Republic of the Philippines

Supreme Court
Manila

SECOND DIVISION

CAROLINA HERNANDEZ- G.R. No. 171165

NIEVERA, DEMETRIO P.
HERNANDEZ, JR., and Present:
MARGARITA H. MALVAR,
Petitioners,
CARPIO, J., Chairperson,
NACHURA,
- versus PERALTA,
ABAD, and
MENDOZA, JJ.
WILFREDO HERNANDEZ, HOME
INSURANCE AND GUARANTY
CORPORATION, PROJECT
MOVERS REALTY AND Promulgated:
DEVELOPMENT CORPORATION,
February 14, 2011
MARIO P. VILLAMOR and LAND
BANK OF THE PHILIPPINES,
Respondents.
x---------------------------------------------------------------------------------------x

DECISION

PERALTA, J.:

This Rule 45 petition for review assails the October 19, 2005 Decision[1] of the Court
of Appeals in CA-G.R. CV No. 83852,[2] as well as the January 11, 2006
Resolution[3] in the same case which denied reconsideration. The said decision had
reversed and set aside the August 30, 2004 judgment[4] rendered by the Regional
Trial Court (RTC) of San Pablo City, Laguna, Branch 32 in Civil Case No. SP-
5742(2000) one for rescission of a memorandum of agreement and declaration of
nullity of a deed of assignment and conveyance, with prayer for preliminary
injunction and damages.

The facts follow.

Project Movers Realty & Development Corporation (PMRDC), one of the

respondents herein, is a duly organized domestic corporation engaged in real estate
development.Sometime in 1995, it entered through its president, respondent Mario
Villamor (Villamor), into various agreements with co-respondents Home Insurance
& Guaranty Corporation (HIGC)[5] and Land Bank of the Philippines (LBP), in
connection with the construction of the Isabel Homes housing project in Batangas
and of the Monumento Plaza commercial and recreation complex in Caloocan
City. In its Asset Pool Formation Agreement, PMRDC conveyed to HIGC the
constituent assets of the two projects,[6] whereas LBP agreed to act as trustee of the
resulting Asset Pool[7] for a consideration.[8] The execution of the projects would be
funded largely through securitization, a method of sourcing development funds by
the issuance of participation certificates against the direct backing assets of the
projects,[9] whereby LBP would act as the nominal issuer of such certificates with
the Asset Pool itself acting as the real issuer.[10] HIGC, in turn, would provide
guaranty coverage to these participation certificates in accordance with its Contract
of Guaranty with PMRDC and LBP. [11]

On November 13, 1997, PMRDC entered into a Memorandum of Agreement

(MOA) whereby it was given the option to buy pieces of land owned by petitioners
Carolina Hernandez-Nievera (Carolina), Margarita H. Malvar (Margarita) and
Demetrio P. Hernandez, Jr. (Demetrio). Demetrio, under authority of a Special
Power of Attorney to Sell or Mortgage,[12] signed the MOA also in behalf of Carolina
and Margarita. In the aggregate, the realty measured 4,580,451 square meters and
was segregated by agreement into Area I and Area II, respectively pertaining to the
parcels covered by Transfer Certificate of Title (TCT) Nos. T-3137, T-3138, T-3139
and T-3140 on the one hand, and on the other by TCT Nos. T-3132, T-3133, T-3134,
T-3135 and T-3136, all issued by the Register of Deeds of Laguna. The MOA
materially provides:
1. THAT, the consideration for the sale of the parcels of land (Areas I and II)
shall be TWENTY-FIVE PESOS (Php 25.00) per square meter or a total of PESOS:
ONE HUNDRED FOURTEEN MILLION FIVE HUNDRED ELEVEN TWO
HUNDRED SEVENTY (Php114,511,270.00);

1. THAT, the VENDEE shall have the option to purchase the above-
described parcels of land within a period of twelve (12) months from the date
of this instrument and that the VENDEE shall pay the vendor option money
in the following amounts and on the dates herein specified:

Area I
PESOS: SIX MILLION (Php6,000,000.00) payable in two (2)
equal installments of PESOS: THREE MILLION
(Php3,000,000.00), the first installment due on or before
November 20, 1997; the second installment due on or before
December 15, 1997, both installments to be covered by
postdated checks upon signing of this Agreement.

Area II
Option money of PESOS: EIGHT MILLION FIVE HUNDRED
THOUSAND (Php8,500,000.00) payable within thirty (30) days
after conveyance to the Isabel Homes Asset Pool.

2. THAT, should the VENDEE exercise the option to purchase the parcels of
land within the stipulated period, the VENDEE shall complete the TWENTY-
FIVE (25%) PERCENT downpayment inclusive of the option money within the
said stipulated period. Balance of the TWENTY FIVE (25%) PERCENT
downpayment exclusive of the option money for Area I is PESOS: TEN
MILLION FOUR HUNDRED EIGHTY-TWO THOUSAND TWO HUNDRED
SIXTY-TWO (Php10,482,262.00) and for Area II is PESOS: THREE MILLION
SIX HUNDRED FORTY-FIVE THOUSAND FIVE HUNDRED FIFTY- SIX
(Php3,645,556.00).

The balance of the purchase price in the amount of PESOS: EIGHTY-FIVE

MILLION EIGHT HUNDRED EIGHTY-THREE FOUR HUNDRED FIFTY-SIX
(Php85,883,456.00) shall be payable within two (2) years in eight (8) quarterly
installments covered by postdated checks. Schedule of payments shall be as
follows:

January 31, 1999 Php 10,735,432.00

April 30, 1999 10,735,432.00
July 31, 1999 10,735,432.00
October 31, 1999 10,735,432.00
January 31, 2000 10,735,432.00
April 30, 2000 10,735,432.00
July 30, 2000 10,735,432.00
 October 31, 2000 10,735,432.00

3. THAT, should the VENDEE fail to exercise its option to purchase the
said described parcels of land within the stipulated period, the option money
shall be forfeited in favor of the VENDOR and that the VENDEE shall return
to the VENDOR all the Transfer Certificates of Title covering the said
described parcels of land within a period of THIRTY (30) DAYS from the
stipulated period, FREE FROM ALL LIENS AND ENCUMBRANCES;

4. THAT, the VENDOR, at the request of the VENDEE, shall agree to

convey the parcels of land to any bank or financial institution by way of mortgage
or to a Trustee by way of a Trust Agreement at any time from the date of this
instrument, PROVIDED, HOWEVER, that the VENDOR is not liable for any
mortgage or loans or obligations that will be incurred by way of mortgage of Trust
Agreement that the VENDEE might enter into;

5. It is agreed that the VENDOR shall have the sole responsibility in the
settlement of the tenants and eviction of the tenants and eviction of the occupants
of the described parcels of land after all consideration have been fully paid by the
VENDEE to the VENDOR;

6. THAT, all taxes including capital gains tax, transfer tax and documentary
stamps tax shall be for the account of the VENDOR;

7. THAT, the VENDOR hereby warrants valid title to, and peaceful
possession of the said described parcels of land after all considerations have been
fully paid.[13]

As an implementation of the MOA, the lands within Area I were then

mortgaged to Solid Bank for which petitioners received consideration from
PMRDC.[14]

Later on, PMRDC saw the need to convey additional properties to and
augment the value of its Asset Pool to support the collateralization of additional
participation certificates to be issued.[15] Thus, on March 23, 1998, it entered with
LBP and Demetrio the latter purportedly acting under authority of the same special
power of attorney as in the MOA into a Deed of Assignment and Conveyance
(DAC)[16] whereby the lands within Area II covered by TCT Nos. T-3132, T-3133,
T-3134, T-3135 and T-3136 were transferred and assigned to the Asset Pool in
exchange for a number of shares of stock which supposedly had already been issued
in the name and in favor of Demetrio. These pieces of land are the subject of the
present controversy as far as they are affected by the explicit provision in the DAC
which dispensed with the stipulated obligation of PMRDC in the MOA to pay option
money should it opt to buy the properties.[17]

PMRDC admittedly did not avail of its option to purchase the lands in Area II
in the twelve months that passed after the execution of the MOA. Although PMRDC
delivered to petitioners certain checks representing the money, the same however
allegedly bounced.[18] Hence, on January 8, 1999, petitioners demanded the return of
the corresponding TCTs.[19] In its January 21, 1999 letter to Demetrio, however,
PMRDC, through Villamor, stated that the TCTs could no longer be delivered back
to petitioners as the covered properties had already been conveyed and assigned to
the Asset Pool pursuant to the March 23, 1998 DAC. In the correspondence that
ensued, petitioners disowned Demetrios signature in the DAC and labeled it a mere
forgery. They explained that Demetrio could not have entered into the said
agreement as his power of attorney was limited only to selling or mortgaging the
properties and not conveying the same to the Asset Pool. Boldly, they asserted that
the fraudulent execution of the DAC was made possible through the connivance of
all the respondents.[20]

With that final word, petitioners instituted an action before the RTC of San
Pablo City, Laguna, Branch 32 for the rescission of the MOA, as well as for the
declaration of nullity of the DAC. They prayed for the issuance of a writ of
preliminary injunction and for the payment of damages.[21]

Ruling for petitioners, the trial court, on August 30, 2004, declared the MOA to be
an option contract and ordered its rescission. It, likewise, declared the DAC null and
void as it made a definite finding of forgery of Demetrios signature as well as fraud
in its execution, and accordingly, adjudged respondents PMRDC and Villamor liable
to petitioner for damages.[22] The dispositive portion of the decision reads:

WHEREFORE, PREMISES CONSIDERED, judgment is hereby rendered

in the favor of the plaintiffs and against the defendants as follows:

1. Rescinding the Memorandum of Agreement (MOA) executed

between the plaintiffs and Project Movers Realty [&] Development
Corporation (PMRDC);
 2. Declaring null and void the Deed of Assignment and Conveyance
(DAC) executed between Project Movers Realty [&] Development
Corporation, Land Bank of the Philippines and Demetrio Hernandez whose
signature is forged;
3. Ordering Transfer Certificate of Title Nos. T-3132, T-3133, T-
3134 and T-3135, all in the names of the plaintiffs, which are in the custody
of the Court, to be delivered to plaintiffs immediately and the plaintiffs are
ordered to issue a corresponding receipt of said certificates of title signed
by all the plaintiffs to be submitted to the OIC-Branch Clerk of Court of this
Court within five (5) days from receipt of said titles;

4. Ordering defendants Mario Villamor and Wilfredo Hernandez to

pay plaintiffs, jointly and severally, the following:

a. Actual damages of P500,000.00;

b. Moral damages of P200,000.00;
c. Exemplary damages of P200,000.00;
d. Attorneys fees in the amount of P300,000.00;
e. And the costs of the suit.

SO ORDERED.[23]

Aggrieved, respondents filed a notice of appeal and elevated the matter to the Court
of Appeals. On October 19, 2005, the Court of Appeals issued the assailed Decision
reversing and setting aside the trial courts decision as follows:

WHEREFORE, based on the foregoing, the appeal is GRANTED. The decision

dated August 30, 2004 of the Regional Trial Court, Branch 32, San Pablo City in
Civil Case No. SP-5742 (2000) is REVERSED and SET ASIDE and a new one is
entered declaring the Deed of Conveyance valid and thus, the Transfer Certificates
of Title subject of this case are ordered returned to HIGC.No costs.
SO ORDERED.[24]

Central to the ruling of the Court of Appeals is its contrary finding that the allegation
of forgery of Demetrios signature in the DAC was not established by the evidence
and, hence, following the legal presumption of regularity in the execution of
notarized deeds, it upheld the validity of the DAC.[25] The Court of Appeals noted
that the incompatibility in the terms of the MOA and the DAC clearly signified the
intention of the parties to have the MOA novated by subsequent agreement and have
the properties conveyed to the Asset Pool in exchange for PMRDC shares to be
issued to Demetrio. This, according to the appellate court, completely changed the
original obligations of PMRDC as provided in the MOA. It noted further that it was
premature to order the release of the subject TCTs to petitioners at this stage of the
proceedings, because that would amount to an execution of the decision.[26]

With the denial of their motion for reconsideration,[27] petitioners filed the instant
petition for review attributing error to the Court of Appeals in declining to rescind
the MOA and declare the DAC null and void.

Petitioners insist that the obligation of PMRDC to deliver back the TCTs
arises on its failure to exercise the option to purchase the lands according to the terms
of the MOA, and that the deliberate refusal of PMRDC to perform such obligation
gives ground for the rescission of the MOA. This thesis is perched on petitioners
argument that the MOA could not have possibly been novated by the DAC
because first, Demetrios signature therein has been forged, and second, Demetrio
could not have validly assented to the DAC in behalf of Carolina and Margarita
because his special power was limited only to selling or mortgaging the properties
and excludes conveying and assigning the said properties to the Asset Pool for
consideration.[28] They also point out that the DAC itself is infirm insofar as it
stipulated to convey the lands to the Asset Pool as the latter supposedly is neither a
registered corporation nor a partnership and does not possess a legal personality.[29]

Commenting on the petition, PMRDC and Villamor advance that

petitioners allegation of fraud and forgery are all factual matters that are
inappropriate in a Rule 45 petition.[30]More importantly, they aver that the novation
of the MOA by the DAC is unmistakable as the DAC itself has made an express
reference to the MOA provisions on the payment of option money and, hence, has
expressly modified the pertinent terms thereof.[31]

HIGC and its president, Wilfredo Hernandez, both represented by the Office
of the Government Corporate Counsel (OGCC),[32] and LBP[33] are of the same
view.[34] In addition, HIGC explains that contrary to petitioners belief, the transfer
of the properties under the DAC is valid as the conveyance has been made to the
Asset Pool with LBP, an entity with juridical entity, acting as trustee
thereof.[35] Addressing the issue of forgery and fraud in the execution of the DAC,
HIGC maintains that these factual matters remain to be mere allegations which
nothing in the records of the case could conclusively prove, except the self-serving
testimony of petitioners themselves.[36]
The Court denies the petition.

Petitioners cause stems from the failure of PMRDC to restore to petitioners

the possession of the TCTs of the lands within Area II upon its failure to exercise
the option to purchase within the 12-month period stipulated in the
MOA. Respondents maintain, however, that said obligation, dependent as it is on the
exercise of the option to purchase, has altogether been expressly obliterated by the
terms of the DAC whereby petitioners, through Demetrio as attorney-in-fact, have
agreed to novate the terms of the MOA by extinguishing the core obligations of
PMRDC on the payment of option money. This seems to suggest that with the
execution of the DAC, PMRDC has already entered into the exercise of its option
except that its obligation to deliver the option money has, by subsequent agreement
embodied in the DAC, been substituted instead by the obligation to issue
participation certificates in Demetrios name but which, likewise, has not yet been
performed by PMRDC. But petitioners stand against the validity of the DAC on the
ground that the signature of Demetrio therein was spurious.

Firmly settled is the jurisprudential rule that forgery cannot be presumed from
a mere allegation but rather must be proved by clear, positive and convincing
evidence by the party alleging the same.[37] The burden to prove the allegation of
forgery in this case has not been conclusively discharged by petitioners
because first, nothing in the records supports the allegation except only perhaps
Demetrios explicit self-serving disavowal of his signature in open
court.[38] Second, while in fact Demetrio at the trial of the case had committed to
have the subject signature examined by an expert,[39] nevertheless, the trial had
terminated without the results of the examination being submitted in
evidence.Third, the claim of forgery, unsubstantiated as it is, becomes even more
unremarkable in light of the fact that the DAC involved in this case is a notarized
deed guaranteed by public attestation in accordance with law, such that the execution
thereof enjoys the legal presumption of regularity in the absence of compelling proof
to the contrary.[40]

Yet the inquiry on the validity of the DAC does not terminate with the finding
alone of the genuineness of Demetrios signature therein, because petitioners also
stand against its validity on the ground of Demetrios non-authority to execute the
same. They claim that the execution of the DAC would be beyond the power of
Demetrio to perform as his authority is limited only to selling or mortgaging the
properties and does not include assigning and conveying said properties to the Asset
Pool in consideration of shares of stocks for his lone benefit. For their part,
respondents, who believe Demetrios power of attorney was broad enough to
effectuate a novation of PMRDCs core obligations in the MOA or, at the least,
implement the provisions thereof through the DAC, invoke the 4th and 5th whereas-
clauses in the DAC which, in relation to each other, supposedly pertain to that certain
provision in the MOA which authorizes the conveyance of the properties to the Asset
Pool in exchange for corporate shares.[41]
The 4th and 5th whereas-clauses in the DAC read as follows:

WHEREAS, on November 3, 1997, PMRDC and LANDOWNER have

entered into a Memorandum of Agreement whereby the former agreed to
convey to the Isabel Homes Asset Pool certain real properties located at Sta.
Maria, Laguna;

[WHEREAS], the LANDOWNER and PMRDC have agreed to revise

and modify the said Memorandum of Agreement, whereby the
LANDOWNER shall dispense with the option money as a requisite to the sale
and purchase of the properties by PMRDC, and agreed to convey absolutely
and unqualifiedly the same properties directly to the Isabel Homes Asset Pool
for and in exchange of shares of stock or equity in PMRDC.[42]

While indeed we find no provision in the MOA such as that alluded to in the
aforequoted 4th whereas-clause in the DAC which purportedly embodies an
agreement by the parties to assign and convey the subject properties to the Asset
Pool, we surmise that the clause could be referring to paragraph 5 of the MOA which
stipulates a commitment on the part of petitioners to give their consent to an
assignment and conveyance of the properties to the Asset Pool but only once a
request therefor is made by PMRDC. Paragraph 5 reads:

5. THAT, the VENDOR at the request of the VENDEE shall agree to

convey the parcels of land to any bank or financial institution by way of
mortgage or to a Trustee by way of a Trust Agreement at any time from the
date of this instrument, PROVIDED, HOWEVER, that the VENDOR is not liable
 for any mortgage or loans or obligations that will be incurred by way of mortgage
of Trust Agreement that the VENDEE might enter into;[43]

Petitioners profess, however, that no such request was ever intimated to them at any
time during the subsistence of the PMRDCs right to exercise the option to buy. But
respondents are quick to reason that a request is unnecessary because Demetrio has
been legally enabled by his special power to give such consent and accordingly
execute the DAC, effect a novation of the MOA, and extinguish the stipulated
obligations of PMRDC therein, or at least that he could assent to the implementation
of the MOA provisions in the way that transpired. We agree.

Demetrios special power of attorney granting the powers to sell and/or mortgage
reads in part:
1. To sell and/or mortgage in favor of any person, corporation, partnership,
private banking or financial institution, government or semi-government banking
or financial institution for such price or amount and under such terms and
conditions as our aforesaid attorney-in-fact may deem just and proper, parcels
of land more particularly described as follows:
xxx
2. To carry out the authority aforestated, to sign, execute and deliver such deeds,
instruments and other papers that may be required or necessary;
3. To further attain the authority herein given, to do and perform such acts and
things that may be necessary or incidental to fully carry out the authority herein
granted.[44]

It is in the context of this vesture of power that Demetrio, representing his

shared interest with Carolina and Margarita, entered into the MOA with PMRDC. It
is likewise within this same context that Demetrio later on entered into the DAC and
accordingly extinguished the previously subsisting obligation of PMRDC to deliver
the stipulated option money and replaced said obligation with the delivery instead
of participation certificates in favor of Demetrio.
The powers conferred on Demetrio were exclusive only to selling and
mortgaging the properties. Between these two specific powers, the power to sell is
quite controversial because it is the sale transaction which bears close resemblance
to the deal contemplated in the DAC. In fact, part of the testimony of Atty. Danilo
Javier, counsel for respondent HIGC and head of its legal department at the time, is
that in the execution of the DAC, respondents had relied on Demetrios special power
of attorney and also on his supposed agreement to be paid in kind, i.e., in shares of
stock, as consideration for the assignment and conveyance of the subject properties
to the Asset Pool.[45] What petitioners miss, however, is that the power conferred on
Demetrio to sell for such price or amount[46] is broad enough to cover the exchange
contemplated in the DAC between the properties and the corresponding corporate
shares in PMRDC, with the latter replacing the cash equivalent of the option money
initially agreed to be paid by PMRDC under the MOA. Suffice it to say that price is
understood to mean the cost at which something is obtained, or something which
one ordinarily accepts voluntarily in exchange for something else, or the
consideration given for the purchase of a thing.[47]

Thus, it becomes clear that Demetrios special power of attorney to sell is

sufficient to enable him to make a binding commitment under the DAC in behalf of
Carolina and Margarita. In particular, it does include the authority to extinguish
PMRDCs obligation under the MOA to deliver option money and agree to a more
flexible term by agreeing instead to receive shares of stock in lieu thereof and in
consideration of the assignment and conveyance of the properties to the Asset
Pool. Indeed, the terms of his special power of attorney allow much leeway to
accommodate not only the terms of the MOA but also those of the subsequent
agreement in the DAC which, in this case, necessarily and consequently has resulted
in a novation of PMRDCs integral obligations. On this score, we quote with approval
the decision of the Court of Appeals, aptly citing the case of California Bus Lines,
Inc. v. State Investment House, Inc.[48] thus

There are two ways which could indicate, in fine, the presence of novation and
thereby produce the effect of extinguishing an obligation by another which
substitutes the same. The first is when novation has been explicitly stated and
declared in unequivocal terms. The second is when the old and the new obligations
are incompatible on every point. The test of incompatibility is whether the two
obligations can stand together, each one having its independent existence. If they
cannot, they are incompatible, and the latter obligation novates the
first. Corollarily, changes that breed incompatibility must be essential in nature and
not merely accidental. The incompatibility must take place in any of the essential
elements of the obligation such as its object, cause or principal conditions thereof;
otherwise, the change would be merely modificatory in nature and insufficient to
extinguish the original obligation.[49]
 In view of the foregoing, the Court finds no useful purpose in addressing all
the other issues raised in this petition.

A final note. Section 10, Book IV, Title III, Chapter 3[50] of the Revised
Administrative Code of 1987 has designated the OGCC to act as the principal law
office of government-owned or controlled corporations (GOCCs) in connection with
any judicial or quasi-judicial proceeding. Yet between the two respondents GOCCs
in this case LBP and HIGC it is only the latter for which the OGCC has entered its
appearance. Nowhere in the records is it shown that the OGCC has ever entered its
appearance in this case as principal legal counsel of respondent LBP, or that at the
very least it has given express conformity to the LBP legal departments
representation.[51]

In Land Bank of the Philippines v. Martinez,[52] citing Land Bank of the

Philippines v. Panlilio-Luciano,[53] we explained that the legal department of LBP is
not expressly authorized by its charter to appear in behalf of the corporation in any
proceeding as the mandate of the law is explicit enough to place the said department
under the OGCCs power of control and supervision. We held in that case:

[Section 10] mandates the OGCC, and not the LBP Legal Department,
as the principal law office of the LBP. Moreover, it establishes the
proper hierarchical order in that the LBP Legal Department remains under
the control and supervision of the OGCC. x x x

At the same time, the existence of the OGCC does not render the LBP Legal
Department a superfluity. We do not doubt that the LBP Legal Department carries
out vital legal services to LBP. However, the performance of such functions cannot
deprive the OGCCs role as overseer of the LBP Legal Department and its mandate
of exercising control and supervision over all GOCC legal departments. For the
purpose of filing petitions and making submissions before this Court, such
control and supervision imply express participation by the OGCC as principal
legal counsel of LBP. x x x

It should also be noted that the aforementioned Section 10, Book IV, Title
III, Chapter 3 of the Administrative Code of 1987 authorizes the OGCC to receive
the attorney's fees adjudged in favor of their client GOCCs, such fees accruing to a
special fund of the OGCC. Evidently, the non-participation of the OGCC in
litigations pursued by GOCCs would deprive the former of its due funding as
authorized by law. Hence, this is another reason why we cannot sustain Attys.
Beramo and Berbao's position that the OGCC need not participate in litigations
pursued by LBP.
 It may strike as disruptive to the flow of a GOCCs daily grind to require the
participation of the OGCC as its principal law office, or the exercise of control and
supervision by the OGCC over the acts of the GOCCs legal departments. For
reasons such as proximity and comfort, the GOCC may find it convenient to rely
instead on its in-house legal departments, or more irregularly, on private
practitioners. Yet the statutory role of the OGCC as principal law office of
GOCCs is one of long-standing, and we have to recognize such function as part
of public policy. Since the jurisdiction of the OGCC includes all GOCCs, its
perspective is less myopic than that maintained by a particular legal
department of a GOCC. It is not inconceivable that left to its own devices, the
legal department of a given GOCC may adopt a legal position inconsistent with
or detrimental to other GOCCs. Since GOCCs fall within the same
governmental framework, it would be detrimental to have GOCCs foisted into
adversarial positions by their respective legal departments. Hence, there is
indubitable wisdom in having one overseer over all these legal departments
which would ensure that the legal positions adopted by the GOCCs would not
conflict with each other or the government.

x x x Certainly, Section 10, Book IV, Title III, Chapter 3 of the Administrative
Code of 1987 can be invoked by adverse parties or by the courts in citing as
deficient the exclusive representation of LBP by its Legal Department. Then again,
if neither the adverse parties nor the courts of jurisdiction choose to contest this
point, there would be no impediment to the litigation to maintain. x x x[54]

WHEREFORE, the Petition is DENIED. The October 19, 2005 Decision and
January 11, 2006 Resolution of the Court of Appeals, in CA- G.R. CV No. 83852,
are hereby AFFIRMED.

SO ORDERED.

DIOSDADO M. PERALTA
Associate Justice

WE CONCUR:

ANTONIO T. CARPIO
 Associate Justice
Chairperson

ANTONIO EDUARDO B. NACHURA ROBERTO A. ABAD

Associate Justice Associate Justice

JOSE CATRAL MENDOZA

Associate Justice

ATTESTATION

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

ANTONIO T. CARPIO
Associate Justice
Second Division, Chairperson

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution and the Division
Chairpersons 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 Courts Division.

RENATO C. CORONA
Chief Justice
[1]
Penned by Associate Justice Juan Q. Enriquez, with Associate Justices Conrado M. Vasquez, Jr. and Vicente Q.
Roxas, concurring; rollo, pp. 26-36.
[2]
The case was entitled, Carolina Hernandez-Nievera, Demetrio P. Hernandez, Jr. and Margarita H.
Malvar v. Wilfredo F. Hernandez, Home Insurance & Guaranty Corporation, Project Movers Realty & Development
Corp., Mario P. Villamor and Land Bank of the Philippines.
[3]
Rollo, pp. 38-39.
[4]
The judgment was signed by Judge Zorayda Herradura-Salcedo, records, Vol. I, pp. 170-202.
[5]
Now known as Home Guaranty Corporation.
[6]
See Asset Pool Formation Agreement dated May 29, 1995, folder of exhibits, pp. 48-69.
[7]
See Trust Agreement dated May 29, 1995, id. at 32-47.
[8]
See Trustee Fee Agreement dated November 15, 1995 between PMRDC and LBP, id. at 81-84.
[9]
See Trust Agreement dated May 29, 1995, id. at 32.
[10]
Asset Pool Formation Agreement, rollo, p. 115.
[11]
See Contract of Guaranty dated May 29, 1995, folder of exhibits, pp. 70-75.
[12]
See Special Power of Attorney dated January 23, 1997; id. at 21-23.
[13]
See Memorandum of Agreement, id. at 18-19. (Emphasis supplied.)
[14]
TSN, September 6, 2000, pp. 19-21, 40-43; TSN, September 27, 2000, p. 5.
[15]
PMRDC Board Resolution No. 7, 1998, folder of exhibits, p. 85.
[16]
See Deed of Assignment and Conveyance, id. at 25-27.
[17]
Id. at 25. It provides:
[WHEREAS], the LANDOWNER and PMRDC have agreed to revise and modify the said Memorandum of
Agreement, whereby the LANDOWNER shall dispense with the option money as a requisite to the sale and
purchase of the properties by PMRDC, and agreed to convey absolutely and unqualifiedly the same properties
directly to the Isabel Homes Asset Pool for and in exchange of shares of stock or equity in PMRDC. (Emphasis
supplied.)
[18]
TSN, September 6, 2000, pp. 8-17. TSN, March 8, 2001, p. 13; TSN, December 7, 2000, pp. 28, 32.
[19]
Records, Vol. I, pp. 29-30.
[20]
CA rollo, pp. 202-221.
[21]
Records, Vol. I, pp. 3-13. The trial court declined to issue a preliminary injunctive relief in view of the fact that
the TCTs in question have already been put in custodia legis, (Records, Vol. II, pp. 38, 84-87).
[22]
Records, Vol. II, pp. 199-200.
[23]
Id. at 201-202.
[24]
CA rollo, p. 212.
[25]
Id.
[26]
Id. at 210-212.
[27]
CA rollo, pp. 245-246.
[28]
Rollo, pp. 15-16.
[29]
Id. at 16-17.
[30]
Id. at 43-44.
[31]
Id. at 45.
[32]
Id. at 68-69.
[33]
Represented by its own Administrative Legal and Litigation Department; id. at 51-52.
[34]
Rollo, pp. 55-56, 86, 89-92.
[35]
Id. at 87-88.
[36]
Id. at 92-101.
[37]
St. Marys Farm, Inc. v. Prima Real Properties, Inc., G.R. No. 158144, July 31, 2008, 560 SCRA 704, 713; Libres
v. Delos Santos, G.R. No.176358, June 17, 2008, 554 SCRA 642, 655; Fernandez v. Fernandez, 416 Phil. 322, 342
(2001); R.F. Navarro & Co., Inc. v. Hon. Vailoces, 413 Phil. 432, 442 (2001); Tenio-Obsequio v. Court of
Appeals, G.R. No. 107967, March 1, 1994, 230 SCRA 550, 558.
[38]
TSN, August 29, 2000, p. 16; TSN, September 27, 2000, pp. 10-11, 19-20.
[39]
TSN, August 29, 2000, p. 17.
[40]
Libres v. Delos Santos, supra note 37; Pan Pacific Industrial Sales Co., Inc. v. Court of Appeals G.R. No. 125283,
February 10, 2006, 482 SCRA 164.
[41]
See Comment of HIGC, rollo, p. 98.
[42]
Rollo, p. 162. (Emphasis supplied.)
[43]
Folder of Exhibits, p. 19. (Emphasis supplied.)
[44]
Id. at 1-3. (Emphasis supplied.)
[45]
TSN, December 7, 2000, pp. 23-34.
[46]
Id.
[47]
Blacks Law Dictionary, 6th ed., pp. 1188-1189.
[48]
463 Phil. 689 (2003).
[49]
Rollo, p. 34.
[50]
Section 10. Office of the Government Corporate Counsel. - The Office of the Government Corporate Counsel
(OGCC) shall act as the principal law office of all government-owned or controlled corporations, their subsidiaries,
other corporate offsprings and government acquired asset corporations and shall exercise control and supervision over
all legal departments or divisions maintained separately and such powers and functions as are now or may hereafter
be provided by law. In the exercise of such control and supervision, the Government Corporate Counsel shall
promulgate rules and regulations to effectively implement the objectives of the Office.
The OGCC is authorized to receive the attorney's fees adjudged in favor of their client government-owned
or controlled corporations, their subsidiaries/other corporate offsprings and government acquired asset corporations.
These attorney's fees shall accrue to a Special fund of the OGCC, and shall be deposited in an authorized government
depository as trust liability and shall be made available for expenditure without the need for a Cash Disbursement
Ceiling, for purposes of upgrading facilities and equipment, granting of employee's incentive pay and other benefits,
and defraying such other incentive expenses not provided for in the General Appropriations Act as may be determined
by the Government Corporate Counsel.
[51]
See Entry of Appearance with Motion for Extension of Time to File Comment, rollo, pp. 51-52.
[52]
G.R. No. 169008, August 14, 2007, 530 SCRA 158.
[53]
G.R. No. 165428, July 13, 2005 (Resolution).
[54]
Land Bank of the Philippines v. Martinez, supra note 52, at 164-166, citing Land Bank of the Philippines v.
Panlilio-Luciano, supra note 53. (