A. 1.

Substantive law creates substantive rights and the two terms in this respect may be

said to be synonymous. Substantive rights in a term which includes those rights

which one enjoys under the legal system prior to the disturbance of normal

relations. (60 C.J. 980.)

Substantive law is that part of the law which creates, defines and regulates rights, or

which regulates the right and duties which give rise to a cause of action; that part of

the law which courts are established to administer; as opposed to adjective or

remedial law, which prescribes the method of enforcing rights or obtain redress for

their invasions (36 C.J. 27; 52 C.J.S. 1026).

- Bustos vs. Lucero (46 Off. Gaz., January Supp., pp. 445, 448)

Substantive law is that part of the law which creates rights concerning life, liberty or

property, or the powers of instrumentalities for the administration of public affairs.

- Primicias vs. Ocampo, 81 Phil. 650

Procedural law refers to the adjective law which prescribes rules and forms of

procedure in order that courts may be able to administer justice. Procedural laws do

not come within the legal conception of a retroactive law, or the general rule against

the retroactive operation of statues - they may be given retroactive effect on actions

pending and undetermined at the time of their passage and this will not violate any

right of a person who may feel that he is adversely affected, insomuch as there are

no vested rights in rules of procedure.

- De Los Santos vs Vda de Mangubat GR-No 149508

October 10, 2007 | 535 SCRA 411

Procedural law refers to the adjective laws which prescribe rules and forms of

procedure in order that courts may be able to administer justice

- Lopez vs. Gloria, 40 Phil. 33

2 - 2.1. Primicias vs Ocampo, G.R. No. L-6120, June 30, 1953

Facts: Petitioner was charged before the Court of First Instance of Manila with two
statutory offenses. On April 23, 1952, petitioner filed a motion praying that
assessors be appointed to assist the court in considering the questions of fact
involved in said cases as authorized by section 49 of Republic Act No. 409, otherwise
known as Revised Charter of the City of Manila, which provides that "the aid of
assessors in the trial of any civil or criminal action in the Municipal Court, or the
Court of First Instance, within the City, may be invoked in the manner provided in
the Code of Civil Procedure."
On April 28, 1952, the court issued an order denying the motion holding in effect
that with the promulgation of the Rules of Court by the Supreme Court, which
became effective on July 1, 1940, all rules concerning pleading, practice and
procedure in all courts of the Philippines previously existing were not only
superseded but expressly repealed, that the Supreme Court, having been vested with
the rule-making power, expressly omitted the portions of the Code of Civil
Procedure regarding assessors in said Rules of Court, and that the reference to said
statute by section 49 of Republic Act No. 409 on the provisions regarding assessors
should be deemed as a mere surplusage.

Petitioner is now imputing abuse of discretion to the respondent Judge and further
seeks to prohibit respondent Judge from proceeding with the trial of two criminal
cases without the assistance of assessors in accordance with the provisions of
section 49 of Republic Act No. 409.

Issue: Whether or not the right of the petitioner to a trial with the aid of assessors is
a substantive right, and being a substantive right, it cannot be impaired by the
courts in the exercise of its rule-making power.

Ruling: Yes. Rules of procedure should be distinguished from substantive law. A

substantive law creates, defines or regulates rights concerning life, liberty or
property, or the powers of agencies or instrumentalities for the administration of
public affairs, whereas rules of procedure are provisions prescribing the method by
which substantive rights may be enforced in courts of justice.

Substantive law creates substantive rights and the two terms in this respect may be
said to be synonymous. Substantive rights in a term which includes those rights
which one enjoys under the legal system prior to the disturbance of normal
relations. (60 C.J. 980.)

Substantive law is that part of the law which creates, defines and regulates rights, or
which regulates the right and duties which give rise to a cause of action; that part of
the law which courts are established to administer; as opposed to adjective or
remedial law, which prescribes the method of enforcing rights or obtain redress for
their invasions (36 C.J. 27; 52 C.J.S. 1026).
The trial with the aid of assessors as granted by section 154 of the Code of Civil
Procedure and section 2477 of the old Charter of Manila are parts of substantive law
and as such are not embraced by the rule-making power of the Supreme Court.
This is so because in said section 154 this matter is referred to as a right given by
law to a party litigant.

Being substantive in nature, it is not difficult to see why the provisions concerning
trial by assessors embodied in the Code of Civil Procedure have not been
incorporated by the Supreme Court in the present Rules of Court. To have done so,
it would have been a travesty of its rule-making power which, by direct mandate of
the Constitution, is limited to matters referring to pleading, practice and procedure.
The application that the respondents draw from the failure to incorporate these
provisions in the present Rules of Court to the effect that the intention was to
eliminate them or repeal them all together cannot, therefore, stand in the light of
the observations and authorities we have above adverted to.

2.2. Baguio Market Vendors Multi-Purpose Cooperative vs. Cabato - Cortes

G.R. No. 165922, February 26, 2010.

Facts: Petitioner is a credit cooperative organized under Republic Act No. 6938,the
Cooperative Code of the Philippines. Article 62(6) of RA 6938 exempts cooperatives:
from the payment of all court and sheriff's fees payable to the Philippine
Government for and in connection with all actions brought under this Code, or
where such action is brought by the Cooperative Development Authority before the
court, to enforce the payment of obligations contracted in favor of the cooperative.

In 2004, petitioner as mortgagee, filed with the Clerk of Court of the Regional Trial
Court of Baguio City a petition to extrajudicially foreclose a mortgage under Act
3135, as amended. Under Section 7(c) of Rule 141, as amended, petitions for
extrajudicial foreclosure are subject to legal fees based on the value of the
mortgagee’s claim. Invoking Article 62 (6) of RA 6938, petitioner sought exemption
from payment of the fees.

30 August 2004, Judge Iluminada Cabato-Cortes, Executive Judge of the trial court,
denied the request for exemption, citing Section 22 of Rule 141 of the Rules of
Court, as amended, exempting from the Rule’s coverage only the "Republic of the
Philippines, its agencies and instrumentalities" and certain suits of local government
units. Petitioner sought reconsideration but respondent denied its motion in the
Order dated 6 October 2004. This time, respondent reasoned that petitioner’s
reliance on Article 62(6) of RA 6938 is misplaced because the fees collected under
Rule 141 are not "fees payable to the Philippine Government" as they do not accrue
to the National Treasury but to a special fund under the Court’s control.

The Office of the Solicitor General (OSG), in its Manifestation (in lieu of Comment),
joins causes with petitioner. The OSG submits that as the substantive rule, Article
62(6) of RA 6938 prevails over Section 22 of Rule 141, a judicial rule of procedure.
The OSG also takes issue with respondent’s finding that the legal fees collected
under Rule 141 are not "fees payable to the Philippine Government" as the judiciary
forms part of the Philippine government, as defined under the Revised
Administrative Code.

Issue: Whether or not, the petitioner’s application for extrajudicial foreclosure is

exempt from legal fees under Article 62(6) of RA 6938.

Ruling: No. RA 6938 does not apply to petitioner’s foreclosure proceeding. The
scope of the legal fees exemption Article 62(6) of RA 6938 grants to cooperatives is
limited to: (1) actions brought under RA 6938; and (2) actions brought by the
Cooperative Development Authority to enforce the payment of obligations
contracted in favor of cooperatives. By simple deduction, it is immediately apparent
that Article 62(6) of RA 6938 is no authority for petitioner to claim exemption from
the payment of legal fees in this proceeding because first, the fees imposable on
petitioner do not pertain to an action brought under RA 6938 but to a petition for
extrajudicial foreclosure of mortgage under Act 3135. Second, petitioner is not the
Cooperative Development Authority which can claim exemption only in actions to
enforce payments of obligations on behalf of cooperatives.

In Echegaray v. Secretary of Justice, it was held that the power to promulgate rules
of pleading, practice and procedure is no longer shared by the Judiciary with
Congress, more so with the Executive. The Court has exclusive power to promulgate
rules on pleading, practice and procedure as "one of the safeguards of this Court’s
institutional independence".

The payment of legal fees is a vital component of the rules promulgated by this
Court concerning pleading, practice and procedure, it cannot be validly annulled,
changed or modified by Congress. As one of the safeguards of this Court’s
institutional independence, the power to promulgate rules of pleading, practice and
procedure is now the Court’s exclusive domain.

2.3. Land Bank of the Philippines vs. De Leon, G.R. No. 143275. March 20, 2003.

Facts: Respondent spouses Arlene & Bernardo de Leon filed a petition to fix the just
compensation of a parcel of land before the Regional Trial Court of Tarlac, Branch
63, acting as a Special Agrarian Court. On December 19, 1997, the agrarian court
rendered summary judgment fixing the compensation of the subject property as
follows: (1) P1,260,000 for the 16.69 hectares of riceland and (2) P2,957,250 for the
30.4160 hectares of sugarland.
The Department of Agrarian Reform & Land Bank of the Philippines both filed separate
appeals using different modes. DAR filed a petition for review while LBP interposed
an ordinary appeal by filing a notice of appeal. DAR’s petition for review was assigned
to the Special Third Division of the Court of Appeals while LBP’s ordinary appeal was
assigned to the Fourth Division of the same court.

On November 6, 1998, the appellate court’s Special Third Division rendered a decision
in the petition for review filed by DAR, giving due course to the same petition and
was ordered by the appellate court to compute appropriate compensation, along with
the legal interests. Meanwhile on February 15, 2000, the appellate court’s Fourth
Division dismissed LBP’s ordinary appeal primarily holding that LBP availed of the
wrong mode of appeal. LBP filed a motion for reconsideration but the same was
denied.

On July 14, 2000, LBP filed before the Supreme Court a petition for review of the
decision of the Court of Appeals. On September 10, 2002, the SC rendered a Decision
affirming the decision of the dismissal of the appellate court due to the wrong mode
of appeal.

Issue: Whether or not, a petition for review is the proper mode of appeal from the
decisions of Special Agrarian Courts.

Ruling: Yes. Section 60 of RA 6657 (The Comprehensive Agrarian Reform Law) is

clear in providing petition for review as the appropriate mode of appeal from
decisions of Special Agrarian Courts.
This case actually lays down a rule of procedure, specifically, a rule on the proper
mode of appeal from decisions of Special Agrarian Courts. Under Section 5 (5),
Article VIII of the 1987 Philippine Constitution, rules of procedure shall not diminish,
increase or modify substantive rights. In determining whether a rule of procedure
affects substantive rights, the test is laid down in Fabian vs. Desierto, which provides
that:

In determining whether a rule prescribed by the Supreme Court, for the

practice and procedure of the lower courts, abridges, enlarges, or modifies
any substantive right, the test is whether the rule really regulates procedure,
that is, the judicial process for enforcing rights and duties recognized by
substantive law and for justly administering remedy and redress for a
disregard or infraction of them. If the rule takes away a vested right, it is not
procedural. If the rule creates a right such as the right to appeal, it may be
classified as a substantive matter; but if it operates as a means of
implementing an existing right then the rule deals merely with procedure.

SC held that, declaring a petition for review as the proper mode of appeal from
judgments of Special Agrarian Courts, is a rule of procedure which affects
substantive rights. If said ruling is given retroactive application, it will prejudice LBP’s
right to appeal because pending appeals in the Court of Appeals will be dismissed
outright on mere technicality thereby sacrificing the substantial merits thereof. It
would be unjust to apply a new doctrine to a pending case involving a party who
already invoked a contrary view and who acted in good faith thereon prior to the
issuance of said doctrine.

Hence, in the light of the aforementioned circumstances, SC emphasized the

prospective application of their Decision dated September 10, 2002. A prospective
application of the same Decision is not only grounded on equity and fair play but
also based on the constitutional tenet that rules of procedure shall not impair
substantive rights.
B 1. Asia United Bank vs. Goodland Company, Inc. G.R. No. 188051, November 22,
2010

Facts: Petitioner assails the February 16, 2009 Decision and the May 18, 2009
Resolution of the Court of Appeals (CA) in CA-G.R. SP No. 103304, annulling the
August 23, 2007 and February 15, 2008 Orders of the Regional Trial Court (RTC) of
Makati City, Branch 150, which in turn denied due course to respondent Goodland
Company, Inc.’s (GOODLAND) notice of appeal for invalid substitution of counsel.

An Ex-Parte Application/Petition for the Issuance of Writ of Possession was filed by

Asia United Bank (AUB) over a 5,801-square- meter lot located in Makati City and
covered by Transfer Certificate of Title (TCT) No. 223120 of the Registry of Deeds of
Makati in AUB’s name. The petition alleged that, on February 20, 2000, GOODLAND
executed a Third Party Real Estate Mortgage on the property in favor of AUB to secure
a P202 million credit.

With the expiration of the redemption period, AUB proceeded to execute an Affidavit
of Consolidation of Ownership. AUB thereafter secured a Certificate Authorizing
Registration from the Bureau of Internal Revenue to facilitate the transfer of the title.
On March 1, 2007, the RTC issued the writ of possession sought by AUB. It ratiocinated
that, as the purchaser of the property at the foreclosure sale and as the new title
holder thereof, AUB’s right of possession and enjoyment of the same had become
absolute. GOODLAND, through its counsel on record, Atty. Bautista, filed a motion for
reconsideration and a supplemental motion for reconsideration, but both were denied
in the Order dated April 25, 2007, which was received by Atty. Bautista on June 15,
2007.

GOODLAND sought recourse with the CA by initially filing a Notice of Appeal with the
RTC, through a certain Atty. Lito Mondragon. On August 23, 2007, the RTC issued an
Order denying due course to GOODLAND’s notice of appeal for being legally inutile
due to Atty. Mondragon’s failure to properly effect the substitution of former counsel
on record, Atty. Bautista. GOODLAND moved for reconsideration, but the same was
denied in the Order dated February 15, 2008.

Issue: Whether or not Goodland complied with the prescribed procedure to properly
effect the substitution of former counsel on record and whether or not they have
the right to oppose the Ex-Parte Application/Petition for the Issuance of Writ of
Possession

Ruling: No. Goodland’s contention were not appreciated by the SC. The emerging
trend of jurisprudence is more inclined to the liberal and flexible application of the
Rules of Court. However, we have not been remiss in reminding the bench and the
bar that zealous compliance with the rules is still the general course of action. Rules
of procedure are in place to ensure the orderly, just, and speedy dispensation of
cases; to this end, inflexibility or liberality must be weighed. The relaxation or
suspension of procedural rules or the exemption of a case from their operation is
warranted only by compelling reasons or when the purpose of justice requires it.

The emerging trend of jurisprudence is more inclined to the liberal and flexible
application of the Rules of Court. Rules of procedure are in place to ensure the orderly,
just, and speedy dispensation of cases; to this end, inflexibility or liberality must be
weighed. The relaxation or suspension of procedural rules or the exemption of a case
from their operation is warranted only by compelling reasons or when the purpose of
justice requires it.

In Hon. Fortich v. Hon. Corona, SC expounded on these guiding principles:

Procedural rules, we must stress, should be treated with utmost respect and due
regard since they are designed to facilitate the adjudication of cases to remedy the
worsening problem of delay in the resolution of rival claims and in the administration
of justice. The requirement is in pursuance to the bill of rights inscribed in the
Constitution which guarantees that "all persons shall have a right to the speedy
disposition of their cases before all judicial, quasi-judicial and administrative bodies."
The adjudicatory bodies and the parties to a case are thus enjoined to abide strictly
by the rules. While it is true that a litigation is not a game of technicalities, it is equally
true that every case must be prosecuted in accordance with the prescribed procedure
to ensure an orderly and speedy administration of justice. There have been some
instances wherein this Court allowed a relaxation in the application of the rules, but
this flexibility was "never intended to forge a bastion for erring litigants to violate the
rules with impunity." A liberal interpretation and application of the rules of procedure
can be resorted to only in proper cases and under justifiable causes and circumstances.

In Sebastian v. Hon. Morales, SC straightened out the misconception that the

enforcement of procedural rules should never be permitted if it would prejudice the
substantive rights of litigants:

Under Rule 1, Section 6 of the 1997 Rules of Civil Procedure, liberal construction of
the rules is the controlling principle to effect substantial justice. Thus, litigations
should, as much as possible, be decided on their merits and not on technicalities. This
does not mean, however, that procedural rules are to be ignored or disdained at will
to suit the convenience of a party. Procedural law has its own rationale in the orderly
administration of justice, namely, to ensure the effective enforcement of substantive
rights by providing for a system that obviates arbitrariness, caprice, despotism, or
whimsicality in the settlement of disputes. Hence, it is a mistake to suppose that
substantive law and procedural law are contradictory to each other, or as often
suggested, that enforcement of procedural rules should never be permitted if it would
result in prejudice to the substantive rights of the litigants.

Hence, rules of procedure must be faithfully followed except only when for persuasive
reasons, they may be relaxed to relieve a litigant of an injustice not commensurate
with his failure to comply with the prescribed procedure.

Indeed, the primordial policy is a faithful observance of the Rules of Court, and their
relaxation or suspension should only be for persuasive reasons and only in meritorious
cases, to relieve a litigant of an injustice not commensurate with the degree of his
thoughtlessness in not complying with the procedure prescribed. Further, a bare
invocation of "the interest of substantial justice" will not suffice to override a stringent
implementation of the rules.

A reading of the CA’s Decision readily shows that the leniency it granted GOODLAND
was merely anchored on substantial justice. The CA overlooked GOODLAND’s failure
to advance meritorious reasons to support its plea for the relaxation of Rule 138,
Section 26. The fact that GOODLAND stands to lose a valuable property is inadequate
to dispense with the exacting imposition of a rather basic rule. Petition is GRANTED