Thursday, June 27, 2019

74 Useful Legal Terminologies for Legal Drafting

74 USEFUL LEGAL TERMINOLOGIES FOR LEGAL DRAFTING

Accentuating – More noticeable.
Accustomed – Customary ; usual.
Ad hoc – created or done for a particular purpose as necessary.
Advent – arrival of a notable person or thing.
Aequitas – Equity i.e fair or just according to natural law.
Arenas – a place or scene of activity , debate , or conflict.
Averred – allege as a fact in support of a plea



Bona fide – in good faith.

Cavil – Argument by which a conclusion evidently false , is drawn from a     principle evidently true.
Certiorari – a writ of a superior court calling forth the records and entire proceedings of an inferior court or a writ by which causes are removed from an inferior court into a superior court.
Construed – interpret in a particular way.
Consonance – Agreement or compatibility , between opinions or actions.
Consortium – the right of association and companionship with one’s husband or wife
Credential – a qualification, achievement , quality, or aspect of a person ‘s background , especially when used to indicate their suitability for something.
Crescendo – Progressive increase in intensity.
Curative petition – question arises whether an aggrieved person is entitled to any relief against the final judgment / order of the Supreme Court, after dismissal of a review petition

Demarcate – Set the boundaries or limits of.
Detention –the act of detaining someone or the state of being in official custody.
Discernible – able to be discerned ; perceptible.
Discrepancy – an illogical or surprising lack of compatibility or similarity between two or more facts.
Dissuade – persuade not to take a particular course of action.
Dreadful – involving great suffering.

Embezzlement – Theft or misappropriation of funds placed in one’s trust or belongings to one’s employer.
Elusive – Difficult to find , catch or achieve.
Enigma – Mysterious or difficult to understand.
Erect –rigidly upright or straight.
Erudite – learned.
Estoppel – the principle which precludes a person from asserting something contrary to what is implied by a previous action or statement of that person or by a previous pertinent judicial determination.
Evacuee – A person evacuated from a place of danger.
Ex gratia –as an act of grace or favour.
Expedient – To Prioritize , to rush

Habeas corpus – a prerogative writ to a person who detains another in custody and which commands him to produce or ‘ have the body of that person before him ‘

In rem – an act , proceeding or right available against the world at large, as opposed to in personam.
Inter alia – among other things

Legal Luminary – a person who inspires or influences others , especially one prominent in a particular sphere.

Mesne – middle, intervening or tame by nature.

Nocumentum – an annoying , unpleasant or obnoxious thing or ptactice.
Non obstante – notwithstanding
Noscitur a socits – a word known by its associates , i.e the meaning of a word cab be gathered from the context.

Obiter dictum – an incidental and collateral opinion uttered by a judge while delivering a judgement and which is not binding.
Oblivious – Aware.
Ordinance – An authoritative order

Pari material – on the same material.
Pendente lite – during the process of litigation.
Per se – by itself
Perished -  die , especially in a violent or sudden way.
Pertinent – Relevant  or applicable to a particular matter , apposite.
Plagiarized – the act of appropriating the literary composition of another , or parts or passages of his writings , or the ideas or language of the same , and passing them off as the product of one’s own mind.
Plenary – unqualified ;  absolute
Preclude – prevent from happening ; make impossible.
Prejudiced – harm or injury that results or may result from some action or judgement.
Prima facie – on the face of it.
Promulgation – to make known by open declaration; publish ; proclaim formally or put into operation.

Ratio Legis – according to spirit of law
Rationale – set of reasons.
RE – in the matter of.
Rebuttable – an instance of rebutting evidence or an accusation.
Res judicata – a case or suit already decided.
Res sub judicata – a matter under judicial consideration.
Retrospectively – looking back.

Sardonic – grimly mocking or cynical.
Sceptical – Doubtful.
Scienter – knowledge ; an allegation in a pleading that the thing has been done knowingly.
Scuffle – a short , confused fight or struggle at close quarters.
Status quo – the state in which the things are , or were.
Submergence – to cover ; bury.
Superannuation – pension paid to a retired employee who has contributed to a superannuation fund.
Supra – above.

Transgression – An act that goes against a law , or code of conduct ; an offence.
Treacherous – Guilty of or involving betrayal.
Tedious –Too long , slow or dull.

Unfettered –  not confined or restricted

Vicinity –the area near or surrounding a particular place.
Volkogeist – general awareness of the people.

Wednesday, May 29, 2019

Elements – Kidnapping for Ransom

THIRD DIVISION
G.R. No. 232361
September 26, 2018

PEOPLE OF THE PHILIPPINES, PLAINTIFF-APPELLEE, VS. FRANCISCO DAMAYO Y JAIME, ACCUSED-APPELLANT.

D E C I S I O N

PERALTA, J.:

Before the Court is an appeal from the January 30, 2017 Decision[1] of the Court of Appeals (CA) in CA-G.R. CR-HC No. 07683, which affirmed with modifications the July 29, 2015 Decision[2] of the Regional Trial Court, Branch 207, Muntinlupa City (RTC), finding accused-appellant Francisco Damayo y Jaime (Damayo) guilty beyond reasonable doubt of the crime of Kidnapping for Ransom.


The antecedent facts are as follows:

Damayo was indicted for Kidnapping for Ransom under Article 267 of the Revised Penal Code, as amended, in an Information which reads:

That, on or about the 7th day of August, 2008, in the City of Muntinlupa, Philippines and within the jurisdiction of this Honorable Court, the above-named accused, a private individual, did then and there willfully, unlawfully and feloniously kidnap one JEROME ROSARIO Y SAMPAGA, an eleven (11)-year-old minor, for the purpose of extorting ransom.

CONTRARY TO LAW.

When arraigned, Damayo pleaded not guilty to the charge. After pre-trial, trial on the merits ensued.

Version of the Prosecution

As summarized by the Office of the Solicitor General (OSG), the People's factual version is as follows:

On August 7, 2008, at 12:00 noon, Jerome Rosario, then eleven (11) years old, was outside his school at Sucat Elementary School, Brgy. Sucat, Muntinlupa City when appellant, known to him as Kuya Frank, approached and told him that he was there to fetch him as they were going somewhere. Since Jerome was familiar with appellant, he went with him and both boarded a jeep bound for Pasay. Upon arriving at Pasay, they boarded a bus. Jerome did not know where they were going.

Worried that Jerome had not returned from school, his parents Edna Rosario and Jerry Rosario started to look for Jerome. When they chanced upon Daryll, a classmate of Jerome, and asked him on his whereabouts, Daryll informed them that an unknown man had taken Jerome during dismissal time. Edna and Jerry then reported the incident to the barangay, where it was blottered.

The next day, August 8, 2008, Edna received a call on her daughter's cellphone from a person who introduced himself as Jerome's classmate. The man, whom Edna recognized to be appellant, stated that Jerome was with him and will be let go, provided that he will be given P150,000.00 and Edna will be unaccompanied when they meet. He directed her to meet him at a terminal in Dau, Pampanga.

The following day, August 9, 2008, Edna and Jerry went to the Muntinlupa City Police Station to report the matter. An operation was planned to retrieve Jerome, where it was agreed that upon meeting appellant at the designated meet-up point, Edna would touch appellant's arm, signaling to the police his identity.

At 2:00 P.M. of the same date, Edna, Jerry, and the police officers, namely, Senior Police Officer 4 (SPO4) Elias Nero, Police Officer 3 (PO3) Rudolph Delmendo, PO3 Roberto Lanting and Police Officer 2 (PO2) Julkabra Sulaiman, proceeded to the Dau terminal in Mabalacat, Pampanga. Upon seeing appellant, Edna touched his arm which prompted the police to arrest him. After handcuffing him, informing him of his arrest and reading him his constitutional rights, the police asked appellant where Jerome was being kept. Appellant told them that Jerome was at his house at No. 301 Telabastaga, San Fernando, Pampanga. They proceeded to the area and were able to safely recover Jerome.[3]

Version of the Defense

The defense relates Damayo's version of the facts in this manner:

x x x x

11. On the other hand, accused FRANCISCO J. DAMAYO vehemently denied the charge against him and interposed that on 7 August 2010, he was instructed by Edna to fetch Jerome from school and to meet her at the Pasay bus terminal thereafter. This is because they were planning to transfer Jerome to another school in Pampanga where they were living as common-law spouses.

12. Prior to the incident, the accused, being one of the Rosarios' close friends, stayed in their house in Sucat for a couple of weeks. At which time, he witnessed how Gerry Rosario abused his wife (Edna) and children. He (accused) tried to distance himself from the Rosarios but Edna kept on asking for his help and advice. As time went by and due to the fact that the accused has always been there for Edna, they grew closer and had an illicit relationship. Ashamed of his weakness, the accused left and stayed with his daughter in Tagaytay. Edna, however, kept on following him.

13. As a last effort to rid himself of his affair with Edna, the accused went to Clark, Pampanga to work there. He, likewise, changed his contact information. Edna, however, was able to trace him and unable to avoid her, the accused succumbed to her desires. They (Edna and the accused) started living together in Pampanga. Edna would then fetch her son, Jerome, every Friday and bring him back to Sucat every Sunday.

14. As the set up proved to be inconvenient for both Edna and Jerome, the couple (Edna and the accused) decided to just transfer Jerome to a school in Pampanga. Thus, on 7 August 2008, after his stay in Tagaytay, the accused met Edna at their house in Sucat, where she asked him to fetch Jerome from school and she will join them at Pasay bus terminal.

15. To his surprise and disappointment, however, Edna did not show up, thus, at Jerome's prodding, the accused decided to leave with Jerome and let Edna follow them to Pampanga.

16. The following day, or on 8 August 2008, Edna called the accused, asking him to bring Jerome back to Sucat, as her husband learned of their plan (to live together with Jerome in Pampanga), and got mad. Unfortunately, however, the accused had no means to travel back to Sucat that day. He (accused) told Edna to fetch Jerome herself or to wait for him to be able to come up with the money for their fare back to Sucat.

17. On 9 August 2008, while the accused was driving his jeepney, he received a call from Edna, asking him to meet her at Dau terminal. Upon arriving thereat, he was suddenly handcuffed by two (2) men in civilian clothes, accusing him of kidnapping Jerome. He instantly denied it and even told them where to find the boy. With no intention of detaining or abducting Jerome, the accused reasoned that he was only following Edna's instructions.[4]

The RTC Ruling

After trial, the RTC rendered its Decision dated July 29, 2015, finding Damayo guilty beyond reasonable of the crime charged. The dispositive portion of which reads:

WHEREFORE, the Court finds accused Francisco Damayo y Jaime guilty beyond reasonable doubt of kidnapping and serious illegal detention under the first (the private complainant is a minor) and second (for the purpose of extorting ransom) paragraphs of Article 267 (4) of the Revised Penal Code, and is sentenced to reclusion perpetua without possibility of parole. He is further ordered to pay private complainant Jerome Rosario y Sampaga civil indemnity in the amount of P25,000.00, and moral damages in the amount of P25,000.00 both with 6% interest per annum from the finality of this decision until fully paid.

The Jail Warden, Muntinlupa City Jail is directed to immediately transfer accused Francisco Damayo y Jaime to the New Bilibid Prison tor the service of his sentence.

SO ORDERED.[5]

The RTC gave credence to the prosecution evidence which established that on August 7, 2006, Damayo took Jerome Rosario y Sampaga (Jerome), who was then eleven years of age, from his school and brought the latter to his house in Pampanga where he deprived the said victim of his personal liberty for three (3) days and that Damayo demanded ransom of P150,000.00 from Edna, Jerome's mother, for the release of her son from captivity. According to the RTC, Jerome convincingly testified on the events that transpired during the kidnapping incident from August 7 to 9, 2006 and positively identified Damayo as his abductor. The RTC rejected the defense of denial interposed by Damayo because it was not substantiated by clear and convincing evidence.

Not in conformity, Damayo appealed his conviction before the CA.

The CA Ruling

On January 30, 2017, the CA rendered its assailed Decision affirming Damayo's conviction with modification as to the award of damages, the fallo of which states:

WHEREFORE, the Decision dated 29 July 2015 of the Regional Trial Court of Muntinlupa City, Branch 207, in Criminal Case No. 08-556 is AFFIRMED with the following MODIFICATIONS:

(1) that the amounts of moral damages and civil indemnity are increased to P100,000.00, each;

(2) that exemplary damages in the amount of P100,000.00 is further awarded.

SO ORDERED.[6]

The CA ruled that the prosecution witnesses unerringly established the commission of the crime of kidnapping for ransom and Damayo's culpability thereof. The CA, likewise, brushed aside Damayo's defense of denial for being self-serving and unsupported by any plausible proof.

Aggrieved, Damayo filed the present appeal and posited the lone assignment of error he previously raised before the CA, to wit:

THE COURT A QUO GRAVELY ERRED IN FINDING THE ACCUSED-APPELLANT GUILTY OF KIDNAPPING SOLELY ON THE BASIS OF THE PROSECUTION WITNESSES' INCONSISTENT AND CONTRADICTORY TESTIMONIES.[7]

In its Resolution[8] dated August 23, 2017, the Court directed both parties to submit their supplemental briefs, if they so desire. On October 23, 2017, the OSG filed its Manifestation (in Lieu of Supplemental Brief)[9] praying that it be excused from filing a Supplemental Brief as its Appellee's Brief had sufficiently ventilated the issues raised. On November 21, 2017, Damayo filed a Manifestation (In lieu of a Supplemental Brief)[10] averring that he would adopt all his arguments in his Appellant's Brief filed before the CA where he had already adequately discussed all matters pertinent to his defense.

Insisting on his acquittal, Damayo asserts that the case for the prosecution was enfeebled by the inconsistent and contradictory testimonies of its witnesses, Jerome and Edna Rosario (Edna). He submits that said testimonies are barren of probative weight and, thus, his conviction based thereon was erroneous. He puts premium on the following alleged material and substantial discrepancies to impugn the credibility of Jerome and Edna:

1) Jerome averred in his Affidavit, dated August 9, 2008, that appellant took him by force, while during his direct testimony, Jerome recounted that he voluntarily went with Damayo because he was familiar with him;

2) While at the witness stand, Edna claimed that she and her husband purposely went to Jerome's classmate, Daryll, to know the whereabouts of their son, but during her later testimony, Edna alleged that she and her husband only chanced upon the said classmate; and

3) During her direct examination, Edna recalled that it was her daughter who received the call from Damayo, while during her cross-examination, Edna stated that she was the one who received the call from Damayo who demanded ransom of P150,000.00.

Damayo denies that he abducted Jerome and maintains that his denial gained commensurate strength since the credibility of the prosecution witnesses is wanting and questionable. He contends that any doubt should be resolved in favor of the accused based on the principle that it is better to liberate a guilty man than to unjustly keep in prison one whose guilt has not been proven by the required quantum of evidence. Damayo stresses that his constitutional right to presumption of innocence remains because there is reasonable doubt that calls for his acquittal.

The Court's Ruling

The appeal is devoid of merit. Damayo's conviction of the cnme charged must stand.

In the case at bench, the RTC, as affirmed by the CA, gave more weight and credence to the testimonies of the prosecution witnesses compared to that of Damayo. After a judicious review of the evidence on record, the Court finds no cogent reason to deviate from the factual findings of the RTC and the CA, and their respective assessment and calibration of the credibility of the prosecution witnesses. Despite Damayo's vigorous protestation, the Court is convinced beyond cavil that the prosecution has proven with moral certainty that Damayo kidnapped Jerome for the purpose of extorting money from his parents.

Jerome unmistakably and compellingly narrated, in detail, the events of the kidnapping incident, from the moment he was taken by Damayo from his school and brought to the latter's residence in Pampanga where he remained in captivity for three (3) days until his rescue by the police officers and his parents. The RTC described Jerome's testimony as "simple, straightforward and credible which was not toppled down in the cross-examination."[11] A perusal of Jerome's testimony confirms the trial court's observation. Jerome was consistent in his account. Even during the rigorous cross-examination conducted by Damayo's counsel, he remained steadfast in his story of the commission of the crime and categorically pinpointed Damayo as his abductor. There is no showing that Jerome simply made up the details of his testimony or that he was coached. His testimony is unequivocal, forthright, cohesive and, hence, bears the hallmarks of honesty and truth. In sum, the RTC did not commit any error when it gave probative weight and credence to Jerome's testimony.

In order that the accused can be convicted of kidnapping and serious illegal detention, the prosecution must prove beyond reasonable doubt all the elements of the crime, namely: (a) the offender is a private individual; (b) he kidnaps or detains another, or in any manner deprives the latter of his liberty; (c) the act of detention or kidnapping must be illegal; and (d) in the commission of the offense any of the following circumstances is present: (1) the kidnapping or detention lasts for more than three days; (2) it is committed by simulating public authority; (3) any serious physical injuries are inflicted upon the person kidnapped or detained or threats to kill him are made; or (4) the person kidnapped or detained is a minor, female, or a public officer.[12]

If the victim of kidnapping and serious illegal detention is a minor, the duration of his detention is immaterial. Also, if the victim is kidnapped and illegally detained for the purpose of extorting ransom, the duration of his detention is immaterial.[13] It is settled that the curtailment of the victim's liberty need not involve any physical restraint upon the latter's person and it is not necessary that the offender kept the victim in an enclosure or treated him harshly.[14] The crime of serious illegal detention is committed by detaining a person or depriving him in any manner of his liberty.[15] Its essence is the actual deprivation of the victim's liberty, coupled with indubitable proof the intent of the accused to effect such deprivation.[16]

The elements of kidnapping as embodied in Article 267 of RPC have been sufficiently proven in the case at bench. It is undisputed that Damayo is a private individual, and that he took Jerome from his school at Sucat Elementary School, Barangay Sucat, Muntinlupa City on August 7, 2008 at 12:00 noon, brought said victim to his house at No. 301 Telabastaga, San Fernando, Pampanga, and kept him there until he was safely recovered by his parents and the police officers on August 9, 2008. That Damayo had no justification whatsoever to detain Jerome is undeniable.

Although it was not established that Jerome was placed inside an enclosure or was locked up, he was nonetheless deprived of his liberty because he cannot leave the place where Damayo brought him as the latter remained outside and kept watch of him. This only goes to show that Jerome was constantly guarded by Damayo during the period of his captivity. Also, let it be underscored that leaving a child in a place from which he did not know the way home, even if he had the freedom to roam around the place of detention, would still amount to deprivation of liberty inasmuch as under this situation, the child's freedom remains at the mercy and control of the abductor.[17]

Here, bringing minor Jerome to a house located somewhere in Pampanga, a place which is totally unfamiliar to him and very far from his residence at Sucat, Muntinlupa City, would constitute denial of the said victim's liberty. Even if Jerome had the freedom of locomotion inside the house of Damayo, he did not have the freedom to leave the same at will or escape therefrom because he did not know where to go and could not possibly go back home to his mother Edna as he didn't know how to do so. Jerome was merely waiting and hoping that he would be brought home or that his parents would fetch him. Verily, the prosecution has established beyond reasonable doubt that Damayo intended to deprive Jerome of his liberty, and his parents, with the custody of their minor son.

In his attempt at exculpation, Damayo posits that the charge against him should not have been given credence since the testimonies of prosecution witnesses Jerome and Edna are allegedly laced with inconsistencies and discrepancies which cast serious doubt on the veracity of their respective claims. Specifically, Damayo points out that while Jerome stated that he had been taken by force in his affidavit, he subsequently testified during his direct examination that he voluntarily went with the appellant because he personally knew the latter as "Kuya Frank" since Damayo stayed in their house for a time. Damayo submits that such inconsistency is sufficient to discredit Jerome.

Damayo's arguments do not persuade.

Jerome's testimony prevails over the statement he gave in the affidavit which he previously executed. It is settled that whenever there is inconsistency between the affidavit and the testimony of a witness in court, the testimony commands greater weight considering that affidavits taken ex parte are inferior to testimony given in court, the former being almost invariably incomplete and oftentimes inaccurate.[18] Affidavits are usually incomplete, as these are frequently prepared by administering officers and cast in their language and understanding of what affiants have said.[19] They are products sometimes of partial suggestions and at other times of want of suggestions and inquiries.[20] Almost always, the affiants would simply sign the documents after being read to them. Jurisprudence is unequivocal in saying that the testimony of a witness prevails over an affidavit.[21]

At any rate, the inconsistency adverted to by Damayo is negligible and merely refers to a minor detail that does not bear relevance on the material and significant fact that Damayo kidnapped Jerome. It does not pertain to the why's and wherefore's of the crime, as to adversely affect the reliability of the People's evidence as a whole. An inconsistency, which has nothing to do with the elements of a crime, is not a ground to reverse a conviction.[22]

Thus, whether Jerome was taken by force or not is of no moment. What is controlling is the act of the accused in detaining the victim against his will after the offender is able to take the victim in his custody.[23] Besides, it is settled that the carrying away of the victim can either be made forcibly or fraudulently,[24] as in this case. The Court gathers from Jerome's testimony that he was deceived by Damayo to go with him. Jerome clearly testified that Damayo told him that they would just go somewhere for a while and that he would be brought back shortly thereafter. The unsuspecting minor readily acceded to Damayo's request because he trusted his "Kuya Frank," but the latter took him instead to Pampanga. Viewed in the light of the foregoing, the Court finds that the discrepancy in question did not damage nor shatter altogether the credibility and the essential integrity of Jerome's testimony, but instead, the honest inconsistency serves to strengthen rather than destroy the victim's credibility.

Anent the inconsistencies in the testimony of witness Edna cited by Damayo, suffice it to say that they are mere trifles which could not discredit her testimony nor diminish her credibility. It must be stressed that even the most candid witnesses oftentimes make mistakes and would fall into confused statements. Trivial inconsistencies do not shake the pedestal upon which the witness' credibility rests. On the contrary, they are taken as badges of truth rather than as indicia of falsehood for they manifest spontaneity and erase any suspicion of a rehearsed testimony[25] as well as negate all doubts that the same were merely perjured. A truth-telling witness is not always expected to give an error-free testimony, considering the lapse of time and the treachery of human memory.[26] Edna is not expected to remember every single detail of the incident with perfect or total recall.

What militates against Damayo's claim of innocence is the time-honored rule that the issue of credibility of witnesses is a question best addressed to the province of the trial court because of its unique position of having observed that elusive and incommunicable evidence of the witnesses' deportment on the stand while testifying and absent any substantial reason which would justify the reversal of the trial court's assessments and conclusions, the reviewing court is generally bound by the former's findings.[27] The Court accords great respect and even finality to the findings of credibility of the trial court, more so if the same were affirmed by the CA, as in this case.[28]

We do not find any compelling reason to deviate from the trial court's evaluation of prosecution witnesses as credible witnesses and the credibility of their respective testimonies. Neither the RTC nor the CA overlooked, misinterpreted, misapplied or disregarded any significant facts and circumstances which when considered would have affected the outcome of the case. To the contrary, the prosecution witnesses' testimonies presented a cohesive, detailed, and convincing account of Jerome's August 7 to 9, 2008 kidnapping incident: from Jerome's actual abduction, to the ransom negotiation, to the supposed ransom payout, and to accused-appellant's apprehension by the police officers and Jerome's rescue.

Still, Damayo denies that he kidnapped Jerome. In a crude effort to muddle the case for the prosecution, Damayo asserts that he and Edna were lovers and that he took Jerome from his school and brought him to Pampanga upon Edna's request. Damayo explains that he and Edna had considered transferring Jerome to a school in Pampanga. He claims that it had peen the practice for Edna and Jerome to spend their weekends with him at their rented home in Pampanga.

Damayo's contention is nothing more than a futile maneuver and a vain attempt to provide a viable excuse for taking Jerome from his school and bringing him to his house in Pampanga where he detained said victim for three days. What destroys the veracity of Damayo's claims is the categorical and credible declaration of Jerome that he and his mother have never stayed in Pampanga with Damayo at any given time, and that he has never been in Pampanga before the kidnapping incident. Case law has it that testimonies of child victims are given full weight and credit, and that the testimony of children of sound mind is likely to be more correct and truthful than that of older persons.[29]

Moreover, as aptly observed by the RTC, if the trip to Pampanga was indeed planned as claimed by Damayo, then Jerome would have brought with him certain personal belongings which he will use during his. stay at appellant's house. Or, if Edna and Jerome really spend their weekends at Pampanga, there would have been clothes available for use at Damayo's place. Evidence on record, however, showed that for the entire duration of his detention, Jerome only wore his school uniform and only had with him his school bag.

Edna, on the other hand, vehemently denied that she and Damayo were lovers and that she gave him an instruction to bring Jerome to Pampanga. We agree with the courts a quo that Edna has not given her consent for Damayo to take and keep her son. This is evident from the fact that Edna, together with her husband, wasted no time and went through the trouble of going to Jerome's school to look for their son when the latter failed to go home at around 4 o'clock in the afternoon on August 7, 2008 and in having the incident of the taking of Jerome by a male person to be blottered before the Barangay Office of the Sucat, Muntinlupa City. This is, likewise, clear from the plea of Edna, via cellular phone, for Damayo to bring home her son.

Apart from Damayo's bare assertion, no other evidence was adduced by the defense to substantiate his claim that he and Edna were lovers. Records show that the testimony of defense witness Edwin Alcantara, appellant's son-in-law, confirming the alleged love affair between Damayo and Edna, was ordered by the RTC to be expunged from the records due to the failure of this witness to appear and testify for cross-examination. Granting arguendo that Edna and Damayo were indeed sweethearts, the same does not negate the commission of kidnapping. Such a romantic relationship, even if true, does not give Damayo the authority to remove Jerome from his school and detain him for three days at San Fernando, Pampanga away from his parents. In any event, the Court notes that Edna's reactions consisting of immediately reporting the kidnapping of his son to the Muntinlupa City Police and identifying the culprit to be herein appellant, cooperating with the police for the apprehension of Damayo, and testifying against him before the RTC, are certainly not consistent with the conduct of a woman deeply in love with appellant. Besides, if it was really true that Edna and Damayo are lovers, then she should have conveniently joined appellant and Jerome in Pampanga instead.

More importantly, Damayo's defense of denial was not corroborated nor bolstered by any competent and independent evidence testimony or other evidence and, hence, cannot be sustained in the face of Jerome's unwavering testimony and of his positive and firm identification of Damayo as the perpetrator. Denial is a self-serving negative evidence, which cannot be given greater weight than that of the declaration of a credible witness who testifies on affirmative matters.[30]

It bears stressing that Damayo utterly failed to allege, much less, prove any ill or ulterior motive on the part of Jerome and Edna to fabricate a story and to falsely charge Damayo with such a very serious crime. Where there is no evidence to show any dubious or improper motive why a prosecution witness should bear false witness against the accused or falsely implicate him in a heinous crime, the testimony is worthy of full faith and credit.[31]

Lastly, the Court determines that the qualifying circumstance of extortion of ransom being the purpose of Damayo in kidnapping Jerome was duly alleged in the Information and has been sufficiently established by the prosecution. Edna clearly testified that on August 8, 2008 at around 8 o'clock in the morning, she received a call from Damayo who demanded that he be given P150,000.00 in exchange for the safe release of Jerome and that the ransom payout shall be held at the Dau Terminal, Mabalacat, Pampanga. Damayo never rebutted this particular testimony of Edna. The fact that he did not receive the ransom payment is of no consequence. Actual payment of ransom is not necessary for the crime to be committed. It is enough that the kidnapping was committed for the purpose of extorting ransom.[32]

Since Damayo's guilt for the crime of kidnapping for ransom had been established beyond reasonable doubt, he should be meted the penalty of death under Article 267 of the Revised Penal Code, as amended. However, considering that the imposition of the death penalty has been prohibited by Republic Act No. 9346, entitled "An Act Prohibiting the Imposition of Death Penalty in the Philippines", the penalty of reclusion perpetua should be imposed upon Damayo. In addition, the qualification "without eligibility for parole" should be affixed to qualify reclusion perpetua pursuant to A.M. No. 15-08-02-SC.[33] Thus, the RTC has properly imposed upon Damayo the penalty of reclusion perpetua without eligibility for parole.

Coming now to the civil liabilities, the Court finds that the CA is correct in awarding P100,000.00 each for civil indemnity, moral damages and exemplary damages being consistent with current jurisprudence.[34] Further, six percent (6%) interest per annum shall be imposed on all damages awarded to be reckoned from the date of the finality of this Decision until fully paid.[35]

WHEREFORE, premises considered, the appeal is DISMISSED. The Decision of the Court of Appeals dated January 30, 2017 in CA-G.R. CR-HC No. 07683 is hereby AFFIRMED. Accused-appellant Francisco Damayo y Jaime is found GUILTY beyond reasonable doubt of the crime of Kidnapping for Ransom and is sentenced to suffer the penalty of Reclusion Perpetua without eligibility for parole. He is ORDERED to PAY the private complainant Jerome Rosario y Sampaga the amounts of P100,000.00 as civil indemnity, P100,000.00 as moral damages, and P100,000.00 as exemplary damages, with legal interest at the rate of six percent (6%) per annum from the time of finality of this Decision until fully paid.

SO ORDERED.

Gesmundo, and J. Reyes, Jr., JJ., concur.
Leonen, J., on wellness leave.
A. Reyes, Jr.,** J., on leave.

October 4, 2018

N O T I C E  O F  J U D G M E N T

Sirs / Mesdames:

Please take notice that on September 26, 2018 a Decision, copy attached hereto, was rendered by the Supreme Court in the above-entitled case, the original of which was received by this Office on October 4, 2018 at 11:30 a.m.

Very truly yours,

(SGD.) WILFREDO V. LAPITAN
Division Clerk of Court

** Designated additional member per Special Order No. 2588 dated August 28, 2018; on leave.

[1] Penned by Associate Justice Socorro B. Inting, with Associate Justices Remedios A. Salazar-Fernando and Priscilla J. Baltazar-Padilla concurring; rollo pp. 2-10.

[2] Penned by Judge Philip A. Aguinaldo; CA rollo pp. 38-48.

[3] Id. at 60-62.

[4] Id. at 30-31.

[5] Id. at 48.

[6] Rollo, p. 9.

[7] CA rollo, p.27.

[8] Rollo, pp. 17-18.

[9] Id. at 19-21.

[10] Id. at 25-27.

[11] CA rollo, p. 46.

[12] People v. Anticamara, et al., 666 Phil. 484, 511 (2011).

[13] People v. Pagalasan, 452 Phil. 341, 362 (2003).

[14] People v. Fabro, G.R. No. 208441, July 17, 2017.

[15] People v. Domasian, 292 Phil. 255, 264 (1993).

[16] People v. Obeso, 460 Phil. 625, 634 (2003).

[17] People v. Baluya, 664 Phil. 140, 151 (2011).

[18] People v. Mamarion, 459 Phil. 51, 85 (2003).

[19] People v. Cueto, 443 Phil. 425, 433 (2003).

[20] People v. Abrera, 347 Phil. 302, 316 (1997).

[21] People v. Ortiz, 413 Phil. 592, 611 (2001).

[22] People v. SPO1 Gonzales, Jr., 781 Phil. 149, 156 (2016).

[23] People v. Siongco, et al., 637 Phil. 488, 500 (2010).

[24] People v. De Guzman, 773 Phil. 662, 674 (2015).

[25] People v. Diopita, 400 Phil. 653, 665 (2000).

[26] People v. Mendoza, 421 Phil. 149, 168 (2001).

[27] People v. Dominguez, Jr., 650 Phil. 492, 520 (2010).

[28] Kummer v. People, 717 Phil. 670, 679 (2013).

[29] People v. Bisda, 454 Phil. 194, 224 (2003).

[30] People v. Jacalne, 674 Phil. 139, 148 (2011).

[31] People v. Gregorio, et al., 786 Phil. 565, 596 (2016).

[32] People v. Salimbago, 373 Phil. 56, 75 (1999).

[33] Section II of A.M. No. 15-08-02-SC (Guidelines for the Proper Use of the Phrase "Without Eligibility for Parole" in Indivisible Penalties) states:

x x x x

II.

In these lights, the following guidelines shall be observed in the imposition of penalties and in the use of the phrase "without eligibility for parole":

(1)

x x x: and

(2) When circumstances are present warranting the imposition of the death penalty, but this penalty is not imposed because of R.A. 9346, the qualification of "without eligibility for parole" shall be used to qualify reclusion perpetua in order to emphasize that the accused should have been sentenced to suffer the death penalty had it not been for R.A. No. 9346.

[34] People v. PO3 Borja, G.R. No. 199710, August 2, 2017.

[35] People v. Romobio, G.R. No. 227705, October 11, 2017.

Qualified Trafficking in Persons

SECOND DIVISION
G.R. No. 235652
July 09, 2018

PEOPLE OF THE PHILIPPINES, PLAINTIFF-APPELLEE, VS. XXX AND YYY,* ACCUSED-APPELLANTS.

D E C I S I O N

PERLAS-BERNABE, J.:

Before the Court is an ordinary appeal[1] filed by accused-appellants XXX and YYY (accused-appellants) assailing the Decision[2] dated August 25, 2017 of the Court of Appeals (CA) in CA-G.R. CR-H.C. No. 08446, which affirmed the Judgment[3] dated October 23, 2015 of the Regional Trial  Court of BiƱan, Laguna, Branch 25 (RTC) in Criminal Case Nos. 21802-B, 21803-B, 21804-B, and 24608-B, convicting them of multiple counts of Qualified Trafficking in Persons defined and penalized under Section 4 in relation to Section 6 of Republic Act No. (RA) 9208,[4] otherwise known as the "Anti-Trafficking in Persons Act of 2003."


The Facts

This case stemmed from various Informations[5] filed before the RTC, charging accused-appellants and a certain John Doe of the crime of Qualified Trafficking in Persons, among others, the accusatory portions of which read:

Criminal Case No. 21802-B

The undersigned 4th Assistant Provincial Prosecutor, hereby accuses XXX and YYY of the crime of Section 4 (e) in relation to Section 6 (a) and (d) of RA 9208, committed as follows:

That for the period comprising the years 2008, 2009, 2010 up to March 5, 2011, in the City of Cabuyao, Province of Laguna, Philippines within the jurisdiction of this Honorable Court, the above-named accused conspiring and confederating with each other, by deception and taking advantage of the vulnerability of the minor complainant being the biological parents of the minor complainant having custody and control over AAA, 14 years old, born on 14 December 1996, did then and there maintain for the purpose of prostitution and/or pornography said minor complainant by then and there providing food, shelter and clothing to induce and persuade the said minor complainant, by using the computer and webcam and internet connections, for the minor complainant to engage in private chat wherein persons, usually foreigners would pay a fee, for the minor complainant to show her genitals, buttocks, breasts, pubic area, and to perform simulated sexual explicit activities as by touching and fondling her genitals, buttocks, breasts, pubic area, and uttering words as "FUCK ME!" "LICK ME", instilling in the mind of the minor complainant that the same is necessary for their support and daily sustenance as the earnings she derives from such activities will pay for the family's food, rental and utilities in violation of the said law.

With the presence of the qualifying circumstances that (i) the trafficked person AAA, 14 years old, born on 14 December 1996, is a child and (ii) the accused are the parents of the minor complainant.

CONTRARY TO LAW.[6]

Criminal Case No. 21803-B

The undersigned 4th Assistant Provincial Prosecutor, hereby accuses XXX and YYY of the crime of Section 4 (e) in relation to Section 6 (a) and (d) of RA 9208, committed as follows:

That for the period comprising the year 2010 up to March 5, 2011, in the City of Cabuyao, Province of Laguna, Philippines within the jurisdiction of this Honorable Court, the above-named accused conspiring and confederating with each other, by deception and taking advantage of the vulnerability of the minor complainant being the biological parents of the minor complainant having custody and control over BBB, 10 years old, born on 14 May 2000, did then and there maintain for the purpose of prostitution and/or pornography said minor complainant by then and there providing food, shelter and clothing to induce and persuade the said minor complainant, by using the computer and webcam and internet connections, to dance naked in front of the camera being viewed through the internet, by a person/s, usually a foreigner named "Sam", who pays a fee, for the minor complainant to: (i) for the minor complainant to engage in private chat wherein persons, usually foreigners would pay for a fee, for the minor complainant to show her genitals, buttocks, breasts, instilling in the mind of the minor complainant that the same is necessary for their support and daily sustenance as the earnings she derives from such activities will pay for the family's food, rental and utilities in violation of the said law.

With the presence of the qualifying circumstances that (i) the trafficked person BBB, 10 years old, born on 14 May 2000, is a child and (ii) the accused are the parents of the minor complainant.

CONTRARY TO LAW.[7]

Criminal Case No. 21804-B.

The undersigned 4th Assistant Provincial Prosecutor, hereby accuses XXX and YYY of the crime of Section 4 (e) in relation to Section 6 (a) and (d) of RA 9208, committed as follows:

That for the period comprising the year 2010 up to March 5, 2011, in the City of Cabuyao, Province of Laguna, Philippines within the . jurisdiction of this Honorable Court, the above-named accused conspiring and confederating with each other, by deception and taking advantage of the vulnerability of the minor complainant being the biological parents of the minor complainant having custody and control over CCC, 9 years old, born on July 24, 2001, did then and there maintain for the purpose of prostitution and/or pornography said minor complainant by then and there providing food, shelter and clothing to induce and persuade the said minor complainant, by using the computer and webcam and internet connections, to dance naked in front of the camera being viewed through the internet, by person/s, usually a foreigner named "Sam", who pays a fee, for the minor complainant to: (i) for the minor complainant to engage in private chat wherein persons, usually foreigners would pay for a fee, for the minor complainant to show her genitals, buttocks, breasts, pubic area[,] instilling in the mind of the minor complainant that the same is necessary for their support and daily sustenance as the earnings she derives from such support and daily sustenance as the earnings she derives from such activities will pay for the family's food, rental and utilities in violation of the said law.

With the presence of the qualifying circumstances that (i) the trafficked person, CCC, 9 years old, born on July 24, 2001, is a child and (ii) the accused are the parents of the minor complainant.

CONTRARY TO LAW.[8]

Criminal Case No. 24608-B

The undersigned 4th Assistant Provincial Prosecutor, hereby accuses XXX and JOHN DOE, whose name and personal circumstances are yet unknown, for the crime of Section 4 (a) in relation to Section 6 (a) and (d) of RA 9208, otherwise known as the "Anti-Trafficking in Persons Act of 2003", committed as follows:

That sometime in April 2010 or in the dates prior thereto in the City of Cabuyao, Province of Laguna, Philippines within the jurisdiction of this Honorable Court, the above-named accused XXX, being the mother of herein complainant AAA, 14 years old, born on 14 December 1996, by taking advantage of the vulnerability of the minor complainant as being the mother accused exerts influence and control over the minor complainant with the intention and purpose of exploitation and prostitution, did then and there willfully, unlawfully and feloniously recruit, transport and provide complainant minor AAA, for the purpose of prostitution by then and there bringing her from their residence in Cabuyao, Laguna to the hotel room occupied by one JOHN HUBBARD, a foreign national in Makati City wherein the said John Hubbard had sexual intercourse with the minor complainant in exchange of material consideration in the amount of One Hundred Thousand Pesos (P100,000.00).

With the qualifying circumstances that the trafficked person, AAA, 14 years old, born on 14 December 1996, is a child and that the accused is a parent and exercises parental authority over the trafficked person as she is the mother of complainant AAA.

CONTRARY TO LAW.[9]

The prosecution claimed that AAA, BBB, and CCC are the minor children of spouses XXX and YYY. AAA claimed that sometime in April 2010, when she was just 13 years old, her mother XXX brought her to a hotel in Makati to meet with a certain John Hubbard who proceeded to have sexual intercourse with her. AAA further alleged that from 2008 to 2011, XXX ordered her to engage in cybersex for three (3) to four (4) times a week in pornographic websites where AAA was shown in her underwear and made to do sexual activities in front of the computer. For their part, BBB and CCC corroborated AAA's statements, both averring that from 2010-2011, XXX ordered them to dance naked in front of the computer with internet connectivity while facilitating the webcam sessions and chatting with a certain "Sam," their usual client. BBB and CCC alleged that during those sessions, their father YYY would be outside the room or fixing the computer. The children all claimed that they were made to do sexual activities to earn money for their household expenses which were collected by YYY in remittance centers.[10]

Sometime in February 2011, AAA sought the assistance of the Department of Social Welfare and Development (DSWD) as she wanted her and her siblings to be rescued. AAA was then taken by the DSWD Social Worker, who then coordinated with the National Bureau of Investigation (NBI). After making an investigation and a technical verification of the pornographic websites which revealed photos and transactions of AAA, the NBI applied for and was granted a search warrant. Subsequently, the law enforcement authorities implemented the search warrant, resulting in the rescue of AAA, BBB, and CCC, the confiscation of the computer units and paraphernalia connected with the alleged crimes, and the arrest of both XXX and YYY.[11]

For their defense, accused-appellants denied the accusations and claimed not knowing any motive for their children's accusations as XXX is a housewife, while YYY works at a printing press. They alleged that AAA ran away when she was impregnated by her boyfriend and denied that computer gadgets were confiscated from them.[12]

The RTC Ruling

In a Judgment[13] dated October 23, 2015, the RTC found accused-appellants guilty beyond reasonable doubt of four (4) counts of Qualified Trafficking in Persons as defined and penalized under RA 9208. Accordingly, they were sentenced to suffer the penalty of life imprisonment and to pay a fine of P2,000,000.00 for each count, and to pay the victims the amounts of P30,000.00 as moral damages and P10,000.00 as exemplary damages for each count.[14] All other charges[15] against them were dismissed for being superfluous as they are deemed subsumed under the crimes for which they were convicted.[16]

The RTC found that the prosecution had proven beyond reasonable doubt the fact that accused-appellants had conspired and confederated with one another to maintain and exploit their children, AAA, BBB, and CCC, into committing cybersex with several foreigners through various websites. In this regard, the RTC pointed out that accused-appellants' assertion that the charges against them are merely fabricated cannot be given credence in light of the children's clear and straightforward testimonies and the lack of ill motive to testify against their own parents.[17]

Aggrieved, accused-appellants appealed to the CA.[18]

The CA Ruling

In a Decision[19] dated August 25, 2017, the CA affirmed accused-appellants' conviction, with the following modifications: (a) YYY's conviction is reduced to three (3) counts of Qualified Trafficking in Persons; and (b) the awards of damages for the victims were increased to P500,000.00 as moral damages and P100,000.00 as exemplary damages.[20]

In affirming accused-appellants' respective convictions, the CA gave credence to the testimonies of the three (3) children-victims who not only positively identified accused-appellants as the perpetrators of the crime, but also straightforwardly explained the acts of sexual exploitation perpetuated against them by their own parents. This notwithstanding, the CA found it appropriate to find the children's father, YYY, guilty for only three (3) counts of Qualified Trafficking, as he was only named as an accused in three (3) of the four (4) total Informations[21] for such crime filed before the RTC.[22]

Hence, this appeal.[23]

The Issue Before the Court

The issue for the Court's resolution is whether or not XXX and YYY are guilty beyond reasonable doubt of four (4) and three (3) counts, respectively, of Qualified Trafficking in Persons.

The Court's Ruling

The appeal is without merit.

Section 3 (a) of RA 9208 defines the term "Trafficking in Persons" as the "recruitment, transportation, transfer or harboring, or receipt of persons with or without the victim's consent or knowledge, within or across national borders by means of threat or use of force, or other forms of coercion, abduction, fraud, deception, abuse of power or of position, taking advantage of the vulnerability of the person, or, the giving or receiving of payments or benefits to achieve the consent of a person having control over another person for the purpose of exploitation which includes at a minimum, the exploitation or the prostitution of others or other forms of sexual exploitation, forced labor or services, slavery, servitude or the removal or sale of organs." The same provision further provides that "[t]he recruitment, transportation, transfer, harboring or receipt of a child for the purpose of exploitation shall also be considered as 'trafficking in persons' even if it does not involve any of the means set forth in the preceding paragraph." ." The crime of "Trafficking in Persons" becomes qualified under, among others, the following circumstances:

Section 6. Qualified Trafficking in Persons. – The following are considered as qualified trafficking:

(a) When the trafficked person is a child;

x x x x

(d) When the offender is an ascendant, parent, sibling, guardian or a person who exercises authority over the trafficked person or when the offense is committed by a public officer or employee;

x x x x

In this case, accused-appellants were charged of three (3) counts each of Qualified Trafficking in Persons under Section 4 (e) in relation to Section 6 (a) and (d) of RA 9208. XXX was further charged with another count of the same crime under Section 4 (a) also in relation to Section 6 (a) and (d) of the same law. Section 4 (a) and (e) of RA 9208 reads:

Section 4. Acts of Trafficking in Persons. – It shall be unlawful for any person, natural or juridical, to commit any of the following acts:

(a) To recruit, transport, transfer, harbor, provide, or receive a person by any means, including those done under the pretext of domestic or overseas employment or training or apprenticeship, for the purpose of prostitution, pornography, sexual exploitation, forced labor, slavery, involuntary servitude or debt bondage;

x x x x

(e) To maintain or hire a person to engage in prostitution or pornography;

x x x x

As correctly ruled by the courts a quo, accused-appellants are guilty beyond reasonable doubt of three (3) counts of Qualified Trafficking in Persons under Section 4 (e) in relation to Section 6 (a) and (d) of RA 9208 as the prosecution had established beyond reasonable doubt that: (a) they admittedly are the biological parents of AAA, BBB, and CCC, who were all minors when the crimes against them were committed; (b) they made their children perform acts of cybersex for different foreigner customers, and thus, engaged them in prostitution and pornography; (c) they received various amounts of money in exchange for the sexual exploitation of their children; and (d) they achieved their criminal design by taking advantage of their children's vulnerability as minors and deceiving them that the money they make from their lewd shows are needed for the family's daily sustenance.

In the same manner, the courts a quo likewise correctly convicted XXX of one (1) count of the same crime, this time under Section 4 (a) in relation to Section 6 (a) and (d) of RA 9208, as it was shown that XXX transported and provided her own minor biological child, AAA, to a foreigner in Makati City for the purpose of prostitution, again under the pretext that the money acquired from such illicit transaction is needed for their family's daily sustenance.

In light of the foregoing, the Court finds no reason to deviate from the factual findings of the trial court, as affirmed by the CA, as there is no indication that it overlooked, misunderstood or misapplied the surrounding facts and circumstances of the case. In fact, the trial court was in the best position to assess and determine the credibility of the witnesses presented by both parties, and hence, due deference should be accorded to the same.[24] As such, accused-appellants' conviction for Qualified Trafficking in Persons must be upheld.

Anent the proper penalty to be imposed on accused-appellants, Section 10 (c) of RA 9208 states that persons found guilty of Qualified Trafficking shall suffer the penalty of life imprisonment and a fine of not less than P2,000,000.00 but not more than P5,000,000.00. Thus, the courts a quo correctly sentenced them to suffer the penalty of life imprisonment and to pay a fine of P2,000,000.00 for each count of Qualified Trafficking in Persons.

Finally, the courts a quo correctly ordered accused-appellants to pay the victims the amounts of P500,000.00 as moral damages and P100,000.00 as exemplary damages for each count of Qualified Trafficking in Persons as such amounts are at par with prevailing jurisprudence.[25] Further, the Court deems it proper to impose on all monetary awards due to the victims legal interest of six percent (6%) per annum from finality of judgment until full payment.[26]

WHEREFORE, the appeal is DENIED. The Decision dated August 25, 2017 of the Court of Appeals in CA-G.R. CR-H.C. No. 08446 is AFFIRMED with MODIFICATIONS as follows:

(a) In Criminal Case No. 21802-B, XXX and YYY are found GUILTY beyond reasonable doubt of Qualified Trafficking in Persons defined and penalized under Section 4 (e) in relation to Section 6 (a) and (d) of RA 9208. Accordingly, they are sentenced to suffer the penalty of life imprisonment and to pay a fine in the amount of P2,000,000.00. In addition, they are ordered to pay the victim, AAA, the amounts of P500,000.00 as moral damages and P100,000.00 as exemplary damages, both with legal interest of six percent (6%) per annum from finality of judgment until fully paid;

(b) In Criminal Case No. 21803-B, XXX and YYY are found GUILTY beyond reasonable doubt of Qualified Trafficking in Persons defined and penalized under Section 4 (e) in relation to Section 6 (a) and (d) of RA 9208: Accordingly, they are sentenced to suffer the penalty of life imprisonment and to pay a fine in the amount of P2,000,000.00. In addition, they are ordered to pay the victim, BBB, the amounts of P500,000.00 as moral damages and P100,000.00 as exemplary damages, both with legal interest of six percent (6%) per annum from finality of judgment until fully paid;

(c) In Criminal Case No. 21804-B, XXX and YYY are found GUILTY beyond reasonable doubt of Qualified Trafficking in Persons defined and penalized under Section 4 (e) in relation to Section 6 (a) and (d) of RA 9208. Accordingly, they are. sentenced to suffer the penalty of life imprisonment and to pay a  fine in the amount of P2,000,000.00. In addition, they are ordered to pay the victim, CCC, the amounts of P500,000.00 as moral damages and P100,000.00 as exemplary damages, both with legal interest of six percent (6%) per annum from finality of judgment until fully paid; and

(d) In Criminal Case No. 24608-B, XXX is found GUILTY beyond reasonable doubt of Qualified Trafficking in Persons defined and penalized under Section 4 (a) in relation to Section 6 (a) and (d) of RA 9208. Accordingly, she is sentenced to suffer the penalty of life imprisonment and to pay a fine in the amount of P2,000,000.00. In addition, she is ordered to pay the victim, AAA, the amounts of P500,000.00 as moral damages and Pl 00,000.00 as exemplary damages, both with legal interest of six percent (6%) per annum from finality of judgment until fully paid.

SO ORDERED.

Carpio, (Chairperson), Peralta, Caguioa, and Reyes, Jr., JJ., concur.

* The identity of the victims or any information which could establish or compromise their identities, as well as those of their immediate family or household members, shall be withheld pursuant to RA 7610, entitled "AN ACT PROVIDING FOR STRONGER DETERRENCE AND SPECIAL PROTECTION AGAINST CHILD ABUSE, EXPLOITATION AND DISCRIMINATION, AND FOR OTHER PURPOSES," approved on June 17, 1992; RA 9262, entitled "AN ACT DEFINING VIOLENCE AGAINST WOMEN AND THEIR CHILDREN, PROVIDING FOR PROTECTIVE MEASURES FOR VICTIMS, PRESCRIBING PENALTIES THEREFORE, AND FOR OTHER PURPOSES," approved on March 8, 2004; and Section 40 of A.M. No. 04-10-11-SC, otherwise known as the "Rule on Violence against Women and Their Children" (November 15, 2004). (See footnote 4 in People v. Cadano, Jr., 729 Phil. 576, 578 [2014], citing People v. Lomaque, 710 Phil. 338, 342 [2013]. See also Amended Administrative Circular No. 83-2015, entitled "PROTOCOLS AND PROCEDURES IN THE PROMULGATION, PUBLICATION, AND POSTING ON THE WEBSITES OF DECISIONS, FINAL RESOLUTIONS, AND FINAL ORDERS USING FICTITIOUS NAMES/PERSONAL CIRCUMSTANCES," dated September 5, 2017.)

[1] See Notice of Appeal dated September 15, 2017; rollo, p. 35-36.

[2] Id. at 2-34. Penned by Associate Justice Ramon A. Cruz with Associate Justices Ricardo R. Rosario and Pablito A. Perez concurring.

[3] CA rollo at 56-79. Penned by Judge Teodoro N. Solis.

[4] Entitled "AN ACT TO INSTITUTE POLICIES TO ELIMINATE TRAFFICKING IN PERSONS ESPECIALLY WOMEN AND CHILDREN, ESTABLISHING THE NECESSARY INSTITUTIONAL MECHANISMS FOR THE PROTECTION AND SUPPORT OF TRAFFICKED PERSONS, PROVIDING PENALTIES FOR ITS VIOLATIONS, AND FOR OTHER PURPOSES," approved on May 26, 2003.

[5] Rollo, pp. 3-6 and 11-12.

[6] Id. at 3-4.

[7] Id. at 4-5.

[8] Id. at 5-6.

[9] Id. at 11-12.

[10] See id. at 12-14. See also Appellee's Brief dated May 9, 2017; CA rollo, pp. 111-113.

[11] See id. at 13-15. See also CA rollo, pp. 113-114.

[12] See id. at 15-16. See also CA rollo, p. 48.

[13] CA rollo, pp. 56-79.

[14] Id. at 79.

[15] Aside from violation of RA 9208, they were also charged for violations of RA 7610, entitled "AN ACT PROVIDING FOR STRONGER DETERRENCE AND SPECIAL PROTECTION AGAINST CHILD ABUSE, EXPLOITATION AND DISCRIMINATION, AND FOR OTHER PURPOSES," otherwise known as the "SPECIAL PROTECTION OF CHILDREN AGAINST ABUSE, EXPLOITATION AND DISCRIMINATION ACT," approved on June 17, 1992 and RA 9775, entitled "AN ACT DEFINING THE CRIME OF CHILD PORNOGRAPHY, PRESCRIBING PENALTIES THEREFOR AND FOR OTHER PURPOSES," otherwise known as the "ANTI-CHILD PORNOGRAPHY ACT OF 2009," approved on November 17, 2009.

[16] See CA rollo, pp. 76-78.

[17] See id. at 67-76.

[18] See Brief for the Accused-Appellants dated December 15, 2016; id. at 37-54.

[19] Rollo, pp. 2-34.

[20] See id. at 31.

[21] A reading of the Information in Criminal Case No. 24608-B would show that YYY was not included as an accused, as it only listed XXX and a certain John Doe as the accused. (See id. at 11-12.)

[22] Id. at 19-30.

[23] See Notice of Appeal dated September 15, 2017; id. at 35-36.

[24] See Peralta v. People, G.R. No. 221991, August 30, 2017, citing People v. Matibag, 757 Phil. 286, 293 (2015).

[25] See People v. Hirang, G.R. No. 223528, January 11, 2017.

[26] See People v. Jugueta, G.R. No. 202124, April 5, 2016, 788 SCRA 331, 338.

Monday, May 20, 2019

RA 10142, Financial Rehabilitation and Insolvency Act (FRIA) of 2010.

Keywords: RA 10142, Financial Rehabilitation and Insolvency Act (FRIA) of 2010.

May the Rehabilitation Rules be applied to resolve the present petition, when the subject petition for rehabilitation was filed under the Interim Rules?

THIRD DIVISION
G.R. No. 191939
March 14, 2018

ALLIED BANKING CORPORATION, PETITIONER,[1] V. IN THE MATTER OF THE PETITION TO HAVE STEEL CORPORATION OF THE PHILIPPINES PLACED UNDER CORPORATE REHABILITATION WITH PRAYER FOR THE APPROVAL OF THE PROPOSED REHABILITATION PLAN, EQUITABLE PCI BANK, INC., RESPONDENT.

D E C I S I O N

MARTIRES, J.:

This is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the 22 July 2008 Decision[2] and 12 April 2010 Resolution[3] of the Court of Appeals (CA) in CA-G.R. SP No. 97206. The CA affirmed the 22 November 2006 Resolution of the Regional Trial Court (RTC or the rehabilitation court), Branch 2, Batangas City, in Spec. Proc. No. 06-7993, which ordered the bank creditors of Steel Corporation of the Philippines (SCP) to unfreeze and restore the latter's bank accounts to the possession, control, and custody of the rehabilitation receiver.




THE FACTS

On 11 September 2006, Equitable PCI Bank, Inc. (EPCIB), as creditor, filed a petition for the corporate rehabilitation of its debtor SCP with the RTC.

EPCIB alleged, among others, that due to the onslaught of the 1997 Asian Financial Crisis, SCP began experiencing a downward trend in its financial condition which prompted various banks and financial institutions to grant it with term loan facilities and working capital lines; that SCP failed to make timely payments on its term loan facilities; that SCP also defaulted on its loan obligations under the December 2002 Omnibus Agreement,[4] where lending banks and other financial institutions agreed to reschedule and restructure SCP's payments on the principal loan and interest, reinstate its working capital lines and establish a new trade financing line; and that the petition for corporate rehabilitation is grounded on Section 1, Rule 4 of the Interim Rules of Corporate Rehabilitation, which provides that "any debtor who foresees the impossibility of meeting its debts when they respectively fall due, or any creditor or creditors holding at least twenty-five percent (25%) of the debtor's total liabilities, may petition the proper Regional Trial Court to have the debtor placed under rehabilitation."

Apart from the foregoing agreements, Allied Banking Corporation (ABC) granted SCP with a revolving credit facility denominated as a letter of credit/trust receipt line in the amount of P100 million, which SCP availed of to finance the importation of its raw materials. Pursuant to this arrangement, SCP executed a trust receipt (TR),[5] which authorizes ABC to charge SCP's account in its possession under instances specified in paragraph 9 thereof, viz:

In the event of any bankruptcy, insolvency, suspension of payment, or failure, or assignment for the benefit of creditors, on my/our part, or of the non-fulfillment of any obligation, or of the non-payment at maturity of any acceptance specified hereon or under any credit issued by the ALLIED BANKING CORPORATION for my/our account, or of the non-payment of any indebtedness on my/our part to the said bank, all obligations, acceptances, indebtedness, and liabilities whatsoever shall thereupon (with or without notice) mature and become due and payable. The ALLIED BANKING CORPORATION is hereby constituted my/our attorney-in-fact, with authority to examine my/our books and records, to charge my/our account or to sell any other property of mine/ours in its possession, and to liquidate any or all of my/our obligations under this Trust Receipt.

The RTC Ruling

On 12 September 2006, the RTC issued an Order[6] (the subject order) granting EPCIB's petition, the dispositive portion of which reads:

WHEREFORE, finding the petition to be sufficient in form and substance, this Order is hereby issued—

(a) Appointing Santiago T. Gabionza Jr., with address at Villanueva Gabionza and De Santos Law Offices, 20/F 139 Corporate Center, Valero Street, Salcedo Village, Makati City, as Rehabilitation Receiver of Steel Corporation of the Philippines, directing him to assume his position as such upon the taking of an oath before the Branch Clerk of this Court and after posting a bond in the amount of P300,000.00 to guarantee the faithful discharge of his duties and obedience to the Orders of this Court;

(b) Upon acceptance by Santiago T. Gabionza, Jr. of his appointment as Rehabilitation Receiver, directing him:

[i] to take possession, control and custody of the assets of the debtor Steel Corporation of the Philippines;

[ii] to closely oversee and monitor the operations of the said debtor corporation during the pendency of the proceedings and to immediately report to this Court any material adverse change in its business;

[iii] to ensure that the value of the properties of Steel Corporation of the Philippines are reasonably maintained pending the termination of whether or not it should be rehabilitated;

[iv] to investigate the acts, conduct, properties, liabilities, and financial condition of the debtor-corporation, the operation of its business and the desirability of the continuance thereof, and any matter relevant to the proceedings or to the formulation of a rehabilitation plan;

[v] to report to this Court any fact ascertained by him pertaining to the causes of the debtor's problems, fraud, preferences, dispositions, encumbrances, misconduct, mismanagement, and irregularities committed by the stockholders, directors, management, or any other person against the debtor;

[vi] to evaluate the existing assets and liabilities, earnings and operations of the said debtor-corporation;

[vii] to determine and recommend to this Court the best way to salvage and protect the interests of the creditors, stockholders and the general public;

[viii] to exercise such powers and prerogatives stated above as may be necessary and proper under the law and the Interim Rules of Procedure on Corporate Rehabilitation over all other corporations, persons or entities as may be affected by these proceedings;

[ix] to apply to this Court for any order or directive that he may deem necessary or desirable to aid him in the exercise of his powers and performance of his duties and functions.

(c) Staying all claims against SCP, by all other corporations, persons or entities insofar as they may be affected by the present proceedings, until further notice from this Court, pursuant to Sec. 6, of Rule 4 of the Interim Rules of Procedure on Corporate Rehabilitation. Steel Corporation of the Philippines is hereby prohibited from selling, encumbering, transferring or disposing in any manner of its assets and properties except in the ordinary course of its business and as may be approved by the Rehabilitation Receiver.

The suppliers of goods or services of Steel Corporation of the Philippines are prohibited from withholding supply of goods and services in the ordinary course of business for as long as it is able to make payment for the services and goods supplied after the issuance of this Order.

Steel Corporation of the Philippines is directed to pay in full the administrative expenses incurred after the issuance of this Order.

The petitioner is directed to publish this Order in a newspaper of general circulation in the Philippines once a week for two (2) consecutive weeks.

All other creditors and all interested parties, including the Securities and Exchange Commission, are directed to file and serve on the petitioner, thru their counsels on record, Divina and Uy Law Offices, 8th Floor, Pacific Star Building, Makati Avenue corner Sen. Gil Puyat Ave., Makati City, a verified comment on the petition, with supporting affidavits and documents, not later than ten (10) days before the date of the initial hearing. Failure to do so will constitute a bar on such creditors and all interested parties from participating in the proceedings.

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SO ORDERED. (emphasis supplied)

On 15 September 2006, petitioner applied the remaining proceeds of SCP's Current Account No. 1801-004-87-6 (subject account) in the amount of P6,750,000.00, maintained with its Aguirre Branch, to its obligations under the TR.

On 29 October 2006, SCP filed an urgent omnibus motion alleging that petitioner violated the rehabilitation court's stay order when it applied the proceeds of its current account to the payment of obligations covered by the stay order. Consequently, it prayed for ABC to immediately restore its current account, credit back to said account the amount of P6,750,000.00, and honor any and all transactions of SCP in said account.

On 2 November 2006, ABC filed an opposition, mainly contending that SCP's obligations with it had become due and demandable, rendering legal compensation valid and proper; that petitioner did not violate the stay order, as it had no notice of its issuance at the time of the legal compensation; and that petitioner cannot be legally compelled to extend credit to SCP against its will.

On 22 November 2006, the RTC issued a resolution (the subject resolution), finding merit in SCP's position, to wit:

WHEREFORE, in view of all the foregoing, the Court hereby orders as follows:

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3. ABC to restore SCP's Current Account No. 1801-004-87-6 at Aguirre Branch, Makati City, and to credit back to the said account the entire deposit balance therein of P6,750,000.00 and to honor any and all transactions of SCP in said account as may be approved by the Rehabilitation Receiver.

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Aggrieved, ABC filed a petition for review under Rule 43 with the CA.

The CA Ruling

The CA affirmed the resolution of the RTC, viz:

WHEREFORE, the November 22, 2006 Resolution of the Regional Trial Court, Branch 2, Batangas City, in Sp. Proc. No. 06-7993, is AFFIRMED.

The CA ruled that the RTC's stay order was effective from the date of its issuance on 12 September 2006, on the basis of Section 11, Rule 4, and Section 5, Rule 3, of the Interim Rules of Corporate Rehabilitation; thus, ABC was bound to comply with it on said date. The CA also ruled that the subject account was already under custodia legis by virtue of the stay order, rendering ABC's unilateral application of the proceeds in the subject account improper. On the issue of impairment of contractual rights, the CA held that no impairment exists because no changes were made in the amount or rate of SCP's debt to ABC. Only the enforcement of the latter's claims is being stayed or suspended.

Unconvinced, ABC filed a motion for reconsideration of the CA decision, which was denied by the CA in its resolution; hence, the instant petition.

The present petition

ABC contends that it was deprived of its right to due process when the RTC ordered ABC to restore SCP's current account and to credit back the amount previously set off. ABC asserts that it was not yet bound by the 12 September 2006 stay order when it made the setoff on 15 September 2006 because jurisdiction over it had not yet been acquired by the rehabilitation court; the stay order was only published on 16 September 2006.

ABC further contends that when it offset the proceeds in the subject account, it merely applied the provisions of law on legal compensation, since SCP had already incurred a default in its obligations rendering operative the terms of the TR it had issued.

ISSUES

ABC raises the following issues:

I. THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING THE LOWER COURT'S DECISION THAT PETITIONER ABC IS BOUND BY THE SEPTEMBER 12, 2006 STAY ORDER THEREBY UNLAWFULLY DEPRIVING THE PETITIONER OF ITS RIGHT TO DUE PROCESS OF LAW.

II. THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING THE LOWER COURT'S DECISION THAT PETITIONER ABC IS PROHIBITED FROM APPLYING THE PROCEEDS OF THE DEPOSIT ACCOUNT OF STEEL CORPORATION TO ITS OUTSTANDING OBLIGATIONS FROM THE DATE OF THE ISSUANCE OF THE STAY ORDER ON 12 SEPTEMBER 2006, AS THE SAID PROCEEDS ARE ALREADY UNDER CUSTODIA LEGIS, BY VIRTUE OF THE STAY ORDER.

THE COURT'S RULING

The central argument to the present petition is that the RTC could not invalidate an act already consummated prior to the date that the subject order was published, since it was only on said date that the court acquired jurisdiction over ABC. ABC primarily bases its assertion on Section 1, Rule 3 of the Interim Rules,[7] which considers rehabilitation proceedings as in rem and jurisdiction over all those affected acquired only upon publication of the notice commencing proceedings.

This Court is thus tasked to determine when the subject order took effect for purposes of compliance, and whether the rehabilitation court can reverse or invalidate acts that are inconsistent with its stay order and are made after its issuance but prior to its publication.

Applying the provisions of the present Rehabilitation Rules, the rehabilitation court properly invalidated ABC's action.

The rehabilitation petition was filed by EPCIB under A.M. No. 00-8-10-SC dated 21 November 2000, or the 2000 Interim Rules of Procedure on Corporate Rehabilitation (Interim Rules).

On 27 August 2013, however, the Court enacted A.M. No. 12-12-11-SC, or the Financial Rehabilitation Rules of Procedure (Rehabilitation Rules), which amended and revised the Interim Rules and the subsequent 2008 Rules of Procedure on Corporate Rehabilitation (2008 Rules), in order to incorporate the significant changes brought about by Republic Act No. 10142 (R.A. No. 10142), otherwise known as the Financial Rehabilitation and Insolvency Act of 2010 (FRIA).[8]

The Rehabilitation Rules provides that the court shall issue a commencement order once it finds the petition for rehabilitation sufficient in form and substance.[9] This commencement order primarily contains: a declaration that the debtor is under rehabilitation, the appointment of a rehabilitation receiver, a directive for all creditors to file their verified notices of claim, and an order staying claims against the debtor.[10] The rehabilitation proceedings shall be deemed to have commenced from the date of filing of the petition,[11] which is also termed the commencement date.

Under the same Rules, the effects of such commencement order shall retroact to the date that the petition was filed, and renders void any attempt to collect on or enforce a claim against the debtor or to set off any debt by the debtor's creditors, after the commencement date, to wit:

SEC. 9. EFFECTS OF THE COMMENCEMENT ORDER. - The effects of the court's issuance of a Commencement Order shall retroact to the date of the filing of the petition and, in addition to the effects of a Stay or Suspension Order described in the foregoing section, shall

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(B) prohibit or otherwise serve as the legal basis for rendering null and void the results of any extrajudicial activity or process to seize property, sell encumbered property, or otherwise attempt to collect on or enforce a claim against the debtor after the commencement date unless otherwise allowed under these Rules, subject to the provisions of Section 49 of this Rule;

(C) serve as legal basis for rendering null and void any set-off after the commencement date of any debt owed to the debtor by any of the debtor's creditors; (emphasis supplied)

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The order issued by the RTC on 12 September 2006, which effectively initiated rehabilitation proceedings and included a suspension of all claims against SCP, is akin to the commencement order under the Rehabilitation Rules.

Clearly, therefore, if the Rehabilitation Rules were to be applied, the directive of the rehabilitation court restoring SCP's current account and crediting back the offset amount is valid and proper, since the offsetting was made on 15 September 2006, after the commencement date on 11 September 2006, when the petition for rehabilitation was filed.

The question thus arises: May the Rehabilitation Rules be applied to resolve the present petition, when the subject petition for rehabilitation was filed under the Interim Rules.

The Court rules in the affirmative.

Section 2, Rule 1 of the Rehabilitation Rules governs rehabilitation cases already pending, except when its application would not prove feasible or would work injustice, to wit:

SEC. 2. SCOPE. - These Rules shall apply to petitions for rehabilitation of corporations, partnerships, and sole proprietorships, filed pursuant to Republic Act No. 10142, otherwise known as the Financial Rehabilitation and Insolvency Act (FRIA) of 2010.

These Rules shall similarly govern all further proceedings in suspension of payments and rehabilitation cases already pending, except to the extent that, in the opinion of the court, its application would not be feasible or would work injustice, in which event the procedures originally applicable shall continue to govern. (emphasis supplied)

The above provision is consistent with the mandate under R.A. No. 10142, viz:

SEC. 146. Application to Pending Insolvency, Suspension of Payments and Rehabilitation Cases. - This Act shall govern all petitions filed after it has taken effect. All further proceedings in insolvency, suspension of payments and rehabilitation cases then pending, except to the extent that in the opinion of the court their application would not be feasible or would work injustice, in which event the procedures set forth in prior laws and regulations shall apply. (emphasis supplied)

The soundness of upholding the retroactive effect of a commencement order is easily discernible.

In Philippine Bank of Communications v. Basic Polyprinters and Packaging Corporation,[12] the Court said that rehabilitation proceedings seek to give insolvent debtors the opportunity to reorganize their affairs and to efficiently and equitably distribute its remaining assets, viz:

Rehabilitation proceedings in our jurisdiction have equitable and rehabilitative purposes. On the one hand, they attempt to provide for the efficient and equitable distribution of an insolvent debtor's remaining assets to its creditors; and on the other, to provide debtors with a "fresh start" by relieving them of the weight of their outstanding debts and permitting them to reorganize their affairs. The purpose of rehabilitation proceedings is to enable the company to gain a new lease on life and thereby allow creditors to be paid their claims from its earnings. (emphasis supplied)

The filing of a petition for the rehabilitation of a debtor, when the court finds that it is sufficient in form and substance, is both (1) an acknowledgment that the debtor is presently financially distressed; and (2) an attempt to conserve and administer its assets in the hope that it will eventually return to its former state of successful financial operation and liquidity.[13] The inherent purpose of rehabilitation is to find ways and means to minimize the expenses of the distressed corporation during the rehabilitation period by providing the best possible framework for the corporation to gradually regain or achieve a sustainable operating form.[14]

Certainly, when a petition for rehabilitation is filed and subsequently granted by the court, its purpose will be defeated if the debtors are still allowed to arbitrarily dispose of their property and pay their liabilities, outside of the ordinary course of business and what is allowed by the court, after the filing of the said petition. Such a scenario does not promote an environment where the debtor could regain its operational footing, contrary to the dictates of rehabilitation.

The petition itself, when granted by the court, is already a recognition of the debtor's distressed financial status not only at the time the order is issued, but also at the time the petition is filed. It is, therefore, more consistent with the objectives of rehabilitation to recognize that the effects of an order commencing rehabilitation proceedings and staying claims against the debtor should retroact to the date the petition is filed.

Accordingly, the Court finds that application of the Rehabilitation Rules to the case at bar is proper, insofar as it clarifies the effect of an order staying claims against a debtor sought to be rehabilitated.

Such application promotes a just and sound resolution to the present controversy, bearing in mind the inherent purpose of rehabilitation proceedings. It is also feasible, considering the subject resolution was within the Rehabilitation Court's powers, wielded for the same purpose identified in both the Interim Rules and the Rehabilitation Rules which is to promote a timely, fair, transparent, effective, and efficient rehabilitation of debtors.[15]

Even the Interim Rules provides for the immediate effectivity of a stay order.

Even if the retroactive effect under the Rehabilitation Rules is inapplicable to the case at bar, the Interim Rules expressly provides that the stay order is effective upon its issuance, viz:

Sec. 11. Period of the Stay Order. - The stay order shall be effective from the date of its issuance until the dismissal of the petition or the termination of the rehabilitation proceedings. (emphasis supplied)

x x x

The foregoing provision finds support in Section 5, Rule 3, of the Interim Rules, to wit:

Sec. 5. Executory Nature of Orders. - Any order issued by the court under these Rules is immediately executory. A petition for review or an appeal therefrom shall not stay the execution of the order unless restrained or enjoined by the appellate court. The review of any order or decision of the court or an appeal therefrom shall be in accordance with the Rules of Court: Provided, however, that the reliefs ordered by the trial or appellate courts shall take into account the need for resolution of proceedings in a just, equitable, and speedy manner. (emphasis supplied)

This Court quotes with approval the CA's disquisition on this matter:

From the above provisions, a stay order issued by the court in a corporate rehabilitation proceeding is effective from the date of its issuance until the dismissal of the petition or the termination of the rehabilitation proceedings. In fact, it is immediately executory.

In the case at bar, there is no doubt that the rehabilitation court correctly held that the appellant is bound by the September 12, 2006 Stay Order as of the date of its issuance, the same being immediately executory and effective without any further act, event, or condition being necessary to compel compliance therewith as expressly provided in Sec. 11, Rule IV and Sec. 5, Rule III of the Interim Rules of Procedure on Corporate Rehabilitation.

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It should be stressed that the Interim Rules was enacted to provide for a summary and non-adversarial rehabilitation proceedings. This is in consonance with the commercial nature of a rehabilitation case, which is aimed to be resolved expeditiously for the benefit of all the parties concerned and the economy in general.

It is true that under the Interim Rules, similar to the Rehabilitation Rules, publication of the notice of the commencement of the proceedings is necessary to acquire jurisdiction over all persons affected, viz:

Section 1. Nature of Proceedings. - Any proceeding initiated under these Rules shall be considered in rem. Jurisdiction over all those affected by the proceedings shall be considered as acquired upon publication of the notice of the commencement of the proceedings in any newspaper of general circulation in the Philippines in the manner prescribed by these Rules.

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The question posed herein is whether the immediate effectivity of the stay order is inconsistent with the publication requirement under the Rules, such that the rehabilitation court cannot invalidate acts made after its issuance but prior to its publication. The Court rules in the negative.

Taking into consideration the laudable objectives of rehabilitation proceedings, the immediate effectivity of the stay order means that the RTC, through an order commencing rehabilitation and staying claims against the debtor, acknowledges that the debtor requires rehabilitation immediately and therefore it can not only prohibit but also nullify acts made after its effectivity, when such acts are violative of the stay order, to prevent any irreparable detriment to the debtor's successful restoration.

The foregoing is validated by the Interim Rules, where the court can declare void any transaction made in violation of the stay order, viz:

Sec. 8. Voidability of Illegal Transfers and Preferences. - Upon motion or motu proprio, the court may declare void any transfer of property or any other conveyance, sale, payment, or agreement made in violation of its stay order or in violation of these Rules. (emphasis supplied)

The publication requirement only means that all affected persons must, to satisfy the requirements of due process, be notified that as of a particular date, the debtor in question requires rehabilitation and should temporarily be exempt from paying its obligations, unless allowed by the court. Once due notice is made, the rehabilitation court may nullify actions inconsistent with the stay order but which may have been taken prior to publication, precisely because prior to publication, creditors may not yet be aware that they are to desist from pursuing claims against the insolvent debtor.

Again, the immediate effectivity of the stay order can be traced to the purpose of rehabilitation: once the necessity of rehabilitating the debtor is recognized, through a petition duly granted, it is imperative that the necessary steps to preserve its assets are taken at the earliest possible time.

It is thus apparent that the RTC properly invalidated petitioner's action made on 15 September 2006, after the subject order was issued.

There was no impairment of contract or deprivation of due process.

According to ABC, the subject resolution constituted an impairment of its contract with SCP because under the TR it executed in ABC's favor, ABC had the right to charge SCP's account in case of nonpayment of any indebtedness. ABC also claims lack of due process because the rehabilitation court directed ABC to restore SCP's account even when the offsetting was made prior to publication of the subject order, when ABC was not yet deemed notified of the order.

Anent the alleged impairment of contract, basic is the principle that the law is deemed written into every contract, such that while a contract is the law between the parties, the provisions of positive law which regulate contracts shall limit and govern their relations.[16] At the time the Trust Receipt Agreement was entered into by ABC and SCP, the law expressly allowed corporations to be declared in a state of suspension of payments under specific instances.[17]

Consequently, said law and its implementing rules are deemed incorporated in the Trust Receipt Agreement, thereby limiting ABC's right to enforce its claim against SCP once a stay or suspension order is issued. Clearly, the principle on inviolability of contracts was not violated.

It must also be noted that the subject order did not eliminate or reduce SCP's obligations to ABC, but merely suspended its enforcement while rehabilitation is being undertaken. In fact, one of the purposes of rehabilitation is to ensure the efficient and equitable distribution of the insolvent debtor's remaining assets to its creditors.[18]

In Golden Merchandising Corporation v. Equitable PCI Bank,[19] which involved the question of whether the shorter redemption period, provided under R.A. No. 8791 and applied to a real mortgage contract executed prior to the enactment of said law, constitutes a violation against the constitutional proscription on impairment of contracts, the Court ruled that there was no impairment because the provision in question did not divest juridical persons of their right to redeem but merely modified the time for the exercise of such right.

Similarly, ABC was not deprived of its right to enforce its claim against SCP. The creditor's right to enforce his claim despite the issuance of a stay order is even validated by Section 8 of the Rehabilitation Rules, to wit:

SEC. 8. COMMENCEMENT OF PROCEEDINGS AND ISSUANCE OF COMMENCEMENT ORDER. - The rehabilitation proceedings shall be deemed to have commenced from the date of filing of the petition.

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The issuance of a stay order does not affect the right to commence actions or proceedings in order to preserve ad cautelam a claim against the debtor and to toll the running of the prescriptive period to file the claim. For this purpose, the plaintiff may file the appropriate court action or proceedings by paying the amount of One Hundred Thousand Pesos (P100,000.00) or one-tenth (1/10) of the prescribed filing fee, whichever is lower. The payment of the balance of the filing fee shall be a jurisdictional requirement for the reinstatement or revival of the case. (emphasis supplied)

It is also clear from the previous discussion that ABC was not deprived of due process when the RTC issued the subject resolution.

The essence of procedural due process is one which hears before it condemns, which proceeds upon inquiry and renders judgment only upon trial. It contemplates notice and opportunity to be heard before judgment is rendered affecting one's person or property.[20]

Rehabilitation proceedings are considered in rem.[21] In rem actions are against the thing itself and they are binding upon the whole world,[22] unlike in personam actions, which are against a person on the basis of his personal liability.[23] "Against the thing" means that the resolution of the case affects the direct or indirect interests of others and assumes that those interests attach to the thing which is the subject matter of the litigation.[24]

The Court has consistently held that in actions in personam, jurisdiction over the parties is required since they seek to impose personal liability. On the other hand, courts need not acquire jurisdiction over the person of the defendant in actions in rem because they are not directed against a specific person. The court need only acquire jurisdiction over the res.[25] Nonetheless, some form of notice to all affected parties is required to satisfy the requirements of due process. Under both the Rehabilitation Rules and the Interim Rules, publication of the notice of the commencement of rehabilitation proceedings is the operative act which vests the court with jurisdiction over all affected parties. As discussed earlier, once jurisdiction is acquired, the court can subject all those affected to orders consistent with the rehabilitation of the insolvent debtor, including the reversal of any transfer, payment, or sale made after the filing of the petition.

It is not disputed that the 12 September 2006 Order of the rehabilitation court was duly published on 16 September 2006; that said order contained a directive for all creditors to file their verified comment on the petition within a stated period; and that ABC filed its verified comment on 17 October 2006.

It is therefore evident that petitioner was notified of the rehabilitation proceedings and given an opportunity to be heard, as in fact it filed a comment thereon, thereby satisfying due process requirements. Moreover, as previously discussed, there was no undue deprivation of property because SCP's obligation to ABC remains.

WHEREFORE, the petition is DENIED. The 22 July 2008 Decision and 12 April 2010 Resolution of the Court of Appeals in CA-G.R. SP No. 97206 are AFFIRMED.

SO ORDERED.

Velasco, Jr., (Chairperson), Bersamin, Leonen, and Gesmundo, JJ., concur.

April 13, 2018

NOTICE OF JUDGMENT

Sirs/Mesdames:

Please take notice that on March 14, 2018 a Decision, copy attached hereto, was rendered by the Supreme Court in the above-entitled case, the original of which was received by this Office on April 13, 2018 at 2:34 p.m.

Very truly yours,

WILFREDO V. LAPITAN
Division Clerk of Court

By:

(SGD.) MISAEL DOMINGO C. BATTUNG III
Deputy Division Clerk of Court

[1] The Petition for Review was originally filed with the title ''In the Matter of the Petition to Have Steel Corporation of the Philippines Placed under Corporate Rehabilitation with Prayer for the Approval of the Proposed Rehabilitation Plan," reflecting Equitable PCI Bank, Inc. as petitioner-appellee and Allied Banking Corporation as appellant. For clarity, the present title reflects ABC as petitioner and EPCIB as respondent.

[2] Rollo, pp. 11-29; penned by Associate Justice Jose Catral Mendoza, with Associate Justices Andres B. Reyes, Jr., and Sesinando E. Villon, concurring.

[3] Id. at 32-34.

[4] Id. at 260-324.

[5] Id. at 109-110.

[6] Id. at 434-438.

[7] Section 1. Nature of Proceedings. - Any proceeding initiated under these Rules shall be considered in rem. Jurisdiction over all those affected by the proceedings shall be considered as acquired upon publication of the notice of the commencement of the proceedings in any newspaper of general circulation in the Philippines in the manner prescribed by these Rules.

[8] The Resolution of the Court under A.M. No. 12-12-11-SC states:

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Whereas, the Supreme Court, through Memorandum "No. 46-2010 dated September 30, 2010 (as amended by Memorandum Order No. 17-2013 dated May 9, 2013), tasked the Sub-Committee on Commercial Courts to revise and/or amend A.M. No. 00-8-10-SC or the Rules of Procedure on Corporate Rehabilitation (2008) to incorporate the significant changes brought about by the enactment of R.A. No. 10142, particularly on rehabilitation proceedings;

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[9] Section 6, Rule 2, the Rehabilitation Rules.

[10] Section 8, Rule 2, the Rehabilitation Rules.

[11] Id.

[12] 745 Phil. 651 (2014).

[13] BIR v. Lepanto Ceramics, Inc., G.R. No. 224764, 24 April 2017.

[14] Id.

[15] Section 2, Rule 2, the Interim Rules; Section 3, Rule 1, the Rehabilitation Rules.

[16] Heirs of Severina San Miguel v. CA, 416 Phil. 943, 954 (2001); Sulo Sa Nayon, Inc. v. Nayong Filipino Foundation, 596 Phil. 715, 723 (2009).

[17] Section 5 (d), Presidential Decree 902-A, as amended by Presidential Decree 1758.

[18] Supra note 12, at 660-661.

[19] 706 Phil. 427 (2013).

[20] Aberca, et al. v. Ver, et al., 684 Phil. 207, 221-222 (2012).

[21] Supra note 7.

[22] De Pedro v. Romasan Development Corporation, 748 Phil. 706, 725 (2014).

[23] Biaco v. Philippine Countryside Rural Bank, 544 Phil. 45, 55 (2007).

[24] Supra note 22, at 725-726.

[25] Id.