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ANDY J. AGOY, G.R. No. 196358 Petitioner, 

Present: 

VELASCO, JR., J ., Chairperson, 

- versus - PERALTA, 

ABAD, 

MENDOZA, and 

PERLAS-BERNABE, JJ. 

ARANETA CENTER, INC., Respondents. Promulgated: 

March 21, 2012 

x --------------------------------------------------------------------------------------- x 

 RESOLUTION  

ABAD, J .: 

This case reiterates the Court’s ruling that the adjudication of a case

 by minute resolution is an exercise of judicial discretion and constitutes

sound and valid judicial practice.

The Facts and the Case 

On June 15, 2011 the Court denied petitioner Jandy J. Agoy’s petition

for review through a minute resolution that reads: 

“G.R. No. 196358 (Jandy J. Agoy vs. Araneta Center, Inc.).- The Court resolves to GRANT  petitioner’s motion forextension of thirty (30) days from the expiration of thereglementary period within which to file a petition for review on

certiorari.

The court further resolves to DENY the petition for reviewon certiorari assailing the Decision dated 19 October 2010 and

Resolution dated 29 March 2011 of the Court of Appeals (CA),

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Manila, in CA-G.R. SP No. 108234 for failure to show that the

CA committed reversible error when it affirmed the dismissal of petitioner Jandy J. Agoy. Petitioner’s repeated delays in remitting

the excess cash advances and admission that he spent them for

other purposes constitute serious misconduct and dishonesty

which rendered him unworthy of the trust and confidence reposedin him by respondent Araneta Center, Inc.”

Apparently, however, Agoy doubted the authenticity of the copy of

the above minute resolution that he received through counsel since he

 promptly filed a motion to rescind the same and to have his case resolved on

its merits via a regular resolution or decision signed by the Justices who took

 part in the deliberation. In a related development, someone claiming to be

Agoy’s attorney-in-fact requested an investigation of the issuance of theresolution of June 15, 2011.

On September 21, 2011 the Court denied Agoy’s motion to rescind

the subject minute resolution and confirmed the authenticity of the copy of

the June 15, 2011 resolution. It also treated his motion to rescind as a

motion for reconsideration and denied the same with finality.

Upon receipt of the Court’s September 21, 2011 resolution, Agoy

filed a motion to rescind the same or have his case resolved by the Court En Banc pursuant to Section 13 in relation to Sec. 4(3), Article VIII of the 1987

Constitution. Agoy reiterated his view that the Court cannot decide his

 petition by a minute resolution. He thus prayed that it rescind its June 15

and September 21, 2011 resolutions, determine whether it was proper for the

Court to resolve his petition through a minute resolution, and submit the case

to the Court en banc for proper disposition through a signed resolution or

decision. 

Questions Presented 

At the heart of petitioner’s motions are the following questions:

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1. Whether or not the copies of the minute resolutions dated June

15, 2011 and September 21, 2011 that Agoy received are authentic; and 

2. Whether or not it was proper for the Court to deny his petitionthrough a minute resolution. 

The Court’s Rulings 

One. The notices of the minute resolutions of June 15 and September21, 2011 sent to Agoy, bearing the signatures of Assistant Clerk of Court

Teresita Aquino Tuazon and Deputy Division Clerk of Court Wilfredo V.

Lapitan, both printed on pink paper and duly received by counsel for

 petitioner as evidenced by the registry return cards, are authentic andoriginal copies of the resolutions. The Court has given Tuazon and Lapitan

the authority to inform the parties under their respective signatures of the

Court’s actions on the incidents in the cases.

Minute resolutions are issued for the prompt dispatch of the actions of

the Court. While they are the results of the deliberations by the Justices of

the Court, they are promulgated by the Clerk of Court or his assistants

whose duty is to inform the parties of the action taken on their cases by

quoting verbatim the resolutions adopted by the Court.[1]

  Neither the Clerk

of Court nor his assistants take part in the deliberations of the case. They

merely transmit the Court’s action in the form prescribed by its Internal

Rules: 

Sec. 7.  Form of notice of a minute resolution. —A notice of

minute resolution shall be embodied in a letter of the Clerk of

Court or the Division Clerk of Court notifying the parties of theaction or actions taken in their case. In the absence of or

whenever so deputized by the Clerk of Court or the Division

Clerk of Court, the Assistant Clerk of Court or Assistant DivisionClerk of Court may likewise sign the letter which shall be in the

following form:

(SUPREME COURT Seal)

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REPUBLIC OF THE PHILIPPINES

SUPREME COURTManila

 EN BANC/____ DIVISION  

NOTICE 

Sirs/Mesdames:

 Please take notice that the Court en banc/___ Division

issued a Resolution dated _____, which reads as follows: 

“G.R./UDK/A.M./A.C. No. ____ (TITLE).—(QUOTE

 RESOLUTION)” 

Very truly yours,

(Sgd.)

CLERK OF COURT/Division Clerk of

Court

As the Court explained in Borromeo v. Court of Appeals,[2]

 no law or

rule requires its members to sign minute resolutions that deny due course to

actions filed before it or the Chief Justice to enter his certification on the

same. The notices quote the Court’s actual resolutions denying due course

to the subject actions and these already state the required legal basis for such

denial. To require the Justices to sign all its resolutions respecting its action

on new cases would be unreasonable and unnecessary.

Based on last year’s figures, the Court docketed a total of 5,864 new

cases, judicial and administrative. The United States Supreme Court

 probably receives lesser new cases since it does not have administrativesupervision of all courts. Yet, it gives due course to and decides only about

100 cases per year. Agoy’s demand that this Court give due course to and

decide all cases filed with it on the merits, including his case, is simply

unthinkable and shows a lack of discernment of reality.

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Two. While the Constitution requires every court to state in itsdecision clearly and distinctly the fact and the law on which it is based, the

Constitution requires the court, in denying due course to a petition for

review, merely to state the legal basis for such denial. 

Sec. 14. No decision shall be rendered by any court

without expressing therein clearly and distinctly the facts and the

law on which it is based. No petition for review or motion forreconsideration of a decision of the court shall be refused duecourse or denied without stating the legal basistherefor.[3] (Emphasis supplied)

With the promulgation of its Internal Rules, the Court itself has

defined the instances when cases are to be adjudicated by decision, signedresolution, unsigned resolution or minute resolution.

[4]  Among those

instances when a minute resolution shall issue is when the Court “denies a

 petition filed under Rule 45 of the [Rules of Court], citing as legal basis the

absence of reversible error committed in the challenged decision, resolution,

or order of the court below.”[5]

  The minute resolutions in this case complied

with this requirement.

The Court has repeatedly said that minute resolutions dismissing the

actions filed before it constitute actual adjudications on the merits. [6]   They

are the result of thorough deliberation among the members of the

Court.[7]

  When the Court does not find any reversible error in the decision

of the CA and denies the petition, there is no need for the Court to fully

explain its denial, since it already means that it agrees with and adopts the

findings and conclusions of the CA. The decision sought to be reviewed and

set aside is correct.[8]

  It would be an exercise in redundancy for the Court to

reproduce or restate in the minute resolution denying the petition the

conclusions that the CA reached.

Agoy questions the Court’s act of treating his motion to rescind as a

motion for reconsideration, arguing that it had no basis for doing so. But the

Court was justified in its action since his motion to rescind asked the Court

to review the merits of his case again.

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WHEREFORE, the Court DENIES petitioner Jandy J. Agoy’smotion to rescind dated December 21, 2011 and the Motion for Clarification

and to Resolve Pending Incidents dated January 31, 2012 for lack of merit.

The Court shall not entertain further pleadings or motions in this

case. Let entry of judgment be issued.

SO ORDERED. 

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DISSENTING OPINION

SANDOVAL-GUTIERREZ, J .:

It is after deep introspection that I am constrained to dissent fromthe denial by the majority of the motions for reconsideration filed by

respondents PEA and AMARI.Chief Justice Charles Evans Hughes of the United States Supreme

Court stated that a dissent is of value because it is “an appeal to thebrooding spirit of the law, to the intelligence of a future day, when a laterdecision may possibly correct the error into which the dissenting judgebelieves the court to have been betrayed.”[1] 

While I joined in the initial grant of the petition, I realized, however,that the tenor of our interpretation of the Constitutional prohibition on theacquisition of reclaimed lands by private corporations is so absolute and

circumscribed as to defeat the basic objectives of its provisions on “TheNational Economy and Patrimony.”[2] 

The Constitution is a flexible and dynamic document. It must beinterpreted to meet its objectives under the complex necessities of thechanging times. Provisions intended to promote social and economicgoals are capable of varying interpretations. My view happens to differfrom that of the majority. I am confident, however, that the demands ofthe nation’s economy and the needs of the majority of our people willbring the majority Decision and this Dissenting Opinion to a commonunderstanding. Always, the goals of the Constitution must be upheld,not defeated nor diminished.

Infrastructure building is a function of the government and ideallyshould be financed exclusively by public funds. However, presentcircumstances show that this cannot be done. Thus, privatecorporations are encouraged to invest in income generating nationalconstruction ventures.

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Investments on the scale of reclamation projects entail hugeamounts of money. It is a reality that only private corporations can raisesuch amounts. In the process, they assist this country in its economicdevelopment. Consequently, our government should not take arbitraryaction against these corporate developers. Obviously, the courts play a

key role in all disputes arising in this area of national development.

This is the background behind my second hard look at the issuesand my resulting determination to dissent.

The basic issue before us is whether a private corporation, such asrespondent AMARI, can acquire reclaimed lands.

The Decision being challenged invokes the Regalian doctrine thatthe State owns all lands and waters of the public domain. The doctrineis the foundation of the principle of land ownership that all lands that

have not been acquired by purchase or grant from the Governmentbelong to the public domain.[3]Property of public dominion is that devotedto public use such as roads, canals, rivers, torrents, ports and bridgesconstructed by the State, riverbanks, shores, roadsteads and that of asimilar character.[4] Those which belong to the State, not devoted topublic use, and are intended for some public service or for thedevelopment of the national wealth, are also classified as property ofpublic dominion.[5] All other property of the State which is not of publicdominion is patrimonial.[6] Also, property of public dominion, when nolonger intended for public use or public service, shall form part of the

patrimonial property of the State.[7] 

In our Decision sought to be reconsidered,[8] we held that thefollowing laws, among others, are applicable to the particularreclamation project involved in this case: the Spanish Law of Waters of1866, the Civil Code of 1889, Act No. 1654 enacted by the PhilippineCommission in 1907, Act No. 2874 (the Public Land Act of 1919), andCommonwealth Act No. 141 of the Philippine National Assembly, alsoknown as the Public Land Act of 1936. Certain dictums areemphasized. Reclaimed lands of the government may be leased but

not sold to private corporations and private individuals. Thegovernment retains title to lands it reclaims. Only lands which havebeen officially delimited or classified as alienable shall be declared opento disposition or concession.

 Applying these laws and the Constitution, we then concluded thatthe submerged areas of Manila Bay are inalienable natural resources ofthe public domain, outside the commerce of man. They have to be

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classified by law as alienable or disposable agricultural lands of thepublic domain and have to be declared open to disposition. However,there can be no classification and declaration of their alienable ordisposable nature until after PEA has reclaimed these submergedareas. Even after the submerged areas have been reclaimed from the

sea and classified as alienable or disposable, private corporations suchas respondent AMARI, are disqualified from acquiring the reclaimedland in view of Section 3, Article XII of the Constitution, quoted asfollows:

“Lands of the Public domain are classified into agricultural, forest or timbre,

mineral lands, and national parks. Agricultural lands of the public domain may

be further classified by law according to the uses to which they may be

devoted. Alienable lands of the public domain shall be limited to agricultural

lands. Private corporations or associations may not hold such alienable

lands of the public domain except by lease, for a period not exceeding

twenty-five years, renewable for not more than twenty-five years, and not to

exceed one thousand hectares in area. Citizens of thePhilippines may lease not

more than five hundred hectares, or acquire not more than twelve hectares

thereof by purchase, homestead, or grant.

“Taking into account the requirements of conservation, ecology, and

development, and subject to the requirements of agrarian reform, the Congress

shall determine, by law, the size of lands of the public domain which may be

acquired, developed, held, or leased and the conditions therefor.”

I dissent from the foregoing conclusions which are based on generallaws mainly of ancient vintage. Reclaimed lands, especially those underthe Manila-Cavite Coastal Roadand Reclamation Project (MCCRRP),are governed by PD 1084[9] and PD 1085[10] enacted in 1976 and 1977,respectively, or more than half a century after the enactment of thePublic Lands Acts of 1919 and 1936.

PD 1084 and PD 1085 provide:

PD 1084- 

“Section 4. Purposes. - The Authority is hereby created for the following

purposes:

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a. To reclaim land, including foreshore and submerged

areas, by dredging, filling or other means, or to acquire

reclaimed land;

b. To develop, improve, acquire, administer, deal in,

subdivide, dispose, lease and sell any and all kinds oflands, buildings, estates and other forms of real property,

owned, managed, controlled and/or operated by the

government;

c. To provide for, operate or administer such services as may

be necessary for the efficient, economical and beneficial

utilization of the above properties. (Emphasis ours)

PD 1085- 

“The land reclaimed in the foreshore and offshore area of Manila Bay pursuant

to the contract for the reclamation and construction of the Manila-

Cavite Coastal Road Project between the Republic of the Philippines and the

Construction and Development Corporation of the Philippines dated November

20, 1973 and/or any other contract or reclamation covering the same area is

herebytransferred, conveyed and assigned to the ownership and

administration of the Public Estates Authority established pursuant to P.D.

No. 1084; Provided, however, that the rights and interest of the Construction

and Development Corporation of the Philippines pursuant to the aforesaid

contract shall be recognized and respected.

xxx xxx xxx

“Special land patent/patents shall be issued by the Secretary of Natural

Resources in favor of the Public Estates Authority without prejudice to

the subsequent transfer to the contractor or his assignees of such portion

or portions of the land reclaimed or to be reclaimed as provided for in the

above-mentioned contract. On the basis of such patents, the Land Registration

Commission shall issue the corresponding certificates of title.” (Emphasis

Ours)

Pursuant to the above provisions, PEA is mandated inter alia toreclaim land, including foreshore and submerged areas, or to acquirereclaimed land. Likewise, PEA has the power to sell any and all kinds oflands and other forms of real property owned and managed by thegovernment. Significantly, PEA is authorized to transfer  to the

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contractor or its assignees portion or portions of the landreclaimed or to be reclaimed. 

It is a fundamental rule that if two or more laws govern the samesubject, every effort to reconcile and harmonize them must be

taken. Interpretare et concordare legibus estoptimus interpretandi. Statutes must be so construed and harmonized with other statutes as to forma uniform system of jurisprudence.[11] However, if several laws cannot beharmonized, the earlier statute must yield to the later enactment. Thelater law is the latest expression of the legislative will.[12] Therefore, it isPD 1084 and PD 1085 which apply to the issues in this case.

Moreover, the laws cited in our Decision are general laws whichapply equally to all the individuals or entities embraced by theirprovisions.[13] The provisions refer to public lands in general. 

Upon the other hand, PD 1084 and PD 1085 are special laws whichrelate to particular economic activities, specific kinds of land and aparticular group of persons.[14] Their coverage is specific andlimited. More specifically, these special laws apply to landreclaimed from Manila Bay by private corporations. 

If harmonization and giving effect to the provisions of both setsof laws is not possible, the special law should be made to prevailover the general law, as it evinces the legislative intent moreclearly. The special law is a specific enactment of the legislature whichconstitutes an exception to the general statute.[15] 

Our Decision cites the constitutional provision banning privatecorporations from acquiring any kind of alienable land of the publicdomain.[16] 

Under the Constitution, lands of the public domain are classified intoagricultural, forest or timber, mineral lands, and natural parks.[17] Landreclaimed from the sea cannotfall under any of the last threecategories because it is neither forest or timber , mineral, nor parkland. It is, therefore, agricultural land.[18] Agricultural land of the

public domain may be alienated.[19]

  However, the Constitution statesthat private corporations may not hold such alienable land except bylease. It follows that AMARI, being a private corporation, cannot holdany reclaimed area. But let it be made clear that PD 1084 transfers thepublic agricultural land formed by reclamation to the “ownership andadministration” of PEA, a government owned corporation. The transferis not to AMARI, a private corporation, hence, the constitutional

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prohibition does not apply. Corollarily, under PD 1085, PEA isempowered to subsequently transfer to the contractor portion orportions of the land reclaimed or to be reclaimed.

Does the Constitution restrain PEA from effecting such transfer to a

private corporation? Under Article 421 of the Civil Code, all property ofthe State which is not of public dominion is patrimonial. PEA does notexercise sovereign functions of government. It handles businessactivities for the government. Thus, the property in its hands, notbeing of public dominion, is held in a patrimonial capacity. PEA,therefore, may sell this property to private corporations without violatingthe Constitution. It is relevant to state that there is no constitutionalobstacle to the sale of real estate held by government ownedcorporations, like the National Development Corporation, the PhilippineNational Railways, the National Power Corporation, etc. to private

corporations. Similarly, why should PEA, being a government ownedcorporation, be prohibited to sell its reclaimed lands to privatecorporations?

I take exception to the view of the majority that after the enactmentof the 1935 Constitution, Section 58 of Act 2874 continues to beapplicable up to the present and that the long established state policy isto retain for the government title and ownership of governmentreclaimed land. This simply is an inaccurate statement of currentgovernment policy. When a government decides to reclaim the land,

such as the area comprising and surrounding the Cultural CenterComplex and other parts of Manila Bay, it reserves title only to theroads, bridges, and spaces allotted for government buildings. The restis designed, as early as the drawing board stage, for sale and use ascommercial, industrial, entertainment or services-oriented ventures. Theidea of selling lots and earning money for the government is the motivewhy the reclamation was planned and implemented in the first place.

May I point out that there are other planned or on-going reclamationprojects in the Philippines. The majority opinion does not only strikedown the Joint Venture Agreement (JVA) between AMARI and PEA but

will also adversely affect or nullify all other reclamation agreements inthe country. I doubt if government financial institutions, like theDevelopment Bank of the Philippines, the Government ServiceInsurance System, the Social Security System or other agencies, wouldrisk a major portion of their funds in a problem-filled and highlyspeculative venture, like reclamation of land still submerged under thesea. Likewise, there certainly are no private individuals, like business

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tycoons and similar entrepreneurs, who would undertake a majorreclamation project without using the corporate device to raise anddisburse funds and to recover the amounts expended with a certainmargin of profits. And why should corporations part with their money ifthere is no assurance of payment, such as a share in the land reclaimed

or to be reclaimed? It would be most unfair and a violation of proceduraland substantive rights[20] to encourage investors, both Filipino andforeign, to form corporations, build infrastructures, spend money andefforts only to be told that the invitation to invest is unconstitutional orillegal with absolutely no indication of how they could be compensatedfor their work.

It has to be stressed that the petition does not actually assail thevalidity of the JVA between PEA and AMARI. The petition mainly seeksto compel PEA to disclose all facts on the then on-going negotiations

with respondent AMARI with respect to the reclamation of portionsof Manila Bay. Petitioner relies on the Constitutional provision that theright of the people to information on matters of public concern shall berecognized and that access to papers pertaining to official transactionsshall be afforded the citizen.[21] I believe that PEA does not have to revealwhat was going on from the very start and during the negotiations with aprivate party. As long as the parties have the legal capacity to enter intoa valid contract over an appropriate subject matter, they do not have tomake public, especially to competitors, the initial bargaining, the give-and-take arguments, the mutual concessions, the moving from one

position to another, and other preliminary steps leading to the draftingand execution of the contract. As in negotiations leading to a treaty orinternational agreement, whether sovereign or commercial in nature, acertain amount of secrecy is not only permissible but compelling.

 At any rate, recent developments appear to have mooted this issue,and anything in the Decision which apparently approves publicity duringon-going negotiations without pinpointing the stage where the right toinformation appears is obiter. The motions for reconsideration alltreat the JVA as a done thing, something already concrete, if  not

finalized. Indeed, it is hypothetical to identify exactly when the right to

information begins and what matters may be disclosed duringnegotiations for the reclamation of land from the sea.

Unfortunately for private respondent, its name, “AMARI,” happens toretain lingering unpleasant connotations. The phrase “grandmother of

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all scams,” arising from the Senate investigation of the original contract,has not been completely erased from the public mind.

However, any suspicion of anything corrupt or improper during theinitial negotiations which led to the award of the reclamation to AMARI

are completely irrelevant to this petition. It bears stressing that theDecision and this Dissenting Opinion center exclusively on questions ofconstitutionality and legality earlier discussed.

To recapitulate, it is my opinion that there is nothing in theConstitution or applicable statutes which impedes the exercise by PEAof its right to sell or otherwise dispose of its reclaimed land to privatecorporations, especially where, as here, the purpose is to compensaterespondent AMARI, the corporate developer, for its expenses incurredin reclaiming the subject areas. Pursuant to PD 1084 and PD 1085,PEA can transfer  to the contractor, such as AMARI, such portionor portions of the land reclaimed or to be reclaimed. 

WHEREFORE, I vote to GRANT the motions for reconsideration andto DISMISS the petition for lack of merit.

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 FRANCISCO SILVA G.R. No. 160174 as NEA Administrator,

Petitioner, Present: 

QUISUMBING, J .,

C

hairperson , 

- versus - CARPIO, 

CARPIO MORALES, 

TINGA, and 

VELASCO,

JR., JJ. 

LEOVIGILDO T. MATIONG, Promulgated: Respondent. 

August 28, 2006 

x-----------------------------------------------------------------------------------------x  

D E C I S I O N 

CARPIO , J.: 

The Case 

Before the Court is a petition for review[1]

 assailing the 19 June

2003 Decision[2]

 and 26 September 2003 Resolution[3]

 of the Court of

Appeals in CA-G.R. SP No. 70399. The Court of Appeals granted the petition for certiorari, prohibition and mandamus filed

 by Leovigildo T. Mationg (“respondent”) and nullified the orders of then

Administrator Francisco Silva (“petitioner”) of the National Electrification

Administration (NEA). The Court of Appeals also denied petitioner’s

Motion for Reconsideration. 

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 The Facts 

Aklan Electric Cooperative, Inc. (AKELCO) is an electric cooperative

under the supervision and control of the NEA[4]

  pursuant to Presidential

Decree No. 269 (PD 269),[5]

  as amended by Presidential Decree No. 1645

(PD 1645),[6]

 and to the Contract of Loan between NEA and AKELCO dated

23 January 1996.[7] 

Respondent was the general manager of AKELCO. 

The present controversy arose when the National Power Corporation

(NAPOCOR) cut-off the electricity in Aklan from 18-20 March 2002

for AKELCO’s failure to pay its approximately P25 million

obligation.[8]

  Edita Bueno (“Bueno”), NEA Officer-in-Charge and DeputyAdministrator for Cooperatives Development and Special Projects, formed a

team to take-over the management and operations of AKELCO.[9]

 On 20

March 2002, NAPOCOR restored the power supply to the area

upon learning of the NEA take-over.[10]

  However, respondent remained the

general manager of AKELCO despite the NEA take-over.[11]

 

On the same day, the AKELCO Board of Directors (AKELCO-BOD)

received a complaint from the different municipal mayors seeking the

dismissal of respondent as AKELCO general manager for gross

incompetence and mismanagement.[12]

  As early as 25 March 1998, the

AKELCO-BOD had already received a letter from the consumer-members

of AKELCO expressing their dissatisfaction and frustration over the

inefficiency of AKELCO’s management.[13]

  An open letter dated 20 March

2002 addressed to President Gloria Macapagal-Arroyo requesting for the

immediate termination of respondent was published in numerous

newspapers.[14]  The inefficiency of AKELCO’s operation also became thesubject of the privilege speech delivered by Congressman

Gabrielle Calizo on 4 March 2002.[15]

 

The AKELCO-BOD issued Resolution No. 18 placing respondent

under indefinite preventive suspension to prevent him from exerting undue

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influence while the audit and investigation were being conducted by the

 NEA management team.

On 21 March 2002, Bueno wrote a letter to the AKELCO-BOD

approving Board Resolution No. 18, however, reducing the preventivesuspension of respondent to 30 days.

On 22 March 2002, Bueno issued a Memorandum[16]

 stating that the

 NEA received another AKELCO-BOD resolution, referred to as Board

Resolution No. 17, disowning and recalling Board Resolution No. 18 and

expressing full trust and confidence in respondent’s management. 

Based on these conflicting board resolutions, AKELCO obviously hadan intra-corporate dispute involving two factions of Board of Directors: one,

headed byChito Peralta (“the Peralta faction”), and the other headed

 by Melanio Rentillo (“the Rentillo faction”). Due to the complexity of the

issue, Bueno revoked the approval of Board Resolution No. 18 and

submitted the determination of the validity of the two board resolutions to

the NEA Board of Administrators (NEA-BOA). Further,Bueno directed the

opposing parties to submit their respective position papers on the matter and

enjoined them to cooperate with the NEA management team. The two

factions submitted their respective position papers. 

On 4 April 2002, Bueno issued Office Order No. 2002-058[17]

 creating

a Committee[18]

  to evaluate the position papers of the two factions of the

AKELCO-BOD. The Committee recommended the approval of Board

Resolution No. 18 passed by the Peralta faction and the disapproval of Board

Resolution No. 17 passed by the Rentillo faction. 

On 11 April 2002, petitioner issued a Resolution

[19]

 approving BoardResolution No. 18 and disapproving Board Resolution No. 17. Petitioner

reiteratedBueno’s letter of 21 March 2002 placing respondent under a 30-

day preventive suspension.

On the same day, the NEA-BOA issued Resolution No.

22[20]

 authorizing petitioner to remove respondent as general manager of

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AKELCO subject to the confirmation of the NEA-BOA, allegedly pursuant

to Section 5(e) of PD 269 as amended by PD 1645 (“PD 269 as amended”). 

On 19 April 2002, petitioner issued an Order for AKELCO’s non-

 payment of its loans and non-compliance with NEA policies, orders andguidelines. The pertinent portions of this order read: 

x x x x

3. The AKELCO Board is directed to pursue action

 per approved Board Resolution 18, as qualifiedly approved by this

office, importantly, its resolution placingAtty.Leovigildo T. Mationg under preventive suspension for thirty

(30) days and that the investigation be terminated within the same period.

4. Pursuant to Section 5(a)(6), Chapter II of P.D. 269,

as amended by Section 3 of P.D. 1645, Mr. Erico A. Bucoy is

hereby designated to manage AKELCO in the meantime that itsGeneral Manager is under suspension.”

x x x x[21] (Emphasis supplied)

On 2 May 2002, respondent filed a petition[22]

 with the Court of

Appeals to enjoin petitioner from enforcing the 11 April 2002 Resolution

and the 19 April 2002Order. 

During the pendency of the petition, the NEA-approved AKELCO

BOD, along with the NEA-appointed Executive

Officer Erico Bucoy (“Bucoy”), issued Board Resolution No.

32[23]

 constituting itself as an investigating committee to look into the

complaints against respondent. In an undated letter, Bucoy informed

respondent of the investigation of the charges against him and asked him to

show why he should not be terminated as general manager of AKELCO.

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On 8 May 2002, the NEA-BOA issued Board Resolution No.

26[24]

 confirming petitioner’s Order dated 19 April 2002 which provided,

among others, the preventive suspension of respondent for 30 days. 

On 11 May 2002, the AKELCO-BOD terminated its investigation andissued Resolution No. 2, Series of 2002-05-11,

[25] finding respondent guilty

of willful breach of trust and confidence to the consumer-members and gross

and habitual neglect of his duties as general manager of AKELCO. The

AKELCO-BOD terminated respondent’s services effective on the same day. 

On 17 May 2002, petitioner issued an Order [26]

 approving AKELCO-

BOD Resolution No. 2, Series of 2002-05-11 terminating respondent as

AKELCO general manager for willful breach of trust and confidence.

On 30 May 2002, respondent filed a Manifestation and Supplemental

Motion[27]

 with the Court of Appeals assailing his removal as AKELCO

general manager and praying for the nullification of petitioner’s issuances

and for reinstatement as AKELCO general manager. 

Meanwhile, the NEA-BOA issued Resolution No. 37[28]

 on 5 June

2002 confirming petitioner’s Order dated 17 May 2002 approving the

removal of respondent. 

In its Decision of 19 June 2003,[29]

 the Court of Appeals granted

respondent’s petition and nullified the assailed Resolution and Orders.

The dispositive portion of the decision reads: 

WHEREFORE, the instant petition is hereby GRANTED. TheResolution dated 11 April 2002, Order dated 19 April 2002 andOrder dated 17 May 2002 are hereby NULLIFIED AND SET

ASIDE. Respondent is hereby ORDERED to reinstate petitioneras general manager of AKELCO without prejudice however to theconduct of proper proceedings for his suspension and termination

as stated herein, if warranted.

SO ORDERED.[30] 

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The Court of Appeals denied petitioner’s motion for reconsideration in

its Resolution of 26 September 2003.[31]

 

Hence, this petition. 

The Ruling of the Court of Appeals 

In nullifying petitioner’s issuances and reinstating respondent as

general manager of AKELCO, the Court of Appeals ruled as follows: 

At the outset, We shall first tackle respondent’s assertionthat the instant case does not fall within our jurisdiction. In

essence, respondent argues that the foregoing acts establish a labor

dispute cognizable only by the Labor Arbiter. We disagree.

x x x What is at issue is whether or not respondent is

vested with the authority to issue the assailed resolutions andorders.

x x x x

Furthermore, under Section 5 of the same law which

amended Section 10 of PD No. 269, if the electric cooperativeconcerned or other similar entity fails after due notice to comply

with NEA orders, rules and regulations and/or decisions, or with

any of the terms of the Loan Agreement, the NEA Board ofAdministrators may take preventive and/or disciplinary measures

including suspension and/or removal and replacement of any or

all of the members of the Board of Directors, officers oremployees of the Cooperative, other borrower institutions or

supervised or controlled entities as the NEA Board ofAdministrators may deem fit and necessary and to take any other

remedial measures as the law or the Loan Agreement may

 provide.

x x x It is the Board of Administrators and not theAdministrator himself who is empowered to suspend and/orterminate the incumbent general manager and appoint an

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acting general manager of an erring electric cooperative. TheAdministrator cannot arrogate unto himself a power that is notgiven to him by the statute. It is a well-established rule of law

that a public official must trace his powers from the statute that

created the office or position. The power, however, need not be

express but may be implied from the wording of the law. In theabsence of such conferment, the public official cannot validly

exercise the power. If executed and properly challenged, the

unauthorized exercise of such power may be set aside. x x x

x x x x

x x x whether or not the Board of Administrators mayvalidly delegate the foregoing powers to the NEAAdministrator. We hold that it cannot.  To sanction thisdelegation would violate the

maxim: potestas delegata non delegari potest  (what has been

delegated cannot be delegated).

x x x x[32] (Emphasis supplied)

In its Resolution dated 26 September 2003 denying petitioner’s motion

for reconsideration,[33]

 the Court of Appeals passed upon the“allegedly undiscussedissues” petitioner raised. The Court of Appeals

reiterated that it has jurisdiction over the case. The Court of Appeals also

held that this case is an exception to the principle of exhaustion of

administrative remedies since petitioner’s issuances were patently illegal

and this case involved purely legal issues. The Court of Appeals rejected

 petitioner’s allegation of respondent’s forum-shopping. Despite petitioner’s

opposition, the Court of Appeals allowed respondent’s Manifestation and

Supplemental Motion to resolve this case on the merits instead of dismissing

it on pure technicality.

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The Issues 

While petitioner raised numerous issues in his 121-page

Memorandum,[34]

 the crucial issue in this case is whether petitioner’sapproval of the AKELCO-BOD’sresolutions suspending and terminating

respondent as AKELCO general manger is valid. Inextricably related to this

issue is the question of whether the NEA-BOA’sauthorization for and

confirmation of respondent’s suspension and removal as AKELCO general

manager by petitioner as then NEA Administrator are legal. 

The Ruling of the Court 

The petition is meritorious. 

 Procedural Matters 

At the outset, the Court declares that its resolution of the presentcase is confined to determining the validity of petitioner’s Resolution and

Orders insofar as the preventive suspension and dismissal of respondent are

concerned. The Court will refrain from discussing other matters raised by

 petitioner immaterial to the resolution of this main issue, such as the transfer

of the AKELCO office to Lezo, Aklan, which is allegedly pending before

the Court of Appeals,[35]

  the management take-over of AKELCO, and the

composition of the AKELCO-BOD. The Court is not a trier of facts. These

incidental matters which definitely require an examination of facts and

evidence are not proper in a petition for review which should only raise

questions of law.[36]

 

Concerning the procedural issues raised by petitioner, suffice it to

state that substantial justice and the public interest involved in this case far

outweigh any procedural lapses committed by respondent. Justice dictates

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that this Court resolve the instant controversy on the merits than dismiss it

on the grounds of forum-shopping, non-amendment of the petition before the

Court of Appeals, collateral attack of various issuances of the NEA-BOA,

exclusion of indispensable parties, and non-exhaustion of administrative

remedies.

Moreover, the Court finds no reversible error in the Court of Appeals’

findings on the issues of jurisdiction, forum-shopping, exhaustion of

administrative remedies, and amendment of the petition for certiorari. On

the issue of jurisdiction, there is evidently no employment relationship

 between the parties. Hence, the instant controversy does not involve a labor

dispute requiring the expertise of the National Labor Relations

Commission. This case involves the exercise of the enforcement power ofthe NEA under Section 10 of PD 269 as amended.[37]

 

On the issue of exhaustion of administrative remedies, the Court holds

that the main issues for resolution in this case are purely legal. Thus, the

instant case falls within the recognized exceptions to the rule of exhaustion

of administrative remedies.[38]

 

On the issue of forum-shopping, the Court sustains the Court of

Appeals’ ruling that appeal is not a speedy and adequate remedy for

respondent. Respondent’s “appeal” to the NEA-BOA appears to be a futileexercise because the assailed issuances were subsequently confirmed by the

 NEA-BOA. Hence, respondent properly filed a petition for certiorari with

the Court of Appeals challenging the authority of petitioner to suspend and

remove him. 

On the issues of collateral attack of various NEA-BOA issuances and

exclusion of indispensable parties, the Court notes that petitioner raised them

for the first time on appeal. Settled is the rule that issues not raised in thecourt a quo  cannot be raised for the first time on appeal because to do so

would be offensive to the basic rules of justice and fair play.[39]

 

 Enforcement Power of the NEA 

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  The NEA, as a public corporation, acts through its Board of

Administrators, composed of a Chairman and four members, one of whom

is the Administrator as ex-officio member.[40]

 The NEA exercises supervision

and control[41] over electric cooperatives organized and operating under the

mandate of PD 269, as amended. The extent of government control overelectric cooperatives covered by PD 269, as amended, is largely a

function of the NEA as a primary source of funds of these electric

cooperatives.[42]

 

In exercising its power of supervision and control over electric

cooperatives, the NEA, through its Board of Administrators, can issueorders, rules and regulations, and motu proprio or upon petition of third

 parties, can conduct investigations in all matters affecting electric

cooperatives pursuant to Section 10 of PD 269, as amended. Further, the

 NEA-BOA may avail of the remedial measures enumerated in Section 10 of

PD 269, as amended, in case of non-compliance by the electric cooperative

concerned with NEA orders, rules and regulations, and decisions, or with

any of the terms of the Loan Agreement. One of these remedial measures,

Section 10(e) of PD 269, as amended, provides for the suspension or

removal of members of the Board of Directors, officers or employees of thedefiant electric cooperative as the NEA-BOA may deem fit and necessary,

thus: 

Section 10.  Enforcement Powers and Remedies. In the exercise

of its power of supervision and control over electric cooperatives

and other borrower, supervised or controlled entities, the NEA is

empowered to issue orders, rules and regulations

and motu proprio or upon petition of third parties, to conduct

investigations, referenda and other similar actions in all mattersaffecting said electric cooperatives and other borrower, or

supervised or controlled entities.

If the electric cooperative concerned or other similar entity

fails after due notice to comply with NEA orders, rules and

regulations and/or decisions, or with any of the terms of the Loan

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Agreement, the NEA Board of Administrators may avail of any or

all of the following remedies:

x x x x

(e) Take preventive and/or disciplinary measuresincluding suspension and/or removal and replacement of any

or all of the members of the Board of Directors, officers or

employees of the Cooperative, other borrower institutions or

supervised or controlled entities as the NEA Board of

Administrators may deem fit and necessary and to take any

other remedial measures as the law or the Loan Agreementmay provide.

The question is whether the NEA-BOA can delegate to the NEA

Administrator its power under Section 10(e) of PD 269, as amended, to take

 preventive and disciplinary measures against electric cooperative officers. 

Petitioner maintains that such power of the NEA-BOA can be

lawfully delegated to the NEA Administrator by virtue of Section 5(b)(7) of

PD 269, as amended. Section 5(b)(7) refers to the NEA Administrator’s

other powers and duties which may be vested in him by the NEA-BOA. 

On the other hand, respondent contends that the power of the NEA-

BOA under Section 10(e) of PD 269, as amended, is reserved solely to the

 NEA-BOA. In other words, the power of the NEA-BOA under Section

10(e) of PD 269, as amended, cannot be validly delegated to the NEA

Administrator. 

Under Section 10 of PD 269, as amended, the power to impose

 preventive and disciplinary measures on erring electric cooperative officerscan be exercised by the NEA-BOA as a collegial body to whom all the

 powers of the NEA had been vested in.[43]

  Section 10(e) of PD 269, as

amended, categorically states that the NEA-BOA may take preventive or

disciplinary measures against an erring electric cooperative officer as the

 NEA-BOA may deem fit and necessary. 

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Contrary to the ruling of the Court of Appeals, there was no undue

delegation of power by the NEA-BOA to the NEA

Administrator. Resolution No. 22 provides: 

WHEREAS, in Section 5(e) of P.D. No. 1645, the NEA

Board may take preventive and/or disciplinary measures including

suspension and/or removal and replacement of any or all of the

members of the Board of Directors, officers or employees of theelectric cooperative, other borrowing institutions or supervised or

controlled entities as the NEA Board of Administrators may deem

fit and necessary and to take any other remedial measures as thelaw or the Loan Agreement may provide;

RESOLVED TO AUTHORIZE THEADMINISTRATOR, as he is hereby authorized, to remove the

General Manager of Aklan Electric Cooperative, Inc. (AKELCO)

as the Administrator may deem fit and necessary, subject toconfirmation of the Board of Administrators.[44] (Emphasissupplied) 

It is clear from Resolution No. 22 that any action of the NEA

Administrator is subject to the confirmation of the NEA-BOA. What is

delegated to the NEA Administrator is only the power to investigate and to

make a recommendation, not the power to discipline.[45]

  The disciplining

authority is still the NEA-BOA. The authority of the NEA Administrator is

only recommendatory. If it were otherwise, there is no need for any

confirmation by the NEA-BOA. Thus, any sanction or penalty arising from

any investigation by the NEA Administrator takes effect only upon

confirmation by the NEA-BOA. 

The act of the NEA-BOA in delegating the power to investigate to the NEA Administrator is not without basis. Hence: 

The rule that requires an administrative officer to exercisehis own judgment and discretion does not preclude him from

utilizing, as a matter of practical administrative procedure, the aid

of subordinates to investigate and report to him the facts, on the

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 basis of which the officer makes his decisions. It is sufficient that

the judgment and discretion finally exercised are those of the

officer authorized by law. x x x[46]

 

Even this Court, in its exercise of its disciplinary authority over lowercourt justices, judges, judicial employees and lawyers, delegates the power

to investigate administrative complaints. Thus: 

[T]he Constitution grants the Supreme Court disciplinary authority

over all lower court justices and judges, as well as judicial

employees and lawyers. While the investigation of administrativecomplaints is delegated usually to the Office of the Court

Administrator (OCA) or the Integrated Bar of the Philippines

(IBP), the Court nonetheless makes its own judgments of the cases[where] sanctions are imposed. It does not merely adopt or solely

rely on the recommendations of the OCA or the IBP.[47]

 

In this case, the phrase “subject to confirmation of the Board of

Administrators” implies that the final decision rests on the NEA-BOA. The

 NEA-BOA may confirm, modify or nullify the act of the NEA

Administrator. 

Further, the delegation of authority by the NEA-BOA was in

accordance with Section 5(b)(7) of PD 269, as amended, which grants the

 NEA Administrator the following powers and duties: 

(1) To execute and administer the policies, plans and

 program, and the rules and regulations, approved or promulgated by the Board of Administrators;

(2) To submit for the consideration of the Board of

Administrators such policies, plans and programs as he deemsnecessary to carry out the provisions and purposes of this Decree;

(3) To direct and supervise the operation and internal

administration of the NEA and, for this purpose, to delegate some

or any of his powers and duties to subordinate officials of the NEA;

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(4) Subject to the guidelines and policies established by

the Board of Administrators, to appoint and fix the number andcompensation of subordinate officials and employees of the

 NEA; Provided, however, [t]he provisions of the Civil Service

Law and Position Classification Law shall not apply to the

appointment and compensation of any such subordinate official oremployee;

(5) For cause, to remove, suspend, or otherwise

discipline any subordinate official or employee;

(6) To prepare an annual report on the activities of the

 NEA at the close of each fiscal year and to submit a copy thereof

to the President of the Philippines and when it comes intoexistence, the Prime Minister and the appropriate committee of,

and as determined by, the National Assembly; and

(7) To exercise such other powers and duties as maybe vested in him by the Board of Administrators.

x x x x (Emphasis supplied)

The Court notes that petitioner did not motu proprio issue the assailed

Resolution and Orders suspending and removing respondent as AKELCO

general manager. The AKELCO-BOD initiated the suspension and

termination of respondent through the issuance of Board Resolutions. The

AKELCO-BOD submitted its Board Resolutions suspending and removing

respondent to NEA for approval. This procedure is in accordance withSection 24(a) of PD 269, as amended, which states in part that “the

management of a cooperative shall be vested in its Board [of Directors],

subject to the supervision and control of NEA which shall have the right

to x xx approve all policies and resolutions.” In approving the AKELCO-

BOD resolutions, petitioner was acting pursuant to the

authorization[48]

 issued by the NEA-BOA. More importantly, the NEA-BOA

confirmed petitioner’s issuances approving the suspension and removal of

respondent.

The Court notes that petitioner’s counsel relied on several decisions of

the Court of Appeals in addition to Supreme Court cases to buttress his

arguments. The Court reminds counsel that decisions of the Court of

Appeals are neither controlling nor conclusive on this Court. Moreover, the

Court strongly suggests that petitioner’s counsel be brief and straightforward

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in drafting pleadings. He should, as much as possible, refrain from

quoting lengthily irrelevant portions of Supreme Court decisions. The

Court further advises petitioner’s counsel to observe and maintain the

respect due to courts at all times. An unfavorable judgment can never justify

the use of intemperate language against the courts.

WHEREFORE, the Court GRANTS the petition. The Court SETSASIDE the 19 June 2003 Decision and 26 September 2003 Resolution of theCourt of Appeals in CA-G.R. SP No. 70399. The Court declares VALIDthe NEA-BOA Resolution No. 37 dated 5 June 2002 confirming NEAAdministrator Francisco Silva’s Order of 17 May 2002 approving the

AKELCO-BOD Resolution No. 2 of 11 May 2002 terminating

respondent Leovigildo T. Mationg as General Manager of AklanElectricCooperative, Inc. 

SO ORDERED 

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MARIA PAZ V. NEPOMUCENO, G.R. No. 146091  joined by her husband, FERMIN A. NEPOMUCENO,

Petitioners,Present: 

PUNO, C.J ., Chairperson, 

CARPIO, 

- v e r s u s - CORONA, AZCUNA and 

LEONARDO-DE CASTRO, JJ. 

CITY OF SURIGAO and SALVADOR SERING in his capacity as City Mayor of  

Surigao,Respondents.  Promulgated: 

July 28, 2008 

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x 

D E C I S I O N CORONA, J .: 

Petitioners assail the February 29, 2000 decision[1]

  and October 12,

2000 resolution of the Court of Appeals (CA) in CA-G.R. CV No. 56461

affirming with modification the decision of the Regional Trial Court (RTC)

of Surigao City, Branch 32, in Civil Case No. 4570. 

Civil Case No. 4570 was a complaint for “Recovery of Real Property

and/or its Market Value” filed by petitioner Maria Paz Nepomuceno to

recover a 652 sq. m. portion[2]

 of her 50,000 sq. m. lot[3]

 which was

occupied, developed and used as a city road by the city government of

Surigao. Maria Paz alleged that the city government neither asked her

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 permission to use the land nor instituted expropriation proceedings for its

acquisition. On October 4, 1994, she and her husband, co-petitioner, Fermin

A. Nepomuceno, wrote respondent (then Surigao City Mayor) Salvador

Sering a letter proposing an amicable settlement for the payment of the

 portion taken over by the city. They subsequently met with Mayor Sering to

discuss their proposal but the mayor rebuffed them in public and refused to

 pay them anything. In a letter dated January 30, 1995, petitioners sought

reconsideration of the mayor’s stand. But again, the city mayor turned this

down in his reply dated January 31, 1995. As a consequence, petitioners

claimed that they suffered mental anguish, embarrassment, disappointment

and emotional distress which entitled them to moral damages. 

In their answer, respondents admitted the existence of the road in

question but alleged that it was constructed way back in the 1960s during the

administration of former Mayor Pedro Espina. At that time, the lot was

owned by the spouses Vicente and Josefa Fernandez who signed a road

right-of-way agreement in favor of the municipal government. However, a

copy of the agreement could no longer be found because the records were

completely destroyed and lost when the Office of the City Engineer was

demolished by typhoon Nitang in 1994. 

After hearing the parties and evaluating their respective evidence, the

RTC rendered its decision[4]

 and held: 

WHEREFORE, premises considered, judgment is hereby

rendered ordering the City of Surigao to pay to Maria Paz V. Nepomuceno and her husband, Fermin Nepomuceno, the sum

of P5,000.00 as attorney’s fees, and the further sum of P3,260.00

as compensation for the portion of land in dispute, with legal

interest thereon from 1960 until fully paid, and upon payment,

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directing her to execute the corresponding deed of conveyance in

favor of the said defendant. The Clerk of Court shall execute thenecessary instrument in the event of her failure to do so.

The claims for moral and exemplary damages are denied

for lack of basis. No pronouncement as to costs.

SO ORDERED.[5] 

Unsatisfied with that decision, the petitioners appealed to the CA. As

stated earlier, the CA modified the RTC decision and held that petitioners

were entitled toP30,000 as moral damages for having been rebuffed by

Mayor Sering in the presence of other people. It also awarded

 petitioners P20,000 as attorney’s fees and litigation expenses considering

that they were forced to litigate to protect their rights and had to travel to

Surigao City from their residence in Ormoc City to prosecute their claim.

The CA affirmed the decision of the trial court in all other respects.

Petitioners filed a motion for reconsideration but it was denied. Hence, this

 petition. 

Petitioners claim that, in fixing the value of their property, justice and

equity demand that the value at the time of actual payment should be the

 basis, not the value at the time of the taking as the RTC and CA held. They

demand P200/sq. m. or a total sum of P130,400 plus legal interest. In the

alternative, petitioners pray for the re-examination of the meaning of just

compensation and cite the separate concurring opinion of Justice Antonio

Barredo in Municipality of La Carlota v. Spouses Gan. [6] 

 

Petitioners also assert that the CA decision in Spouses Mamerto

 Espina, Sr. and Flor Espina v. City of Ormoc[7]

 should be applied to this

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case because of the substantial factual similarity between the two cases. In

that case, the City of Ormoc was directed to institute a separate

expropriation proceeding over the subject property.

Moreover, petitioners maintain that exemplary damages should be

awarded because respondent City of Surigao illegally took their property. 

Petitioners’ arguments are without merit.

In a long line of cases, we have consistently ruled that where actual

taking is made without the benefit of expropriation proceedings and the

owner seeks recovery of the possession of the property prior to the filing of

expropriation proceedings, it is the value of the property at the time of taking

that is controlling for purposes of compensation.[8]

 As pointed out

in Republic v. Lara, [9] 

 the reason for this rule is: 

The owner of private property should be compensated only forwhat he actually loses; it is not intended that his compensationshall extend beyond his loss or injury.  And what he loses isonly the actual value of his property at the time it istaken. This is the only way the compensation to be paid can betruly just; i.e., “just” not only to the individual whose property is

taken, “but to the public, which is to pay for it.”

Thus, the value of petitioners’ property must be ascertained as of 1960

when it was actually taken. It is as of that time that the real measure of their

loss may fairly be adjudged. The value, once fixed, shall earn interest at the

legal rate until full payment is effected, conformably with other principles

laid down by case law.[10]

 

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Regarding petitioners’ contention on the applicability of Article 1250

of the Civil Code,[11]

  Republic v. CA[12]

  is enlightening: 

Article 1250 of the Civil Code, providing that, in case ofextraordinary inflation or deflation, the value of the currency at

the time of the establishment of the obligation shall be the basis

for the payment when no agreement to the contrary is

stipulated, has strict application only to contractualobligations. In other words, a contractual agreement is needed forthe effects of extraordinary inflation to be taken into account to

alter the value of the currency. (emphasis supplied)

Since there was never any contractual obligation between the parties

in this case, Article 1250 of the Civil Code finds no application. 

Moreover, petitioners cannot properly insist on the application of the

CA decision in Spouses Mamerto Espina, Sr. and Flor Espina v. City of

Ormoc.[13]

  A decision of the CA does not establish judicial precedent. A

ruling of the CA on any question of law is not binding on this Court.[14]

 In

fact, the Court may review, modify or reverse any such ruling of the CA.

Finally, we deny petitioners’ prayer for exemplary damages.

Exemplary damages may be imposed by way of example or correction for

the public good.[15]

 The award of these damages is meant to be a deterrent to

socially deleterious actions.[16]

 Exemplary damages would have been

appropriate had it been shown that the city government indeed misused its power of eminent domain.

[17] In this case, both the RTC and the CA found

there was no socially deleterious action or misuse of power to speak of. We

see no reason to rule otherwise. 

WHEREFORE, the petition is hereby DENIED.

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[G.R. No. 134284. December 1, 2000] 

AYALA CORPORATION, petitioner, vs. ROSA-DIANA REALTY

AND DEVELOPMENT CORPORATION, respondent. D E C I S I O N 

DE LEON, JR., J .: 

Before us is a petition for review on certiorari  seeking the reversal of adecision rendered by the Court of Appeals in C.A. G.R. C.V. No. 4598 entitled,“Ayala Corporation vs. Rosa-Diana Realty and Development Corporation,”dismissing Ayala Corporation’s petition for lack of merit. 

The facts of the case are not in dispute: 

Petitioner Ayala Corporation (hereinafter referred to as Ayala) was theregistered owner of a parcel of land located in Alfaro Street, Salcedo Village,Makati City with an area of 840 square meters, more or less and covered byTransfer Certificate of Title (TCT) No. 233435 of the Register of Deeds of Rizal. 

On April 20, 1976, Ayala sold the lot to Manuel Sy married to Vilma Poand Sy Ka Kieng married to Rosa Chan. The Deed of Sale executed between

 Ayala and the buyers contained Special Conditions of Sale and DeedRestrictions. Among the Special Conditions of Sale were: 

a) the vendees shall build on the lot and submit the building plans to the vendor

before September 30, 1976 for the latter’s approval  

b) the construction of the building shall start on or before March 30, 1977 and

completed before 1979. Before such completion, neither the deed of sale

shall be registered nor the title released even if the purchase price shall havebeen fully paid  

c) there shall be no resale of the property  

The Deed Restrictions, on the other hand, contained the stipulation that thegross floor area of the building to be constructed shall not be more than five (5)times the lot area and the total height shall not exceed forty two (42) meters. Therestrictions were to expire in the year 2025. 

Manuel Sy and Sy Ka Kieng failed to construct the building in violation of theSpecial Conditions of Sale. Notwithstanding the violation, Manuel Sy and SyKa Kieng, in April 1989, were able to sell the lot to respondent Rosa-DianaRealty and Development Corporation (hereinafter referred to as Rosa-Diana)with Ayala’s approval. As a consideration for Ayala to release the Certificate ofTitle of the subject property, Rosa-Diana, on July 27, 1989 executed anUndertaking promising to abide by said special conditions of sale executedbetween Ayala and the original vendees. Upon the submission of the

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Undertaking, together with the building plans for a condominium project, knownas “The Peak”, Ayala released title to the lot, thereby enabling Rosa-Diana toregister the deed of sale in its favor and obtain Certificate of Title No. 165720 inits name. The title carried as encumbrances the special conditions of sale andthe deed restrictions. Rosa-Diana’s building plans as approved by Ayala were

“subject to strict compliance of cautionary notices appearing on the building plansand to the restrictions encumbering the Lot regarding the use and occupancy ofthe same.” 

Thereafter, Rosa-Diana submitted to the building official of Makati anotherset of building plans for “The Peak” which were substantially different from thosethat it earlier submitted to Ayala for approval. While the building plans whichRosa-Diana submitted to Ayala for approval envisioned a 24-meter high, seven(7) storey condominium project with a gross floor area of 3,968.56 squaremeters, the building plans which Rosa-Diana submitted to the building official ofMakati, contemplated a 91.65 meter high, 38 storey condominium building with agross floor area of 23,305.09 square meters.[1] Needless to say, while the first set

of building plans complied with the deed restrictions, the latter set exceeded thesame. 

During the construction of Rosa-Diana’s condominium project, Ayala filed anaction with the Regional Trial Court (RTC) of Makati, Branch 139 for specificperformance, with application for a writ of preliminary injunction/temporaryrestraining order against Rosa-Diana Realty seeking to compel the latter tocomply with the contractual obligations under the deed of restrictions annotatedon its title as well as with the building plans it submitted to the latter. In thealternative, Ayala prayed for rescission of the sale of the subject lot to Rosa-Diana Realty. 

The lower court denied Ayala’s prayer for injunctive relief, thus enablingRosa-Diana to complete the construction of the building. Undeterred, Ayala triedto cause the annotation of a notice of lis pendens on Rosa-Diana’s title. TheRegister of Deeds of Makati, however, refused registration of the notice of lis

 pendens  on the ground that the case pending before the trial court, being anaction for specific performance and/or rescission, is an action in personam whichdoes not involve the title, use or possession of the property. [2] The LandRegistration Authority (LRA) reversed the ruling of the Register of Deeds sayingthat an action for specific performance or rescission may be classified as aproceeding of any kind in court directly affecting title to the land or the use oroccupation thereof for which a notice of lis pendens may be held proper.[3] The

decision of the LRA, however, was overturned by the Court of Appeals in C.A.G.R. S.P. No. 29157. In G.R. No. 112774, We affirmed the ruling of the CA onFebruary 16, 1994 saying 

We agree with respondent court that the notice of lis pendens is not proper in this instance. The case before the trial court is a personal

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action since the cause of action thereof arises primarily from the alleged

violation of the Deed of Restrictions. 

In the meantime, Ayala completed its presentation of evidence before thetrial court. Rosa-Diana filed a Demurrer to Evidence averring that Ayala failed to

establish its right to the relief sought inasmuch as (a) Ayala admittedly does notenforce the deed restrictions uniformly and strictly (b) Ayala has lost itsright/power to enforce the restrictions due to its own acts and omissions; and (c)the deed restrictions are no longer valid and effective against lot buyers in

 Ayala’s controlled subdivision. 

The trial court sustained Rosa-Diana’s Demurrer to Evidence saying that Ayala was guilty of abandonment and/or estoppel due to its failure to enforce theterms of deed of restrictions and special conditions of sale against Manuel Syand Sy Ka Kieng. The trial court noted that notwithstanding the violation of thespecial conditions of sale, Manuel Sy and Sy Ka Kieng were able to transfer thetitle to Rosa-Diana with the approval of Ayala. The trial court added that Ayala’sfailure to enforce the restrictions with respect to Trafalgar, Shellhouse, Eurovilla,LPL Plaza, Parc Regent, LPL Mansion and Leronville which are located withinSalcedo Village, shows that Ayala discriminated against those which it wants tohave the obligation enforced. The trial court then concluded that for Ayala todiscriminately choose which obligor would be made to follow certain conditionsand which should not, did not seem fair and legal.  

The Court of Appeals affirmed the ruling of the trial court saying that the“appeal is sealed by the doctrine of the law of the case in C.A. G.R. S.P. No.29157” where it was stated that 

 ]x x x Ayala is barred from enforcing the Deed of Restrictions inquestion pursuant to the doctrine of waiver and estoppel. Under theterms of the deed of sale, the vendee Sy Ka Kieng assumed faithfulcompliance with the special conditions of sale and with the SalcedoVillage Deed of Restrictions. One of the conditions was that a buildingwould be constructed within one year. However, Sy Ka Kieng failed toconstruct the building as required under the Deed of Sale. Ayala didnothing to enforce the terms of the contract. In fact, it even agreed tothe sale of the lot by Sy Ka Kieng in favor of petitioner Realty in 1989 orthirteen (13) years later. We, therefore, see no justifiable reason for

 Ayala to attempt to enforce the terms of the conditions of sale againstthe petitioner. 

 x x x  

The Court of Appeals also cited C.A. G.R. C.V. No. 46488 entitled, “AyalaCorporation vs. Ray Burton Development Corporation” which relied on C.A. G.R.

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S.P. No. 29157 in ruling that Ayala is barred from enforcing the deed restrictionsin dispute. Upon a motion for reconsideration filed by herein petitioner, the Courtof Appeals clarified that “the citation of the decision in Ayala Corporation vs. RayBurton Development Corporation, C.A. G.R. C.V. No. 46488, February 27, 1996,was made not because said decision is res judicata to the case at bar but rather

because it is precedential under the doctrine of stare decisis.”  Upon denial of said motion for reconsideration, Ayala filed the present

appeal. 

 Ayala contends that the pronouncement of the Court of Appeals in C.A. G.R.S.P. No. 29157 that it is estopped from enforcing the deed restrictions ismerely obiter dictainasmuch as the only issue raised in the aforesaid case wasthe propriety of a lis pendens annotation on Rosa-Diana’s certificate of title. 

 Ayala avers that Rosa-Diana presented no evidence whatsoever on Ayala’ssupposed waiver or estoppel in C.A. G.R. S.P. No. 29157. Ayala likewisepointed out that at the time C.A. G.R. S.P. No. 29157 was on appeal, the issues

of the validity and continued viability of the deed of restrictions and theirenforceability by Ayala were joined and then being tried before the trial court. 

Petitioner’s assignment of errors in the present appeal may essentially besummarized as follows: 

I. The Court of Appeals acted in a manner not in accord with law and the

applicable decisions of the Supreme Court in holding that the doctrine of thelaw of the case, or stare decisis, operated to dismiss Ayala’s appeal. 

II. The Court of Appeals erred as a matter of law and departed from theaccepted and usual course of judicial proceedings when it failed to expressly

pass upon the specific errors assigned in Ayala’s appeal. 

 A discussion on the distinctions between law of the case, staredecisis and obiter dicta is in order. 

The doctrine of the law of the case  has certain affinities with, but is clearlydistinguishable from, the doctrines of res judicata and stare decisis, principallyon the ground that the rule of the law of the case operates only in the particularcase and only as a rule of policy and not as one of law.[4] At variance with thedoctrine of stare decisis, the ruling adhered to in the particular case under thedoctrine of the law of the case need not be followed as a precedent insubsequent litigation between other parties, neither by the appellate court whichmade the decision followed on a subsequent appeal in the same case, nor by

any other court. The ruling covered by the doctrine of the law of the case isadhered to in the single case where it arises, but is not carried into other casesas a precedent.[5] On the other hand, under the doctrine of stare decisis, once apoint of law has been established by the court, that point of law will, generally, befollowed by the same court and by all courts of lower rank in subsequent caseswhere the same legal issue is raised. [6] Stare decisis proceeds from the firstprinciple of justice that, absent powerful countervailing considerations, like casesought to be decided alike.[7] 

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The Court of Appeals, in ruling against petitioner Ayala Corporation statedthat the appeal is “sealed” by the doctrine of the law of the case, referring to G.R.No. 112774 entitled “Ayala Corporation, petitioner  vs. Court of Appeals, etal., respondents”. The Court of Appeals likewise made reference to C.A. G.R.C.V. No. 46488 entitled, “Ayala Corporation vs. Ray Burton Development

Corporation, Inc.” in ruling against petitioner saying that it is jurisprudential underthe doctrine of stare decisis. 

It must be pointed out that the only issue that was raised before the Court of Appeals in C.A. G.R. S.P. No. 29157 was whether or not the annotation of lis pendens is proper. The Court of Appeals, in its decision, in fact stated “theprincipal issue to be resolved is: whether or not an action for specificperformance, or in the alternative, rescission of deed of sale to enforce the deedof restrictions governing the use of property, is a real or personal action, or onethat affects title thereto and its use or occupation thereof." [8] 

In the aforesaid decision, the Court of Appeals even justified the cancellation

of the notice of lis pendens on the ground that Ayala had ample protection shouldit succeed in proving its allegations regarding the violation of the deed ofrestrictions, without unduly curtailing the right of the petitioner to fully enjoy itsproperty in the meantime that there is as yet no decision by the trial court.[9] 

From the foregoing, it is clear that the Court of Appeals was aware that theissue as to whether petitioner is estopped from enforcing the deed of restrictionshas yet to be resolved by the trial court. Though it did make a pronouncementthat the petitioner is estopped from enforcing the deed of restrictions, it alsomentioned at the same time that this particular issue has yet to be resolved bythe trial court. Notably, upon appeal to this Court, We have affirmed the ruling ofthe Court of Appeals only as regards the particular issue of the propriety of the

cancellation of the notice of lis pendens. 

We see no reason then, how the law of the case or stare decisis can be heldto be applicable in the case at bench. If at all, the pronouncement made by theCourt of Appeals that petitioner Ayala is barred from enforcing the deed ofrestrictions can only be considered as obiter dicta. As earlier mentioned, the onlyissue before the Court of Appeals at the time was the propriety of the annotationof the lis pendens. The additional pronouncement of the Court of Appeals that

 Ayala is estopped from enforcing the deed of restrictions even as it recognizedthat this said issue is being tried before the trial court was not necessary todispose of the issue as to the propriety of the annotation of the lis

 pendens. A dictum is an opinion of a judge which does not embody theresolution or determination of the court, and made without argument, or fullconsideration of the point, not the proffered deliberate opinion of the judgehimself.[10] It is not necessarily limited to issues essential to the decision but mayalso include expressions of opinion which are not necessary to support thedecision reached by the court. Mere dicta are not binding under the doctrineof stare decisis.[11] 

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While the Court of Appeals did not err in ruling that the present petition is notbarred by C.A. G.R. C.V. No. 46488 entitled “Ayala Corporation vs. Ray BurtonDevelopment Inc.” under the doctrine of res judicata, neither, however, can thelatter case be cited as precedential under the doctrine of stare decisis. It must bepointed out that at the time the assailed decision was rendered, C.A. G.R. C.V.

No. 46488 was on appeal with this Court. Significantly, in the decision We haverendered in Ayala Corporation vs. Ray Burton Development Corporation[12] whichbecame final and executory on July 5, 1999 we have clearly stated that “ Anexamination of the decision in the said Rosa-Diana case reveals that the soleissue raised before the appellate court was the propriety of the lis

 pendens annotation. However, the appellate court went beyond the sole issueand made factual findings bereft of any basis in the record to inappropriately rulethat AYALA is in estoppel and has waived its right to enforce the subjectrestrictions. Such ruling was immaterial to the resolution of the issue ofthe propriety of the annotation of the lis pendens. The finding of estoppel wasthus improper and made in excess of jurisdiction.” 

Coming now to the merits of the case, petitioner avers that the Court of Appeals departed from the usual course of judicial proceedings when it failed toexpressly pass upon the specific errors assigned in its appeal. Petitionerreiterates its contention that the trial court’s findings that Ayala has waivedits right to enforce the deed of restrictions is not supported by law and evidence. 

We find merit in the petition. 

It is basic that findings of fact of the trial court and the Court of Appeals areconclusive upon the Supreme Court when supported by substantialevidence.[13]  We are constrained, however, to review the trial court’s findings offact, which the Court of Appeals chose not to pass upon, inasmuch as there is

ample evidence on record to show that certain facts were overlooked whichwould affect the disposition of the case. 

In its assailed decision of February 4, 1994, the trial court, ruled in favor ofrespondent Rosa-Diana Realty on the ground that Ayala had not acted fairlywhen it did not institute an action against the original vendees despite the latter’sviolation of the Special Conditions of Sale but chose instead to file an actionagainst herein respondent Rosa-Diana. The trial court added that although the38 storey building of Rosa-Diana is beyond the total height restriction, it was notviolative of the National Building Code. According to the trial court theconstruction of the 38 storey building known as “The Peak” has not been shownto have been prohibited by law and neither is it against public policy. 

It bears emphasis that as complainant, Ayala had the prerogative to initiatean action against violators of the deed restrictions. That Rosa-Diana had actedin bad faith is manifested by the fact that it submitted two sets of building plans,one which was in conformity with the deed restrictions submitted to Ayala andMACEA, and the other, which exceeded the height requirement in the deedrestrictions to the Makati building official for the purpose of procuring a buildingpermit from the latter. Moreover, the violation of the deed restrictions committed

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by respondent can hardly be denominated as a minor violation. It should bepointed out that the original building plan which was submitted to and approvedby petitioner Ayala Corporation, envisioned a twenty four (24) meter high, seven(7) storey condominium whereas the respondent’s building plan which wassubmitted to and approved by the building official of Makati is that of a thirty eight

(38) storey, 91.65 meters high, building. At present, the Peak building ofrespondent which actually stands at 133.65 meters with a total gross floor area of23,305.09 square meters, seriously violates the dimensions indicated in thebuilding plans submitted by Rosa-Diana to petitioner Ayala for approvalinasmuch as the Peak building exceeds the approved height limit by about 109meters and the allowable gross floor area under the applicable deed restrictionsby about 19,105 square meters. Clearly, there was a gross violation of the deedrestrictions and evident bad faith by the respondent. 

It may not be amiss to mention that the deed restrictions were revised in ageneral membership meeting of the association of lot owners in Makati CentralBusiness District – the Makati Commercial Estate Association, Inc. (MACEA) –

whereby direct height restrictions were abolished in lieu of floor arealimits. Respondent, however, did not vote for the approval of this revision duringthe General Membership meeting which was held on July 11, 1990 at the ManilaPolo Club Pavilion, Makati, Metro Manila and again on July 12, 1990 at the HotelMandarin Oriental, Makati, Metro Manila. Hence, respondent continues to bebound by the original deed restrictions applicable to Lot 7, Block 1 and annotatedon its title to said lot. In any event, assuming arguendo that respondent voted forthe approval of direct height restrictions in lieu of floor area limits, the total floorarea of its Peak building would still be violative of the floor area limits to theextent of about 9,865 square meters of allowable floor area under the MACEArevised restrictions. 

Respondent Rosa-Diana avers that there is nothing illegal or unlawful in thebuilding plans which it used in the construction of the Peak condominium“inasmuch as it bears the imprimatur   of the building official of Makati, who istasked to determine whether building and construction plans are in accordancewith the law, notably, the National Building Code.” 

Respondent Rosa-Diana, however, misses the point inasmuch as it hasfreely consented to be bound by the deed restrictions when it entered into acontract of sale with spouses Manuel Sy and Sy Ka Kieng. While respondentclaims that it was under the impression that the deed restrictions were no longerbeing enforced by Ayala, the Undertaking[14] it executed belies this same claim. In

said Undertaking, respondent agreed to “construct and complete the constructionof the house on said lot as required under the special condition of sale.”Respondent likewise bound itself to abide and comply with x x x the condition ofthe rescission of the sale by Ayala Land, Inc. on the grounds therein stated x x x. 

Contractual obligations between parties have the force of law between themand absent any allegation that the same are contrary to law, morals, good

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customs, public order or public policy, they must be complied with in goodfaith. Hence, Article 1159 of the New Civil Code provides 

“Obligations arising from contracts have the force of law between thecontracting parties and should be complied with in good faith.”  

Respondent Rosa-Diana insists that the trial court had already ruled that theUndertaking executed by its Chairman and President cannot validly bind Rosa-Diana and hence, it should not be held bound by the deed restrictions.  

We agree with petitioner Ayala’s observation that respondent Rosa-Diana’sspecial and affirmative defenses before the trial court never mentionedany allegation that its president and chairman were not authorized to executethe Undertaking. It was inappropriate therefore for the trial court to rule that inthe absence of any authority or confirmation from the Board of Directors ofrespondent Rosa-Diana, its Chairman and the President cannot validly enter intoan undertaking relative to the construction of the building on the lot within oneyear from July 27, 1989 and in accordance with the deed restrictions. Curiously,while the trial court stated that it cannot be presumed that the Chairman and thePresident can validly bind respondent Rosa-Diana to enter into the aforesaidUndertaking in the absence of any authority or confirmation from the Board ofDirectors, the trial court held that the ordinary presumption of regularity ofbusiness transactions is applicable as regards the Deed of Sale which wasexecuted by Manuel Sy and Sy Ka Kieng and respondent Rosa-Diana. In thelight of the fact that respondent Rosa-Diana never alleged in its Answer that itspresident and chairman were not authorized to execute the Undertaking, theaforesaid ruling of the trial court is without factual and legal basis and surprisingto say the least. 

The fact alone that respondent Rosa-Diana convenie