Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 172227 June 29, 2011
SPOUSES WILFREDO PALADA and BRIGIDA PALADA,* Petitioners,
vs.
SOLIDBANK CORPORATION and SHERIFF MAYO DELA CRUZ, Respondents.
D E C I S I O N
DEL CASTILLO, J.:
Allegations of bad faith and fraud must be proved by clear and convincing evidence.1
This Petition for Review on Certiorari2 under Rule 45 of the Rules of Court assails the January 11, 2006 Decision3 of the Court of Appeals (CA) in CA-G.R. CV No. 84236 which dismissed the complaint filed by the petitioners against the respondents and declared as valid the real estate mortgage and certificate of sale. Also assailed is the April 12, 2006 Resolution4 which denied the motion for reconsideration thereto.
Factual Antecedents
In February or March 1997, petitioners, spouses Wilfredo and Brigida Palada, applied for a P3 million loan broken down as follows: P1 million as additional working capital under the bills discounting line; P500,000.00 under the bills purchase line; and P1.5 million under the time loan from respondent Solidbank Corporation (bank).5
On March 17, 1997, petitioners received from the bank the amount of P1 million as additional working capital evidenced by a promissory note6 and secured by a real estate mortgage7 in favor of the bank covering several real properties situated in Santiago City.8
Due to the failure of petitioners to pay the obligation, the bank foreclosed the mortgage and sold the properties at public auction.9
On August 19, 1999, petitioners filed a Complaint10 for nullity of real estate mortgage and sheriff’s certificate of sale11 with prayer for damages, docketed as Civil Case No. 35-2779, against the bank and respondent Sheriff Mayo dela Cruz (sheriff) before the Regional Trial Court (RTC) of Santiago City, Branch 35.12 Petitioners alleged that the bank, without their knowledge and consent, included their properties covered by Transfer Certificate of Title (TCT) Nos. T-225131 and T-225132,13 among the list of properties mortgaged; that it was only when they received the notice of sale from the sheriff in August 1998 that they found out about the inclusion of the said properties; that despite their objection, the sheriff proceeded with the auction sale; and that the auction sale was done in Santiago City in violation of the stipulation on venue in the real estate mortgage.14
The bank, in its Answer,15 denied the material allegations of the Complaint and averred that since petitioners were collaterally deficient, they offered TCT Nos. T-237695, T-237696, T-225131 and T-225132 as additional collateral;16 that although the said properties were at that time mortgaged to the Philippine National Bank (PNB), the bank accepted the offer and caused the annotation of the mortgage in the original copies with the Register of Deeds with the knowledge and consent of petitioners;17 and that when petitioners’ obligation to PNB was extinguished, they delivered the titles of the four properties to the bank.18
Ruling of the Regional Trial Court
On October 21, 2004, the RTC rendered a Decision19 declaring the real estate mortgage void for lack of sufficient consideration. According to the RTC, the real estate mortgage lacks consideration because the loan contract was not perfected due to the failure of the bank to deliver the full P3 million to petitioners.20 The RTC also found the bank guilty of fraud and bad faith, thereby ordering it to pay petitioners moral and exemplary damages, and attorney’s fees. The RTC ruled:
Furthermore, it appears that the defendant unilaterally changed the term and condition of their loan contract by releasing only P1M of the P3M approved loan. The defendant, in so doing, violated their principal contract of loan in bad faith, and should be held liable therefor.
Likewise, the defendant bank acted in bad faith when it made it appear that the mortgage was executed by the plaintiffs on June 16, 1997, when the document was acknowledged before Atty. German Balot, more so, when it made it appear that the mortgage was registered with the Register of Deeds allegedly on the same date, when in truth and in fact, the plaintiffs executed said mortgage sometime [in] March, 1997, obviously much earlier than June 16, 1997; for, if indeed the mortgage was executed on said date, June 16, 1997, it should have been written on the mortgage contract itself. On the contrary, the date and place of execution [were left blank]. Amazingly, defendant claims that it was the plaintiffs who [had the] mortgage notarized by Atty. Balot; such claim however is contrary or against its own interest, because, the defendant should be the most interested party in the genuineness and due execution of material important papers and documents such as the mortgage executed in its favor to ensure the protection of its interest embodied in said documents, and the act of leaving the notarization of such a very important document as a mortgage executed in its favor is contrary to human nature and experience, more so against its interest; hence, the claim is untrue.
Moreover, the defendant also appears to have been motivated by bad faith amounting to fraud when it was able to register the mortgage with the Register of Deeds at the time when the collateral certificates of titles were still in the custody and possession of another mortgagee bank (PNB) due also to an existing/subsisting mortgage covering the same. Definitely, the defendant resorted to some machinations or fraudulent means in registering the contract of mortgage with the Register of Deeds. This should not be countenanced.
Thus, on account of defendant’s bad faith, plaintiffs suffered mental anguish, serious anxiety, besmirched reputation, wounded feelings, moral shock and social humiliation, which entitle them to the award of moral damages, more so, that it was shown that defendants’ bad faith was the proximate cause of these damages plaintiffs suffered.
x x x x
WHEREFORE, with all the foregoing considerations, judgment is hereby rendered in favor of the plaintiffs and against the defendant as follows:
1. DECLARING as null and void the undated real estate mortgage between the plaintiffs and the defendant, appearing as Doc. No. 553; Page No. 29; Book No. 28; Series of 1997; (Exhibits "B" for the plaintiffs, Exhibit "1" for the defendant);
2. Likewise DECLARING as null and void the Sheriff’s Foreclosure and the Certificate of Sale, dated October 7, 1998 (Exhibit "F" to "F-3");
3. ORDERING the defendant to pay the plaintiffs the following damages:
a) Php 1,000,000.00, moral damages;
b) Php 500,000.00, exemplary damages; and
c) Php 50,000.00, Attorney’s fee; and
4. ORDERING the defendant to pay the cost of litigation, including plaintiffs’ counsel’s court appearance at Php1,500.00 each.
SO ORDERED.21
Ruling of the Court of Appeals
On appeal, the CA reversed the ruling of the RTC. The CA said that based on the promissory note and the real estate mortgage contract, the properties covered by TCT Nos. T-225131 and T-225132 were mortgaged to secure the loan in the amount of P1 million, and not the P3 million loan applied by petitioners.22 As to the venue of the auction sale, the CA declared that since the properties subject of the case are in Santiago City, the holding of the auction sale in Santiago City was proper23 pursuant to Sections 124 and 225 of Act No. 3135.26 The CA likewise found no fraud or bad faith on the part of the bank to warrant the award of damages by the RTC, thus:
The List of Properties Mortgaged printed at the dorsal side of the real estate mortgage contract particularly includes the subject parcels of land covered by TCT No. T-225132 and TCT No. T-225131. Below the enumeration, the signatures of [petitioners] clearly appear. The document was notarized before Notary Public German M. Balot. We therefore find no cogent reason why the validity of the real estate mortgage covering the two subject properties should not be sustained.
Settled is the rule in our jurisdiction that a notarized document has in its favor the presumption of regularity, and to overcome the same, there must be evidence that is clear, convincing and more than merely preponderant; otherwise the document should be upheld. Clearly, the positive presumption of the due execution of the subject real estate mortgage outweighs [petitioners’] bare and unsubstantiated denial that the parcels of land covered by TCT Nos. T-225132 and T-225131 were among those intended to secure the loan of One Million Pesos. Their imputation of fraud among the officials of [the bank] is weak and unpersuasive. x x x
x x x x
We also note why despite the alleged non-approval of [petitioners’] application for additional loan, the owner’s copy of TCT Nos. T-225131 and T-225132 remained in the possession of [the bank]. [Petitioners’] claim that they were still hoping to obtain an additional loan in the future appears to this court as a weak explanation. The continued possession by the bank of the certificates of title merely supports the bank’s position that the parcels of land covered by these titles were actually mortgaged to secure the payment of the One Million Peso loan.
x x x x
WHEREFORE, in view of the foregoing, the assailed decision of the Regional Trial Court, Branch 35 of Santiago City in Civil Case No. 35-2779 is hereby ANNULLED and SET ASIDE and a new one entered:
(1) DISMISSING the complaint filed by the plaintiffs-appellees against the defendants-appellants; and
(2) Declaring VALID the questioned real estate mortgage and certificate of sale.
SO ORDERED.27
On February 1, 2006, petitioners moved for reconsideration but the CA denied the same in its Resolution dated April 12, 2006.28
Issues
Hence, the present recourse, where petitioners allege that:
(A)
THE COURT OF APPEALS ERRED AND GRAVELY ABUSED ITS DISCRETION IN ANNULLING OR REVERSING THE FINDINGS OF BRANCH 35, REGIONAL TRIAL COURT OF SANTIAGO CITY THEREBY IN EFFECT DISMISSING THE COMPLAINT FILED BY THE PETITIONERS AGAINST RESPONDENTS SOLIDBANK CORPORATION AND SHERIFF MAYO DELA CRUZ.
(B)
THE COURT OF APPEALS ERRED IN DECLARING VALID THE REAL ESTATE MORTGAGE EXECUTED BETWEEN THE PETITIONERS AND RESPONDENT SOLIDBANK CORPORATION AND IN SUSTAINING THE VALIDITY OF THE CERTIFICATE OF SALE ISSUED BY RESPONDENT SHERIFF MAYO DELA CRUZ.
(C)
THE COURT OF APPEALS ERRED IN MISAPPRECIATING THE
FINDINGS OF FACTS OF BRANCH 35, REGIONAL TRIAL COURT OF SANTIAGO CITY.29
Simply put, the core issue in this case is the validity of the real estate mortgage and the auction sale.
Petitioners’ Arguments
Petitioners echo the ruling of the RTC that the real estate mortgage and certificate of sale are void because the bank failed to deliver the full amount of the loan. They likewise impute bad faith and fraud on the part of the bank in including TCT Nos. T-225131 and T-225132 in the list of properties mortgaged. They insist that they did not sign the dorsal portion of the real estate mortgage contract, which contains the list of properties mortgaged, because at that time the dorsal portion was still blank;30 and that TCT Nos. T-225131 and T-225132 were not intended to be included in the list of mortgaged properties because these titles were still mortgaged with the PNB at the time the real estate mortgage subject of this case was executed.31 Moreover, they claim that they delivered the titles of these properties to the bank as additional collateral for their additional loans, and not for the P1 million loan.32
Respondent bank’s Arguments
The bank denies petitioners’ allegations of fraud and bad faith and argues that the real estate mortgage which was properly notarized enjoys the presumption of regularity.33 It maintains that TCT Nos. T-225131 and T-225132 were mortgaged as additional collateral for the P1 million loan.34
Our Ruling
The petition is bereft of merit.
The loan contract was perfected.
Under Article 193435 of the Civil Code, a loan contract is perfected only upon the delivery of the object of the contract.
In this case, although petitioners applied for a P3 million loan, only the amount of P1 million was approved by the bank because petitioners became collaterally deficient when they failed to purchase TCT No. T-227331 which had an appraised value of P1,944,000.00.36 Hence, on March 17, 1997, only the amount of P1 million was released by the bank to petitioners.37
Upon receipt of the approved loan on March 17, 1997, petitioners executed a promissory note for the amount of P1 million.38 As security for the P1 million loan, petitioners on the same day executed in favor of the bank a real estate mortgage over the properties covered by TCT Nos. T-237695, T-237696, T-237698, T-143683, T-143729, T-225131 and T-225132. Clearly, contrary to the findings of the RTC, the loan contract was perfected on March 17, 1997 when petitioners received the P1 million loan, which was the object of both the promissory note and the real estate mortgage executed by petitioners in favor of the bank.
Claims of fraud and bad faith are unsubstantiated.
Petitioners claim that there was fraud and bad faith on the part of the bank in the execution and notarization of the real estate mortgage contract.
We do not agree.
There is nothing on the face of the real estate mortgage contract to arouse any suspicion of insertion or forgery. Below the list of properties mortgaged are the signatures of petitioners.39 Except for the bare denials of petitioner, no other evidence was presented to show that the signatures appearing on the dorsal portion of the real estate mortgage contract are forgeries.
Likewise flawed is petitioners’ reasoning that TCT Nos. T-225131 and T-225132 could not have been included in the list of properties mortgaged as these were still mortgaged with the PNB at that time. Under our laws, a mortgagor is allowed to take a second or subsequent mortgage on a property already mortgaged, subject to the prior rights of the previous mortgages.401avvphi1
As to the RTC’s finding that "the x x x bank acted in bad faith when it made it appear that the mortgage was executed by the [petitioners] on June 16, 1997, when the document was acknowledged before Atty. German, x x x when in truth and in fact, the [petitioners] executed said mortgage sometime in March, 1997 x x x," we find the same without basis. A careful perusal of the real estate mortgage contract would show that the bank did not make it appear that the real estate mortgage was executed on June 16, 1997, the same day that it was notarized, as the date of execution of the real estate mortgage contract was left blank.41 And the mere fact that the date of execution was left blank does not prove bad faith. Besides, any irregularity in the notarization or even the lack of notarization does not affect the validity of the document. Absent any clear and convincing proof to the contrary, a notarized document enjoys the presumption of regularity and is conclusive as to the truthfulness of its contents.42
All told, we find no error on the part of the CA in sustaining the validity of the real estate mortgage as well as the certificate of sale.
WHEREFORE, the petition is hereby DENIED. The assailed January 11, 2006 Decision of the Court of Appeals and its April 12, 2006 Resolution in CA-G.R. CV No. 84236 are hereby AFFIRMED.
SO ORDERED.
MARIANO C. DEL CASTILLO
Associate Justice
WE CONCUR:
RENATO C. CORONA
Chief Justice
Chairperson
| TERESITA J. LEONARDO-DE CASTRO Associate Justice | LUCAS P. BERSAMIN Associate Justice |
MARTIN S. VILLARAMA, JR.
Associate Justice
C E R T I F I C A T I O N
Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the above 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
Footnotes
* In view of the demise of petitioner Brigada Palada, the title of the instant case should have been "Wilfredo Palada and Heirs of Brigada Palada" (See Transcript of Stenographic Notes [TSN] dated September 9, 2003, pp. 2-3).
1 Cathay Pacific Airways, Ltd. v. Sps. Vazquez, 447 Phil. 306, 321 (2003).
2 Rollo, pp. 9-21.
3 Id. at 23-33; penned by Associate Justice Rodrigo V. Cosico and concurred in by Associate Justices Regalado E. Maambong and Lucenito N. Tagle.
4 CA rollo, pp. 84-85.
5 Rollo, p. 40.
6 Records, p. 7. Although the promissory note is dated June 16, 1997, both parties admit that the promissory note was executed on March 17, 1997 (Complaint, id. at 2 and Answer, id. at 23).
7 Id. at 8.
8 Rollo, pp. 23-24; TSN dated July 17, 2000, pp. 6-9, Direct Examination of Wilfredo Palada.
9 Id. at 24.
10 Records, pp. 1-6.
11 Id. at 11-14.
12 Rollo, p. 34.
13 Indicated as T-225152 and T-221512 in the Complaint; see records, p. 2.
14 Id. at 3-4.
15 Id. at 23-26.
16 Id. at 24.
17 Id.
18 Id.
19 Rollo, pp. 34-46; penned by Judge Efren M. Cacatian.
20 Id. at 43.
21 Id. at 44-46.
22 Id. at 29-30.
23 Id. at 31.
24 SECTION 1. When a sale is made under a special power inserted in or attached to any real-estate mortgage hereafter made as security for the payment of money or the fulfillment of any other obligation, the provisions of the following sections shall govern as to the manner in which the sale and redemption shall be effected, whether or not provision for the same is made in the power.
25 SECTION 2. Said sale cannot be made legally outside of the province in which the property sold is situated; and in case the place within said province in which the sale is to be made is the subject of stipulation, such sale shall be made in said place or in the municipal building of the municipality in which the property or part thereof is situated.
26 An Act To Regulate The Sale Of Property Under Special powers Inserted In Or Annexed To Real-Estate Mortgages.
27 Rollo, pp. 30-32.
28 Id. at 10-11.
29 Id. at 14-15.
30 Id. at 110.
31 Id.
32 Id. at 114.
33 Id. at unpaged-129 and 131-132.
34 Id. at 127.
35 Art. 1934. An accepted promise to deliver something by way of commodatum or simple loan is binding upon the parties, but the commodatum or simple loan itself shall not be perfected until the delivery of the object of the contract.
36 TSN dated July 17, 2000, pp. 21-22, Direct Examination of Wilfredo Palada; TSN dated July 31, 2000, pp. 7 and 25-26, Cross-examination and Re-direct examination of Wilfredo Palada; TSN dated August 25, 2003, p. 22, Direct Examination of Julieta Ayala.
37 TSN dated July 17, 2000, p. 5; Direct Examination of Wilfredo Palada.
38 Id. at 5-7.
39 Rollo, p. 30.
40 Cinco v. Court of Appeals, G.R. No. 151903, October 9, 2009, 603 SCRA 108,118.
41 Records, p. 8.
42 Ocampo v. Land Bank of the Philippines, G.R. No. 164968, July 3, 2009, 591 SCRA 562, 571-572.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 102358 November 19, 1992
SPOUSES VICENTE and GLORIA MANALO, petitioners,
vs.
HON. NIEVES ROLDAN-CONFESOR, in her capacity as Undersecretary of Labor and Employment, JOSE SARMIENTO as POEA Administrator, CAREERS PLANNERS SPECIALISTS INTERNATIONAL, INC., and SPOUSES VICTOR and ELNORA FERNANDEZ, respondents.
BELLOSILLO, J.:
The Court views with grave concern the alarming incidents of illegal recruitment which demonstrate all too clearly that overseas employment has fast developed into a major source not only of much-needed foreign exchanged but also, for the cunning and the crafty, of easy money.
In response to a newspaper advertisement looking for a couple to work as driver and tutor cum baby sitter, petitioners Vicente and Gloria Manalo went to Career Planners Specialists International, Inc. (CPSI), a licensed service contracting firm owned by private respondents, the spouses Victor and Elnora Fernandez. After the requisite interview and testing, they were hired to work for a family in Saudi Arabia for a monthly salary of US$350.00 each. According to petitioners, a placement fee of P40,000.00 was imposed as a precondition for the processing of their papers. They paid only P30,000.00 in cash and executed a promissory note for the balance. Then they were allowed by respondent Elnora Fernandez to sign their contract papers but did not issue a receipt for the placement fee despite demand.
Shortly before boarding their flight to Saudi Arabia, petitioners were handed their contracts. According to Gloria, she was surprised to discover that her position had been changed to that of domestic help. However, a CPSI employee assured her that the change was only for the purpose of facilitating her departure and did not in any way alter her employment as tutor. Incidentally, CPSI provided petitioners with the Travel Exit Pass (TEP) of Filipino Manpower Services, Inc. (FILMAN), a duly licensed recruitment agency.
Contrary to the representation of her recruiter, Gloria was actually hired as a domestic help and not as a tutor, so that after working for only twenty-five (25) days in Jeddah, she returned to Manila. Soon after, Vicente also resigned from his work and followed her home. He could not stand the unbearable working conditions of his employment. However, before leaving, he had to execute a promissory note to cover his plane fare which respondent Victor Fernandez advanced. Vicente also had to sign a quitclaim in favor of CPSI and his employer.
On 29 February 1988, petitioners sued private respondents before the Philippines Overseas Employment Administration (POEA) charging them with illegal exaction, 1 false adverstisement, 2 and violation of other pertinents laws, rules and regulations. They demanded the refund of the amount exacted from them, plus payment of moral damages and the imposition of administrative sanctions. 3
Private respondents countered: (1) that Gloria applied as domestic help fully aware that she could not be a tutor since she did not speak Arabic; (2) that the promissory note for P10,000.00 was required of petitioners because they were hired without paying placement fees; (3) that it was unlikely for petitioners, who were mature, educated and experienced in overseas work, to part with P30,000.00 without securing a receipt; (4) that Vicente executed a quitclaim in favor of CPSI duly authenticated by embassy officials in Saudi Arabia; (5) that there was no impropriety in having the employment papers of petitioners processed by FILMAN because it was a sister company of CPSI, and private respondents Victor and Elnora were officers in both agencies.
Private respondents prayed for the disqualification of petitioners from overseas employment, and sought to recover from them the SR 1,150 plane fare advanced by Victor for Vicente, P10,000.00 as placement fee evidenced by a promissory note, and attorney's fees.
Mainly, on the basis of the transcripts of petitioners' testimonies in the clarificatory questioning before the Rizal Provincial Prosecutor in a related criminal case, 4 the POEA issued its Order of 7 May 1990 giving more weight and credence to petitioners' version thus —
After a careful evaluation of the facts and the evidence presented, we are more inclined to give weight to complainants' posture. Complainants' version of the case spontaneously presented in their pleadings is, to our mind, more convincing than respondent's stand. Moreover, the manner by which complainants narrated the whole incident inspired belief in the allegation that respondent Career is indeed guilty of illegal exaction. Thus, the actual expenses incurred by herein complainants computed hereinbelow less the allowable fees of P3,000.00 (P1,500.00 per worker, respondent being a service contractor) should be returned to them.
Actual Expenses —
P30,000.00 — placement fees
14.00 — application form
300.00 — psychological test
1,400.00 — medical exam
P31,000.00 — total
less 3,000.00 — processing fees at
P1,500.00 per applicant
P28,714.00 — amount to be refunded
It appearing, however, that only respondent Career Planners Specialist(s) Int'l. Inc., took part in the collection of the aforesaid amount, the same should be solely held liable.
We cannot likewise give credence to the Final Quitclaim signed by complainant Vicente Manalo before he left for the Philippines and presented by respondent as defense. While its genuineness may not be in question, we believe that it has no bearing on the issue at bar. The aforesaid Quitclaim deals more with matters concerning complainants' employment abroad. However, the subject of the instant claim is the refund of complainants' expenses prior to their deployment to Saudi Arabia.
On the other hand, we hold FILMAN liable for allowing its document such as the TEP to be used by other agency. Respondent's defense that there is nothing wrong in this because FILMAN is a sister company of CAREER does not merit consideration because such practice is not allowed under the POEA Rules and Regulations. A check with our records, however, showed that respondent FILMAN had been put in the list of forever banned agencies effective April 5, 1989.
Anent the claim for moral damages, this Office has no jurisdiction to entertain the same.
WHEREFORE, . . . the Authority of Career Planners Specialist(s) International is hereby suspended for four (4) months or in lieu thereof, a fine of P40,000.00 is hereby imposed for illegal exaction on two counts plus restitution of the amount of P28,714.00 to herein complainants in both instances.
Filipino Manpower Services, Inc. is hereby meted a fine of P40,000.00 for two counts of misrepresentation. Its perpetual disqualification from recruitment activities is hereby reiterated.
The claim for moral damages is dismissed for lack of jurisdiction.
Respondent Career's counterclaim is likewise dismissed or lack of merit. 5
Private respondents filed a motion for reconsideration and on 4 February 1991, POEA issued a resolution setting arise its earlier order stating that —
It is worth mentioning at this point that our sole basis for holding respondent Career liable for illegal exaction was the uncorroborated testimony of the complainants.
As we have consistently held, (the) charge of illegal exaction is a serious charge which may cause the suspension or cancellation of the authority or license of the offending agency. Hence, it should be proven and substantiated by a clear and convincing evidence. Mere allegation of complainant that the agency charged more than the authorized fee will not suffice to indict the agency for illegal exaction unless the allegation is supported by other corroborative circumstantial evidence.
Thus, for lack of concrete evidence or proof to support our initial findings, we are inclined to reconsider the penalty imposed upon respondent.
Foregoing premises, the penalty of suspension imposed upon respondent Career Planners Specialist(s) International, Inc. pursuant to our Order dated May 7, 1990 is hereby LIFTED.
Accordingly, the alternative fine of P40,000.00 which was paid under protest by respondent is hereby ordered refunded to them. 6
Petitioners appealed to the Secretary of Labor. On 5 July 1991, then Undersecretary of Labor Ma. Nieves Roldan-Confesor (now Secretary of Labor) sustained the reconsideration of POEA. Her Order reads in part —
We find . . . no cogent reason or sufficient justification to reverse or modify the assailed Order.
Records reveal that the only basis for holding respondent Career Planners Specialist(s) International, Inc., liable for illegal exaction, as held in the previous POEA Order dated May 7, 1990 was the uncorroborated testimony of the complainants. There was no concrete evidence or proof to support the POEA Administrator's initial findings.
We take this opportunity to inform the complainants that the charge of illegal exaction is a serious charge which may cause the suspension or cancellation of the authority or license of a recruitment agency. Therefore, said charge must be proven and substantiated by clear and convincing evidence. A mere allegation will not suffice to find an agency liable for illegal exaction unless said allegation is supported by other corroborative circumstantial evidence. In this connection, records show that complainants could not narrate the specific circumstances surrounding their alleged payment of the amount of P30,000.00. They could not even remember the specific date when said amount was paid to respondent agency. In addition, when complainants were separately questioned as to how the money was kept bundled together prior to being handed to respondent agency for payment, Gloria Manalo said it was wrapped in a piece of paper while Vicente Manalo said it was placed inside an envelope. 7
On the charge of petitioners that they were given jobs (driver/domestic help) different from those advertised by private respondents, the Undersecretary ruled that there was no misrepresentation by way of false advertisement because it was established that private respondents also caused to be printed in the same newspaper page a second box looking for a couple driver/domestic help.
In her Order of 9 October 1991, then Undersecretary Ma. Nieves Roldan-Confesor denied petitioners' motion for reconsideration. 8
In the present recourse, petitioners claim that public respondent POEA committed a fatal jurisdictional error when it resolved private respondents' motion for reconsideration in violation of Rule V, Book VI of the 1985 POEA Rules and Regulations directing the transmittal of motions for reconsideration to the National Labor Relations Commission (NLRC) for determination. Consequently, for want of legal competence to act on said motion, the Order of 4 February 1991, as well as the subsequent orders of public respondent Undersecretary of Labor dated 5 July 1991 and 9 October 1991, is null and void.
In Aguinaldo Industries Corporation v. Commissioner of Internal Revenue 9 We ruled —
To allow a litigant to assume a different posture when he comes before the court and challenge the position he had accepted at the administrative level, would be to sanction a procedure whereby the court — which is supposed to review administrative determinations — would not review, but determine and decide for the first time, a question not raised at the administrative forum. This cannot be permitted, for the same reason that underlies the requirement of prior exhaustion of administrative remedies to give administrative authorities the prior opportunity to decide controversies within its competence, and in much the same way that, on the judicial level, issues not raised in the lower court cannot be raised for the first time on appeal.
The alleged procedural lapse by respondent POEA was raised by petitioners only before Us, notwithstanding that such ground was already existing when they appealed to the Secretary of Labor. Ironically, petitioners now question the jurisdiction of the Secretary of Labor over the appeal which they themselves elevated to that office. When petitioners filed their motion for reconsideration with the Undersecretary of Labor, this procedural issue was not even mentioned. Clearly, it would be the height of unfairness and inequity if We now allow petitioners to backtrack after getting an unfavorable verdict from public respondents whose authority they themselves involved. In Tijam v. Sibonghanoy 10 We said: ". . . we frown upon the "undesirable practice" of a party submitting his case for decision and then accepting the judgment, only if favorable, and attacking it for lack of jurisdiction, when adverse . . . ."
In this regard, however, We find no procedural infirmity constituting reversible error.
The 1985 POEA Rules and Regulations 11 is divided into eight (8) Books. Book VI, cited by petitioners, is entitled "Adjudication Rules". The procedure outlined therein relates to the original and exclusive jurisdiction exercised by POEA through its Adjudication Department "to hear and decide all cases involving employer-employee relations arising out of or by virtue of a law or contact involving Filipino workers for overseas employment," involving "[v]iolation of the terms and conditions of employment . . . . [d]isputes relating to the implementation and interpretation of employment contracts . . . [m]oney claims of workers against their employers and/or their duly authorized agents in the Philippines or vice versa . . . . [c]laims for death, disability and other benefits arising out of employment . . . . and . . . . [v]iolations of our non-compliance with any compromise agreement entered into by and between the parties in an overseas employment contract."
On the other hand, Book II entitled "Licensing and Regulations" of the 1985 POEA Rules and Regulations, notably Rule VI cited by private respondents, refers particularly to the procedure for suspension, cancellation and revocation of Authority or License 12 through the POEA Licensing and Regulation Office (LRO).
The controversy in the present case centers on the liability of private respondents for illegal exaction, false advertisement and violation of pertinent laws and rules on recruitment of overseas workers and the resulting imposition of penalty of suspension of the Authority of respondent CPSI. Quite plainly, We are not concerned here with employer-employee relations, the procedure of which is outlined in Book VI; rather, with the suspension or revocation of Authority embodied in Book II.
Evidently, no jurisdictional error was accordingly committed because in cases affecting suspension, revocation or cancellation of Authority, the POEA has authority under Sec. 18, Rule VI, Book II, to resolve motions for reconsideration which may thereafter be appealed to the Secretary of Labor. Section 18, provides: "A motion for reconsideration of an order o suspension (issued by POEA) or an appeal to the Minister (now Secretary of Labor) from an order cancelling a license or authority may be entertained only when filed with the LRO within ten (10) working days from the service of the order or decision" (parenthesis supplied).
Petitioners also argue that public respondents gravely abused their discretion when they violated petitioners' right to administrative due process by requiring clear and convincing evidence to establish the charge illegal exaction. This point is well taken. There was grave abuse of discretion.
In the administrative proceedings for cancellation, revocation or suspension of Authority or License, no rule requires that testimonies of complainants be corroborated by documentary evidence, if the charge of unlawful exaction is substantially proven. All administrative determinations require only substantial proof and not clear and convincing evidence as erroneously contended by pubic respondents.
Clear and convincing proof is ". . . more than mere preponderance, but not to extent of such certainty as is required beyond reasonable doubt as in criminal cases . . ." 13 while substantial evidence ". . . consists of more than a mere scintilla of evidence but may be somewhat less than a preponderance . . . ." 14 Consequently, in the hierarchy of evidentiary values, We find proof beyond reasonable doubt at the highest level, followed by clear and convincing evidence, preponderance of evidence, and substantial evidence, in that order.
That the administrative determination of facts may result in the suspension or revocation of the authority of CPSI does not require a higher degree of proof. The proceedings are administrative, and the consequent imposition of suspension/revocation of Authority/License does not make the proceedings criminal. Moreover, the sanctions are administrative and, accordingly, their infliction does not give rise to double jeopardy when a criminal action is instituted for the same act.
Thus We held in Atlas Consolidated Mining and Development Corporation v. Factoran, Jr. 15 —
. . . it is sufficient that administrative findings of fact are supported by evidence, or negatively stated, it is sufficient that findings of fact are not shown to be unsupported by evidence. Substantial evidence is all that is needed to support an administrative finding of fact, and substantial evidence is such relevant evidence as a reasonable mind might accept as adequate to support a conclusion (Ang Tibay v. Court of Industrial Relations, 69 Phil. 635, 642; Police Commission v. Lood, 127 SCRA 762 [1984].
The POEA, after assessing the evidence of both parties, found that private respondents collected from petitioners P30,000.00 as placement fees; consequently, it ruled that there was illegal exaction. Surprisingly, without altering its findings of fact, POEA reconsidered its order. It held that uncorroborated testimonies were not enough to conclude that illegal exaction was committed, particularly so that this might result in the suspension or revocation of respondents' authority to engage in recruitment activities. The premise that testimonies of petitioners should be supported by some other form of evidence is, to say the least, fallacious. In Castillo v. Court of Appeals, 16 where the appellate court reversed the findings of fact of the trial court by requiring a higher degree of proof, We held —
. . . we find no strong and cogent reason which justifies the appellate court's deviation from the findings and conclusions of the trial court. As pointed out in Hernandez v. Intermediate Appellate Court (189 SCRA 758 [1990]), in agrarian cases, all that is required is mere substantial evidence. Hence, the agrarian court's findings of fact which went beyond the minimum evidentiary support demanded by law, that is, supported by substantial evidence, are final and conclusive and cannot be reversed by the appellate tribunal.
The seeming discrepancy in the statements of the witnesses (one saying the money was wrapped in paper, the other, that the money was in an envelope; neither testified on the specific date of the exaction), refers only to minor details. Perhaps it would be different if the variance refers to essential points, e.g., whether the amount of P30,000.00 was actually paid by petitioners to private respondents. Consequently, whether the money was wrapped in paper, or placed in an envelope, or unwrapped or whether the parties could not recall when there payment was effected is unimportant. After all, the money could have been wrapped in paper and placed in the envelope, or placed in the envelope without being wrapped, or wrapped with use of an unpasted envelope that appeared to be the envelope itself. In either case, petitioners, could have viewed them differently; but the difference is ultimately inconsequential. The crucial point to consider is that the petitioners categorically and unequivocally testified that respondents collected from them the amount of P30,000.00 as their placement fees and that they paid the amount demanded. In this regard, it may be worth to emphasize that only substantial evidence, not necessarily clear and convincing evidence, is required. Moreover, when confronted with conflicting assertions, the rule that "as between a positive and categorical testimony which has a ring of truth on one hand, and a bare denial on the other, the former is generally held to prevail . . . ." 17 applies.
But even on the supposition that there was no payment of P30,000.00, it cannot be denied that private respondents required petitioners to execute a promissory note for P10,000.00 purportedly because petitioners were hired without paying placement fees. The mere charging of P10,000.00, standing alone, is enough to hold private respondents answerable for illegal exaction because the allowable amount to be collected per contract worker according to respondent POEA was only P1,500.00, or P3,000.00 for both petitioners.
WHEREFORE, the petition is GRANTED. The challenged Orders of respondent Undersecretary of Labor dated 5 July 1991 and 9 October 1991, as well as the Resolution of respondent POEA dated 4 February 1991, having been issued with grave abuse of discretion amounting to lack or excess of jurisdiction are SET ASIDE, and the original Order of respondent POEA dated 7 May 1990 is ordered REINSTATED and AFFIRMED.
SO ORDERED.
Cruz, Padilla and Griño-Aquino, JJ., concur.
Footnotes
1 Charging or accepting, directly or indirectly, any amount greater than that specified in the schedule of allowable fees (Art. 34, par. [a], P.D. 442, as amended, known as the Labor Code of the Philippines); imposing or accepting, directly or indirectly, any amount of money, goods or services, or any fee or bond in excess of what is prescribed by the POEA (Sec. 2, par. [a], Rule VI, Book II, 1985 POEA Rules and Regulations).
2 Engaging in act(s) of misrepresentation, such as publication or advertisement of false or deceptive notices or information in relation to the recruitment and placement of worker (Sec. 2, par. [b], Ibid.).
3 Petition, Annex "A", Rollo, p. 30.
4 I.S. No. 88-647, "Gloria Manalo v. Victor Fernandez and Elnora Fernandez", and I.S. No. 88-718, "Vicente Manalo v. Victor Manalo v. Victor Fernandez and Elnora Fernandez", both for estafa/illegal recruitment.
5 Petition, Annex "E", Rollo, pp. 122-124.
6 Petition, Annex "G", Rollo, pp. 133-134.
7 Petition, Annex "I", Rollo, pp. 138-139.
8 Petition, Annex "K", Rollo, p. 166.
9 No. L-29790, 25 February 1982; 112 SCRA 136, 140.
10 No. L-21450, 15 April 1968, 23 SCRA 29, 36, citing a number of related cases.
11 The 1985 POEA Rules and Regulations was then in effect during the proceedings before POEA. However, it is now superseded by the 1991 POEA Rules and Regulations promulgated 31 May 1991.
12 "Authority" is a document issued by the Minister (now Secretary of Labor) to a private recruitment entity authorized to deploy its own workers for its project overseas (Sec. 1, par. [d], Rule II Book I, 1985 POEA Rules and Regulations. "License" is a document issued by the Minister (now Secretary of Labor) to an agency authorizing it to recruit and hire Filipino workers for overseas employment (Sec. 1, par. [q], Ibid. Public respondent POEA appears to confuse Authority with License, for while POEA refers to CPSI, a licensed service contractor, what it suspended actually was the Authority of CPSI.
13 Black's Law Dictionary, 5th Ed., p. 227, citing Fred C. Walker C. Walker Agency, Inc. v. Lucas, 215 Va. 535, 211 S.E. 2d 88, 92.
14 Ibid., p. 1281, citing Marker v. Finch, D.C. Del., 322 F. Supp. 905, 910.
15 G. R. No. 75501, 15 September 1987; 154 SCRA 49, 54.
16 G. R. No. 98028, 27 January 1992; 205 SCRA 529, 535.
17 People v. Caballes, G. R. Nos. 93437-45, 12 July 1991; 199 SCRA 152, 167.
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