J.A.B. Bulao & Associates

REPUBLIC OF THE PHILIPPINES VS. RESINS INC. (G.R. NO. 175891, 12 JANUARY 2010, CARPIO, J.) (SUBJECTS: SERVICE OF JUDGMENT; BURDEN OF PROVING SERVICE; CERTIFICATE OF MAILING NOT SUFFICIENT).

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

D E C I S I O N

CARPIO, J.:

The Case

G.R. No. 175891 is a petition for review¹ assailing the Decision² promulgated on 25 May 2006 by the Court of Appeals (CA) in CA-G.R. SP No. 78516. The appellate court denied the petition filed by the Republic of the Philippines (Republic) through the Office of the Solicitor General (OSG). The appellate court found no grave abuse of discretion on the part of the Regional Trial Court of Misamis Oriental, Branch 20, Cagayan de Oro City (RTC) in rendering its 17 March 1993³ Judgment and 17 January 1994⁴ Amended Judgment, as well as in issuing its 7 July 1999⁵ and 28 May 2003⁶ Orders in Land Registration Case No. N-91-012, LRA Record No. N-62407. The RTC allowed the Land Registration Authority (LRA) to issue a Decree of Registration in favor of Resins, Incorporated (Resins, Inc.) over eight lots in Jasaan, Misamis Oriental after the RTC’s Judgment⁷ dated 17 March 1993 became final and executory.

The Facts

The appellate court narrated the facts as follows:

On 17 October 1991, [Resins, Inc.] filed x x x Land Registration Case [No. N-91-012] before the [RTC] for judicial confirmation of title over eight (8) parcels of land situated in the Municipality of Jasaan, Misamis Oriental. The initial hearing for said case was originally set on 4 February 1992. Prior to said date of hearing, the [LRA] filed with the [RTC] a report recommending that an Order be issued to [Resins, Inc.] directing it to submit the names and complete postal addresses of the adjoining lot owners, and that after complying with the said Order, the initial hearing be reset “on a date consistent with LRC Circular No. 353.”

Pursuant to the LRA recommendation, the application for original registration of titles was amended. Thereupon, the [RTC] issued an Order dated 17 January 1992 setting the initial hearing on 30 April 1992.

On 10 February 1992, the OSG entered its appearance as counsel of the Republic x x x. In its notice of appearance, the [OSG] manifested thus:

The City Prosecutor of Cagayan de Oro City has been authorized to appear in this case and, therefore, should also be furnished notices of hearings, orders, resolutions, decisions, processes. However, as the Solicitor General retains supervision and control of the representation in this case and has to approve withdrawal of the case, non-appeal or other actions which appear to compromise the interests of the Government, only notices of orders, resolutions, and decisions served on him will bind the party represented.

On 27 February 1992, the OSG received the notice of initial hearing of the application. The notice of the initial hearing was also served on the Regional Executive Director of the Department of Environment and Natural Resources, the Secretary of the Department of Public Works and Highways, the Director of the Bureau of Mines, the Director of the Bureau of Fisheries and Aquatic Resources, the Secretary of the Department of Agrarian Reform, the Director of the Forest Management Bureau, the Provincial Governor, the Provincial Fiscal, the Provincial Treasurer, the Provincial Engineer, the Public Works and Highways District Engineer, the Community Environment and Natural Resources Officer, Land Management Sector, the Municipal Mayor, the Municipal Council of Jasaan, Misamis Oriental, the adjoining lot owners, and to all whom it may concern.

The notice of initial hearing was published in the 16 March 1992 issue of the Official Gazette and the 11 March 1992 issue of the Golden Chronicle pursuant to Section 23 of Presidential Decree No. 1529. On 19 March 1992, the City Sheriff posted the notice on the parcels of land sought to be registered, at the municipality building, and in conspicuous places in the Municipality of Jasaan, Misamis Oriental.

During the initial hearing on 30 April 1992, the [RTC] issued an Order of general default against the whole world except against [the Republic] who had filed its opposition to the application and one RENATO BAUTISTA who intimated to the [RTC] that he would file his opposition.

Subsequent hearings were conducted on the following dates: 16 July 1992, 23 July 1992, 15 September 1992, and 16 December 1992.

On 08 January 1993, [Resins, Inc.] filed Applicant’s Formal Offer of Documentary Evidence.

On 04 February 1993, the [RTC] issued an Order which states:

Considering the fact that all the exhibits of the applicant Resins, Incorporated were duly identified and attested to by the witnesses for the applicant and considering the fact that no opposition was filed by the government to the said exhibits, all the exhibits of the applicant from Exhibits “A” to “N,” inclusive, are hereby admitted as part of the testimonies of the witnesses for the applicant.

SO ORDERED.⁸

The Regional Trial Court’s Ruling

On 17 March 1993, the RTC rendered its Judgment⁹ in favor of Resins, Inc. The dispositive portion reads:

In [v]iew of the [f]oregoing, judgment is hereby rendered finding applicant Resins Incorporated, as owner in fee simple of all the lots sought to be registered – Lot 980, Cad-367, Lot 1371, Cad-367, Lot 1372, Cad-367, Lot 1373, Cad-367, Lot 1417, Cad-367, Lot 3462, Cad-267, Lot 3463, Cad-367, and Lot 3465, Cad-367, all of Jasaan Cadastre and having registerable [sic] titles thereto, hereby decreeing that Lot Nos. 980, 1371, 1372, 1373, 1417, 3462, 3463, and 3465 be registered in the name of Resins Incorporated, a corporation organized pursuant to the laws of the Philippines with its main office located at Jasaan, Misamis Oriental, in accordance with the technical descriptions correspondingly marked as Exhibits A-2, B-2, C-2, D-2, E-2, F-2, G-2, and H-2.

SO ORDERED.¹⁰

Despite the favorable judgment, Resins, Inc., was unable to have the lots registered in its name because of typographical errors in the RTC’s 17 March 1993 Judgment. On 6 January 1994, Resins, Inc. moved to correct the typographical errors and alleged:

1. That on March 17, 1993, the [RTC] rendered judgment approving the above-captioned application;

2. That up to the present no decree of registration has been issued and upon inquiry from the [LRA] [Resins, Inc.] learned that the reason is because [sic] there are two (2) typographical errors in the judgment, to wit:

a. Lot No. 3464 appearing on page 2, subpar[.] (g), line 1 should be Lot 3463 because par. 1 on the application shows that the 7^th lot applied for is Lot 3463;

b. That material omissions were made on page 4, line 31 as follow[s]:

ORIGINAL WORDINGS:

“poses per Tax Dec. Nos. 858391 and 09352 marked Cad-367, Jasaan”

which should read as follows after supplying the omissions:

“poses per Tax Dec. Nos. 858391 and 09352 marked Exhs. E-3 and E-6, that Lot 3463, Cad-367, Jasaan”¹¹

The RTC issued an Amended Judgment¹² on 17 January 1994. However, only the error on page 2 was corrected and the error on page 4 remained. Upon yet another motion of Resins, Inc., the RTC issued another Amended Judgment on 16 March 1994 which corrected both errors. The OSG received a copy of the Amended Judgment on 2 May 1994, and filed a notice of appeal on 12 May 1994. Resins, Inc. filed a second motion to order the LRA to issue a decree of registration in its favor.

On 7 July 1999, the RTC issued an Order¹³ granting Resins, Inc.’s motion. The Order reads, thus:

Submitted before this court is the “Second Motion to Order the LRA to Issue a Decree of Registration, etc.” dated May 10, 1999 and filed on June 14, 1999 praying that

“1. The appeal filed by the [OSG] on May 12, 1994 or more than one (1) year from receipt of the original judgment, be ordered dismissed;

“2. Another order be issued directing the LRA to issue a decree of registration for the eight (8) lots enumerated in par. 1 hereof, based on the Amended Judgment dated March 16, 1994 and for other reliefs due under the premises.”

Despite notice to the Solicitor General[,] he or his representative did not appear in the hearing of June 18, 1999, nor did he file an opposition to the motion.

The Court finds the motion meritorious. The motion is granted. Hence, the [OSG]’s appeal of May 12, 1999 is dismissed. The Land Registration Authority (LRA) is hereby directed to issue a decree of registration in favor of [Resins, Inc.] for Lots 986, 1371, 1372, 1373, 1417, 3462, 3463, and 3465, CAD-367 of the Jasaan Cadastre after the judgment dated March 17, 1993 became final and executory.

SO ORDERED.

The Republic filed a Motion for Reconsideration¹⁴ of the 7 July 1999 Order. The Republic alleged that the OSG was never furnished a copy of the alleged original decision. The Republic cited Resins, Inc.’s Motion to Dismiss Appeal,¹⁵ which stated “[t]hat the original judgment of this case was issued on March 19, 1993, copy of which was furnished to the Office of the Solicitor General c/o the City Prosecutor who was delegated to represent the former during the proceedings.” Therefore, the 17 March 1993 Judgment never acquired finality with respect to the Republic.

Resins, Inc. filed an Opposition to the Motion for Reconsideration¹⁶ on 19 August 1999. Resins, Inc. stated that the OSG was furnished a copy of the 17 March 1993 decision. The OSG received the decision on 6 April 1993, as certified by the RTC Clerk of Court,¹⁷ and as evidenced by post office return slips.¹⁸

On 28 May 2003, the RTC issued yet another Order.¹⁹ Said Order reads, thus:

For resolution is the motion for reconsideration filed by the oppositor Republic of the Philippines represented by the Office of the Solicitor General of the order dismissing the notice of appeal filed by the said oppositor alleging that the Republic was never furnished copy of the judgment dated March 17, 1993 and that an amended order of the decision is entirely new which supersedes the original decision.

The motion was vehemently opposed by the applicant alleging that the Cagayan de Oro City Prosecutor received copy of the said judgment on March 29, 1993 while the Office of the Solicitor General, the Land Registration Authority, and the Bureau of Lands received copy of the judgment on April 6, 1993.

The records of the case shows [sic] that indeed these offices received the copy of the judgment as mentioned in the opposition per return slips attached to the records. Since there is no appeal filed within 30 days from receipt of the judgment, the judgment of this Court therefore has already become final and executory.

Anent the issue that the amended judgment supersedes the original judgment and as correctly pointed out by the applicant, the amendment pertains to harmless clerical errors in pages 2 and 4 of the original judgment but the dispositive portion confirming applicant’s ownership over the lots was not changed.

The Republic then filed a Petition for Certiorari and Prohibition²⁰ with prayer for temporary restraining order and/or writ of preliminary injunction. The Republic sought to nullify, set aside, and prevent the implementation of the RTC’s Orders dated 7 July 1999 and 28 May 2003; as well as to nullify and set aside the Judgment dated 17 March 1993 and the Amended Judgment dated 17 January 1994. The Republic claimed that the entries in the logbook of the OSG’s Docket Division do not indicate that the 17 March 1993 Judgment was ever received by the OSG and actually transmitted to the lawyers assigned to represent the Republic in the present case.

The Ruling of the Court of Appeals

On 25 May 2006, the CA rendered its Decision²¹ and denied the Republic’s petition. The CA saw no grave abuse of discretion in the RTC’s dismissal of the Republic’s appeal, which appeal was based on the OSG’s alleged non-receipt of its copy of the original Judgment.

The CA found that the records of the case show that the OSG indeed received its copy of the original Judgment on 6 April 1993 as the return slip clearly indicated the date of service on the OSG. The OSG did not file an appeal within the reglementary period; hence, the RTC ruled that the Judgment is already final and executory. The CA also rejected the OSG’s desire for examination of entries in the OSG’s logbook as well as the affidavit of its bookbinder. The CA ruled that evaluation of evidentiary matters is beyond the province of a writ of certiorari. Moreover, even if the evidence were considered, the same should still be rejected because the OSG failed to show that the bookbinder had authority to record and keep legal custody of the logbook. Finally, the CA ruled that the only issue in a petition for certiorari is lack or excess or grave abuse of discretion. Thus, the OSG’s contention that the State cannot be put in estoppel by the mistakes of its agents is misplaced.

The Issues

The Republic enumerated the following grounds to support its Petition:

I. The Court of Appeals gravely erred in not holding that the RTC of Misamis Oriental, Branch 20 acted with grave abuse of discretion amounting to lack or excess of jurisdiction when it dismissed [the Republic’s] notice of appeal (in its Order dated July 7, 1999) and subsequently denied [the Republic’s] motion for reconsideration of such dismissal (in its Order dated May 28, 2003) because of the clear showing that the OSG, as [the Republic’s] statutory counsel, was not actually notified of and/or had not received a copy of the original Judgment dated March 17, 2003 in Land Registration Case No. N-91-912.

II. The Court of Appeals has gravely erred in not holding that the RTC of Misamis Oriental, Branch 20 acted with grave abuse of discretion amounting to lack or excess of jurisdiction in issuing the July 7, 1999 and May 28, 2003 Orders which unduly deprived petitioner of its opportunity to interpose an appeal from the original Judgment dated March 17, 1993 and/or Amended Judgment dated January 17, 1994 in the subject land registration case which found respondent-applicant Resins Incorporated to have registrable title to all the eight (8) lots applied for despite lack of clear factual and legal basis to support the conclusion that “applicant and his predecessor-in-interest had openly, continuosly [sic], adversely and uninterruptedly been in possession of the lots as owned for about 40 years prior to filing of the application.²²

The Court’s Ruling

The petition is meritorious. We rule that Resins, Inc. failed to prove that the Republic, via the OSG, indeed received the 17 March 1993 Judgment.

At the time of the promulgation of the trial court’s judgment, the applicable rules were those of the Revised Rules of Court. Pertinent portions of these sections are quoted below:

Sec. 5. Service by registered or ordinary mail. ‒ If service is not made personally, service by registered mail shall be required if registry service exists in the locality; otherwise service may be made by depositing the copy in the post office, in a sealed envelope, plainly addressed to the party or his attorney at his office, if known, otherwise at his residence, if known, with postage fully prepaid, and with instructions to the postmaster to return the mail to the sender after ten (10) days if undelivered.²³

Sec. 7. Service of judgments, final orders or resolutions. ‒ Judgments, final orders or resolutions shall be served either personally or registered mail. x x x²⁴

Sec. 8. Completeness of service. ‒ x x x Service by registered mail is complete upon actual receipt by the addressee, but if he fails to claim his mail from the post office within five (5) days from the date of first notice of the postmaster, service shall take effect at the expiration of such time.²⁵

Sec. 10. Proof of service. ‒ x x x If the service is by ordinary mail, proof thereof shall consist of an affidavit of the person mailing of facts showing compliance with section 5 of this rule. If service is made by registered mail, proof shall be made by such affidavit and the registry receipt issued by the mailing office. The registry return card shall be filed immediately upon its receipt by the sender, or in lieu thereof the letter unclaimed together with the certified or sworn copy of the notice given by the postmaster to the addressee.²⁶

When service of notice is an issue, the rule is that the person alleging that the notice was served must prove the fact of service. The burden of proving notice rests upon the party asserting its existence.²⁷ In civil cases, service made through registered mail is proved by the registry receipt issued by the mailing office and an affidavit of the person mailing of facts showing compliance with Section 13, Rule 13 of the 1997 Rules on Civil Procedure.²⁸

The OSG insists that it did not actually receive a copy of the 17 March 1993 Judgment. The OSG received a certified copy of the 17 March 1993 Judgment only after its 24 June 2003 written request to the Assistant City Prosecutor of Cagayan de Oro. The OSG presented a certified photocopy of the page of the OSG’s Docket Division Log Book listing the orders, pleadings, and other papers received by the OSG pertaining to the present case. The last document on the case received by the OSG before the receipt of the Amended Judgment on 2 May 1994 was an Order dated 26 December 1992 and received on 13 January 1993. There was no record of the Judgment dated 17 March 1993. Because of this non-receipt, the Republic was deprived of the opportunity to appeal or to ask for reconsideration of the judgment. The OSG filed a notice of appeal on 12 May 1994, only after its receipt of the Amended Judgment.

Resins, Inc., on the other hand, asserts that the certification of the RTC Clerk of Court and photocopies of the return slips from the post office are sufficient to prove that the OSG indeed received the 17 March 1993 Judgment.

Resins, Inc.’s argument must fail.

OSG’s denial of receipt of the 17 March 1993 Judgment required Resins, Inc. to show proof that the Judgment was sent through registered mail and that it was received by the Republic. While the certification from the RTC Clerk of Court and photocopies of the return slips prove that the Republic was served the judgment, it does not follow that the Republic, via the OSG, actually received the judgment. Receipts for registered letters and return receipts do not prove themselves, they must be properly authenticated in order to serve as proof of receipt of the letters.²⁹ Resins, Inc. also did not show a certification from the postmaster that notice was duly issued and delivered to the OSG such that service by registered mail may be deemed completed. It cannot be stressed enough that “it is the registry receipt issued by the mailing office and the affidavit of the person mailing, which proves service made through registered mail.”³⁰ Absent one or the other, or worse both, there is no proof of service.³¹

Mere certification of the RTC Clerk of Court is insufficient because the Clerk of Court may not be the person who did the mailing. The certification in this case is also not under oath. There must be an affidavit of the person who actually did the mailing. In the present case, the certification of the Clerk of Court states:

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

This certifies that the original carbon copy of the Judgment of the above-entitled case appearing on pages 484-488 dated March 17, 1993 was received by the Office of the Solicitor-General on April 6, 1993 as per return slip. A copy of which is attached herewith.

Posted on this 13^th day of August, 1999 in the city of Cagayan de Oro.

TAUMATURGO U. MACABINLAR

Clerk of Court V³²

It is clear that the certification does not state that the Clerk of Court did the mailing. Mere photocopies of the return slips are also insufficient. The original copies of the registry receipt or, in lieu thereof, the unclaimed notice and a certification from the postmaster of the issuance of notice, should be presented. Indeed, we declared in Delgado v. Hon. P.C. Ceniza, et al. that:

We find that the service of the judgment rendered in the case suffers from two defects, namely, there is no affidavit of the clerk of court, the person mailing, and there is no registry return card, or a certified or sworn copy of the notice given by the postmaster to the addressee.³³ (Emphasis supplied)

While we concede that there may be a presumption of regularity, in the ordinary course of events, that the RTC Clerk of Court sent the 17 March 1993 Judgment to the OSG, such presumption should fail when the OSG itself denies receipt. When the service of the judgment is questioned, such as in the present case, there is a need to present both the registry receipt issued by the mailing office and the affidavit of the person mailing. Since the OSG presented proof of non-receipt, it became incumbent upon Resins, Inc. to prove receipt, which Resins, Inc. failed to do.

WHEREFORE, we GRANT the petition. The Decision of the Court of Appeals in CA-G.R. SP No. 78516 promulgated on 25 May 2006 is REVERSED and SET ASIDE. The Regional Trial Court of Misamis Oriental, Branch 20, Cagayan de Oro City is directed to hear the appeal of the Republic of the Philippines in Land Registration Case No. N-91-012, LRA Record No. N-62407.

SO ORDERED.

ANTONIO T. CARPIO

Associate Justice

WE CONCUR:

DIOSDADO M. PERALTA

Associate Justice

ROBERTO A. ABAD JOSE PORTUGAL PEREZ

Associate Justice Associate Justice

JOSE C. 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

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

* Designated additional member per Raffle dated 21 June 2010.

1 Under Rule 45 of the 1997 Rules of Civil Procedure.

2 Rollo, pp. 82-99. Penned by Associate Justice Myrna Dimaranan Vidal, with Associate Justices Romulo V. Borja and Ramon R. Garcia, concurring.

3 Id. at 124-128. Penned by Judge Alejandro M. Velez.

4 Id. at 129-133. Penned by Judge Alejandro M. Velez.

5 Id. at 143. Penned by Judge Anthony E. Santos.

6 Id. at 157-158. Penned by Judge Gregorio D. Pantanosas, Jr.

7 Id. at 124-128.

8 Id. at 83-86.

9 Id. at 124-128.

10 Id. at 128.

11 Id. at 87.

12 Id. at 129-133.

13 Id. at 143.

14 Id. at 144-149.

15 Id. at 137-138.

16 Id. at 150.

17 Id. at 151.

18 Id. at 152.

19 Id. at 157-158.

20 Under Rule 65 of the 1997 Rules of Civil Procedure.

21 Rollo, pp. 82-99.

22 Id. at 36-37.

23 Now Section 7, Rule 13 of the 1997 Rules of Civil Procedure.

24 Now Section 9, Rule 13 of the 1997 Rules of Civil Procedure.

25 Now Section 10, Rule 13 of the 1997 Rules of Civil Procedure.

26 Now Section 13, Rule 13 of the 1997 Rules of Civil Procedure.

27 Government of the Philippines v. Aballe, G.R. No. 147212, 24 March 2006, 485 SCRA 308, 317.

28 Petition for Habeas Corpus of Benjamin Vergara v. Judge Gedorio, Jr., 450 Phil. 623, 634 (2003). See also note 26.

29 Ting v. Court of Appeals, 398 Phil. 481, 493 (2000) citing Central Trust Co. v. City of Des Moines, 218 NW 580 (1928).

30 Supra note 27, at 318. Emphasis in the original.

31 Cruz v. Court of Appeals, 436 Phil. 641, 652 (2002).

32 Rollo, p. 151.

33 101 Phil. 740, 743 (1957).

BPI FAMILY SAVINGS BANK INC. VS. GOLDEN POWER DIESEL SALES CENTER, INC. and RENATO C. TAN, G.R. NO. 176019, 12 JANUARY 2011, CARPIO, J.) SUBJECTS: MORTGAGES, WRIT OF POSSESSION. (BRIEF TITLE: BPI FAMILY SAVINGS BANK VS. GOLDEN POWER DIESEL SALES CENTER, INC. ET AL.)

x –  – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – -x

D E C I S I O N

CARPIO, J.:

The Case

This is a petition for review¹ of the 13 March 2006 Decision² and 19 December 2006 Resolution³ of the Court of Appeals in CA-G.R. SP No. 78626. In its 13 March 2006 Decision, the Court of Appeals denied petitioner BPI Family Savings Bank, Inc.ʼs (BPI Family) petition for mandamus and certiorari. In its 19 December 2006 Resolution, the Court of Appeals denied BPI Familyʼs motion for reconsideration.

The Facts

On 26 October 1994, CEDEC Transport, Inc. (CEDEC) mortgaged two parcels of land covered by Transfer Certificate of Title (TCT) Nos. 134327 and 134328 situated in Malibay, Pasay City, including all the improvements thereon (properties), in favor of BPI Family to secure a loan of P6,570,000. On the same day, the mortgage was duly annotated on the titles under Entry No. 94-2878. On 5 April and 27 November 1995, CEDEC obtained from BPI Family additional loans of P2,160,000 and P1,140,000, respectively, and again mortgaged the same properties. These latter mortgages were duly annotated on the titles under Entry Nos. 95-6861 and 95-11041, respectively, on the same day the loans were obtained.

Despite demand, CEDEC defaulted in its mortgage obligations. On 12 October 1998, BPI Family filed with the ex-officio sheriff of the Regional Trial Court of Pasay City (RTC) a verified petition for extrajudicial foreclosure of real estate mortgage over the properties under Act No. 3135, as amended.⁴

On 10 December 1998, after due notice and publication, the sheriff sold the properties at public auction. BPI Family, as the highest bidder, acquired the properties for P13,793,705.31. On 14 May 1999, the Certificate of Sheriffʼs Sale, dated 24 February 1999, was duly annotated on the titles covering the properties.

On 15 May 1999, the one-year redemption period expired without CEDEC redeeming the properties. Thus, the titles to the properties were consolidated in the name of BPI Family. On 13 September 2000, the Registry of Deeds of Pasay City issued new titles, TCT Nos. 142935 and 142936, in the name of BPI Family.

However, despite several demand letters, CEDEC refused to vacate the properties and to surrender possession to BPI Family. On 31 January 2002, BPI Family filed an Ex-Parte Petition for Writ of Possession over the properties with Branch 114 of the Regional Trial Court of Pasay City (trial court). In its 27 June 2002 Decision, the trial court granted BPI Familyʼs petition.⁵ On 12 July 2002, the trial court issued the Writ of Possession.

On 29 July 2002, respondents Golden Power Diesel Sales Center, Inc. and Renato C. Tan⁶ (respondents) filed a Motion to Hold Implementation of the Writ of Possession.⁷ Respondents alleged that they are in possession of the properties which they acquired from CEDEC on 10 September 1998 pursuant to the Deed of Absolute Sale with Assumption of Mortgage (Deed of Sale).⁸ Respondents argued that they are third persons claiming rights adverse to CEDEC, the judgment obligor and they cannot be deprived of possession over the properties. Respondents also disclosed that they filed a complaint before Branch 111 of the Regional Trial Court of Pasay City, docketed as Civil Case No. 99-0360, for the cancellation of the Sheriffʼs Certificate of Sale and an order to direct BPI Family to honor and accept the Deed of Absolute Sale between CEDEC and respondents.⁹

On 12 September 2002, the trial court denied respondents’ motion.¹⁰ Thereafter, the trial court issued an alias writ of possession which was served upon CEDEC and all other persons claiming rights under them.

However, the writ of possession expired without being implemented. On 22 January 2003, BPI Family filed an Urgent Ex-Parte Motion to Order the Honorable Branch Clerk of Court to Issue Alias Writ of Possession. In an Order dated 27 January 2003, the trial court granted BPI Familyʼs motion.

Before the alias writ could be implemented, respondent Renato C. Tan filed with the trial court an Affidavit of Third Party Claim¹¹ on the properties. Instead of implementing the writ, the sheriff referred the matter to the trial court for resolution.

On 11 February 2003, BPI Family filed an Urgent Motion to Compel Honorable Sheriff and/or his Deputy to Enforce Writ of Possession and to Break Open the properties. In its 7 March 2003 Resolution, the trial court denied BPI Familyʼs motion and ordered the sheriff to suspend the implementation of the alias writ of possession.¹² According to the trial court, “the order granting the alias writ of possession should not affect third persons holding adverse rights to the judgment obligor.” The trial court admitted that in issuing the first writ of possession it failed to take into consideration respondents’ complaint before Branch 111 claiming ownership of the property. The trial court also noted that respondents were in actual possession of the properties and had been updating the payment of CEDECʼs loan balances with BPI Family. Thus, the trial court found it necessary to amend its 12 September 2002 Order and suspend the implementation of the writ of possession until Civil Case No. 99-0360 is resolved.

BPI Family filed a motion for reconsideration. In its 20 June 2003 Resolution, the trial court denied the motion.¹³

BPI Family then filed a petition for mandamus and certiorari with application for a temporary restraining order or preliminary injunction before the Court of Appeals. BPI Family argued that the trial court acted with grave abuse of discretion amounting to lack or excess of jurisdiction when it ordered the suspension of the implementation of the alias writ of possession. According to BPI Family, it was the ministerial duty of the trial court to grant the writ of possession in its favor considering that it was now the owner of the properties and that once issued, the writ should be implemented without delay.

The Court of Appeals dismissed BPI Familyʼs petition. The dispositive portion of the 13 March 2006 Decision reads:

WHEREFORE, the instant Petition for Writ of Mandamus and Writ of Certiorari with Application for a TRO and/or Preliminary Injunction is hereby DENIED. The twin Resolutions dated March 7, 2003 and June 20, 2003, both issued by the public respondent in LRC Case No. 02-0003, ordering the sheriff to suspend the implementation of the Alias Writ of Possession issued in favor of the petitioner, and denying its Urgent Omnibus Motion thereof, respectively, are hereby AFFIRMED.

SO ORDERED.¹⁴

BPI Family filed a motion for reconsideration. In its 19 December 2006 Resolution, the Court of Appeals denied the motion.

The Ruling of the Court of Appeals

The Court of Appeals ruled that the trial court did not commit grave abuse of discretion in suspending the implementation of the alias writ of possession because respondents were in actual possession of the properties and are claiming rights adverse to CEDEC, the judgment obligor. According to the Court of Appeals, the principle that the implementation of the writ of possession is a mere ministerial function of the trial court is not without exception. The Court of Appeals held that the obligation of the court to issue an ex parte writ of possession in favor of the purchaser in an extrajudicial foreclosure sale ceases to be ministerial once it appears that there is a third party in possession of the property who is claiming a right adverse to that of the debtor or mortgagor.

The Issues

BPI Family raises the following issues:

A.

The Honorable Court of Appeals seriously erred in upholding the finding of the Honorable Regional Trial Court that despite the fact that private respondents merely stepped into the shoes of mortgagor CEDEC, being the vendee of the properties in question, they are categorized as third persons in possession thereof who are claiming a right adverse to that of the debtor/mortgagor CEDEC.

B.

The Honorable Court of Appeals gravely erred in sustaining the aforementioned twin orders suspending the implementation of the writ of possession on the ground that the annulment case filed by private respondents is still pending despite the established ruling that pendency of a case questioning the legality of a mortgage or auction sale cannot be a ground for the non-issuance and/or non-implementation of a writ of possession.¹⁵

The Ruling of the Court

The petition is meritorious.

BPI Family argues that respondents cannot be considered “a third party who is claiming a right adverse to that of the debtor or mortgagor” because respondents, as vendee, merely stepped into the shoes of CEDEC, the vendor and judgment obligor. According to BPI Family, respondents are mere extensions or successors-in-interest of CEDEC. BPI Family also argues that the pendency of an action questioning the validity of a mortgage or auction sale cannot be a ground to oppose the implementation of a writ of possession.

On the other hand, respondents insist that they are third persons who claim rights over the properties adverse to CEDEC. Respondents argue that the obligation of the court to issue an ex parte writ of possession in favor of the purchaser in an extrajudicial foreclosure sale ceases to be ministerial once it appears that there is a third party in possession of the property who is claiming a right adverse to that of the judgment obligor.

In extrajudicial foreclosures of real estate mortgages, the issuance of a writ of possession is governed by Section 7 of Act No. 3135, as amended, which provides:

SECTION 7. In any sale made under the provisions of this Act, the purchaser may petition the Court of First Instance (Regional Trial Court) of the province or place where the property or any part thereof is situated, to give him possession thereof during the redemption period, furnishing bond in an amount equivalent to the use of the property for a period of twelve months, to indemnify the debtor in case it be shown that the sale was made without violating the mortgage or without complying with the requirements of this Act. Such petition shall be made under oath and filed in form of an ex parte motion in the registration or cadastral proceedings if the property is registered, or in special proceedings in the case of property registered under the Mortgage Law or under section one hundred and ninety-four of the Administrative Code, or of any other real property encumbered with a mortgage duly registered in the office of any register of deeds in accordance with any existing law, and in each case the clerk of the court shall, upon the filing of such petition, collect the fees specified in paragraph eleven of section one hundred and fourteen of Act Numbered Four hundred and ninety-six, as amended by Act Numbered Twenty-eight hundred and sixty-six, and the court shall, upon approval of the bond, order that a writ of possession issue, addressed to the sheriff of the province in which the property is situated, who shall execute said order immediately.

This procedure may also be availed of by the purchaser seeking possession of the foreclosed property bought at the public auction sale after the redemption period has expired without redemption having been made.¹⁶

In China Banking Corporation v. Lozada,¹⁷ we ruled:

It is thus settled that the buyer in a foreclosure sale becomes the absolute owner of the property purchased if it is not redeemed during the period of one year after the registration of the sale. As such, he is entitled to the possession of the said property and can demand it at any time following the consolidation of ownership in his name and the issuance to him of a new transfer certificate of title. The buyer can in fact demand possession of the land even during the redemption period except that he has to post a bond in accordance with Section 7 of Act No. 3135, as amended. No such bond is required after the redemption period if the property is not redeemed. Possession of the land then becomes an absolute right of the purchaser as confirmed owner. Upon proper application and proof of title, the issuance of the writ of possession becomes a ministerial duty of the court.¹⁸ (Emphasis supplied)

Thus, the general rule is that a purchaser in a public auction sale of a foreclosed property is entitled to a writ of possession and, upon an ex parte petition of the purchaser, it is ministerial upon the trial court to issue the writ of possession in favor of the purchaser.

There is, however, an exception. Section 33, Rule 39 of the Rules of Court provides:

Section 33. Deed and possession to be given at expiration of redemption period; by whom executed or given. – x x x

\
Upon the expiration of the right of redemption, the purchaser or redemptioner shall be substituted to and acquire all the rights, title, interest and claim of the judgment obligor to the property as of the time of the levy. The possession of the property shall be given to the purchaser or last redemptioner by the same officer unless a third party is actually holding the property adversely to the judgment obligor. (Emphasis supplied)

Therefore, in an extrajudicial foreclosure of real property, when the foreclosed property is in the possession of a third party holding the same adversely to the judgment obligor, the issuance by the trial court of a writ of possession in favor of the purchaser of said real property ceases to be ministerial and may no longer be done ex parte.¹⁹ The procedure is for the trial court to order a hearing to determine the nature of the adverse possession.²⁰ For the exception to apply, however, the property need not only be possessed by a third party, but also held by the third party adversely to the judgment obligor.

In this case, BPI Family invokes the general rule that they are entitled to a writ of possession because respondents are mere successors-in-interest of CEDEC and do not possess the properties adversely to CEDEC. Respondents, on the other hand, assert the exception and insist that they hold the properties adversely to CEDEC and that their possession is a sufficient obstacle to the ex parte issuance of a writ of possession in favor of BPI Family.

Respondentsʼ argument fails to persuade the Court. It is clear that respondents acquired possession over the properties pursuant to the Deed of Sale which provides that for P15,000,000 CEDEC will “sell, transfer and convey” to respondents the properties “free from all liens and encumbrances excepting the mortgage as may be subsisting in favor of the BPI FAMILY SAVINGS BANK.”²¹ Moreover, the Deed of Sale provides that respondents bind themselves to assume “the payment of the unpaid balance of the mortgage indebtedness of the VENDOR (CEDEC) amounting to P7,889,472.48, as of July 31, 1998, in favor of the aforementioned mortgagee (BPI Family) by the mortgage instruments and does hereby further agree to be bound by the precise terms and conditions therein contained.”²²

In Roxas v. Buan,²³ we ruled:

It will be recalled that Roxasʼ possession of the property was premised on its alleged sale to him by Valentin for the amount of P100,000.00. Assuming this to be true, it is readily apparent that Roxas holds title to and possesses the property as Valentinʼs transferee. Any right he has to the property is necessarily derived from that of Valentin. As transferee, he steps into the latterʼs shoes. Thus, in the instant case, considering that the property had already been sold at public auction pursuant to an extrajudicial foreclosure, the only interest that may be transferred by Valentin to Roxas is the right to redeem it within the period prescribed by law. Roxas is therefore the successor-in-interest of Valentin, to whom the latter had conveyed his interest in the property for the purpose of redemption. Consequently, Roxasʼ occupancy of the property cannot be considered adverse to Valentin.²⁴

In this case, respondentsʼ possession of the properties was premised on the sale to them by CEDEC for the amount of P15,000,000. Therefore, respondents hold title to and possess the properties as CEDECʼs transferees and any right they have over the properties is derived from CEDEC. As transferees of CEDEC, respondents merely stepped into CEDEC’s shoes and are necessarily bound to acknowledge and respect the mortgage CEDEC had earlier executed in favor of BPI Family.²⁵ Respondents are the successors-in-interest of CEDEC and thus, respondentsʼ occupancy over the properties cannot be considered adverse to CEDEC.

Moreover, in China Bank v. Lozada,²⁶ we discussed the meaning of “a third party who is actually holding the property adversely to the judgment obligor.” We stated:

The exception provided under Section 33 of Rule 39 of the Revised Rules of Court contemplates a situation in which a third party holds the property by adverse title or right, such as that of a co-owner, tenant or usufructuary. The co-owner, agricultural tenant, and usufructuary possess the property in their own right, and they are not merely the successor or transferee of the right of possession of another co-owner or the owner of the property.²⁷

In this case, respondents cannot claim that their right to possession over the properties is analogous to any of these. Respondents cannot assert that their right of possession is adverse to that of CEDEC when they have no independent right of possession other than what they acquired from CEDEC. Since respondents are not holding the properties adversely to CEDEC, being the latterʼs successors-in-interest, there was no reason for the trial court to order the suspension of the implementation of the writ of possession.

Furthermore, it is settled that a pending action for annulment of mortgage or foreclosure sale does not stay the issuance of the writ of possession.²⁸ The trial court, where the application for a writ of possession is filed, does not need to look into the validity of the mortgage or the manner of its foreclosure.²⁹ The purchaser is entitled to a writ of possession without prejudice to the outcome of the pending annulment case.³⁰

In this case, the trial court erred in issuing its 7 March 2003 Order suspending the implementation of the alias writ of possession. Despite the pendency of Civil Case No. 99-0360, the trial court should not have ordered the sheriff to suspend the implementation of the writ of possession. BPI Family, as purchaser in the foreclosure sale, is entitled to a writ of possession without prejudice to the outcome of Civil Case No. 99-0360.

WHEREFORE, we GRANT the petition. We SET ASIDE the 13 March 2006 Decision and the 19 December 2006 Resolution of the Court of Appeals in CA-G.R. SP No. 78626. We SET ASIDE the 7 March and 20 June 2003 Resolutions of the Regional Trial Court, Branch 114, Pasay City. We ORDER the sheriff to proceed with the implementation of the writ of possession without prejudice to the outcome of Civil Case No. 99-0360.

SO ORDERED.

ANTONIO T. CARPIO

Associate Justice

WE CONCUR:

ANTONIO EDUARDO B. NACHURA

Associate Justice

DIOSDADO M. PERALTA ROBERTO A. ABAD

Associate Justice Associate Justice

JOSE C. 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

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

1 Under Rule 45 of the 1997 Rules of Civil Procedure.

2 Rollo, pp. 8-17. Penned by Associate Justice Noel G. Tijam, with Associate Justices Elvi John S. Asuncion and Mariflor P. Punzalan Castillo concurring.

3 Id. at 19.

4 An Act To Regulate The Sale Of Property Under Special Powers Inserted In Or Annexed To The Real Estate Mortgages. Approved on 6 March 1924.

5 Rollo, pp. 58-61.

6 Respondent Renato C. Tan is the President and Chief Executive Officer of Golden Power.

7 Rollo, pp. 62-64.

8 Id. at 133-135.

9 Id. at 65-77. Entitled “Golden Power Diesel Sales Center, Inc. and Renato C. Tan v. BPI Family Savings Bank, Inc., Elvira A. Lim, CEDEC Transport Corporation, Pepito S. Celestino as Clerk of Court of the Regional Trial Court of Pasay City and as Ex-officio Sheriff, and Deputy Sheriff Severino DC Balubar, Jr.”

10 Id. at 80-83.

11 Id. at 85-88.

12 Id. at 89-93.

13 Id. at 94-98.

14 Id. at 17.

15 Id. at 32.

16 China Banking Corporation v. Lozada, G.R. No. 164919, 4 July 2008, 557 SCRA 177, citing IFC Service Leasing and Acceptance Corporation v. Nera, 125 Phil. 595 (1967).

17 Id.

18 Id. at 196.

19 Philippine National Bank v. Court of Appeals, 424 Phil. 757 (2002), citing Barican v. Intermediate Appellate Court, 245 Phil. 316 (1988).

20 Unchuan v. Court of Appeals, 244 Phil. 733 (1988).

21 Rollo, p. 135.

22 Id.

23 249 Phil. 41 (1988).

24 Id. at 47-48. Citations omitted.

25 Spouses Paderes v. Court of Appeals, 502 Phil. 76 (2005).

26 Supra note 16.

27 Id. at 202-204. Citations omitted.

28 Fernandez v. Espinoza, G.R. No. 156421, 14 April 2008, 551 SCRA 136; Idolor v. Court of Appeals, 490 Phil. 808 (2005); Samson v. Rivera, G.R. No. 154355, 20 May 2004, 428 SCRA 759.

29 Idolor v. Court of Appeals, supra.

30 Spouses Ong v. Court of Appeals, 388 Phil. 857 (2000).

THE HERITAGE HOTEL MANILA, ACTING THROUGH ITS OWNER, GRAND PLAZA HOTEL CORPORATION VS. NATIONAL UNION OF WORKERS IN THE HOTEL, RESTAURANT AND ALLIED INDUSTRIES-HERITAGE HOTEL MANILA SUPERVISORS CHAPTER (NUWHRAIN-HHMSC) (G.R. NO. 178296, 12 JANUARY 2011, NACHURA, J.) SUBJECTS: JURISDICTION OF BUREAU OF LABOR RELATIONS; POWER OF CONTROL OF DOLE SECRETARY; UNION REGISTRATION. (BRIEF TITLE: HERITAGE HOTEL VS. NATIONAL UNION OF WORKERS.)

x————————————————————-x

DECISION

NACHURA, J.: 

          Before the Court is a petition for review on certiorari of the Decision^[1][1] of the Court of Appeals (CA) dated May 30, 2005 and Resolution dated June 4, 2007. The assailed Decision affirmed the dismissal of a petition for cancellation of union registration filed by petitioner, Grand Plaza Hotel Corporation, owner of Heritage Hotel Manila, against respondent, National Union of Workers in the Hotel, Restaurant and Allied Industries-Heritage Hotel Manila Supervisors Chapter (NUWHRAIN-HHMSC), a labor organization of the supervisory employees of Heritage Hotel Manila.

          The case stemmed from the following antecedents:

On October 11, 1995, respondent filed with the Department of Labor and Employment-National Capital Region (DOLE-NCR) a petition for certification election.^[2][2]  The Med-Arbiter granted the petition on February 14, 1996 and ordered the holding of a certification election.^[3][3] On appeal, the DOLE Secretary, in a Resolution dated August 15, 1996, affirmed the Med-Arbiter’s order and remanded the case to the Med-Arbiter for the holding of a preelection conference on February 26, 1997. Petitioner filed a motion for reconsideration, but it was denied on September 23, 1996.

          The preelection conference was not held as initially scheduled; it was held a year later, or on February 20, 1998. Petitioner moved to archive or to dismiss the petition due to alleged repeated non-appearance of respondent. The latter agreed to suspend proceedings until further notice. The preelection conference resumed on January 29, 2000.

          Subsequently, petitioner discovered that respondent had failed to submit to the Bureau of Labor Relations (BLR) its annual financial report for several years and the list of its members since it filed its registration papers in 1995. Consequently, on May 19, 2000, petitioner filed a Petition for Cancellation of Registration of respondent, on the ground of the non-submission of the said documents. Petitioner prayed that respondent’s Certificate of Creation of Local/Chapter be cancelled and its name be deleted from the list of legitimate labor organizations. It further requested the suspension of the certification election proceedings.^[4][4] 

          On June 1, 2000, petitioner reiterated its request by filing a Motion to Dismiss or Suspend the [Certification Election] Proceedings,^[5][5] arguing that the dismissal or suspension of the proceedings is warranted, considering that the legitimacy of respondent is seriously being challenged in the petition for cancellation of registration. Petitioner maintained that the resolution of the issue of whether respondent is a legitimate labor organization is crucial to the issue of whether it may exercise rights of a legitimate labor organization, which include the right to be certified as the bargaining agent of the covered employees.

          Nevertheless, the certification election pushed through on June 23, 2000. Respondent emerged as the winner.^[6][6]

On June 28, 2000, petitioner filed a Protest with Motion to Defer Certification of Election Results and Winner,^[7][7] stating that the certification election held on June 23, 2000 was an exercise in futility because, once respondent’s registration is cancelled, it would no longer be entitled to be certified as the exclusive bargaining agent of the supervisory employees. Petitioner also claimed that some of respondent’s members were not qualified to join the union because they were either confidential employees or managerial employees. It then prayed that the certification of the election results and winner be deferred until the petition for cancellation shall have been resolved, and that respondent’s members who held confidential or managerial positions be excluded from the supervisors’ bargaining unit.

         Meanwhile, respondent filed its Answer^[8][8] to the petition for the cancellation of its registration. It averred that the petition was filed primarily to delay the conduct of the certification election, the respondent’s certification as the exclusive bargaining representative of the supervisory employees, and the commencement of bargaining negotiations. Respondent prayed for the dismissal of the petition for the following reasons: (a) petitioner is estopped from questioning respondent’s status as a legitimate labor organization as it had already recognized respondent as such during the preelection conferences; (b) petitioner is not the party-in-interest, as the union members are the ones who would be disadvantaged by the non-submission of financial reports; (c) it has already complied with the reportorial requirements, having submitted its financial statements for 1996, 1997, 1998, and 1999, its updated list of officers, and its list of members for the years 1995, 1996, 1997, 1998, and 1999; (d) the petition is already moot and academic, considering that the certification election had already been held, and the members had manifested their will to be represented by respondent.

          Citing National Union of Bank Employees v. Minister of Labor, et al.^[9][9] and Samahan ng Manggagawa sa Pacific Plastic v. Hon. Laguesma,^[10][10] the Med-Arbiter held that the pendency of a petition for cancellation of registration is not a bar to the holding of a certification election. Thus, in an Order^[11][11] dated January 26, 2001, the Med-Arbiter dismissed petitioner’s protest, and certified respondent as the sole and exclusive bargaining agent of all supervisory employees.

          Petitioner subsequently appealed the said Order to the DOLE Secretary.^[12][12] The appeal was later dismissed by DOLE Secretary Patricia A. Sto. Tomas (DOLE Secretary Sto. Tomas) in the Resolution of August 21, 2002.^[13][13] Petitioner moved for reconsideration, but the motion was also denied.^[14][14]

          In the meantime, Regional Director Alex E. Maraan (Regional Director Maraan) of DOLE-NCR finally resolved the petition for cancellation of registration. While finding that respondent had indeed failed to file financial reports and the list of its members for several years, he, nonetheless, denied the petition, ratiocinating that freedom of association and the employees’ right to self-organization are more substantive considerations. He took into account the fact that respondent won the certification election and that it had already been certified as the exclusive bargaining agent of the supervisory employees. In view of the foregoing, Regional Director Maraan—while emphasizing that the non-compliance with the law is not viewed with favor—considered the belated submission of the annual financial reports and the list of members as sufficient compliance thereof and considered them as having been submitted on time. The dispositive portion of the decision^[15][15] dated December 29, 2001 reads:

WHEREFORE, premises considered, the instant petition to delist the National Union of Workers in the Hotel, Restaurant and Allied Industries-Heritage Hotel Manila Supervisors Chapter from the roll of legitimate labor organizations is hereby DENIED.

SO ORDERED.^[16][16]

          Aggrieved, petitioner appealed the decision to the BLR.^[17][17] BLR Director Hans Leo Cacdac inhibited himself from the case because he had been a former counsel of respondent.

          In view of Director Cacdac’s inhibition, DOLE Secretary Sto. Tomas took cognizance of the appeal. In a resolution^[18][18] dated February 21, 2003, she dismissed the appeal, holding that the constitutionally guaranteed freedom of association and right of workers to self-organization outweighed respondent’s noncompliance with the statutory requirements to maintain its status as a legitimate labor organization.

Petitioner filed a motion for reconsideration,^[19][19] but the motion was likewise denied in a resolution^[20][20] dated May 30, 2003. DOLE Secretary Sto. Tomas admitted that it was the BLR which had jurisdiction over the appeal, but she pointed out that the BLR Director had voluntarily inhibited himself from the case because he used to appear as counsel for respondent. In order to maintain the integrity of the decision and of the BLR, she therefore accepted the motion to inhibit and took cognizance of the appeal.

          Petitioner filed a petition for certiorari with the CA, raising the issue of whether the DOLE Secretary acted with grave abuse of discretion in taking cognizance of the appeal and affirming the dismissal of its petition for cancellation of respondent’s registration.

          In a Decision dated May 30, 2005, the CA denied the petition. The CA opined that the DOLE Secretary may legally assume jurisdiction over an appeal from the decision of the Regional Director in the event that the Director of the BLR inhibits himself from the case. According to the CA, in the absence of the BLR Director, there is no person more competent to resolve the appeal than the DOLE Secretary. The CA brushed aside the allegation of bias and partiality on the part of the DOLE Secretary, considering that such allegation was not supported by any evidence.

          The CA also found that the DOLE Secretary did not commit grave abuse of discretion when she affirmed the dismissal of the petition for cancellation of respondent’s registration as a labor organization. Echoing the DOLE Secretary, the CA held that the requirements of registration of labor organizations are an exercise of the overriding police power of the State, designed for the protection of workers against potential abuse by the union that recruits them. These requirements, the CA opined, should not be exploited to work against the workers’ constitutionally protected right to self-organization.

          Petitioner filed a motion for reconsideration, invoking this Court’s ruling in Abbott Labs. Phils., Inc. v. Abbott Labs. Employees Union,^[21][21] which categorically declared that the DOLE Secretary has no authority to review the decision of the Regional Director in a petition for cancellation of union registration, and Section 4,^[22][22] Rule VIII, Book V of the Omnibus Rules Implementing the Labor Code.

          In its Resolution^[23][23] dated June 4, 2007, the CA denied petitioner’s motion, stating that the BLR Director’s inhibition from the case was a peculiarity not present in the Abbott case, and that such inhibition justified the assumption of jurisdiction by the DOLE Secretary.

          In this petition, petitioner argues that:

I.

The Court of Appeals seriously erred in ruling that the Labor Secretary properly assumed jurisdiction over Petitioner’s appeal of the Regional Director’s Decision in the Cancellation Petition x x x.

A.             Jurisdiction is conferred only by law. The Labor Secretary had no jurisdiction to review the decision of the Regional Director in a petition for cancellation. Such jurisdiction is conferred by law to the BLR.

B.              The unilateral inhibition by the BLR Director cannot justify the Labor Secretary’s exercise of jurisdiction over the Appeal.

C.              The Labor Secretary’s assumption of jurisdiction over the Appeal without notice violated Petitioner’s right to due process.

II.

The Court of Appeals gravely erred in affirming the dismissal of the Cancellation Petition despite the mandatory and unequivocal provisions of the Labor Code and its Implementing Rules.^[24][24]

The petition has no merit.

          Jurisdiction to review the decision of the Regional Director lies with the BLR. This is clearly provided in the Implementing Rules of the Labor Code and enunciated by the Court in Abbott. But as pointed out by the CA, the present case involves a peculiar circumstance that was not present or covered by the ruling in Abbott. In this case, the BLR Director inhibited himself from the case because he was a former counsel of respondent. Who, then, shall resolve the case in his place?

In Abbott, the appeal from the Regional Director’s decision was directly filed with the Office of the DOLE Secretary, and we ruled that the latter has no appellate jurisdiction. In the instant case, the appeal was filed by petitioner with the BLR, which, undisputedly, acquired jurisdiction over the case. Once jurisdiction is acquired by the court, it remains with it until the full termination of the case.^[25][25]

Thus, jurisdiction remained with the BLR despite the BLR Director’s inhibition. When the DOLE Secretary resolved the appeal, she merely stepped into the shoes of the BLR Director and performed a function that the latter could not himself perform. She did so pursuant to her power of supervision and control over the BLR.^[26][26]

          Expounding on the extent of the power of control, the Court, in Araneta, et al. v. Hon. M. Gatmaitan, et al.,^[27][27] pronounced that, if a certain power or authority is vested by law upon the Department Secretary, then such power or authority may be exercised directly by the President, who exercises supervision and control over the departments. This principle was incorporated in the Administrative Code of 1987, which defines “supervision and control” as including the authority to act directly whenever a specific function is entrusted by law or regulation to a subordinate.^[28][28] Applying the foregoing to the present case, it is clear that the DOLE Secretary, as the person exercising the power of supervision and control over the BLR, has the authority to directly exercise the quasi-judicial function entrusted by law to the BLR Director.

          It is true that the power of control and supervision does not give the Department Secretary unbridled authority to take over the functions of his or her subordinate. Such authority is subject to certain guidelines which are stated in Book IV, Chapter 8, Section 39(1)(a) of the Administrative Code of 1987.^[29][29] However, in the present case, the DOLE Secretary’s act of taking over the function of the BLR Director was warranted and necessitated by the latter’s inhibition from the case and the objective to “maintain the integrity of the decision, as well as the Bureau itself.”^[30][30]

          Petitioner insists that the BLR Director’s subordinates should have resolved the appeal, citing the provision under the Administrative Code of 1987 which states, “in case of the absence or disability of the head of a bureau or office, his duties shall be performed by the assistant head.”^[31][31] The provision clearly does not apply considering that the BLR Director was neither absent nor suffering from any disability; he remained as head of the BLR. Thus, to dispel any suspicion of bias, the DOLE Secretary opted to resolve the appeal herself.

          Petitioner was not denied the right to due process when it was not notified in advance of the BLR Director’s inhibition and the DOLE Secretary’s assumption of the case. Well-settled is the rule that the essence of due process is simply an opportunity to be heard, or, as applied to administrative proceedings, an opportunity to explain one’s side or an opportunity to seek a reconsideration of the action or ruling complained of.^[32][32] Petitioner had the opportunity to question the BLR Director’s inhibition and the DOLE Secretary’s taking cognizance of the case when it filed a motion for reconsideration of the latter’s decision. It would be well to state that a critical component of due process is a hearing before an impartial and disinterested tribunal, for all the elements of due process, like notice and hearing, would be meaningless if the ultimate decision would come from a partial and biased judge.^[33][33]  It was precisely to ensure a fair trial that moved the BLR Director to inhibit himself from the case and the DOLE Secretary to take over his function.

          Petitioner also insists that respondent’s registration as a legitimate labor union should be cancelled. Petitioner posits that once it is determined that a ground enumerated in Article 239 of the Labor Code is present, cancellation of registration should follow; it becomes the ministerial duty of the Regional Director to cancel the registration of the labor organization, hence, the use of the word “shall.”  Petitioner points out that the Regional Director has admitted in its decision that respondent failed to submit the required documents for a number of years; therefore, cancellation of its registration should have followed as a matter of course.

          We are not persuaded.

Articles 238 and 239 of the Labor Code read:

ART. 238. CANCELLATION OF REGISTRATION; APPEAL

            The certificate of registration of any legitimate labor organization, whether national or local, shall be canceled by the Bureau if it has reason to believe, after due hearing, that the said labor organization no longer meets one or more of the requirements herein prescribed.^[34][34]

            ART. 239. GROUNDS FOR CANCELLATION OF UNION REGISTRATION.

            The following shall constitute grounds for cancellation of union registration:

            x x x x

            (d) Failure to submit the annual financial report to the Bureau within thirty (30) days after the closing of every fiscal year and misrepresentation, false entries or fraud in the preparation of the financial report itself;

            x x x x

            (i) Failure to submit list of individual members to the Bureau once a year or whenever required by the Bureau.^[35][35]

          These provisions give the Regional Director ample discretion in dealing with a petition for cancellation of a union’s registration, particularly, determining whether the union still meets the requirements prescribed by law. It is sufficient to give the Regional Director license to treat the late filing of required documents as sufficient compliance with the requirements of the law. After all, the law requires the labor organization to submit the annual financial report and list of members in order to verify if it is still viable and financially sustainable as an organization so as to protect the employer and employees from fraudulent or fly-by-night unions. With the submission of the required documents by respondent, the purpose of the law has been achieved, though belatedly.

          We cannot ascribe abuse of discretion to the Regional Director and the DOLE Secretary in denying the petition for cancellation of respondent’s registration. The union members and, in fact, all the employees belonging to the appropriate bargaining unit should not be deprived of a bargaining agent, merely because of the negligence of the union officers who were responsible for the submission of the documents to the BLR.

           Labor authorities should, indeed, act with circumspection in treating petitions for cancellation of union registration, lest they be accused of interfering with union activities. In resolving the petition, consideration must be taken of the fundamental rights guaranteed by Article XIII, Section 3 of the Constitution, i.e., the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful concerted activities. Labor authorities should bear in mind that registration confers upon a union the status of legitimacy and the concomitant right and privileges granted by law to a legitimate labor organization, particularly the right to participate in or ask for certification election in a bargaining unit.^[36][36] Thus, the cancellation of a certificate of registration is the equivalent of snuffing out the life of a labor organization. For without such registration, it loses – as a rule – its rights under the Labor Code.^[37][37] 

          It is worth mentioning that the Labor Code’s provisions on cancellation of union registration and on reportorial requirements have been recently amended by Republic Act (R.A.) No. 9481, An Act Strengthening the Workers’ Constitutional Right to Self-Organization, Amending for the Purpose Presidential Decree No. 442, As Amended, Otherwise Known as the Labor Code of the Philippines, which lapsed into law on May 25, 2007 and became effective on June 14, 2007. The amendment sought to strengthen the workers’ right to self-organization and enhance the Philippines’ compliance with its international obligations as embodied in the International Labour Organization (ILO) Convention No. 87,^[38][38] pertaining to the non-dissolution of workers’ organizations by administrative authority.^[39][39]  Thus, R.A. No. 9481 amended Article 239 to read:     

          ART. 239. Grounds for Cancellation of Union Registration.—The following may constitute grounds for cancellation of union registration:

            (a) Misrepresentation, false statement or fraud in connection with the adoption or ratification of the constitution and by-laws or amendments thereto, the minutes of ratification, and the list of members who took part in the ratification;

            (b) Misrepresentation, false statements or fraud in connection with the election of officers, minutes of the election of officers, and the list of voters;

            (c) Voluntary dissolution by the members.

          R.A. No. 9481 also inserted in the Labor Code Article 242-A, which provides:

          ART. 242-A. Reportorial Requirements.—The following are documents required to be submitted to the Bureau by the legitimate labor organization concerned:

            (a) Its constitution and by-laws, or amendments thereto, the minutes of ratification, and the list of members who took part in the ratification of the constitution and by-laws within thirty (30) days from adoption or ratification of the constitution and by-laws or amendments thereto;

            (b) Its list of officers, minutes of the election of officers, and list of voters within thirty (30) days from election;

(c) Its annual financial report within thirty (30) days after the close of every fiscal year; and

            (d) Its list of members at least once a year or whenever required by the Bureau.

            Failure to comply with the above requirements shall not be a ground for cancellation of union registration but shall subject the erring officers or members to suspension, expulsion from membership, or any appropriate penalty.

          ILO Convention No. 87, which we have ratified in 1953, provides that “workers’ and employers’ organizations shall not be liable to be dissolved or suspended by administrative authority.” The ILO has expressed the opinion that the cancellation of union registration by the registrar of labor unions, which in our case is the BLR, is tantamount to dissolution of the organization by administrative authority when such measure would give rise to the loss of legal personality of the union or loss of advantages necessary for it to carry out its activities, which is true in our jurisdiction. Although the ILO has allowed such measure to be taken, provided that judicial safeguards are in place, i.e., the right to appeal to a judicial body, it has nonetheless reminded its members that dissolution of a union, and cancellation of registration for that matter, involve serious consequences for occupational representation. It has, therefore, deemed it preferable if such actions were to be taken only as a last resort and after exhausting other possibilities with less serious effects on the organization.^[40][40]

          The aforesaid amendments and the ILO’s opinion on this matter serve to fortify our ruling in this case. We therefore quote with approval the DOLE Secretary’s rationale for denying the petition, thus:

It is undisputed that appellee failed to submit its annual financial reports and list of individual members in accordance with Article 239 of the Labor Code. However, the existence of this ground should not necessarily lead to the cancellation of union registration. Article 239 recognizes the regulatory authority of the State to exact compliance with reporting requirements. Yet there is more at stake in this case than merely monitoring union activities and requiring periodic documentation thereof.

            The more substantive considerations involve the constitutionally guaranteed freedom of association and right of workers to self-organization. Also involved is the public policy to promote free trade unionism and collective bargaining as instruments of industrial peace and democracy. An overly stringent interpretation of the statute governing cancellation of union registration without regard to surrounding circumstances cannot be allowed. Otherwise, it would lead to an unconstitutional application of the statute and emasculation of public policy objectives. Worse, it can render nugatory the protection to labor and social justice clauses that pervades the Constitution and the Labor Code.

            Moreover, submission of the required documents is the duty of the officers of the union. It would be unreasonable for this Office to order the cancellation of the union and penalize the entire union membership on the basis of the negligence of its officers. In National Union of Bank Employees vs. Minister of Labor, L-53406, 14 December 1981, 110 SCRA 296, the Supreme Court ruled:

            As aptly ruled by respondent Bureau of Labor Relations Director Noriel: “The rights of workers to self-organization finds general and specific constitutional guarantees. x x x Such constitutional guarantees should not be lightly taken much less nullified. A healthy respect for the freedom of association demands that acts imputable to officers or members be not easily visited with capital punishments against the association itself.”

            At any rate, we note that on 19 May 2000, appellee had submitted its financial statement for the years 1996-1999. With this submission, appellee has substantially complied with its duty to submit its financial report for the said period. To rule differently would be to preclude the union, after having failed to meet its periodic obligations promptly, from taking appropriate measures to correct its omissions. For the record, we do not view with favor appellee’s late submission. Punctuality on the part of the union and its officers could have prevented this petition.^[41][41]

           WHEREFORE, premises considered, the Court of Appeals Decision dated May 30, 2005 and Resolution dated June 4, 2007 are AFFIRMED.

SO ORDERED.

                                      ANTONIO EDUARDO B. NACHURA

                                      Associate Justice

WE CONCUR:

ANTONIO T. CARPIO

Associate Justice

Chairperson

JOSE CATRAL MENDOZA

Associate Justice

A T T E S T A T I O N

          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

                                      Chairperson, Second Division

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

          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