Trial Court (RTC), Branch 45 in Civil Case No. U-5743, granting the demurrer
to evidence filed by respondents and dismissing their Complaint, which ruling was upheld by the CA.
The Facts
The instant case arose from a Complaint for Declaration of Nullity of Documents and Titles, Recovery of Possession and Ownership, Reconveyance,
Partition and Damages filed by petitioners at the Urdaneta City RTC of Pangasinan against respondents. Petitioners alleged a share over three (3)
properties owned by respondents, which formed part of the estate of petitioners’ deceased grandparents, Benito and Florentina Pasag. They averred
that Benito and Florentina Pasag died intestate, thus, leaving behind all their properties to their eight (8) children––Pedro, Isidro, Basilio, Severino,
Bonifacio, Maria, Juanita, and Fortunata. However, Severino, the predecessor of respondents, claimed in an affidavit of self-adjudication that he is the
sole, legal, and compulsory heir of Benito and Florentina Pasag. Consequently, he was able to appropriate to himself the properties covered by
Original Certificates of Title (OCT) Nos. 2983 and 1887. Thereafter, Severino executed a deed of absolute sale over the said properties in favor of his
daughter, respondent Florentina Parocha. Moreover, petitioners alleged that Severino used the same affidavit of self-adjudication to secure a free
patent over an agricultural land that had long been under the possession of Benito and Florentina Pasag.
In denying the material allegations in the Complaint, respondents averred in their Answer that the properties left behind by the spouses Benito and
Florentina Pasag had already been partitioned among their eight (8) surviving children. They claimed that the parcels of land covered by OCT Nos.
2983 and 1887 are Bonifacio’s share of which he later on renounced in a Quitclaim Deed in favor of his brother, Severino. As regards the parcel of land
covered by OCT No. P-20607, respondents asserted that the said land had been in Severino’s possession and occupation since 1940, thus, giving him
the right to apply for and be granted a free patent over it. Having complied with the requirements of law, Severino’s title had now become indefeasible.
The trial of the case commenced on March 19, 1996. On March 9, 1999, petitioners rested their case and were granted ten (10) days within which to
submit their formal offer of documentary exhibits. However, petitioners failed to submit the said pleading within the required period.
On April 19, 1999, petitioners asked the trial court to give them until May 11, 1999 to submit their offer of evidence; and it subsequently granted their
motion. However, on May 11, 1999, they again failed to submit their offer of evidence and moved for another extension of five (5) days.
Unfortunately, petitioners still failed to submit their formal offer of evidence within the extended period. Consequently, in its June 17, 1999 Order, 3 the
trial court deemed waived petitioners’ right to make their formal offer of evidence.
On July 27, 1999, petitioners moved for the admission of their offer of evidence. On September 1, 1999, however, the trial court issued an
Order4 denying petitioners’ formal offer of evidence for their "consistent failure"5 to submit it.
On October 28, 1999, respondents filed a Motion to Dismiss on Demurrer to Evidence.
On February 24, 2000, in its Resolution,6 the trial court granted respondents’ demurrer to evidence and ordered the dismissal of the Complaint.
Petitioners’ Motion for Reconsideration was denied for lack of merit.
Petitioners appealed the case to the CA.
The Ruling of the Court of Appeals
Affirming the ruling of the trial court, the CA held that petitioners failed to prove their claim by a preponderance of evidence. It observed that "no
concrete and substantial evidence was adduced by [petitioners]" 7 to substantiate their allegation that Severino, the predecessor of respondents,
fraudulently executed an affidavit of self-adjudication in order to exclude petitioners from the settlement of the estate of Benito and Florentina Pasag.
The Issues
Petitioners submit the following issues for our consideration:
I.
The Hon. Court of Appeals committed reversible error in affirming the Decision of the Court a quo despite the gross negligence of their counsel thus
depriving their rights to due process.
II.
The Court of Appeals committed reversible error in affirming the Decision of the trial court instead of remanding the case for further proceedings to
clearly establish their respective claims on the subject properties.8
Simply stated, the issues revolve on the propriety of the following: (1) waiver of petitioners’ offer of documentary evidence; and (2) dismissal of the
Complaint on a demurrer to evidence.
The petition has no merit.
Waiver of the Offer of Evidence
The Rules of Court provides that "the court shall consider no evidence which has not been formally offered." 9 A formal offer is necessary because
judges are mandated to rest their findings of facts and their judgment only and strictly upon the evidence offered by the parties at the trial. 10 Its function
is to enable the trial judge to know the purpose or purposes for which the proponent is presenting the evidence. 11 On the other hand, this allows
opposing parties to examine the evidence and object to its admissibility. Moreover, it facilitates review as the appellate court will not be required to
review documents not previously scrutinized by the trial court.12
Strict adherence to the said rule is not a trivial matter. The Court in Constantino v. Court of Appeals 13 ruled that the formal offer of one’s evidence is
deemed waived after failing to submit it within a considerable period of time. It explained that the court cannot admit an offer of evidence made after a
lapse of three (3) months because to do so would "condone an inexcusable laxity if not non-compliance with a court order which, in effect, would
encourage needless delays and derail the speedy administration of justice."14
Applying the aforementioned principle in this case, we find that the trial court had reasonable ground to consider that petitioners had waived their right
to make a formal offer of documentary or object evidence. Despite several extensions of time to make their formal offer, petitioners failed to comply
with their commitment and allowed almost five months to lapse before finally submitting it. Petitioners’ failure to comply with the rule on admissibility of
evidence is anathema to the efficient, effective, and expeditious dispensation of justice. Under the Rule on guidelines to be observed by trial court
judges and clerks of court in the conduct of pre-trial and case of deposition and discovery measures,15 it is provided that:
On the last hearing day allotted for each party, he is required to make his formal offer of evidence after the presentation of his last witness and the
opposing party is required to immediately interpose his objection thereto. Thereafter the judge shall make the ruling on the offer of evidence in open
court. However, the judge has the discretion to allow the offer of evidence in writing in conformity with Section 35, Rule 132[.]
On the other hand, Section 35 of Rule 132 of the Rules of Court provides that "documentary and object evidence shall be offered after the presentation
of a party’s testimonial evidence." It requires that "such offer shall be done orally unless allowed by the Court to be done in writing."
The pre-trial guidelines and Sec. 35 of Rule 132 jointly considered, it is made clear that the party who terminated the presentation of evidence must
make an oral offer of evidence on the very day the party presented the last witness. Otherwise, the court may consider the party’s documentary or
object evidence waived. While Sec. 35 of Rule 132 says that the trial court may allow the offer to be done in writing, this can only be tolerated in
extreme cases where the object evidence or documents are large in number––say from 100 and above, and only where there is unusual difficulty in
preparing the offer.
The party asking for such concession should however file a motion, pay the filing fee, set the date of the hearing not later than 10 days after the filing of
the motion,16 and serve it on the address of the party at least three (3) days before the hearing.17 In short, it is a litigated motion and cannot be done ex
parte. Counsels for parties should not however rely on the benevolence of the trial court as they are expected to have thoroughly and exhaustively
prepared for all possible pieces of evidence to be presented and the purposes for which they will be utilized. As a matter of fact, the draft of the offer of
evidence can already be prepared after the pre-trial order is issued, for, then, the counsel is already fully aware of the documentary or object evidence
which can be put to use during trial. Remember that under the pre-trial guidelines, the trial court is ordered to integrate in the pre-trial order the
following directive:
No evidence shall be allowed to be presented and offered during the trial in support of a party’s evidence-in-chief other than those that had been
identified below and pre-marked during the pre-trial. Any other evidence not indicated or listed below shall be considered waived by the parties.
However, the Court, in its discretion, may allow introduction of additional evidence in the following cases: (a) those to be used on cross-examination or
re-cross-examination for impeachment purposes; (b) those presented on re-direct examination to explain or supplement the answers of a witness
during the cross-examination; (c) those to be utilized for rebuttal or sur-rebuttal purposes; and (d) those not available during the pre-trial proceedings
despite due diligence on the part of the party offering the same.18
It is apparent from the foregoing provision that both parties should obtain, gather, collate, and list all their respective pieces of evidence–– whether
testimonial, documentary, or object––even prior to the preliminary conference before the clerk of court or at the latest before the scheduled pre-trial
conference. Otherwise, pieces of evidence not identified or marked during the pre-trial proceedings are deemed waived and rendered inutile. The
parties should strictly adhere to the principle of "laying one’s cards on the table." In the light of these issuances and in order to obviate interminable
delay in case processing, the parties and lawyers should closely conform to the requirement that the offer of evidence must be done orally on the day
scheduled for the presentation of the last witness.
Thus, the trial court is bound to consider only the testimonial evidence presented and exclude the documents not offered. Documents which may have
been identified and marked as exhibits during pre-trial or trial but which were not formally offered in evidence cannot in any manner be treated as
evidence. Neither can such unrecognized proof be assigned any evidentiary weight and value. It must be stressed that there is a significant distinction
between identification of documentary evidence and its formal offer. The former is done in the course of the pre-trial, and trial is accompanied by the
marking of the evidence as an exhibit; while the latter is done only when the party rests its case. 19 The mere fact that a particular document is identified
and marked as an exhibit does not mean that it has already been offered as part of the evidence.20 It must be emphasized that any evidence which a
party desires to submit for the consideration of the court must formally be offered by the party; otherwise, it is excluded and rejected.21
Dismissal of the Complaint on a Demurrer to Evidence
Having established that the documentary evidence of petitioners is inadmissible, this Court is now tasked to determine the propriety of the dismissal of
the Complaint on a demurrer to evidence.
A demurrer to evidence is an instrument for the expeditious termination of an action;22 thus, abbreviating judicial proceedings.23 It is defined as "an
objection or exception by one of the parties in an action at law, to the effect that the evidence which his adversary produced is insufficient in point of
law (whether true or not) to make out his case or sustain the issue." 24 The demurrer challenges the sufficiency of the plaintiff’s evidence to sustain a
verdict.25 In passing upon the sufficiency of the evidence raised in a demurrer, the court is merely required to ascertain whether there is competent or
sufficient proof to sustain the indictment or to support a verdict of guilt.26
In the present case, we have thoroughly reviewed the records and are convinced that petitioners have failed to sufficiently prove their allegations. It is a
basic rule in evidence that the burden of proof lies on the party who makes the allegations.27 However, petitioners did not substantiate their allegations
and merely argued that the Complaint should be "threshed out in a full blown trial in order to establish their respective positions on issues [which are] a
matter of judicial appreciation."28
Regardless of the bare argument of petitioners, however, we find that the trial and appellate courts were correct in dismissing the Complaint. The
allegation that Severino fraudulently excluded the other heirs of Benito and Florentina Pasag in the settlement of the latter’s estate was not supported
by concrete evidence. While petitioners maintain that the estate of Benito and Florentina was never partitioned among their heirs, the testimony of their
witness, Eufemio Pasag, proves otherwise. Significantly, during cross-examination, Eufemio admitted that the children of Benito and Florentina,
including the father of petitioners, had received properties as inheritance from the said spouses. He testified, thus:
Q Are you aware that there are eight (8) children of the spouses Benito and Faustina Pasag?
A Yes, sir.
Q And one of whom is Bonifacio Pasag?
A Yes, sir.
Q And one of whom is Severino Pasag?
A Yes, sir.
Q Are you likewise aware, Mr. Witness, that after the death of the spouses Benito and Faustina Pasag, there was no last will and testament?
A Yes, sir.
Q And of course, you are aware that there are properties left by the said spouses, is that right?
A Yes, sir.
Q And in fact, your father Pedro Pasag has already a title in his name of the properties left by the spouses to Pedro Pasag, is that right?
A Yes, sir.
Q And in fact, it is where your house was situated or erected among those properties that was given to your father, is that right?
A Yes, sir.
Q And of course you are aware that likewise Severino Pasag, after the death of the spouses Benito and Faustina Pasag, acquired some properties as
inheritance, is that right?
A Yes, sir.
xxxx
Q And you also agree with me that Isidro Pasag, Juanito Bustillo, Fortunata Savellano, Basilio Pasag, and Maria Lumague and the other brothers and
sisters of your father likewise received property of their own as a result of the death of your grandfather, is that right?
A Yes, sir.29
It must be stressed that fraud is not presumed; and it must be proved by clear and convincing evidence, 30 and not by mere conjectures or
speculations.31 No such evidence was presented in this case to sustain petitioners’ allegations.
WHEREFORE, we DENY the petition and AFFIRM the assailed February 15, 2002 Decision and September 6, 2002 Resolution of the CA, with costs
against petitioners.
SO ORDERED.
PRESBITERO J. VELASCO, JR.

Associate Justice
G.R. No. 105813 September 12, 1994
CONCEPCION M. CATUIRA, petitioner,
vs.
COURT OF APPEALS and PEOPLE OF THE PHILIPPINES, respondents.
Arnold V. Guerrero & Associates for petitioner.
BELLOSILLO, J.:
Is the testimony of a witness inadmissible in evidence if not formally offered at the time the witness is called to testify, as required in Sec. 35, in relation
to Sec. 34, Rule 132, of the Revised Rules on Evidence? 1
On 8 June 1990, two (2) Informations for estafa were filed against petitioner Concepcion M. Catuira with the Regional Trial Court of Calamba, Laguna,
for having issued two (2) checks in payment of her obligation to private complainant Maxima Ocampo when petitioner had no sufficient funds to cover
the same, which checks upon presentment for payment were dishonored by the drawee bank. 2
After the prosecution had presented its evidence, petitioner Concepcion M. Catuira filed a Motion to Dismiss (by way of Demurrer to Evidence) under
Sec. 15, Rule 119, of the 1985 Revised Rules on Criminal Procedure. 3 Petitioner contended that the testimony of private respondent Ocampo was
inadmissible in evidence since it was not properly introduced when she was called to testify as mandated in Sec. 35, Rule 132, of the Revised Rules on
Evidence. Petitioner also argued that even if the testimony of private respondent was considered, the evidence of the prosecution still failed to prove
that the checks were issued in payment of an obligation.
On 26 July 1991, the trial court denied the motion to dismiss for lack of merit. On 18 October 1991, it likewise denied the motion to reconsider its denial
of the motion to dismiss.
On 4 November 1991 petitioner elevated her case to the Court of Appeals through a petition for certiorari, prohibition and mandamus. In a similar
move, the appellate court rejected her petition and sustained the trial court in its denial of the motion to dismiss. Hence, this recourse seeking to annul
the decision of the Court of Appeals rendered on 27 February 1992 as well as its resolution of 1 June 1992. 4
Petitioner claims that the Court of Appeals erred when it accepted the testimony of private respondent despite the undisputed fact that it was not
offered at the time she was called to testify; her testimony should have been stricken off the record pursuant to Sec. 34, Rule 132, which prohibits the
court from considering evidence which has not been formally offered; and, it was error for respondent appellate court to declare that petitioner's
objection was not done at the proper time since under Sec. 36, Rule 132, 5 objection to evidence offered orally must be made immediately after the
offer is made. Evidently, petitioner could not have waived her right to object to the admissibility of the testimony of private respondent since the rule
requires that it must be done only at the time such testimony is presented and the records plainly show that the opportunity for petitioner to object only
came when the prosecution attempted, albeit belatedly, to offer the testimony after it has rested its case. 6
The petition is devoid of merit. The reason for requiring that evidence be formally introduced is to enable the court to rule intelligently upon the
objection to the questions which have been asked. 7 As a general rule, the proponent must show its relevancy, materiality and competency. Where the
proponent offers evidence deemed by counsel of the adverse party to be inadmissible for any reason, the latter has the right to object. But such right is
a mere privilege which can be waived. Necessarily, the objection must be made at the earliest opportunity, lest silence when there is opportunity to
speak may operate as a waiver of objections. 8
Thus, while it is true that the prosecution failed to offer the questioned testimony when private respondent was called to the witness stand, petitioner
waived this procedural error by failing to object at the appropriate time, i.e., when the ground for objection became reasonably apparent the moment
private respondent was called to testify without any prior offer having been made by the proponent. Most apt is the observation of the appellate court:
While it is true that the prosecution failed to offer in evidence the testimony of the complaining witness upon calling her to testify
and that it was only after her testimony and after the petitioner moved that it be stricken that the offer was made, the respondent
Court did not gravely err in not dismissing the case against the petitioner on the ground invoked. For, she should have objected
to the testimony of the complaining witness when it was not first offered upon calling her and should not have waited in ambush
after she had already finished testifying. By so doing she did not save the time of the Court in hearing the testimony of the
witness that after all according to her was inadmissible. And for her failure to make known her objection at the proper time, the
procedural error or defect was
waived. 9
Indeed, the rationale behind Sec. 34, Rule 132, is manifest in the minutes of the Revision of Rules Committee. 10 Thus —
The new rule would require the testimony of a witness to offer it at the time the witness is called to testify. This is the best time
to offer the testimony so that the court's time will not be wasted. Since it can right away rule on whether the testimony is not
necessary because it is irrelevant or immaterial.
If petitioner was genuinely concerned with the ends of justice being served, her actuations should have been otherwise. Instead, she attempted to
capitalize on a mere technicality to have the estafa case against her dismissed. 11 But even assuming that petitioner's objection was timely, it was at
best pointless and superfluous. For there is no debating the fact that the testimony of complaining witness is relevant and material in the criminal
prosecution of petitioner for estafa. It is inconceivable that a situation could exist wherein an offended party's testimony is immaterial in a criminal
proceeding. Consequently, even if the offer was belatedly made by the prosecution, there is no reason for the testimony to be expunged from the
record. On the contrary, the unoffered oral evidence must be admitted if only to satisfy the court's sense of justice and fairness and to stress that
substantial justice may not be denied merely on the ground of technicality. 12
WHEREFORE, the decision of the Court of Appeals sustaining the order of the Regional Trial Court of Calamba, Laguna, Br. 35, denying petitioner's
motion to dismiss (by way of demurrer to evidence) is AFFIRMED. Costs against petitioner.
SO ORDERE

Fede Rem

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G.R. No.

170598 October 9, 2013

FAR EAST BANK TRUST COMPANY, Petitioner,

Ruling of the RTC

Articles 19, 21, 22 and 23 of the Civil Code x x x.

3. the amount of ₱100,000.00 as exemplary damages;

4. the sum of ₱30,000.00 as and for attorney’s fees; and

Chan appealed,7 assigning the following errors to the RTC, to wit:

BSP CIRCULAR LETTER

SUBJECT : Technology Fraud on ATM Systems

These acts are carried out by:

1. A specialized scanner attached to the ATM card slot, and;

The appeal lacks merit.

We disagree with FEBTC.

Did FEBTC discharge its burden of proof?

The CA ruled that FEBTC did not because –

In our view, the CA’s ruling was correct.

G.R. No. 209917

G.R. No. 209696

TAKENAKA CORPORATION AND ASAHIKOSAN CORPORATION, Petitioners,

G.R. No. 209731

PHILIPPINE INTERNATIONAL AIR TERMINALS CO., INC. Petitioner,

I. The Factual Antecedents

A. The NAIA-IPT IIII Contract and PIATCO

1. The NAIA-IPT III Contract

3. PIATCO and the Services of Takenaka and Asahikosan

B. The Agan v. PIATCO Case, G.R. No. 155001

1. The Case and the Decision dated May 5, 2003

C. The Expropriation Case, Civil Case No. 04-0876

D. The Republic v. Gingoyon Case, G.R. No. 166429

1. The Case and the Decision dated December 19, 2005

1. The Appointment of DG Jones and Partners as an Independent Appraiser

2. The BOC's Expenses

F. The Parties and the BOC's Appraisal of the NAIA-IPT III

1. The Government's Appraisal

3. Takenaka and Asahikosan's Appraisal

4. The BOC's Appraisal

II. The RTC Rulings in Civil Case No. 04-0876

A. The Main Decision

B. The RTC's Interlocutory Order on the Validity of the Escrow Account

2. The Omnibus Order dated October 11, 2011

III. The CA Rulings

A. CA-G.R. CV No. 98029

B. CA-G.R. SP. No. 123221

V. The Parties' Positions

A. The Government's Position

C. Takenaka and Asahikosan's Position

VI. The Issues

VII. The Court's Rulings

A. G.R. Nos. 209917, 209696, and 209731

2. Framework: Eminent domain is an inherent power of the State

3. Construction cost of the NAIA-IPT III

3.a. The base valuation of the NAIA-IPT III

3.c. The unnecessary areas

4. Attendant cost of the NAIA-IPT III

4.a. PIATCO's attendant cost

4.b. The BOC and the RTC's attendant cost

4.c. The Government's attendant cost

5. Deductions to the Replacement Cost of the NAIA-IPT III

5.a. Depreciation should be deducted from the replacement cost

6. Adjustments to the Replacement Cost

6.a. The replacement cost should be adjusted to December 2004 values