J.A.B. Bulao & Associates

CASE 2011-0067: METROPOLITAN MANILA DEVELOPMENT AUTHORITY, DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES, DEPARTMENT OF EDUCATION, CULTURE AND SPORTS,^[1] DEPARTMENT OF HEALTH, DEPARTMENT OF AGRICULTURE, DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS, DEPARTMENT OF BUDGET AND MANAGEMENT, PHILIPPINE COAST GUARD, PHILIPPINE NATIONAL POLICE MARITIME GROUP, AND DEPARTMENT OF THE INTERIOR AND LOCALGOVERNMENT VS. CONCERNED RESIDENTS OFMANILA BAY, REPRESENTED ANDJOINED BY DIVINA V. ILAS, SABINIANO ALBARRACIN, MANUEL SANTOS, JR., DINAH DELA PEÑA, PAUL DENNIS QUINTERO, MA. VICTORIA LLENOS, DONNA CALOZA, FATIMA QUITAIN, VENICE SEGARRA, FRITZIE TANGKIA, SARAH JOELLE LINTAG, HANNIBAL AUGUSTUS BOBIS, FELIMON SANTIAGUEL, AND JAIME AGUSTIN R. OPOSA (G.R. NOS. 171947-48, 15 FEBRUARY 2011, VELASCO, JR., J.)

Republic of the Philippines

SUPREME COURT

Manila

EN BANC

x————————————————————————————–x

R E S O L U T I O N

VELASCO, JR., J.:

          On December 18, 2008, this Court rendered a Decision in G.R. Nos. 171947-48 ordering petitioners to clean up, rehabilitate and preserve Manila Bay in their different capacities. The fallo reads:

            WHEREFORE, the petition is DENIED. The September 28, 2005 Decision of the CA in CA-G.R. CV No. 76528 and SP No. 74944 and the September 13, 2002 Decision of the RTC in Civil Case No. 1851-99 are AFFIRMED but with MODIFICATIONS in view of subsequent developments or supervening events in the case. The fallo of the RTC Decision shall now read:

WHEREFORE, judgment is hereby rendered ordering the abovenamed defendant-government agencies to clean up, rehabilitate, and preserve Manila Bay, and restore and maintain its waters to SB level (Class B sea waters per Water Classification Tables under DENR Administrative Order No. 34 [1990]) to make them fit for swimming, skin-diving, and other forms of contact recreation.

In particular:

(1) Pursuant to Sec. 4 of EO 192, assigning the DENR as the primary agency responsible for the conservation, management, development, and proper use of the country’s environment and natural resources, and Sec. 19 of RA 9275, designating the DENR as the primary government agency responsible for its enforcement and implementation, the DENR is directed to fully implement its Operational Plan for the Manila Bay Coastal Strategy for the rehabilitation, restoration, and conservation of the Manila Bay at the earliest possible time.  It is ordered to call regular coordination meetings with concerned government departments and agencies to ensure the successful implementation of the aforesaid plan of action in accordance with its indicated completion schedules.

(2) Pursuant to Title XII (Local Government) of the Administrative Code of 1987 and Sec. 25 of the Local Government Code of 1991, the DILG, in exercising the President’s power of general supervision and its duty to promulgate guidelines in establishing waste management programs under Sec. 43 of the Philippine Environment Code (PD 1152), shall direct all LGUs in Metro Manila, Rizal, Laguna, Cavite, Bulacan, Pampanga, and Bataan to inspect all factories, commercial establishments, and private homes along the banks of the major river systems in their respective areas of jurisdiction, such as but not limited to the Pasig-Marikina-San Juan Rivers, the NCR (Parañaque-Zapote, Las Piñas) Rivers, the Navotas-Malabon-Tullahan-Tenejeros Rivers, the Meycauayan-Marilao-Obando (Bulacan) Rivers, the Talisay (Bataan) River, the Imus (Cavite) River, the Laguna De Bay, and other minor rivers and waterways that eventually discharge water into the Manila Bay; and the lands abutting the bay, to determine whether they have wastewater treatment facilities or hygienic septic tanks as prescribed by existing laws, ordinances, and rules and regulations. If none be found, these LGUs shall be ordered to require non-complying establishments and homes to set up said facilities or septic tanks within a reasonable time to prevent industrial wastes, sewage water, and human wastes from flowing into these rivers, waterways, esteros, and the Manila Bay, under pain of closure or imposition of fines and other sanctions.

(3) As mandated by Sec. 8 of RA 9275, the MWSS is directed to provide, install, operate, and maintain the necessary adequate waste water treatment facilities in Metro Manila, Rizal, and Cavite where needed at the earliest possible time.

(4) Pursuant to RA 9275, the LWUA, through the local water districts and in coordination with the DENR, is ordered to provide, install, operate, and maintain sewerage and sanitation facilities and the efficient and safe collection, treatment, and disposal of sewage in the provinces of Laguna, Cavite, Bulacan, Pampanga, and Bataan where needed at the earliest possible time.

(5) Pursuant to Sec. 65 of RA 8550, the DA, through the BFAR, is ordered to improve and restore the marine life of the Manila Bay.  It is also directed to assist the LGUs in Metro Manila, Rizal, Cavite, Laguna, Bulacan, Pampanga, and Bataan in developing, using recognized methods, the fisheries and aquatic resources in the Manila Bay.

(6) The PCG, pursuant to Secs. 4 and 6 of PD 979, and the PNP Maritime Group, in accordance with Sec. 124 of RA 8550, in coordination with each other, shall apprehend violators of PD 979, RA 8550, and other existing laws and regulations designed to prevent marine pollution in the Manila Bay.

(7) Pursuant to Secs. 2 and 6-c of EO 513 and the International Convention for the Prevention of Pollution from Ships, the PPA is ordered to immediately adopt such measures to prevent the discharge and dumping of solid and liquid wastes and other ship-generated wastes into theManila Bay waters from vessels docked at ports and apprehend the violators.

(8) The MMDA, as the lead agency and implementor of programs and projects for flood control projects and drainage services in Metro Manila, in coordination with the DPWH, DILG, affected LGUs, PNP Maritime Group, Housing and Urban Development Coordinating Council (HUDCC), and other agencies, shall dismantle and remove all structures, constructions, and other encroachments established or built in violation of RA 7279, and other applicable laws along the Pasig-Marikina-San Juan Rivers, the NCR (Parañaque-Zapote, Las Piñas) Rivers, the Navotas-Malabon-Tullahan-Tenejeros Rivers, and connecting waterways and esteros in Metro Manila.  The DPWH, as the principal implementor of programs and projects for flood control services in the rest of the country more particularly in Bulacan, Bataan, Pampanga, Cavite, and Laguna, in coordination with the DILG, affected LGUs, PNP Maritime Group, HUDCC, and other concerned government agencies, shall remove and demolish all structures, constructions, and other encroachments built in breach of RA 7279 and other applicable laws along the Meycauayan-Marilao-Obando (Bulacan) Rivers, the Talisay (Bataan) River, the Imus (Cavite) River, the Laguna De Bay, and other rivers, connecting waterways, and esteros that discharge wastewater into the Manila Bay.

In addition, the MMDA is ordered to establish, operate, and maintain a sanitary landfill, as prescribed by RA 9003, within a period of one (1) year from finality of this Decision.  On matters within its territorial jurisdiction and in connection with the discharge of its duties on the maintenance of sanitary landfills and like undertakings, it is also ordered to cause the apprehension and filing of the appropriate criminal cases against violators of the respective penal provisions of RA 9003, Sec. 27 of RA 9275 (the Clean Water Act), and other existing laws on pollution.

(9) The DOH shall, as directed by Art. 76 of PD 1067 and Sec. 8 of RA 9275, within one (1) year from finality of this Decision, determine if all licensed septic and sludge companies have the proper facilities for the treatment and disposal of fecal sludge and sewage coming from septic tanks. The DOH shall give the companies, if found to be non-complying, a reasonable time within which to set up the necessary facilities under pain of cancellation of its environmental sanitation clearance.

(10) Pursuant to Sec. 53 of PD 1152, Sec. 118 of RA 8550, and Sec. 56 of RA 9003, the DepEd shall integrate lessons on pollution prevention, waste management, environmental protection, and like subjects in the school curricula of all levels to inculcate in the minds and hearts of students and, through them, their parents and friends, the importance of their duty toward achieving and maintaining a balanced and healthful ecosystem in the Manila Bay and the entire Philippine archipelago.

(11) The DBM shall consider incorporating an adequate budget in the General Appropriations Act of 2010 and succeeding years to cover the expenses relating to the cleanup, restoration, and preservation of the water quality of the Manila Bay, in line with the country’s development objective to attain economic growth in a manner consistent with the protection, preservation, and revival of our marine waters.

(12) The heads of petitioners-agencies MMDA, DENR, DepEd, DOH, DA, DPWH, DBM, PCG, PNP Maritime Group, DILG, and also of MWSS, LWUA, and PPA, in line with the principle of “continuing mandamus,” shall, from finality of this Decision, each submit to the Court a quarterly progressive report of the activities undertaken in accordance with this Decision.

                        SO ORDERED.

The government agencies did not file any motion for reconsideration and the Decision became final in January 2009.

The case is now in the execution phase of the final and executory December 18, 2008 Decision.  The Manila Bay Advisory Committee was created to receive and evaluate the quarterly progressive reports on the activities undertaken by the agencies in accordance with said decision and to monitor the execution phase.

In the absence of specific completion periods, the Committee recommended that time frames be set for the agencies to perform their assigned tasks.  This may be viewed as an encroachment over the powers and functions of the Executive Branch headed by the President of the Philippines.

This view is misplaced.

The issuance of subsequent resolutions by the Court is simply an exercise of judicial power under Art. VIII of the Constitution, because the execution of the Decision is but an integral part of the adjudicative function of the Court.  None of the agencies ever questioned the power of the Court to implement the December 18, 2008 Decision nor has any of them raised the alleged encroachment by the Court over executive functions.

While additional activities are required of the agencies like submission of plans of action, data or status reports, these directives are but part and parcel of the execution stage of a final decision under Rule 39 of the Rules of Court.  Section 47 of Rule 39 reads:

Section 47.  Effect of judgments or final orders.––The effect of a judgment or final order rendered by a court of the Philippines, having jurisdiction to pronounce the judgment or final order, may be as follows:

            x x x x

(c)        In any other litigation between the same parties of their successors in interest, that only is deemed to have been adjudged in a former judgment or final order which appears upon its face to have been so adjudged, or which was actually and necessarily included therein or necessary thereto. (Emphasis supplied.)

          It is clear that the final judgment includes not only what appears upon its face to have been so adjudged but also those matters “actually and necessarily included therein or necessary thereto.”  Certainly, any activity that is needed to fully implement a final judgment is necessarily encompassed by said judgment.

Moreover, the submission of periodic reports is sanctioned by Secs. 7 and 8, Rule 8 of the Rules of Procedure for Environmental cases:

Sec. 7.  Judgment.––If warranted, the court shall grant the privilege of the writ of continuing mandamus requiring respondent to perform an act or series of acts until the judgment is fully satisfied and to grant such other reliefs as may be warranted resulting from the wrongful or illegal acts of the respondent. The court shall require the respondent to submit periodic reports detailing the progress and execution of the judgment, and the court may, by itself or through a commissioner or the appropriate government agency, evaluate and monitor compliance.  The petitioner may submit its comments or observations on the execution of the judgment.

            Sec. 8.  Return of the writ.––The periodic reports submitted by the respondent detailing compliance with the judgment shall be contained in partial returns of the writ.  Upon full satisfaction of the judgment, a final return of the writ shall be made to the court by the respondent.  If the court finds that the judgment has been fully implemented, the satisfaction of judgment shall be entered in the court docket. (Emphasis supplied.)

          With the final and executory judgment in MMDA, the writ of continuing mandamus issued in MMDA means that until petitioner-agencies have shown full compliance with the Court’s orders, the Court exercises continuing jurisdiction over them until full execution of the judgment.

          There being no encroachment over executive functions to speak of, We shall now proceed to the recommendation of the Manila Bay Advisory Committee.

          Several problems were encountered by the Manila Bay Advisory Committee.^[2] An evaluation of the quarterly progressive reports has shown that (1) there are voluminous quarterly progressive reports that are being submitted; (2) petitioner-agencies do not have a uniform manner of reporting their cleanup, rehabilitation and preservation activities; (3) as yet no definite deadlines have been set by petitioner DENR as to petitioner-agencies’ timeframe for their respective duties; (4) as of June 2010 there has been a change in leadership in both the national and local levels; and (5) some agencies have encountered difficulties in complying with the Court’s directives.

          In order to implement the afore-quoted Decision, certain directives have to be issued by the Court to address the said concerns. 

Acting on the recommendation of the Manila Bay Advisory Committee, the Court hereby resolves to ORDER the following:

(1)     The Department of Environment and Natural Resources (DENR), as lead agency in the Philippine Clean Water Act of 2004, shall submit to the Court on or before June 30, 2011 the updated Operational Plan for the Manila Bay Coastal Strategy.

The DENR is ordered to submit summarized data on the overall quality of Manila Bay waters for all four quarters of 2010 on or before June 30, 2011.

The DENR is further ordered to submit the names and addresses of persons and companies in Metro Manila, Rizal, Laguna,Cavite, Bulacan, Pampanga and Bataan that generate toxic and hazardous waste on or before September 30, 2011.

(2)     On or before June 30, 2011, the Department of the Interior and Local Government (DILG) shall order the Mayors of all cities in Metro Manila; the Governors of Rizal, Laguna, Cavite, Bulacan, Pampanga and Bataan; and the Mayors of all the cities and towns in said provinces to inspect all factories, commercial establishments and private homes along the banks of the major river systems––such as but not limited to the Pasig-Marikina-San Juan Rivers, the National Capital Region (Paranaque-Zapote, Las Pinas) Rivers, the Navotas-Malabon-Tullahan-Tenejeros Rivers, the Meycauayan-Marilao-Obando (Bulacan) Rivers, the Talisay (Bataan) River, the Imus (Cavite) River, and the Laguna De Bay––and other minor rivers and waterways within their jurisdiction that eventually discharge water into the Manila Bay and the lands abutting it, to determine if they have wastewater treatment facilities and/or hygienic septic tanks, as prescribed by existing laws, ordinances, rules and regulations.  Said local government unit (LGU) officials are given up to September 30, 2011 to finish the inspection of said establishments and houses.

In case of non-compliance, the LGU officials shall take appropriate action to ensure compliance by non-complying factories, commercial establishments and private homes with said law, rules and regulations requiring the construction or installment of wastewater treatment facilities or hygienic septic tanks.

The aforementioned governors and mayors shall submit to the DILG on or before December 31, 2011 their respective compliance reports which will contain the names and addresses or offices of the owners of all the non-complying factories, commercial establishments and private homes, copy furnished the concerned environmental agency, be it the local DENR office or the Laguna Lake Development Authority.

The DILG is required to submit a five-year plan of action that will contain measures intended to ensure compliance of all non-complying factories, commercial establishments, and private homes.

On or before June 30, 2011, the DILG and the mayors of all cities in Metro Manila shall consider providing land for the wastewater facilities of the Metropolitan Waterworks and Sewerage System (MWSS) or its concessionaires (Maynilad and Manila Water, Inc.) within their respective jurisdictions.

(3)     The MWSS shall submit to the Court on or before June 30, 2011 the list of areas in Metro Manila, Rizal and Cavite that do not have the necessary wastewater treatment facilities. Within the same period, the concessionaires of the MWSS shall submit their plans and projects for the construction of wastewater treatment facilities in all the aforesaid areas and the completion period for said facilities, which shall not go beyond 2037.

On or before June 30, 2011, the MWSS is further required to have its two concessionaires submit a report on the amount collected as sewerage fees in their respective areas of operation as of December 31, 2010.

(4)     The Local Water Utilities Administration is ordered to submit on or before September 30, 2011 its plan to provide, install, operate and maintain sewerage and sanitation facilities in said cities and towns and the completion period for said works, which shall be fully implemented by December 31, 2020.

(5)     The Department of Agriculture (DA), through the Bureau of Fisheries and Aquatic Resources, shall submit to the Court on or before June 30, 2011 a report on areas in Manila Bay where marine life has to be restored or improved and the assistance it has extended to the LGUs in Metro Manila, Rizal, Cavite, Laguna, Bulacan, Pampanga and Bataan in developing the fisheries and aquatic resources in Manila Bay.  The report shall contain monitoring data on the marine life in said areas. Within the same period, it shall submit its five-year plan to restore and improve the marine life in Manila Bay, its future activities to assist the aforementioned LGUs for that purpose, and the completion period for said undertakings.

The DA shall submit to the Court on or before September 30, 2011 the baseline data as of September 30, 2010 on the pollution loading into the Manila Bay system from agricultural and livestock sources.

(6)     The Philippine Ports Authority (PPA) shall incorporate in its quarterly reports the list of violators it has apprehended and the status of their cases. The PPA is further ordered to include in its report the names, make and capacity of the ships that dock in PPA ports.  The PPA shall submit to the Court on or before June 30, 2011 the measures it intends to undertake to implement its compliance with paragraph 7 of the dispositive portion of the MMDA Decision and the completion dates of such measures.

The PPA should include in its report the activities of its concessionaire that collects and disposes of the solid and liquid wastes and other ship-generated wastes, which shall state the names, make and capacity of the ships serviced by it since August 2003 up to the present date, the dates the ships docked at PPA ports, the number of days the ship was at sea with the corresponding number of passengers and crew per trip, the volume of solid, liquid and other wastes collected from said ships, the treatment undertaken and the disposal site for said wastes.

(7)     The Philippine National Police (PNP) Maritime Group shall submit on or before June 30, 2011 its five-year plan of action on the measures and activities it intends to undertake to apprehend the violators of Republic Act No. (RA) 8550 or thePhilippine Fisheries Code of 1998 and other pertinent laws, ordinances and regulations to prevent marine pollution in Manila Bayand to ensure the successful prosecution of violators.

The Philippine Coast Guard shall likewise submit on or before June 30, 2011 its five-year plan of action on the measures and activities they intend to undertake to apprehend the violators of Presidential Decree No. 979 or the Marine Pollution Decree of 1976 and RA 9993 or the Philippine Coast Guard Law of 2009 and other pertinent laws and regulations to prevent marine pollution in Manila Bay and to ensure the successful prosecution of violators.

(8)     The Metropolitan Manila Development Authority (MMDA) shall submit to the Court on or before June 30, 2011 the names and addresses of the informal settlers in Metro Manila who, as of December 31, 2010, own and occupy houses, structures, constructions and other encroachments established or built along the Pasig-Marikina-San Juan Rivers, the NCR (Parañaque-Zapote, Las Piñas) Rivers, the Navotas-Malabon-Tullahan-Tenejeros Rivers, and connecting waterways and esteros, in violation of RA 7279 and other applicable laws.  On or before June 30, 2011, the MMDA shall submit its plan for the removal of said informal settlers and the demolition of the aforesaid houses, structures, constructions and encroachments, as well as the completion dates for said activities, which shall be fully implemented not later than December 31, 2015.

The MMDA is ordered to submit a status report, within thirty (30) days from receipt of this Resolution, on the establishment of a sanitary landfill facility for Metro Manila in compliance with the standards under RA 9003 or the Ecological Solid Waste Management Act.

On or before June 30, 2011, the MMDA shall submit a report of the location of open and controlled dumps in Metro Manila whose operations are illegal after February 21, 2006,^[3] pursuant to Secs. 36 and 37 of RA 9003, and its plan for the closure of these open and controlled dumps to be accomplished not later than December 31, 2012.  Also, on or before June 30, 2011, the DENR Secretary, as Chairperson of the National Solid Waste Management Commission (NSWMC), shall submit a report on the location of all open and controlled dumps in Rizal, Cavite, Laguna, Bulacan, Pampanga and Bataan.

On or before June 30, 2011, the DENR Secretary, in his capacity as NSWMC Chairperson, shall submit a report on whether or not the following landfills strictly comply with Secs. 41 and 42 of RA 9003 on the establishment and operation of sanitary landfills, to wit:

National Capital Region

1.     Navotas SLF (PhilEco), Brgy. Tanza (New Site), Navotas City

2.     Payatas Controlled Dumpsite, Barangay Payatas, Quezon City

Region III

3.     Sitio Coral, Brgy. Matictic, Norzagaray, Bulacan

4.     Sitio Tiakad, Brgy. San Mateo, Norzagaray, Bulacan

5.     Brgy. Minuyan, San Jose del Monte City, Bulacan

6.     Brgy. Mapalad, Santa Rosa, Nueva Ecija

7.     Sub-zone Kalangitan, Clark Capas, Tarlac Special

Economic Zone

Region IV-A

8.     Kalayaan (Longos), Laguna

9.     Brgy. Sto. Nino, San Pablo City, Laguna

10.            Brgy. San Antonio (Pilotage SLF), San Pedro, Laguna

11.            Morong, Rizal

12.            Sitio Lukutan, Brgy. San Isidro, Rodriguez (Montalban), Rizal (ISWIMS)

13.            Brgy. Pintong Bukawe, San Mateo, Rizal (SMSLFDC)

On or before June 30, 2011, the MMDA and the seventeen (17) LGUs in Metro Manila are ordered to jointly submit a report on the average amount of garbage collected monthly per district in all the cities in Metro Manila from January 2009 up to December 31, 2010 vis-à-vis the average amount of garbage disposed monthly in landfills and dumpsites.  In its quarterly report for the last quarter of 2010 and thereafter, MMDA shall report on the apprehensions for violations of the penal provisions of RA 9003, RA 9275 and other laws on pollution for the said period.

On or before June 30, 2011, the DPWH and the LGUs in Rizal, Laguna, Cavite, Bulacan, Pampanga, and Bataan shall submit the names and addresses of the informal settlers in their respective areas who, as of September 30, 2010, own or occupy houses, structures, constructions, and other encroachments built along the Meycauayan-Marilao-Obando (Bulacan) Rivers, the Talisay (Bataan) River, the Imus (Cavite) River, the Laguna de Bay, and other rivers, connecting waterways and esteros that discharge wastewater into the Manila Bay, in breach of RA 7279 and other applicable laws.  On or before June 30, 2011, the DPWH and the aforesaid LGUs shall jointly submit their plan for the removal of said informal settlers and the demolition of the aforesaid structures, constructions and encroachments, as well as the completion dates for such activities which shall be implemented not later than December 31, 2012.

(9)     The Department of Health (DOH) shall submit to the Court on or before June 30, 2011 the names and addresses of the owners of septic and sludge companies including those that do not have the proper facilities for the treatment and disposal of fecal sludge and sewage coming from septic tanks.

The DOH shall implement rules and regulations on Environmental Sanitation Clearances and shall require companies to procure a license to operate from the DOH.

The DOH and DENR-Environmental Management Bureau shall develop a toxic and hazardous waste management system by June 30, 2011 which will implement segregation of hospital/toxic/hazardous wastes and prevent mixing with municipal solid waste.

On or before June 30, 2011, the DOH shall submit a plan of action to ensure that the said companies have proper disposal facilities and the completion dates of compliance.

(10)   The Department of Education (DepEd) shall submit to the Court on or before May 31, 2011 a report on the specific subjects on pollution prevention, waste management, environmental protection, environmental laws and the like that it has integrated into the school curricula in all levels for the school year 2011-2012.

On or before June 30, 2011, the DepEd shall also submit its plan of action to ensure compliance of all the schools under its supervision with respect to the integration of the aforementioned subjects in the school curricula which shall be fully implemented by June 30, 2012.

(11)   All the agencies are required to submit their quarterly reports electronically using the forms below. The agencies may add other key performance indicators that they have identified.

SO ORDERED.

   PRESBITERO J. VELASCO, JR.                                Associate Justice

WE CONCUR:

RENATO C. CORONA

Chief Justice

              ANTONIO T. CARPIO            CONCHITA CARPIO MORALES                       

                           Associate Justice                                  Associate Justice

  ANTONIO EDUARDO B. NACHURA       TERESITA J. LEONARDO-DE CASTRO   

                        Associate Justice                                                 Associate Justice

     ARTURO D. BRION                              DIOSDADO M. PERALTA

          Associate Justice                                           Associate Justice

   LUCAS P. BERSAMIN                      MARIANO C. DEL CASTILLO

          Associate Justice                                            Associate Justice

               ROBERTO A. ABAD                           MARTIN S. VILLARAMA, JR.

                   Associate Justice                                             Associate Justice

JOSE PORTUGAL PEREZ                  JOSE CATRAL MENDOZA 

Associate Justice                                   Associate Justice

MARIA LOURDES P. A. SERENO

Associate Justice

C E R T I F I C A T I O N

                Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the above Resolution had been reached in consultation before the case was assigned to the writer of the opinion of the Court.

                                                                   RENATO C. CORONA

Chief Justice

                ^[1] Now the Department of Education (DepEd).

^[2]  On February 10, 2009, the Court En Banc approved a resolution creating an Advisory Committee “that will verify the reports of the government agencies tasked to clean up the Manila Bay.” It is composed of two members of the Court and three technical experts:

Hon. Presbitero J. Velasco, Jr.

Chairperson and ponente of MMDA vs. Concerned Residents of Manila

Hon. Jose Midas P. Marquez

Court Administrator

Vice-Chairperson

Members/Technical Experts:

Dr. Gil S. Jacinto

Former Director, UP Marine Science Institute

Dr. Elisea G. Gozun

Chair of Earth Day Network and Former DENR Secretary

Dr. Antonio G.M. La Viña

Former DENR Undersecretary

Dean of the Ateneo School of Government

^[3] Our Decision in Metropolitan Manila Development Authority v. Concerned Residents of Manila Bay, G.R. Nos. 171947-48, December 18, 2008, 574 SCRA 661, 690, states: “RA 9003 took effect on February 15, 2001 and the adverted grace period of five (5) years [in Sec. 37 of RA 9003] which ended on February 21, 2006 has come and gone, but no single sanitary landfill which strictly complies with the prescribed standards under RA 9003 has yet been set up.” (Emphasis supplied.)

CASE 2011-0066: INSURANCE OF THE PHILIPPINE ISLANDS CORPORATION VS. SPOUSES VIDAL S. GREGORIO AND JULITA GREGORIO (G.R. NO. 174104, 14 FEBRUARY 2011, PERALTA, J.) SUBJECTS: LACHES; PRESCRIPTION; ACTION FOR DAMAGES ON GROUND OF FRAUD. (BRIEF TITLE: IPIC VS. SPOUSES GREGORIO)

Republic of the Philippines

Supreme Court

Manila

SECOND DIVISION

x – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – x

DECISION

PERALTA, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking the reversal and nullification of the Decision¹ of the Court of Appeals (CA), dated June 14, 2006 and its Resolution² dated August 10, 2006 in CA-G.R. CV No. 82303. The assailed CA Decision reversed the Decision³ of the Regional Trial Court (RTC) of Morong, Rizal, Branch 79, in Civil Case No. 748-M in favor of herein petitioner, while the questioned CA Resolution denied petitioner’s motion for reconsideration.

The pertinent antecedent facts of the case, as summarized by the CA, are as follows:

On January 10, 1968, the spouses Vidal Gregorio and Julita Gregorio [herein respondents] obtained a loan from the Insurance of the Philippine Islands Corporation [herein petitioner] (formerly known as Pyramid Insurance Co., Inc.) in the sum of P2,200.00, payable on or before January 10, 1969, with interest thereon at the rate of 12% per annum. By way of security for the said loan, [respondents] executed a Real Estate Mortgage in favor of [petitioner] over a parcel of land known as Lot 6186 of the Morong Cadastre, then covered by Tax Declaration No. 7899 issued by the Municipal Assessor’s Office of Morong, Rizal.

On February 14, 1968, [respondents] again obtained another loan from [petitioner] in the sum of P2,000.00, payable on or before February 14, 1969, with 12% interest per annum. Another Real Estate Mortgage, covering a parcel of land known as Lot No. 6190 of the Morong Cadastre under Tax Declaration No. 10518, was executed by [respondents] in favor of [petitioner].

On April 10, 1968, [respondents] obtained, for the third time, another loan from [petitioner] in the amount of P4,500.00 payable on or before April 10, 1969 with 12% interest per annum. As a security for the loan, [respondents] again executed a Real Estate Mortgage, this time covering two parcels of land: Lot 3499 under Tax Declaration No. 10631-Rizal and a lot situated in Brgy. Kay Kuliat under Tax Declaration No. 3918.

[Respondents] failed to pay their loans, as a result of which the [mortgaged] properties were extrajudicially foreclosed. The extrajudicial foreclosure sale was conducted on December 11, 1969 where [petitioner] was the highest bidder. Since [respondents] failed to redeem the property, [petitioner] consolidated its ownership over the properties. The corresponding Tax Declarations were thereafter issued in the name of [petitioner].⁴

On February 20, 1996, petitioner filed a Complaint⁵ for damages against respondents alleging that in 1995, when it was in the process of gathering documents for the purpose of filing an application for the registration and confirmation of its title over the foreclosed properties, it discovered that the said lots were already registered in the names of third persons and transfer certificates of title (TCT) were issued to them.

Claiming that respondents acted in a fraudulent and malevolent manner in enticing it to grant their loan applications by misrepresenting ownership of the subject properties, petitioner prayed for the grant of actual and exemplary damages as well as attorney’s fees and litigation expenses.

In their Amended Answer,⁶ respondents contended that their obligations in favor of petitioner were all settled by the foreclosure of the properties given as security therefor. In the alternative, respondents argue that petitioner’s cause of action and right of action are already barred by prescription and laches.

In its Decision dated February 23, 2004, the RTC of Morong, Rizal, ruled in favor of petitioner, the dispositive portion of which reads:

WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff and as against the defendants, directing the latter to pay the plaintiff, jointly and severally, as follows:

a. Actual damages in the amount of P1,000,000.00, representing the fair market value of the real properties subject matter of this suit;

b. For defendants’ deceit and bad faith, exemplary damage in the sum of P300,000.00;

c. Attorney’s fees and litigation expenses in the amount of P200,000.00; and

d. Costs of suit.

SO ORDERED.⁷

Aggrieved, respondents appealed the judgment of the trial court to the CA.

On June 14, 2006, the CA rendered a Decision reversing and setting aside the decision of the RTC and dismissing the complaint of petitioner. It ruled that petitioner’s action for damages is barred by prescription and laches.

Petitioner filed a Motion for Reconsideration but the CA denied it in its Resolution of August 10, 2006.

Hence, the instant petition.

Petitioner’s main contention is that the CA erred in ruling that petitioner’s right to any relief under the law has already prescribed or is barred by laches. Petitioner argues that the prescriptive period of its action for damages should be counted from 1995, which it alleges to be the time that it discovered the fraud committed by respondents against it.

On the other hand, the CA ruled that petitioner’s right of action prescribed four years after the subject properties were registered with the Register of Deeds of Morong, Rizal and TCTs were subsequently issued in the names of third persons in the years 1970, 1973 and 1989.

The Court finds the petition meritorious.

Petitioner filed an action for damages on the ground of fraud committed against it by respondents. Under the provisions of Article 1146 of the Civil Code, actions upon an injury to the rights of the plaintiff or upon a quasi-delict must be instituted within four years from the time the cause of action accrued.⁸

The Court finds no error in the ruling of the CA that petitioner’s cause of action accrued at the time it discovered the alleged fraud committed by respondents. It is at this point that the four-year prescriptive period should be counted. However, the Court does not agree with the CA in its ruling that the discovery of the fraud should be reckoned from the time of registration of the titles covering the subject properties.

The Court notes that what has been given by respondents to petitioner as evidence of their ownership of the subject properties at the time that they mortgaged the same are not certificates of title but tax declarations, in the guise that the said properties are unregistered. On the basis of the tax declarations alone and by reason of respondent’s misrepresentations, petitioner could not have been reasonably expected to acquire knowledge of the fact that the said properties were already titled. As a consequence, petitioner may not be charged with any knowledge of any subsequent entry of an encumbrance which may have been annotated on the said titles, much less any change of ownership of the properties covered thereby. As such, the Court agrees with petitioner that the reckoning period for prescription of petitioner’s action should be from the time of actual discovery of the fraud in 1995. Hence, petitioner’s suit for damages, filed on February 20, 1996, is well within the four-year prescriptive period.

Neither may the principle of laches apply in the present case.

The essence of laches or “stale demands” is the failure or neglect for an unreasonable and unexplained length of time to do that which, by exercising due diligence, could or should have been done earlier, thus, giving rise to a presumption that the party entitled to assert it either has abandoned or declined to assert it.⁹ It is not concerned with mere lapse of time; the fact of delay, standing alone, being insufficient to constitute laches.¹⁰

In addition, it is a rule of equity and applied not to penalize neglect or sleeping on one’s rights, but rather to avoid recognizing a right when to do so would result in a clearly unfair situation.¹¹ There is no absolute rule as to what constitutes laches or staleness of demand; each case is to be determined according to its particular circumstances.¹² Ultimately, the question of laches is addressed to the sound discretion of the court and, being an equitable doctrine, its application is controlled by equitable considerations.¹³ It cannot be used to defeat justice or perpetrate fraud and injustice.¹⁴ It is the better rule that courts, under the principle of equity, will not be guided or bound strictly by the statute of limitations or the doctrine of laches when to be so, a manifest wrong or injustice would result.¹⁵

It is significant to point out at this juncture that the overriding consideration in the instant case is that petitioner was deprived of the subject properties which it should have rightly owned were it not for the fraud committed by respondents. Hence, it would be the height of injustice if respondents would be allowed to go scot-free simply because petitioner relied in good faith on the former’s false representations. Besides, as earlier discussed, even in the exercise of due diligence, petitioner could not have been expected to immediately discover respondents’ fraudulent scheme.

WHEREFORE, the instant petition is GRANTED. The Decision and Resolution, dated June 14, 2006 and August 10, 2006, respectively, of the Court of Appeals in CA-G.R. CV No. 82303, are REVERSED and SET ASIDE. The Decision of the Regional Trial Court of Morong, Rizal, Branch 79, dated February 23, 2004 in Civil Case No. 748-M, is REINSTATED.

SO ORDERED.

DIOSDADO M. PERALTA

Associate Justice

WE CONCUR:

ANTONIO T. CARPIO

Associate Justice

Chairperson

ANTONIO EDUARDO B. NACHURA ROBERTO A. ABAD

Associate Justice Associate Justice

JOSE CATRAL MENDOZA

Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

ANTONIO T. CARPIO

Associate Justice

Second Division, Chairperson

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson’s Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

RENATO C. CORONA

Chief Justice

1Penned by Associate Justice Renato C. Dacudao, with Associate Justices Hakim S. Abdulwahid and Monina Arevalo-Zenarosa, concurring; rollo, pp. 28-40.2Id. at 42.3Rollo, pp. 187-194.4Id. at 29-30.5Records, pp. 1-12.6Id. at 77-82.7Id. at 553-554.8Philippine Long Distance Telephone Company v. Dulay, 254 Phil. 30, 36 (1989).9Heirs of Emilio Santioque v. Heirs of Emilio Calma, G.R. No. 160832, October 27, 2006, 505 SCRA 665, 684-685.10GF Equity, Inc. v. Valenzona, G.R. No. 156841, June 30, 2005, 462 SCRA 466, 480.11Bicol Agro-Industrial Producers Cooperative, Inc. (BAPCI) v. Obias, G.R. No. 172077, October 9, 2009, 603 SCRA 173, 196; Bogo-Medellin Milling Co., Inc. v. Court of Appeals, 455 Phil. 285, 303 (2003).12Department of Education, Division of Albay v. Oñate, G.R. No. 161758, June 8, 2007, 524 SCRA 200, 216-217.13Placewell International Services Corporation v. Camote, G.R. No. 169973, June 26, 2006, 492 SCRA 761, 769.14LICOMCEN, Inc. v. Foundation Specialists, Inc., G.R. Nos. 167022 and 169678, August 31, 2007, 531 SCRA 705, 725; Amoroso v. Alegre, Jr., G.R. No. 142766, June 15, 2007, 524 SCRA 641, 656; Galicia v. Manliquez Vda. de Mindo, G.R. No. 155785, April 13, 2007, 521 SCRA 85, 96.15Benatiro v. Heirs of Evaristo Cuyos, G.R. No. 161220, July 30, 2008, 560 SCRA 478, 503.