Categories
2020 January

REPUBLIC OF THE PHILIPPINES, PETITIONER, V. REMAR A. QUIÑONEZ, RESPONDENT.

FIRST DIVISION
[ G.R. No. 237412, January 06, 2020 ]

REPUBLIC OF THE PHILIPPINES, PETITIONER, V. REMAR A. QUIÑONEZ, RESPONDENT.

D E C I S I O N

CAGUIOA, J:

The Case

This is a Petition for Review on Certiorari1 filed under Rule 45 of the Rules of Court against the Decision[2] dated June 29, 2017 (assailed Decision) and Resolution[3] dated January 31, 2018 (assailed Resolution) in CA-G.R. SP No. 07581-MIN rendered by the Court of Appeals4.

The assailed Decision and Resolution upheld the Judgment[5] dated April 11, 2016 issued by the Regional Trial Court of Surigao City, Branch 32 (RTC) in Special Proceedings No. 7669, which, in turn, declared Lovelyn Uriarte Quiñonez (Lovelyn) presumptively dead under Article 41 of the Family Code.

The Facts

The facts, as narrated by theCA, are as follows:

[Petitioner Remar A. Quinonez (Remar)] and his wife Lovelyn met in [Gamaon[6]], Mangagoy, Bislig City when Remar was in college [and] staying at his aunt’s house. After eight months [of being] in a relationship, they got married on August 16, 1997 at the Saint Vincent de Paul Parish in Mangagoy, Bislig City[. The wedding was] officiated by Rev. Fr. Ivan Novo, as shown in their Marriage Certificate.

After their wedding, the couple stayed at the house of Lovelyn’s parents and they begot two (2) children [namely], Emar A. Quiñonez born on January 20, 1998 and Diana Love Quiñonez born on December 15, 1999.

To support his family, Remar started working as a security guard at the National Food Authority Warehouse in October 1997, although later on, he transferred to Cebu City for an opportunity to earn a bigger salary.

Sometime in 2001, when Lovelyn’s father received his retirement pay, Lovelyn asked her husband’s permission to go on a three-month vacation in Manila to visit some relatives. Despite Remar’s reluctance, he agreed to his wife’s request.

During the first three months[,] Lovelyn constantly communicated with Remar through cell phone. It was also at this time that Remar resigned from his work in Cebu City and transferred to Surigao City, where he worked as a security guard at the Surigao City Hall of Justice.

Remar informed Lovelyn that as soon as she arrive[d] from Manila, they would x x x be living together in Surigao City [with] their two children. Thereafter, the calls and text messages tapered off until the communication between the spouses ceased altogether.

At first, Remar thought that his wife just lost her cellphone, so he inquired about her from their relatives in Bislig City. Someone informed him that his wife was then already cohabiting with another man and would no longer be coming back out of shame.

On November 2003, Remar’s uncle informed him that Lovelyn was in Bislig City to visit their children. Remar filed for an emergency leave of absence from his work and left for Bislig City only to be told that his wife had already left for Lingig, Surigao del Sur. He went after her in Lingig, yet upon arrival, he was told that Lovelyn stayed only for a day and returned to Bislig. He was then constrained to go back to Surigao City, without seeing his wife.

In the summer of 2004, Remar filed for a leave from work to look for his wife in Manila. [Remar also] went to Batangas along with his aunt, Evelyn Pachico[,] as well as to Cavite with Lovelyn’s aunt, Leonora Aguilar, yet they were not able to find her.

On February 27, 2013, after almost ten (10) years of trying to know about the whereabouts of his wife from their relatives proved futile, x x x [Remar filed a] Petition for Declaration of Presumptive Death before the RTC. x x x[7] (Emphasis supplied)

RTC Proceedings

After compliance with the jurisdictional requirements of publication and posting, and with no objection having been filed, the RTC issued a Judgment (RTC Judgment) in Remar’s favor. The dispositive portion of said Judgment reads:

WHEREFORE, judgment is hereby rendered declaring that absentee spouse[, Lovelyn,] is presumptively dead pursuant to Article 41 of the Family Code of the Philippines without prejudice to the effect of the reappearance of the said absentee spouse.

SO ORDERED.[8]

According to the RTC, Remar was able to show that he had exerted diligent efforts to locate his wife, considering that he spent his meager resources to look for her in Surigao del Sur, Metro Manila, Batangas and Cavite — places where he was told his wife had been seen.[9] In addition, Remar consistently communicated with Lovelyn’s relatives in Bislig City to ascertain whether they had any information regarding the latter’s whereabouts. In sum, the RTC found Remar’s efforts sufficient for purposes of declaring Lovelyn presumptively dead.[10]

The RTC Judgment, being rendered in summary proceedings, became immediately final and executory in accordance with Article 247, in relation to Article 238 of the Family Code.[11]

CA Proceedings

Subsequently, the Republic of the Philippines12 filed a Petition for Certiorari[13] before the CA seeking to annul the RTC Judgment for having been issued with grave abuse of discretion amounting to lack or excess of jurisdiction. Therein, the Republic argued that Remar failed to establish that he “exerted proper and honest to goodness inquiries and efforts to ascertain Lovelyn’s whereabouts and whether or not she is still alive.”[14]

Citing Republic v. Cantor15, the Republic characterized Remar’s search as passive in nature.[16] In particular, the Republic averred that while Remar claimed to have looked for Lovelyn in several places, he failed to explain the nature and extent of his efforts and inquiries. As well, the Republic claimed that Remar failed to present proof that Lovelyn’s relatives and friends had no information regarding her whereabouts. Too, the Republic questioned Remar’s failure to report Lovelyn’s disappearance to the authorities.[17]

The Republic also prayed for the issuance of a Temporary Restraining Order and Writ of Preliminary Injunction to restrain the execution of the RTC Judgment.[18]

The CA resolved to deny the Petition for Certiorari through the assailed Decision, the dispositive portion of which reads:

ALL TOLD, the [P]etition for Certiorari is DENIED. The [RTC Judgment] in Special Proceedings No. 7669 for Declaration of Presumptive Death under Article 41 of the Family Code of Lovelyn Uriarte Quiñonez is hereby AFFIRMED.

SO ORDERED.[19]

Foremost, the CA held that while the Republic resorted to the correct remedy of certiorari under Rule 65, its Petition for Certiorari warranted outright dismissal for failure to tile a prior motion for reconsideration before the RTC — a prerequisite to the filing of a petition for certiorari with the CA.[20]

In any case, the CA ruled that the Petition for Certiorari fails even on the merits, since the RTC Judgment is sufficiently supported by the evidence on record.[21] The CA observed that what the Republic puts in issue is the RTC’s appreciation of the facts and evidence which are not the proper subjects of certiorari under Rule 65.[22]

The Republic filed a motion for reconsideration which the CA also denied through the assailed Resolution.[23]

The Republic received a copy of the assailed Resolution on February 20, 2018.[24]

On March 2, 2018, the Republic filed a Motion for Extension,[25] praying for an additional period of thirty (30) days from March 7, 2018, or until April 6, 2018, to file a petition for review on certiorari.

This Petition was filed on April 5, 2018.

In compliance with the Court’s June 27, 2018 Resolution,[26] Remar filed his Comment[27] to the Petition on September 14, 2018.

The Republic filed its Reply[28] on April 5, 2019. Thereafter, the case was deemed submitted for resolution.

Here, the Republic insists that Remar’s efforts in locating his wife Lovelyn were insufficient to give rise to a “well-founded belief’ that she is dead. On this basis, the Republic maintains that Remar’s petition to declare Lovelyn presumptively dead should have been dismissed.

The issue

The sole issue for the Court’s resolution is whether the CA erred when it found sufficient legal basis to uphold the declaration of Lovelyn’s presumptive death.

The Court’s Ruling

The Petition is granted.

The Petition raises a pure question of law

Before delving into the singular substantive issue, the Court first resolves the procedural issues.

The CA held that the Republic’s Petition for Certiorari was procedurally infirm for two reasons — first, the Petition for Certiorari was filed with the CA without a prior motion for reconsideration; and second, said petition raised questions of fact and evidence which are not cognizable under a Rule 65 petition.

The Court disagrees.

A petition for certiorari under Rule 65 “is a special civil action that may be resorted to only in the absence of appeal or any plain, speedy, and adequate remedy in the ordinary course of law.”[29]

As a general rule, a motion for reconsideration must first be filed with the lower court before the extraordinary remedy of certiorari is resorted to, since a motion for reconsideration is considered a plain, speedy and adequate remedy in the ordinary course of law. Nevertheless, this general rule admits of well-established exceptions, one of which is when the Issue raised is a pure question of law.[30]

There is a question of law in a given case when the doubt or difference arises as to what the law is on a certain state of facts, and there is a question of fact when the doubt or difference arises as to the truth or the falsehood of alleged facts.[31]

Here, the Republic does not dispute the truthfulness of Remar’s allegations, particularly, the specific acts he claims to have done to locate Lovelyn. What the Republic does question is the sufficiency of these acts, that is, whether they are sufficient to merit a legal declaration of Lovelyn’s presumptive death.

Clearly, the Republic’s Petition for Certiorari raised a pure legal question. Hence, direct resort to the CA via Rule 65, without filing with the RTC a prior motion for reconsideration, was proper.

The requisites for declaration of presumptive death under the Family Code
Article 41 of the Family Code provides the requirements for a declaration of presumptive death, thus:

ART. 41. A marriage contracted by any person during the subsistence of a previous marriage shall be null and void, unless before the celebration of the subsequent marriage, the prior spouse had been absent for four consecutive years and the spouse present had a well-founded belief that the absent spouse was already dead. In case of disappearance where there is danger of death under the circumstances set forth in the provisions of Article 391 of the Civil Code, an absence of only two years shall be sufficient.

For the purpose of contracting the subsequent marriage under the preceding paragraph, the spouse present must institute a summary proceeding as provided in this Code for the declaration of presumptive death of the absentee, without prejudice to the effect of reappearance of the absent spouse. (Emphasis supplied)

Culled from this provision, the essential requisites for a declaration of presumptive death for the purpose of remarriage are:

  1. That the absent spouse has been missing for four consecutive years, or two consecutive years if the disappearance occurred where there is danger of death under the circumstances laid down in Article 391, Civil Code;
  2. That the present spouse wishes to remarry;
  3. That the present spouse has a well-founded belief that the absentee is dead; and
  4. That the present spouse files a summary proceeding for the declaration of presumptive death of the absentee.[32] (Emphasis in the original)

The Petition is anchored on Remar’s alleged failure to prove compliance with the third requisite. Thus, a closer examination of this requirement is necessary.

In Cantor, the Court en banc clarified the meaning of well-founded belief by comparing the language of Article 41 to its Civil Code counterpart. The Court held:

Notably, Article 41 of the Family Code, compared to the old provision of the Civil Code which it superseded, imposes a stricter standard. It requires a “well-founded belief’ that the absentee is already dead before a petition for declaration of presumptive death can be granted. We have had occasion to make the same observation in Republic v. Nolasco, where we noted the crucial differences between Article 41 of the Family Code and Article 83 of the Civil Code, to wit:

Under Article 41, the time required for the presumption to arise has been shortened to four (4) years; however, there is need for a judicial declaration of presumptive death to enable the spouse present to remarry. Also, Article 41 of the Family Code imposes a stricter standard than the Civil Code: Article 83 of the Civil Code merely requires either that there be no news that such absentee is still alive; or the absentee is generally considered to be dead and believed to be so by the spouse present, or is presumed dead under Articles 390 and 391 of the Civil Code. The Family Code, upon the other hand, prescribes as “well founded belief” that the absentee is already dead before a petition for declaration of presumptive death can be granted.

Thus, mere absence of the spouse (even for such period required by the law), lack of any news that such absentee is still alive, failure to communicate or general presumption of absence under the Civil Code would not suffice. This conclusion proceeds from the premise that Article 41 of the Family Code places upon the present spouse the burden of proving the additional and more stringent requirement of “well-founded belief” which can only be discharged upon a showing of proper and honest-to-goodness inquiries and efforts to ascertain not only the absent spouse’s whereabouts but, more importantly, that the absent spouse is still alive or is already dead.

The Requirement of Well-Founded Belief

The law did not define what is meant by ‘”well-founded belief.” It depends upon the circumstances of each particular case. Its determination, so to speak, remains on a case-to-case basis. To be able to comply with this requirement, the present spouse must prove that his/her belief was the result of diligent and reasonable efforts and inquiries to locate the absent spouse and that based on these efforts and inquiries, he/she believes that under the circumstances, the absent spouse is already dead. It requires exertion of active effort (not a mere passive one).[33] (Emphasis and underscoring supplied; emphasis and italics in the original omitted)

Based on these parameters, the Court held that the efforts exerted by respondent therein fell short of the degree of diligence required by law and jurisprudence:

In the case at bar, the respondent’s “well-founded belief” was anchored on her alleged “earnest efforts” to locate [her husband,] Jerry, which consisted of the following:

(1) She made inquiries about Jerry’s whereabouts from her in­ laws, neighbors and friends; and

(2) Whenever she went to a hospital, she saw to it that she looked through the patients’ directory, hoping to find Jerry.

These efforts, however, fell short of the “stringent standard” and degree of diligence required by jurisprudence for the following reasons:

First, the respondent did not actively look for her missing husband. It can be inferred from the records that her hospital visits and her consequent checking of the patients’ directory therein were unintentional. She did not purposely undertake a diligent search for her husband as her hospital visits were not planned nor primarily directed to look for him. This Court thus considers these attempts insufficient to engender a belief that her husband is dead.

Second, she did not report Jerry’s absence to the police nor did she seek the aid of the authorities to look for him. While a finding of well-founded belief varies with the nature of the situation in which the present spouse is placed, under present conditions, we find it proper and prudent for a present spouse, whose spouse had been missing, to seek the aid of the authorities or, at the very least, report his/her absence to the police.

Third, she did not present as witnesses Jerry’s relatives or their neighbors and friends, who can corroborate her efforts to locate Jerry. Worse, these persons, from whom she allegedly made inquiries, were not even named. As held in Nolasco, the present spouse’s bare assertion that he inquired from his friends about his absent spouse’s whereabouts is insufficient as the names of the friends from whom he made inquiries were not identified in the testimony nor presented as witnesses.

Lastly, there was no other corroborative evidence to support the respondent’s claim that she conducted a diligent search. Neither was there supporting evidence proving that she had a well-founded belief other than her bare claims that she inquired from her friends and in-laws about her husband’s whereabouts.

In sum, the Court is of the view that the respondent merely engaged in a “passive search” where she relied on uncorroborated inquiries from her in-laws, neighbors and friends. She failed to conduct a diligent search because her alleged efforts are insufficient to form a well-founded belief that her husband was already dead. As held in Republic of the Philippines v. Court of Appeals (Tenth Div.), “[w]hether or not the spouse present acted on a well-founded belief of death of the absent spouse depends upon the inquiries to be drawn from a great many circumstances occurring before and after the disappearance of the absent spouse and the nature and extent of the inquiries made by [the] present spouse.”[34] (Emphasis and underscoring supplied; emphasis in the original omitted)

Citing Cantor, the Republic asserts that the standard of “well-founded belief’ is exacting; it presupposes that the present spouse had exerted diligent and reasonable efforts to locate the absent spouse.[35] According to the Republic, Remar’s efforts fall short of this requirement.[36]

The Court agrees.

To recall, Remar’s efforts to locate Lovelyn are marked by the following acts:

Remar travelled to several places where his wife had been reportedly seen particularly, Bislig City and the Municipality of Lingig in the province of Surigao del Sur, Metro Manila, Batangas and Cavite; and

Remar constantly communicated with Lovelyn’s relatives for a period of ten (10) years in order to ascertain Lovelyn’s whereabouts.

Unfortunately, Remar failed to allege, much less prove, the extent of the search he had conducted in the places where he claims to have gone. This leaves the Court with no way to ascertain the extent of Remar’s search.

Remar also failed to identify which of Lovelyn’s relatives he had communicated with, and disclose what he learned from these communications. Again, this leaves the Court with no basis to determine whether the information Remar learned is sufficient to engender a well-founded belief that Lovelyn is dead.

Moreover, much like the respondent in Cantor, Remar never sought the help of the authorities to locate Lovelyn in the course of her ten (10)­year disappearance. Remar was given ample opportunity to explain his failure to report Lovelyn ‘s disappearance, considering that the Republic first noted such failure when it filed its Petition for Certiorari with the CA. Curiously, however, Remar chose not to address the matter.

Finally, the allegations in Remar’s Petition for Declaration of Presumptive Death[37] suggest that he is aware of the true cause of Lovelyn ‘s disappearance, thus:

In the first three (3) months that his wife was in Manila[,] [there] was x x x constant communication through cellphone calls and [texts]. [Remar] relayed to [Lovelyn] that he is x x x working in Surigao City as a security guard in the Hall of Justice. x x x

Then the calls and [texts] got fewer and fewer until [they] stopped. He thought that the cell phone of his wife was just lost so he started inquiries from his and her relatives in [Bislig] City. One confess[ed] that his wife is now [cohabiting] with another man and will not be going home because of shame. He could not believe and refuse[d) to believe the devastating news.[38]

The Court commiserates with Remar’s plight. Nevertheless, the Court cannot uphold the issuance of a declaration of presumptive death for the purpose of remarriage where there appears to be no well-founded belief of the absentee spouse’s death, but only the likelihood that the absentee spouse does not want to be found.

WHEREFORE, premises considered, the Petition is GRANTED. The Decision and Resolution respectively dated June 29, 2017 and January 31, 2018 rendered by the Court of Appeals in CA-G.R. SP No. 07581-MIN are REVERSED and SET ASIDE.

Necessarily, the Judgment dated April 11, 2016 issued by the Regional Trial Court of Surigao City, Branch 32, in Special Proceedings No. 7669 is also REVERSED and SET ASIDE. Consequently, the petition of respondent Remar A. Quinonez to have his wife, Lovelyn Uriarte Quiñonez declared presumptively dead for the purpose of remarriage is DENIED.

SO ORDERED.

Peralta, C.J., (Chairperson), J. Reyes, Jr., and Lazaro-Javier, JJ., concur.
Lopez, J., on official leave.

[1] Rollo, pp. 51-70.
[2] Id. at 71-78. Penned by Associate Justice Oscar V. Badelles, with the concurrence of Associate Justices Romulo V. Borja and Perpetua T. Atal-Paño.
[3] Id. at 79-81.
[4] Twenty-First Division and Former Twenty-First Division, respectively
[5] CA rollo, pp. 14-17. Penned by Acting Presiding Judge Dan R. Calderon.
[6] Also appears as “Garmaon” and “Ganaon” in some parts of the records.
[7] Rollo, pp. 72-73.
[8] CA rollo, p. 17.
[9] Id. at 16.
[10] See id. at 16-17.
[11] In reference to summary judicial proceedings under the Family Code, Articles 238 and 247 state:
ART. 238. Until modified by the Supreme Court, the procedural rules in this Title shall apply in all cases provided for in this Code requiring summary court proceedings. Such cases shall be decided in an expeditious manner without regard to technical rules.
x x x x
ART. 247. The judgment of the court shall be immediately final and executory.
[12] Through the Office of the Solicitor General.
[13] Rollo, pp. 93-103.
[14] Id. at 96.
[15] 723 Phil. 114 (2013).
[16] Rollo, p. 98.
[17] Id. at 97.
[18] See id. at 100-101.
[19] Id. at 77.
[20] Id. at 74.
[21] Id. at 75.
[22] Id. at 76.
[23] Id. at 79-81.
[24] Id. at 52.
[25] Id. at 3-8.
[26] Id. at 150-151.
[27] Id. at 165-172.
[28] Id. at 181-189.
[29] Genpact Services, Inc. v. Santos-Falceso, 814 Phil. 1091, 1099 (2017).
[30] Id. at 1099-1100.
[31] See generally Parañaque Kings Enterprises. Inc. v. Court of Appeals, 335 Phil. 1184, 1195 (1997).
[32] Republic v. Cantor, supra note 15, at 127-128.
[33] Id. at 128-129.
[34] Id. at 132-133.
[35] See rollo, p. 56.
[36] Id. at 60.
[37] Denominated as “In the Matter for the Declaration of Presumptive Death of Lovelyn Uriarte Quiñonez for Purposes of Remarriage Under Article 41 of the Family Code of the Philippines,” rollo, pp. 82-85.
[38] Rollo, p. 109.

Categories
2020 January

IMELDA SZE, SZE KOU FOR, & TERESITA NG, PETITIONERS, VS. BUREAU OF INTERNAL REVENUE, REPRESENTED BY THE COMMISSIONER OF INTERNAL REVENUE, RESPONDENTS.

FIRST DIVISION
[ G.R. No. 210238, January 06, 2020 ]

IMELDA SZE, SZE KOU FOR, & TERESITA NG, PETITIONERS, VS. BUREAU OF INTERNAL REVENUE, REPRESENTED BY THE COMMISSIONER OF INTERNAL REVENUE, RESPONDENTS.

DECISION

REYES, J. JR., J.:

The Facts

The respondent Bureau of Internal Revenue (BIR) issued Revenue Regulation 8-2001 or the Voluntary Assessment Program (VAP), granting tax payers the privilege of last priority in the audit and investigation of all internal revenue taxes for the taxable year December 31, 2000, and all prior years under certain conditions. Chiat Sing Cardboard Corporation (Chiat Corp.) availed of the VAP and was issued a certificate of qualification for 1999 and 2000. The BIR clarified that availment of the VAP should not be construed to cover up any fraud or illegal acts that the taxpayer may commit as it is a mere privilege.[1]

On March 25, 2003, the BIR issued a Letter of Authority (LOA) for the examination of accounting books and records of Chiat Corp. for all internal revenue taxes for 1999 and 2000. Chiat Corp.’s Master Payroll, Beth Tugade (Tugade) received the LOA, but the required documents were not presented. On May 5, 2003, Tugade received the BIR’s second notice and final notice, and still the records were not presented.[2]

Due to Chiat Corp’s. refusal to present its accounting records, the BIR conducted an investigation and discovered that Chiat Corp.: (1) underdeclared its sales amounting to P160,588,321.63 and P113,578,182.69; (2) underdeclared its income amounting to P10,663,130.96 and P5,678,909.13 for 1999 and 2000, respectively; (3) derived income from undeclared importation of raw materials; (4) the underdeclared sales and income should have been subjected to VAT and income tax; (5) deliberately and wilfully misdeclared its taxable base to evade payment of correct internal revenue liabilities; (6) failed to withhold taxes on labor cost it claimed amounting to P427,010,000.00; (7) failed to rectify its income, value-added and withholding tax returns, which should reflect the actual and correct taxable base; and (8) understated the payment of its correct tax liabilities by more than 30%.[3]

Thereafter, the BIR issued a Notice of Informal Conference (NIC), Preliminary Assessment Notice (PAN), Formal Letter of Demand (FLD), and Final Assessment Notice (FAN). Despite these notices, Chiat Corp. failed to interpose any protest; thus, the BIR’s assessment for deficiency taxes for 1999 and 2000 amounting to P33,847,574.18 became final, executory and demandable.[4]

On May 19, 2005, the BIR charged the officers of Chiat Corp., petitioners Imelda T. Sze (Sze), Sze Kou For (For), and Teresita A. Ng (Ng), with tax evasion and/or tax fraud for violation of Sections 27(A), 31, 32, 56(A)(l), 79(A)(B), 80(A), 81, 106, ll4(A)(B), in relation to Sections 251, 253(d), 254, 255, and 256 of the National Internal Revenue Code of 1997 (NIRC).[5]

Petitioners Sze, For, and Ng denied the accusations against them and claimed, among other allegations, that: (1) there was no factual and legal basis for the charges; (2) the filing was premature and violated their rights to due process; (3) they did not receive the notices; (4) they were not responsible for any underdeclaration, misdeclaration or importation; (5) they were not responsible for the preparation and filing of tax returns; (6) Chiat Corp. has no assets to satisfy the assessed taxes; (7) Chiat Corp. notified the BIR of the termination of business as of December 2004; and (8) the BIR presumed that Chiat Corp. manufactured the raw materials into final products and sold them.[6]

The State Prosecutor dismissed the complaint on July 12, 2006. The BIR moved for reconsideration, which was denied on November 29, 2006. The BIR filed a petition for review before the Department of Justice (DOJ), which denied the same in a resolution dated April 27, 2007. The DOJ also denied the BIR’s motion for reconsideration on June 17, 2010. The BIR elevated the case before the Court of Appeals (CA) through a petition for certiorari.[7]

The CA Decision

In its May 31, 2012 Decision,[8] the CA gave due course to the petition after finding that the records showed sufficient evidence of probable cause for tax evasion and violation of the NIRC. Chiat Corp. failed to present countervailing evidence to refute the documents and other importation records from different government agencies.[9]

The CA held that the DOJ abused its discretion when it failed to consider various documents from the Department of Trade and Industry’s Bureau of Import Services, the BIR’s Audit Information Tax Exemption Incentive Division, and the Bureau of Custom’s Management Information System Technology Group.[10]

The CA observed that Chiat Corp. filed an application for retirement of business after applying for YAP. the CA found this move as suspicious, if not an indication of bad faith.[11]

The CA resolved that probable cause was sufficiently established, and ordered the DOJ to file the corresponding Information with the proper court.[12]

Chiat Corp. moved for reconsideration, which the CA denied in its November 26, 2013 Resolution.[13] Undeterred, petitioners Sze, For, and Ng filed this petition for review on certiorari before the Court.

The Issue Presented

Whether or not the CA erred in finding probable cause for violation of the NIRC.

The Court’s Ruling

While this petition is pending, the petitioners manifested to the Court that pursuant to the May 31, 2012 CA Decision, an Amended Information in Criminal Case Nos. 0-385 to 0-392 were filed against them in the Court of Tax Appeals (CTA). They moved to quash the Amended Information due to prescription and double jeopardy. On July 8, 2015, the CTA issued a resolution dismissing all the cases on the ground of prescription. The CTA resolution became final and executory, and an entry of judgment was later issued. The petitioners aver that with this development, the issues in their petition have become moot and academic.[14]

The BIR confirmed in its Manifestation and Comment, that the DOJ complied with the CA’s decision and filed criminal Information against Sze, For, and Ng. On July 8, 2015, the CTA promulgated a resolution dismissing Criminal Case Nos. O-385 to O-392 due to prescription.[15]

In its Reply, the petitioners reiterated that the propriety of the CA’s decision in finding probable cause was rendered moot and academic by the CTA decision dismissing the Amended Information against them.[16]

Section 281 of the Tax Reform Act of 1997[17] states that the prescriptive period for violation of the law is five years.

SEC. 281. Prescription for Violations of any Provision of this Code. – All violations of any provision of this Code shall prescribe after five (5) years.

Prescription shall begin to run from the day of the commission of the violation of the law, and if the same be not known at the time, from the discovery thereof and the institution of judicial proceedings for its investigation and punishment.

The prescription shall be interrupted when proceedings are instituted against the guilty persons and shall begin to run again if the proceedings are dismissed for reasons not constituting jeopardy.

x x x x

The CTA explained that Revenue Memorandum Circular 101-90 provides that an offense under the tax code is considered discovered only after the manner of commission and the nature and extent of fraud has been definitely ascertained. This occurs when the BIR renders its final decision and requires the taxpayer to pay the deficiency tax.[18]

The CTA determined that the FLD and the FAN for taxable years 1999 and 2000 were served on Chiat Corp. on February 7, 2005. Chiat Corp. did not file a protest, resulting in the finality, demandability, and executory nature of the assessment for deficiency taxes. Counting 30 days from the service of the FLD and the FAN, the violations were considered discovered on March 9, 2005. The BIR’s revenue officers filed their joint affidavit in the DOJ for preliminary investigation on May 26, 2005. However, the original Information was only filed in court on April 23, 2014, which exceeded the five-year prescriptive period. Therefore, the action had prescribed.[19]

The Court observed that the Public Prosecutor did not appeal or move for reconsideration of the CTA’s decision; thus rendering it final and executory.

The Court dismisses the petition for being moot and academic.

In Peñafrancia Sugar Mill, Inc. v. Sugar Regulatory Administration,[20] the Court defined moot and academic as:

A case or issue is considered moot and academic when it ceases to present a justiciable controversy by virtue of supervening events, so that an adjudication of the case or a declaration on the issue would be of no practical value or use. In such instance, there is no actual substantial relief which a petitioner would be entitled to, and which would be negated by the dismissal of the petition. Courts generally decline jurisdiction over such case or dismiss it on the ground of mootness. This is because the judgment will not serve any useful purpose or have any practical legal effect because, in the nature of things, it cannot be enforced. (Citation omitted)

Here, the dismissal of the criminal cases on the ground of prescription rendered the issue on the propriety of the CA’s decision in finding probable cause as moot and academic. Thus, the Court finds it appropriate to abstain from passing upon the merits of this petition where legal relief is neither needed nor called for.

WHEREFORE, the petition is DISMISSED for being moot and academic.

SO ORDERED.

Peralta, C. J., (Chairperson), Caguioa, and Lazaro-Javier, JJ., concur.
Lopez, J., on official leave.

[1] Rollo, pp. 26-27.
[2] Id. at 27-28.
[3] Id. at 28-29.
[4] Id. at 29-30.
[5] Id. at 26.
[6] Id. at 30-31, 34-35, 38.
[7] Id. at 52.
[8] Penned by Associate Justice Angelita A. Gacutan, with Associate Justices Magdangal M. De Leon and Francisco P. Acosta, concurring; id. at 25-65.
[9] Id. at 60
[10] Id. at 62.
[11] Id. at 60-61.
[12] Id. at 64.
[13] Id. at 66-67.
[14] Id. at 92-93.
[15] Id. at 119.
[16] Id. at 139-141.
[17] Republic Act 8424, AN ACT AMENDING THE NIRC, AS AMENDED, AND FOR OTHER PURPOSES, approved on December 11, 1997.
[18] Rollo, p. 97.
[19] Id. at 97-98.
[20] 728 Phil. 535, 540 (2014).

Categories
2020 January

JESUS EDANGALINO Y DIONISIO, PETITIONER, VS. PEOPLE OF THE PHILIPPINES, RESPONDENT.

FIRST DIVISION
[ G.R. No. 235110, January 08, 2020 ]

JESUS EDANGALINO Y DIONISIO, PETITIONER, VS. PEOPLE OF THE PHILIPPINES, RESPONDENT.

D E C I S I O N

PERALTA, C.J.:

Assailed in this petition for review on certiorari[1] is the Decision[2] dated March 28, 2017 of the Court of Appeals (CA) in CA-G.R. CR No. 37912 which affirmed in toto the Decision[3] dated May 4, 2015 of the Regional Trial Court (RTC), Branch 263, Marikina City, finding petitioner Jesus Edangalino y Dionisio guilty of violation of Section 11, Article II of Republic Act (R.A.) No. 9165, otherwise known as the Comprehensive Dangerous Drugs Act of 2002. Also assailed is the Resolution[4] dated October 11, 2017 of the CA which denied reconsideration thereof.

In an Information[5] dated September 12, 2011, petitioner was charged with violation of Section 11, Article II of R.A. No. 9165, the accusatory portion of which reads:

That on or about the 8th day of September 2011, in the City of Marikina, Philippines, and within the jurisdiction of this Honorable Court, the above-named accused, without being authorized by law to possess or otherwise use any dangerous drugs, did then and there willfully, unlawfully and knowingly have in his possession, direct custody and control 0.02 [gram] of Methamphetamine Hydrochloride (shabu), a dangerous drug, in violation of the above-cited law.[6]

During his arraignment on September 29, 2011, petitioner, duly assisted by his counsel de oficio, pleaded not guilty to the charge.[7] Pre-trial and trial thereafter ensued.

The facts of the case as stated by the CA, thus:

Version of the Prosecution:

The antecedent facts as narrated by the Office of the Solicitor General (OSG) are as follows:

On September 7, 2011, around 11:00 in the evening, an informant arrived at the office of the District Anti-Illegal Drugs Special Operation Task Group (DAID-SOTG) of the Eastern Police District located at Meralco Avenue, Pasig City, and reported that a certain “Amboy” of Barangay Malanday, Marikina City was engaged in illegal drug trade activities. Acting on the said report, P/Supt. Elmer R. Cereno (P/Supt. Cereno) immediately informed (sic) a team to conduct a buy-bust operation against “Amboy”. The members of the team were subsequently briefed of the plan for the operation, and PO1 Rey Lambino (PO1 Lambino) was assigned as the poseur-buyer while PO1 Yon Enguio (PO1 Enguio) was tasked to be a back-up officer together with the members of the team. A five hundred-peso (Php500.00) bill with its serial number RJ697456 was also marked with “RL” at its upper right corner to serve as the buy-bust money. It was likewise agreed during the briefing that PO1 Lambino will ring the phone of PO1 Enguio to signify that the sale is consummated and he needs assistance to effect the arrest of “Amboy”.

Around 11:45 in the evening, armed with a coordination form from Philippine Drug Enforcement Agency (PDEA) with MMRO Control # 0911-00072, the buy-bust team proceeded to Barangay Malanday, Marikina City where their informant agreed to meet them.

Around 1:40 in the morning of the following day, September 8, 2011, the team together with the informant proceeded to Jocson Street, Barangay Malanday, Marikina City. Thereat, PO1 Lambino and the informant looked for “Amboy” while the rest of the team positioned themselves strategically where they can oversee the transaction and immediately respond.

A few minutes later, PO1 Lambino and the informant saw “Amboy” standing along an alley. When they approached him, the informant introduced PO1 Lambino to “Amboy” as the one who wants to buy shabu. “Amboy” immediately brought one (1) piece of plastic sachet of suspected shabu and said that the same was worth P300.00. Before PO1 Lambino can even respond to “Amboy”, someone shouted in background “May mga pulis.” Upon hearing the same, “Amboy” attempted to run and flee the area but he was successfully restrained by PO1 Lambino. PO1 Lambino then introduced himself as a police officer, and confiscated from him one (1) plastic sachet of suspected shabu which should have been the subject of the sale between them if not for the interruption. PO1 Lambino then informed “Amboy”, later on identified as the appellant, of his violation as well as his constitutional rights while under arrest. While at the place of the arrest and in front of the appellant, the plastic sachet of suspected shabu seized from the appellant was immediately marked by PO1 Lambino with “RL/Amboy 09-08-2011,” photographed and inventoried. The certificate of inventory was then signed by the appellant.

The appellant and the seized item were then brought to DAID-SOTG office at the Eastern Police District in Meralco Avenue, Pasig City for investigation. After a request for laboratory examination of the seized specimen was prepared, the seized item was then brought by PO1 Lambino to the EPD Crime Laboratory where the same was received by PCI Cejes. The results of the laboratory examination conducted by PCI Cejes revealed that the contents of the plastic sachet confiscated from the appellant are positive for the presence of methamphetamine hydrochloride, a dangerous drug. The same plastic sachet of shabu was presented during trial and was identified to be the same item seized from the appellant during the operation on September 7-8, 2011.

Version of the Defense:

For its part, the defense [proffered] the sole testimony of the appellant to refute the foregoing accusations and aver a different version of the story.

According to the appellant, he met and brought a certain “Melvin” to his house on 07 September 2011. While inside his house, Melvin asked him if he knew someone selling drugs in the area so he accompanied him to the house of his neighbor, Cedie. At Cedie’s house, Melvin immediately consumed the shabu that he bought and left at 11:00 o’clock (sic) in the evening.

Thirty (30) minutes later, Melvin returned and asked to be accompanied again to Cedie’s house which appellant acceded. Melvin purchased shabu again, used half of it and kept the other half. Sensing Melvin’s uneasiness, appellant asked him if he intended to contact his police companions to arrest their target. Melvin then went inside the comfort room to contact the police. Thereafter, he sat by the door and opened it when the police arrived. The policemen searched the house for illegal drugs but were unable to find any. Appellant and three (3) others were thereafter arrested.[8] (Citations omitted)

On May 4, 2015, the RTC rendered its Decision[9] finding petitioner guilty of violating Section 11, Article II of R.A. No. 9165, the dispositive portion of which reads:

WHEREFORE, above premises considered, the court finds accused JESUS EDANGALINO y DIONISIO GUILTY of the offense charged against him.

The accused is hereby sentenced to suffer the penalty of imprisonment of TWELVE (12) YEARS and ONE (1) DAY to TWENTY (20) YEARS in accordance with par. (3) of Sec. 11 of R. A. No. 9165.

He is also ordered to pay the fine in the amount of Three Hundred Thousand Pesos (P300,000.00).

SO ORDERED.[10]

The RTC found that while the police failed to strictly follow the requirements of Section 21 of R.A. No. 9165, what is important is the preservation of the integrity and the evidentiary value of the seized items, because the same will be utilized in ascertaining the guilt or the innocence of the accused. Police Officer 1 (PO1) Rey Lambino categorically stated that he recovered from petitioner the illegal drugs presented in court; thus, the presumption that the integrity of the evidence has been preserved subsists unless it can be shown that there was bad faith, ill will or tampering with evidence which obligation rests on the accused. The RTC did not give weight to petitioner’s denial for being inherently weak and it relied on the presumption of regularity in the official function of the police operatives.

On March 28, 2017, the CA rendered its assailed Decision,[11] the decretal portion of which reads:

FOR THESE REASONS, the appealed Decision dated 04 May 2015 rendered by Branch 263 of the Regional Trial Court, Marikina City convicting appellant for violation of Section 11, Article II of Republic Act No. 9165, otherwise known as The Comprehensive Dangerous Drugs Act of 2002, in Criminal Case No. 2011-3935-D-MK is AFFIRMED in toto.[12]

The CA found that all the elements for the prosecution of illegal possession of dangerous drugs, i.e., (1) the accused is in possession of an item or object which is identified as a prohibited drug; (2) such possession is not authorized by law; and (3) the accused freely and consciously possesses the said drug, had been established. It gave credence to the testimony of the prosecution witness who is a police officer, thus presumed to have performed his duty in a regular manner. It ruled that there was no confusion surrounding the corpus delicti in this case since the illegal drug confiscated from petitioner, taken to the police headquarters, subjected to laboratory examination, introduced in evidence and identified in court, was the same illegal drug seized from petitioner during the buy-bust operation. It found petitioner’s denial unsubstantiated by any convincing evidence and it cannot prevail against the positive testimony of PO1 Lambino. The CA ruled that non-compliance with the procedural requirements under Section 21 of R.A. No. 9165 and its Implementing Rules and Regulations (IRR) is not a serious flaw that can render void the seizures and custody of drugs in a buy-bust operation.

Petitioner’s motion for reconsideration was denied in a Resolution[13] dated October 11, 2017.

Petitioner files the instant petition for review on certiorari on the lone issue of:

WHETHER THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE PETITIONER’S CONVICTION FOR VIOLATION OF SECTION 11, ARTICLE II OF REPUBLIC ACT NO. 9165, DESPITE THE SERIOUS IRREGULARITIES IN THE CONDUCT OF THE POLICE OPERATION AND THE PROSECUTION’S FAILURE TO ESTABLISH THE IDENTITY AND INTEGRITY OF THE ALLEGED CONFISCATED DRUGS CONSTITUTING THE CORPUS DELICTI OF THE CRIME CHARGED.[14]

Petitioner claims, among others, that the records failed to show that the police officers complied with the mandatory procedures provided under paragraph 1, Section 21, Article II of R.A. No. 9165; that the prosecution failed to establish the presence of the indispensable witnesses during the conduct of the inventory and the photographing of the seized item; that there was no justifiable ground presented on why the presence of these persons was not secured; and that it was only the CA that acknowledged the supposed preservation of the integrity and evidentiary value of the seized item that, to its opinion, justified non-compliance.

We find the petition meritorious.

To begin with, prosecution for illegal possession of prohibited drugs necessitates that the elemental act of possession of a prohibited substance be established with moral certainty, together with the fact that the same is not authorized by law. The dangerous drug itself constitutes the very corpus delicti of the offense and the fact of its existence is vital to a judgment of conviction.[15] Therefore, it is essential that the identity of the prohibited drug be established beyond doubt. This requirement necessarily arises from the unique characteristic of the illegal drugs that renders them indistinct, not readily identifiable, and easily open to tampering, alteration or substitution either by accident or otherwise. Thus, to remove any doubt or uncertainty on the identity and integrity of the seized drug, evidence must definitely show that the illegal drug presented in court is the same illegal drug actually recovered from the accused; otherwise, the prosecution for possession under R.A. No. 9165 fails.[16]

Section 21 of R.A. No. 9165 provides for the procedural safeguards in the handling of seized drugs by the apprehending officer/team, to wit:

(1) The apprehending team having initial custody and control of the drugs shall, immediately after seizure and confiscation, physically inventory and photograph the same in the presence of the accused or the person/s from whom such items were confiscated and/or seized, or his/her representative or counsel, a representative from the media and the Department of Justice (DOJ), and any elected public official who shall be required to sign the copies of the inventory and be given a copy thereof[.]

And Section 21 (a) of the IRR of R.A. No. 9165 provides:

(a) The apprehending officer/team having initial custody and control of the drugs shall, immediately after seizure and confiscation, physically inventory and photograph the same in the presence of the accused or the person/s from whom such items were confiscated and/or seized, or his/her representative or counsel, a representative from the media and the Department of Justice (DOJ), and any elected public official who shall be required to sign the copies of the inventory and be given a copy thereof: Provided, that the physical inventory and photograph shall be conducted at the place where the search warrant is served; or at the nearest police station or at the nearest office of the apprehending officer/team, whichever is practicable, in case of warrantless seizures; Provided, further, that non-compliance with these requirements under justifiable grounds, as long as the integrity and the evidentiary value of the seized items are properly preserved by the apprehending officer/team, shall not render void and invalid such seizures of and custody over said items[.]

R.A. No. 10640[17] amended Section 21 of R.A. No. 9165 and incorporated the saving clause contained in the IRR, and requires that the conduct of the physical inventory and taking of photograph of the seized items be done in the presence of (1) the accused or the person/s from whom such items were confiscated and/or seized, or his/her representative or counsel; (2) an elected public official; and (3) a representative of the National Prosecution Service or the media.

Since the alleged crime was committed in 2011, the old provisions of Section 21 of R.A. No. 9165 and its IRR are applicable which provide that after seizure and confiscation of the drugs, the apprehending team is required to immediately conduct a physically inventory and photograph the seized items in the presence of (1) the accused or the person/s from whom such items were confiscated and/or seized, or his/her representative or counsel; (2) a representative from the media and (3) from the Department of Justice (DOJ); and (4) any elected public official who shall be required to sign the copies of the inventory and be given a copy thereof. It is assumed that the presence of these persons will guarantee “against planting of evidence and frame-up, [i.e., they are] necessary to insulate the apprehension and incrimination proceedings from any taint of illegitimacy or irregularity.”[18]

A review of the records shows that there were no representatives from the media and the DOJ, and an elected public official when the marking, physical inventory and photographing of the seized item were done. PO1 Lambino admitted the absence of the required witnesses in his cross-examination, as follows:

Q: When this operation happened, how long have you been a police officer assigned in Anti-Illegal Drugs?
A: Almost six months, sir.

Q: During that time you would agree with me that you are familiar with the provisions of Republic Act 9165?
A: Yes, sir.

Q: You are familiar with Section 21 of that RA 9165, correct?
A: Not really, sir.

Q: Not really?
A: Yes, sir.

Q: Are you saying that you are implementing a law which you are not familiar with?
A: No, sir.

Q: So what does Section 21 states (sic)?
A: I did (sic) not familiar in (sic) Section 21 but I know the other sections of RA 9165, sir.

Q: Because you do not know what is stated in Section 21 of RA 9165, you did not ask any barangay official to witness the preparation of the inventory?
A: Sir, we make (sic) an effort.

Q: Please answer yes or no[.]
A: Yes, sir.

Q: You also did not ask any media representative or representative from the DOJ to witness that inventory?
A: Yes, sir.

Q: No one was also present when you were taking a photograph of the accused and the specimen that you confiscated?
A: Yes, sir.

Q: Where did you mark the evidence?
A: At the place of arrest, sir.

Q: At the place of arrest?
A: Yes, sir.

Q: You also mentioned that you took the photograph of the accused as well as the specimen at the place of arrest, is that right?
A: The photograph of the accused at the office but the evidence our (sic) recovered to (sic) the suspect at the place of arrest, sir.

Q: The marking?
A: Marking and taking of the photographs of the evidence recovered, sir.

Q: How about the photograph of the accused?
A: At the office, sir.

Q: At the office?
A: Yes, sir.

Q: Why is it that you did not take the photograph of the accused at the area?
A: We don’t have the white board, sir.

Q: When you were marking the evidence that you allegedly confiscated there were no representative from media, barangay and DOJ, right?
A: Yes, sir.[19]

While the failure of the apprehending team to strictly comply with the procedure laid down in Section 21 of R.A. No. 9165 and the IRR does not ipso facto render the seizure and custody over the items as void and invalid, the prosecution must satisfactorily prove that (a) there is justifiable ground for non-compliance; and (b) the integrity and evidentiary value of the seized items are properly preserved. The justifiable ground for non-compliance must be proven as a fact, because the Court cannot presume what these grounds are or that they even exist.[20] Here, PO1 Lambino’s testimony failed to establish any plausible explanation or justification on why the presence of the representatives from the media and the DOJ, and the elective official was not secured, to wit:

Q: Mr. Witness, why is it that you were not able to have barangay official signed (sic) the inventory of evidence?
A: Because sometimes, sir…

Q: No, that time, at the time when you had the marking why was there no barangay official?
A: At that time sir, we make (sic) effort to coordinate at the barangay but there [was] no available barangay official.

Q: What about the member of the media, why was there no member of media?

COURT:

Was Edwin Moreno not around during that time?
A: He [was] around, sir.

COURT:

He [was] around.

PROSECUTOR ABUAY, JR.:

Q: Why did he not sign the certificate?

COURT:

Answer.

WITNESS:

A: He did not sign, sir.

PROSECUTOR ABUAY, JR.:

Q: Why?
A: Our Chief, DAID, did not sign any…

COURT:

Si Edwin Moreno, sabi mo kasi [kanina] andun siya, ang tanong ni fiscal bakit hindi mo pinapirma?

A: Edwin Moreno?

COURT:

Oo, sabi mo [kanina], he [was] around.

PROSECUTOR ABUAY, JR.:

Why was (sic) no media (sic) signed?

A: There [was] no media around and also barangay official.[21]

In People v. Reyes,[22] this Court enumerated certain instances where the absence of the required witnesses may be justified, thus:

It must be emphasized that the prosecution must be able to prove a justifiable ground in omitting certain requirements provided in Sec. 21 such as, but not limited to the following: (1) media representatives are not available at that time or that the police operatives had no time to alert the media due to the immediacy of the operation they were about to undertake, especially if it is done in more remote areas; (2) the police operatives, with the same reason, failed to find an available representative of the National Prosecution Service; (3) the police officers, due to time constraints brought about by the urgency of the operation to be undertaken and in order to comply with the provisions of Article 125[23] of the Revised Penal Code in the timely delivery of prisoners, were not able to comply with all the requisites set forth in Section 21 of R.A. 9165.

And in People of the Philippines v. Vicente Sipin y De Castro,[24] we held:

The prosecution never alleged and proved that the presence of the required witnesses was not obtained for any of the following reasons, such as: (1) their attendance was impossible because the place of arrest was a remote area; (2) their safety during the inventory and photograph of the seized drugs was threatened by an immediate retaliatory action of the accused or any person/s acting for and in his/her behalf; (3) the elected official[s] themselves were involved in the punishable acts sought to be apprehended; (4) earnest efforts to secure the presence of a DOJ or media representative and an elected public official within the period required under Article 125 of the Revised Penal Code prove futile through no fault of the arresting officers, who face the threat of being charged with arbitrary detention; or (5) time constraints and urgency of the anti-drug operations, which often rely on tips of confidential assets, prevented the law enforcers from obtaining the presence of the required witnesses even before the offenders could escape.

The prosecution’s failure to offer any justifiable reason for its non-compliance with Section 21 of R.A. No. 9165 resulted in a substantial gap in the chain of custody of the seized item from petitioner which placed the integrity and evidentiary value of the seized item in question. Therefore, we find petitioner’s acquittal of the crime charged in order.

We find no basis on the RTC’s and the CA’s findings that the police officer regularly performed his official duty. Judicial reliance on the presumption of regularity in the performance of official duty despite the lapses in the procedures undertaken by the agents of the law is fundamentally flawed because the lapses themselves are affirmative proofs of irregularity.[25] The presumption of regularity in the performance of duty cannot overcome the stronger presumption of innocence in favor of the accused. Otherwise, a mere rule of evidence will defeat the constitutionally enshrined right to be presumed innocent.[26]

WHEREFORE, premises considered, the petition for review on certiorari is GRANTED. The Decision dated March 28, 2017 and the Resolution dated October 11, 2017 of the Court of Appeals in CA-G.R. CR No. 37912 are hereby REVERSED and SET ASIDE. Petitioner Jesus Edangalino y Dionisio is accordingly ACQUITTED for failure of the prosecution to prove his guilt beyond reasonable doubt. The Director of the Bureau of Corrections is ORDERED to immediately cause the release of petitioner from detention, unless he is being held for some other lawful cause, and to inform this Court his action hereon within five (5) days from receipt of this Decision.

SO ORDERED.

Caguioa, J. Reyes, Jr., and Lazaro-Javier, JJ., concur.
Lopez, J., on wellness leave.

[1] Rollo, pp. 11-28.
[2] Id. at 32-44. Penned by Associate Justice Elihu A. Ybañez, and concurred in by Associate Justices Magdangal M. De Leon and Carmelita Salandanan Manahan.
[3] Id. at 68-75. Penned by Presiding Judge Armando C. Velasco.
[4] Id. at 46-47.
[5] Records, pp. 1-2.
[6] Id. at 1.
[7] Id. at 25.
[8] Rollo, pp. 34-36.
[9] Supra note 3.
[10] Id. at 74-75.
[11] Supra note 2.
[12] Id. at 43.
[13] Supra note 4.
[14] Rollo, p. 17.
[15] Carino, et al. v. People, 600 Phil. 433, 444 (2009).
[16] People of the Philippines v. Rogelio Yagao y Llaban, G.R. No. 216725, February 18, 2019.
[17] Took effect on July 23, 2014.
Section 1 of Republic Act No. 10640 provides:
Section 1. x x x.
“SEC. 21. Custody and Disposition of Confiscated, Seized, and/or Surrendered Dangerous Drugs, Plant Sources of Dangerous Drugs, Controlled Precursors and Essential Chemicals, Instruments/Paraphernalia and/or Laboratory Equipment. – The PDEA shall take charge and have custody of all dangerous drugs, plant sources of dangerous drugs, controlled precursors and essential chemicals, as well as instruments/paraphernalia and/or laboratory equipment so confiscated, seized and/or surrendered, for proper disposition in the following manner:
“(1) The apprehending team having initial custody and control of the dangerous drugs, controlled precursors and essential chemicals, instruments/paraphernalia and/or laboratory equipment shall, immediately after seizure and confiscation, conduct a physical inventory of the seized items and photograph the same in the presence of the accused or the person/s from whom such items were confiscated and/or seized, or his/her representative or counsel, with an elected public official and a representative of the National Prosecution Service or the media who shall be required to sign the copies of the inventory and be given a copy thereof: Provided, That the physical inventory and photograph shall be conducted at the place where the search warrant is served; or at the nearest police station or at the nearest office of the apprehending officer/team, whichever is practicable, in case of warrantless seizures: Provided, finally, That noncompliance of these requirements under justifiable grounds, as long as the integrity and the evidentiary value of the seized items are properly preserved by the apprehending officer/team, shall not render void and invalid such seizures and custody over said items.”
[18] People of the Philippines v. Robert D. Duran, G.R. No. 233251, March 13, 2019.
[19] TSN, February 27, 2013, pp. 12-15.
[20] People v. De Guzman y Danzil, 630 Phil. 637, 649 (2010).
[21] TSN, February 27, 2013, pp. 21-23.
[22] G.R. No. 219953, April 23, 2018, 862 SCRA 352, 367-368.
[23] Article 125. Delay in the delivery of detained persons to the proper judicial authorities. – The penalties provided in the next preceding article shall be imposed upon the public officer or employee who shall detain any person for some legal ground and shall fail to deliver such person to the proper judicial authorities within the period of twelve (12) hours, for crimes or offenses punishable by light penalties, or their equivalent; eighteen (18) hours, for crimes or offenses punishable by correctional penalties, or their equivalent and thirty-six (36) hours, for crimes, or offenses punishable by afflictive or capital penalties, or their equivalent. In every case, the person detained shall be informed of the cause of his detention and shall be allowed upon his request, to communicate and confer at any time with his attorney or counsel. (As amended by E.O. Nos. 59 and 272, Nov. 7, 1986 and July 25, 1987, respectively).
[24] G.R. No. 224290, June 11, 2018.
[25] People of the Philippines v. Gerald Arvin Elinto Ramirez and Belinda Galienba Lachica, G.R. No. 225690, January 17, 2018.
[26] People of the Philippines v. Dave Claudel y Lucas, G.R. No. 219852, April 3, 2019.

Categories
2020 January

ATTY. PEDRO B. AGUIRRE, COMPLAINANT, V. ATTY. CRISPIN T. REYES, RESPONDENT.

FIRST DIVISION
[ A.C. No. 4355, January 08, 2020 ]

ATTY. PEDRO B. AGUIRRE, COMPLAINANT, V. ATTY. CRISPIN T. REYES, RESPONDENT.

D E C I S I O N

LAZARO-JAVIER, J.:

The Case

Almost a quarter of century ago, complainant Atty. Pedro B. Aguirre charged respondent Atty. Crispin T. Reyes with multiple violations of the Code of Professional Responsibility (CPR), i.e. Rule 3.01, Rule 8.01 in relation to Rule 19.01, and Rule 10.03 in relation to Rule 12.02.

Antecedents

Atty. Aguirre’s Complaint[1] dated December 1, 1994

Atty. Aguirre essentially stated:

Atty. Reyes violated Rule 3.01[2] by making false claims in his memo[3] dated December 20, 1993 addressed to the Board of Directors of Banco Filipino, which partly reads:

x x x

(5) Undersigned counsel was also mainly instrumental in winning the Supreme Court case (GR 70054) to reopen BF. He also made “a special arrangement” that is quite confidential which should not be divulged to “small men” like Mr. Gatmaitan. His Memo of Feb. 8, 1991, Aide Memoire of March 24, 1991 etc addressed to Don Tomas B. Aguirre attest to his modest but effectively fruitful professional services.

x x x

These false statements, i.e., that he was “instrumental in winning the Supreme Court case” and he made “special arrangements” put the Supreme Court in a bad light. They amounted to ”false, fraudulent, misleading, deceptive, undignified, self-laudatory or unfair statement or claim regarding his qualifications or legal services.”

Atty. Reyes also violated Rule 8.01[4] in relation to Rule 19.01[5] when he drafted the following: 1) confidential/restricted memo[6] dated March 28, 1994 addressed to all Banco Filipino directors and executive officers; and 2) Amended Complaint[7] dated May 10, 1994 in SEC Case No. 04-94-4750 entitled “Eduardo Rodriguez, et al. v. Tala Realty Services Corp., et al.” He wrote the same on behalf of the minority stockholders of Banco Filipino and addressed it to all concerned individuals at Tala Realty Corporation. He stated:

x x x

  1. Truly, we have here the biggest bank fraud involving over P1 Billion of Banco Filipino properties sold by simulated contracts to Tala controlled by parties who were then BF Directors and now want the properties for themselves. Once litigated, the bank will be affected and damaged, while the good name, reputation, honesty and integrity of the 3 principal parties behind this sophisticated “plunder” will be destroyed. Hence, litigation should be avoided. This delicate case has to be resolved now confidentially and amicably to avoid disastrous scandal for all parties concerned.
  2. The 3 principals behind/controlling Tala Realty Corporation should now be guided by their conscience. They are already very very rich. Their immense fortune can neither be taken beyond the grave while their children’s children will still continue to live in abundance and luxury for all time.[8]

x x x

In the amended complaint which Atty. Reyes filed with the SEC, he also averred:

33.3 Further, they also fraudulently covet and misappropriate for their own benefit these properties/funds/receivables belonging to Banco Filipino blatantly without the least shame or moral scruples to the great prejudice and gargantuan damage of the bank, hence, they are likewise criminally liable for related grave crimes punishable by the Revised Penal Code and the General Banking Act.[9]

These statements were “abusive, offensive, or otherwise improper.” The same transcended the permissible bounds of legitimate criticism, hence, were violative of Rule 8.01.

Atty. Reyes, too, violated Rule 19.01 because he “presented unfounded criminal charges to obtain an improper advantage in any case or proceeding” when he filed criminal cases for estafa (against Nancy Ty, Pedro Aguirre, Elizabeth Palma, Rolando Salonga, Rubencito del Mundo, Virgilio Gesmundo, Pilar Ongking, Dolly Lim, Cynthia Mesina, John Does and Jane Does) and falsification (against Nancy Ty, Pedro Aguirre, John Doe, Peter Doe, Richard Doe and Jane Doe) with the prosecution services of Rizal, Makati, and Manila. By engaging in forum-shopping, Atty. Reyes committed malpractice.

Atty. Reyes’s Comment and Counter Complaint

In his Comment with Counter Complaint for Disbarment,[10] Atty. Reyes asserted in the main:

On October 6, 1993, his legal services were engaged to intervene in SEC Case Nos. 2693 and 219 specifically through a derivative suit purposely to protect the interests of BF Homes, which was being plundered by billions of pesos worth of assets. The measures he took in the SEC case were brought to the attention of BF Homes’ directors and management officers, yet, he was viciously subjected to all sorts of blame, ridicule, and aspersion.[11]

On December 13, 1993, BF Homes Vice President Rodrigo Gatmaitan, Jr. issued a defamatory memo against him, prompting him, in turn, to issue a retaliatory memo on December 20, 1993. The memo was in defense of his good name, integrity, and honor as a man and as a professional. He was being blamed for the company’s water shortage and the withdrawal of Balgos and Perez as BF Homes’ counsel.[12]

The language he used in his memo and amended complaint was not abusive nor offensive. The words were apt, vivid, picturesque, proper, and elegant.[13] He did not initiate unfounded criminal charges to gain improper advantage. The criminal charge was an aspect of the efforts to recover eighteen (18) major Banco Filipino branches from Tala Realty Services Corporation. He pursued the complaints for estafa in Makati and for falsification of public documents in Manila on his client’s instructions. [14]

Atty. Aguirre should be the one disbarred for gross violation of the CPR: a) Canon 1 and Rules 1.01, 1.02; b) Canon 7 and Rule 7.03; and c) Canon 10 and Rule 10.01.

Atty. Aguirre was a major stockholder of Tala Realty Services Corporation through his dummy Rubencito del Mundo, a member of the company’s board of directors. Sometime between 1979 and 1980, Banco Filipino assets were placed in trust with Tala. Together with other major stockholders, Atty. Aguirre used Tala to plunder and inflict irreparable damage on Banco Filipino. They sold some of its assets, specifically its major branches and pocketed the profits as their own. Atty. Aguirre had already received millions of pesos from renting out Banco Filipino properties and from selling Banco Filipino’s properties situated in Parañaque, Recto, and Cervantes. Atty. Aguirre and his cohorts did not even render a complete accounting of the transactions involving Banco Filipino assets. [15]

Atty. Aguirre’s Comment

In his Comment[16] dated May 19, 1995, Atty. Aguirre essentially riposted: the matters raised by Atty. Reyes including Tala’s alleged ownership of the controversial properties should be threshed out in appropriate judicial proceedings. The counter-complaint for disbarment against him is another harassment suit which should be dismissed outright.

Proceedings Before the
Integrated Bar of the Philippines – Commission on Bar Discipline
(IDP-CBD)

By Resolution[17] dated June 7, 1995, the Court referred the case to the Integrated Bar of the Philippines – Commission on Bar Discipline (IBP – CBD). After due proceedings, the IBP-CBD under Order[18] dated February 2, 2006 directed the parties to manifest if they were still interested in pursuing the cases. In their respective manifestations,[19] the parties expressed interest to continue with the case. Atty. Reyes also moved for consolidation of the complaint and the counter[-]complaint.[20] Another round of proceedings was held, after which, the parties submitted their respective memoranda.[21]

Report and Recommendation of the IBP-CBD
By its Report and Recommendation[22] dated September 20, 2016, the IBP-CBD recommended the dismissal of both the complaint and the counter­ complaint by reason of the death of Atty. Aguirre (ADM Case No. 4355) and for failure of Atty. Reyes to substantiate his charge against Atty. Aguirre who, as stated, had already died (CBD Case No. 06-1664) thus:

Adm. Case No. 4355
(Atty. Pedro B. Aguirre v. Atty. Crispin T. Reyes)
The complainant [Atty. Pedro B. Aguirre] filed his Memorandum in July, 2007. The respondent [Atty. Crispin T. Reyes] filed his Memorandum in August, 2007. Since then, nothing has come out of this case. No proceedings of any kind were held in this case, and the parties alternated in having this case moved from one setting to another.
The complainant died on September 6, 2013. Proof of his death was received by the Commission. He died without being able to submit proof in support of his charges against the respondent.

On the other hand, the respondent is now a centenarian and long retired from professional practice. He had paid his dues, so to speak.

For the reasons that the complainant is already dead, that complainant had not completed his chore of submitting proof in support of his charges against the respondent, and that the respondent is already a centenarian long retired from the practice of the legal profession, it is hereby recommended that this case against respondent Atty. Crispin T. Reyes be dismissed.

CBD Case No. 06-1664
(Atty. Crispin T Reyes v. Atty. Pedro B. Aguirre)

In view of the death of respondent Atty. Pedro B. Aguirre on September 6, 2013, a fact established by a verified Certificate of Death submitted by respondent Aguirre’s own counsel, it is respectfully recommended that the case against him [Atty. Pedro B. Aguirre] be dismissed for being moot and academic.

RESPECTFULLY SUBMITTED.[23] (italics supplied)

Proceedings before this Court

By Resolution[24] dated February 12, 2018, the Court, in A.C. No. 11903, adopted and approved the recommendation of the IBP-CBD, dismissing the complaint against Atty. Aguirre by reason of the latter’s death (CBD Case No. 06-1664).

The only unresolved case now is A.C. No. 4355 which Atty. Aguirre filed against Atty. Reyes.

Issue

Should the complaint for disbarment against Atty. Reyes still proceed despite the death of complainant Atty. Aguirre?

Ruling

A disbarment case
is sui generis

At the threshold, the Court emphasizes anew that a disbarment case, being sui generis, may proceed despite a complainant’s desistance or failure to prosecute, thus:

A disbarment case is sui generis for it is neither purely civil nor purely criminal, but is rather an investigation by the court into the conduct of its officers. The issue to be determined is whether respondent is still fit to continue to be an officer of the court in the dispensation of justice. Hence, an administrative proceeding for disbarment continues despite the desistance of a complainant, or failure of the complainant to prosecute the same, or in this case, the failure of respondent to answer the charges against him despite numerous notices.[25] (Emphasis supplied)

Further, lawyers are officers of the court who are empowered to appear, prosecute, and defend the causes of their clients. The law imposes on them peculiar duties, responsibilities and liabilities. Membership in the bar imposes on them certain obligations. They are duty bound to uphold the dignity of the legal profession. They must act honorably, fairly and candidly towards each other and otherwise conduct themselves beyond reproach at all times.[26] Being, thus, officers of the court, complainants in cases against lawyers are treated as mere witnesses. Thus, complaints against lawyers may still proceed despite complainants’ death. Tudtud v. Judge Coliflores[27] is relevant:

We do not agree with the recommendation. The death of the complainant herein does not warrant the non-pursuance of the charges against respondent Judge. In administrative cases against public officers and employees, the complainants are, in a real sense, only witnesses. Hence, the unilateral decision of a complainant to withdraw from an administrative complaint, or even his death, as in the case at bar, does not prevent the Court from imposing sanctions upon the parties subject to its administrative supervision. (Emphasis supplied)

Verily, Atty. Aguirre’s death will not automatically warrant the dismissal of the disbarment complaint against Atty. Reyes.

We now resolve.

Quantum of evidence
required in disbarment suits

In administrative proceedings, such as disbarment, the quantum of proof necessary for a finding of guilt is substantial evidence, i.e., that amount of relevant evidence that a reasonable mind might accept as adequate to support a conclusion. Complainants have the burden of proving by substantial evidence the allegations in their complaints. The basic rule is that mere allegation is not evidence and is not equivalent to proof. Charges based on mere suspicion and speculation likewise cannot be given credence.[28]

Atty. Reyes is liable for violation
of Rule 8.01 of the CPR

Here, Atty. Aguirre charged Atty. Reyes with violating Rule 3.01 of the CPR for allegedly making false statements in his memo. The specific statements pertain to Atty. Reyes claiming that he was “instrumental in winning the Supreme Court case” and he made “special arrangements.” According to Atty. Aguirre, these statements not only put the Court in a bad light, they too, purportedly amounted to ”false, fraudulent, misleading, deceptive, undignified, self-laudatory or unfair statement or claim regarding his qualifications or legal services.”

The thing speaks for itself. The statements are undoubtedly self-laudatory, nay, undignified. The standards of the legal profession condemn the lawyer’s advertisement of his talents. A lawyer cannot, without violating the ethics of his profession, advertise his talents or skills in a manner similar to a merchant advertising his goods. The proscription against advertising of legal services or solicitation of legal business rests on the fundamental postulate that the practice of law is a profession.[29]

Whether in fact these statements are false, fraudulent, misleading, or deceptive is another story. There is nothing on record indicating them to be so. Surely, allegations must be proven by sufficient evidence because bare allegation is definitely not evidence.[30]

Regarding Atty. Aguirre’s allegations that the statements put this Court in a bad light particularly the reference to “special arrangements,” suffice it to state that standing alone, the so-called “special arrangements” are at best equivocal and cannot serve as basis to conclude that Atty. Reyes is guilty of unethical behavior. To repeat, allegations are not proof and petitioner bears the burden of substantiating the same.[31]

Atty. Aguirre also charged Atty. Reyes with violating Rule 8.01 when the latter purportedly employed abusive, offensive, or otherwise improper language in the following documents he drafted, viz.: the confidential/restricted memo dated March 28, 1994 and captioned “Tala properties ‘warehouses’ by Banco Filipino,” and the Amended Complaint dated May 10, 1994 in SEC Case 04-94-4750 entitled “Eduardo Rodriguez, et al v. Tala Realty Services Corp., et al.” These statements are: 1) “Truly, we have here the biggest bank fraud involving over P1 Billion of Banco Filipino properties sold by simulated contracts to Tala controlled by parties who were then BF Directors and now want the properties for themselves;” 2) “The 3 principals behind/controlling Tala Realty Corporation should now be guided by their conscience. They are already very very rich;” and 3) “Further, they also fraudulently covet and misappropriate for their own benefit these properties/funds/receivables belonging to Banco Filipino blatantly without the least shame or moral scruples to the great prejudice and gargantuan damage of the bank.”

Though a lawyer’s language may be forceful and emphatic, it should always be dignified and respectful, befitting the dignity of the legal profession. The use of intemperate language and unkind ascriptions has no place in the dignity of the judicial forum.[32] On many occasions, the Court has reminded the members of the Bar to abstain from any offensive personality and to refrain from any act prejudicial to the honor or reputation of a party or a witness. In keeping with the dignity of the legal profession, a lawyer’s language even in his pleadings, must be dignified.[33]

Atty. Reyes here proudly proclaims that the statements he uttered are apt, vivid, picturesque, proper, and elegant. The Court finds these statements uncalled for and malicious, if not, defamatory. They constitute a personal attack against the persons being referred to. They were no longer relevant to the cases involving Banco Filipino and Tala at that time. Saberon v. Atty. Larong[34] is apropos:

Respecting respondent’s argument that the matters stated in the Answer he filed before the BSP were privileged, it suffices to stress that lawyers, though they are allowed a latitude of pertinent remark or comment in the furtherance of the causes they uphold and for the felicity of their clients, should not trench beyond the bounds of relevancy and propriety in making such remark or comment.

True, utterances, petitions and motions made in the course of judicial proceedings have consistently been considered as absolutely privileged, however false or malicious they may be, but only for so long as they are pertinent and relevant to the subject of inquiry. The test of relevancy has been stated, thus:

x x x. As to the degree of relevancy or pertinency necessary to make alleged defamatory matters privileged the courts favor a liberal rule. The matter to which the privilege does not extend must be so palpably wanting in relation to the subject matter of the controversy that no reasonable man can doubt its relevancy and impropriety. In order that matter alleged in a pleading may be privileged, it need not be in every case material to the issues presented by the pleadings. It must, however, be legitimately related thereto, or so pertinent to the subject of the controversy that it may become the subject of inquiry in the course of the trial x x x. (Emphasis supplied)

So must it be.

As for the appropriate penalty for violation of Rule 8.01, Saberon ordained:

With regard to complainant’s plea that respondent be disbarred, this Court has consistently considered disbarment and suspension of an attorney as the most severe forms of disciplinary action, which should be imposed with great caution. They should be meted out only for duly proven serious administrative charges.

Thus, while respondent is guilty of using infelicitous language, such transgression is not of a grievous character as to merit respondent’s disbarment. In light of respondent’s apologies, the Court finds it best to temper the penalty for his infraction which, under the circumstances, is considered simple, rather than grave, misconduct.

Applying Saberon, the Court finds Atty. Reyes guilty of simple misconduct for which he is fined P2,000.00.

Atty. Reyes was not
guilty of forum-shopping

The Court first proscribed forum-shopping under its Administrative Circular No. 29-91 as the willful and deliberate act of filing multiple suits to ensure favorable action. From the legal ethics standpoint, forum-shopping may also constitute a violation of Canon 1,[35] Canon 12,[36] and Rule 12.04.[37] These provisions direct lawyers to obey the laws of the land and promote respect for the law and legal processes, impose on them the duty to assist in the speedy and efficient administration of justice, and prohibit them from unduly delaying a case by misusing court processes. Additionally, Atty. Reyes is charged with violating Rule 19.01 of the CPR.

Records bear out two (2) complaint-affidavits: the first was executed on August 3, 1994,[38] by Rodolfo Nazareno, Lauro Feliciano, Renato Balibag, and Lester Elido, charging respondents therein with estafa through unfaithfulness or abuse of confidence before the Office of the Provincial Prosecutor of Rizal; and the second was executed in October [21,] 1994[39] by the same complainants, charging the same respondents with falsification of public document before the Office of the City Prosecutor of Manila.

These complaint-affidavits pertain to two (2) distinct crimes, i.e. estafa and falsification. There may be identity of parties, rights or causes of action and reliefs sought but a conviction in the first case for estafa through unfaithfulness or abuse of confidence definitely will not preclude a finding of guilt for falsification of public document in another. For each crime requires the concurrence of different elements for conviction. Surely, there is no forum­ shopping when the element of identity of right or cause of action is absent in the two (2) cases involved. For then, these cases will never give rise to litis pendentia or res judicata.

In fine, the charge of forum-shopping against Atty. Reyes must fail. Atty. Aguirre was not able to clearly demonstrate how the filing of the twin criminal complaints could have enabled Atty. Reyes to obtain improper advantage as a member of the bar.

ACCORDINGLY, respondent Atty. Crispin T. Reyes is found guilty of SIMPLE MISCONDUCT for using intemperate language in violation of 8.01 of the Code of Professional Responsibility. He is required to pay a fine of two thousand pesos (P2,000.00) within five (5) days from notice thereof. For this purpose, he is DIRECTED to formally inform the Court of the exact date when he shall have received this decision.

Atty. Reyes is ABSOLVED of the charges of forum-shopping and violations of Rule 19.01, and Rule 10.03 in relation to Rule 12.02.

Let copy of this Decision be furnished the Office of the Bar Confidant for appropriate annotation in the record of Atty. Crispin T. Reyes.

SO ORDERED.

Peralta (C.J.), Caguioa, and J. Reyes, Jr., JJ., concur.
Lopez, J., on official leave.

[1] Rollo, pp. 1-9.
[2] Rule 3.01 – A lawyer shall not use or permit the use of any false, fraudulent, misleading, deceptive, undignified, self-laudatory or unfair statement or claim regarding his qualifications or legal services.
[3] Rollo, pp. 10-16.
[4] Rule 8.01 -A lawyer shall not, in his professional dealings, use language which is abusive, offensive or otherwise improper.
[5] Rule 19.01- A lawyer shall employ only fair and honest means to attain the lawful objectives of his client and shall not present, participate in presenting or threaten to present unfounded criminal charges to obtain an improper advantage in any case or proceeding.
[6] Rollo, pp. 80-86.
[7] Id. at 45-78.
[8] Id. at 92.
[9] Id. at 71.
[10] The complaint was dated February 17, 1994, which may have been a typographical error. It was notarized on February 20, 1995. The correct date may have been February 17, 1995, id. at 205-242.
[11] Id. at 206.
[12] Id. at 206-214.
[13] Id. at 217.
[14] Id. at 218-219.
[15] Id. at 234-242.
[16] Id. at 286-290.
[17] Id. at 299.
[18] Id. at 318.
[19] Id. at 319-323.
[20] Id. at 319.
[21] Id. at 334-385.
[22] Id. at 399-400.
[23] Id.
[24] Id. at 405.
[25] Bunagan-Bansig v. Atty. Celera, 724 Phil. 141, 150 (2014).
[26] Garcia v. Atty. Lopez, 558 Phil. 1, 5 (2007).
[27] 458 Phil. 49, 53 (2003).
[28] Cabas v. Sususco, 787 Phil. 167, 174 (2016).
[29] Ulep v. The Legal Clinic, Inc., 295 Phil. 454, 487 (1993).
[30] See Real v. Sangu Philippines, Inc. and/or Abe, 655 Phil. 68, 86 (2011).
[31] See Angeles v. Polytex Design, Inc. and/or Cua and Gabiola, 562 Phil. 152, 160 (2007).
[32] Noble III v. Atty. Ailes, 762 Phil. 296, 301 (2015).
[33] Gimeno v. Atty. Zaide, 759 Phil. 10, 23-24 (2015).
[34] 574 Phil. 510, 518 (2008).
[35] CANON 1 – A LAWYER SHALL UPHOLD THE CONSTITUTION, OBEY THE LAWS OF THE LAND AND PROMOTE RESPECT FOR LAW OF AND LEGAL PROCESSES.
[36] CANON 12- A LAWYER SHALL EXERT EVERY EFFORT AND CONSIDER IT HIS DUTY TO ASSIST IN THE SPEEDY AND EFFICIENT ADMINISTRATION OF JUSTICE.
[37] Rule 12.04- A lawyer shall not unduly delay a case, impede the execution of a judgment or misuse Court processes.
[38] Rollo, pp. 116-135.
[39] Id. at 177-196.

Categories
2020 January

PAPERTECH, INC ., VS. PETITIONER, JOSEPHINE P. KATANDO,RESPONDENT.

THIRD DIVISION
[ G.R. No. 236020, January 08, 2020 ]

PAPERTECH, INC ., VS. PETITIONER, JOSEPHINE P. KATANDO,RESPONDENT.

D E C I S I O N

CARANDANG, J.:

This is a Petition for Review on Certiorari[1] filed by petitioner Papertech, Inc. (Papertech) assailing the Decision[2] dated August 18, 2017 and Resolution[3] dated December 1, 2017 of the Court of Appeals (CA) in CA-G.R. SP No. 142250. The CA reversed and set aside the Decision[4] dated May 25, 2015 and Resolution [5] dated June 30, 2015 of the National Labor Relations Commission (NLRC), which affirmed the Decision[6] dated January 30, 2015 of Labor: Arbiter Nicolas B. Nicolas (Labor Arbiter Nicolas), insofar as it ordered the payment of separation pay to respondent Josephine P. Katando (Katando) in lieu of her reinstatement.

Antecedents

On June 6, 1996, Papertech hired Katando as a machine operator [7] in its office at 835 Felipe Pike Street, Bagong Ilog, Pasig City.[8] In 2007, Katando and other employees of Papertech filed a Petition for Certification Election.[9] They conducted a picket in the company on February 28, 2008.[10] This prompted Papertech to file a Complaint for Illegal Strike [11] against Katando and the other participants in the picket on May 24, 2008. Papertech prayed that the participants be declared to have lost their employment.[12]

Labor Arbiter Thomas T. Que, Jr. (Labor Arbiter Que) ruled in favor of Papertech on May 30, 2008, but his ruling was reversed by the NLRC on appeal in its Decision on May 29, 2009[13] The NLRC ordered the reinstatement of Katando and her fellow employees. The ruling of the NLRC was upheld by the CA and this Court, and became final and executory on September 2, 2011. Upon motion ofKatando and the other employees, Labor Arbiter Que issued a Writ of Execution on April 17, 2013 ordering their reinstatement at Papertech’s premises in Pasig City. [14]

On May 14, 2013, Papertech sent a notice to Katando and other employees ordering them to report to various posts in Cagayan De Oro, Davao City, Cebu City, Iloilo City, and Pangasinan, under pain of removal in case of non-compliance. They filed a Manifestation with Urgent Motion to Cite Respondent Company in Contempt and to Order Payment of their Salaries.[15] On August 5, 2013, Labor Arbiter Que denied their manifestation with motion, so they filed a verified petition for extraordinary remedies before the NLRC. The NLRC granted it in its Resolutions dated September 30, 2013[16] and November 29, 2013[17] and declared the Order[18] dated August 5, 2013 ofLabor Arbiter Que null and void. The NLRC ordered Labor Arbiter Que to resolve the issues on the salaries as contained in Katando and her co-respondents’ manifestation with motion, and to proceed with the execution of the NLRC Decision dated May 29, 2009 without delay.[19] Papertech assailed the NLRC Resolutions before the CA.[20]

On December 14, 2013, Katando received a memorandum from Papertech stating that due to urgency of business, she will be transferred to its Makati office.[21] The memorandum states that she will still be under the same employment terms and conditions but will be tasked to clean the area.[22] Three days later, Katando received another memorandum asking her to explain why she should not be subjected to disciplinary action for failing to sign the December 14, 2013 memorandum, for her refusal to transfer to the Makati office, and for shouting at Papertech’s representative. Papertech sent Katando a memorandum on Dcember 26, 2013 imposing a seven-day suspension upon her for her disrespectful behaviour to her fellow employees and officials of the company .[23]

Katando served her suspension. However, she was suspended yet again for one week for her disobedience or refusal to transfer as directed. Katando then filed a complaint for illegal suspension before the NLRC.[24]

Papertech issued a memorandum dated February 6, 2014 to Katando reiterating her transfer to its Makati office.[25] Thereafter, Papertech issued a notice to Katando re4uiring her to explain within 48 hours why she refused to receive the February 6, 2014 memorandum. Katando submitted her explanation.[26]

Papertech issued another notice to Katando on February 17, 2014 directing her to explain why she should not be administratively charged for refusing to transfer to its Makati office. Despite submitting her explanation, Papertech issued a notice on February 24, 2014 dismissing Katando for her insubordination. Katando filed a complaint for illegal dismissal, moral and exemplary damages, and attorney’s fees against Papertech [27] and its Chairman of the Board of Directors, Alexander Wong, and Human Resource Manager Joan M. Balde.[28]

On May 26, 2014, Labor Arbiter Rosalina Maria O. Apita-Battung issued a Decision[29] finding that Katando ‘s suspension was illegal.[30]

Ruling of the Labor Arbiter

On January 30, 2015, Labor Arbiter Nicolas issued a ruling in favor of Katando in this case, to wit:

WHEREFORE, premises considered, complainant is declared illegally dismissed. Accordingly, respondent Papertec Inc. is ordered to pay her backwages, other benefits, separation pay plus attorney’s fees, in the total amount of P429,258.72

Other claims are denied for lack of merit.

SO ORDERED.[31]

Labor Arbiter Nicolas held that there was no just cause for Katando’ s termination. Papertech failed to prove the existence of a legitimate urgency justifying her transfer to the Makati office. In fact, they did not disprove the certification from the Makati City Business Permit Office that it is not a registered entity in Makati City.[32] Thus, Labor Arbiter Nicolas ordered Papertech to pay Katando backwages from the time that she was illegally dismissed until the finality of its decision based on her daily wage plus allowance amounting to P480.00. However, Katando’s prayer for reinstatement was not granted. Instead, Papertech was ordered to pay her separation pay of one month pay for every year of service from the commencement of her employment on June 6, 1996 until the finality of its decision. According to Labor Arbiter Nicolas, “[t]he filing of the instant case and the attempts of the Papertech to transfer the complainant have brought about antipathy and antagonism between them, thereby resulting to strained relationship.”[33] With respect to the claim for damages, it was, likewise, denied due to Katando’s failure to discuss or pray for it in her position paper. Labor Arbiter Nicolas granted attorney’s fees because Katando was forced to litigate. Katando partially appealed to the NLRC.[34]

Ruling of the NLRC

On May 25, 2015, the NLRC denied the partial appeal but ordered Papertech to pay Katando her backwages from the time that she was illegally dismissed on February 25, 2014 until the finality of its decision, and separation pay computed at one month pay for every year of service up to the finality of the decision.[35]

The NLRC agreed with the Labor Arbiter that separation pay should be given to Katando in lieu of her reinstatement. The NLRC cited several cases involving Papertech and Katando, namely: (1) Papertech’s complaint in 2008 for illegal strike; (2) Katando’s verified petition for extraordinary remedies in September 2013; (3) Katando’s complaint for illegal suspension in February 2014; and (4) Katando’s complaint for illegal dismissal on April 24, 2014.

The NLRC held that these cases created an atmosphere of antipathy and antagonism.[36] According to the NLRC, “separation pay is the better alternative as it liberates Katando from what could be a highly hostile work environment, while releasing respondents from the grossly unpalatable obligation of maintaining in their employ a worker they could no longer trust.”[37]

Katando appealed to the CA.

Meanwhile on November 9, 2015, the CA, in CA-G.R. SP No.135557,[38] nullified the Resoutions dated September 30, 2013 and November 29, 2013 of the NLRC and directed Katando and her co-respondents to report back to work in the place designated by Papertech per notice of job assignments dated May 4, 2013, or if they obstinately refuse such assignment, ordered Papertech to pay them separation pay equivalent to one month salary for every year of service, as fraction of at least six months being considered as one whole year.[39] he CA held that Papertech was able to prove that it could no longer reinstate Katando and her co-petitioners to their previous positions. The abolition of these positions in its premises in Pasig City and the employees’ reassignment to its provincial plants were a valid exercise of its management prerogative.[40] Should the employees refuse their reinstatement to an equivalent position, the CA held that the payment of separation pay is a viable remedy.[41] This Court upheld the ruling of the CA in Our Resolution[42] dated August 15, 2016, which became final and executory on November 21, 2016.[43]

Ruling of the CA

On August 18, 2017, the CA granted Katando’s petition and ordered Papertech to immediately reinstate her to her previous position without loss of seniority rights in addition to the award of backwages.[44]

The CA ruled that the doctrine of strained relations cannot apply to Katando as she is part of the rank and file workforce and does not occupy a managerial or key position in the company. She even asked for her reinstatement. In addition, there is no proof of strained relations between her and Papertech.[45] It is not sufficient that the parties were involved in several cases because no strained relations should arise from a valid and legal act of asserting one’s right.[46]

Papertech filed a motion for reconsideration but it was denied by the CA. Thus, it filed a petition for review on certiorari before this Court seeking the reversal of the ruling of the CA. In compliance with the Resolution of this Court, Katando filed her comment and/or opposition to Papertech’s petition.

Issue

Whether the CA erred in ordering the reinstatement of Katando instead of granting her separation pay.

Ruling of the Court

We grant the petition.

The doctrine of strained relations was first introduced in the case of Balaquezon Employees & Workers Transportation Union v. Zamora.[47] In Balaquezon, the Court awarded backwages as severance pay based on equity. The Court explained, “[t]his means that a monetary award is to be paid to the striking employees as an alternative to reinstatement which can no longer be effected in view of the long passage of time or because of the “realities of the situation .”[48] After Balaquezon, the Court further expounded on the doctrine of strained relations in the case of Globe-Mackay Cable and Radio Corp. v. National Labor Relations Commission,[49] wherein We discussed the following considerations in applying the doctrine of strained relations: (1) the employee must occupy a position where he or she enjoys the trust and confidence of his or her employer;50 it is likely that if reinstated, an atmosphere of antipathy and antagonism may be generated as to adversely affect the efficiency and productivity of the employee concerned; (3) it cannot be applied indiscriminately because some hostility is invariably engendered between the parties as a result of litigation; and (4) it cannot arise from a valid and legal act of asserting one’s right.[51] After Globe-Mackay, We clarified that the doctrine cannot apply when the employee has not indicated an aversion to returning to work, or does not occupy a position of trust and confidence in, or has no say in the operation of, the employer’s business.[52] In addition, strained relations between the parties must be proven as a fact.[53]

Although Katando does not occupy a position of tn1st and confidence as a machine operator, the circumstances of this case nonetheless calls for the application of the doctrine of strained relations. It is true that litigation between the parties per se should not bar the reinstatement of an employee. However, as observed by the NLRC, this is not the only case involving Papertech and Katando. They have been in conflict since 2008, or for 11 years now. In the case of Digital Telecommunications Philippines, Inc. v. Digitel Employees Union,[54] We held that the length of time from the occurrence of the incident to its resolution and the demonstrated litigiousness of the parties showed that their relationship is strained. Similarly, the protracted litigation between the parties here sufficiently demonstrate that their relationship is strained. It is notable that Papertech has not even bothered to appeal the ruling of the Labor Arbiter, and even stated that “in order not to prolong the proceedings, and for both parties to peacefully move on from this unwanted situation, Papertech is willing to pay the judgment award of separation pay.”[55] Clearly, Papertech does not want Katando back as its employee.

Moreover, the CA stated in its final and executory November 9, 2015 Decision in CA-G.R. SP No. 135557, wherein Katando was one of the respondents together with Papertech’s other employees, that what remained in Papertech’s Pasig City premises was its sales, marketing, and distribution operations. In that lease, the CA held that the transfer of Papertech’s manufacturing and production departments to its provincial plants was valid. Consequently, the positions held by Katando and her co-respondents in Pasig City were abolished.[56] Bearing this in mind, Katando ‘s reinstatement as a machine operator in Papertech’s Pasig City premises is no longer possible; Thus, separation pay is the only viable option for Katando.

In addition to the monetary awards to Katando, legal interest to be counted from the time of extrajudicial or judicial demand, if the amount was established with reasonable certainty, or otherwise from the date of judgment of the court which quantified the amount until full payment, may also be imposed. However, the imposition of legal interest is subject to the discretion of the court.[57] Considering that Papertech was willing to pay Katando’s backwages and separation pay after Labor Arbiter Nicolas rendered his Decision,[58] We find that the imposition of an interest in this case is not warranted. Papertech should not be penalized for the delay in payment of the monetary awards because it was Katando who opted to elevate the case before the NLRC and the CA.

WHEREFORE, the petition is GRANTED. The Decision dated August 18, 2017 and the Resolution dated December 1, 2017 of the Court of Appeals in CA-G.R. SP No. 142550 are hereby REVERSED and SET ASIDE. The Decision dated May 25, 2015 and the Resolution dated June 30, 2015 of the National Labor Relations Commission in NLRC NCR Case No. 04-04837-14 are REINSTATED.

SO ORDERED.

Leonen, (Chairperson), Gesmundo, Zalameda, and Delos Santos, JJ. concur.

  • Designated as Additional Member of the Third Division.

[1] Rollo, pp. 10-31.
[2] Penned by Associate Justice Mario V. Lopez, with Associate Justices Remedios A. Salazar-Fernando and Ramon Paul L. Hernando (now a Member of this Court), concurring; id. at 32-38.
[3] Id. at 39-40.
[4] Penned by Commissioner Dolores M. Peralta-Beley, with Commissioners Grace E. Maniquiz-Tan and Mercedes R. Posada-Lacap, concurring; id. at 219-228.
[5] Id. at 234-236. Commissioner Grace E. Maniquiz-Tan dissented and stated that she was for the reinstatement of the complainant.
[6] Penned by Labor Arbiter Nicolas B. Nicolas; id. at 201-208.
[7] Id. at 220.
[8] Id. at 157.
[9] Id. at 163-166.
[10] Id. at 220.
[11] Id. at 41-48.
[12] Id. at 220.
[13] Id. at 288.
[14] Id. at 220.
[15] Id. at 127-132.
[16] Id. at 220-221.
[17] Id. at 287-288.
[18] No attached to the rollo.
[19] Rollo, p. 145.
[20] Docketed as CA-G.R. SP No. 135557.
[21] Rollo, p. 221.
[22] Id. at 61.
[23] Id. at 221.
[24] Id.
[25] Id.
[26] Id. at 221-222.
[27] Id. at 222.
[28] Id. at 201.
[29] Id. at 156-160.
[30] Id. at 223.
[31] Id. at 207-208.
[32] Id. at 206.
[33] Id. at 207.
[34] Id.
[35] Id. at 227.
[36] Id. at 226.
[37] Id. at 226-227.
[38] Penned by Associate Justice Zenaida T. Galapate-Laguilles, with Associate Justices Mariflor P. Punzalan-Castillo and Fiorito S. Macalino, concurring; id. at 287-297.
[39] Id. at 296-297.
[40] Id. at 294.
[41] Id. at 295-296.
[42] Id. at 298.
[43] Id. at 299.
[44] Id. at 37.
[45] Id. at 36.
[46] Id. at 37.
[47] Esmalin v. National Labor Relations Commission, 258 Phil. 335,349 (1989).
[48] Balaquezon Employees & Workers Transportation Union v. Zamora, 186 Phil. 3, 9 (1980).
[49] 283 Phil. 649, 664 (1992).
[50] See TPG Corp. v. Pinas, 804 Phil. 222, 232 (2017).
[51] Supra note 49 at 661.
[52] Fernandez, Jr. v. Manila Electric Co., G.R. No. 226002, June 25, 2018, 868 SCRA 156, 169.
[53] Rodriguez v. Sintron Systems, Inc., G.R. No. 240254, July 24, 2019.
[54] 697 Phil. 132, 157 (2012).
[55] Rollo, p. 25.
[56] Id. at 294.
[57] Lara’s Gifts & Decors, Inc. v. Midtown Industrial Sales, Inc., G.R. No. 225433, August 28,2019.
[58] See rollo, p. 255.

Categories
2020 January

HILARIO P. SORIANO, PETITIONER, V. PEOPLE OF THE PHILIPPINES, RESPONDENT.

FIRST DIVISION
[ G.R. No. 240458, January 08, 2020 ]

HILARIO P. SORIANO, PETITIONER, V. PEOPLE OF THE PHILIPPINES, RESPONDENT.

D E C I S I O N

J. REYES, JR., J.:

Before this Court is a Petition for Review on Certiorari,[1] assailing the Decision[2] dated February 28, 2018 of the Court of Appeals (CA) in CA-G.R. CR No. 39252, which affirmed with modification, only as to the penalty imposed, the Decision[3] dated October 13, 2015 of the Regional Trial Court (RTC) of Malolos City, Bulacan, finding petitioner Hilario P. Soriano (petitioner) guilty beyond reasonable doubt of violating Section 83 of Republic Act (R.A.) No. 337, as amended by Presidential Decree (P.D.) No. 1795 or the General Banking Act, and of estafa thru falsification of commercial documents.

Factual Antecedents

Two separate Information were filed against petitioner as follows:

Criminal Case No. 1719-M-2000

That on or about June 27, 1997 and thereafter and within the jurisdiction of this Honorable Court, the said accused, in his capacity as president of the Rural Bank of San Miguel (Bulacan), Inc., did then and there, unlawfully and feloniously, indirectly borrow or secure a loan with the Rural Bank of San Miguel, San Miguel Branch, a domestic rural banking institution created, organized and existing under Philippine Laws, amounting to Ph[P]15 million, knowing fully well that the same has been done by him without the written consent and approval of the majority of the board of directors of the said bank, and which consent and approval the said accused deliberately failed to obtain and enter the same upon the records of said banking institution and to transmit a copy of which to the supervising department of the said bank as required by the General Banking Act, by using the name of one depositor VIRGILIO J. MALANG of San Miguel, Bulacan, who have no knowledge of the said loan, and once in possession of the said amount of Ph[P]14,775,000.00 net of interest, converted the same to his own personal use and benefit, m flagrant violation of the said law.

CONTRARY TO LAW.[4]

Criminal Case No. 1720-M-2000

That on or about June 27, 1997 and thereafter, in San Miguel, Bulacan and within the jurisdiction of this Honorable Court, the said accused HILARIO P. SORIANO and ROSALINDA ILAGAN, as principals by direct participation, with unfaithfulness or abuse of confidence and taking advantage of their position as president of the Rural Bank of San Miguel (Bulacan) Inc., and Manager of the Rural Bank of San Miguel-San Miguel Branch, a duly organized banking institutions (sic) under Philippine laws, conspiring, confederating and mutually helping one another, did then and there, willfully and feloniously falsify loan documents consisting of loan application/information sheet, promissory note dated June 27, 1997, disclosure statement on loan/credit transaction, credit proposal report, manager’s check no. 06514 (sic) dated June 27, 1997 and undated RBSM-San Miguel Branch check voucher, by making it appear that one VIRGILIO J. MALANG filed the aforementioned loan documents when in truth and in fact, VIRGILIO J. MALANG did not participate in the execution of the said loan documents and that by virtue of the said falsification and with deceit and intent to cause damage, the accused credited the loan proceeds of the loan (sic) amounting to Ph[P]14,777,000.00, (sic) net of interest to the account of VIRGILIO J. MALANG with the RBSM and thereafter converted the same amount to their own personal gain and benefit, to the damage and prejudice of the Rural Bank of San Miguel-San Miguel Branch, its creditors and the Bangko Sentral ng Pilipinas in the amount of Ph[P]14,775,000.00.

CONTRARY TO LAW.[5]

Petitioner was charged of securing an indirect loan from Rural Bank of San Miguel (RBSM) while being an officer thereof by falsifying loan documents and making it appear that a certain Virgilio Malang (Malang) obtained the same, and thereafter, converting the proceeds for his personal gain and benefit.

To prove the charges, the prosecution presented, aside from pertinent documentary evidence, the following witnesses, to wit: (1) Herminio Principio (Principio) of the Department of Rural Bank Supervision and Examination Section, Bangko Sentral ng Pilipinas (DRB-BSP);6 Malang, a businessman and depositor of the (RBSM) in Bulacan;7 Andres Santillana (Santillana), president of Mechants Rural Bank of Talavera, Inc. (MRBTI);8 Epifanio Posada (Posada), branch manager of MRBTI, Sta. Rosa Branch;9 Evelyn Ramos (Ramos), a representative of the Land Bank of the Philippines (Land Bank), Gapan Branch;10 Nancy Angeles (Angeles), a cashier from Land Bank-Gapan;11 Francisco Gementiza (Gementiza) of the Philippine Clearing House (PCH);12 Nonito Cristobal (Cristobal), former branch manager of Land Bank-Gapan;[13] and (9) Elmer Haber (Haber) of the Philippine Deposit Insurance Corporation (PDIC).[14]

Principio testified that he was tasked to ascertain the financial conditions of rural banks and determine if these banks comply with the banking laws and the regulations, as well as the directives of the BSP. He became in-charge of RBSM. During the general examination, RBSM was found to have several violations, particularly the grant of loans “without proper and complete loan documentation” and “clean or unsecured loans were being granted in such a large amount that would be considered excessive for the substance of needs of the borrowers.”[15]

Upon further investigation, it was discovered that on June 27, 1997, RBSM released an unsecured loan with a principal amount of P15,000,000.00 to Malang, without a co-maker and collateral; without approval from the Credit Committee or the Board of Directors; and through an incomplete loan application, the same being signed in blank except for the name and address.[16] In a Letter[17] dated September 15, 1997 addressed to the BSP, petitioner stated that said loan was “approved/confirmed under BR No. 64A-1997 dated July 9, 1997” and that the same was “secured with the following collaterals: TCT-RT25807 (T-111040) situated in San Miguel, Bulacan, TCT-T34464 situated in Baliuag, Bulacan, [and] TCT-285848 situated in Caloocan City.”[18] Records, however, show that no report regarding said loan was submitted to the DRB-BSP and that there were no annotations on the transfer certificates of title purportedly subject of the real estate mortgage.[19]

Principio demanded from petitioner’s co-accused, Rosalinda Ilagan (Ilagan), RBSM General Manager, to produce the credit folder of the subject loan. Ilagan furnished Principio the following documents: (a) Loan Application/Information Sheet, signed in blank and without any information except the name and address of the alleged borrower; (b) Promissory Note No. 101-97-110 dated June 27, 1997, in the principal amount of P15,000,000.00, purportedly executed by Malang; (c) Disclosure Statement on Loan/Credit Transaction, purportedly signed by Malang; and (d) unnumbered Credit Proposal Report dated May 14, 1997, for spouses Malang, which was prepared, recommended for approval and signed by Hagan, approved by petitioner as member of the Board of Directors of RBSM, and does not bear the signatures of the majority of the Board of Directors of RBSM.[20]

Pursuant to the said loan, Manager’s Check No. 016514[21] dated June 27, 1997 in the amount of P14,775,000.00 payable to Malang was released.

Malang, however, denied having applied for and received any proceeds of the said loan. This was corroborated by an Affidavit[22] executed by Hagan. Instead, Malang testified that he knew petitioner as the president of RBSM and because they were both stockholders of MRBTI. He narrated that petitioner encouraged him to apply for a loan and gave him documents to fill up and sign. He, however, withdrew the application later on due to his wife’s objection thereto, and also due to their lawyer’s advice that the loan will not be granted because of the insufficient collateral. He was, thus, surprised to discover that the loan proceeds were deposited to his purported current account with RBSM, when he does not have one. Two personal checks with Nos. 0122077[23] and 0122076[24] dated July 1, 1997, amounting to P12,409,791.99 and P2,365,000.00, respectively, payable to himself, were thereafter issued and drawn from the said current account.[25] These checks were then deposited to another purported account of Malang in MRBTI.[26]

Upon confronting Santillana, MRBTI’s president, about the deposit, he found out that it was Ilagan, upon petitioner’s instruction, who deposited the two checks to the account.[27]

Santillana testified that, indeed, sometime m July 1997, Ilagan deposited checks in Malang’s account and thereafter, also withdrawn by Ilagan, per petitioner’s instruction. According to Santillana, petitioner instructed him as follows: “x x x Andy may padadala akong tseke riyan ideposito mo [sa] account ni Malang pagka clear ika, pababalikan ko kay Rose dyan, kukunin sayo ipalit mo ng kuwan ipakiusap mo sa Landbank na ipalit ng tseke sa ganong pangalan.”[28] Thus, the deposited amount was withdrawn through the issuance of 30 MRBTI checks,[29] drawn against MRBTI’s Land Bank account, payable to Malang. Thereafter, as arranged, said checks were taken by a certain Diosa Marquez with Ilagan and used to buy two Land Bank cashier’s checks, amounting to P12,409,791.99 (Check No. 000000992) and P2,365,000.00 (000000993) both dated July 3, 1997, payable to Norma Rayo (Rayo) and Teresa Villacorta (Villacorta), respectively.[30]

Ramos and Angeles of Land Bank-Gapan corroborated this testimony.[31]

These Land Bank checks, among others, were then deposited to RBSM to pay off petitioner’s previous irregular loans. Said payments were evidenced by official receipts issued by RBSM.[32]

Despite several opportunities given, the defense failed to file its formal offer of evidence.[33]

Incidentally, on May 18, 2014, the RTC received a copy of the Certificate of Death dated February 13, 2014 of Ilagan.[34]

In a Decision[35] dated October 13, 2015, the RTC found petitioner guilty as charged, viz.:

WHEREFORE, judgment is hereby rendered finding the accused Hilario P. Soriano:

a) [I]n Criminal Case No. 1719-M-2000, GUILTY beyond reasonable doubt for violation of Section 83, R.A. No. 337 as amended by P.D. No. 1795 (General Banking Act) and hereby sentences him to suffer imprisonment of ten years and a fine of Ph[P]200,000.00;

b) In Criminal Case No. 1720-M-2000, GUILTY beyond reasonable doubt of Estafa thru Falsification of Commercial Documents and hereby sentences him to an indeterminate prison sentence ranging from ten years and one day of prision mayor as minimum, to twenty years of reclusion temporal as maximum, and to indemnify the Rural Bank of San Miguel-San Miguel Branch, its creditors and Bangko Sentral ng Pilipinas the total sum of Php14,775,000.00, with interests thereon at the rate of 12% per annum from the filing of the Informations until paid, plus costs. Further, the accessory penalties as provided by law shall be imposed upon the accused.

On the other hand, the liability of accused, Rosalinda Ilagan, is extinguished in view of her death, as per Death Certificate dated 13 February 2014.

SO ORDERED.[36]

On appeal, the CA affirmed the RTC’s Decision with modification only as to the penalties imposed as follows:

WHEREFORE, the foregoing considered, the appeal is DENIED. The Decision dated 13 October 2015 of the Regional Trial Court (Branch 17, Malolos City) in Crim. Case Nos. 1719-M-2000 and 1720-M-2000 is AFFIRMED WITH MODIFICATION as to the following penalties prescribed:

(a) In Criminal Case No. 1719-M-2000, accused-appellant Hilario P. Soriano is found GUILTY beyond reasonable doubt for violation of Section 83, R.A. No. 337 as amended by P.D. No. 1795 (General Banking Act) and is hereby sentenced to suffer imprisonment of Ten (10) Years and a fine of Ten Thousand Pesos (P10,000.00); and

(b) In Criminal Case No. 1720-M-2000, accused-appellant Hilario P. Soriano is found GUILTY beyond reasonable doubt for the complex crime of Estafa thru Falsification of Commercial Documents and is hereby sentenced to an indeterminate sentence of imprisonment ranging from Four (4) Years and Two (2) Months of prision correccional as minimum to Thirteen (13) Years of reclusion temporal as maximum, and to indemnify the Rural Bank of San Miguel-San Miguel Branch, its creditors and Bangko Sentral ng Pilipinas the total sum of P14,775,000.00, with interests thereon at the rate of 12% per annum from the filing of the Informations until paid, plus costs. Further, the accessory penalties as provided by law shall be imposed upon the accused.

SO ORDERED.[37]

Petitioner’s motion for reconsideration was likewise denied by the CA in its June 26, 2018 assailed Resolution.[38]

Hence, this petition.

Issues

  1. Was petitioner’s guilt in Criminal Case No. 1719-M-2000 for violation of Section 83 of R.A. No. 337, as amended, proved beyond reasonable doubt?
  2. Was petitioner’s guilt in Criminal Case No. 1720-M-2000 for the complex crime of estafa thru falsification of commercial documents proved beyond reasonable doubt?

Petitioner maintains that he did not violate Section 83 of R.A. No. 337, as amended, or the DOSRI[39] law. Specifically, petitioner avers that the prosecution attempted to establish that he obtained an indirect loan under Malang’s name in the net amount of P14,775,000.00 but its evidence, namely the General Examination Report, refers to a different loan, i.e., his irregular loan amounting to P34,000,000.00. Petitioner also argues that the prosecution’s failure to present Rayo as witness was fatal to its case. Petitioner also points out that the prosecution failed to check his bank account to see if the subject went straight to his coffers to prove that it inured to his benefit.

Petitioner also argues that the prosecution evidence was insufficient to prove his participation in the commission of the crime of estafa through falsification of commercial documents. Specifically, petitioner stresses the fact that it was actually Malang who signed the loan application was established. Further, petitioner points out that as RBSM’s president, he was not engaged in frontline services for him to be able to process loan applications.

The Court’s Ruling

We find no merit in the instant petition.

At the outset, it must be noted that the arguments raised by petitioner inarguably require to inquire into the sufficiency of the evidence presented by the prosecution, a course of action which this Court will, generally, not do, consistent with our repeated holding that this Court is not a trier of facts. It is basic that factual findings of trial courts, including their assessment of witnesses’ credibility, are entitled to great weight and respect by this Court, especially when affirmed by the CA.[40] None of the jurisprudential exceptions[41] to this rule obtain in this case.

We find no cogent reason to deviate from the courts a quo’s ruling that petitioner was guilty beyond reasonable doubt of violating the DOSRI law, as well as of the complex crime of estafa through falsification of commercial documents. The clear, positive, and categorical testimonies of the nine prosecution witnesses that corroborate each other on all material points, coupled with the voluminous documentary evidence on record clearly establish petitioner’s guilt on the offenses charged.

Violation of the DOSRI Law

Section 83 of R.A. No. 337, as amended, states:

SEC. 83. No director or officer of any banking institution shall, either directly or indirectly, for himself or as the representative or agent of others, borrow any of the deposits of funds of such bank, nor shall he become a guarantor, indorser, or surety for loans from such bank to others, or in any manner be an obligor for moneys borrowed from the bank or loaned by it, except with the written approval of the majority of the directors of the bank, excluding the director concerned. Any such approval shall be entered upon the records of the corporation and a copy of such entry shall be transmitted forthwith to the Superintendent of Banks. The office of any director or officer of a bank who violates the provisions of this section shall immediately become vacant and the director or officer shall be punished by imprisonment of not less than one year nor more than ten years and by a fine of not less than one thousand nor more than ten thousand pesos.

x x x x.

From the foregoing, the following elements must be present to constitute a violation of the above-quoted provision: (1) the offender is a director or officer of any banking institution; (2) the offender, either directly or indirectly, for himself or as a representative or agent of another, performs any of the following acts: (a) he borrows any of the deposits or funds of such bank; or (b) he becomes a guarantor, indorser, or surety for loans from such bank to others; or (c) he becomes in any manner an obligor for money borrowed from bank or loaned by it; and (3) the offender has performed any of such acts without the written approval of the majority of the directors of the bank, excluding the offender, as the director concerned.[42]

The essence of the crime is becoming an obligor of the bank without securing the necessary written approval of the majority of the bank’s directors. The DOSRI law was enacted as the Congress deemed it essential to impose certain restrictions on the borrowings undertaken by directors and officers in order to protect the public, especially the depositors. Such restriction is necessary because of the advantage these bank officers have because of their position, in acquiring loans or borrowing funds from the bank funds. Indeed, banks were not created for the benefit of their directors and officers; they cannot use the assets of the bank for their own benefit, except as may be permitted by law.[43]

As borne by the records, the aforecited elements were established beyond reasonable doubt in this case. There is no question that petitioner was a director and officer of RBSM, being the president thereof. It was also established that the subject loan had no approval from RBSM’s board of directors. Petitioner, however, questions the existence of the second element. Petitioner argues that the evidence of the prosecution was not able to prove that the subject loan under Malang’s name, was his indirect loan as the prosecution evidence pertained to a different loan; nor was the prosecution able to establish that the alleged proceeds of said loan inured to his benefit to make him an obligor thereof.

According to petitioner, the prosecution evidence, particularly the General Examination Report of RBSM as of September 15, 1996, pertained to the another irregular loan under his name amounting to P34,000,000.00, which was divided into two names: his and Rayo’s. Put differently, petitioner avers that what the prosecution was able to prove was his previous irregular loans, not the indirect loan under Malang’s name, which was the subject of the Information in Criminal Case No. 1719-M-2000. Petitioner avers that the prosecution was “muddling the issues”.

Contrary to petitioner’s position, it is not the prosecution, but his averments, which muddle the factual circumstances.

Indeed, petitioner was charged and convicted under the DOSRI law because of his indirect loan under Malang’s name. This was established through the testimonies of the prosecution witnesses, found credible by the trial court and the CA, coupled with the documentary evidence presented. Evidence on record clearly establish that petitioner orchestrated the release of the subject fictitious loan under Malang’s name, the proceeds thereof were used to pay petitioner’s other irregular loans from RBSM. The prosecution witnesses testified that the whole process – from the loan application, the purported approval thereof, the release, up to the use of the proceeds were made to happen through the direct instructions of petitioner.

Contrary to what petitioner attempts to impress to this Court, the General Examination Report was not the only evidence presented by the prosecution to prove his hand in the indirect loan under Malang’s name. There was no error on the part of the prosecution in finding it relevant to prove petitioner’s previous irregular loans to establish his interest or motive in obtaining the subject indirect loan, i.e., to apply the same to said previous loans, among others. Indeed, as found by the courts a quo, the prosecution’s evidence was sufficient, not only to prove that petitioner orchestrated the whole process to obtain the subject loan, but also to prove that the proceeds thereof were used to pay off his previous irregular loans. Principio testified:

Q: Now, you pointed to a hand-written notation appearing at the dorsal portion of Exh. HH which dorsal portion was marked Exh. HH-1-a and the written notation which are O.R. No. 187038 and another O.R. is 187039, what are these ORs all about?
(Witness examining)
A: These [receipts] were issued by the Rural Bank of San Miguel, Plaridel Branch, sir.

Q: Why did the Rural Bank of San Miguel, Plaridel Branch issued said O.R.[s]?
A: [They are] for the receipt of the check[s] in the name of Teresa Villacorta and Norma Rayo, sir. [These] checks [were] applied to the loan[sl of Norma Rayo, Hilario Soriano and other names, sir.

Q: Now, let’s go to the two checks, one by one, to which loan was the check marked as Exh. HH in the amount of P2,365,000.00 applied to?
(Witness examining)
A: The check No. 00992 in the amount of P12,409,791.99 was applied to the loan of Norma Rayo and Hilario Soriano, sir.

Q: How about the check marked Exh. HH?
A: It was applied to the loan of Hilario P. Soriano, E. Perdigonez, C. de Guzman, and R. Carlos and M.V. Tecson, sir.[44] (Emphasis supplied)

Neither was the non-presentation of Rayo as a witness fatal to the prosecution’s case. The testimonies of the prosecution witnesses which were corroborative of each other in all the relevant and material points, coupled with the documentary evidence on record, established in detail, not only petitioner’s connection with Rayo, as well as Villacorta, but also the scheme perpetrated by petitioner to obtain the fictitious loan under Malang’s name.

That the proceeds of the subject loan did not go “straight to his coffers,” as petitioner points out, is of no moment. The established fact remains that petitioner obtained the subject indirect loan and used the proceeds thereof to pay his other obligations, among others. To this Court’s mind, it would be absurd for a high-ranking bank officer to orchestrate the processing and acquisition of a fictitious loan and to deposit the proceeds thereof straight to his personal bank account only to leave paper trails and put himself at the risk of easy apprehension. Precisely, petitioner resorted to a circuitous scheme to perpetrate his plan.

As held by this Court in the related case of Soriano v. People,[45] the prohibition under the DOSRI law is broad enough to cover various modes of borrowing, viz.:

It covers loans by a bank director or officer (like herein petitioner) which are made either: (1) directly, (2) indirectly, (3) for himself, (4) or as the representative or agent of others. It applies even if the director or officer is a mere guarantor, indorser or surety for someone else’s loan or is in any manner an obligor for money borrowed from the bank or loaned by it. The covered transactions are prohibited unless the approval, reportorial and ceiling requirements under Section 83 are complied with. The prohibition is intended to protect the public, especially the depositors, from the overborrowing of bank funds by bank officers, directors, stockholders and related interests, as such overborrowing may lead to bank failures. It has been said that “banking institutions are not created for the benefit of the directors [or officers]. While directors have great powers as directors, they have no special privileges as individuals. They cannot use the assets of the bank for their own benefit except as permitted by law. Stringent restrictions are placed about them so that when acting both for the bank and for one of themselves at the same time, they must keep within certain prescribed lines regarded by the legislature as essential to safety in the banking business.

A direct borrowing is obviously one that is made in the name of the DOSRI himself or where the DOSRI is a named party, while an indirect borrowing includes one that is made by a third party, but the DOSRI has a stake in the transaction. The latter type – indirect borrowing – applies here. x x x (Citations omitted)

Considering all the foregoing established circumstances, we find that the courts a quo correctly ruled that the prosecution evidence proved beyond reasonable doubt that petitioner, as president of RBSM, indirectly borrowed or secured a loan with RBSM without the written consent and approval of the majority of the board of directors, which consent and approval petitioner deliberately failed to obtain, by using the name of one depositor Malang, the latter having no knowledge of said loan, and thereafter converted the same to his own personal use and benefit.

Estafa through Falsification of
Commercial Documents

The elements of falsification of documents under paragraph 1, Article 172 of the Revised Penal Code (RPC) are: (1) that the offender is a private individual or a public officer or employee who did not take advantage of his official position; (2) that he committed any of the acts of falsification enumerated in Article 171 of the RPC;[46] and (3) that the falsification was committed in a public, official or commercial document.[47]

All these elements were likewise established in this case beyond reasonable doubt.

First, petitioner is a private individual.

Second, petitioner committed one of the acts of falsification under Article 171 of the RPC, i.e., he caused it to appear that Malang applied for the subject loan when he, in fact, did not do so. Records show that petitioner was able to convince Malang to sign the loan application, promissory note, and disclosure statement in blank, and together with his now deceased co-accused Ilagan, processed and approved the loan even if the same was retracted and discontinued by Malang, not to mention that the documents and requirements therefor were incomplete. Checks were later on issued and the proceeds thereof withdrawn under Malang’s name, again without the latter’s knowledge. Petitioner also made it appear, as can be gleaned from the Letter dated September 15, 1997 addressed to the BSP signed by petitioner, that the purported loan application of Malang was approved by RBSM board of directors and secured by real estate properties. Records, however, show that there was no such approval from the board nor was there any collateral for the subject loan.

Third, the falsification was committed in bank loan application, promissory note, checks and disclosure statement, among others, which are commercial documents. Commercial documents are, in general, documents or instruments which are “used by merchants or businessmen to promote or facilitate trade or credit transactions” such as the above-said documents and instruments.[48]

This committed falsification was also established to have been a necessary means to commit estafa.

In Tanenggee[49] the Court explained that:

The falsification of a public, official, or commercial document may be a means of committing estafa, because before the falsified document is actually utilized to defraud another, the crime of falsification has already been consummated, damage or intent to cause damage not being an element of the crime of falsification of public, official or commercial document. In other words, the crime of falsification has already existed. Actually utilizing that falsified public, official or commercial document to defraud another is estafa. But the damage is caused by the commission of estafa, not by the falsification of the document. Therefore, the falsification of the public, official or commercial document is only a necessary means to commit estafa.

Estafa is generally committed when (a) the accused defrauded another by abuse of confidence, or by means of deceit, and (b) the offended party or a third party suffered damage or prejudice capable of pecuniary estimation.” “[D]eceit is the false representation of a matter of fact, whether by words or conduct, by false or misleading allegations, or by concealment of that which should have been disclosed which deceives or is intended to deceive another so that he shall act upon it to his legal injury.” (Citations omitted)

As in this case, the crime of falsification was already consummated, and the falsified documents were, thereafter, used to defraud the bank to release money purportedly to Malang.

Records show that the elements of estafa obtain in this case. Petitioner falsely represented that Malang pursued the loan application and promissory note that were signed in blank through petitioner’s prodding; and orchestrating the whole process until he, with his now deceased co-accused Ilagan, succeeded in withdrawing the proceeds thereof from RBSM, coursing them through MRBTI and Land Bank, and thereafter applying the same to his previous irregular loans also with RBSM. Clearly, petitioner employed deceit to acquire money, on another person’s account, and use the same for his personal use and benefit, which resulted to the damage and prejudice of the RBSM in the amount of P14,775,000.00.

Again, petitioner could not have acquired the said amount to pay off his previous loans without the act of falsification. The falsification was, therefore, a necessary means to commit estafa, and falsification was already consummated even before the falsified documents were used to defraud the bank.[50]

Thus, the complex crime of estafa through falsification of documents is committed when the offender commits on a public, official or commercial document any of the acts of falsification enumerated in Article 171 as a necessary means to commit estafa.[51]

The fact that the loan application was actually signed by Malang, not by petitioner, could not belie his direct hand in perpetrating the crime. To reiterate, it was established that the loan application was signed by Malang in blank and processed through petitioner’s instructions, to make it appear that Malang purportedly participated in applying for the subject loan, despite the fact that the purported loan application was withdrawn by Malang. It was likewise established that it was petitioner’s scheme that made the issuance of the check in the name of Malang, and thereafter, the checks in the names of Rayo and Villacorta, possible. Hence, as correctly found by the RTC and the CA, one of the acts of falsification under Article 171 of the RPC, particularly paragraph 2 thereof- causing it to appear that a person has participated in any act when he did not in fact participate – is present in this case.

Also, while it may be true that petitioner, as RBSM president, was not engaged in frontline services for him to be able to actually process loan applications, his direct participation in the “circuitous scheme” which perpetrated the falsification and deception cannot be denied as borne by the records. Again, the prosecution’s evidence established beyond reasonable doubt that said nefarious scheme was devised by petitioner and was successfully executed through his direct instructions to the working participants.

In fine, as correctly synthesized by the appellate court:

There is overwhelming evidence to establish the fact that upon the instructions of [petitioner] Soriano, a fictitious loan in the amount of P15,000,000.00 was made to appear to have been granted by RBSM and released to Malang, and later on, the money was misappropriated by [petitioner] Soriano. From the extant evidence, it is indubitable that this intricate process was orchestrated by [petitioner] Soriano, with the help of accused Ilagan, to the detriment of Malang and RBSM. Earlier on, [petitioner] Soriano was able to convince Malang to sign the loan application, promissory note, and disclosure statement in blank and, together with accused Ilagan, processed and approved the loan, even though the same was retracted and discontinued by Malang, not to mention that the documents were incomplete, and the loan was not approved by the Board of Directors nor was it secured by any collateral. It was also established that it was [petitioner] Soriano who instructed Santillana to accept the RBSM manager’s check in the amount of P14,775,000.00, and to issue in its stead thirty (30) manager’s checks that were negotiated with Land Bank-Gapan Branch to secure the two (2) checks under the names of Rayo and Villacorta, for whatever purpose [petitioner] Soriano wanted to achieve.[52]

Imposable Penalty

For the violation of the DOSRI law, Section 83 of R.A. No. 337, as amended provides for the penalty of imprisonment of not less than one year nor more than 10 years and a fine of not less than P1,000.00 nor more than P10,000.00. Hence the imposed penalty of 10 years of imprisonment and a fine of P10,000.00 is well within the range of the prescribed penalty.

For the crime of estafa through falsification of commercial documents, being a complex crime, the penalty for the more serious crime, which is estafa in this case, shall be imposed in its maximum period. The CA correctly modified the penalty imposed by the RTC pursuant to the amendments under R.A. No. 10951,[53] the same being applicable retroactively as held in the recent case of Hernan v. Sandiganbayan.[54] Thus, under Section 85 of R.A. No. 10951, the penalty for estafa is prision correccional in its maximum period to prision mayor in its minimum period if the amount of the fraud is over P2,400,000.00 but does not exceed P4,400,000.00. If the amount of the fraud exceeds the latter sum, the penalty shall be imposed in its maximum period, adding one year for each additional P2,000,000.00 but the total penalty shall not exceed 20 years. In such cases, and also for purposes of the imposition of accessory penalties, the imposable penalty shall be termed prision mayor or reclusion temporal, as the case may be.

Applying the Indeterminate Sentence Law and considering that the amount involved herein is P14,775,000.00, the minimum term of the imposable penalty should be within the range of the penalty next lower to that prescribed by law for the offense, i.e., prision correccional in its minimum and medium periods applied in its maximum period, which is 2 years, 11 months, and 11 days to 4 years and 2 months. The CA, thus, correctly imposed the penalty of 4 years and 2 months of prision correccional as minimum.

On the other hand, the maximum term of the imposable penalty shall be taken from the maximum of the prescribed penalty[55] or 6 years, 8 months, and 21 days to 8 years, adding one year to the floor or the ceiling of the prescribed penalty at the discretion of the court,[56] for each additional P2,000,000.00 from the threshold amount of P4,400,000.00. Thus, as P14,775,000.00 exceeded P4,400,00.00 by P10,375,000.00, the difference shall be divided by P2,000,000.00 to bring us to the number of years to be added as incremental penalty, i.e., 5.1875. Prevailing jurisprudence dictates that any fraction of a year shall be discarded, hence, we only add 5 years either to the floor of the prescribed penalty or 6 years, 8 months, and 21 days or to the ceiling, which is 8 years. Thus, again, the CA correctly imposed the penalty of 13 years of reclusion temporal as maximum.

We, however, find it proper to modify the 12% interest imposed by the CA on the civil indemnity pursuant to recent jurisprudence[57] and BSP Circular No. 799. Thus, the interest rate of 6% per annum shall be imposed on the amount of P14,775,000.00 from the date of the finality of this Decision until full payment.

WHEREFORE, premises considered, the petition is DENIED. Accordingly, the Decision dated February 28, 2018 of the Court of Appeals is hereby AFFIRMED with MODIFICATION only as to the interest imposed. Accordingly, an interest of 6% per annum shall be IMPOSED on the amount of Fourteen Million Seven Hundred Seventy-Five Thousand (P14,775,000.00) Pesos from the date of the finality of this Decision until full payment.

SO ORDERED.

Peralta, C.J. (Chairperson), Caguioa (Working Chairperson), and Lazaro-Javier, JJ., concur.
Lopez, J., on official leave.

[1] Rollo, pp. 13-37.
[2] Penned by Associate Justice Manuel M. Barrios, with Associate Justices Victoria Isabel A. Paredes and Jhosep Y. Lopez, concurring; id. at 41-53.
[3] Penned by Presiding Judge Ma. Theresa V. Mendoza-Arcega; id. at 85-102.
[4] Amended Information; id. at 88.
[5] Id. at 87.
[6] Id. at 89-92.
[7] Id. at 92-93.
[8] Id. at 93-94.
[9] Id. at 94.
[10] Id.
[11] Id. at 95.
[12] Id.
[13] Id.
[14] Id. at 95-96.
[15] Id. at 16-17.
[16] Id. at 17.
[17] Exhibits “P-series,” records, Vol. V-A. pp. 249-253.
[18] Exhibit “P-5,” id. at 252.
[19] Rollo, p. 91; Exhibits “Q,” “R,” ”S,” id. at 254-256.
[20] Id. at 17.
[21] Exhibit “Z,” records, Vol. V-A, pp. 288-290.
[22] Exhibit “Y,” id. at 287.
[23] Exhibit “BB,” id. at 293.
[24] Exhibit “CC.” id.
[25] Rollo, pp. 92-93.
[26] Deposit Slip dated July 3, 1997, Exhibit “EE,” records, Vol. V-A, p. 295.
[27] Rollo, p. 88.
[28] Id. at 94.
[29] Exhibits “FF-series,” records, Vol. V-A, pp. 296-303.
[30] Rollo, pp. 93-94.
[31] Id. at 94-95.
[32] Exhibits “TT” and “UU,” records, Vol. V-A, pp. 427-428.
[33] Id. at 97.
[34] Id.
[35] Supra note 3.
[36] Rollo, pp. 101-102.
[37] Id. at 52.
[38] Id. at 55-57.
[39] Director, Officer, Stockholder and Related Interest.
[40] Pucay v. People, 536 Phil. 1117, 1125 (2006).
41 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 facts 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 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; (10) when the findings of fact are premised on the supposed absence of evidence and contradicted by the evidence on record; and (11) when the Court of Appeals manifestly overlooked certain relevant facts not disputed by the parties, which, if properly considered, would justify a different conclusion. Id. (Citation omitted)
[42] Go v. Bangko Sentral ng Pilipinas, 619 Phil. 306, 317 (2009).
[43] Id. at 317.
[44] TSN, Redirect Examination of Principio, Transcript of Stenographic Notes, April 28, 2005, pp. 9-10.
[45] 625 Phil. 33, 53-54 (2010).
[46] ART. 171. Falsification by public officer, employee; or notary or ecclesiastical minister. – The penalty of prision mayor and a fine not to exceed P5,000 pesos shall be imposed upon any public officer, employee, or notary who, taking advantage of his official position, shall falsify a document by committing any of the following acts:

  1. Counterfeiting or imitating any handwriting, signature, or rubric;
  2. Causing it to appear that persons have participated in any act or proceeding when they did not in fact so participate;
  3. Attributing to persons who have participated in an act or proceeding statements other than those in fact made by them;
  4. Making untruthful statements in a narration of facts;
  5. Altering true dates;
  6. Making any alteration or intercalation in a genuine document which changes its meaning;
  7. Issuing in an authenticated form a document purporting to be a copy of an original document when no such original exists, or including in such copy a statement contrary to, or different from, that of the genuine original; or
  8. Intercalating any instrument or note relative to the issuance thereof in a protocol, registry, or official book. (Emphasis supplied)
    [47] Tanenggee v. People, 712 Phil. 310, 332-333 (2013).
    [48] Id. at 333.
    [49] Id. at 334-335, citing the case of Domingo v. People, 618 Phil. 499 (2009).
    [50] Id. at 335.
    [51] Id.
    [52] Rollo, pp. 47-48.
    [53] AN ACT ADJUSTING THE AMOUNT OR THE VALUE OF PROPERTY AND DAMAGE ON WHICH A PENALTY IS BASED AND THE FINES IMPOSED UNDER THE REVISED PENAL CODE, AMENDING FOR THE PURPOSE ACT NO. 3815, OTHERWISE KNOWN AS “THE REVISED PENAL CODE” as AMENDED. Approved August 29, 2017.
    [54] G.R. No. 217874, December 5, 2017.
    [55] THE REVISED PENAL CODE, Article 48; “The falsification, which is the means used to commit the crime of malversation, is in the nature of a generic aggravating circumstance that effectively directs the imposition of the prescribed penalty in its maximum period”; People v. Valdez, G.R. Nos. 216007-09, 774 Phil. 723, 743 (2015).
    [56] People v. Ocden, 665 Phil. 268, 294 (2011).
    [57] Desmoparan v. People, G.R. No. 233598, March 27, 2019.
Categories
2020 January

SALVACION ZALDIVAR-PEREZ, PETITIONER, VS. HON. FIRST DIVISION OF THE SANDIGANBAYAN, PEOPLE OF THE PHILIPPINES, REPRESENTED BY ASSISTANT SPECIAL PROSECUTOR III MA. HAZELINA TUJAN-MILITANTE, OFFICE OF THE SPECIAL PROSECUTOR, OFFICE OF THE OMBUDSMAN, RESPONDENTS.

SECOND DIVISION
[ G.R. No. 204739, January 14, 2020 ]

SALVACION ZALDIVAR-PEREZ, PETITIONER, VS. HON. FIRST DIVISION OF THE SANDIGANBAYAN, PEOPLE OF THE PHILIPPINES, REPRESENTED BY ASSISTANT SPECIAL PROSECUTOR III MA. HAZELINA TUJAN-MILITANTE, OFFICE OF THE SPECIAL PROSECUTOR, OFFICE OF THE OMBUDSMAN, RESPONDENTS.

Hernando, J.:

Before this Court is a Petition for Certiorari[1] (under Rule 65 of the Rules of Court) with Prayer for Temporary Restraining Order assailing the August 28, 2012[2] and October 10, 2012[3] Resolutions of the Sandiganbayan in Criminal Case No. SB-12-CRM- 149, entitled People v. Salvacion Z. Perez, for having been rendered with grave abuse of discretion. The August 28, 2012 Resolution denied petitioner Salvacion Zaldivar-Perez’s (Perez) Urgent Motion to Dismiss with Notice of Entry of Appearance and Prayer for Deferment of Arraignment, while the October 10, 2012 Resolution denied her Motion for Reconsideration.

The case stemmed from the following facts:

A Complaint-Affidavit[4] dated April 28, 2006 for Unlawful Appointment, defined and penalized under Article 244 of the Revised Penal Code (RPC), was filed on May 17, 2006 with the Office of the Provincial Prosecutor of San Jose, Antique (OPP-Antique), Department of Justice, by Numeriano Tamboong (Tainboong) against petitioner Perez, who was then the Provincial Governor of Antique. Tamboong alleged that petitioner Perez appointed Atty. Eduardo S. Fortaleza (Fortaleza) on January 30, 2006 as the Provincial Legal Officer of the province despite knowing that he did not meet the minimum requirement of five (5) years in the practice oflaw under Section 481, Article XI, Title V of the Local Government Code of 1991.[5]

In her Counter-Affidavit[6] dated September 20, 2006, petitioner Perez argued that the appointment ofFortaleza is well-deserved because during his tenure as Provincial Legal Officer, he has been performing his duties and responsibilities with competence, honesty and integrity. She added that the position is confidential and co-terminus, thus experience can be dispensed with as provided under Rule X, Section 1(e) of the Omnibus Rules on Appointments and Other Personnel Actions under. the Civil Service Commission (CSC) Memorandum Circular (MC) No. 40, Series of 1998.[7]

She also averred that as Provincial Governor, she is authorized to appoint employees embraced in the Non-Career Service in the Government.

In its Resolution[8] dated August 6, 2009, the OPP-Antique ruled that there was sufficient evidence to support the existence of probable cause for Violation of Article 244 (Unlawful Appointments) of the RPC committed by petitioner Perez. It was noted that at the time of his appointment as Provincial Legal Officer, Fortaleza was a member of the Philippine Bar for only three (3) years, eight (8) months and twenty-eight (28) days, which is short of the 5-year minimum experience requirement as provided in Section 481 of the Local Government Code of 1991. In finding untenable petitioner Perez’s justification that experience can be dispensed with as Fortaleza’s position is confidential, the OPP-Antique opined that CSC MC No. 1, series of 1977, is a rule of general application with respect to appointment and other personnel action, thus it cannot amend a specific provision of a law. It is only the legislature that has the plenary power to repeal, abrogate or revoke existing laws. Thus, the OPP-Antique, in its August 6, 2009 Resolution, recommended that a criminal complaint for Violation of Article 244 of the RPC (Unlawful Appointments) be filed against petitioner Perez.

The original records of the ca e, together with the August 6, 2009 Resolution, were forwarded and received by the Deputy Ombudsman for Visayas on October 8, 2009 for approval.[9]

On October 12, 2009, the Deputy Ombudsman for Visayas endorsed[10] the August 6, 2009 Resolution, together with the records of the case, to the Preliminary Investigation, Administrative Adjudication and Review Bureau, an office under the supervision of Overall Deputy Ombudsman Orlando C. Casimiro (Deputy Ombudsman Casimiro) who has the investigative jurisdiction over the case, pursuant to the July 10, 2008 Memorandum of Ombudsman Ma. Merceditas Gutierrez (Ombudsman Gutierrez).

The initial indorsement of the Review Resolution of the said August 6, 2009 Resolution, recommending the approval of the filing of the Information against petitioner Perez for the offense complained of, was made on March 3, 2011 to Ombudsman Gutierrez.[11] As there was a change of leadership in the Office of the Ombudsman (OMB), a Review dated September 8, 2011 of the . August 6, 2009 Resolution was again indorsed on September 26, 2011 by Deputy Ombudsman Casimiro to the newly appointed Ombudsman Conchita Carpio Morales[12] who approved the aid Resolution on April 24, 2012.[13] Petitioner Perez was furnished a copy of the September 8, 2011 Review on May 10,2012.

On May 24, 2012, an Information[14] indicting petitioner Perez for Violation of Article 244 of the RPC (Unlawful Appointments) was filed before the Sandiganbayan. On May 8, 2012, the Sandiganbayan issued a Resolution directing the Bureau of Immigration to bar petitioner Perez from leaving the country without its prior approval. Petitioner Perez received a copy of the May 28, 2012 Resolution of the Sandiganbayan on May 30, 2012.

Incidentally, petitioner Perez filed aMotion for Reconsideration[15] of the September 8, 2011 Review on June 19, 2012[16] with the Office of the Overall Deputy Ombudsman who in turn indorsed the same to the OPP-Antique on June 26, 2012.

On July 3, 2012, the OPP-Antique received[17] petitioner Perez’s Urgent Motion to Dismiss with Notice of Entry of Appearance and Prayer for Deferment of Arraignment dated July 2, 2012 which was set for hearing[18] on July 5, 2012. In the said Motion, petitioner Perez complained of the delay in the preliminary investigation both before the OPP-Antique and the OMB­ Visayas,[19] which violated her constitutional right to a speedy disposition of the case, thus prayed for the dismissal of her case.[20] According to petitioner Perez, it took the OPP-Antique more than three (3) years from the filing of the Affidavit-Complaint to conclude the preliminary investigation and to arrive at the Resolution dated August 6, 2009, which it indorsed to the Deputy Ombudsman for Visayas on October 8, 2009 for approval, while it took the OMB almost two (2) years from the date the Resolution of the OPP-Antique was endorsed to them up to the time the Review Resolution came out and almost three years from the date of the Resolution of the OPP-Antique to the filing of the Information before the Sandiganbayan. Petitioner Perez argued that this protracted delay in the disposition of her case was prejudicial to her rights.

On July 12,2012, the prosecution filed its Comment Opposition[21] dated July 11, 2012 to the Petitioner’s Urgent Motion to Dismiss with Notice of Entry of Appearance and Prayer for Deferment of Arraignment. It argued that “there was no intentional delay on the part of the Office of the Ombudsman in the conduct of the preliminary investigation[,] neither was the proceeding attended by vexatious, capricious or oppressive delays [as] to prejudice the [petitioner] in her right to speedy disposition of her case.”[22]

Ruling of the Sandiganbayan

On August 28, 2012, the Sandiganbayan issued its first assailed Resolution denyingPetitioner Perez’s Motion to Dismiss with Notice of Entry of Appearance and Prayer for Deferment of Arraignment for lack of merit.

While the Sandiganbayan agreed with petitioner Perez that the Constitution guarantees her right to due process and speedy disposition of her case, however, it found that based on the circumstances obtaining in this case, both the OPP-Antique and the OMB-Visayas committed no violation of petitioner Perez’s aforesaid rights. The Sandiganbayan noted that although there was a long delay in the preliminary investigation of the case starting from the OPP-Antique, the record does not show that petitioner Perez had ever asserted her right to the speedy resolutions of the said preliminary investigation by following it up after she submitted her counter-affidavit or by filing any motion for the early resolution of the same both before the OPP­ Antique and OMB-Visayas. It was only after the arraignment was set on July 5, 2012 that petitioner Perez filed a Motion for Reconsideration raising delay in the conduct of the preliminary investigation. Having slept on her right to speedy disposition of her case for an unreasonable and unexplained length of time, the Sandiganbayan ruled that petitioner Perez cannot now invoke violation of such right to justify the dismissal of the case as her inaction was tantamount to the waiver of her right.

As to the contention of petitioner Perez that the proceeding in this case should be deferred because of the pendency of the Motion for Reconsideration before the OMB-Visayas, the Sandiganbayan ruled that the filing of the Information with the Court on May 24,2012 did not affect the validity of the Information as it did not deprive hero of her right to seek reconsideration of the said Resolution. Moreover, the only requirement under Section 7(a), Rule II of the Rules of Procedure of the OMB (Administrative Order No. 07, as amended) is that the Motion for Reconsideration should be filed within five (5) days from notice thereof with the OMB, or the Deputy Ombudsman as the case may be, with the corresponding leave of court in cases where the Information has already been filed in court. The prosecution alleged that petitioner Perez failed to comply with he said requirement when she filed her motion for reconsideration on the 21st day from receipt of the September 11, 2011 Review of the Resolution date August 6, 2009. However, petitioner Perez argued that her Motion for Reconsideration was filed within the period required by law. At any rate, Section (b), Rule II of the Rules of Procedure of the OMB also provides that the “filing of a motion for reconsideration/reinvestigation shall not bar the filing of the corresponding information in Court on the basis o the finding of probable cause in the resolution subject of the motion.”

In the end, the Sandiganbayan ruled:

WHEREFORE, in light of al1 the foregoing, the accused’s Urgent Motion to Dismiss With Notice of Entry of Appearance and Prayer for Deferment of Arraignment, dated Jul 2, 2012, is hereby DENIED for lack of merit.

The arraignment of the accused is hereby set on September 27,2012 at 8:30 in the morning.

SO ORDERED.[23]

Aggrieved, petitioner Perez filed a Motion for Reconsideration of the above Resolution of the Sandiganbayan which was opposed by the prosecution for being a reiteration of her arguments in her previous motion.[24]

In its Resolution[25] dated October 10, 2012, the Sandiganbayan denied petitioner Perez’s Motion for Reconsideration on the ground that the arguments set forth therein were a mere rehash or reiteration of the arguments in her Urgent Motion to Dismiss, and Reply which the Court had already judiciously considered and passed upon, except for the issue that the Information was filed by the Investigating Prosecutor without the prior written authority or approval of the Provincial or City Prosecutor or Chief State Prosecutor or the Ombudsman or his Deputy.

Hence, this Petition for Certiorari.

Petitioner Perez seeks to reverse and set aside the August 28, 2012 and October 10, 2012 Resolutions ofthe Sandiganbayan on the ground that said court gravely abused its discretion when it refused: 1) to defer the proceeding in the criminal case in light of the pending Motion for Reconsideration filed before the OMB-Visayas; 2) to dismiss the criminal case despite the fact that an Information was filed without proper authority; and 3) to dismiss the criminal case despite the fact that there was undue and unjustifiable delay in the resolution of the said case by the OMB-Visayas in grave violation of her constitutional right to due process and speedy disposition of the case against her.

Petitioner Perez maintains that the Sandiganbayan committed grave abuse of discretion amounting to lack or excess of jurisdiction when it refused to defer the proceeding in this case due to the pending Motion for Reconsideration before the OMB.

We hold otherwise.

The issue raised by petitioner has already been addressed by the Court in Garcia v. Sandiganbayan[26] where We held:

From the filing of information, any disposition of the case such as its dismissal or its continuation rests on the sound discretion of the court, which becomes the sole judge on what to do with the case before it. Pursuant to said authority, the court takes full authority over the case, including the manner of the conduct of litigation and resort to processes that will ensure the preservation of its jurisdiction. Thus, it may issue warrants of arrest, HDOs and other processes that it deems warranted tinder the circumstances.

In this case, the Sandiganbayan acted within its jurisdiction when it issued the HDOs against the petitioner. That the petitioner may seek reconsideration of the finding of probable cause against her by the OMB does not undermine nor suspend the jurisdiction already acquired by the Sandiganbayan. There was also no denial of due process since the petitioner was not precluded from filing a motion for reconsideration of the resolution of the OMB. In addition , the resolution of her motion for reconsideration before the OMB and he conduct of the proceedings before the Sandiganbayan may proceed concurrently.

Moreover, the Rules of Procedure of the Office of the Ombudsman expressly provides that the filing of motion of reconsideration does not prevent the filing of information. Sect on 7, Rule II of Administrative Order No. 07 reads:

Section 7. Motion for reconsideration

a) Only one motion for reconsideration or reinvestigation of an approved order or resolution shall be allowed, the same to be filed within five (5) days from notice thereof with the Office of the Ombudsman, or the proper Deputy Ombudsman as the case may be, with corresponding leave of court in cases where information has already bee filed in court;

b) The filing of a motion for reconsideration/reinvestigation shall not bar the filing of the corresponding information in Court on the basis of the finding of probable cause in the resolution subject of the motion. (As amended by Administrative Order No. 15, dated February 16, 2000) x x x

As can be understood from the foregoing, an information may be filed even before the lapse of the period to file a motion for reconsideration of the finding of probable cause. The investigating prosecutor need not wait until the resolution of the motion for reconsideration before filing the information with the Sandiganbayan especially that his findings and recommendation already carry the stamp of approval of the Ombudsman. In any case, the continuation of the proceedings is not dependent on the resolution of the motion for reconsideration by the investigating prosecutor. In the event that, after a review of the case, the investigating prosecutor was convinced that there is no sufficient evidence to warrant a belief that the accused committed the offense, his resolution will not result to the automatic dismissal of the case or withdrawal of information already filed before the Sandiganbayan. The matter will still depend on the sound discretion of the court. Having acquired jurisdiction over the case, the Sandiganbayan is not bound by such resolution but is required to evaluate it before proceeding further with the trial and should embody such assessment in the order disposing the motion. Thus, in Fuentes v. Sandiganbayan, the Court emphasized:

The court is not to the mere approval or disapproval of the stand taken by the prosecution. The court must itself be convinced that there is indeed no sufficient evidence against the accused and this conclusion can only be reached after an assessment of the evidence in the possession of the prosecution. What is required is the court’s own assessment of such evidence. (Citations omitted, emphasis supplied)

Petitioner Perez likewise alleges that the Information filed against her should be declared null and void because it was filed without the authority of the Ombudsman or her Deputy. She argues that the Information was prepared by the Investigating Prosecutor on September 8, 2011 and sworn to on the same date or months ahead of its approval by Ombudsman Carpio Morales on April24, 2012.

Petitioner Perez’s contention is not well-taken.

As correctly found by the Sandiganbayan, the prosecution did not commit any violation considering that the Ombudsman approved the September 8, 2011 Review of the August 6, 2009 Resolution on April 24, 2012 and when it was filed on May 24, 2012, the Information bore the approval of Ombudsman Carpio Morales.

Notwithstanding the foregoing, We hold that the Sandiganbayan committed grave abuse of discretion amounting to lack or excess of jurisdiction when it ruled that there was no violation of petitioner Perez’s right to the speedy disposition of her case.

“The right to speedy disposition of cases x x x enshrined in Section 16, Article III of the Constitution x x x declares in no uncertain terms that ‘[a]ll persons shall have the right to a speedy disposition of their cases before all judicial, quasi-judicial, or administrative bodies. [This constitutional mandate demands] the swift resolution or termination of a pending case or proceeding. The right to a speedy disposition of cases is deemed violated only when the proceedings are attended by vexatious, capricious, and oppressive delays. What the Constitution prohibits are unreasonable, arbitrary and oppressive delays which render rights nugatory.”[27]

In Dela Peña v. Sandiganbayan,[28] the Court laid down certain guidelines to determine whether the right to speedy disposition of cases has been violated, to wit:

The concept of speedy disposition is relative or flexible. A mere mathematical reckoning of the time involved is not sufficient. Particular regard must be taken of the facts and circumstances peculiar to each case. Hence, the doctrinal rule is that in the determination of whether that right has been violated, the factors that may be considered and balanced are as follows: (1) the length of delay; (2) the reasons for the delay; (3) the assertion or failure to assert such right by the accused; and (4) the prejudice caused by the delay. (Citations omitted)

After a careful review of the facts and circumstances of this case and following he above principle, We find that petitioner Perez’s right to speedy disposition of the case against her has been transgressed.

First, as to the length of delay.

The records show that Tamboong’s Complaint-Affidavit was filed before the OPP-Antique on May 17, 2006. On September 21,2006, petitioner Perez filed her counter-affidavit dated. September 20, 2006. On September 28, 2006, Tamboong filed his Reply-Affidavit. After finding probable cause, the OMB-Visayas issued a Resolution dated August 6, 2009 recommending that a criminal complaint for Unlawfull Appointment be filed against petitioner Perez. On October 12, 2009, the August 6, 2009 Resolution was forwarded and received by the Deputy Ombusman for Visayas for review. The initial indorsement of the Review Resolution of the August 6, 2009 Resolution was made on March 3, 2011 to Ombudsman Gutierrez. As there was a change of leadership in the OMB, a Review dated September 8, 2011 of the August 6, 2009 Resolution was again indorsed on September 26, 2011 to the newly appointed Ombudsman Carpio-Morales who approved the said Review Resolution on April 24, 2012. On ay 24, 2012 an Information indicting petitioner Perez for Violation of Article 244 of the RPC (Unlawful Appointments) was filed with the Sandiganbayan.

From the foregoing facts, approximately six years had elapsed from May 17, 2006, the time when the complaint-affidavit was filed before the OPP-Antique, until May 24, 2012, when the case was filed before the Sandiganbayan. The OPP-Antique too almost three years from the filing of the Complaint-Affidavit within which to conclude the preliminary investigation and to arrive at its August 6, 2009 Resolution, while it took the OMB for Visayas more than three years from the date. the August 6, 2009 Resolution was endorsed to it up to the time the Review Resolution was finalized on September 8, 2011 and approved by Ombudsman Carpio Morales on September 26, 2011. Still, it took he Ombudsman another eight months from the approval of the September 8, 2011 Review of the August 6, 2009 Resolution up to the filing of the complaint before the Sandiganbayan on May 24, 2012. This period to conduct and complete the preliminary investigation is already excessive. Such a long delay was unreasonable and inordinate so as to constitute an outright violation of the speedy disposition of petitioner Perez’s case.

Second, as to the reason for the delay.

Valid reasons for the delay identified and accepted by the Court include, but are not limited to: (1) extraordinary complications such as the degree of difficulty of the questions involved, the number of persons charged, the various pleadings filed, and the voluminous documentary and testimonial evidence on record; and (2) acts attributable to the respondents.[29]

We note that the prosecution offered no explanation regarding the delay in conducting the preliminary investigation and in its findings indicting petitioner Perez of the offense charged. The charge of Unlawful Appointment based on the ground that the appointee does not possess the minimum requirement for the said position is a simple case and does not involve a complicated and complex issue that would require the painstaking scrutiny and perusal of the Ombudsman that would warrant the protracted delay. It bears stressing that this case involved only petitioner Perez and the only pleading that she filed was her Counter-Affidavit and nothing else. Clearly, the delay in this case is a disregard of the Ombudsman’s Constitutional mandate to be the “protector of the people” and as such, required to act promptly on complaints filed in any form or manner against officers and employees of the Government, or of any subdivision, agency or instrumentality thereof, in order to promote efficient service.[30]

Third, with regard to the assertion or failure to assert such right by the accused.

The Court disagrees with the ratiocination of the Sandiganbayan that laches had already set in because petitioner Perez failed or neglected for an unreasonable length of time to assert her right to a speedy termination of the preliminary investigation or to file a motion for early resolution of the said investigation before the OPP-Antique. It is not for the petitioner to ensure that the wheels of justice continue to turn. Rather, it is for the State to guarantee that the case is disposed within a reasonable period. Thus, it is of no moment that petitioner Perez did not file any motion before the Ombudsman to expedite the proceeding. It is sufficient that she raised the constitutional infraction prior to her arraignment before the Sandiganbayan.[31]

In Cervantes v. Sandiganbayan[32] we emphatically held:

It is the duty of the prosecutor to speedily resolve the complaint, as mandated by the Constitution, regardless of whether the petitioner did not object to the delay or that the delay was with his acquiescence provided that it was not due to causes directly attributable to him.

Similarly, we pointed out in Coscolluela v. Sandiganbayan[33] that:

Being the respondents in the preliminary investigation proceedings, it was not the petitioners’ duty to follow up on the prosecution of their case. Conversely, it was the Office of the Ombudsman’s responsibility to expedite the same within the bounds of reasonable timeliness in view of its mandate to promptly act on all complaints lodged before it. As pronounced in the case of Baker v. Wingo:

A defendant has no duty to bring himself to trial; the State has that duty as well as the duty of insuring that the trial is consistent with due process. (Citation omitted)

Fourth, prejudice caused by the delay.

There is no doubt that petitioner Perez was prejudiced by the inordinate delay in the conduct of the preliminary investigation. The lapse of six years before the filing of the Information with the Sandiganbayan placed her in a situation of uncertainty. This protracted period of uncertainty over her case caused her anxiety, suspicion and even hostility. The inordinate delay defeats the salutary objective of the right to speedy disposition of cases, which is “to assure that an innocent person may be free from the anxiety and expense of litigation or, if otherwise, of having his guilt determined within the shortest possible time compatible with the presentation and consideration of whatsoever legitimate defense he may interpose.”[34] To perpetuate a violation of this right by the lengthy and unreasonable delay would result to petitioner Perez’s inability to adequately prepare for her case and would create a situation where the defense witnesses were unable to recall accurately the events of the distant past, leading to the impairment of petitioner Perez’s possible defenses.[35] This, we cannot co untenance without running afoul to the Constitution.

Thus, in view of the foregoing, it is indubitable that petitioner Perez’s constitutional right to speedy disposition of her case had been infringed. Perforce, the assailed resolutions must be set aside and the criminal case filed against petitioner Perez be dismissed.

WHEREFORE, the Petition for Certiorari is GRANTED. The August 28, 2012 and October 10, 2012 Resolutions of the Sandiganbayan in Criminal Case No. SB-12-CRM-0149 are REVERSED and SET ASIDE. Criminal Case No. SB-12-CRM-0149 against petitioner Salvacion Zaldivar­ Perez is hereby DISMISSED on the ground of violation of her right to a speedy trial. The Temporary Restraining Order issued by this Court on January 16, 2013 enjoining the First Division of the Sandiganbayan, the respondents, their representatives, agents or other persons acting on their behalf from proceeding with Criminal Case No. SB-12-CRM-0149 and from executing the Resolutions dated August 28,2012 and October 10,2012 of the Sandiganbayan, First Division, is mad PERMANENT.

Perlas-Bernabe,J., (Chairperson), Reyes, A. Jr., Hernando, Inting,* and Zalameda, ** JJ., concur.

  • On official leave.

** Designated Additional Member per Special Order No. 2727 dated October 25, 2019.

[1] Rollo, pp. 3-29.
[2] Id. at 30-38; penned by Associate Justice Efren N. De la Cruz and concurred in by Associate Justices
Rodolfo A. Ponferrada and Rafael L. Lagos.
[3] Id. at 39-41.
[4] ld. at 174-177.
[5] SECTION 481. Qualifications, Term, Powers and Duties.-(a) No person shall be appointed legal officer
unless he is a citizen of the Philippines, a resident of the local government unit concerned, of good moral character, and a member of the Philippine Bar. He must have practiced his profession for at least five (5) years in the case of the provincial and city legal officer, and three (3) years in the case of the municipal legal officer.
[6] Rollo, pp. 51-59.
[7] e. Appointees to confidential/personal staff must meet only the educational requirements prescribed under
CSC MC l, s. 1997. The civil service eligibility, experience, training and other requirements are dispensed with.
[8] Rollo, pp. 181-184.
[9] Id. at 179.
[10]Id.at 180.
[11]Id.at 185.
[12]Id.at 186.
[13]Id.at 189.
[14]Id.at 191-192.
[15]Id.at 195-210.
[16]Id.at 195.
[17] Id. at 98.
[18] Id. at 97.
[19] Id. at 92.
[20] Id. at 92-93.
[21] Id. at 218-225.
[22] Id. at 221-222.
[23] Id. at 37-38.
[24] Id. at 39.
[25] Id. at 39-41.
[26] G.R. Nos. 205904-06, October 17, 2018.
[27] Salcedo v. Sandiganbayan, G.R. Nos. 223869-960, February 13,2019.
[28] 412 Phil. 921, 929 (2001).
[29] Magante v. Sandiganbayan, G.R. Nos. 230950-51, July 23,2018.
[30] Escobar v. People, G.R. Nos. 228349 and 228353, September 19,2018.
[31] Id
[32] 366 Phil. 602, 609 (1999).
[33] 714 Phil. 55, 64 (2013), citing Barker v. Wingo, 407 U.S. 514 (1972).
[34] Id. at 65.
[35] Id.

Categories
2020 January

VALENTIN C. MIRANDA, COMPLAINANT, VS. ATTY. MACARIO D. CARPIO, RESPONDENT.

FIRST DIVISION
[ A.C. No. 6281, January 15, 2020 ]

VALENTIN C. MIRANDA, COMPLAINANT, VS. ATTY. MACARIO D. CARPIO, RESPONDENT.

R E S O L U T I O N

PERALTA, C.J.:

For the consideration of the Court is the Report and Recommendation[1] dated June 20, 2019 of the Office of the Bar Confidant (OBC), which was submitted pursuant to this Court’s Resolution[2] dated December 3, 2014.

On September 26, 2011, the Court issued a Decision[3] which suspended respondent from the practice of law for a period of six (6) months, and ordered him to return to complainant the owner’s duplicate of OCT No. 0-94 immediately upon receipt of the said Decision. Respondent was warned that a repetition of the same or similar acts shall be dealt with more severely.

In a Resolution[4] dated July 28, 2014, the Court required the respondent to show cause why he should not be held in contempt of court for failure to comply with the lawful order of the Court; and to comply with the said Order by returning to the complainant the owner’s duplicate of OCT No. 0-94. Furthermore, the Court required respondent to file his sworn statement with motion to lift order of suspension with certification to that effect, from the IBP Local Chapter where he is affiliated, and from the Office of the Executive Judge of the courts where he practices his legal profession, to affirm that he has fully served his six (6) months suspension from October 12, 2011 to April 12, 2012, all within ten (10) days from notice.

In a letter[5] dated August 21, 2014, respondent attached a copy of his last letter[6] dated May 25, 2014 to the Court, stating that he was always ready to return the owner’s duplicate of OCT No. 0-94. He stated, however, that it was complainant who failed to claim the said title from respondent. He reasoned that he cannot release: the said title to anyone but only to the complainant in the interest of security. He also asserted his advance age as reason to his inability to personally deliver the said title.

In his Explanation/Compliance/Motion to Lift Order of Suspension[7] dated October 28, 2014, respondent also argued that he cannot return the owner’s duplicate of OCT No. 0-94 since it was not complainant who gave it to him. He stressed that he received the said copy as proof of his success in handling LRC Case No. M-226 as complainant’s counsel. In the same motion, respondent reiterated complainant’s failure to personally claim the said copy of the OCT from him.

Further, respondent argued that he was only forced to accept a case without first having his suspension lifted by the Court because of financial necessity, and that he firmly believed that his suspension was automatically lifted.

The OBC recommended that the respondent’s motion to lift order of suspension be denied, and to impose a more severe penalty due to the continuing failure of respondent to comply with the Court’s Decision dated September 26, 2011.

After a careful review of the records of the case, We resolve to adopt the recommendation of the OBC.

Respondent’s contentions that (1) it was complainant who failed to personally claim the owner’s duplicate of OCT No. 0-94 from him; and (2) he should not be made to return the said copy of the OCT because he secured the same from the court and not from the complainant, are absurd, and shall not be given any weight or consideration.

As a matter of fact, respondent’s actuations are violative of the oath he took before admission to the practice of law, which provides:

I, do solemnly swear that I will maintain allegiance to the Republic of the Philippines; I will support its Constitution and obey laws as well as the legal orders of the duly constituted authorities therein; I will do no falsehood, nor consent to the doing of any in court; I will not wittingly nor willingly promote or sue any groundless, false or unlawful suit, or give aid nor consent to the same; I will delay no man for money or malice, and will conduct myself as a lawyer according to the best of my knowledge and discretion, with all good fidelity as well to the courts as to my clients; and I impose upon myself these voluntary obligations without any mental reservation or purpose of evasion. So help me God.[8]

As an officer of the court, it is a lawyer’s duty to uphold the dignity and authority of the Court. The highest form of respect for judicial authority is shown by a lawyer’s obedience to court orders and processes.[9]

Respondent cannot escape the fact that he disobeyed the order of the Court by reasoning that it was complainant’s fault for not personally claiming the copy of the said OCT from him. The order of the Court was clearly directed at him, and for him alone, to comply. He cannot simply pass this obligation to the complainant.

We do not give any credence to respondent’s contention that his failure to return the said copy is also due to his advance age and sickly condition. It may be noted that respondent maintains a law office, which is more than capable to effect the delivery of the said document to the complainant, either personally or through mail.

Also, respondent’s arguments that he was only forced to accept a case without first having his suspension lifted by the Court because of financial necessity, and that he firmly believed that his suspension was automatically lifted, are untenable.

In Paras v. Paras,[10] We held respondent administratively liable when he accepted new clients and cases and worked on an amicable settlement for his client with the Department of Agrarian Reform even before the Court lifted his suspension order.

Financial necessity is not’ a valid excuse to disregard the order of suspension as meted against respondent. Jurisprudence is replete with cases where the Court held that “the lifting of a lawyer’s suspension is not automatic upon the end of the period stated in the Court’s decision, and an order from the Court lifting the suspension at the end of the period is necessary in order to enable him to resume the practice of his profession.”[11]

WHEREFORE, respondent’s motion to lift the order of suspension is hereby DENIED. Atty. MACARIO D. CARPIO is further SUSPENDED from the practice of law for another six (6) months, effective upon receipt of this Resolution.

Likewise, Atty. Carpio is DIRECTED to RETURN the owner’s duplicate copy of the OCT No. 0-94 to the complainant. He is again hereby warned that a repetition of the same or similar acts shall be dealt with more severely.

Let a copy of this Resolution be made part of the records of respondent in the Office of the Bar Confidant, Supreme Court of the Philippines, and be furnished the Integrated Bar of the Philippines, and be circulated to all courts.

SO ORDERED.

Caguioa, J. Reyes, Jr., Lazaro-Javier, and Lopez, JJ., concur.

[1] Rollo, pp. 537-539.
[2] Id. at 535-536.
[3] Id. at 438-447.
[4] Id. at 453.
[5] Id. at 478.
[6] Id. at 479-480.
[7] Id. at 489-534.
[8] Emphasis supplied.
[9] Santeco v. Atty. Avance, 659 Phil. 48, 51 (2011).
[10] 807 Phil. 153 (2017).
[11] Maniago v. Atty. De Dios, 631 Phil. 139, 144 (2010), citing A.C. No. 3066, entitled J.K. Mercado and Sons Agricultural Enterprises, Inc. v. De Vera and A.C. No. 4438, entitled Atty. De Vera v. Atty. Meryvn G. Encanto, et al., 375 Phil. 766 (1999); Memorandum dated November 4, 2008 addressed to Justice Consuela Ynares-Santiago, Chairperson, Third Division.

Categories
2020 January

ATTY. AROLF M. ANCHETA, PETITIONER, V. FELOMINO C. VILLA, RESPONDENT.

FIRST DIVISION
[ G.R. No. 229634, January 15, 2020 ]

ATTY. AROLF M. ANCHETA, PETITIONER, V. FELOMINO C. VILLA, RESPONDENT.

D E C I S I O N

CAGUIOA, J:

This is a Petition for Review on Certiorari[1] under Rule 45 of the Rules of Court assailing the Resolutions dated September 20, 2016[2] and December 28, 2016[3] of the Court of Appeals (CA) in CA-G.R. SP No. 147457. The CA dismissed outright the petition for certiorari filed by petitioner Arolf M. Ancheta (Ancheta).

The Facts

This case stemmed from an administrative complaint filed by respondent Felomino C. Villa (Villa) against Ancheta, former Provincial Agrarian Reform Adjudicator (PARAD) of the Department of Agrarian Reform Adjudication Board (DARAB) Regional Office No. III, Talavera, Nueva Ecija for Grave Misconduct and Dishonesty and for violation of Republic Act No. (R.A.) 3019 in connection with Ancheta’s alleged irregular Issuance of an Order granting the quashal of a writ of execution in favor of Villa.[4]

According to Villa’s complaint, he was the winning party in a case before the CA, the Decision of which was promulgated on June 30, 2004. On May 12, 2010, he filed a Motion for Immediate Issuance of a Writ of Execution and Urgent Manifestation before the DARAB-Talavera to implement said Decision. On June 23, 2010, Villa filed an Urgent Manifestation with Motion for Early Resolution because the five-year execution period for the CA Decision would expire in October 2010. On September 8, 2010, Ancheta issued an Order granting Villa’s motion for issuance of a writ of execution, which was implemented on October 4, 2010.[5]

On November 23, 2010, the opposing party filed a Motion to Quash the Writ of Execution. On December 6, 2010, the opposing party also filed a Complaint for Enforcement of Judgment by Action/Revival of Judgment. On January 12, 2011, Villa filed a Verified Answer with Motion to Admit the Answer as Opposition to the Motion to Quash Writ of Execution.[6]

Subsequently, Villa learned from close friends and relatives that the opposing party was allegedly boasting that the latter would soon recover the subject property after giving a huge amount of money to Ancheta. He also learned that a resolution or order was already issued and that the opposing party already went to DARAB-Talavera to get a copy of the same.[7] Villa further claimed that some employees of the DARAB-Talavera secretly told him that there was indeed a resolution or order reversing the writ of execution earlier issued in his favor. Thus, Villa was constrained to file an Urgent Motion for Inhibition against Ancheta.[8]

On June 10, 2011, Ancheta issued an Order granting the motion for inhibition and inhibited himself from handling the case. The case was then indorsed to the DARAB Regional Office at San Fernando City, Pampanga.[9]

Meanwhile, Villa sent a copy of the Motion for Inhibition to Director Marlyn Torres-Galvez (Dir. Torres-Galvez) of the Public Assistance Bureau, Office of the Ombudsman. Because of this, Dir. Torres-Galvez wrote Ancheta on July 18, 2011 asking about the status of said motion. In the last week of August 2011, Dir. Torres-Galvez sent a letter to Villa informing him that the case records were already turned over to the DARAB Regional Office.[10]

Villa alleged that after his initial follow-up on the case, he observed that there was still no “Order” added to the case records. However, after his next follow-up on October 27, 2011,[11] he was surprised that a supposed Order dated May 18, 2011 by Ancheta granting the quashal of the writ (subject Order) was added to the records of the case. According to Villa, the subject Order might have been secretly put into the case records to influence the Regional Adjudicator in resolving the case in favor of the other party.[12] Thus, Villa claimed that Ancheta’s acts made him liable for Dishonesty and Grave Misconduct and for violation of R.A. 3019.[13]

In his counter-affidavit, Ancheta denied the charges against him, mainly arguing that Villa’s claims were all hearsay and unsupported by evidence. Ancheta claimed that if there was indeed a resolution on the opposing party’s motion, then the parties would have received it officially. Ancheta pointed out that Villa himself admitted that he only got a copy of the subject Order from the DARAB Regional Office which is already beyond his jurisdiction as PARAD.[14]

Moreover, Ancheta contended that even if the subject Order existed, it was unenforceable and invalid as it was not released officially. Also, he averred that Villa was not prejudiced as he was still in possession of the subject landholding. Additionally, Ancheta claimed that he could not influence the Regional Adjudicator who inherited the case since the latter was higher in rank than him and has a mind of his own.[15]

The Ruling of the Ombudsman

In a Decision[16] dated May 7, 2013, the Ombudsman found Ancheta guilty of simple neglect of duty and imposed on him a fine in lieu of suspension, to wit:

Considering that this is respondent’s first offense and that he is already separated from public service, we deem it proper to impose a fine, in lieu of suspension, equivalent to one (1) month of his salary which shall be reckoned at the time of his resignation on December 1, 2011.

WHEREFORE, PREMISES CONSIDERED, judgment is hereby rendered finding respondent AROLF M. ANCHETA guilty of Simple Neglect of Duty and is hereby meted the penalty of fine, in lieu of suspension, equivalent to one (1) month of his salary, pursuant to Section 46 (D), Rule 10 of the Revised Rules in Administrative Cases in the Civil Service (RRACCS), in relation to Section 10, Rule III of Administrative Order No. 07, as amended by Administrative Order No. 17, and Section 25 of R.A. No. 6770.[17]

The Ombudsman found no relevant and competent evidence linking Ancheta to the alleged inclusion of the subject Order in the case records because the statements of Villa and his witnesses were all hearsay.[18] The Ombudsman also pointed out that if Ancheta was indeed biased and partial against Villa, the former would not have inhibited from the case but would have resolved it in the other party’s favor.[19]

However, the Ombudsman found it perplexing that despite Ancheta’s inhibition from the case, the subject Order still found its way in the case records which was already reassigned to the Regional Adjudicator. Thus, the Ombudsman ruled that Ancheta either neglected to tear or pierce the printed unofficial order, or delete the same in his computer files after he inhibited from the case. According to the Ombudsman, this has unreasonably led to the filing of the instant case which could have been avoided had Ancheta not been remiss with his duty. Thus, the Ombudsman found Ancheta guilty of neglect of duty classified as simple considering that the subject Order did not cause undue injury or prejudice to Villa.[20]

Ancheta moved for reconsideration, which was denied in an Order[21] dated March 7, 2016. On May 26, 2016, Ancheta filed an Appeal to the Head Office, which was likewise denied in an Order[22] dated June 14, 2016. The Ombudsman treated said appeal as a second Motion for Reconsideration (MR), which is a prohibited pleading.[23]

Aggrieved, Ancheta filed a petition for certiorari before the CA.

The Ruling of the CA

In a Resolution[24] dated September 20, 2016, the CA dismissed the petition outright for the following procedural defects: 1) there was no allegation as to when Ancheta received a copy of the assailed Decision and when he filed the MR; 2) the assailed Decision and Resolution stemmed from an administrative disciplinary complaint before the Ombudsman; hence, a petition for review under Rule 43 was the proper remedy, not a petition for certiorari under Rule 65; 3) the “Appeal to the Head of Office,” being in the nature of a second MR, did not toll the running of the period to file a petition for review; and 4) payment of docket and other legal fees is short by P1,180.00.

Ancheta filed an MR, which was denied in a Resolution[25] dated December 28, 2016. Hence, the instant petition.

Petition before the Court

In his Petition for Review on Certiorari,[26] Ancheta argues that the CA erred in dismissing his petition outright based on technicalities. On the lack of allegation as to when he received a copy of the assailed Ombudsman Decision, Ancheta claims that the same was indicated in his petition and in any case, the lack of allegation of such is not sufficient to dismiss his appeal.[27] Further, Ancheta argues that the CA erred in ruling that a Rule 43 petition, instead of a Rule 65 petition, was the proper remedy in questioning the Ombudsman’s Decision.[28] Also, Ancheta avers that he filed, in good faith, the Appeal to the Head of Office in order to exhaust administrative remedies.[29] Finally, Ancheta claims that he already paid the correct docket fees.[30]

Even assuming that the petition had procedural lapses, Ancheta insists that the CA should not have dismissed the petition outright considering the merits of the petition.[31]

In its Comment,[32] the Ombudsman, through the Office of the Solicitor General, maintains that the CA correctly dismissed Ancheta’s petition. According to the Ombudsman, the CA was within its right to choose not to apply liberality of the rules considering the numerous errors in the petition and its lack of merit.[33]

In the meantime, Villa’s wife sent a letter informing the Court of the death of Villa and reiterating the arguments of her late husband.[34]

In his Reply,[35] Ancheta reiterates his position, asserting anew that there is no evidence pointing to his liability.[36]

Issue

Whether the CA erred in dismissing the petition outright, and in the affirmative, whether Ancheta is administratively liable.

The Court’s Ruling

The petition is meritorious.

On the outright dismissal
of the petition before the
CA

To begin with, it should be emphasized that compliance with procedural rules is necessary for an orderly administration of justice. Nevertheless, these rules are not to be rigidly applied so as to frustrate the greater interest of substantial justice. As stated in the Rules of Court, these rules “shall be liberally construed in order to promote their object and to assist the parties in obtaining just, speedy, and inexpensive determination of every action and proceeding.”[37]

To recall, the CA outrightly dismissed Ancheta’s petition on the following grounds: 1) failure to pay the correct docket fees; 2) failure to state the date of receipt of a copy of the assailed decision; 3) filing before the Ombudsman of an Appeal to the Head of Office which was treated as a second MR, a prohibited pleading; hence, the reglementary period was not tolled; and 4) availing of the wrong remedy. The Court shall discuss these grounds ad seriatim.

As regards the payment of the correct docket fees, the Court gives credence to Ancheta’s claim that there was no intention on. his part to defraud the CA when he failed to pay the full amount of docket fees. According to him, he immediately paid the correct amount upon learning of the shortage,[38] as evidenced by the postal money order in the amount of P1,180.00.[39]

On Ancheta’s failure to state the date of receipt of the assailed decision and for his filing of a prohibited second MR, while these are indeed procedural irregularities, the same do not warrant a dismissal of the petition. Litigations should, as much as possible, be decided on the merits and not on technicalities.[40] Here, a relaxation of the technical rules of procedure is warranted considering the substantial merits of the case, as will be explained later.

Finally, as regards the propriety of the petition for certiorari filed by Ancheta, the CA erred in dismissing his petition for being the wrong remedy. Contrary to the ruling of the CA, Ancheta correctly filed a petition for certiorari under Rule 65 instead of a petition for review on certiorari under Rule 43. Even the Ombudsman conceded in its Comment that Ancheta availed of the correct remedy.[41]

Indeed, the Court had ruled in Fabian v. Desierto[42] that appeals from the decisions of the Ombudsman rendered in administrative disciplinary cases should be filed before the CA through a Rule 43 petition. However, the CA’s reliance[43] on Fabian in dismissing Ancheta’s petition is misplaced. The CA failed to consider that Ancheta was meted the penalty of a fine equivalent to one-month salary by the Ombudsman. Such penalty was final, executory, and unappealable under Section 7, Rule III; of Administrative Order No. 07, issued by the Ombudsman to implement Section 27 of R.A. 6770,[44] which reads in part:

SEC. 7. Finality and execution of decision.—Where the respondent is absolved of the charge, and in case of conviction where the penalty imposed is public censure or reprimand, suspension of not more than one month, or a fine equivalent to one month salary, the decision shall be final, executory and unappealable. In all other cases, the decision may be appealed to the Court of Appeals on a verified petition for review under the requirements and conditions set forth in Rule 43 of the Rules of Court, within fifteen (15) days from receipt of the written Notice of the Decision or Order denying the motion for Reconsideration. (Emphasis and underscoring supplied)

Given the final, executory and unappealable nature of the Ombudsman’s decision, Ancheta’s remedy is a Rule 65 Petition, as held in Dagan v. Office of the Ombudsman:[45]

x x x In Republic v. Francisco, we ruled that decisions of administrative or quasi-administrative agencies which are declared by law final and unappealable are subject to judicial review if they fail the test of arbitrariness, or upon proof of gross abuse of discretion, fraud or error of law. When such administrative or quasi-judicial bodies grossly misappreciate evidence of such nature as to compel a contrary conclusion, the Court will not hesitate to reverse the factual findings. Thus, the decision of the Ombudsman may be reviewed, modified or reversed via petition for certiorari under Rule 65 of the Rules of Court, on a finding that it had no jurisdiction over the complaint, or of grave abuse of discretion amounting to excess or lack of jurisdiction.

That said, there still is the question which court has jurisdiction over a certiorari petition under Rule 65.

x x x x

Considering that a special civil action for certiorari is within the concurrent original jurisdiction of the Supreme Court and the Court of Appeals, such petition should be initially filed with the Court of Appeals in observance of the doctrine of hierarchy of courts.[46] (Emphasis supplied)

Ancheta was therefore correct in filing a petition for certiorari before the CA to assail the Ombudsman decision considering that the same was final, executory and unappealable and he was able to show that the Ombudsman grossly misappreciated the evidence so as to compel a contrary conclusion. Thus, the CA erred in dismissing his petition outright.

To avert further delay, the Court opts to resolve the instant petition on its merits rather than remand the case to the appellate court, a remand not being necessary where, as in the instant case, the ends of justice would not be served thereby and the Court is in a position to resolve the dispute based on the records before it.[47]

On Ancheta’s administrative liability

While factual findings of administrative and quasi-judicial agencies, such as the Ombudsman, are generally accorded not only respect but at times finality, this holds true only when they are supported by substantial evidence.[48] Here, a judicious review of the records of the case reveals that there is no substantial evidence to hold Ancheta liable for simple neglect of duty.

Below are the findings of the Ombudsman as stated in the assailed Decision:

[Villa] claimed that [Ancheta] should be administratively sanctioned for trying to induce or persuade the Regional Adjudicator by sending a copy of the alleged irregular order for the latter’s reference, and personally following up the DARAB case through text messages.

However, the following undisputed facts militate against [Villa’s] position, thus:

In an Order dated June 10, 2011, [Ancheta] inhibited from handling the subject DARAB case;

As of date, the subject landholding is still in the possession of [Villa], thus, the latter was not clearly prejudiced;

The questioned order was unofficial as it was not released and received by the parties themselves; and

The assailed order was traced at the DARAB Regional Office at San Fernando City, Pampanga where [Ancheta] had no jurisdiction.

Tested against the foregoing undisputed facts, we are of the impression that if [Ancheta] was indeed bias[ed] and partial against [Villa], the former would not have inhibited from the case but would have resolved it in the other party’s favor. It is certainly against common human experience that a person would inhibit from a case and then follow it up again from a person who is superior than him, as what [Villa] claimed.

Furthermore, this Office struggles to trace [Ancheta’s] link in the surfacing of the alleged irregular order at the DARAB Regional Office. x x x

x x x x

In the instant case, [Villa] and his witnesses gave statements that they talked and heard Ms. Fernanda Paraan saying that the alleged order was brought by two men in [Ancheta’s] employ and that the latter was following up the DARAB case from the Regional Adjudicator by sending text messages advising the latter to use the alleged order in resolving the case.

Verily, [Villa] and his witnesses’ statements are considered hearsay since they had no personal knowledge of [the facts alleged] x x x.

x x x What [Villa] and his witnesses stated, therefore, were matters which were not derived from their own perception but from Paraan’s and the Regional Adjudicator’s, who both did not give sworn statements to that effect.[49] (Emphasis and underscoring supplied)

From the foregoing, the Ombudsman concluded that there is no relevant and competent evidence linking Ancheta to the alleged inclusion of the unofficial Order in the case records. In fact, according to the Ombudsman, the subject Order was incorporated in the case records by the staff at the DARAB Regional Office in San Fernando, Pampanga.[50]

Despite the foregoing, the Ombudsman still ruled as follows:

However, we are perplexed by the fact that despite [Ancheta’s] Order dated June 10, 2011 inhibiting from the DARAB case, the alleged irregular Order dated May 18, 2011 still found its way in the case records which was already reassigned to the Regional Adjudicator. This means that [Ancheta], either neglected to tear or pierce the printed unofficial order, or delete the same in his computer files after he issued the Order dated June 10, 2011 inhibiting himself from handling the DARAB case. As a result, the said unofficial order may have found its way in the hands of unscrupulous individuals who may have used the same for evil purposes. This has unreasonably led to the filing of the instant case which could have been avoided had [Ancheta] not been remiss with his duty.[51] (Emphasis supplied)

The Court disagrees with the Ombudsman.

To reiterate, the Ombudsman has already made a categorical finding that “there is no relevant and competent evidence linking [Ancheta] into the alleged inclusion of the unofficial order in the case records.”[52] Moreover, Villa himself alleged that during his initial follow-up of the case before the DARAB Regional Office, the subject Order was not yet attached to the case records, and it was only during his next follow-up that he saw the subject Order in the case records.[53] Logically, it would mean that when Ancheta transferred the case records to the Regional Office, he did not include the subject Order. This is confirmed by the Ombudsman’s own finding that “the said order was incorporated in the case records by the staff at the DARAB Regional Office in San Fernando Pampanga,”[54] where Ancheta had no jurisdiction.[55]

As the Ombudsman “struggle[d] to trace [Ancheta’s] link in the surfacing of the alleged irregular order at the DARAB Regional Office,”[56] so too does the Court struggle in subscribing to the Ombudsman’s finding of administrative liability against Ancheta.

Simple neglect of duty means the failure of an employee or official to give proper attention to a task expected of him or her, signifying a disregard of a duty resulting from carelessness or indifference.[57] In this case, the Ombudsman ruled that Ancheta “fell short of the reasonable diligence required of him, for failing to exercise due care and prudence in ascertaining that the printed unofficial order or its soft copy in his computer files [is] already tom or deleted after issuing the order inhibiting himself from the DARAB case.”[58]

However, there appears to be insufficient basis for the Ombudsman’s findings. Its ruling that Ancheta “either neglected to tear or pierce the printed unofficial order, or delete the same in his computer files after he issued the Order x x x inhibiting himself’ is mere conjecture, which is not enough to hold Ancheta administratively liable especially when coupled with the established fact, admitted by the Ombudsman herself, that there is no evidence linking Ancheta to the inclusion of the subject Order in the case records before the DARAB Regional Office.

While substantial evidence — which is more than a mere scintilla but is such relevant evidence as a reasonable mind might accept as adequate to support a conclusion — suffices to hold one administratively liable, this does not authorize any finding to be made just as long as there is any evidence to support it. It does not excuse administrative agencies from taking into account countervailing evidence which fairly detracts from the evidence supporting a finding.[59] Here, as demonstrated by the Court, the evidence (or lack thereof) in support of the Ombudsman’s findings failed to satisfy the quantum of evidence required. There is simply not enough evidence to hold Ancheta liable for simple neglect of duty.

WHEREFORE, the Petition is GRANTED. The Court of Appeals Resolutions dated September 20, 2016 and December 28, 2016 in CA-G.R. S.P. No. 147457, as well as the Office of the Ombudsman Decision dated May 7, 2013 and Orders dated March 7, 2016 and June 14, 2016 in OMB-L-A-11-0801-L are REVERSED and SET ASIDE. Petitioner Arolf M. Ancheta is hereby ABSOLVED from any administrative liability in connection with the instant case.

SO ORDERED.

Gesmundo,[*] J. Reyes, Jr., Lazaro-Javier, and Lopez, JJ., concur.

[*] Per Raffle dated December 11, 2019.
[1] Rollo, pp. 3-26.
[2] Id. at 32-33. Penned by Associate Justice Fernanda Lampas Peralta, with Associate Justices Jane Aurora C. Lantion and Nina G. Antonio-Valenzuela concurring.
[3] Id. at 35.
[4] Id. at 54-55.
[5] Id. at 55-56.
[6] Id. at 56.
[7] Id. at 57.
[8] Id.
[9] Id.
[10] Id. at 58.
[11] Id. at 40.
[12] Id. at 58.
[13] Id. at 59.
[14] Id. at 60.
[15] Id.
[16] Id. at 54-80. Prepared by Graft Investigation and Prosecution Officer Quijano S. Laure and approved by Ombudsman Conchita Carpio Morales.
[17] Id. at 78.
[18] Id. at 75-76.
[19] Id. at 72.
[20] Id. at 76-77.
[21] Id. at 87-90.
[22] Id. at 98-100.
[23] Id. at 99.
[24] Id. at 32-33. Penned by Associate Justice Fernanda Lampas Peralta, with Associate Justices Jane Aurora C. Lantion and Nina G. Antonio-Valenzuela concurring.
[25] Id. at 35.
[26] Id. at 3-26.
[27] Id. at 7-8.
[28] Id. at 9-10.
[29] Id. at 11-12.
[30] Id. at 24.
[31] Id. at 24-25.
[32] Id. at 138-153.
[33] Id. at 140.
[34] Id. at 179-184.
[35] Id. at 189-192.
[36] Id. at 190.
[37] RULES OF COURT, Rule 1, Sec. 6.
[38] Rollo, p. 24.
[39] Id. at. 132.
[40] Mitra v. Sablan-Guevarra, G.R. No. 213994, April 18, 2018, 862 SCRA 32, 37-38.
[41] Rollo, p. 143.
[42] 356 Phil. 787, 808 (1998).
[43] Rollo, p. 33 (see footnote no. 4 of the CA Decision).
[44] See Crebello v. Office of the Ombudsman, G.R. No. 232325, April 10, 2019, accessed at < http://elibrary.judiciary.gov.ph/thebookshelf/showdocs/1/65037 >.
[45] 721 Phil. 400 (2013).
[46] Id. at 411-413.
[47] Fulgencio v. National Labor Relations Commission, 457 Phil. 868, 882 (2003).
[48] Baylon v. Fact-Finding intelligence Bureau, 442 Phil. 217, 235 (2002).
[49] Rollo, pp. 71-76.
[50] Id. at 76.
[51] Id. at 76-77.
[52] Id. at 76.
[53] Id. at 58.
[54] Id. at 76.
[55] Id. at 72.
[56] Id.
[57] Republic v. Canastillo, 551 Phil. 987, 996 (2007), citing Dajao v. Lluch, 429 Phil. 620, 626 (2002).
[58] Rollo, p. 77.
[59] Baylon v. Fact-Finding Intelligence Bureau, supra note 48.

Categories
2020 January

ASSOCIATION OF INTERNATIONAL SHIPPING LINES, INC., APL CO. PTE LTD., AND MAERSK-FILIPINAS, INC., PETITIONERS, V. SECRETARY OF FINANCE AND COMMISSIONER OF INTERNAL REVENUE, RESPONDENTS.

FIRST DIVISION
[ G.R. No. 222239, January 15, 2020 ]

ASSOCIATION OF INTERNATIONAL SHIPPING LINES, INC., APL CO. PTE LTD., AND MAERSK-FILIPINAS, INC., PETITIONERS, V. SECRETARY OF FINANCE AND COMMISSIONER OF INTERNAL REVENUE, RESPONDENTS.

D E C I S I O N

LAZARO-JAVIER, J.:

Antecedents

On July 1, 2005, Republic Act No. 9337[1] (RA 9337) was enacted, amending select provisions of the 1997 National Internal Revenue Code (NIRC), namely, Sections 27, 28, 34, 106, 107, 108, 109, 110, 111, 112, 113, 114, 116, 117, 119, 121, 148, 151, 236, 237 and 288.

In relation to these amendments, then Commissioner of Internal Revenue (CIR) Lilian Hefti issued Revenue Memorandum Circular No. 31-2008[2] (RMC 31-2008) dated January 30, 2008. It sought to “clarify certain provisions of the National Internal Revenue Code of 1997, as amended (Code), as it applies to shipping companies and their agents as well as their suppliers to ensure that the law is properly implemented and taxes are properly collected, in a manner that aligns with acceptable business practices.” Its relevant portions read:

Q-3: Are on-line international sea carriers subject to VAT?
A-3: No. On-line international sea carriers are not subject to VAT they being subject to percentage tax under Title V of the Tax Code. They are liable to the three percent (3%) percentage tax imposed on their gross receipts from outbound fares and freight, pursuant to Section 118 of the Code.

However, if these on-line international sea carriers engage in other transactions not exempt under Section 119 of the Code, they shall be liable to the twelve percent (12%) VAT on these transactions.

Q-4: Are demurrage fees collected by on-line international sea carriers due to delay by the shipper in unloading their inbound cargoes subject to tax?
A-4: Yes, Demurrage fees, which are in the nature of rent for the use of property of the carrier in the Philippines is considered income from Philippine source and is subject to income tax under the regular rate as the other types of income of the on-line carrier. Said other line of business may likewise be subject to VAT or percentage tax applying the rule on threshold discussed in the succeeding paragraph.

Q-5: Are detention fees and other charges collected by international sea carriers subject to tax?
A-5: Detention fees and other charges relating to outbound cargoes and inbound cargoes are all considered Philippine-sourced income of the international sea carriers they being collected for the use of property or rendition of services in the Philippines, and are subject to the Philippine income tax under the regular rate, and to the Value added tax, if the total annual receipts from all the VAT-registered activities exceeds one million five hundred thousand pesos (P1,500,000.00). However, if the total annual gross receipts do not exceed one million five hundred thousand pesos, said taxpayer is liable to pay the 3% percentage tax.

x x x

Q-14: Are sales of goods, supplies, equipment, fuel and services to persons engaged in international shipping operations subject to VAT?
A-14: The sale of goods, supplies, equipment, fuel and services including leases of property) to the common carrier to be used in its international sea transport operations is zero-rated. Provided, that the same is limited to goods, supplies, equipment, fuel and services pertaining to or attributable to the transport of goods and passengers from a port in the Philippine directly to a foreign port without docking or stopping at any other port in the Philippines to unload passengers and/or cargoes loaded in and from another domestic port; Provided, further, that if any portion of such fuel, equipment, goods or supplies and services is used for purposes other than that mentioned in this paragraph, such portion of fuel, equipment, goods, supplies and services shall be subject to 12% VAT.

x x x

Q-34: Are commission incomes received by the local shipping agents from their foreign principals subject to VAT?
A-34: The commission income or fees received by the local shipping agents for outbound freights/fares received by their foreign principals which are on-line international sea carriers (touching any port in the Philippines as part of their operation) shall be zero-rated pursuant to the provisions of Section 108(B)(4) of the Code. Said provision does not require that payments of the commission income or fees for “services rendered to persons engaged in international shipping operations, including leases of property for use thereof,” be paid in acceptable foreign currency in order that such transaction may be zero-rated. On the other hand, commission income or fees received by the local shipping agents pertaining to inbound freights/fares received by their foreign principals/on-line international sea carriers or pertaining to freights/fares received by off-line international sea carriers shall be subject to VAT at 12%.

Five (5) years after the enactment of RA 9337, on December 6, 2010, petitioners Association of International Shipping Lines, Inc.3, APL Co. Pte. Ltd.4, and Maersk-Filipinas, Inc. (Maersk) sought to nullify RMC 31-2008 via a petition for declaratory relief entitled “Association of International Shipping Lines, Inc. (AISL), APL Co. Pte. Ltd. (APL), and Maersk-Filipinas, Inc. (Maersk) v. Commissioner of Internal Revenue.” The case was raffled to RTC-Branch 98, Quezon City, and docketed as Civil Case No. Q-09-64241.[5]

Petitioners prayed that the trial court: 1) issue a writ of preliminary injunction enjoining the then BIR Commissioner and her representatives, agents, or those acting under her instructions or on her behalf from implementing, enforcing, or acting pursuant to or on the basis of the challenged provisions of RMC 31-2008; and 2) render judgment declaring these challenged provisions void.[6]

According to petitioners, RMC 31-2008 was void insofar as it imposed regular tax rate of thirty percent (30%) and twelve percent (12%) VAT on the demurrage and detention fees collected by international shipping carriers from shippers or consignees for delay in the return of containers, on the domestic portion of services to persons engaged in international shipping operations, and on commission income received by local shipping agents from international shipping carriers or in connection with inbound shipments.

By Order[7] dated May 18, 2012, Branch 98 held that international carriers were not subject to income tax under Section 28 (A)(1)(3b)[8] of the NIRC. Too, demurrage fees were not considered income derived from other or separate business of the international carrier. Being incidental to the trade or business of the international carrier, demurrage fees should instead form part of the Gross Philippine Billings (GPB) subject to 2.5% tax under Section 28. Further the law did not expressly impose 12% VAT on the domestic portion of the services rendered by international carriers.[9] Thus:

WHEREFORE, premises considered, and pursuant to Rule 35 of the 1997 Rules of Civil Procedure, the Court grants the motion for summary judgment and declares as INVALID, the pertinent portions of Revenue Memorandum Circular No. 31-2008, insofar as the latter subjects the: a) demurrage and detention fees to the regular corporate income tax rate under Section 28(A)(1) and 12% VAT; b) domestic portion of the services rendered to persons engaged in international shipping operation to 12% VAT; and c) commission income or fees received by local shipping agents from international shipping carriers for the latter’s inbound freights/fares to 12% VAT, for being contrary to Section 28 (A)(1), and (3) and Section 108 (B)(4) of the National Internal Revenue Code of 1997, as amended.

SO ORDERED.[10]

The Order became final and executory as of June 16, 2012.[11]

On March 7, 2013, Republic Act No. 10378[12] (RA 10378) was enacted, amending Section 28 (A)(3)(a) of the NIRC. The provision now reads:

SEC. 28. Rates of Income Tax on Foreign Corporations.—

(A) Tax on Resident Foreign Corporations. —

(1) xxx
(2) xxx
(3)International Carrier. — An international carrier doing business in the Philippines shall pay a tax of two and one-half percent (2 1/2 %) on its ‘Gross Philippine Billings’ as defined hereunder:

(a) International Air Carrier. — ‘Gross Philippine Billings’ refers to the amount of gross revenue derived from carriage of persons, excess baggage, cargo, and mail originating from the Philippines in a continuous and uninterrupted f1ight, irrespective of the place of sale or issue and the place of payment of the ticket or passage document: Provided, That tickets revalidated, exchanged and/or indorsed to another international airline form part of the Gross Philippine Billings if the passenger boards a plane in a port or point in the Philippines: Provided, further, That for a flight which originates from the Philippines, but transshipment of passenger takes place at any part outside the Philippines on another airline, only the aliquot portion of the cost of the ticket corresponding to the leg flown from the Philippines to the point of transshipment shall form part of Gross Philippine Billings.

(b) International Shipping. — ‘Gross Philippine Billings’ means gross revenue whether for passenger, cargo or mail originating from the Philippines up to final destination, regardless of the place of sale or payments of the passage or freight documents.

Provided, That international carriers doing business in the Philippines may avail of a preferential rate or exemption from the tax herein imposed on their gross revenue derived from the carriage of persons and their excess baggage on the basis of an applicable tax treaty or international agreement to which the Philippines is a signatory or on the basis of reciprocity such that an international carrier, whose home country grants income tax exemption to Philippine carriers, shall likewise be exempt from the tax imposed under this provision.

x x x.
The Secretary of Finance, thereafter, issued the implementing rules under Revenue Regulation No. 15-2013[13] (RR 15-2013), the validity of which is now the subject of this petition.

The Proceedings Before the Trial Court

Over three (3) years later, on December 4, 2013, petitioners initiated the present petition for declaratory relief,[14] this time, challenging Section 4.4 of RR 15-2013 and impleading as respondents both the Secretary of Finance and the CIR. Section 4.4 reads:

4.4) Taxability of Income Other Than Income From International Transport Services. — All items of income derived by international carriers that do not form part of Gross Philippine Billings as defined under these Regulations shall be subject to tax under the pertinent provisions of the NIRC, as amended.

Demurrage fees, which are in the nature of rent for the use of property of the carrier in the Philippines, is considered income from Philippine source and is subject to income tax under the regular rate as the other types of income of the on-line carrier.

Detention fees and other charges relating to outbound cargoes and inbound cargoes are all considered Philippine-sourced income of international sea carriers they being collected for the use of property or rendition of services in the Philippines, and are subject to the Philippine income tax under the regular rate. (Emphasis supplied)

The case was raffled to RTC-Branch 77, Quezon City, and docketed Special Civil Action No. R-QZN-13-05590-CV, then presided by Acting Presiding Judge Cleto R. Villacorta III.

Petitioners’ Arguments

Petitioners argued that Section 4.4 of RR 15-2013 invalidly subjects demurrage and detention fees collected by international shipping carriers to regular corporate income tax rate. This very same imposition had been previously declared invalid by Branch 98 through its final and executory Order dated May 18, 2012.[15] Section 4.4 of RR 15-2013 should not, therefore, be given effect by reason of res judicata.[16] The treatment of demurrage and detention fees on the carriage of cargoes prior to and after the enactment of RA 10378 did not change. There is nothing in RA 10378 which even touches on demurrage and detention fees, much less, provides or even implies that they should be treated as income subject to tax at the regular corporate income tax rate.[17]

In fact, RR 15-2013 unduly widens the scope of RA 10378 by imposing additional taxes on international shipping carriers not authorized or provided by law. Besides, demurrage and detentions fees are not income but penalties imposed by the carrier on the charterer, shipper, consignee, or receiver, as the case may be, to allow the carrier to recover losses or expenses associated with or caused by the undue delay in the loading and/or discharge of the latter’s shipments from the containers.[18] They are akin to damages.[19] Assuming that demurrage and detention fees may be treated as income, these fees are taxable only if they form part of Gross Philippine Billings (GPB) and taxed at the preferential rate of 2.5%.[20]

Further, RR 15-2013 is invalid because it was promulgated without public hearing as required by the Revised Administrative Code and case law. Also, no copies of RR 15-2013 were filed with the University of the Philippines – Law Center, as required by the Revised Administrative Code, thus, the same is deemed not to have become effective.[21]

Respondents’ Arguments

By Comment[22] dated February 3, 2014, the Secretary of Finance, through the Office of the Solicitor General (OSG), countered that the Order dated May 18, 2012 in Civil Case No. Q-09-64241 did not preclude the Secretary of Finance from issuing Section 4.4 of RR 15-2013 because a) the first case involves RMC 31-2008 which the CIR issued to clarify matters involving common carriers by sea, in relation to their transport of passengers, goods, and services, while the second case involves RR 15-2013 which the Secretary of Finance issued pursuant to his mandate under RA 10378; b) RMC 31-2008 was issued based on the authority of the CIR to interpret the provisions of the NIRC while RR 15-2013 was issued by virtue of the authority of the Secretary of Finance under RA 10378; and c) the Secretary of Finance was not impleaded as respondent in the first case, thus, he is not bound by the finality of Order dated May 18, 2012. Besides, the Secretary of Finance and the CIR are two (2) distinct officials governing two (2) separate agencies.

According to respondents, RR 15-2013 does not expand the provisions of RA 10378. It simply clarifies what constitutes Gross Philippine Billings (GPB) such that anything outside the definition of GPB is subject to the regular income tax rate for resident foreign corporations. Thus, the law need not specifically mention demurrage or detention fees as among those falling outside the definition of GPB.[23]

Respondents stress that demurrage and detention fees are income. They not only serve as penalties for consignees, they also serve as compensation for extended use of containers. As resident foreign corporations, they are covered by the provisions on the regular income tax rate and not the preferential rate of 2.5% imposed on GPB.[24]

Lastly, respondents argue that the absence of public hearing prior to the publication of RR 15-2013 or non-submission of copies thereof to the UP­ Law Center did not render it ineffective. An interpretative regulation such as RR 15-2013, to be effective, needs nothing further than its bare issuance for it gives no real consequence more than what the law itself already prescribes. It adds nothing to the law and does not affect the substantial rights of any person.[25]

In its Answer[26] dated January 27, 2014, the CIR, through the BIR Litigation Department riposted that the trial court had no jurisdiction over the petition for declaratory relief because its subject matter involved a revenue regulation. Under Commonwealth Act No. 55[27] (CA 55), actions for declaratory relief do not apply to cases involving tax liabilities under any law administered by the BIR.[28] Further, res judicata does not apply to the case.

Petitioners’ Omnibus Motion

Petitioners subsequently filed an Omnibus Motion 1) for Judicial Notice; and 2) for Summary Judgment[29] dated December 4, 2014.

Petitioners prayed that the trial court take judicial notice of the following: 1) the existence of RMC 31-2008; 2) the final and executory Order dated May 18, 2012 in Civil Case No. Q-09-64241 and its Certificate of Finality dated August 28, 2012; 3) the enactment of Republic Act No. 10378[30] (RA 10378), which recognized the principle of reciprocity for grant of income tax exemptions to international shipping carriers and rationalized the taxes imposed thereon; and 4) the issuance of RR 15-2013.

Petitioners also filed a motion for summary judgment on ground that there was no genuine issue as to any material fact and/or the facts were undisputed and certain based on the pleadings, admissions, and affidavits on record.

The Ruling of the Trial Court

Following the parties’ exchange of pleadings, the trial court, then presided by Acting Presiding Judge Villacorta, through its first assailed Order[31] dated September 15, 2015: 1) granted petitioners’ motion for judicial notice of the existence of RMC 31-2008, the issuance of Order dated May 18, 2012 in Civil Case No. Q-09-64241 and its corresponding Certificate of Finality dated August 28, 2012, and the enactment of RA 10378 – all these being the official acts of different branches of government; 2) declared that it had no jurisdiction over the petition for declaratory relief pursuant to CA 55 which removed from regional trial courts the authority to rule on cases involving one’s liability for tax, duty, or charge collectible under any law administered by the Bureau of Customs or the BIR; 3) ruled against the application of res judicata to the case because — first, res judicata does not give rise to a cause of action for the purpose of initiating a complaint, res judicata being a shield not a sword and executive and legislative authorities have the power to enact laws and rules to supersede judge-made laws or rules, second, the enactment and implementation of RA 10378 constituted a supervening event which negated the application of res judicata, third, there is no similarity of parties, subject matters, and causes of action between the present case and Civil Case No. Q-09-64241; and 4) found RR No. 15-2013 to be a reasonable tax regulation and an interpretative issuance, the effectivity of which does not require a public hearing, nay, prior registration with the UP Law Center. Thus, the trial court decreed:

WHEREFORE:

(1) The Motion for Judicial Notice is granted. This Court declares that the issuance of (i) RMC 31-2008, (ii) RTC-Branch 98 Order dated May 18, 2012 in Civil Case No. Q-09-64241, (iii) RTC-Branch 98 Certification of the finality of the Order dated May 18, 2012 in Civil Case No. Q-09- 64241, (iv) RA 10378, and (v) RR 15-2013, is an established fact in this case.

(2) The Motion for Summary Judgment is denied and as a result the instant petition for declaratory relief is dismissed.

Costs de oficio.

SO ORDERED.[32]

Petitioners’ partial motion for reconsideration was denied under Order dated January 8, 2016.

The Present Petition

Petitioners now seek, on pure questions of law, the Court’s discretionary appellate jurisdiction to review and reverse the assailed dispositions. They essentially reiterate the arguments raised in their petition for declaratory relief, i.e. a) res judicata and immutability of judgments apply to this case and the enactment of RA 10378 is not a supervening event which operates to negate the application of the aforesaid principles; b) RR 15-2013 is invalid because it erroneously subjects demurrage and detention fees collected by international shipping carriers to regular income tax rate, albeit these are not income; and c) RR 15-2013 is not an interpretative issuance, thus, a public hearing and prior registration with the UP Law Center are required for its validity and effectivity.

Respondents Secretary of Finance and CIR, through Senior State Solicitor Jonathan dela Vega, submits: Res judicata does not apply here because there is no commonality of parties between this case and Civil Case No. Q-09-64241. The Secretary of Finance and the CIR are two (2) distinct officials.[33] RR 15-2013 does not add to the provisions of RA 10378. It simply clarifies how the GPB of international sea carriers should be determined. Its issuance is germane to the purpose of the law.[34] Lastly, RR 15-2013 is an interpretative regulation, thus, to be effective, it need not be filed with the UP Law Center.[35]

Petitioners’ Reply[36] dated October 27, 2016 echoes their previous arguments against RR 15-2013.

Issues

Does res judicata apply in this case?

Is a petition for declaratory relief proper for the purpose of invalidating RR No. 15-2013?

Is RR 15-2013 a valid revenue regulation?

Ruling

Res judicata does not apply here

Res judicata applies in the concept of “bar by prior judgment” if the following requisites concur: (1) the former judgment or order must be final; (2) the judgment or order must be on the merits; (3) the decision must have been rendered by a court having jurisdiction over the subject matter and the parties; and (4) there must be, between the first and the second action, identity of parties, of subject matter, and of causes of action.[37]

Here, we rule that there is no substantial identity of parties and subject matter.

a) No substantial identity of parties

Tambunting, Jr. v. Sumabat[38] explains the nature of a petition for declaratory relief, thus:

An action for declaratory relief should be filed by a person interested under a deed, will, contract or other written instrument, and whose rights are affected by a statute, executive order, regulation or ordinance before breach or violation thereof. The purpose of the action is to secure an authoritative statement of the rights and obligations of the parties under a statute, deed, contract, etc. for their guidance in its enforcement or compliance and not to settle issues arising from its alleged breach. It may be entertained only before the breach or violation of the statute, deed, contract, etc. to which it refers. Where the law or contract has already been contravened prior to the filing of an action for declaratory relief, the court can no longer assume jurisdiction over the action. In other words, a court has no more jurisdiction over an action for declaratory relief if its subject, i.e., the statute, deed, contract, etc., has already been infringed or transgressed before the institution of the action. Under such circumstances, inasmuch as a cause of action has already accrued in favor of one or the other party, there is nothing more for the court to explain or clarify short of a judgment or final order. (Emphasis supplied)

Thus, it is required that the parties to the action for declaratory relief be those whose rights or interests are affected by the contract or statute being questioned.[39] Section 2 of Rule 63 of the Rules of Court further underscores that a judgment in a petition for declaratory relief binds only the impleaded parties:

Section 2. Parties. — All persons who have or claim any interest which would be affected by the declaration shall be made parties; and no declaration shall, except as otherwise provided in these Rules, prejudice the rights of persons not parties to the action. (2a, R64)

Heirs of Marcelino Doronio v. Heirs of Fortunato Doronio[40] further elucidates on this principle, thus:

Petitioners cannot also use the finality of the RTC decision in Petition Case No. U-920 as a shield against the verification of the validity of the deed of donation. According to petitioners, the said final decision is one for quieting of title. In other words, it is a case for declaratory relief under Rule 64 (now Rule 63) of the Rules of Court, which provides:

SECTION 1. Who may file petition. – Any person interested under a deed, will, contract or other written instrument, or whose rights are affected by a statute, executive order or regulation, or ordinance, may, before breach or violation thereof, bring an action to determine any question of construction or validity arising under the instrument or statute and for a declaration of his rights or duties thereunder.

An action for the reformation of an instrument, to quiet title to real property or remove clouds therefrom, or to consolidate ownership under Article 1607 of the Civil Code, may be brought under this rule.

SECTION 2. Parties. – All persons shall be made parties who have or claim any interest which would be affected by the declaration; and no declaration shall, except as otherwise provided in these rules, prejudice the rights of persons not parties to the action.

However, respondents were not made parties in the said Petition Case No. U-920. Worse, instead of issuing summons to interested parties, the RTC merely allowed the posting of notices on the bulletin boards of Barangay Cabalitaan, Municipalities of Asingan and Lingayen, Pangasinan. As pointed out by the CA, citing the ruling of the RTC:

x x x In the said case or Petition No. U-920, notices were posted on the bulletin boards of barangay Cabalitaan, Municipalities of Asingan and Lingayen, Pangasinan, so that there was a notice to the whole world and during the initial hearing and/or hearings, no one interposed objection thereto.

Suits to quiet title are not technically suits in rem, nor are they, strictly speaking, in personam, but being against the person in respect of the res, these proceedings are characterized as quasi in rem. The judgment in such proceedings is conclusive only between the parties. Thus, respondents are not bound by the decision in Petition Case No. U-920 as they were not made parties in the said case. (Emphasis supplied)

Applying the foregoing principles here, we find that there is no identity of parties between Civil Case No. Q-09-64241 and this case.

The final and executory Order dated May 18, 2012 of RTC-Branch 98 in Civil Case No. Q-09-64241 is only binding on herein petitioners Association of International Shipping Lines, Inc., APL Co. Pte. Ltd. and Maersk-Filipinas, Inc. and the lone respondent in that case, the CIR. Meanwhile, in this case, although the petitioners are the same, the respondents include not only the CIR but the Secretary of Finance as well. Note that the Secretary of Finance was not party in Civil Case No. Q-09-64241. Consequently, the Secretary of Finance is not bound by the final and executory judgment in Civil Case No. Q-09-64241. Additionally, unlike in the said case, it is the Secretary of Finance’s issuance which is the subject of the present challenge, not the CIR’s.

The distinction between the CIR and the Secretary of Finance, as respondents, is not hairsplitting. On one hand, when BIR Commissioner Lilian B. Hefti issued RMC 31-2008 on January 30, 2008, she did so under the auspices of Section 4[41] of the NIRC. On the other hand, when Secretary Cesar Purisima issued RR 15-2013 on September 20, 2013, he did so in obedience to the legislative directive under Section 5[42] of RA 10378 and pursuant to his rule-making power under Section 244[43] of the NIRC.

Verily, the Commissioner and the Secretary cannot be considered as one, For when they issued their respective revenue memoranda or regulation, they did so pursuant to the separate powers and prerogatives granted by law.

b) No substantial identity of subject matter

While it is true that RMC 31-2008, subject of Civil Case No. Q-09- 64241, on one hand, and RR 15-2013, subject of the present case, on the other, both treat demurrage and detention fees to be within the prism of regular corporate income tax rate, each, however, differs from the other with respect to the authority from which it emanated.

In Civil Case No. Q-09-64241, what was challenged was the CIR’s authority to issue RMC 31-2008 pursuant to Section 4 of the NIRC. On the other hand, what is being challenged here is the Secretary of Finance’s authority to issue RR 15-2013 in accordance with Section 244 of the NIRC and Section 5 of RA 10378. The CIR and the Secretary of Finance derive their respective powers from two (2) distinct sources, thus, their respective issuances, too, are separate and independent of each other.

More, the supposed invalidity of the CIR’s issuance in Civil Case No. Q-09-64241 does not preclude the Secretary of Finance from rendering his issuance on the same subject.

More important, the judgment in Civil Case No. Q-09-64241 does not rise to a level of a judicial precedent to be followed in subsequent cases by all courts in the land, since the same was rendered by a regional trial court, and not by this Court. Verily, the Order dated May 18, 2012 of RTC-Branch 98, although binding on the CIR, cannot serve as a judicial precedent for the purpose of precluding the Secretary of Finance from promulgating a similar issuance on the same subject.

A petition for declaratory
relief is not the proper remedy
to seek the invalidation of RR 15-2013;
petition is treated as one for prohibition

To begin with, the trial court dismissed the case below, among others, for lack of jurisdiction pursuant to Section 1 of CA 55, which reads:

Section 1. Section one of Act Numbered Thirty-seven hundred and thirty-six is hereby amended so as to read as follows:

“SECTION 1. Construction. — Any person interested under a deed, contract or other written instrument, or whose rights are affected by a statute, may bring an action in a Court of First Instance to determine any question of construction or validity arising under such deed, contract, instrument or statute and for a declaration of his rights or duties thereunder: Provided, however, That the provisions of this Act shall not apply to cases where a taxpayer questions his liability for the payment of any tax, duty, or charge collectible under any law administered by the Bureau of Customs or the Bureau of Internal Revenue.” (Emphasis supplied)

In CJH Development Corp. v. BIR,[44] this Court clarified that CA 55 is still good law, thus:

CJH alleges that CA No. 55 has already been repealed by the Rules of Court; thus, the remedy of declaratory relief against the assessment made by the BOC is proper. It cited the commentaries of Moran allegedly to the effect that declaratory relief lies against assessments made by the BIR and BOC. Yet in National Dental Supply Co. v. Meer, this Court held that:

From the opinion of the former Chief Justice Moran may be deduced that the failure to incorporate the above proviso [CA No. 55] in section 1, rule 66, [now Rule 64] is not due to an intention to repeal it but rather to the desire to leave its application to the sound discretion of the court, which is the sole arbiter to determine whether a case is meritorious or not. And even if it be desired to incorporate it in rule 66, it is doubted if it could be done under the rule-making power of the Supreme Court considering that the nature of said proviso is substantive and not adjective, its purpose being to lay down a policy as to the right of a taxpayer to contest the collection of taxes on the part of a revenue officer or of the Government. With the adoption of said proviso, our law-making body has asserted its policy on the matter, which is to prohibit a taxpayer to question his liability for the payment of any tax that may be collected by the Bureau of Internal Revenue. As this Court well said, quoting from several American cases, “The Government may fix the conditions upon which it will consent to litigate the validity of its original taxes…” “The power of taxation being legislative, all incidents are within the control of the Legislature.” In other words, it is our considered opinion that the proviso contained in Commonwealth Act No. 55 is still in full force and effect and bars the plaintiff from filing the present action.

As a substantive law that has not been repealed by another statute, CA No. 55 is still in effect and holds sway. Precisely, it has removed from the courts’ jurisdiction over petitions for declaratory relief involving tax assessments. The Court cannot repeal, modify or alter an act of the Legislature. (Emphasis supplied)

CIR v. Standard Insurance, Co., Inc.[45] further reinforced the rule that regional trial courts have no jurisdiction over petitions for declaratory relief against the imposition of tax liability or validity of tax assessments:

The more substantial reason that should have impelled the RTC to desist from taking cognizance of the respondent’s petition for declaratory relief except to dismiss the petition was its lack of jurisdiction.

We start by reminding the respondent about the inflexible policy that taxes, being the lifeblood of the Government, should be collected promptly and without hindrance or delay. Obeisance to this policy is unquestionably dictated by law itself. Indeed, Section 218 of the NIRC expressly provides that “[n]o court shall have the authority to grant an injunction to restrain the collection of any national internal revenue tax, fee or charge imposed by th[e] [NIRC].” Also, pursuant to Section 11[15] of R.A. No. 1125, as amended, the decisions or rulings of the Commissioner of Internal Revenue, among others, assessing any tax, or levying, or distraining, or selling any property of taxpayers for the satisfaction of their tax liabilities are immediately executory, and their enforcement is not to be suspended by any appeals thereof to the Court of Tax Appeals unless “in the opinion of the Court [of Tax Appeals] the collection by the Bureau of Internal Revenue or the Commissioner of Customs may jeopardize the interest of the Government and/or the taxpayer,” in which case the Court of Tax Appeals “at any stage of the proceeding may suspend the said collection and require the taxpayer either to deposit the amount claimed or to file a surety bond for not more than double the amount.”

In view of the foregoing, the RTC not only grossly erred in giving due course to the petition for declaratory relief, and in ultimately deciding to permanently enjoin the enforcement of the specified provisions of the NIRC against the respondent, but even worse acted without jurisdiction. (Emphasis supplied)

Tambunting, Jr. v. Sumabat,[46] explained the nature of a petition for declaratory relief, thus:

An action for declaratory relief should be filed by a person interested under a deed, will, contract or other written instrument, and whose rights are affected by a statute, executive order, regulation or ordinance before breach or violation thereof. The purpose of the action is to secure an authoritative statement of the rights and obligations of the parties under a statute, deed, contract, etc. for their guidance in its enforcement or compliance and not to settle issues arising from its alleged breach. It may be entertained only before the breach or violation of the statute, deed, contract, etc. to which it refers. Where the law or contract has already been contravened prior to the filing of an action for declaratory relief, the court can no longer assume jurisdiction over the action. In other words, a court has no more jurisdiction over an action for declaratory relief if its subject, i.e., the statute, deed, contract, etc., has already been infringed or transgressed before the institution of the action. Under such circumstances, inasmuch as a cause of action has already accrued in favor of one or the other party, there is nothing more for the court to explain or clarify short of a judgment or final order.

Verily, since there is no actual case involved in a petition for declaratory relief, it cannot be the proper vehicle to invoke the power of judicial review to declare a statute as invalid or unconstitutional. As decreed in DOTR v. PPSTA,[47] the proper remedy is certiorari or prohibition, thus:

The Petition for Declaratory Relief is not the proper remedy

One of the requisites for an action for declaratory relief is that it must be filed before any breach or violation of an obligation. Section 1, Rule 63 of the Rules of Court states, thus:

x x x

Thus, there is no actual case involved in a Petition for Declaratory Relief. It cannot, therefore, be the proper vehicle to invoke the judicial review powers to declare a statute unconstitutional.

It is elementary that before this Court can rule on a constitutional issue, there must first be a justiciable controversy. A justiciable controversy refers to an existing case or controversy that is appropriate or ripe for judicial determination, not one that is conjectural or merely anticipatory. As We emphasized in Angara v. Electoral Commission, any attempt at abstraction could only lead to dialectics and barren legal questions and to sterile conclusions unrelated to actualities.

To question the constitutionality of the subject issuances, respondents should have invoked the expanded certiorari jurisdiction under Section 1 of Article VIII of the 1987 Constitution. The adverted section defines judicial power as the power not only “to settle actual controversies involving rights which are legally demandable and enforceable,” but also “to determine whether or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the Government.”

There is a grave abuse of discretion when there is patent violation of the Constitution, the law, or existing jurisprudence. On this score, it has been ruled that “the remedies of certiorari and prohibition are necessarily broader in scope and reach, and the writ of certiorari or prohibition may be issued to correct errors of jurisdiction committed not only by a tribunal, corporation, board or officer exercising judicial, quasi-judicial or ministerial functions, but also to set right, undo[,] and restrain any act of grave abuse of discretion amounting to lack or excess of jurisdiction by any branch or instrumentality of the Government, even if the latter does not exercise judicial, quasi-judicial or ministerial functions.” Thus, petitions for certiorari and prohibition are the proper remedies where an action of the legislative branch is seriously alleged to have infringed the Constitution. (Emphasis supplied)

In Diaz et at v. Secretary of Finance, et al.,[48] the Court, nonetheless, held that a petition for declaratory relief may be treated as one for prohibition if the case has far-reaching implications and raises questions that need to be resolved for the public good; or if the assailed act or acts of executive officials are alleged to have usurped legislative authority, thus:

On August 24, 2010 the Court issued a resolution, treating the petition as one for prohibition rather than one for declaratory relief, the characterization that petitioners Diaz and Timbol gave their action. The government has sought reconsideration of the Court’s resolution, however, arguing that petitioners’ allegations clearly made out a case for declaratory relief, an action over which the Court has no original jurisdiction. The government adds, moreover, that the petition does not meet the requirements of Rule 65 for actions for prohibition since the BIR did not exercise judicial, quasi-judicial, or ministerial functions when it sought to impose VAT on toll fees. Besides, petitioners Diaz and Timbol has a plain, speedy, and adequate remedy in the ordinary course of law against the BIR action in the form of an appeal to the Secretary of Finance.

But there are precedents for treating a petition for declaratory relief as one for prohibition if the case has far-reaching implications and raises questions that need to be resolved for the public good. The Court has also held that a petition for prohibition is a proper remedy to prohibit or nullify acts of executive officials that amount to usurpation of legislative authority.

Here, the imposition of VAT on toll fees has far-reaching implications. Its imposition would impact, not only on the more than half a million motorists who use the tollways everyday, but more so on the government’s effort to raise revenue for funding various projects and for reducing budgetary deficits. (Emphasis supplied)

Here, RR 15-2013 greatly impacts the Philippine maritime industry since it is considered “as more of the ‘backbone’ of the Philippines’ burgeoning economy due to its significance both for trade and transportation.”[49] For this reason and the fact that the issue at hand has already pended since 2013 or for more than six (6) years now, first with the trial court and now with this Court, we resolve to treat the present case as one for certiorari or prohibition and settle the controversy once and for all. Diaz aptly enunciated:

Although the petition does not strictly comply with the requirements of Rule 65, the Court has ample power to waive such technical requirements when the legal questions to be resolved are of great importance to the public. The same may be said of the requirement of locus standi which is a mere procedural requisite. (Emphasis supplied)

RR 15-2013 is a valid
issuance

In treating demurrage and detention fees as regular income subject to regular income tax rate, the Secretary of Finance relied on Section 28(A)(I)(3a) of the NIRC, as amended by RA 10378, viz.:

SEC. 28. Rates of Income Tax on Foreign Corporations. —

(A) Tax on Resident Foreign Corporations. —

(1) xxx
(2) xxx
(3). International Carrier.—An international carrier doing business in the Philippines shall pay a tax of two and one-half percent (2 1/2 %) on its ‘Gross Philippine Billings’ as defined hereunder:

(c) International Air Carrier. — ‘Gross Philippine Billings’ refers to the amount of gross revenue derived from carriage of persons, excess baggage, cargo, and mail originating from the Philippines in a continuous and uninterrupted flight, irrespective of the place of sale or issue and the place of payment of the ticket or passage document: Provided, That tickets revalidated, exchanged and/or indorsed to another international airline form part of the Gross Philippine Billings if the passenger boards a plane in a port or point in the Philippines: Provided, further, That for a flight which originates from the Philippines, but transshipment of passenger takes place at any part outside the Philippines on another airline, only the aliquot portion of the cost of the ticket corresponding to the leg flown from the Philippines to the point of transshipment shall form part of Gross Philippine Billings.

(d) International Shipping. — ‘Gross Philippine Billings’ means gross revenue whether for passenger, cargo or mail originating from the Philippines up to final destination, regardless of the place of sale or payments of the passage or freight documents.

Provided, That international carriers doing business in the Philippines may avail of a preferential rate or exemption from the tax herein imposed on their gross revenue derived from the carriage of persons and their excess baggage on the basis of an applicable tax treaty or international agreement to which the Philippines is a signatory or on the basis of reciprocity such that an international carrier, whose home country grants income tax exemption to Philippine carriers, shall likewise be exempt from the tax imposed under this provision.(Emphasis supplied)

x x x.

This provision is still in effect since it was not amended by RA 10963 or the Tax Reform for Acceleration and Inclusion law.

To determine whether demurrage and detention fees are subject to the preferential 2.5% rate, we refer to the definition of “Gross Philippine Billings” (GPB) under Section 28(A)(I)(3a) of the NIRC, as amended by RA 10378, viz.: “gross revenue whether for passenger, cargo or mail originating from the Philippines up to final destination, regardless of the place of sale or payments of the passage or freight documents.”

RR 15-2013 echoes this definition, thus:

B) Determination of Gross Philippine Billings of International Sea Carriers. — In computing for “Gross Philippine Billings” of international sea carriers, there shall be included the total amount of gross revenue whether for passenger, cargo, and/or mail originating from the Philippines up to final destination, regardless of the place of sale or payments of the passage or freight documents.

x x x

Verily, the GPB covers gross revenue derived from transportation of passengers, cargo and/or mail originating from the Philippines up to the final destination. Any other income, therefore, is subject to the regular income tax rate. When the law is clear, there is no other recourse but to apply it regardless of its perceived harshness. Dura lex sed lex.[50]

Under RR 15-2013, demurrage and detention fees are not deemed within the scope of GPB. For demurrage fees “which are in the nature of rent for the use of property of the carrier in the Philippines, is considered income from Philippine source and is subject to income tax under the regular rate as the other types of income of the on-line carrier.” On the other hand, detention fees and other charges “relating to outbound cargoes and inbound cargoes are all considered Philippine-sourced income of international sea carriers they being collected for the use of property or rendition of services in the Philippines, and are subject to the Philippine income tax under the regular rate.”

Demurrage fee is the allowance or compensation due to the master or owners of a ship, by the freighter, for the time the vessel may have been detained beyond the time specified or implied in the contract of affreightment or the charter-party. It is only an extended freight or reward to the vessel, in compensation for the earnings the carrier is improperly caused to lose.[51]

Detention occurs when the consignee holds on to the carrier’s container outside of the port, terminal, or depot beyond the free time that is allotted. Detention fee is charged when import containers have been picked up, but the container (regardless if it is full or empty) is still in the possession of the consignee and has not been returned within the allotted time. Detention fee is also charged for export containers in which the empty container has been picked up for loading, and the loaded container is returned to the steamship line after the allotted free time.[52]

Indeed, the exclusion of demurrage and detention fees from the preferential rate of 2.5% is proper since they are not considered income derived from transportation of persons, goods and/or mail, in accordance with the rule expressio unios est exclusio alterius.

Demurrage and detention fees definitely form part of an international sea carrier’s gross income. For they are acquired in the normal course of trade or business. The phrase “in the course of trade or business” means the regular conduct or pursuit of a commercial or an economic activity, including transactions incidental thereto, by any person regardless of whether or not the person engaged therein is a nonstock, nonprofit private organization (irrespective of the disposition of its net income and whether or not it sells exclusively to members or their guests), or government entity.[53]

Surely, gross income means income derived from whatever source, including compensation for services; the conduct of trade or business or the exercise of a profession; dealings in property; interests; rents; royalties; dividends; annuities; prizes and winnings; pensions; and a partner’s distributive share in the net income of a general professional partnership,[54] among others. Demurrage and detention fees fall within the definition of “gross income” – the former is considered as rent payment for the vessel; and the latter, compensation for use of a carrier’s container.

RR 15-2013 is an
interpretative and internal issuance

An interpretative or implementing rule is defined under Section 2 (2), Chapter 1, Book VIII of the Revised Administrative Code, viz.:

Section 2. Definitions. – As used in this Book:

x x x

(2) “Rule” means any agency statement of general applicability that implements or interprets a law, fixes and describes the procedures in, or practice requirements of, an agency, including its regulations. The term includes memoranda or statements concerning the internal administration or management of an agency not affecting the rights of, or procedure available to, the public.

Chapter 2 of Book VII of the same Code further provides the manner by which administrative rules attain effectivity:

Section 3. Filing.-

(1) Every agency shall file with the University of the Philippines Law Center three (3) certified copies of every rule adopted by it. Rules in force on the date of effectivity of this Code which are not filed within three (3) months from that date shall not thereafter be the basis of any sanction against any party or persons.

(2) The records officer of the agency, or his equivalent functionary, shall carry out the requirements of this section under pain of disciplinary action.

(3) A permanent register of all rules shall be kept by the issuing agency and shall be open to public inspection.

Section 4. Effectivity. – In addition to other rule-making requirements provided by law not inconsistent with this Book, each rule shall become effective fifteen (15) days from the date of filing as above provided unless a different date is fixed by law, or specified in the rule in cases of imminent danger to public health, safety and welfare, the existence of which must be expressed in a statement accompanying the rule. The agency shall take appropriate measures to make emergency rules known to persons who may be affected by them.

SECTION 5. Publication and Recording.—The University of the Philippines Law Center shall:

(1) Publish a quarterly bulletin setting forth the text of rules filed with it during the preceding quarter; and

(2) Keep an up-to-date codification of all rules thus published and remaining in effect, together with a complete index and appropriate tables.

SECTION 6. Omission of Some Rules.— (1) The University of the Philippines Law Center may omit from the bulletin or the codification any rule if its publication would be unduly cumbersome, expensive or otherwise inexpedient, but copies of that rule shall be made available on application to the agency which adopted it, and the bulletin shall contain a notice stating the general subject matter of the omitted rule and new copies thereof may be obtained.

(2) Every rule establishing an offense or defining an act which, pursuant to law is punishable as a crime or subject to a penalty shall in all cases be published in full text.

SECTION 7. Distribution of Bulletin and Codified Rules.—The University of the Philippines Law Center shall furnish one (1) free copy each of every issue of the bulletin and of the codified rules or supplements to the Office of the President, Congress, all appellate courts and the National Library. The bulletin and the codified rules shall be made available free of charge to such public officers or agencies as the Congress may select, and to other persons at a price sufficient to cover publication and mailing or distribution costs.

SECTION 8. Judicial Notice.—The court shall take judicial notice of the certified copy of each rule duly filed or as published in the bulletin or the codified rules.

SECTION 9. Public Participation.—(1) If not otherwise required by law, an agency shall, as far as practicable, publish or circulate notices of proposed rules and afford interested parties the opportunity to submit their views prior to the adoption of any rule.

(2) In the fixing of rates, no rule or final order shall be valid unless the proposed rates shall have been published in a newspaper of general circulation at least two (2) weeks before the first hearing thereon.

(3) In case of opposition, the rules on contested cases shall be observed. (Emphasis supplied)

Excepted are interpretative regulations and those merely internal in nature, which do not require filing with the U.P. Law Center for their effectivity. On this score, ASTEC v. ERC[55] is proper:

As interpretative regulations, the policy guidelines of the ERC on the treatment of discounts extended by power suppliers are also not required to be filed with the U.P. Law Center in order to be effective. Section 4, Chapter 2, Book VII of the Administrative Code of 1987 requires every rule adopted by an agency to be filed with the U.P. Law Center to be effective. However, in Board of Trustees of the Government Service Insurance System v. Velasco, this Court pronounced that “[n]ot all rules and regulations adopted by every government agency are to be filed with the UP Law Center.” Interpretative regulations and those merely internal in nature are not required to be filed with the U.P. Law Center. Paragraph 9 (a) of the Guidelines for Receiving and Publication of Rules and Regulations Filed with the U.P. Law Center states:

  1. Rules and Regulations which need not be filed with the U.P. Law Center, shall, among others, include but not be limited to, the following:

a. Those which are interpretative regulations and those merely internal in nature, that is, regulating only the personnel of the Administrative agency and not the public. (Emphasis supplied)

RR 15-2013 is an internal issuance for the guidance of “all internal revenue officers and others concerned.” It is also an interpretative issuance vis-à-vis RA 10378, thus:

SECTION 2. SCOPE. — Pursuant to Section 244 of the National Internal Revenue Code of 1997 (NIRC), as amended, and Section 5 of RA No. 10378, these Regulations are hereby promulgated to implement RA No. 10378, amending Sections 28(A)(3)(a), 109, 118 and 236 of the NIRC.

RR 15-2013 merely sums up the rules by which international carriers may avail of preferential rates or exemption from income tax on their gross revenues derived from the carriage of persons and their excess baggage based on the principle of reciprocity or an applicable tax treaty or international agreement to which the Philippines is a signatory. Interpretative regulations are intended to interpret, clarify or explain existing statutory regulations under which the administrative body operates. Their purpose or objective is merely to construe the statute being administered and purport to do no more than interpret the statute. Simply, they try to say what the statute means and refer to no single person or party in particular but concern all those belonging to the same class which may be covered by the said rules.[56]

Indeed, when an administrative rule is merely interpretative in nature, its applicability needs nothing further than its bare issuance, for it gives no real consequence more than what the law itself has already prescribed.[57] As such, RR 15-2013 need not pass through a public hearing or consultation, get published, nay, registered with the U.P. Law Center for its effectivity.

ACCORDINGLY, the petition is DENIED for lack of merit. The Orders dated September 15, 2015 and January 8, 2016 of the Regional Trial Court, Branch 77, Quezon City, in Special Civil Action No. R-QZN-13-05590-CV are AFFIRMED.

SO ORDERED.

Peralta, C.J., (Chairperson), Caguioa, J. Reyes, Jr., and Lopez, JJ., concur.

[1] AN ACT AMENDING SECTIONS 27, 28, 34, 106, 107, 108, 109, 110, 111, 112, 113, 114, 116, 117, 119, 121, 148, 151, 236, 237 AND 288 OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED, AND FOR OTHER PURPOSES.
[2] Clarification of Issues Concerning Common Carriers by Sea and their Agents Relative to the Transport of Passengers, Goods or Cargoes.
[3] Is a non-stock, non-profit corporation duly organized and existing under the laws of the Republic of the Philippines, whose members are international shipping carriers and/or their agents operating in the Philippines.
[4] Is an AISL member-firm engaged in international shipping business. It is a corporation duly organized and existing under the laws of Singapore and licensed to do business in the Philippines.
[5] Rollo, p. 102.
[6] Id.
[7] Id. at 102-115.
[8] SEC. 28. Rates of Income Tax on Foreign Corporations. –
(A) Tax on Resident Foreign Corporations. –
(1) In General. – Except as otherwise provided in this Code, a corporation organized, authorized, or existing under the laws of any foreign country, engaged in trade or business within the Philippines, shall be subject to an income tax equivalent to thirty-five percent (35%) of the taxable income derived in the preceding taxable year from all sources within the Philippines: Provided, That effective January 1, 2009, the rate of income tax shall be thirty percent (30%).
In the case of corporations adopting the fiscal-year accounting period, the taxable income shall be computed without regard to the specific date when sales, purchases and other transactions occur. Their income and expenses for the fiscal year shall be deemed to have been earned and spent equally for each month of the period.
The corporate income tax rate shall be applied on the amount computed by multiplying the number of months covered by the new rate within the fiscal year by the taxable income of the corporation for the period, divided by twelve.
Provided, however, That a resident foreign corporation shall be granted the option to be taxed at fifteen percent (15%) on gross income under the same conditions, as provided in Section 27(A).
x x x
(3) International Carrier. -An international carrier doing business in the Philippines shall pay a tax of two and one-half percent (2 1/2%) on its ‘Gross Philippine Billings’ as defined hereunder:
x x x
(b) International Shipping.- ‘Gross Philippine Billings’ means gross revenue whether for passenger, cargo or mail originating from the Philippines. up to final destination, regardless of the place of sale or payments of the passage or freight documents.
x x x
[9] Rollo, pp. 111-114.
[10] Id. at 114-115.
[11] Id. at 116.
[12] AN ACT RECOGNIZING THE PRINCIPLE OF RECIPROCITY AS BASIS FOR THE GRANT OF INCOME TAX EXEMPTIONS TO INTERNATIONAL CARRIERS AND RATIONALIZING OTHER TAXES IMPOSED THEREON BY AMENDING SECTIONS 28(A)(3)(a), 109, 118 AND 236 OF THE NATIONAL INTERNAL REVENUE CODE (NIRC), AS AMENDED, AND FOR OTHER PURPOSES.
[13] Revenue Regulations Implementing Republic Act No. 10378 entitled “An Act Recognizing the Principle of Reciprocity as Basis for the Grant of Income Tax Exemptions to International Carriers and Rationalizing Other Taxes Imposed thereon by Amending Sections 28 (A)(3)(A), 109, 118 And 236 of the National Internal Revenue Code (NIRC), as amended, and for other Purposes.”
[14] With applications for a temporary restraining order and a writ of preliminary injunction, rollo, pp. 136- 165.
[15] Id. at 139.
[16] Id. at 141-146.
[17] Id. at 149.
[18] Id. at 150-151.
[19] Id. at 152.
[20] Id. at 155.
[21] Id. at 160.
[22] Id. at 411-426.
[23] Id. at 417-418.
[24] Id. at 420-424.
[25] Id. at 424.
[26] Id. at 427-444.
[27] AN ACT TO AMEND SECTION ONE OF ACT NUMBERED THIRTY-SEVEN HUNDRED AND THIRTY-SIX, BY PROVIDING THAT THE PROVISIONS OF THE SAID ACT SHALL NOT APPLY TO CASES INVOLVING LIABILITY FOR ANY TAX, DUTY, OR CHARGE COLLECTIBLE UNDER ANY LAW ADMINISTERED BY THE BUREAU OF CUSTOMS OR THE BUREAU OF INTERNAL REVENUE.
[28] Rollo, pp. 428-432.
[29] Id. at 474-491.
[30] AN ACT RECOGNIZING THE PRINCIPLE OF RECIPROCITY AS BASIS FOR THE GRANT OF INCOME TAX EXEMPTIONS TO INTERNATIONAL CARRIERS AND RATIONALIZING OTHER TAXES IMPOSED THEREON BY AMENDING SECTIONS 28(A)(3)(a), 109, 118 AND 236 OF THE NATIONAL INTERNAL REVENUE CODE (NIRC), AS AMENDED, AND FOR OTHER PURPOSES.
[31] Rollo, pp. 89-94.
[32] Id. at 94.
[33] Id. at 654-655.
[34] Id. at 658.
[35] Id. at 665.
[36] Id. at 674-700.
[37] Diaz, Jr. v. Valenciano, Jr., G.R. No. 209376, December 06, 2017, 848 SCRA 85, 96 (2017).
[38] 507 Phil. 94, 98 (2005).
[39] City of Lapu-Lapu v. PEZA, 748 Phil. 473, 512-513 (2014).
[40] 565 Phil. 766, 786-787 (2007).
[41] SEC. 4. Power of the Commissioner to Interpret Tax Laws and to Decide Tax Cases – The power to interpret the provisions of this Code and other tax laws shall be under the exclusive and original jurisdiction of the Commissioner, subject to review by the Secretary of Finance.
The power to decide disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties imposed in relation thereto, or other matters arising under this Code or other laws or portions thereof administered by the Bureau of Internal Revenue is vested in the Commissioner, subject to the exclusive appellate jurisdiction of the Court of Tax Appeals.
[42] Section 5. Implementing Rules and Regulations. — The Secretary of Finance shall, upon the recommendation of the Commissioner of Internal Revenue, promulgate not later than thirty (30) days upon the effectivity of this Act the necessary rules and regulations for its effective implementation. The Department of Finance (DOF), in coordination with the Department of Foreign Affairs (DFA), shall oversee the exchange of notes between the Philippines and concerned countries for purposes of facilitating the availment of reciprocal exemptions intended under this Act.
[43] SEC. 244. Authority of Secretary of Finance to Promulgate Rules and Regulations. – The Secretary of Finance, upon recommendation of the Commissioner, shall promulgate all needful rules and regulations for the effective enforcement of the provisions of this Code.
[44] 595 Phil. 1051, 1057-1058 (2008).
[45] G.R. No. 219340, November 07, 2018.
[46] Supra note 38.
[47] G.R. No. 230107, July 24, 2018.
[48] 669 Phil. 371, 382-383 (2011).
[49] Letran, Bjorn Biel M. “A bustling and thriving sector,” BWorldOnline.Com., April 25, 2018. See https://www.bworldonline.com/a-bustling-and-thriving-sector.
[50] Obiasca v. Basallote, 626 Phil. 775, 785 (2010).
[51] Black’s Law Dictionary See: < a href=”https://thelawdictionary.org/demurrage/” title=”DEMURRAGE” >DEMURRAGE < /a > (Last accessed: November 13, 2019)
[52] PNG Logistics See: http://pnglc.com/detention-and-demurrage-whats-the-difference/ (Last accessed: November 13, 2019)
[53] Section 105, RA 8424.
[54] See CIR v. PAL, 535 Phil. 95, 106 (2006).
[55] 695 Phil. 243, 280 (2012).
[56] Republic of the Philippines v. Drugmaker’s Laboratories, Inc., et al., 728 Phil. 480, 490 (2014).
[57] Id.