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REPUBLIC OF THE PHILIPPINES, petitioner, vs. THE HON.

COURT OF APPEALS The principal issue in this case is whether a petition for declaration of the
(Twentieth Division), HON. PRESIDING JUDGE FORTUNITO L. MADRONA, RTC- presumptive death of a person is in the nature of a special proceeding. If it is, the
BR. 35 and APOLINARIA MALINAO JOMOC, respondents. period to appeal is 30 days and the party appealing must, in addition to a notice of appeal, file
with the trial court a record on appeal to perfect its appeal. Otherwise, if the petition is an
ordinary action, the period to appeal is 15 days from notice or decision or final order appealed
DECISION
from and the appeal is perfected by filing a notice of appeal (Section 3, Rule 41, Rules of Court).

CARPIO-MORALES, J.:
As defined in Section 3(a), Rule 1 of the Rules of Court, a civil action is one by which a party sues
another for the enforcement or protection of a right, or the prevention of redress of a wrong
In In the Matter of Declaration of Presumptive Death of Absentee Spouse Clemente P. while a special proceeding under Section 3(c) of the same rule is defined as a remedy by which a
Jomoc, Apolinaria Malinao Jomoc, petitioner, the Ormoc City, Regional Trial Court, Branch 35, party seeks to establish a status, a right or a particular fact (Heirs of Yaptinchay, et al. v. Del
by Order of September 29, 1999,[1] granted the petition on the basis of the Commissioners Rosario, et al., G.R. No. 124320, March 2, 1999).
Report[2] and accordingly declared the absentee spouse, who had left his petitioner-wife nine
years earlier, presumptively dead.
Considering the aforementioned distinction, this Court finds that the instant petition is in the
nature of a special proceeding and not an ordinary action. The petition merely seeks for a
In granting the petition, the trial judge, Judge Fortunito L. Madrona, cited Article 41, par. 2 declaration by the trial court of the presumptive death of absentee spouse Clemente Jomoc. It
of the Family Code. Said article provides that for the purpose of contracting a valid subsequent does not seek the enforcement or protection of a right or the prevention or redress of a wrong.
marriage during the subsistence of a previous marriage where the prior spouse had been absent Neither does it involve a demand of right or a cause of action that can be enforced against any
for four consecutive years, the spouse present must institute summary proceedings for the person.
declaration of presumptive death of the absentee spouse, without prejudice to the effect of the
reappearance of the absent spouse.
On the basis of the foregoing discussion, the subject Order dated January 13, 2000 denying
OSGs Motion for Reconsideration of the Order dated November 22, 1999 disapproving its Notice
The Republic, through the Office of the Solicitor General, sought to appeal the trial courts of Appeal was correctly issued. The instant petition, being in the nature of a special
order by filing a Notice of Appeal.[3] proceeding, OSG should have filed, in addition to its Notice of Appeal, a record on
appeal in accordance with Section 19 of the Interim Rules and Guidelines to Implement BP Blg.
129 and Section 2(a), Rule 41 of the Rules of Court . . . (Emphasis and underscoring supplied)
By Order of November 22, 1999s,[4] the trial court, noting that no record of appeal was
filed and served as required by and pursuant to Sec. 2(a), Rule 41 of the 1997 Rules of Civil
Procedure, the present case being a special proceeding, disapproved the Notice of Appeal. The Republic (petitioner) insists that the declaration of presumptive death under Article 41
of the Family Code is not a special proceeding involving multiple or separate appeals where a
record on appeal shall be filed and served in like manner.
The Republics Motion for Reconsideration of the trial courts order of disapproval having
been denied by Order of January 13, 2000,[5] it filed a Petition for Certiorari[6] before the Court of
Appeals, it contending that the declaration of presumptive death of a person under Article 41 of Petitioner cites Rule 109 of the Revised Rules of Court which enumerates the cases
the Family Code is not a special proceeding or a case of multiple or separate appeals requiring a wherein multiple appeals are allowed and a record on appeal is required for an appeal to be
record on appeal. perfected. The petition for the declaration of presumptive death of an absent spouse not being
included in the enumeration, petitioner contends that a mere notice of appeal suffices.
By Decision of May 5, 2004, [7] the Court of Appeals denied the Republics petition on
procedural and substantive grounds in this wise: By Resolution of December 15, 2004, [8] this Court, noting that copy of the September 27,
2004 Resolution[9] requiring respondent to file her comment on the petition was returned
unserved with postmasters notation Party refused, Resolved to consider that copy deemed
At the outset, it must be stressed that the petition is not sufficient in form. It failed to attach to
served upon her.
its petition a certified true copy of the assailed Order dated January 13, 2000 [denying its Motion
for Reconsideration of the November 22, 1999 Order disapproving its Notice of Appeal].
Moreover, the petition questioned the [trial courts] Order dated August 15, 1999, which declared The pertinent provisions on the General Provisions on Special Proceedings, Part II of
Clemente Jomoc presumptively dead, likewise for having been issued with grave abuse of the Revised Rules of Court entitled SPECIAL PROCEEDINGS, read:
discretion amounting to lack of jurisdiction, yet, not even a copy could be found in the records.
On this score alone, the petition should have been dismissed outright in accordance with Sec. 3,
RULE 72
Rule 46 of the Rules of Court.

SUBJECT MATTER AND APPLICABILITY


However, despite the procedural lapses, the Court resolves to delve deeper into the substantive
issue of the validity/nullity of the assailed order.
OF GENERAL RULES
Section 1. Subject matter of special proceedings. Rules of special proceedings are provided for in had been absent for four consecutive years and the spouse present had a well-founded belief
the following: that the absent spouses 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.
(a) Settlement of estate of deceased persons;

For the purpose pf contracting the subsequent marriage under the preceding paragraph, the
(b) Escheat;
spouses 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 a
(c) Guardianship and custody of children; reappearance of the absent spouse. (Emphasis and underscoring supplied)

(d) Trustees; Rule 41, Section 2 of the Revised Rules of Court, on Modes of Appeal, invoked by the trial
court in disapproving petitioners Notice of Appeal, provides:
(e) Adoption;
Sec. 2. Modes of appeal. -

(f) Rescission and revocation of adoption;


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

xxx
(j) Voluntary dissolution of corporations;

By the trial courts citation of Article 41 of the Family Code, it is gathered that the petition
(k) Judicial approval of voluntary recognition of minor natural children;
of Apolinaria Jomoc to have her absent spouse declared presumptively dead had for its purpose
her desire to contract a valid subsequent marriage. Ergo, the petition for that purpose is
(l) Constitution of family home; a summary proceeding, following above-quoted Art. 41, paragraph 2 of the Family Code.

(m) Declaration of absence and death; Since Title XI of the Family Code, entitled SUMMARY JUDICIAL PROCEEDING IN THE FAMILY
LAW, contains the following provision, inter alia:
(n) Cancellation or correction of entries in the civil registry.
xxx
Sec. 2. Applicability of rules of civil actions. In the absence of special provisions, the rules
provided for in ordinary actions shall be, as far as practicable, applicable in special proceedings. Art. 238. Unless modified by the Supreme Court, the procedural rules in this Title shall apply in
(Underscoring supplied) all cases provided for in this Codes requiring summary court proceedings. Such cases
shall be decided in an expeditious manner without regard to technical rules. (Emphasis
and underscoring supplied)
The pertinent provision of the Civil Code on presumption of death provides:

x x x,
Art. 390. After an absence of seven years, it being unknown whether or not the absentee still
lives, he shall be presumed dead for all purposes, except for those of succession.
there is no doubt that the petition of Apolinaria Jomoc required, and is, therefore, a summary
proceeding under the Family Code, not a special proceeding under the Revised Rules of Court
x x x (Emphasis and underscoring supplied)
appeal for which calls for the filing of a Record on Appeal. It being a summary ordinary
proceeding, the filing of a Notice of Appeal from the trial courts order sufficed.
Upon the other hand, Article 41 of the Family Code, upon which the trial court anchored its
grant of the petition for the declaration of presumptive death of the absent spouse, provides:
That the Family Code provision on repeal, Art. 254, provides as follows:

Art. 41. A marriage contracted by any person during the subsistence of a previous marriage shall
Art. 254. Titles III, IV, V, VI, VII, VIII, IX, XI and XV of Book I of Republic Act No. 386, otherwise
be null and void, unless before the celebration of the subsequent marriage, the prior spouses
known as the Civil Code of the Philippines, as amended, and Articles 17, 18, 19, 27, 28, 29, 30,
31, 39, 40, 41 and 42 of Presidential Decree No. 603, otherwise known as the Child and Youth Spouses Graciano del Rosario and Graciana Esguerra were registered owners of a parcel of
Welfare Code, as amended, and all laws, decrees, executive orders, proclamations rules and land with an area of 9,322 square meters located in Manila and covered by Transfer Certificate of
regulations, or parts thereof, inconsistent therewith are hereby repealed, (Emphasis and Title No. 11889. Upon the death of Graciana in 1951, Graciano, together with his six children,
underscoring supplied), namely: Bayani, Ricardo, Rafael, Leticia, Emiliana and Nieves, entered into an extrajudicial
settlement of Gracianas estate on 09 February 1954 adjudicating and dividing among
themselves the real property subject of TCT No. 11889. Under the agreement, Graciano received
seals the case in petitioners favor.
8/14 share while each of the six children received 1/14 share of the said property. Accordingly,
TCT No. 11889 was cancelled, and in lieu thereof, TCT No. 35980 was issued in the name of
Finally, on the alleged procedural flaw in petitioners petition before the appellate court. Graciano and the six children.
Petitioners failure to attach to his petition before the appellate court a copy of the trial
courts order denying its motion for reconsideration of the disapproval of its Notice of Appeal is
Further, on 09 February 1954, said heirs executed and forged an Agreement of
not necessarily fatal, for the rules of procedure are not to be applied in a technical sense. Given
Consolidation-Subdivision of Real Property with Waiver of Rights where they subdivided among
the issue raised before it by petitioner, what the appellate court should have done was to direct
themselves the parcel of land covered by TCT No. 35980 into several lots. Graciano then
petitioner to comply with the rule.
donated to his children, share and share alike, a portion of his interest in the land amounting to
4,849.38 square meters leaving only 447.60 square meters registered under Gracianos name, as
As for petitioners failure to submit copy of the trial courts order granting the petition for covered by TCT No. 35988. Subsequently, the land subject of TCT No. 35988 was further
declaration of presumptive death, contrary to the appellate courts observation that petitioner subdivided into two separate lots where the first lot with a land area of 80.90 square meters was
was also assailing it, petitioners 8-page petition [10] filed in said court does not so reflect, it merely registered under TCT No. 107442 and the second lot with a land area of 396.70 square meters
having assailed the order disapproving the Notice of Appeal. was registered under TCT No. 107443. Eventually, Graciano sold the first lot [2]to a third person
but retained ownership over the second lot.[3]

WHEREFORE, the assailed May 5, 2004 Decision of the Court of Appeals is hereby
REVERSED and SET ASIDE. Let the case be REMANDED to it for appropriate action in light of the On 20 March 1980, Graciano married herein petitioner Patricia Natcher. During their
foregoing discussion. marriage, Graciano sold the land covered by TCT No. 107443 to his wife Patricia as a result of
which TCT No. 186059[4] was issued in the latters name. On 07 October 1985, Graciano died
leaving his second wife Patricia and his six children by his first marriage, as heirs.
SO ORDERED.

In a complaint[5] filed in Civil Case No. 71075 before the Regional Trial Court of Manila,
PATRICIA NATCHER, petitioner, vs. HON. COURT OF APPEALS AND THE HEIRS OF
Branch 55, herein private respondents alleged that upon Gracianos death, petitioner Natcher,
GRACIANO DEL ROSARIO LETICIA DEL ROSARIO, EMILIA DEL ROSARIO-
through the employment of fraud, misrepresentation and forgery, acquired TCT No. 107443, by
MANANGAN, ROSALINDA FUENTES LLANA, RODOLFO FUENTES, ALBERTO
making it appear that Graciano executed a Deed of Sale dated 25 June 1987 [6] in favor of herein
FUENTES, EVELYN DEL ROSARIO, and EDUARDO DEL ROSARIO, respondents.
petitioner resulting in the cancellation of TCT No. 107443 and the issuance of TCT No. 186059 in
the name of Patricia Natcher. Similarly, herein private respondents alleged in said complaint that
DECISION as a consequence of such fraudulent sale, their legitimes have been impaired.

BUENA, J.: In her answer[7] dated 19 August 1994, herein petitioner Natcher averred that she was
legally married to Graciano on 20 March 1980 and thus, under the law, she was likewise
considered a compulsory heir of the latter. Petitioner further alleged that during Gracianos
May a Regional Trial Court, acting as a court of general jurisdiction in an action for
lifetime, Graciano already distributed, in advance, properties to his children, hence, herein
reconveyance and annulment of title with damages, adjudicate matters relating to the
private respondents may not anymore claim against Gracianos estate or against herein
settlement of the estate of a deceased person particularly in questions as to advancement of
petitioners property.
property made by the decedent to any of the heirs?

After trial, the Regional Trial Court of Manila, Branch 55, rendered a decision dated 26
Sought to be reversed in this petition for review on certiorari under Rule 45 is the
January 1996 holding:[8]
decision[1] of public respondent Court of Appeals, the decretal portion of which declares:

1) The deed of sale executed by the late Graciano del Rosario in favor of Patricia
Wherefore in view of the foregoing considerations, judgment appealed from is reversed and set
Natcher is prohibited by law and thus a complete nullity. There being no
aside and another one entered annulling the Deed of Sale executed by Graciano Del Rosario in
evidence that a separation of property was agreed upon in the marriage
favor of defendant-appellee Patricia Natcher, and ordering the Register of Deeds to Cancel TCT
settlements or that there has been decreed a judicial separation of property
No. 186059 and reinstate TCT No. 107443 without prejudice to the filing of a special proceeding
between them, the spouses are prohibited from entering (into) a contract of
for the settlement of the estate of Graciano Del Rosario in a proper court. No costs.
sale;

So ordered.
2) The deed of sale cannot be likewise regarded as a valid donation as it was equally
prohibited by law under Article 133 of the New Civil Code;
3) Although the deed of sale cannot be regarded as such or as a donation, it may ordinary in this sense, but is instituted and prosecuted according to some special mode as in the
however be regarded as an extension of advance inheritance of Patricia Natcher case of proceedings commenced without summons and prosecuted without regular pleadings,
being a compulsory heir of the deceased. which are characteristics of ordinary actions. X X X A special proceeding must therefore be in the
nature of a distinct and independent proceeding for particular relief, such as may be instituted
independently of a pending action, by petition or motion upon notice. [10]
On appeal, the Court of Appeals reversed and set aside the lower courts decision
ratiocinating, inter alia:
Applying these principles, an action for reconveyance and annulment of title with damages
is a civil action, whereas matters relating to settlement of the estate of a deceased person such
It is the probate court that has exclusive jurisdiction to make a just and legal distribution of the
as advancement of property made by the decedent, partake of the nature of a special
estate. The court a quo, trying an ordinary action for reconveyance/annulment of title, went
proceeding, which concomitantly requires the application of specific rules as provided for in the
beyond its jurisdiction when it performed the acts proper only in a special proceeding for the
Rules of Court.
settlement of estate of a deceased person. XXX

Clearly, matters which involve settlement and distribution of the estate of the decedent
X X X Thus the court a quo erred in regarding the subject property as an advance
fall within the exclusive province of the probate court in the exercise of its limited jurisdiction.
inheritance. What the court should have done was merely to rule on the validity of (the) sale and
leave the issue on advancement to be resolved in a separate proceeding instituted for that
purpose. X X X Thus, under Section 2, Rule 90 of the Rules of Court, questions as to advancement made
or alleged to have been made by the deceased to any heir may be heard and determined by
the court having jurisdiction of the estate proceedings; and the final order of the court
Aggrieved, herein petitioner seeks refuge under our protective mantle through the
thereon shall be binding on the person raising the questions and on the heir.
expediency of Rule 45 of the Rules of Court and assails the appellate courts decision for being
contrary to law and the facts of the case.
While it may be true that the Rules used the word may, it is nevertheless clear that the
same provision[11] contemplates a probate court when it speaks of the court having jurisdiction of
We concur with the Court of Appeals and find no merit in the instant petition.
the estate proceedings.

Section 3, Rule 1 of the 1997 Rules of Civil Procedure defines civil action and special
Corollarily, the Regional Trial Court in the instant case, acting in its general jurisdiction, is
proceedings, in this wise:
devoid of authority to render an adjudication and resolve the issue of advancement of the real
property in favor of herein petitioner Natcher, inasmuch as Civil Case No. 71075 for
X X X a) A civil action is one by which a party sues another for the enforcement or protection of a reconveyance and annulment of title with damages is not, to our mind, the proper vehicle to
right, or the prevention or redress of a wrong. thresh out said question. Moreover, under the present circumstances, the RTC of Manila, Branch
55 was not properly constituted as a probate court so as to validly pass upon the question of
advancement made by the decedent Graciano Del Rosario to his wife, herein petitioner Natcher.
A civil action may either be ordinary or special. Both are governed by the rules for ordinary civil
actions, subject to specific rules prescribed for a special civil action.
At this point, the appellate courts disquisition is elucidating:

XXX
Before a court can make a partition and distribution of the estate of a deceased, it must first
settle the estate in a special proceeding instituted for the purpose. In the case at hand, the court
c) A special proceeding is a remedy by which a party seeks to establish a status, a right or a
a quo determined the respective legitimes of the plaintiffs-appellants and assigned the subject
particular fact.
property owned by the estate of the deceased to defendant-appellee without observing the
proper proceedings provided (for) by the Rules of Court. From the aforecited discussions, it is
As could be gleaned from the foregoing, there lies a marked distinction between an action clear that trial courts trying an ordinary action cannot resolve to perform acts pertaining to a
and a special proceeding. An action is a formal demand of ones right in a court of justice in the special proceeding because it is subject to specific prescribed rules. Thus, the court a quo erred
manner prescribed by the court or by the law. It is the method of applying legal remedies in regarding the subject property as an advance inheritance.[12]
according to definite established rules. The term special proceeding may be defined as an
application or proceeding to establish the status or right of a party, or a particular fact. Usually,
In resolving the case at bench, this Court is not unaware of our pronouncement in Coca
in special proceedings, no formal pleadings are required unless the statute expressly so
vs. Borromeo[13] and Mendoza vs. Teh[14] that whether a particular matter should be resolved
provides. In special proceedings, the remedy is granted generally upon an application or motion.
[9] by the Regional Trial Court (then Court of First Instance) in the exercise of its general jurisdiction
or its limited probate jurisdiction is not a jurisdictional issue but a mere question of procedure. In
essence, it is a procedural question involving a mode of practice which may be waived. [15]
Citing American Jurisprudence, a noted authority in Remedial Law expounds further:

Notwithstanding, we do not see any waiver on the part of herein private respondents
It may accordingly be stated generally that actions include those proceedings which are inasmuch as the six children of the decedent even assailed the authority of the trial court, acting
instituted and prosecuted according to the ordinary rules and provisions relating to actions at in its general jurisdiction, to rule on this specific issue of advancement made by the decedent to
law or suits in equity, and that special proceedings include those proceedings which are not petitioner.
Analogously, in a train of decisions, this Court has consistently enunciated the long life, respondent Solano was her faithful girl Friday and a constant companion since no close
standing principle that although generally, a probate court may not decide a question of title or relative was available to tend to her needs.
ownership, yet if the interested parties are all heirs, or the question is one of collation or
advancement, or the parties consent to the assumption of jurisdiction by the probate court and
In recognition of Solano's faithful and dedicated service, Ms. Hankins executed in her favor
the rights of third parties are not impaired, then the probate court is competent to decide the
two (2) deeds of donation involving two (2) parcels of land covered by TCT Nos. 7807 and 7808
question of ownership.[16]
of the Registry of Deeds. Private respondent alleged that she misplaced the deeds of donation
and were nowhere to be found.
Similarly in Mendoza vs. Teh, we had occasion to hold:

While the deeds of donation were missing, the Republic filed a petition for the escheat of
In the present suit, no settlement of estate is involved, but merely an allegation seeking the estate of Elizabeth Hankins before the Regional Trial Court of Pasay City.[1] During the
appointment as estate administratrix which does not necessarily involve settlement of estate proceedings, a motion for intervention was filed by Romeo Solano, spouse of private respondent,
that would have invited the exercise of the limited jurisdiction of a probate court. and one Gaudencio Regosa, but on 24 June 1987 the motion was denied by the trial court for the
[17]
(emphasis supplied) reason that "they miserably failed to show valid claim or right to the properties in
question."[2] Since it was established that there were no known heirs and persons entitled to the
properties of decedent Hankins, the lower court escheated the estate of the decedent in favor
Of equal importance is that before any conclusion about the legal share due to a
of petitioner Republic of the Philippines.
compulsory heir may be reached, it is necessary that certain steps be taken first. [18] The net
estate of the decedent must be ascertained, by deducting all payable obligations and charges
from the value of the property owned by the deceased at the time of his death; then, all By virtue of the decision of the trial court, the Registry of Deeds of Pasay City cancelled
donations subject to collation would be added to it. With the partible estate thus determined, the TCT Nos. 7807 and 7808 and issued new ones, TCT Nos. 129551 and 129552, both in the name
legitime of the compulsory heir or heirs can be established; and only thereafter can it be of Pasay City.
ascertained whether or not a donation had prejudiced the legitimes. [19]

In the meantime, private respondent claimed that she accidentally found the deeds of
A perusal of the records, specifically the antecedents and proceedings in the present case, donation she had been looking for for a long time. In view of this development, respondent
reveals that the trial court failed to observe established rules of procedure governing the Amada Solano filed on 28 January 1997 a petition before the Court of Appeals for the annulment
settlement of the estate of Graciano Del Rosario. This Court sees no cogent reason to sanction of the lower court's decision alleging, among other, that[3] -
the non-observance of these well-entrenched rules and hereby holds that under the prevailing
circumstances, a probate court, in the exercise of its limited jurisdiction, is indeed the best forum
13.1. The deceased Elizabeth Hankins having donated the subject properties to the petitioner in
to ventilate and adjudge the issue of advancement as well as other related matters involving the
1983 (for TCT No. 7807) and 1984 (for TCT No. 7808), these properties did not and could not
settlement of Graciano Del Rosarios estate.
form part of her estate when she died on September 20, 1985. Consequently, they could not
validly be escheated to the Pasay City Government;
WHEREFORE, premises considered, the assailed decision of the Court of Appeals is
hereby AFFIRMED and the instant petition is DISMISSED for lack of merit.
13.2. Even assuming arguendo that the properties could be subject of escheat proceedings, the
decision is still legally infirm for escheating the properties to an entity, the Pasay City
SO ORDERED. Government, which is not authorized by law to be the recipient thereof. The property should
have been escheated in favor of the Republic of the Philippines under Rule 91, Section 1 of the
New Rules of Court x x x x
REPUBLIC OF THE PHILIPPINES represented by the REGISTER OF DEEDS OF PASAY
CITY, petitioner, vs. COURT OF APPEALS (SPECIAL FORMER 3RD DIVISION)
AND AMADA H. SOLANO, assisted by her husband ROMEO On 17 March 1997 the Office of the Solicitor General representing public respondents RTC
SOLANO, respondents. and the Register of Deeds (herein petitioner) filed an answer setting forth their affirmative
defenses, to wit: (a) lack of jurisdiction over the nature of the action; and, (b) the cause of action
was barred by the statute of limitations.
DECISION

Finding no cogent reason to justify the dismissal of the petition for annulment, the Court of
BELLOSILLO , J.:
Appeals issued on 12 November 1998 the first of its assailed Resolutions giving due course to
the petition for annulment of judgment and setting the date for trial on the merits. In upholding
This petition for certiorari seeks to nullify two (2) Resolutions of the Court of Appeals the theory of respondent Solano, the Appeals Court ruled that -
dated 12 November 1998 and 4 May 2000 giving due course to the petition for annulment of
judgment filed by private respondent Amada H. Solano on 3 February 1997 and denying
Herein petitioner invokes lack of jurisdiction over the subject matter on the part of respondent
petitioner's motion for reconsideration.
RTC to entertain the escheat proceedings x x x because the parcels of land have been earlier
donated to herein petitioner in 1983 and 1984 prior to the death of said Hankins; and therefore,
For more than three (3) decades (from 1952 to 1985) private respondent Amada Solano respondent court could not have ordered the escheat of said properties in favor of the Republic
served as the all-around personal domestic helper of the late Elizabeth Hankins, a widow and a of the Philippines, assign them to respondent Pasay City government, order the cancellation of
French national. During Ms. Hankins' lifetime and most especially during the waning years of her the old titles in the name of Hankins and order the properties registered in the name of
respondent Pasay City x x x x The 1997 Rules of Civil Procedure specifically laid down the finality of the escheat proceedings is an extraneous matter which is clearly not an instance of
grounds of annulment filed before this Court, to wit: extrinsic fraud and lack of extrinsic fraud nor a ground to oust the lower court of its jurisdiction.
jurisdiction. Jurisdiction over the subject matter is conferred by law and this jurisdiction is
determined by the allegations of the complaint. It is axiomatic that the averments of the
Petitioner also insists that notwithstanding the execution of the deeds of donation in favor
complaint determine the nature of the action and consequently the jurisdiction of the
of private respondent, the 5-year statute of limitations within which to file claims before the
courts. Thus whether or not the properties in question are no longer part of the estate of the
court a quo as set forth in Rule 91 of the Revised Rules of Court has set in.
deceased Hankins at the time of her death; and, whether or not the alleged donations are valid
are issues in the present petition for annulment which can be resolved only after a full blown
trial x x x x The present controversy revolves around the nature of the parcels of land purportedly
donated to private respondent which will ultimately determine whether the lower court had
jurisdiction to declare the same escheated in favor of the state.
It is for the same reason that respondents espousal of the statute of limitations against herein
petition for annulment cannot prosper at this stage of the proceedings. Indeed, Section 4, Rule
91 of the Revised Rules of Court expressly provides that a person entitled to the estate must file We rule for the petitioner. Escheat is a proceeding, unlike that of succession or
his claim with the court a quo within five (5) years from the date of said judgment. However, it is assignment, whereby the state, by virtue of its sovereignty, steps in and claims the real or
clear to this Court that herein petitioner is not claiming anything from the estate of the deceased personal property of a person who dies intestate leaving no heir. In the absence of a lawful
at the time of her death on September 20, 1985; rather she is claiming that the subject parcels owner, a property is claimed by the state to forestall an open "invitation to self-service by the
of land should not have been included as part of the estate of the said decedent as she is the first comers."[5] Since escheat is one of the incidents of sovereignty, the state may, and usually
owner thereof by virtue of the deeds of donation in her favor. does, prescribe the conditions and limits the time within which a claim to such property may be
made. The procedure by which the escheated property may be recovered is generally prescribed
by statue, and a time limit is imposed within which such action must be brought.
In effect, herein petitioner, who alleges to be in possession of the premises in question, is
claiming ownership of the properties in question and the consequent reconveyance thereof in
her favor which cause of action prescribes ten (10) years after the issuance of title in favor of In this jurisdiction, a claimant to an escheated property must file his claim "within five (5)
respondent Pasay City on August 7, 1990. Herein petition was seasonably filed on February 3, years from the date of such judgment, such person shall have possession of and title to the
1997 under Article 1144, to wit: same, or if sold, the municipality or city shall be accountable to him for the proceeds, after
deducting the estate; but a claim not made shall be barred forever." [6] The 5-year period is not a
device capriciously conjured by the state to defraud any claimant; on the contrary, it is
Art. 1144. The following actions must be brought within ten years from the time the right of
decidedly prescribed to encourage would-be claimants to be punctilious in asserting their claims,
action accrues: (1) Upon a written contract; (2) Upon an obligation created by law; (3) Upon a
otherwise they may lose them forever in a final judgment.
judgment.

Incidentally, the question may be asked: Does herein private respondent, not being an heir
And Article 1456, to wit:
but allegedly a donee, have the personality to be a claimant within the purview of Sec. 4, Rule
91, of the Revised Rules of Court? In this regard, we agree with the Solicitor General that the
Art. 1456. If property is acquired through mistake or fraud, the person obtaining it is, by force of case of Municipal Council of San Pedro, Laguna v. Colegio de San Jose, Inc.,[7] is applicable at
law, considered a trustee of an implied trust for the benefit of the person from whom the least insofar as it concerns the Court's discussion on who is an "interested party" in an escheat
property comes.[4] proceeding -

In its Resolution of 4 May 2000 the Court of Appeals denied the motion for reconsideration In a special proceeding for escheat under sections 750 and 751 the petitioner is not the sole and
filed by public respondents Register of Deeds of Pasay City and the Presiding judge of the lower exclusive interested party. Any person alleging to have a direct right or interest in the property
court and set the trial on the merits for June 15 and 16, 2000. sought to be escheated is likewise an interested party and may appear and oppose the petition
for escheat. In the present case, the Colegio de San Jose, Inc. and Carlos Young appeared
alleging to have a material interest in the Hacienda de San Pedro Tunasan; the former because it
In its effort to nullify the Resolutions herein before mentioned, petitioner points out that
claims to be the exclusive owner of the hacienda, and the latter because he claims to be the
the Court of Appeals committed grave abuse of discretion amounting to lack or excess of
lessee thereof under a contract legally entered with the former (underscoring supplied).
jurisdiction (a) in denying petitioner's affirmative defenses set forth in its answer and motion for
reconsideration, and in setting the case for trial and reception of evidence; and, (b) in giving due
course to private respondent's petition for annulment of decision despite the palpable setting-in In the instant petition, the escheat judgment was handed down by the lower court as early
of the 5-year statute of limitations within which to file claims before the court a quo set forth in as 27 June 1989 but it was only on 28 January 1997, more or less seven (7) years after, when
Rule 91 of the Revised Rules of Court and Art. 1014 of the Civil Code. private respondent decided to contest the escheat judgment in the guise of a petition for
annulment of judgment before the Court of Appeals. Obviously, private respondent's belated
assertion of her right over the escheated properties militates against recovery.
Petitioner argues that the lower court had jurisdiction when it escheated the properties in
question in favor of the city government and the filing of a petition for annulment of judgment
on the ground of subsequent discovery of the deeds of donation did not divest the lower court of A judgment in escheat proceedings when rendered by a court of competent jurisdiction is
its jurisdiction on the matter. It further contends that Rule 47 of the 1997 Rules of Civil Procedure conclusive against all persons with actual or constructive notice, but not against those who are
only provides for two (2) grounds for the annulment of judgment, namely: extrinsic fraud and not parties or privies thereto. As held in Hamilton v. Brown,[8] "a judgment of escheat was held
lack of jurisdiction. As such the discovery of the deeds of donation seven (7) years after the conclusive upon persons notified by advertisement to all persons interested. Absolute lack on
the part of petitioners of any dishonest intent to deprive the appellee of any right, or in any way Deeds. These lots were sequestered by the Presidential Commission on
injure him, constitutes due process of law, proper notice having been observed." With the lapse Good Government [(PCGG)].
of the 5-year period therefore, private respondent has irretrievably lost her right to claim and the Sometime in 1990, a certain Teresita Millan (Millan), through her
representative, Jerry Montemayor, offered to buy said lots for
supposed "discovery of the deeds of donation" is not enough justification to nullify the escheat
6,724,085.71, with the promise that she will take care of clearing whatever
judgment which has long attained finality. preliminary obstacles there may[]be to effect a completion of the sale. The
Spouses Bakunawa gave to Millan the Owners Copies of said TCTs and in
turn, Millan made a down[]payment of 1,019,514.29 for the intended
In the mind of this Court the subject properties were owned by the decedent during the
purchase. However, for one reason or another, Millan was not able to clear
time that the escheat proceedings were being conducted and the lower court was not divested said obstacles. As a result, the Spouses Bakunawa rescinded the sale and
of its jurisdiction to escheat them in favor of Pasay City notwithstanding an allegation that they offered to return to Millan her down[]payment of 1,019,514.29. However,
had been previously donated. We recall that a motion for intervention was earlier denied by the Millan refused to accept back the 1,019,514.29 down[]payment.
escheat court for failure to show "valid claim or right to the properties in question." [9] Where a Consequently, the Spouses Bakunawa, through their company, the Hi-Tri
person comes into an escheat proceeding as a claimant, the burden is on such intervenor to Development Corporation (Hi-Tri) took out on October 28, 1991, a Managers
establish his title to the property and his right to intervene. A fortiori, the certificates of title Check from RCBC-Ermita in the amount of 1,019,514.29, payable to Millans
company Rosmil Realty and Development Corporation (Rosmil) c/o Teresita
covering the subject properties were in the name of the decedent indicating that no transfer of
Millan and used this as one of their basis for a complaint against Millan and
ownership involving the disputed properties was ever made by the deceased during her Montemayor which they filed with the Regional Trial Court of Quezon City,
lifetime. In the absence therefore of any clear and convincing proof showing that the subject Branch 99, docketed as Civil Case No. Q-91-10719 [in 1991], praying that:
lands had been conveyed by Hankins to private respondent Solano, the same still remained, at 1. That the defendants Teresita Mil[l]an and Jerry
least before the escheat, part of the estate of the decedent and the lower court was right not to Montemayor may be ordered to return to plaintiffs
assume otherwise. The Court of Appeals therefore cannot perfunctorily presuppose that the spouses the Owners Copies of Transfer Certificates
subject properties were no longer part of the decedent's estate at the time the lower court of Title Nos. 324985, 324986, 103724, 98827,
98828 and 98829;
handed down its decision on the strength of a belated allegation that the same had previously
2. That the defendant Teresita Mil[l]an be
been disposed of by the owner. It is settled that courts decide only after a close scrutiny of every correspondingly ordered to receive the amount of
piece of evidence and analyze each case with deliberate precision and unadulterated One Million Nineteen Thousand Five Hundred
thoroughness, the judgment not being diluted by speculations, conjectures and unsubstantiated Fourteen Pesos and Twenty Nine Centavos
assertions. (1,019,514.29);
3. That the defendants be ordered to pay to plaintiffs
spouses moral damages in the amount of
WHEREFORE, the petition is GRANTED. The assailed Resolution of the Court of Appeals 2,000,000.00; and
dated 12 November 1998 giving due course to the petition for annulment of judgment, and its 4. That the defendants be ordered to pay plaintiffs
Resolution dated 4 May 2000 denying petitioner's motion for reconsideration, are SET ASIDE. The attorneys fees in the amount of 50,000.00.
decision of the RTC-Br. 114, Pasay City, dated 27 June 1989, is REINSTATED. Being part and parcel of said complaint, and consistent with their
prayer in Civil Case No. Q-91-10719 that Teresita Mil[l]an be correspondingly
ordered to receive the amount of One Million Nineteen Thousand Five
SO ORDERED. Hundred Fourteen Pesos and Twenty Nine [Centavos] (1,019,514.29)[], the
Spouses Bakunawa, upon advice of their counsel, retained custody of RCBC
Managers Check No. ER 034469 and refrained from canceling or negotiating
Rizal commercialversusHI-TRI DEVELOPMENT CORPORATION and LUZ R. it.
BAKUNAWA, All throughout the proceedings in Civil Case No. Q-91-10719,
especially during negotiations for a possible settlement of the case, Millan
was informed that the Managers Check was available for her withdrawal,
Before the Court is a Rule 45 Petition for Review on Certiorari filed by petitioner Rizal she being the payee.
Commercial Banking Corporation (RCBC) against respondents Hi-Tri Development Corporation On January 31, 2003, during the pendency of the abovementioned
case and without the knowledge of [Hi-Tri and Spouses Bakunawa], x x x
(Hi-Tri) and Luz R. Bakunawa (Bakunawa). Petitioner seeks to appeal from the 26 November 2009
RCBC reported the 1,019,514.29-credit existing in favor of Rosmil to the
Decision and 27 May 2010 Resolution of the Court of Appeals (CA), [1] which reversed and set Bureau of Treasury as among its unclaimed balances as of January 31, 2003.
aside the 19 May 2008 Decision and 3 November 2008 Order of the Makati City Regional Trial Allegedly, a copy of the Sworn Statement executed by Florentino N.
Court (RTC) in Civil Case No. 06-244.[2] The case before the RTC involved the Complaint for Mendoza, Manager and Head of RCBCs Asset Management, Disbursement &
Escheat filed by the Republic of the Philippines (Republic) pursuant to Act No. 3936, as amended Sundry Department (AMDSD) was posted within the premises of RCBC-
by Presidential Decree No. 679 (P.D. 679), against certain deposits, credits, and unclaimed Ermita.
balances held by the branches of various banks in the Philippines. The trial court declared the On December 14, 2006, x x x Republic, through the [Office of the
Solicitor General (OSG)], filed with the RTC the action below for Escheat
amounts, subject of the special proceedings, escheated to the Republic and ordered them
[(Civil Case No. 06-244)].
deposited with the Treasurer of the Philippines (Treasurer) and credited in favor of the Republic. On April 30, 2008, [Spouses Bakunawa] settled amicably their
[3]
The assailed RTC judgments included an unclaimed balance in the amount of 1,019,514.29, dispute with Rosmil and Millan. Instead of only the amount of
maintained by RCBC in its Ermita Business Center branch. 1,019,514.29, [Spouses Bakunawa] agreed to pay Rosmil and Millan the
amount of 3,000,000.00, [which is] inclusive [of] the amount of []
1,019,514.29. But during negotiations and evidently prior to said
We quote the narration of facts of the CA[4] as follows: settlement, [Manuel Bakunawa, through Hi-Tri] inquired from RCBC-Ermita
x x x Luz [R.] Bakunawa and her husband Manuel, now deceased the availability of the 1,019,514.29 under RCBC Managers Check No. ER
(Spouses Bakunawa) are registered owners of six (6) parcels of land covered 034469. [Hi-Tri and Spouses Bakunawa] were however dismayed when they
by TCT Nos. 324985 and 324986 of the Quezon City Register of Deeds, and were informed that the amount was already subject of the escheat
TCT Nos. 103724, 98827, 98828 and 98829 of the Marikina Register of proceedings before the RTC.
On April 17, 2008, [Manuel Bakunawa, through Hi-Tri] wrote x x x Consequently, respondents filed an Omnibus Motion dated 11 June 2008, seeking the
RCBC, viz: partial reconsideration of the RTC Decision insofar as it escheated the fund allocated for the
We understand that the deposit corresponding to the payment of the Managers Check. They asked that they be included as party-defendants or, in
amount of Php 1,019,514.29 stated in the Managers the alternative, allowed to intervene in the case and their motion considered as an answer-in-
Check is currently the subject of escheat proceedings intervention. Respondents argued that they had meritorious grounds to ask reconsideration of
pending before Branch 150 of the Makati Regional Trial the Decision or, alternatively, to seek intervention in the case. They alleged that the deposit was
Court. subject of an ongoing dispute (Civil Case No. Q-91-10719) between them and Rosmil since 1991,
Please note that it was our impression that the deposit and that they were interested parties to that case.[5]
would be taken from [Hi-Tris] RCBC bank account once On 3 November 2008, the RTC issued an Order denying the motion of respondents.
an order to debit is issued upon the payees The trial court explained that the Republic had proven compliance with the requirements of
presentation of the Managers Check. Since the payee publication and notice, which served as notice to all those who may be affected and prejudiced
rejected the negotiated Managers Check, presentation by the Complaint for Escheat. The RTC also found that the motion failed to point out the findings
of the Managers Check was never made. and conclusions that were not supported by the law or the evidence presented, as required by
Consequently, the deposit that was supposed to be Rule 37 of the Rules of Court. Finally, it ruled that the alternative prayer to intervene was filed
allocated for the payment of the Managers Check was out of time.
supposed to remain part of the Corporation[s] RCBC The CA Ruling
bank account, which, thereafter, continued to be On 26 November 2009, the CA issued its assailed Decision reversing the 19 May 2008
actively maintained and operated. For this reason, We Decision and 3 November 2008 Order of the RTC. According to the appellate court, [6] RCBC failed
hereby demand your confirmation that the amount of to prove that the latter had communicated with the purchaser of the Managers Check (Hi-Tri
Php 1,019,514.29 continues to form part of the funds in and/or Spouses Bakunawa) or the designated payee (Rosmil) immediately before the bank filed
the Corporations RCBC bank account, since pay-out of its Sworn Statement on the dormant accounts held therein. The CA ruled that the banks failure
said amount was never ordered. We wish to point out to notify respondents deprived them of an opportunity to intervene in the escheat proceedings
that if there was any attempt on the part of RCBC to and to present evidence to substantiate their claim, in violation of their right to due process.
consider the amount indicated in the Managers Check Furthermore, the CA pronounced that the Makati City RTC Clerk of Court failed to issue individual
separate from the Corporations bank account, RCBC notices directed to all persons claiming interest in the unclaimed balances, as well as to require
would have issued a statement to that effect, and them to appear after publication and show cause why the unclaimed balances should not be
repeatedly reminded the Corporation that the deposit deposited with the Treasurer of the Philippines. It explained that the jurisdictional requirement of
would be considered dormant absent any fund individual notice by personal service was distinct from the requirement of notice by publication.
movement. Since the Corporation never received any Consequently, the CA held that the Decision and Order of the RTC were void for want of
statements of account from RCBC to that effect, and jurisdiction.
more importantly, never received any single letter from Issue
RCBC noting the absence of fund movement and After a perusal of the arguments presented by the parties, we cull the main issues as
advising the Corporation that the deposit would be follows:
treated as dormant. I. Whether the Decision and Order of the RTC were void for failure to send
On April 28, 2008, [Manuel Bakunawa] sent another letter to x x x separate notices to respondents by personal service
RCBC reiterating their position as above-quoted. II. Whether petitioner had the obligation to notify respondents immediately
In a letter dated May 19, 2008, x x x RCBC replied and informed before it filed its Sworn Statement with the Treasurer
[Hi-Tri and Spouses Bakunawa] that: III. Whether or not the allocated funds may be escheated in favor of the
The Banks Ermita BC informed Hi-Tri and/or its principals Republic
regarding the inclusion of Managers Check No. Discussion
ER034469 in the escheat proceedings docketed as Civil Petitioner bank assails[7] the CA judgments insofar as they ruled that notice by
Case No. 06-244, as well as the status thereof, between personal service upon respondents is a jurisdictional requirement in escheat proceedings.
28 January 2008 and 1 February 2008. Petitioner contends that respondents were not the owners of the unclaimed balances and were
xxx xxx xxx thus not entitled to notice from the RTC Clerk of Court. It hinges its claim on the theory that the
Contrary to what Hi-Tri hopes for, the funds covered by funds represented by the Managers Check were deemed transferred to the credit of the payee or
the Managers Check No. ER034469 does not form part holder upon its issuance.
of the Banks own account. By simple operation of law, We quote the pertinent provision of Act No. 3936, as amended, on the rule on service
the funds covered by the managers check in issue of processes, to wit:
became a deposit/credit susceptible for inclusion in the Sec. 3. Whenever the Solicitor General shall be informed of such
escheat case initiated by the OSG and/or Bureau of unclaimed balances, he shall commence an action or actions in the
Treasury. name of the People of the Republic of the Philippinesin the Court of
xxx xxx xxx First Instance of the province or city where the bank, building and loan
Granting arguendo that the Bank was duty-bound to association or trust corporation is located, in which shall be joined as
make good the check, the Banks obligation to do so parties the bank, building and loan association or trust
prescribed as early as October 2001. corporation and all such creditors or depositors. All or any of such
(Emphases, citations, and annotations were omitted.) creditors or depositors or banks, building and loan association or trust
The RTC Ruling corporations may be included in one action. Service of process in such
The escheat proceedings before the Makati City RTC continued. On 19 May 2008, the trial court action or actions shall be made by delivery of a copy of the complaint
rendered its assailed Decision declaring the deposits, credits, and unclaimed balances subject of and summons to the president, cashier, or managing officer of each
Civil Case No. 06-244 escheated to the Republic. Among those included in the order of forfeiture defendant bank, building and loan association or trust corporation and by
was the amount of 1,019,514.29 held by RCBC as allocated funds intended for the payment of publication of a copy of such summons in a newspaper of general
the Managers Check issued in favor of Rosmil. The trial court ordered the deposit of the circulation, either in English, in Filipino, or in a local dialect, published in the
escheated balances with the Treasurer and credited in favor of the Republic. Respondents claim locality where the bank, building and loan association or trust corporation is
that they were not able to participate in the trial, as they were not informed of the ongoing situated, if there be any, and in case there is none, in the City of Manila, at
escheat proceedings. such time as the court may order. Upon the trial, the court must hear all
parties who have appeared therein, and if it be determined that
such unclaimed balances in any defendant bank, building and loan whereby the state compels the surrender to it of unclaimed deposit balances when there is
association or trust corporation are unclaimed as hereinbefore stated, substantial ground for a belief that they have been abandoned, forgotten, or without an owner.
then the court shall render judgment in favor of the Government of [19]

the Republic of the Philippines, declaring that said unclaimed balances Act No. 3936, as amended, outlines the proper procedure to be followed by banks and
have escheated to the Government of the Republic of the Philippines and other similar institutions in filing a sworn statement with the Treasurer concerning dormant
commanding said bank, building and loan association or trust corporation to accounts:
forthwith deposit the same with the Treasurer of the Philippines to credit of Sec. 2. Immediately after the taking effect of this Act and within the month
the Government of the Republic of the Philippines to be used as the National of January of every odd year, all banks, building and loan associations, and
Assembly may direct. trust corporations shall forward to the Treasurer of the Philippines a
At the time of issuing summons in the action above provided for, statement, under oath, of their respective managing officers, of all
the clerk of court shall also issue a notice signed by him, giving the credits and deposits held by them in favor of persons known to be
title and number of said action, and referring to the complaint therein, dead, or who have not made further deposits or withdrawals during
and directed to all persons, other than those named as defendants the preceding ten years or more, arranged in alphabetical order
therein, claiming any interest in any unclaimed balance mentioned according to the names of creditors and depositors, and showing:
in said complaint, and requiring them to appear within sixty days (a) The names and last known place of residence or post office addresses
after the publication or first publication, if there are several, of such of the persons in whose favor such unclaimed balances stand;
summons, and show cause, if they have any, why the unclaimed
balances involved in said action should not be deposited with the (b) The amount and the date of the outstanding unclaimed balance and
Treasurer of the Philippines as in this Act provided and notifying them whether the same is in money or in security, and if the latter, the
that if they do not appear and show cause, the Government of the nature of the same;
Republic of the Philippines will apply to the court for the relief
demanded in the complaint. A copy of said notice shall be attached to, (c) The date when the person in whose favor the unclaimed balance
and published with the copy of, said summons required to be published as stands died, if known, or the date when he made his last deposit or
above, and at the end of the copy of such notice so published, there shall be withdrawal; and
a statement of the date of publication, or first publication, if there are
several, of said summons and notice. Any person interested may (d) The interest due on such unclaimed balance, if any, and the amount
appear in said action and become a party thereto. Upon the thereof.
publication or the completion of the publication, if there are A copy of the above sworn statement shall be posted in a
several, of the summons and notice, and the service of the summons on conspicuous place in the premises of the bank, building and loan
the defendant banks, building and loan associations or trust association, or trust corporation concerned for at least sixty days from the
corporations, the court shall have full and complete jurisdiction in date of filing thereof: Provided, That immediately before filing the
the Republic of the Philippines over the said unclaimed balances above sworn statement, the bank, building and loan association, and
and over the persons having or claiming any interest in the said trust corporation shall communicate with the person in whose favor
unclaimed balances, or any of them, and shall have full and the unclaimed balance stands at his last known place of residence
complete jurisdiction to hear and determine the issues herein, and or post office address.
render the appropriate judgment thereon. (Emphasis supplied.) It shall be the duty of the Treasurer of the Philippines to inform the Solicitor
Hence, insofar as banks are concerned, service of processes is made by delivery of a General from time to time the existence of unclaimed balances held by
copy of the complaint and summons upon the president, cashier, or managing officer of the banks, building and loan associations, and trust corporations. (Emphasis
defendant bank.[8] On the other hand, as to depositors or other claimants of the unclaimed supplied.)
balances, service is made by publication of a copy of the summons in a newspaper of general As seen in the afore-quoted provision, the law sets a detailed system for notifying
circulation in the locality where the institution is situated. [9] A notice about the forthcoming depositors of unclaimed balances. This notification is meant to inform them that their deposit
escheat proceedings must also be issued and published, directing and requiring all persons who could be escheated if left unclaimed. Accordingly, before filing a sworn statement, banks and
may claim any interest in the unclaimed balances to appear before the court and show cause other similar institutions are under obligation to communicate with owners of dormant accounts.
why the dormant accounts should not be deposited with the Treasurer. The purpose of this initial notice is for a bank to determine whether an inactive account has
Accordingly, the CA committed reversible error when it ruled that the issuance of indeed been unclaimed, abandoned, forgotten, or left without an owner. If the depositor simply
individual notices upon respondents was a jurisdictional requirement, and that failure to effect does not wish to touch the funds in the meantime, but still asserts ownership and dominion over
personal service on them rendered the Decision and the Order of the RTC void for want of the dormant account, then the bank is no longer obligated to include the account in its sworn
jurisdiction. Escheat proceedings are actions in rem,[10] whereby an action is brought against the statement.[20] It is not the intent of the law to force depositors into unnecessary litigation and
thing itself instead of the person. [11] Thus, an action may be instituted and carried to judgment defense of their rights, as the state is only interested in escheating balances that have been
without personal service upon the depositors or other claimants. [12] Jurisdiction is secured by the abandoned and left without an owner.
power of the court over the res.[13] Consequently, a judgment of escheat is conclusive upon In case the bank complies with the provisions of the law and the unclaimed balances
persons notified by advertisement, as publication is considered a general and constructive are eventually escheated to the Republic, the bank shall not thereafter be liable to any person
notice to all persons interested.[14] for the same and any action which may be brought by any person against in any bank xxx for
Nevertheless, we find sufficient grounds to affirm the CA on the exclusion of the funds unclaimed balances so deposited xxx shall be defended by the Solicitor General without cost to
allocated for the payment of the Managers Check in the escheat proceedings. such bank.[21] Otherwise, should it fail to comply with the legally outlined procedure to the
Escheat proceedings refer to the judicial process in which the state, by virtue of its prejudice of the depositor, the bank may not raise the defense provided under Section 5 of Act
sovereignty, steps in and claims abandoned, left vacant, or unclaimed property, without there No. 3936, as amended.
being an interested person having a legal claim thereto. [15] In the case of dormant accounts, the Petitioner asserts[22] that the CA committed a reversible error when it required RCBC to
state inquires into the status, custody, and ownership of the unclaimed balance to determine send prior notices to respondents about the forthcoming escheat proceedings involving the
whether the inactivity was brought about by the fact of death or absence of or abandonment by funds allocated for the payment of the Managers Check. It explains that, pursuant to the law,
the depositor.[16] If after the proceedings the property remains without a lawful owner interested only those whose favor such unclaimed balances stand are entitled to receive notices. Petitioner
to claim it, the property shall be reverted to the state to forestall an open invitation to self- argues that, since the funds represented by the Managers Check were deemed transferred to
service by the first comers. [17] However, if interested parties have come forward and lain claim to the credit of the payee upon issuance of the check, the proper party entitled to the notices was
the property, the courts shall determine whether the credit or deposit should pass to the the payee Rosmil and not respondents. Petitioner then contends that, in any event, it is not
claimants or be forfeited in favor of the state. [18] We emphasize that escheat is not a proceeding liable for failing to send a separate notice to the payee, because it did not have the address of
to penalize depositors for failing to deposit to or withdraw from their accounts. It is a proceeding
Rosmil. Petitioner avers that it was not under any obligation to record the address of the payee forfeiture of unclaimed balances. We further note that there is nothing in the records that would
of a Managers Check. show that the OSG appealed the assailed CA judgments. We take this failure to appeal as an
In contrast, respondents Hi-Tri and Bakunawa allege [23] that they have a legal interest indication of disinterest in pursuing the escheat proceedings in favor of the Republic.
in the fund allocated for the payment of the Managers Check. They reason that, since the funds WHEREFORE the Petition is DENIED. The 26 November 2009 Decision and 27 May
were part of the Compromise Agreement between respondents and Rosmil in a separate civil 2010 Resolution of the Court of Appeals in CA-G.R. SP No. 107261 are hereby AFFIRMED.
case, the approval and eventual execution of the agreement effectively reverted the fund to the
credit of respondents. Respondents further posit that their ownership of the funds was evidenced BANG VS SY
by their continued custody of the Managers Check.
An ordinary check refers to a bill of exchange drawn by a depositor (drawer) on a bank NACHURA, J.:
(drawee),[24] requesting the latter to pay a person named therein (payee) or to the order of the Before this Court are two Petitions for Review on Certiorari under Rule 45 of the Rules
payee or to the bearer, a named sum of money. [25] The issuance of the check does not of itself of Court. The first Petition, G.R. No. 114217, assails the Decision [2] dated May 6, 1993 and the
operate as an assignment of any part of the funds in the bank to the credit of the drawer. Resolution[3] dated February 28, 1994 of the Court of Appeals (CA) in CA-G.R. SP No. 17686. On
[26]
Here, the bank becomes liable only after it accepts or certifies the check. [27] After the check is the other hand, the second Petition, G.R. No. 150797, questions the Decision dated February 28,
accepted for payment, the bank would then debit the amount to be paid to the holder of the 2001 and the Resolution dated November 5, 2001 of the CA in CA-G.R. SP No. 46244.
check from the account of the depositor-drawer.
There are checks of a special type called managers or cashiers checks. These are bills The factual antecedents are as follows:
of exchange drawn by the banks manager or cashier, in the name of the bank, against the bank
itself. [28]
Typically, a managers or a cashiers check is procured from the bank by allocating a G.R. No. 114217
particular amount of funds to be debited from the depositors account or by directly paying or
depositing to the bank the value of the check to be drawn. Since the bank issues the check in its On May 28, 1980, respondent Rolando Sy filed a Complaint for Partition against
name, with itself as the drawee, the check is deemed accepted in advance. [29] Ordinarily, the spouses Jose Sy Bang and Iluminada Tan, spouses Julian Sy and Rosa Tan, Zenaida Sy, Ma. Emma
check becomes the primary obligation of the issuing bank and constitutes its written promise to Sy, Oscar Sy, Rosalino Sy, Lucio Sy, Enrique Sy, Rosauro Sy, Bartolome Sy, Florecita Sy, Lourdes
pay upon demand.[30] Sy, Julieta Sy, Rosita Ferrera-Sy, and Renato Sy before the then Court of First Instance of Quezon,
Nevertheless, the mere issuance of a managers check does not ipso facto work as an Branch 2, docketed as Civil Case No. 8578.[4]
automatic transfer of funds to the account of the payee. In case the procurer of the managers or
cashiers check retains custody of the instrument, does not tender it to the intended payee, or Respondents Rolando Sy, Rosalino Sy, Lucio Sy, Enrique Sy, Rosauro Sy, Bartolome Sy, Julieta Sy,
fails to make an effective delivery, we find the following provision on undelivered Lourdes Sy, and Florecita Sy are the children of Sy Bang by his second marriage to respondent
instruments under the Negotiable Instruments Law applicable:[31] Rosita Ferrera-Sy, while petitioners Jose Sy Bang, Julian Sy and Oscar Sy are the children of Sy
Sec. 16. Delivery; when effectual; when presumed. Every Bang from his first marriage to Ba Nga, and petitioners Zenaida Tan and Ma. Emma Sy are the
contract on a negotiable instrument is incomplete and revocable until children of petitioner spouses Jose Sy Bang and Iluminada Tan.[5]
delivery of the instrument for the purpose of giving effect
thereto. As between immediate parties and as regards a remote party Sy Bang died intestate in 1971, leaving behind real and personal properties, including several
other than a holder in due course, the delivery, in order to be effectual, businesses.[6]
must be made either by or under the authority of the party making,
drawing, accepting, or indorsing, as the case may be; and, in such case, During an out-of-court conference between petitioners and respondents, it was agreed that the
the delivery may be shown to have been conditional, or for a special management, supervision or administration of the common properties and/or the entire estate of
purpose only, and not for the purpose of transferring the property in the the deceased Sy Bang shall be placed temporarily in the hands of petitioner Jose Sy Bang, as
instrument. But where the instrument is in the hands of a holder in due trustee, with authority to delegate some of his functions to any of petitioners or private
course, a valid delivery thereof by all parties prior to him so as to make respondents. Thus, the function or duty of bookkeeper was delegated by Jose Sy Bang to his co-
them liable to him is conclusively presumed. And where the instrument is no petitioner Julian Sy, and the duty or function of management and operation of the business of
longer in the possession of a party whose signature appears thereon, a valid cinema of the common ownership was delegated by petitioner Jose Sy Bang to respondent
and intentional delivery by him is presumed until the contrary is proved. Rosauro Sy.[7]
(Emphasis supplied.)
Petitioner acknowledges that the Managers Check was procured by respondents, and that the Herein petitioners and respondents also agreed that the income of the three cinema houses,
amount to be paid for the check would be sourced from the deposit account of Hi-Tri. [32] When namely, Long Life, SBS and Sy-Co Theaters, shall exclusively pertain to respondents for their
Rosmil did not accept the Managers Check offered by respondents, the latter retained custody of support and sustenance, pending the termination of Civil Case No. 8578, for Judicial Partition,
the instrument instead of cancelling it. As the Managers Check neither went to the hands of and the income from the vast parts of the entire estate and other businesses of their common
Rosmil nor was it further negotiated to other persons, the instrument remained undelivered. father, to pertain exclusively to petitioners. Hence, since the year 1980, private respondents,
Petitioner does not dispute the fact that respondents retained custody of the instrument. [33] through respondent Rosauro Sy, had taken charge of the operation and management of the
Since there was no delivery, presentment of the check to the bank for payment did not three cinema houses, with the income derived therefrom evenly divided among themselves for
occur. An order to debit the account of respondents was never made. In fact, petitioner confirms their support and maintenance.[8]
that the Managers Check was never negotiated or presented for payment to its Ermita Branch,
and that the allocated fund is still held by the bank. [34] As a result, the assigned fund is deemed On March 30, 1981, the Judge rendered a First Partial Decision based on the Compromise
to remain part of the account of Hi-Tri, which procured the Managers Check. The doctrine that Agreement dated November 10, 1980, submitted in Civil Case No. 8578 by plaintiff Rolando Sy
the deposit represented by a managers check automatically passes to the payee is inapplicable, and defendants Jose Sy Bang and Julian Sy. On April 2, 1981, the Judge rendered a Second Partial
because the instrument although accepted in advance remains undelivered. Hence, respondents Decision based on the pretrial order of the court, dated March 25, 1981, entered into by and
should have been informed that the deposit had been left inactive for more than 10 years, and between respondent Renato Sy and petitioner spouses. Said First Partial Decision and Second
that it may be subjected to escheat proceedings if left unclaimed. Partial Decision had long become final, without an appeal having been interposed by any of the
After a careful review of the RTC records, we find that it is no longer necessary to parties.[9]
remand the case for hearing to determine whether the claim of respondents was valid. There
was no contention that they were the procurers of the Managers Check. It is undisputed that On June 8, 1982, the Judge rendered a Third Partial Decision, [10] the dispositive portion of which
there was no effective delivery of the check, rendering the instrument incomplete. In addition, reads as follows:
we have already settled that respondents retained ownership of the funds. As it is obvious from
their foregoing actions that they have not abandoned their claim over the fund, we rule that the WHEREFORE, the Court hereby renders this Third Partial Decision:
allocated deposit, subject of the Managers Check, should be excluded from the escheat
proceedings. We reiterate our pronouncement that the objective of escheat proceedings is state
(a) Declaring that all the properties, businesses or After several incidents in the case, the Court, on May 8, 1989, referred the petition to
assets, their income, produce and improvements, as well as all the rights, the CA for proper determination and disposition.
interests or participations (sic) in the names of defendants Jose Sy Bang and
his wife Iluminada Tan and their children, defendants Zenaida and Ma. The CA rendered the assailed Decision [17] on May 6, 1993, denying due course to and
Emma; both surnamed Sy, and defendants Julian Sy and his wife Rosa Tan, dismissing the petition for lack of merit. It held that Judge Puno acted correctly in issuing the
as belonging to the estate of Sy Bang, including the properties in the names assailed Third Partial Decision. The CA said that the act of Judge Puno in rendering a partial
of said defendants which are enumerated in the Complaints in this case and decision was in accord with then Rule 36, Section 4, of the Rules of Court, which stated that in an
all those properties, rights and interests which said defendants may have action against several defendants, the court may, when a judgment is proper, render judgment
concealed or fraudulently transferred in the names of other persons, their against one or more of them, leaving the action to proceed against the others. It found that the
agents or representatives; judges decision to defer resolution on the properties in the name of Rosalino, Bartolome,
Rolando, and Enrique would not affect the resolution on the properties in the names of Jose Sy
(b) Declaring the following as the heirs of Sy Bang, Bang, Iluminada, Julian, Rosa, Zenaida, and Ma. Emma, since the properties were separable and
namely: his surviving widow, Maria Rosita Ferrera-Sy and her children, distinct from one another such that the claim that the same formed part of the Sy Bang estate
Enrique, Bartolome, Rosalino, Rolando, Rosauro, Maria Lourdes, Florecita could be the subject of separate suits.
and Julieta, all surnamed Sy, and his children by his first wife, namely: Jose
Sy Bang, Julian Sy, Lucio Sy, Oscar Sy and Renato Sy; The CA also upheld the judges appointment of a receiver, saying that the judge did so
after both parties had presented their evidence and upon verified petition filed by respondents,
(c) Ordering the partition of the Estate of Sy Bang and in order to preserve the properties under litigation. Further, the CA found proper the order to
among his heirs entitled thereto after the extent thereof shall have been cancel the notice of lis pendens annotated in the certificates of title in the names of Rosalino,
determined at the conclusion of the proper accounting which the parties in Rolando and Bartolome.
this case, their agents and representatives, shall render and after
segregating and delivering to Maria Rosita Ferrera-Sy her one-half (1/2) The Motion for Reconsideration was denied on February 28, 1994.[18]
share in the conjugal partnership between her and her deceased husband
Sy Bang; On April 22, 1994, petitioners filed this Petition for Review on Certiorari under Rule 43
of the Rules of Court.
(d) Deferring resolution on the question concerning the
inclusion for partition of properties in the names of Rosalino, Bartolome, The Court denied the Petition for non-compliance with Circulars 1-88 and 19-91 for
Rolando and Enrique, all surnamed Sy. failure of petitioners to attach the registry receipt. Petitioners moved for reconsideration, and the
Petition was reinstated on July 13, 1994.
SO ORDERED.
In this Petition for Review, petitioners seek the reversal of the CA Decision and
Resolution in CA-G.R. SP No. 17686 and, consequently, the nullification of the Third Partial
On June 16, 1982, petitioners filed a Motion to Suspend Proceedings and for Inhibition, Decision and orders of the trial court in Civil Case No. 8578. They also pray for the Court to
alleging, among others, that the Judge had patently shown partiality in favor of their co- direct the trial court to proceed with the reception of further evidence in Civil Case No. 8578.
defendants in the case. This motion was denied on August 16, 1982.[11] [19]
In particular, petitioners allege that the CA decided questions of substance not in accord with
law when it upheld the trial courts Third Partial Decision which, they alleged, was rendered in
On July 4, 1982, petitioners filed a Petition for Prohibition and for Inhibition violation of their rights to due process.
(Disqualification) and Mandamus with Restraining Order with the Supreme Court docketed as
G.R. No. 60957. The Petition for Prohibition and for Inhibition was denied, and the Petition for Petitioners narrate that the trial court initially gave them two trial days May 26 and 27, 1982 to
Mandamus with Restraining Order was Noted.[12] present their evidence. However, at the hearing on May 26, the judge forced them to terminate
the presentation of their evidence. On June 2, 1982, following petitioners submission of
On August 17, 1982, the Judge issued two Orders: (1) in the first Order, [13] Mrs. Lucita additional documentary evidence, the trial court scheduled the case for hearing on June 8 and 9,
L. Sarmiento was appointed as Receiver, and petitioners Motion for New Trial and/or 1982, at 2 oclock in the afternoon in view of the importance of the issue concerning whether all
Reconsideration, dated July 9, 1982 and their Supplemental Motion, dated July 12, 1982, were the properties in the names of Enrique Sy, Bartolome Sy, Rosalino Sy, and Rolando Sy and/or
denied for lack of merit; and (2) in the second Order, [14] the Judge ordered the immediate their respective wives (as well as those in the names of other party-litigants in this case) shall be
cancellation of the lis pendens annotated at the back of the certificates of title in the names of declared or included as part of the Estate of Sy Bang, and in view of the numerous documentary
Bartolome Sy, Rosalino Sy and Rolando Sy. evidences (sic) presented by Attys. Raya and Camaligan. At the June 8 hearing, petitioners
presented additional evidence. Unknown to them, however, the trial court had already rendered
On August 18, 1982, the trial court approved the bond posted by the receiver, Mrs. its Third Partial Decision at 11 oclock that morning. Thus, petitioners argue that said Third Partial
Lucita L. Sarmiento, Bartolome Sy, Rolando Sy and Rosalino Sy. [15] Decision is void.[20]

While the Petition for Mandamus with Restraining Order was pending before the First They also question the trial courts First Order dated August 17, 1982 and Order dated August 18,
Division of the Supreme Court, petitioners filed a Petition for Certiorari and Prohibition before the 1982 granting the prayer for receivership and appointing a receiver, respectively, both allegedly
Supreme Court, docketed as G.R. No. 61519. A Temporary Restraining Order was issued on issued without a hearing and without showing the necessity to appoint a receiver. Lastly, they
August 31, 1982, to enjoin the Judge from taking any action in Civil Case No. 8578 and, likewise, question the Second Order dated August 17, 1982 canceling the notice of lis pendens ex
restraining the effectivity of and compliance with the Resolution dated August 16, 1982, the two parte and without any showing that the notice was for the purpose of molesting the adverse
Orders dated August 17, 1982, and the Order dated August 18, 1982. parties, or that it was not necessary to protect the rights of the party who caused it to be
recorded.[21]
On September 2, 1982, petitioners withdrew their Petition for Mandamus with
Restraining Order, docketed as G.R. No. 60957. On May 9, 1996, Rosita Ferrera-Sy filed a Motion for Payment of Widows Allowance. She alleged
that her deceased husband, Sy Bang, left an extensive estate. The properties of the estate were
On September 11, 1982, an Urgent Manifestation and Motion was filed by Mrs. Lucita found by the trial court to be their conjugal properties. From the time of Sy Bangs death in 1971
L. Sarmiento, the appointed receiver, which was opposed by petitioners on September 24, until the filing of the motion, Rosita was not given any widows allowance as provided in Section
1982. [16] 3, Rule 83 of the Rules of Court by the parties in possession and control of her husbands estate,
or her share in the conjugal partnership.[22]
In their Comment on the Motion for Payment of Widows Allowance, petitioners argued that
Section 3, Rule 83 of the Rules of Court specifically provides that the same is granted only during Petitioners filed a Supplement to their Memorandum, additionally arguing that the Third Partial
the settlement of the estate of the decedent, and this allowance, under Article 188 of the Civil Decision did not only unduly bind the properties without due process, but also ignored the
Code (now Article 133 of the Family Code), shall be taken from the common mass of property fundamental rule on the indefeasibility of Torrens titles.[34]
during the liquidation of the inventoried properties. [23] Considering that the case before the trial
court is a special civil action for partition under Rule 69 of the Rules of Court, Rosita is not G.R. No. 150797
entitled to widows allowance.
Meanwhile, on September 30, 1996, respondents filed a Joint Petition for the
On September 23, 1996, the Court granted the Motion for Payment of Widows Allowance and Guardianship of the Incompetent Rosita Ferrera-Sy before the RTC of Lucena City, Branch 58
ordered petitioners jointly and severally to pay Rosita P25,000.00 as the widows allowance to be (Guardianship court), docketed as Special Proceedings No. 96-34. On May 19, 1997, Rosauro Sy,
taken from the estate of Sy Bang, effective September 1, 1996 and every month thereafter until who sought to be named as the special guardian, filed before the Guardianship court a Motion to
the estate is finally settled or until further orders from the Court.[24] Order Court Deposit of Widows Allowance Ordered by the Supreme Court. [35] Then, he filed a
Motion before this Court seeking an Order for petitioners to pay Rosita P2,150,000.00 in widows
In a Manifestation dated October 1, 1996, petitioners informed the Court that Rosita and co- allowance and P25,000.00 every month thereafter, as ordered by this Court in its September 23,
petitioner Enrique Sy had executed a waiver of past, present and future claims against 1996 Resolution. He also prayed for petitioners imprisonment should they fail to comply
petitioners and, thus, should be dropped as parties to the case. [25] Attached thereto was therewith.[36]
a Sinumpaang Salaysay wherein Rosita and Enrique stated that they were given P1 million and a
229-square meter parcel of land, for which reason they were withdrawing as plaintiffs in Civil On July 8, 1997, the Guardianship court issued an Order, the dispositive portion of which reads:
Case No. 8578.[26]

Respondents, except Enrique Sy, filed a Counter-Manifestation and Opposition to Drop Rosita Sy WHEREFORE, Mr. Jose Sy Bang and his wife Iluminada Tan; and their
as a Party.[27] They said that it would be ridiculous for Rosita to give up her share in Sy Bangs children, Zenaida Sy and Ma. Emma Sy; and Julian Sy and his wife Rosa Tan,
estate, amounting to hundreds of millions of pesos, which had already been ordered partitioned are hereby ordered to deposit to this Court, jointly and severally, the
by the trial court, to the prejudice of her seven full-blooded children. They alleged that Rosita amount of P250,000.00 representing the widows allowance of the
was not in possession of her full faculties when she affixed her thumbmark on the Sinumpaang incompetent Rosita Ferrera Sy corresponding the (sic) periods from
Salaysay considering her age, her frequent illness, and her lack of ability to read or write. Hence, September 1, 1996 to June 30, 1997, and additional amount of P25,000.00
they filed a petition before the Regional Trial Court (RTC) of Lucena City for guardianship over her per month and every month thereafter, within the first ten (10) days of each
person and properties. They also alleged that Enrique and some of Jose Sy Bangs children would month.[37]
stealthily visit Rosita in Rosauros house while the latter was away. On one of those occasions,
she was asked to affix her thumbmark on some documents she could not read and knew nothing
about. They claim that Rosita has never received a single centavo of the P1 million allegedly Petitioners Motion for Reconsideration was denied. Rosauro, the appointed guardian,
given her. then asked the Guardianship court to issue a writ of execution. Meanwhile, on December 10,
1997, petitioners filed a Petition for Certiorari with the CA docketed as CA-G.R. SP No. 46244 to
In their Reply to Counter-Manifestation, [28] petitioners countered that respondents failed to annul the July 8, 1997 Order and October 9, 1997 Resolution of the Guardianship court. [38]
present any concrete evidence to challenge the Sinumpaang Salaysay. Since the same was duly
notarized, it was a public document and presumed valid. They, likewise, alleged that the In a Decision[39] dated February 28, 2001, the CA ruled in respondents favor, finding nothing
Counter-Manifestation was filed without Rositas authorization as, in fact, she had written her legally objectionable in private respondent Rosauro Sys filing of the motion to order the deposit
counsel with instructions to withdraw said pleading. [29] Further, they averred that Rosita executed of the widows allowance ordered by the Supreme Court in G.R. No. 114217 or, for that matter, in
the Sinumpaang Salaysay while in full possession of her faculties. They alleged that Rosita the public respondents grant thereof in the order herein assailed. More so, when the public
intended to oppose the petition for guardianship and they presented a copy of a sworn respondents actions are viewed in the light of the Supreme Courts denial of petitioners motion
certification from Rositas physician that she (Rosita) is physically fit and mentally competent to for reconsideration of its resolution dated September 23, 1996.[40] Thus it held:
attend to her personal or business transactions.[30]

On the other hand, petitioners filed a Motion for Reconsideration of the Courts September 23, WHEREFORE, the petition is DENIED for lack of merit and the assailed
1996 Resolution. It alleged that Rosita and Enrique executed their Sinumpaang Salaysay on resolution dated September 23, 1996 (sic) is AFFIRMED in toto. No
August 29, 1996. However, this development was made known to the Court only on October 1, pronouncement as to costs.
1996; hence, the Court was not aware of this when it issued its Resolution. Petitioners prayed for
the reconsideration of the September 23, 1996 Resolution and dropping Rosita and Enrique as SO ORDERED.
parties to the case.[31]
In their Opposition to the Motion for Reconsideration, respondents maintained that the
Court should not consider the Motion for Reconsideration. Respondents alleged that Rosita Their Motion for Reconsideration having been denied on November 5, 2001, [41] petitioners filed
thumbmarked the Sinumpaang Salaysay without understanding the contents of the document or this Petition for Review[42] under Rule 45 of the Rules of Court praying for this Court to reverse
the implications of her acts. Respondents also tried to demonstrate that their mother would the CAs February 28, 2001 Decision and its Resolution denying the Motion for Reconsideration,
thumbmark any document that their children asked her to by exhibiting four documents each and to declare the Guardianship court to have exceeded its jurisdiction in directing the deposit of
denominated as Sinumpaang Salaysay and thumbmarked by Rosita. One purported to disown the widows allowance in Special Proceedings No. 96-34. [43] They argued that the Guardianship
the earlier Sinumpaang Salaysay. The second was a reproduction of the earlier Sinumpaang courts jurisdiction is limited to determining whether Rosita was incompetent and, upon finding in
Salaysay with the amount changed to P100.00, the Transfer Certificate of Title number changed the affirmative, appointing a guardian. Moreover, under Rule 83, Section 3, of the Rules of Court,
to 12343567, and the size of the property to as big as the entire Lucena City. The third purported a widows allowance can only be paid in an estate proceeding. Even if the complaint for partition
to bequeath her shares in the conjugal partnership of gains to Rosauro, Bartolome, Rolando, and were to be considered as estate proceedings, only the trial court hearing the partition case had
Rosalino, while refusing to give any inheritance to Florecita, Lourdes, Julieta, and Enrique. Lastly, the exclusive jurisdiction to execute the payment of the widows allowance.[44]
the fourth contradicted the third in that it was in favor of Florecita, Lourdes, Julieta, and Enrique,
while disinheriting Rosauro, Bartolome, Rolando, and Rosalino. These, respondents assert, clearly They raised the following issues:
show that their mother would sign any document, no matter the contents, upon the request of
any of her children.[32]
The Court of Appeals erred in affirming the Guardianship Courts Order dated
The Court denied the Motion for Reconsideration on November 18, 1996.[33] 8 July 1997, and Resolution dated 9 October 1997, in that:
Iluminada, Zenaida and Ma. Emma paid the court fine of P260,010.00 on April 5, 2005.[51]
I Respondents, except Rosauro Sy (who had died), filed a Motion for Execution [52] before this Court
The trial court, acting as a Guardianship Court, and limited jurisdiction, had on April 25, 2005. On the other hand, petitioner Rosa Tan filed a Motion for Reconsideration with
no authority to enforce payment of widows allowance. Prayer for Clarification.[53] She alleged that, in accordance with Chinese culture, she had no
participation in the management of the family business or Sy Bangs estate. After her husbands
II death, she allegedly inherited nothing but debts and liabilities, and, having no income of her
The payment of widows allowance cannot be implemented at [the] present own, was now in a quandary on how these can be paid. She asked the Court to consider that she
because the estate of Sy Bang the source from which payment is to be had not disobeyed its Resolution and to consider her motion.
taken has not been determined with finality. Other petitioners, Iluminada, Zenaida and Ma. Emma, also filed a Motion for
Reconsideration with Prayer for Clarification. [54] They stressed that the P1 million and the piece of
III land Rosita had already received from Jose Sy Bang in 1996 should form part of the widows
The Order of the trial court purporting to enforce payment of widows allowance. They also argued that whatever allowance Rosita may be entitled to should come
allowance unduly modified the express terms of this Honorable Courts from the estate of Sy Bang. They further argued the unfairness of being made to pay the
Resolution granting it.[45] allowance when none of them participated in the management of Sy Bangs estate; Zenaida and
Ma. Emma being minors at the time of his death, while Iluminada and Rosa had no significant
role in the family business.
Petitioners, likewise, question the Guardianship courts omission of the phrase to be taken from
the estate of Sy Bang from the July 8, 1997 Order. They interpreted this to mean that the Respondents then filed a Motion for Issuance of Order Requiring Respondents to Deposit with the
Guardianship court was ordering that the widows allowance be taken from their own properties Supreme Courts Cashier its Ordered Widows Allowance [55] and a Motion for Execution of
and not from the estate of Sy Bang an undue modification of this Courts September 23, 1996 Resolution dated April 4, 2005.[56] Petitioners opposed the same.[57]
Resolution.[46]
On July 25, 2005, the Court issued a Resolution granting both of respondents motions and
On January 21, 2002, the Court resolved to consolidate G.R. No. 114217 and G.R. No. 150797. denying petitioners motion for reconsideration. [58]
The parties submitted their respective Memoranda on May 21, 2003 and June 19, 2003, both of
which were noted by this Court in its August 11, 2003 Resolution. Petitioners Iluminada, Zenaida and Ma. Emma filed, on August 15, 2005, a Manifestation of
Compliance and Motion for Clarification. [59] They maintained that the issues they had raised in
Pending the issuance of this Courts Decision in the two cases, respondent Rosauro Sy filed, on the motion for reconsideration had not been duly resolved. They argued that when this Court
November 11, 2003, a Motion to Order Deposit in Court of Supreme Courts Ordered Widows issued its September 23, 1996 Resolution, it was not yet aware that Rosita had executed
Allowance Effective September 23, 1996 and Upon Failure of Petitioners Julian Sy, et al. to a Sinumpaang Salaysay, wherein she waived her claims and causes of action against
Comply Therewith to Order Their Imprisonment Until Compliance. He alleged that his mother had petitioners. They also informed this Court that, on April 17, 1998, the Guardianship court had
been ill and had no means to support herself except through his financial assistance, and that issued an Order which recognized a temporary agreement based on the voluntary offer of Jose
respondents had not complied with this Courts September 23, 1996 Resolution, promulgated Sy Bang of a financial assistance of P5,000.00 per month to Rosita while the case was
seven years earlier.[47] He argued that respondents defiance constituted indirect contempt of pending. Moreover, as a manifestation of good faith, petitioners Iluminada, Zenaida and Ma.
court. That the Guardianship court had found them guilty of indirect contempt did not help his Emma paid the P430,000.00 out of their own funds in partial compliance with the Courts
mother because she was still unable to collect her widows allowance. [48] Resolution. However, the same did not in any way constitute a waiver of their rights or defenses
in the present case. They underscored the fact that the allowance must come from the estate of
Petitioners opposed said Motion arguing that the estate from which the widows allowance is to Sy Bang, and not from Jose Sy Bang or any of the latters heirs, the extent of which remained
be taken has not been settled. They also reiterated that Rosita, together with son Enrique, had undetermined. They further asked the Court to adjudicate the liability for the widows allowance
executed a Sinumpaang Salaysay waiving all claims against petitioners. Hence, there was no to be equally divided between them and the other set of petitioners, the heirs of Julian Sy.
legal ground to cite them in contempt.[49]
On August 30, 2005, respondents filed a motion asking this Court to issue an Order for the
On April 4, 2005, this Court granted Rosauros Motion, to wit: immediate incarceration of petitioners for refusing to comply with the Courts resolution. [60] They
aver that the period within which petitioners were to comply with the Courts Resolution had now
lapsed, and thus, petitioners must now be incarcerated for failure to abide by said
WHEREFORE, the Court finds and so holds Resolution. They likewise asked the Court to refer petitioners counsel, Atty. Vicente M. Joyas, to
petitioner Iluminada Tan (widow of deceased petitioner Jose Sy Bang), the Integrated Bar of the Philippines (IBP) for violations of the Canons of Professional
their children and co-petitioners Zenaida Sy, Ma. Emma Sy, Julian Sy and Responsibility or to declare him in contempt of court. They alleged that despite the finality of the
the latters wife Rosa Tan, GUILTY of contempt of this Court and are Courts denial of petitioners motion for reconsideration, Atty. Joyas still filed a Manifestation with
collectively sentenced to pay a FINE equivalent to ten (10%) percent of the compliance arguing the same points. Further, Atty. Joyas is not petitioners counsel of record in
total amount due and unpaid to Rosita Ferrera-Sy by way of a widows this case since he never formally entered his appearance before the Court. [61]
allowance pursuant to this Courts Resolution of September 13, 1996, and
accordingly ORDERS their immediate imprisonment until they shall have In a Resolution dated September 14, 2005, the Court denied the motion to refer Atty. Joyas to the
complied with said Resolution by paying Rosita Ferrera-Sy the amount of IBP for being a wrong remedy.[62]
TWO MILLION SIX HUNDRED THOUSAND ONE HUNDRED PESOS
(P2,600,100.00), representing her total accumulated unpaid widows Petitioners Iluminada, Zenaida and Ma. Emma then filed an Omnibus Motion, [63] seeking an
allowance from September, 1996 to April, 2005 at the rate of TWENTY-FIVE extension of time to comply with the Courts Resolution and Motion to delete the penalty of fine
THOUSAND PESOS (P25,000.00) a month, plus six (6%) percent interest as a consequence of voluntary compliance. They insist that their compliance with the order to
thereon. The Court further DIRECTS petitioners to faithfully pay Rosita pay the widows allowance should obliterate, expunge, and blot out the penalty of fine and
Ferrera-Sy her monthly widows allowance for the succeeding months as imprisonment. They alleged that for their failure to comply with this Courts Resolution, the
they fall due, under pain of imprisonment. RTC, Lucena City, found them guilty of indirect contempt and imposed on them a fine
of P30,000.00. They had appealed said order to the CA.
This Resolution is immediately EXECUTORY.
They also tried to make a case out of the use of the terms joint and several in the September 23
SO ORDERED.[50] Resolution, and collectively in the April 5, 2005 Resolution. They argued that joint and several
creates individual liability for each of the parties for the full amount of the obligation, while
collectively means that all members of the group are responsible together for the action of the
group. Hence, collectively would mean that the liability belongs equally to the two groups of that respondents Rolando, Maria Lourdes, Florecita, Rosalino, Enrique, and Rosita Ferrera-Sy
petitioners. They requested for an additional 60 days to raise the necessary amount. They also have executed separate waivers and quitclaims over their shares in the estate of Sy Bang for
asked the Court to hold their imprisonment in abeyance until their just and reasonable certain considerations. However, out of respect for the Court and their fear of incarceration, they
compliance with the Courts orders. complied with the Courts orders using their personal funds which they claim is unfair because
they have never participated in the management of the properties of Sy Bang. They prayed that
Barely a month later, petitioners, through their new counsel, filed another Manifestation the Court pronounce that the liability for the widows allowance be divided proportionately
stressing that Sy Bangs marriage to Rosita Ferrera is void. They claimed that respondents have among the following groups: Iluminada, Zenaida, and Ma. Emma; Rosa Tan; Rosalino Sy and wife
falsified documents to lead the courts into believing that Rositas marriage to Sy Bang is valid. Helen Loo; Bartolome Sy and wife Virginia Lim; Rolando Sy and wife Anacorita Rioflorido; and the
heirs of Enrique Sy, namely, Elaine Destura and Edwin Maceda.
The Omnibus Motion was denied in a Resolution dated October 17, 2005. Thereafter,
respondents filed a Motion to Immediately Order Incarceration of Petitioners, [64] which petitioners On March 23, 2006, petitioners filed an Urgent Reply to respondents Comment on the
opposed.[65] manifestation of compliance with Opposition [74] to the motion filed by respondents for the Court
to reiterate its order for the NBI to arrest petitioners for failure to comply with the February 15,
In a Resolution dated December 12, 2005,[66] the Court issued a Warrant of Arrest[67] against 2006 Resolution. They argued that they had fully complied with the Courts orders. They alleged
petitioners and directed the National Bureau of Investigation (NBI) to detain them until they that on three occasions within the period, they had tried to submit 12 postdated checks to the
complied with this Courts April 4, 2005 and July 25, 2005 Resolutions. Courts cashiers, but the same were refused due to the policy of the Court not to issue receipts
on postdated checks. They then filed a motion before the RTC of Lucena City praying for
Petitioner Rosa Tan filed a Manifestation with Motion. [68] She informed the Court that, to show authority to deposit the checks with the trial court. The motion was denied but, on
that she was not obstinate and contumacious of the Court and its orders, she had begged and reconsideration, was later granted. The checks are now in the custody of the RTC. The only issue
pleaded with her relatives to raise money to comply, but concedes that she was only able to respondents raise, they claim, is the amount of the checks. Hence, there is no basis for the Court
raise a minimal amount since she has no source of income herself and needs financial support to to direct the NBI to effect their arrest.
buy her food and medicines. She obtained her brothers help and the latter issued six checks in
the total amount of P650,000.00. She also alleged that she was not informed by her husbands The Court, in a Resolution dated March 29, 2006, required respondents to comment on the
counsel of the developments in the case, and remained unconsulted on any of the matters or motion to include some of them in the payment of widows allowance. Petitioners, on the other
incidents of the case. She reiterated that she had no participation in the management of the Sy hand, were required to comment on a motion filed by respondents for the Court to reiterate its
Bang estate and received nothing of value upon her husbands death. She prayed that the Court order to the NBI to arrest petitioners for failure to comply with the February 15, 2006 Resolution.
would not consider her failure to raise any further amount as contempt or defiance of its orders. [75]

The motion was denied in a Resolution dated January 16, 2006. Petitioners filed their Comment with Motion for Partial Reconsideration of the March
29, 2006 Resolution.[76] They reiterated their arguments in their Urgent Reply to respondents
In an Urgent Manifestation of Compliance with the Contempt Resolutions with Payment of Comment on the manifestation of compliance with Opposition. They further alleged that there is
Widows Allowance with Prayer Reiterating the Lifting of Warrant of Arrest on Humanitarian now a Resolution by the Regional State Prosecutor, Region IV, San Pablo City, finding probable
Grounds,[69] petitioners Iluminada, Zenaida and Ma. Emma asked the Court to delete the penalty cause to charge respondents with falsification of three marriage contracts between Sy Bang and
of indefinite imprisonment considering their partial compliance and the partial compliance of Rosita Ferrera. According to them, this development now constitutes a highly prejudicial question
Rosa Tan. They expressed willingness to deposit the widows allowance with the Supreme Courts on whether they should comply with the order to pay widows allowance. They claim that, while
Cashier pending the determination of Sy Bangs estate. They reasoned that the money to be the filing of the information is merely the first step in the criminal prosecution of respondents, it
deposited is their own and does not belong to Sy Bangs estate. The deposit is made for the sole already casts doubt on whether Rosita is legally entitled to the widows allowance. They now seek
purpose of deleting the penalty of indefinite imprisonment. They claim that they are not willfully partial reconsideration of the Resolution inasmuch as it requires them to deposit with the Clerk
disobeying the Courts order but are merely hesitating to comply because of pending incidents of Court, RTC of Lucena City, Branch 58, new checks payable to Rosita Ferrera.
such as the falsification charges against Rosita, the resolution of the partition case, the
Sinumpaang Salaysay executed by Rosita, and the pendency of Rositas guardianship Respondents, on the other hand, filed a Comment and Manifestation [77] on why they should not
proceedings, as well as humanitarian considerations. Thus, they prayed for the Court to be made to pay the widows allowance. They argued that the RTC had already decided that the
reconsider the order of contempt and to recall the warrant of arrest. estate of Sy Bang was comprised of properties in the names of Jose Sy Bang, Iluminada Tan,
Zenaida, Ma. Emma, Julian Sy, and Rosa Tan, and the same was affirmed by the CA. Pending the
On February 15, 2006, this Court issued a Resolution [70] lifting the warrant of arrest on petitioners resolution of the appeal before this Court, this Decision stands. Thus, petitioners claim that the
Iluminada, Zenaida, Ma. Emma, and Rosa Tan on the condition that they issue the corresponding estate of Sy Bang is yet undetermined is false. They also claim that, contrary to petitioners
checks to settle the accrued widows allowance of Rosita Ferrera-Sy. They were also directed to claims of being poor, they still hold enormous properties of the Sy Bang estate, which had been
submit proof of their compliance to the Court within ten (10) days from notice. transferred in their names through falsification of public documents, now subject of several
cases which respondents filed against them before the Department of Justice (DOJ). Respondents
In a Manifestation[71] dated February 28, 2006, petitioners Iluminada, Zenaida and Ma. Emma further claim that the validity of their mothers marriage to Sy Bang has been recognized by the
informed the Court that they had deposited the checks in favor of Rosita with the courts in several cases where the issue had been raised, including the case for recognition of
RTC, Lucena City, Branch 58, during the proceedings on February 28, 2006.[72] Rositas Filipino citizenship, the guardianship proceedings, and the partition proceedings.

Respondents filed a Comment to the Manifestation arguing that the deposit of said checks, On June 23, 2006, respondents filed a Motion for Substitution of Parties. [78] They averred that Jose
amounting to P1,073,053.00, does not amount to full compliance with the Courts order Sy Bang died on September 11, 2001, leaving behind his widow Iluminada and 14 children, while
considering that the accrued widows allowance now amounted to P4,528,125.00. Julian Sy died on August 28, 2004, leaving behind his widow Rosa and eight children. The claims
against Jose and Julian were not extinguished by their deaths. It was the duty of petitioners
Then, petitioners Iluminada, Zenaida and Ma. Emma filed a Motion to include Rosalino Sy, counsel, under Rule 3, Section 16 of the Rules of Court, to inform the Court of these deaths
Bartolome Sy, Rolando Sy, and Heirs of Enrique Sy as Likewise Liable for the Payment of Widows within 30 days thereof. Petitioners counsel failed to so inform this Court, which should be a
Allowance as Heirs of Sy Bang as they may also hold Assets-Properties of the Estate of Sy Bang. ground for disciplinary action. Hence, respondents prayed that the Court order the heirs of the
[73]
They argued that it is denial of the equal protection clause for the Court to single out only the two deceased to appear and be substituted in these cases within 30 days from notice.
two children of the first marriage Jose Sy Bang and Julian Sy and their heirs, as the ones
responsible for the widows allowance. This ruling, they aver, does not take into consideration the In a Resolution[79] dated July 5, 2006, the Court granted the motion for substitution and noted the
numerous and valuable properties from the estate of Sy Bang being held in the names of Comment and Manifestation on the Motion to include Rosalino Sy, Bartolome Sy, Rolando Sy,
Rosalino, Bartolome, Rolando, and Enrique. They alleged that two compromise agreements, both and Heirs of Enrique Sy as Likewise Liable for the Payment of Widows Allowance as Heirs of Sy
approved by the trial court, transferred properties to Rolando and Renato. They further alleged Bang.
Petitioners, although sued collectively, each held a separate and separable interest in
Respondents then filed a Manifestation and Motion to Implement the Supreme Courts the properties of the Sy Bang estate.
Resolutions of September 23, 1996, April 4, 2005, July 25, 2005, December 12, 2005, and
February 15, 2006.[80] They prayed that petitioners be given a last period of five days within The pronouncement as to the obligation of one or some petitioners did not affect the
which to deposit with the Supreme Court Cashier all the accrued widows allowances as of June determination of the obligations of the others. That the properties in the names of petitioners
2006. were found to be part of the Sy Bang estate did not preclude any further findings or judgment on
the status or nature of the properties in the names of the other heirs.
Petitioners Iluminada, Zenaida and Ma. Emma opposed respondents manifestation and motion.
[81]
They argued that the resolutions sought to be implemented were all issued prior to the DOJ The trial courts June 2, 1982 Order reads:
Resolution finding probable cause to file the falsification charges against respondents. They
contended that the criminal cases for falsification expose Rosita as a mere common-law wife and
not a widow; hence, there is no legal justification to give her the widows allowance. They also IN view of the importance of the issue concerning whether all the properties
reiterated their earlier arguments against the grant of widows allowance. in the name (sic) of Enrique Sy, Bartolome Sy, Rosalino Sy and Rolando Sy
and/or their respective wives (as well as those in the names of the other
Meanwhile, Rosa Tan filed a Comment on the Substitution of Parties with Motion for parties litigants in this case), (sic) shall be declared or included as part of
Reconsideration.[82] She argued that since the trial court had already appointed a judicial the Estate of Sy Bang, and in view of the numerous documentary evidences
administrator for the estate of Sy Bang, which includes Julian Sys estate, the proper party to be (sic) presented by Attys. Raya and Camaligan after the said question was
substituted should be the administrator and not Julians heirs who never exercised ownership agreed to be submitted for resolution on May 26, 1982, the Court hereby
rights over the properties thereof. sets for the reception or for the resolution of said issue in this case on June 8
and 9, 1982, both at 2:00 oclock in the afternoon; notify all parties litigants
The Court denied the motion for reconsideration to the Resolution granting substitution of in this case of these settings.[85]
parties for lack of merit on November 20, 2006.

The Courts Ruling It is obvious from the trial courts order [86] that the June 8, 1982 hearing is for the
purpose of determining whether properties in the names of Enrique Sy, Bartolome Sy, Rosalino
G.R. No. 114217 Sy, and Rolando Sy and/or their respective wives are also part of the Sy Bang estate.

Finding no reversible error therein, we affirm the CA Decision. Hence, in the assailed Decision, the trial court said:

The Third Partial Decision of the RTC


[I]n fact, the Court will require further evidence for or against any of the
To review, the CA held, to wit: parties in this case in the matter of whatever sums of money, property or
asset belonging to the estate of Sy Bang that came into their possession in
order that the Court may be properly guided in the partition and
The respondent Judge acted correctly inasmuch as his decision to adjudication of the rightful share and interest of the heirs of Sy Bang over
defer the resolution on the question concerning the properties in the name the latters estate; this becomes imperative in view of new matters shown in
of Rosalino, Bartolome, Rolando and Enrique, all surnamed Sy, will not the Submission and Formal Offer of Reserve Exhibits and the Offer of
necessarily affect the decision he rendered concerning the properties in the Additional Documentary Evidence filed respectively by Oscar Sy and Jose Sy
names of Jose Sy Bang and wife, Julian Sy and wife, Zenaida Sy and Maria Bang, et al., thru their respective counsels after the question of whether or
Sy, considering that the properties mentioned were separable and distinct not the properties in the names of Enrique, Bartolome, Rosalino, and
from each other, such that the claim that said properties were not their own, Rolando, all surnamed Sy, should form part or be included as part of the
but properties of the late Sy Bang, could have been the subject of separate estate of Sy Bang, had been submitted for resolution as of May 26, 1982;
suits.[83] the Court deems it proper to receive additional evidence on the part of any
of the parties litigants in this case if only to determine the true extent of the
estate belonging to Sy Bang.[87]
We agree with the CA.

Section 4, Rule 36 of the Revised Rules on Civil Procedure states: The trial court painstakingly examined the evidence on record and narrated the
details, then carefully laid out the particulars in the assailed Decision. The evidence that formed
the basis for the trial courts conclusion is embodied in the Decision itself evidence presented by
SEC. 4. Several judgments. In an action against several the parties themselves, including petitioners.
defendants, the court may, when a several judgment is proper, render
judgment against one or more of them, leaving the action to proceed However, notwithstanding the trial courts pronouncement, the Sy Bang estate cannot
against the others. be partitioned or distributed until the final determination of the extent of the estate and only
until it is shown that the obligations under Rule 90, Section 1,[88] have been settled.[89]

The trial courts Third Partial Decision is in the nature of a several judgment as In the settlement of estate proceedings, the distribution of the estate properties can
contemplated by the rule quoted above. The trial court ruled on the status of the properties in only be made: (1) after all the debts, funeral charges, expenses of administration, allowance to
the names of petitioners (defendants below) while deferring the ruling on the properties in the the widow, and estate tax have been paid; or (2) before payment of said obligations only if the
names of respondents pending the presentation of evidence. distributees or any of them gives a bond in a sum fixed by the court conditioned upon the
payment of said obligations within such time as the court directs, or when provision is made to
A several judgment is proper when the liability of each party is clearly separable and meet those obligations.[90]
distinct from that of his co-parties, such that the claims against each of them could have been
the subject of separate suits, and judgment for or against one of them will not necessarily affect Settling the issue of ownership is the first stage in an action for partition. [91] As this
the other.[84] Court has ruled:
The issue of ownership or co-ownership, to be more precise, must first be SEC. 77. Cancellation of lis pendens. Before final judgment,
resolved in order to effect a partition of properties. This should be done in a notice of lis pendens may be cancelled upon order of the court, after
the action for partition itself. As held in the case of Catapusan v. Court of proper showing that the notice is for the purpose of molesting the
Appeals: adverse party, or that it is not necessary to protect the rights of the
party who caused it to be registered. It may also be cancelled by the
Register of Deeds upon verified petition of the party who caused the
In actions for partition, the court cannot registration thereof.
properly issue an order to divide the property, unless it
first makes a determination as to the existence of co- At any time after final judgment in favor of the defendant, or
ownership. The court must initially settle the issue of other disposition of the action such as to terminate finally all rights of
ownership, the first stage in an action for partition. the plaintiff in and to the land and/or buildings involved, in any case in
Needless to state, an action for partition will not lie if which a memorandum or notice of lis pendens has been registered as
the claimant has no rightful interest over the subject provided in the preceding section, the notice of lis pendens shall be
property. In fact, Section 1 of Rule 69 requires the party deemed cancelled upon the registration of certificate of the clerk of
filing the action to state in his complaint the nature and court in which the action or proceeding was pending stating the manner
extent of his title to the real estate. Until and unless the of disposal thereof.
issue of ownership is definitely resolved, it would be
premature to effect a partition of the properties x x x. [92]
The filing of a notice of lis pendens has a two-fold effect: (1) to keep the subject
matter of the litigation within the power of the court until the entry of the final judgment in order
Moreover, the Third Partial Decision does not have the effect of terminating the to prevent the final judgment from being defeated by successive alienations; and (2) to bind a
proceedings for partition. By its very nature, the Third Partial Decision is but a determination purchaser, bona fide or not, of the land subject of the litigation to the judgment or decree that
based on the evidence presented thus far. There remained issues to be resolved by the court. the court will promulgate subsequently.[95]
There would be no final determination of the extent of the Sy Bang estate until the courts
examination of the properties in the names of Rosalino, Bartolome, Rolando, and Enrique. Based While the trial court has an inherent power to cancel a notice of lis pendens, such
on the evidence presented, the trial court will have to make a pronouncement whether the power is to be exercised within the express confines of the law. As provided in Section 14, Rule
properties in the names of Rosalino, Bartolome, Rolando, and Enrique indeed belong to the Sy 13 of the 1997 Rules of Civil Procedure, a notice of lis pendens may be cancelled on two
Bang estate. Only after the full extent of the Sy Bang estate has been determined can the trial grounds: (1) when the annotation was for the purpose of molesting the title of the adverse party,
court finally order the partition of each of the heirs share. or (2) when the annotation is not necessary to protect the title of the party who caused it to be
recorded.[96]
Appointment of Receiver
This Court has interpreted the notice as:
As to the issue of the judges appointment of a receiver, suffice it to say that the CA The notice is but an incident in an action, an extrajudicial one, to be sure. It
conclusively found thus: does not affect the merits thereof. It is intended merely to constructively
advise, or warn, all people who deal with the property that they so deal with
it at their own risk, and whatever rights they may acquire in the property in
The records show that the petitioners were never deprived of their any voluntary transaction are subject to the results of the action, and may
day in court. Upon Order of the respondent Judge, counsel for the well be inferior and subordinate to those which may be finally determined
petitioners submitted their opposition to [the] petition for appointment of a and laid down therein. The cancellation of such a precautionary notice is
receiver filed by private respondents. x x x. therefore also a mere incident in the action, and may be ordered by the
Court having jurisdiction of it at any given time. And its continuance or
Moreover, evidence on record shows that respondent Judge removallike
the continuance or removal of a preliminary attachment of
appointed the receiver after both parties have presented their evidence and injunctionis not contingent on the existence of a final judgment in the
after the Third Partial Decision has been promulgated. Such appointment action, and ordinarily has no effect on the merits thereof.[97]
was made upon verified petition of herein private respondents, alleging that
petitioners are mismanaging the properties in litigation by either
mortgaging or disposing the same, hence, the said properties are in danger The CA found, and we affirm, that Rosalino, Bartolome and Rolando were able to prove
of being lost, wasted, dissipated, misused, or disposed of. The respondent that the notice was intended merely to molest and harass the owners of the property, some of
Judge acted correctly in granting the appointment of a receiver in Civil Case whom were not parties to the case. It was also proven that the interest of Oscar Sy, who caused
No. 8578, in order to preserve the properties in litis pendentia and neither the notice to be annotated, was only 1/14 of the assessed value of the property. Moreover,
did he abuse his discretion nor acted arbitrarily in doing s. On the contrary, Rosalino, Bartolome and Rolando were ordered to post a P50,000.00 bond to protect whatever
We find that it was the petitioners who violated the status quo sought to be rights or interest Oscar Sy may have in the properties under litis pendentia.[98]
maintained by the Supreme Court, in G.R. No. 61519, by their intrusion and
unwarranted seizures of the 3 theaters, subject matter of the litigation, and G.R. No. 150797
which are admittedly under the exclusive management and operation of
private respondent, Rosauro Sy.[93] In G.R. No. 150797, petitioners are asking this Court to reverse the CAs February 28,
2001 Decision and its Resolution denying the Motion for Reconsideration, and to declare the
Guardianship court to have exceeded its jurisdiction in directing the deposit of the widows
Cancellation of Notice of Lis Pendens allowance in Special Proceedings No. 96-34.

Next, petitioners question the trial courts Order canceling the notice of lis pendens.[94] We find merit in petitioners contention.

Section 77 of Presidential Decree No. 1529, or the Property Registration Decree, The court hearing the petition for guardianship had limited jurisdiction. It had no
provides: jurisdiction to enforce payment of the widows allowance ordered by this Court.
This argument deserves scant consideration.
Reviewing the antecedents, we note that the claim for widows allowance was made
before the Supreme Court in a case that did not arise from the guardianship proceedings. The A finding of probable cause does not conclusively prove the charge of falsification
case subject of the Supreme Court petition (Civil Case No. 8578) is still pending before the RTC against respondents.
of Lucena City.
In a preliminary investigation, probable cause has been defined as the existence of
Rule 83, Sec. 3, of the Rules of Court states: such facts and circumstances as would excite the belief, in a reasonable mind, acting on the
facts within the knowledge of the prosecutor, that the person charged was guilty of the crime for
which he was prosecuted. It is well-settled that a finding of probable cause needs to rest only
SEC. 3. Allowance to widow and family. The widow and minor or on evidence showing that more likely than not a crime has been committed and was
incapacitated children of a deceased person, during the settlement of the committed by the suspects. Probable cause need not be based on clear and convincing
estate, shall receive therefrom, under the direction of the court, such evidence of guilt, neither on evidence establishing guilt beyond reasonable doubt, and
allowance as are provided by law. definitely not on evidence establishing absolute certainty of guilt.[102]

Correlatively, Article 188 of the Civil Code states: Hence, until the marriage is finally declared void by the court, the same is presumed
valid and Rosita is entitled to receive her widows allowance to be taken from the estate of Sy
Art. 188. From the common mass of property support shall be Bang.
given to the surviving spouse and to the children during the liquidation of
the inventoried property and until what belongs to them is delivered; but We remind petitioners again that they are duty-bound to comply with whatever the
from this shall be deducted that amount received for support which exceeds courts, in relation to the properties under litigation, may order.
the fruits or rents pertaining to them.
Motion to Include Rosalino Sy, Bartolome Sy, Rolando Sy, and Heirs of Enrique Sy as
Obviously, the court referred to in Rule 83, Sec. 3, of the Rules of Court is the court Likewise Liable for the Payment of Widows Allowance as Heirs of Sy Bang
hearing the settlement of the estate. Also crystal clear is the provision of the law that the
widows allowance is to be taken from the common mass of property forming part of the estate of
the decedent. On March 14, 2006, petitioners filed a Motion to include Rosalino Sy, Bartolome Sy,
Rolando Sy, and Heirs of Enrique Sy as Likewise Liable for the Payment of Widows Allowance as
Thus, as evident from the foregoing provisions, it is the court hearing the settlement Heirs of Sy Bang.
of the estate that should effect the payment of widows allowance considering that the properties
of the estate are within its jurisdiction, to the exclusion of all other courts. [99] The Motion is denied.

In emphasizing the limited jurisdiction of the guardianship court, this Court has The widows allowance, as discussed above, is chargeable to Sy Bangs estate. It must
pronounced that: be stressed that the issue of whether the properties in the names of Rosalino, Bartolome,
Rolando, and Enrique Sy form part of Sy Bangs estate remains unsettled since this Petition
questioning the trial courts Third Partial Decision has been pending. On the other hand, there
Generally, the guardianship court exercising special and limited jurisdiction has been a categorical pronouncement that petitioners are holding properties belonging to Sy
cannot actually order the delivery of the property of the ward found to be Bangs estate.
embezzled, concealed, or conveyed. In a categorical language of this Court,
only in extreme cases, where property clearly belongs to the ward or where That the full extent of Sy Bangs estate has not yet been determined is no excuse from
his title thereto has been already judicially decided, may the court direct its complying with this Courts order. Properties of the estate have been identified i.e., those in the
delivery to the guardian. In effect, there can only be delivery or return of the names of petitioners thus, these properties should be made to answer for the widows allowance
embezzled, concealed or conveyed property of the ward, where the right or of Rosita. In any case, the amount Rosita receives for support, which exceeds the fruits or rents
title of said ward is clear and undisputable. However, where title to any pertaining to her, will be deducted from her share of the estate. [103]
property said to be embezzled, concealed or conveyed is in dispute, x x x
the determination of said title or right whether in favor of the persons said A Final Note
to have embezzled, concealed or conveyed the property must be
determined in a separate ordinary action and not in a guardianship We are appalled by the delay in the disposition of this case brought about by
proceedings.[100] petitioners propensity to challenge the Courts every directive. That the petitioners would go to
extreme lengths to evade complying with their duties under the law and the orders of this Court
is truly deplorable. Not even a citation for contempt and the threat of imprisonment seemed to
Further, this Court has held that the distribution of the residue of the estate of the deter them. Their contumacious attitude and actions have dragged this case for far too long with
deceased incompetent is a function pertaining properly, not to the guardianship proceedings, practically no end in sight. Their abuse of legal and court processes is shameful, and they must
but to another proceeding in which the heirs are at liberty to initiate. [101] not be allowed to continue with their atrocious behavior. Petitioners deserve to be sanctioned,
and ordered to pay the Court treble costs.
Other Unresolved Incidents
WHEREFORE, the foregoing premises considered, the Petition in G.R. No. 150797
Payment of Widows Allowance is GRANTED, while the Petition in G.R. No. 114217
is DENIED. The RegionalTrial Court of Lucena City is directed to hear and decide Civil Case No.
It has been 13 years since this Court ordered petitioners to pay Rosita Ferrera-Sy her 8578 with dispatch. The Motion to include Rosalino Sy, Bartolome Sy, Rolando Sy, and Heirs of
monthly widows allowance. Petitioners Iluminada, Zenaida and Ma. Emma have since fought Enrique Sy as Likewise Liable for the Payment of Widows Allowance as Heirs of Sy Bang
tooth and nail against paying the said allowance, grudgingly complying only upon threat of is DENIED. Treble costs against petitioners.
incarceration. Then, they again argued against the grant of widows allowance after the DOJ
issued its Resolution finding probable cause in the falsification charges against
respondents. They contended that the criminal cases for falsification proved that Rosita is a
mere common-law wife and not a widow and, therefore, not entitled to widows allowance. G.R. No. 151243 April 30, 2008
LOLITA R. ALAMAYRI, petitioner, still, [Fernando] cannot sue in representation of the corporation there being no
vs. evidence to show that he was duly authorized to do so.
ROMMEL, ELMER, ERWIN, ROILER and AMANDA, all surnamed PABALE, respondents.

Subsequently, [the Pabale siblings] filed a Motion to Intervene alleging that they are
DECISION now the land owners of the subject property. Thus, the complaint was amended to
include [the Pabale siblings] as party defendants. In an Order dated April 24, 1984, the
trial court denied [Naves] Motion to Dismiss prompting her to file a Manifestation and
CHICO-NAZARIO, J.:
Motion stating that she was adopting the allegations in her Motion to Dismiss in
answer to [Fernandos] amended complaint.
Before this Court is a Petition for Review on Certiorari 1 under Rule 45 of the Rules of Court filed
by petitioner Lolita R. Alamayri (Alamayri) seeking the reversal and setting aside of the
Thereafter, [Nave] filed a Motion to Admit her Amended Answer with Counterclaim and
Decision,2 dated 10 April 2001, of the Court of Appeals in CA-G.R. CV No. 58133; as well as the
Cross-claim praying that her husband, Atty. Vedasto Gesmundo be impleaded as her
Resolution,3 dated 19 December 2001 of the same court denying reconsideration of its
co-defendant, and including as her defense undue influence and fraud by reason of
aforementioned Decision. The Court of Appeals, in its assailed Decision, upheld the validity of
the fact that she was made to appear as widow when in fact she was very much
the Deed of Absolute Sale, dated 20 February 1984, executed by Nelly S. Nave (Nave) in favor of
married at the time of the transaction in issue. Despite the opposition of [Fernando]
siblings Rommel, Elmer, Erwin, Roiler and Amanda, all surnamed Pabale (the Pabale siblings)
and [the Pabale siblings], the trial court admitted the aforesaid Amended Answer with
over a piece of land (subject property) in Calamba, Laguna, covered by Transfer Certificate of
Counterclaim and Cross-claim.
Title (TCT) No. T-3317 (27604); and, thus, reversed and set aside the Decision, 4 dated 2
December 1997, of the Regional Trial Court (RTC) of Pasay City, Branch 119 in Civil Case No. 675-
84-C.5 The 2 December 1997 Decision of the RTC declared null and void the two sales Still unsatisfied with her defense, [Nave] and Atty. Vedasto Gesmundo filed a Motion to
agreements involving the subject property entered into by Nave with different parties, namely, Admit Second Amended Answer and Amended Reply and Cross-claim against [the
Sesinando M. Fernando (Fernando) and the Pabale siblings; and ordered the reconveyance of the Pabale siblings], this time including the fact of her incapacity to contract for being
subject property to Alamayri, as Naves successor-in-interest. mentally deficient based on the psychological evaluation report conducted on
December 2, 1985 by Dra. Virginia P. Panlasigui, M. A., a clinical psychologist. Finding
the motion unmeritorious, the same was denied by the court a quo.
There is no controversy as to the facts that gave rise to the present Petition, determined by the
Court of Appeals to be as follows:
[Nave] filed a motion for reconsideration thereof asseverating that in Criminal Case
No. 1308-85-C entitled "People vs. Nelly S. Nave" she raised therein as a defense her
This is a Complaint for Specific Performance with Damages filed by Sesinando M.
mental deficiency. This being a decisive factor to determine once and for all whether
Fernando, representing S.M. Fernando Realty Corporation [Fernando] on February 6,
the contract entered into by [Nave] with respect to the subject property is null and
1984 before the Regional Trial Court of Calamba, Laguna presided over by Judge
void, the Second Amended Answer and Amended Reply and Cross-claim against [the
Salvador P. de Guzman, Jr., docketed as Civil Case No. 675-84-C against Nelly S. Nave
Pabale siblings] should be admitted.
[Nave], owner of a parcel of land located in Calamba, Laguna covered by TCT No. T-
3317 (27604). [Fernando] alleged that on January 3, 1984, a handwritten "Kasunduan
Sa Pagbibilihan" (Contract to Sell) was entered into by and between him and [Nave] Before the motion for reconsideration could be acted upon, the proceedings in this
involving said parcel of land. However, [Nave] reneged on their agreement when the case was suspended sometime in 1987 in view of the filing of a Petition for
latter refused to accept the partial down payment he tendered to her as previously Guardianship of [Nave] with the Regional Trial Court, Branch 36 of Calamba, Laguna,
agreed because she did not want to sell her property to him anymore. [Fernando] docketed as SP No. 146-86-C with Atty. Vedasto Gesmundo as the petitioner. On June
prayed that after trial on the merits, [Nave] be ordered to execute the corresponding 22, 1988, a Decision was rendered in the said guardianship proceedings, the
Deed of Sale in his favor, and to pay attorneys fees, litigation expenses and damages. dispositive portion of which reads:

[Nave] filed a Motion to Dismiss averring that she could not be ordered to execute the "Under the circumstances, specially since Nelly S. Nave who now resides
corresponding Deed of Sale in favor of [Fernando] based on the following grounds: (1) with the Brosas spouses has categorically refused to be examined again at
she was not fully apprised of the nature of the piece of paper [Fernando] handed to the National Mental Hospital, the Court is constrained to accept the Neuro-
her for her signature on January 3, 1984. When she was informed that it was for the Psychiatric Evaluation report dated April 14, 1986 submitted by Dra. Nona
sale of her property in Calamba, Laguna covered by TCT No. T-3317 (27604), she Jean Alviso-Ramos and the supporting report dated April 20, 1987 submitted
immediately returned to [Fernando] the said piece of paper and at the same time by Dr. Eduardo T. Maaba, both of the National Mental Hospital and hereby
repudiating the same. Her repudiation was further bolstered by the fact that when finds Nelly S. Nave an incompetent within the purview of Rule 92 of the
[Fernando] tendered the partial down payment to her, she refused to receive the Revised Rules of Court, a person who, by reason of age, disease, weak mind
same; and (2) she already sold the property in good faith to Rommel, Elmer, Erwin, and deteriorating mental processes cannot without outside aid take care of
Roller and Amanda, all surnamed Pabale [the Pabale siblings] on February 20, 1984 herself and manage her properties, becoming thereby an easy prey for
after the complaint was filed against her but before she received a copy thereof. deceit and exploitation, said condition having become severe since the year
Moreover, she alleged that [Fernando] has no cause of action against her as he is 1980. She and her estate are hereby placed under guardianship. Atty.
suing for and in behalf of S.M. Fernando Realty Corporation who is not a party to the Leonardo C. Paner is hereby appointed as her regular guardian without need
alleged Contract to Sell. Even assuming that said entity is the real party in interest, of bond, until further orders from this Court. Upon his taking his oath of
office as regular guardian, Atty. Paner is ordered to participate actively in
the pending cases of Nelly S. Nave with the end in view of protecting her 4. Ordering the [Pabale siblings] to execute a transfer of title over the
interests from the prejudicial sales of her real properties, from the property in favor of Ms. Lolita P. [Alamayri] in the concept of reconveyance
overpayment in the foreclosure made by Ms. Gilda Mendoza-Ong, and in because the sale in their favor has been declared null and void;
recovering her lost jewelries and monies and other personal effects.

5. Ordering the [Pabale siblings] to surrender possession over the property


SO ORDERED." to Ms. [Alamayri] and to account for its income from the time they took over
possession to the time the same is turned over to Ms. Lolita [Alamayri], and
thereafter pay the said income to the latter;
Both [Fernando] and [the Pabale siblings] did not appeal therefrom, while the appeal
interposed by spouses Juliano and Evangelina Brosas was dismissed by this Court for
failure to pay the required docketing fees within the reglementary period. 6. Ordering [Fernando] and the [Pabale siblings], jointly and severally, to
pay Ms. [Alamayri]:

In the meantime, [Nave] died on December 9, 1992. On September 20, 1993, Atty.
Vedasto Gesmundo, [Naves] sole heir, she being an orphan and childless, executed an a. attorneys fees in the sum of P30,000.00; and
Affidavit of Self-Adjudication pertaining to his inherited properties from [Nave].

b. the costs.6
On account of such development, a motion for the dismissal of the instant case and
for the issuance of a writ of execution of the Decision dated June 22, 1988 in SP No.
S.M. Fernando Realty Corporation, still represented by Fernando, filed an appeal with the Court
146-86-C (petition for guardianship) was filed by Atty. Vedasto Gesmundo on February
of Appeals, docketed as CA-G.R. CV No. 58133, solely to question the portion of the 2 December
14, 1996 with the court a quo. [The Pabale siblings] filed their Opposition to the
1997 Decision of the RTC ordering him and the Pabale siblings to jointly and severally pay
motion on grounds that (1) they were not made a party to the guardianship
Alamayri the amount of P30,000.00 as attorneys fees.
proceedings and thus cannot be bound by the Decision therein; and (2) that the
validity of the Deed of Absolute Sale executed by the late [Nave] in their favor was
never raised in the guardianship case. The Pabale siblings intervened as appellants in CA-G.R. CV No. 58133 averring that the RTC erred
in declaring in its 2 December 1997 Decision that the Deed of Absolute Sale dated 20 February
1984 executed by Nave in their favor was null and void on the ground that Nave was found
The case was then set for an annual conference. On January 9, 1997, Atty. Vedasto
incompetent since the year 1980.
Gesmundo filed a motion seeking the courts permission for his substitution for the
late defendant Nelly in the instant case. Not long after the parties submitted their
respective pre-trial briefs, a motion for substitution was filed by Lolita R. Alamayre The Court of Appeals, in its Decision, dated 10 April 2001, granted the appeals of S.M. Fernando
(sic) [Alamayri] alleging that since the subject property was sold to her by Atty. Realty Corporation and the Pabale siblings. It ruled thus:
Vedasto Gesmundo as evidenced by a Deed of Absolute Sale, she should be
substituted in his stead. In refutation, Atty. Vedasto Gesmundo filed a Manifestation
WHEREFORE, premises considered, the appeal filed by S. M. Fernando Realty
stating that what he executed is a Deed of Donation and not a Deed of Absolute Sale
Corporation, represented by its President, Sesinando M. Fernando as well as the
in favor of [Alamayri] and that the same was already revoked by him on March 5,
appeal interposed by Rommel, Elmer, Erwin, Roller and Amanda, all surnamed Pabale,
1997. Thus, the motion for substitution should be denied.
are hereby GRANTED. The Decision of the Regional Trial Court of Pasay City, Branch
119 in Civil Case No. 675-84-C is hereby REVERSED and SET ASIDE and a new one
On July 29, 1997, the court a quo issued an Order declaring that it cannot make a rendered upholding the VALIDITY of the Deed of Absolute Sale dated February 20,
ruling as to the conflicting claims of [Alamayri] and Atty. Vedasto Gesmundo. After the 1984.
case was heard on the merits, the trial court rendered its Decision on December 2,
1997, the dispositive portion of which reads:
No pronouncements as to costs.7

"WHEREFORE, judgment is hereby rendered as follows:


Alamayri sought reconsideration of the afore-quoted Decision of the appellate court, invoking
the Decision,8 dated 22 June 1988, of the RTC in the guardianship proceedings, docketed as SP.
1. Declaring the handwritten Contract to Sell dated January 3, 1984 PROC. No. 146-86-C, which found Nave incompetent, her condition becoming severe since 1980;
executed by Nelly S. Nave and Sesinando Fernando null and void and of no and thus appointed Atty. Leonardo C. Paner as her guardian. Said Decision already became final
force and effect; and executory when no one appealed therefrom. Alamayri argued that since Nave was already
judicially determined to be an incompetent since 1980, then all contracts she subsequently
entered into should be declared null and void, including the Deed of Sale, dated 20 February
2. Declaring the Deed of Absolute Sale dated February 20, 1984 executed
1984, which she executed over the subject property in favor of the Pabale siblings.
by Nelly S. Nave in favor of the [Pabale siblings] similarly null and void and
of no force and effect;
According to Alamayri, the Pabale siblings should be bound by the findings of the RTC in its 22
June 1988 Decision in SP. PROC. No. 146-86-C, having participated in the said guardianship
3. Recognizing Ms. Lolita P. [Alamayri] as the owner of the property covered
proceedings through their father Jose Pabale. She pointed out that the RTC explicitly named in its
by TCT No. 111249 of the land records of Calamba, Laguna;
orders Jose Pabale as among those present during the hearings held on 30 October 1987 and 19
November 1987 in SP. PROC. No. 146-86-C. Alamayri thus filed on 21 November 2001 a Motion It is espoused in the Rules of Court, under paragraphs (b) and (c) of Section 47, Rule 39, which
to Schedule Hearing to Mark Exhibits in Evidence so she could mark and submit as evidence read:
certain documents to establish that the Pabale siblings are indeed the children of Jose Pabale.

SEC. 47. Effect of judgments or final orders. The effect of a judgment or final order
Atty. Gesmundo, Naves surviving spouse, likewise filed his own Motion for Reconsideration of rendered by a court of the Philippines, having jurisdiction to pronounce the judgment
the 10 April 2001 Decision of the Court of Appeals in CA-G.R. CV No. 58133, asserting Naves or final order, may be as follows:
incompetence since 1980 as found by the RTC in SP. PROC. No. 146-86-C, and his right to the
subject property as owner upon Naves death in accordance with the laws of succession. It must
xxxx
be remembered that Atty. Gesmundo disputed before the RTC the supposed transfer of his rights
to the subject property to Alamayri, but the court a quo refrained from ruling thereon.
(b) In other cases, the judgment or final order is, with respect to the matter directly
adjudged or as to any other matter that could have been raised in relation thereto,
In a Resolution, dated 19 December 2001, the Court of Appeals denied for lack of merit the
conclusive between the parties and their successors in interest by title subsequent to
Motions for Reconsideration of Alamayri and Atty. Gesmundo.
the commencement of the action or special proceeding, litigating the same thing and
under the same title and in the same capacity; and
Hence, Alamayri comes before this Court via the present Petition for Review on Certiorari under
Rule 45 of the Rules of Court, with the following assignment of errors:
(c) In any other litigation between the same parties or their successors in interest, that
only is deemed to have been adjudged in a former judgment or final order which
I appears upon its face to have been so adjudged, or which was actually and
necessarily included therein or necessary thereto.

THE COURT OF APPEALS ERRED IN HOLDING THAT THE FINDING THAT NELLY S. NAVE
WAS INCOMPETENT IN SPECIAL PROCEEDING NO. 146-86-C ON JUNE 22, 1988 CANNOT The doctrine of res judicata thus lays down two main rules which may be stated as follows: (1)
RETROACT TO AFFECT THE VALIDITY OF THE DEED OF SALE SHE EXECUTED ON The judgment or decree of a court of competent jurisdiction on the merits concludes the parties
FEBRUARY 20, 1984 IN FAVOR OF RESPONDENTS PABALES. and their privies to the litigation and constitutes a bar to a new action or suit involving the same
cause of action either before the same or any other tribunal; and (2) Any right, fact, or matter in
issue directly adjudicated or necessarily involved in the determination of an action before a
II
competent court in which a judgment or decree is rendered on the merits is conclusively settled
by the judgment therein and cannot again be litigated between the parties and their privies
THE COURT OF APPEALS ERRED IN HOLDING THAT THE DECISION IN SPECIAL whether or not the claims or demands, purposes, or subject matters of the two suits are the
PROCEEDING NO. 146-86-C DATED JUNE 22, 1988 IS NOT BINDING ON RESPONDENTS same. These two main rules mark the distinction between the principles governing the two
PABALES. typical cases in which a judgment may operate as evidence. 11 In speaking of these cases, the
first general rule above stated, and which corresponds to the afore-quoted paragraph (b) of
Section 47, Rule 39 of the Rules of Court, is referred to as "bar by former judgment"; while the
III
second general rule, which is embodied in paragraph (c) of the same section and rule, is known
as "conclusiveness of judgment."
THE COURT OF APPEALS ERRED IN DENYING PETITIONERS MOTION TO SCHEDULE
HEARING TO MARK DOCUMENTARY EXHIBITS IN EVIDENCE TO ESTABLISH THE
The Resolution of this Court in Calalang v. Register of Deeds provides the following enlightening
IDENTITY OF JOSE PABALE AS THE FATHER OF RESPONDENTS PABALES.9
discourse on conclusiveness of judgment:

It is Alamayris position that given the final and executory Decision, dated 22 June 1988, of the
The doctrine res judicata actually embraces two different concepts: (1) bar by former
RTC in SP. PROC. No. 146-86-C finding Nave incompetent since 1980, then the same fact may no
judgment and (b) conclusiveness of judgment.
longer be re-litigated in Civil Case No. 675-84-C, based on the doctrine of res judicata, more
particularly, the rule on conclusiveness of judgment.
The second concept conclusiveness of judgment states that a fact or question
which was in issue in a former suit and was there judicially passed upon and
This Court is not persuaded.
determined by a court of competent jurisdiction, is conclusively settled by the
judgment therein as far as the parties to that action and persons in privity with them
Res judicata literally means "a matter adjudged; a thing judicially acted upon or decided; a thing are concerned and cannot be again litigated in any future action between such parties
or matter settled by judgment." Res judicata lays the rule that an existing final judgment or or their privies, in the same court or any other court of concurrent jurisdiction on
decree rendered on the merits, and without fraud or collusion, by a court of competent either the same or different cause of action, while the judgment remains unreversed
jurisdiction, upon any matter within its jurisdiction, is conclusive of the rights of the parties or by proper authority. It has been held that in order that a judgment in one action can be
their privies, in all other actions or suits in the same or any other judicial tribunal of concurrent conclusive as to a particular matter in another action between the same parties or
jurisdiction on the points and matters in issue in the first suit.10 their privies, it is essential that the issue be identical. If a particular point or question
is in issue in the second action, and the judgment will depend on the determination of
that particular point or question, a former judgment between the same parties or their
privies will be final and conclusive in the second if that same point or question was in Contrary to Alamayris assertion, conclusiveness of judgment has no application to the instant
issue and adjudicated in the first suit (Nabus vs. Court of Appeals, 193 SCRA 732 Petition since there is no identity of parties and issues between SP. PROC. No. 146-86-C and Civil
[1991]). Identity of cause of action is not required but merely identity of issues. Case No. 675-84-C.

Justice Feliciano, in Smith Bell & Company (Phils.), Inc. vs. Court of Appeals (197 SCRA No identity of parties
201, 210 [1991]), reiterated Lopez vs. Reyes (76 SCRA 179 [1977]) in regard to the
distinction between bar by former judgment which bars the prosecution of a second
SP. PROC. No. 146-86-C was a petition filed with the RTC by Atty. Gesmundo for the appointment
action upon the same claim, demand, or cause of action, and conclusiveness of
of a guardian over the person and estate of his late wife Nave alleging her incompetence.
judgment which bars the relitigation of particular facts or issues in another litigation
between the same parties on a different claim or cause of action.
A guardian may be appointed by the RTC over the person and estate of a minor or an
incompetent, the latter being described as a person "suffering the penalty of civil interdiction or
The general rule precluding the relitigation of material facts or questions
who are hospitalized lepers, prodigals, deaf and dumb who are unable to read and write, those
which were in issue and adjudicated in former action are commonly applied
who are of unsound mind, even though they have lucid intervals, and persons not being of
to all matters essentially connected with the subject matter of the litigation.
unsound mind, but by reason of age, disease, weak mind, and other similar causes, cannot,
Thus, it extends to questions necessarily implied in the final judgment,
without outside aid, take care of themselves and manage their property, becoming thereby an
although no specific finding may have been made in reference thereto and
easy prey for deceit and exploitation."14
although such matters were directly referred to in the pleadings and were
not actually or formally presented. Under this rule, if the record of the
former trial shows that the judgment could not have been rendered without Rule 93 of the Rules of Court governs the proceedings for the appointment of a guardian, to wit:
deciding the particular matter, it will be considered as having settled that
matter as to all future actions between the parties and if a judgment
Rule 93
necessarily presupposes certain premises, they are as conclusive as the
judgment itself.12
APPOINTMENT OF GUARDIANS

Another case, Oropeza Marketing Corporation v. Allied Banking Corporation, further


differentiated between the two rules of res judicata, as follows: SECTION 1. Who may petition for appointment of guardian for resident. Any
relative, friend, or other person on behalf of a resident minor or incompetent who has
no parent or lawful guardian, or the minor himself if fourteen years of age or over,
There is "bar by prior judgment" when, as between the first case where the
may petition the court having jurisdiction for the appointment of a general guardian
judgment was rendered and the second case that is sought to be barred, there is
for the person or estate, or both, of such minor or incompetent. An officer of the
identity of parties, subject matter, and causes of action. In this instance, the
Federal Administration of the United States in the Philippines may also file a petition in
judgment in the first case constitutes an absolute bar to the second action. Otherwise
favor of a ward thereof, and the Director of Health, in favor of an insane person who
put, the judgment or decree of the court of competent jurisdiction on the merits
should be hospitalized, or in favor of an isolated leper.
concludes the litigation between the parties, as well as their privies, and constitutes a
bar to a new action or suit involving the same cause of action before the same or
other tribunal. SEC. 2. Contents of petition. A petition for the appointment of a general guardian
must show, so far as known to the petitioner:

But where there is identity of parties in the first and second cases, but no
identity of causes of action, the first judgment is conclusive only as to those (a) The jurisdictional facts;
matters actually and directly controverted and determined and not as to matters
merely involved therein. This is the concept of res judicata known
(b) The minority or incompetency rendering the appointment necessary or
as "conclusiveness of judgment." Stated differently, any right, fact, or matter in
convenient;
issue directly adjudicated or necessarily involved in the determination of an action
before a competent court in which judgment is rendered on the merits is conclusively
settled by the judgment therein and cannot again be litigated between the parties and (c) The names, ages, and residences of the relatives of the minor or
their privies whether or not the claim, demand, purpose, or subject matter of the two incompetent, and of the persons having him in their care;
actions is the same.13
(d) The probable value and character of his estate;
In sum, conclusiveness of judgment bars the re-litigation in a second case of a fact or question
already settled in a previous case. The second case, however, may still proceed provided that it
(e) The name of the person for whom letters of guardianship are prayed.
will no longer touch on the same fact or question adjudged in the first case. Conclusiveness of
judgment requires only the identity of issues and parties, but not of causes of action.
The petition shall be verified; but no defect in the petition or verification shall render
void the issuance of letters of guardianship.
SEC. 3. Court to set time for hearing. Notice thereof. When a petition for the Although the rules allow the RTC to direct the giving of other general or special notices of the
appointment of a general guardian is filed, the court shall fix a time and place for hearings on the petition for appointment of a guardian, it was not established that the RTC
hearing the same, and shall cause reasonable notice thereof to be given to the actually did so in SP. PROC. No. 146-86-C.
persons mentioned in the petition residing in the province, including the minor if
above 14 years of age or the incompetent himself, and may direct other general or
Alamayris allegation that the Pabale siblings participated in SP. PROC. No. 146-86-C rests on two
special notice thereof to be given.
Orders, dated 30 October 198715 and 19 November 1987,16 issued by the RTC in SP. PROC. No.
146-86-C, expressly mentioning the presence of a Jose Pabale, who was supposedly the father of
SEC. 4. Opposition to petition. Any interested person may, by filing a written the Pabale siblings, during the hearings held on the same dates. However, the said Orders by
opposition, contest the petition on the ground of majority of the alleged minor, themselves cannot confirm that Jose Pabale was indeed the father of the Pabale siblings and that
competency of the alleged incompetent, or the unsuitability of the person for whom he was authorized by his children to appear in the said hearings on their behalf.
letters are prayed, and may pray that the petition be dismissed, or that letters of
guardianship issue to himself, or to any suitable person named in the opposition.
Alamayri decries that she was not allowed by the Court of Appeals to submit and mark additional
evidence to prove that Jose Pabale was the father of the Pabale siblings.
SEC. 5. Hearing and order for letters to issue. At the hearing of the petition the
alleged incompetent must be present if able to attend, and it must be shown that the
It is true that the Court of Appeals has the power to try cases and conduct hearings, receive
required notice has been given. Thereupon the court shall hear the evidence of the
evidence and perform any and all acts necessary to resolve factual issues raised in cases falling
parties in support of their respective allegations, and, if the person in question is a
within its original and appellate jurisdiction, including the power to grant and conduct new trials
minor or incompetent it shall appoint a suitable guardian of his person or estate, or
or further proceedings. In general, however, the Court of Appeals conducts hearings and
both, with the powers and duties hereinafter specified.
receives evidence prior to the submission of the case for judgment.17 It must be pointed out
that, in this case, Alamayri filed her Motion to Schedule Hearing to Mark Exhibits in Evidence
xxxx on 21 November 2001. She thus sought to submit additional evidence as to the identity of Jose
Pabale, not only after CA-G.R. CV No. 58133 had been submitted for judgment, but after the
Court of Appeals had already promulgated its Decision in said case on 10 April 2001.
SEC. 8. Service of judgment. Final orders or judgments under this rule shall be
served upon the civil registrar of the municipality or city where the minor or
incompetent person resides or where his property or part thereof is situated. The parties must diligently and conscientiously present all arguments and available evidences in
support of their respective positions to the court before the case is deemed submitted for
judgment. Only under exceptional circumstances may the court receive new evidence after
A petition for appointment of a guardian is a special proceeding, without the usual parties, i.e.,
having rendered judgment;18 otherwise, its judgment may never attain finality since the parties
petitioner versus respondent, in an ordinary civil case. Accordingly, SP. PROC. No. 146-86-C
may continually refute the findings therein with further evidence. Alamayri failed to provide any
bears the title: In re: Guardianship of Nelly S. Nave for Incompetency, Verdasto Gesmundo y
explanation why she did not present her evidence earlier. Merely invoking that the ends of
Banayo, petitioner, with no named respondent/s.
justice would have been best served if she was allowed to present additional evidence is not
sufficient to justify deviation from the general rules of procedure. Obedience to the requirements
Sections 2 and 3 of Rule 93 of the Rules of Court, though, require that the petition contain the of procedural rules is needed if the parties are to expect fair results therefrom, and utter
names, ages, and residences of relatives of the supposed minor or incompetent and those disregard of the rules cannot justly be rationalized by harking on the policy of liberal
having him in their care, so that those residing within the same province as the minor or construction.19 Procedural rules are tools designed to facilitate the adjudication of cases. Courts
incompetent can be notified of the time and place of the hearing on the petition. and litigants alike are thus enjoined to abide strictly by the rules. And while the Court, in some
instances, allows a relaxation in the application of the rules, this, we stress, was never intended
to forge a bastion for erring litigants to violate the rules with impunity. The liberality in the
The objectives of an RTC hearing a petition for appointment of a guardian under Rule 93 of the
interpretation and application of the rules applies only to proper cases and under justifiable
Rules of Court is to determine, first, whether a person is indeed a minor or an incompetent who
causes and circumstances. While it is true that litigation is not a game of technicalities, it is
has no capacity to care for himself and/or his properties; and, second, who is most qualified to
equally true that every case must be prosecuted in accordance with the prescribed procedure to
be appointed as his guardian. The rules reasonably assume that the people who best could help
insure an orderly and speedy administration of justice. 20
the trial court settle such issues would be those who are closest to and most familiar with the
supposed minor or incompetent, namely, his relatives living within the same province and/or the
persons caring for him. Moreover, contrary to Alamayris assertion, the Court of Appeals did not deny her Motion to
Schedule Hearing to Mark Exhibits in Evidence merely for being late. In its Resolution, dated 19
December 2001, the Court of Appeals also denied the said motion on the following grounds:
It is significant to note that the rules do not necessitate that creditors of the minor or
incompetent be likewise identified and notified. The reason is simple: because their presence is
not essential to the proceedings for appointment of a guardian. It is almost a given, and While it is now alleged, for the first time, that the [herein respondents Pabale siblings]
understandably so, that they will only insist that the supposed minor or incompetent is actually participated in the guardianship proceedings considering that the Jose Pabale
capacitated to enter into contracts, so as to preserve the validity of said contracts and keep the mentioned therein is their late father, [herein petitioner Alamayri] submitting herein
supposed minor or incompetent obligated to comply therewith. documentary evidence to prove their filiation, even though admitted in evidence at
this late stage, cannot bind [the Pabale siblings] as verily, notice to their father is not
notice to them there being no allegation to the effect that he represented them before
Hence, it cannot be presumed that the Pabale siblings were given notice and actually took part
the Calamba Court.21
in SP. PROC. No. 146-86-C. They are not Naves relatives, nor are they the ones caring for her.
As the appellate court reasoned, even if the evidence Alamayri wanted to submit do prove that Alamayri capitalizes on the declaration of the RTC in its Decision dated 22 June 1988 in SP. PROC.
the Jose Pabale who attended the RTC hearings on 30 October 1987 and 19 November 1987 in No. 146-86-C on Naves condition "having become severe since the year 1980."25 But there is
SP. PROC. No. 146-86-C was the father of the Pabale siblings, they would still not confirm his no basis for such a declaration. The medical reports extensively quoted in said Decision,
authority to represent his children in the said proceedings. Worth stressing is the fact that Jose prepared by: (1) Dr. Nona Jean Alviso-Ramos, dated 14 April 1986,26 and (2) by Dr. Eduardo T.
Pabale was not at all a party to the Deed of Sale dated 20 February 1984 over the subject Maaba, dated 20 April 1987,27 both stated that upon their examination, Nave was suffering from
property, which was executed by Nave in favor of the Pabale siblings. Without proper authority, "organic brain syndrome secondary to cerebral arteriosclerosis with psychotic episodes," which
Jose Pabales presence at the hearings in SP. PROC. No. 146-86-C should not bind his children to impaired her judgment. There was nothing in the said medical reports, however, which may shed
the outcome of said proceedings or affect their right to the subject property. light on when Nave began to suffer from said mental condition. All they said was that it existed
at the time Nave was examined in 1986, and again in 1987. Even the RTC judge was only able to
observe Nave, which made him realize that her mind was very impressionable and capable of
Since it was not established that the Pabale siblings participated in SP. PROC. No. 146-86-C, then
being manipulated, on the occasions when Nave visited the court from 1987 to 1988. Hence, for
any finding therein should not bind them in Civil Case No. 675-84-C.
this Court, the RTC Decision dated 22 June 1988 in SP. PROC. No. 146-86-C may be conclusive as
to Naves incompetency from 1986 onwards, but not as to her incompetency in 1984. And other
No identity of issues than invoking the 22 June 1988 Decision of the RTC in SP. PROC. No. 146-86-C, Alamayri did not
bother to establish with her own evidence that Nave was mentally incapacitated when she
executed the 20 February 1984 Deed of Sale over the subject property in favor of the Pabale
Neither is there identity of issues between SP. PROC. No. 146-86-C and Civil Case No. 675-84-C
siblings, so as to render the said deed void.
that may bar the latter, by conclusiveness of judgment, from ruling on Naves competency in
1984, when she executed the Deed of Sale over the subject property in favor the Pabale siblings.
All told, there being no identity of parties and issues between SP. PROC. No. 146-86-C and Civil
Case No. 675-84-C, the 22 June 1988 Decision in the former on Naves incompetency by the year
In SP. PROC. No. 146-86-C, the main issue was whether Nave was incompetent at the time of
1986 should not bar, by conclusiveness of judgment, a finding in the latter case that Nave still
filing of the petition with the RTC in 1986, thus, requiring the appointment of a guardian over her
had capacity and was competent when she executed on 20 February 1984 the Deed of Sale over
person and estate.
the subject property in favor of the Pabale siblings. Therefore, the Court of Appeals did not
commit any error when it upheld the validity of the 20 February 1984 Deed of Sale.
In the cross-claim of Nave and Atty. Gesmundo against the Pabale siblings in Civil Case No. 675-
84-C, the issue was whether Nave was an incompetent when she executed a Deed of Sale of the
WHEREFORE, premises considered, the instant Petition for Review is hereby DENIED. The
subject property in favor of the Pabale siblings on 20 February 1984, hence, rendering the said
Decision, dated 10 April 2001, of the Court of Appeals in CA-G.R. CV No. 58133, is
sale void.
hereby AFFIRMED in toto. Costs against the petitioner Lolita R. Alamayri.

While both cases involve a determination of Naves incompetency, it must be established at two
SO ORDERED.
separate times, one in 1984 and the other in 1986. A finding that she was incompetent in 1986
does not automatically mean that she was so in 1984. In Carillo v. Jaojoco,22 the Court ruled that
despite the fact that the seller was declared mentally incapacitated by the trial court only nine THIRD DIVISION
days after the execution of the contract of sale, it does not prove that she was so when she IN THE MATTER OF APPLICATION G.R. No. 154598
executed the contract. Hence, the significance of the two-year gap herein cannot be gainsaid FOR THE ISSUANCE OF A WRIT OF
HABEAS CORPUS Present:
since Naves mental condition in 1986 may vastly differ from that of 1984 given the intervening
period. RICHARD BRIAN THORNTON for PANGANIBAN,J., Chairman,
and in behalf of the minor SANDOVAL-GUTIERREZ,*
child SEQUEIRA JENNIFER CORONA and
Capacity to act is supposed to attach to a person who has not previously been declared
DELLE FRANCISCO THORNTON CARPIO MORALES, JJ.
incapable, and such capacity is presumed to continue so long as the contrary be not proved; Petitioner,
that is, that at the moment of his acting he was incapable, crazy, insane, or out of his
mind.23 The burden of proving incapacity to enter into contractual relations rests upon the
person who alleges it; if no sufficient proof to this effect is presented, capacity will be - versus -
presumed.24

ADELFA FRANCISCO THORNTON,


Nave was examined and diagnosed by doctors to be mentally incapacitated only in 1986, when Respondent. Promulgated:
the RTC started hearing SP. PROC. No. 146-86-C; and she was not judicially declared an August 16, 2004
incompetent until 22 June 1988 when a Decision in said case was rendered by the RTC, resulting
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
in the appointment of Atty. Leonardo C. Paner as her guardian. Thus, prior to 1986, Nave is still
presumed to be capacitated and competent to enter into contracts such as the Deed of Sale DECISION
over the subject property, which she executed in favor of the Pabale siblings on 20 February
1984. The burden of proving otherwise falls upon Alamayri, which she dismally failed to do, CORONA, J.:
having relied entirely on the 22 June 1988 Decision of the RTC in SP. PROC. No. 146-86-C.
This is a petition to review, under Rule 45 of the Rules of Court, the July 5, 2002 resolution [1] of
the Court of Appeals, Sixteenth Division, in CA G.R. SP No. 70501 dismissing the petition for
habeas corpus on the grounds of lack of jurisdiction and lack of substance. The dispositive
portion[2] read: Petitioner argues that unless this Court assumes jurisdiction over a petition
for habeas corpus involving custody of minors, a respondent can easily
WHEREFORE, the Court DISMISSES the petition for habeas corpus evade the service of a writ of habeas corpus on him or her by just moving
on the grounds that: a) this Court has no jurisdiction over the subject matter out of the region over which the Regional Trial Court issuing the writ has
of the petition; and b) the petition is not sufficient in substance. territorial jurisdiction. That may be so but then jurisdiction is conferred by
law. In the absence of a law conferring such jurisdiction in this Court, it
cannot exercise it even if it is demanded by expediency or necessity.
Petitioner, an American, and respondent, a Filipino, were married on August 28, 1998 in the
Catholic Evangelical Church at United Nations Avenue, Manila. A year later, respondent gave Whether RA 8369 is a good or unwise law is not within the authority of this
birth to a baby girl whom they named Sequeira Jennifer Delle Francisco Thornton. Court or any court for that matter to determine. The enactment of a law on
However, after three years, respondent grew restless and bored as a plain housewife. She jurisdiction is within the exclusive domain of the legislature. When there is a
wanted to return to her old job as a guest relations officer in a nightclub, with the freedom to go perceived defect in the law, the remedy is not to be sought form the courts
out with her friends. In fact, whenever petitioner was out of the country, respondent was also but only from the legislature.
often out with her friends, leaving her daughter in the care of the househelp.

Petitioner admonished respondent about her irresponsibility but she continued her carefree The only issue before us therefore is whether the Court of Appeals has jurisdiction to issue writs
ways. On December 7, 2001, respondent left the family home with her daughter Sequiera of habeas corpus in cases involving custody of minors in the light of the provision in RA 8369
without notifying her husband. She told the servants that she was bringing Sequiera to Purok giving family courts exclusive original jurisdiction over such petitions.
Marikit, Sta. Clara, Lamitan, Basilan Province. In his comment, the Solicitor General points out that Section 20 of the Rule on Custody of Minors
and Writ of Habeas Corpus in Relation to Custody of Minors (A.M. No. 03-04-04-SC, effective May
Petitioner filed a petition for habeas corpus in the designated Family Court in Makati City but this 15, 2003) has rendered the issue moot. Section 20 of the rule provides that a petition for habeas
was dismissed, presumably because of the allegation that the child was in Basilan. Petitioner corpus may be filed in the Supreme Court,[4] Court of Appeals, or with any of its members and, if
then went to Basilan to ascertain the whereabouts of respondent and their daughter. However, so granted, the writ shall be enforceable anywhere in the Philippines.[5]
he did not find them there and the barangay office of Sta. Clara, Lamitan, Basilan, issued a
certification[3] that respondent was no longer residing there. The petition is granted.
The Court of Appeals should take cognizance of the case since there is nothing in RA
Petitioner gave up his search when he got hold of respondents cellular phone bills showing calls 8369 that revoked its jurisdiction to issue writs of habeas corpus involving the custody of minors.
from different places such as Cavite, Nueva Ecija, Metro Manila and other provinces. Petitioner The Court of Appeals opines that RA 8369 impliedly repealed RA 7902 and BP 129 since, by
then filed another petition for habeas corpus, this time in the Court of Appeals which could issue giving family courts exclusive jurisdiction over habeas corpus cases, the lawmakers intended it
a writ of habeas corpus enforceable in the entire country. to be the sole court which can issue writs of habeas corpus. To the court a quo, the word
exclusive apparently cannot be construed any other way.
However, the petition was denied by the Court of Appeals on the ground that it did not have
jurisdiction over the case. It ruled that since RA 8369 (The Family Courts Act of 1997) gave We disagree with the CAs reasoning because it will result in an iniquitous situation, leaving
family courts exclusive original jurisdiction over petitions for habeas corpus, it impliedly repealed individuals like petitioner without legal recourse in obtaining custody of their children. Individuals
RA 7902 (An Act Expanding the Jurisdiction of the Court of Appeals) and Batas Pambansa 129 who do not know the whereabouts of minors they are looking for would be helpless since they
(The Judiciary Reorganization Act of 1980): cannot seek redress from family courts whose writs are enforceable only in their respective
territorial jurisdictions. Thus, if a minor is being transferred from one place to another, which
Under Sec. 9 (1), BP 129 (1981) the Intermediate Appellate Court seems to be the case here, the petitioner in a habeas corpus case will be left without legal
(now Court of Appeals) has jurisdiction to issue a writ of habeas corpus remedy. This lack of recourse could not have been the intention of the lawmakers when they
whether or not in aid of its appellate jurisdiction. This conferment of passed the Family Courts Act of 1997. As observed by the Solicitor General:
jurisdiction was re-stated in Sec. 1, RA 7902 (1995), an act expanding the
jurisdiction of this Court. This jurisdiction finds its procedural expression in Under the Family Courts Act of 1997, the avowed policy of the State is to
Sec. 1, Rule 102 of the Rules of Court. protect the rights and promote the welfare of children. The creation of the
Family Court is geared towards addressing three major issues regarding
In 1997, RA 8369 otherwise known as Family Courts Act was enacted. It childrens welfare cases, as expressed by the legislators during the
provides: deliberations for the law. The legislative intent behind giving Family Courts
exclusive and original jurisdiction over such cases was to avoid further
Sec. 5. Jurisdiction of Family Court. The Family Courts clogging of regular court dockets, ensure greater sensitivity and
shall have exclusive original jurisdiction to hear and specialization in view of the nature of the case and the parties, as well as to
decide the following cases: guarantee that the privacy of the children party to the case remains
protected.
xxx xxx xxx
The primordial consideration is the welfare and best interests of the child. We rule
b. Petition for guardianship, therefore that RA 8369 did not divest the Court of Appeals and the Supreme Court of their
custody of children, habeas corpus jurisdiction over habeas corpus cases involving the custody of minors. Again, to quote the
in relation to the latter. Solicitor General:

The vital question is, did RA 8369 impliedly repeal BP 129 and RA 7902 To allow the Court of Appeals to exercise jurisdiction over the petition for
insofar as the jurisdiction of this Court to issue writ of habeas corpus in habeas corpus involving a minor child whose whereabouts are uncertain and
custody of minor cases is concerned? The simple answer is, yes, it did, transient will not result in one of the situations that the legislature seeks to
because there is no other meaning of the word exclusive than to constitute avoid. First, the welfare of the child is paramount. Second, the ex parte
the Family Court as the sole court which can issue said writ. If a court other nature of habeas corpus proceedings will not result in disruption of the
than the Family Court also possesses the same competence, then the childs privacy and emotional well-being; whereas to deprive the appellate
jurisdiction of the former is not exclusive but concurrent and such an court of jurisdiction will result in the evil sought to be avoided by the
interpretation is contrary to the simple and clear wording of RA 8369. legislature: the childs welfare and well being will be prejudiced.
brought into accord with other laws as to form a uniform system of
This is not the first time that this Court construed the word exclusive as not foreclosing resort to jurisprudence. The fundament is that the legislature should be presumed to
another jurisdiction. As correctly cited by the Solicitor General, in Floresca vs. Philex Mining have known the existing laws on the subject and not have enacted
Corporation,[6] the heirs of miners killed in a work-related accident were allowed to file suit in the conflicting statutes. Hence, all doubts must be resolved against any implied
regular courts even if, under the Workmens Compensation Act, the Workmens Compensation repeal, and all efforts should be exerted in order to harmonize and give
Commissioner had exclusive jurisdiction over such cases. effect to all laws on the subject.[9]

We agree with the observations of the Solicitor General that: The provisions of RA 8369 reveal no manifest intent to revoke the jurisdiction of the
While Floresca involved a cause of action different from the case at bar. it Court of Appeals and Supreme Court to issue writs of habeas corpus relating to the custody of
supports petitioners submission that the word exclusive in the Family Courts minors. Further, it cannot be said that the provisions of RA 8369, RA 7092 and BP 129 are
Act of 1997 may not connote automatic foreclosure of the jurisdiction of absolutely incompatible since RA 8369 does not prohibit the Court of Appeals and the Supreme
other courts over habeas corpus cases involving minors. In the same Court from issuing writs of habeas corpus in cases
manner that the remedies in the Floresca case were selective, the involvingthe custody of minors. Thus, the provisions of RA
jurisdiction of the Court of Appeals and Family Court in the case at bar is 8369 must be read in harmony with RA 7029 and BP 129 that family courts have concurrent
concurrent. The Family Court can issue writs of habeas corpus enforceable jurisdiction with the Court of Appeals and the Supreme Court in petitions for habeas corpus
only within its territorial jurisdiction. On the other hand, in cases where the where the custody of minors is at issue.
territorial jurisdiction for the enforcement of the writ cannot be determined In any case, whatever uncertainty there was has been settled with the adoption of A.M. No. 03-
with certainty, the Court of Appeals can issue the same writ enforceable 03-04-SC Re: Rule on Custody of Minors and Writ of Habeas Corpus in Relation to Custody of
throughout the Philippines, as provided in Sec. 2, Rule 102 of the Revised Minors. Section 20 of the rule provides that:
Rules of Court, thus:
Section 20. Petition for writ of habeas corpus.- A verified petition
The Writ of Habeas Corpus may be granted by the for a writ of habeas corpus involving custody of minors shall be filed with
Supreme Court, or any member thereof, on any day and the Family Court. The writ shall be enforceable within its judicial region to
at any time, or by the Court of Appeals or any member which the Family Court belongs.
thereof in the instances authorized by law, and if so
granted it shall be enforceable anywhere in the xxx xxx xxx
Philippines, and may be made returnable before the
court or any member thereof, or before a Court of First The petition may likewise be filed with the Supreme Court, Court
Instance, or any judge thereof for hearing and decision of Appeals, or with any of its members and, if so granted, the writ shall be
on the merits. It may also be granted by a Court of First enforceable anywhere in the Philippines. The writ may be made returnable
Instance, or a judge thereof, on any day and at any to a Family Court or to any regular court within the region where the
time, and returnable before himself, enforceable only petitioner resides or where the minor may be found for hearing and decision
within his judicial district. (Emphasis supplied) on the merits. (Emphasis Ours)

In ruling that the Commissioners exclusive jurisdiction did not foreclose resort to the
regular courts for damages, this Court, in the same Floresca case, said that it was merely From the foregoing, there is no doubt that the Court of Appeals and Supreme Court
applying and giving effect to the constitutional guarantees of social justice in the 1935 and 1973 have concurrent jurisdiction with family courts in habeas corpus cases where the custody of
Constitutions and implemented by the Civil Code. It also applied the well-established rule that minors is involved.
what is controlling is the spirit and intent, not the letter, of the law: One final note. Requiring the serving officer to search for the child all over the country is not an
unreasonable availment of a remedy which the Court of Appeals cited as a ground for dismissing
Idolatrous reverence for the law sacrifices the human being. The the petition. As explained by the Solicitor General:[10]
spirit of the law insures mans survival and ennobles him. In the words of
Shakespeare, the letter of the law killeth; its spirit giveth life. That the serving officer will have to search for the child all over
the country does not represent an insurmountable or unreasonable
xxx xxx xxx obstacle, since such a task is no more different from or difficult than the
duty of the peace officer in effecting a warrant of arrest, since the latter is
It is therefore patent that giving effect to the social justice likewise enforceable anywhere within the Philippines.
guarantees of the Constitution, as implemented by the provisions of the
New Civil Code, is not an exercise of the power of law-making, but is WHEREFORE, the petition is hereby GRANTED. The petition for habeas corpus in CA-
rendering obedience to the mandates of the fundamental law and the G.R.-SP-No. 70501 is hereby REINSTATED and REMANDED to the Court of Appeals, Sixteenth
implementing legislation aforementioned. Division.

Language is rarely so free from ambiguity as to be incapable of being used in more


than one sense. Sometimes, what the legislature actually had in mind is not accurately reflected
in the language of a statute, and its literal interpretation may render it meaningless, lead to G.R. No. 202666 September 29, 2014
absurdity, injustice or contradiction.[7] In the case at bar, a literal interpretation of the word
exclusive will result in grave injustice and negate the policy to protect the rights and promote
the welfare of children[8] under the Constitution and the United Nations Convention on the Rights RHONDA AVE S. VIVARES and SPS. MARGARITA and DAVID SUZARA, Petitioners,
of the Child. This mandate must prevail over legal technicalities and serve as the guiding vs.
principle in construing the provisions of RA 8369. ST. THERESA'S COLLEGE, MYLENE RHEZA T. ESCUDERO, and JOHN DOES, Respondents.
Moreover, settled is the rule in statutory construction that implied repeals are not
favored:
The two laws must be absolutely incompatible, and a clear finding DECISION
thereof must surface, before the inference of implied repeal may be drawn.
The rule is expressed in the maxim, interpretare et concordare leqibus est
optimus interpretendi, i.e., every statute must be so interpreted and VELASCO, JR., J.:
The individual's desire for privacy is never absolute, since participation in society is an equally 5. Clothing that advocates unhealthy behaviour; depicts obscenity; contains sexually
powerful desire. Thus each individual is continually engaged in a personal adjustment process in suggestive messages, language or symbols; and 6. Posing and uploading pictures on
which he balances the desire for privacy with the desire for disclosure and communication of the Internet that entail ample body exposure.
himself to others, in light of the environmental conditions and social norms set by the society in
which he lives.
On March 1, 2012, Julia, Julienne, Angela, and the other students in the pictures in question,
reported, as required, to the office of Sr. Celeste Ma. Purisima Pe (Sr. Purisima), STCs high school
- Alan Westin, Privacy and Freedom (1967) principal and ICM6Directress. They claimed that during the meeting, they were castigated and
verbally abused by the STC officials present in the conference, including Assistant Principal
Mussolini S. Yap (Yap), Roswinda Jumiller, and Tigol. What is more, Sr. Purisima informed their
The Case
parents the following day that, as part of their penalty, they are barred from joining the
commencement exercises scheduled on March 30, 2012.
Before Us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, in relation to
Section 19 of A.M. No. 08-1-16-SC,1 otherwise known as the "Rule on the Writ of Habeas Data."
A week before graduation, or on March 23, 2012, Angelas mother, Dr. Armenia M. Tan (Tan), filed
Petitioners herein assail the July 27, 2012 Decision2 of the Regional Trial Court, Branch 14 in
a Petition for Injunction and Damages before the RTC of Cebu City against STC, et al., docketed
Cebu City (RTC) in SP. Proc. No. 19251-CEB, which dismissed their habeas data petition.
as Civil Case No. CEB-38594.7 In it, Tan prayed that defendants therein be enjoined from
implementing the sanction that precluded Angela from joining the commencement exercises.
The Facts

On March 25, 2012,petitioner Rhonda Ave Vivares (Vivares), the mother of Julia, joined the fray
Nenita Julia V. Daluz (Julia) and Julienne Vida Suzara (Julienne), both minors, were, during the as an intervenor. On March 28, 2012, defendants inCivil Case No. CEB-38594 filed their
period material, graduating high school students at St. Theresa's College (STC), Cebu City. memorandum, containing printed copies of the photographs in issue as annexes. That same day,
Sometime in January 2012, while changing into their swimsuits for a beach party they were the RTC issued a temporary restraining order (TRO) allowing the students to attend the
about to attend, Julia and Julienne, along with several others, took digital pictures of themselves graduation ceremony, to which STC filed a motion for reconsideration.
clad only in their undergarments. These pictures were then uploaded by Angela Lindsay Tan
(Angela) on her Facebook3 profile.
Despite the issuance of the TRO,STC, nevertheless, barred the sanctioned students from
participating in the graduation rites, arguing that, on the date of the commencement exercises,
Back at the school, Mylene Rheza T. Escudero (Escudero), a computer teacher at STCs high its adverted motion for reconsideration on the issuance ofthe TRO remained unresolved.
school department, learned from her students that some seniors at STC posted pictures online,
depicting themselves from the waist up, dressed only in brassieres. Escudero then asked her
Thereafter, petitioners filed before the RTC a Petition for the Issuance of a Writ of Habeas Data,
students if they knew who the girls in the photos are. In turn, they readily identified Julia,
docketed as SP. Proc. No. 19251-CEB8 on the basis of the following considerations:
Julienne, and Chloe Lourdes Taboada (Chloe), among others.

1. The photos of their children in their undergarments (e.g., bra) were taken for
Using STCs computers, Escuderos students logged in to their respective personal Facebook
posterity before they changed into their swimsuits on the occasion of a birthday beach
accounts and showed her photos of the identified students, which include: (a) Julia and Julienne
party;
drinking hard liquor and smoking cigarettes inside a bar; and (b) Julia and Julienne along the
streets of Cebu wearing articles of clothing that show virtually the entirety of their black
brassieres. What is more, Escuderos students claimed that there were times when access to or 2. The privacy setting of their childrens Facebook accounts was set at "Friends Only."
the availability of the identified students photos was not confined to the girls Facebook They, thus, have a reasonable expectation of privacy which must be respected.
friends,4 but were, in fact, viewable by any Facebook user.5

3. Respondents, being involved in the field of education, knew or ought to have known
Upon discovery, Escudero reported the matter and, through one of her students Facebook page, of laws that safeguard the right to privacy. Corollarily, respondents knew or ought to
showed the photosto Kristine Rose Tigol (Tigol), STCs Discipline-in-Charge, for appropriate have known that the girls, whose privacy has been invaded, are the victims in this
action. Thereafter, following an investigation, STC found the identified students to have deported case, and not the offenders. Worse, after viewing the photos, the minors were called
themselves in a manner proscribed by the schools Student Handbook, to wit: "immoral" and were punished outright;

1. Possession of alcoholic drinks outside the school campus; 4. The photos accessed belong to the girls and, thus, cannot be used and reproduced
without their consent. Escudero, however, violated their rights by saving digital copies
of the photos and by subsequently showing them to STCs officials. Thus, the Facebook
2. Engaging in immoral, indecent, obscene or lewd acts;
accounts of petitioners children were intruded upon;

3. Smoking and drinking alcoholicbeverages in public places;


5. The intrusion into the Facebook accounts, as well as the copying of information,
data, and digital images happened at STCs Computer Laboratory; and
4. Apparel that exposes the underwear;
6. All the data and digital images that were extracted were boldly broadcasted by Our Ruling
respondents through their memorandum submitted to the RTC in connection with Civil
Case No. CEB-38594. To petitioners, the interplay of the foregoing constitutes an
We find no merit in the petition.
invasion of their childrens privacy and, thus, prayed that: (a) a writ of habeas databe
issued; (b) respondents be ordered to surrender and deposit with the court all soft and
printed copies of the subjectdata before or at the preliminary hearing; and (c) after Procedural issues concerning the availability of the Writ of Habeas Data
trial, judgment be rendered declaring all information, data, and digital images
accessed, saved or stored, reproduced, spread and used, to have been illegally
The writ of habeas datais a remedy available to any person whose right to privacy in life, liberty
obtained inviolation of the childrens right to privacy.
or security is violated or threatened by an unlawful act or omission of a public official or
employee, or of a private individual or entity engaged in the gathering, collecting or storing of
Finding the petition sufficient in form and substance, the RTC, through an Order dated July 5, data or information regarding the person, family, home and correspondence of the aggrieved
2012, issued the writ of habeas data. Through the same Order, herein respondents were directed party.11 It is an independent and summary remedy designed to protect the image, privacy,
to file their verified written return, together with the supporting affidavits, within five (5) working honor, information, and freedom of information of an individual, and to provide a forum to
days from service of the writ. enforce ones right to the truth and to informational privacy. It seeks to protect a persons right
to control information regarding oneself, particularly in instances in which such information is
being collected through unlawful means in order to achieve unlawful ends.12
In time, respondents complied with the RTCs directive and filed their verified written return,
laying down the following grounds for the denial of the petition, viz: (a) petitioners are not the
proper parties to file the petition; (b) petitioners are engaging in forum shopping; (c) the instant In developing the writ of habeas data, the Court aimed to protect an individuals right to
case is not one where a writ of habeas data may issue;and (d) there can be no violation of their informational privacy, among others. A comparative law scholar has, in fact, defined habeas
right to privacy as there is no reasonable expectation of privacy on Facebook. dataas "a procedure designed to safeguard individual freedom from abuse in the information
age."13 The writ, however, will not issue on the basis merely of an alleged unauthorized access to
information about a person.Availment of the writ requires the existence of a nexus between the
Ruling of the Regional Trial Court
right to privacy on the one hand, and the right to life, liberty or security on the other. 14 Thus, the
existence of a persons right to informational privacy and a showing, at least by substantial
On July 27, 2012, the RTC rendered a Decision dismissing the petition for habeas data. The evidence, of an actual or threatened violation of the right to privacy in life, liberty or security of
dispositive portion of the Decision pertinently states: the victim are indispensable before the privilege of the writ may be extended. 15

WHEREFORE, in view of the foregoing premises, the Petition is hereby DISMISSED. Without an actionable entitlement in the first place to the right to informational privacy, a
habeas datapetition will not prosper. Viewed from the perspective of the case at bar,this
requisite begs this question: given the nature of an online social network (OSN)(1) that it
The parties and media must observe the aforestated confidentiality.
facilitates and promotes real-time interaction among millions, if not billions, of users, sans the
spatial barriers,16 bridging the gap created by physical space; and (2) that any information
xxxx uploaded in OSNs leavesan indelible trace in the providers databases, which are outside the
control of the end-usersis there a right to informational privacy in OSN activities of its users?
Before addressing this point, We must first resolve the procedural issues in this case.
SO ORDERED.9

a. The writ of habeas data is not only confined to cases of extralegal killings and enforced
To the trial court, petitioners failed to prove the existence of an actual or threatened violation of
disappearances
the minors right to privacy, one of the preconditions for the issuance of the writ of habeas data.
Moreover, the court a quoheld that the photos, having been uploaded on Facebook without
restrictions as to who may view them, lost their privacy in some way. Besides, the RTC noted, Contrary to respondents submission, the Writ of Habeas Datawas not enacted solely for the
STC gathered the photographs through legal means and for a legal purpose, that is, the purpose of complementing the Writ of Amparoin cases of extralegal killings and enforced
implementation of the schools policies and rules on discipline. disappearances.

Not satisfied with the outcome, petitioners now come before this Court pursuant to Section 19 of Section 2 of the Rule on the Writ of Habeas Data provides:
the Rule on Habeas Data.10

Sec. 2. Who May File. Any aggrieved party may file a petition for the writ of habeas data.
The Issues However, in cases of extralegal killings and enforced disappearances, the petition may be filed
by:
The main issue to be threshed out inthis case is whether or not a writ of habeas datashould be
issued given the factual milieu. Crucial in resolving the controversy, however, is the pivotal point (a) Any member of the immediate family of the aggrieved party, namely: the spouse,
of whether or not there was indeed an actual or threatened violation of the right to privacy in the children and parents; or
life, liberty, or security of the minors involved in this case.
(b) Any ascendant, descendant or collateral relative of the aggrieved party within the To agree with respondents above argument, would mean unduly limiting the reach of the writ to
fourth civil degreeof consanguinity or affinity, in default of those mentioned in the a very small group, i.e., private persons and entities whose business is data gathering and
preceding paragraph. (emphasis supplied) storage, and in the process decreasing the effectiveness of the writ asan instrument designed to
protect a right which is easily violated in view of rapid advancements in the information and
communications technologya right which a great majority of the users of technology
Had the framers of the Rule intended to narrow the operation of the writ only to cases of
themselves are not capable of protecting.
extralegal killings or enforced disappearances, the above underscored portion of Section 2,
reflecting a variance of habeas data situations, would not have been made.
Having resolved the procedural aspect of the case, We now proceed to the core of the
controversy.
Habeas data, to stress, was designed "to safeguard individual freedom from abuse in the
information age."17 As such, it is erroneous to limit its applicability to extralegal killings and
enforced disappearances only. In fact, the annotations to the Rule preparedby the Committee on The right to informational privacy on Facebook
the Revision of the Rules of Court, after explaining that the Writ of Habeas Data complements
the Writ of Amparo, pointed out that:
a. The Right to Informational Privacy

The writ of habeas data, however, can be availed of as an independent remedy to enforce ones
The concept of privacyhas, through time, greatly evolved, with technological advancements
right to privacy, more specifically the right to informational privacy. The remedies against the
having an influential part therein. This evolution was briefly recounted in former Chief Justice
violation of such right can include the updating, rectification, suppression or destruction of the
Reynato S. Punos speech, The Common Right to Privacy,20 where he explained the three strands
database or information or files in possession or in control of respondents.18 (emphasis Ours)
of the right to privacy, viz: (1) locational or situational privacy; 21 (2) informational privacy; and
Clearly then, the privilege of the Writ of Habeas Datamay also be availed of in cases outside of
(3) decisional privacy.22 Of the three, what is relevant to the case at bar is the right to
extralegal killings and enforced disappearances.
informational privacyusually defined as the right of individuals to control information about
themselves.23
b. Meaning of "engaged" in the gathering, collecting or storing of data or information

With the availability of numerous avenues for information gathering and data sharing nowadays,
Respondents contention that the habeas data writ may not issue against STC, it not being an not to mention each systems inherent vulnerability to attacks and intrusions, there is more
entity engaged in the gathering, collecting or storing of data or information regarding the reason that every individuals right to control said flow of information should be protected and
person, family, home and correspondence of the aggrieved party, while valid to a point, is, that each individual should have at least a reasonable expectation of privacy in cyberspace.
nonetheless, erroneous. Several commentators regarding privacy and social networking sites, however, all agree that
given the millions of OSN users, "[i]n this [Social Networking] environment, privacy is no longer
grounded in reasonable expectations, but rather in some theoretical protocol better known as
To be sure, nothing in the Rule would suggest that the habeas data protection shall be available
wishful thinking."24
only against abuses of a person or entity engaged in the businessof gathering, storing, and
collecting of data. As provided under Section 1 of the Rule:
It is due to this notion that the Court saw the pressing need to provide for judicial remedies that
would allow a summary hearing of the unlawful use of data or information and to remedy
Section 1. Habeas Data. The writ of habeas datais a remedy available to any person whose
possible violations of the right to privacy.25 In the same vein, the South African High Court, in its
right to privacy in life, liberty or security is violated or threatened by an unlawful act or omission
Decision in the landmark case, H v. W,26promulgated on January30, 2013, recognized that "[t]he
of a public official or employee, or of a private individual or entity engaged in the gathering,
law has to take into account the changing realities not only technologically but also socially or
collecting or storing of data or information regarding the person, family, home and
else it will lose credibility in the eyes of the people. x x x It is imperative that the courts respond
correspondence of the aggrieved party. (emphasis Ours)
appropriately to changing times, acting cautiously and with wisdom." Consistent with this, the
Court, by developing what may be viewed as the Philippine model of the writ of habeas data, in
The provision, when taken in its proper context, as a whole, irresistibly conveys the idea that effect, recognized that, generally speaking, having an expectation of informational privacy is not
habeas data is a protection against unlawful acts or omissions of public officials and of private necessarily incompatible with engaging in cyberspace activities, including those that occur in
individuals or entities engaged in gathering, collecting, or storing data about the aggrieved party OSNs.
and his or her correspondences, or about his or her family. Such individual or entity need not be
in the business of collecting or storing data.
The question now though is up to whatextent is the right to privacy protected in OSNs? Bear in
mind that informational privacy involves personal information. At the same time, the very
To "engage" in something is different from undertaking a business endeavour. To "engage" purpose of OSNs is socializingsharing a myriad of information, 27 some of which would have
means "to do or take part in something." 19 It does not necessarily mean that the activity must be otherwise remained personal.
done in pursuit of a business. What matters is that the person or entity must be gathering,
collecting or storing said data or information about the aggrieved party or his or her family.
b. Facebooks Privacy Tools: a response to the clamor for privacy in OSN activities
Whether such undertaking carries the element of regularity, as when one pursues a business,
and is in the nature of a personal endeavour, for any other reason or even for no reason at all, is
immaterial and such will not prevent the writ from getting to said person or entity. Briefly, the purpose of an OSN is precisely to give users the ability to interact and to stay
connected to other members of the same or different social media platform through the sharing
of statuses, photos, videos, among others, depending on the services provided by the site. It is
akin to having a room filled with millions of personal bulletin boards or "walls," the contents of Without these privacy settings, respondents contention that there is no reasonable expectation
which are under the control of each and every user. In his or her bulletin board, a user/owner can of privacy in Facebook would, in context, be correct. However, such is not the case. It is through
post anythingfrom text, to pictures, to music and videosaccess to which would depend on the availability of said privacy tools that many OSN users are said to have a subjective
whether he or she allows one, some or all of the other users to see his or her posts. Since expectation that only those to whomthey grant access to their profile will view the information
gaining popularity, the OSN phenomenon has paved the way to the creation of various social they post or upload thereto.35
networking sites, includingthe one involved in the case at bar, www.facebook.com (Facebook),
which, according to its developers, people use "to stay connected with friends and family, to
This, however, does not mean thatany Facebook user automatically has a protected expectation
discover whats going on in the world, and to share and express what matters to them."28
of privacy inall of his or her Facebook activities.

Facebook connections are established through the process of "friending" another user. By
Before one can have an expectation of privacy in his or her OSN activity, it is first necessary that
sending a "friend request," the user invites another to connect their accounts so that they can
said user, in this case the children of petitioners,manifest the intention to keepcertain posts
view any and all "Public" and "Friends Only" posts of the other.Once the request is accepted, the
private, through the employment of measures to prevent access thereto or to limit its
link is established and both users are permitted to view the other users "Public" or "Friends
visibility.36 And this intention can materialize in cyberspace through the utilization of the OSNs
Only" posts, among others. "Friending," therefore, allows the user to form or maintain one-to-one
privacy tools. In other words, utilization of these privacy tools is the manifestation,in cyber
relationships with other users, whereby the user gives his or her "Facebook friend" access to his
world, of the users invocation of his or her right to informational privacy. 37
or her profile and shares certain information to the latter. 29

Therefore, a Facebook user who opts to make use of a privacy tool to grant or deny access to his
To address concerns about privacy,30 but without defeating its purpose, Facebook was armed
or her post orprofile detail should not be denied the informational privacy right which necessarily
with different privacy tools designed to regulate the accessibility of a users profile 31 as well as
accompanies said choice.38Otherwise, using these privacy tools would be a feckless exercise,
information uploaded by the user. In H v. W,32 the South Gauteng High Court recognized this
such that if, for instance, a user uploads a photo or any personal information to his or her
ability of the users to "customize their privacy settings," but did so with this caveat: "Facebook
Facebook page and sets its privacy level at "Only Me" or a custom list so that only the user or a
states in its policies that, although it makes every effort to protect a users information, these
chosen few can view it, said photo would still be deemed public by the courts as if the user
privacy settings are not foolproof."33
never chose to limit the photos visibility and accessibility. Such position, if adopted, will not only
strip these privacy tools of their function but it would also disregard the very intention of the
For instance, a Facebook user canregulate the visibility and accessibility of digital user to keep said photo or information within the confines of his or her private space.
images(photos), posted on his or her personal bulletin or "wall," except for the usersprofile
picture and ID, by selecting his or her desired privacy setting:
We must now determine the extent that the images in question were visible to other Facebook
users and whether the disclosure was confidential in nature. In other words, did the minors limit
(a) Public - the default setting; every Facebook user can view the photo; the disclosure of the photos such that the images were kept within their zones of privacy? This
determination is necessary in resolving the issue of whether the minors carved out a zone of
privacy when the photos were uploaded to Facebook so that the images will be protected against
(b) Friends of Friends - only the users Facebook friends and their friends can view the
unauthorized access and disclosure.
photo;

Petitioners, in support of their thesis about their childrens privacy right being violated, insist
(b) Friends - only the users Facebook friends can view the photo;
that Escudero intruded upon their childrens Facebook accounts, downloaded copies ofthe
pictures and showed said photos to Tigol. To them, this was a breach of the minors privacy since
(c) Custom - the photo is made visible only to particular friends and/or networks of the their Facebook accounts, allegedly, were under "very private" or "Only Friends" setting
Facebook user; and safeguarded with a password.39 Ultimately, they posit that their childrens disclosure was only
limited since their profiles were not open to public viewing. Therefore, according to them, people
who are not their Facebook friends, including respondents, are barred from accessing said post
(d) Only Me - the digital image can be viewed only by the user.
without their knowledge and consent. Aspetitioners children testified, it was Angelawho
uploaded the subjectphotos which were only viewable by the five of them,40 although who these
The foregoing are privacy tools, available to Facebook users, designed to set up barriers to five are do not appear on the records.
broaden or limit the visibility of his or her specific profile content, statuses, and photos, among
others, from another users point of view. In other words, Facebook extends its users an avenue
Escudero, on the other hand, stated in her affidavit41 that "my students showed me some
to make the availability of their Facebook activities reflect their choice as to "when and to what
pictures of girls cladin brassieres. This student [sic] of mine informed me that these are senior
extent to disclose facts about [themselves] and to put others in the position of receiving such
high school [students] of STC, who are their friends in [F]acebook. x x x They then said [that]
confidences."34 Ideally, the selected setting will be based on ones desire to interact with others,
there are still many other photos posted on the Facebook accounts of these girls. At the
coupled with the opposing need to withhold certain information as well as to regulate the
computer lab, these students then logged into their Facebook account [sic], and accessed from
spreading of his or her personal information. Needless to say, as the privacy setting becomes
there the various photographs x x x. They even told me that there had been times when these
more limiting, fewer Facebook users can view that users particular post.
photos were public i.e., not confined to their friends in Facebook."

STC did not violate petitioners daughters right to privacy


In this regard, We cannot give muchweight to the minors testimonies for one key reason: failure
to question the students act of showing the photos to Tigol disproves their allegation that the
photos were viewable only by the five of them. Without any evidence to corroborate their of 100 (As own Facebook friends) is dramatically increased to 300 (As 100 friends plus Bs 200
statement that the images were visible only to the five of them, and without their challenging friends or the public, depending upon Bs privacy setting). As a result, the audience who can
Escuderos claim that the other students were able to view the photos, their statements are, at view the post is effectively expandedand to a very large extent.
best, self-serving, thus deserving scant consideration.42

This, along with its other features and uses, is confirmation of Facebooks proclivity towards user
It is well to note that not one of petitioners disputed Escuderos sworn account that her students, interaction and socialization rather than seclusion or privacy, as it encourages broadcasting of
who are the minors Facebook "friends," showed her the photos using their own Facebook individual user posts. In fact, it has been said that OSNs have facilitated their users self-tribute,
accounts. This only goes to show that no special means to be able to viewthe allegedly private thereby resulting into the "democratization of fame."51 Thus, it is suggested, that a profile, or
posts were ever resorted to by Escuderos students,43 and that it is reasonable to assume, even a post, with visibility set at "Friends Only" cannot easily, more so automatically, be said to
therefore, that the photos were, in reality, viewable either by (1) their Facebook friends, or (2) by be "very private," contrary to petitioners argument.
the public at large.

As applied, even assuming that the photos in issue are visible only to the sanctioned students
Considering that the default setting for Facebook posts is"Public," it can be surmised that the Facebook friends, respondent STC can hardly be taken to task for the perceived privacy invasion
photographs in question were viewable to everyone on Facebook, absent any proof that since it was the minors Facebook friends who showed the pictures to Tigol. Respondents were
petitioners children positively limited the disclosure of the photograph. If suchwere the case, mere recipients of what were posted. They did not resort to any unlawful means of gathering the
they cannot invoke the protection attached to the right to informational privacy. The ensuing information as it was voluntarily given to them by persons who had legitimate access to the said
pronouncement in US v. Gines-Perez44 is most instructive: posts. Clearly, the fault, if any, lies with the friends of the minors. Curiously enough, however,
neither the minors nor their parents imputed any violation of privacy against the students who
showed the images to Escudero.
[A] person who places a photograph on the Internet precisely intends to forsake and renounce all
privacy rights to such imagery, particularly under circumstances suchas here, where the
Defendant did not employ protective measures or devices that would have controlled access to Furthermore, petitioners failed to prove their contention that respondents reproduced and
the Web page or the photograph itself.45 broadcasted the photographs. In fact, what petitioners attributed to respondents as an act of
offensive disclosure was no more than the actuality that respondents appended said
photographs in their memorandum submitted to the trial court in connection with Civil Case No.
Also, United States v. Maxwell46 held that "[t]he more open the method of transmission is, the
CEB-38594.52 These are not tantamount to a violation of the minors informational privacy rights,
less privacy one can reasonably expect. Messages sent to the public at large inthe chat room or
contrary to petitioners assertion.
e-mail that is forwarded from correspondent to correspondent loses any semblance of privacy."

In sum, there can be no quibbling that the images in question, or to be more precise, the photos
That the photos are viewable by "friends only" does not necessarily bolster the petitioners
of minor students scantily clad, are personal in nature, likely to affect, if indiscriminately
contention. In this regard, the cyber community is agreed that the digital images under this
circulated, the reputation of the minors enrolled in a conservative institution. However, the
setting still remain to be outside the confines of the zones of privacy in view of the following:
records are bereft of any evidence, other than bare assertions that they utilized Facebooks
privacy settings to make the photos visible only to them or to a select few. Without proof that
(1) Facebook "allows the world to be more open and connected by giving its users the they placed the photographs subject of this case within the ambit of their protected zone of
tools to interact and share in any conceivable way;" 47 privacy, they cannot now insist that they have an expectation of privacy with respect to the
photographs in question.

(2) A good number of Facebook users "befriend" other users who are total strangers; 48
Had it been proved that the access tothe pictures posted were limited to the original uploader,
through the "Me Only" privacy setting, or that the users contact list has been screened to limit
(3) The sheer number of "Friends" one user has, usually by the hundreds; and
access to a select few, through the "Custom" setting, the result may have been different, for in
such instances, the intention to limit access to the particular post, instead of being broadcasted
(4) A users Facebook friend can "share"49 the formers post, or "tag"50 others who are to the public at large or all the users friends en masse, becomes more manifest and palpable.
not Facebook friends with the former, despite its being visible only tohis or her own
Facebook friends.
On Cyber Responsibility

It is well to emphasize at this point that setting a posts or profile details privacy to "Friends" is
It has been said that "the best filter is the one between your childrens ears."53 This means that
no assurance that it can no longer be viewed by another user who is not Facebook friends with
self-regulation on the part of OSN users and internet consumers ingeneral is the best means of
the source of the content. The users own Facebook friend can share said content or tag his or
avoiding privacy rights violations.54As a cyberspace communitymember, one has to be proactive
her own Facebook friend thereto, regardless of whether the user tagged by the latter is Facebook
in protecting his or her own privacy.55 It is in this regard that many OSN users, especially minors,
friends or not with the former. Also, when the post is shared or when a person is tagged, the
fail.Responsible social networking or observance of the "netiquettes" 56 on the part of teenagers
respective Facebook friends of the person who shared the post or who was tagged can view the
has been the concern of many due to the widespreadnotion that teenagers can sometimes go
post, the privacy setting of which was set at "Friends."
too far since they generally lack the people skills or general wisdom to conduct themselves
sensibly in a public forum.57
To illustrate, suppose A has 100 Facebook friends and B has 200. A and B are not Facebook
friends. If C, As Facebook friend, tags B in As post, which is set at "Friends," the initial audience
Respondent STC is clearly aware of this and incorporating lessons on good cyber citizenship in its Be it enacted by the Senate and House of Representatives of the Philippines in Congress
curriculum to educate its students on proper online conduct may be mosttimely. Too, it is not assembled:
only STC but a number of schools and organizations have already deemed it important to include
digital literacy and good cyber citizenshipin their respective programs and curricula in view of
SECTION 1. Title. This Act shall be known as the Family Courts Act of 1997.
the risks that the children are exposed to every time they participate in online
activities.58 Furthermore, considering the complexity of the cyber world and its pervasiveness,as
well as the dangers that these children are wittingly or unwittingly exposed to in view of their SEC. 2. Statement of National Policies. The State shall protect the rights and promote the
unsupervised activities in cyberspace, the participation of the parents in disciplining and welfare of children in keeping with the mandate of the Constitution and the precepts of the
educating their children about being a good digital citizen is encouraged by these institutions United Nations Convention on the rights of the Child. The State shall provide a system of
and organizations. In fact, it is believed that "to limit such risks, theres no substitute for parental adjudication for youthful offenders which takes into account their peculiar circumstances.
involvement and supervision."59

The State recognizes the sanctity of family life and shall protect and strengthen the family as a
As such, STC cannot be faulted for being steadfast in its duty of teaching its students to basic autonomous social institution. The courts shall preserve the solidarity of the family,
beresponsible in their dealings and activities in cyberspace, particularly in OSNs, whenit provide procedures for the reconciliation of spouses and the amicable settlement of family
enforced the disciplinary actions specified in the Student Handbook, absenta showing that, in controversy.
the process, it violated the students rights.

SEC. 3. Establishment of Family Courts. There shall be established a Family Court in every
OSN users should be aware of the risks that they expose themselves to whenever they engage province and city in the country. In case where the city is the capital of the province, the Family
incyberspace activities.1wphi1 Accordingly, they should be cautious enough to control their Court shall be established in the municipality which has the highest population.
privacy and to exercise sound discretion regarding how much information about themselves they
are willing to give up. Internet consumers ought to be aware that, by entering or uploading any
SEC. 4. Qualification and Training of Family Court Judges. Section 15 of Batas Pambansa Blg.
kind of data or information online, they are automatically and inevitably making it permanently
129, as amended, is hereby further amended to read as follows:
available online, the perpetuation of which is outside the ambit of their control. Furthermore, and
more importantly, information, otherwise private, voluntarily surrendered by them can be
opened, read, or copied by third parties who may or may not be allowed access to such. SEC. 15. (a) Qualification. No person shall be appointed Regional Trial Judge or Presiding Judge
of the Family Court unless he is a natural-born citizen of the Philippines, at least thirty-five (35)
years of age, and, for at least ten (10) years, has been engaged in the practice of law in the
It is, thus, incumbent upon internet users to exercise due diligence in their online dealings and
Philippines or has held a public office in the Philippines requiring admission to the practice of law
activities and must not be negligent in protecting their rights. Equity serves the vigilant.
as indispensable requisite.
Demanding relief from the courts, as here, requires that claimants themselves take utmost care
in safeguarding a right which they allege to have been violated. These are indispensable. We
cannot afford protection to persons if they themselves did nothing to place the matter within the (b) Training of Family Court Judges. The Presiding Judge, as well as the court personnel of the
confines of their private zone. OSN users must be mindful enough to learn the use of privacy Family Courts, shall undergo training and must have the experience and demonstrated ability in
tools, to use them if they desire to keep the information private, and to keep track of changes in dealing with child and family cases.
the available privacy settings, such as those of Facebook, especially because Facebook is
notorious for changing these settings and the site's layout often.
The Supreme Court shall provide a continuing education program on child and family laws,
procedure and other related disciplines to judges and personnel of such courts.
In finding that respondent STC and its officials did not violate the minors' privacy rights, We find
no cogent reason to disturb the findings and case disposition of the court a quo.
SEC. 5. Jurisdiction of Family Courts. The Family Courts shall have exclusive original jurisdiction
to hear and decide the following cases:
In light of the foregoing, the Court need not belabor the other assigned errors.
a) Criminal cases where one or more of the accused is below eighteen (18) years of age but not
WHEREFORE, premises considered, the petition is hereby DENIED. The Decision dated July 27, less than nine (9) years of age but not less than nine (9) years of age or where one or more of
2012 of the Regional Trial Court, Branch 14 in Cebu City in SP. Proc. No. 19251-CEB is hereby the victims is a minor at the time of the commission of the offense: Provided, That if the minor is
AFFIRMED. found guilty, the court shall promulgate sentence and ascertain any civil liability which the
accused may have incurred.

No pronouncement as to costs.
The sentence, however, shall be suspended without need of application pursuant to Presidential
Decree No. 603, otherwise known as the Child and Youth Welfare Code;
[REPUBLIC ACT NO. 8369]

b) Petitions for guardianship, custody of children, habeas corpus in relation to the latter;
AN ACT ESTABLISHING FAMILY COURTS, GRANTING THEM EXCLUSIVE ORIGINAL
JURISDICTION OVER CHILD AND FAMILY CASES, AMENDING BATAS PAMBANSA BILANG
129, AS AMENDED, OTHERWISE KNOWN AS THE JUDICIARY REORGANIZATION ACT OF c) Petitions for adoption of children and the revocation thereof;
1980, APPROPRIATING FUNDS THEREFOR AND FOR OTHER PURPOSES
d) Complaints for annulment of marriage, declaration of nullity of marriage and those relating to The court may order the temporary custody of children in all civil actions for their custody. The
marital status and property relations of husband and wife or those living together under different court may also order support pendente lite, including deduction from the salary and use of
status and agreements, and petitions for dissolution of conjugal partnership of gains; conjugal home and other properties in all civil actions for support.

e) Petitions for support and/or acknowledgment; SEC. 8. Supervision of Youth Detention Homes. The judge of the Family Court shall have direct
control and supervision of the youth detention home which the local government unit shall
establish to separate the youth offenders from adult criminals: Provided, however, That
f) Summary judicial proceedings brought under the provisions of Executive Order No. 209,
alternatives to detention and institutional care shall be made available to the accused including
otherwise known as the Family Code of the Philippines;
counseling, recognizance, bail, community continuum, or diversions from the justice
system: Provided, further, That the human rights of the accused are fully respected in a manner
g) Petitions for declaration of status of children as abandoned, dependent o neglected children, appropriate to their well-being.
petitions for voluntary or involuntary commitment of children; the suspension, termination, or
restoration of parental authority and other cases cognizable under Presidential Decree No. 603,
SEC. 9. Social Services and Counseling Division. Under the guidance of the Department of
Executive Order No. 56, (Series of 1986), and other related laws;
Social Welfare and Development (DSWD), a Social Services and Counseling Division (SSCD) shall
be established in each judicial region as the Supreme Court shall deem necessary based on the
h) Petitions for the constitution of the family home; number of juvenile and family cases existing in such jurisdiction. It shall provide appropriate
social services to all juvenile and family cases filed with the court and recommend the proper
social action. It shall also develop programs, formulate uniform policies and procedures, and
i) Cases against minors cognizable under the Dangerous Drugs Act, as amended;
provide technical supervision and monitoring of all SSCD in coordination with the judge.

j) Violations of Republic Act No. 7610, otherwise known as the Special Protection of Children
SEC. 10. Social Services and Counseling Division Staff. The SSCD shall have a staff composed
Against Child Abuse, Exploitation and Discrimination Act, as amended by Republic Act No. 7658;
of qualified social workers and other personnel with academic preparation in behavioral sciences
and
to carry out the duties of conducting intake assessment, social case studies, casework and
counseling, and other social services that may be needed in connection with cases filed with the
k) Cases of domestic violence against: court: Provided, however, That in adoption cases and in petitions for declaration of
abandonment, the case studies may be prepared by social workers of duly licensed child caring
or child placement agencies, or the DSWD. When warranted, the division shall recommend that
1) Women which are acts of gender based violence that results, or are likely to result in
the court avail itself of consultative services of psychiatrists, psychologists, and other qualified
physical, sexual or psychological harm or suffering to women; and other forms of physical abuse
specialists presently employed in other departments of the government in connection with its
such as battering or threats and coercion which violate a womans personhood, integrity and
cases.
freedom movement; and

The position of Social Work Adviser shall be created under the Office of the Court Administrator,
2) Children which include the commission of all forms of abuse, neglect, cruelty, exploitation,
who shall monitor and supervise the SSCD of the Regional Trial Court.
violence, and discrimination and all other conditions prejudicial to their development.

SEC. 11. Alternative Social Services. In accordance with Sec. 17 of this Act, in areas where no
If an act constitutes a criminal offense, the accused or batterer shall be subject to criminal
Family Court has been established or no Regional Trial Court was designated by the Supreme
proceedings and the corresponding penalties.
Court due to the limited number of cases, the DSWD shall designate and assign qualified,
trained, and DSWD accredited social workers of the local government units to handle juvenile
If any question involving any of the above matters should arise as an incident in any case and family cases filed in the designated Regional Trial Court of the place.
pending in the regular courts, said incident shall be determined in that court.

SEC. 12. Privacy and Confidentiality of Proceedings. All hearings and conciliation of the child
SEC. 6. Use of Income. All Family Courts shall be allowed the use of ten per cent (10%) of their and family cases shall be treated in a manner consistent with the promotion of the childs and
income derived from filing and other court fees under Rule 141 of the Rules of Court for research the familys dignity and worth, and shall respect their privacy at all stages of the proceedings.
and other operating expenses including capital outlay: Provided, That this benefit shall likewise Records of the cases shall be dealt with utmost confidentiality and the identity of parties shall
be enjoyed by all courts of justice. not be divulged unless necessary and with authority of the judge.

The Supreme Court shall promulgate the necessary guidelines to effectively implement the SEC. 13. Special Rules of Procedure. The Supreme Court shall promulgate special rules of
provisions of this SEC. procedure for the transfer of cases to the new courts during the transition period and for the
disposition of family cases with the best interests of the child and the protection of the family as
primary consideration taking into account the United Nations Convention on the Rights of the
SEC. 7. Special Provisional Remedies. In cases of violence among immediate family members
Child.
living in the same domicile or household, the Family Court may issue a restraining order against
the accused of defendant upon verified application by the complainant or the victim for relief
from abuse.
SEC. 14. Appeals. Decisions and orders of the court shall be appealed in the same manner and (a) Shares of stocks, bonds, debentures, notes evidences of indebtedness, asset-
subject to the same conditions as appeals from the ordinary Regional Trial Courts. backed securities;

SEC. 15. Appropriations. The amount necessary to carry out the provisions of this Act shall be (b) Investment contracts, certificates of interest or participation in a profit sharing
included in the General Appropriations Act of the year following in its enactment into law and agreement, certifies of deposit for a future subscription;
thereafter.

(c) Fractional undivided interests in oil, gas or other mineral rights;


SEC. 16. Implementing Rules and Regulations. The Supreme Court, in coordination with the
DSWD, shall formulate the necessary rules and regulations for the effective implementation of
(d) Derivatives like option and warrants;
the social aspects of this Act.

(e) Certificates of assignments, certificates of participation, trust certificates, voting


SEC. 17. Transitory Provisions. Pending the establishment of such Family Courts, the Supreme
trust certificates or similar instruments
Court shall designate from among the branches ofthe Regional Trial Court at least one Family
Court in each of the cities of Manila, Quezon, Pasay, Caloocan, Makati, Pasig, Mandaluyong,
Muntinlupa, Laoag, Baguio, Santiago, Dagupan, Olongapo, Cabanatuan, San Jose, Angeles, (f) Proprietary or nonproprietary membership certificates in corporations; and
Cavite, Batangas, Lucena, Naga, Iriga, Legazpi, Roxas, Iloilo, Bacolod, Dumaguete, Tacloban,
Cebu, Mandaue, Tagbilaran, Surigao, Butuan, Cagayan de Oro, Davao, General Santos,
(g) Other instruments as may in the future be determined by the Commission.
Oroquieta, Ozamis, Dipolog, Zamboanga, Pagadian, Iligan, and in such other places as the
Supreme Court may deem necessary.
3.2. "Issuer" is the originator, maker, obligor, or creator of the security.

Additional cases other than those provided in Sec. 5 may be assigned to the Family Courts when
their dockets permit: Provided, That such additional cases shall not be heard on the same day 3.3. "Broker" is a person engaged in the business of buying and selling securities for the account
family cases are heard. of others.

In areas where there are no Family Courts, the cases referred to in Sec. 5 of this Act shall be 3.4. "Dealer" means many person who buys sells securities for his/her own account in the
adjudicated by the Regional Trial Court. ordinary course of business.

3.5. "Associated person of a broker or dealer" is an employee therefor whom, directly exercises
control of supervisory authority, but does not include a salesman, or an agent or a person whose
functions are solely clerical or ministerial.
REPUBLIC ACT NO. 8799

3.6. "Clearing Agency" is any person who acts as intermediary in making deliveries upon
THE SECURITIES REGULATION CODE
payment effect settlement in securities transactions.

Be it enacted by the Senate and the House of Representative of the Philippines in the Congress
3.7. "Exchange" is an organized market place or facility that brings together buyers and sellers
assembled:
and executes trade of securities and/or commodities.

CHAPTER I
3.8. "Insider" means (a) the issuer; (b) a director or officer (or any person performing similar
TITLE AND DEFINITIONS
functions) of, or a person controlling the issuer; gives or gave him access to material information
about the issuer or the security that is not generally available to the public; (d) A government
Section 1. Title. - This shall be known as "The Securities Regulation Code" employee, director, or officer of an exchange, clearing agency and/or self-regulatory organization
who has access to material information about an issuer or a security that is not generally
available to the public; or (e) a person who learns such information by a communication from
Section 2. Declaration of State Policy. The State shall establish a socially conscious, free
any forgoing insiders.
market that regulates itself, encourage the widest participation of ownership in enterprises,
enhance the democratization of wealth, promote the development of the capital market, protect
investors, ensure full and fair disclosure about securities, minimize if not totally eliminate insider 3.9. "Pre-need plans" are contracts which provide for the performance of future services of or the
trading and other fraudulent or manipulative devices and practices which create distortions in payment of future monetary considerations at the time actual need, for which plan holders pay
the free market. To achieve these ends, this Securities Regulation Code is hereby enacted. in cash or installment at stated prices, with or without interest or insurance coverage and
includes life, pension, education, interment, and other plans which the Commission may from
time to time approve.
Section 3. Definition of Terms. - 3.1. "Securities" are shares, participation or interests in a
corporation or in a commercial enterprise or profit-making venture and evidenced by a
certificate, contract, instruments, whether written or electronic in character. It includes:
3.10. "Promoter" is a person who, acting alone or with others, takes initiative in founding and 4.6. The Commission may, for purposes of efficiency, delegate any of its functions to any
organizing the business or enterprise of the issuer and receives consideration therefor. department of office of the Commission, an individual Commissioner or staff member of the
Commission except its review or appellate authority and its power to adopt, alter and
supplement any rule or regulation.
3.11. "Prospectus" is the document made by or an behalf of an issuer, underwriter or dealer to
sell or offer securities for sale to the public through registration statement filed with the
Commission. The commission may review upon its own initiative or upon the petition of any interested party
any action of any department or office, individual Commissioner, or staff member of the
Commission.
3.12. "Registration statement" is the application for the registration of securities required to be
filed with the Commission.
Section 5. Powers and Functions of the Commission. 5.1. The commission shall act with
transparency and shall have the powers and functions provided by this code, Presidential Decree
3.13. "Salesman" is a natural person, employed as such as an agent, by a dealer, issuer or
No. 902-A, the Corporation Code, the Investment Houses law, the Financing Company Act and
broker to buy and sell securities.
other existing laws. Pursuant thereto the Commission shall have, among others, the following
powers and functions:
3.14. "Uncertificated security" is a security evidenced by electronic or similar records.

(a) Have jurisdiction and supervision over all corporations, partnership or associations
3.15. "Underwriter" is a person who guarantees on a firm commitment and/or declared best who are the grantees of primary franchises and/or a license or a permit issued by the
effort basis the distribution and sale of securities of any kind by another company. Government;

CHAPTER II (b) Formulate policies and recommendations on issues concerning the securities
SECURITIES AND EXCHANGE COMMISSION market, advise Congress and other government agencies on all aspect of the
securities market and propose legislation and amendments thereto;
Section 4. Administrative Agency. 4.1. This Code shall be administered by the Security and
Exchange Commission (hereinafter referred to as the "Commission") as a Collegial body, (c) Approve, reject, suspend, revoke or require amendments to registration
composed of a chairperson and (4) Commissioners, appointed by the President for a term of (7) statements, and registration and licensing applications;
seven years each and who shall serves as such until their successor shall have been appointed
and qualified. A Commissioner appointed to fill a vacancy occurring prior to the expiration of the
(d) Regulate, investigate or supervise the activities of persons to ensure compliance;
term for which his/her predecessor was appointed, shall serve only for the unexpired portion of
their terms under Presidential Decree No. 902-A. Unless the context indicates otherwise, the
term "Commissioner" includes the Chairperson. (e) Supervise, monitor, suspend or take over the activities of exchanges, clearing
agencies and other SROs;

4.2. The Commissioners must be natural-born citizens of the Philippines, at least forty (40) years
of age for the Chairperson and at least thirty-five (35) years of age for the Commissioners, of (f) Impose sanctions for the violation of laws and rules, regulations and orders, and
good moral character, or unquestionable integrity, of known probity and patriotism, and with issued pursuant thereto;
recognized competence in social and economic disciplines: Provided, That the majority of
Commissioners, including the Chairperson, shall be members of the Philippine Bar.
(g) Prepare, approve, amend or repeal rules, regulations and orders, and issue
opinions and provide guidance on and supervise compliance with such rules,
4.3. The chairperson is chief executive officer of the Commission. The Chairperson shall execute regulation and orders;
and administer the policies, decisions, orders and resolutions approved by the Commission and
shall have the general executive direction and supervision of the work and operation of the
(h) Enlist the aid and support of and/or deputized any and all enforcement agencies of
Commission and its members, bodies, boards, offices, personnel and all its administrative
the Government, civil or military as well as any private institution, corporation, firm,
business.
association or person in the implementation of its powers and function under its Code;

4.4. The salary of the Chairperson and the Commissioners shall be fixed by the President of the
(i) Issue cease and desist orders to prevent fraud or injury to the investing public;
Philippines based on the objective classification system, at a sum comparable to the members of
the Monetary Board and commensurate importance and responsibilities attached to the position.
(j) Punish for the contempt of the Commission, both direct and indirect, in accordance
with the pertinent provisions of and penalties prescribed by the Rules of Court;
4.5. The Commission shall hold meetings at least once a week for the conduct of business or as
often as may be necessary upon the call of the Chairperson or upon the request of (3)
Commissioners. The notice of the meeting shall be given to all Commissioners and the presence (k) Compel the officers of any registered corporation or association to call meetings of
of three (3) Commissioners shall constitute a quorum. In the absence of the Chairperson, the stockholders or members thereof under its supervision;
most senior Commissioner shall act as presiding officer of the meeting.
(l) Issue subpoena duces tecum and summon witnesses to appear in any proceedings Section 7. Reorganization. 7.1. To achieve the goals of this Code, consistent with the Civil
of the Commission and in appropriate cases, order the examination, search and Service laws, the Commission is hereby authorized to provide for its reorganization, to
seizure of all documents, papers, files and records, tax returns and books of accounts streamline its structure and operations, upgrade its human resource component and enable it to
of any entity or person under investigation as may be necessary for the proper more efficiently and effectively perform its functions and exercise its power under this Code.
disposition of the cases before it, subject to the provisions of existing laws;

7.2. All positions of the Commissions shall be governed by a compensation and position
(m) Suspend, or revoke, after proper notice and hearing the franchise or certificate of classification system and qualification standards approved by the Commission based on
registration of corporations, partnership or associations, upon any of the grounds comprehensive job analysis and audit of actual duties and personal responsibilities. The
provided by law; and compensation plan shall be comparable with the prevailing compensation plan in the Bangko
Sentral ng Pilipinas and other government financial institutions and shall be subject to periodic
review by the Commission no more than once every two (2) years without prejudice to yearly
(n) Exercise such other powers as may be provided by law as well as those which may
merit review or increases based on productivity and efficiency. The Commission shall, therefore,
be implied from, or which are necessary or incidental to the carrying out of, the
be exempt from laws, rules, and regulations on compensation, position classification and
express powers granted the Commission to achieve the objectives and purposes of
qualifications standards. The Commission shall, however, endeavor to make its system conform
these laws.
as closely as possible with the principles under the Compensation and Position Classification Act
of 1989 (Republic Act. 6758, as amended).
5.2. The Commissions jurisdiction over all cases enumerated under section 5 of Presidential
Decree No. 902-A is hereby transferred to the Courts of general jurisdiction or the appropriate
CHAPTER III
Regional Trial Court: Provided, That the Supreme Court in the exercise of its authority may
REGISTRATION OF SECURITIES
designate the Regional Trial Court branches that shall exercise jurisdiction over the cases. The
Commission shall retain jurisdiction over pending cases involving intra-corporate disputes
submitted for final resolution which should be resolved within one (1) year from the enactment Section 8. Requirement of Registration of Securities. 8.1. Securities shall not be sold or offered
of this Code. The Commission shall retain jurisdiction over pending suspension of for sale or distribution within the Philippines, without a registration statement duly filed with and
payment/rehabilitation cases filed as of 30 June 2000 until finally disposed. approved by the Commission. Prior to such sale, information on the securities, in such form and
with such substance as the Commission may prescribe, shall be made available to each
prospective purchaser.
Section 6. Indemnification and Responsibilities of Commissioners. 6.1. The Commission shall
indemnify each Commissioner and other officials of the Commission, including personnel
performing supervision and examination functions for all cost and expenses reasonably incurred 8.2. The Commission may conditionally approve the registration statement under such terms as
by such persons in connection with any civil or criminal actions, suits or proceedings to be liable it may deem necessary.
for gross negligence or misconduct. In the event of settlement or compromise, indemnification
shall be provided only in connection with such matters covered by the settlement as to which
8.3. The Commission may specify the terms and conditions under which any written
the Commission is advised by external counsel that the persons to be indemnified did not
communication, including any summary prospectus, shall be deemed not to constitute an offer
commit any gross negligence or misconduct. The costs and expenses incurred in defending the
for sale under this Section.
aforementioned action, suit or proceeding may be paid by the Commission in advance of the
final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf
of the Commissioner, officer or employee to repay the amount advanced should it ultimately be 8.4. A record of the registration of securities shall be kept in Register Securities in which shall be
determined by the Commission that he/she is not entitled to be indemnified as provided in this recorded orders entered by the Commission with respect such securities. Such register and all
subsection. documents or information with the respect to the securities registered therein shall be open to
public inspection at reasonable hours on business days.

6.2. The Commissioners, officers and employees of the Commission who willfully violate this
Code or who are guilty of negligence, abuse or acts of malfeasance or fail to exercise 8.5. The Commission may audit the financial statements, assets and other information of firm
extraordinary diligence in the performance of their duties shall be held liable for any loss or applying for registration of its securities whenever it deems the same necessary to insure full
injury suffered by the Commission or other institutions such as a result of such violation, disclosure or to protect the interest of the investors and the public in general.
negligence, abuse, or malfeasance, or failure to exercise extraordinary diligence. Similar
responsibility shall apply to the Commissioners, officers and employees of the Commission for
Section 9. Exempt Securities. 9.1. The requirement of registration under Subsection 8.1 shall
(1) the disclosure of any information, discussion or resolution of the Commission of a confidential
not as a general rule apply to any of the following classes of securities:
nature, or about the confidential operations of the Commission unless the disclosure is in
connection with the performance of official functions with the Commission or prior authorization
of the Commissioners; or (2) the use of such information for personal gain or to the detriment of (a) Any security issued or guaranteed by the Government of the Philippines, or by any
the government, the Commission or third parties: Provided, however, That any data or political subdivision or agency thereof, or by any person controlled or supervised by,
information required to be submitted to the President and/or Congress or its appropriate and acting as an instrumentality of said Government.
committee, or to be published under the provisions of this Code shall not be considered
confidential.
(b) Any security issued or guaranteed by the government of any country with which
the Philippines maintains diplomatic relations, or by any state, province or political
subdivision thereof on the basis of reciprocity: Provided, That the Commission may
require compliance with the form and content for disclosures the Commission may at the conversion price, would at the time of such conversion fall within the class of
prescribe. securities entitled to registration under this Code. Upon such conversion the par value
of the security surrendered in such exchange shall be deemed the price at which the
securities issued and delivered in such exchange are sold.
(c) Certificates issued by a receiver or by a trustee in bankruptcy duly approved by the
proper adjudicatory body.
(h) Brokers transaction, executed upon customers orders, on any registered
Exchange or other trading market.
(d) Any security or its derivatives the sale or transfer of which, by law, is under the
supervision and regulation of the Office of the Insurance Commission, Housing and
Land Use Rule Regulatory Board, or the Bureau of Internal Revenue. (i) Subscriptions for shares of the capitals stocks of a corporation prior to the
incorporation thereof or in pursuance of an increase in its authorized capital stocks
under the Corporation Code, when no expense is incurred, or no commission,
(e) Any security issued by a bank except its own shares of stock.
compensation or remuneration is paid or given in connection with the sale or
disposition of such securities, and only when the purpose for soliciting, giving or taking
9.2. The Commission may, by rule or regulation after public hearing, add to the foregoing any of such subscription is to comply with the requirements of such law as to the
class of securities if it finds that the enforcement of this Code with respect to such securities is percentage of the capital stock of a corporation which should be subscribed before it
not necessary in the public interest and for the protection of investors. can be registered and duly incorporated, or its authorized, capital increase.

Section 10. Exempt Transactions. 10.1. The requirement of registration under Subsection 8.1 (j) The exchange of securities by the issuer with the existing security holders
shall not apply to the sale of any security in any of the following transactions: exclusively, where no commission or other remuneration is paid or given directly or
indirectly for soliciting such exchange.

(a) At any judicial sale, or sale by an executor, administrator, guardian or receiver or


trustee in insolvency or bankruptcy. (k) The sale of securities by an issuer to fewer than twenty (20) persons in the
Philippines during any twelve-month period.

(b) By or for the account of a pledge holder, or mortgagee or any of a pledge lien
holder selling of offering for sale or delivery in the ordinary course of business and not (l) The sale of securities to any number of the following qualified buyers:
for the purpose of avoiding the provision of this Code, to liquidate a bonafide debt, a
security pledged in good faith as security for such debt.
(i) Bank;

(c) An isolated transaction in which any security is sold, offered for sale, subscription
(ii) Registered investment house;
or delivery by the owner therefore, or by his representative for the owners account,
such sale or offer for sale or offer for sale, subscription or delivery not being made in
the course of repeated and successive transaction of a like character by such owner, (iii) Insurance company;
or on his account by such representative and such owner or representative not being
the underwriter of such security.
(iv) Pension fund or retirement plan maintained by the Government of the
Philippines or any political subdivision thereof or manage by a bank or other
(d) The distribution by a corporation actively engaged in the business authorized by its persons authorized by the Bangko Sentral to engage in trust functions;
articles of incorporation, of securities to its stockholders or other security holders as a
stock dividend or other distribution out of surplus.
(v) Investment company or;

(e) The sale of capital stock of a corporation to its own stockholders exclusively, where
(vi) Such other person as the Commission may rule by determine as
no commission or other remuneration is paid or given directly or indirectly in
qualified buyers, on the basis of such factors as financial sophistication, net
connection with the sale of such capital stock.
worth, knowledge, and experience in financial and business matters, or
amount of assets under management.
(f) The issuance of bonds or notes secured by mortgage upon real estate or tangible
personal property, when the entire mortgage together with all the bonds or notes
10.2. The Commission may exempt other transactions, if it finds that the requirements of
secured thereby are sold to a single purchaser at a single sale.
registration under this Code is not necessary in the public interest or for the protection of the
investors such as by the reason of the small amount involved or the limited character of the
(g) The issue and delivery of any security in exchange for any other security of the public offering.
same issuer pursuant to a right of conversion entitling the holder of the security
surrendered in exchange to make such conversion: Provided, That the security so
10.3. Any person applying for an exemption under this Section, shall file with the Commission a
surrendered has been registered under this Code or was, when sold, exempt from the
notice identifying the exemption relied upon on such form and at such time as the Commission
provision of this Code, and that the security issued and delivered in exchange, if sold
by the rule may prescribe and with such notice shall pay to the Commission fee equivalent to
one-tenth (1/10) of one percent (1%) of the maximum value aggregate price or issued value of statement as provided in Section 14 hereof. The Commission shall enter an order declaring the
the securities. registration statement to be effective if it finds that the registration statement together with all
the other papers and documents attached thereto, is on its face complete and that the
requirements have been complied with. The Commission may impose such terms and conditions
Section 11. Commodity Futures Contracts. - No person shall offer, sell or enter into commodity
as may be necessary or appropriate for the protection of the investors.
futures contracts except in accordance with the rules, regulations and orders the Commission
may prescribe in the public interest. The Commission shall promulgate rules and regulations
involving commodity futures contracts to protect investors to ensure the development of a fair 12.7. Upon affectivity of the registration statement, the issuer shall state under oath in every
and transparent commodities market. prospectus that all registration requirements have been met and that all information are true
and correct as represented by the issuer or the one making the statement. Any untrue
statement of fact or omission to state a material fact required to be stated herein or necessary
Section 12. Procedure of Registration Securities. - 12.1. All securities required to be registered
to make the statement therein not misleading shall constitute fraud.
under Subsection 8. I shall be registered through the filing by the issuer in the main office of the
Commission, of a sworn registration statement with the respect to such securities, in such form
and containing such information and document as the Commission prescribe. The registration Section 13. Rejection and Revocation of Registration of Securities. 13.1. The Commission may
statement shall include any prospectus required or permitted to be delivered under Subsections reject a registration statement and refuse registration of the security there-under, or revoke the
8.2, 8.3, and 8.4. affectivity of a registration statement and the registration of the security there-under after the
due notice and hearing by issuing an order to such effect, setting forth its finding in respect
thereto, if it finds that:
12.2. In promulgating rules governing the content of any registration statement (including any
prospectus made a part thereof or annex thereto), the Commission may require the registration
statement to contain such information or documents as it may, by rule, prescribe. It may (a) The issuer:
dispense with any such requirements, or may require additional information or documents,
including written information from an expert, depending on the necessity thereof or their
(i) Has been judicially declared insolvent;
applicability to the class of securities sought to be registered.

(ii) Has violated any of the provision of this Code, the rules promulgate
12.3. The information required for the registration of any kind, and all securities, shall include,
pursuant thereto, or any order of the Commission of which the issuer has
among others, the effect of the securities issue on ownership, on the mix of ownership,
notice in connection with the offering for which a registration statement has
especially foreign and local ownership.
been filed

12.4. The registration statement shall be signed by the issuers executive officer, its principal
(iii) Has been or is engaged or is about to engage in fraudulent transactions;
operating officer, its principal financial officer, its comptroller, its principal accounting officer, its
corporate secretary, or persons performing similar functions accompanied by a duly verified
resolution of the board of directors of the issuer corporation. The written consent of the expert (iv) Has made any false or misleading representation of material facts in any
named as having certified any part of the registration statement or any document used in prospectus concerning the issuer or its securities;
connection therewith shall also be filed. Where the registration statement shares to be sold by
selling shareholders, a written certification by such selling shareholders as to the accuracy of
(v) Has failed to comply with any requirements that the Commission may
any part of the registration statement contributed to by such selling shareholders shall be filed.
impose as a condition for registration of the security for which the
registration statement has been filed; or
12.5. (a) Upon filing of the registration statement, the issuer shall pay to the Commission a fee
of not more than one-tenth (1/10) of one per centum (1%) of the maximum aggregate price at
(b) The registration statement is on its face incomplete or inaccurate in any material
which such securities are proposed to be offered. The Commission shall prescribe by the rule
respect or includes any untrue statements of a material fact required to be stated
diminishing fees in inverse proportion the value of the aggregate price of the offering.
therein or necessary to make the statement therein not misleading; or

(b) Notice of the filing of the registration statement shall be immediately published by
(c) The issuer, any officer, director or controlling person performing similar functions,
the issuer, at its own expense, in two (2) newspapers of general circulation in the
or any under writer has been convicted, by a competent judicial or administrative
Philippines, once a week for two (2) consecutive weeks, or in such other manner as
body, upon plea of guilty, or otherwise, of an offense involving moral turpitude and /or
the Commission by the rule shall prescribe, reciting that a registration statement for
fraud or is enjoined or restrained by the Commission or other competent or
the sale of such securities has been filed, and that aforesaid registration statement, as
administrative body for violations of securities, commodities, and other related laws.
well as the papers attached thereto are open to inspection at the Commission during
business hours, and copies thereof, photostatic or otherwise, shall be furnished to
interested parties at such reasonable charge as the Commission may prescribe. For the purposes of this subsection, the term "competent judicial or administrative body" shall
include a foreign court of competent jurisdiction as provided for under Rules of Court.

12.6. Within forty-five (45) days after the date of filing of the registration statement, or by such
later date to which the issuer has consented, the Commission shall declare the registration
statement effective or rejected, unless the applicant is allowed to amend the registration
13.2. The Commission may compel the production of all the books and papers of such issuer, Code. The Commission may also suspend the right to sell and offer for the sale such security
and may administer oaths to, and examine the officers of such the issuer or any other person pending further investigation, by entering an order specifying the grounds for such action, and
connected therewith as to its business and affairs. by notifying the issuer, underwriter, dealer or broker known as participating in such offering.

13.3. If any issuer shall refuse to permit an examination to be made by the Commission, its 15.2. The refusal to furnish information required by the Commission may be a ground for the
refusal shall be ground for the refusal or revocation of the registration of its securities. issuance of an order of suspension pursuant to Subsection 15.1. Upon the issuance of any such
order and notification to the issuer, underwriter, dealer or broken know as participating in such
offering, no further offer or sale of any such security shall be made until the same is lifted or set
13.4. If the Commission deems its necessary, it may issue an order suspending the offer and
aside by the Commission. Otherwise such sale shall be void.
sale of the securities pending any investigation. The order shall state the grounds for taking such
action, but such order of suspension although binding upon the persons notified thereof, shall be
deemed confidential, and shall not be published. Upon the issuance of the suspension order, no 15.3. Upon issuance of an order of suspension, the Commission shall conduct a hearing. If the
further offer or sale of such security shall be made until the same is lifted or set aside by the Commission determines that the sale of any security should be revoked is shall issue an order
Commission. Otherwise, such sale shall be void. prohibiting sale of such security.

13.5. Notice of issuance of such order shall be given to the issuer and every dealer and broker 15.4. Until the issuance of a final order, the suspension of the right to sell, though binding upon
who shall have notified the Commission of an intention to sell such security. the persons notified there of, shall be deemed confidential, and shall not be published, unless it
shall appear that the order of suspension has been violated after notice. If, however, the
Commission finds that the sale of the security will neither be fraudulent nor result in fraud, it
13.6. A registration statement may be withdrawn by the issuer only with the consent of the
shall forthwith issue an order revoking the order of suspension, and such security shall be
Commission.
restored to its status as a registered security as of the date of such order of suspension.

Section 14. Amendment to the Registration Statement. 14.1. If a registration statement is on


CHAPTER IV
its face incomplete or inaccurate in any material respect, the Commission shall issue an order
REGULATION OF PRE-NEED PLANS
directing the amendment of the registration statement. Upon compliance with such order, the
amended registration statement shall become effective in accordance with the procedure
mentioned in Subsection 12.6 hereof. Section 16. Pre-Need Plans. No person shall sell or offer for sale to the public any pre-need
plan except in accordance with rules and regulations which the Commission shall prescribe. Such
rules shall regulate the sale of pre-need plans by, among other things, requiring the registration
14.2. An amendment filed prior to the effective date of the registration statement shall
of pre-need plans, licensing persons involved in the sale of pre- need plans, requiring disclosures
recommence the forty-five (45) day period within which the Commission shall act on a
to prospective plan holders, prescribing advertising guidelines, providing for uniform accounting
registration statement. An amendment filed after the effective date of the registration statement
system, reports and recording keeping with respect to such plans, imposing capital, bonding and
shall become effective only upon such date as determined by the Commission.
other financial responsibility, and establishing trust funds for the payment of benefits under such
plans.
14.3. If any change occurs in the facts set forth in a registration statement, the issuer shall file
an amendment thereto setting forth the change.
CHAPTER V
REPORTORIAL REQUIREMENTS
14.4. If, at any time, the Commission finds that the registration statement contains any false
statement or omits to state any fact required to be stated therein or necessary to make the
Section 17. Periodic and Other Reports of Issuer. 17.1. Every issuer satisfying the requirements
statements therein not misleading, the Commission may conduct an examination, and, after due
in Subsection 17.2 hereof shall file with the Commission:
notice and hearing, issue an order suspending the affectivity registration statement. If the
statement is duly amended, the suspension order may be lifted.
(a) Within one hundred thirty-five (135) days, after the end of the issuers fiscal year,
or such other time as the Commission may prescribe, an annual report which shall
14.5. In making such examination the Commission or any officer or officers designated by it may
include, among others, a balance sheet, profit and loss statement and statement of
administer oaths and affirmations and shall have access to, and may demand the production of,
cash flows, for such last fiscal year, certified public accountant, an a management
any books, records or documents relevant to the examination. Failure of the issuer, underwriter,
discussion and analysis of results of operation; and
or any other person to cooperate, or his obstruction or refusal to undergo an examination, shall
be a ground for the issuance of a suspension order.
(b) Such other periodical reports for interim fiscal periods and current reports on
significant developments of the issuer as the Commission may prescribe as necessary
Section 15. Suspension of Registration. - 15.1. If at any time, the information contained in the
to keep current information on the operation of the business and financial condition of
registration statement filed is or has become misleading, incorrect, inadequate or incomplete in
the issuer.
any material respect, or the sale or offering for sale of the security registered thereunder may
work or tend to work a fraud, the Commission may require from the issuer such further
information as may in its judgement be necessary to enable the Commission to ascertain 17.2. The reportorial requirements of Subsection 17.1 shall apply to the following:
whether the registration of such security should be revoked on any ground specified in this
(a) An issuer which has sold a class of its securities pursuant to a registration under (c) The number of shares of such security which are beneficially owned, and the
section 12 hereof: Provided however, That the obligation of such issuer to file reports number of shares concerning which there is a right to acquire, directly or indirectly,
shall be suspended for any fiscal year after the year such registration became by; (i) such person, and (ii) each associate of such person, giving the background,
effective if such issuer, as of the first day of any such fiscal year, has less than one identity, residence, and citizenship of each such associate; and
hundred (100) holder of such class securities or such other number as the Commission
shall prescribe and it notifies the Commission of such;
(d) Information as to any contracts, arrangements, or understanding with any person
with respect to any securities of the issuer including but not limited to transfer, joint
(b) An issuer with a class of securities listed for trading on an Exchange; and ventures, loan or option arrangements, puts or call guarantees or division of losses or
profits, or proxies naming the persons with whom such contracts, arrangements, or
understanding have been entered into, and giving the details thereof.
(c) An issuer with assets of at least Fifty million pesos (50,000,000.00) or such other
amount as the Commission shall prescribe, and having two hundred (200) or more
holder each holding at least one hundred (100) share of a class of its equity 18.2. If any change occurs in the facts set forth in the statements, an amendment shall be
securities: Provided, however, That the obligation of such issuer to file report shall be transmitted to the issuer, the Exchange and the Commission.
terminate ninety (90) days after notification to the Commission by the issuer that the
number of its holders holding at least one hundred (100) share reduced to less than
18.3. The Commission, may permit any person to file in lieu of the statement required by
one hundred (100).
subsection 17.1 hereof, a notice stating the name of such person, the shares of any equity
securities subject to Subsection 17.1 which are owned by him, the date of their acquisition and
17.3. Every issuer of a security listed for trading on an Exchange a copy of any report filed with such other information as the commission may specify, if it appears to the commission that such
the Commission under Subsection 17.1. hereof. securities were acquired by such person in the ordinary course of his business and were not
acquired for the purpose of and do not have the effect of changing or influencing the control of
the issuer nor in connection with any transaction having such purpose or effect.
17.4. All reports (including financial statements) required to be filed with the Commission
pursuant to Subsection 17.1 hereof shall be in such form, contain such information and be filed
at such times as the Commission shall prescribe, and shall be in lieu of any periodical or current CHAPTER VI
reports or financial statements otherwise required to be filed under the Commission shall PROTECTION OF SHAREHOLDERS INTERESTS
prescribe.

Section 19. Tender Offers. Any person or group of persons acting in concert who intends to
17.5. Every issuer which has a class of equity securities satisfying any of the requirements in acquire at least 15% of any class of any equity security of a listed corporation of any class of any
Subsection 17.2 shall furnish to each holder of such equity security an annual report in such equity security of a corporation with assets of at least fifty million pesos (50,000,000.00) and
form and containing such information as the Commission shall prescribe. having two hundred(200) or more stockholders at least one hundred shares each or who intends
to acquire at least thirty percent(30%) of such equity over a period of twelve months(12) shall
make a tender offer to stockholders by filling with the Commission a declaration to that effect;
17.6. Within such period as the Commission may prescribe preceding the annual meeting of the
and furnish the issuer, a statement containing such of the information required in Section 17 of
holders of any equity security of a class entitled to vote at such meeting , the issuer shall
this Code as the Commission may prescribe. Such person or group of persons shall publish all
transmit to such holders an annual report in conformity with subsection 17.5.
request or invitations or tender offer or requesting such tender offers subsequent to the initial
solicitation or request shall contain such information as the Commission may prescribe, and shall
Section 18. Reports by five per centum (5%) Holders of Equity Securities. 18.1. In every case be filed with the Commission and sent to the issuer not alter than the time copies of such
in which an issuer satisfies the requirements of Subsection 17.2 hereof any person who acquires materials are first published or sent or given to security holders.
directly or indirectly the beneficial ownership of more than five of per centum (5%) of such class
or in excess of such lesser per centum as the Commission by rule may prescribe, shall, within
(a) Any solicitation or recommendation to the holders of such a security to accept or
ten (10) days after such acquisition or such reasonable time as fixed by the Commission, submit
reject a tender offer or request or invitation for tenders shall be made in accordance
to the issuer of the securities, to the Exchange where the security is traded, and to the
with such rules and regulations as may be prescribe.
Commission a sworn statement containing the following information and such order information
as the Commission may require in the public interest or for the protection of investors.
(b) Securities deposited pursuant to a tender offer or request or invitation for tenders
may be withdrawn by or on behalf of the depositor at any time throughout the period
(a) The personal background, identity, residence, and citizenship of, and the nature of
that tender offer remains open and if the securities deposited have not been
such beneficial ownership by, such person and all other person by whom or on whose
previously accepted for payment, and at any time after sixty (60) days from the date
behalf the purchases are effected; in the event the beneficial owner is a juridical
of the original tender offer to request or invitation, except as the Commission may
person, the of business of the beneficial owner shall also be reported;
otherwise prescribe.

(b) If the purpose of the purchases or prospective purchases is to acquire control of


(c) Where the securities offered exceed that which person or group of persons is
the business of the issuer of the securities, any plans or proposals which such persons
bound or willing to take up and pay for, the securities that are subject of the tender
may have that will effect a major change in its business or corporate structure;
offers shall be taken up us nearly as may be pro data, disregarding fractions,
according to the number of securities deposited to each depositor. The provision of
this subject shall also apply to securities deposited within ten (10) days after notice of under Section 20. The Commission shall prescribe by rule diminishing fees in inverse proportion
increase in the consideration offered to security holders, as described in paragraph (e) to the value of the aggregate price of the offering.
of this subsection, is first published or sent or given to security holders.

Section 22. Internal Record Keeping and Accounting Control. - Every issuer which has a class of
(d) Where any person varies the terms of a tender offer or request or invitation for securities that satisfies the requirements of Subsection 17.2 shall:
tenders before the expiration thereof by increasing the consideration offered to
holders of such securities, such person shall pay the increased consideration to each
22.1. Device and maintain a system of internal accounting controls sufficient to provide
security holder whose securities are taken up and paid for whether or not such
reasonable assurance that: (a) Transactions and access to assets are pursuant to management
securities have been taken up by such person before the variation of the tender offer
authorization; (b) Financial statements are provided in conformity with generally accepted
or request or invitation.
accounting principles that are adopted by the Accounting standards council and the rules
promulgated by the Commission with the regard to the preparation of the financial statements;
19.2. It shall be lawful for any person to make any untrue statement of a material fact or omit to and (c) Recorded assets are compared with existing assets at reasonable intervals and
state any material fact necessary in order to make the statements made in the light of the differences are reconciled.
circumstances under which they are made, not mis-leading, or to engaged to any fraudulent,
deceptive or manipulative acts or practices, in connection with any tender offer or request or
Section 23. Transactions of Directors officers and Principal Stockholders. 23.1. Every person
invitation for tenders, or any solicitation for any security holders in opposition to or in favor of
who is directly or indirectly the beneficial owner of more than ten per centum (10%) of any class
any such favor of any such offer, request, or invitation. The Commission shall, for the purposes
of any equity security which satisfies the requirements of subsection 17.2, or who is a director or
of this subsection, define and prescribe means reasonably designed to prevent, such acts and
an officer of the issuer of such security, shall file, at the time either such requirement is first
practices as are fraudulent, deceptive and manipulative.
satisfied or after ten days after he becomes such a beneficial owner, director, or officer, a
statement form the Commission and, if such security is listed for trading on an exchange, also
Section 20. Proxy solicitations. - 20.1. Proxies must be issued and proxy solicitation must be with the exchange of the amount of all the equity security of such issuer of which he is the
made in accordance with rules and regulations to be issued by the Commission; beneficial owner, and within ten days after the close of each calendar month thereafter, if there
has been a change in such ownership at the close of the calendar month and such changes in
his ownership as have occurred during such calendar month.
20.2. Proxies must be in writing, signed by the stockholder or his duly authorized representative
and file before the scheduled meeting with the corporate secretary.
23.2. For the purpose of preventing the unfair use of information which may have been obtained
by such beneficial owner, director or officer by reason of his relationship to the issuer, any profit
20.3. Unless otherwise provided in the proxy, it shall be valid only for the meeting for which it is
realized by him from any purchase or sale, or any sale or purchase, of any equity security of
intended. No proxy shall be valid only for the meting for which it is intended. No proxy shall be
such issuer within any period of less than (6) months unless such security was acquired in good
valid and effective for a period longer than five (5) years at one time.
faith in connection with a debt previously contracted, shall inure to and be recoverable by the
issuer, irrespective of any intention of holding the security purchased or of not repurchasing the
20.4. No broker or dealer shall give any proxy, consent or any authorization, in respect of any security sold for a period exceeding six (6) months. Suit to recover such profit may be instituted
security carried for the account of the customer, to a person other than the customer, without before the Regional Trial Court by the issuer, or by the owner of any security of the issuer in the
written authorization of such customer. name and in behalf of the issuer if the issuer shall fail or refuse to bring such suit within sixty
(60) days after request or shall fail diligently to prosecute the same thereafter, but not such shall
be brought more than two years after the date such profit was realized. This Subsection shall not
20.5. A broker or dealer who holds or acquire the proxy for at least ten percent (10%) or such
be construed to cover any transaction were such beneficial owner was not such both time of the
percentage as the commission may prescribe of the outstanding share of such issuer, shall
owner or the sale, or the sale of purchase, of the security involved, or any transaction or
submit a report identifying the beneficial owner of ten days after such acquisition, for its own
transactions which the Commission by rules and regulations may exempt as not comprehended
account or customer, to the issuer of security, to the exchange where the security is traded and
within the purpose of this subsection.
to the Commission.

23.3. It shall be unlawful for any such beneficial owner, director or officer, directly or indirectly,
Section 21. Fees of Tender Offers and Certain Proxy Solicitations. At the time of filling with the
to sell any equity security of such issuer if the person selling the principal: (a) Does not own the
Commission of any statement required under Section 19 for any tender offer or Section 72.2 for
security sold: or (b) If owning the security, does not deliver not deliver it against such sale within
issuer purchases, or Section 20 for proxy or consent solicitation, The Commission may require
20 days thereafter, or does not within five days after such sale deposit in the mails or the
that the person making such filing pay a fee of not more than one-tenth (1/10)(1%) of;
unusual channels of transportation; but no person shall be deemed to have violated this
subsection if he proves not withstanding the exercise of good faith he was unable to make such
21.1. The propose aggregate purchase price in the case of a transaction under Section 20 or delivery in such time, or that to do so would cause undue inconvenience or expense.
72.2; or

23.4. The provisions of subsection 23.2 shall not apply to any purchase and sale, or sale and
21.2. The proposed payment in cash, and ion value of any securities or property to be purchase, and the provisions of Subsection 23.3 shall not apply to any sale, of an equity security
transferred in the acquisition, merger or consolidating, or the cash and value of any securities not then or thereafter held by him and an investment account, by a dealer in the ordinary course
proposed to be received upon the sale disposition of such assets in the case of a solicitation of his business and incident to the establishment or maintenance by him of a primary or
secondary market, otherwise than on an Exchange, for such security. The Commission may, by
such rules and regulations as it deems necessary or appropriate in the public interest, define and 24.3. The foregoing provisions notwithstanding, the Commission, having due regard to the public
prescribe terms and conditions with respect to securities held in an investment account and interest and the protection of investors, may, by rules and regulations, allow certain acts or
transactions made in the ordinary course of business and incident to the establishment or transactions that may otherwise be prohibited under this Section.
maintenance of a primary or secondary market.

Section 25. Regulation of Option Trading. No member of an Exchange shall, directly or


CHAPTER VII indirectly endorse or guarantee the performance of any put, call, straddle, option or privilege in
PROHIBITIONS AND FRAUD, MANIPULATION AND INSIDER TRADING relation to any security registered on a securities exchange. The terms "put", "call", "straddle",
"option", or "privilege" shall not include any registered warrant, right or convertible security.

Section 24. Manipulation of Security Prices; Devices and Practices. 24.1 It shall be unlawful
for any person acting for himself or through a dealer or broker, directly or indirectly: Section 26. Fraudulent Transactions. It shall be unlawful for any person, directly or indirectly,
in connection with the purchase or sale of any securities to:

(a) To create a false or misleading appearance of active trading in any listed security
traded in an Exchange of any other trading market (hereafter referred to purposes of 26.1. Employ any device, scheme, or artifice to defraud;
this Chapter as "Exchange"):

26.2. Obtain money or property by means of any untrue statement of a material fact of any
(i) By effecting any transaction in such security which involves no change in omission to state a material fact necessary in order to make the statements made, in the light of
the beneficial ownership thereof; the circumstances under which they were made, not misleading; or

(ii) By entering an order or orders for the purchase or sale of such security 26.3. Engage in any act, transaction, practice or course of business which operates or would
with the knowledge that a simultaneous order or orders of substantially the operate as a fraud or deceit upon any person.
same size, time and price, for the sale or purchase of any such security, has
or will be entered by or for the same or different parties; or
Section 27. Insiders Duty to Disclose When Trading. 27.1. It shall be unlawful for an insider to
sell or buy a security of the issuer, while in possession of material information with respect to
(iii) By performing similar act where there is no change in beneficial the issuer or the security that is not generally available to the public, unless: (a) The insider
ownership. proves that the information was not gained from such relationship; or (b) If the other party
selling to or buying from the insider (or his agent) is identified, the insider proves: (I) that he
disclosed the information to the other party, or (ii) that he had reason to believe that the other
(b) To affect, alone or with others, a securities or transactions in securities that: (I)
party otherwise is also in possession of the information. A purchase or sale of a security of the
Raises their price to induce the purchase of a security, whether of the same or a
issuer made by an insider defined in Subsection 3.8, or such insiders spouse or relatives by
different class of the same issuer or of controlling, controlled, or commonly controlled
affinity or consanguinity within the second degree, legitimate or common-law, shall be presumed
company by others; or (iii) Creates active trading to induce such a purchase or sale
to have been effected while in possession of material nonpublic information if transacted after
through manipulative devices such as marking the close, painting the tape, squeezing
such information came into existence but prior to dissemination of such information to the public
the float, hype and dump, boiler room operations and such other similar devices.
and the lapse of a reasonable time for market to absorb such information: Provided, however,
That this presumption shall be rebutted upon a showing by the purchaser or seller that he was
(c) To circulate or disseminate information that the price of any security listed in an aware of the material nonpublic information at the time of the purchase or sale.
Exchange will or is likely to rise or fall because of manipulative market operations of
any one or more persons conducted for the purpose of raising or depressing the price
27.2. For purposes of this Section, information is "material nonpublic" if: (a) It has not been
of the security for the purpose of inducing the purpose of sale of such security.
generally disclosed to the public and would likely affect the market price of the security after
being disseminated to the public and the lapse of a reasonable time for the market to absorb the
(d) To make false or misleading statement with respect to any material fact, which he information; or (b) would be considered by a reasonable person important under the
knew or had reasonable ground to believe was so false or misleading, for the purpose circumstances in determining his course of action whether to buy, sell or hold a security.
of inducing the purchase or sale of any security listed or traded in an Exchange.

27.3. It shall be unlawful for any insider to communicate material nonpublic information about
(e) To effect, either alone or others, any series of transactions for the purchase and/or the issuer or the security to any person who, by virtue of the communication, becomes an
sale of any security traded in an Exchange for the purpose of pegging, fixing or insider as defined in Subsection 3.8, where the insider communicating the information knows or
stabilizing the price of such security; unless otherwise allowed by this Code or by rules has reason to believe that such person will likely buy or sell a security of the issuer whole in
of the Commission. possession of such information.

24.2. No person shall use or employ, in connection with the purchase or sale of any security any 27.4. (a) It shall be unlawful where a tender offer has commenced or is about to commence for:
manipulative or deceptive device or contrivance. Neither shall any short sale be effected nor any
stop-loss order be executed in connection with the purchase or sale of any security except in
(i) Any person (other than the tender offeror) who is in possession of material
accordance with such rules and regulations as the Commission may prescribe as necessary or
nonpublic information relating to such tender offer, to buy or sell the securities of the
appropriate in the public interest for the protection of investors.
issuer that are sought or to be sought by such tender offer if such person knows or has person. The application shall be separately signed and certified by the registered broker or
reason to believe that the information is nonpublic and has been acquired directly or dealer to which such salesman or associated person is to become affiliated, or by the issuer in
indirectly from the tender offeror, those acting on its behalf, the issuer of the the case of a salesman employed appointed or authorized solely by such issuer. The application
securities sought or to be sought by such tender offer, or any insider of such issuer; shall be in such form and contain such information and documents concerning the salesman or
and associated person as the Commission by rule shall prescribe. For purposes of this Section, a
salesman shall not include any employee of an issuer whose compensation is not determined
directly or indirectly on sales of securities if the issuer.
(ii) Any tender offeror, those acting on its behalf, the issuer of the securities sought or
to be sought by such tender offer, and any insider of such issuer to communicate
material nonpublic information relating to the tender offer to any other person where 28.7. Applications filed pursuant to Subsections 28.5 and 28.6 shall be accompanied by a
such communication is likely to result in a violation of Subsection 27.4 (a)(I). registration fee in such reasonable amount prescribed by the Commission.

(b) For purposes of this subsection the term "securities of the issuer sought or to be sought by 28.8. Within thirty (30) days after the filing of any application under this Section, the
such tender offer" shall include any securities convertible or exchangeable into such securities Commission shall by order: (a) Grant registrations if it determines that the requirements of this
or any options or rights in any of the foregoing securities. Section and the qualifications for registrations set forth in its rules and regulations have been
satisfied ; or (b) Deny said registration.

CHAPTER VIII
REGULATION OF SECURITIES MARKET PROFESSIONALS 28.9. The names and addresses of all persons approved for the registration as brokers, dealers,
associated persons or salesman and all orders of the Commission with respect thereto shall be
recorded in a Register of Securities Market Professionals kept in the office of the Commission
Section 28. Registration of Brokers, Dealers, Salesmen and Associated Persons. 28.1. No
which shall be open to public inspection.
person shall engage in the business of buying or selling securities in the Philippine as a broker or
dealer, or act as a salesman, or an associated person of any broker or dealer unless registered
as such with the Commission. 28.10. Every person registered pursuant to this Section shall file with the Commission, in such
form as the Commission shall prescribe, information necessary to keep the application for
registration current and accurate, including in the case of a broker or dealer changes in
28.2. No registered broker or dealer shall employ any salesman or any associated person, and
salesmen, associated persons and owners thereof.
no issuer shall employ any salesman, who is not registered as such with the Commission.

28.11. Every person registered pursuant to this Selection shall pay to the Commission an annual
28.3. The Commission, by rule or order, may conditionally or unconditionally exempt from
fee at such time and in such reasonable amount as the Commission shall prescribe. Upon notice
subsection 28.1 and 28.2 any broker, dealer, salesman, associated person of any broker or
by the Commission that such annual fee has not been paid as required, the registration of such
dealer, or any class of the foregoing, as it deems consistent with the public interest and the
person shall be suspended until payment has been made.
protection of investors.

28.12. The registration of a salesman or associated person shall be automatically terminated


28.4. The Commission shall promulgate rules and regulation prescribing the qualifications for
upon the cessation of his affiliation with said registered broker or dealer or with an issuer in the
registration of each category of applicant, which shall, among other things, require as a
case of a salesman employed, appointed or authorized by such issuer. Promptly following any
condition for registration that:
such cessation of affiliation, the registered broker or dealer, issuer as the case may be, shall file
with the Commission a notice of separation of such salesman or associated person.
(a) If a natural person, the applicant satisfactorily pass a written examination as to his
proficiency and knowledge in the area of activity for which registration is sought;
Section 29. Revocation, Refusal or Suspension of Registration of Brokers, Dealers, Salesmen
and Associated Persons. 29.1. Registration under Section 28 of this Code may be refused , or
(b) In the case of a broker or dealer, the applicant satisfy a minimum net capital as any registration granted thereunder may be revoked, suspended, or limitations placed thereon,
prescribed by the Commission, and provide a bond or other security as the by the Commission if, after due notice and hearing the Commission determines the application
Commission may prescribe to secure compliance with the provisions of this Code; and or registrant.

(c) If located outside of the Philippines, the applicant files a written consent to service (a) Has willfully violated any provision of this Code, any rule, regulation or order made
of process upon the Commission pursuant to Section 65 hereof. hereunder, or any other law administered by the Commission, or in the case of a
registered broker, dealer or associated persons has failed to supervise, with a view to
preventing such violation, another person who commits such violation;
28.5. A broker or dealer may apply for registration by filing with the Commission a written
application in such forms and containing such information and documents concerning such
broker or dealer as the Commission by rule shall prescribe. (b) Has willfully made or caused to be made a materially false or misleading
statement in any application for registration or report filed with the Commission or a
self-regulatory organization, or has willfully omitted to state any material fact that is
28.6. Registration of a salesman or of an associated person of a registered broker or dealer may
required to be stated therein;
be made upon written application filed with the Commission by such salesman or associated
(c) Has failed to satisfy the qualifications or requirements for registration prescribed 29.4. It shall be sufficient cause for refusal, revocation or suspension of a brokers or dealers
under Section 28 and the rules and regulations of the Commission promulgated registrations, if any associated person thereof or any juridical entity controlled by such
thereunder; associated person has committed any act or omission or is subject to any disability enumerated
in paragraphs (a) through (i) of Subsection 29. I hereof.

(d) Has been convicted, by a competent judicial or administrative body of an offense


involving moral turpitude, fraud, embezzlement, counterfeiting, theft, estafa, Section 30. Transactions and Responsibility of Brokers and Dealers. 30.1 No brokers or dealer
misappropriation, forgery, bribery, false oath, or perjury, or of a violation of securities, shall deal in or otherwise buy or sell, for its own account or for its own account or for the account
commodities, banking, real state or insurance laws; of customers, securities listed on an Exchange issued by any corporation where any
stockholders, director, associated person or salesman, or authorized clerk of said broker or
dealer and all the relatives of the foregoing within the fourth civil degree of consanguinity or
(e) Is enjoined or restrained by a competent judicial or administrative body from
affinity, is at the same time holding office in said issuer corporation as a director, president, vice-
engaging in securities, commodities, banking, real state or insurance activities or from
president, manager, treasurer, comptroller, secretary or any office trust and responsibility, or is
willfully violating laws governing such activities;
a controlling of the issuer.

(f) Is subject to an order of a competent judicial or administrative body refusing,


30.2. No broker or dealer shall effect any transaction in securities or induce or attempt to induce
revoking or suspending any registration, licensed or other permit under this Code, the
the purchase or sale of any security except in compliance with such rules and regulations as the
rules and regulations promulgated thereunder, any other law administered by the
Commission shall prescribe to ensure fair and honest dealings in securities and provide financial
Commission;
safeguards and other standards for the operations of brokers and dealers, including the
establishments of minimum net capital requirements, the acceptance of custody and use of
(g) Is subject to an order of a self-regulatory organization suspending or expelling him securities of customers, and the carrying and use of deposits and credit balances of customers.
from membership or participating therein or from association with a member or
participant thereof;
Section 31. Development of Securities Market Professionals. The Commission in joint
undertaking with self regulatory organizations, organizations and associations of finance
(h) Has been found by a competent judicial or administrative body to have willfully professionals as well as private educational and research institute shall undertake or
violated any provisions of securities, commodities, banking, real state or insurance facilitate/organize continuing training, conferences/seminars, updating programs, research and
laws, or has willfully aided, abetted, counseled, commanded, induced or procured such developments as well as technology transfer at the latest and advance trends in issuance and
violation; or trading of securities, derivatives, commodity trades and other financial instruments, as well as
securities markets of other countries.

(i) Has been judicially declared insolvent.


CHAPTER IX
EXCHANGES AND OTHER SECURITIES TRADING MARKETS
For purposes of this subsection, the term "competent judicial or administrative body" shall
include a foreign court of competent jurisdiction and a foreign financial regulator.
Section 32. Prohibition on Use of Unregistered Exchange; Regulation of Over-the-Counter
Markets. 32.1. No broker, dealer, salesman, associated person of a broker or dealer, or
29.2. (a) In case of charges against a salesman or associated person, notice thereof shall also be
Exchange, directly or indirectly shall make use of any facility of an Exchange in the Philippines to
given the broker, dealer or issuer employing such salesman or associated person.
effect any transaction in a security, or to report such transaction, unless such Exchange is
registered as such under Section 33 of this Code.
(b) Pending the hearing, the Commission shall have the power to order the
suspensions of such brokers, dealers, associated persons or salesmans
32.2. (a) No broker, dealer, salesman or associated person of a broker or dealer, singly or in
registration: Provided, That such order shall state the cause for such suspension. Until
concert with any other person, shall make, create or operate, or enable another to make, create
the entry of a final order, the suspension of such registration, though binding upon the
or operate, any trading market, otherwise than on a registered Exchange, for the buying and
persons notified thereof, shall be deemed confidential, and shall not be published,
selling of any security, except in accordance with rules and regulations the Commission may
unless it shall appear that the order of suspension has been violated after notice.
prescribe.

29.3. The orders of the Commission refusing, revoking, suspending or placing limitations on a
(b) The Commission may promulgate rules and regulations governing transactions by
registration as herein above provided, together with its findings, shall be entered in the Register
brokers, dealers, salesmen or associated persons of a broker or dealer, over any
of Securities Market Professionals. The suspension or revocation of the registration of a dealer or
facilities of such trading market and may require such market to be administered by a
broker shall also automatically suspend the registration of all salesmen and associated persons
self-regulatory organization determined by the Commission as capable of insuring the
affiliated with such broker or dealer. The order of the Commission refusing, revoking, suspending
protection of investors comparable to that provided in the case of a registered
or placing limitations on a registration as herein above provided, together with its findings, shall
Exchange. Such self-regulatory organization must provide a centralized marketplace
be entered in the Register of Securities Market Professionals. The suspension or revocation of the
for trading and must satisfy requirements comparable to those prescribed for
registration of a dealer or broker shall also automatically suspend the registration of a dealer or
registration of Exchanges in Section 33 of this Code.
broker shall also automatically suspend the registration of all salesmen and associated persons
affiliated with such broker or dealer.
Section 33. Registration of Exchanges. 33.1. Any Exchange may be registered as such with limitation of any person from association with member, and the prohibition or
the Commission under the terms and conditions hereinafter provided in this Section and Section limitation of any person from access to services offered by the Exchange;
40 hereof, by filing an application for registration in such form and containing such information
and supporting documents as the Commission by rule shall prescribe, including the following:
(f) That the brokers in the board of the Exchange shall comprise of not more than
forty-nine percent (49%) of such board and shall proportionately represent the
(a) An undertaking to comply and enforce by its members with the provisions of this Exchange membership in terms of volume/value or trade and paid up capital, and that
Code, its implementing rules and regulations and the rules of the Exchange; any natural person associated with a juridical entity that is a member for this
purpose; Provide, That any registered Exchange existing prior to the affectivity of this
Code shall immediately comply with this requirement;
(b) The organizational charts of the Exchange, rules of procedure, and a list of its
officers and members;
(g) For the board of the Exchange to include in its composition (1) the president of the
Exchange, and (ii) no less than fifty one percent (51%) of the remaining members of
(c) Copies of the rules of the Exchange; and
the board to be comprised of three (3) independent directors and persons who
represent the interests of issuers, investors, and other market participants, who are
(d) An undertaking that in the event a member firm becomes insolvent or when the not associated with any broker or dealer or member of the Exchange for a period of
Exchange shall have found that the financial condition of its member firm has so two (2) years prior to his/her appointment. No officer or employee of a member, its
deteriorated that it cannot readily meet the demands of its customers for the delivery subsidiaries or affiliates or related interests shall become an independent director:
of securities and/or payment of sales proceeds, the Exchange shall, upon order of the Provided, however, That the Commission may by rule, regulation, or order upon
Commission, take over the operation of the insolvent member firm and immediately application, permit the exchange organized as a stock corporation to use a different
proceed to settle the member firms liabilities to its customers. governance structure: Provided, further, That the Commission is satisfied that the
Exchange is acting in the public interest and is able to effectively operate as a self-
regulatory organization under this Code: Provided, finally, That any registered
33.2. Registrations of an Exchange shall be granted upon compliance with the following
exchange existing prior to the affectivity of this Code shall immediately comply with
provisions:
this requirement.

(a) That the applicant is organized as a stock corporation: Provided, That any
(h) The president and other management of the Exchange to consist only of persons
registered Exchange existing prior to the effectivity of this Code shall within one (1)
who are not members and are not associated in any capacity, directly or indirectly
year reorganize as a stock corporation pursuant to a demutualization plan approved
with any broker or dealer or member or listed company of the Exchange: Provided,
by the Commission;
That the Exchange may only appoint, and a person may only serve, as an officer of the
exchange if such person has not been a member or affiliated with any broker, dealer,
(b) That the applicant is engaged solely in the business of operating an or member of the Exchange for a period of at least two (2) years prior to such
exchange: Provided, however, That the Commission may adopt rules, regulations or appointment;
issue an order, upon application, exempting an Exchange organized as a stock
corporation and owned and controlled by another juridical person from the restriction.
(i) The transparency of transactions on the Exchange;

(c) Where the Exchange is organized as a stock corporation, that no person may
(j) The equitable allocation of reasonable dues, fees, and other charges among
beneficially own or control, directly or indirectly, more than five percent (5%) of the
members and issuers and other persons using any facility or system which the
voting rights of the Exchange and no industry or business group may beneficially own
Exchange operates or controls;
or control, directly or indirectly, more than twenty percent (20%) of the voting rights of
the Exchange: Provided, however, That the Commission may adopt rules, regulations
or issue an order, upon application from this prohibition where it finds that such (k) Prevention of fraudulent and manipulative acts and practices, promotion of just
ownership or control will not negatively impact on the exchanges ability to effectively and equitable principles of trade, and, in general, protection of investors and the
operate in the public interest. public interest; and

(d) The expulsion, suspension, or disciplining of a member and persons associated (l) The transparent, prompt and accurate clearance and settlement of transactions
with a member for conduct or proceeding inconsistent with just and equitable effected on the Exchange.
principles of fair trade, and for violations of provisions of this Code, or any other Act
administered by the Commission, the rules, regulations and orders thereunder, or the
33.3. If the Commission finds that the applicant Exchange is capable of complying and enforcing
rules of the Exchange;
compliance by its members, and persons associated with such members, with the provisions of
this Code, and the rules of the Exchange, and that the rules of Exchange are fair, just and
(e) A fair procedure for the disciplining of members and persons associated with adequate, the Commission shall cause such Exchange to be registered. If, after notice due and
members, the denial of membership to any person seeking to be a member, the hearing, the Commission finds otherwise, the application shall be denied.
barring of any person from association with a member, and the prohibition or
33.4. Within ninety (90) days after the filing of the application the Commission may issue an following the issuance of the order of suspension, shall notify the affected issuer of the reasons
order either granting or denying registration as an Exchange, unless the Exchange applying for for such suspension and provide such issuer with an opportunity for hearing to determine
registration shall withdraw its application or shall consent to the Commissions deferring action whether the suspension should be lifted.
on its application for a stated longer period after the date of filing. The filing with the
Commission of an application for registration by an Exchange shall be deemed to have taken
36.2. Wherever two (2) or more Exchanges or other trading markets exist, the Commission may
place upon the receipt thereof. Amendments to an application may be made upon such terms as
require and enforce uniformity of trading regulations in and/or between or among said
the Commission may prescribe.
Exchanges or other trading markets.

33.5. Upon the registration of an Exchange, it is shall pay a fee in such amount and within such
36.3. In addition to the existing Philippine Stock Exchange, the Commission shall have the
period as the Commission may fix.
authority to determine the number, size and location of stock Exchanges, other trading markets
and commodity Exchanges and other similar organizations in the light of national or regional
33.6. Upon appropriate application in accordance with the rules and regulations of the requirements for such activities with the view to promote, enhance, protect, conserve or
Commission and upon such terms as the Commission may deemed necessary for the protection rationalize investment.
of investors, an exchange may withdraw its registration or suspend its operations or resume the
same.
36.4. The Commission, having due regard to the public interest, the protection of investors, the
safeguarding of securities and funds, and maintenance of fair competition among brokers,
Section 34. Segregation and Limitation of functions of Members, Broker and Dealers. - 34.1. It dealers, clearing agencies, and transfer agents, shall promulgate rules and regulations for the
shall be unlawful for any member-broker of an Exchange to effect any transaction on such prompt and accurate clearance and settlement of securities transactions.
Exchange for its own account, the account of an associated person, or an account with the
respect to which it or an associated person thereof exercises the investment
36.5. (a) The Commission may establish or facilitate the establishment of trust funds which shall
discretion: Provided, however, That this Section shall not make unlawful-
be contributed by Exchanges, brokers, dealers, underwriters, transfer agents, salesmen and
other persons transacting in securities, as the Commission may require, for the purpose of
(a) Any transaction by a member-broker acting in the capacity of a market maker; compensating investors for the extraordinary losses or damage they may suffer due to business
failure or fraud or mismanagement of the persons with whom they transact, under such rules
and regulations as the Commission may from time to time prescribe or approve in the public
(b) Any transaction reasonably necessary to carry on an odd-lot transactions;
interest.

(c) Any transaction to offset a transaction made in error; and


(b) The Commission may, having due regard to the public interest or the protection of
investors, regulate, supervise, examine, suspend or otherwise discontinue such and
(d) Any other transaction of a similar nature as may be defined by the Commission. other similar funds under such rules and regulations which the Commission may
promulgate, and which may include taking custody and management of the fund itself
as well as investments in and disbursements from the funds under such forms of
34.2. In all instances where the member-broker effects a transaction on an Exchange for its own
control and supervision by the Commission as it may from time to time require. The
account or the account of an associated person or an account with the respect to which it
authority granted to the Commission under this subsection shall also apply to all funds
exercises investment discretion, it shall disclose to such customer at or before the completion of
established for the protection of investors, whether established by the Commission or
the transaction it is acting for its own account: Provided, further, That this fact shall be reflected
otherwise.
in the order ticket and the confirmation slip.

Section 37. Registration of Innovative and Other Trading Markets. The Commission, having
34.3. Any member-broker who violates the provisions of this Section shall be subject to the
due regard for national economic development, shall encourage competitiveness in the market
administrative sanctions provided in Section 54 of this Code.
by promulgating within six (6) months upon the enactment of this Code, rules for the registration
and licensing of innovative and other trading markets or Exchanges covering, but not limited to,
Section 35. Additional Fees of Exchanges. In addition to the registration fee prescribed in the issuance and trading of innovative securities, securities of small, medium, growth and
Section 33 of this Code, every Exchange shall pay to the Commission, on a semestral basis on or venture enterprises, and technology-based ventures pursuant to Section 33 of this Code.
before the tenth day of the end of the end of every semester of the calendar year, a fee in such
an amount as the Commission shall prescribe, but not more than one-hundredth of one per
Section 38. Independent Directors. Any corporation with a class of equity securities listed for
centum (1%) of the aggregate amount of the sales of securities transacted on such Exchange
trading on an Exchange or with assets in excess of Fifty million pesos (P50,000,000.00) and
during the preceding calendar year for the privilege of doing business, during the preceding
having two hundred (200) or more holders, at least of two hundred (200) of which are holding at
calendar year or any part thereof.
least one hundred (100) shares of a class of its equity securities or which has sold a class of
equity securities to the public pursuant to an effective registration statement in compliance with
Section 36. Powers with Respect to Exchanges and Other Trading Market. 36.1. The Section 12 hereof shall have at least two (2) independent directors or such independent
Commission is authorized, if in its opinion such action is necessary or appropriate for the directors shall constitute at least twenty percent (20%) of the members of such board whichever
protection of investors and the public interest so requires, summarily to suspend trading in any is the lesser. For this purpose, an "independent director" shall mean a person other than an
listed security on any Exchange or other trading market for a period not exceeding thirty (30) officer or employee of the corporation, its parent or subsidiaries, or any other individual having a
days but not exceeding ninety (90) days: Provided, however, That the Commission promptly
relationship with the corporation, which would interfere with the exercise of independent (a) The president of the association and
judgement in carrying out the responsibilities of a director.

(b) Person who represent the interests of the issuer and public
CHAPTER X investors and are not associated with any broker or dealer or
REGISTRATION, RESPONSIBILITIES AND OVERSIGHT OF SELF-REGULATORY member of the association; that the president and other
ORGANIZATIONS management of the association not be a member or associated
with any broker, dealer or member of the association;

Section 39. Associations of Securities Brokers, and Dealers, and Other Securities Related
Organizations. 39.1. The Commission shall have the power to register as a self-regulatory (iv) For the equitable allocation of reasonable dues, fees, and other charges
organization, or otherwise grant licenses, and to regulate, supervise, examine, suspend or among member and issuers and other persons using any facility or system
otherwise discontinue, as a condition for the operation of organizations whose operations are which the association operates or controls;
related to or connected with the securities market such as but not limited to associations of
brokers and dealers, transfer agents, custodians, fiscal and paying agents, computer services,
(v) For the prevention of fraudulent and manipulative acts and practices, the
news disseminating services, proxy solicitors, statistical agencies, securities rating agencies, and
promotion of just and equitable principles of trade, and, in general, the
securities information processor which are engaged in business of: (a) Collecting, processing, or
protection of investors and the public interest;
preparing for distribution or publication, or assisting, participating in, or coordinating the
distribution or publication of, information with respect to transactions in or quotations for any
security; or (b) Distributing or publishing, whether by means of a ticker tape, a communications (vi) That its members and persons associated with its members shall be
network, a terminal display device, or otherwise, on a current and continuing basis, information appropriately disciplined for violation of any provision of this Code, the rules
with respect to such transactions or quotations. The Commission may prescribe rules and and regulations thereunder, or the rules of the association;
regulations which are necessary or appropriate in the public interest or for the protection of
investors to govern self-regulatory organizations and other organizations licensed or regulated
(vii) That a fair procedure for the disciplining of members and persons
pursuant to the authority granted in Subsection 39.1 including the requirement of cooperation
associated with members, the denial of membership to any person seeking
within and among, and electronic integration of the records of, all participants in the securities
membership therein, the barring of any person from becoming associated
market to ensure transparency and facilitate exchange of information.
with a member thereof, and the prohibition or limitation by the association
of any person with respect to access to services offered by the association
39.2. An association of brokers and dealers may be registered as a securities association or a member thereof.
pursuant to Subsection 39.3 by filing with the Commission an application for registration in such
form as the Commission, by rule, may prescribe containing the rules of the association and such
39.4. (a) A registered securities association shall deny membership to any person who is not a
other information and documents as the Commission, by rule, may prescribe as necessary or
registered broker or dealer.
appropriate in the public interest or for the protection of investors.

(b) A registered securities association may deny membership to, or condition the
39.3. An association of brokers and dealers shall not be registered as a securities association
membership of, a registered broker or dealer if such broker or dealer:
unless the Commission determines that:

(i) Does not meet the standards of financial responsibility, operational


(a) The association is so organized and has the capacity to be able to carry out the
capability, training, experience or competence that are prescribe by the
purposes of this Code and to comply with, and to enforce compliance by its members
rules of the association; or
and persons associated with its members, with the provisions of this Code, the rules
and regulations thereunder, and the rules of the association.
(ii) Has engaged, and there is a reasonable likelihood it will again engage, in
acts or practices inconsistent with just and equitable principles of fair trade.
(b) The rules of the association, notwithstanding anything in the Corporation Code to
the contrary, provide that:
(c) A registered securities association may deny membership to a registered broker or
dealer not engage in a type of business in which the rules of the association require
(i) Any registered broker or dealer may become a member of the
members to be engaged: Provided, however, That no registered securities association
association;
may deny membership to a registered broker or dealer by reason of the amount of
business done by the broker or dealer.
(ii) There exist a fair representation of its members to serve on the Board of
Directors of the association and in the administration of its affairs, and that
A registered securities association may examine and verify the qualifications of an
may any natural person associated with a juridical entity that is a member
applicant to become a member in accordance with procedure established by the rules
shall himself be deemed to be a member for this purpose;
of the association.

(iii) The Board of Directors of the association includes in its composition:


(d) A registered securities association may bar a salesman or person associated with a its rules and practices and, after due to notice and hearing it determines that such changes have
broker or dealer from being employed by a member or set conditions for the not been effected, and that such changes are not necessary, by the rule or regulation or by
employment of a salesman or associated if such person: order, may alter, abrogate or supplement the rules of such self-regulatory organization in so far
as necessary or appropriate to effect such changes in respect of such matters as:

(i) Does not meet the standards of training, experience, or competence that
are prescribe by the rules of the association; or (a) Safeguards in respect of the financial responsibility of members and adequate
provision against the evasion of financial responsibility through the use of corporate
forms or special partnerships;
(ii) Has engage, and there is a reasonable likelihood he will again engage, in
acts or practices inconsistent with just and equitable principles of fair trade.
(b) The supervision of trading practices;

A registered securities association may examine and verify the qualifications of an applicant to
become a salesman or associated person employed by a member in accordance with the (c) The listing or striking from listing of any security;
procedures establish by the rules of the association. A registered association also may require a
salesman or associated person employed by a member to be registered with the association in
(d) Hours of trading;
accordance with the procedures prescribed in the rules of the association.

(e) The manner, methods, and place of soliciting business;


39.5. In any proceeding by a registered securities association to determine whether a person
shall be denied membership, or barred from association with a member, the association shall
provide notice to the person under review of the specific grounds being considered for denial, (f) Fictitious accounts;
afford him an opportunity to defend against the allegations, and keep a record of the
proceedings. A determination by the association to deny membership shall be supported by a
(g) The time and method of making settlements, payments, and deliveries, and of
statement setting forth the specific grounds on which the denial is based.
closing accounts;

Section 40. Powers with Respect to Self-Regulatory Organizations. - 40.1. Upon the filing of an
(h) The transparency of securities transactions and prices;
application for registration as an Exchange under Section 33, a registered securities association
under Section 39, a registered clearing agency under Section 42, or other self-regulatory
organization under this Section, the Commission shall have ninety (90) days within which to (i) The fixing of reasonable rates of fees, interest, listing and other charges, but not
either grant registration should be denied. In the event proceedings are instituted, the rates of commission;
Commission shall have two hundred seventy (270) days within which to conclude such
proceedings at which time it shall, by order, grant or deny such registration.
(j) Minimum units of trading;

40.2. Every self-regulatory organization shall comply with the provision of this Code, the rules
(k) Odd-lot purchases and sales;
and regulations thereunder, and its own rules, and enforce compliance therewith,
notwithstanding any provisions of the Corporation Code to the contrary, by its members, persons
associated with its members of its participants. (l) Minimum deposits on margin accounts; and

40.3. (a) Each self-regulatory organization shall submit to the Commission for prior approval any (m) The supervision, auditing and disciplining of members or participants.
proposed rule or amendment thereto, together with a concise statement of the reason and effect
of the proposed amendment
40.5. The Commission, after due notice and hearing, is authorized, in the public interest and to
protect investors:
(b) Within sixty (60) days after submission of a proposed amendment, the Commission
shall, by order, approve the proposed amendment. Otherwise, the same may be made
(a) To suspend for a period not exceeding twelve (12) months or to revoke the
effective by the self-regulatory organization.
registration of a self-regulatory organization, or to censure or impose limitations on the
activities, functions, and operations of such self-organization, if the Commission finds
(c) In the event of an emergency requiring action for the protection of investors, the that such a self-regulatory organization has willfully violated or is unable to comply
maintenance of fair and orderly markets, or the safeguarding of securities and funds, a with any provision of this Code or of the rules and regulations thereunder, or its own or
self-regulatory organization may put a proposed amendment into effect has failed to enforce compliance therewith by a member of, person associated with a
summarily; Provided however, That the copy of the same shall be immediately member, or a participant in such self-regulatory organization;
submitted to the Commission.
(b) To expel from a self-regulatory organization any member thereof or any participant
40.4. The Commission is further authorized, if after making appropriate request in writing to a therein who is subject to an order of the Commission under Section 29 of this Code or
self-regulatory organization that such organization effect on its own behalf specified changes in is found to have willfully violated any provision of this Code or suspend for a period
not exceeding twelve (12) months for violation of any provision of this Code or any Commission, the rules or regulations thereunder, or the rules of the self-regulatory organization
other laws administered by the Commission, or rules and regulations thereunder, or as specified by such organization, whether such provisions were applied in a manner consistent
effected, directly or indirectly, any transaction for any person who, such member or with the purposes of this Code, and whether, with due regard for the public interest and the
participant had reason to believe, was violating in respect of such transaction any of protection of investors the sanction is excessive or oppressive.
such provisions; and

40.8. The powers of the Commission under this Section shall apply to organized exchanges and
(c) To remove from the office or censure any officer or director of a self-regulatory registered clearing agencies.
organization if it finds that such officer or director has violated any provision of this
Code, any other law administered by the Commission, the rules or regulations
CHAPTER XI
thereunder, or the rules of such self-regulatory organization, abused his authority,
ACQUISITION AND TRANSFER OF SECURITIES AND SETTLEMENT OF TRANSACTION IN
without reasonable justification or excuse has failed to enforce compliance with any of
SECURITIES
such provisions.

Section 41. Prohibition on Use of Unregistered Clearing Agency. It shall be unlawful for any
40.6. (a) A self-regulatory organization is authorized to discipline a member of or participant in
broker, dealer, salesman, associated person of a broker or dealer, or clearing agency, directly or
such self-regulatory organization, or any person associated with a member, including the
indirectly, to make use of any facility of a clearing agency in Philippines to make deliveries in
suspension or expulsion of such member or participant, and the suspension or bar from being
connection with transaction in securities or to reduce the number of settlements of securities
associated with a member, if such person has engage in acts or practices inconsistent with just
transactions or to allocate securities settlement responsibilities or to provide for the central
and equitable principles of fair trade or in willful violation of any provision of the Code, any other
handling of securities so that transfers, loans and pledges and similar transaction can be made
law administered by the Commission, the rules or regulations thereunder, or the rules of the self-
by bookkeeping entry or otherwise to facilitate the settlement of securities transactions without
regulatory organization. In any disciplinary proceeding by a self-regulatory organization (other
physical delivery of securities certificates, unless such clearing agency is registered as such
than a summary proceeding pursuant to paragraph (b) of this subsection) the self-regulatory
under Section 42 of this Code or is exempted from such registration upon application by the
organization shall bring specific charges, provide notice to the person charged, afford the person
clearing agency because, in the opinion of the Commission, by reason of the limited volume of
charged with an opportunity to defend against the charges, and keep a record of the
transactions which are settled using the clearing agency, it is not practicable and not necessary
proceedings. A determination to impose a disciplinary sanction shall be supported by a written
or appropriate in the public interest or for the protection of investors to require such registration.
statement of the offenses, a summary of the evidence presented and a statement of the
sanction imposed.
Section 42. Registration of Clearing Agencies. - 42.1. Any clearing agency may be registered as
such with the Commission under the terms and conditions hereinafter provided in this Section,
(b) A self-regulatory organization may summarily: (I) Suspend a member, participant
by filing an application for registration in such form and containing such information and
or person associated with a member who has been or is expelled or suspended from
supporting documents as the Commission by rule shall prescribe, including the following:
any other self-regulatory organization; or (ii) Suspend a member who the self-
regulatory organization finds to be in such financial or operating difficulty that the
member or participant cannot be permitted to continue to do business as a member (a) An undertaking to comply and enforce compliance by its participants with the
with safety to investors, creditors, other members, participants or the self-regulatory provisions of this Code, and any amendments thereto, and the implementing rules or
organization: Provided, That the self-regulatory organization immediately notifies the regulations made or to be made thereunder, and the clearing agencys rules;
Commission of the action taken. Any person aggrieved by a summary action pursuant
to this paragraph shall be promptly afforded an opportunity for a hearing by the
(b) The organizational charts of the Exchange, its rules of procedure, and list of its
association in accordance with the provisions of paragraph (a) of this subsection. The
officers and participants;
Commission, by order, may stay a summary action on its own motion or upon
application by any person aggrieved thereby, if the Commission determines
summarily or after due notice and hearing (which hearing may consist solely of the (c) Copies of the clearing agencys rules.
submission of affidavits or presentation of oral arguments) that a stay is consistent
with the public interest and the protection of investors.
42.2. No registration of a clearing agency shall be granted unless the rules of the clearing
agency include provision for:
40.7. A self-regulatory organization shall promptly notify the Commission of any disciplinary
sanction on any member thereof or participant therein, any denial of membership or
(a) The expulsions, suspension, or disciplining of a participant for violations of this
participation in such organization, or the imposition of any disciplinary sanction on a person
Code, or any other Act administered by the Commission, the rules, regulations, and
associated with a member or a bar of such person from becoming so associated. Within thirty
orders thereunder, or the clearing agencys rules;
(30) days after such notice, any aggrieved person may appeal to the Commission from, or the
Commission from, or the Commission on its own motion within such period, may institute review
of, the decision of the self-regulatory organization, at the conclusion of which, after due notice (b) A fair procedure for the disciplining of participants, the denial of participation rights
and hearing (which may consist solely of review of the record before the self-regulatory to any person seeking to be a participant, and the prohibition or limitation of any
organization), the Commission shall affirm, modify or set aside the sanction. In such proceeding person from access to services offered by the clearing agency;
the Commission shall determine whether the aggrieved person has engaged or omitted to
engage in the acts and practices as found by the self-regulatory organization, whether such acts
(c) The equitable allocation of reasonable dues, fees, and other charges among
and practices constitute willful violations of this Code, any other law administered by the
participants;
(d) Prevention of fraudulent and manipulative acts and practices, promotion of just as the corporation is concerned, when a transfer is recorded in the books of the corporation so
and equitable principles of trade, and, in general, protection of investors and the as to show the names of the parties to the transfer and the number of shares transferred.
public interest;

However, nothing in this Code shall compliance by banking and other institutions under the
(e) The transparent, prompt and accurate clearance and settlement of transactions in supervision of the Bangko Sentral ng Pilipinas and their stockholders with the applicable ceilings
securities handled by the clearing agency; and on shareholding prescribed under pertinent banking laws and regulations.

(f) The establishment and oversight of a fund to guarantee the prompt and accurate Section 44. Evidentiary Value of Clearing Agency Record. The official records and book entries
clearance and settlement of transaction executed on an exchange, including a of a clearing agency shall constitute the best evidence of such transactions between clearing
requirement that members each contribute an amount based on their and a relevant agency shall constitute the best between clearing agency and its participants or members
percentage of the daily exposure of the (4) largest trading brokers which adequately clients to prove their rights, title and entitlement with respect to the book-entry security
reflects trading risks undertaken or pursuant to another formula set forth in holdings of the participants or members held on behalf of the clients. However, the corporation
Commission rules or regulations or order, upon application: Provided, however, That a shall not be bound by the foregoing transactions unless the corporate secretary is duly notified
clearing agency engaged in the business of securities depository shall be exempt from in such manner as the Commission may provide.
this requirement.

Section 45. Pledging a Security or Interest Therein. In addition to other methods recognized
42.3. In the case of an application filed pursuant to this section, the Commission shall grant by law, a pledge of, including an uncertificated security, is properly constituted and the
registration if it is finds That the requirements of this code and the rules and regulations instrument proving the right pledged shall be considered delivered to the creditor under Articles
thereunder with respect to the applicant have been satisfied, and shall deny registration if it 2093 and 2095 of the Civil Code if a securities intermediary indicates by book entry that such
does not make such finding. security has been credited to a specially designated pledge account in favor of the pledgee. A
pledge under this subsection has the effect of the delivery of a security in bearer form or duly
indorsed in blank representing the quantity or amount of such security or right pledged. In the
42.4. Upon appropriate application in accordance with the rules and regulations of the
case of a registered clearing agency, the procedures by which, and the exact time at which, such
Commission and upon such terms as the Commission may deem necessary for the protection of
book-entries are created shall be governed by the registered clearing agencys rules. However,
investors, a clearing agency may withdraw its registration or suspend its operation or resume
the corporation shall not be bound by the foregoing transactions unless the corporate secretary
the same.
is duly notified in such manner as the Commission may provide.

Section 43. Uncertificated Securities. Notwithstanding Section 63 of the Corporation Code of


Section 46. Issuers Responsibility for Wrongful Transfer to Registered Clearing Agency. - The
the Philippines: 43.1. A corporation whose securities are registered pursuant to this Code or
registration of a transfer of a security into the name of and by a registered clearing agency or its
listed on securities exchange may:
name of or by a registered clearing agency or its nominee shall be final and conclusive unless
the clearing agency had notice of an adverse claim before the registration was made. The above
(a) If so resolved by its Board of Directors and agreed by a shareholder, investor or provisions which the claimant may have against the issuer for wrongful registration in such
securities intermediary, issue shares to, or record the transfer of some or all its shares circumstances.
into the name of said shareholders, investors or, securities intermediary in the form of
uncertified securities. The use of uncertified securities in these circumstances shall be
Section 47. Power of the Commission With Respect to Securities Ownership. The Commission
without prejudice to the rights of the securities intermediary subsequently to require
is authorize, having due regard to the public interest and the protection of investors, to
the corporation to issue a certificate in respect of any shares recorded in its name;
promulgate rules and regulations which:
and

47.1. Validate the transfer of securities by book-entries rather than the delivery of physical
(b) If so provided in its articles of incorporation and by-laws, issue all of the shares of a
certificates;
particular class in the form of Uncertificated securities and subject to a condition that
investors may not require the corporation to issue a certificate in respect of any
shares recorded in their name. 47.2. Establish when a person acquires a security or an interest therein and when delivery of a
security to a purchaser occurs;

43.2. The Commission by rule may allow other corporations to provide in their articles of
incorporation and by-laws for the use of uncertificated securities. 47.3. Establish which records constitute the best evidence of a persons interests in a security
and the effect of any errors in electronic records of ownership;

43.3. Transfers of securities, including an uncertificated securities, may be validly made and
consummated by appropriate book-entries in the securities intermediaries, or in the stock and 47.4. Codify the rights of investors who choose to hold their securities indirectly through a
transfer book held by the corporation or the stock transfer agent and such bookkeeping entries registered clearing agency and/ or other securities intermediaries;
shall be binding on the parties to the transfer. A transfer under this subsection has the effect of
the delivery of a security in bearer form or duly indorsed in blank representing the quantity or
47.5. Codify the duties of securities intermediaries (including clearing agencies) who hold
amount of security or right transferred, including the unrestricted negotiability of that security
securities on behalf of investors; and
by reason of such delivery. However, transfer of uncertificated shares shall only be valid, so far
47.6 Give first priority to any claims of a registered clearing agency against a participant arising 48.3 Any person not subject to Subsection 48.2 hereof shall extend or maintain credit or arrange
from a failure by the participant to meet its obligations under the clearing agencys rules in for the extension or maintenance of credit for the purpose of purchasing or carrying any
respect of the clearing and settlement of transactions in securities, in a dissolution of the security, only in accordance with such rules and regulations as the Commission shall prescribe to
participant, and any such rules and regulation shall bind the issuers of the securities, investors in prevent the excessive use of credit for the purchasing or carrying of or trading in securities in
the securities, any third parties with interests in the securities, and the creditors of a participant circumvention of the other provisions of this Section.. Such rules and regulations may impose
of a registered clearing agency. upon all loans made for the purpose of purchasing or carrying securities limitations similar to
those imposed upon members, brokers, or dealers by Subsection 48.2 and the rules and
regulations thereunder. This subsection and the rules and regulations thereunder shall not apply:
CHAPTER XII
MARGIN AND CREDIT
(a) To a credit extension made by a person not in the ordinary course of business; (b)
to a loan to a dealer to aid in the financing of the distribution of securities to
Section 48. Margin Requirements. 48.1. For the purpose of preventing the excessive use of
customers not through the medium of an Exchange; or (c) To such other credit
credit for the purchase or carrying of securities, the Commission, in accordance with the credit
extension as the Commission shall exempt from the operation of this subsection and
and monetary policies that may be promulgated from time to time by the Monetary Board of the
the rules and regulations thereunder upon specified terms and conditions for stated
Bangko Sentral ng Pilipinas, shall prescribed rules and regulations with respect to the amount of
period.
credit that may be extended on any security. For the extension of credit, such rules and
regulations shall be based upon the following standard:
Section 49. Restrictions on Borrowings by Members, Brokers, and Dealers. It shall be unlawful
for any registered broker or dealer, or member of an Exchange, directly or indirectly;
An amount not greater than the whichever is the higher of

49.1. To permit in the ordinary course of business as a broker or dealer his aggregate
(a) Sixty-five per centum (65%) of the current market price of the security, or
indebtedness including customers credit balances, to exceed such percentage of the net capital
(exclusive of fixed assets and value of Exchange membership) employed in the business, but not
(b) One hundred per centum (100%) of the lowest market price of the security during exceeding in any case to thousand percentum (2,000%), as the Commission may be rules and
the preceding thirty-six (36) calendar months, but not more than seventy-five per regulations prescribe as necessary or appropriate in the public interest or for the protection of
centum (75%) of the current market price. investors.

However, the Monetary Board may increase or decrease the above percentages, in order to 49.2. To pledge, mortgage, or otherwise encumber or arrange for the pledge, mortgage, or
achieve the objectives of the Government with due regard for promotion of the economy and encumbrance of any security carried for the account of any customer under circumstances: (a)
prevention of the use of excessive credit. That will permit the commingling of his securities, without his written consent, with the
securities of any customer; (b) That will permit such securities to be commingled with the
securities of any person other than a bona fide customer; or (c) that will permit such securities
Such rules and regulations may make appropriate provision with respect to the carrying of
to be pledged, mortgaged or encumbered, or subjected to any lien or claim of the pledgee, for a
undermargined accounts for limited periods and under specified conditions; the withdrawal of
sum in excess of the aggregate indebtedness of such customers in respect of such securities.
funds or securities; the transfer of accounts from one lender to another; special or different
However, the Commission, having due regard to the protection of investors, may, by rules and
margin requirements for delayed deliveries, short sales, arbitrage transactions, and securities to
regulations, allow certain transactions that may otherwise be prohibited under this subsection.
which letter (b) of the second paragraph of this subsection does not apply; the methods to be
used in calculating loans, and margins and market prices; and similar administrative
adjustments and details. 49.3. To lend or arrange for the lending of any security carried for the account of any customer
without the written consent of such customer or in contravention of such rules and regulations
as the Commission shall prescribe.
48.2. No member of an Exchange or broker or dealer shall, directly or indirectly, extend or
maintain credit is extended and maintain credit or arrange for the extension or maintenance of
credit to or for any customer: Section 50. Enforcement of Margin Requirement and Restrictions on Borrowing. To prevent
indirect violations of the margin requirements under Section 48, the broker or dealer shall
require the customer in non-margin transactions to pay the price of the security purchased for
(a) On any security unless such credit is extended and maintained in accordance with
his account within such period as the Commission may prescribe, which shall in no case exceed
the rules and regulations which the Commission shall prescribe under this Section
the prescribed settlement date. Otherwise, the broker shall sell the security purchased starting
including rules setting credit in relation to net capital of such member, broker or
on the next trading day but not beyond ten (10) trading days following the last day for the
dealer; and
customer to pay such purchase price, unless such sale cannot be effected within said period for
justifiable reasons. The sale shall be without prejudice to the right of the broker or dealer to
(b) Without collateral or any collateral other than securities, except (I) to maintain a recover any deficiency from the customer. To prevent indirect violation of the restrictions on
credit initially extended in conformity with rules and regulations of the Commission borrowing under Section 49, the broker shall, unless otherwise directed by the customer, pay the
and (ii) in cases where the extension or maintenance of credit is not for the purpose of net sales price of the securities sold for a customer within the same period as above prescribed
purchasing or carrying securities or of evading or circumventing the provisions of by the Commission: Provided, That the customer shall be required to deliver the instruments
paragraph (a) of this subsection. evidencing the securities as a condition for such payment upon demand by the broker.
CHAPTER XIII person has violated or is about to violate any provision of this Code, any rule, regulation or order
GENERAL PROVISIONS thereunder, or any rule of an Exchange, registered securities association, clearing agency, other
self-regulatory organization, and may require or permit any person to file with it a statement in
writing, under oath or otherwise, as the Commission shall determine, as to all facts and
Section 51. Liabilities of Controlling Persons, Aider and Abettor and Other Secondary Liability.
circumstances concerning the matter to be investigated. The Commission may publish
51.1. Every person who, by or through stock ownership, agency, or otherwise, or in connection
information concerning any such violations, and to investigate any fact, condition, practice or
with an agreement or understanding with one or more other persons, controls any person liable
matter which it may deem necessary or proper to aid in the enforcement of the provisions of this
under this Code or the rules or regulations of the Commission thereunder, shall also be liable
Code, in the prescribing of rules and regulations thereunder, or in securing information to serve
jointly and severally with and to the same extent as such controlled persons to any person to
as a basis for recommending further legislation concerning the matters to which this Code
whom such controlled person is liable, unless the controlling person proves that, despite the
relates: Provided, however, That any person requested or subpoenaed to produce documents or
exercise of due diligence on his part, he has no knowledge of the existence of the facts by
testify in any investigation shall simultaneously be notified in writing of the purpose of such
reason of which the liability of the controlled person is alleged to exist.
investigation: Provided, further, That all criminal complaints for violations of this Code, and the
implementing rules and regulations enforced or administered by the Commission shall be
51.2. It shall be unlawful for any person, directly, or indirectly, to do any act or thing which it referred to the Department of Justice for preliminary investigation and prosecution before the
would be unlawful for such person to do under the provisions of this Code or any rule or proper court: Provided, furthermore, That in instances where the law allows independent civil or
regulation thereunder. criminal proceedings of violations arising from the same act, the Commission shall take
appropriate action to implement the same: provided, finally, That the investigation, prosecution,
and trial of such cases shall be given priority.
51.2. It shall be unlawful for any director or officer of, or any owner of any securities issued by,
any issuer required to file any document, report or other information under this Code or any rule
or regulation of the Commission thereunder, without just cause, to hinder, delay or obstruct the 53.2. For the purpose of any such investigation, or any other proceeding under this Code, the
making or filing of any such document, report, or information. Commission or any officer designated by it is empowered to administer oaths and
affirmations, subpoena witnesses, compel attendance, take evidence, require the production of
any book, paper, correspondence, memorandum, or other record which the Commission deems
51.3. It shall be unlawful for any person to aid, abet, counsel, command, induce or procure any
relevant or material to the inquiry, and to perform such other acts necessary in the conduct of
violation of this Code, or any rule, regulation or order of the Commission thereunder.
such investigation or proceedings.

52.4. Every person who substantially assists the act or omission of any person primarily liable
53.3. Whenever it shall appear to the Commission that any person has engaged or is about to
under Sections 57, 58, 59 and 60 of this Code, with knowledge or in reckless disregard that such
engage in any act or practice constituting a violation of any provision of this Code, any rule,
act or omission is wrongful, shall be jointly and severally liable as an aider and abettor for
regulation or order thereunder, or any rule of an Exchange, registered securities association,
damages resulting from the conduct of the person primarily liable: Provided, however, That an
clearing agency or other self-regulatory organization, it may issue an order to such person to
aider and abettor shall be liable only to the extent of his relative contribution in causing such
desist from committing such act or practice: Provided, however, That the Commission shall not
damages in comparison to that of the person primarily liable, or the extent to which the aider
charge any person with violation of the rules of an Exchange or other self-regulatory
and abettor was unjustly enriched thereby, whichever is greater.
organization unless it appears to the Commission that such Exchange or other self-regulatory
organization is unable or unwilling to take action against such person. After finding that such
Section 52. Accounts and Records, Reports, Examination of Exchanges, members, and Others. person has engaged in any such act or practice and that there is a reasonable likelihood of
52.1. Every registered Exchange, broker or dealer, transfer agent, clearing agency, securities continuing, further or future violations by such person, the Commission may issue ex-parte a
association, and other self-regulatory organization, and every other person required to register cease and desist order for a maximum period of ten (10) days, enjoining the violation and
under this Code, shall make, keep and preserve for such periods, records, furnish such copies compelling compliance with such provision. The Commission may transmit such evidence as
thereof, and make such reports, as the Commission by its rules and regulations may prescribe. may be available concerning any violation of any provision of this Code, or any rule, regulation
Such accounts, correspondence, memoranda, papers, books, and other records shall be subject or order thereunder, to the Department of Justice, which may institute the appropriate criminal
at any time to such reasonable periodic, special or other examinations by representatives of the proceedings under this Code.
Commission as the Commission may deem necessary or appropriate in the public interest of for
the protection of investors.
53.4. Any person who, within his power but without cause, fails or refuses to comply with any
lawful order, decision or subpoena issued by the Commission under Subsection 53.2 or
52.2. Any brother, dealer or other person extending credit, who is subject to the rules and Subsection 53.3 or Section 64 of this Code, shall after due notice and hearing, be guilty of
regulations prescribed by the Commission pursuant to this Code, shall make such reports to the contempt of the Commission. Such person shall be fined in such reasonable amount as the
Commission as may be necessary or appropriate to enable it to perform the functions conferred Commission may determine, or when such failure or refusal is a clear and open defiance of the
upon it by this Code. Commissions order, decision or subpoena, shall be detained under an arrest order issued by the
Commission, until such order, decision or subpoena is complied with.
52.3. For purposes of this Section, the term "records refers to accounts, correspondence,
memoranda, tapes, discs, papers, books and other documents or transcribed information of any Section 54. Administrative Sanctions. 54.1. If, after due notice and hearing, the Commission
type, whether written or electronic in character. finds that: (a) There is a violation of this Code, its rule, or its orders; (b) Any registered broker or
dealer, associated person thereof has failed reasonably to supervise, with a view to preventing
violations, another person subject to supervision who commits any such violation; (c) Any
Section 53. Investigations, Injunctions and Prosecution of Offenses. 53.1. The Commission may,
registrant or other person has, in a registration statement or in other reports, applications,
in its discretion, make such investigations as it deems necessary to determine whether any
accounts, records or documents required by law or rules to be filed with the Commission, made may sue and recover damages from the following enumerated persons, unless it is proved that
any untrue statement of a material fact, or omitted to state any material fact required to be at the time of such acquisition he knew of such untrue statement or omission:
stated their or necessary to make the statements therein not misleading; or, in the case of an
underwriter, has failed to conduct an inquiry with reasonable diligence to insure that a
(a) The issuer and every person who signed the registration statement:
registration statement is accurate and complete in all material respects; or (d) Any person has
refused to permit any lawful examinations into its affairs, it shall, in its discretion, and subject
only to the limitations hereinafter prescribed, impose any or all of the following sanctions as may (b) Every person who was a director of, or any other person performing similar
be appropriate in light of the facts and circumstances: functions, or a partner in, the issuer at the time of the filing of the registration
statement or any part, supplement or amendment thereof with respect to which his
liability is asserted;
(i) Suspension, or revocation of any registration for the offering of securities;

(c) Every person who is named in the registration statement as being or about to
(ii) A fine of no less than Ten thousand pesos (P10,000.00) nor more than One million
become a director of, or a person performing similar functions, or a partner in, the
pesos (P1,000,000.00) plus not more than Two thousand pesos (P2,000.00) for each
issuer and whose written consent thereto is filed with the registration statement;
day of continuing violation;

(d) Every auditor or auditing firm named as having certified any financial statements
(iii) In the case of a violation of Sections 19.2, 20, 24, 26 and 27, disqualification from
used in connection with the registration statement or prospectus.
being an officer, member of the Board of Directors, or person performing similar
functions, of an issuer required to file reports under Section 17 of this Code or any
other act, rule or regulation administered by the Commission; (e) Every person who, with his written consent, which shall be filed with the
registration statement, has been named as having prepared or certified any part of
the registration statement, or as having prepared or certified any report or valuation
(iv) In the case of a violation of Section 34, a fine of no more than three (3) times the
which is used in connection with the registration statement, with respect to the
profit gained or loss avoided as result of the purchase, sale or communication
statement, report, or valuation, which purports to have been prepared or certified by
proscribed by such Section, and
him.

(v) Other penalties within the power of the Commission to impose.


(f) Every selling shareholder who contributed to and certified as to the accuracy of a
portion of the registration statement, with respect to that portion of the registration
54.2. The imposition of the foregoing administrative sanctions shall be without prejudice to the statement which purports to have been contributed by him.
filing of criminal charges against the individuals responsible for the violation.

(g) Every underwriter with respect to such security.


54.3. The Commission shall have the power to issue writs of execution to enforce the provisions
of the Section and to enforce payment of the fees and other dues collectible under this Code.
56.2. If the person who acquired the security did so after the issuer has made generally available
to its security holders an income statement covering a period of at least twelve (12) months
Section 55. Settlement Offers. 55.1. At any time, during an investigation or proceeding under beginning from the effective date of the registration statement, then the right of recovery under
this Code, parties being investigated and/or charged may propose in writing an offer of this subsection shall be conditioned on proof that such person acquired the security relying upon
settlement with the Commission. such untrue statement in the registration statement or relying upon the registration statement
and not knowing of such income statement, but such reliance may be established without proof
of the reading of the registration statement by such person.
55.2. Upon receipt of such offer of settlement, the Commission may consider the offer based on
timing, the nature of the investigation or proceeding, and the public interest.
Section 57. Civil Liabilities Arising in Connection With Prospectus, Communications and
Reports. 57.1. Any person who:
55.3. The Commission may only agree to a settlement offer based on its findings that such
settlement is in the public interest. Any agreement to settle shall have no legal effect until
publicly disclosed. Such decision may be made without a determination of guilt on the part of (a) Offers to sell or sells a security in violation of Chapter III, or
the person making the offer.

(b) Offers to sell or sells a security, whether or not exempted by the provisions of this
55.4. The Commission shall adopt rules and procedures governing the filing, review, withdrawal, Code, by the use of any means or instruments of transportation or communication, by
form of rejection and acceptance of such offers. means of a prospectus or other written or oral communication, which includes an
untrue statement of a material fact or omits to state a material fact necessary in order
to make the statements, in the light of the circumstances under which they were
Section 56. Civil Liabilities on Account of False Registration Statement. 56.1. Any person
made, not misleading (the purchaser not knowing of such untruth or omission), and
acquiring a security, the registration statement of which or any part thereof contains on its
who shall fail in the burden of proof that he did not know, and in the exercise of
effectivity an untrue statement of a material fact or omits to state a material fact required to be
reasonable care could not have known, of such untruth or omission, shall be liable to
stated therein or necessary to make such statements not misleading, and who suffers damage,
the person purchasing such security from him, who may sue to recover the
consideration paid for such security with interest thereon, less the amount of any Section 62. Limitation of Actions. 62.1. No action shall be maintained to enforce any liability
income received thereon, upon the tender of such security, or for damages if he no created under Section 56 or 57 of this Code unless brought within two (2) years after the
longer owns the security. discovery of the untrue statement or the omission, or, if the action is to enforce a liability
created under Subsection 57.1 (a), unless, brought within two (2) yeas after the violation upon
which it is based. In no event shall an such action be brought to enforce a liability created under
57.2. Any person who shall make or cause to be made any statement in any report, or document
Section 56 or Subsection 57.1 (a) more than five (5) years after the security was bona
filed pursuant to this Code or any rule or regulation thereunder, which statement as at the time
fide offered to the public, or under Subsection 57.1 (b0 more than five (5) years after the sale.
and in the light of the circumstances under which it was made false or misleading with respect
to any material fact, shall be liable to any person who, not knowing that such statement was
false or misleading, and relying upon such statement shall have purchased or sold a security at a 62.2. No action shall be maintained to enforce any liability created under any other provision of
price which was affected by such statement, for damages caused by such reliance, unless the this Code unless brought within two (20 years after the discovery of the facts constituting the
person sued shall prove that he acted in good faith and had no knowledge that such statement cause of action and within five (5) years after such cause of action accrued.
was false or misleading.

Section 63. Amount of Damages to be Awarded. 63.1. All suits to recover damages pursuant
Section 58. Civil Liability of Fraud in Connection with Securities Transactions. Any person who to Sections 56, 57, 58, 59, 60 and 61 shall be brought before the Regional Trial Court, which shall
engages in any act or transaction in violation of Sections 19.2, 20 or 26, or any rule or regulation have exclusive jurisdiction to hear and decide such suits. The Court is hereby authorized to
of the Commission thereunder, shall be liable to any other person who purchases or sells any award damages in an amount not exceeding triple the amount of the transaction plus actual
security, grants or refuses to grant any proxy, consent or authorization, or accepts or declines an damages.
invitation for tender of a security, as the case may be, for the damages sustained by such other
person as a result of such act or transaction.
Exemplary damages may also be awarded in cases of bad faith, fraud, malevolence or
wantonness in the violation of this Code or the rules and regulations promulgated thereunder.
Section 59. Civil Liability for Manipulation of Security Prices. Any person who willfully
participates in any act or transaction in violation of Section 24 shall be liable to any person who
The Court is also authorized to award attorneys fees not exceeding thirty percentum (30%) of
shall purchase or sell any security at a price which was affected by such act or transaction, and
the award.
the person so injured may sue to recover the damages sustained as a result of such act or
transaction.
63.2. The persons specified in Sections 56, 57, 58, 59, 60 and 61 hereof shall be jointly and
severally liable for the payment of damages. However, any person who becomes liable for the
Section 60. Civil Liability with Respect to Commodity Futures Contracts and Pre-need Plans.
payment of such damages may recover contribution from any other person who, if sued
60.1. Any person who engages in any act or transactions in willful violation of any rule or
separately, would have been liable to make the same payment, unless the former was guilty of
regulation promulgated by the Commission under Section 11 or 16, which the Commission
fraudulent representation and the latter was not.
denominates at the time of issuance as intended to prohibit fraud in the offer and sale of pre-
need plans or to prohibit fraud, manipulation, fictitious transactions, undue speculation, or other
unfair or abusive practices with respect to commodity future contracts, shall be liable to any 63.3. Notwithstanding any provision of law to the contrary, all persons, including the issuer, held
other person sustaining damages as a result of such act or transaction. liable under the provisions of Sections 56, 57, 58, 59, 60 and 61 shall contribute equally to the
total liability adjudged herein. In no case shall the principal stockholders, directors and other
officers of the issuer or persons occupying similar positions therein, recover their contribution to
60.2. As to each such rule or regulation so denominated, the Commission by rule shall prescribe
the liability from the issuer. However, the right of the issuer to recover from the guilty parties the
the elements of proof required for recovery and any limitations on the amount of damages that
amount it has contributed under this Section shall not be prejudiced.
may be imposed.

Section 64. Cease and Desist Order. 64.1. The Commission, after proper investigation or
Section 61. Civil Liability on Account of Insider Trading. 61.1. Any insider who violates
verification, motu proprio or upon verified complaint by any aggrieved party, may issue a cease
Subsection 27.1 and any person in the case of a tender offer who violates Subsection 27.4 (a)(I),
and desist order without the necessity of a prior hearing if in its judgment the act or practice,
or any rule or regulation thereunder, by purchasing or selling a security while in possession of
unless restrained, will operate as a fraud on investors or is otherwise likely to cause grave or
material information not generally available to the public, shall be liable in a suit brought by any
irreparable injury or prejudice to the investing public.
investor who, contemporaneously with the purchase or sale of securities that is the subject of
the violation, purchased or sold securities of the same class unless such insider, or such person
in the case of a tender offer, proves that such investor knew the information or would have 64.2. Until the Commission issue a cease and desist order, the fact that an investigation has
purchased or sold at the same price regardless of disclosure of the information to him. been initiated or that a complaint has been filed, including the contents of the complaint, shall
be confidential. Upon issuance of a cease and desist order, the Commission shall make public
such order and a copy thereof shall be immediately furnished to each person subject to the
61.2. An insider who violates Subsection 27.3 or any person in the case of a tender offer who
order.
violates Subsection 27.4 (a), or any rule or regulation thereunder, by communicating material
nonpublic information, shall be jointly and severally liable under Subsection 61.1 with, and to the
same extent as, the insider, or person in the case of a tender offer, to whom the communication 64.3. Any person against whom a cease and desist order was issued may, within five (5) days
was directed and who is liable under Subsection 61.1 by reason of his purchase or sale of a from receipt of the order, file a formal request for a lifting thereof. Said request shall be set for
security. hearing by the Commission not later than fifteen (15) days from its filing and the resolution
thereof shall be made not later than ten (10) days from the termination of the hearing. If the
Commission fails to resolve the request within the time herein prescribed, the cease and desist seller or a security any representation that any such action or failure to act by the Commission is
order shall automatically be lifted. to be so construed or has such effect.

Section 65. Substituted Service Upon the Commission. Service of summons or other process 67.2. Nothing contained in Subsection 67.1 shall, however, be construed as an exemption from
shall be made upon the Commission in actions or legal proceedings against an issuer or any liability of an employee or officer of the Commission for any nonfeasance, misfeasance or
person liable under this Code who is not domiciled in the Philippines. Upon receipt by the malfeasance in the discharge of his official duties.
Commission of such summons, the Commission shall within ten (10) days thereafter, transmit by
registered mail a copy of such summons and the complaint or other legal process to such issuer
Section 68. Special Accounting Rules. The Commission shall have the authority to make,
or person at his last known address or principal office. The sending thereof by the Commission,
amend, and rescind such accounting rules and regulations as may be necessary to carry out the
the expenses for which shall be advanced by the party at whose instance it is made, shall
provisions of this Code, including rules and regulations as may be necessary to carry out the
complete such service.
provisions of this Code, including rules and regulations governing registration statements and
prospectuses for various classes of securities and issuers, and defining accounting, technical and
Section 66. Revelation of Information Filed with the Commission. 66.1. All information filed trade terms used in this Code. Among other things, the Commission may prescribe the form or
with the commission in compliance with the requirements of this Code shall be made available to forms in which required information shall be set forth, the items or details to be shown in the
any member of the general public, upon request, in the premises and during regular office hours balance sheet and income statement, and the methods to be followed in the preparation of
of the Commission, except as set forth in this Section. accounts, appraisal or valuation of assets and liabilities, determination of depreciation and
depletion, differentiation of recurring and non-recurring income, differentiation of investment
and operating income, and in the preparation, where the Commission deems it necessary or
66.2. Nothing in this Code shall be construed to require, or to authorize the Commission to
desirable of consolidated balance sheets or income accounts of any person directly or indirectly
require, the revealing of trade secrets or processes in any application, report, or document filed
controlling or controlled by the issuer, or any person under direct or indirect common control
with the Commission.
with the issuer.

66.3. Any person filing any such application, report or document may make written objection to
Section 69. Effect on Existing Law. The rights and remedies provided by this Code shall be in
the public disclosure of information contained therein, stating the grounds for such objection,
addition to any and all order rights and remedies that may now exist. However, except as
and the Commission may hear objections as it deems necessary. The Commission may, in such
provided in Section 56 and 63 hereof, no person permitted to maintain a suit for damages under
cases, make available to the public the information contained in any such application, report, or
the provisions of this Code shall recover, through satisfaction of judgment in one or more
document only when a disclosure of such information is required in the public interest or for the
actions, a total amount in excess of his actual damages on account of the act complained
protection of investors; and copies of information so made available may be furnished to any
of: Provided, That exemplary damages may be awarded in cases of bad faith, fraud, malevolence
person having a legitimate interest therein at such reasonable charge and under such
or wantonness in the violation of this Code or the rules and regulations promulgated thereunder.
reasonable limitations as the Commission may prescribe.

Section 70. Judicial Review of Commission Orders. Any person aggrieved by an order of the
66.4. It shall be unlawful for any member, officer, or employee of the Commission to disclose to
Commission may appeal the order to the Court of Appeals by petition for review in accordance
any person other than a member, officer or employee of the Commission or to use for personal
with the pertinent provisions of the Rules of Court.
benefit, any information contained in any application, report, or document filed with the
Commission which is not made available to the public pursuant to Subsection 66.3.
Section 71. Validity of Contracts. 71.1. Any condition, stipulation, provision binding any
person to waive compliance with any provision of this Code or of any rule or regulation
66.5. Notwithstanding anything in Subsection 66.4 to the contrary, on request from a foreign
thereunder, or of any rule of an Exchange required thereby, as well as the waiver itself, shall be
enforcement authority of any country whose laws grant reciprocal assistance as herein provided,
void.
the Commission may provide assistance in accordance with this subsection, including the
disclosure of any information filed with or transmitted to the Commission. If the requesting
authority states that it is conducting an investigation which it deems necessary to determine 71.2. Every contract made in violation of any provision of this Code or of any rule or regulation
whether any person has violated, is violating, or is about to violate any laws relating to securities thereunder, and every contract, including any contract for listing a security or an Exchange
or commodities matters that the requesting authority administers or enforces. Such assistance heretofore or hereafter made, the performance of which involves the violation of, or the
may be provided without regard to whether the facts stated in the request would also constitute continuance of any relationship or practice in violation of, any provision of this Code, or any rule
a violation of law of the Philippines. or regulation thereunder, shall be void:

Section 67. Effect of action of Commission and Unlawful Representations with Respect Thereto. (a) As regards the rights of any person who, in violation of any such provision, rule or
67.1. No action or failure to act by the Commission in the administration of this Code shall be regulation, shall have made or engaged in the performance of any such contract, and
construed to mean that the Commission has in any way passed upon the merits of or given
approval to any security or any transactions or transactions therein, nor shall such action or
(b) As regards the rights of any person who, not being a party to such contract, shall
failure to act with regard to any statement or report filed with or examined by the Commission
have acquired any right thereunder with actual knowledge of the facts by reason of
pursuant to this Code or the rules and regulations thereunder to be deemed a finding by the
which the making or performance of such contract was in violation of any such
Commission that such statements or report is true and accurate on its face or that it is not false
provision, rule or regulation.
or misleading. It shall be unlawful to make, or cause to be made, to any prospective purchaser or
71.3. Nothing in this Code shall be construed: Section 73. Penalties. Any person who violates any of the provisions of this Code, or the rules
and regulations promulgated by the Commission under authority thereof, or any person who, in
a registration statement filed under this Code, makes any untrue statement of a material fact or
(a) To affect the validity of any loan or extension of credit made or of any lien created
omits to state any material fact required to be stated therein or necessary to make the
prior or subsequent to the effectivity of this Code, unless at the time of the making of
statements therein not misleading, shall, upon conviction, suffer a fine of not less than Fifty
such loan or extension of credit or the creating of such lien, the person making such
thousand pesos (P50,000.00) nor more than Five million pesos (P5,000,000.00) or imprisonment
loan or extension of credit or acquiring such lien shall have actual knowledge of the
of not less than seven (7) years nor more than twenty-one (21) years, or both in the discretion of
facts by reason of which the making of such loan or extension of credit or the
the court. If the offender is a corporation, partnership or association or other juridical entity, the
acquisition of such lien is a violation of the provisions of this Code or any rules or
penalty may in the discretion of the court be imposed upon such juridical entity and upon the
regulations thereunder, or
officer or officers of the corporation, partnership, association or entity responsible for the
violation, and if such officer is an alien, he shall in addition to the penalties prescribed, be
(b) To afford a defense to the collection of any debt, obligation or the enforcement of deported without further proceedings after service of sentence.
any lien by any person who shall have acquired such debt, obligation or lien in good
faith for value and without actual knowledge of the violation of any provision of this
Section 74. Transitory Provisions. The Commission, as organized under existing laws, shall
Code or any rule or regulation thereunder affecting the legality of such debt,
continue to exist and exercise its powers, functions and duties under such laws and this
obligation or lien.
Code: Provided, That until otherwise mandated by a subsequent law, the Commission shall
continue to regulate and supervise commodity futures contracts as provided in Section 11 and
Section 72. Rules and Regulations; Effectivity. 72.1. This Code shall be self-executory. To pre-need plans and the pre-need industry as provided in Section 16 of this Code.
effect the provisions and purposes of this Code, the Commission may issue, amend, and rescind
such rules and regulations and orders necessary or appropriate, including rules and regulations
All further requirements herein shall be complied with upon approval of this Code: Provided,
defining accounting, technical, and trade terms used in this Code, and prescribing the form or
however, That compliance may be deferred for such reasonable time as the Commission may
forms in which information required in registration statements, applications, and reports to the
determine but not to exceed one (1) year from approval of this Code: Provided, further, That
Commission shall be set forth. For purposes of its rules or regulations, the Commission may
securities which are being offered at the time of effectivity of this Code pursuant to an effective
classify persons, securities, and other matters within its jurisdiction, prescribe different
registration and permit, may continue to be offered and sold in accordance with the provisions of
requirements for different classes of persons, securities, or matters, and by rule or order,
the Revised Securities Act in effect immediately prior to approval of this Code.
conditionally or unconditionally exempt any person, security, or transaction, or class or classes
of persons, securities or transactions, from any or all provisions of this Code.
All unexpended funds for the calendar year, properties, equipment and records of the Securities
and Exchange Commission are hereby retained by the Commission as reorganized under this
Failure on the part of the Commission to issue rules and regulations shall not in any manner
Code and the amount of Two hundred million pesos (P200,000,000.00) or such amount
affect the self-executory nature of this Code.
necessary to carry out the reorganization provided in this Code is hereby appropriated.

72.2. The Commission shall promulgate rules and regulations providing for reporting, disclosure
All employees of the Commission who voluntarily retire or are separated from the service with
and the prevention of fraudulent, deceptive or manipulative practices in connection with the
the Commission and whose retirement or separation has been approved by the Commission,
purchase by an issuer, by tender offer or otherwise, of and equity security of a class issued by it
shall be paid retirement or separation benefits and other entitlement granted under existing
that satisfies the requirements of Subsection 17.2. such rules and regulations may require such
laws.
issuer to provide holders of equity securities of such dates with such information relating to the
reasons for such purchase, the source of funds, the number of shares to be purchased, the price
to be paid for such securities, the method of purchase and such additional information as the G.R. No. 200620, March 18, 2015
Commission deems necessary or appropriate in the public interest or for the protection of ROBERTO L. ABAD, MANUEL D. ANDAL, BENITO V. ARANETA, PHILIP G. BRODETT,
investors, or which the Commission deems to be material to a determination by holders whether ENRIQUE L. LOCSIN AND ROBERTO V. SAN JOSE, Petitioners, v. PHILIPPINE
COMMUNICATIONS SATELLITE CORPORATION, REPRESENTED BY VICTOR
such security should be sold.
AFRICA, Respondent.
DECISION
72.3. For the purpose of Subsection 72.2, a purchase by or for the issuer or any person VILLARAMA, JR., J.:
This case is a remnant of the multiple suits generated by the two factions battling for control of
controlling, controlled by, or under common control with the issuer, or a purchase subject to the
two sequestered corporations since 2004, a controversy we already resolved with finality in
control of the issuer or any such person, shall be deemed to be a purchased by the issuer. The 2013.
commission shall have the power to make rules and regulations implementing this subsection,
including exemptive rules and regulations covering situations in which the Commission deems it Assailed in this petition for review under Rule 45 are the Decision1 dated October 21, 2011 and
unnecessary or inappropriate that a purchase of the type described in this subsection shall be Resolution2 dated February 10, 2012 of the Court of Appeals (CA) in CA-G.R. SP No. 99789. The
deemed to be a purchase by the issuer for the purpose of some or all of the provisions of CA reversed the Order3 dated June 21, 2007 of the Regional Trial Court (RTC) of Makati City,
Subsection 72.2. Branch 149 in Civil Case No. 06-095.

Respondent Philippine Communications Satellite Corporation (PHILCOMSAT), along with


72.4. The rules and regulations promulgated by the Commission shall be published in two (20 Philippine Overseas Telecommunications Corporation (POTC) were among those private
newspapers or general circulation in the Philippines, and unless otherwise prescribed by the companies sequestered by the Philippine Commission on Good Government (PCGG) after the
EDSA People Power Revolution in 1986. PHILCOMSAT owns 81% of the outstanding capital stock
Commission, the same shall be effective fifteen (15) days after the date of the last publication.
of Philcomsat Holdings Corporation (PHC). The majority shareholders of PHILCOMSAT are also
the seven families who have owned and controlled POTC (Ilusorio, Nieto, Poblador, Africa,
Benedicto, Ponce Enrile and Elizalde). On February 2, 2006, PHILCOMSAT filed in the RTC a Complaint8 for Inspection of Books against
the incumbent PHC directors and/or officers, to enforce its right under Sections 74 and 75 of
During the administration of President Gloria Macapagal-Arroyo, Enrique L. Locsin and Manuel D. the Corporation Code of the Philippines. The original defendants were Julio J. Jalandoni, Luis K.
Andal, along with Julio Jalandoni, were appointed nominee-directors representing the Republic of Lokin, Jr., Oliverio G. Laperal, Nieto, Jr., Prudencio C. Somera, and herein petitioners Andal,
the Philippines through the PCGG in the board of directors of POTC and the board of directors of Locsin, Brodett, San Jose and Araneta.
PHILCOMSAT. These PCGG nominees have aligned with the Nieto family against the group of
Africa and Ilusorio (Africa-Bildner), in the ensuing battle for control over the respective boards of In its Order dated June 21, 2007, the RTC dismissed the complaint for lack of jurisdiction.
POTC, PHILCOMSAT and PHC. Benito Araneta was also a nominee of PCGG during the term of Citing Del Moral v. Republic of the Philippines9 and Olaguer v. RTC, National Capital Judicial
President Joseph Ejercito Estrada. Region, Br. 48, Manila,10 said court ruled that it is the Sandiganbayan which has jurisdiction
considering that plaintiff is a sequestered corporation of the Republic through the PCGG alleging
On August 31, 2004, the following were elected during the annual stockholders meeting of PHC a right of inspection over PHC but which right or authority was being raised as a defense by the
conducted by the Nieto-PCGG group: Locsin (Director and Acting Chairman); Oliverio Laperal defendants.
(Director and Vice-Chairman); Manuel H. Nieto, Jr. (Director, President and Chief Executive
Officer); Philip G. Brodett (Director and Vice-President); Andal (Director, Treasurer and Chief PHILCOMSAT appealed to the CA thru a petition for review under Rule 43 arguing that it is the
Financial Officer); Roberto V. San Jose (Director and Corporate Secretary); Jalandoni, Lokin, Jr., RTC and not Sandiganbayan which has jurisdiction over the case involving a stockholders right
Prudencio Somera, Roberto Abad and Benito Araneta as Directors. Said election at PHC was the to inspect corporate books and records. Petitioners countered that the main controversy is
offshoot of separate elections conducted by the two factions in POTC and PHILCOMSAT, the rooted upon the issue of who are the rightful representative and board of directors of
Africa-Bildner group and the Nieto-PCGG group. PHILCOMSAT. Accordingly, PHILCOMSATs right of inspection hinges on the resolution of the
ongoing power struggle within PHILCOMSAT, specifically on the issue of who between the Africa
In the July 28, 2004 stockholders meetings of POTC and PHILCOMSAT, Victor Africa was among and Nieto-Locsin groups is the legitimate board of directors. It was further pointed out that POTC
those in the Africa-Bildner group who were elected as Directors. He was designated as the POTC and PHILCOMSAT were both under sequestration by the PCGG, and hence all issues and
proxy to the PHILCOMSAT stockholders meeting. While Locsin, Andal and Nieto, Jr. were also controversies arising therefrom or related or incidental thereto fall under the exclusive and
elected as Directors, they did not accept their election as POTC and PHILCOMSAT Directors. original jurisdiction of the Sandiganbayan. Petitioners also contended that the petition should be
Instead, the Nieto-PCGG group held the stockholders meeting for PHILCOMSAT on August 9, dismissed on the ground of litis pendentia as the CA may take judicial notice of the fact that
2004 at the Manila Golf Club. Immediately after the stockholders meeting, an organizational many cases involving Africas purported authority to represent PHILCOMSAT are pending before
meeting was held, and Nieto, Jr. and Locsin were respectively elected as Chairman and President several courts, which issue must necessarily be resolved to determine who possesses the right
of PHILCOMSAT. At the same meeting, they issued a proxy in favor of Nieto, Jr. and/or Locsin of inspection of PHCs books and records.
authorizing them to represent PHILCOMSAT and vote the PHILCOMSAT shares in the
stockholders meeting of PHC scheduled on August 31, 2004. Finding merit in petitioners arguments, the CA granted the petition, as
follows:chanRoblesvirtualLawlibrary
Thereafter, the two factions took various legal steps including the filing of suits and countersuits WHEREFORE, the Petition is hereby GRANTED. The Order of dismissal dated 21 June 2007 of
to gain legitimacy for their respective election as directors and officers of POTC and the Regional Trial Court of Makati City, Branch 149, in Civil Case No. 06-095, is REVERSED and
PHILCOMSAT. The Africa group had sought the invalidation of the proxy issued in favor of Nieto, SET ASIDE. Accordingly, the case is remanded to the court a quo for further proceedings. The
Jr. and/or Locsin and consequent nullification of the elections held during the annual court a quo is reminded to hear and decide the case with dispatch.
stockholders meeting of PHC on August 31, 2004 (Civil Case No. 04-1049 of RTC, Makati City,
Branch 138). Prior to this, there was the pending case involving the compromise agreement SO ORDERED.11cralawred
dated June 28, 1996 entered into by Atty. Potenciano Ilusorio with the Republic of the Philippines cralawlawlibrary
and the PCGG relative to the Ilusorio familys shareholdings in POTC, including those shares
forcibly taken from him by former President Ferdinand Marcos which were placed in the name of With the denial of their motion for reconsideration, petitioners are now before this Court.
Independent Realty Corporation (IRC) and Mid-Pasig Land Development (Mid-Pasig). By Decision
dated June 15, 2005, this Court affirmed the validity of the said compromise agreement in G.R. The issues submitted for our resolution are: (1) whether it is the Sandiganbayan or RTC which
Nos. 141796 and 141804. As a result of the compromise agreement, the Ilusorio, Africa, has jurisdiction over a stockholders suit to enforce its right of inspection under Section 74 of
Poblador, Benedicto and Ponce Enrile families gained majority control (51.37%) and the Nieto the Corporation Code; and (2) whether the complaint failed to state a cause of action
family and PCGG became the minority. considering that PHILCOMSAT never authorized Africa or any other person to file the said
complaint.
On November 17, 2005, Africa in his capacity as President and CEO of PHILCOMSAT, and as
stockholder in his own right, wrote the board and management of PHC that PHILCOMSAT will The petition has no merit.
exercise its right of inspection over the books, records, papers, etc. pertinent to the business
transactions of PHC for the 3rd quarter of 2005, specifically the companys financial Both issues presented in this case pertaining to the jurisdiction of the RTC in intra-corporate
documents.4cralawred disputes within the sequestered corporations of PCGG, and who between the contending groups
held the controlling interest in POTC, and consequently in PHILCOMSAT and PHC, have already
In his letter dated November 22, 2005, Nieto, Jr. said that Africas request will be referred to the been resolved in the consolidated petitions docketed as G.R. No. 184622 (Philippine Overseas
PHC Board of Directors or Executive Committee in view of the several pending cases involving Telecommunications Corp. [POTC] and Philippine Communications Satellite Corporation
the Africa and Nieto-PCGG groups on one hand, and the PHC and its board of directors on the [PHILCOMSAT] v. Victor Africa, et al.), G.R. Nos. 184712-14 (POTC and PHILCOMSAT v. Hon. Jenny
other. He further advised Africa to inform them in writing of his reasons and purposes for such Lin Aldecoa-Delorino, Pairing Judge of RTC Makati City, Br. 138, et al.), G.R. No. 186066
inspection.5 In reply, Africa reiterated his request for inspection asserting that the PHILCOMSAT (Philcomsat Holdings Corp., represented by Concepcion Poblador v. PHILCOMSAT, represented by
board of directors was elected on September 22, 2005 under circumstances in consonance with Victor Africa), and G.R. No. 186590 (Philcomsat Holdings Corp., represented by Erlinda I. Bildner
the final decision of this Court and that there is no case against its legitimacy. 6cralawred v. Philcomsat Holdings Corp., represented by Enrique L. Locsin).12cralawred

On the day of the scheduled inspection, PHILCOMSAT sent its representatives, Atty. Samuel On the first issue, we ruled that it is the RTC and not the Sandiganbayan which has jurisdiction
Divina and Enrico Songco. However, Brodett disallowed the conduct of the inspection which over cases which do not involve a sequestration-related incident but an intra-corporate
prompted PHILCOMSAT through its counsel to make a written query whether the refusal of controversy.
Brodett to permit the conduct of PHCs inspection of corporate books and financial documents Originally, Section 5 of Presidential Decree (P.D.) No. 902-A vested the original and exclusive
was with the knowledge and authority of PHCs board of directors. But no reply or jurisdiction over cases involving the following in the SEC, to wit:
communication was received by Africa from the PHC.7cralawred xxxx
(a) Devices or schemes employed by, or any acts of the board of directors, business associates, The subject matter of his complaint in the SEC does not therefore fall within the ambit of this
its officers or partners, amounting to fraud and misrepresentation which may be detrimental to Courts Resolution of August 10, 1988 on the cases just mentioned, to the effect that, citing
the interest of the public and/or of the stockholder, partners, members of associations or PCGG v. Pena, et al., all cases of the Commission regarding the funds, moneys, assets, and
organization registered with the Commission;ChanRoblesVirtualawlibrary properties illegally acquired or misappropriated by former President Ferdinand Marcos, Mrs.
Imelda Romualdez Marcos, their close relatives, Subordinates, Business Associates, Dummies,
(b) Controversies arising out of intra-corporate or partnership relations, between and Agents, or Nominees, whether civil or criminal, are lodged within the exclusive and original
among stockholders, members or associates; between any or all of them and the jurisdiction of the Sandiganbayan, and all incidents arising from, incidental to, or related to,
corporation, partnership or association of which they are stockholders, members or associates, such cases necessarily fall likewise under the Sandiganbayans exclusive and original
respectively; and between such corporation, partnership or association and the State insofar as jurisdiction, subject to review on certiorari exclusively by the Supreme Court. His complaint
it concerns their individual franchise or right as such entity;ChanRoblesVirtualawlibrary does not involve any property illegally acquired or misappropriated by Marcos, et al., or any
incidents arising from, incidental to, or related to any case involving such property, but assets
(c) Controversies in the election or appointment of directors, trustees, officers or managers of indisputably belonging to San Miguel Corporation which were, in his (de los Angeles') view, being
such corporations, partnership or associations;ChanRoblesVirtualawlibrary illicitly committed by a majority of its board of directors to answer for loans assumed by a sister
corporation, Neptunia Co., Ltd.
(d) Petitions of corporations, partnerships or associations to be declared in the state of
suspension of payment in cases where the corporation, partnership or association possesses De los Angeles complaint, in fine, is confined to the issue of the validity of the assumption by
sufficient property to cover all its debts but foresees the impossibility of meeting them when the corporation of the indebtedness of Neptunia Co., Ltd., allegedly for the benefit of certain of
they respective fall due or in cases where the corporation, partnership or association has no its officers and stockholders, an issue evidently distinct from, and not even remotely requiring
sufficient assets to cover its liabilities but is under the management of a Rehabilitation Receiver inquiry into the matter of whether or not the 33,133,266 SMC shares sequestered by the PCGG
or Management Committee created pursuant to this Decree. belong to Marcos and his cronies or dummies (on which, issue, as already pointed out, de los
Upon the enactment of Republic Act No. 8799 (The Securities Regulation Code), effective on Angeles, in common with the PCGG, had in fact espoused the affirmative). De los Angeles
August 8, 2000, the jurisdiction of the SEC over intra-corporate controversies and the other dispute, as stockholder and director of SMC, with other SMC directors, an intra-corporate one, to
cases enumerated in Section 5 of P.D. No. 902-A was transferred to the Regional Trial Court be sure, is of no concern to the Sandiganbayan, having no relevance whatever to the ownership
pursuant to Section 5.2 of the law, which provides: of the sequestered stock. The contention, therefore, that in view of this Court's ruling as regards
5.2. The Commissions jurisdiction over all cases enumerated in Section 5 of Presidential Decree the sequestered SMC stock above adverted to, the SEC has no jurisdiction over the de los
No. 902-A is hereby transferred to the Courts of general jurisdiction or the appropriate Regional Angeles complaint, cannot be sustained and must be rejected. The dispute concerns acts of
Trial Court; Provided, That the Supreme Court in the exercise of its authority may designate the the board of directors claimed to amount to fraud and misrepresentation which may
Regional Trial Court branches that shall exercise jurisdiction over these cases. The Commission be detrimental to the interest of the stockholders, or is one arising out of intra-
shall retain jurisdiction over pending cases involving intra-corporate disputes submitted for final corporate relations between and among stockholders, or between any or all of them
resolution which should be resolved within one (1) year from the enactment of this Code. The and the corporation of which they are stockholders.
Commission shall retain jurisdiction over pending suspension of payments/rehabilitation cases Moreover, the jurisdiction of the Sandiganbayan has been held not to extend even to
filed as of 30 June 2000 until finally disposed. a case involving a sequestered company notwithstanding that the majority of the
To implement Republic Act No. 8799, the Court promulgated its resolution of November 21, 2000 members of the board of directors were PCGG nominees. The Court marked this
in A.M. No. 00-11-03-SC designating certain branches of the RTC to try and decide the cases distinction clearly in Holiday Inn (Phils.), Inc. v. Sandiganbayan, holding thusly:
enumerated in Section 5 of P.D. No. 902-A. Among the RTCs designated as special commercial The subject-matter of petitioners proposed complaint-in-intervention involves basically, an
courts was the RTC (Branch 138) in Makati City, the trial court for Civil Case No. 04-1049. interpretation of contract, i.e., whether or not the right of first refusal could and/or should have
been observed, based on the Addendum/Agreement of July 14, 1988, which extended the terms
On March 13, 2001, the Court adopted and approved the Interim Rules of Procedure for Intra- and conditions of the original agreement of January 1, 1976. The question of whether or not the
Corporate Controversies under Republic Act No. 8799 in A.M. No. 01-2-04-SC, effective on April sequestered property was lawfully acquired by Roberto S. Benedicto has no bearing on the
1, 2001, whose Section 1 and Section 2, Rule 6 state: legality of the termination of the management contract by NRHDCs Board of Directors. The two
Section 1. Cases covered. The provisions of this rule shall apply to election contests in stock are independent and unrelated issues and resolution of either may proceed independently of
and non-stock corporations. each other. Upholding the legality of Benedictos acquisition of the sequestered property is not a
guarantee that HIPs management contract would be upheld, for only the Board of Directors of
Section 2. Definition. An election contest refers to any controversy or dispute NRHDC is qualified to make such a determination.
involving title or claim to any elective office in a stock or non-stock corporation, the validation
of proxies, the manner and validity of elections, and the qualifications of candidates, Likewise, the Sandiganbayan correctly denied jurisdiction over the proposed complaint-in-
including the proclamation of winners, to the office of director, trustee or other officer directly intervention. The original and exclusive jurisdiction given to the Sandiganbayan over PCGG
elected by the stockholders in a close corporation or by members of a non-stock corporation cases pertains to (a) cases filed by the PCGG, pursuant to the exercise of its powers under
where the articles of incorporation or by-laws so provide. (bold underscoring supplied) Executive Order Nos. 1, 2 and 14, as amended by the Office of the President, and Article XVIII,
Conformably with Republic Act No. 8799, and with the ensuing resolutions of the Section 26 of the Constitution, i.e., where the principal cause of action is the recovery of ill-
Court on the implementation of the transfer of jurisdiction to the Regional Trial Court, gotten wealth, as well as all incidents arising from, incidental to, or related to such cases and
the RTC (Branch 138) in Makati had the authority to hear and decide the election (b) cases filed by those who wish to question or challenge the commissions acts or orders in
contest between the parties herein. There should be no disagreement that jurisdiction over such cases.
the subject matter of an action, being conferred by law, could neither be altered nor
conveniently set aside by the courts and the parties. Evidently, petitioners proposed complaint-in-intervention is an ordinary civil case that does not
pertain to the Sandiganbayan. As the Solicitor General stated, the complaint is not directed
To buttress its position, however, the Nieto-Locsin Group relied on Section 2 of Executive Order against PCGG as an entity, but against a private corporation, in which case it is not per se, a
No. 14, which expressly mandated that the PCGG shall file all such cases, whether civil or PCGG case.
criminal, with the Sandiganbayan, which shall have exclusive and original jurisdiction thereof. In the cases now before the Court, what are sought to be determined are the propriety of the
election of a party as a Director, and his authority to act in that capacity. Such issues
The reliance was unwarranted. should be exclusively determined only by the RTC pursuant to the pertinent law on
jurisdiction because they did not concern the recovery of ill-gotten wealth.13
Section 2 of Executive Order No. 14 had no application herein simply because the subject (Emphasis supplied)cralawlawlibrary
matter involved was an intra-corporate controversy, not any incidents arising from, incidental to,
or related to any case involving assets whose nature as ill-gotten wealth was yet to be In the case at bar, the complaint concerns PHILCOMSATs demand to exercise its right of
determined. In San Miguel Corporation v. Kahn, the Court held that: inspection as stockholder of PHC but which petitioners refused on the ground of the ongoing
power struggle within POTC and PHILCOMSAT that supposedly prevents PHC from recognizing and/or Locsin to vote the proxies of the group in the PHILCOMSAT meeting.
PHILCOMSATs representative (Africa) as possessing such right or authority from the legitimate
directors and officers. Clearly, the controversy is intra-corporate in nature as they arose out of For the same reason, the POTC proxies used by Nieto, Jr. and Locsin to elect
intra-corporate relations between and among stockholders, and between stockholders and the themselves respectively as Chairman and President of PHILCOMSAT; and the
corporation. PHILCOMSAT proxies used by Nieto, Jr. and Locsin in the August 31, 2004 PHC
elections to elect themselves respectively as President and Acting Chairman of PHC,
As to the issue of whether the complaint should be dismissed for failure to state a cause of were all invalid for not having the support of the majority shareholders of said
action since PHILCOMSAT never authorized Africa to file it, we rule in the negative. corporations.

A complaint should not be dismissed for insufficiency of cause of action if it appears clearly from While it is true that judicial decisions should be given a prospective effect, such prospectivity did
the complaint and its attachments that the plaintiff is entitled to relief. Conversely, a complaint not apply to the June 15, 2005 ruling in G.R. No. 141796 and G.R. No. 141804 because the ruling
may be dismissed for lack of cause of action if it is obvious from the complaint and its did not enunciate a new legal doctrine or change the interpretation of the law as to prejudice the
annexes that the plaintiff is not entitled to any relief.14 Here, attached to the complaint is the parties and undo their situations established under an old doctrine or prior interpretation.
Board Secretarys Certificate15 stating, among others, that PHILCOMSAT board of directors had Indeed, the ruling only affirmed the compromise agreement consummated on June 28, 1996 and
authorized its President to exercise the right of inspection in its subsidiary PHC, and to file a case approved by the Sandiganbayan on June 8, 1998, and accordingly implemented through the
in court in case of refusal by PHC. cancellation of the shares in the names of IRC and MLDC and their registration in the names of
Atty. Ilusorio to the extent of 673 shares, and of the Republic to the extent of 4,727 shares. In a
Petitioners insist that the board meeting held on September 22, 2005 where the aforesaid manner of speaking, the decision of the Court in G.R. No. 141796 and G.R. No. 141804
resolution was approved, is void for want of a quorum as the majority of the legitimate directors promulgated on June 15, 2005 declared the compromise agreement valid, and such validation
of PHILCOMSAT were not present at and notified of the meeting. This clearly alludes to the properly retroacted to the date of the judicial approval of the compromise agreement on June 8,
Nieto-PCGG groups non-recognition of the election of the board of directors of POTC and 1998.
PHILCOMSAT conducted by the Africa-Bildner group.
Consequently, although the assailed elections were conducted by the Nieto-PCGG group on
The issue thus boils down to the legitimacy of the Africa-Bildner group as the controlling interest August 31, 2004 but the ruling in G.R. No. 141796 and G.R. No. 141804 was promulgated only on
in PHILCOMSAT. June 15, 2005, the ruling was the legal standard by which the issues raised in Civil Case No. 04-
1049 should be resolved.17 (Emphasis supplied)cralawlawlibrary
In the same cited case of Philippine Overseas Telecommunications Corp. (POTC) v. Africa, 16 we
have further settled with finality, under the doctrine of stare decisis, the question of who WHEREFORE, the petition is DENIED for lack of merit. The Decision dated October 21, 2011
between the contending factions (Africa-Bildner) and (Nieto-PCGG) held the controlling interest and Resolution dated February 10, 2012 of the Court of Appeals in CA-G.R. SP No. 99789 are
in POTC, and consequently PHILCOMSAT and PHC. Thus:chanRoblesvirtualLawlibrary hereby AFFIRMED.
The question of who held the majority shareholdings in POTC and PHILCOMSAT was
definitively laid to rest in G.R. No. 141796 and G.R. No. 141804, whereby the Court
upheld the validity of the compromise agreement the Government had concluded G.R. No. 160597 July 20, 2006
with Atty. Ilusorio. Said the Court:
With the imprimatur of no less than the former President Fidel V. Ramos and the approval of the
Sandiganbayan, the Compromise Agreement must be accorded utmost respect. Such amicable REPUBLIC OF THE PHILIPPINES, petitioner,
settlement is not only allowed but even encouraged. Thus, in Republic vs. Sandiganbayan, we vs.
held: ROSELIE ELOISA BRINGAS BOLANTE a.k.a. MARIA ELOISA BRINGAS
xxxx BOLANTE, respondent.

The authority of the PCGG to enter into Compromise Agreements in civil cases and to grant
immunity, under certain circumstances, in criminal cases is now settled and established. DECISION
In Republic of the Philippines and Jose O. Campos, Jr. vs. Sandiganbayan, et al. (173 SCRA 72
[1989]), this Court categorically stated that amicable settlements and compromises are not only
allowed but actually encouraged in civil cases. A specific grant of immunity from criminal GARCIA, J.:
prosecutions was also sustained. In Benedicto vs. Board of Administrators of Television Stations
RPN, BBC, and IBC (207 SCRA 659 [1992]), the Court ruled that the authority of the PCGG to
validly enter into Compromise Agreement for the purpose of avoiding litigation or putting an end In this petition for review under Rule 45 of the Rules of Court, the Republic of the Philippines
to one already commenced was indisputable. x x x (italics supplied) assails and seeks to set aside the decision1 of the Court of Appeals (CA) dated October 21, 2003
Having been sealed with court approval, the Compromise Agreement has the force of res in CA-G.R. CV No. 74398 affirming that of the Regional Trial Court (RTC) of Bangued, Abra in
judicata between the parties and should be complied with in accordance with its terms. Pursuant Special Proceeding Case No. 1916, a petition for change of name thereat commenced by herein
thereto, Victoria C. de los Reyes, Corporate Secretary of the POTC, transmitted to Mr. Magdangal respondent Roselie Eloisa Bringas Bolante also known as Maria Eloisa Bringas Bolante.
B. Elma, then Chief Presidential Legal Counsel and Chairman of PCGG, Stock Certificate No. 131
dated January 10, 2000, issued in the name of the Republic of the Philippines, for 4,727 POTC
shares. Thus, the Compromise Agreement was partly implemented.cralawlawlibrary In her petition before the RTC, respondent alleged, among other things, the following:

As a result of the Government having expressly recognized that 673 POTC shares
belonged to Atty. Ilusorio, Atty. Ilusorio and his group gained the majority control of 1. That she is a Filipino, of legal age, married, born to spouses Floriano B. Bolante and
POTC. Paula B. Bringas and a resident since birth of Bangued, Abra;

Applying the ruling in G.R. No. 141796 and G.R. No. 141804 to Civil Case No. 04-1049, the RTC
(Branch 138) correctly concluded that the Nieto-PCGG Group, because it did not have 2. That per records in the Office of the Municipal Civil Registrar, Bangued, Abra, her
the majority control of POTC, could not have validly convened and held the registered name is Roselie Eloisa Bringas Bolante which name, as far as she can
stockholders meeting and election of POTC officers on August 5, 2004 during which remember, she did not use but instead the name Maria Eloisa Bringas Bolante;
Nieto, Jr. and PCGG representative Guy De Leon were respectively elected as
President and Chairman; and that there could not be a valid authority for Nieto, Jr.
3. That the name Maria Eloisa appears in all her school as well as in her other public An excerpt of other portions of her testimony, as recited in the Republic's petition which cited
and private records; and the decision of the trial court:

4. That her married name is Maria Eloisa B. Bolante-Marbella. At the witness stand the petitioner [herein respondent Bolante] testified, among
others, that she is now married to Jorge Marbella, Jr. and presently residing at Bliss
Angad, Bangued, Abra since 1995 but before she resided in Zone 4, Bangued, Abra
Thus, to prevent confusion, Ms. Bolante prayed that her registered name be changed to conform
since birth. She presented her birth certificate and was marked as Exhibit J to establish
to the name she has always carried and used.
such fact of birth and to effect that the name Roselie Eloisa B. Bolante entered therein
is not her true and correct name but instead Maria Eloisa Bolante which she had been
Finding the petition sufficient in form and substance, the trial court ordered respondent, as using during her school days, while being a government employee, and in all her
petitioner thereat, to comply with the jurisdictional requirements of notice and publication, and public and private records.
set the hearing on February 20, 2001.

She presented her professional license issued by the Professional Regulation


At the scheduled February 20, 2001 initial hearing, the trial court issued an Order giving Commission, Certificate issued by the Philippine Institute of Certified Public
respondent five (5) days within which to file a written formal offer of evidence to establish Accountant and a 'Quick Count' document all issued in her name Maria Eloisa B.
jurisdictional facts and set the presentation of evidence proper on March 26, 2001. In the Marbella, which documents were marked as Exhibit K and Exhibit L and Exhibit M
afternoon of February 20, respondent filed her "Offer of Evidence for Marking and Identification respectively. She likewise marked her marriage license as Exhibit N to prove her
Purposes to Prove Jurisdictional Facts." marriage xxx.

On June 5, 2001, the branch clerk of court, acting upon the trial court's express March 26, 2001 xxx xxx xxx
directive for a resetting, issued a notice for a July 18, 2001 hearing. Following another resetting,
what actually would be the initial hearing was, after notice, scheduled on September 25, 2001
On cross she stated that the purpose of filing the petition is that, she wanted to secure
and actually held. At that session, respondent presented and marked in evidence several
a passport and wanted that the same be issued in her correct name and that she
documents without any objection on the part of herein petitioner Republic, represented by the
would not have filed the petition was (sic) it not for the passport.
Office of the Solicitor General (OSG), thru the duly deputized provincial prosecutor of Abra.
Among the documents thus submitted and marked in evidence were the following:
On clarificatory question by the Court she said that her reason in filing the petition is
her realization that there will be a complication upon her retirement. 2 (Words in
Exh. "A" - The Petition
bracket added.)

Exh. "B" - The Notice of Initial Hearing


On January 23, 2002, the trial court rendered judgment granting the basic petition, disposing as
follows:
Exh. "C" - The Certificate of Posting

WHEREFORE, premises considered, this petition is hereby approved and is granted by


Exh. "D" - The Appearance of the Solicitor General this Court for being meritorious.

Exh. "E" - The Authority given to the Office of the Provincial Prosecutor The Municipal Registrar of Bangued, Abra, is hereby directed:

Exh. "F" - The Affidavit of Publication a) To change the name of the petitioner in her record of birth from Roselie Eloisa
Bringas Bolante to Maria Eloisa Bringas Bolante; and,
Exh. "F-I" -The Newspaper Clippings
b) To record this decision in the Civil Registry in accordance with Registry Regulations.

Exh. "G" - The Norluzonian Courier


Furnish copy of this Order to the Municipal Civil Registrar of Bangued, Abra for
recording and compliance.
Exh. "H" - Another copy of Norluzonian Courier

SO ORDERED.3 (Underscoring added)


Shortly after the trial court has declared its acquisition of jurisdiction over the case, respondent
took the witness stand to state that the purpose of her petition was to have her registered name
changed to that which she had actually been using thru the years. She also categorically stated In time, the Republic, through the OSG, went to the CA whereat its appellate recourse was
she had not been accused of any crime under either her registered name or her present correct docketed as CA-G.R. CV No. 74398. In the herein assailed Decision of October 21, 2003,4 the
name. appellate court affirmed in toto that of the trial court.
Hence, the Republic's present petition on the following issues: prohibited period prescribed under Section 3, Rule 103 of the Rules. The Court, as did the
CA,7 must emphasize, however, that the trial court, evidently upon realizing the error committed
respecting the 4-month limitation, lost no time in rectifying its mistake by rescheduling, with due
I
notice to all concerned, the initial hearing for several times, finally settling for September 25,
2001.
WHETHER OR NOT RESPONDENT'S SUBSTANTIAL COMPLIANCE WITH SEC. 3, RULE 103
OF THE RULES OF COURT IS SUFFICIENT TO VEST THE TRIAL COURT WITH
It is the Republic's posture that the fact that the hearing took place on September 25, 2001,
JURISDICTION TO TAKE COGNIZANCE OF THE PETITION A QUO.
beyond the four-month prohibited period, did not cure the jurisdictional defect since notice of the
September 25, 2001 setting went unpublished. Pressing on, the Republic would state and
II correctly so that the in rem nature of a change of name proceeding necessitates strict
compliance with all jurisdictional requirements, particularly on publication, in order to vest the
court with jurisdiction thereover.8
WHETHER OR NOT RESPONDENT'S BARE TESTIMONY, UNSUPPORTED BY ANY OTHER
EVIDENCE, IS SUFFICIENT TO PROVE THAT THE CHANGE OF HER NAME IS NOT
RESORTED FOR ILLEGAL PURPOSES. The Court, to be sure, is fully aware that the required publication serves as notice to the whole
world that the proceeding in question has for its object to bar indifferently all who might be
minded to make an objection of any and against the right sought to be established. It is the
Sections 2 and 3, Rule 103 of the Rules of Court prescribe the procedural and jurisdictional
publication of such notice that brings in the whole world as a party in the case and vests the
requirements for a change of name. As we articulated in Republic v. Hon. Judge of Branch III of
court with jurisdiction to hear and decide it.9
the CFI of Cebu,5 citing pertinent jurisprudence,6 non-compliance with these requirements would
be fatal to the jurisdiction of the lower court to hear and determine a petition for change of
name. The provisions adverted to are pertinently quoted hereunder: In the context of Section 3, Rule 103 of the Rules, publication is valid if the following requisites
concur: (1) the petition and the copy of the order indicating the date and place for the hearing
must be published; (2) the publication must be at least once a week for three successive weeks;
SEC. 2. Contents of petition. - A petition for change of name shall be signed and
and, (3) the publication must be in some newspaper of general circulation published in the
verified by the person desiring his name changed, or some other person on his behalf,
province, as the court shall deem best. Another validating ingredient relates to the caveat
and shall set forth:
against the petition being heard within 30 days prior to an election or within four (4) months
after the last publication of the notice of the hearing.
(a) That the petitioner has been a bona fide resident of the province where the petition
is filed for at least three (3) years prior to the date of such filing;
It cannot be over-emphasized that in a petition for change of name, any interested person may
appear at the hearing and oppose the petition. Likewise, the Solicitor General or his deputy shall
(b) The cause for which the change of the petitioner's name is sought; appear on behalf of the Government.10 The government, as an agency of the people, represents
the public and, therefore, the Solicitor General, who appears on behalf of the government,
effectively represents the public.11 In this case, the Solicitor General deputized the provincial
(c) The name asked for.
prosecutor of Abra for the purpose of appearing in the trial on his behalf. As it were, the
provincial prosecutor of Abra was fully apprised of the new dates of the initial hearing.
SEC. 3. Order for hearing. - If the petition filed is sufficient in form and substance, the Accordingly, there was no actual need for a republication of the initial notice of the hearing.
court, by an order reciting the purpose of the petition, shall fix a date and place for the
hearing thereof, and shall direct that a copy of the order be published before the
Not lost on the Court is the fact that during the September 25, 2001 initial hearing which, to
hearing at least once a week for three (3) successive weeks in some newspaper of
reiterate is already outside the 4-month limitation prescribed by the Rules, the provincial
general circulation published in the province, . The date set for the hearing shall not
prosecutor of Abra interposed no objection as to the genuineness, authenticity, relevancy or
be within thirty (30) days prior to an election nor within four (4) months after the last
sufficiency of the exhibits presented to prove the jurisdictional requirements exacted by the
publication of the notice. (Underscoring added.)
Rules. In a very real sense, therefore, the petitioner Republic fully and knowingly acquiesced in
the jurisdiction of the trial court. The peculiar circumstances obtaining in this case and the
On the postulate that the initial hearing of a petition for a change of name cannot be set within requirements of fair dealing demand that we accord validity to the proceedings a quo.
four (4) months from the last publication of the notice of such hearing, petitioner submits at the
threshold that the trial court did not acquire jurisdiction over the case for want or defective
On the issue as to propriety of the desired change of name, we are guided by decisional law on
publication.
the matter. As we have held, the State has an interest in the names borne by individuals for
purposes of identification, and that changing one's name is a privilege and not a right.
We are not persuaded. Accordingly, a person can be authorized to change his name appearing in either his certificate of
birth or civil registry upon showing not only of reasonable cause, or any compelling reason which
may justify such change, but also that he will be prejudiced by the use of his true and official
As gleaned from the records, the basic petition for change of name was filed on October 18,
name. 12 Jurisprudence has recognized certain justifying grounds to warrant a change of name.
2000 and set for hearing on February 20, 2001 via an Order issued on November 13, 2000.
Among these are: (a) when the name is ridiculous, dishonorable or extremely difficult to write or
The notice of hearing was published in the November 23, and 30, 2000 and December 7, 2000
pronounce; (b) when the change will avoid confusion; (c) when one has been continuously used
issues of the Norluzonian Courier. Counted from the last day, December 7, 2000, of publication
and been known since childhood by a Filipino name, and was unaware of alien parentage; (d)
of the Order, the initial hearing scheduled on February 20, 2001 is indeed within the four-month
when the surname causes embarrassment and there is no showing that the desired change of At bottom, petitioner Republic has not demonstrated that the allowance of the basic petition is
name was for a fraudulent purpose or that the change of name will prejudice public interest. 13 whimsical or based on a consideration other than to avoid confusion. The trial court appears to
have exercised its discretion judiciously when it granted the petition. Like the CA, the Court
loathes to disturb the action thus taken.
The matter of granting or denying petitions for change of name and the corollary issue of what is
a proper and reasonable cause therefor rests on the sound discretion of the court. The evidence
presented need only be satisfactory to the court; it need not be the best evidence WHEREFORE, the petition is DENIED and the assailed Decision of the Court of Appeals dated
available.14 What is involved in special proceedings for change of name is, to borrow October 21, 2003 is AFFIRMED.
from Republic v. Court of Appeals, 15 "not a mere matter of allowance or disallowance of the
petition, but a judicious evaluation of the sufficiency and propriety of the justifications advanced
in support thereof, mindful of the consequent results in the event of its grant and with the sole
prerogative for making such determination being lodged in the courts."
RP VS CAGANDAHAN

With the view we take of the case, respondent's submission for a change of name is with proper
and reasonable reason. As it were, she has, since she started schooling, used the given name
and has been known as Maria Eloisa, albeit the name Roselie Eloisa is written on her birth
record. Her scholastic records, as well as records in government offices, including that of her
This is a petition for review under Rule 45 of the Rules of Court raising purely questions
driver's license, professional license as a certified public accountant issued by the Professional of law and seeking a reversal of the Decision [1] dated January 12, 2005 of the Regional Trial Court
Regulation Commission, and the "Quick Count" document of the COMELEC, all attest to her (RTC), Branch 33 of Siniloan, Laguna, which granted the Petition for Correction of Entries in Birth
having used practically all her life the name Maria Eloisa Bringas Bolante. Certificate filed by Jennifer B. Cagandahan and ordered the following changes of entries in
Cagandahans birth certificate: (1) the name Jennifer Cagandahan changed to Jeff Cagandahan and
(2) gender from female to male.
The imperatives of avoiding confusion dictate that the instant petition is granted. But beyond The facts are as follows.
practicalities, simple justice dictates that every person shall be allowed to avail himself of any On December 11, 2003, respondent Jennifer Cagandahan filed a Petition for Correction
opportunity to improve his social standing, provided he does so without causing prejudice or of Entries in Birth Certificate[2] before the RTC, Branch 33 of Siniloan, Laguna.
injury to the interests of the State or of other people.16 In her petition, she alleged that she was born on January 13, 1981 and was registered
as a female in the Certificate of Live Birth but while growing up, she developed secondary male
characteristics and was diagnosed to have Congenital Adrenal Hyperplasia (CAH) which is a
The OSG's argument that respondent's bare testimony is insufficient to show that the requested condition where persons thus afflicted possess both male and female characteristics. She further
name is not sought for any illegal purpose and/or in avoidance of any entanglement with the law alleged that she was diagnosed to have clitoral hyperthropy in her early years and at age six,
deserves scant consideration. Surely, the issuance of a police and NBI clearance or like underwent an ultrasound where it was discovered that she has small ovaries. At age thirteen,
tests revealed that her ovarian structures had minimized, she has stopped growing and she has
certification, while perhaps apropos, cannot, as the OSG suggests, be a convincing norm of one's
no breast or menstrual development. She then alleged that for all interests and appearances as
good moral character or compelling evidence to prove that the change of name is not sought for well as in mind and emotion, she has become a male person. Thus, she prayed that her birth
any evil motive or fraudulent intent. Respondent's open court testimony, given under pain of certificate be corrected such that her gender be changed from female to male and her first name
perjury and for which she was cross-examined, that she had not been accused of any crime be changed from Jennifer to Jeff.
under her registered name or under her present name (name that she is using) had convinced The petition was published in a newspaper of general circulation for three (3)
the trial court of the bona fides of her request for change of name. As the CA correctly consecutive weeks and was posted in conspicuous places by the sheriff of the court. The
ratiocinated: Solicitor General entered his appearance and authorized the Assistant Provincial Prosecutor to
appear in his behalf.
To prove her claim, respondent testified and presented the testimony of Dr. Michael
In the case at bar, petitioner [now respondent] seeks to change her registered name in Sionzon of the Department of Psychiatry, University of the PhilippinesPhilippine General
order to avoid confusion having used a different name all her life. This is a valid Hospital. Dr. Sionzon issued a medical certificate stating that respondents condition is known as
CAH. He explained that genetically respondent is female but because her body secretes male
ground under the afore-mentioned enumeration not to mention that the instant
hormones, her female organs did not develop normally and she has two sex organs female and
remedy presents the less cumbersome and most convenient way to set her records male. He testified that this condition is very rare, that respondents uterus is not fully developed
straight. because of lack of female hormones, and that she has no monthly period. He further testified
that respondents condition is permanent and recommended the change of gender because
respondent has made up her mind, adjusted to her chosen role as male, and the gender change
Anent the contention of oppositor-appellant that petitioner failed to prove that the would be advantageous to her.
petition is not resorted to for an illegal purpose due to her inability to present NBI as The RTC granted respondents petition in a Decision dated January 12, 2005 which
well as police clearance to the effect that she has no derogatory records, due perusal reads:
of the requirements of Rule 103 reveals that it does not so provide such a quantum of The Court is convinced that petitioner has satisfactorily shown
proof to establish the fact that a petitioner has no derogatory records. This purpose, that he is entitled to the reliefs prayed [for]. Petitioner has adequately
presented to the Court very clear and convincing proofs for the granting of
we think, is served upon the declaration and affirmation of the petitioner in open court
his petition. It was medically proven that petitioners body produces male
that the petition is not to further fraud but for a legitimate purpose, coupled by the hormones, and first his body as well as his action and feelings are that of a
absence of any oppositor to the petition. There is yet no jurisprudence requiring a male. He has chosen to be male. He is a normal person and wants to be
petitioner in a petition for a change of name to present NBI and police clearances to acknowledged and identified as a male.
prove that the said petition is not resorted to for purpose of fraud. Until such time, we WHEREFORE, premises considered, the Civil Register of Pakil,
see no urgency to impose the requirements espoused by oppositor-appellant. (Word in Laguna is hereby ordered to make the following corrections in the birth
bracket added). [c]ertificate of Jennifer Cagandahan upon payment of the prescribed fees:
a) By changing the name from Jennifer Cagandahan to SEC. 4. Hearing. Any interested person may appear at the hearing and
JEFF CAGANDAHAN; and oppose the petition. The Solicitor General or the proper provincial or city
b) By changing the gender from female to MALE. fiscal shall appear on behalf of the Government of the Republic.
It is likewise ordered that petitioners school records, voters SEC. 5. Judgment. Upon satisfactory proof in open court on the date fixed in
registry, baptismal certificate, and other pertinent records are hereby the order that such order has been published as directed and that the
amended to conform with the foregoing corrected data. allegations of the petition are true, the court shall, if proper and reasonable
SO ORDERED.[3] cause appears for changing the name of the petitioner, adjudge that such
Thus, this petition by the Office of the Solicitor General (OSG) seeking a reversal of the name be changed in accordance with the prayer of the petition.
abovementioned ruling. SEC. 6. Service of judgment. Judgments or orders rendered in connection
The issues raised by petitioner are: with this rule shall be furnished the civil registrar of the municipality or city
THE TRIAL COURT ERRED IN GRANTING THE PETITION CONSIDERING THAT: where the court issuing the same is situated, who shall forthwith enter the
I. same in the civil register.
THE REQUIREMENTS OF RULES 103 AND 108 OF THE RULES OF COURT HAVE Rule 108
NOT BEEN COMPLIED WITH; AND, CANCELLATION OR CORRECTION OF ENTRIES
II. IN THE CIVIL REGISTRY
CORRECTION OF ENTRY UNDER RULE 108 DOES NOT ALLOW CHANGE OF SEX SECTION 1. Who may file petition. Any person interested in any act, event,
OR GENDER IN THE BIRTH CERTIFICATE, WHILE RESPONDENTS MEDICAL order or decree concerning the civil status of persons which has been
CONDITION, i.e., CONGENITAL ADRENAL HYPERPLASIA DOES NOT MAKE HER A recorded in the civil register, may file a verified petition for the cancellation
MALE.[4] or correction of any entry relating thereto, with the Regional Trial Court of
Simply stated, the issue is whether the trial court erred in ordering the correction of the province where the corresponding civil registry is located.
entries in the birth certificate of respondent to change her sex or gender, from female to male, SEC. 2. Entries subject to cancellation or correction. Upon good and valid
on the ground of her medical condition known as CAH, and her name from Jennifer to Jeff, under grounds, the following entries in the civil register may be cancelled or
Rules 103 and 108 of the Rules of Court. corrected: (a) births; (b) marriages; (c) deaths; (d) legal separations; (e)
The OSG contends that the petition below is fatally defective for non-compliance with judgments of annulments of marriage; (f) judgments declaring marriages
Rules 103 and 108 of the Rules of Court because while the local civil registrar is an indispensable void from the beginning; (g) legitimations; (h) adoptions; (i)
party in a petition for cancellation or correction of entries under Section 3, Rule 108 of the Rules acknowledgments of natural children; (j) naturalization; (k) election, loss or
of Court, respondents petition before the court a quo did not implead the local civil registrar. recovery of citizenship; (l) civil interdiction; (m) judicial determination of
[5]
The OSG further contends respondents petition is fatally defective since it failed to state that filiation; (n) voluntary emancipation of a minor; and (o) changes of name.
respondent is a bona fide resident of the province where the petition was filed for at least three SEC. 3. Parties. When cancellation or correction of an entry in the civil
(3) years prior to the date of such filing as mandated under Section 2(b), Rule 103 of the Rules of register is sought, the civil registrar and all persons who have or claim any
Court.[6] The OSG argues that Rule 108 does not allow change of sex or gender in the birth interest which would be affected thereby shall be made parties to the
certificate and respondents claimed medical condition known as CAH does not make her a male. proceeding.
[7]
SEC. 4. Notice and publication. Upon the filing of the petition, the court
On the other hand, respondent counters that although the Local Civil Registrar of Pakil, shall, by an order, fix the time and place for the hearing of the same, and
Laguna was not formally named a party in the Petition for Correction of Birth Certificate, cause reasonable notice thereof to be given to the persons named in the
nonetheless the Local Civil Registrar was furnished a copy of the Petition, the Order to publish on petition. The court shall also cause the order to be published once a week
December 16, 2003 and all pleadings, orders or processes in the course of the proceedings, for three (3) consecutive weeks in a newspaper of general circulation in the
[8]
respondent is actually a male person and hence his birth certificate has to be corrected to province.
reflect his true sex/gender,[9] change of sex or gender is allowed under Rule 108, [10] and SEC. 5. Opposition. The civil registrar and any person having or claiming any
respondent substantially complied with the requirements of Rules 103 and 108 of the Rules of interest under the entry whose cancellation or correction is sought may,
Court.[11] within fifteen (15) days from notice of the petition, or from the last date of
Rules 103 and 108 of the Rules of Court provide: publication of such notice, file his opposition thereto.
SEC. 6. Expediting proceedings. The court in which the proceedings is
Rule 103 brought may make orders expediting the proceedings, and may also grant
CHANGE OF NAME preliminary injunction for the preservation of the rights of the parties
SECTION 1. Venue. A person desiring to change his name shall present the pending such proceedings.
petition to the Regional Trial Court of the province in which he resides, [or, in SEC. 7. Order. After hearing, the court may either dismiss the petition or
the City of Manila, to the Juvenile and Domestic Relations Court]. issue an order granting the cancellation or correction prayed for. In either
SEC. 2. Contents of petition. A petition for change of name shall be signed case, a certified copy of the judgment shall be served upon the civil
and verified by the person desiring his name changed, or some other person registrar concerned who shall annotate the same in his record.
on his behalf, and shall set forth: The OSG argues that the petition below is fatally defective for non-compliance with
(a) That the petitioner has been a bona fide resident of the Rules 103 and 108 of the Rules of Court because respondents petition did not implead the local
province where the petition is filed for at least three (3) years civil registrar. Section 3, Rule 108 provides that the civil registrar and all persons who have or
prior to the date of such filing; claim any interest which would be affected thereby shall be made parties to the
(b) The cause for which the change of the petitioner's name is proceedings. Likewise, the local civil registrar is required to be made a party in a proceeding for
sought; the correction of name in the civil registry. He is an indispensable party without whom no final
(c) The name asked for. determination of the case can be had.[12] Unless all possible indispensable parties were duly
SEC. 3. Order for hearing. If the petition filed is sufficient in form and notified of the proceedings, the same shall be considered as falling much too short of the
substance, the court, by an order reciting the purpose of the petition, shall requirements of the rules.[13] The corresponding petition should also implead as respondents the
fix a date and place for the hearing thereof, and shall direct that a copy of civil registrar and all other persons who may have or may claim to have any interest that would
the order be published before the hearing at least once a week for three (3) be affected thereby.[14] Respondent, however, invokes Section 6,[15] Rule 1 of the Rules of Court
successive weeks in some newspaper of general circulation published in the which states that courts shall construe the Rules liberally to promote their objectives of securing
province, as the court shall deem best. The date set for the hearing shall not to the parties a just, speedy and inexpensive disposition of the matters brought before it. We
be within thirty (30) days prior to an election nor within four (4) months agree that there is substantial compliance with Rule 108 when respondent furnished a copy of
after the last publication of the notice. the petition to the local civil registrar.
The determination of a persons sex appearing in his birth certificate is a legal issue Biologically, nature endowed respondent with a mixed (neither consistently and
and the court must look to the statutes. In this connection, Article 412 of the Civil Code provides: categorically female nor consistently and categorically male) composition. Respondent has
female (XX) chromosomes. However, respondents body system naturally produces high levels of
ART. 412. No entry in a civil register shall be changed or corrected without a male hormones (androgen). As a result, respondent has ambiguous genitalia and the phenotypic
judicial order. features of a male.
Ultimately, we are of the view that where the person is biologically or
Together with Article 376[16] of the Civil Code, this provision was amended by Republic naturally intersex the determining factor in his gender classification would be what the
Act No. 9048[17] in so far as clerical or typographical errors are involved. The correction or individual, like respondent, having reached the age of majority, with good reason thinks of
change of such matters can now be made through administrative proceedings and without the his/her sex. Respondent here thinks of himself as a male and considering that his body produces
need for a judicial order. In effect, Rep. Act No. 9048 removed from the ambit of Rule 108 of the high levels of male hormones (androgen) there is preponderant biological support for
Rules of Court the correction of such errors. Rule 108 now applies only to substantial changes considering him as being male. Sexual development in cases of intersex persons makes the
and corrections in entries in the civil register.[18] gender classification at birth inconclusive. It is at maturity that the gender of such persons, like
Under Rep. Act No. 9048, a correction in the civil registry involving the change of sex respondent, is fixed.
is not a mere clerical or typographical error. It is a substantial change for which the applicable Respondent here has simply let nature take its course and has not taken unnatural
procedure is Rule 108 of the Rules of Court.[19] steps to arrest or interfere with what he was born with. And accordingly, he has already ordered
The entries envisaged in Article 412 of the Civil Code and correctable under Rule 108 his life to that of a male. Respondent could have undergone treatment and taken steps, like
of the Rules of Court are those provided in Articles 407 and 408 of the Civil Code: taking lifelong medication,[26] to force his body into the categorical mold of a female but he did
ART. 407. Acts, events and judicial decrees concerning the civil status of not. He chose not to do so. Nature has instead taken its due course in respondents development
persons shall be recorded in the civil register. to reveal more fully his male characteristics.
In the absence of a law on the matter, the Court will not dictate on respondent
ART. 408. The following shall be entered in the civil register: concerning a matter so innately private as ones sexuality and lifestyle preferences, much less on
whether or not to undergo medical treatment to reverse the male tendency due to CAH. The
(1) Births; (2) marriages; (3) deaths; (4) legal separations; (5) annulments of Court will not consider respondent as having erred in not choosing to undergo treatment in order
marriage; (6) judgments declaring marriages void from the beginning; (7) to become or remain as a female. Neither will the Court force respondent to undergo treatment
legitimations; (8) adoptions; (9) acknowledgments of natural children; (10) and to take medication in order to fit the mold of a female, as society commonly currently knows
naturalization; (11) loss, or (12) recovery of citizenship; (13) civil this gender of the human species. Respondent is the one who has to live with
interdiction; (14) judicial determination of filiation; (15) voluntary his intersex anatomy. To him belongs the human right to the pursuit of happiness and of
emancipation of a minor; and (16) changes of name. health. Thus, to him should belong the primordial choice of what courses of action to take along
The acts, events or factual errors contemplated under Article 407 of the Civil Code the path of his sexual development and maturation. In the absence of evidence that respondent
include even those that occur after birth.[20] is an incompetent[27] and in the absence of evidence to show that classifying respondent as a
Respondent undisputedly has CAH. This condition causes the early or inappropriate male will harm other members of society who are equally entitled to protection under the law,
appearance of male characteristics. A person, like respondent, with this condition produces too the Court affirms as valid and justified the respondents position and his personal judgment of
much androgen, a male hormone. A newborn who has XX chromosomes coupled with CAH being a male.
usually has a (1) swollen clitoris with the urethral opening at the base, an ambiguous genitalia In so ruling we do no more than give respect to (1) the diversity of nature; and (2) how
often appearing more male than female; (2) normal internal structures of the female an individual deals with what nature has handed out. In other words, we respect respondents
reproductive tract such as the ovaries, uterus and fallopian tubes; as the child grows older, some congenital condition and his mature decision to be a male. Life is already difficult for the
features start to appear male, such as deepening of the voice, facial hair, and failure to ordinary person. We cannot but respect how respondent deals with his unordinary state and thus
menstruate at puberty. About 1 in 10,000 to 18,000 children are born with CAH. help make his life easier, considering the unique circumstances in this case.
CAH is one of many conditions[21] that involve intersex anatomy. During the twentieth As for respondents change of name under Rule 103, this Court has held that a change
century, medicine adopted the term intersexuality to apply to human beings who cannot be of name is not a matter of right but of judicial discretion, to be exercised in the light of the
classified as either male or female. [22] The term is now of widespread use. According reasons adduced and the consequences that will follow.[28] The trial courts grant of respondents
to Wikipedia, intersexuality is the state of a living thing of a gonochoristicspecies whose sex change of name from Jennifer to Jeff implies a change of a feminine name to a masculine name.
chromosomes, genitalia, and/or secondary sex characteristics are determined to be neither Considering the consequence that respondents change of name merely recognizes his preferred
exclusively male nor female. An organism with intersex may have biological characteristics of gender, we find merit in respondents change of name. Such a change will conform with the
both male and female sexes. change of the entry in his birth certificate from female to male.
Intersex individuals are treated in different ways by different cultures. In most WHEREFORE, the Republics petition is DENIED. The Decision dated January 12,
societies, intersex individuals have been expected to conform to either a male or female gender 2005 of the Regional Trial Court, Branch 33 of Siniloan, Laguna, is AFFIRMED. No
role.[23]
Since the rise of modern medical science in Western societies, some intersex people with pronouncement as to costs.
ambiguous external genitalia have had their genitalia surgically modified to resemble either
male or female genitals.[24] More commonly, an intersex individual is considered as suffering
from a disorder which is almost always recommended to be treated, whether by surgery and/or
by taking lifetime medication in order to mold the individual as neatly as possible into the G.R. No. 174689 October 22, 2007
category of either male or female.
In deciding this case, we consider the compassionate calls for recognition of the
various degrees of intersex as variations which should not be subject to outright denial. It has ROMMEL JACINTO DANTES SILVERIO, petitioner,
been suggested that there is some middle ground between the sexes, a no-mans land for those vs.
individuals who are neither truly male nor truly female. [25] The current state of Philippine statutes REPUBLIC OF THE PHILIPPINES, respondent.
apparently compels that a person be classified either as a male or as a female, but this Court is
not controlled by mere appearances when nature itself fundamentally negates such rigid
classification. DECISION
In the instant case, if we determine respondent to be a female, then there is no basis
for a change in the birth certificate entry for gender. But if we determine, based on medical
testimony and scientific development CORONA, J.:
showing the respondent to be other than female, then a change in the
subjects birth certificate entry is in order.
When God created man, He made him in the likeness of God; He created them male Petitioner filed the present petition not to evade any law or judgment or any infraction
and female. (Genesis 5:1-2) thereof or for any unlawful motive but solely for the purpose of making his birth
records compatible with his present sex.

Amihan gazed upon the bamboo reed planted by Bathala and she heard voices
coming from inside the bamboo. "Oh North Wind! North Wind! Please let us out!," the The sole issue here is whether or not petitioner is entitled to the relief asked for.
voices said. She pecked the reed once, then twice. All of a sudden, the bamboo
cracked and slit open. Out came two human beings; one was a male and the other
The [c]ourt rules in the affirmative.
was a female. Amihan named the man "Malakas" (Strong) and the woman "Maganda"
(Beautiful). (The Legend of Malakas and Maganda)
Firstly, the [c]ourt is of the opinion that granting the petition would be more in
consonance with the principles of justice and equity. With his sexual [re-assignment],
When is a man a man and when is a woman a woman? In particular, does the law recognize the
petitioner, who has always felt, thought and acted like a woman, now possesses the
changes made by a physician using scalpel, drugs and counseling with regard to a persons sex?
physique of a female. Petitioners misfortune to be trapped in a mans body is not his
May a person successfully petition for a change of name and sex appearing in the birth
own doing and should not be in any way taken against him.
certificate to reflect the result of a sex reassignment surgery?

Likewise, the [c]ourt believes that no harm, injury [or] prejudice will be caused to
On November 26, 2002, petitioner Rommel Jacinto Dantes Silverio filed a petition for the change
anybody or the community in granting the petition. On the contrary, granting the
of his first name and sex in his birth certificate in the Regional Trial Court of Manila, Branch 8.
petition would bring the much-awaited happiness on the part of the petitioner and her
The petition, docketed as SP Case No. 02-105207, impleaded the civil registrar of Manila as
[fianc] and the realization of their dreams.
respondent.

Finally, no evidence was presented to show any cause or ground to deny the present
Petitioner alleged in his petition that he was born in the City of Manila to the spouses Melecio
petition despite due notice and publication thereof. Even the State, through the [OSG]
Petines Silverio and Anita Aquino Dantes on April 4, 1962. His name was registered as "Rommel
has not seen fit to interpose any [o]pposition.
Jacinto Dantes Silverio" in his certificate of live birth (birth certificate). His sex was registered as
"male."
WHEREFORE, judgment is hereby rendered GRANTING the petition and ordering the
Civil Registrar of Manila to change the entries appearing in the Certificate of Birth of
He further alleged that he is a male transsexual, that is, "anatomically male but feels, thinks and
[p]etitioner, specifically for petitioners first name from "Rommel Jacinto" to MELY and
acts as a female" and that he had always identified himself with girls since childhood. 1 Feeling
petitioners gender from "Male" to FEMALE. 5
trapped in a mans body, he consulted several doctors in the United States. He underwent
psychological examination, hormone treatment and breast augmentation. His attempts to
transform himself to a "woman" culminated on January 27, 2001 when he underwent sex On August 18, 2003, the Republic of the Philippines (Republic), thru the OSG, filed a petition for
reassignment surgery2 in Bangkok, Thailand. He was thereafter examined by Dr. Marcelino certiorari in the Court of Appeals.6 It alleged that there is no law allowing the change of entries in
Reysio-Cruz, Jr., a plastic and reconstruction surgeon in the Philippines, who issued a medical the birth certificate by reason of sex alteration.
certificate attesting that he (petitioner) had in fact undergone the procedure.
On February 23, 2006, the Court of Appeals7 rendered a decision8 in favor of the Republic. It
From then on, petitioner lived as a female and was in fact engaged to be married. He then ruled that the trial courts decision lacked legal basis. There is no law allowing the change of
sought to have his name in his birth certificate changed from "Rommel Jacinto" to "Mely," and either name or sex in the certificate of birth on the ground of sex reassignment through surgery.
his sex from "male" to "female." Thus, the Court of Appeals granted the Republics petition, set aside the decision of the trial
court and ordered the dismissal of SP Case No. 02-105207. Petitioner moved for reconsideration
but it was denied.9 Hence, this petition.
An order setting the case for initial hearing was published in the Peoples Journal Tonight, a
newspaper of general circulation in Metro Manila, for three consecutive weeks.3 Copies of the
order were sent to the Office of the Solicitor General (OSG) and the civil registrar of Manila. Petitioner essentially claims that the change of his name and sex in his birth certificate is
allowed under Articles 407 to 413 of the Civil Code, Rules 103 and 108 of the Rules of Court and
RA 9048.10
On the scheduled initial hearing, jurisdictional requirements were established. No opposition to
the petition was made.
The petition lacks merit.

During trial, petitioner testified for himself. He also presented Dr. Reysio-Cruz, Jr. and his
American fianc, Richard P. Edel, as witnesses. A Persons First Name Cannot Be Changed On the Ground of Sex Reassignment

On June 4, 2003, the trial court rendered a decision4 in favor of petitioner. Its relevant portions Petitioner invoked his sex reassignment as the ground for his petition for change of name and
read: sex. As found by the trial court:
Petitioner filed the present petition not to evade any law or judgment or any infraction status.18 RA 9048 does not sanction a change of first name on the ground of sex reassignment.
thereof or for any unlawful motive but solely for the purpose of making his birth Rather than avoiding confusion, changing petitioners first name for his declared purpose may
records compatible with his present sex. (emphasis supplied) only create grave complications in the civil registry and the public interest.

Petitioner believes that after having acquired the physical features of a female, he became Before a person can legally change his given name, he must present proper or reasonable cause
entitled to the civil registry changes sought. We disagree. or any compelling reason justifying such change.19 In addition, he must show that he will be
prejudiced by the use of his true and official name.20 In this case, he failed to show, or even
allege, any prejudice that he might suffer as a result of using his true and official name.
The State has an interest in the names borne by individuals and entities for purposes of
identification.11 A change of name is a privilege, not a right. 12 Petitions for change of name are
controlled by statutes.13 In this connection, Article 376 of the Civil Code provides: In sum, the petition in the trial court in so far as it prayed for the change of petitioners first
name was not within that courts primary jurisdiction as the petition should have been filed with
the local civil registrar concerned, assuming it could be legally done. It was an improper remedy
ART. 376. No person can change his name or surname without judicial authority.
because the proper remedy was administrative, that is, that provided under RA 9048. It was also
filed in the wrong venue as the proper venue was in the Office of the Civil Registrar of Manila
This Civil Code provision was amended by RA 9048 (Clerical Error Law). In particular, Section 1 of where his birth certificate is kept. More importantly, it had no merit since the use of his true and
RA 9048 provides: official name does not prejudice him at all. For all these reasons, the Court of Appeals correctly
dismissed petitioners petition in so far as the change of his first name was concerned.

SECTION 1. Authority to Correct Clerical or Typographical Error and Change of First


Name or Nickname. No entry in a civil register shall be changed or corrected without No Law Allows The Change of Entry In The Birth Certificate As To Sex On the Ground
a judicial order, except for clerical or typographical errors and change of first name or of Sex Reassignment
nickname which can be corrected or changed by the concerned city or municipal civil
registrar or consul general in accordance with the provisions of this Act and its
The determination of a persons sex appearing in his birth certificate is a legal issue and the
implementing rules and regulations.
court must look to the statutes.21 In this connection, Article 412 of the Civil Code provides:

RA 9048 now governs the change of first name.14 It vests the power and authority to entertain
ART. 412. No entry in the civil register shall be changed or corrected without a judicial
petitions for change of first name to the city or municipal civil registrar or consul general
order.
concerned. Under the law, therefore, jurisdiction over applications for change of first name is
now primarily lodged with the aforementioned administrative officers. The intent and effect of
the law is to exclude the change of first name from the coverage of Rules 103 (Change of Name) Together with Article 376 of the Civil Code, this provision was amended by RA 9048 in so far
and 108 (Cancellation or Correction of Entries in the Civil Registry) of the Rules of Court, until as clerical or typographical errors are involved. The correction or change of such matters can
and unless an administrative petition for change of name is first filed and subsequently now be made through administrative proceedings and without the need for a judicial order. In
denied.15 It likewise lays down the corresponding venue,16 form17 and procedure. In sum, the effect, RA 9048 removed from the ambit of Rule 108 of the Rules of Court the correction of such
remedy and the proceedings regulating change of first name are primarily administrative in errors.22 Rule 108 now applies only to substantial changes and corrections in entries in the civil
nature, not judicial. register.23

RA 9048 likewise provides the grounds for which change of first name may be allowed: Section 2(c) of RA 9048 defines what a "clerical or typographical error" is:

SECTION 4. Grounds for Change of First Name or Nickname. The petition for change SECTION 2. Definition of Terms. As used in this Act, the following terms shall mean:
of first name or nickname may be allowed in any of the following cases:

xxx xxx xxx


(1) The petitioner finds the first name or nickname to be ridiculous, tainted with
dishonor or extremely difficult to write or pronounce;
(3) "Clerical or typographical error" refers to a mistake committed in the
performance of clerical work in writing, copying, transcribing or typing an
(2) The new first name or nickname has been habitually and continuously used by the entry in the civil register that is harmless and innocuous, such as misspelled
petitioner and he has been publicly known by that first name or nickname in the name or misspelled place of birth or the like, which is visible to the eyes or
community; or obvious to the understanding, and can be corrected or changed only by
reference to other existing record or records: Provided, however, That
no correction must involve the change of nationality, age, status
(3) The change will avoid confusion.
or sex of the petitioner. (emphasis supplied)

Petitioners basis in praying for the change of his first name was his sex reassignment. He
Under RA 9048, a correction in the civil registry involving the change of sex is not a mere clerical
intended to make his first name compatible with the sex he thought he transformed himself into
or typographical error. It is a substantial change for which the applicable procedure is Rule 108
through surgery. However, a change of name does not alter ones legal capacity or civil
of the Rules of Court.
The entries envisaged in Article 412 of the Civil Code and correctable under Rule 108 of the But there is no such special law in the Philippines governing sex reassignment and its effects.
Rules of Court are those provided in Articles 407 and 408 of the Civil Code: 24 This is fatal to petitioners cause.

ART. 407. Acts, events and judicial decrees concerning the civil status of persons shall Moreover, Section 5 of Act 3753 (the Civil Register Law) provides:
be recorded in the civil register.

SEC. 5. Registration and certification of births. The declaration of the physician or


ART. 408. The following shall be entered in the civil register: midwife in attendance at the birth or, in default thereof, the declaration of either
parent of the newborn child, shall be sufficient for the registration of a birth in the civil
register. Such declaration shall be exempt from documentary stamp tax and shall be
(1) Births; (2) marriages; (3) deaths; (4) legal separations; (5) annulments of marriage;
sent to the local civil registrar not later than thirty days after the birth, by the
(6) judgments declaring marriages void from the beginning; (7) legitimations; (8)
physician or midwife in attendance at the birth or by either parent of the newborn
adoptions; (9) acknowledgments of natural children; (10) naturalization; (11) loss, or
child.
(12) recovery of citizenship; (13) civil interdiction; (14) judicial determination of
filiation; (15) voluntary emancipation of a minor; and (16) changes of name.
In such declaration, the person above mentioned shall certify to the following facts: (a)
date and hour of birth; (b) sex and nationality of infant; (c) names, citizenship and
The acts, events or factual errors contemplated under Article 407 of the Civil Code include even
religion of parents or, in case the father is not known, of the mother alone; (d) civil
those that occur after birth.25 However, no reasonable interpretation of the provision can justify
status of parents; (e) place where the infant was born; and (f) such other data as may
the conclusion that it covers the correction on the ground of sex reassignment.
be required in the regulations to be issued.

To correct simply means "to make or set aright; to remove the faults or error from" while to
xxx xxx xxx (emphasis supplied)
change means "to replace something with something else of the same kind or with something
that serves as a substitute."26 The birth certificate of petitioner contained no error. All entries
therein, including those corresponding to his first name and sex, were all correct. No correction is Under the Civil Register Law, a birth certificate is a historical record of the facts as they existed
necessary. at the time of birth.29 Thus, the sex of a person is determined at birth, visually done by the birth
attendant (the physician or midwife) by examining the genitals of the infant. Considering that
there is no law legally recognizing sex reassignment, the determination of a persons sex made
Article 407 of the Civil Code authorizes the entry in the civil registry of certain acts (such as
at the time of his or her birth, if not attended by error, 30is immutable.31
legitimations, acknowledgments of illegitimate children and naturalization), events (such as
births, marriages, naturalization and deaths) and judicial decrees (such as legal separations,
annulments of marriage, declarations of nullity of marriages, adoptions, naturalization, loss or When words are not defined in a statute they are to be given their common and ordinary
recovery of citizenship, civil interdiction, judicial determination of filiation and changes of name). meaning in the absence of a contrary legislative intent. The words "sex," "male" and "female" as
These acts, events and judicial decrees produce legal consequences that touch upon the legal used in the Civil Register Law and laws concerning the civil registry (and even all other laws)
capacity, status and nationality of a person. Their effects are expressly sanctioned by the laws. should therefore be understood in their common and ordinary usage, there being no legislative
In contrast, sex reassignment is not among those acts or events mentioned in Article 407. intent to the contrary. In this connection, sex is defined as "the sum of peculiarities of structure
Neither is it recognized nor even mentioned by any law, expressly or impliedly. and function that distinguish a male from a female"32 or "the distinction between male and
female."33 Female is "the sex that produces ova or bears young"34 and male is "the sex that has
organs to produce spermatozoa for fertilizing ova." 35 Thus, the words "male" and "female" in
"Status" refers to the circumstances affecting the legal situation (that is, the sum total of
everyday understanding do not include persons who have undergone sex reassignment.
capacities and incapacities) of a person in view of his age, nationality and his family
Furthermore, "words that are employed in a statute which had at the time a well-known meaning
membership.27
are presumed to have been used in that sense unless the context compels to the
contrary."36 Since the statutory language of the Civil Register Law was enacted in the early
The status of a person in law includes all his personal qualities and relations, more or 1900s and remains unchanged, it cannot be argued that the term "sex" as used then is
less permanent in nature, not ordinarily terminable at his own will, such as something alterable through surgery or something that allows a post-operative male-to-female
his being legitimate or illegitimate, or his being married or not. The comprehensive transsexual to be included in the category "female."
term status include such matters as the beginning and end of legal personality,
capacity to have rights in general, family relations, and its various aspects, such as
For these reasons, while petitioner may have succeeded in altering his body and appearance
birth, legitimation, adoption, emancipation, marriage, divorce, and sometimes even
through the intervention of modern surgery, no law authorizes the change of entry as to sex in
succession.28 (emphasis supplied)
the civil registry for that reason. Thus, there is no legal basis for his petition for the correction or
change of the entries in his birth certificate.
A persons sex is an essential factor in marriage and family relations. It is a part of a persons
legal capacity and civil status. In this connection, Article 413 of the Civil Code provides:
Neither May Entries in the Birth Certificate As to First Name or Sex Be Changed on
the Ground of Equity
ART. 413. All other matters pertaining to the registration of civil status shall be
governed by special laws.
The trial court opined that its grant of the petition was in consonance with the principles of
justice and equity. It believed that allowing the petition would cause no harm, injury or prejudice CERUILA VS DELANTAR
to anyone. This is wrong.
Petitioners-spouses Platon Ceruila and Librada D. Ceruila (Ceruilas) filed an action with the
The changes sought by petitioner will have serious and wide-ranging legal and public policy Regional Trial Court (RTC) of Manila, docketed as Spec. Proc. No. 97-818932, for the annulment
consequences. First, even the trial court itself found that the petition was but petitioners first and cancellation of the birth certificate of Maria Rosilyn Telin Delantar (Rosilyn), the child-victim
in the rape case involving Romeo Jaloslos.[1] The RTC granted the Ceruilas petition in its decision
step towards his eventual marriage to his male fianc. However, marriage, one of the most
dated April 11, 1997[2] which was nullified, however, by the Court of Appeals (CA) on June 10,
sacred social institutions, is a special contract of permanent union between a man and a 1999.[3] The CA denied petitioners motion for reconsideration.[4] Hence the present petition.
woman.37 One of its essential requisites is the legal capacity of the contracting parties who must
be a male and a female.38 To grant the changes sought by petitioner will substantially The antecedents are as follows:
reconfigure and greatly alter the laws on marriage and family relations. It will allow the union of
a man with another man who has undergone sex reassignment (a male-to-female post-operative Sometime in 1996, Rosilyn complained against her father, Simplicio Delantar (Simplicio) for child
transsexual). Second, there are various laws which apply particularly to women such as the abuse, particularly prostitution. Simplicio was incarcerated at the Pasay City Jail starting August
22, 1996 which prompted the filing of a petition for involuntary commitment of Rosilyn in favor
provisions of the Labor Code on employment of women, 39 certain felonies under the Revised
of the Department of Social Welfare and Development (DSWD), as the whereabouts of the
Penal Code40 and the presumption of survivorship in case of calamities under Rule 131 of the mother, Librada Ceruila, was unknown. The petition was granted by the RTC of Pasay City,
Rules of Court,41 among others. These laws underscore the public policy in relation to women Branch 119 on November 9, 1996 and Simplicios motion to vacate said judgment was denied by
which could be substantially affected if petitioners petition were to be granted. said court on January 20, 1997.[5]

On February 3, 1997, the Ceruilas filed a petition before the RTC of Manila, entitled IN THE
It is true that Article 9 of the Civil Code mandates that "[n]o judge or court shall decline to MATTER OF CANCELLATION AND ANNULMENT OF THE BIRTH CERTIFICATE OF MARIA ROSILYN
render judgment by reason of the silence, obscurity or insufficiency of the law." However, it is TELIN DELANTAR, praying that the birth certificate of Rosilyn be canceled and declared null and
not a license for courts to engage in judicial legislation. The duty of the courts is to apply or void for the reasons that said birth certificate was made an instrument of the crime of simulation
interpret the law, not to make or amend it. of birth and therefore invalid and spurious, and it falsified all material entries therein, as follows:

In our system of government, it is for the legislature, should it choose to do so, to determine
a. The name of her mother which should not be
what guidelines should govern the recognition of the effects of sex reassignment. The need for
petitioner Librada A. Telin;
legislative guidelines becomes particularly important in this case where the claims asserted are
statute-based.
b. The signature of informant referring to Librada
T. Delantar being a forgery;
To reiterate, the statutes define who may file petitions for change of first name and for correction c. The name of Simplicio Delantar as the
or change of entries in the civil registry, where they may be filed, what grounds may be invoked, biological father, considering that, as already mentioned, he is
what proof must be presented and what procedures shall be observed. If the legislature intends merely the foster father and co-guardian in fact of Maria Rosilyn
to confer on a person who has undergone sex reassignment the privilege to change his name and the name of the natural father in (sic) unknown;
and sex to conform with his reassigned sex, it has to enact legislation laying down the guidelines d. The date of marriage of the supposed parents,
in turn governing the conferment of that privilege. since the parents reflected in said certificate were (sic) actually
full blood brother and sister and therefore marriage between the
two is virtually impossible;
It might be theoretically possible for this Court to write a protocol on when a person may be e. The status of Maria Rosilyn as a legitimate
child as the same (sic) is actually not legitimate;
recognized as having successfully changed his sex. However, this Court has no authority to
f. The date of actual birth of Marial (sic) Rosilyn,
fashion a law on that matter, or on anything else. The Court cannot enact a law where no law since the known father merely made it appear that she was born
exists. It can only apply or interpret the written word of its co-equal branch of government, at the time the informations for the birth certificate were supplied
Congress. by him to the civil registrar or (sic) proper recording;

Petitioner pleads that "[t]he unfortunates are also entitled to a life of happiness, contentment g. The name of the physician who allegedly
and [the] realization of their dreams." No argument about that. The Court recognizes that there attended at the time of birth of Maria Rosilyn, being a fictitious Dr.
are people whose preferences and orientation do not fit neatly into the commonly recognized Santos.[6]
parameters of social convention and that, at least for them, life is indeed an ordeal. However,
the remedies petitioner seeks involve questions of public policy to be addressed solely by the
legislature, not by the courts.

On February 7, 1997, the RTC issued an Order setting the case for hearing on March 19,
WHEREFORE, the petition is hereby DENIED.
1997 and directed the publication of said order once a week for three consecutive weeks in a
newspaper of general circulation. The Order also stated that any person who is interested in the
Costs against petitioner. petition may interpose his/her comment or opposition thereto on or before the scheduled
hearing.[7]

SO ORDERED.
entered as Juan Delantar and Carila Telen (Exhibit J-1 and K-1). The Court is
inclined to concur with the observation of the petitioner that it is highly
unlikely that the alleged parents of Rosilyn would commit an incestuous act
Summons was sent to the Civil Register of Manila. [8] However, no representative appeared during and proclaim to the whole world that they are the parents of the herein
the scheduled hearing.[9] minor. The court has also observed that in the baptismal certificate of
Librada Delantar, it is entered therein that she was born on January 8,
1940 in Tubod, Manglanilla, Cebu (Exhibit K-2). Such being the case, then
Librada must have been 45 years of age at the time of the birth of Rosilyn in
stark contrast to her age appearing in Entry No. 27 (sic) of the birth
certificate of the latter which shows that Librada was 27 years old at the
On April 11, 1997, the RTC rendered its decision granting the petition of the Ceruilas as follows: time of her delivery. The presentation of the baptismal certificate of Librada
Delantar as secondary evidence of her birth certificate was resorted to after
the Office of the Local Civil Registrar of Minglanilla, Cebu gave a certification
to the effect that the records of birth on file with the office for the period
January, 1940 to April, 1945 were all destroyed by WORLD WAR II (Exhibit L).
And going for the jugular, so to speak, the signature of the person named
WHEREFORE, judgment is hereby rendered:
Librada T. delos Santos in the birth certificate (Exhibit I) purporting to be
1. DECLARING the certificate of live birth of the Minor Maria
that of the petitioner wife and the signature of the latter appearing in the
Rosilyn Telin Delantar as registered under the Local Civil Registry No. 85-
verification of the petitioner (sic) (Exhibit A-6) are so strikingly dissimilar
27325 of the office of the City Civil Registrar of Manila as null and
that they could not have but proceeded from two different hands. For it does
void ab initio: and
not require the trained eye of an expert calligrapher to discern such
discrepancy in the writing style.
2. ORDERING the City Civil Registrar of Manila and the National
Statistics Office, Manila, to expunge from their respective marriage registers
In fine, there being an abundance of evidence to support the petitioners
the entry of the birth of said minor and such other documents pertaining
claim that the birth certificate is indeed a falsified document, the Court is
thereto, if any.
left with no other alternative but to grant the relief prayed for in the
petition. To let the birth certificate reamin (sic) as it is would adversely
Let a copy of this Decision be served on the Office of the City Civil Registrar
affect the rights and interests of the herein petitioners.[12]
of Manila and the National Statistics Office for record purposes.

SO ORDERED.[10]
On July 15, 1997, Rosilyn, represented by her legal guardian, the DSWD, filed, with the CA, a
petition for the annulment of judgment in the petition for cancellation of entry of her birth
certificate.[13] She claimed that she and her guardian were not notified of the petition and the
The RTC explained in its Decision thus:
subsequent judgment and learned about the same only from the news on May 16, 1997.[14] She
argued that the RTC decision was issued without jurisdiction and in violation of her right to due
During the initial trial, the petition was read aloud in open court to find out if
process; that the Judge did not have authority to declare her to be illegitimate; and that mere
there is any opposition thereto. There being none, the petitioners counsel,
correction of entries, not cancellation of the entire certificate, is the appropriate remedy. [15]
Atty. Goering G.C. Paderanga, then established the jurisdictional
requirements (Exhibits A to E). [11] Thereafter, petitioner husband Platon
Rosilyn further argued that: granting, without admitting that Librada is not her mother, still it
Ceruila was placed on the stand as the lone witness for the petitioner and
was erroneous to cancel or annul her entire birth certificate; Librada is not an interested party
after he completed his testimony, Atty. Paderanga formally offered his
concerning the issue of whether Simplicio is the father, the date of actual birth, and the name of
evidence and rested his case.
the physician who attended to the birth; [16] Libradas allegations are also contradicted by (a) the
Records Based on Cord Dressing Room Book dated April 13-May 29, 1985, issued by Emelita H.
The evidence on record reveals the following:
Avinante, Head of the Medical Records Section and Admitting Unit of the Fabella Hospital, which
is attached to the petition for annulment as Annex E and which states that Maria Rosilyn
On May 11, 1985, a child was born at the Dr. Jose Fabella Memorial Hospital
Delantar was born on May 11, 1985 at the Fabella Hospital and that her parents are Librada Telin
in Sta. Cruz, Manila. The name of the child was entered in her birth
and Simplicio Delantar;[17] and (b) the admission of Simplicio in his Motion to Vacate
certificate as Maria Rosilyn Telin Delantar (Exhibit I). In the said birth
Judgment[18] in Sp. Proc. No. 96-419[19] regarding the custody of Rosilyn, which is attached to the
certificate the name of the childs mother appear as Librada A. Telin (Entry
petition to annul as Annex F, where he stated that he, as the rightful parent of Rosilyn, should
No. 6) while that of her father as Simplicio R. Delantar (Entry No. 9). The
not be deprived of his parental authority.[20]
birth certificate likewise shows that the parents of the child, Simplicio R.
Delantar and Librada A. Telin, were married on February 14,
On June 10, 1999, the CA rendered the herein assailed decision, the dispositive portion of which
1977 in Manila (Entry No. 12). Likewise, in Entry No. 21 of the same
reads:
document, it is made to appear that the mother of the child was 27 years
old when the child was born and that she was attended in her delivery
WHEREFORE, premises considered, the instant Petition
thereof by Dr. Santos (Entry No. 13). The birth certificate was signed by one
is GRANTED.
Librada T. delos Santos as the informant and mother of the child with her
given address as 2165 P. Burgos St., Pasay City (Entry No. 14). This is the
Judgment is hereby rendered DECLARING NULL and VOID the decision of the
very certificate of live birth that is being seriously impugned by the herein
respondent Regional Trial Court dated April 11, 1997 in Special Proceedings
petitioners.
No. 97-81893.
In support of their petition, the petitioners submitted the baptismal
With costs against private respondents.
certificates of Simplicio Delantar (Exhibit J) and Librada Delantar (Exhibit K)
to prove that they are full blood brother and sister and could not have been
SO ORDERED.[21]
possible for them to have sired Rosilyn (sic). In the said baptismal
certificates, the names of the parents of Simplicio and Librada are similarly
The CA reasoned that: WHETHER OR NOT THE HONORABLE COURT OF APPEALS SHOULD HAVE
EXERCISED ITS PEREMPTORY POWER TO DECLARE THE SUBJECT BIRTH
As shown in the caption of the petition in Special Proceedings No. 97-81893 CERTIFICATE NULL AND VOID AB INITIO.[24]
entitled In the Matter of Cancellation and Annulment of the Birth Certificate
of Maria Rosilyn Telin Delantar, herein petitioner Rosilyn Delantar
represented by her legal guardian, DSWD, was not made a party-respondent As to the first issue, petitioners argue that: since the falsification of the entries in the
therein,contrary to the mandatory provision of Section 3 of Rule 108 of the birth certificate of Rosilyn renders the same void ab initio, the case should be liberally construed
Rules of Court as an ordinary civil action for declaration of nullity of falsified documents based on Article 5 of
the Civil Code[25] and Section 15, Rule 6 of the Rules of Court [26]and not as a special proceeding;
In the said Special Proceeding No. 97-81893, petitioners therein, Platon petitioners were only constrained to utilize the provisions of Rule 108 of the Rules of Court on
Ceruila and Librada D. Ceruila, sought not only a cancellation or correction the Cancellation or Correction of Entries in the Civil Registry since Article 5 of the Civil Code
of an entry in the birth certificate of Rosilyn Telin Delantar but in effect provides no procedure for the nullification of void documents which happens to be a birth
sought to annul, cancel or expunge from the Civil Register the subject birth certificate in this case; since the present case involves an ordinary civil action, the cases relied
certificate. With more reasons, therefore, that all parties, particularly Rosilyn upon by the CA which are applicable only to special proceedings should not be applied herein;
Telin Delantar, or thru her legal guardian, the DSWD, whose birth certificate the civil registrar, which is an indispensable party, was duly served summons by mail;
was sought to be annulled or cancelled from the Civil Register must not only respondent, meanwhile, is not an indispensable party and granting that she is, she was deemed
be notified but must be made a party in the said petition. duly impleaded as her name was clearly stated in the caption of the case; respondents location
could not be determined as she was reported to have ran away from the custody of Simplicio,
thus the publication of the petition and the order of the RTC setting the case for hearing once a
Petitioner and her guardian are undoubtedly persons who have interest week for three consecutive weeks in a newspaper of general circulation should be considered
which would be affected by the petition for the obvious reason that it is the substantial notice and the requirements of due process deemed substantially complied with;
entry of her birth which is being sought to be annulled and cancelled. there was no adversarial proceeding in court because the parties were declared in general
default thus, just like an ordinary civil case, the court should receive evidence ex parte.[27]
As to the second issue, petitioners claim that: the CA should have exercised its peremptory
In a similar case, the Supreme Court ruled that corrections of substantial power to declare the birth certificate of Rosilyn as null and void ab initio following the doctrine
entries in the certificate other than mere clerical errors, should be passed that where an instrument is void ab initio for being contrary to law, no amount of technicalities
upon in an appropriate adversary proceedings with all the persons could correct its inherent nullity; otherwise, there will be multiplicity of actions as the parties will
interested are made parties therein Republic vs. Valencia (141 SCRA 462; have to file cases anew to annul respondents birth certificate. [28]
468-469; 470-474).
They then pray that the CA decision dated June 10, 1999 be reversed and that the RTC judgment
The proceedings undertaken in said Special Proceedings No. 97-81893 is dated April 11, 1997 be reinstated.[29]
indeed wanting of the required notice to all the parties having claim or Anent the first issue, the Solicitor General, for the respondent, contends that: since the
interest which would be affected thereby, and of the adversarial petitioners chose to file a petition under Rule 108 they cannot in the present action turn around
proceedings, as disclosed in the decision dated April 11, 1997 and claim that their case is not a special proceeding; in any case, due process was not complied
with rendering the proceedings a quo annullable; petitioners sought to establish Librada Ceruilas
status, i.e., whether or not she is the mother of respondent, thus, the action falls within the
With the foregoing disquisitions, We find that the decision dated April 11, ambit of Sec. 3(c), Rule 1 of the Rules of Court;[30]petitioners did not allege that they are bringing
1997 null and void for want of jurisdiction over the person of herein the suit to enforce or protect their right or to prevent or redress a wrong, for their case to be
petitioner Rosilyn Delantar and the DSWD as her legal guardian and all categorized as an ordinary civil action; Art. 5 of the Civil Code which is being invoked by
persons who have or claim any interest which would be affected by the said petitioners is a general provision, while entries of record of birth in the civil register are governed
decision. Also, the said decision dated April 11, 1997 is considered null and by Republic Act No. 3753 (Civil Registry Law) as amended, and Presidential Decree No. 651;
void for lack of due process there being no adversarial proceedings (was) since the law provides for a remedy when an entry in a record found in the civil registry is
conducted by the public respondent Regional Trial Court. erroneous or falsified, petitioners cannot, by their mere allegation, transport their case from the
realm of the rules on special proceedings for the correction of entry to that of an ordinary civil
case for annulment of a falsified document; in Republic vs. Valencia,[31] it was held that the
And, even if the same judgment had already become final and executory, parties who must be made parties to a proceeding concerning the cancellation or correction of
and had in fact been executed, as in the instant case, still the execution an entry in the civil register are the civil registrar and all persons who have or who are claiming
thereof produces no legal effects. [22] interests who would be affected thereby; respondent, being a person whose interests would be
adversely affected by the petition, is an indispensable party to the case; publication cannot be
substituted for notice; respondent cannot be declared in default since she was not properly
The CA denied the motion for reconsideration of petitioners. [23] Hence, the present petition notified.[32]
raising the following issues:
Anent the second issue, respondent contends that the CA has no authority to rule on the merits
I of the case since in a petition for annulment of judgment on the ground of lack of jurisdiction, its
authority is limited to ruling on whether or not the petitioner was denied due process of law; that
WHETHER OR NOT THE COURT OF APPEALS ERRED AND COMMITTED GRAVE if the CA were to rule on the merits of the case, it would have deprived respondent of due
ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN process; and that in any case, respondents record of birth is not void as Librada was only able to
DECLARING NULL AND VOID THE DECISION RENDERED BY THE REGIONAL prove that she is not the mother of respondent.[33]
TRIAL COURT OF MANILA BRANCH 38 DATED APRIL 11, 1997 IN SPEC.
PROCEEDING NO. 97-81893 ENTITLED: IN THE MATTER OF CANCELLATION
AND ANNULMENT OF THE BIRTH CERTIFICATE OF MARIA ROSILYN TELIN
DELANTAR

II
Preliminarily, this Court notes that while the petition states that it is one for review
on certiorari, it claimed at the same time that the CA committed grave abuse of discretion Indeed, there were instances when we ruled that even though an interested party was not
amounting to lack of jurisdiction, which is properly a ground for a petition for certiorari under impleaded in the petition, such defect was cured by compliance with Sec. 4, Rule 108 on
Rule 65 and not for a petition for review on certiorari under Rule 45. Considering however the publication. In said cases, however, earnest efforts were made by the petitioners in bringing to
substance of the issues raised herein, we shall treat the present petition, as it claims, to be a court all possible interested parties.[41]
petition for review on certiorari.[34]
Such is not the case at bar. Rosilyn was never made a party at all to the proceedings seeking the
Is the petition for annulment and cancellation of the birth certificate of Rosilyn an ordinary civil cancellation of her birth certificate. Neither did petitioners make any effort to summon the
action or a special proceeding? Considering that the petition, based on its allegations, does not Solicitor General.
question the fact of birth of Rosilyn, all matters assailing the truthfulness of any entry in the
birth certificate properly, including the date of birth, fall under Rule 108 of the Rules of Court It does not take much to deduce the real motive of petitioners in seeking the cancellation of
which governs cancellation or correction of entries in the Civil Registry. Thus, the petition filed by Rosilyns birth certificate and in not making her, her guardian, the DSWD, and the Republic of
the Ceruilas, alleging material entries in the certificate as having been falsified, is properly the Philippines, through the Solicitor General, parties to the petition. Rosilyn was involved in the
considered as a special proceeding pursuant to Section 3(c), Rule 1 and Rule 108 of the Rules of rape case against Romeo Jalosjos, where her father, as appearing in the birth certificate, was
Court. said to have pimped her into prostitution. In the criminal case, the defense contended that the
birth certificate of Rosilyn should not have been considered by the trial court to prove Rosilyns
Did the Ceruilas comply with the requirements of Rule 108? We answer in the negative. age and thus find basis for statutory rape, as said birth certificate has been cancelled by the RTC
of Manila, Branch 38, in the special proceeding antecedent to this petition. Their efforts in this
Sec. 3, Rule 108 of the Rules of Court, expressly states that: regard, however, were thwarted when the CA overturned Branch 38s decision, and the Court, in
G.R. Nos. 132875-76[42] considered other evidence as proof of Rosilyns age at the time of the
SEC. 3. Parties. --- When cancellation or correction of an entry in the civil commission of the crime.
register is sought, the civil registrar and all persons who have or claim any
interest which would be affected thereby shall be made parties to the There is also no merit in the contention of petitioners that because of the false entries
proceeding. in the birth certificate of Rosilyn, the same is void ab initio, hence should be nullified under Art. 5
of the Civil Code, or should be nullified by the CA in exercise of its peremptory power to declare
null and void the said certificate.
Indeed, not only the civil registrar but also all persons who have or claim any interest which
would be affected by a proceeding concerning the cancellation or correction of an entry in the The function of a petition for annulment of judgment, under Rule 47 of the Rules of
civil register must be made parties thereto. [35] As enunciated in Republic vs. Benemerito, Court, is not to replace the trial courts decision sought to be annulled. The action under Sections
[36]
unless all possible indispensable parties were duly notified of the proceedings, the same shall 1, 2 and 7 of said Rule, to wit:
be considered as falling much too short of the requirements of the rules. [37]
Section. 1. Coverage. --- This Rule shall govern the annulment by the Court
Here, it is clear that no party could be more interested in the cancellation of Rosilyns birth of Appeals of judgments or final orders and resolutions in civil actions of
certificate than Rosilyn herself. Her filiation, legitimacy, and date of birth are at stake. Regional Trial Courts for which the ordinary remedies of new trial, appeal,
petition for relief or other appropriate remedies are no longer available
Petitioners claim that even though Rosilyn was never made a party to the proceeding, through no fault of the petitioner.
it is enough that her name was included in the caption of the petition. Such reasoning is without
merit. Sec. 2. Grounds for annulment. --- The annulment may be based only on the
grounds of extrinsic fraud and lack of jurisdiction.
As we pronounced in Labayo-Rowe vs. Republic [38]
where the mother sought changes in the
entries of her two childrens birth certificates: Extrinsic fraud shall not be a valid ground if it was availed of, or could have
been availed of, in a motion for new trial or petition for relief.
since only the Office of the Solicitor General was notified through the Office
of the Provincial Fiscal, representing the Republic of the Philippines as the Sec. 7. Effect of judgment. --- A judgment of annulment shall set aside the
only respondent, the proceedings taken, which is summary in nature, is questioned judgment or final order or resolution and render the same null
short of what is required in cases where substantial alterations are and void, without prejudice to the original action being refiled in the proper
sought. Aside from the Office of the Solicitor General, all other court. However, where the judgment or final order or resolution is set aside
indispensable parties should have been made respondents. They on the ground of extrinsic fraud, the court may on motion order the trial
include not only the declared father of the child but the child as court to try the case as if a timely motion for new trial had been granted
well, together with the paternal grandparents, if any, as their therein.
hereditary rights would be adversely affected thereby. All other persons
who may be affected by the change should be notified or
represented . . ..[39] (Emphasis supplied) is merely for the annulment of the RTC Decision on grounds of extrinsic fraud and lack of
jurisdiction, nothing more. The Rules do not allow the CA to resolve the merits of the petition for
the amendment and cancellation of the birth certificate of Rosilyn or to substitute its own
In the present case, only the Civil Registrar of Manila was served summons, who, however, did findings thereon.
not participate in the proceedings. This alone is clearly not sufficient to comply with the
requirements laid down by the rules. WHEREFORE, the petition is DENIED for lack of merit.
LEBIN VS MIRASOL
Petitioners further claim that the lack of summons on Rosilyn was cured by the publication of the
order of the trial court setting the case for hearing for three consecutive weeks in a newspaper
of general circulation. BERSAMIN, J.:

We do not agree. Summons must still be served, not for the purpose of vesting the courts with
jurisdiction, but to comply with the requirements of fair play and due process. [40]This is but The perfection of an appeal in the manner and within the period laid down by law is mandatory
proper, to afford the person concerned the opportunity to protect her interest if she so chooses. and jurisdictional.
dismiss the appeal, insisting that the record on appeal had been filed late. [19] The RTC granted
The Case the motion to dismiss the appeal on February 1, 2002. [20] The petitioners moved for
reconsideration on March 13, 2002, [21] but the RTC denied their motion for reconsideration on
In Special Proceedings No. 1307 involving the settlement of the estate of the late L.J. May 21, 2004.[22]
Hodges, the Regional Trial Court (RTC), Branch 27, in Iloilo City, issued an order dated May 3,
1995 (ruling that a property of the estate sold to the petitioners be divided in two equal portions Hence, the petitioners appealed via petition for review on certiorari filed on June 23, 2004, to
between the petitioners and the respondent). [1] On March 2, 1998, the RTC affirmed the order seek the review and reversal of the orders of the RTC dated February 1, 2002 and May 21, 2004.
dated May 3, 1995.[2] The petitioners filed a notice of appeal and, later on, a record on appeal, Issues
but the respondents moved to dismiss their appeal on June 15, 2000 on the ground of tardiness
of the record on appeal. The RTC granted the motion to dismiss on February 1, 2002. On March 1. Whether or not the RTC erred in dismissing the petitioners appeal for
13, 2002, the petitioners moved for reconsideration of the dismissal, [3] but the RTC denied the their failure to timely file a record on appeal; and
motion for reconsideration on May 21, 2004. [4] Thus, on June 23, 2004, the petitioners directly
appealed to the Court, assailing the orders of February 1, 2002 and May 21, 2004. 2. Whether or not the RTC committed reversible error in adjudging that
Lot 18 be sold to both the petitioners and Mirasol in equal portions.
Antecedents

In January 1985, the petitioners relayed their offer to the administrator of the Estate of L.J. Ruling
Hodges to purchase for P22,560.00 Lot 18, Block 7 of 971 (Lot 18), an asset of the Estate
situated on D.B. Ledesma Interior, Jaro, Iloilo City. They made a deposit of P4,512.00, the
equivalent of 20% of the offer.[5] On August 1, 1985, the administrator sought judicial approval of The petition for review lacks merit.
the offer,[6] stating to the RTC that petitioner Erlinda Lebin was the actual occupant of Lot 18.
[7]
The RTC commissioned one Atty. Tabares to conduct an ocular inspection of Lot 18 to ascertain I
if Erlinda Lebin was really the occupant. In his report, Atty. Tabares confirmed that Erlinda Lebin RTC did not err in dismissing the petitioners appeal
was the only occupant of Lot 18. [8]Accordingly, on August 28, 1985, the RTC granted the for their failure to timely file a record on appeal
administrators motion for approval of the offer.[9]
Among the innovations introduced by Batas Pambansa Blg. 129[23] is the elimination of
In the meanwhile, respondent Vilma S. Mirasol (Mirasol) also offered to purchase the the record on appeal in most cases, retaining the record on appeal only for appeals in special
lot containing an area of 188 square meters where her house stood. The lot was initially proceedings and in other cases in which the Rules of Court allows multiple appeals. Section 39
identified as Lot No. 4, Block 7 of 971 (Lot 4), but a later survey revealed that her house was of Batas Pambansa Blg. 129 has incorporated this innovation, to wit:
actually standing on Lot 18, not Lot 4. [10] Learning on November 11, 1985 of the approval of the
petitioners offer to purchase Lot 18, therefore, Mirasol filed on December 6, 1985 a petition for Section 39. Appeals. - The period for appeal from final orders,
relief from the order dated August 28, 1985.[11] resolutions, awards, judgments, or decisions of any court in all cases shall
be fifteen (15) days counted from the notice of the final order, resolution,
On December 17, 1987, pending resolution of the petition for relief, the petitioners award, judgment, or decision appealed from: Provided however, That
paid the last installment for Lot 18, and moved for the execution of the deed of sale. in habeas corpus cases, the period for appeal shall be forty-eight (48) hours
[12]
Apparently, the motion was not acted upon by the RTC. from the notice of the judgment appealed from.

At last, on May 3, 1995, the RTC resolved the petition for relief, viz: No record on appeal shall be required to take an appeal. In
WHEREFORE, the Court, under the auspices of equity and justice lieu thereof, the entire record shall be transmitted with all the
tempered with humanitarian reasons, hereby declare each of the offeror- pages prominently numbered consecutively, together with an index
claimants after complying with their respective obligation with the estate, of the contents thereof.
should there be any, to be the owner where their respective houses stand,
and therefore, DIRECTS and ENJOINS for the following matters to be This section shall not apply in appeals in special proceedings
undertaken: and in other cases wherein multiple appeals are allowed under
applicable provisions of the Rules of Court. (emphasis supplied)
For the Administrator of the L.J. Hodges Estate:
In early 1990, the Supreme Court issued its resolution in Murillo v. Consul[24] to clarify
1) To assist both offeror-claimants in effecting a Relocation Survey and fortify a judicial policy against misdirected or erroneous appeals, stating:
Plan and cause the equal partition of the subject lot herein between the said
offeror-claimant; At present then, except in criminal cases where the penalty imposed
is life imprisonment or reclusion perpetua, there is no way by which
2) To execute the corresponding deed of sale over the aforecited judgments of regional trial courts may be appealed to the Supreme Court
subject lot in favor of the herein offeror-claimants --- Erlinda Lebin and Vilma except by petition for review on certiorari in accordance with Rule 45 of the
S. Mirasol purposely to expedite the issuance of respective title; and --- Rules of Court, in relation to Section 17 of the Judiciary Act of 1948 as
amended.The proposition is clearly stated in the Interim Rules: Appeals to
3) To exact payment from either or both offeror-claimants should the Supreme Court shall be taken by petition for certiorari which shall be
there be any deficiency, and/or to refund payment should there be any governed by Rule 45 of the Rules of Court.
excess payment from either or both offeror-claimants.
On the other hand, it is not possible to take an appeal
SO ORDERED.[13] by certiorari to the Court of Appeals. Appeals to that Court from the
Regional Trial Courts are perfected in two (2) ways, both of which are
On May 23, 1995, the petitioners moved for reconsideration and/or new trial. [14] On March 2, entirely distinct from an appeal by certiorari to the Supreme Court. They
1998, the RTC denied the motion for reconsideration and/or new trial of the petitioners. [15] Thus, are:
on March 27, 1998, the petitioners filed a notice of appeal in the RTC. [16] Allegedly, on May 5,
1998, they also filed a record on appeal. [17] On January 25, 1999, they presented an ex
parte motion to approve the record on appeal. [18] On June 15, 2000, Mirasol filed a motion to
a) by ordinary appeal, or appeal by writ of error - where
judgment was rendered in a civil or criminal action by the An offshoot of Murillo v. Consul is the inclusion in the 1997 revision of the rules of civil
RTC in the exercise of original jurisdiction; and procedure, effective July 1, 1997, of a provision that forthrightly delineated the modes of
appealing an adverse judgment or final order. The provision is Section 2 of Rule 41, viz:
b) by petition for review - where judgment was rendered
by the RTC in the exercise of appellate jurisdiction. Section 2. Modes of appeal.

The petition for review must be filed with the Court of Appeals within (a) Ordinary appeal. The appeal to the Court of Appeals in
15 days from notice of the judgment, and as already stated, shall point out cases decided by the Regional Trial Court in the exercise of its
the error of fact or law that will warrant a reversal or modification of the original jurisdiction shall be taken by filing a notice of appeal with
decision or judgment sought to be reviewed. An ordinary appeal is taken by the court which rendered the judgment or final order appealed
merely filing a notice of appeal within 15 days from notice of the judgment, from and serving a copy thereof upon the adverse party. No record
except in special proceedings or cases where multiple appeals are allowed on appeal shall be required except in special proceedings and other
in which event the period of appeal is 30 days and a record on appeal is cases of multiple or separate appeals where the law or these Rules
necessary. so require. In such cases, the record on appeal shall be filed and
served in like manner.
There is therefore no longer any common method of appeal in civil
cases to the Supreme Court and the Court of Appeals. The present (b) Petition for review. The appeal to the Court of Appeals in cases
procedures for appealing to either court and, it may be added, the process decided by the Regional Trial Court in the exercise of its appellate
of ventilation of the appeal are distinct from each other. To repeat, appeals jurisdiction shall be by petition for review in accordance with Rule 42.
to this court cannot now be made by petition for review or by notice of
appeals (and, in certain instances, by record on appeal), but only by petition (c) Appeal by certiorari. In all cases where only questions of law are
for review on certiorari under Rule 45. As was stressed by this Court as early raised or involved, the appeal shall be to the Supreme Court by petition for
as 1980, in Buenbrazo v. Marave, 101 SCRA 848, all the members of the review on certiorari in accordance with Rule 45. (n) (emphasis supplied)
bench and bar are charged with knowledge, not only that since the
enactment of Republic Act No. 8031 in 1969, the review of the decision of
the Court of First Instance in a case exclusively cognizable by the inferior The changes and clarifications recognize that appeal is neither a natural nor a
court xxx cannot be made in an ordinary appeal or by record on appeal, but constitutional right, but merely statutory, and the implication of its statutory character is that
also that appeal by record on appeal to the Supreme Court under Rule 42 of the party who intends to appeal must always comply with the procedures and rules governing
the Rules of Court was abolished by Republic Act No. 5440 which, as appeals, or else the right of appeal may be lost or squandered.
already stated, took effect on September 9, 1968. Similarly, in Santos, Jr., v.
C.A., 152 SCRA 378, this Court declared that Republic Act No. 5440 had long As the foregoing rules further indicate, a judgment or final order in special
superseded Rule 41 and Section 1, Rule 122 of the Rules of Court on direct proceedings is appealed by record on appeal. A judgment or final order determining and
appeals from the court of first instance to the Supreme Court in civil and terminating a particular part is usually appealable, because it completely disposes of a particular
criminal cases, x x and that direct appeals to this Court from the trial court matter in the proceeding, unless otherwise declared by the Rules of Court.[26]The ostensible
on questions of law had to be through the filing of a petition for review reason for requiring a record on appeal instead of only a notice of appeal is the multi-part nature
on certiorari, wherein this Court could either give due course to the of nearly all special proceedings, with each part susceptible of being finally determined and
proposed appeal or deny it outright to prevent the clogging of its docket terminated independently of the other parts. An appeal by notice of appeal is a mode that
with unmeritorious and dilatory appeals. envisions the elevation of the original records to the appellate court as to thereby obstruct the
trial court in its further proceedings regarding the other parts of the case. In contrast, the record
In fine, if an appeal is essayed to either court by the wrong on appeal enables the trial court to continue with the rest of the case because the original
procedure, the only course of action open is to dismiss the appeal. In other records remain with the trial court even as it affords to the appellate court the full opportunity to
words, if an appeal is attempted from a judgment of a Regional Trial Court review and decide the appealed matter.
by notice of appeal, that appeal can and should never go to this Court,
regardless of any statement in the notice that the court of choice is the Section 1, Rule 109 of the Rules of Court underscores the multi-part nature of special
Supreme Court; and more than once has this Court admonished a Trial Judge proceedings by enumerating the particular judgments and final orders already subject of appeal
and/or his Clerk of Court, as well as the attorney taking the appeal, for by any interested party despite other parts of the proceedings being still untried or unresolved,
causing the records to be sent up to this Court in such a case. Again, if an to wit:
appeal by notice of appeal is taken from the Regional Trial Court to the Court
of Appeals and in the latter Court, the appellant raises naught but issues of Section 1. Orders or judgments from which appeals may be taken.
law, the appeal should be dismissed for lack of jurisdiction. And finally, it - An interested person may appeal in special proceedings from an order or
may be stressed once more, it is only through petitions for review judgment rendered by a Court of First Instance or a Juvenile and Domestic
on certiorari that the appellate jurisdiction of the Supreme Court may Relations Court, where such order or judgment:
properly be invoked.
(a) Allows or disallows a will;
There is no longer any justification for allowing transfers of
erroneous appeals from one court to the other, much less for (b) Determines who are the lawful heirs of a deceased person, or the
tolerating continued ignorance of the law on appeals. It thus distributive share of the estate to which such person is entitled;
behooves every attorney seeking review and reversal of a
judgment or order promulgated against his client, to determine (c) Allows or disallows, in whole or in part, any claim against the
clearly the errors he believes may be ascribed to the judgment or estate of a deceased person, or any claim presented on behalf of the estate
order, whether of fact or of law; then to ascertain which court in offset to a claim against it;
properly has appellate jurisdiction; and finally, to observe
scrupulously the requisites for appeal prescribed by law, with keen (d) Settles the account of an executor, administrator, trustee or
awareness that any error or imprecision in compliance therewith guardian;
may well be fatal to his client's cause.[25] (emphasis supplied)
(e) Constitutes, in proceedings relating to the settlement of the Section 13, Rule 41 of the Rules of Court empowers the RTC as the trial court, motu
estate of a deceased person, or the administration of a trustee or guardian, proprio or on motion, to dismiss the appeal for having been taken out of time or for non-payment
a final determination in the lower court of the rights of the party appealing, of the docket and other lawful fees within the reglementary period. [32] For that reason, the RTC
except that no appeal shall be allowed from the appointment of a special rightly granted Mirasols motion to dismiss the record on appeal.
administrator; and
Nonetheless, the petitioners propose to be excused from the requirement of filing a record on
(f) Is the final order or judgment rendered in the case, and affects appeal, arguing that (t)o require a (r)ecord on (a)ppeal here is to reproduce the more than
the substantial rights of the person appealing, unless it be an order granting eighteen (18) volumes of records here which is quite impossible to do and that most of these
or denying a motion for a new trial or for reconsideration. records, (sic) have nothing to do with the present controversy.[33] Also, they state that their
counsel was of the honest belief and impression that the same was not really necessary because
The petitioners appeal comes under item (e) of Section 1, supra, due to the final order the nature of the controversy xxx is civil and not an intestate one.[34]
of May 3, 1995 issued in the settlement of the estate of L.J. Hodges being a final determination
in the lower court of the rights of the party appealing. In order to elevate a part of the records The petitioners submissions are frail and facetious.
sufficient for appellate review without the RTC being deprived of the original records, the remedy
was to file a record on appeal to be approved by the RTC. In order to come up with the record on appeal, the petitioners were not expected to
reproduce over 18 volumes of the records, for their record on appeal would have included only
The elimination of the record on appeal under Batas Pambansa Blg. 129 made feasible the records of the trial court which the appellate court would be asked to pass upon. [35] Section
the shortening of the period of appeal from the original 30 days to only 15 days from notice of 6, Rule 41 of the 1997 Rules of Civil Procedure, which meanwhile became applicable to them,
the judgment or final order. Section 3,[27] Rule 41 of the Rules of Court, retains the original 30 specified what the record on appeal should contain, thusly:
days as the period for perfecting the appeal by record on appeal to take into consideration the
need for the trial court to approve the record on appeal. Within that 30-day period a party Section 6. Record on appeal; form and contents thereof. - The full
aggrieved by a judgment or final order issued in special proceedings should perfect an appeal by names of all the parties to the proceedings shall be stated in the caption of
filing both a notice of appeal and a record on appeal in the trial court, serving a copy of the the record on appeal and it shall include the judgment or final order from
notice of appeal and a record on appeal upon the adverse party within the period; [28] in addition, which the appeal is taken and, in chronological order, copies of only such
the appealing party shall pay within the period for taking an appeal to the clerk of the court that pleadings, petitions, motions and all interlocutory orders as are related to
rendered the appealed judgment or final order the full amount of the appellate court docket and the appealed judgment or final order for the proper understanding of the
other lawful fees.[29] A violation of these requirements for the timely perfection of an appeal by issue involved, together with such data as will show that the appeal was
record on appeal,[30] or the non-payment of the full amount of the appellate court docket and perfected on time. If an issue of fact is to be raised on appeal, the record on
other lawful fees to the clerk of the trial court [31] may be a ground for the dismissal of the appeal. appeal shall include by reference all the evidence, testimonial and
documentary, taken upon the issue involved. The reference shall specify the
Did the petitioners comply with the requirements for perfecting their appeal? documentary evidence by the exhibit numbers or letters by which it was
identified when admitted or offered at the hearing, and the testimonial
The petitioners received the assailed May 3, 1995 order of the RTC on May 15, 1995. evidence by the names of the corresponding witnesses. If the whole
They filed a motion for reconsideration and/or new trial on May 24, 1995. On March 23, 1998, testimonial and documentary evidence in the case is to be included, a
they were served with the order dated March 2, 1998 (denying their motion for reconsideration statement to that effect will be sufficient without mentioning the names of
and/or new trial). Although they filed a notice of appeal on March 27, 1998, they submitted the the witnesses or the numbers or letters of exhibits. Every record on appeal
record on appeal only on May 5, 1998. Undoubtedly, they filed the record on appeal 43 days exceeding twenty (20) pages must contain a subject index. (6a)
from March 23, 1998, the date they received the denial of their motion for reconsideration
and/or new trial. They should have filed the record on appeal within 30 days from their notice of The right to appeal is a mere statutory privilege, and should be exercised only in the
the judgment. Their appeal was not perfected, therefore, because their filing of the record on manner prescribed by law.[36] The statutory nature of the right to appeal requires the one who
appeal happened beyond the end of their period for the perfection of their appeal. avails himself of it to strictly comply with the statutes or rules that are considered indispensable
interdictions against needless delays and for an orderly discharge of judicial business. In the
The petitioners filing of the motion for reconsideration vis--vis the order of May 3, absence of highly exceptional circumstances warranting their relaxation, like when the loftier
1995 interrupted the running of the period of 30 days; hence, their period to appeal started to demands of substantial justice and equity require the relaxation, [37] or when there are other
run from May 15, 1995, the date they received the order of May 3, 1995. They filed their motion special and meritorious circumstances and issues, [38] such statutes or rules should remain
for reconsideration on May 24, 1995. By then, nine days out of their 30-day period to appeal inviolable.[39]
already elapsed. They received a copy of the order dated March 2, 1998 on March 23, 1998.
Thus, the period to appeal resumed from March 23, 1998 and ended 21 days later, or on April In like manner, the perfection of an appeal within the period laid down by law is
13, 1998. Yet, they filed their record on appeal only on May 5, 1998, or 22 days beyond the end mandatory and jurisdictional, because the failure to perfect the appeal within the time
of their reglementary period. Although, by that time, the 1997 Rules on Civil prescribed by the Rules of Court causes the judgment or final order to become final as to
Procedure had meanwhile taken effect (July 1, 1997), their period of appeal remained 30 days. It preclude the appellate court from acquiring the jurisdiction to review the judgment or final order.
is stressed that under the 1997 revisions, the timely filing of the motion for reconsideration [40]
The failure of the petitioners and their counsel to file their record on appeal on time rendered
interrupted the running of the period of appeal, pursuant to Section 3, Rule 41 of the 1997 Rules the orders of the RTC final and unappealable. Thereby, the appellate court lost the jurisdiction to
on Civil Procedure, viz: review the challenged orders, and the petitioners were precluded from assailing the orders.

Section 3. Period of ordinary appeal. The appeal shall be taken II


within fifteen (15) days from notice of the judgment or final order appealed RTC committed no reversible error in allocating
from. Where a record on appeal is required, the appellant shall file a notice Lot 18 in equal portions to both petitioners and respondent
of appeal and a record on appeal within thirty (30) days from notice of the
judgment or final order. The non-perfection of the appeal by the petitioners notwithstanding, the Court declares that the
RTC did not err in allocating the parcel of land equally to the parties if only to serve and enforce
The period of appeal shall be interrupted by a timely motion a standing policy in the settlement of the large estate of the late L.J. Hodges to prefer actual
for new trial or reconsideration. No motion for extension of time to occupants in the disposition of estate assets. The policy was entirely within the power of the RTC
file a motion for new trial or reconsideration shall be allowed. (n) to adopt and enforce as the probate court.
(emphasis supplied)
As stated in the administrators motion for approval of the offer, the approval of the offer to legacies, or expenses of administration; but such authority shall not be
purchase would be conditioned upon whether the petitioners were the only actual occupants. granted if inconsistent with the provisions of a will. In case of such sale, the
The condition was designed to avoid the dislocation of actual occupants, and was the reason proceeds shall be assigned to the persons entitled to the estate in the
why the RTC dispatched Atty. Tabares to determine who actually occupied the property before proper proportions. [emphasis supplied]
approving the motion. It turned out that the report of Atty. Tabares about the petitioners being
the only occupants was mistaken, because the house of Mirasol, who had meanwhile also Without doubt, the disposal of estate property required judicial approval before it could be
offered to purchase the portion where her house stood, happened to be within the same lot executed.[42] Implicit in the requirement for judicial approval was that the probate court could
subject of the petitioners offer to purchase. The confusion arose from the misdescription of rescind or nullify the disposition of a property under administration that was effected without its
Mirasols portion as Lot 4, instead of Lot 18.[41] authority.[43] This power included the authority to nullify or modify its approval of the sale of the
property of the estate to conform to the law or to the standing policies set and fixed for the
Under Rule 89 of the Rules of Court, the RTC may authorize the sale, mortgage, or encumbrance purpose, where the invalidation or modification derived from the falsity of the factual basis of
of assets of the estate. The approval of the sale in question, and the modification of the the disposition, or from any other factual mistake, or from the concealment of a material fact by
disposition of property of the Estate of L.J. Hodges were made pursuant to Section 4 of Rule 89, a party. Consequently, the probate courts modification of its approval of the petitioners offer to
to wit: purchase was well within the power of the RTC to nullify or modify after it was found to be
contrary to the condition for the approval. Thereby, the RTCs ruling, being sound and judicious,
Section 4. When court may authorize sale of estate as beneficial to constituted neither abuse of discretion nor excess of jurisdiction.
interested persons; Disposal of proceeds. - When it appears that the
sale of the whole or a part of the real or personal estate will be WHEREFORE, we DENY the petition for review, and AFFIRM the final orders dated
beneficial to the heirs, devisees, legatees, and other interested May 3, 1995 and March 2, 1998.
persons, the court may, upon application of the executor or administrator
and on written notice to the heirs, devisees and legatees who are interested The petitioners shall pay the costs of suit.
in the estate to be sold, authorize the executor or administrator to sell the
whole or a part of said estate, although not necessary to pay debts,

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