Office of the Ombudsman vs.

Rodas
G.R. No. 225669, Mar 23, 2022

FACTS:
The case involves the Office of the Ombudsman as the petitioner against respondent Lilah
Ymbong Rodas, an Engineer II at the Maritime Industry Authority (MARINA), with the
Supreme Court issuing a decision on March 23, 2022. The controversy began in 2003 when
the Ombudsman received an anonymous letter accusing Rodas of possessing assets dispro-
portionate to her income. The Ombudsman subpoenaed Rodas's Statements of Assets, Lia-
bilities, and Net Worth (SALNs) for the years 1999 to 2003, which revealed discrepancies
in the declaration of her assets. Specifically, she failed to accurately report the cost of her
properties, positing fair market values instead, and did not account for a significant in-
crease in her net worth of P906,000.00 over the period in question.
In her defense, Rodas admitted to errors in her SALNs but claimed that she had inherited
assets and had substantial savings from her previous employment in the private sector
spanning 19 years. The Ombudsman ruled against her on August 28, 2009, declaring her
guilty of Serious Dishonesty, resulting in dismissal from service.
The appellate court sustained the Ombudsman's finding that respondent must be held ad-
ministratively liable for her abject failure to declare her savings in her SALNs for 1999 un-
til 2003. However, it ruled that respondent was able to explain and account for her undis-
closed wealth. And because the law does not penalize a public officer's "explained wealth,"
respondent was guilty only of simple negligence and not serious dishonesty.
The Ombudsman filed a motion for reconsideration, which the CA denied on June 20, 2016.
Tragically, Rodas passed away on August 30, 2016.
The Ombudsman interposed a Motion for Reconsideration of the above Decision but the
same was denied by the CA in the herein assailed Resolution16 dated June 20, 2016.
ISSUE:
Whether or not the CA correctly ruled respondent guilty only of Simple Negligence and not,
as argued by the Ombudsman, Serious Dishonesty.
RULING:
In order to determine respondent's administrative liability, a review of the nature of the of-
fenses involved in this case is imperative.
The nature of the charges against respondent
Dishonesty, as an administrative offense, is defined as the concealment or distortion of
truth in a matter of fact relevant to one's office or connected with the performance of his or
her duties.22 It implies a disposition to lie, cheat, deceive, or defraud; untrustworthiness;
lack of integrity; lack of honesty, probity, or integrity in principle; and lack of fairness and
straightforwardness.23 It is a malevolent act that puts serious doubt upon one's ability to
perform his or her duties with the integrity and uprightness demanded of a public officer or
employee.24 Dishonesty is classified in three gradations, namely: serious, less serious, and
simple.25
Here, respondent was accused by the Ombudsman of committing serious dishonesty. There
is serious dishonesty when any of the following circumstances are present:
(1) [T]he dishonest act caused serious damage and grave prejudice to the Government;
(2) [T]he respondent gravely abused his [or her] authority in order to commit the dishonest
act;
(3) [W]here the respondent is an accountable officer, the dishonest act directly involves
property, accountable forms or money for which he [or she] is directly accountable and the
respondent shows an intent to commit material gain, graft and corruption;
(4) [T]he dishonest act exhibits moral depravity on the part of respondent;
(5) [T]he respondent employed fraud and/or falsification of official documents in the com-
mission of the dishonest act related to his/her employment;
(6) [T]he dishonest act was committed several times or in various occasions;
(7) [T]he dishonest act involves a Civil Service examination irregularity or fake Civil Ser-
vice eligibility such as, but not limited to impersonation, cheating and use of crib sheets;
and
(8) [O]ther analogous circumstances.26 (Citation omitted)
On the other hand, negligence is the omission of the diligence which is required by the na-
ture of the obligation and corresponds with the circumstances of the persons, of the time,
and of the place.27 In the case of public officials, there is negligence when there is a breach
of duty or failure to perform the obligation.28
Simple negligence, or simple neglect of duty, is characterized by the failure of an em-
ployee or official to give proper attention to a task expected of him or her, signifying a dis -
regard of a duty resulting from carelessness or indifference. 29 An act done in good faith,
which constitutes only an error of judgment and for no ulterior motive and/or purpose, is
merely simple negligence.30
Serious dishonesty is a grave offense which is punishable by dismissal from the ser-
vice31 with the accessory penalties of cancellation of eligibility, forfeiture of retirement ben-
efits, perpetual disqualification from holding public office, and from taking the civil service
examinations.32 In contrast, simple negligence or simple neglect of duty is a less grave of-
fense33 punishable by suspension from office for one (1) month and one (1) day to six (6)
months for the first offense, and dismissal for the second offense.34
Guided by the foregoing parameters, We find the petition bereft of merit.
The CA correctly found respondent guilty only of simple negligence and not seri-
ous dishonesty
Respondent admitted that she failed to declare in her SALNs the savings that she earned
from her 19-year-career in the private sector prior to joining MARINA, which savings she
used to purchase two cars and some pieces of jewelry that she declared only in her 2003
SALN. However, We cannot sustain the Ombudsman's position that such omission alone
amounts to a finding of serious dishonesty as would warrant against respondent the ulti-
mate penalty of dismissal from the service.
In Navarro v. Office of the Ombudsman,40 this Court declared:
[A] mere misdeclaration in the SALN does not automatically amount to dishonesty.
Only when the accumulated wealth becomes manifestly disproportionate to the in-
come or other sources of income of the public officer/employee and he fails to prop-
erly account or explain his other sources of income, does he become susceptible to
dishonesty. x x x Where the source of the undisclosed wealth can be properly ac-
counted for, then it is "explained wealth" which the law does not penalize. 41 (Cita-
tions omitted)
It bears noting that while the Ombudsman claimed that respondent maliciously tried to
hide her savings of P906,000.00, it was never asserted that it was impossible for respon-
dent to legally earn the same.
Since respondent was able to sufficiently explain the legality of her previously undisclosed
savings, she cannot be held administratively liable for serious dishonesty.
At most, respondent is guilty of simple negligence for having failed to ascertain that her
SALN was accomplished properly, accurately, and in more detail. 44 Alternatively stated, re-
spondent can only be found administratively liable for simple negligence since there is no
proof that her failure to disclose her savings was impelled by ulterior motive or purpose.
Hence, the CA correctly imposed against her the penalty of suspension without pay for one
year.
People vs. Montilla y Cariaga
G.R. No. 198449, Nov 22, 2021

FACTS:
The accused-appellant and one Dale Duay (Duay) were charged with the crime of Murder.
Duay remained at large. Thus, the case proceeded only against the accused-appellant. 4
When arraigned, accused-appellant, assisted by counsel, entered a plea of "not
guilty."5 However, during pre-trial, the accused-appellant interposed that he merely acted
in self-defense. Thus, a reverse trial was conducted.6
The accused-appellant testified that on the night of August 20, 1999, he was at his aunt
Duay's house when the victim, Ranie Lapidante, along with Armando Dipos and Jonathan
Molina, forcibly entered and confronted him. According to him, the victim drew a pistol,
prompting a struggle during which the gun accidentally discharged and hit the victim in
the stomach. The accused-appellant then fled the scene through the back door, leaving the
victim on Duay's bed.
The prosecution, for its part, presented as witnesses Jonathan, Dipos, Fernando Septimo
(Septimo), and Lucila Jacome (Jacome), Medical Records Officer of the Corazon Locsin
Montelibano Memorial Regional Hospital.8
At around 9:30 PM on August 20, 1999, Jonathan, Septimo, the victim, and Purok President
Dipos went to Duay’s house, where she asked the victim to testify in her favor in an upcom-
ing case, but he refused. As the group prepared to leave, Duay convinced them to stay for
coffee, and Myrna went out to get it. Outside, Jonathan and Dipos saw Myrna returning
with the accused-appellant, who was armed and pointed a gun at Dipos but backed off after
recognizing him.The accused-appellant proceeded to the house of Duay. While inside, per
order of Duay, the accused-appellant shot the victim.
The RTC Ruling
The RTC found the accused-appellant's narration unworthy of belief finding that the same
is contrary to the ordinary course of events, and uncorroborated by independent evidence.
The killing having been attended by the qualifying circumstance of treachery, the RTC ad-
judged the accused appellant guilty of the crime of Murder.15
The CA Ruling
In essence, the CA reiterated and adopted the factual findings and conclusions of law ar-
rived at by the RTC.
The accused-appellant filed a Notice of Appeal18 before the CA on February 23, 2011. In a
Resolution19 dated May 17, 2011, the CA gave due course to the appeal and ordered that
the records of the case be forwarded to this Court.
RULING:
The appeal is not meritorious.
At the core of the accused-appellant's defense is that he accidentally shot the victim in self-
defense. The accused who pleads self-defense admits the authorship of the crime. The bur-
den is then shifted to him to prove self-defense by clear and convincing evidence.
Self-defense is a justifying circumstance and exempts the accused from criminal liability,
upon showing of the concurrence of the following circumstances: (1) unlawful aggression;
(2) reasonable necessity of the means employed to prevent or repel the unlawful aggres-
sion; and (3) lack of sufficient provocation on the part of the person defending himself.27
To successfully invoke whether complete or incomplete self-defense, it is indispensable that
unlawful aggression must be proven. Failure to do so, the two other elements would have
no factual or legal basis to stand on.28
The test for the presence of unlawful aggression is whether the aggression from the victim
put in real peril the life or personal safety of the person defending himself; the threat must
not be an imaginary threat. It requires for its existence the presence of three (3) elements,
namely: (a) there must be a physical or material attack or assault; (b) the attack or assault
must be actual, or, at least, imminent; and (c) the attack or assault must be unlawful. 29
Judging from the circumstances of this case, the accused-appellant was unable to prove the
existence of unlawful aggression. Thus, his claim of self defense must fail.
In unlawful aggression, there must be either an "attack with physical force or with a
weapon, an offensive act that positively determines the intent of the aggressor to cause the
injury" or "an attack that is impending or at the point of happening." 30 In the latter case, it
must not consist in a mere threatening attitude. The imminent attack must be offensive and
positively strong.31
The accused-appellant averred that the victim pointed a gun at him and this was what led
him to grapple for its possession. However, as observed by the RTC and the CA, accused-
appellant's version of events is hard to believe when evaluated in relation to the injury sus-
tained by the victim.
As the accused-appellant's defense rests upon his bare allegation and self-serving claim
and uncorroborated by independent evidence, it is clear that he is unable to meet the quan-
tum of proof required.
With respect to qualifying circumstances, the Information alleged the killing to have been
attended by evident premeditation and treachery. The RTC and the CA found only the latter
to be present. The Court agrees.
Treachery or alevosia, is present when the offender adopts means, methods, or forms in the
execution of the felony that ensure its commission without risk to himself arising from the
defense which the offended party might make. Treachery is characterized by a deliberate,
sudden, and unexpected assault from behind, without warning and without giving the vic-
tim a chance to defend himself or repel the assault and removing all risk to the assailant. 37
Herein, there is no denying that while the attack is frontal, the victim was caught off-guard
when the shot was fired. To recall, the victim with his companions were at the house of
Duay waiting for coffee to be served when the accused-appellant suddenly appeared and,
without warning, shot the victim. The sudden and unexpected attack on the unarmed victim
rendered him defenseless and without any chance to avoid it.38
Estomo vs. Civil Service Commission, Regional Office No. X
G.R. No. 248971, Aug 31, 2022

FACTS:
On April 29, 1997, CSC Region X Director IV Vivencio N. Muego, Jr. sent a Notice/Letter of
Award to Engr. Domingo F. Estomo (Estomo) of Domingo F. Estomo Trading & Construc-
tion.
On May 6, 1997, CSC Region X and Domingo F. Estomo Trading & Construction, repre-
sented by Estomo, executed a Contract For Works.7 Pursuant to the Notice to Commence
Work,8 the project works commenced on May 8, 1997. The target date of completion was
on October 5, 1997.9
Estomo wrote several letters to CSC Region X regarding the extra works needed for the
complete construction of the third floor of CSC-X building (project). Estomo claimed that all
extra works amounted to P206,008.66.
On the other hand, the following extra works were denied by Estomo due to financial con-
straints: (1) pebble finish at the front wall of the building; (2) fire escape; and (3) additional
400 amperes main breaker, including its accessories.16
In the meantime, Estomo invited the CSC inspectorate team to conduct a final inspection of
the project on September 26, 1997.17 The CSC building was eventually inaugurated on Oc-
tober 6, 1997.18
On November 24, 1997, Estomo sent anew a demand letter, wherein the total extra works
increased to P261,963.82
On January 15, 1998, the CSC sent a letter to Estomo advising him to make the necessary
rectification or completion of deficiencies as reflected in the Report of the Technical Com-
mittee of the City Engineering Office (CEO). According to the Report, some items in the
project were defective, and were not in accordance with the specifications given by the
CEO.21
On January 24, 1998, Estomo sent a final demand letter for the total amount of
P604,278.60, representing the balance from the Contract for Works and the extra
works.22 Estomo remained unpaid. Thus, he filed before the RTC a Complaint23 for Specific
Performance, Sum of Money plus Damages against the CSC.
In its Answer,24 the CSC admitted the extra works, but denied their completion.
Motion for Partial Judgment on the Pleadings
The RTC acknowledged CSC’s implied admission of liability and fund availability but re-
quired Estomo to first meet government audit and accounting requirements within 10 days
before payment. The trial then continued.
On March 5, 2001, the CSC filed a Motion To Tender Payment before the RTC, to allow pay-
ment through an escrow deposit, claiming Estomo’s failure to submit required documents
prevented them from using the project, harming public interest. They also requested provi-
sional use of the third floor of their building.
On March 13, 2001, the CSC received Estomo’s documents, but City Engineer Bingona
found them incomplete and improperly signed. He requested Estomo and the CSC to jointly
evaluate the project's actual accomplishments and compliance with contract specifications.
In an Order36 dated March 21, 2001, the RTC granted the Motion To Tender Payment in
Court filed by the CSC. Meanwhile, Estomo prayed for the release of the full amount ten-
dered by the CSC.
The CSC filed a motion requesting the RTC to order Estomo to coordinate with the City En-
gineer’s Office (CEO) for document processing and to require the CEO to submit an evalua-
tion report. The RTC denied the motion, stating it had no legal basis to compel the CEO, as
it was not a party to the case.
RTC finally granted Estomo's prayer, and allowed the release of the full amount tendered
by the CSC.39
The CSC filed a Motion to Dismiss, claiming the RTC lacked jurisdiction because the CSC,
as a government agency, is immune from suit and that the COA has jurisdiction over the
claim. It also opposed the full release of funds to Estomo, asserting that only ₱97,060.19 re-
lated to the original contract should be released.
The RTC denied the CSC's Motion to Dismiss, ruling that the CSC was estopped from ques-
tioning jurisdiction after actively participating in the case since 1998. It held that state im-
munity cannot be used to commit injustice, especially since the government benefited from
the project. The CSC also waived its immunity by filing a counterclaim. The RTC ordered
the full release of ₱217,174.46 to Estomo based on equity, fair play, and quantum meruit,
noting the project was 95% complete.
The CSC filed another Motion for Reconsideration, which was denied by the RTC in its Or-
der dated March 4, 2008.46
Ruling of the RTC
The RTC ruled that since the original contract and extra works were completed and used
by the CSC since 1997, it would be unjust not to require payment of the outstanding bal -
ance. It found the balance for the original contract to be ₱342,314.78 and the total cost for
extra works to be ₱261,963.82.
CSC filed an appeal before the CA.
Ruling of the CA
The CA partly granted the appeal filed by the CSC.52
Evaluating Estomo's failure to substantiate his claim for the extra works, the CA noted that:
Estomo's demand for the payment of extra works in the amount of P261,963.82 is anchored
on the letters The letters dated between July and November 1997 sent by Estomo to the
CSC were only requests or suggestions for extra works, clearly indicating they required
CSC’s approval. Since there was no proof that CSC approved the amounts Estomo claimed,
these letters cannot justify his demanded payments.
The CSC presented Resolution No. 97-1101 dated November 28, 1997, approving only
₱144,735.98 for extra works. The Court of Appeals found that the remaining balance for
the original contract was ₱371,431.20, which after deductions for taxes, fees, and deficien-
cies, amounted to ₱217,174.42. Estomo failed to adequately contest these deductions.
The Court of Appeals ruled that CSC’s obligation to Estomo ended with the release of
₱217,174.46 through escrow. It denied Estomo’s claim for an additional ₱387,104.14, con-
sidering it unjust enrichment. However, the CA also denied CSC’s claim for liquidated dam-
ages due to lack of proof of delay and the value of completed work.
Estomo filed his Motion for Reconsideration, but was eventually denied by the CA in its
Resolution60 dated July 19, 2019.
Undeterred, Estomo filed the present Petition for Review on Certiorari.
ISSUE/S:
(1) whether the case involves a question of fact, beyond the office of a Petition for Review
on Certiorari under Rule 45 of the Rules of Court;
(2) whether the deductions on the Contract for Works are valid;
(3) whether Estomo is entitled to his claim for payment for extra works in the amount of
P261,963.82; and
(4) whether the retention money shall be released in favor of Estomo.
RULING:
I. Question of Fact
Generally, under Rule 45, the Supreme Court does not review factual issues or weigh evi-
dence anew, focusing only on questions of law. However, an exception exists when the
Court of Appeals’ findings conflict with those of the trial court, allowing the Supreme Court
to review factual findings in such cases.
As applied, a careful re-examination of the evidence on record is necessary to detemine
whether it was the RTC or the CA that properly appreciated certain relevant facts, such as
the previous payments made, the total cost for the extra works approved, the percentage of
work actually completed, and the propriety of the deductions and retention fee withheld.
II. Propriety of the deductions in the original Contract for Works
Estomo argued that the original contract price of ₱1,475,789.07 only covered materials,
and that the retention fee and other deductions by the CSC were made unilaterally without
basis.
The Court does not agree.
The Contract for Works between CSC and Estomo is governed by P.D. No. 1594 and its
IRR, which set rules for government infrastructure projects, including installment progress
payments. Estomo received ₱912,107.44 from three progress payments, which were net of
deductions for retention money, recoupment, and taxes.
The Court now proceeds to determine if the foregoing deductions were in accordance with
the proper law, rules, and guidelines.
A. Retention Money
Retention money is a form of security which seeks to ensure that the work is satisfactorily
done, and on schedule. It is withheld by the procuring entity (i.e., the government) from
progress payments due to the contractor to guarantee indemnity for uncorrected discov-
ered defects and third-party liabilities in infrastructure projects. 72
Under the 1992 IRR of P.D. No. 1594, retention money of 10% must be deducted from
progress payments until 50% of the contract value is paid. The CSC correctly deducted
10% retention from the first two progress payments totaling ₱768,516.79 (52.075% of the
contract price) but did not deduct retention from the third payment of ₱480,577.06, com-
plying with the rules.
B. Advance Payments/Recoupment
The 1992 IRR of P.D. No. 1594 allows the government to make advance payments to con-
tractors in an amount equivalent to 15% of the total contract price, subject to recoupment
from periodic progress billings submitted by the contractor.
Records show that on May 14, 1997, the CSC made an advance payment to Estomo in the
amount of P221,368.35, which is within the 15% limit prescribed by the rules.
C. Withholding taxes
In 1997, the applicable law on withholding VAT was R.A. No. 8241, which amended R.A.
No. 7716. It required government agencies, including CSC, to withhold VAT at 6% on gross
receipts for services rendered by contractors, with a special rate of 8.5% for government
public works contractors. The CSC’s withholding tax rates did not align with these prevail-
ing tax laws. Additionally, VAT applies to gross receipts from services provided by contrac-
tors under the amended National Internal Revenue Code.
However, the CSC never provided an explanation or breakdown of its computation for the
tax deducted from the progress payments. Nevertheless, the formula can be derived by
working backwards given the foregoing amounts.
As it appears, the CSC withheld VAT computed at the then-prevailing rate of 6% on the
progress payments after the 10% retention money was deducted from the gross amount.
In order to determine whether the CSC properly applied the withholding tax rate of 6% on
the gross amount after the deductions were made for the retention money, a brief
discussion of the definition of "gross receipts" is warranted.
Under Section 110(c) of the NIRC, government agencies must withhold 6% VAT on the
gross receipts, which includes the entire contract price and retention money. Since reten-
tion money is part of the contract price held as security and not excluded from VAT, CSC
erred by deducting the 10% retention from the tax base when calculating VAT. This led to
underpayment.
Thus, the CSC should have computed the amount of VAT to be withheld by applying the 6%
VAT rate to the gross amount of each of the progress payments, without deducting the 10%
retention money.
Since the progress payments were already released to Estomo, the appropriate remedy is
to withhold the 6% VAT on the retention money still due to him.
III. Balance for the extra works and the principle of quantum meruit
Per CSC Resolution No. 97-1101, only ₱144,735.98 was approved for extra works, while Es-
tomo claims ₱261,963.82 based on quantum meruit. Change or extra work orders must be
necessary for project completion, within the contract's scope, and require approval by the
proper authorities before commencement. The 1992 IRR of P.D. No. 1594 mandates that no
extra work can proceed without approval from the Secretary or authorized representative.
Estomo submitted several letters requesting extra works starting July 1997, but these were
merely requests pending CSC approval, which was only granted on November 28, 1997.
The Court of Appeals noted that payments cannot be based solely on such letters. Under
the 1992 IRR of P.D. No. 1594, extra work payment requests must include detailed, ap-
proved supporting forms, which Estomo failed to provide.
Exceptions to the prior approval rule exist only in emergencies or urgent cases, which do
not apply here. Estomo proceeded with extra works without approval, risking non-payment;
only ₱144,735.98 was approved. His claim under quantum meruit is rejected because such
relief requires clear knowledge and consent from the government and acknowledgment of
the work done, which are absent in this case.
In sum, the Court agrees with the CSC that the total cost for the extra works amount to
only P144,735.98. Estomo's claim in the amount of P261,963.82 has no legal basis since the
principle of quantum meruit does not apply.
IV. Propriety of the deductions in the escrow deposit
Indeed, and as previously discussed, the Court upholds the position of the CSC as regards
the balance for the extra works in the amount of P144,735.98.
The discussion on the propriety of the deduction for retention money, recoupment, and tax
equally applies to the escrow deposit computed above.
Retention money is only allowed until 50% of the work's value is completed. Since over
50% of the original contract was already paid by August 15, 1997, the retention fee of
₱14,471.60 deducted from the total balance (including extra works) is improper. No reten-
tion should have been deducted on the later payments, including the March 7, 2001 pay-
ment, as the extra works are part of the same project.

The recoupment deduction was proper, as Estomo received a ₱221,368.35 cash advance
and had repaid ₱189,601.99 through progress payments, leaving ₱31,766.36 deducted from
the March 7, 2001 escrow deposit. The CSC also deducted ₱25,998.79 (7% withholding tax)
from the gross amount, but failed to provide proof of remittance to tax authorities. The
Court clarifies these deductions and their compliance with tax laws.

The Court takes this opportunity to clarify the deduction made and to provide context on
the applicable tax regulations.
The escrow deposit made on March 7, 2001, is governed by the 1997 National Internal Rev-
enue Code (NIRC), effective January 1, 1998, and predates amendments by R.A. No. 9337
in 2005. Under Section 114(c) of the 1997 NIRC, the government must withhold 6% VAT on
the gross receipts for services rendered by contractors before making such payments,
which is creditable against the contractor's VAT liability.
The Bureau of Internal Revenue issued Revenue Regulation No. 02-98 to implement the
1997 NIRC’s withholding tax provisions starting January 1, 1998, which includes the es-
crow deposit. Under Section 2.57.2(E) of RR No. 02-98, income payments to general build-
ing contractors are subject to a 1% creditable withholding tax on gross payments. This ap-
plies to contractors involved in complex construction projects requiring multiple trades or
specialized skills, such as buildings, plants, utilities, and similar structures.
The CSC properly deducted and withheld taxes totaling 7% of the gross amount of
P371,431.20, consisting of 6% VAT under Section 114(c) of the 1997 NIRC and 1% ex-
panded withholding tax under Section 2.57.2(E) of RR No. 02-98. The deduction of
P25,998.79 was lawful and correct.
XV. Release of the retention money
Estomo is entitled to the release of the retention money withheld from the progress pay -
ments on July 14 and August 15, 1997. Retention money serves as security to ensure satis-
factory and timely completion of work, protecting against defects and third-party liabilities.
Additionally, the CSC made an escrow deposit of P217,174.16 representing full payment for
the Contract for Works, including approved extra works. However, an amount of
P82,000.00 was also deducted as deficiencies to secure the completion of defects identified
by the CEO.
On January 15, 1998, the CSC directed Estomo to rectify the defects within 15 days. The
CSC likewise advised Estomo that the Certificate of Final Completion will only be issued af-
ter the defects have been rectified. However, in a January 26, 1998 letter, the CSC ex-
pressed willingness to pay the contract balance once the P82,000.00 worth of deficiencies
were rectified and required documents submitted. The CSC later reiterated in its Motion
for Reconsideration that Estomo had neither completed the work nor submitted the neces-
sary documents, and the deficiencies remained unresolved.
The Court notes that the P82,000.00 deficiencies serve the same purpose as the retention
money, which under the IRR of P.D. No. 1594, can only be released upon final acceptance
of the works evidenced by a Certificate of Final Completion. Since the deficiencies pre-
vented the issuance of this certificate, their deduction protected the government’s interest.
However, as the CSC has had possession of the project since 1997 and Estomo has already
submitted the required documents. To further withhold the retention money would sanction
unjust enrichment in favor of the government, to the prejudice of Estomo.
Although Estomo is entitled to the release of his retention money for the progress pay-
ments made on July 14 and August 1997, as earlier discussed, the same should be subject
to 6% VAT since they were excluded by the CSC from its computation of tax withheld.
Finally, Estomo's claim for damages and attorney's fees must fail for lack of merit.
The case is REMANDED to the Regional Trial Court of Misamis Oriental, Cagayan de Oro
City, Branch 20, for the proper computation of the total monetary award due to petitioner
Domingo F. Estomo in accordance with this Decision.
SO ORDERED.

Philippine National Bank Binalbagan Branch vs. Tad-y

G.R. No. 214588, Sep 7, 2022
FACTS:
On January 30, 1975, spouses Jose Tad-y and Patricia Toledanes Tad-y secured a P109,000
agricultural sugar crop loan from PNB’s Binalbagan branch, secured by a Real Estate Mort-
gage (REM) on six land parcels in Himamaylan City and Hinigaran, Negros Occidental, an-
notated as Entry No. 201793 on the titles. On August 14, 1975, they obtained a second loan
of P63,000 from PNB, with the REM extended to cover this loan, annotated as Entry No.
210254.
On August 9, 1988, two parcels under the REM, Lots 778 and 788, were auctioned by the
Negros Occidental provincial treasurer due to unpaid property taxes. PNB was the sole bid-
der and bought them for P10,609.63. On August 23, 1989, PNB was officially conveyed
ownership through Final Bills of Sale, and the sale was annotated on the titles on Septem-
ber 16, 1988. In November 1995, the spouses Tad-y restructured their loans under RA No.
7202 and completed payments by 1996. On March 6, 1996, PNB released the REM, but ex-
cluded Lots 778 and 788, claiming ownership through the auction.
Patricia Toledanes Tad-y wrote to PNB in 2001 and 2003 requesting the release of Lots 778
and 788, offering to reimburse PNB for the auction price. PNB responded that it already
owned the lots but was open to negotiating a repurchase. On March 23, 2004, Patricia and
her children, represented by Antonio Tad-y, filed a complaint for breach of contract and re-
conveyance of property with the RTC of Himamaylan City.
The RTC ruled in favor of the Tad-ys, ordering Philippine National Bank (PNB) to reconvey
titles of Lots 778 and 788 to the plaintiffs. The Tad-ys must pay PNB the auction price, re-
lated expenses, and 12% annual interest. The Register of Deeds is instructed to issue new
titles to the Tad-ys once full payment, including interest, is made.
The RTC held that under the mortgage agreement, PNB was obligated to pay the real prop-
erty taxes if the Tad-ys defaulted, but PNB failed to do so, allowing the lots to become
delinquent and then bought them at a below-market auction price. While PNB's auction
participation wasn’t illegal, it was an abuse of rights harming the Tad-ys. Additionally,
since PNB was automatically appointed attorney-in-fact for the Tad-ys, its purchase should
benefit them. The court also dismissed PNB's argument that the province should be a party
to the case, as the issue was only PNB’s auction participation.
On appeal by PNB,31 the CA affirmed the RTC decision.
The Court of Appeals upheld the RTC’s ruling that PNB was obligated to pay the real prop-
erty taxes when the spouses Tad-y failed to do so, based on the mortgage agreement’s pro-
visions. PNB wrongfully allowed the taxes to accumulate and then bought the properties at
a low auction price. The court also barred PNB from raising the prescription (statute of lim-
itations) defense on appeal since it was not raised in its original answer.
The Court of Appeals upheld the RTC’s finding that PNB, by failing to pay the real estate
taxes, became attorney-in-fact for the spouses Tad-y under the mortgage agreement. As a
result, PNB’s acquisition of the lots benefits the Tad-ys. The court also ruled that a con-
structive trust was created over the properties, meaning PNB holds them in trust for the
Tad-ys because it obtained the properties through an abuse of confidence, and therefore
must act in their benefit.
PNB filed a motion for reconsideration,37 which the CA denied.
ISSUE/S:
[A]
THE COURT OF APPEALS HAS MADE AN INFERENCE THAT IS MANIFESTLY MISTAKEN
WHEN IT HELD THAT PETITIONER PNB COMMITTED A BREACH OF THE REAL ESTATE
MORTGAGE CONTRACT WHEN IT FAILED TO PAY THE REAL ESTATE TAXES DUE ON
THE SUBJECT PROPERTIES.
[B]
THE COURT OF APPEALS HAS RENDERED THE ASSAILED DECISION BASED ON A MIS-
APPREHENSION OF FACTS WHEN IT HELD THAT PETITIONER PNB WAS ACTING AS
ATTORNEY-IN-FACT OF SPS. JOSE & PATRICIA TAD-Y DURING THE PUBLIC AUCTION
SALE OF THE SUBJECT PROPERTIES TO SATISFY THE REALTY TAX DELINQUENCIES.
[C]
THE COURT OF APPEALS HAS ACTED IN A MANNER CONTRARY TO LAW AND SET-
TLED JURISPRUDENCE WHEN IT FAILED TO CONSIDER THAT THE PRESENT COM-
PLAINT IS BARRED BY PRESCRIPTION WHICH IS APPARENT ON THE FACE OF THE
COMPLAINT AND THE RECORDS OF THE CASE.38
Prescription
PNB argues that the CA erred in refusing to consider the defense of prescription. PNB ar-
gues that pursuant to Rule 9, Section 1 of the Rules of Court, the trial court should have
dismissed the case motu proprio because the prescription of the Tad-ys' cause of action is
apparent on the face of the complaint.39 PNB further argues that it can still raise the issue
on appeal since the bar by prescription is apparent on the face of the complaint and no new
factual issue connected therewith arose during the trial.
The Court emphasized that the defense of prescription does not automatically justify dis-
missal of a complaint under Rule 16. Dismissal based on prescription is only proper when it
is clearly apparent from the face of the complaint.If the issue of prescription involves evi-
dentiary matters, it cannot be resolved through a motion to dismiss. Instead, it must be ad-
dressed during a full trial, wherein both parties will be given ample opportunity to prove
their respective claims and defenses.
Under the 2019 Amendments to the 1997 Rules of Civil Procedure, the filing of a motion to
dismiss on the ground of prescription is still permitted pursuant to Rule 15, Section 12(a)
(1).45 Under Rule 6, Section 5(b), prescription is an affirmative defense which may also be
invoked in an answer, in which case the trial court may conduct a summary hearing
thereon within the time frames provided in Rule 8, Section 12(d). Crucially, Rule 8, Section
1 facilitates the determination of the fact of prescription by requiring the parties to plead
their evidence in support or in refutation thereof.
Prescription that is clearly apparent from the pleadings or evidence on record may be in-
voked even after rendition of judgment on the merits, or on motion for reconsideration, or
for the first time on appeal, or even on motion for reconsideration of the denial of an ap-
peal.
However, it must be reiterated that the party who invokes prescription for the first time on
appeal or thereafter must prove that it is clearly, sufficiently and satisfactorily apparent on
the record either in the allegations of the plaintiffs complaint, or otherwise established by
the evidence.49
In the case at bar, we find that the issue of prescription can no longer be raised on appeal,
for the following reasons:
1. The statutory basis for prescription is unclear. PNB inconsistently invoked different
provisions (Article 1144[1] for written contracts, and later Article 1144[2] for con-
structive trust) without clearly establishing which statute of limitations applies. The
Rules of Court require that the specific statute barring the action must be clearly
shown on record.
2. Relative to the lack of clarity on the basis of prescription, the allegations of the com-
plaint and the relief sought thereby open the possibility of the application of other
statutes of limitation.
It bears repeating that PNB’s arguments for the first time on appeal. The trial court, which
is the judicially-designated primary factfinder in our legal system, was unable to pass upon
these arguments which involve matters of fact. Given these circumstances, the CA's refusal
to pass upon the defense of prescription was justified.
Obligation to pay real property taxes under the REM
PNB contends that the responsibility to pay real property taxes remained solely with the
spouses Tad-y. It argues that under paragraph (c) of the Real Estate Mortgage (REM), its
obligation to pay such taxes only arises in the event of default and if PNB chooses to fore-
close the mortgage. Since no foreclosure occurred, PNB claims it was never obligated to
pay the real property taxes on the disputed lots.
Article 1374 of the Civil Code requires that contracts be interpreted as a whole, with any
doubtful stipulations clarified through the context of the entire agreement. Applying this
principle to the Real Estate Mortgage (REM) between PNB and the spouses Tad-y, it is
clear that the duty to pay all taxes and assessments on the mortgaged properties lies solely
with the mortgagor. Failure to do so constitutes an event of default, giving the mortgagee
the right to foreclose. Paragraph (c) of the REM outlines the consequences and procedures
for both extrajudicial and judicial foreclosure. The latter part of the paragraph, introduced
by the phrase “In case of judicial foreclosure,” sets out additional obligations applicable
only if the mortgagee opts for judicial foreclosure. Among these is the clause stating that
the mortgagee shall advance unpaid taxes and insurance premiums. The use of the word
“also” signals that this obligation supplements the others, but only under judicial foreclo-
sure. Therefore, since PNB did not pursue judicial foreclosure, its obligation to advance
real property taxes never arose. The Court thus upheld PNB’s interpretation.
Creation of agency relation under paragraph (d) of the REM
PNB contends that the attorney-in-fact powers granted under paragraph (d) of the REM do
not include the authority to purchase or acquire the mortgaged properties at an auction
sale, but rather are limited to facilitating the mortgagee’s right to manage or dispose of the
property to satisfy the debt, in line with Article 2087 of the Civil Code. Paragraph (d) ex -
plicitly appoints the mortgagee as attorney-in-fact upon breach of any mortgage condition,
granting broad powers to take possession, collect rents, eject tenants, lease, sell privately,
make repairs, and perform other acts necessary for proper administration of the property.
While it clearly establishes PNB’s automatic appointment as agent following the Tad-ys’
breach due to unpaid real property taxes, the core issue remains whether this provision au-
thorizes PNB to acquire Lots 778 and 788 through a tax delinquency auction on behalf of
the spouses Tad-y.
The issue is whether paragraph (d) empowers PNB to acquire Lots 778 and 788 at
a tax delinquency auction sale on the spouses Tad-y's behalf.
Although paragraph (d) does not explicitly state that PNB has the power to buy the mort-
gaged properties at a public sale, it implicitly grants this authority through its provision al-
lowing PNB to "perform any other act which the Mortgagee may deem convenient for the
proper administration of the mortgaged property." As part of the real estate mortgage
(REM) contract between PNB and the spouses Tad-y, this power aligns with the nature of a
real estate mortgage, which fundamentally gives the mortgagee the right to sell or alienate
the property to satisfy the principal obligation when due. The REM also stipulates that if
the mortgagor fully pays the obligations, including interest and expenses, the mortgage be-
comes null and void. Since the Tad-ys fully settled their debt in 1996, the REM was ren-
dered functus officio, meaning PNB was obligated to release the properties back to the
Tad-ys.
A contract must be interpreted as a whole, and paragraph (d) of the REM should be seen
not as an independent power of attorney but as a security measure to help the mortgagee
exercise its right to foreclose. This aligns with Article 2087 of the Civil Code, which allows
the mortgagee to alienate the mortgaged property to satisfy the debt when due. The phrase
granting PNB authority to perform acts deemed convenient for administering the mort-
gaged property includes actions necessary to preserve its foreclosure rights. PNB admitted
it participated in the auction sale solely to protect its interest in the properties, preventing
third-party acquisition and ensuring their availability for foreclosure. However, since the
Tad-ys fully paid their loan in 1996, the REM and PNB’s interest became functus officio,
meaning the mortgage and PNB’s foreclosure rights were extinguished and unexercised.
Article 1878 of the Civil Code requires specific powers of attorney for acts involving the
transfer of ownership or real rights over immovable property, which are acts of strict do-
minion. However, the power granted to PNB to perform acts convenient for the administra-
tion of the mortgaged property falls under Article 1877, which covers acts of administra-
tion. Whether an act is administrative or involves strict dominion is a factual question, as
good administration may sometimes involve acts that affect ownership. In this case, PNB
admitted it purchased the lots solely to protect its mortgage interest, an act considered ad-
ministrative under both the Civil Code and the mortgage contract’s general agency provi-
sion. Therefore, the courts rightly concluded that PNB’s purchase at the 1988 tax delin-
quency auction benefits the spouses Tad-y.
Creation of constructive trust by virtue of PNB's acquisition of the disputed lots by
delinquency auction sale
Finally, PNB argues that the CA erred in ruling that a constructive trust was created over
the disputed properties by operation of law. PNB argues that its conduct with respect to
the disputed lots did not amount to actual or constructive fraud which creates a construc-
tive trust by operation of law.
Article 1456 of the Civil Code provides that a person who acquires property through mis-
take or fraud is considered a trustee of a trust created by force of law for the benefit of the
person from whom the property comes.
In the case at bar, we find PNB guilty of constructive fraud for breaching its fiduciary duty
to the spouses Tad-y under the REM, when it refused to release the disputed lots. It has
been established that PNB acquired the disputed lots through the 1988 auction sale on be-
half of the spouses Tad-y, pursuant to the power-of-attorney provisions under paragraph (d)
of the REM. As earlier mentioned, when the loans were fully paid in 1996, without PNB
having exercised its right to foreclose on the mortgaged properties, PNB lost any interest it
had in the disputed properties; and should have perforce turned them over to the Tad-ys.
In Severino v. Severino, an agent who administered a parcel of land on his niece's behalf
obtained a certificate of title to the said parcel. In ordering the agent to reconvey the prop-
erty, we held:
The relations of an agent to his principal are fiduciary and it is an elementary and
very old rule that in regard to property forming the subject-matter of the agency, he
is estopped from acquiring or asserting a title adverse to that of the principal. His
position is analogous to that of a trustee and he cannot consistently, with the princi-
ples of good faith, be allowed to create in himself an interest in opposition to that of
his principal or cestui que trust. x x x An agent is not only estopped from denying
his principal's title to the property, but he is also disabled from acquiring interests
therein adverse to those of his principal during the term of the agency.76
Likewise, PNB, as the agent of the spouses Tad-y, cannot acquire title to the disputed prop-
erties, since it bought them on the latter's behalf and held them strictly for the purpose of
foreclosure: an option which it never exercised.
WHEREFORE, the present petition is hereby DENIED. The April 16, 2013 Decision and
the September 4, 2014 Resolution of the Court of Appeals in CA-G.R. CV No. 01412
are AFFIRMED.
SO ORDERED.
Hamid vs. Gervasio Security and Investigation Agency, Inc.
G.R. No. 230968, Jul 27, 2022

FACTS:
Petitioner was hired as a security guard by Gervasio Security and Investigation Agency in
2003. In October 2010, he was assigned to Midas Hotel, working 12-hour shifts seven days
a week. On May 24, 2011, despite it being his rest day and feeling unwell, he was forced to
work a night shift due to the absence of another guard. The next day, after completing a
24-hour duty, he was issued a memorandum asking for an explanation after he was caught
sleeping on duty. In his written response, petitioner admitted to taking a nap because he
was feeling sick, suffering from a cough and difficulty breathing, and was taking medica-
tion to ease his symptoms.

Despite petitioner’s explanation, he was suspended without pay for 30 days and was told to
report back after the suspension. During this time, he was informed that he would be re-
lieved from his post based on the client’s request. After serving his suspension, petitioner
waited for reassignment but received no further instructions, leading him to file a com-
plaint for illegal suspension and separation pay, later amending it to include illegal (con-
structive) dismissal. Respondents denied dismissing petitioner, stating they sent multiple
notices requiring him to report for duty, but he did not respond and instead filed the com-
plaint.

The Labor Arbiter Ruling

Labor Arbiter (LA) Jonalyn M. Gutierrez (Gutierrez) rendered the September 12, 2012 Deci-
sion18 dismissing petitioner's complaint for lack of merit. 19 The LA ratiocinated that respon-
dents were able to show proof that petitioner was notified to report to work after his sus -
pension, but the latter failed to comply; and that petitioner failed to adequately deny that
he received such notices to report.
The NLRC Ruling
On appeal, the NLRC affirmed the dismissal of the complaint.
The CA Ruling
In the assailed Decision27 promulgated on August 28, 2015, the CA dismissed the petition
and deemed the same closed and terminated. The CA ruled that with the execution of a
Quitclaim and Release executed by petitioner, the receipt of the amount of P9,500.00 as
consideration thereof, and the dismissal of the complaint in an Order dated September 12,
2013 by the Executive LA, Fatima Jambaro-Franco (Jambaro-Franco), the petition has been
rendered moot and academic.
Hence, the instant Petition for Review on Certiorari interposing the following issues:
Issues
I.
WHETHER THE [CA] GRAVELY ERRED WHEN IT DECLARED THE CASE DEEMED
CLOSED AND TERMINATED DESPITE THE FACT THAT THE APPROVED QUITCLAIM
AND RELEASE PERTAINS TO A DIFFERENT CASE INVOLVING THE SAME PARTIES.
II.
WHETHER THE [CA] GRAVELY ERRED IN NOT RULING THAT THE PETITIONER WAS
CONSTRUCTIVELY DISMISSED.
III.
WHETHER THE [CA] GRAVELY ERRED IN NOT RULING THAT THE PETITIONER IS ENTI-
TLED TO ALL HIS MONETARY CLAIMS.31
RULING:
We find the petition meritorious.
In the current petition, the petitioner argues that the Quitclaim and Release cited by the
Court of Appeals relates to a different case involving the same parties, making the dis-
missal of his petition inappropriate. He also claims constructive dismissal due to being
placed on floating status for over six months and asserts he never received the notices to
report for work, explaining his failure to return. Respondents, on the other hand, maintain
that they did not dismiss the petitioner and that he failed to report despite receiving four
notices sent to his last known address.

We rule in favor of petitioner.

Petitioner's execution of a Quitclaim and Release after receipt of the amount of
P9,500.00 pertains to a different case.
The amended complaint for illegal dismissal (constructive dismissal), illegal suspension and
claims for moral and exemplary damages and attorney's fees from where the instant peti-
tion is rooted is docketed as NLRC-NCR-Case No. 01-0034-12. 34 It was initially filed on Jan-
uary 6, 2012 and amended on March 14, 2012. It was then dismissed by LA Gutierrez on
September 12, 2012.
Meanwhile, the second complaint, where the same parties entered into an amicable settle-
ment, pertains to the case filed before the Executive LA Jambaro-Franco, with docket num-
ber NLRC-NCR-06-09002-13. It was a complaint for money claim (surety bond) filed on
June 21, 2013.35 Needless to state, there were two separate and distinct cases wherein the
same parties were involved.
It is clear that the petitioner signed a Quitclaim and Release after receiving P9,500 from
the respondents, but this was related to the second case (NLRC-NCR-06-09002-13) involv-
ing the reimbursement of a surety bond, not the first illegal dismissal case. This settlement
led to the dismissal of the second case, as confirmed by the hearing minutes dated Septem-
ber 12, 2013, showing the petitioner’s execution of the Quitclaim and Release upon receipt
of the payment.

Petitioner was constructively dismissed.

Placing security guards on floating status is allowed but should not exceed six months, or
else it may be considered constructive dismissal. The petitioner was suspended for one
month starting May 26, 2011, and was relieved from his post on June 13, 2011, putting him
on floating status from June 26, 2011. Respondents argue that petitioner was not construc-
tively dismissed because they sent him notices to report for work before six months lapsed,
but petitioner claims he never received these notices as they were sent to his old address.
Consequently, petitioner filed a complaint for constructive dismissal on January 6, 2012,
about seven months after being relieved.

Records show that, indeed, there exist four notices of different dates addressed to peti-
tioner requiring him to report for immediate posting. As to whether petitioner received or
not these notices, suffice it to say that the LA and the NLRC have already ruled that re -
spondents have mailed them to petitioner's given address and that petitioner failed to ade-
quately deny receipt of this notices.
It bears stressing, however, that the mailing and/or serving of these notices and the receipt
thereof by petitioner do not automatically hamper a case for constructive dismissal.
In a plethora of cases, We have emphasized that a security guard's employer must give a
new assignment to the employee within six months. This assignment must be to a specific
or particular client. "A general return-to-work order does not suffice." 40 Otherwise stated,
jurisprudence requires not only that the employee be recalled to the agency's office, but
that the employee be deployed to a specific client before the lapse of six months.
In this case, petitioner was on floating status for over six months, and the notices sent by
respondents only directed him to report to the agency without specifying a client. Thus, pe-
titioner was deemed constructively dismissed. Although respondents did not explicitly
claim abandonment, their argument that petitioner failed to report suggests otherwise, but
the prompt filing of the constructive dismissal complaint contradicts any claim of abandon-
ment.
In sum, the CA's dismissal of the Petition for Certiorari based on a Quitclaim and Release is
misplaced. As exhaustively discussed, the Quitclaim and Release pertain to a different case,
a complaint for money claims, not to the instant case for constructive dismissal.
Furthermore, petitioner was indeed constructively dismissed. He was not given a specific
client within six months from the time he was placed in a floating status. While notices
were sent to petitioner, these notices were merely general return-to-work orders which did
not alter petitioner's floating status. The notices did not state a specific client to which peti-
tioner would be assigned.
As a consequence of the finding of illegal dismissal, petitioner would ordinarily be entitled
to reinstatement.47 There are instances, however, that reinstatement is no longer feasible.
Since the complaint for illegal dismissal was filed in 2012, and over 10 years have passed,
the Court ruled that reinstatement is no longer practical. Additionally, the petitioner
specifically requested separation pay instead of reinstatement. Therefore, the Court
granted separation pay equivalent to one month for every year of service, with any fraction
of at least six months counted as one whole year, up to the finality of the Resolution.

Other monetary claims are dismissed for failure of petitioner to prove his entitlement
thereto.