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EN BANC

[G.R. No. 152154. November 18, 2003]

REPUBLIC
OF
THE
PHILIPPINES, petitioner,
vs. HONORABLE
SANDIGANBAYAN (SPECIAL FIRST DIVISION), FERDINAND E.
MARCOS (REPRESENTED BY HIS ESTATE/HEIRS: IMELDA R.
MARCOS, MARIA IMELDA [IMEE] MARCOS-MANOTOC, FERDINAND R.
MARCOS, JR. AND IRENE MARCOS-ARANETA), AND IMELDA
ROMUALDEZ MARCOS, respondents.
RESOLUTION
CORONA, J.:
Before us are motions dated August 1, 2003, August 2, 2003 and August 25,
2003 of respondents Imelda R. Marcos, Irene Marcos-Araneta, Ma. Imelda Marcos
and Ferdinand R. Marcos, Jr., respectively, seeking reconsideration of our decision
dated July 15, 2003 which ordered the forfeiture in favor of the Republic of the
Philippines of the Swiss deposits in escrow at the Philippine National Bank (PNB) in
the estimated aggregate amount of US$658,175,373.60 as of January 31, 2002.
Respondent Imelda Marcos, in her motion for reconsideration, asks this Court to
set aside the aforesaid decision dated July 15, 2003, premised on the following
grounds:
I
THE DECISION OF THIS HONORABLE COURT EFFECTIVELY
DEPRIVED RESPONDENT OF HER CONSTITUTIONALLY ENSHRINED
RIGHT TO DUE PROCESS ON THE FOLLOWING GROUNDS:

D. EVEN ASSUMING THAT THE PROSECUTION WAS ABLE TO


ESTABLISH A PRIMA FACIE CASE, A SUMMARY JUDGMENT
CANNOT BE RENDERED IN FORFEITURE PROCEEDINGS.
RESPONDENT HAS THE RIGHT TO BE GIVEN THE OPPORTUNITY
TO OVERTHROW THE DISPUTABLE PRESUMPTION.
E. THE FACTUAL FINDING THAT THE FOUNDATIONS INVOLVED IN
THE INSTANT FORFEITURE PROCEEDINGS ARE CONSIDERED
BUSINESSES, AND WERE MANAGED BY RESPONDENT
TOGETHER WITH HER LATE HUSBAND, WILL PERNICIOUSLY
AFFECT THE CRIMINAL PROCEEDINGS FILED BY THE REPUBLIC
AGAINST RESPONDENT.
II
THE DECISION OF THE SUPREME COURT, WHICH IMPROPERLY
CONVERTED THE SPECIAL CIVIL ACTION INTO A REGULAR APPEAL,
DIVESTED RESPONDENT OF HER RIGHT TO APPEAL THE CASE ON
THE MERITS, THEREBY DEPRIVING HER OF DUE PROCESS.
A. THE RESOLUTION DATED 31 JANUARY 2002 RAISED BEFORE
THIS HONORABLE COURT ON A PETITION FOR CERTIORARI,
WAS OBVIOUSLY A MERE INTERLOCUTORY ORDER. THE
DECISION OF THIS HONORABLE COURT SHOULD NOT HAVE
DELVED ON THE MERITS OF THE CASE, IN DIRECT VIOLATION
OF RESPONDENTS RIGHT TO APPEAL, WHICH IS EXPRESSLY
CONFERRED BY THE RULES.
Respondent Imelda Marcos further alleges that our July 15, 2003 decision will
prejudice the criminal cases filed against her.
Respondents Ferdinand, Jr. and Imee Marcos also pray that the said decision
be set aside and the case be remanded to the Sandiganbayan to give petitioner
Republic the opportunity to present witnesses and documents and to afford
respondent Marcoses the chance to present controverting evidence, based on the
following:
I

A. FORFEITURE PROCEEDINGS UNDER R.A. 1379, IN RELATION TO


THE EXECUTIVE ORDERS ARE CRIMINAL/PENAL IN NATURE,
HENCE, RESPONDENT HAS ALL THE RIGHTS IN FAVOR OF THE
ACCUSED
UNDER THE
CONSTITUTION; AND
THE
PROSECUTION HAS THE BURDEN OF PROVING RESPONDENT'S
GUILT BEYOND REASONABLE DOUBT.

THE LETTER AND INTENT OF RA 1379 FORBID/PRECLUDE


SUMMARY JUDGMENT AS THE PROCESS TO DECIDE FORFEITURE
UNDER
RA
1379. THUS,
IT
PROVIDES
FOR SPECIFIC
JURISDICTIONAL ALLEGATIONS IN THE PETITION AND MANDATES A
WELL-DEFINED PROCEDURE TO BE STRICTLY OBSERVED BEFORE
FORFEITURE JUDGMENT MAY BE RENDERED.

B. CONSIDERING THE CRIMINAL/PENAL NATURE OF THE


PROCEEDINGS, THE DENIALS RAISED BY RESPONDENT IN HER
ANSWER WERE SUFFICIENT TO TRAVERSE THE ALLEGATIONS
IN THE PETITION FOR FORFEITURE.

II

C. THE PROSECUTION HAD FAILED TO ESTABLISH EVEN A PRIMA


FACIE CASE AGAINST RESPONDENT, MUCH LESS PROVEN ITS
CASE FOR FORFEITURE BEYOND REASONABLE DOUBT.

SUMMARY JUDGMENT IN THE DECISION UNDER RECONSIDERATION


DIMINISHES/MODIFIES OR REPEALS VIA JUDICIAL LEGISLATION SUBSTANTIVE
RIGHTS OF RESPONDENTS GRANTED AND GUARANTEED BY RA 1379 AND IS
THEREFORE UNCONSTITUTIONAL.
III

THE DECISION IS CONSTITUTIONALLY INVALID FOR FAILURE TO EXPRESS


CLEARLY AND DISTINCTLY THE TRUE/GENUINE STATEMENT OF FACTS
(ADDUCED AFTER TRIAL/ PRESENTATION OF EVIDENCE) ON WHICH IT IS
BASED.
IV
THE LAW(S) ON WHICH THE DECISION IS BASED IS/ARE NOT
APPLICABLE/PROPER AND/OR ARE FORCEFULLY STRAINED TO JUSTIFY THE
UNWARRANTED CONCLUSIONS REACHED, VIOLATIVE OF CONSTITUTIONAL
AND STATUTORY INJUNCTIONS.
V

II
SUMMARY JUDGMENT IS APPLICABLE TO A PETITION FOR
FORFEITURE, AS LONG AS THERE IS NO GENUINE FACTUAL ISSUE
WHICH WOULD CALL FOR TRIAL ON THE MERITS.
III
THE DECISION DATED JULY 15, 2003 OF THIS HONORABLE COURT
CLEARLY EXPRESSED THE FACTS ON WHICH IT IS BASED, MOST
OF WHICH WERE ADMITTED BY PRIVATE RESPONDENTS IN THEIR
PLEADINGS SUBMITTED TO THE SANDIGANBAYAN AND IN THE
COURSE OF THE PROCEEDINGS.
IV

ASSUMING SUMMARY JUDGMENT IS APPLICABLE AND PROPER, IT


IS NOT WARRANTED UNDER THE PREMISES.

CERTIORARI IS THE APPROPRIATE AND SPEEDY REMEDY OF


PETITIONER REPUBLIC, GIVEN THE GRAVE ABUSE OF DISCRETION
COMMITTED BY RESPONDENT SANDIGANBAYAN IN TOTALLY
REVERSING ITS OWN DECISION DATED SEPTEMBER 19, 2000 AND
IN ISSUING THE SUBJECT RESOLUTION DATED JANUARY 31, 2002,
AND CONSIDERING THAT THE CASE IS IMBUED WITH IMMENSE
PUBLIC INTEREST, PUBLIC POLICY AND DEEP HISTORICAL
REPERCUSSIONS.

VII

ASSUMING THAT A SUMMARY JUDGMENT IS PROPER, THE


AVERMENTS OF THE PETITION FORFEITURE ARE INCOMPLETE
AND INCONCLUSIVE TO COMPLY WITH THE REQUISITE
IMPERATIVES. JUDGMENT VIOLATES THE CONDITIONS SINE QUA
NON TO BE OBSERVED TO RENDER A VALID DECISION OF
FORFEITURE UNDER RA 1379.

A FORFEITURE PROCEEDING UNDER REPUBLIC ACT NO. 1379 IS


CIVIL AND NOT CRIMINAL IN NATURE.

THERE BEING A DEPRIVATION OF DUE PROCESS, THE COURT AXIOMATICALLY


OUSTED ITSELF OF JURISDICTION. HENCE, THE DECISION IS VOID.
VI

VIII
THE STATEMENT OF OPERATIVE FACTS/FACTUAL NARRATION AS
WELL AS THE CONCLUSIONS REACHED IN THE DECISION ARE
CONTRADICTED OR REFUTED BY THE PLEADINGS OF THE
PARTIES, THE JUDICIAL ADMISSIONS OF PETITIONER, THE
PROCEEDINGS BEFORE SANDIGANBAYAN AND THE ORDERS
ISSUED.
Respondent Irene Araneta, in her motion for reconsideration, merely reiterates
the arguments previously raised in the pleadings she filed in this Court and prays that
the Courts decision dated July 15, 2003 be set aside.
In its consolidated comment dated September 29, 2003, the Office of the
Solicitor General argues that:

VI
THE DECISION DATED JULY 15, 2003 OF THIS HONORABLE COURT
WILL NOT PREJUDICE THE CRIMINAL ACTIONS FILED AGAINST
RESPONDENT IMELDA R. MARCOS FOR VIOLATION OF THE ANTIGRAFT AND CORRUPT PRACTICES ACT.
On October 6, 2003, respondents Marcos, Jr. and Imee Marcos filed a motion
for leave to file a reply to petitioner Republic's consolidated comment, which this
Court granted. On October 22, 2003, they filed their reply to the consolidated
comment.
As the aforequoted issues are interwoven, the Court shall discuss them
together.
At the outset, we note that respondents, in their motions for reconsideration, do
not raise any new matters for the Court to resolve. The arguments in their motions for
reconsideration are mere reiterations of their contentions fully articulated in their
previous pleadings, and exhaustively probed and passed upon by the Court.

I
THE MOTIONS FOR RECONSIDERATION DO NOT RAISE ANY NEW
MATTER AND WERE FILED MANIFESTLY TO DELAY THE EXECUTION
OF THE DECISION DATED JULY 15, 2003.

SUMMARY JUDGMENT IN FORFEITURE PROCEEDINGS

Respondent Marcoses argue that the letter and intent of RA 1379 forbid and
preclude summary judgment as the process to decide forfeiture cases under the law.
It provides for specific jurisdictional allegations in the petition and mandates a welldefined procedure to be strictly observed before a judgment of forfeiture may be
rendered.
According to respondents, Section 5 of RA 1379 requires the court to set a date
for hearing during which respondents shall be given ample opportunity to explain, to
the satisfaction of the court, how they acquired the property. They contend that the
proceedings under RA 1379 are criminal in character, thus they have all the rights of
an accused under the Constitution such as the right to adduce evidence and the right
to a hearing. They claim that it is petitioner which has the burden of proving
respondents' guilt beyond reasonable doubt and that forfeiture of property should
depend not on the weakness of their evidence but on the strength of petitioner's.
Accordingly, respondents maintain that, due to the criminal nature of forfeiture
proceedings, the denials raised by them were sufficient to traverse all the allegations
in the petition for forfeiture.
The issue of the propriety of summary judgment was painstakingly discussed
and settled in our July 15, 2003 decision:
A summary judgment is one granted upon motion of a party for an expeditious settlement of
the case, it appearing from the pleadings, depositions, admissions and affidavits that there are
no important questions or issues of fact posed and, therefore, the movant is entitled to a
judgment as a matter of law. A motion for summary judgment is premised on the assumption
that the issues presented need not be tried either because these are patently devoid of substance
or that there is no genuine issue as to any pertinent fact. It is a method sanctioned by the
Rules of Court for the prompt disposition of a civil action where there exists no serious
controversy. Summary judgment is a procedural devise for the prompt disposition of actions in
which the pleadings raise only a legal issue, not a genuine issue as to any material fact. [1]

IS SUMMARY JUDGMENT IN FORFEITURE


PROCEEDINGS A VIOLATION OF DUE PROCESS?

The principal contention now of respondent Marcoses is limited to their


argument that our aforementioned decision effectively deprived them of their
constitutionally enshrined right to due process.
According to respondents, RA 1379 is penal in substance and effect, hence,
they are entitled to the constitutional safeguards enjoyed by an accused.
Respondents further argue that the reinstatement of the decision of the
Sandiganbayan dated September 19, 2000, which ordered the forfeiture of the
properties subject of the instant case by summary judgment, diminished or repealed,
by judicial legislation, respondents rights guaranteed by RA 1379 for failure to set a
date for hearing to benefit respondents.
We disagree.
Due process of law has two aspects: substantive and procedural due
process. In order that a particular act may not be impugned as violative of the due

process clause, there must be compliance with both substantive and the procedural
requirements thereof.[2]
In the present context, substantive due process refers to the intrinsic validity of a
[3]
law that interferes with the rights of a person to his property. On the other hand,
procedural due process means compliance with the procedures or steps, even
periods, prescribed by the statute, in conformity with the standard of fair play and
without arbitrariness on the part of those who are called upon to administer it. [4]
Insofar as substantive due process is concerned, there is no showing that RA
1379 is unfair, unreasonable or unjust. In other words, respondent Marcoses are not
being deprived of their property through forfeiture for arbitrary reasons or on flimsy
grounds. As meticulously explained in the July 15, 2003 decision of the Court, EO
No. 1[5] created the PCGG primarily to assist then President Corazon Aquino in the
recovery, pursuant to RA 1379, of vast government resources amassed and stolen by
former President Ferdinand Marcos, his immediate family, relatives, close associates
and other cronies. These assets were stashed away here and abroad.
A careful study of the provisions of RA 1379 readily discloses that the forfeiture
proceedings in the Sandiganbayan did not violate the substantive rights of respondent
Marcoses. These proceedings are civil in nature, contrary to the claim of the
Marcoses that it is penal in character.
In Almeda Sr., et al. vs. Perez, et al., [6] we suggested a test to determine
whether the proceeding for forfeiture is civil or criminal:
. . . Forfeiture proceedings may be either civil or criminal in nature, and may be in rem or in
personam. If they are under a statute such that if an indictment is presented the forfeiture can
be included in the criminal case they are criminal in nature, although they may be civil in
form; and where it must be gathered from the statute that the action is meant to be criminal in
its nature it cannot be considered as civil. If, however, the proceeding does not involve the
conviction of the wrongdoer for the offense charged the proceeding is of a civil nature; and
under statutes which specifically so provide, where the act or omission for which the forfeiture
is imposed is not also a misdemeanor, such forfeiture may be sued for and recovered in a civil
action. (37 CJS, Forfeiture, Sec. 5, pp. 15-16)
In the case of Republic vs. Sandiganbayan and Macario Asistio, Jr.,[7] this Court
categorically declared that:
The rule is settled that forfeiture proceedings are actions in rem and therefore civil in nature.
The proceedings under RA 1379 do not terminate in the imposition of a penalty
but merely in the forfeiture of the properties illegally acquired in favor of the
State. Section 6 of said law provides:
x x x If the respondent is unable to show to the satisfaction of the court that he has lawfully
acquired the property in question, then the court shall declare such property forfeited in favor
of the State, and by virtue of such judgment the property aforesaid shall become property of
the State x x x

The procedure outlined in the law leading to forfeiture is that provided for in
a civil action:
xxx

xxx

xxx

Sec. 3. The petition The petition shall contain the following information:
(a)

The name and address of the respondent.

(b)
The public office or employment he holds and such other public
offices or employments which he has previously held.
(c)
The approximate amount of property he has acquired during his
incumbency in his past and present offices and employments.
(d)
A description of said property, or such thereof as has been
identified by the Solicitor General.
(e)
The total amount of his government salary and other proper
earnings and incomes from legitimately acquired property, and
(f)
Such other information as may enable the court to determine
whether or not the respondent has unlawfully acquired property during his
incumbency.
xxx

xxx

xxx

Sec. 4. Period for the answer. The respondent shall have a period of fifteen days within
which to present his answer.
In short, there is a petition, then an answer and lastly, a hearing. The preliminary
investigation required prior to the filing of the petition, in accordance with Section 2 of
the Act, is expressly provided to be similar to a preliminary investigation in a criminal
case. The similarity, however, ends there for, if the investigation were akin to that in a
criminal case but all the other succeeding steps were those for a civil proceeding,
then the process as a whole is definitely not criminal. Were it a criminal proceeding,
there would be, after preliminary investigation, a reading of the information, a plea of
guilty or not guilty, a trial and a reading of judgment in the presence of respondents.
But these steps, as above set forth, are clearly not provided for in the law.
Prescinding from the foregoing discussion, save for annulment of marriage or
declaration of its nullity or for legal separation, summary judgment is applicable to all
kinds of actions.[8]
The proceedings in RA 1379 and EO No. 14 were observed in the prosecution
of the petition for forfeiture. Section 1 of EO No.14-A, dated August 18, 1986,
amending Section 3 of EO No.14, provides that civil suits to recover unlawfully
acquired property under RA 1379 may be proven by preponderance of evidence.
Under RA 1379 and EO Nos. 1 and 2, the Government is required only to state the

known lawful income of respondents for the prima facie presumption of illegal
provenance to attach. As we fully explained in our July 15, 2003 decision,petitioner
Republic was able to establish this prima facie presumption. Thus, the burden of proof
shifted, by law, to the respondents to show by clear and convincing evidence that the
Swiss deposits were lawfully acquired and that they had other legitimate sources of
income. This, respondent Marcoses did not do. They failed or rather, refused to
raise any genuine issue of fact warranting a trial for the reception of evidence
therefor. For this reason and pursuant to the State policy to expedite recovery of illgotten wealth, petitioner Republic moved for summary judgment which the
Sandiganbayan appropriately acted on.
Respondents also claim that summary judgment denies them their right to a
hearing and to present evidence purposely granted under Section 5 of RA 1379.
Respondents were repeatedly accorded full opportunity to present their case,
their defenses and their pleadings. Not only did they obstinately refuse to do
so. Respondents time and again tried to confuse the issues and the Court itself, and
to delay the disposition of the case.
Section 5 of RA 1379 provides:
The court shall set a date for a hearing which may be open to the public, and during which the
respondent shall be given ample opportunity to explain, to the satisfaction of the court, how he
has acquired the property in question.
And pursuant to Section 6 of the said law, if the respondent is unable to show to the
satisfaction of the court that he has lawfully acquired the property in question, then
the court shall declare such property forfeited in favor of the State.
Respondent Marcoses erroneously understood hearing to be synonymous with
trial. The words hearing and trial have different meanings and connotations. Trial
may refer to the reception of evidence and other processes. It embraces the period
for the introduction of evidence by both parties. Hearing, as known in law, is not
confined to trial but embraces the several stages of litigation, including the pre-trial
stage. A hearing does not necessarily mean presentation of evidence. It does not
necessarily imply the presentation of oral or documentary evidence in open court but
that the parties are afforded the opportunity to be heard.
A careful analysis of Section 5 of RA 1379 readily discloses that the word
hearing does not always require the formal introduction of evidence in a trial, only
that the parties are given the occasion to participate and explain how they acquired
the property in question. If they are unable to show to the satisfaction of the court that
they lawfully acquired the property in question, then the court shall declare such
property forfeited in favor of the State. [9] There is no provision in the law that a full
blown trial ought to be conducted before the court declares the forfeiture of the
subject property. Thus, even if the forfeiture proceedings do not reach trial, the court
is not precluded from determining the nature of the acquisition of the property in
question even in a summary proceeding.
Due process, a constitutional precept, does not therefore always and in all
situations require a trial-type proceeding. The essence of due process is found in the
reasonable opportunity to be heard and submit ones evidence in support of his
defense. What the law prohibits is not merely the absence of previous notice but the

[10]

absence thereof and the lack of opportunity to be heard. This opportunity was
made completely available to respondents who participated in all stages of the
litigation.
When the petition for forfeiture was filed at the Sandiganbayan, respondent
Marcoses argued their case and engaged in all of the lengthy discussions,
argumentation, deliberations and conferences, and submitted their pleadings,
documents and other papers. When petitioner Republic moved for summary
judgment, respondent Marcoses filed their demurrer to evidence. They agreed to
submit the case for decision with their opposition to the motion for summary
judgment. They moved for the reconsideration of the Sandiganbayan resolution dated
September 19, 2000 which granted petitioner Republics motion for summary
judgment (which was in fact subsequently reversed in its January 31, 2002
resolution.) And when the case finally reached this Court, respondent Marcoses were
given, on every occasion, the chance to file and submit all the pleadings necessary to
defend their case. And even now that the matter has been finally settled and
adjudicated, their motion for reconsideration is being heard by this Court.

But a forfeiture proceeding is an action in rem, against the thing itself instead of
against the person. Being civil in character, it requires no more than a preponderance
of evidence.[11] And by preponderance of evidence is meant that the evidence as a
[12]
whole adduced by one side is superior to that of the other.
Hence, the factual
findings of this Court in its decision dated July 15, 2003 will, as a consequence,
neither affect nor do away with the requirement of having to prove her guilt beyond
reasonable doubt in the criminal cases against her.
One final note. We take judicial notice of newspaper accounts that a certain
Judge Manuel Real of the US District Court of Hawaii issued a global freeze order
on the Marcos assets, including the Swiss deposits. We reject this order outrightly
because
it
is
a
transgression
not
only
of
the
principle
of
territoriality in public international law but also of the jurisdiction of this Court
recognized by the parties-in-interest and the Swiss government itself.
WHEREFORE, the motions for reconsideration are hereby DENIED with
FINALITY.
SO ORDERED.

For twelve long years, respondent Marcoses tried to stave off this case with
nothing but empty claims of lack of knowledge or information sufficient to form a
belief, or they were not privy to the transactions, or they could not remember
(because the transactions) happened a long time ago or that the assets were
lawfully acquired. And they now allege deprivation of their right to be heard and
present evidence in their defense?

Davide, Jr., C.J., Puno, Vitug, Panganiban, Quisumbing, Ynares-Santiago,


Sandoval-Gutierrez,
Austria-Martinez,
Carpio-Morales,
Callejo,
Sr.,
Azcuna, and Tinga, JJ., concur.
Carpio, J., no part.

It would be repulsive to our basic concepts of justice and fairness to allow


respondents to further delay the adjudication of this case and defeat the judgment of
this Court which was promulgated only after all the facts, issues and other
considerations essential to a fair and just determination had been judiciously
evaluated.

NICOLAS vs. ROMULO


Supreme Court En Banc

Petitioner Republic has the right to a speedy disposition of this case. It would
readily be apparent to a reasonable mind that respondent Marcoses have been
deliberately resorting to every procedural device to delay the resolution hereof. There
is justice waiting to be done. The people and the State are entitled to favorable
judgment, free from vexatious, capricious and oppressive delays, the salutary
objective being to restore the ownership of the Swiss deposits to the rightful owner,
the Republic of the Philippines, within the shortest possible time.
The respondent Marcoses cannot deny that the delays in this case have all been
made at their instance. The records can testify to this incontrovertible fact. It will be a
mockery of justice to allow them to benefit from it. By their own deliberate acts not
those of the Republic or anybody else they are deemed to have altogether waived
or abandoned their right to proceed to trial.
Respondent Imelda R. Marcos likewise asserts that the factual finding that the
foundations involved in the instant forfeiture proceedings were businesses managed
by her and her late husband, will adversely affect the criminal proceedings filed by the
Republic against her. The contention is bereft of merit. The criminal cases referred
to by said respondent are actions in personam, directed against her on the basis of
her personal liability. In criminal cases, the law imposes the burden of proving guilt
on the prosecution beyond reasonable doubt, and the trial judge in evaluating the
evidence must find that all the elements of the crime charged have been established
by sufficient proof to convict.

DECISION
AZCUNA, J.:
These are petitions for certiorari, etc. as special civil actions and/or for review of the
Decision of the Court of Appeals in Lance Corporal Daniel J. Smith v. Hon. Benjamin T.
Pozon, et al., in CA-G.R. SP No. 97212, dated January 2, 2007.
The facts are not disputed.
Respondent Lance Corporal (L/CPL) Daniel Smith is a member of the United States
Armed Forces. He was charged with the crime of rape committed against a Filipina, petitioner
herein, sometime on November 1, 2005, as follows:
The undersigned accused LCpl. Daniel Smith, Ssgt. Chad Brian
Carpentier, Dominic Duplantis, Keith Silkwood and Timoteo L. Soriano,
Jr. of the crime of Rape under Article 266-A of the Revised Penal Code, as
amended by Republic Act 8353, upon a complaint under oath filed by
Suzette S. Nicolas, which is attached hereto and made an integral part
hereof as Annex A, committed as follows:
That on or about the First (1st) day of
November 2005, inside the Subic Bay Freeport Zone,

Olongapo City and within the jurisdiction of this


Honorable Court, the above-named accuseds (sic),
being then members of the United States Marine
Corps, except Timoteo L. Soriano, Jr., conspiring,
confederating together and mutually helping one
another, with lewd design and by means of force,
threat and intimidation, with abuse of superior strength
and taking advantage of the intoxication of the victim,
did then and there willfully, unlawfully and
feloniously sexually abuse and have sexual intercourse
with or carnal knowledge of one Suzette S. Nicolas, a
22-year old unmarried woman inside a Starex Van
with Plate No. WKF-162, owned by Starways Travel
and Tours, with Office address at 8900 P. Victor St.,
Guadalupe, Makati City, and driven by accused
Timoteo L. Soriano, Jr., against the will and consent of
the said Suzette S. Nicolas, to her damage and
prejudice.
CONTRARY TO LAW.[1]

Pursuant to the Visiting Forces Agreement (VFA) between the Republic of


the Philippines and the United States, entered into on February 10, 1998, the United States, at
its request, was granted custody of defendant Smith pending the proceedings.
During the trial, which was transferred from the Regional Trial Court (RTC) of
Zambales to the RTC of Makati for security reasons, the United States Government faithfully
complied with its undertaking to bring defendant Smith to the trial court every time his
presence was required.
On December 4, 2006, the RTC of Makati, following the end of the trial, rendered
its Decision, finding defendant Smith guilty, thus:
WHEREFORE, premises considered, for failure of the
prosecution to adduce sufficient evidence against accused S/SGT. CHAD
BRIAN CARPENTER, L/CPL. KEITH SILKWOOD AND L/CPL.
DOMINIC DUPLANTIS, all of the US Marine Corps assigned at the USS
Essex, are hereby ACQUITTED to the crime charged.
The prosecution having presented sufficient evidence against
accused L/CPL. DANIEL J. SMITH, also of the US Marine Corps at the
USS Essex, this Court hereby finds him GUILTY BEYOND
REASONABLE DOUBT of the crime of RAPE defined under Article
266-A, paragraph 1 (a) of the Revised Penal Code, as amended by R.A.
8353, and, in accordance with Article 266-B, first paragraph thereof,
hereby sentences him to suffer the penalty of reclusion perpetua together
with the accessory penalties provided for under Article 41 of the same
Code.
Pursuant to Article V, paragraph No. 10, of the Visiting Forces
Agreement entered into by the Philippines and the United States, accused

L/CPL. DANIEL J. SMITH shall serve his sentence in the facilities that
shall, thereafter, be agreed upon by appropriate Philippine and United
States authorities. Pending agreement on such facilities, accused L/CPL.
DANIEL J. SMITH is hereby temporarily committed to the Makati City
Jail.
Accused L/CPL. DANIEL J. SMITH is further sentenced to
indemnify complainant SUZETTE S. NICOLAS in the amount
of P50,000.00 as compensatory damages plus P50,000.00 as moral
damages.
SO ORDERED.[2]

As a result, the Makati court ordered Smith detained at the Makati jail until further
orders.
On December 29, 2006, however, defendant Smith was taken out of the Makati jail
by a contingent of Philippine law enforcement agents, purportedly acting under orders of the
Department of the Interior and Local Government, and brought to a facility for detention under
the control of the United States government, provided for under new agreements between the
Philippines and the United States, referred to as the Romulo-Kenney Agreement of December
19, 2006 which states:
The Government of the Republic of the Philippines and the Government of
the United States of America agree that, in accordance with the Visiting
Forces Agreement signed between our two nations, Lance Corporal Daniel
J. Smith, United States Marine Corps, be returned to U.S. military custody
at the U.S. Embassy in Manila.
(Sgd.) KRISTIE A. KENNEY
Representative of the United States
of America

(Sgd.) ALBERTO G. ROMULO


Representative of the Republic
of the Philippines

DATE:

DATE: December 19, 2006__

12-19-06

and the Romulo-Kenney Agreement of December 22, 2006 which states:


The Department of Foreign Affairs of the Republic of the Philippines and
the Embassy of the United States of America agree that, in accordance
with the Visiting Forces Agreement signed between the two nations, upon
transfer of Lance Corporal Daniel J. Smith, United States Marine Corps,
from the Makati City Jail, he will be detained at the first floor, Rowe
(JUSMAG) Building, U.S. Embassy Compound in a room of
approximately 10 x 12 square feet. He will be guarded round the clock
by U.S. military personnel. The Philippine police and jail authorities,
under the direct supervision of the Philippine Department of Interior and
Local Government (DILG) will have access to the place of detention to
ensure the United States is in compliance with the terms of the VFA.

The matter was brought before the Court of Appeals which decided on January 2,
2007, as follows:
WHEREFORE, all the foregoing considered, we resolved to
DISMISS the petition for having become moot. [3]

Subsequently, the United States agreed to turn over these bases to the Philippines;
and with the expiration of the RP-US Military Bases Agreement in 1991, the territory covered
by these bases were finally ceded to the Philippines.
To prevent a recurrence of this experience, the provision in question was adopted in
the 1987 Constitution.

Hence, the present actions.


The petitions were heard on oral arguments on September 19, 2008, after which the
parties submitted their memoranda.
Petitioners contend that the Philippines should have custody of defendant L/CPL
Smith because, first of all, the VFA is void and unconstitutional.
This issue had been raised before, and this Court resolved in favor of the
constitutionality of the VFA. This was in Bayan v. Zamora,[4] brought by Bayan, one of
petitioners in the present cases.
Against the barriers of res judicata vis--vis Bayan, and stare decisis vis--vis all
the parties, the reversal of the previous ruling is sought on the ground that the issue is of
primordial importance, involving the sovereignty of the Republic, as well as a specific
mandate of the Constitution.

The provision is thus designed to ensure that any agreement allowing the presence of
foreign military bases, troops or facilities in Philippine territory shall be equally binding on
the Philippines and the foreign sovereign State involved. The idea is to prevent a recurrence
of the situation in which the terms and conditions governing the presence of foreign armed
forces in our territory were binding upon us but not upon the foreign State.
Applying the provision to the situation involved in these cases, the question is
whether or not the presence of US Armed Forces in Philippine territory pursuant to the VFA is
allowed under a treaty duly concurred in by the Senate xxx and recognized as a treaty by
the other contracting State.
This Court finds that it is, for two reasons.
First, as held in Bayan v. Zamora,[5] the VFA was duly concurred in by the
Philippine Senate and has been recognized as a treaty by the United States as attested and
certified by the duly authorized representative of the United States government.

The provision of the Constitution is Art. XVIII, Sec. 25 which states:


Sec. 25. After the expiration in 1991 of the Agreement between
the Philippines and the United States of America concerning Military
Bases, foreign military bases, troops, or facilities shall not be allowed in
the Philippines except under a treaty duly concurred in by the Senate and,
when the Congress so requires, ratified by a majority of the votes cast by
the people in a national referendum held for that purpose, and recognized
as a treaty by the other contracting State.
The reason for this provision lies in history and the Philippine experience in regard
to the United States military bases in the country.

The fact that the VFA was not submitted for advice and consent of the United States
Senate does not detract from its status as a binding international agreement or treaty
recognized by the said State. For this is a matter of internal United States law. Notice can be
taken of the internationally known practice by the United States of submitting to its Senate for
advice and consent agreements that are policymaking in nature, whereas those that carry out or
further implement these policymaking agreements are merely submitted to Congress, under
the provisions of the so-called CaseZablocki Act, within sixty days from ratification. [6]
The second reason has to do with the relation between the VFA and the RP-US
Mutual Defense Treaty of August 30, 1951. This earlier agreement was signed and duly
ratified with the concurrence of both the Philippine Senate and the United States Senate.
The RP-US Mutual Defense Treaty states:[7]

It will be recalled that under the Philippine Bill of 1902, which laid the basis for the
Philippine Commonwealth and, eventually, for the recognition of independence, the United
States agreed to cede to the Philippines all the territory it acquired from Spain under the Treaty
of Paris, plus a few islands later added to its realm, except certain naval ports and/or military
bases and facilities, which the United States retained for itself.

MUTUAL DEFENSE TREATY BETWEEN THE REPUBLIC OF


THE PHILIPPINES AND
THE UNITED
STATES
OF
AMERICA. Signed at Washington, August 30, 1951.
The Parties of this Treaty

This is noteworthy, because what this means is that Clark and Subic and the other
places in the Philippines covered by the RP-US Military Bases Agreement of 1947 were not
Philippine territory, as they were excluded from the cession and retained by the US.
Accordingly, the Philippines had no jurisdiction over these bases except to the extent
allowed by the United States. Furthermore, the RP-US Military Bases Agreement was never
advised for ratification by the United States Senate, a disparity in treatment, because
the Philippines regarded it as a treaty and had it concurred in by our Senate.

Reaffirming their faith in the purposes and principles of the


Charter of the United Nations and their desire to live in peace with all
peoples and all governments, and desiring to strengthen the fabric of peace
in the Pacific area.
Recalling with mutual pride the historic relationship which brought
their two peoples together in a common bond of sympathy and mutual

ideals to fight side-by-side against imperialist aggression during the last


war.

under its jurisdiction in the Pacific Ocean, its armed forces, public vessels
or aircraft in the Pacific.

Desiring to declare publicly and formally their sense of unity


and their common determination to defend themselves against
external armed attack, so that no potential aggressor could be under the
illusion that either of them stands alone in the Pacific area.

ARTICLE VI. This Treaty does not affect and shall not be
interpreted as affecting in any way the rights and obligations of the Parties
under the Charter of the United Nations or the responsibility of the United
Nations for the maintenance of international peace and security.

Desiring further to strengthen their present efforts for


collective defense for the preservation of peace and security pending
the development of a more comprehensive system of regional security in
the Pacific area.

ARTICLE VII. This Treaty shall be ratified by the Republic of


the Philippines and the United Nations of America in accordance with
their respective constitutional processes and will come into force when
instruments of ratification thereof have been exchanged by them
at Manila.

Agreeing that nothing in this present instrument shall be


considered or interpreted as in any way or sense altering or diminishing
any existing agreements or understandings between the Republic of
the Philippines and the United States of America.
Have agreed as follows:
ARTICLE I. The parties undertake, as set forth in the Charter of
the United Nations, to settle any international disputes in which they may
be involved by peaceful means in such a manner that international peace
and security and justice are not endangered and to refrain in their
international relation from the threat or use of force in any manner
inconsistent with the purposes of the United Nations.

ARTICLE VIII. This Treaty shall remain in force


indefinitely. Either Party may terminate it one year after notice has been
given to the other party.
IN WITHNESS WHEREOF the undersigned Plenipotentiaries
have signed this Treaty.
DONE in duplicate at Washington this thirtieth day of August,
1951.
For the Republic of the Philippines:
(Sgd.) CARLOS

P.

(Sgd.) JOAQUIN

M.

(Sgd.) VICENTE

J.

ROMULO
ARTICLE II. In order more effectively to achieve the objective of
this Treaty, the Parties separately and jointly by self-help and mutual
aid will maintain and develop their individual and collective capacity
to resist armed attack.

ELIZALDE
FRANCISCO
(Sgd.) DIOSDADO

ARTICLE III. The Parties, through their Foreign Ministers or their


deputies, will consult together from time to time regarding the
implementation of this Treaty and whenever in the opinion of either of
them the territorial integrity, political independence or security of either of
the Parties is threatened by external armed attack in the Pacific.

MACAPAGAL

ARTICLE IV. Each Party recognizes that an armed attack in the


Pacific area on either of the parties would be dangerous to its own peace
and safety and declares that it would act to meet the common dangers in
accordance with its constitutional processes.

DULLES

Any such armed attack and all measures taken as a result thereof
shall be immediately reported to the Security Council of the United
Nations. Such measures shall be terminated when the Security Council
has taken the measures necessary to restore and maintain international
peace and security.
ARTICLE V. For the purpose of Article IV, an armed attack on
either of the Parties is deemed to include an armed attack on the
metropolitan territory of either of the Parties, or on the island territories

For the United States of America:


(Sgd.) DEAN ACHESON
(Sgd.) JOHN
FOSTER
(Sgd.) TOM CONNALLY
(Sgd.) ALEXANDER
WILEY[8]
Clearly, therefore, joint RP-US military exercises for the purpose of developing the
capability to resist an armed attack fall squarely under the provisions of the RP-US Mutual
Defense Treaty. The VFA, which is the instrument agreed upon to provide for the joint RPUS military exercises, is simply an implementing agreement to the main RP-US Military
Defense Treaty. The Preamble of the VFA states:
The Government of the United States of America and the Government of
the Republic of the Philippines,

Reaffirming their faith in the purposes and principles of the Charter of the
United Nations and their desire to strengthen international and regional
security in the Pacific area;
Reaffirming their obligations under the Mutual Defense Treaty
of August 30, 1951;
Noting that from time to time elements of the United States armed
forces may visit the Republic of the Philippines;
Considering that cooperation between the United States and the
Republic of the Philippines promotes their common security interests;
Recognizing the desirability of defining the treatment of United
States personnel visiting the Republic of the Philippines;
Have agreed as follows:[9]

Government shall present its position to the United States Government


regarding custody, which the United States Government shall take into full
account. In the event Philippine judicial proceedings are not completed
within one year, the United States shall be relieved of any obligations
under this paragraph. The one year period will not include the time
necessary to appeal. Also, the one year period will not include any time
during which scheduled trial procedures are delayed because United
States authorities, after timely notification by Philippine authorities to
arrange for the presence of the accused, fail to do so.
Petitioners contend that these undertakings violate another provision of the
Constitution, namely, that providing for the exclusive power of this Court to adopt rules of
procedure for all courts in the Philippines (Art. VIII, Sec. 5[5]). They argue that to allow the
transfer of custody of an accused to a foreign power is to provide for a different rule of
procedure for that accused, which also violates the equal protection clause of the Constitution
(Art. III, Sec. 1.).
Again, this Court finds no violation of the Constitution.

Accordingly, as an implementing agreement of the RP-US Mutual Defense Treaty, it


was not necessary to submit the VFA to the US Senate for advice and consent, but merely to
the US Congress under the CaseZablocki Act within 60 days of its ratification. It is for this
reason that the US has certified that it recognizes the VFA as a binding international
agreement, i.e., a treaty, and this substantially complies with the requirements of Art. XVIII,
Sec. 25 of our Constitution. [10]
The provision of Art. XVIII, Sec. 25 of the Constitution, is complied with by virtue
of the fact that the presence of the US Armed Forces through the VFA is a presence allowed
under the RP-US Mutual Defense Treaty. Since the RP-US Mutual Defense Treaty itself has
been ratified and concurred in by both the Philippine Senate and the US Senate, there is no
violation of the Constitutional provision resulting from such presence.
The VFA being a valid and binding agreement, the parties are required as a matter of
international law to abide by its terms and provisions.
The VFA provides that in cases of offenses committed by the members of the US
Armed Forces in the Philippines, the following rules apply:

Article V
Criminal Jurisdiction
xxx
6. The custody of any United States personnel over whom the
Philippines is to exercise jurisdiction shall immediately reside with United
States military authorities, if they so request, from the commission of the
offense until completion of all judicial proceedings. United States military
authorities shall, upon formal notification by the Philippine authorities and
without delay, make such personnel available to those authorities in time
for any investigative or judicial proceedings relating to the offense with
which the person has been charged. In extraordinary cases, the Philippine

The equal protection clause is not violated, because there is a substantial basis for a
different treatment of a member of a foreign military armed forces allowed to enter our
territory and all other accused. [11]
The rule in international law is that a foreign armed forces allowed to enter ones
territory is immune from local jurisdiction, except to the extent agreed upon. The Status of
Forces Agreements involving foreign military units around the world vary in terms and
conditions, according to the situation of the parties involved, and reflect their bargaining
power. But the principle remains, i.e., the receiving State can exercise jurisdiction over the
forces of the sending State only to the extent agreed upon by the parties. [12]
As a result, the situation involved is not one in which the power of this Court to
adopt rules of procedure is curtailed or violated, but rather one in which, as is normally
encountered around the world, the laws (including rules of procedure) of one State do not
extend or apply except to the extent agreed upon to subjects of another State due to the
recognition of extraterritorial immunity given to such bodies as visiting foreign armed
forces.
Nothing in the Constitution prohibits such agreements recognizing immunity from
jurisdiction or some aspects of jurisdiction (such as custody), in relation to long-recognized
subjects of such immunity like Heads of State, diplomats and members of the armed forces
contingents of a foreign State allowed to enter another States territory. On the contrary, the
Constitution states that the Philippines adopts the generally accepted principles of international
law as part of the law of the land. (Art. II, Sec. 2).
Applying, however, the provisions of VFA, the Court finds that there is a different
treatment when it comes to detention as against custody. The moment the accused has to be
detained, e.g., after conviction, the rule that governs is the following provision of the VFA:
Article V
Criminal Jurisdiction
xxx

Sec. 10. The confinement or detention by Philippine authorities


of United States personnel shall be carried out in facilities agreed on by
appropriate Philippines and United
Statesauthorities. United
States personnel serving sentences in the Philippines shall have the right to
visits and material assistance.

It is clear that the parties to the VFA recognized the difference between custody
during the trial and detention after conviction, because they provided for a specific
arrangement to cover detention. And this specific arrangement clearly states not only that the
detention shall be carried out in facilities agreed on by authorities of both parties, but also that
the detention shall be by Philippine authorities. Therefore, the Romulo-Kenney Agreements
of December 19 and 22, 2006, which are agreements on the detention of the accused in
the United States Embassy, are not in accord with the VFA itself because such detention is
not by Philippine authorities.
Respondents should therefore comply with the VFA and negotiate with
representatives of the United States towards an agreement on detention facilities under
Philippine authorities as mandated by Art. V, Sec. 10 of the VFA.
Next, the Court addresses the recent decision of the United States Supreme Court
in Medellin v. Texas ( 552 US ___ No. 06-984, March 25, 2008), which held that treaties
entered into by the United States are not automatically part of their domestic law unless these
treaties are self-executing or there is an implementing legislation to make them enforceable.
On February 3, 2009, the Court issued a Resolution, thus:
G.R. No. 175888 (Suzette Nicolas y Sombilon v. Alberto Romulo, et al.);
G.R. No. 176051 (Jovito R. Salonga, et al. v. Daniel Smith, et
al.); and G.R. No. 176222 (Bagong Alyansang Makabayan
[BAYAN], et al. v. President Gloria Macapagal-Arroyo, et al.).
The parties, including the Solicitor General, are required to submit
within three (3) days a Comment/Manifestation on the following points:
1.

What is the implication on the RP-US Visiting Forces


Agreement of the recent US Supreme Court decision in Jose
Ernesto Medellin v. Texas, dated March 25, 2008, to the effect
that treaty stipulations that are not self-executory can only be
enforced pursuant to legislation to carry them into effect; and
that, while treaties may comprise international commitments,
they are not domestic law unless Congress has enacted
implementing statutes or the treaty itself conveys an intention
that it be self-executory and is ratified on these terms?

2.

Whether the VFA is enforceable in the US as domestic law,


either because it is self-executory or because there exists
legislation to implement it.

3.

Whether the RP-US Mutual Defense Treaty of August 30,


1951 was concurred in by the US Senate and, if so, is there proof

of the US Senate advice and consent resolution? Peralta, J., no


part.
After deliberation, the Court holds, on these points, as follows:
First, the VFA is a self-executing Agreement, as that term is defined
in Medellin itself, because the parties intend its provisions to be enforceable, precisely because
the Agreement is intended to carry out obligations and undertakings under the RP-US Mutual
Defense Treaty. As a matter of fact, the VFA has been implemented and executed, with
the US faithfully complying with its obligation to produce L/CPL Smith before the court
during the trial.
Secondly, the VFA is covered by implementing legislation, namely, the Case-Zablocki
Act, USC Sec. 112(b), inasmuch as it is the very purpose and intent of the US Congress that
executive agreements registered under this Act within 60 days from their ratification be
immediately implemented. The parties to these present cases do not question the fact that the
VFA has been registered under the Case-Zablocki Act.
In sum, therefore, the VFA differs from the Vienna Convention on Consular Relations
and the Avena decision of the International Court of Justice (ICJ), subject matter of
the Medellin decision. The Convention and the ICJ decision are not self-executing and are not
registrable under the Case-Zablocki Act, and thus lack legislative implementing authority.
Finally, the RP-US Mutual Defense Treaty was advised and consented to by the US
Senate on March 20, 1952, as reflected in the US Congressional Record, 82ndCongress,
Second Session, Vol. 98 Part 2, pp. 2594-2595.
The framers of the Constitution were aware that the application of international law
in domestic courts varies from country to country.
As Ward N. Ferdinandusse states in his Treatise, DIRECT APPLICATION OF
INTERNATIONAL CRIMINAL LAW IN NATIONAL COURTS, some countries require
legislation whereas others do not.
It was not the intention of the framers of the 1987 Constitution, in adopting Article
XVIII, Sec. 25, to require the other contracting State to convert their system to achieve
alignment and parity with ours. It was simply required that the treaty be recognized as a treaty
by the other contracting State. With that, it becomes for both parties a binding international
obligation and the enforcement of that obligation is left to the normal recourse and processes
under international law.
Furthermore, as held by the US Supreme Court in Weinberger v. Rossi,[13] an
executive agreement is a treaty within the meaning of that word in international law and
constitutes enforceable domestic law vis--vis the United States. Thus, the US Supreme Court
in Weinberger enforced the provisions of the executive agreement granting preferential
employment to Filipinos in the US Bases here.

Accordingly, there are three types of treaties in the American system:


1.

Art. II, Sec. 2 treaties These are advised and consented to by the US
Senate in accordance with Art. II, Sec. 2 of the US Constitution.

2.

ExecutiveCongressional Agreements: These are joint agreements of


the President and Congress and need not be submitted to the Senate.

3.

Sole Executive Agreements. These are agreements entered into by the


President. They are to be submitted to Congress within sixty (60) days of
ratification under the provisions of the Case-Zablocki Act, after which
they are recognized by the Congress and may be implemented.

LEONARDO-DE
CASTRO,
BRION, and
PERALTA, JJ.

COMMISSION ON AUDIT,
Promulgated:
Respondent.
February 26, 2009
x-----------------------------------------------------x

As regards the implementation of the RP-US Mutual Defense Treaty, military aid or
assistance has been given under it and this can only be done through implementing
legislation. The VFA itself is another form of implementation of its provisions.

DECISION
CARPIO, J.:

WHEREFORE, the petitions are PARTLY GRANTED, and the Court of Appeals
Decision in CA-G.R. SP No. 97212 dated January 2, 2007 is MODIFIED. The Visiting
Forces Agreement (VFA) between the Republic of the Philippines and the United States,
entered into on February 10, 1998, is UPHELD as constitutional, but the Romulo-Kenney
Agreements of December 19 and 22, 2006 are DECLARED not in accordance with the
VFA, and respondent Secretary of Foreign Affairs is hereby ordered to forthwith negotiate
with the United States representatives for the appropriate agreement on detention facilities
under Philippine authorities as provided in Art. V, Sec. 10 of the VFA, pending which
the status quo shall be maintained until further orders by this Court.
The Court of Appeals is hereby directed to resolve without delay the related matters
pending therein, namely, the petition for contempt and the appeal of L/CPL Daniel Smith from
the judgment of conviction.
No costs.
SO ORDERED.

EN BANC

BASES CONVERSION AND


DEVELOPMENT AUTHORITY,
Petitioner,

G.R. No. 178160


Present:

- versus -

PUNO, C.J.,
QUISUMBING,
YNARES-SANTIAGO,*
CARPIO,
AUSTRIA-MARTINEZ,
CORONA,
CARPIO MORALES,
TINGA,*
CHICO-NAZARIO,
VELASCO, JR.,
NACHURA,

The Case
This is a petition for certiorari [1] with prayer for the issuance of a temporary restraining
order and a writ of preliminary injunction. The petition seeks to nullify Decision No. 2007020[2] dated 12 April 2007 of the Commission on Audit (COA).
The Facts
On 13 March 1992, Congress approved Republic Act (RA) No. 7227 [3] creating the
Bases Conversion and Development Authority (BCDA). Section 9 of RA No. 7227 states that
the BCDA Board of Directors (Board) shall exercise the powers and functions of the
BCDA. Under Section 10, the functions of the Board include the determination of the
organizational structure and the adoption of a compensation and benefit scheme at least
equivalent to that of the Bangko Sentral ng Pilipinas (BSP). Accordingly, the Board
determined the organizational structure of the BCDA and adopted a compensation and benefit
scheme for its officials and employees.
On 20 December 1996, the Board adopted a new compensation and benefit scheme
which included a P10,000 year-end benefit granted to each contractual employee, regular
permanent employee, and Board member. In a memorandum[4] dated 25 August 1997, Board
Chairman Victoriano A. Basco (Chairman Basco) recommended to President Fidel V. Ramos
(President Ramos) the approval of the new compensation and benefit scheme. In a
memorandum[5] dated 9 October 1997, President Ramos approved the new compensation and
benefit scheme.
In 1999, the BSP gave a P30,000 year-end benefit to its officials and employees. In
2000, the BSP increased the year-end benefit from P30,000 to P35,000. Pursuant to Section
10 of RA No. 7227 which states that the compensation and benefit scheme of the BCDA shall
be at least equivalent to that of the BSP, the Board increased the year-end benefit of BCDA
officials and employees from P10,000 to P30,000. Thus in 2000 and 2001, BCDA officials
and employees received a P30,000 year-end benefit, and, on 1 October 2002, the Board passed
Resolution No. 2002-10-193[6] approving the release of a P30,000 year-end benefit for 2002.
Aside from the contractual employees, regular permanent employees, and Board
members, the full-time consultants of the BCDA also received the year-end benefit.
On 20 February 2003, State Auditor IV Corazon V. Espao of the COA issued Audit
Observation Memorandum (AOM) No. 2003-004[7] stating that the grant of year-end benefit to

Board members was contrary to Department of Budget and Management (DBM) Circular
Letter No. 2002-2 dated 2 January 2002. In Notice of Disallowance (ND) No. 03-001-BCDA(02)[8] dated 8 January 2004, Director IV Rogelio D. Tablang (Director Tablang), COA, Legal
and Adjudication Office-Corporate, disallowed the grant of year-end benefit to the Board
members and full-time consultants. In Decision No. 2004-013[9] dated 13 January 2004,
Director Tablang concurred with AOM No. 2003-004 and ND No. 03-001-BCDA-(02).
In a letter[10] dated 20 February 2004, BCDA President and Chief Executive Officer Rufo
Colayco requested the reconsideration of Decision No. 2004-013. In a Resolution[11] dated 22
June 2004, Director Tablang denied the request. The BCDA filed a notice of appeal [12] dated 8
September 2004 and an appeal memorandum[13] dated 23 December 2004 with the COA.
The COAs Ruling
In Decision No. 2007-020,[14] the COA affirmed the disallowance of the year-end benefit
granted to the Board members and full-time consultants and held that the presumption of good
faith did not apply to them. The COA stated that:

despite the earlier clarification on the matter by the DBM thru the issuance
on January 2, 2002 of DBM Circular Letter No. 2002-02, still, the BCDA
Board of Directors enacted Resolution No. 2002-10-93 on October 1, 2002
granting YEB to the BCDA personnel including themselves. Full time
consultants, being non-salaried personnel, are also not entitled to such
presumption since they knew from the very beginning that they are only
entitled to the amount stipulated in their contracts as compensation for
their services. Hence, they should be made to refund the disallowed
YEB.[15] (Boldfacing in the original)
Hence, this petition.
The Courts Ruling
The Board members and full-time consultants of the BCDA are not entitled to the yearend benefit.

The granting of YEB x x x is not without x x x limitation. DBM


Circular Letter No. 2002-02 dated January 2, 2002 stating, viz:

First, the BCDA claims that the Board can grant the year-end benefit to its members and
full-time consultants because, under Section 10 of RA No. 7227, the functions of the Board
include the adoption of a compensation and benefit scheme.

2.0 To clarify and address issues/requests concerning the same,


the
following compensation policies are
hereby reiterated:

The Court is not impressed. The Boards power to adopt a compensation and benefit
scheme is not unlimited. Section 9 of RA No. 7227 states that Board members are entitled to
a per diem:

2.1
PERA,
personnel
benefits, these

ADCOM, YEB and retirement benefits, are


benefits granted in addition to salaries. As fringe
shall be paid only when the basic salary is also paid.

2.2
Members of the Board of Directors of agencies are not
salaried
officials of the government. As
non-salaried
officials
they
are
not
entitled to PERA, ADCOM, YEB
and retirement benefits unless
expressly
provided by law.
2.3
Department Secretaries, Undersecretaries and Assistant
Secretaries
who serve as Ex-officio Members of
the Board of Directors are not
entitled to any
remuneration in
line
with
the
Supreme
Court
ruling
that their services in the Board are already
paid for and covered by
the remuneration attached
to their office. (underscoring ours)

Members of the Board shall receive a per diem of not more than
Five
thousand
pesos
(P5,000)
for
every
board
meeting: Provided, however, That the per diem collected per month
does not exceed the equivalent of four (4) meetings: Provided, further,
That the amount of per diem for every board meeting may be increased by
the President but such amount shall not be increased within two (2) years
after its last increase. (Emphasis supplied)
Section 9 specifies that Board members shall receive a per diem for every board meeting;
limits the amount of per diem to not more than P5,000; and limits the total amount of per
diem for one month to not more than four meetings. In Magno v. Commission on
Audit,[16] Cabili v. Civil Service Commission,[17] De Jesus v. Civil Service
Commission,[18] Molen, Jr. v. Commission on Audit,[19] and Baybay Water District v.
Commission on Audit,[20] the Court held that the specification of compensation and
limitation of the amount of compensation in a statute indicate that Board members are
entitled only to the per diem authorized by law and no other. In Baybay Water District, the
Court held that:

Clearly, as stated above, the members and ex-officio members of the


Board of Directors are not entitled to YEB, they being not salaried
officials of the government. The same goes withfull time
consultants wherein no employer-employee relationships exist between
them and the BCDA. Thus, the whole amount paid to them
totaling P342,000 is properly disallowed in audit.

By specifying the compensation which a director is entitled to receive and


by limiting the amount he/she is allowed to receive in a month, x x x the
law quite clearly indicates that directors x x x are authorized to receive
only the per diem authorized by law and no other compensation or
allowance in whatever form. [21]

Moreover, the presumption of good faith may not apply to the


members and ex-officio members of the Board of Directors because

Also, DBM Circular Letter No. 2002-2 states that, Members of the Board of Directors
of agencies are not salaried officials of the government. As non-salaried officials they are

not entitled to PERA, ADCOM, YEB and retirement benefits unless expressly provided by
law. RA No. 7227 does not state that the Board members are entitled to a year-end benefit.
With regard to the full-time consultants, DBM Circular Letter
No. 2002-2 states
that, YEB and retirement benefits, are personnel benefits granted in addition to
salaries. As fringe benefits, these shall be paid only when the basic salary is also
paid. The full-time consultants are not part of the BCDA personnel and are not paid the
basic salary. The full-time consultants consultancy contracts expressly state that there is no
employer-employee relationship between the BCDA and the consultants, and that the BCDA
shall pay the consultants a contract price. For example, the consultancy contract [22] of a
certain Dr. Faith M. Reyes states:
SECTION 2. Contract Price. For and in consideration of the services to
be performed by the CONSULTANT (16 hours/week), BCDA shall pay
her the amount of TWENTY THOUSAND PESOS and 00/100
(P20,000.00), Philippine currency, per month.

II of the Constitution are not self-executing provisions. In that case, the Court held that
Some of the constitutional provisions invoked in the present case were taken from Article II
of the Constitution specifically, Sections 5 x x x and 18 the provisions of which the
Court categorically ruled to be non self-executing.
Third, the BCDA claims that the denial of year-end benefit to the Board members and
full-time consultants violates Section 1, Article III of the Constitution. [25] More specifically,
the BCDA claims that there is no substantial distinction between regular officials and
employees on one hand, and Board members and full-time consultants on the other. The
BCDA states that there is here only a distinction, but no difference because both have
undeniably one common goal as humans, that is x x x to keep body and soul together or,
[d]ifferently put, both have mouths to feed and stomachs to fill.
The Court is not impressed. Every presumption should be indulged in favor of the
constitutionality of RA No. 7227 and the burden of proof is on the BCDA to show that
there is a clear and unequivocal breach of the Constitution.[26] In Abakada Guro Party
List v. Purisima,[27] the Court held that:

xxxx
SECTION 4. Employee-Employer Relationship. It is understood that
no employee-employer relationship shall exist between BCDA and the
CONSULTANT.
SECTION 5. Period of Effectivity. This CONTRACT shall have an
effectivity period of one (1) year, from January 01, 2002 to December 31,
2002, unless sooner terminated by BCDA in accordance with Section 6
below.

A law enacted by Congress enjoys the strong presumption of


constitutionality. To justify its nullification, there must be a clear and
unequivocal breach of the Constitution, not a doubtful and unequivocal
one. To invalidate [a law] based on x x x baseless supposition is an
affront to the wisdom not only of the legislature that passed it but also of
the executive which approved it.

Since full-time consultants are not salaried employees of BCDA, they are not entitled to the
year-end benefit which is a personnel benefit granted in addition to salaries and which is
paid only when the basic salary is also paid.

The BCDA failed to show that RA No. 7227 unreasonably singled out Board members
and full-time consultants in the grant of the year-end benefit. It did not show any clear and
unequivocal breach of the Constitution. The claim that there is no difference between regular
officials and employees, and Board members and full-time consultants because both groups
have mouths to feed and stomachs to fill is fatuous. Surely, persons are not automatically
similarly situated thus, automatically deserving of equal protection of the laws just
because they both have mouths to feed and stomachs to fill. Otherwise, the existence of a
substantial distinction would become forever highly improbable.

Second, the BCDA claims that the Board members and full-time consultants should be
granted the year-end benefit because the granting of year-end benefit is consistent with
Sections 5 and 18, Article II of the Constitution. Sections 5 and 18 state:

Fourth, the BCDA claims that the Board can grant the year-end benefit to its members
and the full-time consultants because RA No. 7227 does not expressly prohibit it from doing
so.

Section 5. The maintenance of peace and order, the protection of


life, liberty, and property, and the promotion of the general welfare are
essential for the enjoyment by all people of the blessings of democracy.

The Court is not impressed. A careful reading of Section 9 of RA No. 7227 reveals that
the Board is prohibited from granting its members other benefits. Section 9 states:

SECTION 6. Termination of Services. BCDA, in its sole discretion


may opt to terminate this CONTRACT when it sees that there is no more
need for the services contracted for. (Boldfacing in the original)

Section 18. The State affirms labor as a primary social economic


force. It shall protect the rights of workers and promote their welfare.

The Court is not impressed. Article II of the Constitution is entitled Declaration of


Principles and State Policies. By its very title, Article II is a statement of general ideological
principles and policies. It is not a source of enforceable rights. [23] In Tondo Medical Center
Employees Association v. Court of Appeals,[24] the Court held thatSections 5 and 18, Article

Members of the Board shall receive a per diem of not more than
Five
thousand
pesos
(P5,000)
for
every
board
meeting: Provided, however, That the per diem collected per month
does not exceed the equivalent of four (4) meetings: Provided, further,
That the amount of per diem for every board meeting may be increased by
the President but such amount shall not be increased within two (2) years
after its last increase. (Emphasis supplied)

Section 9 specifies that Board members shall receive a per diem for every board meeting;
limits the amount of per diem to not more than P5,000; limits the total amount ofper diem for
one month to not more than four meetings; and does not state that Board members may receive
other benefits. In Magno,[28] Cabili,[29] De Jesus,[30] Molen, Jr.,[31] and Baybay Water
District,[32] the Court held that the specification of compensation and limitation of the
amount of compensation in a statute indicate that Board members are entitled only to
the per diem authorized by law and no other.
The specification that Board members shall receive a per diem of not more than P5,000
for every meeting and the omission of a provision allowing Board members to receive other
benefits lead the Court to the inference that Congress intended to limit the compensation of
Board members to the per diem authorized by law and no other. Expressio unius est exclusio
alterius. Had Congress intended to allow the Board members to receive other benefits, it
would have expressly stated so.[33] For example, Congress intention to allow Board members
to receive other benefits besides the per diem authorized by law is expressly stated in Section
1 of RA No. 9286:[34]
SECTION 1. Section 13 of Presidential Decree No. 198, as
amended, is hereby amended to read as follows:
SEC. 13. Compensation. Each director shall receive per
diem to be determined by the Board, for each meeting of the Board
actually attended by him, but no director shall receiveper diems in any
given month in excess of the equivalent of the total per diem of four
meetings in any given month.
Any per diem in excess of One hundred fifty pesos (P150.00) shall
be subject to the approval of the Administration. In addition thereto,
each director shall receive allowances and benefits as the Board may
prescribe subject to the approval of the Administration. (Emphasis
supplied)
The Court cannot, in the guise of interpretation, enlarge the scope of a statute or insert into a
statute what Congress omitted, whether intentionally or unintentionally.[35]
When a statute is susceptible of two interpretations, the Court must adopt the one in
consonance with the presumed intention of the legislature to give its enactments the most
reasonable and beneficial construction, the one that will render them operative and
effective.[36] The Court always presumes that Congress intended to enact sensible
statutes.[37] If the Court were to rule that the Board could grant the year-end benefit to its
members, Section 9 of RA No. 7227 would become inoperative and ineffective the
specification that Board members shall receive a per diem of not more than P5,000 for every
meeting; the specification that the per diem received per month shall not exceed the equivalent
of four meetings; the vesting of the power to increase the amount of per diem in the President;
and the limitation that the amount of per diem shall not be increased within two years from its
last increase would all become useless because the Board could always grant its members
other benefits.
With regard to the full-time consultants, DBM Circular Letter No. 2002-2 states that,
YEB and retirement benefits, are personnel benefits granted in addition to salaries. As
fringe benefits, these shall be paid only when the basic salary is also paid. The full-time

consultants are not part of the BCDA personnel and are not paid the basic salary. The fulltime consultants consultancy contracts expressly state that there is no employer-employee
relationship between BCDA and the consultants and that BCDA shall pay the consultants a
contract price. Since full-time consultants are not salaried employees of the BCDA, they are
not entitled to the year-end benefit which is a personnelbenefit granted in addition to
salaries and which is paid only when the basic salary is also paid.
Fifth, the BCDA claims that the Board members and full-time consultants are entitled to
the year-end benefit because (1) President Ramos approved the granting of the benefit to the
Board members, and (2) they have been receiving it since 1997.
The Court is not impressed. The State is not estopped from correcting a public officers
erroneous application of a statute, and an unlawful practice, no matter how long, cannot give
rise to any vested right. [38]
The Court, however, notes that the Board members and full-time consultants received the
year-end benefit in good faith. The Board members relied on (1) Section 10 of RA No. 7227
which authorized the Board to adopt a compensation and benefit scheme; (2) the fact that RA
No. 7227 does not expressly prohibit Board members from receiving benefits other than
the per diem authorized by law; and (3) President Ramos approval of the new compensation
and benefit scheme which included the granting of a year-end benefit to each contractual
employee, regular permanent employee, and Board member. The full-time consultants relied
on Section 10 of RA No. 7227 which authorized the Board to adopt a compensation and
benefit scheme. There is no proof that the Board members and full-time consultants knew that
their receipt of the year-end benefit was unlawful. In keeping with Magno,[39] De
Jesus,[40] Molen, Jr.,[41] and Kapisanan ng mga Manggagawa sa Government Service
Insurance System (KMG) v. Commission on Audit,[42] the Board members and full-time
consultants are not required to refund the year-end benefits they have already received.
WHEREFORE, the petition is PARTIALLY GRANTED. Commission on Audit
Decision No. 2007-020 dated 12 April 2007 is AFFIRMED with theMODIFICATION that
the Board members and full-time consultants of the Bases Conversion and Development
Authority are not required to refund the year-end benefits they have already received.
SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila
EN BANC

A.M. No. 93-7-696-0 February 21, 1995


In Re JOAQUIN T. BORROMEO, Ex Rel. Cebu City Chapter of the Integrated Bar
of the Philippines.

RESOLUTION

PER CURIAM:
It is said that a little learning is a dangerous thing; and that he who acts as his own
lawyer has a fool for a client. There would seem to be more than a grain of truth in
these aphorisms; and they appear to find validation in the proceeding at bench, at
least.
The respondent in this case, Joaquin T. Borromeo, is not a lawyer but has apparently
read some law books, and ostensibly come to possess some superficial awareness of
a few substantive legal principles and procedural rules. Incredibly, with nothing more
than this smattering of learning, the respondent has, for some sixteen (16) years now,
from 1978 to the present, been instituting and prosecuting legal proceedings in
various courts, dogmatically pontificating on errors supposedly committed by the
courts, including the Supreme Court. In the picturesque language of former Chief
Justice Enrique M. Fernando, he has "with all the valor of ignorance," 1 been verbally
jousting with various adversaries in diverse litigations; or in the words of a well-known
song, rushing into arenas "where angels fear to tread." Under the illusion that his
trivial acquaintance with the law had given him competence to undertake litigation, he
has ventured to represent himself in numerous original and review proceedings.
Expectedly, the results have been disastrous. In the process, and possibly in aid of
his interminable and quite unreasonable resort to judicial proceedings, he has seen fit
to compose and circulate many scurrilous statements against courts, judges and their
employees, as well as his adversaries, for which he is now being called to account.
Respondent Borromeo's ill-advised incursions into lawyering were generated by fairly
prosaic transactions with three (3) banks which came to have calamitous
consequences for him chiefly because of his failure to comply with his contractual
commitments and his stubborn insistence on imposing his own terms and conditions
for their fulfillment. These banks were: Traders Royal Bank (TRB), United Coconut
Planters Bank (UCPB), Security Bank & Trust Co. (SBTC). Borromeo obtained loans
or credit accommodation from them, to secure which he constituted mortgages over
immovables belonging to him or members of his family, or third persons. He failed to
pay these obligations, and when demands were made for him to do so, laid down his
own terms for their satisfaction which were quite inconsistent with those agreed upon
with his obligees or prescribed by law. When, understandably, the banks refused to
let him have his way, he brought suits right and left, successively if not
contemporaneously, against said banks, its officers, and even the lawyers who
represented the banks in the actions brought by or against him. He sued, as well, the
public prosecutors, the Judges of the Trial Courts, and the Justices of the Court of
Appeals and the Supreme Court who at one time or another, rendered a judgment,
resolution or order adverse to him, as well as the Clerks of Court and other Court
employees signing the notices thereof. In the aggregate, he has initiated or spawned
in different fora the astounding number of no less-than fifty (50) original or review
proceedings, civil, criminal, administrative. For some sixteen (16) years now, to
repeat, he has been continuously cluttering the Courts with his repetitive, and quite
baseless if not outlandish complaints and contentions.

I. CASES INVOLVING TRADERS


ROYAL BANK (TRB)
The first bank that Joaquin T. Borromeo appears to have dealt with was the Traders
Royal Bank (TRB). On June 2, 1978, he got a loan from it in the sum of P45,000.00.
This he secured by a real estate mortgage created over two parcels of land covered
by TCT No. 59596 and TCT No. 59755 owned, respectively, by Socorro BorromeoThakuria (his sister) and Teresita Winniefred Lavarino. On June 16, 1978, Borromeo
obtained a second loan from TRB in the amount of P10,000.00, this time giving as
security a mortgage over a parcel of land owned by the Heirs of Vicente V. Borromeo,
covered by TCT No. RT-7634. Authority to mortgage these three lots was vested in
him by a Special Power of Attorney executed by their respective owners.
Additionally, on April 23, 1980, Borromeo obtained a Letter of Credit from TRB in the
sum of P80,000.00, in consideration of which he executed a Trust Receipt (No.
2
595/80) falling due on July 22, 1980.
Borromeo failed to pay the debts as contracted despite demands therefor.
Consequently, TRB caused the extra-judicial foreclosure of the mortgages given to
secure them. At the public sale conducted by the sheriff on September 7, 1981, the
three mortgaged parcels of land were sold to TRB as the highest bidder, for
P73,529.09.
Within the redemption period, Borromeo made known to the Bank his intention to
redeem the properties at their auction price. TRB manager Blas C. Abril however
made clear that Borromeo would also have to settle his outstanding account under
Trust Receipt No. 595/80 (P88,762.78), supra. Borromeo demurred, and this
disagreement gave rise to a series of lawsuits commenced by him against the Bank,
its officers and counsel, as aforestated.
A. CIVIL CASES
1.
RTC
Case
No. R-22506; CA
CV No. 07015; G.R. No. 83306

G.R.

On October 29, 1982 Borromeo filed a complaint in the Cebu City Regional Trial
Court for specific performance and damages against TRB and its local manager, Blas
Abril, docketed as Civil Case No. R-22506. The complaint sought to compel
defendants to allow redemption of the foreclosed properties only at their auction price,
with stipulated interests and charges, without need of paying the obligation secured
by the trust receipt above mentioned. Judgment was rendered in his favor on
December 20, 1984 by Branch 23 of the Cebu City RTC; but on defendants' appeal to
the Court of Appeals docketed as CA-G.R. CV No. 07015 the judgment was
reversed, by decision dated January 27, 1988. The Court of Appeals held that the
"plaintiff (Borromeo) has lost his right of redemption and can no longer compel
defendant to allow redemption of the properties in question."
Borromeo elevated the case to this court where his appeal was docketed as G.R. No.
83306. By Resolution dated August 15, 1988, this Court's First Division denied his

petition for review "for failure . . . to sufficiently show that the respondent Court of
Appeals had committed any reversible error in its questioned judgment, it appearing
on the contrary that the said decision is supported by substantial evidence and is in
accord with the facts and applicable law." Reconsideration was denied, by Resolution
dated November 23, 1988. A second motion for reconsideration was denied by
Resolution dated January 30, 1989, as was a third such motion, by Resolution dated
April 19, 1989. The last resolution also directed entry of judgment and the remand of
the case to the court of origin for prompt execution of judgment. Entry of judgment
was made on May 12, 1989. By Resolution dated August 7, 1989, the Court denied
another motion of Borromeo to set aside judgment; and by Resolution dated
December 20, 1989, the Court merely noted without action his manifestation and
motion praying that the decision of the Court of Appeals be overturned, and declared
that "no further motion or pleading . . . shall be entertained . . . ."
2.
RTC
Case
CA-G.R. SP No. 22356

No. CEB

8750;

The ink was hardly dry on the resolutions just mentioned before Borromeo initiated
another civil action in the same Cebu City Regional Court by which he attempted to
litigate the same issues. The action, against the new TRB Branch Manager, Jacinto
Jamero, was docketed as Civil Case No. CEB-8750. As might have been anticipated,
the action was, on motion of the defense, dismissed by Order dated May 18,
3
1990, on the ground ofres judicata, the only issue raised in the second action i.e.,
Borromeo's right to redeem the lots foreclosed by TRB having been ventilated in
Civil Case No. R-22506 (Joaquin T. Borromeo vs. Blas C. Abril and Traders Royal
Bank) (supra) and, on appeal, decided with finality by the Court of Appeals and the
Supreme Court in favor of defendants therein.
The Trial Court's judgment was affirmed by the Court of Appeals in CA-G.R. SP No.
22356.
3.
RTC
Case
CA-G.R. SP No. 28221

No. CEB-9485;

In the meantime, and during the pendency of Civil Case No. R-22506, TRB
consolidated its ownership over the foreclosed immovables. Contending that act of
consolidation amounted to a criminal offense, Borromeo filed complaints in the Office
of the City Prosecutor of Cebu against the bank officers and lawyers. These
complaints were however, and quite correctly, given short shrift by that Office.
Borromeo then filed suit in the Cebu City RTC, this time not only against the TRB,
TRB officers Jacinto Jamero and Arceli Bustamante, but also against City Prosecutor
Jufelinito Pareja and his assistants, Enriqueta Belarmino and Eva A. Igot, and the
TRB lawyers, Mario Ortiz and the law, firm, HERSINLAW. The action was docketed
as Civil Case No. CEB-9485. The complaint charged Prosecutors Pareja, Belarmino
and Igot with manifest partiality and bias for dismissing the criminal cases just
mentioned; and faulted TRB and its manager, Jamero, as well as its lawyers, for
consolidating the titles to the foreclosed properties in favor of the bank despite the
pendency of Case No. R-22506. This action also failed. On defendants' motion, it was
dismissed on February 19, 1992 by the RTC. (Branch 22) on the ground of res
judicata(being identical with Civil Case Nos. R-22506 and CEB-8750, already decided

with finality in favor of TRB), and lack of cause of action (as to defendants Pareja,
Belarmino and Igot).
Borromeo's certiorari petition to the Court of Appeals (CA G.R. SP No. 28221) was
dismissed by that Court's 16th Division 4 on October 6, 1992, for the reason that the
proper remedy was appeal.
4.
RTC
Case
CA-G.R. SP No. 27100

No. CEB-10368;

Before Case No. CEB-9845 was finally decided, Borromeo filed, on May 30, 1991, still
another civil action for the same cause against TRB, its manager, Jacinto Jamero,
and its lawyers, Atty. Mario Ortiz and the HERSINLAW law office. This action was
docketed as Civil Case No. CEB-10368, and was described as one for "Recovery of
Sums of Money, Annulment of Titles with Damages." The case met the same fate as
the others. It was, on defendants' motion, dismissed on September 9, 1991 by the
5
RTC (Branch 14 ) on the ground of litis pendentia.
The RTC ruled that
Civil Case No. CEB-9485 will readily show that the defendants
therein, namely the Honorable Jufelinito Pareja, Enriqueta
Belarmino, Eva Igot, Traders Royal Bank, Arceli Bustamante,
Jacinto Jamero, Mario Ortiz and HERSINLAW are the same
persons or nearly all of them who are impleaded as defendants in
the present Civil Case No. CEB-10368, namely, the Traders Royal
Bank, Jacinto Jamero, Mario Ortiz and HERSINLAW. The only
difference is that more defendants were impleaded in Civil Case
No. CEB-9485, namely, City Prosecutor Jufelinito Pareja and his
assistants Enriqueta Belarmino and Eva Igot. The inclusion of the
City Prosecutor and his two assistants in Civil Case No. CEB-9485
was however merely incidental as apparently they had nothing to
do with the questioned transaction in said case. . . .
The Court likewise found that the reliefs prayed for were the same as those sought in
Civil Case No. CEB-9485, and the factual bases of the two cases were essentially the
same the alleged fraudulent foreclosure and consolidation of the three properties
mortgaged years earlier by Borromeo to TRB.
For some reason, the Order of September 9, 1991 was set aside by an Order
rendered by another Judge on November 11, 1991 6 the Judge who previously
heard the case having inhibited himself; but this Order of November 11, 1991 was, in
turn, nullified by the Court of Appeals (9th Division), by Decision promulgated on
March 31, 1992 in CA-G.R. SP No. 27100 (Traders Royal Bank vs. Hon. Celso M.
7
Gimenez, etc. and Joaquin T. Borromeo), which decision also directed dismissal of
Borromeo's complaint.
5. RTC Case No. CEB-6452

When a new branch manager, Ronald Sy, was appointed for TRB, Cebu City,
Borromeo forthwith made that event the occasion for another new action, against
TRB, Ronald Sy, and the bank's attorneys Mario Ortiz, Honorato Hermosisima, Jr.,
Wilfredo Navarro and HERSINLAW firm. This action was docketed as Civil Case No.
CEB-6452, and described as one for "Annulment of Title with Damages." The
complaint, dated October 20, 1987, again involved the foreclosure of the three (3)
immovables above mentioned, and was anchored on the alleged malicious, deceitful,
and premature consolidation of titles in TRB's favor despite the pendency of Civil
8
Case No. 22506. On defendant's motion, the trial court dismissed the case on the
ground of prematurity, holding that "(a)t this point . . ., plaintiff's right to seek
annulment of defendant Traders Royal Bank's title will only accrue if and when
plaintiff will ultimately and finally win Civil Case No. R-22506."
6. RTC Case No. CEB-8236
Having thus far failed in his many efforts to demonstrate to the courts the "merit" of
his cause against TRB and its officers and lawyers, Borromeo now took a different
tack by also suing (and thus also venting his ire on) the members of the appellate
courts who had ruled adversely to him. He filed in the Cebu City RTC, Civil Case No.
CEB-8236, impleading as defendants not only the same parties he had theretofore
been suing TRB and its officers and lawyers (HERSINLAW, Mario Ortiz) but
also the Chairman and Members of the First Division of the Supreme Court who had
repeatedly rebuffed him in G.R. No. 83306 (SEE sub-head I, A, 1, supra), as well as
the Members of the 5th, 9th and 10th Divisions of the Court of Appeals who had
likewise made dispositions unfavorable to him. His complaint, dated August 22, 1989,
aimed to recover damages from the defendants Justices for
. . . maliciously and deliberately stating blatant falsehoods and
disregarding evidence and pertinent laws, rendering manifestly
unjust and biased resolutions and decisions bereft of signatures,
facts or laws in support thereof, depriving plaintiff of his cardinal
rights to due process and against deprivation of property without
said process, tolerating, approving and legitimizing the patently
illegal, fraudulent, and contemptuous acts of defendants TRB,
(which) constitute a) GRAVE DERELICTION OF DUTY AND
ABUSE OF POWER emanating from the people, b) FLAGRANT
VIOLATIONS OF THE CONSTITUTION, CARDINAL PRIMARY
RIGHTS DUE PROCESS, ART. 27, 32, CIVIL CODE, Art. 208,
REV. PENAL CODE, and R.A. 3019, for which defendants must be
held liable under said laws.
The complaint also prayed for reconveyance of the "fake titles obtained fraudulently
by TRB/HERSINLAW," and recovery of "100,000.00 moral damages; 30,000.00
exemplary damages; and P5,000.00 litigation expenses." This action, too, met a quick
and unceremonious demise. On motion of defendants TRB and HERSINLAW, the
trial court, by Order dated November 7, 1989, 9 dismissed the case.
7. RTC Case No. CEB-13069

It appears that Borromeo filed still another case to litigate the same cause subject of
two (2) prior actions instituted by him. This was RTC Case No. CEB-13069, against
TRB and the latter's lawyers, Wilfredo Navarro and Mario Ortiz. The action was
10
dismissed in an Order dated October 4, 1993, on the ground of res judicata the
subject matter being the same as that in Civil Case No. R-22506, decision in which
was affirmed by the Court of Appeals in CA-G.R. CV No. 07015 as well as by this
Court in G.R. No. 83306 11 and litis pendentia the subject matter being also the
same as that in Civil Case No. CEB-8750, decision in which was affirmed by the
12
Court of Appeals in CA G.R. SP No. 22356.
8. RTC Criminal Case No. CBU-19344;
CA-G.R. SP No. 28275; G.R. No. 112928
On April 17, 1990 the City Prosecutor of Cebu City filed an information with the RTC
of Cebu (Branch 22) against Borromeo charging him with a violation of the Trust
13
Receipts Law. The case was docketed as Criminal Case No. CBU-19344. After a
while, Borromeo moved to dismiss the case on the ground of denial of his right to a
speedy trial. His motion was denied by Order of Judge Pampio A. Abarintos dated
April 10, 1992. In the same order, His Honor set an early date for Borromeo's
arraignment and placed the case "under a continuous trial system on the dates as
may be agreed by the defense and prosecution." Borromeo moved for
reconsideration. When his motion was again found without merit, by Order dated May
21, 1992, he betook himself to the Court of Appeals on a special civil action
of certiorari, to nullify these adverse orders, his action being docketed as CA-G.R. SP
No. 28275.
Here again, Borromeo failed. The Court of Appeals declared that the facts did not
show that there had been unreasonable delay in the criminal action against him, and
14
denied his petition for being without merit.
Borromeo then filed a petition for review with this Court (G.R. No. 112928), but by
resolution dated January 31, 1994, the same was dismissed for failure of Borromeo to
comply with the requisites of Circulars Numbered 1-88 and 19-91. His motion for
reconsideration was subsequently denied by Resolution dated March 23, 1994.
a.
Clarificatory
Communications
Borromeo Re "Minute Resolutions"

to

He next filed a Manifestation dated April 6, 1994 calling the Resolution of March 23,
1994 "Un-Constitutional, Arbitrary and tyrannical and a gross travesty of 'Justice,'"
because it was "signed only by a mere clerk and . . . (failed) to state clear facts and
law," and "the petition was not resolved on MERITS nor by any Justice but by a mere
15
clerk."
The Court responded with another Resolution, promulgated on June 22, 1994, and
with some patience drew his attention to the earlier resolution "in his own previous
case (Joaquin T. Borromeo vs. Court of Appeals and Samson Lao, G.R. No. 82273, 1
16
June 1990; 186 SCRA 1) and on the same issue he now raises." Said Resolution of
June 22, 1994, after reiterating that the notices sent by the Clerk of Court of the

Court En Banc or any of the Divisions simply advise of and quote the resolution
actually adopted by the Court after deliberation on a particular matter, additionally
stated that Borromeo "knew, as well, that the communications (notices) signed by the
Clerk of Court start with the opening clause
Quoted hereunder, for your information, is a resolution of the First
Division of this Court dated. _________,
thereby indisputably showing that it is not the Clerk of Court who prepared or signed
the resolutions."
This was not, by the way, the first time that the matter had been explained to
Borromeo. The record shows that on July 10, 1987, he received a letter from Clerk of
Court Julieta Y. Carreon (of this Court's Third Division) dealing with the subject, in
relation to G.R. No. 77243. 17 The same matter was also dealt with in the letter
received by him from Clerk of Court Luzviminda D. Puno, dated April 4, 1989, and in
the letter to him of Clerk of Court (Second Division) Fermin J. Garma, dated May 19,
18
1989. And the same subject was treated of in another Resolution of this Court,
notice of which was in due course served on him, to wit: that dated July 31, 1989, in
G.R. No. 87897. 19
B. CRIMINAL CASES
Mention has already been made of Borromeo's attempt with "all the valor of
ignorance" to fasten not only civil, but also criminal liability on TRB, its officers and
lawyers. 20 Several other attempts on his part to cause criminal prosecution of those
he considered his adversaries, will now be dealt with here.
1. I. S. Nos. 90-1187 and 90-1188
On March 7, 1990, Borromeo filed criminal complaints with the Office of the Cebu City
Prosecutor against Jacinto Jamero (then still TRB Branch Manager), "John Doe and
officers of Traders Royal Bank." The complaints (docketed as I.S. Nos. 90-1187-88)
accused the respondents of "Estafa and Falsification of Public Documents." He
claimed, among others that the bank and its officers, thru its manager, Jacinto
Jamero, sold properties not owned by them: that by fraud, deceit and false pretenses,
respondents negotiated and effected the purchase of the (foreclosed) properties from
his (Borromeo's) mother, who "in duress, fear and lack of legal knowledge," agreed to
the sale thereof for only P671,000.00, although in light of then prevailing market
prices, she should have received P588,030.00 more.
In a Joint Resolution dated April 11, 1990, 21 the Cebu City Fiscal's office dismissed
the complaints observing that actually, the Deed of Sale was not between the bank
and Borromeo's mother, but between the bank and Mrs. Thakuria (his sister), one of
the original owners of the foreclosed properties; and that Borromeo, being a stranger
to the sale, had no basis to claim injury or prejudice thereby. The Fiscal ruled that the
bank's ownership of the foreclosed properties was beyond question as the matter had
been raised and passed upon in a judicial litigation; and moreover, there was no proof
of the document allegedly falsified nor of the manner of its falsification.

a. I.S. Nos. 87-3795 and 89-4234


Evidently to highlight Borromeo's penchant for reckless filing of unfounded
complaints, the Fiscal also adverted to two other complaints earlier filed in his Office
by Borromeo involving the same foreclosed properties and directed against
respondent bank officers' predecessors (including the former Manager, Ronald Sy)
and lawyers both of which were dismissed for lack of merit. These were:
a. I. S. No. 87-3795 (JOAQUIN T. BORROMEO vs. ATTY. MARIO
ORTIZ and RONALD SY) for "Estafa Through Falsification of Public
Documents, Deceit and False Pretenses." This case was
dismissed by Resolution dated January 19, 1988 of the City
Prosecutor's Office because based on nothing more than a letter
dated June 4, 1985, sent by Bank Manager Ronald Sy to the lessee
of a portion of the foreclosed immovables, advising the latter to
remit all rentals to the bank as new owner thereof, as shown by the
consolidated title; and there was no showing that respondent Atty.
Ortiz was motivated by fraud in notarizing the deed of sale in TRB's
favor after the lapse of the period of redemption, or that Ortiz had
benefited pecuniarily from the transaction to the prejudice of
complainant; and
b. I.S. No. 89-4234 (JOAQUIN T. BORROMEO vs. RONALD SY,
ET AL.) for "Estafa Through False Pretenses and Falsification of
Public Documents." This case was dismissed by Resolution
dated January 31, 1990.
2. I.S.Nos. 88-205 to 88-207
While Joaquin Borromeo's appeal (G.R. No. 83306) was still pending before the
22
Supreme Court, an affidavit was executed in behalf of TRB by Arceli Bustamante,
in connection with the former's fire insurance claim over property registered in its
name one of two immovables formerly owned by Socorro B. Thakuria (Joaquin
23
Borromeo's sister) and foreclosed by said bank. In that affidavit, dated September
10, 1987, Bustamante stated that "On 24 June 1983, TRB thru foreclosure acquired
real property together with the improvements thereon which property is located at F.
Ramos St., Cebu City covered by TCT No. 87398 in the name or TRB." The affidavit
was notarized by Atty. Manuelito B. Inso.
Claiming that the affidavit was "falsified and perjurious" because the claim of title by
TRB over the foreclosed lots was a "deliberate, wilful and blatant fasehood in that,
among others: . . . the consolidation was premature, illegal and invalid," Borromeo
filed a criminal complaint with the Cebu City Fiscal's Office against the affiant
(Bustamante) and the notarizing lawyer (Atty. Inso) for "falsification of public
document, false pretenses, perjury." On September 28, 1988, the Fiscal's Office
24
dismissed the complaint. It found no untruthful statements in the affidavit or any
malice in its execution, considering that Bustamante's statement was based on the
Transfer Certificate of Title in TRB's file, and thus the document that Atty. Inso
notarized was legally in order.

3. OMB-VIS-89-00136
This Resolution of this Court (First Division) in G.R. No. 83306 dated August 15, 1988
sustaining the judgment of the Court of Appeals (10th Division) of January 27,
1988 in CA-G.R. CV No. 07015, supra, was made the subject of a criminal complaint
by Borromeo in the Office of the Ombudsman, Visayas, docketed as OMB-VIS-8900136. His complaint against "Supreme Court Justice (First Div.) and Court of
Appeals Justice (10th Div)" was dismissed for lack of merit in a Resolution issued
on February 14, 1990 25 which, among other things, ruled as follows:
It should be noted and emphasized that complainant has remedies
available under the Rules of Court, particularly on civil procedure
and existing laws. It is not the prerogative of this Office to make a
review of Decisions and Resolutions of judicial courts, rendered
within their competence. The records do not warrant this Office to
take further proceedings against the respondents.
In addition, Sec. 20. of R.A. 6770, "the Ombudsman Act states that
the Office of the Ombudsman may not conduct the necessary
investigation of any administrative act or omission complained of if
it believes that (1) the complainant had adequate remedy in another
judicial or quasi-judicial body;" and Sec. 21 the same law provides
that the Office of the Ombudsman does not have disciplinary
authority over members of the Judiciary.
II. CASES INVOLVING UNITED COCONUT
PLANTERS BANK (UCPB)
26

As earlier stated, Borromeo (together with a certain Mercader) also borrowed


money from the United Coconut Planters Bank (UCPB) and executed a real estate
mortgage to secure repayment thereof. The mortgage was constituted over a 122square-meter commercial lot covered by TCT No. 75680 in Borromeo's name. This
same lot was afterwards sold on August 7, 1980 by Borromeo to one Samson K. Lao
for P170,000.00, with a stipulation for its repurchase (pacto de retro) by him
(Borromeo, as the vendor). The sale was made without the knowledge and consent of
UCPB.
A. CIVIL CASES
Now, just as he had defaulted in the payment of the loans and credit accommodations
he had obtained from the Traders Royal Bank, Borromeo failed in the fulfillment of his
obligations to the UCPB.
Shortly after learning of Borromeo's default, and obviously to obviate or minimize the
ill effects of the latter's delinquency, Lao applied with the same bank (UCPB) for a
loan, offering the property he had purchased from Borromeo as collateral. UCPB was
not averse to dealing with Lao but imposed several conditions on him, one of which
was for Lao to consolidate his title over the property. Lao accordingly instituted a suit
for consolidation of title, docketed as Civil Case No. R-21009. However, as will shortly

be narrated, Borromeo opposed the consolidation prayed for. As a result, UCPB


cancelled Lao's application for a loan and itself commenced proceedings foreclose
the mortgage constituted by Borromeo over the property.
This signaled the beginning of court battles waged by Borromeo not only against Lao,
but also against UCPB and the latter's lawyers, battles which he (Borromeo) fought
contemporaneously with his court war with Traders Royal Bank.
1.
RTC
Case
No. R-21009; AC-G.R.
No. CV-07396; G.R. No. 82273
The first of this new series of court battles was, as just stated, the action initiated by
Samson Lao in the Regional Trial Court of Cebu (Branch 12), docketed as Case No.
R-21009, for consolidation of title in his favor over the 122-square-meter lot subject of
the UCPB mortgage, in accordance with Article 1007 of the Civil Code. In this suit Lao
was represented by Atty. Alfredo Perez, who was later substituted by Atty. Antonio
Regis. Borromeo contested Lao's application.
Judgment was in due course rendered by the RTC (Branch 12, Hon. Francis Militante,
presiding) denying consolidation because the transaction between the parties could
not be construed as a sale with pacto de retrobeing in law an equitable mortgage;
however, Borromeo was ordered to pay Lao the sum of P170,000.00, representing
the price stipulated in the sale a retro, plus the amounts paid by Lao for capital gains
and other taxes in connection with the transaction (P10,497.50).
Both Lao and Borromeo appealed to the Court of Appeals. Lao's appeal was
dismissed for failure of his lawyer to file brief in his behalf. Borromeo's appeal ACG.R. No. CV-07396 resulted in a Decision by the Court of Appeals dated
December 14, 1987, affirming the RTC's judgment in toto.
The Appellate Court's decision was, in turn, affirmed by this Court (Third Division) in a
four-page Resolution dated September 13, 1989, promulgated in G.R. No. 82273
an appeal also taken by Borromeo. Borromeo filed a motion for reconsideration on
several grounds, one of which was that the resolution of September 13, 1989 was
unconstitutional because contrary to "Sec. 4 (3), Art. VIII of the Constitution," it was
not signed by any Justice of the Division, and there was "no way of knowing which
justices had deliberated and voted thereon, nor of any concurrence of at least three of
the members." Since the motion was not filed until after there had been an entry of
judgment, Borromeo having failed to move for reconsideration within the reglementary
period, the same was simply noted without action, in a Resolution dated November
27, 1989.
Notices of the foregoing Resolutions were, in accordance with established rule and
practice, sent to Borromeo over the signatures of the Clerk of Court and Assistant
Clerk of Court (namely: Attys. Julieta Y. CARREON and Alfredo MARASIGAN,
respectively).
a. RTC Case No. CEB-8679

Following the same aberrant pattern of his judicial campaign against Traders Royal
Bank, Borromeo attempted to vent his resentment even against the Supreme Court
officers who, as just stated, had given him notices of the adverse dispositions of this
Court's Third Division. He filed Civil Case No. CEB-8679 in the Cebu City RTC (CFI)
for recovery of damages against "Attys. Julieta Y. Carreon and Alfredo Marasigan,
Division Clerk of Court and Asst. Division Clerk of Court, Third Division, and Atty.
Jose I. Ilustre, Chief of Judicial Records Office." He charged them with usurpation of
judicial functions, for allegedly "maliciously and deviously issuing biased, fake,
baseless and unconstitutional 'Resolution' and 'Entry of Judgment' in G.R. No.
82273."

petition is filed merely to forestall the early execution of judgment


and for non-compliance with the rules. The resolution denying due
course always gives the legal basis. As emphasized in In
Re: Wenceslao Laureta, 148 SCRA 382, 417 [1987], "[T]he Court is
not 'duty bound' to render signed Decisions all the time. It has
ample discretion to formulate Decisions and/or Minute
Resolutions, provided a legal basis is given, depending on its
evaluation of a case" . . . This is the only way whereby it can act on
all cases filed before it and, accordingly, discharge its constitutional
functions. . . .

Summonses were issued to defendants by RTC Branch 18 (Judge Rafael R. Ybaez,


presiding). These processes were brought to the attention of this Court's Third
Division. The latter resolved to treat the matter as an incident in G.R. No. 82273, and
referred it to the Court En Banc on April 25, 1990. By Resolution (issued in said G.R.
No. 82273, supra) dated June 1, 1990, the Court En Banc ordered Judge Ybaez to
quash the summonses, to dismiss Civil Case No. CEB-8679, and "not to issue
summons or otherwise to entertain cases of similar nature which may in the future be
filed in his court." Accordingly, Judge Ibaez issued an Order on June 6, 1990
quashing the summonses and dismissing the complaint in said Civil Case No. CEB8679.

. . . (W)hen the Court, after deliberating on a petition and any


subsequent pleadings, manifestations, comments, or motions
decides to deny due course to the petition and states that the
questions raised are factual, or no reversible error in the
respondent court's decision is shown, or for some other legal basis
stated in the resolution, there is sufficient compliance with the
constitutional requirement . . . (of Section 14, Article VIII of the
Constitution "that no petition for review or motion for
reconsideration shall be refused due course or denied without
stating the legal basis thereof").

27

The Resolution of June 1, 1990 explained to Borromeo in no little detail the nature
and purpose of notices sent by the Clerks of Court of decisions or resolutions of the
Court En Banc or the Divisions, in this wise:
This is not the first time that Mr. Borromeo has filed
charges/complaints against officials of the Court. In several letter
complaints filed with the courts and the Ombudsman, Borromeo
had repeatedly alleged that he "suffered injustices," because of the
disposition of the four (4) cases he separately appealed to this
Court which were resolved by minute resolutions, allegedly in
violation of Sections 4 (3), 13 and 14 of Article VIII of the 1987
Constitution. His invariable complaint is that the resolutions which
disposed of his cases do not bear the signatures of the Justices
who participated in the deliberations and resolutions and do not
show that they voted therein. He likewise complained that the
resolutions bear no certification of the Chief Justice and that they
did not state the facts and the law on which they were based and
were signed only by the Clerks of Court and therefore
"unconstitutional, null and void."
xxx xxx xxx
The Court reminds all lower courts, lawyers, and litigants that it
disposes of the bulk of its cases by minute resolutions and decrees
them as final and executory, as were a case is patently without
merit, where the issues raised are factual in nature, where the
decision appealed from is in accord with the facts of the case and
the applicable laws, where it is clear from the records that the

For a prompt dispatch of actions of the Court, minute resolutions


are promulgated by the Court through the Clerk of Court, who takes
charge of sending copies thereof to the parties concerned by
quoting verbatim the resolution issued on a particular case. It is the
Clerk of Court's duty to inform the parties of the action taken on
their cases quoting the resolution adopted by the Court. The Clerk
of Court never participates in the deliberations of a case. All
decisions and resolutions are actions of the Court. The Clerk of
Court merely transmits the Court's action. This was explained in the
case G.R. No. 56280, "Rhine Marketing Corp. v. Felix Gravante,
et al.," where, in a resolution dated July 6, 1981, the Court
said "[M]inute resolutions of this Court denying or dismissing
unmeritorious petitions like the petition in the case at bar, are the
result of a thorough deliberation among the members of this Court,
which does not and cannot delegate the exercise of its judicial
functions to its Clerk of Court or any of its subalterns, which should
be known to counsel. When a petition is denied or dismissed by this
Court, this Court sustains the challenged decision or order together
with its findings of facts and legal conclusions.
Minute resolutions need not be signed by the members of the Court
who took part in the deliberations of a case nor do they require the
certification of the Chief Justice. For to require members of the
Court to sign all resolutions issued would not only unduly delay the
issuance of its resolutions but a great amount of their time would be
spent on functions more properly performed by the Clerk of Court
and which time could be more profitably used in the analysis of
cases and the formulation of decisions and orders of important
nature and character. Even with the use of this procedure, the

Court is still struggling to wipe out the backlogs accumulated over


the years and meet the ever increasing number of cases coming to
it. . . .
b.
RTC
CIVIL
CASE
6740; G.R. No. 84054

NO. CEB-(6501)

It is now necessary to digress a little and advert to actions which, while having no
relation to the UCPB, TRB or SBTC, are relevant because they were the predicates
for other suits filed by Joaquin Borromeo against administrative officers of the
Supreme Court and the Judge who decided one of the cases adversely to him.
The record shows that on or about December 11, 1987, Borromeo filed a civil action
for damages against a certain Thomas B. Tan and Marjem Pharmacy, docketed as
Civil Case No. CEB-6501. On January 12, 1988, the trial court dismissed the case,
without prejudice, for failure to state a cause of action and prematurity (for noncompliance with P.D. 1508).
What Borromeo did was simply to re-file the same complaint with the same Court, on
March 18, 1988. This time it was docketed as Civil Case No. CEB-6740, and
assigned to Branch 17 of the RTC of Cebu presided by Hon. Mario Dizon. Again,
however, on defendants' motion, the trial court dismissed the case, in an order dated
May 28, 1988. His first and second motions for reconsideration having been denied,
Borromeo filed a petition for review before this Court, docketed as G.R. No. 84054
(Joaquin T. Borromeo vs. Tomas Tan and Non. Mario Dizon).
In a Resolution dated August 3, 1988, the Court required petitioner to comply with the
rules by submitting a verified statement of material dates and paying the docket and
legal research fund fees; it also referred him to the Citizens Legal Assistance Office
for help in the case. His petition was eventually dismissed by Resolution of the
Second Division dated November 21, 1988, for failure on his part to show any
reversible error in the trial court's judgment. His motion for reconsideration was
denied with finality, by Resolution dated January 18, 1989.
Borromeo wrote to Atty. Fermin J. Garma (Clerk of Court of the Second Division) on
April 27, 1989 once more remonstrating that the resolutions received by him had not
been signed by any Justice, set forth no findings of fact or law, and had no
certification of the Chief Justice. Atty. Garma replied to him on May 19, 1989, pointing
out that "the minute resolutions of this Court denying dismissing petitions, like the
petition in the case at bar, which was denied for failure of the counsel and/or
petitioner to sufficiently show that the Regional Trial Court of Cebu, Branch 17, had
committed any reversible error in the questioned judgment [resolution dated
November 21, 1988], are the result of a thorough deliberation among the members of
this Court, which does not and cannot delegate the exercise of its judicial function to
its Clerk of Court or any of its subalterns. When the petition is denied or dismissed by
the Court, it sustains the challenged decision or order together with its findings of
facts and legal conclusions."

Borromeo obviously had learned nothing from the extended Resolution of June 1,
1990 in G.R. No. 82273, supra(or the earlier communications to him on the same
subject) which had so clearly pointed out that minute resolutions of the Court are as
much the product of the Members' deliberations as full-blown decisions or resolutions,
and that the intervention of the Clerk consists merely in the ministerial and routinary
function of communicating the Court's action to the parties concerned.
c. RTC Case No. CEB-9042
What Borromeo did next, evidently smarting from this latest judicial rebuff, yet another
in an already long series, was to commence a suit against Supreme Court (Second
Division) Clerk of Court Fermin J. Garma and Assistant Clerk of Court Tomasita Dris.
They were the officers who had sent him notices of the unfavorable resolutions in
G.R. No. 84054, supra. His suit, filed on June 1, 1990, was docketed as Case No.
CEB-9042 (Branch 8, Hon. Bernardo Salas presiding). Therein he complained
essentially of the same thing he had been harping on all along: that in relation to G.R.
No. 91030 in which the Supreme Court dismissed his petition for "technical
reasons" and failure to demonstrate any reversible error in the challenged judgment
the notice sent to him of the "unsigned and unspecific" resolution of February
19, 1990, denying his motion for reconsideration had been signed only by the
defendant clerks of court and not by the Justices. According to him, he had thereupon
written letters to defendants demanding an explanation for said "patently unjust and
un-Constitutional resolutions," which they ignored; defendants had usurped judicial
functions by issuing resolutions signed only by them and not by any Justice, and
without stating the factual and legal basis thereof; and defendants' "wanton, malicious
and patently abusive acts" had caused him "grave mental anguish, severe moral
shock, embarrassment, sleepless nights and worry;" and consequently, he was
entitled to moral damages of no less than P20,000.00 and exemplary damages of
P10,000.00, and litigation expenses of P5,000.00.
On June 8, 1990, Judge Renato C. Dacudao ordered the records of the case
transmitted to the Supreme Court conformably with its Resolution dated June 1, 1990
in G.R. No. 82273, entitled "Joaquin T. Borromeo vs. Hon. Court of Appeals and
Samson-Lao," supra directing that all complaints against officers of that Court be
28
forwarded to it for appropriate action.
Borromeo filed a "Manifestation/Motion" dated June 27, 1990 asking the Court to
"rectify the injustices" committed against him in G.R. Nos. 83306, 84999, 87897,
77248 and 84054. This the Court ordered expunged from the record (Resolution, July
19, 1990).
2.
RTC
Case
No. R-21880; CA-G.R.
CV No. 10951; G.R. No. 87897
Borromeo also sued to stop UCPB from foreclosing the mortgage on his property. In
the Cebu City RTC, he filed a complaint for "Damages with Injunction," which was
docketed as Civil Case No. R-21880 (Joaquin T. Borromeo vs. United Coconut
Planters Bank, et al.). Named defendants in the complaint were UCPB, Enrique
Farrarons(UCPB Cebu Branch Manager) and Samson K. Lao. UCPB was
represented in the action by Atty. Danilo Deen, and for a time, by Atty. Honorato

Hermosisima (both being then resident partners of ACCRA Law Office). Lao was
represented by Atty. Antonio Regis. Once again, Borromeo was rebuffed. The Cebu
RTC (Br. 11, Judge Valeriano R. Tomol, Jr. presiding) dismissed the complaint,
upheld UCPB's right to foreclose, and granted its counterclaim for moral damages in
the sum of P20,000.00; attorney's fees amounting to P10,000.00; and litigation
expenses of P1,000.00.

to persuade the Court that the errors imputed to the Court of


Appeals had indeed been committed and therefore, there was no
cause to modify the conclusions set forth in that judgment; and in
such a case, there is obviously no point in reproducing and
restating the conclusions and reasons therefor of the Court of
Appeals.

Borromeo perfected an appeal to the Court of Appeals where it was docketed as CAG.R. CV No. 10951. That Court, thru its Ninth Division (per Martinez, J., ponente, with
de la Fuente and Pe, JJ., concurring), dismissed his appeal and affirmed the Trial
Court's judgment.

Premises considered, the Court further Resolved to DIRECT


ENTRY OF JUDGMENT.

Borromeo filed a petition far review with the Supreme Court which, in G.R. No. 87897
dismissed it for insufficiency in form and substance and for being "largely
unintelligible." Borromeo's motion for reconsideration was denied by Resolution dated
June 25, 1989. A second motion for reconsideration was denied in a Resolution dated
July 31, 1989 which directed as well entry of judgment (effected on August 1, 1989).
In this Resolution, the Court (First Division) said:
The Court considered the Motion for Reconsideration dated July 4,
1989 filed by petitioner himself and Resolved to DENY the same for
lack of merit, the motion having been filed without "express leave of
court" (Section 2, Rule 52, Rules of Court) apart from being a
reiteration merely of the averments of the Petition for Review dated
April 14, 1989 and the Motion for Reconsideration dated May 25,
1989. It should be noted that petitioner's claims have already been
twice rejected as without merit, first by the Regional Trial Court of
Cebu and then by the Court of Appeals. What petitioner desires
obviously is to have a third ruling on the merits of his claims, this
time by this Court. Petitioner is advised that a review of a decision
of the Court of Appeals is not a matter of right but of sound judicial
discretion and will be granted only when there is a special and
important reason therefor (Section 4, Rule 45); and a petition for
review may be dismissed summarily on the ground that "the appeal
is without merit, or is prosecuted manifestly for delay or the
question raised is too unsubstantial to require consideration"
(Section 3, Rule 45), or that only questions of fact are raised in the
petition, or the petition otherwise fails to comply with the formal
requisites prescribed therefor (Sections 1 and 2, Rule 45; Circular
No. 1-88). Petitioner is further advised that the first sentence of
Section 14, Article VIII of the 1987 Constitution refers to a decision,
and has no application to aresolution as to which said section
pertinently provides that a resolution denying a motion for
reconsideration need state only the legal basis therefor; and that
the resolution of June 26, 1989 denying petitioner's first Motion for
Reconsideration dated May 25, 1989 does indeed state the legal
reasons therefor. The plain and patent signification of the grounds
for denial set out in the Resolution of June 26, 1989 is that the
petitioner's arguments aimed at the setting aside of the
resolution denying the petition for review and consequently bringing
about a review of the decision of the Court of Appeals had failed

On August 13, 1989 Borromeo wrote to Atty. Estrella C. Pagtanac, then the Clerk of
Court of the Court's First Division, denouncing the resolution above mentioned as "a
LITANY OF LIES, EVASIONS, and ABSURD SELF-SERVING LOGIC from a
Supreme Court deluded and drunk with power which it has forgotten emanates from
the people," aside from being "patently UNCONSTITUTIONAL for absence of
signatures and facts and law: . . . and characterizing the conclusions therein as "the
height of ARROGANCE and ARBITRARINESS assuming a KING-LIKE AND EVEN
GOD-LIKE
POWER totally at variance and contradicted by . . . CONSTITUTIONAL provisions . .
." To the letter Borromeo attached copies of (1) his "Open Letter to the Ombudsman"
dated August 10, 1989 protesting the Court's "issuing UNSIGNED, UNSPECIFIC, and
BASELESS 'MINUTE RESOLUTIONS;'" (2) his "Open Letter of Warning" dated
August 12, 1989; and (3) a communication of Domingo M. Quimlat, News
Ombudsman, Phil. Daily Inquirer, dated August 10, 1989. His letter was ordered
expunged from the record because containing "false, impertinent and scandalous
matter (Section 5, Rule 9 of the Rules of Court)." Another letter of the same ilk, dated
November 7, 1989, was simply "NOTED without action" by Resolution promulgated
on December 13, 1989.
3.
RTC
Case
No. CEB-4852; CA
SP No. 14519; G.R. No. 84999

G.R.

In arrant disregard of established rule and practice, Borromeo filed another action to
invalidate the foreclosure effected at the instance of UCPB, which he had
unsuccessfully tried to prevent in Case No. CEB-21880. This was Civil Case No.
CEB-4852 of the Cebu City RTC (Joaquin T. Borromeo vs. UCPB, et al.) for
"Annulment of Title with Damages." Here, UCPB was represented by Atty. Laurence
Fernandez, in consultation with Atty. Deen.
On December 26, 1987, the Cebu City RTC (Br. VII, Hon. Generoso A. Juaban,
presiding) dismissed the complaint on the ground of litis pendentia and ordered
Borromeo to pay attorney's fees (P5,000.00) and litigation expenses (P1,000.00).
Borromeo instituted a certiorari action in the Court of Appeals to annul this judgment
(CA G.R. SP No. 14519); but his action was dismissed by the Appellate Court on
June 7, 1988 on account of his failure to comply with that Court's Resolution of May
13, 1988 for submission of certified true copies of the Trial Court's decision of
December 26, 1987 and its Order of February 26, 1988, and for statement of "the
dates he received . . . (said) decision and . . . order."

Borromeo went up to this Court on appeal, his appeal being docketed as G.R. No.
84999. In a Resolution dated October 10, 1988, the Second Division required
comment on Borromeo's petition for review by the respondents therein named, and
required Borromeo to secure the services of counsel. On November 9, 1988, Atty.
Jose L. Cerilles entered his appearance for Borromeo. After due proceedings,
Borromeo's petition was dismissed, by Resolution dated March 6, 1989 of the Second
Division for failure to sufficiently show that the Court of Appeals had committed any
reversible error in the questioned judgment. His motion for reconsideration dated April
4, 1989, again complaining that the resolution contained no findings of fact and law,
was denied.
a. RTC Case No. CEB-8178
Predictably, another action, Civil Case No. CEB-8178, was commenced by Borromeo
in the RTC of Cebu City, this time against the Trial Judge who had lately rendered
judgment adverse to him, Judge Generoso Juaban. Also impleaded as defendants
were UCPB, and Hon. Andres Narvasa (then Chairman, First Division), Estrella
G.Pagtanac and Marissa Villarama (then, respectively, Clerk of Court and Assistant
Clerk of Court of the First Division), and others. Judge German G. Lee of Branch 15
of said Court to which the case was raffled caused issuance of summonses
which were in due course served on September 22, 1989, among others, on said
defendants in and of the Supreme Court. In an En Banc Resolution dated October 2,
1989 in G.R. No. 84999 this Court, required Judge Lee and the Clerk of Court
and Assistant Clerk of Court of the Cebu RTC to show cause why no disciplinary
action should be taken against them for issuing said summonses.

sale thereof by Lao to Logarta. Borromeo appealed to the Court of Appeals, but that
Court, in CA-G.R. CV No. 04097, affirmed the Trial Court's judgment, by Decision
promulgated on October 10, 1986.
Borromeo came up to this Court. on appeal, his review petition being docketed as
G.R. No. 77248. By Resolution of the Second Division of March 16, 1987, however,
his petition was denied for the reason that "a) the petition as well as the docket and
legal research fund fees were filed and paid late; and (b) the issues raised are factual
and the findings thereon of the Court of Appeals are final." He moved for
reconsideration; this was denied by Resolution dated June 3, 1987.
He thereafter insistently and persistently still sought reconsideration of said adverse
resolutions through various motions and letters, all of which were denied. One of his
letters inter alia complaining that the notice sent to him by the Clerk of Court did
not bear the signature of any Justice elicited the following reply from Atty. Julieta Y.
Carreon, Clerk of Court of the Third Division, dated July 10, 1987, reading as follows:
Dear Mr. Borromeo:
This refers to your letter dated June 9, 1987 requesting for a copy
of the actual resolution with the signatures of all the Justices of the
Second Division in Case G.R. No. 77243 whereby the motion for
reconsideration of the dismissal of the petition was denied for lack
of merit.

Shortly thereafter, Atty. Jose L. Cerilles who, as already stated, had for a time
represented Borromeo in G.R. No. 84999 filed with this Court his withdrawal of
appearance, alleging that there was "no compatibility" between him and his client,
Borromeo because "Borromeo had been filing pleadings, papers; etc. without . . .
(his) knowledge and advice" and declaring that he had "not advised and . . . (had)
no hand in the filing of (said) Civil Case CEB 8178 before the Regional Trial Court in
Cebu. On the other hand, Judge Lee, in his "Compliance" dated October 23, 1989,
apologized to the Court and informed it that he had already promulgated an order
dismissing Civil Case No. CEB-8178 on motion of the principal defendants therein,
namely, Judge Generoso Juaban and United Coconut Planters Bank (UCPB). Atty.
Cerilles' withdrawal of appearance, and Judge Lee's compliance, were noted by the
Court in its Resolution dated November 29, 1989.

In connection therewith, allow us to cite for your guidance,


Resolution dated July 6, 1981 in G.R. No. 56280, Rhine Marketing
Corp. v. Felix Gravante, Jr., et al., wherein the Supreme Court
declared that "(m)inute resolutions of this Court denying or
dismissing unmeritorious petitions like the petition in the case at
bar, are the result of a thorough deliberation among the members of
this Court, which does not and cannot delegate the exercise of its
judicial functions to its Clerk of Court or any of its subalterns, which
should be known to counsel. When a petition is denied or dismissed
by this Court, this Court sustains the challenged decision or order
together with its findings of facts and legal conclusions." It is the
Clerk of Court's duty to notify the parties of the action taken on their
case by quoting the resolution adopted by the Court.

4.
RTC
Case
No. CEB-374; CA-G.R.
CV No. 04097; G.R. No. 77248

Very truly yours,

It is germane to advert to one more transaction between Borromeo and Samson K.


Lao which gave rise to another action that ultimately landed in this Court. 29 The
transaction involved a parcel of land of Borromeo's known as the "San Jose Property"
(TCT No. 34785). Borromeo sued Lao and another person (Mariano Logarta) in the
Cebu Regional Trial Court on the theory that his contract with the latter was not an
absolute sale but an equitable mortgage. The action was docketed as Case No. CEB374. Judgment was rendered against him by the Trial Court (Branch 12) declaring
valid and binding the purchase of the property by Lao from him, and the subsequent

JULIETA Y. CARREON
B. CRIMINAL CASES
Just as he had done with regard to the cases involving the Traders Royal Bank, and
similarly without foundation, Borromeo attempted to hold his adversaries in the cases
concerning the UCPB criminally liable.

1. Case No; OMB-VIS-89-00181


In relation to the dispositions made of Borromeo's appeals and other attempts to
30
overturn the judgment of the RTC in Civil Case No. 21880, Borromeo filed with the
Office of the Ombudsman (Visayas) on August 18, 1989, a complaint against the
Chairman and Members of the Supreme Court's First Division; the Members of the
Ninth Division of the Court of Appeals, Secretary of Justice Sedfrey Ordoez,
Undersecretary of Justice Silvestre Bello III, and Cebu City Prosecutor Jufelinito
Pareja, charging them with violations of the Anti-Graft and Corrupt Practices Act and
the Revised Penal Code.
By Resolution dated January 12, 1990, 31 the Office of the Ombudsman dismissed
Borromeo's complaint, opining that the matters therein dealt with had already been
tried and their merits determined by different courts including the Supreme Court
(decision, June 26, 1989, in G.R. No. 87987). The resolution inter alia stated that,
"Finally, we find it unreasonable for complainant to dispute and defiantly refuse to
acknowledge the authority of the decree rendered by the highest tribunal of the land
in this case. . . ."
2. Case No. OMB-VIS-90-00418
A second complaint was filed by Borromeo with the Office of the Ombudsman
(Visayas), dated January 12, 1990, against Atty. Julieta Carreon, Clerk of Court of the
Third Division, Supreme Court, and others, charging them with a violation of R.A.
3019 (and the Constitution, the Rules of Court, etc.) for supposedly usurping judicial
functions in that they issued Supreme Court resolutions (actually, notices of
resolutions) in connection with G.R. No. 82273 which did not bear the justices'
signatures. 32 In a Resolution dated March 19, 1990, the Office of the Ombudsman
dismissed his complaint for "lack of merit" declaring inter alia that "in all the
questioned actuations of the respondents alleged to constitute usurpation . . . it
cannot be reasonably and fairly inferred that respondents really were the ones
rendering them," and "it is not the prerogative of this office to review the correctness
of judicial resolutions." 33
III. CASES INVOLVING SECURITY
BANK & TRUST CO. (SBTC)
A. CIVIL CASES
1.
RTC
Case
No. 21615; CAG.R. No. 20617; G.R. No. 94769
The third banking institution which Joaquin T. Borromeo engaged in running court
battles, was the Security Bank & Trust Company (SBTC). From it Borromeo had
obtained five (5) loans in the aggregate sum of P189,126.19, consolidated in a single
Promissory Note on May 31, 1979. To secure payment thereof, Summa Insurance
Corp. (Summa) issued a performance bond which set a limit of P200,000.00 on its
liability thereunder. Again, as in the case of his obligations to Traders Royal Bank and

UCPB, Borromeo failed to discharge his contractual obligations. Hence, SBTC


brought an action in the Cebu City RTC against Borromeo and Summa for collection.
The action was docketed as Civil Case No. R-21615, and was assigned to Branch 10,
Judge Leonardo Caares, presiding. Plaintiff SBTC was represented by Atty. Edgar
Gica, who later withdrew and was substituted by the law firm, HERSINLAW. The latter
appeared in the suit through Atty. Wilfredo Navarro.
Judgment by default was rendered in the case on January 5, 1989; both defendents
were sentenced to pay to SBTC, solidarily, the amount of P436,771.32; 25% thereof
as attorney's fees (but in no case less than P20,000.00); and P5,000.00 as litigation
expenses; and the costs. A writ of execution issued in due course pursuant to which
an immovable of Borromeo was levied on, and eventually sold at public auction on
October 19, 1989 in favor of the highest bidder, SBTC.
On February 5, 1990, Borromeo filed a motion to set aside the judgment by default,
but the same was denied on March 6, 1990. His Motion for Reconsideration having
likewise been denied, Borromeo went to the Court of Appeals for relief (CA-G.R. No.
20617), but the latter dismissed his petition. Failing in his bid for reconsideration,
Borromeo appealed to this Court on certiorari his appeal being docketed as G.R.
No. 94769. On September 17, 1990, this Court dismissed his petition, and
subsequently denied with finality his motion for reconsideration. Entry of Judgment
was made on December 26, 1990.
However, as will now be narrated, and as might now have been anticipated in light of
his history of recalcitrance and bellicosity, these proceedings did not signify the end of
litigation concerning Borromeo's aforesaid contractual commitments to SBTC, but
only marked the start of another congeries of actions and proceedings, civil and
criminal concerning the same matter, instituted by Borromeo.
2. RTC Case No. CEB-9267
While G.R. No. 94769 was yet pending in the Supreme Court, Borromeo commenced
a suit of his own in the Cebu RTC against SBTC; the lawyers who represented it in
Civil Case No. R-21625 HERSINLAW, Atty.Wilfredo Navarro, Atty. Edgar
Gica; and even the Judge who tried and disposed of the suit, Hon. Leonardo
Caares. He denominated his action, docketed as Civil Case No. CEB-9267, as one
for "Damages from Denial of Due Process, Breach of Contract, Fraud, Unjust
Judgment, with Restraining Order and Injunction." His complaint accused defendants
of "wanton, malicious and deceitful acts" in "conniving to deny plaintiff due process
and defraud him through excessive attorney's fees," which acts caused him grave
mental and moral shock, sleepless nights, worry, social embarrassment and severe
anxiety for which he sought payment of moral and exemplary damages as well as
litigation expenses.
By Order dated May 21, 1991, the RTC of Cebu City, Branch 16 (Hon. Godardo
Jacinto, presiding) granted the demurrer to evidence filed by defendants and
dismissed the complaint, holding that "since plaintiff failed to introduce evidence to

support . . . (his) causes of action asserted . . ., it would be superfluous to still require


defendants to present their own evidence as there is nothing for them to controvert."
2.
RTC
Case
CA-G.R. CV No. 39047

the temperament he has, by far, exhibited, the appellant is,


however, sufficiently warned that similar displays in the future shall
accordingly be dealt with with commensurate severity.

No. CEB-10458;

Nothing daunted, and running true to form, Borromeo filed on July 2, 1991 still
another suit against the same parties SBTC, HERSINLAW, and Judge Caares
34
but now including Judge Godardo Jacinto, who had rendered the latest judgment
against him. This suit, docketed as Civil Case No. CEB-10458, was, according to
Borromeo, one "for Damages (For Unjust Judgment and Orders, Denial of Equal
Protection of the Laws Violation of the Constitution, Fraud and Breach of Contract)."
Borromeo faulted Judges Caares and Jacinto "for the way they decided the two
cases (CVR-21615 & CEB NO. 9267)," and contended that defendants committed
"wanton, malicious, and unjust acts" by "conniving to defraud plaintiff and deny him
equal protection of the laws and due process," on account of which he had been
"caused untold mental anguish, moral shock, worry, sleepless nights, and
embarrassment for which the former are liable under Arts. 20, 21, 27, and 32 of the
Civil Code."
The defendants filed motions to dismiss. By Order dated August 30, 1991, the RTC of
Cebu City, Branch 15 (Judge German G. Lee, Jr., presiding) dismissed the complaint
on grounds of res judicata, immunity of judges from liability in the performance of their
official functions, and lack of jurisdiction.
Borromeo took an appeal to the Court of Appeals, which docketed it as CA-G.R. CV
No. 39047.
In the course thereof, he filed motions to cite Atty. Wilfredo F. Navarro, lawyer of
SBTC, for contempt of court. The motions were denied by Resolution of the Court of
35
Appeals (Special 7th Division) dated April 13, 1993. Said the Court:
Stripped of their disparaging and intemperate innuendoes, the
subject motions, in fact, proffer nothing but a stark difference in
opinion as to what can, or cannot, be considered res judicata under
the circumstances.
xxx xxx xxx
By their distinct disdainful tenor towards the appellees, and his
apparent penchant for argumentum ad hominen, it is, on the
contrary the appellant who precariously treads the acceptable limits
of argumentation and personal advocacy. The Court, moreover,
takes particular note of the irresponsible leaflets he admits to have
authored and finds them highly reprehensible and needlessly
derogatory to the dignity, honor and reputation of the Courts. That
he is not a licensed law practitioner is, in fact, the only reason that
his otherwise contumacious behavior is presently accorded the
patience and leniency it probably does not deserve. Considering

IV. OTHER CASES


A. RTC Case No. CEB-2074; CA-G.R,
CV No. 14770; G.R. No. 98929
One other case arising from another transaction of Borromeo with Samson K. Lao is
pertinent. This is Case No. CEB-2974 of the Regional Trial Court of Cebu. It appears
that sometime in 1979, Borromeo was granted a loan of P165,000.00 by the
Philippine Bank of Communications (PBCom) on the security of a lot belonging to him
in San Jose Street, Cebu City, covered by TCT No. 34785. 36 Later, Borromeo
obtained a letter of credit in the amount of P37,000.00 from Republic Planters Bank,
with Samson Lao as co-maker. Borromeo failed to pay his obligations; Lao agreed to,
and did pay Borromeo's obligations to both banks (PBCom and Republic), in
consideration of which a deed of sale was executed in his favor by Borromeo over two
(2) parcels of land, one of which was that mortgaged to PBCom, as above stated. Lao
then mortgaged the land to PBCom as security for his own loan in the amount of
P240,000.00.
Borromeo subsequently sued PBCom, some of its personnel, and Samson Lao in the
Cebu Regional Trial Court alleging that the defendants had conspired to deprive him
of his property. Judgment was rendered against him by the Trial Court. Borromeo
elevated the case to the Court of Appeals where his appeal was docketed as CA-G.R.
CV No. 14770. On March 21, 1990, said Court rendered judgment affirming the Trial
Court's decision, and on February 7, 1991, issued a Resolution denying Borromeo's
motion for reconsideration. His appeal to this Court, docketed as G.R. No. 98929, was
given short shrift. On May 29, 1991, the Court (First Division) promulgated a
Resolution denying his petition for review "for being factual and for failure . . . to
sufficiently show that respondent court had committed any reversible error in its
questioned judgment."
Stubbornly, in his motion for reconsideration, he insisted the notices of the resolutions
sent to him were unconstitutional and void because bearing no signatures of the
Justices who had taken part in approving the resolution therein mentioned.
B. RTC Case No. CEB-11528
What would seem to be the latest judicial dispositions rendered against Borromeo, at
least as of date of this Resolution, are two orders issued in Civil Case No. CEB-11528
of the Regional Trial Court at Cebu City (Branch 18), which was yet another case filed
by Borromeo outlandishly founded on the theory that a judgment promulgated against
him by the Supreme Court (Third Division) was wrong and "unjust." Impleaded as
defendant in the action was former Chief Justice Marcelo B. Fernan, as Chairman of
the Third Division at the time in question. On August 31, 1994 the presiding judge,
Hon. Galicano O. Arriesgado, issued a Resolution inter aliadismissing Borromeo's

complaint "on grounds of lack of jurisdiction and res judicata." His Honor made the
following pertinent observations:
. . . (T)his Court is of the well-considered view and so holds that this
Court has indeed no jurisdiction to review, interpret or reverse the
judgment or order of the Honorable Supreme Court. The acts or
omissions complained of by the plaintiff against the herein
defendant and the other personnel of the highest Court of the land
as alleged in paragraphs 6 to 12 of plaintiff's complaint are certainly
beyond the sphere of this humble court to consider and pass upon
to determine their propriety and legality. To try to review, interpret
or reverse the judgment or order of the Honorable Supreme Court
would appear not only presumptuous but also contemptuous. As
argued by the lawyer for the defendant, a careful perusal of the
allegations in the complaint clearly shows that all material
allegations thereof are directed against a resolution of the Supreme
Court which was allegedly issued by the Third Division composed
of five (5) justices. No allegation is made directly against defendant
Marcelo B. Fernan in his personal capacity. That being the case,
how could this Court question the wisdom of the final order or
judgment of the Supreme Court (Third Division) which according to
the plaintiff himself had issued a resolution denying plaintiffs
petition and affirming the Lower Court's decision as reflected in the
"Entry of Judgment." Perhaps, if there was such violation of the
Rules of Court, due process and Sec. 14, Art. 8 of the Constitution
by the defendant herein, the appropriate remedy should not have
been obtained before this Court. For an inferior court to reverse,
interpret or review the acts of a superior court might be construed to
a certain degree as a show of an uncommon common sense.
Lower courts are without supervising jurisdiction to interpret or to
reverse the judgment of the higher courts.
Borromeo's motion for reconsideration dated September 20, 1994 was denied "for
lack of sufficient factual and legal basis" by an Order dated November 15, 1994.
V. ADMINISTRATIVE CASE No. 3433
A. Complaint Against Lawyers
of his Court Adversaries
Borromeo also initiated administrative disciplinary proceedings against the lawyers
who had appeared for his adversaries UCPB and Samson K. Lao in the actions
above mentioned, and others. As already mentioned, these lawyers were: Messrs.
Laurence Fernandez, Danilo Deen, Honorato Hermosisima, Antonio Regis, and
Alfredo Perez. His complaint against them, docketed as Administrative Case No.
3433, prayed for their disbarment. Borromeo averred that the respondent lawyers
connived with their clients in (1) maliciously misrepresenting a deed of sale with pacto
de retro as a genuine sale, although it was actually an equitable mortgage; (2)
fraudulently depriving complainant of his proprietary rights subject of the Deed of
Sale; and (3) defying two lawful Court orders, all in violation of their lawyer's oath to

do no falsehood nor consent to the doing of any in Court. Borromeo alleged that
respondents Perez and Regis falsely attempted to consolidate title to his property in
favor of Lao.
B. Answer of Respondent Lawyers
The respondent lawyers denounced the disbarment complaint as "absolutely
baseless and nothing but pure harassment." In a pleading dated July 10, 1990,
entitled "Comments and Counter Motion to Cite Joaquin Borromeo in Contempt of
Court;" July 10, 1990, filed by the Integrated Bar of the Philippines Cebu City Chapter,
signed by Domero C. Estenzo (President), Juliano Neri (Vice-President), Ulysses
Antonio C. Yap (Treasurer); Felipe B. Velasquez (Secretary), Corazon E. Valencia
(Director), Virgilio U. Lainid (Director), Manuel A. Espina (Director), Ildefonsa A.
Ybaez (Director), Sylvia G. Almase (Director), and Ana Mar Evangelista P. Batiguin
(Auditor). The lawyers made the following observations:
It is ironic. While men of the legal profession regard members of the
Judiciary with deferential awe and respect sometimes to the extent
of cowering before the might of the courts, here is a non-lawyer
who, with gleeful abandon and unmitigated insolence, has cast
aspersions and shown utter disregard to the authority and name of
the courts.
And lawyers included. For indeed, it is very unfortunate that here is
a non-lawyer who uses the instruments of justice to harass lawyers
and courts who crosses his path more especially if their actuations
do not conform with his whims and caprices.
Adverting to letters publicly circulated by Borromeo, inter alia charging then Chief
Justice Marcelo B. Fernan with supposed infidelity and violation of the constitution,
etc., the lawyers went on to say the following:
The conduct and statement of Borromeo against this Honorable
Court, and other members of the Judiciary are clearly and grossly
disrespectful, insolent and contemptuous. They tend to bring
dishonor to the Judiciary and subvert the public confidence on the
courts. If unchecked, the scurrilous attacks will undermine the
dignity of the courts and will result in the loss of confidence in the
country's judicial system and administration of justice.
. . . (S)omething should be done to protect the integrity of the courts
and the legal profession. So many baseless badmouthing have
been made by Borromeo against this Honorable Court and other
courts that for him to go scot-free would certainly be demoralizing to
members of the profession who afforded the court with all the
respect and esteem due them.

Subsequently, in the same proceeding; Borromeo filed another pleading protesting


the alleged "refusal" of the Cebu City Chapter of the Integrated Bar of the Philippines
to act on his disbarment cases "filed against its members."
C. Decision of the IBP
On March 28, 1994, the National Executive Director, IBP (Atty. Jose Aguila Grapilon)
transmitted to this Court the notice and copy of the decision in the case, reached after
due investigation, as well as the corresponding records in seven (7) volumes. Said
decision approved and adopted the Report and Recommendation dated December
15, 1993 of Atty. Manuel P. Legaspi, President, IBP, Cebu City Chapter, representing
the IBP Commission on Bar Discipline, recommending dismissal of the complaint as
against all the respondents and the issuance of a "warning to Borromeo to be more
cautious and not be precipitately indiscriminate in the filing of administrative
complaints against lawyers." 37
VI. SCURRILOUS WRITINGS
Forming part of the records of several cases in this Court are copies of letters ("open"
or otherwise), "circulars," flyers or leaflets harshly and quite unwarrantedly derogatory
of the many court judgments or directives against him and defamatory of his
adversaries and their lawyers and employees, as well as the judges and court
employees involved in the said adverse dispositions some of which scurrilous
writings were adverted to by the respondent lawyers in Adm. Case No. 3433, supra.
The writing and circulation of these defamatory writing were apparently undertaken by
Borromeo as a parallel activity to his "judicial adventures." The Court of Appeals had
occasion to refer to his "apparent penchant for argumentum ad hominen" and of the
"irresponsible leaflets he admits to have authored . . . (which were found to be) highly
reprehensible and needlessly derogatory to the dignity, honor and reputation of the
Courts."
In those publicly circulated writings, he calls judges and lawyers ignorant, corrupt,
oppressors, violators of the Constitution and the laws, etc.
Sometime in July, 1990, for instance, he wrote to the editor of the "Daily Star" as
regards the reported conferment on then Chief Justice Marcelo B. Fernan of an
"Award from the University of Texas for his contributions in upholding the Rule of
Law, Justice, etc.," stressing that Fernan "and the Supreme Court persist in rendering
rulings patently violative of the Constitution, Due Process and Rule of Law,
particularly in their issuance of so-called Minute Resolutions devoid of FACT or LAW
or SIGNATURES . . ." He sent a copy of his letter in the Supreme Court.
He circulated an "OPEN LETTER TO SC justices, Fernan," declaring that he had
"suffered INJUSTICE after INJUSTICE from you who are sworn to render TRUE
JUSTICE but done the opposite, AND INSTEAD OF RECTIFYING THEM, labeled my
cases as 'frivolous, nuisance, and harassment suits' while failing to refute the
irrefutable evidences therein . . .;" in the same letter, he specified what he considered
to be some of "the terrible injustices inflicted on me by this Court."

In another letter to Chief Justice Fernan, he observed that "3 years after EDSA, your
pledges have not been fulfilled. Injustice continues and as you said, the courts are
agents of oppression, instead of being saviours and defenders of the people. The
saddest part is that (referring again to minute resolutions) even the Supreme Court,
the court of last resort, many times, sanctions injustice and the trampling of the rule of
law and due process, and does not comply with the Constitution when it should be the
first to uphold and defend it . . . ." Another circulated letter of his, dated June 21, 1989
and captioned, "Open Letter to Supreme Court Justices Marcelo Fernan and Andres
Narvasa," repeated his plaint of having "been the victim of many . . . 'Minute
Resolutions' . . . which in effect sanction the theft and landgrabbing and arson of my
properties by TRADERS ROYAL BANK, UNITED COCONUT PLANTERS BANK,
AND one TOMAS B. TAN all without stating any FACT or LAW to support your
dismissal of . . . (my) cases, despite your firm assurances (Justice Fernan) that you
would cite me such facts or laws (during our talk in your house last March 12 1989);"
and that "you in fact have no such facts or laws but simply want to ram down a most
unjust Ruling in favor of a wrongful party. . . ."
In another flyer entitled in big bold letters, "A Gov't That Lies! Blatant attempt to fool
people!" he mentions what he regards as "The blatant lies and contradictions of the
Supreme Court, CA to support the landgrabbing by Traders Royal Bank of
Borromeos' Lands." Another flyer has at the center the caricature of a person, seated
on a throne marked Traders Royal Bank, surrounded by such statements as, "Sa
TRB para kami ay royalty. Nakaw at nakaw! Kawat Kawat! TRB WILL STEAL!" etc
Still another "circular" proclaims: "So the public may know: Supreme Court minute
resolutions w/o facts, law, or signatures violate the Constitution" and ends with the
admonition: "Supreme Court, Justice Fernan: STOP VIOLATING THE CHARTER." 38
One other "circular" reads:
SC,
NARVASA

CODDLERS
VIOLATOR OF LAWS

OF

TYRANTS!!!
CROOKS!

by: JOAQUIN BORROMEO


NARVASA's SC has denied being a DESPOT nor has it shielded
CROOKS in the judiciary. Adding "The SCRA (SC Reports) will
attest to this continuing vigilance Of the supreme Court." These are
lame, cowardly and self-serving denials and another "selfexoneration" belied by evidence which speak for themselves (Res
Ipsa Loquitor) (sic) the SCRA itself.
It is pure and simply TYRANNY when Narvasa and associates
issued UNSIGNED, UNCLEAR, SWEEPING "Minute Resolutions"
devoid of CLEAR FACTS and LAWS in patent violation of Secs.
4(3), 14, Art. 8 of the Constitution. It is precisely through said
TYRANNICAL, and UNCONSTITUTIONAL sham rulings that
Narvasa & Co. have CODDLED CROOKS like crony bank TRB,
UCPB, and SBTC, and through said fake resolutions that Narvasa
has LIED or shown IGNORANCE of the LAW in ruling that

CONSIGNATION IS NECESSARY IN RIGHT OF REDEMPTION


(GR 83306). Through said despotic resolutions, NARVASA & CO.
have sanctioned UCPB/ACCRA's defiance of court orders and
naked land grabbing What are these if not TYRANNY? (GR
84999).

DECLARING HIMSELF, JUSTICES, and even


MERE CLERKS TO BE IMMUNE FROM SUIT
AND UN-ACCOUNTABLE TO THE PEOPLE and
REFUSING TO ANSWER AND REFUTE
CHARGES AGAINST HIMSELF

Was it not tyranny for the SC to issue an Entry of Judgment without


first resolving the motion for reconsideration (G.R No. 82273). Was
it not tyranny and abuse of power for the SC to order a case
dismissed against SC clerks (CEBV-8679) and declare justices and
said clerks "immune from suit" despite their failure to file any
pleading? Were Narvasa & Co. not in fact trampling on the rule of
law and rules of court and DUE PROCESS in so doing? (GR No.
82273).

JOAQUIN T. BORROMEO

TYRANTS will never admit that they are tyrants. But their acts
speak for themselves! NARVASA & ASSOC: ANSWER AND
REFUTE THESE SERIOUS CHARGES OR RESIGN!!
IMPEACH NARVASA
ISSUING UNSIGNED, SWEEPING, UNCLEAR,
UNCONSTITUTIONAL
"MINUTE
RESOLUTIONS" VIOLATIVE OF SECS. 4(3), 14,
ART. 8, Constitution
VIOLATING RULES OF COURT AND DUE
PROCESS IN ORDERING CASE AGAINST SC
CLERKS (CEB-8679) DISMISSED DESPITE
THE LATTER'S FAILURE TO FILE PLEADINGS;
HENCE IN DEFAULT
CORRUPTION AND/OR GROSS IGNORANCE
OF
THE
LAW
IN
RULING,
THAT
CONSIGNATION IS NECESSARY IN RIGHT OF
REDEMPTION, CONTRADICTING LAW AND
SC'S OWN RULINGS TO ALLOW CRONY
BANK TRB TO STEALS LOTS WORTH P3
MILLION
CONDONING CRONY BANK UCPB'S
DEFIANCE OF TWO LAWFUL COURT
ORDERS AND STEALING OF TITLE OF
PROPERTY WORTH P4 MILLION
BEING JUDGE AND ACCUSED AT THE SAME
TIME AND PREDICTABLY EXONERATING
HIMSELF AND FELLOW CORRUPT JUSTICES

VI. IMMEDIATE ANTECEDENTS


OF PROCEEDINGS AT BAR
A. Letter of Cebu City Chapter
IBP, dated June 21, 1992
Copies of these circulars evidently found their way into the hands, among others, of
some members of the Cebu City Chapter of the Integrated Bar of the Philippines. Its
President thereupon addressed a letter to this Court, dated June 21, 1992, which (1)
drew attention to one of them that last quoted, above " . . . .sent to the IBP Cebu
City Chapter and probably other officers . . . in Cebu," described as containing "highly
libelous and defamatory remarks against the Supreme Court and the whole justice
system" and (2) in behalf of the Chapter's "officers and members," strongly urged
the Court "to impose sanctions against Mr. Borromeo for his condemnable act."
B. Resolution of July 22, 1993
Acting thereon, the Court En Banc issued a Resolution on July 22, 1993, requiring
comment by Borromeo on the letter, notice of which was sent to him by the Office of
the Clerk of Court. The resolution pertinently reads as follows:
xxx xxx xxx
The records of the Court disclose inter alia that as early as April 4,
1989, the Acting Clerk of Court, Atty. Luzviminda D. Puno, wrote a
four page letter to Mr. Borromeo concerning G.R. No. 83306
(Joaquin T. Borromeo vs. Traders Royal Bank [referred to by
Borromeo in the "circular" adverted to by the relator herein, the IBP
Cebu City Chapter]) and two (2) other cases also filed with the
Court by Borromeo: G.R. No. 77248 (Joaquin T. Borromeo v.
Samson Lao and Mariano Logarta) and G.R. No. 84054 (Joaquin T.
Borromeo v. Hon. Mario Dizon and Tomas Tan), all resolved
adversely to him by different Divisions of the Court. In that letter
Atty. Puno explained to Borromeo very briefly the legal principles
applicable to his cases and dealt with the matters mentioned in his
circular.
The records further disclose subsequent adverse rulings by the
Court in other cases instituted by Borromeo in this Court, i.e., G.R.
No. 87897 (Joaquin T. Borromeo v. Court of Appeals, et al.) and
No. 82273 (Joaquin T. Borromeo v. Court of Appeals and Samson

Lao), as well as the existence of other communications made public


by Borromeo reiterating the arguments already passed upon by the
court in his cases and condemning the court's rejection of those
arguments.
Acting on the letter dated June 21, 1993 of the Cebu City Chapter
of the Integrated Bar of the Philippines thru its above named,
President, and taking account of the related facts on record, the
Court Resolved:
1) to REQUIRE:
(a) the Clerk of Court (1) to DOCKET the matter at bar as a
proceeding for contempt against Joaquin T. Borromeo instituted at
the relation of said Cebu City Chapter, Integrated Bar of the
Philippines, and (2) to SEND to the City Sheriff, Cebu City, notice of
this resolution and copies of the Chapter's letter dated June 21,
1993 together with its annexes; and
(b) said City Sheriff of Cebu City to CAUSE PERSONAL SERVICE
of said notice of resolution and a copy of the Chapter's letter dated
June 21, 1993, together with its annexes, on Joaquin T. Borromeo
at his address at Mabolo, Cebu City; and
2) to ORDER said Joaquin T. Borromeo, within ten (10) days from
receipt of such notice and the IBP Chapter's letter of June 21, 1993
and its annexes, to file a comment on the letter and its annexes as
well as on the other matters set forth in this resolution, serving copy
thereof on the relator, the Cebu City Chapter of the Integrated Bar
of the Philippines, Palace of Justice Building, Capitol, Cebu City.
SO ORDERED.
1. Atty. Puno's Letter of April 4, 1989
Clerk of Court Puno's letter to Borromeo of April 4, 1989, referred to in the first
paragraph of the resolution just mentioned, explained to Borromeo for perhaps the
second time, precisely the principles and established practice relative to "minute
resolutions" and notices thereof, treated of in several other communications and
resolutions sent to him by the Supreme Court, to wit: the letter received by him on
July 10, 1987, from Clerk of Court Julieta Y. Carreon (of this Court's Third Division) (in
relation to G.R No. 77243 39) the letter to him of Clerk of Court (Second Division)
Fermin
J.
Garma,
dated
May
19,
1989, 40 and three resolutions of this Court, notices of which were in due course
41
served on him, to wit: that dated July 31, 1989, in G.R. No. 87897; that dated June
1, 1990 in G.R. No. 82274 (186 SCRA 1), 42 and that dated June 11, 1994 in G. R.
43
No. 112928.
C. Borromeo's Comment of August 27, 1993

In response to the Resolution of July 22, 1993, Borromeo filed a Comment dated
August 27, 1993 in which he alleged the following:
1) the resolution of July 22, 1993 (requiring comment) violates the
Constitution which requires "signatures and concurrence of majority
of members of the High Court;" hence, "a certified copy duly signed
by Justices is respectfully requested;"
2) the Chief Justice and other Members of the Court should inhibit
themselves "since they cannot be the Accused and Judge at the
same time, . . . (and) this case should be heard by an impartial and
independent body;"
3) the letter of Atty. Legaspi "is not verified nor signed by members
of said (IBP Cebu Chapter) Board; . . . is vague, unspecific, and
sweeping" because failing to point out "what particular statements
in the circular are allegedly libelous and condemnable;" and does
not appear that Atty. Legaspi has authority to speak or file a
complaint "in behalf of those accused in the "libelous circular;"
4) in making the circular, he (Borromeo) "was exercising his rights
of freedom of speech, of expression, and to petition the government
for redress of grievances as guaranteed by the Constitution (Sec. 4,
Art. III) and in accordance with the accountability of public officials;"
the circular merely states the truth and asks for justice based on the
facts
and
the
law; . . . it is not libelous nor disrespectful but rather to be
commended and encouraged; . . . Atty. Legaspi . . . should specify
under oath which statements are false and lies;
5) he "stands by the charges in his circular and is prepared to
support them with pertinent facts, evidence and law;" and it is
"incumbent on the Hon. Chief Justice and members of the High
Court to either refute said charges or dispense the justice that they
are duty bound to dispense.
D. Resolution of September 30, 1993
After receipt of the comment, and desiring to accord Borromeo the fullest opportunity
to explain his side, and be reprsented by an attorney, the Court promulgated the
following Resolution on September 30, 1993, notice of which was again served on
him by the Office of the Clerk of Court.
. . . The return of service filed by Sheriff Jessie A. Belarmino, Office
of the Clerk of Court Regional Trial Court of Cebu City, dated
August 26, 1993, and the Comment of Joaquin Borromeo, dated
August 27, 1993, on the letter of President Manuel P. Legaspi of
the relator dated June 21, 1993, are both NOTED. After deliberating
on the allegations of said Comment, the Court Resolved to GRANT

Joaquin T. Borromeo an additional period of fifteen (15) days from


notice hereof within which to engage the services or otherwise seek
the assistance of a lawyer and submit such further arguments in
addition to or in amplification of those set out in his Comment dated
August 27, 1993, if he be so minded.

circular," theorized that it is "incumbent on the said Justices to rectify their grave as
well as to dismiss Atty. Legaspi's baseless and false charges."
VII. THE COURT CONCLUSIONS
A. Respondent's Liability
for Contempt of Court

SO ORDERED.
E. Borromeo's Supplemental Comment
of October 15, 1992
Borromeo filed a "Supplemental Comment" dated October 15, 1992, reiterating the
arguments and allegations in his Comment of August 27, 1993, and setting forth
"additional arguments and amplification to . . . (said) Comment," viz.:
1) the IBP and Atty. Legaspi have failed "to specify and state under
oath the alleged 'libelous' remarks contained in the circular . . .;
(they should) be ordered to file a VERIFIED COMPLAINT . . .(failing
in which, they should) be cited in contempt of court for making false
charges and wasting the precious time of this Highest Court by
filing a baseless complaint;
2) the allegations in their circular are not libelous nor disrespectful
but "are based on the TRUTH and the LAW", namely:
a) "minute resolutions" bereft of signatures and
clear facts and laws are patent violations of Secs.
4(32), 13, 14, Art. VIII of the Constitution;
b) there is no basis nor thruth to this Hon. Court's
affirmation to the Appelate Court's ruling that the
undersigned "lost" his right of redemption price,
since no less than this Hon. Court has ruled in
many
rulings
that
CONSIGNATION
IS
UNNECESSARY in right of redemption;
c) this Hon. Court has deplorably condoned crony banks TRB and
UCPB's frauds and defiance of court orders in G.R. Nos. 83306 and
878997 and 84999.
F. Borromeo's "Manifestation" of
November 26, 1993
Borromeo afterwards filed a "Manifestation" under date of November 26, 1993,
adverting to "the failure of the IBP and Atty. Legaspi to substantiate his charges under
oath and the failure of the concerned Justices to refute the charges in the alledged
"libelous circular" and, construing these as "and admission of the thruth in said

Upon the indubitable facts on record, there can scarcely be any doubt of Borromeo's
guilt of contempt, for abuse of and interference with judicial rules and processes,
gross disrespect to courts and judges and improper conduct directly impeding,
obstructing and degrading the administration of justice. 44 He has stubbornly litigated
issues already declared to be without merit, obstinately closing his eyes to the many
rulings rendered adversely to him in many suits and proceedings, rulings which had
become final and executory, obdurately and unreasonably insisting on the application
of his own individual version of the rules, founded on nothing more than his personal
(and quite erroneous) reading of the Constitution and the law; he has insulted the
judges and court officers, including the attorneys appearing for his adversaries,
needlessly overloaded the court dockets and sorely tried the patience of the judges
and court employees who have had to act on his repetitious and largely unfounded
complaints, pleadings and motions. He has wasted the time of the courts, of his
adversaries, of the judges and court employees who have had the bad luck of having
to act in one way or another on his unmeritorious cases. More particularly, despite his
attention having been called many times to the egregious error of his theory that the
so-called "minute resolutions" of this Court should contain findings of fact and
conclusions of law, and should be signed or certified by the Justices promulgating the
same, 45 he has mulishly persisted in ventilating that self-same theory in various
proceedings, causing much loss of time, annoyance and vexation to the courts, the
court employees and parties involved.
1. Untenability of Proffered Defenses
The first defense that he proffers, that the Chief Justice and other Members of the
Court should inhibit themselves "since they cannot be the Accused and Judge at the
same time . . . (and) this case should be heard by an impartial and independent body,
is still another illustration of an entirely unwarranted, arrogant and reprehensible
assumption of a competence in the field of the law: he again uses up the time of the
Court needlessly by invoking an argument long since declared and adjudged to be
untenable. It is axiomatic that the "power or duty of the court to institute a charge for
contempt against itself, without the intervention of the fiscal or prosecuting officer, is
essential to the preservation of its dignity and of the respect due it from litigants,
lawyers and the public. Were the intervention of the prosecuting officer required and
judges obliged to file complaints for contempts against them before the prosecuting
officer, in order to bring the guilty to justice, courts would be inferior to prosecuting
officers and impotent to perform their functions with dispatch and absolute
independence. The institution of charges by the prosecuting officer is not necessary
to hold persons guilty of civil or criminal contempt amenable to trial and punishment
by the court. All that the law requires is that there be a charge in writing duly filed in
court and an opportunity to the person charged to be heard by himself or counsel.

The charge may be made by the fiscal, by the judge, or even by a private person. . .
." 46
His claim that the letter of Atty. Legaspi "is not verified nor signed by members of
said (IBP Cebu Chapter) Board; . . . is vague, unspecific, and sweeping" because
failing to point out what particular statements in the circular are allegedly libelous and
condemnable;" and it does not appear that Atty. Legaspi has authority to speak or file
a complaint "in behalf of those accused in the 'libelous' circular" is in the premises,
plainly nothing but superficial philosophizing, deserving no serious treatment.
Equally as superficial, and sophistical, is his other contention that in making the
allegations claimed to be contumacious, he "was exercising his rights of freedom of
speech, of expression, and to petition the government for redress of grievances as
guaranteed by the Constitution (Sec. 4, Art. III) and in accordance with the
accountablity of public officials." The constitutional rights invoked by him afford no
justification for repetitious litigation of the same causes and issues, for insulting
lawyers, judges, court employees; and other persons, for abusing the processes and
rules of the courts, wasting their time, and bringing them into disrepute and
disrespect.
B. Basic Principles Governing
the Judicial Function
The facts and issues involved in the proceeding at bench make necessary a
restatement of the principles governing finality of judgments and of the paramount
need to put an end to litigation at some point, and to lay down definite postulates
concerning what is perceived to be a growing predilection on the part of lawyers and
litigants like Borromeo to resort to administrative prosecution (or institution of
civil or criminal actions) as a substitute for or supplement to the specific modes of
appeal or review provided by law from court judgments or orders.
1.
Reason
Hierarchy

for

courts; Judicial

Courts exist in every civilized society for the settlement of controversies. In every
country there is a more or less established hierarchical organization of courts, and a
more or less comprehensive system of review of judgments and final orders of lower
courts.
The judicial system in this jurisdiction allows for several levels of litigation, i.e., the
presentation of evidence by the parties a trial or hearing in the first instance as
well as a review of the judgments of lower courts by higher tribunals, generally by
consideration anew and ventilation of the factual and legal issues through briefs or
memoranda. The procedure for review is fixed by law, and is in the very nature of
things, exclusive to the courts.
2.
Paramount
Need
Litigation at Some Point

to

end

It is withal of the essence of the judicial function that at some point, litigation must
end. Hence, after the procedures and processes for lawsuits have been undergone,
and the modes of review set by law have been exhausted, or terminated, no further
ventilation of the same subject matter is allowed. To be sure, there may be, on the
part of the losing parties, continuing disagreement with the verdict, and the
conclusions therein embodied. This is of no moment, indeed, is to be expected; but, it
is not their will, but the Court's, which must prevail; and, to repeat, public policy
demands that at some definite time, the issues must be laid to rest and the court's
47
dispositions thereon accorded absolute finality. As observed by this Court
in Rheem of the Philippines v. Ferrer, a 1967 decision, 48 a party "may think highly of
his intellectual endowment. That is his privilege. And he may suffer frustration at what
he feels is others' lack of it. This is his misfortune. Some such frame of mind,
however, should not be allowed to harden into a belief that he may attack a court's
decision in words calculated to jettison the time-honored aphorism that courts are the
temples of right."
3.
Judgments
Not Reviewable

of

Supreme

Court

The sound, salutary and self-evident principle prevailing in this as in most


jurisdictions, is that judgments of the highest tribunal of the land may not be reviewed
by any other agency, branch, department, or official of Government. Once the
Supreme Court has spoken, there the matter must rest. Its decision should not and
cannot be appealed to or reviewed by any other entity, much less reversed or
modified on the ground that it is tainted by error in its findings of fact or conclusions of
law, flawed in its logic or language, or otherwise erroneous in some other
respect. 49 This, on the indisputable and unshakable foundation of public policy, and
constitutional and traditional principle.
In an extended Resolution promulgated on March 12, 1987 in In Re: Wenceslao
Laureta involving an attempt by a lawyer to prosecute before the Tanod bayan
"members of the First Division of this Court collectively with having knowingly and
deliberately rendered an 'unjust extended minute Resolution' with deliberate bad faith
in violation of Article 204 of the Revised penal Code ". . . and for deliberatly causing
"undue injury" to respondent . . . and her co-heirs because of the "unjust Resolution"
promulgated, in violation of the Anti-Graft and Corrupt Practices Act . . . the
following pronouncements were made in reaffirmation of established doctrine: 50
. . . As aptly declared in the Chief Justice's Statement of December
24, 1986, which the Court hereby adopts in toto, "(I)t is elementary
that the Supreme Court is supreme the third great department of
government entrusted exclusively with the judicial power to
adjudicate with finality all justiciable disputes, public and private. No
other department or agency may pass upon its judgments or
declare them "unjust." It is elementary that "(A)s has ever been
stressed since the early case of Arnedo vs.Llorente (18 Phil. 257,
263 [1911]) "controlling and irresistible reasons of public policy and
of sound practice in the courts demand that at the risk of occasional
error, judgments of courts determining controversies submitted to
them should become final at some definite time fixed by law, or by a

rule of practice recognized by law, so as to be thereafter beyond


the control even of the court which rendered them for the purpose
of correcting errors of fact or of law, into which, in the opinion of the
court it may have fallen. The very purpose for which the courts are
organized is to put an end to controversy, to decide the questions
submitted to the litigants, and to determine the respective rights of
the parties. (Luzon Brokerage Co., Inc. vs. Maritime Bldg., Co., Inc.,
86 SCRA 305, 316-317)

In respect of Courts below the Supreme Court, the ordinary remedies available under
law to a party who is adversely affected by their decisions or orders are a motion for
new trial (or reconsideration) under Rule 37, and an appeal to either the Court of
Appeals or the Supreme Court, depending on whether questions of both fact and law,
or of law only, are raised, in accordance with fixed and familiar rules and conformably
51
with the hierarchy of courts. Exceptionally, a review of a ruling or act of a court on
the ground that it was rendered without or in excess of its jurisdiction, or with grave
abuse of discretion, may be had through the special civil action of certiorari or
prohibition pursuant to Rule 65 of the Rules of Court.

xxx xxx xxx


Indeed, resolutions of the Supreme Court as a collegiate court,
whether an en banc or division, speak for themselves and are
entitled to full faith and credence and are beyond investigation or
inquiry under the same principle of conclusiveness of enrolled bills
of the legislature. (U.S. vs. Pons, 34 Phil. 729; Gardiner, et al. vs.
Paredes, et al., 61 Phil. 118; Mabanag vs. Lopez Vito, 78 Phil. 1)
The Supreme Court's pronouncement of the doctrine that "(I)t is
well settled that the enrolled bill . . . is conclusive upon the courts as
regards the tenor of the measure passed by Congress and
approved by the President. If there has been any mistake in the
printing of the bill before it was certified by the officers of Congress
and approved by the Executive [as claimed by petitioner-importer
who unsuccessfully sought refund of margin fees] on which we
cannot speculate, without jeopardizing the principle of separation of
powers and undermining one of the cornerstones of our
democractic system the remedy is by amendment or curative
legislation, not by judicial decree" is fully and reciprocally applicable
to Supreme Court orders, resolutions and decisions, mutatis
mutandis. (Casco Phil. Chemical Co., Inc. vs. Gimenez, 7 SCRA
347, 350. (Citing Primicias vs. Paredes, 61 Phil. 118, 120; Mabanag
vs. Lopez Vito, 78 Phil. 1; Macias vs. Comelec, 3 SCRA 1).
The Court has consistently stressed that the "doctrine of separation
of powers calls for the executive, legislative and judicial
departments being left alone to discharge their duties as they see
fit" (Tan vs. Macapagal, 43 SCRA 677). It has thus maintained in
the same way that the judiciary has a right to expect that neither the
President nor Congress would cast doubt on the mainspring of its
orders or decisions, it should refrain from speculating as to alleged
hidden forces at work that could have impelled either coordinate
branch into acting the way it did. The concept of separation of
powers presupposes mutual respect by and between the three
departments of the government. (Tecson vs. Salas, 34 SCRA 275,
286-287).
4. Final and Executory
Lower
Courts
Not
Even by Supreme Court

Judgments of
Reviewable

However, should judgments of lower courts which may normally be subject to


review by higher tribunals become final and executory before, or without,
exhaustion of all recourse of appeal, they, too, become inviolable, impervious to
modification. They may, then, no longer be reviewed, or in anyway modified directly or
indirectly, by a higher court, not even by the Supreme Court, much less by any other
official, branch or department of Government. 52
C. Administrative Civil or Criminal Action
against Judge. Not Substitute for Appeal;
Proscribed by Law and Logic
Now, the Court takes judicial notice of the fact that there has been of late a
regrettable increase in the resort to administrative prosecution or the institution of a
civil or criminal action as a substitute for or supplement to appeal. Whether
intended or not, such a resort to these remedies operates as a form of threat or
intimidation to coerce judges into timorous surrender of their prerogatives, or a
reluctance to exercise them. With rising frequency, administrative complaints are
being presented to the Office of the Court Administrator; criminal complaints are being
filed with the Office of the Ombudsman or the public prosecutor's office; civil actions
for recovery of damages commenced in the Regional Trial Courts against trial judges,
and justices of the Court of Appeals and even of the Supreme Court.
1. Common Basis of Complaints
Against Judges
Many of these complaints set forth a common indictment: that the respondent Judges
or Justices rendered manifestly unjust judgments or interlocutory orders 53 i.e.,
judgments or orders which are allegedly not in accord with the evidence, or with law
or jurisprudence, or are tainted by grave abuse of discretion thereby causing
injustice, and actionable and compensable injury to the complainants (invariably
losing litigants). Resolution of complaints of this sort quite obviously entails a common
requirement for the fiscal, the Ombudsman or the Trial Court: a review of the decision
or order of the respondent Judge or Justice to determine its correctness or
erroneousness, as basic premise for a pronouncement of liability.
2. Exclusivity of Specific Procedures for
Correction of Judgments and Orders

The question then, is whether or not these complaints are proper; whether or not in
lieu of the prescribed recourses for appeal or review of judgments and orders of
courts, a party may file an administrative or criminal complaint against the judge for
rendition of an unjust judgment, or, having opted for appeal, may nonetheless
simultaneously seek also such administrative or criminal remedies.
Given the nature of the judicial function, the power vested by the Constitution in the
Supreme Court and the lower courts established by law, the question submits to only
one answer: the administrative or criminal remedies are neither alternative nor
cumulative to judicial review where such review is available, and must wait on the
result thereof.
Simple reflection will make this proposition amply clear, and demonstrate that any
contrary postulation can have only intolerable legal implications. Allowing a party who
feels aggrieved by a judicial order or decision not yet final and executory to mount an
administrative, civil or criminal prosecution for unjust judgment against the issuing
judge would, at a minimum and as an indispensable first step, confer the prosecutor
(or Ombudsman) with an incongruous function pertaining, not to him, but to the
courts: the determination of whether the questioned disposition is erroneous in its
findings of fact or conclusions of law, or both. If he does proceed despite that
impediment, whatever determination he makes could well set off a proliferation of
administrative or criminal litigation, a possibility here after more fully explored.
Such actions are impermissible and cannot prosper. It is not, as already pointed out,
within the power of public prosecutors, or the Ombudsman or his deputies, directly or
vicariously, to review judgments or final orders or resolutions of the Courts of the land.
The power of review by appeal or special civil action is not only lodged
exclusively in the Courts themselves but must be exercised in accordance with a welldefined and long established hierarchy, and long-standing processes and procedures.
No other review is allowed; otherwise litigation would be interminable, and vexatiously
repetitive.
These principles were stressed in In Re: Wenceslao Laureta, supra.

54

Respondents should know that the provisions of Article 204 of the


Revised Penal Code as to "rendering knowingly unjust judgment,"
refer to an individual judge who does so "in any case submitted to
him for decision" and even then, it is not the prosecutor who would
pass judgment on the "unjustness" of the decision rendered by him
but the proper appellate court with jurisdiction to review the same,
either the Court of Appeals and/or the Supreme Court.
Respondents should likewise know that said penal article has no
application to the members of a collegiate court such as this Court
or its Divisions who reach their conclusions in consultation and
accordingly render their collective judgment after due deliberation. It
also follows, consequently, that a charge of violation of the AntiGraft and Corrupt Practices Act on the ground that such a collective
decision is "unjust" cannot prosper.
xxx xxx xxx

To subject to the threat and ordeal of investigation and prosecution,


a judge, more so a member of the Supreme Court for official acts
done by him in good faith and in the regular exercise of official duty
and judicial functions is to subvert and undermine that very
independence of the judiciary, and subordinate the judiciary to the
executive. "For it is a general principle of the highest importance to
the proper administration of justice that a judicial officer in
exercising the authority vested in him, shall be free to act upon his
own convictions, without apprehension of personal consequences
to himself. Liability to answer to everyone who might feel himself
aggrieved by the action of the judge would be inconsistent with the
possession of this freedom, and would destroy that independence
without which no judiciary can be either respectable or useful."
(Bradley vs. Fisher, 80 U. S. 335).
xxx xxx xxx
To allow litigants to go beyond the Court's resolution and claim that
the members acted "with deliberate bad faith" and rendered an
"unjust resolution" in disregard or violation of the duty of their high
office to act upon their own independent consideration and
judgment of the matter at hand would be to destroy the authenticity,
integrity and conclusiveness of such collegiate acts and resolutions
and to disregard utterly the presumption of regular performance of
official duty. To allow such collateral attack would destroy the
separation of powers and undermine the role of the Supreme Court
as the final arbiter of all justiciable disputes.
Dissatisfied litigants and/or their counsels cannot without violating
the separation of powers mandated by the Constitution relitigate in
another forum the final judgment of this Court on legal issues
submitted by them and their adversaries for final determination to
and by the Supreme Court and which fall within the judicial power to
determine and adjudicate exclusively vested by the Constitution in
the Supreme Court and in such inferior courts as may be
established by law.
This is true, too, as regards judgments, otherwise appealable, which have become
final and executory. Such judgments, being no longer reviewable by higher tribunals,
are certainly not reviewable by any other body or authority.
3. Only Courts Authorized, under Fixed
Rules to Declare Judgments or Orders
Erroneous or Unjust
To belabor the obvious, the determination of whether or not a judgement or order is
unjust or was (or was not) rendered within the scope of the issuing judge's
authority, or that the judge had exceeded his jurisdiction and powers or maliciously
delayed the disposition of a case is an essentially judicial function, lodged by
existing law and immemorial practice in a hierarchy of courts and ultimately in the

highest court of the land. To repeat, no other entity or official of the Government, not
the prosecution or investigation service or any other branch; nor any functionary
thereof, has competence to review a judicial order or decision whether final and
executory or not and pronounce it erroneous so as to lay the basis for a criminal or
administrative complaint for rendering an unjust judgment or order. That prerogative
belongs to the courts alone.

unjust judgment, or against the Justices of the Court of Appeals or the Supreme Court
who should affirm his conviction.
The situation is ridiculous, however the circumstances of the case may be modified,
and regardless of whether it is a civil, criminal or administrative proceeding that is
availed of as the vehicle to prosecute the judge for supposedly rendering an unjust
decision or order.

4. Contrary Rule Results in Circuitousness


and Leads to Absurd Consequences
Pragmatic considerations also preclude prosecution for supposed rendition of unjust
judgments or interlocutory orders of the type above described, which, at bottom,
consist simply of the accusation that the decisions or interlocutory orders are
seriously wrong in their conclusions of fact or of law, or are tainted by grave abuse of
discretion as distinguished from accusations of corruption, or immorality, or other
wrongdoing. To allow institution of such proceedings would not only be legally
improper, it would also result in a futile and circuitous exercise, and lead to absurd
consequences.
Assume that a case goes through the whole gamut of review in the judicial
hierarchy; i.e., a judgment is rendered by a municipal trial court; it is reviewed and
affirmed by the proper Regional Trial Court; the latter's judgment is appealed to and in
due course affirmed by the Court of Appeals; and finally, the appellate court's
decision is brought up to and affirmed by the Supreme Court. The prosecution of the
municipal trial court judge who rendered the original decision (for knowingly rendering
a manifestly unjust judgment) would appear to be out of the question; it would mean
that the Office of the Ombudsman or of the public prosecutor would have to find, at
the preliminary investigation, not only that the judge's decision was wrong and unjust,
but by necessary implication that the decisions or orders of the Regional Trial Court
Judge, as well as the Justices of the Court of Appeals and the Supreme Court who
affirmed the original judgment were also all wrong and unjust most certainly an act
of supreme arrogance and very evident supererogation. Pursuing the proposition
further, assuming that the public prosecutor or Ombudsman should nevertheless opt
to undertake a review of the decision in question despite its having been affirmed
at all three (3) appellate levels and thereafter, disagreeing with the verdict of all
four (4) courts, file an information in the Regional Trial Court against the Municipal
Trial Court Judge, the fate of such an indictment at the hands of the Sandiganbayan
or the Regional Trial Court would be fairly predictable.
Even if for some reason the Municipal Trial Court Judge is convicted by the
Sandiganbayan or a Regional Trial Court, the appeal before the Supreme Court or the
Court of Appeals would have an inevitable result: given the antecedents, the verdict of
conviction would be set aside and the correctness of the judgment in question,
already passed upon and finally resolved by the same appellate courts, would
necessarily be sustained.
Moreover, in such a scenario, nothing would prevent the Municipal Trial Judge, in his
turn, from filing a criminal action against the Sandiganbayan Justices, or the Regional
Trial Court Judge who should convict him of the offense, for knowingly rendering an

5. Primordial Requisites
Criminal Prosecution

for

Administrative

This is not to say that it is not possible at all to prosecute judges for this impropriety,
of rendering an unjust judgment or interlocutory order; but, taking account of all the
foregoing considerations, the indispensable requisites are that there be a final
declaration by a competent court in some appropriate proceeding of the manifestly
unjust character of the challenged judgment or order, and there be also evidence of
malice or bad faith, ignorance or inexcusable negligence, on the part of the judge in
rendering said judgement or order. That final declaration is ordinarily contained in the
judgment rendered in the appellate proceedings in which the decision of the trial court
in the civil or criminal action in question is challenged.
What immediately comes to mind in this connection is a decision of acquittal or
dismissal in a criminal action, as to which the same being unappealable it would
be unreasonable to deny the State or the victim of the crime (or even public-spirited
citizens) the opportunity to put to the test of proof such charges as they might see fit
to press that it was unjustly rendered, with malice or by deliberate design, through
inexcusable ignorance or negligence, etc. Even in this case, the essential requisite is
that there be an authoritative judicial pronouncement of the manifestly unjust
character of the judgment or order in question. Such a pronouncement may result
from either (a) an action of certiorari or prohibition in a higher court impugning the
validity of the; judgment, as having been rendered without or in excess of jurisdiction,
or with grave abuse of discretion; e.g., there has been a denial of due process to the
prosecution; or (b) if this be not proper, an administrative proceeding in the Supreme
Court against the judge precisely for promulgating an unjust judgment or order. Until
and unless there is such a final, authoritative judicial declaration that the decision or
order in question is "unjust," no civil or criminal action against the judge concerned is
legally possible or should be entertained, for want of an indispensable requisite.
D. Judges Must be Free from
Influence or Pressure
Judges must be free to judge, without pressure or influence from external forces or
factors. They should not be subject to intimidation, the fear of civil, criminal or
administrative sanctions for acts they may do and dispositions they may make in the
performance of their duties and functions. Hence it is sound rule, which must be
recognized independently of statute, that judges are not generally liable for acts done
within the scope of their jurisdiction and in good faith.

This Court has repeatedly and uniformly ruled that a judge may not be held
administratively accountable for every erroneous order or decision he renders. 55 To
hold otherwise would be nothing short of harassment and would make his position
doubly unbearable, for no one called upon to try the facts or interpret the law in the
56
process of administering justice can be infallible in his judgment. The error must be
57
gross or patent, deliberate and malicious, or incurred with evident bad faith; it is
only in these cases that administrative sanctions are called for as an imperative duty
of the Supreme Court.
As far as civil or criminal liability is concerned, existing doctrine is that "judges of
superior and general jurisdiction are not liable to respond in civil action for damages
for what they may do in the exercise of their judicial functions when acting within their
legal powers and jurisdiction." 58 Based on Section 9, Act No. 190, 59 the doctrine is
still good law, not inconsistent with any subsequent legislative issuance or court rule:
"No judge, justice of the peace or assessor shall be liable to a civil action for the
recovery of damages by reason of any judicial action or judgment rendered by him in
good faith, and within the limits of his legal powers and jurisdiction."
Exception to this general rule is found in Article 32 of the Civil Code, providing that
any public officer or employee, or any private individual, who directly or indirectly
obstructs, defeats, violates or in any manner impedes or impairs any of the
enumerated rights and liberties of another person which rights are the same as
those guaranteed in the Bill of Rights (Article III of the Constitution); shall be liable
to the latter for damages. However, such liability is not demandable from a judge
unless his act or omission constitutes a violation of the Penal Code or other penal
statute. But again, to the extent that the offenses therein described have "unjust
judgment or "unjust interlocutory order" for an essential element, it need only be
reiterated that prosecution of a judge for any of them is subject to the caveat already
mentioned: that such prosecution cannot be initiated, much less maintained, unless
there be a final judicial pronouncement of the unjust character of the decision or order
in issue.

groundless and insulting proceedings against the courts, born of affected bravado or
sheer egocentrism, to the extent of even involving the legislative and executive
departments, the Ombudsman included, in their assaults against the Judiciary in
pursuit of personal agendas. But all things, good or bad, must come to an end, and it
is time for the Court to now draw the line, with more promptitude, between reasoned
dissent and self-seeking pretense. The Court accordingly serves notice to those with
the same conceit or delusions that it will henceforth deal with them, decisively and
fairly, with a firm and even hand, and resolutely impose such punitive sanctions as
may be appropriate to maintain the integrity and independence of the judicial
institutions of the country.
WHEREFORE, Joaquin T. Borromeo is found and declared GUILTY of constructive
contempt repeatedly committed over time, despite warnings and instructions given to
him, and to the end that he may ponder his serious errors and grave misconduct and
learn due respect for the Courts and their authority, he is hereby sentenced to serve a
term of imprisonment of TEN (10) DAYS in the City Jail of Cebu City and to pay a fine
of ONE THOUSAND PESOS (P1,000.00). He is warned that a repetition of any of the
offenses of which he is herein found guilty, or any similar or other offense against
courts, judges or court employees, will merit further and more serious sanctions.
IT IS SO ORDERED.
Narvasa, C.J., Feliciano, Padilla, Bidin, Regalado, Davide, Jr., Romero, Bellosillo,
Melo, Quiason, Vitug, Kapunan, Mendoza and Francisco, JJ., concur.
Puno, J., took no part.

Republic of the Philippines


Supreme Court
Baguio City

E. Afterword
Considering the foregoing antecedents and long standing doctrines, it may well be
asked why it took no less than sixteen (16) years and some fifty (50) grossly
unfounded cases lodged by respondent Borromeo in the different rungs of the
Judiciary before this Court decided to take the present administrative measure. The
imposition on the time of the courts and the unnecessary work occasioned by
respondent's crass adventurism are self-evident and require no further elaboration. If
the Court, however, bore with him with Jobian patience, it was in the hope that the
repeated rebuffs he suffered, with the attendant lectures on the error of his ways,
would somehow seep into his understanding and deter him from further forays along
his misguided path. After all, as has repeatedly been declared, the power of contempt
is exercised on the preservative and not the vindictive principle. Unfortunately the
Court's forbearance had no effect on him.
Instead, the continued leniency and tolerance extended to him were read as signs of
weakness and impotence. Worse, respondent's irresponsible audacity appears to
have influenced and emboldened others to just as flamboyantly embark on their own

EN BANC
REPUBLIC OF THE PHILIPPINES,
Petitioner,
- versus -

SANDIGANBAYAN
(FIRST
DIVISION),
EDUARDO
M.
COJUANGCO,
JR.,
AGRICULTURAL
CONSULTANCY
SERVICES, INC., ARCHIPELAGO REALTY
CORP., BALETE RANCH, INC., BLACK
STALLION RANCH, INC., CHRISTENSEN

G.R. No. 166859

PLANTATION
COMPANY,
DISCOVERY
REALTY CORP., DREAM PASTURES, INC.,
ECHO RANCH, INC., FAR EAST RANCH,
INC., FILSOV SHIPPING COMPANY, INC.,
FIRST
UNITED
TRANSPORT,
INC.,
HABAGAT REALTY DEVELOPMENT, INC.,
KALAWAKAN RESORTS, INC., KAUNLARAN
AGRICULTURAL CORP., LABAYUG AIR
TERMINALS,
INC.,
LANDAIR
INTERNATIONAL MARKETING CORP., LHL
CATTLE CORP., LUCENA OIL FACTORY,
INC., MEADOW LARK PLANTATIONS, INC.,
METROPLEX COMMODITIES, INC., MISTY
MOUNTAIN
AGRICULTURAL
CORP.,
NORTHEAST CONTRACT TRADERS, INC.,
NORTHERN CARRIERS CORP., OCEANSIDE
MARITIME ENTERPRISES, INC., ORO
VERDE SERVICES, INC., PASTORAL FARMS,
INC., PCY OIL MANUFACTURING CORP.,
PHILIPPINE
TECHNOLOGIES,
INC.,
PRIMAVERA FARMS, INC., PUNONG-BAYAN
HOUSING DEVELOPMENT CORP., PURA
ELECTRIC
COMPANY,
INC.,
RADIO
AUDIENCE DEVELOPERS INTEGRATED
ORGANIZATION, INC., RADYO PILIPINO
CORP., RANCHO GRANDE, INC., REDDEE
DEVELOPERS,
INC.,
SAN
ESTEBAN
DEVELOPMENT CORP., SILVER LEAF
PLANTATIONS, INC., SOUTHERN SERVICE
TRADERS, INC., SOUTHERN STAR CATTLE
CORP., SPADE ONE RESORTS CORP.,
UNEXPLORED LAND DEVELOPERS, INC.,
VERDANT PLANTATIONS, INC., VESTA
AGRICULTURAL CORP. AND WINGS
RESORTS CORP.,
Respondents.

STALLION
RANCH,
INC.,
MISTY
MOUNTAINS
AGRICULTURAL
CORP.,
ARCHIPELAGO
REALTY
CORP.,
AGRICULTURAL
CONSULTANCY
SERVICES, INC., SOUTHERN STAR CATTLE
CORP., LHL CATTLE CORP., RANCHO
GRANDE, INC., DREAM PASTURES, INC.,
FAR EAST RANCH, INC., ECHO RANCH,
INC.,
LAND
AIR
INTERNATIONAL
MARKETING
CORP.,
REDDEE
DEVELOPERS,
INC.,
PCY
OIL
MANUFACTURING CORP., LUCENA OIL
FACTORY,
INC.,
METROPLEX
COMMODITIES,
INC.,
VESTA
AGRICULTURAL
CORP.,
VERDANT
PLANTATIONS,
INC.,
KAUNLARAN
AGRICULTURAL CORP., ECJ & SONS
AGRICULTURAL
ENTERPRISES,
INC.,
RADYO PILIPINO CORP., DISCOVERY
REALTY
CORP.,
FIRST
UNITED
TRANSPORT, INC., RADIO AUDIENCE
DEVELOPERS
INTEGRATED
ORGANIZATION,
INC.,
ARCHIPELAGO
FINANCE AND LEASING CORP., SAN
ESTEBAN
DEVELOPMENT
CORP.,
CHRISTENSEN PLANTATION COMPANY,
NORTHERN CARRIERS CORP., VENTURE
SECURITIES, INC., BALETE RANCH, INC.,
ORO
VERDE
SERVICES,
INC.,
and
KALAWAKAN RESORTS, INC.,
Respondents.
x--------------------------x
REPUBLIC OF THE PHILIPPINES,
Petitioner,

x--------------------------x
- versus REPUBLIC OF THE PHILIPPINES,
Petitioner,

- versus -

SANDIGANBAYAN
(FIRST
DIVISION),
EDUARDO M. COJUANGCO, JR., MEADOW
LARK PLANTATIONS, INC., SILVER LEAF
PLANTATIONS, INC., PRIMAVERA FARMS,
INC., PASTORAL FARMS, INC., BLACK

G.R. No. 169203

EDUARDO
M.
COJUANGCO,
JR.,
FERDINAND E. MARCOS, IMELDA R.
MARCOS, EDGARDO J. ANGARA,* JOSE C.
CONCEPCION,
AVELINO
V.
CRUZ,
EDUARDO U. ESCUETA, PARAJA G.
HAYUDINI,
JUAN
PONCE
ENRILE,
TEODORO D. REGALA, DANILO URSUA,
ROGELIO A. VINLUAN, AGRICULTURAL
CONSULTANCY SERVICES, INC., ANGLO
VENTURES, INC., ARCHIPELAGO REALTY

CORP.,
AP
HOLDINGS,
INC.,
ARC
INVESTMENT, INC., ASC INVESTMENT,
INC.,
AUTONOMOUS
DEVELOPMENT
CORP., BALETE RANCH, INC., BLACK
STALLION RANCH, INC., CAGAYAN DE
ORO OIL COMPANY, INC., CHRISTENSEN
PLANTATION
COMPANY,
COCOA
INVESTORS, INC., DAVAO AGRICULTURAL
AVIATION, INC., DISCOVERY REALTY
CORP., DREAM PASTURES, INC., ECHO
RANCH, INC., ECJ & SONS AGRI. ENT., INC.,
FAR EAST RANCH, INC., FILSOV SHIPPING
COMPANY,
INC.,
FIRST
MERIDIAN
DEVELOPMENT, INC., FIRST UNITED
TRANSPORT,
INC.,
GRANEXPORT
MANUFACTURING
CORP.,
HABAGAT
REALTY DEVELOPMENT, INC., HYCO
AGRICULTURAL, INC., ILIGAN COCONUT
INDUSTRIES, INC., KALAWAKAN RESORTS,
INC., KAUNLARAN AGRICULTURAL CORP.,
LABAYOG AIR TERMINALS, INC., LANDAIR
INTERNATIONAL MARKETING
CORP.,
LEGASPI OIL COMPANY, LHL CATTLE
CORP., LUCENA OIL FACTORY, INC.,
MEADOW LARK PLANTATIONS, INC.,
METROPLEX COMMODITIES, INC., MISTY
MOUNTAIN
AGRICULTURAL
CORP.,
NORTHEAST CONTRACT TRADERS, INC.,
NORTHERN CARRIERS CORP., OCEANSIDE
MARITIME ENTERPRISES, INC., ORO
VERDE SERVICES, INC., PASTORAL FARMS,
INC., PCY OIL MANUFACTURING CORP.,
PHILIPPINE
RADIO
CORP.,
INC.,
PHILIPPINE
TECHNOLOGIES,
INC.,
PRIMAVERA FARMS, INC., PUNONG-BAYAN
HOUSING DEVELOPMENT CORP., PURA
ELECTRIC
COMPANY,
INC.,
RADIO
AUDIENCE DEVELOPERS INTEGRATED
ORGANIZATION, INC., RADYO PILIPINO
CORP., RANCHO GRANDE, INC., RANDY
ALLIED
VENTURES,
INC.,
REDDEE
DEVELOPERS,
INC.,
ROCKSTEEL
RESOURCES, INC., ROXAS SHARES, INC.,
SAN ESTEBAN DEVELOPMENT CORP., SAN
MIGUEL CORPORATION OFFICERS, INC.,
SAN PABLO MANUFACTURING CORP.,
SOUTHERN LUZON OIL MILLS, INC.,
SILVER
LEAF
PLANTATIONS,
INC.,
SORIANO SHARES, INC., SOUTHERN
SERVICE TRADERS, INC., SOUTHERN STAR
CATTLE CORP., SPADE 1 RESORTS CORP.,

G.R. No. 180702

TAGUM AGRICULTURAL DEVELOPMENT


CORP.,
TEDEUM
RESOURCES,
INC.,
THILAGRO EDIBLE OIL MILLS, INC., TODA
HOLDINGS, INC., UNEXPLORED LAND
DEVELOPERS,
INC.,
VALHALLA
PROPERTIES,
INC.,
VENTURES
SECURITIES,
INC.,
VERDANT
PLANTATIONS,
INC.,
VESTA
AGRICULTURAL
CORP.
and
WINGS
RESORTS CORP.,
Respondents.
x------------------------x
JOVITO R. SALONGA, WIGBERTO E.
TAADA, OSCAR F. SANTOS, VIRGILIO M.
DAVID, ROMEO C. ROYANDAYAN for himself
and for SURIGAO DEL SUR FEDERATION OF
AGRICULTURAL COOPERATIVES (SUFAC),
MORO
FARMERS
ASSOCIATION
OF
ZAMBOANGA DEL SUR (MOFAZS) and
COCONUT FARMERS OF SOUTHERN
LEYTE
COOPERATIVE
(COFA-SL);
PHILIPPINE RURAL RECONSTRUCTION
MOVEMENT
(PRRM),
represented
by
CONRADO
S.
NAVARRO;
COCONUT
INDUSTRY REFORM MOVEMENT, INC.
(COIR) represented by JOSE MARIE T.
FAUSTINO; VICENTE FABE for himself and
for PAMBANSANG KILUSAN NG MGA
SAMAHAN NG MAGSASAKA (PAKISAMA);
NONITO CLEMENTE for himself and for the
NAGKAKAISANG UGNAYAN NG MGA
MALILIIT
NA
MAGSASAKA
AT
MANGGAGAWA SA NIYUGAN (NIUGAN);
DIONELO M. SUANTE, SR. for himself and for
KALIPUNAN
NG
MALILIIT
NA
MAGNINIYOG NG PILIPINAS (KAMMPIL),
INC.,
Petitioners-Intervenors.

Specifically, the petitions and their particular reliefs are as follows:


(a)

G.R. No. 166859 (petition for certiorari), to assail the resolution


promulgated
on December
10,
2004[4] denying
the
Republics Motion For Partial Summary Judgment;

(b)

G.R. No. 169023 (petition for certiorari), to nullify and set


aside, firstly, the resolution promulgated on October 8,
2003,[5] and, secondly, the resolution promulgated on June 24,
2005[6] modifying the resolution of October 8, 2003; and

(c)

G.R. No. 180702 (petition for review on certiorari), to appeal the


decision promulgated on November 28, 2007.[7]

Present:
CORONA, C.J.,
CARPIO,
CARPIO MORALES,
VELASCO, JR.,
NACHURA,
LEONARDO-DE CASTRO,
BRION,
PERALTA,
BERSAMIN,
DEL CASTILLO,
ABAD,
VILLARAMA, JR.,
PEREZ,
MENDOZA, and
SERENO, JJ.:
Promulgated:
April 12, 2011
x-----------------------------------------------------------------------------------------x

DECISION
BERSAMIN, J.:
For over two decades, the issue of whether the sequestered sizable block of shares
representing 20% of the outstanding capital stock of San Miguel Corporation (SMC) at the
time of acquisition belonged to their registered owners or to the coconut farmers has remained
unresolved. Through this decision, the Court aims to finally resolve the issue and terminate the
uncertainty that has plagued that sizable block of shares since then.
These consolidated cases were initiated on various dates by the Republic of the
Philippines
(Republic) via petitions
for certiorari in
G.R.
Nos.
166859[1] and
[2]
[3]
169023, and via petition for review on certiorari in 180702, the first two petitions being
brought to assail the following resolutions issued in Civil Case No. 0033-F by the
Sandiganbayan, and the third being brought to appeal the adverse decision promulgated on
November 28, 2007 in Civil Case No. 0033-F by the Sandiganbayan.

ANTECEDENTS
On July 31, 1987, the Republic commenced Civil Case No. 0033 in the Sandiganbayan
by complaint, impleading as defendants respondent Eduardo M. Cojuangco, Jr. (Cojuangco)
and 59 individual defendants. On October 2, 1987, the Republic amended the complaint in
Civil Case No. 0033 to include two additional individual defendants. OnDecember 8, 1987,
the Republic further amended the complaint through its Amended Complaint [Expanded per
Court-Approved Plaintiffs Manifestation/Motion Dated Dec. 8, 1987] albeit dated October 2,
1987.
More than three years later, on August 23, 1991, the Republic once more amended the
complaint apparently to avert the nullification of the writs of sequestration issued against
properties of Cojuangco. The amended complaint dated August 19, 1991, designated as Third
Amended Complaint [Expanded Per Court-Approved Plaintiffs Manifestation/Motion Dated
Dec. 8, 1987],[8] impleaded in addition to Cojuangco, President Marcos, and First Lady Imelda
R. Marcos nine other individuals, namely: Edgardo J. Angara, Jose C. Concepcion, Avelino V.
Cruz, Eduardo U. Escueta, Paraja G. Hayudini, Juan Ponce Enrile, Teodoro D. Regala, and
Rogelio Vinluan, collectively, the ACCRA lawyers, and Danilo Ursua, and 71 corporations.
On March 24, 1999, the Sandiganbayan allowed the subdivision of the complaint in
Civil Case No. 0033 into eight complaints, each pertaining to distinct transactions and
properties and impleading as defendants only the parties alleged to have participated in the
relevant transactions or to have owned the specific properties involved. The subdivision
resulted into the following subdivided complaints, to wit:
Subdivided Complaint
1. Civil Case No. 0033-A

Subject Matter
Anomalous Purchase and Use of First United
Bank (now United Coconut Planters Bank)

2.

Civil Case No. 0033-B

Creation of Companies Out of Coco Levy


Funds

3.

Civil Case No. 0033-C

Creation and Operation of Bugsuk Project and


Award of P998 Million Damages to
Agricultural Investors, Inc.

4.

Civil Case No. 0033-D

Disadvantageous Purchases and Settlement of


the Accounts of Oil Mills Out of Coco Levy
Funds

5.

Civil Case No. 0033-E

Unlawful Disbursement
ofCoco Levy Funds

6.

Civil Case No. 0033-F

Acquisition of SMC shares of stock

7.

Civil Case No. 0033-G

Acquisition of Pepsi-Cola

8.

Civil Case No. 0033-H

Behest Loans and Contracts

and

Dissipation

In Civil Case No. 0033-F, the individual defendants were Cojuangco, President
Marcos and First Lady Imelda R. Marcos, the ACCRA lawyers, and Ursua. Impleaded as
corporate defendants were Southern Luzon Oil Mills, Cagayan de Oro Oil Company,
Incorporated, Iligan Coconut Industries, Incorporated, San Pablo Manufacturing
Corporation, Granexport Manufacturing Corporation, Legaspi Oil Company, Incorporated,
collectively referred to herein as the CIIF Oil Mills, and their 14 holding companies, namely:
Soriano Shares, Incorporated, Roxas Shares, Incorporated, Arc Investments, Incorporated,
Toda Holdings, Incorporated, ASC Investments, Incorporated, Randy Allied Ventures,
Incorporated, AP Holdings, Incorporated, San Miguel Corporation Officers, Incorporated, Te
Deum Resources, Incorporated, Anglo Ventures, Incorporated, Rock Steel Resources,
Incorporated, Valhalla Properties, Incorporated, and First Meridian Development,
Incorporated.
Allegedly, Cojuangco purchased a block of 33,000,000 shares of SMC stock through
the 14 holding companies owned by the CIIF Oil Mills. For this reason, the block of
33,133,266 shares of SMC stock shall be referred to as the CIIF block of shares.

namely: softdrinks, agribusiness, oil mills, shipping,


manufacturing, textile, as more fully described below.

cement

14. Defendant Eduardo Cojuangco, Jr. taking undue advantage of


his association, influence and connection, acting in unlawful concert with
Defendants Ferdinand E. Marcos and Imelda R. Marcos, and the
individual defendants, embarked upon devices, schemes and stratagems,
including the use of defendant corporations as fronts, to unjustly enrich
themselves at the expense of Plaintiff and the Filipino people, such as
when he misused coconut levy funds to buy out majority of the
outstanding shares of stock of San Miguel Corporation in order to control
the largest agri-business, foods and beverage company in the Philippines,
more particularly described as follows:
(a) Having control over the coconut levy, Defendant
Eduardo M. Cojuangco invested the funds in diverse activities,
such as the various businesses SMC was engaged in (e.g. large
beer, food, packaging, and livestock);
(b) He entered SMC in early 1983 when he bought most of
the 20 million shares Enrique Zobel owned in the Company. The
shares, worth $49 million, represented 20% of SMC;
(c) Later that year, Cojuangco also acquired the Soriano
stocks through a series of complicated and secret agreements, a key
feature of which was a voting trust agreement that stipulated that
Andres, Jr. or his heir would proxy over the vote of the shares
owned by Soriano and Cojuangco. This agreement, which
accounted for 30% of the outstanding shares of SMC and which
lasted for five (5) years, enabled the Sorianos to retain
management control of SMC for the same period;

Also impleaded as defendants in Civil Case No. 0033-F were several


corporations[9] alleged to have been under Cojuangcos control and used by him to acquire the
block of shares of SMC stock totaling 16,276,879 at the time of acquisition (representing
approximately 20% percent of the capital stock of SMC). These corporations are referred to as
Cojuangco corporations or companies, to distinguish them from the CIIF Oil Mills. Reference
hereafter to Cojuangco and the Cojuangco corporations or companies shall be as Cojuangco, et
al., unless the context requires individualization.

(d) Furthermore, in exchange for an SMC investment of


$45 million in non-voting preferred shares in UCPB, Soriano
served as the vice-chairman of the supposed bank of the coconut
farmers, UCPB, and in return, Cojuangco, for investing funds from
the coconut levy, was named vice-chairman of SMC;

The
material
averments
of
the
Republics Third
Complaint (Subdivided)[10] in Civil Case No. 0033-F included the following:

(e) Consequently, Cojuangco enjoyed the privilege of


appointing his nominees to the SMC Board, to which he appointed
key members of the ACCRA Law Firm (herein Defendants)
instead of coconut farmers whose money really funded the sale;

12. Defendant Eduardo Cojuangco, Jr., served as a public officer


during the Marcos administration. During the period of his incumbency as
a public officer, he acquired assets, funds, and other property grossly and
manifestly disproportionate to his salaries, lawful income and income
from legitimately acquired property.
13. Having fully established himself as the undisputed coconut
king with unlimited powers to deal with the coconut levy funds, the stage
was now set for Defendant Eduardo M. Cojuangco, Jr. to launch his
predatory forays into almost all aspects of Philippine economic activity

Amended

(f) The scheme of Cojuangco to use the lawyers of the said


Firm was revealed in a document which he signed on 19 February
1983 entitled Principles and Framework of Mutual Cooperation
and Assistance which governed the rules for the conduct of
management of SMC and the disposition of the shares which he
bought.
(g) All together, Cojuangco purchased 33 million shares of
the SMC through the following 14 holding companies:

a)
b)
c)
d)
e)
f)
g)
h)
i)
j)
k)
l)
m)
n)

Soriano Shares, Inc.


ASC Investors, Inc.
Roxas Shares, Inc.
ARC Investors, Inc.
Toda Holdings, Inc.
AP Holdings, Inc.
Fernandez Holdings, Inc.
SMC Officers Corps., Inc.
Te Deum Resources, Inc.
Anglo Ventures Corp.
Randy Allied Ventures, Inc.
Rock Steel Resources, Inc.
Valhalla Properties Ltd., Inc.
First Meridian Development, Inc.

1,249,163
1,562,449
2,190,860
4,431,798
3,424,618
1,580,997
838,837
2,385,987
2,674,899
1,000.000
1,000,000
2,432,625
1,361,033
1,000,000
___________
33,133,266

3.1. The same fourteen companies were in turn owned by


the following six (6) so-called CIIF Companies which were:
a)
b)
c)
d)
e)
f)

San Pablo Manufacturing Corp.


Southern Luzon Coconut Oil Mills, Inc.
Granexport Manufacturing Corporation
Legaspi Oil Company, Inc.
Cagayan de Oro Oil Company, Inc.
Iligan Coconut Industries, Inc.

19%
11%
19%
18%
18%
15%
_____
100%

(h) Defendant Corporations are but shell corporations


owned by interlocking shareholders who have previously admitted
that they are just nominee stockholders who do not have any
proprietary interest over the shares in their names. The respective
affidavits of the following, namely: Jose C. Concepcion,
Florentino M. Herrera III, Teresita J. Herbosa, Teodoro D. Regala,
Victoria C. de los Reyes, Manuel R. Roxas, Rogelio A. Vinluan,
Eduardo U. Escuete and Franklin M. Drilon, who were all, at the
time they became such stockholders, lawyers of the Angara Abello
Concepcion Regala & Cruz (ACCRA) Law Offices, the previous
counsel who incorporated said corporations, prove that they were
merely nominee stockholders thereof.
(i) Mr. Eduardo M. Cojuangco, Jr., acquired a total of
16,276,879 shares of San Miguel Corporation from the Ayala
group: of said shares, a total of 8,138,440 (broken into 7,128,227
Class A and 1,010,213 Class B shares) were placed in the names of
Meadowlark Plantations, Inc. (2,034,610) and Primavera Farms,
Inc. (4,069,220). The Articles of Incorporation of these three
companies show that Atty. Jose C. Concepcion of ACCRA owns
99.6% of the entire outstanding stock. The same shareholder
executed three (3) separate Declaration of Trust and Assignment

of Subscription: in favor of a BLANK assignee pertaining to his


shareholdings in Primavera Farms, Inc., Silver Leaf Plantations,
Inc. and Meadowlark Plantations, Inc.
(k) The other respondent Corporations are owned by
interlocking shareholders who are likewise lawyers in
the ACCRA Law Offices and had admitted their status as
nominee stockholders only.
(k-1) The corporations: Agricultural
Consultancy Services, Inc., Archipelago Realty
Corporation, Balete Ranch, Inc., Black Stallion
Ranch, Inc., Discovery Realty Corporation, First
United Transport, Inc., Kaunlaran Agricultural
Corporation, LandAir International Marketing
Corporation, Misty Mountains Agricultural
Corporation, Pastoral Farms, Inc., Oro Verde
Services, Inc. Radyo Filipino Corporation,
Reddee Developers, Inc., Verdant Plantations,
Inc. and Vesta Agricultural Corporation, were
incorporated by lawyers of ACCRA Law Offices.
(k-2) With respect to PCY Oil
Manufacturing Corporation and Metroplex
Commodities, Inc., they are controlled
respectively by HYCO, Inc. and Ventures
Securities, Inc., both of which were incorporated
likewise by lawyers of ACCRA Law Offices.
(k-3) The stockholders who appear as
incorporators in most of the other Respondents
corporations are also lawyers of the ACCRA Law
Offices, who as early as 1987 had admitted under
oath that they were acting only as nominee
stockholders.
(l) These companies, which ACCRA Law Offices
organized for Defendant Cojuangco to be able to control more than
60% of SMC shares, were funded by institutions which depended
upon the coconut levy such as the UCPB, UNICOM, United
Coconut Planters Assurance Corp. (COCOLIFE), among
others. Cojuangco and his ACCRA lawyers used the funds from 6
large coconut oil mills and 10 copra trading companies to borrow
money from the UCPB and purchase these holding companies and
the SMC stocks. Cojuangco used $150 million from the coconut
levy, broken down as follows:
Amount
(in million)

Source

Purpose

$22.26

Oil Mills

equity in holding
companies

$65.6

Oil Mills

loan to holding
companies

$61.2

UCPB

loan to holding
companies [164]

The entire amount, therefore, came from the coconut levy, some
passing through the Unicom Oil mills, others directly from the
UCPB.
(m) With his entry into the said Company, it began to get
favors from the Marcos government, significantly the lowering of
the excise taxes (sales and specific taxes) on beer, one of the main
products of SMC.
(n) Defendant Cojuangco controlled SMC from 1983 until
his co-defendant Marcos was deposed in 1986.
(o) Along
with
Cojuangco,
Defendant
Enrile
and ACCRA also had interests in SMC, broken down as follows:
% of SMC
Cojuangco

Owner

31.3%

coconut levy money

18%

companies linked to Cojuangco

5.2%

government

5.2%

SMC employee retirement fund

Enrile & ACCRA


1.8%
1.8%

Enrile
Jaka Investment Corporation

1.8%

ACCRA Investment Corporation

monopoly. Through insidious means and machinations, ACCRA, being


the wholly-owned investment arm, ACCRA Investments Corporation,
became the holder of approximately fifteen million shares representing
roughly 3.3% of the total outstanding capital stock of UCPB as of 31
March 1987. This ranks ACCRA Investments Corporation number 44
among the top 100 biggest stockholders of UCPB which has
approximately 1,400,000 shareholders. On the other hand, the corporate
books show the name Edgardo J. Angara as holding approximately 3,744
shares as of February, 1984.
16. The acts of Defendants, singly or collectively, and/or in unlawful
concert with one another, constitute gross abuse of official position and
authority, flagrant breach of public trust and fiduciary obligations, brazen
abuse of right and power, unjust enrichment, violation of the constitution
and laws of the Republic of the Philippines, to the grave and irreparable
damage of Plaintiff and the Filipino people. [11]
On June 17, 1999, Ursua and Enrile each filed his separate Answer with Compulsory
Counterclaims.
Before filing their answer, the ACCRA lawyers sought their exclusion as defendants in
Civil Case No. 0033, averring that even as they admitted having assisted in the organization
and acquisition of the companies included in Civil Case No. 0033, they had acted as mere
nominees-stockholders of corporations involved in the sequestration proceedings pursuant to
office practice. After the Sandiganbayan denied their motion, they elevated their cause to this
Court, which ultimately ruled in their favor in the related cases of Regala, et al. v.
Sandiganbayan, et al.[12] and Hayudini v. Sandiganbayan, et al.,[13] as follows:
WHEREFORE, IN VIEW OF THE FOREGOING, the Resolutions
of respondent Sandiganbayan (First Division) promulgated on March 18,
1992 and May 21, 1992 are hereby ANNULLED and SET
ASIDE. Respondent Sandiganbayan is further ordered to exclude
petitioners Teodoro D. Regala, Edgardo J. Angara, Avelino V. Cruz, Jose
C. Concepcion, Victor P. Lazatin, Eduardo U. Escueta and Paraja G.
Hayudini as parties-defendants in SB Civil Case No. 0033 entitled
Republic of the Philippines v. Eduardo Cojuangco, Jr., et al.
SO ORDERED.
Conformably with the ruling, the Sandiganbayan excluded the ACCRA lawyers from
the case on May 24, 2000.[14]

15. Defendants Eduardo Cojuangco, Jr., Edgardo J. Angara, Jose C.


Concepcion, Teodoro Regala, Avelino Cruz, Rogelio Vinluan, Eduardo U.
Escueta and Paraja G. Hayudini of the Angara Concepcion Cruz Regala
and Abello law offices (ACCRA) plotted, devised, schemed, conspired
and confederated with each other in setting up, through the use of coconut
levy funds, the financial and corporate framework and structures that led
to
the
establishment
of
UCPB,
UNICOM,
COCOLIFE,
COCOMARK. CIC, and more than twenty other coconut levy-funded
corporations, including the acquisition of San Miguel Corporation shares
and its institutionalization through presidential directives of the coconut

On June 23, 1999, Cojuangco filed his Answer to the Third Amended
Complaint,[15] averring the following affirmative defenses, to wit:
7.00. The Presidential Commission on Good Government (PCGG) is
without authority to act in the name and in behalf of the Republic of
the Philippines.
7.01. As constituted in E.O. No. 1, the PCGG was composed of
Minister Jovito R. Salonga, as Chairman, Mr. Ramon Diaz, Mr. Pedro L.

Yap, Mr. Raul Daza and Ms. Mary Concepcion Bautista, as


Commissioners. When the complaint in the instant case was filed,
Minister Salonga, Mr. Pedro L. Yap and Mr. Raul Daza had already left
the PCGG. By then the PCGG had become functus officio.

In his own Answer with Compulsory Counterclaims,[18] Enrile specifically denied the
material averments of the Third Amended Complaint and asserted affirmative defenses.
The CIIF Oil Mills Answer[19] also contained affirmative defenses.

7.02. The Sandiganbayan has no jurisdiction over the complaint or


over the transaction alleged in the complaint.
7.03. The complaint does not allege any cause of action.
7.04. The complaint is not brought in the name of the real parties in
interest, assuming any cause of action exists.

On December 20, 1999, the Sandiganbayan scheduled the pre-trial in Civil Case No.
0033-F on March 8, 2000, giving the parties sufficient time to file their Pre-Trial Briefs prior
to that date. Subsequently, the parties filed their respective Pre-Trial Briefs, as follows:
Cojuangco and the Cojuangco corporations, jointly on February 14, 2000; Enrile, on March 1,
2000; the CIIF Oil Mills, on March 3, 2000; and Ursua, on March 6, 2000. However, the
Republic sought several extensions to file its own Pre-Trial Brief, and eventually did so
on May 9, 2000.

7.05. Indispensable and necessary parties have not been impleaded.


7.06. There is improper joinder of causes of action (Sec. 6, Rule 2,
Rules of Civil Procedure). The causes of action alleged, if any, do not
arise out of the same contract, transaction or relation between the parties,
nor are they simply for money, or are of the same nature and character.
7.07. There is improper joinder of parties defendants (Sec. 11, Rule
3, Rules of Civil Procedure).The causes of action alleged as to defendants,
if any, do not involve a single transaction or a related series of
transactions. Defendant is thus compelled to litigate in a suit regarding
matters as to which he has no involvement. The questions of fact and law
involved are not common to all defendants.
7.08. In so far as the complaint seeks the forfeiture of assets
allegedly acquired by defendant manifestly out of proportion to their
salaries, to their other lawful income and income from legitimately
acquired property, under R.A. 1379, the previous inquiry similar to
preliminary investigation in criminal cases required to be conducted
under Sec. 2 of that law before any suit for forfeiture may be instituted,
was not conducted; as a consequence, the Court may not acquire and
exercise jurisdiction over such a suit.
7.09. The complaint in the instant suit was filed July 31, 1987, or
within one year before the local election held on January 18, 1988. If this
suit involves an action under R.A. 1379, its institution was also in direct
violation of Sec. 2, R.A. No. 1379.
7.10. E.O. No. 1, E.O. No. 2, E.O. No. 14 and 14-A, are
unconstitutional. They violate due process, equal protection, ex post facto
and bill of attainder provisions of the Constitution.
7.11. Acts imputed to defendant which he had committed were done
pursuant to law and in good faith.
The Cojuangco corporations Answer[16] had the same tenor as the Answer of
Cojuangco.
In his own Answer with Compulsory Counterclaims,[17] Ursua averred affirmative and
special defenses.

In the meanwhile, some non-parties sought to intervene. On November 22, 1999,


GABAY Foundation, Inc. (GABAY) filed its complaint-in-intervention. On February 24,
2000, the Philippine Coconut Producers Federation, Inc., Maria Clara L. Lobregat, Jose R.
Eleazar, Jr., Domingo Espina, Jose Gomez, Celestino Sabate, Manuel del Rosario, Jose
Martinez, Jr., and Eladio Chato (collectively referred to as COCOFED, considering that the
co-intervenors were its officers) also sought to intervene, citing the October 2, 1989 ruling in
G.R. No. 75713 entitled COCOFED v. PCGG whereby the Court recognized COCOFED as
the private national association of coconut producers certified in 1971 by the PHILCOA as
having the largest membership among such producers and as such entrusted it with the task
of maintaining continuing liaison with the different sectors of the industry, the government
and its mass base. Pending resolution of its motion for intervention, COCOFED filed a PreTrial Brief on March 2, 2000.
On May 24, 2000, the Sandiganbayan denied GABAYs intervention without prejudice
because it found that the allowance of GABAY to enter under the special character in which
it presents itself would be to open the doors to other groups of coconut farmers whether of the
same kind or of any other kind which could be considered a sub-class or a sub-classification of
the coconut planters or the coconut industry of this country. [20]
COCOFEDs intervention as defendant was allowed on May 24, 2000, however,
because the position taken by the COCOFED is relevant to the proceedings herein, if only to
state that there is a special function which the COCOFED and the coconut planters have in the
matter of the coconut levy funds and the utilization of those funds, part of which is in dispute
in the instant matter.[21]
The pre-trial was actually held on May 24, 2000,[22] during which the Sandiganbayan
sought clarification from the parties, particularly the Republic, on their respective positions,
but at the end it found the clarifications inadequately enlightening. Nonetheless, the
Sandiganbayan, not disposed to reset, terminated the pre-trial:
xxx primarily because the Court is given a very clear impression that the
plaintiff does not know what documents will be or whether they are even
available to prove the causes of action in the complaint. The Court has
pursued and has exerted every form of inquiry to see if there is a way by
which the plaintiff could explain in any significant particularity the acts
and the evidence which will support its claim of wrong-doing by the
defendants. The plaintiff has failed to do so.[23]

The following material portions of the pre-trial order[24] are quoted to provide a
proper perspective of what transpired during the pre-trial, to wit:
Upon oral inquiry from the Court, the issues which were being raised
by plaintiff appear to have been made on a very generic
character. Considering that any claim for violation or breach of trust or
deception cannot be made on generic statements but rather by specific acts
which would demonstrate fraud or breach of trust or deception, together
with the evidence in support thereof, the same was not acceptable to the
Court.
The plaintiff through its designated counsel for this morning, Atty.
Dennis Taningco, has represented to this Court that the annexes to its pretrial brief, more particularly the findings of the COA in its various
examinations, copies of which COA reports are attached to the pre-trial
brief, would demonstrate the wrong, the act or omission attributed to the
defendants or to several of them and the basis, therefore, for the relief that
plaintiff seeks in its complaint. It would appear, however, that the plaintiff
through its counsel at this time is not prepared to go into the specifics of
the identification of these wrongs or omissions attributed to plaintiff.
The Court has reminded the plaintiff that a COA report proves itself
only in proceedings where the issue arises from a review of the
accountability of particular officers and, therefore, to show the existence
of shortages or deficiencies in an examination conducted for that purpose,
provided that such a report is accompanied by its own working papers and
other supporting documents.
In civil cases such as this, a COA report would not have the same
independent probative value since it is not a review of the accountability
of public officers for public property in their custody as accountable
officers. It has been the stated view of this Court that a COA report, to be
of significant evidence, may itself stand only on the basis of the supporting
documents that upon which it is based and upon an analysis made by those
who are competent to do so. The Court, therefore, sought a more specific
statement from plaintiff as to what these documents were and which of
them would prove a particular act or omission or a series of acts or
omissions purportedly committed by any, by several or by all of the
defendants in any particular stage of the chain of alleged wrong-doing in
this case.
The plaintiff was not in a position to do so.
The Court has remonstrated with the plaintiff, insofar as its
inadequacy is concerned, primarily because this case was set for pre-trial
as far back as December and has been reset from its original setting, with
the undertaking by the plaintiff to prepare itself for these proceedings. It
appears to this Court at this time that the failure of the plaintiff to have
available responses and specific data and documents at this stage is not
because the matter has been the product of oversight or notes and papers
left elsewhere; rather, the agitation of this Court arises from the fact that at
this very stage, the plaintiff through its counsel does not know what these

documents are, where these documents will be and is still anticipating a


submission or a delivery thereof by COA at an undetermined time. The
justification made by counsel for this stance is that this is only pre-trial
and this information and the documents are not needed yet.
The Court is not prepared to postpone the pre-trial anew primarily
because the Court is given a very clear impression that the plaintiff does
not know what documents will be or whether they are even available to
prove the causes of action in the complaint. The Court has pursued and
has exerted every form of inquiry to see if there is a way by which the
plaintiff could explain in any significant particularity the acts and the
evidence which will support its claim of wrong-doing by the
defendants. The plaintiff has failed to do so.
Defendants Cojuangco have come back and reiterated their previous
inquiry as to the statement of the cause of action and the description
thereof. While the Court acknowledges that logically, that statement along
that line would be primary, the Court also recognizes that sometimes the
phrasing of the issue may be determined or may arise after a statement of
the evidence is determined by this Court because the Court can put itself in
a position of more clearly and perhaps more accurately stating what the
issues are. The Pre-Trial Order, after all, is not so much a reflection of
merely separate submissions by all of the parties involved, witnesses by
the Court, as to what the subject matter of litigation will be, including the
determination of what matters of fact remain unresolved. At this time, the
plaintiff has not taken the position on any factual statement or any piece of
evidence which can be subject of admission or denial, nor any specifics of
any act which could be disputed by the defendants; what plaintiff through
counsel has stated are general conclusions, general statements of abuse
and misuse and opportunism.
After an extended break requested by some of the parties, the
sessions were resumed and nothing anew arose from the plaintiff. The
plaintiff sought fifteen (15) days to file a reply to the comments and
observations made by defendant Cojuangco to the pre-trial brief of the
plaintiff. This Court denied this Request since the submissions in
preparation for pre-trial are not litigious or contentious matters. They are
mere assertions or positions which may or may not be meritorious
depending upon the view of the Court of the entire case and if useful at the
pre-trial. At this stage, the plaintiff then reiterated its earlier request to
consider the pre-trial terminated. The Court sought the positions of the
other parties, whether or not they too were prepared to submit their
respective positions on the basis of what was before the Court at pretrial. All of the parties, in the end, have come to an agreement that they
were submitting their own respective positions for purpose of pre-trial on
the basis of the submissions made of record.
With all of the above, the pre-trial is now deemed terminated.
This Order has been overly extended simply because there has been
a need to put on record all of the events that have taken place leading to
the conclusions which were drawn herein.

The parties have indicated a desire to make their submissions outside


of trial as a consequence of this terminated pre-trial, with the plea that the
transcript of the proceedings this morning be made available to them, so
that they may have the basis for whatever assertions they will have to
make either before this Court or elsewhere. The Court deems the same
reasonable and the Court now gives the parties fifteen (15) days after
notice to them that the transcript of stenographic notes of the proceedings
herein are complete and ready for them to be retrieved. Settings for trial
or for any other proceeding hereafter will be fixed by this Court either
upon request of the parties or when the Court itself shall have determined
that nothing else has to be done.
The Court has sought confirmation from the parties present as to the
accuracy of the recapitulation herein of the proceedings this morning and
the Court has gotten assent from all of the parties.
xxx
SO ORDERED.[25]
In the meanwhile, the Sandiganbayan, in order to conform with the ruling
in Presidential Commission on Good Government v. Cojuangco, et al.,[26] resolved
COCOFEDsOmnibus Motion (with prayer for preliminary injunction) relative to who should
vote the UCPB shares under sequestration, holding as follows: [27]
In the light of all of the above, the Court submits itself to
jurisprudence and with the statements of the Supreme Court in G.R. No.
115352 entitled Enrique Cojuangco, Jr., et al. vs. Jaime Calpo, et al. dated
January 27, 1997, as well as the resolution of the Supreme Court
promulgated on January 27, 1999 in the case of PCGG vs. Eduardo
Cojuangco, Jr., et al., G.R. No. 13319 which included the Sandiganbayan
as one of the respondents. In these two cases, the Supreme Court ruled
that the voting of sequestered shares of stock is governed by two
considerations, namely:
1. whether there is prima facie evidence showing that the
said shares are ill-gotten and thus belong to the State;
and
2. whether there is an imminent danger of dissipation thus
necessitating their continued sequestration and voting by
the PCGG while the main issue pends with the
Sandiganbayan.
xxx
xxx
xxx.
In view hereof, the movants COCOFED, et al and Ballares, et al. as
well as Eduardo Cojuangco, et al. who were acknowledged to be
registered stockholders of the UCPB are authorized, as are all other
registered stockholders of the United Coconut Planters Bank, until further
orders from this Court, to exercise their rights to vote their shares of stock
and themselves to be voted upon in the United Coconut Planters Bank

(UCPB) at the scheduled Stockholders Meeting on March 6, 2001 or on


any subsequent continuation or resetting thereof, and to perform such acts
as will normally follow in the exercise of these rights as registered
stockholders.
xxx

xxx

xxx.

Consequently, on March 1, 2001, the Sandiganbayan issued a writ of preliminary


injunction to enjoin the PCGG from voting the sequestered shares of stock of the UCPB.
On July 25, 2002, before Civil Case No. 0033-F could be set for trial, the Republic filed
a Motion for Judgment on the Pleadings and/or for Partial Summary Judgment (Re:
Defendants CIIF Companies, 14 Holding Companies and COCOFED, et al.). [28]
Cojuangco, Enrile, and COCOFED separately opposed the motion. Ursua adopted
COCOFEDs opposition.
Thereafter, the Republic likewise filed a Motion for Partial Summary Judgment [Re:
Shares in San Miguel Corporation Registered in the Respective Names of Defendant Eduardo
M. Cojuangco, Jr. and the Defendant Cojuangco Companies].[29]
Cojuangco, et al. opposed the motion,[30] after which the Republic submitted its
reply.

[31]

On February 23, 2004, the Sandiganbayan issued an order, [32] in which it enumerated the
admitted facts or facts that appeared to be without substantial controversy in relation to the
Republics Motion for Judgment on the Pleadings and/or for Partial Summary Judgment [Re:
Defendants CIIF Companies, 14 Holding Companies and COCOFED, et al.].
Commenting on the order of February 23, 2004, Cojuangco, et al. specified the
items they considered as inaccurate, but particularly interposed no objection to item no. 17 (to
the extent that item no. 17 stated that Cojuangco had disclaimed any interest in the CIIF block
SMC shares of stock registered in the names of the 14 corporations listed in item no. 1 of the
order).[33]
The Republic also filed its Comment,[34] but COCOFED denied the admitted facts
summarized in the order of February 23, 2004.[35]
Earlier, on October 8, 2003,[36] the Sandiganbayan resolved the various pending motions
and pleadings relative to the writs of sequestration issued against the defendants, disposing:
IN VIEW OF THE FOREGOING, the Writs of Sequestration Nos. (a)
86-0042 issued on April 8, 1986, (b) 86-0062 issued on April 21, 1986, (c)
86-0069 issued on April 22, 1986, (d) 86-0085 issued on May 9, 1986, (e)
86-0095 issued on May 16, 1986, (f) 86-0096 dated May 16, 1986, (g) 860097 issued on May 16, 1986, (h) 86-0098 issued on May 16, 1986 and (i)
87-0218 issued on May 27, 1987 are hereby declared automatically lifted
for being null and void.
Despite the lifting of the writs of sequestration, since the Republic
continues to hold a claim on the shares which is yet to be resolved, it is

hereby ordered that the following shall be annotated in the relevant


corporate books of San Miguel Corporation:
(1) any sale, pledge, mortgage or other disposition of any
of the shares of the Defendants Eduardo Cojuangco, et al.
shall be subject to the outcome of this case;
(2) the Republic through the PCGG shall be given
twenty (20) days written notice by Defendants Eduardo
Cojuangco, et al. prior to any sale, pledge, mortgage or other
disposition of the shares;
(3) in the event of sale, mortgage or other disposition of
the shares, by the Defendants Cojuangco, et al., the
consideration therefore, whether in cash or in kind, shall be
placed in escrow with Land Bank of the Philippines, subject
to disposition only upon further orders of this Court; and
(4) any cash dividends that are declared on the shares
shall be placed in escrow with the Land Bank of
the Philippines, subject to disposition only upon further orders
of this Court. If in case stock dividends are declared, the
conditions on the sale, pledge, mortgage and other disposition
of any of the shares as above-mentioned in conditions 1, 2 and
3, shall likewise apply.
In so far as the matters raised by Defendants Eduardo Cojuangco,
et al. in their Omnibus Motion dated September 23, 1996 and Reply to
PCGGs Comment/Opposition with Motion to Order PCGG to Complete
Inventory, to Nullify Writs of Sequestration and to Enjoin PCGG from
Voting Sequestered Shares of Stock dated January 3, 1997, considering
the above conclusion, this Court rules that it is no longer necessary to
delve into the matters raised in the said Motions.
SO ORDERED.[37]
Cojuangco, et al. moved for the modification of the resolution, [38] praying for the
deletion of the conditions for allegedly restricting their rights. The Republic also sought
reconsideration of the resolution. [39]
Eventually, on June 24, 2005, the Sandiganbayan denied both motions, but reduced
the restrictions thuswise:
WHEREFORE, the Motion for Reconsideration (Re: Resolution
dated September 17, 2003 Promulgated on October 8, 2003)
dated October 24, 2003 of Plaintiff Republic is hereby DENIED for lack
of merit. As to the Motion for Modification (Re: Resolution Promulgated
on October 8, 2003) dated October 22, 2003, the same is hereby DENIED
for lack of merit. However, the restrictions imposed by this Court in its
Resolution dated September 17, 2003 and promulgated on October 8,
2003 shall now read as follows:

Despite the lifting of the writs of sequestration, since


the Republic continues to hold a claim on the shares which is
yet to be resolved, it is hereby ordered that the following shall
be annotated in the relevant corporate books of San Miguel
Corporation:
a) any sale, pledge, mortgage or other disposition of
any of the shares of the Defendants Eduardo Cojuangco, et al.
shall be subject to the outcome of this case.
b) the Republic through the PCGG shall be given
twenty (20) days written notice by Defendants Eduardo
Cojuangco, et al. prior to any sale, pledge, mortgage or other
disposition of the shares.
SO ORDERED.[40]
Pending resolution of the motions relative to the lifting of the writs of sequestration,
SMC filed a Motion for Intervention with attached Complaint-in-Intervention,[41]alleging,
among other things, that it had an interest in the matter in dispute between the Republic and
defendants CIIF Companies for being the owner by purchase of a portion (i.e., 25,450,000
SMC shares covered by Stock Certificate Nos. A0004129 and B0015556 of the so-called
CIIF block of SMC shares of stock sought to be recovered as alleged ill-gotten wealth).
Although Cojuangco, et al. interposed no objection to SMCs intervention, the
Republic opposed,[42] averring that the intervention would be improper and was a mere attempt
to litigate anew issues already raised and passed upon by the Supreme Court. COCOFED
similarly opposed SMCs intervention,[43] and Ursua adopted its opposition.
On May 6, 2004, the Sandiganbayan denied SMCs motion to intervene. [44] SMC sought
reconsideration,[45] and its motion to that effect was opposed by COCOFED and the Republic.
On May 7, 2004, the Sandiganbyan granted the Republics Motion for Judgment on the
Pleadings and/or Partial Summary Judgment (Re: Defendants CIIF Companies, 14 Holding
Companies and COCOFED, et al.) and rendered a Partial Summary Judgment,[46] the
dispositive portion of which reads as follows:
WHEREFORE, in view of the foregoing, we hold that:
The Motion for Partial Summary Judgment (Re: Defendants CIIF
Companies, 14 Holding Companies and Cocofed, et al.) filed by Plaintiff
is hereby GRANTED. ACCORDINGLY, THE CIIF COMPANIES,
NAMELY:
1.
2.
3.
4.
5.
6.

Southern Luzon Coconut Oil Mills (SOLCOM);


Cagayan de Oro Oil Co., Inc. (CAGOIL);
Iligan Coconut Industries, Inc. (ILICOCO);
San Pablo Manufacturing Corp. (SPMC);
Granexport Manufacturing Corp. (GRANEX); and
Legaspi Oil Co., Inc. (LEGOIL),

AS WELL AS THE 14 HOLDING COMPANIES, NAMELY:


1. Soriano Shares, Inc.;
2. ACS Investors, Inc.;
3. Roxas Shares, Inc.;
4. Arc Investors, Inc.;
5. Toda Holdings, Inc.;
6. AP. Holdings, Inc.;
7. Fernandez Holdings, Inc.;
8. SMC Officers Corps. Inc.;
9. Te Deum Resources, Inc.;
10. Anglo Ventures, Inc.;
11. Randy Allied Ventures, Inc.;
12. Rock Steel Resources, Inc.;
13. Valhalla Properties Ltd., Inc.; and
14. First Meridian Development, Inc.
AND THE CIIF BLOCK OF SAN MIGUEL CORPORATION (SMC)
SHARES OF STOCK TOTALING 33,133,266 SHARES AS OF 1983
TOGETHER WITH ALL DIVIDENDS DECLARED, PAID AND
ISSUED THEREON AS WELL AS ANY INCREMENTS THERETO
ARISING FROM, BUT NOT LIMITED TO, EXERCISE OF PREEMPTIVE RIGHTS ARE DECLARED OWNED BY THE
GOVERNMENT IN-TRUST FOR ALL THE COCONUT FARMERS
AND ORDERED RECONVEYED TO THE GOVERNMENT.
Let the trial of this Civil Case proceed with respect to the issues
which have not been disposed of in this partial Summary Judgment,
including the determination of whether the CIIF Block of SMC Shares
adjudged to be owned by the Government represents 27% of the issued
and outstanding capital stock of SMC according to plaintiff or 31.3% of
said capital stock according to COCOFED, et al. and Ballares, et al.
SO ORDERED.[47]
In the same resolution of May 7, 2004, the Sandiganbayan considered the Motions to
Dismiss filed by Cojuangco, et al. on August 2, 2000 and by Enrile on September 4, 2000 as
overtaken by the Republics Motion for Judgment on the Pleadings and/or Partial Summary
Judgment.[48]
On May 25, 2004, Cojuangco, et al. filed their Motion for Reconsideration. [49]
COCOFED filed its so-called Class Action Omnibus Motion: (a) Motion to Dismiss
for Lack of Subject Matter Jurisdiction and Alternatively, (b) Motion for
Reconsideration dated May 26, 2004.[50]
The Republic submitted its Consolidated Comment.[51]
Relative to the resolution of May 7, 2004, the Sandiganbayan issued its resolution of
December 10, 2004,[52] denying the Republics Motion for Partial Summary Judgment (Re:

Shares in San Miguel Corporation Registered in the Respective Names of Defendants


Eduardo M. Cojuangco, Jr. and the defendant Cojuangco Companies) upon the following
reasons:
In the instant case, a circumspect review of the records show that
while there are facts which appear to be undisputed, there are also
genuine factual issues raised by the defendants which need to be
threshed out in a full-blown trial. Foremost among these issues are the
following:
1)

What are the various sources of funds, which the


defendant Cojuangco and his companies claim they
utilized to acquire the disputed SMC shares?

2)

Whether or not such funds acquired from alleged


various sources can be considered coconut levy funds;

3)

Whether or not defendant Cojuangco had indeed served


in the governing bodies of PC, UCPB and/or CIIF Oil
Mills at the time the funds used to purchase the SMC
shares were obtained such that he owed a fiduciary duty
to render an account to these entities as well as to the
coconut farmers;

4)

Whether or not defendant Cojuangco took advantage of


his position and/or close ties with then President Marcos
to obtain favorable concessions or exemptions from the
usual financial requirements from the lending banks
and/or coco-levy funded companies, in order to raise the
funds to acquire the disputed SMC shares; and if so, what
are these favorable concessions or exemptions?

Answers to these issues are not evident from the submissions of


the plaintiff and must therefore be proven through the presentation of
relevant and competent evidence during trial. A perusal of the
subject Motion shows that the plaintiff hastily derived conclusions
from the defendants statements in their previous pleadings although
such conclusions were not supported by categorical facts but only
mere inferences. In the Reply dated October 2, 2003, the plaintiff
construed the supposed meaning of the phrase various sources
(referring to the source of defendant Cojuangcos funds which were
used to acquire the subject SMC shares), which plaintiff said was
quite obvious from the defendants admission in his Pre-Trial Brief,
which we quote:
According to Cojuangcos own Pre-Trial Brief, these
so-called various sources, i.e., the sources from which he
obtained the funds he claimed to have used in buying the 20%
SMC shares are not in fact various as he claims them to
be. He says he obtained loans from UCPB and advances
from the CIIF Oil Mills. He even goes as far as to admit that
his only evidence in this case would have been records of

UCPB and a representative of the CIIF Oil Mills obviously


the records of UCPB relate to the loans that Cojuangco
claims to have obtained from UCPB of which he was
President and CEO while the representative of the CIIF Oil
Mills will obviously testify on the advances Cojuangco
obtained from CIIF Oil Mills of which he was also the
President and CEO.
From the foregoing premises, plaintiff went on to conclude that:
These admissions of defendant Cojuangco are outright
admissions that he (1) took money from the bank entrusted by
law with the administration of coconut levy funds and (2)
took more money from the very corporations/oil mills in
which part of those coconut levy funds (the CIIF) was placed
treating the funds of UCPB and the CIIF as his own
personal capital to buy his SMC shares.
We cannot agree with the plaintiffs contention that the
defendants statements in his Pre-Trial Brief regarding the
presentation of a possible CIIF witness as well as UCPB records, can
already be considered as admissions of the defendants exclusive use
and misuse of coconut levy funds to acquire the subject SMC shares
and defendant Cojuangcos alleged taking advantage of his positions
to acquire the subject SMC shares. Moreover, in ruling on a motion
for summary judgment, the court should take that view of the
evidence most favorable to the party against whom it is directed,
giving such party the benefit of all inferences. Inasmuch as this issue
cannot be resolved merely from an interpretation of the defendants
statements in his brief, the UCPB records must be produced and the
CIIF witness must be heard to ensure that the conclusions that will be
derived have factual basis and are thus, valid.
WHEREFORE, in view of the forgoing, the Motion for Partial
Summary Judgment dated July 11, 2003 is hereby DENIED for lack of
merit.
SO ORDERED.
Thereafter, on December 28, 2004, the Sandiganbayan resolved the other pending
motions,[53] viz:
WHEREFORE, in view of the foregoing, the Motion for
Reconsideration dated May 25, 2004 filed by defendant Eduardo M.
Cojuangco, Jr., et al. and the Class Action Omnibus Motion: (a) Motion to
Dismiss for Lack of Subject Matter Jurisdiction and Alternatively, (b)
Motion for Reconsideration dated May 26, 2004 filed by COCOFED, et
al. and Ballares, et al. are hereby DENIED for lack of merit.
SO ORDERED.[54]

COCOFED moved to set the case for trial, [55] but the Republic opposed the
motion.[56] On their part, Cojuangco, et al. also moved to set the trial, [57] with the Republic
similarly opposing the motion. [58]
On March 23, 2006, the Sandiganbayan granted the motions to set for trial and set
the trial on August 8, 10, and 11, 2006. [59]
In the meanwhile, on August 9, 2005, the Republic filed a Motion for Execution of
Partial Summary Judgment (re: CIIF block of SMC Shares of Stock),[60] contending that an
execution pending appeal was justified because any appeal by the defendants of the Partial
Summary Judgment would be merely dilatory.
Cojuangco, et al. opposed the motion.[61]
The Sandiganbayan denied the Republics Motion for Execution of Partial Summary
Judgment (re: CIIF block of SMC Shares of Stock),[62] to wit:
WHEREFORE, the MOTION FOR EXECUTION OF PARTIAL
SUMMARY JUDGMENT (RE: CIIF BLOCK OF SMC SHARES OF
STOCK) dated August 8, 2005 of the plaintiff is hereby denied for lack of
merit. However, this Court orders the severance of this particular claim of
Plaintiff. The Partial Summary Judgment dated May 7, 2004 is now
considered a separate final and appealable judgment with respect to the
said CIIF Block of SMC shares of stock.
The Partial Summary Judgment rendered on May 7, 2004 is
modified by deleting the last paragraph of the dispositive portion which
will now read, as follows:
WHEREFORE, in view of the foregoing, we hold that:
The Motion for Partial Summary Judgment (Re:
Defendants CIIF Companies, 14 Holding Companies and
Cocofed, et al.) filed by Plaintiff is hereby
GRANTED. ACCORDINGLY, THE CIIF COMPANIES,
NAMELY:
1.
2.
3.
4.
5.
6.

Southern Coconut Oil Mills (SOLCOM);


Cagayan de Oro Oil Co., Inc. (CAGOIL);
Iligan Coconut Industries, Inc. (ILICOCO);
San Pablo Manufacturing Corp. (SPMC);
Granexport Manufacturing Corp.
(GRANEX); and
Legaspi Oil Co., Inc. (LEGOIL),

AS WELL AS
NAMELY:
1.
2.
3.
4.

THE

14

Soriano Shares, Inc.;


ACS Investors, Inc.;
Roxas Shares, Inc.;
Arc Investors, Inc.;

HOLDING

COMPANIES,

5. Toda Holdings, Inc.;


6. AP Holdings, Inc.;
7. Fernandez Holdings, Inc.;
8. SMC Officers Corps, Inc.;
9. Te Deum Resources, Inc.;
10. Anglo Ventures, Inc.;
11. Randy Allied Ventures, Inc.;
12. Rock Steel Resources, Inc.;
13. Valhalla Properties Ltd., Inc.; and
14. First Meridian Development, Inc.
AND THE CIIF BLOCK OF SAN MIGUEL
CORPORATION (SMC) SHARES OF STOCK TOTALING
33,133,266 SHARES AS OF 1983 TOGETHER WITH ALL
DIVIDENDS DECLARED, PAID AND ISSUED THEREON
AS WELL AS ANY INCREMENTS THERETO ARISING
FROM, BUT NOT LIMITED TO, EXERCISE OF PREEMPTIVE RIGHTS ARE DECLARED OWNED BY THE
GOVERNMENT IN TRUST FOR ALL THE COCONUT
FARMERS AND ORDERED RECONVEYED TO THE
GOVERNMENT.
The aforementioned Partial Summary Judgment is now deemed a
separate appealable judgment which finally disposes of the ownership of
the CIIF Block of SMC Shares, without prejudice to the continuation of
proceedings with respect to the remaining claims particularly those
pertaining to the Cojuangco, et al. block of SMC shares.

liable to their transferees-buyers, especially if they are buyers in good faith


and for value. In such eventuality, defendants Cojuangco, et al. cannot be
shielded by the cloak of principle of caveat emptor because case law has it
that this rule only requires the purchaser to exercise such care and
attention as is usually exercised by ordinarily prudent men in like business
affairs, and only applies to defects which are open and patent to the
service of one exercising such care.
Moreover, said defendants Eduardo M. Cojuangco, et al. are
hereby ordered to render their report on the sale within ten (10) days from
completion of the payment by the San Miguel Corporation Retirement
Plan.
SO ORDERED.[68]
Cojuangco, et al. later rendered a complete accounting of the proceeds from the sale
of the Cojuangco block of shares of SMC stock, informing that a total amount
of P4,786,107,428.34 had been paid to the UCPB as loan repayment. [69]
It appears that the trial concerning the disputed block of shares was not scheduled
because the consideration and resolution of the aforecited motions for summary judgment
occupied much of the ensuing proceedings.
At the hearing of August 8, 2006, the Republic manifested[70] that it did not intend to
present any testimonial evidence and asked for the marking of certain exhibits that it would
have the Sandiganbayan take judicial notice of. The Republic was then allowed to mark
certain documents as its Exhibits A to I, inclusive, following which it sought and was granted
time within which to formally offer the exhibits.

SO ORDERED.[63]
During the pendency of the Republics motion for execution, Cojuangco, et al. filed
a Motion for Authority to Sell San Miguel Corporation (SMC) shares, praying for leave to
allow the sale of SMC shares to proceed, exempted from the conditions set forth in the
resolutions promulgated on October 3, 2003 and June 24, 2005. [64] The Republic
opposed, contending that the requested leave to sell would be tantamount to removing
jurisdiction over the res or the subject of litigation.[65]
However, the Sandiganbayan eventually granted the Motion for Authority to Sell San
Miguel Corporation (SMC) shares.[66]
Thereafter, Cojuangco, et al. manifested to the Sandiganbayan that the shares would
be sold to the San Miguel Corporation Retirement Plan. [67] Ruling on the manifestations of
Cojuangco, et al., the Sandiganbayan issued its resolution of July 30, 2007 allowing the sale of
the shares, to wit:
This notwithstanding however, while the Court exempts the sale
from the express condition that it shall be subject to the outcome of the
case, defendants Cojuangco, et al. may well be reminded that despite the
deletion of the said condition, they cannot transfer to any buyer any
interest higher than what they have. No one can transfer a right to another
greater than what he himself has. Hence, in the event that the Republic
prevails in the instant case, defendants Cojuangco, et al. hold themselves

On August 31, 2006, the Republic filed its Manifestation of Purposes (Re: Matters
Requested or Judicial Notice on the 20% Shares in San Miguel Corporation Registered in the
Respective Names of defendant Eduardo M. Cojuangco, Jr. and the defendant Cojuangco
Companies).[71]
On September 18, 2006, the Sandiganbayan issued the following resolution, [72] to
wit:
Acting on the Manifestation of Purposes (Re: Matters Requested or
Judicial Notice on the 20% Shares in San Miguel Corporation Registered
in the Respective names of Defendant Eduardo M. Cojuangco, Jr. and the
Defendant Cojuangco Companies) dated 28 August 2006 filed by the
plaintiff, which has been considered its formal offer of evidence, and the
Comment of Defendants Eduardo M. Cojuangco, Jr., et al. on Plaintiffs
Manifestation of Purposes Dated August 30, 2006 dated September
15, 2006, the court resolves to ADMIT all the exhibits offered, i.e.:

Exhibit A the Answer of defendant Eduardo M.


Cojuangco, Jr. to the Third Amended Complaint (Subdivided)
dated June 23, 1999, as well as the sub-markings (Exhibit A1 to A-4;
Exhibit B the Pre-Trial Brief dated January 11, 2000 of
defendant CIIF Oil Mills and fourteen (14) CIIF Holding

Companies, as well as the sub-markings Exhibits B-1 and


B-2
Exhibit C the Pre-Trial Brief dated January 11, 2000 of
defendant Eduardo M. Cojuangco, Jr. as well as the submarkings Exhibits C-1, C-1-a and C-1-b;
Exhibit D the Plaintiffs Motion for Summary Judgment
[Re: Shares in San Miguel Corporation Registered in the
Respective Names of Defendant Eduardo M. Cojuangco, Jr.
and the Defendant Cojuangco Companies] dated July 11,
2003, as well as the sub-markings Exhibits D-1 to D-4

The Republic came to the Court via petition for certiorari[77] to assail the denial of
its Motion for Partial Summary Judgment through the resolution promulgated on December
10, 2004, insisting that the Sandiganbayan thereby committed grave abuse of discretion: (a) in
holding that the various sources of funds used in acquiring the SMC shares of stock remained
disputed; (b) in holding that it was disputed whether or not Cojuangco had served in the
governing bodies of PCA, UCPB, and/or the CIIF Oil Mills; and (c) in not finding that
Cojuangco had taken advantage of his position and had violated his fiduciary obligations in
acquiring the SMC shares of stock in issue.
The Court will consider and resolve the issues thereby raised alongside the issues
presented in G.R. No. 180702.

the said exhibits being part of the record of the case, as well as
G.R. No. 169203

Exhibit E Presidential Decree No. 961 dated July 11,


1976;
Exhibit F Presidential Decree No. 755 dated July 29,
1975;
Exhibit G Presidential Decree No. 1468 dated June 11,
1978;
Exhibit H Decision of the Supreme Court in Republic vs.
COCOFED, et al., G.R. Nos. 147062-64, December 14,
2001, 372 SCRA 462

the aforementioned exhibits being matters of public record.


The admission of these exhibits is being made over the objection of
the defendants Cojuangco, et al. as to the relevance thereof and as to the
purposes for which they were offered in evidence, which matters shall be
taken into consideration by the Court in deciding the case on the merits.
The trial hereon shall proceed on November 21, 2006, at 8:30 in
the morning as previously scheduled. [73]
During the hearing on November 24, 2006, Cojuangco, et al. filed their Submission and
Offer of Evidence of Defendants, [74] formally offering in evidence certain documents to
substantiate their counterclaims, and informing that they found no need to present
countervailing evidence because the Republics evidence did not prove the allegations of
the Complaint. On December 5, 2006, after the Republic submitted its Comment,[75] the
Sandiganbayan admitted the exhibits offered by Cojuangco, et al., and granted the parties a
non-extendible period within which to file their respective memoranda and reply-memoranda.
Thereafter, on February 23, 2007, the Sandiganbayan considered the case submitted for
decision.[76]
ISSUES
The various issues submitted for consideration by the Court are summarized
hereunder.
G.R. No. 166859

In the resolution promulgated on October 8, 2003, the Sandiganbayan declared as


automatically lifted for being null and void nine writs of sequestration (WOS) issued against
properties of Cojuangco and Cojuangco companies, considering that: (a) eight of them (i.e.,
WOS No. 86-0062 dated April 21, 1986; WOS No. 86-0069 dated April 22, 1986; WOS No.
86-0085 dated May 9, 1986; WOS No. 86-0095 dated May 16, 1986; WOS No. 86-0096 dated
May 16, 1986; WOS No. 86-0097 dated May 16, 1986; WOS No. 86-0098 dated May 16,
1986; and WOS No. 87-0218 dated May 27, 1987) had been issued by only one PCGG
Commissioner, contrary to the requirement of Section 3 of the Rules of the PCGG for at least
two Commissioners to issue the WOS; and (b) the ninth (i.e., WOS No. 86-0042 dated April 8,
1986), although issued prior to the promulgation of the Rules of the PCGG requiring at least
two Commissioners to issue the WOS, was void for being issued without prior
determination by the PCGG of a prima facie basis for sequestration.
Nonetheless, despite its lifting of the nine WOS, the Sandiganbayan prescribed four
conditions to be still annotated in the relevant corporate books of San Miguel Corporation
considering that the Republic continues to hold a claim on the shares which is yet to be
resolved.[78]
In its resolution promulgated on June 24, 2005, the Sandiganbayan denied the
Republics Motion for Reconsideration filed vis-a-vis the resolution promulgated on October
8, 2003, but reduced the conditions earlier imposed to only two. [79]
On September 1, 2005, the Republic filed a petition for certiorari[80] to annul the
resolutions promulgated on October 8, 2003 and on June 24, 2005 on the ground that the
Sandiganbayan had thereby committed grave abuse of discretion:
I.
XXX IN LIFTING WRIT OF SEQUESTRATION NOS. 86-0042 AND
87-0218 DESPITE EXISTENCE OF THE BASIC REQUISITES FOR
THE VALIDITY OF SEQUESTRATION.
II.
XXX WHEN IT DENIED PETITIONERS ALTERNATIVE PRAYER
IN ITS MOTION FOR RECONSIDERATION FOR THE ISSUANCE OF
AN ORDER OF SEQUESTRATION AGAINST ALL THE SUBJECT
SHARES OF STOCK IN ACCORDNCE WITH THE RULING IN
REPUBLIC VS. SANDIGANBAYAN, 258 SCRA 685 (1996).

III.
XXX IN SUBSEQUENTLY DELETING THE LAST TWO (2)
CONDITIONS WHICH IT EARLIER IMPOSED ON THE SUBJECT
SHARES OF STOCK.[81]

COMPANIES, SHOULD BE RECONVEYED TO THE REPUBLIC OF


THE PHILIPPINES FOR HAVING BEEN ACQUIRED USING
COCONUT LEVY FUNDS.[84]
On their part, the petitioners-in-intervention[85] submit the following issues, to wit:

G.R. No. 180702


On November 28, 2007, the Sandiganbayan promulgated its decision, [82] decreeing
as follows:
WHEREFORE, in view of all the foregoing, the Court is constrained
to DISMISS, as it hereby DISMISSES, the Third Amended Complaint in
subdivided Civil Case No. 0033-F for failure of plaintiff to prove by
preponderance of evidence its causes of action against defendants with
respect to the twenty percent (20%) outstanding shares of stock of San
Miguel Corporation registered in defendants names, denominated herein
as the Cojuangco, et al. block of SMC shares. For lack of satisfactory
warrant, the counterclaims in defendants Answers are likewise ordered
dismissed.
SO ORDERED.
Hence, the Republic appeals, positing:
I.
COCONUT LEVY FUNDS ARE PUBLIC FUNDS. THE SMC SHARES,
WHICH WERE ACQUIRED BY RESPONDENTS COJUANGCO, JR.
AND THE COJUANGCO COMPANIES WITH THE USE OF
COCONUT LEVY FUNDS IN VIOLATION OF RESPONDENT
COJUANGCO, JR.S FIDUCIARY OBLIGATION ARE,
NECESSARILY, PUBLIC IN CHARACTER AND SHOULD BE
RECONVEYED TO THE GOVERNMENT.
II.
PETITIONER
HAS
CLEARLY
DEMONSTRATED
ITS
ENTITLEMENT, AS A MATTER OF LAW, TO THE RELIEFS
PRAYED FOR.[83]
and urging the following issues to be resolved, to wit:
I.
WHETHER THE HONORABLE SANDIGANBAYAN COMMITTED A
REVERSIBLE ERROR WHEN IT DISMISSED CIVIL CASE NO. 0033F; AND

II.
WHETHER OR NOT THE SUBJECT SHARES IN SMC, WHICH
WERE ACQUIRED BY, AND ARE IN THE RESPECTIVE NAMES OF
RESPONDENTS COJUANGCO, JR. AND THE COJUANGCO

I
WHETHER OR NOT THE COURT A QUO GRAVELY ERRED AND
DECIDED THE CASE A QUO IN VIOLATION OF LAW AND
APPLICABLE RULINGS OF THE HONORABLE COURT IN RULING
THAT, WHILE ADMITTEDLY THE SUBJECT SMC SHARES WERE
PURCHASED FROM LOAN PROCEEDS FROM UCPB AND
ADVANCES FROM THE CIIF OIL MILLS, SAID SUBJECT SMC
SHARES ARE NOT PUBLIC PROPERTY
II
WHETHER OR NOT THE COURT A QUO GRAVELY ERRED AND
DECIDED THE CASE A QUO IN VIOLATION OF LAW AND
APPLICABLE RULINGS OF THE HONORABLE COURT IN FAILING
TO RULE THAT, EVEN ASSUMING FOR THE SAKE OF
ARGUMENT THAT LOAN PROCEEDS FROM UCPB ARE NOT
PUBLIC FINDS, STILL, SINCE RESPONDENT COJUANGCO, IN
THE PURCHASE OF THE SUBJECT SMC SHARES FROM SUCH
LOAN PROCEEDS, VIOLATED HIS FIDUCIARY DUTIES AND
TOOK A COMMERCIAL OPPORTUNITY THAT RIGHTFULLY
BELONGED TO UCPB (A PUBLIC CORPORATION), THE SUBJECT
SMC SHARES SHOULD REVERT BACK TO THE GOVERNMENT.

RULING
We deny all the petitions of the Republic.
I
Lifting of nine WOS for violation of PCGG Rules
did not constitute grave abuse of discretion
Through its resolution promulgated on June 24, 2005, assailed on certiorari in G.R.
No. 169203, the Sandiganbayan lifted the nine WOS for the following reasons, to wit:
Having studied the antecedent facts, this Court shall now resolve
the pending incidents especially defendants Motion to Affirm that the
Writs or Orders of Sequestration Issued on Defendants Properties Were
Unauthorized, Invalid and Never Became Effective dated March 5, 1999.
Section 3 of the PCGG Rules and Regulations promulgated
on April 11, 1986, provides:
Sec. 3. Who may issue. A writ of sequestration or a
freeze or hold order may be issued by the Commission upon

the authority of at least two Commissioners, based on the


affirmation or complaint of an interested party or motu propio
(sic) the issuance thereof is warranted.
In this present case, of all the questioned writs of sequestration issued
after the effectivity of the PCGG Rules and Regulations or after April 11,
1986, only writ no. 87-0218 issued on May 27, 1987 complied with the
requirement that it be issued by at least two Commissioners, the same
having been issued by Commissioners Ramon E. Rodrigo and Quintin S.
Doromal. However, even if Writ of Sequestration No. 87-0218 complied
with the requirement that the same be issued by at least two
Commissioners, the records fail to show that it was issued with factual
basis or with factual foundation as can be seen from the Certification of
the Commission Secretary of the PCGG of the excerpt of the minutes of
the meeting of the PCGG held on May 26, 1987, stating therein that:
The Commission approved the recommendation of Dir.
Cruz to sequester all the shares of stock, assets, records, and
documents of Balete Ranch, Inc. and the appointment of the
Fiscal Committee with ECI Challenge, Inc./Pepsi-Cola for
Balete Ranch, Inc. and the Aquacor Marketing Corp. vice
Atty. S. Occena. The objective is to consolidate the Fiscal
Committee activities covering three associated entities of Mr.
Eduardo Cojuangco.Upon recommendation of Comm.
Rodrigo, the reconstitution of the Board of Directors of the
three companies was deferred for further study.
Nothing in the above-quoted certificate shows that there was a prior
determination of a factual basis or factual foundation. It is the absence of
a prima facie basis for the issuance of a writ of sequestration and not the
lack of authority of two (2) Commissioners which renders the said writ
void ab initio. Thus, being the case, Writ of Sequestration No. 87-0218
must be automatically lifted.
As declared by the Honorable Supreme Court in two cases it has
decided,
The absence of a prior determination by the PCGG of
a prima facie basis for the sequestration order is, unavoidably,
a fatal defect which rendered the sequestration of respondent
corporation and its properties void ab initio. And
The corporation or entity against which such writ is
directed will not be able to visually determine its validity,
unless the required signatures of at least two commissioners
authorizing its issuance appear on the very document
itself. The issuance of sequestration orders requires the
existence of a prima facie case. The two commissioner rule
is obviously intended to assure a collegial determination of
such fact. In this light, a writ bearing only one signature is an
obvious transgression of the PCGG Rules.

Consequently, the writs of sequestration nos. 86-0062, 86-0069,


86-0085, 86-0095, 86-0096, 86-0097 and 86-0098 must be lifted for not
having complied with the pertinent provisions of the PCGG Rules and
Regulations, all of which were issued by only one Commissioner and after
April 11, 1986 when the PCGG Rules and Regulations took effect, an utter
disregard of the PCGGs Rules and Regulations. The Honorable Supreme
Court has stated that:
Obviously, Section 3 of the PCGG Rules was intended
to protect the public from improvident, reckless and needless
sequestrations of private property. And since these Rules
were issued by Respondent Commission, it should be the first
entity to observe them.
Anent the writ of sequestration no. 86-0042 which was issued on
April 8, 1986 or prior to the promulgation of the PCGG Rules and
Regulations on April 11, 1986, the same cannot be declared void on the
ground that it was signed by only one Commissioner because at the time it
was issued, the Rules and Regulations of the PCGG were not yet in
effect. However, it again appears that there was no prior determination of
the existence of a prima facie basis or factual foundation for the issuance
of the said writ. The PCGG, despite sufficient time afforded by this Court
to show that a prima facie basis existed prior to the issuance of Writ No.
86-0042, failed to do so. Nothing in the records submitted by the PCGG
in compliance of the Resolutions and Order of this Court would reveal that
a meeting was held by the Commission for the purpose of determining the
existence of a prima facie evidence prior to its issuance. In a case decided
by the Honorable Supreme Court, wherein it involved a writ of
sequestration issued by the PCGG on March 19, 1986 against all assets,
movable and immovable, of Provident International Resources
Corporation and Philippine Casino Operators Corporation, the Honorable
Supreme Court enunciated:
The questioned sequestration order was, however issued
on March 19, 1986, prior to the promulgation of the PCGG
Rules and Regulations. As a consequence, we cannot
reasonably expect the commission to abide by said rules,
which were nonexistent at the time the subject writ was issued
by then Commissioner Mary Concepcion Bautista. Basic is
the rule that no statute, decree, ordinance, rule or regulation
(and even policies) shall be given retrospective effect unless
explicitly stated so. We find no provision in said Rules which
expressly gives them retroactive effect, or implies the
abrogation of previous writs issued not in accordance with the
same Rules. Rather, what said Rules provide is that they
shall be effective immediately, which in legal parlance, is
understood as upon promulgation. Only penal laws are
given retroactive effect insofar as they favor the accused.
We
distinguish
this
case
from Republic
vs.
Sandiganbayan, Romualdez and Dio Island Resort, G.R. No.
88126, July 12, 1996 where the sequestration order against

Dio Island Resort, dated April 14, 1986, was prepared, issued
and signed not by two commissioners of the PCGG, but by
the head of its task force in Region VIII. In holding that said
order was not valid since it was not issued in accordance with
PCGG Rules and Regulations, we explained:
(Sec. 3 of the PCGG Rules and Regulations),
couched in clear and simple language, leaves no
room for interpretation. On the basis thereof, it is
indubitable that under no circumstances can a
sequestration or freeze order be validly issued by
one not a commissioner of the PCGG.
xxx

xxx

xxx

Even assuming arguendo that Atty. Ramirez


had been given prior authority by the PCGG to
place Dio Island Resort under sequestration,
nevertheless, the sequestration order he issued is
still void since PCGG may not delegate its authority
to sequester to its representatives and subordinates,
and any such delegation is valid and ineffective.
We further said:
In the instant case, there was clearly no prior
determination made by the PCGG of a prima facie basis for
the sequestration of Dio Island Resort, Inc. x x x
xxx xxx xxx
The absence of a prior determination by the PCGG of
a prima facie basis for the sequestration order is, unavoidably,
a fatal defect which rendered the sequestration of respondent
corporation and its properties void ab initio. Being void ab
initio, it is deemed nonexistent, as though it had never been
issued, and therefore is not subject to ratification by the
PCGG.
What were obviously lacking in the above case were the
basic requisites for the validity of a sequestration order which
we laid down in BASECO vs. PCGG, 150 SCRA 181, 216,
May 27, 1987, thus:
Section (3) of the Commissions Rules and regulations
provides that sequestration or freeze (and takeover) orders
issue upon the authority of at least two commissioners, based
on the affirmation or complaint of an interested party, or
motu propio (sic) when the Commission has reasonable
grounds to believe that the issuance thereof is warranted.

In the case at bar, there is no question as to the presence


of prima facie evidence justifying the issuance of the
sequestration order against respondent corporations. But the
said order cannot be nullified for lack of the other requisite
(authority of at least two commissioners) since, as explained
earlier, such requisite was nonexistent at the time the order
was issued.
As to the argument of the Plaintiff Republic that Defendants
Cojuangco, et al. have not shown any contrary prima facie proof that the
properties subject matter of the writs of sequestration were legitimate
acquisitions, the same is misplaced. It is a basic legal doctrine, as well as
many times enunciated by the Honorable Supreme Court that when
a prima facie proof is required in the issuance of a writ, the party seeking
such extraordinary writ must establish that it is entitled to it by complying
strictly with the requirements for its issuance and not the party against
whom the writ is being sought for to establish that the writ should not be
issued against it.
According to the Republic, the Sandiganbayan thereby gravely abused its discretion
in: (a) in lifting WOS No. 86-0042 and No. 87-0218 despite the basic requisites for the
validity of sequestration being existent; (b) in denying the Republics alternative prayer for the
issuance of an order of sequestration against all the subject shares of stock in accordance with
the ruling in Republic v. Sandiganbayan, 258 SCRA 685, as stated in its Motion For
Reconsideration; and (c) in deleting the last two conditions the Sandiganbayan had earlier
imposed on the subject shares of stock.
We sustain the lifting of the nine WOS for the reasons made extant in the assailed
resolution of October 8, 2003, supra.
Section 3 of the Rules of the PCGG, promulgated on April 11, 1986, provides:
Section 3. Who may issue. A writ of sequestration or a freeze or
hold order may be issued by the Commission upon the authority of at least
two Commissioners, based on the affirmation or complaint of an interested
party or motu proprio when the Commission has reasonable grounds to
believe that the issuance thereof is warranted.

Conformably with Section 3, supra, WOS No. 86-0062 dated April 21, 1986; WOS No.
86-0069 dated April 22, 1986; WOS No. 86-0085 dated May 9, 1986; WOS No. 86-0095
dated May 16, 1986; WOS No. 86-0096 dated May 16, 1986; WOS No. 86-0097 dated May
16, 1986; and WOS No. 86-0098 dated May 16, 1986 were lawfully and correctly nullified
considering that only one PCGG Commissioner had issued them.
Similarly, WOS No. 86-0042 dated April 8, 1986 and WOS No. 87-0218 dated May
27, 1987 were lawfully and correctly nullified notwithstanding that WOS No. 86-0042, albeit
signed by only one Commissioner (i.e., Commissioner Mary Concepcion Bautista), was not at
the time of its issuance subject to the two-Commissioners rule, and WOS No. 87-0218, albeit
already issued under the signatures of two Commissioners considering that both had been
issued without a prior determination by the PCGG of aprima facie basis for the sequestration.

Plainly enough, the irregularities infirming the issuance of the several WOS could
not be ignored in favor of the Republic and resolved against the persons whose properties were
subject of the WOS. Where the Rules of the PCGG instituted safeguards under Section
3, supra, by requiring the concurrent signatures of two Commissioners to every WOS issued
and the existence of a prima facie case of ill gotten wealth to support the issuance, the noncompliance with either of the safeguards nullified the WOS thus issued. It is already settled
that sequestration, due to its tendency to impede or limit the exercise of proprietary rights by
private citizens, is construed strictly against the State, conformably with the legal maxim that
statutes in derogation of common rights are generally strictly construed and rigidly confined to
the cases clearly within their scope and purpose.[86]
Consequently, the nullification of the nine WOS, being in implementation of the
safeguards the PCGG itself had instituted, did not constitute any abuse of its discretion, least
of all grave, on the part of the Sandiganbayan.
Nor did the Sandiganbayan gravely abuse its discretion in reducing from four to only
two the conditions imposed for the lifting of the WOS. The Sandiganbayan thereby acted with
the best of intentions, being all too aware that the claim of the Republic to the sequestered
assets and properties might be prejudiced or harmed pendente lite unless the protective
conditions were annotated in the corporate books of SMC. Moreover, the issue became
academic following the Sandiganbayans promulgation of its decision dismissing the
Republics Amended Complaint, which thereby removed the stated reason the Republic
continues to hold a claim on the shares which is yet to be resolved underlying the need for
the annotation of the conditions (whether four or two).
II
The Concept and Genesis of
Ill-Gotten Wealth in the Philippine Setting
A brief review of the Philippine law and jurisprudence pertinent to ill-gotten
wealth should furnish an illuminating backdrop for further discussion.
In the immediate aftermath of the peaceful 1986 EDSA Revolution, the
administration of President Corazon C. Aquino saw to it, among others, that rules defining the
authority of the government and its instrumentalities were promptly put in place. It is
significant to point out, however, that the administration likewise defined the limitations of the
authority.
The first official issuance of President Aquino, which was made on February 28,
1986, or just two days after the EDSA Revolution, was Executive Order (E.O.) No. 1, which
created the Presidential Commission on Good Government (PCGG). Ostensibly, E.O. No. 1
was the first issuance in light of the EDSA Revolution having come about mainly to address
the pillage of the nations wealth by President Marcos, his family, and cronies.

E.O. No. 1 contained only two WHEREAS Clauses, to wit:


WHEREAS, vast resources of the government have been
amassed by former President Ferdinand E. Marcos, his immediate family,
relatives, and close associates both here and abroad;

WHEREAS, there is an urgent need to recover all ill-gotten


wealth;[87]
Paragraph (4) of E.O. No. 2[88] further required that the wealth, to be ill-gotten, must be
acquired by them through or as a result of improper or illegal use of or the conversion of
funds belonging to the Government of the Philippines or any of its branches, instrumentalities,
enterprises, banks or financial institutions, or by taking undue advantage of their official
position, authority, relationship, connection or influence to unjustly enrich themselves at the
expense and to the grave damage and prejudice of the Filipino people and the Republic of the
Philippines.
Although E.O. No. 1 and the other issuances dealing with ill-gotten wealth (i.e., E.O.
No. 2, E.O. No. 14, and E.O. No. 14-A) only identified the subject matter of ill-gotten wealth
and the persons who could amass ill-gotten wealth and did not include an explicit definition
of ill-gotten wealth, we can still discern the meaning and concept of ill-gotten wealth from the
WHEREAS Clauses themselves of E.O. No. 1, in that ill-gotten wealth consisted of the vast
resources of the government amassed by former President Ferdinand E. Marcos, his
immediate family, relatives and close associates both here and abroad. It is clear, therefore,
that ill-gotten wealth would not include all the properties of President Marcos, his immediate
family, relatives, and close associates but only the part that originated from the vast resources
of the government.
In time and unavoidably, the Supreme Court elaborated on the meaning and concept
of ill-gotten wealth. In Bataan Shipyard & Engineering Co., Inc. v. Presidential Commission
on Good Government,[89] or BASECO, for the sake of brevity, the Court held that:
xxx until it can be determined, through appropriate judicial
proceedings, whether the property was in truth ill-gotten, i.e.,
acquired through or as a result of improper or illegal use of or the
conversion of funds belonging to the Government or any of its
branches, instrumentalities, enterprises, banks or financial
institutions, or by taking undue advantage of official position, authority,
relationship, connection or influence, resulting in unjust enrichment of the
ostensible owner and grave damage and prejudice to the State. And this,
too, is the sense in which the term is commonly understood in other
jurisdictions.[90]

The BASECO definition of ill-gotten wealth was reiterated


Commission on Good Government v. Lucio C. Tan,[91] where the Court said:

in Presidential

On this point, we find it relevant to define ill-gotten wealth.


In Bataan Shipyard and Engineering Co., Inc., this Court described illgotten wealth as follows:
Ill-gotten wealth is that acquired through or as a result
of improper or illegal use of or the conversion of funds
belonging to the Government or any of its branches,
instrumentalities, enterprises, banks or financial institutions,
or by taking undue advantage of official position, authority,
relationship, connection or influence, resulting in unjust

enrichment of the ostensible owner and grave damage and


prejudice to the State. And this, too, is the sense in which the
term is commonly understood in other jurisdiction.
Concerning respondents shares of stock here, there is no evidence
presented by petitioner that they belong to the Government of
the Philippines or any of its branches, instrumentalities, enterprises, banks
or financial institutions. Nor is there evidence that respondents, taking
undue advantage of their connections or relationship with former President
Marcos or his family, relatives and close associates, were able to acquire
those shares of stock.

Incidentally, in its 1998 ruling in Chavez v. Presidential Commission on Good


Government,[92] the Court rendered an identical definition of ill-gotten wealth, viz:
xxx. We may also add that ill-gotten wealth, by its very nature,
assumes a public character. Based on the aforementioned Executive
Orders, ill-gotten wealth refers to assets and properties purportedly
acquired, directly or indirectly, by former President Marcos, his immediate
family, relatives and close associates through or as a result of their
improper or illegal use of government funds or properties; or their
having taken undue advantage of their public office; or their use of
powers, influence or relationships, resulting in their unjust enrichment
and causing grave damage and prejudice to the Filipino people and the
Republic of the Philippines. Clearly, the assets and properties referred
to supposedly originated from the government itself. To all intents and
purposes, therefore, they belong to the people. As such, upon
reconveyance they will be returned to the public treasury, subject only
to the satisfaction of positive claims of certain persons as may be adjudged
by competent courts. Another declared overriding consideration for the
expeditious recovery of ill-gotten wealth is that it may be used for national
economic recovery.
All these judicial pronouncements demand two concurring elements to be present
before assets or properties were considered as ill-gotten wealth, namely: (a) they must have
originated from the government itself, and (b) they must have been taken by former
President Marcos, his immediate family, relatives, and close associates by illegal means.
But settling the sources and the kinds of assets and property covered by E.O. No. 1
and related issuances did not complete the definition of ill-gotten wealth. The further
requirement was that the assets and property should have been amassed by former President
Marcos, his immediate family, relatives, and close associates both here and abroad. In this
regard, identifying former President Marcos, his immediate family, and relatives was not
difficult, but identifying other persons who might be the close associates of former President
Marcos presented an inherent difficulty, because it was not fair and just to include within the
term close associates everyone who had had any association with President Marcos, his
immediate family, and relatives.
Again, through several rulings, the Court became the arbiter to determine who were
the close associates within the coverage of E.O. No. 1.

In Republic v. Migrio,[93] the Court held that respondents Migrio, et al. were not
necessarily among the persons covered by the term close subordinate or close associateof
former President Marcos by reason alone of their having served as government officials or
employees during the Marcos administration, viz:
It does not suffice, as in this case, that the respondent is or was a
government official or employee during the administration of former
Pres. Marcos. There must be a prima facie showing that the
respondent unlawfully accumulated wealth by virtue of his close
association or relation with former Pres. Marcos and/or his wife. This
is so because otherwise the respondents case will fall under existing
general laws and procedures on the matter. xxx
In Cruz, Jr. v. Sandiganbayan,[94] the Court declared that the petitioner was not
a close associate as the term was used in E.O. No. 1 just because he had served as the
President and General Manager of the GSIS during the Marcos administration.
In Republic v. Sandiganbayan,[95] the Court stated that respondent Maj. Gen.
Josephus Q. Ramas having been a Commanding General of the Philippine Army during the
Marcos administration d[id] not automatically make him a subordinate of former President
Ferdinand Marcos as this term is used in Executive Order Nos. 1, 2, 14 and 14-A absent a
showing that he enjoyed close association with former President Marcos.
It is well to point out, consequently, that the distinction laid down by E.O. No. 1 and its
related issuances, and expounded by relevant judicial pronouncements unavoidably
required competent evidentiary substantiation made in appropriate judicial proceedings to
determine: (a) whether the assets or properties involved had come from the vast resources of
government, and (b) whether the individuals owning or holding such assets or properties were
close associates of President Marcos. The requirement of competent evidentiary
substantiation made in appropriate judicial proceedings was imposed because the factual
premises for the reconveyance of the assets or properties in favor of the government due to
their being ill-gotten wealth could not be simply assumed. Indeed, in BASECO,[96] the Court
made this clear enough by emphatically observing:
6. Governments Right and Duty to Recover All Ill-gotten Wealth
There can be no debate about the validity and eminent propriety of
the Governments plan to recover all ill-gotten wealth.
Neither can there be any debate about the proposition that assuming
the above described factual premises of the Executive Orders and
Proclamation No. 3 to be true, to be demonstrable by competent evidence,
the recovery from Marcos, his family and his minions of the assets and
properties involved, is not only a right but a duty on the part of
Government.
But however plain and valid that right and duty may be, still a
balance must be sought with the equally compelling necessity that a
proper respect be accorded and adequate protection assured, the
fundamental rights of private property and free enterprise which are
deemed pillars of a free society such as ours, and to which all members of
that society may without exception lay claim.

xxx Democracy, as a way of life enshrined in the Constitution,


embraces as its necessary components freedom of conscience, freedom of
expression, and freedom in the pursuit of happiness. Along with these
freedoms are included economic freedom and freedom of enterprise within
reasonable bounds and under proper control. xxx Evincing much concern
for the protection of property, the Constitution distinctly recognizes the
preferred position which real estate has occupied in law for ages. Property
is bound up with every aspect of social life in a democracy as democracy
is conceived in the Constitution. The Constitution realizes the
indispensable role which property, owned in reasonable quantities and
used legitimately, plays in the stimulation to economic effort and the
formation and growth of a solid social middle class that is said to be the
bulwark of democracy and the backbone of every progressive and happy
country.
a.

Need of Evidentiary Substantiation in Proper Suit

Consequently, the factual premises of the Executive Orders


cannot simply be assumed. They will have to be duly established by
adequate proof in each case, in a proper judicial proceeding, so that
the recovery of the ill-gotten wealth may be validly and properly
adjudged and consummated; although there are some who maintain that
the fact that an immense fortune, and vast resources of the government
have been amassed by former President Ferdinand E. Marcos, his
immediate family, relatives, and close associates both here and abroad,
and they have resorted to all sorts of clever schemes and manipulations to
disguise and hide their illicit acquisitions is within the realm of judicial
notice, being of so extensive notoriety as to dispense with proof
thereof. Be this as it may, the requirement of evidentiary
substantiation has been expressly acknowledged, and the procedure to
be followed explicitly laid down, in Executive Order No. 14. [97]
Accordingly, the Republic should furnish to the Sandiganbayan in proper judicial
proceedings the competent evidence proving who were the close associates of President
Marcos who had amassed assets and properties that would be rightly considered as ill-gotten
wealth.
III.
Summary Judgment was not warranted;
The Republic should have adduced evidence
to substantiate its allegations against the Respondents
We affirm the decision of November 28, 2007, because the Republic did not discharge
its burden as the plaintiff to establish by preponderance of evidence that the respondents SMC
shares were illegally acquired with coconut-levy funds.
The decision of November 28, 2007 fully explained why the Sandiganbayan dismissed
the Republics case against Cojuangco, et al., viz:

Going over the evidence, especially the laws, i.e., P.D. No. 961, P.D.
No. 755, and P.D. No. 1468, over which plaintiff prayed that Court to take
judicial notice of, it is worth noting that these same laws were cited by
plaintiff when it filed its motion for judgment on the pleadings and/or
summary judgment regarding the CIIF block of SMC shares of
stock. Thus, the Court has already passed upon the same laws when it
arrived at judgment determining ownership of the CIIF block of SMC
shares of stock. Pertinently, in the Partial Summary Judgment
promulgated onMay 7, 2004, the Court gave the following rulings finding
certain provisions of the above-cited laws to be constitutionally infirmed,
thus:
In this case, Section 2(d) and Section 9 and 10, Article III,
of P.D. Nos. 961 and 1468 mandated the UCPB to utilize the
CIIF, an accumulation of a portion of the CCSF and the
CIDF, for investment in the form of shares of stock in
corporations organized for the purpose of engaging in the
establishment and the operation of industries and commercial
activities and other allied business undertakings relating to
coconut and other palm oils industry in all aspects. The
investments made by UCPB in CIIF companies are required
by the said Decrees to be equitably distributed for free by the
said bank to the coconut farmers (Sec. 10, P.D. No. 961 and
Sec. 10, P.D. No. 1468). The public purpose sought to be
served by the free distribution of the shares of stock acquired
with the use of public funds is not evident in the laws
mentioned. More specifically, it is not clear how private
ownership of the shares of stock acquired with public funds
can serve a public purpose. The mode of distribution of the
shares of stock also left much room for the diversion of assets
acquired through public funds into private uses or to serve
directly private interests, contrary to the Constitution. In the
said distribution, defendants COCOFED, et al. and Ballares,
et al. admitted that UCPB followed the administrative
issuances of PCA which we found to be constitutionally
objectionable in our Partial Summary Judgment in Civil Case
No. 0033-A, the pertinent portions of which are quoted
hereunder:
xxx

xx

xxx.

The distribution for free of the shares of stock of the


CIIF Companies is tainted with the above-mentioned
constitutional infirmities of the PCA administrative
issuances. In view of the foregoing, we cannot consider the
provision of P.D. No. 961 and P.D. No. 1468 and the
implementing regulations issued by the PCA as valid legal
basis to hold that assets acquired with public funds have
legitimately become private properties.
The CIIF Companies having been acquired with public
funds, the 14 CIIF-owned Holding Companies and all their

assets, including the CIIF Block of SMC Shares, being public


in character, belong to the government. Even granting that
the 14 Holding Companies acquired the SMC Shares through
CIIF advances and UCPB loans, said advances and loans are
still the obligations of the said companies. The incorporating
equity or capital of the 14 Holding Companies, which were
allegedly used also for the acquisition of the subject SMC
shares, being wholly owned by the CIIF Companies, likewise
form part of the coconut levy funds, and thus belong to the
government in trust for the ultimate beneficiaries thereof,
which are all the coconut farmers.
xxx

xxx

xxx.

And, with the above-findings of the Court, the CIIF block of SMC
shares were subsequently declared to be of public character and should be
reconveyed to the government in trust for coconut farmers. The foregoing
findings notwithstanding, a question now arises on whether the same laws
can likewise serve as ultimate basis for a finding that the Cojuangco, et al.
block of SMC shares are also imbued with public character and should
rightfully be reconveyed to the government.
On this point, the Court disagrees with plaintiff that reliance on
said laws would suffice to prove that defendants Cojuangco, et al.s
acquisition of SMC shares of stock was illegal as public funds were
used. For one, plaintiffs reliance thereon has always had reference
only to the CIIF block of shares, and the Court has already settled the
same by going over the laws and quoting related findings in the
Partial Summary judgment rendered in Civil Case No. 0033-A. For
another, the allegations of plaintiff pertaining to the Cojuangco block
representing twenty percent (20%) of the outstanding capital stock of
SMC stress defendant Cojuangcos acquisition by virtue of his
positions as Chief Executive Officer of UCPB, a member-director of
the Philippine Coconut Authority (PCA) Governing Board, and a
director of the CIIF Oil Mills. Thus, reference to the said laws would
not settle whether there was abuse on the part of defendants
Cojuangco, et al. of their positions to acquire the SMC shares. [98]
Besides, in the Resolution of the Court on plaintiffs Motion for
Parial Summary Judgment (Re: Shares in San Miguel Corporation
Registered in the Respective Names of Defendants Eduardo M.
Cojuangco, Jr. and the defendant Cojuangco Companies), the Court
already rejected plaintiffs reference to said laws. In fact, the Court
declined to grant plaintiffs motion for partial summary judgment
because it simply contended that defendant Cojuangcos statements in
his pleadings, which plaintiff again offered in evidence herein,
regarding the presentation of a possible CIIF witness as well as UCPB
records can already be considered admissions of defendants exclusive
use and misuse of coconut levy funds. In the said resolution, the
Court already reminded plaintiff that the issues cannot be resolved by
plaintiffs interpretation of defendant Cojuangcos statements in his
brief. Thus, the substantial portion of the Resolution of the Court

denying plaintiffs motion for partial summary judgment is again


quoted for emphasis: [99]
We cannot agree with the plaintiffs contention that the
defendants statements in his Pre-Trial Brief regarding the
presentation of a possible CIIF witness as well as UCPB
records, can already be considered as admissions of the
defendants exclusive use and misuse of coconut levy funds to
acquire the subject SMC shares and defendant Cojuangcos
alleged taking advantage of his positions to acquire the
subject SMC shares. Moreover, in ruling on a motion for
summary judgment, the court should take that view of the
evidence most favorable to the party against whom it is
directed, giving such party the benefit of all favorable
inferences. Inasmuch as this issue cannot be resolved
merely from an interpretation of the defendants statements
in his brief, the UCPB records must be produced and the
CIIF witness must be heard to ensure that the conclusions
that will be derived have factual basis and are thus,
valid. [100]
WHEREFORE, in view of the foregoing, the Motion for
Partial Summary Judgment dated July 11, 2003 is hereby
DENIED for lack of merit.
SO ORDERED.
(Emphasis supplied)
Even assuming that, as plaintiff prayed for, the Court takes
judicial notice of the evidence it offered with respect to the Cojuangco
block of SMC shares of stock, as contained in plaintiffs manifestation
of purposes, still its evidence do not suffice to prove the material
allegations in the complaint that Cojuangco took advantage of his
positions in UCPB and PCA in order to acquire the said shares. As
above-quoted, the Court, itself, has already ruled, and hereby stress
that UCPB records must be produced and the CIIF witness must be
heard to ensure that the conclusions that will be derived have factual
basis and are thus, valid. Besides, the Court found that there are
genuine factual issues raised by defendants that need to be threshed
out in a full-blown trial, and which plaintiff had the burden to
substantially prove. Thus, the Court outlined these genuine factual
issues as follows:
1) What are the various sources of funds, which
defendant Cojuangco and his companies claim they
utilized to acquire the disputed SMC shares?
2) Whether or not such funds acquired from alleged
various sources can be considered coconut levy
funds;

3) Whether or not defendant Cojuangco had indeed


served in the governing bodies of PCA, UCPB
and/or CIIF Oil Mills at the time the funds used to
purchase the SMC shares were obtained such that
he owed a fiduciary duty to render an account to
these entities as well as to the coconut farmers;
4) Whether or not defendant Cojuangco took
advantage of his position and/or close ties with then
President Marcos to obtain favorable concessions
or exemptions from the usual financial
requirements from the lending banks and/or cocolevy funded companies, in order to raise the funds
to acquire the disputed SMC shares; and if so,
what are these favorable concessions or
exemptions?[101]
Answers to these issues are not evident from the
submissions of plaintiff and must therefore be proven
through the presentation of relevant and competent evidence
during trial. A perusal of the subject Motion shows that the
plaintiff hastily derived conclusions from the defendants
statements in their previous pleadings although such
conclusions were not supported by categorical facts but
only
mere
inferences. xxx
xxx xxx.
(Emphasis
supplied) [102]
Despite the foregoing pronouncement of the Court, plaintiff did not
present any other evidence during the trial of this case but instead made its
manifestation of purposes, that later served as its offer of evidence in the
instant case, that merely used the same evidence it had already relied upon
when it moved for partial summary judgment over the Cojuangco block of
SMC shares. Altogether, the Court finds the same insufficient to prove
plaintiffs allegations in the complaint because more than judicial notices,
the factual issues require the presentation of admissible, competent and
relevant evidence in accordance with Sections 3 and 4, Rule 128 of the
Rules on Evidence.
Moreover, the propriety of taking judicial notice of plaintiffs
exhibits is aptly questioned by defendants Cojuangco, et al. Certainly, the
Court can take judicial notice of laws pertaining to the coconut levy funds
as well as decisions of the Supreme Court relative thereto, but taking
judicial notice does not mean that the Court would accord full probative
value to these exhibits. Judicial notice is based upon convenience and
expediency for it would certainly be superfluous, inconvenient, and
expensive both to parties and the court to require proof, in the ordinary
way, of facts which are already known to courts. However, a court
cannot take judicial notice of a factual matter in
controversy. Certainly, there are genuine factual matters in the
instant case, as above-cited, which plaintiff ought to have proven with
relevant and competent evidence other than the exhibits it offered.

Referring to plaintiffs causes of action against defendants


Cojuangco, et al., the Court finds its evidence insufficient to prove that
the source of funds used to purchase SMC shares indeed came from
coconut levy funds. In fact, there is no direct link that the loans obtained
by defendant Cojuangco, Jr. were the same money used to pay for the
SMC shares. The scheme alleged to have been taken by defendant
Cojuangco, Jr. was not even established by any paper trail or testimonial
evidence that would have identified the same. On account of his positions
in the UCPB, PCA and the CIIF Oil Mills, the Court cannot conclude that
he violated the fiduciary obligations of the positions he held in the absence
of proof that he was so actuated and that he abused his positions. [103]

It was plain, indeed, that Cojuangco, et al. had tendered genuine issues through their
responsive pleadings and did not admit that the acquisition of the Cojuangco block of SMC
shares had been illegal, or had been made with public funds. As a result, the Republic needed
to establish its allegations with preponderant competent evidence, because, as earlier stated,
the fact that property was ill gotten could not be presumed but must be substantiated with
competent proof adduced in proper judicial proceedings. That the Republic opted not to
adduce competent evidence thereon despite stern reminders and warnings from the
Sandiganbayan to do so revealed that the Republic did not have the competent evidence to
prove its allegations against Cojuangco, et al.
Still, the Republic, relying on the 2001 holding
COCOFED,[104] pleads in its petition for review (G.R. No. 180702) that:

in Republic

v.

With all due respect, the Honorable Sandiganbayan failed to consider


legal
precepts
and
procedural
principles
vis--vis the records of the case showing that the funds or various loans
or advances used in the acquisition of the disputed SMC Shares
ultimately came from the coconut levy funds.
As discussed hereunder, respondents own admissions in their
Answers and Pre-Trial Briefs confirm that the various sources of funds
utilized in the acquisition of the disputed SMC shares came from
borrowings and advances from the UCPB and the CIIF Oil Mills.[105]
Thereby, the Republic would have the Sandiganbayan pronounce the block of SMC
shares of stock acquired by Cojuangco, et al. as ill-gotten wealth even without the Republic
first presenting preponderant evidence establishing that such block had been acquired illegally
and with the use of coconut levy funds.
The Court cannot heed the Republics pleas for the following reasons:
To begin with, it is notable that the decision of November 28, 2007 did not rule on
whether coconut levy funds were public funds or not. The silence of the Sandiganbayan on the
matter was probably due to its not seeing the need for such ruling following its conclusion that
the Republic had not preponderantly established the source of the funds used to pay the
purchase price of the concerned SMC shares, and whether the shares had been acquired with
the use of coconut levy funds.

Secondly, the ruling in Republic v. COCOFED[106] determined only whether certain


stockholders of the UCPB could vote in the stockholders meeting that had been called. The
issue now before the Court could not be controlled by the ruling in Republic v.
COCOFED, however, for even as that ruling determined the issue of voting, the Court was
forthright enough about not thereby preempting the Sandiganbayans decisions on the
merits on ill-gotten wealth in the several cases then pending, including this one, viz:
In making this ruling, we are in no way preempting the proceedings
the Sandiganbayan may conduct or the final judgment it may promulgate
in Civil Case No. 0033-A, 0033-B and 0033-F. Our determination here is
merely prima facie, and should not bar the anti-graft court from making a
final ruling, after proper trial and hearing, on the issues and prayers in the
said civil cases, particularly in reference to the ownership of the subject
shares.
We also lay down the caveat that, in declaring the coco levy
funds to be prima facie public in character, we are not ruling in any
final manner on their classification whether they are general or
trust or special funds since such classification is not at issue
here. Suffice it to say that the public nature of the coco levy funds is
decreed by the Court only for the purpose of determining the right to
vote the shares, pending the final outcome of the said civil cases.
Neither are we resolving in the present case the question of
whether the shares held by Respondent Cojuangco are, as he claims,
the result of private enterprise. This factual matter should also be
taken up in the final decision in the cited cases that are pending in the
court a quo. Again, suffice it to say that the only issue settled here is
the right of PCGG to vote the sequestered shares, pending the final
outcome of said cases.

borrowings and advances had been illegal because the shares had not been purchased for the
benefit of the Coconut Farmers. To buttress its assertion, the Republic relied on the
admissions supposedly made in paragraph 2.01 of Cojuangcos Answer in relation to
paragraph 4 of the Republics Amended Complaint.
The best way to know what paragraph 2.01 of Cojuangcos Answer admitted is to
refer to both paragraph 4 of the Amended Complaint and paragraph 2.01 of
his Answer,which are hereunder quoted:
Paragraph 4 of the Amended Complaint
4. Defendant EDUARDO M. COJUANGCO, JR., was Governor of
Tarlac, Congressman of then First District of Tarlac and Ambassador-atLarge in the Marcos Administration. He was commissioned Lieutenant
Colonel in the Philippine Air Force, Reserve. Defendant Eduardo M.
Cojuangco, Jr., otherwise known as the Coconut King was head of the
coconut monopoly which was instituted by Defendant Ferdinand E.
Marcos, by virtue of the Presidential Decrees. Defendant Eduardo E.
Cojuangco, Jr., who was also one of the closest associates of the
Defendant Ferdinand E. Marcos, held the positions of Director of the
Philippine Coconut Authority, the United Coconut Mills, Inc., President
and Board Director of the United Coconut Planters Bank, United Coconut
Planters Life Assurance Corporation, and United Coconut Chemicals, Inc.
He was also the Chairman of the Board and Chief Executive Officer and
the controlling stockholder of the San Miguel Corporation. He may be
served summons at 45 Balete Drive, Quezon City or at 136 East
9th Street, Quezon City.
Paragraph 2.01 of Respondent Cojuangcos Answer
2.01. Herein defendant admits paragraph 4 only insofar as it alleges
the following:

Thirdly, the Republics assertion that coconut levy funds had been used to source the
payment for the Cojuangco block of SMC shares was premised on its allegation that the UCPB
and the CIIF Oil Mills were public corporations. But the premise was grossly erroneous and
overly presumptuous, because:
(a) The fact of the UCPB and the CIIF Oil Mills being public corporations
or government-owned or government-controlled corporations
precisely remainedcontroverted by Cojuangco, et al. in light of the
lack of any competent to that effect being in the records;
(b) Cojuangco explicitly averred in paragraph 2.01.(b) of his Answer that
the UCPB was a private corporation; and
(c) The Republic did not competently identify or establish which ones of
the Cojuangco corporations had supposedly received advances from
the CIIF Oil Mills.
Fourthly, the Republic asserts that the contested block of shares had been paid for with
borrowings from the UCPB and advances from the CIIF Oil Mills, and that such

(a) That herein defendant has held the following


positions in government: Governor of Tarlac, Congressman of
the then First District of Tarlac, Ambassador-at-Large,
Lieutenant Colonel in the Philippine Air Force and Director of
the Philippines Coconut Authority;
(b) That he held the following positions in private
corporations: Member of the Board of Directors of the United
Coconut Oil Mills, Inc.; President and member of the Board
of Directors of the United Coconut Planters Bank, United
Coconut Planters Life Assurance Corporation, and United
Coconut Chemicals, Inc.; Chairman of the Board and Chief
Executive of San Miguel Corporation; and
(c) That he may be served with summons at 136 East
9th Street, Quezon City.

Herein defendant specifically denies the rest of the allegations of


paragraph 4, including any insinuation that whatever association he may
have had with the late Ferdinand Marcos or Imelda Marcos has been in
connection with any of the acts or transactions alleged in the complaint or
for any unlawful purpose.

It is basic in remedial law that a defendant in a civil case must apprise the trial court
and the adverse party of the facts alleged by the complaint that he admits and of the facts
alleged by the complaint that he wishes to place into contention. The defendant does the
former either by stating in his answer that they are true or by failing to properly deny them.
There are two ways of denying alleged facts: one is by general denial, and the other, by
specific denial.[107]
In this jurisdiction, only a specific denial shall be sufficient to place into contention
an alleged fact.[108] Under Section 10,[109] Rule 8 of the Rules of Court, a specific denial of an
allegation of the complaint may be made in any of three ways, namely: (a) a defendant
specifies each material allegation of fact the truth of which he does not admit and, whenever
practicable, sets forth the substance of the matters upon which he relies to support his denial;
(b) a defendant who desires to deny only a part of an averment specifies so much of it as is
true and material and denies only the remainder; and (c) a defendant who is without
knowledge or information sufficient to form a belief as to the truth of a material averment
made in the complaint states so, which has the effect of a denial.
The
express
qualifications
contained
in
paragraph
2.01
of
Cojuangcos Answer constituted efficient specific denials of the averments of paragraph 2 of
the RepublicsAmended Complaint under the first method mentioned in Section 10 of Rule
8, supra. Indeed, the aforequoted paragraphs of the Amended Complaint and of
Cojuangcos Answerindicate that Cojuangco thereby expressly qualified his admission of
having been the President and a Director of the UCPB with the averment that the UCPB was a
private corporation; that his Answers allegation of his being a member of the Board of
Directors of the United Coconut Oil Mills, Inc. did not admit that he was a member of the
Board of Directors of the CIIF Oil Mills, because the United Coconut Oil Mills, Inc. was not
one of the CIIF Oil Mills; and that his Answer nowhere contained any admission or statement
that he had held the various positions in the government or in the private corporations at the
same time and in 1983, the time when the contested acquisition of the SMC shares of stock
took place.
What the Court stated in Bitong v. Court of Appeals (Fifth Division)[110] as to
admissions is illuminating:
When taken in its totality, the Amended Answer to the Amended
Petition, or even the Answer to the Amended Petition alone, clearly raises
an issue as to the legal personality of petitioner to file the
complaint. Every alleged admission is taken as an entirety of the fact
which makes for the one side with the qualifications which limit,
modify or destroy its effect on the other side. The reason for this is,
where part of a statement of a party is used against him as an admission,
the court should weigh any other portion connected with the statement,
which tends to neutralize or explain the portion which is against interest.

In other words, while the admission is admissible in evidence, its


probative value is to be determined from the whole statement and
others intimately related or connected therewith as an integrated
unit. Although acts or facts admitted do not require proof and cannot be
contradicted, however, evidence aliunde can be presented to show that the
admission was made through palpable mistake. The rule is always in
favor of liberality in construction of pleadings so that the real matter
in dispute may be submitted to the judgment of the court.
And, lastly, the Republic cites the following portions of the joint Pre-Trial Brief of
Cojuangco, et al.,[111] to wit:
IV.
PROPOSED EVIDENCE
xxx
4.01. xxx Assuming, however, that plaintiff presents evidence to
support its principal contentions, defendants evidence in rebuttal would
include testimonial and documentary evidence showing: a) the ownership
of the shares of stock prior to their acquisition by respondents (listed in
Annexes A and B); b) the consideration for the acquisition of the
shares of stock by the persons or companies in whose names the shares of
stock are now registered; and c) the source of the funds used to pay the
purchase price.
4.02. Herein respondents intend to present the following
evidence:
xxx
b. Proposed Exhibits ____, ____, ____
Records of the United Coconut Planters Bank which would show
borrowings of the companies listed in Annexes A and B, or
companies affiliated or associated with them, which were used to
source payment of the shares of stock of the San Miguel Corporation
subject of this case.
4.03. Witnesses.
xxx
(b) A representative of the United Coconut Planters Bank who
will testify in regard the loans which were used to source the payment
of the price of SMC shares of stock.
(c) A representative from the CIIF Oil Mills who will testify in
regard the loans or credit advances which were used to source the
payment of the purchase price of the SMC shares of stock.

The Republic insists that the aforequoted portions of the joint Pre-Trial Brief were
Cojuangco, et al.s admission that:
(a) Cojuangco had received money from the UCPB, a bank entrusted by
law with the administration of the coconut levy funds; and

(b) Cojuangco had received more money from the CIIF Oil Mills in which
part of the CIIF funds had been placed, and thereby used the funds of
the UCPB and the CIIF as capital to buy his SMC shares.[112]

3.00. Based on the complaint and the answer, the acquisition of the
San Miguel shares by, and their registration in the names of, the
companies listed in Annexes A and B may be deemed undisputed.
3.01. All other allegations in the complaint are disputed.[115]

We disagree with the Republics posture.


The statements found in the joint Pre-Trial Brief of Cojuangco, et al. were
noticeably written beneath the heading of Proposed Evidence. Such location indicated that the
statements were only being proposed, that is, they were not yet intended or offered as
admission of any fact stated therein. In other words, the matters stated or set forth therein
might or might not be presented at all. Also, the text and tenor of the statements expressly
conditioned the proposal on the Republic ultimately presenting its evidence in the action. After
the Republic opted not to present its evidence, the condition did not transpire; hence, the
proposed admissions, assuming that they were that, did not materialize.
Obviously, too, the statements found under the heading of Proposed Evidence in the
joint Pre-Trial Brief were incomplete and inadequate on the important details of
thesupposed transactions (i.e., alleged borrowings and advances). As such, they could not
constitute admissions that the funds had come from borrowings by Cojuangco, et al. from the
UCPB or had been credit advances from the CIIF Oil Companies. Moreover, the purpose for
presenting the records of the UCPB and the representatives of the UCPB and of the still
unidentified or unnamed CIIF Oil Mills as declared in the joint Pre-Trial Brief did not at all
show whether the UCPB and/or the unidentified or unnamed CIIF Oil Mills were
the only sources of funding, or that such institutions, assuming them to be the sources of the
funding, had been the only sources of funding. Such ambiguousness disqualified the
statements from being relied upon as admissions. It is fundamental that any statement, to be
considered as an admission for purposes of judicial proceedings, should
bedefinite, certain and unequivocal;[113] otherwise, the disputed fact will not get settled.
Another reason for rejecting the Republics posture is that the Sandiganbayan, as the
trial court, was in no position to second-guess what the non-presented records of the
UCPB would show as the borrowings made by the corporations listed in Annexes A and B, or
by the companies affiliated or associated with them, that were used to source payment of the
shares of stock of the San Miguel Corporation subject of this case, or what the representative
of the UCPB or the representative of the CIIF Oil Mills would testify about loans or credit
advances used to source the payment of the price of SMC shares of stock.
Lastly, the Rules of Court has no rule that treats the statements found under the
heading Proposed Evidence as admissions binding Cojuangco, et al. On the contrary, theRules
of Court has even distinguished between admitted facts and facts proposed to be
admitted during the stage of pre-trial. Section 6 (b),[114] Rule 18 of the Rules of Court,requires
a Pre-Trial Brief to include a summary of admitted facts and a proposed stipulation of
facts. Complying with the requirement, the joint Pre-Trial Brief of Cojuangco, et al. included
the summary of admitted facts in its paragraph 3.00 of its Item III, separately and distinctly
from the Proposed Evidence, to wit:
III.
SUMMARY OF UNDISPUTED FACTS

The burden of proof, according to Section 1, Rule 131 of the Rules of Court, is the
duty of a party to present evidence on the facts in issue necessary to establish his claim or
defense by the amount of evidence required by law. Here, the Republic, being the plaintiff,
was the party that carried the burden of proof. That burden required it to demonstrate through
competent evidence that the respondents, as defendants, had purchased the SMC shares of
stock with the use of public funds; and that the affected shares of stock constituted ill-gotten
wealth. The Republic was well apprised of its burden of proof, first through the joinder of
issues made by the responsive pleadings of the defendants, including Cojuangco, et al. The
Republic was further reminded through the pre-trial order and the Resolution denying
its Motion for Summary Judgment, supra, of the duty to prove the factual allegations on illgotten wealth against Cojuangco, et al., specifically the following disputed matters:
(a) When the loans or advances were incurred;
(b) The amount of the loans from the UCPB and of the credit advances
from the CIIF Oil Mills, including the specific CIIF Oil Mills
involved;
(c) The identities of the borrowers, that is, all of the respondent
corporations together, or separately; and the amounts of the
borrowings;
(d) The conditions attendant to the loans or advances, if any;
(e) The manner, form, and time of the payments made to Zobel or to the
Ayala Group, whether by check, letter of credit, or some other form;
and
(f) Whether the loans were paid, and whether the advances were
liquidated.
With the Republic nonetheless choosing not to adduce evidence proving the factual
allegations, particularly the aforementioned matters, and instead opting to pursue its claims
by Motion for Summary Judgment, the Sandiganbayan became completely deprived of the
means to know the necessary but crucial details of the transactions on the acquisition of the
contested block of shares. The Republics failure to adduce evidence shifted no burden to the
respondents to establish anything, for it was basic that the partywho asserts, not the party who
denies, must prove.[116] Indeed, in a civil action, the plaintiff has the burden of pleading every
essential fact and element of the cause of action and proving them by preponderance of
evidence. This means that if the defendant merely denies each of the plaintiffs allegations and
neither side produces evidence on any such element, the plaintiff must necessarily fail in the
action.[117] Thus, the Sandiganbayan correctly dismissed Civil Case No. 0033-F for failure of
the Republic to prove its case by preponderant evidence.
A summary judgment under Rule 35 of the Rules of Court is a procedural technique
that is proper only when there is no genuine issue as to the existence of a material fact and the

moving party is entitled to a judgment as a matter of law. [118] It is a method intended to


expedite or promptly dispose of cases where the facts appear undisputed andcertain from the
pleadings, depositions, admissions, and affidavits on record. [119] Upon a motion for summary
judgment the courts sole function is to determine whether there is an issue of fact to be tried,
and all doubts as to the existence of an issue of fact must be resolved against the moving
party. In other words, a party who moves for summary judgment has the burden of
demonstrating clearly the absence of any genuine issue of fact, and any doubt as to the
existence of such an issue is resolved against the movant. Thus, in ruling on a motion for
summary judgment, the court should take that view of the evidence most favorable to the party
against whom it is directed, giving that party the benefit of all favorable inferences. [120]
The term genuine issue has been defined as an issue of fact that calls for the
presentation of evidence as distinguished from an issue that is sham, fictitious, contrived, set
up in bad faith, and patently unsubstantial so as not to constitute a genuine issue for trial. The
court can determine this on the basis of the pleadings, admissions, documents, affidavits, and
counter-affidavits submitted by the parties to the court. Where the facts pleaded by the parties
are disputed or contested, proceedings for a summary judgment cannot take the place of a
trial.[121] Well-settled is the rule that a party who moves for summary judgment has the burden
of demonstrating clearly the absence of any genuine issue of fact.[122] Upon that partys
shoulders rests the burden to prove the cause of action, and to show that the defense is
interposed solely for the purpose of delay. After the burden has been discharged, the defendant
has the burden to show facts sufficient to entitle him to defend. [123] Any doubt as to the
propriety of a summary judgment shall be resolved against the moving party.

The Republics lack of proof on the source of the funds by which Cojuangco, et al. had
acquired their block of SMC shares has made it shift its position, that it now suggests that
Cojuangco had been enabled to obtain the loans by the issuance of LOI 926 exempting the
UCPB from the DOSRI and the Single Borrowers Limit restrictions.
We reject the Republics suggestion.
Firstly, as earlier pointed out, the Republic adduced no evidence on the significant
particulars of the supposed loan, like the amount, the actual borrower, the approving
official, etc. It did not also establish whether or not the loans were DOSRI[126] or issued in
violation of the Single Borrowers Limit. Secondly, the Republic could not outrightly assume
that President Marcos had issued LOI 926 for the purpose of allowing the loans by the UCPB
in favor of Cojuangco. There must be competent evidence to that effect. And, finally, the
loans, assuming that they were of a DOSRI nature or without the benefit of the required
approvals or in excess of the Single Borrowers Limit, would not be void for that reason.
Instead, the bank or the officers responsible for the approval and grant of the DOSRI loan
would be subject only to sanctions under the law. [127]
VI.
Cojuangco violated no fiduciary duties
The Republic invokes the following pertinent statutory provisions of the Civil Code,
to wit:

We need not stress that the trial courts have limited authority to render summary
judgments and may do so only in cases where no genuine issue as to any material fact clearly
exists between the parties. The rule on summary judgment does not invest the trial courts with
jurisdiction to try summarily the factual issues upon affidavits, but authorizes summary
judgment only when it appears clear that there is no genuine issue as to any material fact.[124]

Article 1455. When any trustee, guardian or other person holding


a fiduciary relationship uses trust funds for the purchase of property and
causes the conveyance to be made to him or to a third person, a trust is
established by operation of law in favor of the person to whom the funds
belong.

IV.
Republics burden to establish by preponderance of evidence that
respondents SMC shares had been illegally acquired with coconutlevy funds was not discharged

Article 1456. If property is acquired through mistake or fraud, the


person obtaining it s by force of law, considered a trustee of an implied
trust for the benefit of the person from whom the property comes.
and the Corporation Code, as follows:

Madame Justice Carpio Morales argues in her dissent that although the contested
SMC shares could be inescapably treated as fruits of funds that are prima facie public in
character, Cojuangco, et al. abstained from presenting countervailing evidence; and that with
the Republic having shown that the SMC shares came into fruition from coco levy funds that
are prima facie public funds, Cojuangco, et al. had to go forward with contradicting evidence,
but did not.
The Court disagrees. We cannot reverse the decision of November 28, 2007 on the basis
alone of judicial pronouncements to the effect that the coconut levy funds wereprima
facie public funds,[125] but without any competent evidence linking the acquisition of the block
of SMC shares by Cojuangco, et al. to the coconut levy funds.
V.
No violation of the DOSRI and
Single Borrowers Limit restrictions

Section 31. Liability of directors, trustees or officers.Directors or


trustees who willfully and knowingly vote for or assent to patently
unlawful acts of the corporation or who are guilty of gross negligence or
bad faith in directing the affairs of the corporation or acquire any personal
or pecuniary interest in conflict with their duty as such directors, or
trustees shall be liable jointly and severally for all damages resulting
therefrom suffered by the corporation, its stockholders or members and
other persons.
When a director, trustee or officer attempts to acquire or acquires, in
violation of his duty, any interest adverse to the corporation in respect of
any matter which has been reposed in him in confidence, as to which
equity imposes a disability upon him to deal in his own behalf, he shall be
liable as a trustee for the corporation and must account for the profits
which otherwise would have accrued to the corporation.

Did Cojuangco breach his fiduciary duties as an officer and member of the Board of
Directors of the UCPB? Did his acquisition and holding of the contested SMC shares come
under a constructive trust in favor of the Republic?
The answers to these queries are in the negative.
The conditions for the application of Articles 1455 and 1456 of the Civil Code (like
the trustee using trust funds to purchase, or a person acquiring property through mistake or
fraud), and Section 31 of the Corporation Code (like a director or trustee willfully and
knowingly voting for or assenting to patently unlawful acts of the corporation, among others)
require factual foundations to be first laid out in appropriate judicial proceedings. Hence,
concluding that Cojuangco breached fiduciary duties as an officer and member of the Board of
Directors of the UCPB without competent evidence thereon would be unwarranted and
unreasonable.
Thus, the Sandiganbayan could not fairly find that Cojuangco had committed breach
of any fiduciary duties as an officer and member of the Board of Directors of the UCPB. For
one, the Amended Complaint contained no clear factual allegation on which to predicate the
application of Articles 1455 and 1456 of the Civil Code, and Section 31 of the Corporation
Code. Although the trust relationship supposedly arose from Cojuangcos being an officer and
member of the Board of Directors of the UCPB, the linkbetween this alleged fact and the
borrowings or advances was not established. Nor was there evidence on the loans or
borrowings, their amounts, the approving authority, etc. As trial court, the Sandiganbayan
could not presume his breach of fiduciary duties without evidence showing so, for fraud or
breach of trust is never presumed, but must be allegedand proved.[128]
The thrust of the Republic that the funds were borrowed or lent might even preclude
any consequent trust implication. In a contract of loan, one of the parties (creditor) delivers
money or other consumable thing to another (debtor) on the condition that the same amount of
the same kind and quality shall be paid. [129] Owing to the consumable nature of the thing
loaned, the resulting duty of the borrower in a contract of loan is to pay, not to return, to the
creditor or lender the very thing loaned. This explains why the ownership of the thing loaned
is transferred to the debtor upon perfection of the contract. [130] Ownership of the thing loaned
having transferred, the debtor enjoys all the rights conferred to an owner of property, including
the right to use and enjoy (jus utendi), to consume the thing by its use (jus abutendi), and to
dispose (jus disponendi), subject to such limitations as may be provided by law. [131] Evidently,
the resulting relationship between a creditor and debtor in a contract of loan cannot be
characterized as fiduciary.[132]
To say that a relationship is fiduciary when existing laws do not provide for such
requires evidence that confidence is reposed by one party in another who exercises dominion
and influence. Absent any special facts and circumstances proving a higher degree of
responsibility, any dealings between a lender and borrower are not fiduciary in nature. [133] This
explains why, for example, a trust receipt transaction is not classified as a simple loan and is
characterized as fiduciary, because the Trust Receipts Law (P.D. No. 115) punishes the
dishonesty and abuse of confidence in the handling of money or goods to the prejudice of
another regardless of whether the latter is the owner. [134]
Based on the foregoing, a debtor can appropriate the thing loaned without any
responsibility or duty to his creditor to return the very thing that was loaned or to report how
the proceeds were used. Nor can he be compelled to return the proceeds and fruits of the loan,
for there is nothing under our laws that compel a debtor in a contract of loan to do so. As

owner, the debtor can dispose of the thing borrowed and his act will not be considered
misappropriation of the thing. [135] The only liability on his part is to pay the loan together with
the interest that is either stipulated or provided under existing laws.
WHEREFORE, the Court dismisses the petitions for certiorari in G.R. Nos.
166859 and 169023; denies the petition for review on certiorari in G.R. No. 180702; and,
accordingly, affirms the decision promulgated by the Sandiganbayan on November 28, 2007
in Civil Case No. 0033-F.
The Court declares that the block of shares in San Miguel Corporation in the names
of respondents Cojuangco, et al. subject of Civil Case No. 0033-F is the exclusive property of
Cojuangco, et al. as registered owners.
Accordingly, the lifting and setting aside of the Writs of Sequestration affecting said
block of shares (namely: Writ of Sequestration No. 86-0062 dated April 21, 1986; Writ of
Sequestration No. 86-0069 dated April 22, 1986; Writ of Sequestration No. 86-0085 dated
May 9, 1986; Writ of Sequestration No. 86-0095 dated May 16, 1986; Writ of Sequestration
No. 86-0096 dated May 16, 1986; Writ of Sequestration No. 86-0097 dated May 16, 1986;
Writ of Sequestration No. 86-0098 dated May 16, 1986; Writ of Sequestration No. 86-0042
dated April 8, 1986; and Writ of Sequestration No. 87-0218 dated May 27, 1987) are affirmed;
and the annotation of the conditions prescribed in the Resolutions promulgated on October 8,
2003 and June 24, 2005 is cancelled.
SO ORDERED.

reconstitution and damages. The case is one of several suits involving ill-gotten or
unexplained wealth that petitioner Republic, through the PCGG, filed with the
Sandiganbayan against private respondent Roberto S. Benedicto and others pursuant
to Executive Order (EO) No. 14,[3] series of 1986.

Republic of the Philippines


Supreme Court
Manila
SECOND DIVISION
REPUBLIC OF THE PHILIPPINES represented by
the PRESIDENTIAL COMMISSION ON GOOD
GOVERNMENT (PCGG),
Petitioner,

- versus -

SANDIGANBAYAN (SECOND DIVISION)


ROBERTO S. BENEDICTO,
Respondents.

and

Pursuant to its mandate under EO No. 1,[4] series of 1986, the PCGG issued
G.R. No. 129406
writs placing under sequestration all business enterprises, entities and other
properties, real and personal, owned or registered in the name of private respondent
Present:
Benedicto, or of corporations in which he appeared to have controlling or majority
interest. Among the properties thus sequestered and taken over by PCGG fiscal
PUNO, J., Chairperson, agents were the 227 shares in NOGCCI owned by private respondentBenedicto and
SANDOVAL-GUTIERREZ,
registered in his name or under the names of corporations he owned or controlled.
CORONA,
AZCUNA, and
Following the sequestration process, PCGG representatives sat as members of
GARCIA, JJ.
the Board of Directors of NOGCCI, which passed, sometime in October 1986, a
resolution effecting a corporate policy change. The change consisted of assessing
a monthly membership due of P150.00 for each NOGCCI share. Prior to this
resolution, an investor purchasing more than one NOGCCI share was exempt from
Promulgated:
paying monthly membership due for the second and subsequent shares that he/she
owned.
March 6, 2006

Subsequently, on March 29, 1987, the NOGCCI Board passed another


resolution, this time increasing the monthly membership due from P150.00 toP250.00
for each share.
As sequestrator of the 227 shares of stock in question, PCGG did not pay the
corresponding monthly membership due thereon totaling P2,959,471.00. On account
thereof, the 227 sequestered shares were declared delinquent to be disposed of in an
auction sale.

x-------------------------- --------------x
DECISION
GARCIA, J.:
Before the Court is this petition for certiorari under Rule 65 of the Rules of
Court to nullify and set aside the March 28, 1995 [1] and March 13, 1997[2]Resolutions
of the Sandiganbayan, Second Division, in Civil Case No. 0034, insofar as said
resolutions ordered the Presidential Commission on Good Government (PCGG) to pay
private respondent Roberto S. Benedicto or his corporations the value of 227 shares
of stock of the Negros Occidental Golf and Country Club, Inc. (NOGCCI)
at P150,000.00 per share, registered in the name of said private respondent or his
corporations.
The facts:

Civil Case No. 0034 entitled Republic of the Philippines, plaintiff, v. Roberto S.
Benedicto, et al., defendants, is a complaint for reconveyance, reversion, accounting,

Apprised of the above development and evidently to prevent the projected


auction sale of the same shares, PCGG filed a complaint for injunction with the
Regional Trial Court (RTC) of Bacolod City, thereat docketed as Civil Case No. 5348.
The complaint, however, was dismissed, paving the way for the auction sale for the
delinquent 227 shares of stock. On August 5, 1989, an auction sale was conducted.
On November
3,
1990, petitioner Republic and
private
respondent Benedicto entered into a Compromise Agreement in Civil Case No.
0034.
The
agreement
contained
a
general
release
clause[5] whereunder petitioner Republic agreed and bound itself to lift the
sequestration on the 227 NOGCCI shares, among other Benedictos
properties, petitioner Republic acknowledging
that
it
was
within
private
respondent Benedictos capacity to acquire the same shares out of his income from
business and the exercise of his profession.[6] Implied in this undertaking is the
recognition by petitioner Republic that the subject shares of stock could not have
been ill-gotten.

In a decision dated October 2, 1992, the Sandiganbayan approved the


Compromise Agreement and accordingly rendered judgment in accordance with its
terms.

Good Government is hereby given a final extension of fifteen (15) days


from receipt hereof within which to comply with the Order of December
6, 1994 as stated hereinabove.

In the process of implementing the Compromise Agreement, either of the


parties would, from time to time, move for a ruling by the Sandiganbayan on the
proper manner of implementing or interpreting a specific provision therein.

On April 1, 1996, PCGG filed a Manifestation with Motion for


Reconsideration,[10] praying for the setting aside of the Resolution of February 23,
1996. OnApril 11, 1996, private respondent Benedicto filed a Motion to Enforce
Judgment Levy. Resolving these two motions, the Sandiganbayan, in its second

On February 22, 1994, Benedicto filed in Civil Case No. 0034 a Motion for

Release
from
Sequestration
Shares/Dividendspraying, inter alia,

and

Return

of

Sequestered

that his NOGCCI shares of stock


be specifically released from sequestration and returned, delivered or paid to him
as part of the parties Compromise Agreement in that case. In a
Resolution[7] promulgated on December 6, 1994, the Sandiganbayan granted
Benedictos aforementioned motion but placed the subject shares under the custody
of its Clerk of Court, thus:
WHEREFORE, in the light of the foregoing, the said
Motion for Release From Sequestration and Return of
Sequestered Shares/Dividends is hereby GRANTED and it is
directed that said shares/dividends be delivered/placed under
the
custody
of
the
Clerk
of
Court,
Sandiganbayan, Manila subject to this Courts disposition.
On March 28, 1995, the Sandiganbayan came out with the herein first
assailed Resolution,[8] which clarified its aforementioned December 6,
1994Resolution and directed the immediate implementation thereof by requiring
PCGG, among other things:
(b)

To deliver to the Clerk of Court the 227 sequestered shares of


[NOGCCI] registered in the name of nominees of ROBERTO S.
BENEDICTO free from all liens and encumbrances, or in default
thereof, to pay their value at P150,000.00 per share which can
be deducted from [the Republics] cash share in the
Compromise Agreement. [Words in bracket added] (Emphasis
Supplied).

Owing to PCGGs failure to comply with the above directive, Benedicto filed
in Civil Case No. 0034 a Motion for Compliance dated July 25, 1995, followed by
an Ex-Parte Motion for Early Resolution dated February 12, 1996. Acting thereon, the
Sandiganbayan promulgated yet another Resolution[9] on February 23, 1996,
dispositively reading:
WHEREFORE, finding merit in the instant motion for early
resolution and considering that, indeed, the PCGG has not shown any
justifiable ground as to why it has not complied with its obligation as set
forth in the Order of December 6, 1994 up to this date and which Order
was issued pursuant to the Compromise Agreement and has already
become final and executory, accordingly, the Presidential Commission on

assailed Resolution[11] dated March 13, 1997, denied that portion of the
PCGGs Manifestation with Motion for Reconsideration concerning the subject 227
NOGCCI shares and granted Benedictos Motion to Enforce Judgment Levy.
Hence, the Republics present recourse on the sole issue of whether or not the
public respondent Sandiganbayan, Second Division, gravely abused its discretion in
holding that the PCGG is at fault for not paying the membership dues on the 227
sequestered NOGCCI shares of stock, a failing which eventually led to the foreclosure
sale thereof.
The petition lacks merit.

To begin with, PCGG itself does not dispute its being considered as a receiver
insofar as the sequestered 227 NOGCCI shares of stock are concerned.[12]PCGG also
acknowledges that as such receiver, one of its functions is to pay outstanding debts
pertaining to the sequestered entity or property,[13] in this case the 227 NOGCCI
shares in question. It contends, however, that membership dues owing to a golf club
cannot be considered as an outstanding debt for which PCGG, as receiver, must pay.
It also claims to have exercised due diligence to prevent the loss through delinquency
sale of the subject NOGCCI shares, specifically inviting attention to the injunctive
suit, i.e., Civil Case No. 5348, it filed before the RTC of Bacolod City to enjoin the
foreclosure sale of the shares.
The filing of the injunction complaint adverted to, without more, cannot
plausibly tilt the balance in favor of PCGG. To the mind of the Court, such filing is a
case of acting too little and too late. It cannot be over-emphasized that it behooved
the PCGGs fiscal agents to preserve, like a responsible father of the family, the value
of the shares of stock under their administration. But far from acting as such father,
what the fiscal agents did under the premises was to allow the element of
delinquency to set in before acting by embarking on a tedious process of going to
court after the auction sale had been announced and scheduled.
The PCGGs posture that to the owner of the sequestered shares rests the
burden of paying the membership dues is untenable. For one, it lost sight of the
reality that such dues are basically obligations attached to the shares, which, in the
final analysis, shall be made liable, thru delinquency sale in case of default in
payment of the dues. For another, the PCGG as sequestrator-receiver of such shares
is, as stressed earlier, duty bound to preserve the value of such shares. Needless to
state, adopting timely measures to obviate the loss of those shares forms part of
such duty and due diligence.

The Sandiganbayan, to be sure, cannot plausibly be faulted for finding the


PCGG liable for the loss of the 227 NOGCCI shares. There can be no quibbling, as
indeed the graft court so declared in its assailed and related resolutions respecting
the NOGCCI shares of stock, that PCGGs fiscal agents, while sitting in the NOGCCI
Board of Directors agreed to the amendment of the rule pertaining to membership
dues. Hence, it is not amiss to state, as did the Sandiganbayan, that the PCGGdesignated fiscal agents, no less, had a direct hand in the loss of the sequestered
shares through delinquency and their eventual sale through public auction. While
perhaps anti-climactic to so mention it at this stage, the unfortunate loss of the
shares ought not to have come to pass had those fiscal agents prudently not agreed
to the passage of the NOGCCI board resolutions charging membership dues on
shares without playing representatives.
Given the circumstances leading to the auction sale of the subject NOGCCI
shares, PCGGs lament about public respondent Sandiganbayan having erred or,
worse still, having gravely abused its discretion in its determination as to who is at
fault for the loss of the shares in question can hardly be given cogency.
For sure, even if the Sandiganbayan were wrong in its findings, which does not
seem to be in this case, it is a well-settled rule of jurisprudence thatcertiorari will
issue only to correct errors of jurisdiction, not errors of judgment. Corollarily, errors
of procedure or mistakes in the courts findings and conclusions are beyond the
corrective hand of certiorari.[14] The extraordinary writ of certiorari may be availed
only upon a showing, in the minimum, that the respondent tribunal or officer
exercising judicial or quasi-judicial functions has acted without or in excess of its or
his jurisdiction, or with grave abuse of discretion. [15]
The term grave abuse of discretion connotes capricious and whimsical
exercise of judgment as is equivalent to excess, or a lack of jurisdiction.[16] The
abuse must be so patent and gross as to amount to an evasion of a positive duty or a
virtual refusal to perform a duty enjoined by law, or to act at all in contemplation of
law as where the power is exercised in an arbitrary and despotic manner by reason of
passion or hostility.[17] Sadly, this is completely absent in the present case. For, at
bottom, the assailed resolutions of the Sandiganbayan did no more than to direct
PCGG to comply with its part of the bargain under the compromise agreement it
freely entered into with private respondent Benedicto. Simply put, the assailed
resolutions of the Sandiganbayan have firm basis in fact and in law.
Lest it be overlooked, the issue of liability for the shares in
question had, as both
public
and
private
respondents
asserted,
long become final and executory. Petitioners narration of facts in its present
petition is even misleading as it conveniently fails to make reference to two (2)
resolutions issued by the Sandiganbayan. We refer to that courts resolutions
of December 6, 1994[18] and February 23, 1996[19] as well as several intervening
pleadings which served as basis for the decisions reached therein. As it were, the
present petition questions only and focuses on the March 28, 1995[20] and March 13,
1997[21]resolutions, which merely reiterated and clarified the graft courts underlying
resolution of December 6, 1994. And to place matters in the proper perspective,

PCGGs failure to comply with the December 6, 1994 resolution prompted the
issuance of the clarificatory and/or reiteratory resolutions aforementioned.
In a last-ditch attempt to escape liability, petitioner Republic, through the
PCGG, invokes state immunity from suit.[22] As argued, the order for it to pay the
value of the delinquent shares would fix monetary liability on a government agency,
thus necessitating the appropriation of public funds to satisfy the judgment
claim.[23] But, as private respondent Benedicto correctly countered, the PCGG fails to
take stock of one of the exceptions to the state immunity principle, i.e., when the
government
itself
is
the
suitor,
as
in Civil
Case
No.
0034.
Where, as here, the State itself is no
less
the
plaintiff
in
the
main case, immunity from
suit
cannot
be
effectively
invoked. [24] For,
as jurisprudence
teaches,
when
the
State,
through
its
duly
authorized officers, takes the initiative in a suit against a private party, it
thereby descends to the level of a private individual and thus opens itself to whatever
counterclaims or defenses the latter may have against it.[25] Petitioner Republics act
of filing its complaint in Civil Case No. 0034 constitutes a waiver of its immunity from
suit. Being itself the plaintiff in that case, petitioner Republic cannot set up its
immunity against private respondent Benedictos prayers in the same case.
In fact, by entering into a Compromise Agreement with private
respondent Benedicto, petitioner Republic thereby stripped
itself
of its immunity from suit and placed itself in the same level of its adversary.
When the State enters into contract, through its officers or agents, in furtherance of a
legitimate aim and purpose and pursuant to constitutional legislative authority,
whereby mutual or reciprocal benefits accrue and rights and obligations arise
therefrom, the State may be sued even without its express consent,
precisely because by entering into a contract the sovereign descends to the level of
the citizen. Its consent to be sued is implied from the very act of entering into such
contract,[26] breach of which on its part gives the corresponding right to the other
party to the agreement.
Finally, it is apropos to stress that the Compromise Agreement in Civil Case No.
0034 envisaged the immediate recovery of alleged ill-gotten wealth without further

litigation by the government, and buying peace on the part of the aging
Benedicto.[27] Sadly, that stated objective has come to naught as not only had the
litigation continued to ensue, but, worse, private respondent Benedicto passed away
on May 15, 2000,[28] with the trial of Civil Case No. 0034 still in swing, so much so
that the late Benedicto had to be substituted by the administratrix of his estate.[29]
WHEREFORE, the instant petition is hereby DISMISSED.
SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila

SECOND DIVISION

DEPARTMENT OF EDUCATION,
DIVISION OF ALBAY
represented by its SCHOOLS
DIVISION SUPERINTENDENT,
Petitioner,

- versus -

G.R. No. 161758


Present:
QUISUMBING, J., Chairperson,
CARPIO,
CARPIO MORALES,
TINGA, and
VELASCO, JR., JJ.
Promulgated:

CELSO OATE,
Respondent.
June 8, 2007
x-----------------------------------------------------------------------------------------x
DECISION
VELASCO, JR., J.:
A little neglect may lead to great prejudice.

Education Culture and Sports (DECS; now Department of Education [DepEd]) developed and
built various school buildings and facilities on the disputed lot.
Sometime in 1991, respondent filed a reconstitution proceeding of OCT No. 2563
which was granted by the Legaspi City RTC, Branch V after due notice, publication, and
hearing. Consequently, OCT No. RO-18971[5] was issued in the name of spouses Claro Oate
and Gregoria Los Baos.
On August 26, 1991, a Deed of Extrajudicial Settlement of Estate and Cession was
executed by respondent and his three (3) sisters, namely: Melba O. Napil, Cielo O.
Lardizabal, and Maria Visia O. Maldo, who waived their successional rights in favor of
respondent Celso Oate. Asserting that the disputed lot was inherited by his father, Francisco
Oate, from the latters father, Claro Oate, by virtue of a prior partition among the three (3)
sons of Claro Oate and Gregoria Los Baos, respondent in turn claimed ownership of said lot
through the deed of extrajudicial settlement.
Meanwhile, the issue of whether respondents father, Francisco Oate, truly
acquired the disputed lot through a prior partition among Claro Oates three (3) children had
been passed upon in another case, Civil Case No. 8724 for Partition, Reconveyance and
Damages filed by the heirs of Rafael Oate before the Legaspi City RTC, Branch IX. [6] In said
case, respondent Celso Oate, the defendant, prevailed and the case was dismissed by the trial
court.
Thereafter, respondent caused Lot No. 6849 to be subdivided into five (5) lots, all
under his name, except Lot No. 6849-B which is under the name of Mariano M.
Lim. OnOctober 26, 1992, the subdivided lots were issued Transfer Certificate of Titles
(TCTs): (1) Lot No. 6849-A (13,072 square meters) under TCT No. T-83946;[7] (2) Lot No.
6849-B (3,100 square meters) under TCT No. T-84049;[8] (3) Lot No. 6849-C (10,000 square
meters) under TCT No. T-83948;[9] (4) Lot No. 6849-D (1,127 square meters) under TCT No.
T-83949;[10] and (5) Lot No. 6849-E (608 square meters) under TCT No. T-83950.[11]

The Case
This is a Petition for Review on Certiorari [1] under Rule 45 seeking to reverse and
set aside the January 14, 2004 Decision[2] of the Court of Appeals (CA) in CA-G.R. CV No.
60659, which affirmed the November 3, 1997 Decision [3] of the Legaspi City Regional Trial
Court (RTC), Branch I, declaring as null and void the December 21, 1998 Deed of
Donation[4] executed by the Municipality of Daraga, Albay in favor of petitioner, and
directing the latter to return to respondent Celso Oate the possession of the portion of land
occupied by the school site of the Daraga North Central Elementary School.
The Facts
Spouses Claro Oate and Gregoria Los Baos owned Lot No. 6849 (disputed lot)
with an area of around 27,907 square meters registered under the Torrens System of land
registration under Original Certificate of Title (OCT) No. 2563. Claro Oate had three
children, namely: Antonio, Rafael, and Francisco, all surnamed Oate. Respondent Celso
Oate is the grandson of Claro Oate, being the son of Francisco Oate.
In 1940, Bagumbayan Elementary School of Daraga was constructed on a portion of
the disputed lot. The school was eventually renamed Daraga North CentralElementary
School. The Municipality of Daraga leveled the area while petitioner Department of

On December 15, 1992, through his counsel, respondent sent a letter to petitioner
apprising it about the facts and circumstances affecting the elementary school and its
occupancy of Lot No. 6849-A with an area of 13,072 square meters. Respondent proposed to
petitioner DECS that it purchase Lot No. 6849-A at the Fair Market Value (FMV) of PhP 400
per square meter and also requested for reasonable rentals from 1960. [12] The records show
that then DECS Director IV Jovencio Revil subsequently referred the matter to the DECS
Division Superintendent Rizalina D. Saquido for investigation. [13]
On February 24, 1993, through his counsel, respondent likewise wrote to Engr.
Orlando Roces, District Engineer, Albay Engineering District about the on-going construction
projects in the school. [14] Engr. Roces then informed respondents counsel that petitioner
DECS is the owner of the school site having acquired the disputed lot by virtue of a Deed of
Donation executed by the Municipality of Daraga, Albay in favor of petitioner. [15]
Consequently,
on
March
18,
1993,
respondent
instituted
a
Complaint[16] for Annulment of Donation and/or Quieting of Title with Recovery of
Possession of Lot No. 6849 located at Barrio Bagumbayan, Daraga, Albay before the Legaspi
City RTC, docketed as Civil Case No. 8715, against petitioner DECS, Division of Albay,
represented by the Division Superintendent of Schools, Mrs. Rizalina D. Saquido; and the
Municipality of Daraga, Albay, represented by the Municipal Mayor, Honorable Cicero
Triunfante.

In its April 28, 1993 Answer, [17] the Municipality of Daraga, Albay, through Mayor
Cicero Triunfante, denied respondents ownership of the disputed lot as it alleged that
sometime in 1940, the Municipality bought said lot from Claro Oate, respondents
grandfather, and since then it had continually occupied said lot openly and publicly in the
concept of an owner until 1988 when the Municipality donated the school site to petitioner
DECS; thus asserting that it could also claim ownership also through adverse
possession. Moreover, it claimed that the disputed lot had been declared in the name of
defendant municipality in the Municipal Assessors Office under Tax Declaration No. 31954
from 1940 until 1988 for purposes of exemption from real estate
taxes. Further, defendant Municipality contended that respondent was guilty of laches and
was estopped from assailing ownership over the disputed lot.
Similarly, petitioners April 29, 1993 Answer [18] reiterated in essence the defenses
raised by the Municipality of Daraga, Albay and further contended that respondent had no
cause of action because it acquired ownership over the disputed lot by virtue of a Deed of
Donation executed on December 21, 1988 in its favor; and that respondents claim was vague
as it was derived from a void Deed of Extrajudicial Settlement of Estate and Cession disposing
of the disputed lot which was already sold to the Municipality of Daraga, Albay in
1940. Petitioner likewise assailed the issuance of a reconstituted OCT over Lot 6849 when the
lower court granted respondents petition for reconstitution without notifying petitioner.
During the ensuing trial where both parties presented documentary and testimonial
evidence, respondent testified that he came to know of the disputed lot in 1973 when he was
23 years old; that he took possession of the said lot in the same year; that he came to know that
the elementary school occupied a portion of the said lot only in 1991; and that it was only in
1992 that he came to know of the Deed of Donation executed by the Municipality of Daraga,
Albay.[19] Also, Felicito Armenta, a tenant cultivating a portion of disputed Lot 6849,
testified that respondent indeed owned said lot and the share of the crops cultivated were paid
to respondent.[20]
However, after respondent testified, defendants in said case filed a Joint Motion to
Dismiss[21] on the ground that respondents suit was against the State which was prohibited
without the latters consent. Respondent countered with his Opposition to Joint Motion to
Dismiss.[22] Subsequently, the trial court denied the Joint Motion to Dismiss, ruling that the
State had given implied consent by entering into a contract. [23]
Aside from the reconstituted OCT No. RO-18971, respondent presented the TCTs
covering the five (5) portions of the partitioned Lot 6849, Tax Declaration No. 04-00600681[24] issued for said lot, and the April 20, 1992 Certification [25] from the Office of the
Treasurer of the Municipality of Daraga, Albay attesting to respondents payment of realty
taxes for Lot 6849 from 1980 to 1990.
After respondent rested his case, the defense presented and marked their
documentary exhibits of Tax Declaration No. 30235 issued in the name of the late Claro
Oate, which was cancelled in 1938; Tax Declaration 31954, [26] which cancelled Tax
Declaration No. 30235, in the name of Municipality of Daraga with the annotation of ExOfficio Deputy Assessor Natalio Grageda attesting to the purchase by the Municipality under
Municipal Voucher No. 69, August 1940 accounts and the issuance of TCT No. 4812 in favor
of the Municipality; Tax Declaration No. 8926[27] in the name of the Municipality which
cancelled Tax Declaration No. 31954; and the subsequent Tax Declaration Nos.
22184,[28] 332,[29] and 04-006-00068.[30]

The defense presented the testimony of Mr. Jose Adra, [31] the Principal of Daraga
North Central Elementary School, who testified on the Municipalitys donation of disputed
Lot 6849 to petitioner and the improvements on said lot amounting to more than PhP 11
million; and Mrs. Toribia Milleza, [32] a retired government employee and resident of
Bagumbayan, Daraga, Albay since 1955, who testified on the Municipalitys continuous and
adverse possession of the disputed lot since 1940.
As mentioned earlier, Civil Case No. 8724 for Partition, Reconveyance and
Damages was instituted by the heirs of Rafael Oate in Legaspi City RTC, Branch IX against
Spouses Celso Oate and Allem Vellez, involving the same disputed lot. Petitioner and codefendant Municipality of Daraga, Albay were about to file a complaint for intervention in
said case, but it was overtaken by the resolution of the case on August 14, 1995 with the trial
court dismissing the complaint.
The Ruling of the RTC
On November 3, 1997, the trial court rendered a Decision in favor of respondent
Celso Oate. The dispositive portion declared, thus:
WHEREFORE, premises considered, judgment is hereby
rendered in favor of the plaintiff and against the defendants:
1.

Declaring the Deed of Donation executed by the


Municipality of Daraga, Albay in favor of the defendant
Department of Education Culture and Sports through the
Albay Schools Division as null and void;

2.

Declaring the plaintiff as the owner in fee simple of Lots


Nos. 6849-A, 6849-C, 6849-D and 6849-E which are
registered in his name;

3.

Commanding the defendants to return the possession of the


portion of the land occupied by the school site to the herein
plaintiff Celso Oate;

4.

Ordering the plaintiff for reason of equity, to pay the


defendant Municipality of Daraga, Albay the amount of
Fifty Thousand (50,000.00) Pesos pursuant to Article 479
of the New Civil Code of the Philippines;

5.

The defendant Department of Education Culture and


Sports being a builder in good faith, the provisions of
Article 448 of the New Civil Code of the Philippines shall
be observed by the parties; and

6.

Ordering the defendants to pay the costs of the suit. No


attorneys fees is hereby adjudged in favor of plaintiffs
counsel.

SO ORDERED.[33]

the Municipality ever existed and thus it could not have validly donated the subject property to
petitioner.
The trial court ratiocinated that it was clear that subject Lot 6849 was originally
registered under the Torrens System in the name of Spouses Claro Oate and Gregoria Los
Baos as evidenced by OCT No. RO-18971. The right of respondent Celso Oate over the
disputed lot had not been proven otherwise or overturned in Civil Case No. 8724, and this was
bolstered by the Deed of Extrajudicial Settlement of Estate and Cession, where respondents
sister waived their successional rights in his favor. Thus, the trial court ruled in favor of
respondents title. Besides, it further ruled that defendants could not assail the registered title
of respondent in a collateral proceeding.
While the Municipality of Daraga, Albay anchored its prior ownership over the
disputed lot by virtue of a sale in 1940 and mentioned TCT No. 4812 supposedly issued in its
name, it however failed to submit any deed of conveyance in its favor, as well as a copy of the
alleged TCT No. 4812. Hence, the trial court held that its claim over disputedLot 6849 was
based solely on adverse prescription which could not prevail over respondents registered title.
The trial court concluded that given these factual and evidentiary proofs, petitioner
had no right to occupy Lot 6849-A, and the Deed of Donation executed by
theMunicipality of Daraga, Albay in favor of petitioner must be nullified. Finally, the trial
court awarded PhP 50,000 to the Municipality of Daraga, Albay for the cost of landfill and
ordered that Article 448[34] of the New Civil Code be followed by the parties as petitioner was
a builder in good faith.
The Ruling of the Court of Appeals
Aggrieved, petitioner DECS and Municipality of Daraga, Albay filed their
respective Notices of Appeal [35] assailing the trial courts Decision before the CA. However,
on June 17, 1998, the appellate court declared the appeals of both petitioners abandoned and
dismissed for their failure to pay the required docket fees within the reglementary
period.[36] Petitioner then filed a Motion for Reconsideration [37] of the said June 17,
1998 Resolution and its appeal was subsequently reinstated. [38] The Municipality ofDaraga,
Albay, however, totally lost its appeal due to inaction, and the appellate court correspondingly
issued a Partial Entry of Judgment on July 9, 1998.[39]
Moreover, the appellate court held that there was no jurisdictional defect in the
reconstitution proceeding being one in rem, and in the issuance of OCT No. RO-18971 based
on the destroyed or lost OCT No. 2563, even if no notice was sent to petitioner. Thus, the CA
ruled that respondents claim of ownership over Lot 6849-A occupied by the school is
conclusive for being soundly predicated on TCT No. T-83946 which cancelled the
reconstituted OCT No. RO-18971. Furthermore, it reiterated the trial courts holding that
petitioner is precluded from attacking collaterally respondents title over the disputed lot in
this proceeding.
The CA emphasized that petitioners failure to present TCT No. 4812allegedly
issued in the name of the Municipality of Daraga, Albay in 1940 in lieu of OCT No. 2563 and
the Deed of Conveyance executed by the original owner, Claro Oate, in favor of the
Municipalitywas fatal to the defense. It reasoned that all the more had their claim of
ownership become doubtful when defendants-appellants [sic] failed to explain from their
pleadings and the evidence submitted before Us their failure to present the two
documents.[40] The appellate court concluded that given these facts, no title in the name of

Anent the issue of the applicability of Amigable v. Cuenca,[41] the CA affirmed the
doctrine enunciated in said case that to uphold the States immunity from suit would subvert
the ends of justice. In fine, the appellate court pointed out the inconvenience and
impossibility of restoring possession of Lot 6849-A to respondent considering the substantial
improvements built on said lot by the government which amounted to almost PhP 12 million;
and that the only relief available was for the government to pay just compensation in favor of
respondent computed on the basis of the value of the property at the time of the governments
taking of the land.
Through its assailed Decision, [42] the CA dismissed petitioners appeal for lack of
merit and affirmed the trial courts decision in toto. It reasoned that laches does not apply, its
application rests on the sound discretion of the court, and where the court believes that its
application would result in manifest wrong or injustice, it is constrained not to be guided
strictly by said doctrine. Besides, it opined that laches could not defeat the rights of a
registered owner.
The Issues
Hence, we have the instant petition where petitioner raises the following assignment
of errors:
I
THE COURT OF APPEALS ERRED IN AFFIRMING THE
TRIAL COURTS FINDING THAT RESPONDENTS CAUSE
OF ACTION TO RECOVER POSSESSION OF THE
SUBJECT PROPERTY IS NOT YET BARRED BY LACHES.
II
THE COURT OF APPEALS ERRED IN ACCORDING
GREAT WEIGHT ON RESPONDENTS RECONSTITUTED
ORIGINAL CERTIFICATE OF TITLE (OCT) NO. 2563
COVERING SUBJECT PROPERTY.
III
THE COURT OF APPEALS ERRED IN RULING THAT
PETITIONER MAY BE SUED IN VIOLATION OF THE
STATES IMMUNITY FROM SUIT.
IV
THE COURT OF APPEALS ERRED IN RULING THAT
PETITIONER MAY BE SUED INDEPENDENTLY OF THE
REPUBLIC OF THE PHILIPPINES.[43]

Petitioner basically raises two issuesthe application of laches and the nonsuability of the State.

The threshold issue is whether petitioner DECS can be sued in Civil Case No. 8715
without its consent. A supplementary issue is whether petitioner DECS can be sued
independently of the Republic of the Philippines.
We rule that petitioner DECS can be sued without its permission as a result of its
being privy to the Deed of Donation executed by the Municipality of Daraga, Albay over the
disputed property. When it voluntarily gave its consent to the donation, any dispute that may
arise from it would necessarily bring petitioner DECS down to the level of an ordinary citizen
of the State vulnerable to a suit by an interested or affected party. It has shed off its mantle of
immunity and relinquished and forfeited its armor of non-suability of the State. [44]
The auxiliary issue of non-joinder of the Republic of the Philippines is likewise
resolved in the negative. While it is true that petitioner is an unincorporated government
agency, and as such technically requires the Republic of the Philippines to be impleaded in
any suit against the former, nonetheless, considering our resolution of the main issue below,
this issue is deemed mooted. Besides, at this point, we deem it best to lift such procedural
technicality in order to finally resolve the long litigation this case has undergone. Moreover,
even if we give due course to said issue, we will arrive at the same ruling.
The Republic of the Philippines need not be impleaded as a party-defendant in Civil
Case
No.
8715
considering
that
it
impliedly
gave
its approval to the involvement of
petitioner DECS in the Deed of Donation. In a situation involving a contract between a
government department and a third party, the Republic of the Philippines need not be
impleaded as a party to a suit resulting from said contract as it is assumed that the authority
granted to such department to enter into such contract carries with it the full responsibility and
authority to sue and be sued in its name.

Main Issue: Equitable Remedy of Laches


Petitioner strongly asserts that the Municipality of Daraga, Albay had continuous,
open, and adverse possession in the concept of an owner over the disputed lot since 1940
until December 21, 1988 or for about 48 years. Significantly, it maintains that Tax
Declaration No. 31954 covering the disputed lot in the name of the Municipality of Daraga,
Albay contains an annotation certifying that said lot was under voucher No. 69, August, 1940
accounts. The corresponding Transfer Title No. 4812 has been issued by the Register of
Deeds Office of Albay on August 3, 1940.[45]
When petitioner received the lot as donation from the Municipality on December 21,
1988, it possessed the subject lot also in the concept of an owner and continued to introduce
improvements on the lot. Consequently, when respondent instituted the instant case in 1993,
petitioner and its predecessor-in-interest Municipality of Daraga, Albay had possessed the
subject lot for a combined period of about fifty two (52) years.
Petitioner strongly avers that Claro Oate, the original owner of subject lot, sold it to
the Municipality. At the very least it asserts that said Claro Oate allowed the Municipality to
enter, possess, and enjoy the lot without protest. In fact, Claro Oate neither protested nor
questioned the cancellation of his Tax Declaration No. 30235 covering the disputed lot and its
substitution by Tax Declaration No. 31954 in the name of the Municipality on account of his
sale of the lot to the latter. In the same vein, when Claro Oate and his spouse died, their
children Antonio, Rafael, and Francisco who succeeded them also did not take any steps to

question the ownership and possession by the Municipality of the disputed lot until they died
on June 8, 1990, June 12, 1991, and October 22, 1957, respectively.
Petitioner maintains that significantly, respondent and his siblings succeeding
their father Francisco as the alleged owners, from his death on October 22, 1957also did not
take any action to recover the questioned lot from 1957 until 1993 when the instant suit was
commenced. Petitioner avers that if they were really the owners of said lot, they would not
have waited 52 long years to institute the suit assuming they have a cause of action against the
Municipality or petitioner. Thus, petitioner submits that the equitable principle of laches has
indubitably set in to bar respondents action to recover possession of, and title to, the disputed
lot.
Laches and its elements
Indeed, it is settled that rights and actions can be lost by delay and by the effect of
delay as the equitable defense of laches does not concern itself with the character of the
defendants title, but only with plaintiffs long inaction or inexcusable neglect to bar the
latters action as it would be inequitable and unjust to the defendant.
Laches is defined as the failure or neglect, for an unreasonable and unexplained
length of time, to do that whichby the exercise of due diligencecould or should have been
done earlier.[46] Verily, laches serves to deprive a party guilty of it to any judicial
remedies. Its elements are: (1) conduct on the part of the defendant, or of one under whom the
defendant claims, giving rise to the situation which the complaint seeks a remedy; (2) delay in
asserting the complainant's rights, the complainant having had knowledge or notice of the
defendant's conduct as having been afforded an opportunity to institute a suit; (3) lack of
knowledge or notice on the part of the defendant that the complainant would assert the right in
which the defendant bases the suit; and (4) injury or prejudice to the defendant in the event
relief is accorded to the complainant, or the suit is not held barred. [47]
In Felix Gochan and Sons Realty Corporation, we held that [t]hough laches
applies even to imprescriptible actions, its elements must be proved positively. Laches is
evidentiary in nature which could not be established by mere allegations in the pleadings and
can not be resolved in a motion to dismiss (emphases supplied). [48] In the same vein, we
explained in Santiago v. Court of Appeals that there is no absolute rule as to what constitutes
laches or staleness of demand; each case is to be determined according to its particular
circumstances.[49]
Issue of laches not barred by adverse judgment
against Daraga, Albay
It is unfortunate that defendant Municipality of Daraga, Albay lost its appeal in CAG.R. CV No. 60659 before the CA for its failure to pay the required docket fees within the
reglementary period. As a result, a Partial Entry of Judgment was made on July 9, 1998 and
consequently, the dispositions in the November 3, 1997 Decision, rendered by the Legaspi
City RTC, Branch I in favor of respondent Celso Oate, became final and executory as against
defendant Municipality of Daraga, Albay.
As an off-shoot, with respect to the Municipality of Daraga, the Deed of Donation in
favor of petitioner DECS was annulledrespondent Oate was declared owner in fee simple
of the disputed lots and entitled to possession but was required to pay PhP 50,000 to the

Daraga Municipal Government and the costs of suit. By reason of the finality of the Decision
against the Municipality of Daraga, Tax Declaration Nos. 04-006-00068, 332, 22184, 31954,
and 8926 are all cancelled and annulled (if not yet cancelled).
What are the effects of the final judgment against Municipality of Daraga on its codefendant, petitioner DECS?
Generally, it has no impact on the appeal of DECS unless the decision affects its
defenses. In this petition, DECS no longer questions the declaration of nullity of the Deed of
Donation over the disputed lot and hence can be considered as a final resolution of the
issue. Likewise, it does not challenge the ownership of Oate of the disputed lots, but merely
relied on the defense of laches. The final directive for Municipality of Daraga to return
possession of the land has no significance on DECS appeal since precisely, it is DECS
position that it should retain possession of the land. From these considerations, the final RTC
November 3, 1997 Decision against the Municipality of Daraga has no substantial and
material effect upon the DECS appeal.
The only remaining issue left is whether laches can inure to the benefit of petitioner
DECS considering the fact that Lot No. 6849-A was devoted to public education when the
elementary school was built in 1940 under the supervision and control of DECS up to 1993
when Civil Case No. 8715 was filed by respondent Oate.
We rule in the affirmative.
Laches has set in
A brief scrutiny of the records does show tell-tale signs of laches. The first element
is undisputed: the then Bagumbayan Elementary School of Daraga was constructed in 1940 on
a portion of disputed Lot 6849, specifically Lot No. 6849-A containing 13,072 square meters
under TCT No. T-83946. Moreover, Mrs. Toribia Milleza, [50] a retired government employee
and resident of Bagumbayan, Daraga since 1955 pertinently testified, thus:
Q: How long have you been residing in this place,
Bagumbayan, Daraga, Albay?
A: Maybe I stayed there in 1955 until the present. [51]
xxxx
Q: Now, can you further recall the kind of building that
was
constructed in this property?
A: Seva type, building.
Q: At present how many buildings were constructed in
this
property?
A: Plenty of school buildings.
Q: Now, how many buildings were first constructed in [sic]
this property?
A: In 1955 only one, the Seva type, then there was constructed
five
(5) Marcos Type buildings during the Marcos time. [52]

The devotion of Lot No. 6849-A to education started in 1940 and continued up to
December 21, 1988 when said lot was donated to the DECS. From then on, DECS built
various buildings and introduced improvements on said lot. Lot No. 6849-A was continuously
used for public education until March 18, 1993 when respondent Oate filed Civil Case No.
8715 and thereafter up to the present.
Thus, for a total period of more than fifty-two (52) years, Lot No. 6849-A was
exclusively and completely utilized by DECS for public education. This fact was not
successfully challenged nor refuted by respondent.
The second element of laches was likewise proven. No evidence was presented to
show that respondent or his predecessors-in-interest ever took any action, administrative or
judicial, nor either party questioned or protested the Municipalitys adverse occupation of a
portion of Lot 6849. As petitioner had demonstrated laches by persuasive and credible
evidence, it is incumbent upon respondent to show that his predecessors-in-interest indeed
protected their rights of ownership over the lot. Thus, as early as 1940, when the first Seva
type school building was constructed over a portion of the disputed lot, now Lot 6849-A,
respondent must prove that his predecessors-in-interest indeed undertook activities to contest
the occupation of the portion of the lot by the Municipality and subsequently by petitioner
DECS. Unfortunately, respondent failed to substantiate such defense of ownership and
possession of the lot and even skirted this issue.
Respondent testified that he came to know of Lot 6849 only in 1973 when he was 23
years old.[53] He asserted that he took possession of said lot in the same year when his two (2)
uncles, the brothers of his late father, passed on to him the disputed lot as his fathers share of
the inheritance from the late Claro Oate and Gregoria Los Baos (his
grandparents). However, it is interesting to note that he testified that he only came to know in
1991 that the elementary school was built on a portion of Lot 6849, now Lot 6849-A. These
assertions are irreconcilable. Common experience tells us that one who owns a property and
takes possession of it cannot fail to discover and know that an existing elementary school was
built and standing on the lot from the time that the owner starts possessing a property.
Nonetheless, even granting that respondent indeed only came to know of such
encroachment or occupation in 1991, his rights cannot be better than that of his predecessorsin-interest, that is, Claro Oate and his uncles, Antonio and Rafael, who died in 1990 and
1991, respectively. Since respondents right over the lot originated from his predecessors-ininterest, then he cannot have better rights over Lot No. 6849-A than the latter. The spring
cannot rise higher than its source. Besides, respondent has not proffered any explanation why
his predecessors-in-interest did not protest and challenge the Municipalitys occupancy over a
portion of their lot. Verily, with the span of around 52 years afforded respondent and his
predecessors-in-interest, their inaction and delay in protecting their rights were certainly
excessive and unjustified.
In the third element, the records clearly bear out the fact that petitioner DECS did
not know nor anticipate that their possession and occupancy of a portion of Lot 6849 would
later be questioned. In fact, petitioner built additional school buildings and facilities on the
school site amounting to more than PhP 11 million. Mr. Jose Adra, School Principal of
the Daraga North Central Elementary School, testified on the donation of the disputed lot to
petitioner and the cost of the improvements on it. [54] After more than forty-eight (48) years of
unquestioned, peaceful, and uninterrupted possession by petitioner DECS, it had no
knowledge nor reason to believe that respondent would assert any right over the lot after the
lapse of such long occupation coupled with a tax declaration in the name of the Daraga
Municipality.

Finally, the last element is likewise proven by the antecedent facts that clearly show
grave prejudice to the government, in general, and to petitioner, in particular, if the instant
action is not barred without even considering the cost of the construction of the school
buildings and facilities and the deleterious effect on the school children and affected school
teachers and personnel if Lot No. 6849-A would be returned to respondent.
Verily, the application of laches is addressed to the sound discretion of the court as
its application is controlled by equitable considerations. In the instant case, with the foregoing
considerations, we are constrained from giving approbation to the trial and appellate courts
ruling that the application of the principle of laches would subvert the ends of justice. Indeed,
it is unjust for the State and the affected citizenry to suffer after respondent and his
predecessors-in-interest had slept on their rights for 52 years.
Also, the inaction of respondent Oate and his predecessors-in-interest for over 50
years has reduced their right to regain possession of Lot 6849-A to a stale demand.
Laches holds over the actual area possessed and occupied by petitioner
We, however, make the clear distinction that laches applies in favor of petitioner
only as regards Lot 6849-A which is actually possessed and occupied by it. Laches does not
apply to Lot Nos. 6849-B, 6849-C, 6849-D, and 6849-E. These portions were never occupied
by the Municipality and petitioner. Agricultural tenant Felicito Armenta testified that his
father, Antonio Armenta, started cultivating portions of Lot 6849 way back in the 1940s and
that he took over the tenancy in 1960 when his father stopped tilling the land. Besides, if the
Municipality indeed owned Lot 6849 by virtue of a purchase, it is likewise guilty of laches in
not protecting or contesting the cultivation by Oates agricultural tenants of said portions
of Lot 6849.
Transfer Certificates of Title on portions of Lot 6849 valid
Petitioner contends that the reconstitution of OCT No. 2563covering subject lot in
1991 or 52 years after the Municipality owned said lotdoes not in any way affect the latters
preferential and superior right over the disputed lot. In the same vein, it maintains that it is
inconsequential that petitioner and the Municipality failed to present as evidence the deed of
conveyance in favor of the Municipality, as well as TCT No. 4812 as a registered land owner
may lose the right to recover possession of a registered property by reason of
laches. Petitioner concludes that the long delayed reconstitution of OCT No. 2563 by
respondent was a mere afterthought and intended to camouflage his and his predecessors
unreasonably long inaction which indicates an awareness that they have no valid claim
whatsoever over disputed Lot 6849.
We disagree.
It must be noted that a reconstitution proceeding is one in rem and is thus binding to
the whole world. While it is true that laches has set in so far as it pertains to the portion of Lot
6849, specifically Lot 6849-A where the Municipality and petitioner DECS had constructed
the existing school, such does not hold true for the totality of Lot 6849 as explained
above. Indeed, the reconstitution proceeding being one in rem, the consequent issuance of
OCT No. RO-18971 in lieu of the lost or destroyed OCT No. 2563 is valid.

Anent the issue of non-notification, we agree with the observation of the courts a
quo that even granting arguendo that petitioner was not notified about the reconstitution
proceeding, such deficiency is not jurisdictional as to nullify and prevail over the final
disposition of the trial court in a proceeding in rem.
More so, while petitioner strongly asserts that the certification in Tax Declaration
No. 31954 attesting to the payment of the disputed lot under Municipal Voucher No. 69 and
the issuance of TCT No. 4812, which was never disputed nor controverted by respondent,
should have been given evidentiary weight by the trial and appellate courts as the
presumptions of regularity and validity of such official act have not been overcome, such
documents cannot defeat the registered title of respondent.
Between a clear showing of ownership evidenced by a registered title and a
certification in a tax declaration, albeit done in an official capacity, the former holds as the
latter is only persuasive evidence. Indeed, tax declarations in land cases per se do not
constitute ownership without other substantial pieces of evidence.
The records do not show and petitioner has not given any cogent explanation why
the Deed of Conveyance in favor of the Municipality of Daraga, Albay and TCT No. 4812
were not presented. With clear and affirmative defenses set up by petitioner
and Municipality of Daraga, Albay, it is incumbent for them to present these documents.
Therefore, the unmistakable inference is that there was indeed no sale and conveyance by
Claro Oate of Lot 6849 in favor of the Municipality. Consequently, the TCTs cancelling
OCT No. RO-18971 covering Lot Nos. 6849-A, 6849-B, 6849-C, 6849-D, and 6849-E were
likewise validly issued.
Thus, notwithstanding valid titles over the portions of Lot 6849, respondent Oate
cannot now take possession over Lot No. 6849-A for reason of laches. In the recent case
of De Vera-Cruz v. Miguel, we reiterated the principle we have consistently applied in laches:
The law[55] provides that no title to registered land in derogation
of that of the registered owner can be acquired by prescription or adverse
possession. Nonetheless, while it is true that a Torrens Title is
indefeasible and imprescriptible, the registered landowner may lose his
right to recover the possession of his registered property by reason
of laches.[56]
Thus, with our resolution of the principal issue of applicability of the equitable
remedy of laches, the issue of suability of the State has been mooted.
A final word. Considering our foregoing disquisition and upon grounds of equity, a
modification of the final decision prevailing between respondent Oate and
theMunicipality of Daraga, Albay is in order. It would be grossly iniquitous for respondent
Oate to pay PhP 50,000 to the Municipality of Daraga, Albay considering that he is not
entitled to recover the possession and usufruct of Lot No. 6849-A.
WHEREFORE, the instant petition is GRANTED and the January 14, 2004
Decision of the CA in CA-G.R. CV No. 60659 affirming the November 3, 1997 Decision of
the Legaspi City RTC is AFFIRMED with the following MODIFICATIONS:
1)
Declaring the DepEd (formerly DECS), Division of Albay to have the rights
of possession and usufruct over Lot 6849-A with an area of 13,072 square meters under TCT
No. T-83946 of the Registry of Deeds of Albay, as a result of laches on the part of respondent

Celso Oate and his predecessors-in-interest. Respondent Celso Oate, his heirs, assigns, and
successors-in-interest are prohibited from selling, mortgaging, or encumbering Lot 6849-A
while the said lot is still being used and occupied by petitioner DECS. However, the rights of
possession and usufruct will be restored to respondent the moment petitioner DECS no longer
needs the said lot. The Registry of Deeds of Albay is ordered to annotate the aforementioned
restrictions and conditions at the back of TCT No. T-83946-A in the name of respondent Celso
Oate. Item No. 2 of the November 3, 1997 Decision of the Legaspi City RTC is modified
accordingly;

HON. VICENTE A. HIDALGO, in his


capacity as Presiding Judge of the Regional
Trial Court of Manila, Branch 37, CARMELO
Promulgated:
V. CACHERO, in his capacity as Sheriff IV,
Regional
Trial
Court
of
Manila,
and TARCILA LAPERAL MENDOZA,
October 4, 2007
Respondents.
x----------------------------------------------------------------------------------------x

2)
Declaring Celso Oate as the true and legal owner in fee simple of the
following lots:

DECISION

a.
Lot 6849-C with an area of 10,000 square meters under
TCT No. T-83948 of the Registry of Deeds of Albay;

GARCIA, J.:

b.
Lot 6849-D with an area of 1,127 square meters under
TCT No. T-83949 of the Registry of Deeds of Albay; and

Via this verified petition for certiorari and prohibition under Rule 65 of the Rules of
Court, the Republic of the Philippines (Republic, for short), thru the Office of the Solicitor
General (OSG), comes to this Court to nullify and set aside the decision dated August 27,
2003 and other related issuances of the Regional Trial Court (RTC) of Manila, Branch 37, in
its Civil Case No. 99-94075. In directly invoking the Courts original jurisdiction to issue the
extraordinary writs of certiorari and prohibition, without challenge from any of the
respondents, the Republic gave as justification therefor the fact that the case involves an
over TWO BILLION PESO judgment against the State, allegedly rendered in blatant
violation of the Constitution, law and jurisprudence.

c.
Lot 6849-E with an area of 608 square meters under TCT
No. T-83950 of the Registry of Deeds of Albay.
3)
Declaring Mariano M. Lim as true and legal owner of Lot 6849-B with an
area of 3,100 square meters under TCT No. T-84049 of the Registry of Deeds of Albay;
4)
Ordering petitioner DECS and all other persons claiming under said
department to return the possession of Lots 6849-C, 6849-D, and 6849-E to respondent Celso
Oate and Lot 6849-B to Mariano M. Lim; and
5)
Deleting Item No. 4 of the November 3, 1997 Decision of the Legaspi City
RTC, which ordered respondent Celso Oate to pay Fifty Thousand Pesos (PhP 50,000) to
defendant Municipality of Daraga, Albay.
The November 3, 1997 Decision of the Legaspi City RTC is AFFIRMED in all
other respects.
No costs.
SO ORDERED.

G.R. No. 161657


Present:

- versus -

At the core of the litigation is a 4,924.60-square meter lot once covered by Transfer
Certificate of Title (TCT) No. 118527 of the Registry of Deeds of Manila in the name of the
herein private respondent Tarcila Laperal Mendoza (Mendoza), married to Perfecto Mendoza.
The lot is situated at No. 1440 Arlegui St., San Miguel, Manila, near the Malacaang Palace
complex. On this lot, hereinafter referred to as the Arlegui property, now stands the
Presidential Guest House which was home to two (2) former Presidents of the Republic and
now appears to be used as office building of the Office of the President. [1]
The facts:

FIRST DIVISION
REPUBLIC OF THE PHILIPPINES,
Petitioner,

By any standard, the case indeed involves a colossal sum of money which, on the face
of the assailed decision, shall be the liability of the national government or, in fine, the
taxpayers. This consideration, juxtaposed with the constitutional and legal questions
surrounding the controversy, presents special and compelling reasons of public interests why
direct recourse to the Court should be allowed, as an exception to the policy on hierarchy of
courts.

PUNO, C.J.,Chairperson,
SANDOVAL-GUTIERREZ,
CORONA,
AZCUNA, and
GARCIA, JJ.

Sometime in June 1999, Mendoza filed a suit with the RTC of Manila for reconveyance
and the corresponding declaration of nullity of a deed of sale and title against the Republic,
the Register of Deeds of Manila and one Atty. Fidel Vivar. In her complaint, as later
amended, docketed as Civil Case No. 99-94075 and eventually raffled to Branch 35 of the
court, Mendoza essentially alleged being the owner of the disputed Arlegui property which
the Republic forcibly dispossessed her of and over which the Register of Deeds of Manila
issued TCT No. 118911 in the name of the Republic.

Answering, the Republic set up, among other affirmative defenses, the States
immunity from suit.

with a five (5%) per cent yearly increase, plus interest thereon at the legal
rate, beginning July 1975 until it finally vacates the same;

The intervening legal tussles are not essential to this narration. What is material is that
in an Order of March 17, 2000, the RTC of Manila, Branch 35, dismissed Mendozas
complaint. The court would also deny, in another order dated May 12, 2000, Mendozas
omnibus motion for reconsideration. On a petition for certiorari, however, the Court of
Appeals (CA), in CA-G.R. SP No. 60749, reversed the trial courts assailed orders and
remanded the case to the court a quo for further proceedings.[2] On appeal, this Court, in G.R.
No. 155231, sustained the CAs reversal action. [3]

5. Ordering the Republic to pay plaintiffs counsel a sum


equivalent to TWENTY FIVE (25%) PER CENT of the current value of the
subject property and/or whatever amount is recovered under the premises;
Further, plaintiff prays for such other relief, just and equitable under the
premises.

From Branch 35 of the trial court whose then presiding judge inhibited himself from
hearing the remanded Civil Case No. 99-94075, the case was re-raffled to Branch 37 thereof,
presided by the respondent judge.
On May 5, 2003, Mendoza filed a Motion for Leave of Court to file a Third Amended
Complaint with a copy of the intended third amended complaint thereto attached. In the May
16, 2003 setting to hear the motion, the RTC, in open court and in the presence of the
Republics counsel, admitted the third amended complaint, ordered the Republic to file its
answer thereto within five (5) days from May 16, 2003 and set a date for pre-trial.
In her adverted third amended complaint for recovery and reconveyance of the Arlegui
property, Mendoza sought the declaration of nullity of a supposed deed of sale dated July 15,
1975 which provided the instrumentation toward the issuance of TCT No. 118911 in the name
of the Republic. And aside from the cancellation of TCT No. 118911, Mendoza also asked for
the reinstatement of her TCT No. 118527. [4] In the same third amended complaint, Mendoza
averred that, since time immemorial, she and her predecessors-in-interest had been in peaceful
and adverse possession of the property as well as of the owners duplicate copy of TCT No.
118527. Such possession, she added, continued until the first week of July 1975 when a
group of armed men representing themselves to be members of the Presidential Security
Group [PSG] of the then President Ferdinand E. Marcos, had forcibly entered [her] residence
and ordered [her] to turn over to them her Copy of TCT No. 118525 and compelled her
and the members of her household to vacate the same ; thus, out of fear for their lives, [she]
handed her Owners Duplicate Certificate Copy of TCT No. 118527 and had left and/or
vacated the subject property. Mendoza further alleged the following:

On May 21, 2003, the Republic, represented by the OSG, filed a Motion for Extension
(With Motion for Cancellation of scheduled pre-trial). In it, the Republic manifested its
inability to simply adopt its previous answer and, accordingly, asked that it be given a period of
thirty (30) days from May 21, 2003 or until June 20, 2003 within which to submit an
Answer.[5] June 20, 2003 came and went, but no answer was filed. On July 18, 2003 and again
on August 19, 2003, the OSG moved for a 30-day extension at each instance. The filing of the
last two motions for extension proved to be an idle gesture, however, since the trial
court had meanwhile issued an order[6] dated July 7, 2003 declaring the petitioner Republic as
in default and allowing the private respondent to present her evidence ex-parte.
The evidence for the private respondent, as plaintiff a quo, consisted of her testimony
denying having executed the alleged deed of sale dated July 15, 1975 which paved the way for
the issuance of TCT No. 118911. According to her, said deed is fictitious or inexistent, as
evidenced by separate certifications, the first (Exh. E), issued by the Register
of Deeds for Manila and the second (Exh. F), by the Office of Clerk of Court, RTC
Manila. Exhibit E[7] states that a copy of the supposed conveying deed cannot, despite
diligent efforts of records personnel, be located, while Exhibit F[8] states that Fidel Vivar was
not a commissioned notary public for and in the City of Manila for the year 1975. Three other
witnesses[9] testified, albeit their testimonies revolved around the appraisal and rental values of
the Arlegui property.
Eventually, the trial court rendered a judgment by default [10] for Mendoza and against the
Republic. To the trial court, the Republic had veritably confiscated Mendozas property, and
deprived her not only of the use thereof but also denied her of the income she could have had
otherwise realized during all the years she was illegally dispossessed of the same.
Dated August 27, 2003, the trial courts decision dispositively reads as follows:

1. Per verification, TCT No. 118527 had already been cancelled by virtue of a deed of
sale in favor of the Republic allegedly executed by her and her deceased husband on July 15,
1975 and acknowledged before Fidel Vivar which deed was annotated at the back of TCT No.
118527 under PE: 2035/T-118911 dated July 28, 1975; and

WHEREFORE, judgment is hereby rendered:


1.

Declaring the deed of sale dated July 15, 1975,


annotated at the back of [TCT] No. 118527 as
PE:2035/T-118911, as non-existent and/or fictitious,
and, therefore, null and void from the beginning;

2.

Declaring that [TCT] No. 118911 of the defendant


Republic of the Philippines has no basis, thereby
making it null and void from the beginning;

3.

Ordering the defendant Register of Deeds for the


City of Manila to reinstate plaintiff [Mendozas TCT]
No. 118527;

2. That the aforementioned deed of sale is fictitious as she (Mendoza) and her husband
have not executed any deed of conveyance covering the disputed property in favor of the
Republic, let alone appearing before Fidel Vivar.

Inter alia, she prayed for the following:


4. Ordering the Republic to pay plaintiff [Mendoza] a reasonable
compensation or rental for the use or occupancy of the subject property in
the sum of FIVE HUNDRED THOUSAND (P500,000.00) PESOS a month

4.

Ordering the defendant Republic to pay just


compensation in the sum of ONE HUNDRED
FORTY THREE MILLION SIX HUNDRED
THOUSAND (P143,600,000.00)PESOS, plus interest
at the legal rate, until the whole amount is paid in full
for the acquisition of the subject property;

5.

Ordering the plaintiff, upon payment of the just


compensation for the acquisition of her property, to
execute the necessary deed of conveyance in favor of
the defendant Republic ; and, on the other hand,
directing the defendant Register of Deeds, upon
presentation of the said deed of conveyance, to cancel
plaintiffs TCT No. 118527 and to issue, in lieu
thereof, a new Transfer Certificate of Title in favor of
the defendant Republic;

6.

Ordering the defendant Republic to pay the


plaintiff the sum of ONE BILLION FOUR
HUNDRED EIGHTY MILLION SIX HUNDRED
TWENTY SEVEN THOUSAND SIX HUNDRED
EIGHTY
EIGHT (P1,480,627,688.00) PESOS,
representing the reasonable rental for the use of the
subject property, the interest thereon at the legal rate,
and the opportunity cost at the rate of three (3%) per
cent per annum, commencing July 1975 continuously
up to July 30, 2003, plus an additional interest at the
legal rate, commencing from this date until the whole
amount is paid in full;

Ordering the defendant Republic to pay the


plaintiff attorneys fee, in an amount equivalent to
FIFTEEN (15%) PER CENT of the amount due to the
plaintiff.
With pronouncement as to the costs of suit.
7.

3.

December 19, 2003 - - Order[15] granting the private respondents motion for
execution.

4.

December 22, 2003 - - Writ of Execution.[16]

Hence, this petition for certiorari.


By Resolution[17] of November 20, 2006, the case was set for oral arguments. On
January 22, 2007, when this case was called for the purpose, both parties manifested their
willingness to settle the case amicably, for which reason the Court gave them up to February
28, 2007 to submit the compromise agreement for approval. Following several approved
extensions of the February 28, 2007 deadline, the OSG, on August 6, 2007, manifested that it
is submitting the case for resolution on the merits owing to the inability of the parties to agree
on an acceptable compromise.
In this recourse, the petitioner urges the Court to strike down as a nullity the trial courts
order declaring it in default and the judgment by default that followed. Sought to be nullified,
too, also on the ground that they were issued in grave abuse of discretion amounting to lack or
in excess of jurisdiction, are the orders and processes enumerated immediately above issued
after the rendition of the default judgment.
Petitioner lists five (5) overlapping grounds for allowing its petition. It starts off by
impugning the order of default and the judgment by default. To the petitioner, the respondent
judge committed serious jurisdictional error when he proceeded to hear the case and
eventually awarded the private respondent a staggering amount without so much as giving the
petitioner the opportunity to present its defense.
Petitioners posture is simply without merit.
Deprivation of procedural due process is obviously the petitioners threshold theme.
Due process, in its procedural aspect, guarantees in the minimum the opportunity to be
heard.[18] Grave abuse of discretion, however, cannot plausibly be laid at the doorstep of the
respondent judge on account of his having issued the default order against the petitioner, then
proceeding with the hearing and eventually rendering a default judgment. For, what the
respondent judge did hew with what Section 3, Rule 9 of the Rules of Court prescribes and
allows in the event the defending party fails to seasonably file a responsive pleading. The
provision reads:

SO ORDERED. (Words in bracket and emphasis added.)

Subsequently, the Republic moved for, but was denied, a new trial per order of the trial
court of October 7, 2003. [11] Denied also was its subsequent plea for reconsideration. [12] These
twin denial orders were followed by several orders and processes issued by the trial court on
separate dates as hereunder indicated:
1.

2.

November 27, 2003 - - Certificate of Finality declaring the August 27, 2003
decision final and executory. [13]
December 17, 2003 - - Order denying the Notice of Appeal filed on
November 27, 2003, the same having been filed beyond the reglementary
period.[14]

SEC. 3. Default; declaration of.- If the defending party fails to answer


within the time allowed therefor, the court shall, upon motion of the
claiming party with notice to the defending party, and proof of such
failure, declare the defending party in default. Thereupon, the court shall
proceed to render judgment granting the claimant such relief as his
pleading may warrant, unless the court in its discretion requires the
claimant to submit evidence . [19]
While the ideal lies in avoiding orders of default, [20] the policy of the law being to have
every litigated case tried on its full merits, [21] the act of the respondent judge in rendering the
default judgment after an order of default was properly issued cannot be struck down as a case
of grave abuse of discretion.
The term grave abuse of discretion, in its juridical sense, connotes capricious,
despotic, oppressive or whimsical exercise of judgment as is equivalent to lack of

jurisdiction.[22] The abuse must be of such degree as to amount to an evasion of a positive duty
or a virtual refusal to perform a duty enjoined by law, as where the power is exercised in a
capricious manner. The word capricious, usually used in tandem with arbitrary, conveys
the notion of willful and unreasoning action. [23]
Under the premises, the mere issuance by the trial court of the order of default followed
by a judgment by default can easily be sustained as correct and doubtless within its
jurisdiction. Surely, a disposition directing the Republic to pay an enormous sum without the
trial court hearing its side does not, without more, vitiate, on due procedural ground, the
validity of the default judgment. The petitioner may have indeed been deprived of such
hearing, but this does not mean that its right to due process had been violated. For, consequent
to being declared in default, the defaulting defendant is deemed to have waived his right to
be heard or to take part in the trial. The handling solicitors simply squandered the Republics
opportunity to be heard. But more importantly, the law itself imposes such deprivation of the
right to participate as a form of penalty against one unwilling without justification to join issue
upon the allegations tendered by the plaintiff.
And going to another point, the petitioner would ascribe jurisdictional error on the
respondent judge for denying its motion for new trial based on any or a mix of the following
factors, viz., (1) the failure to file an answer is attributable to the negligence of the former
handling solicitor; (2) the meritorious nature of the petitioners defense; and (3) the value of
the property involved.
The Court is not convinced. Even as the Court particularly notes what the trial court had
said on the matter of negligence: that all of the petitioners pleadings below bear at least three
signatures, that of the handling solicitor, the assistant solicitor and the Solicitor General
himself, and hence accountability should go up all the way to the top of the totem pole of
authority, the cited reasons advanced by the petitioner for a new trial are not recognized under
Section 1, Rule 37 of the Rules of Court for such recourse. [24]Withal, there is no cogent reason
to disturb the denial by the trial court of the motion for new trial and the denial of the
reiterative motion for reconsideration.
Then, too, the issuance by the trial court of the Order dated December 17,
2003[25] denying the petitioners notice of appeal after the court caused the issuance on
November 27, 2003 of a certificate of finality of its August 27, 2003 decision can hardly be
described as arbitrary, as the petitioner would have this Court believe. In this regard, the Court
takes stock of the following key events and material dates set forth in the assailed December
17, 2003 order, supra: (a) The petitioner, thru the OSG, received onAugust 29, 2003 a copy of
the RTC decision in this case, hence had up to September 13, 2003, a Saturday, within which
to perfect an appeal; (b) On September 15, 2003, a Monday, the OSG filed its motion for new
trial, which the RTC denied, the OSG receiving a copy of the order of denial on October 9,
2003; and (c) On October 24, 2003, the OSG sought reconsideration of the order denying the
motion for new trial. The motion for reconsideration was denied per Order dated November
25, 2003, a copy of which the OSG received on the same date.
Given the foregoing time perspective, what the trial court wrote in its aforementioned
impugned order of December 17, 2003 merits approval:
In the case at bar, it is clear that the motion for new trial filed on the
fifteenth (15th) day after the decision was received on August 29, 2003
was denied and the moving party has only the remaining period from
notice of notice of denial within which to file a notice of appeal. xxx

Accordingly, when defendants [Republic et al.] filed their motion for


new trial on the last day of the fifteen day (15) prescribed for taking an
appeal, which motion was subsequently denied, they had one (1) day
from receipt of a copy of the order denying new trial within which to
perfect [an] appeal . Since defendants had received a copy of the order
denying their motion for new trial on 09 October 2003, reckoned from
that date, they only have one (1) day left within which to file the notice of
appeal. But instead of doing so, the defendants filed a motion for
reconsideration which was later declared by the Court as pro forma
motion in the Order dated 25 November 2003. The running of the
prescriptive period, therefore, can not be interrupted by a pro
forma motion. Hence the filing of the notice of appeal on 27 November
2007 came much too late for by then the judgment had already become
final and executory.[26](Words in bracket added; Emphasis in the
original.)
It cannot be over-emphasized at this stage that the special civil action of certiorari is
limited to resolving only errors of jurisdiction; it is not a remedy to correct errors of judgment.
Hence, the petitioners lament, partly covered by and discussed under the first ground for
allowing its petition, about the trial court taking cognizance of the case notwithstanding
private respondents claim or action being barred by prescription and/or laches cannot be
considered favorably. For, let alone the fact that an action for the declaration of the inexistence
of a contract, as here, does not prescribe;[27] that a void transfer of property can be recovered
by accion reivindicatoria;[28] and that the legal fiction of indefeasibility of a Torrens title
cannot be used as a shield to perpetuate fraud, [29] the trial courts disinclination not to
appreciate in favor of the Republic the general principles of prescription or laches constitutes,
at best, errors of judgment not correctable by certiorari.
The evidence adduced below indeed adequately supports a conclusion that the Office of
the President, during the administration of then President Marcos, wrested possession of the
property in question and somehow secured a certificate of title over it without a conveying
deed having been executed to legally justify the cancellation of the old title (TCT No. 118527)
in the name of the private respondent and the issuance of a new one (TCT No. 118911) in the
name of petitioner Republic. Accordingly, granting private respondents basic plea for
recovery of the Arlegui property, which was legally hers all along, and the reinstatement of
her cancelled certificate of title are legally correct as they are morally right. While not exactly
convenient because the Office of the President presently uses it for mix residence and office
purposes, restoring private respondent to her possession of the Arlegui property is still
legally and physically feasible. For what is before us, after all, is a registered owner of a
piece of land who, during the early days of the martial law regime, lost possession thereof to
the Government which appropriated the same for some public use, but without going through
the legal process of expropriation, let alone paying such owner just compensation.
The Court cannot, however, stop with just restoring the private respondent to her
possession and ownership of her property. The restoration ought to be complemented by some
form of monetary compensation for having been unjustly deprived of the beneficial use
thereof, but not, however, in the varying amounts and level fixed in the assailed decision of
the trial court and set to be executed by the equally assailed writ of execution. The Court finds
the monetary award set forth therein to be erroneous. And the error relates to basic
fundamentals of law as to constitute grave abuse of discretion.

As may be noted, private respondent fixed the assessed value of her Arlegui
property at P2,388,990.00. And in the prayer portion of her third amended complaint for
recovery, she asked to be restored to the possession of her property and that the petitioner be
ordered to pay her, as reasonable compensation or rental use or occupancy thereof, the sum
of P500,000.00 a month, or P6 Million a year, with a five percent (5%) yearly increase plus
interest at the legal rate beginning July 1975. From July 1975 when the PSG allegedly took
over the subject property to July 2003, a month before the trial court rendered judgment, or a
period of 28 years, private respondents total rental claim would, per the OSGs computation,
only amount to P371,440,426.00. In its assailed decision, however, the trial court ordered the
petitioner to pay private respondent the total amount of over P1.48 Billion or the mindboggling amount of P1,480,627,688.00, to be exact, representing the reasonable rental for the
property, the interest rate thereon at the legal rate and the opportunity cost. This figure is on
top of the P143,600,000.00 which represents the acquisition cost of the disputed property. All
told, the trial court would have the Republic pay the total amount of about P1.624 Billion,
exclusive of interest, for the taking of a property with a declared assessed value
of P2,388,900.00. This is not to mention the award of attorneys fees in an amount equivalent
to 15% of the amount due the private respondent.

which took it for a public purposes without instituting expropriation proceedings or paying any
compensation for the lot, the Court, citing Herrera v. Auditor General,[34] ordered payment of
just compensation but in the form of interest when a return of the property was no longer
feasible.

In doing so, the respondent judge brazenly went around the explicit command of Rule 9,
Section 3(d) of the Rules of Court [30] which defines the extent of the relief that may be
awarded in a judgment by default, i.e., only so much as has been alleged and proved. The
court acts in excess of jurisdiction if it awards an amount beyond the claim made in the
complaint or beyond that proved by the evidence. [31] While a defaulted defendant may be said
to be at the mercy of the trial court, the Rules of Court and certainly the imperatives of fair
play see to it that any decision against him must be in accordance with law. [32] In the abstract,
this means that the judgment must not be characterized by outrageous one-sidedness, but by
what is fair, just and equitable that always underlie the enactment of a law.

Albeit title to the Arlegui property remains in the name of the petitioner Republic, it is
actually the Office of the President which has beneficial possession of and use over it since
the 1975 takeover. Accordingly, and in accord with the elementary sense of justice, it
behooves that office to make the appropriate budgetary arrangements towards paying private
respondent what is due her under the premises. This, to us, is the right thing to do. The
imperatives of fair dealing demand no less. And the Court would be remiss in the discharge of
its duties as dispenser of justice if it does not exhort the Office of the President to comply with
what, in law and equity, is its obligation. If the same office will undertake to pay its obligation
with reasonable dispatch or in a manner acceptable to the private respondent, then simple
justice, while perhaps delayed, will have its day. Private respondent is in the twilight of her
life, being now over 90 years of age. [39] Any delay in the implementation of this disposition
would be a bitter cut.

Given the above perspective, the obvious question that comes to mind is the level of
compensation which for the use and occupancy of the Arlegui property - would be fair to
both the petitioner and the private respondent and, at the same time, be within acceptable
legal bounds. The process of balancing the interests of both parties is not an easy one. But
surely, the Arlegui property cannot possibly be assigned, even perhaps at the present real
estate business standards, a monthly rental value of at least P500,000.00 orP6,000,000.00 a
year, the amount private respondent particularly sought and attempted to prove. This asking
figure is clearly unconscionable, if not downright ridiculous, attendant circumstances
considered. To the Court, an award of P20,000.00 a month for the use and occupancy of
the Arlegui property, while perhaps a little bit arbitrary, is reasonable and may be
granted pro hac vice considering the following hard realities which the Court takes stock of:
1.
2.
3.

The property is relatively small in terms of actual area and had an assessed
value of only P2,388,900.00;
What the martial law regime took over was not exactly an area with a new and
imposing structure, if there was any; and
The Arlegui
property had
minimal
rental
value
during
the
relatively long martial law years, given the very restrictive entry and egress
conditions prevailing at the vicinity at that time and even after.

To be sure, the grant of monetary award is not without parallel. In Alfonso v. Pasay
City,[33] a case where a registered owner also lost possession of a piece of lot to a municipality

The award of attorneys fees equivalent to 15% of the amount due the private
respondent, as reduced herein, is affirmed.
The assessment of costs of suit against the petitioner is, however, nullified, costs not
being allowed against the Republic, unless otherwise provided by law. [35]
The assailed trial courts issuance of the writ of execution[36] against government funds
to satisfy its money judgment is also nullified. It is basic that government funds and properties
may not be seized under writs of execution or garnishment to satisfy such
judgments.[37] Republic v. Palacio[38] teaches that a judgment against the State generally
operates merely to liquidate and establish the plaintiffs claim in the absence of express
provision; otherwise, they can not be enforced by processes of law.

WHEREFORE, the decision of the Regional Trial Court of Manila dated August 27,
2003 insofar as it nullified TCT No. 118911 of petitioner Republic of the Philippines and
ordered the Register of Deeds of Manila to reinstate private respondent Tarcila L. Mendozas
TCT No. 118527, or to issue her a new certificate of title is AFFIRMED. Should it be
necessary, the Register of Deeds of Manila shall execute the necessary conveying deed to
effect the reinstatement of title or the issuance of a new title to her.
It is MODIFIED in the sense that for the use and occupancy of the Arlegui property,
petitioner Republic is ordered to pay private respondent the reasonable amount ofP20,000.00 a
month beginning July 1975 until it vacates the same and the possession thereof restored to the
private respondent, plus an additional interest of 6% per annum on the total amount due upon
the finality of this Decision until the same is fully paid. Petitioner is further ordered to pay
private respondent attorney's fees equivalent to 15% of the amount due her under the
premises.
Accordingly, a writ of certiorari is hereby ISSUED in the sense that:
1. The respondent courts assailed decision of August 27, 2003 insofar as it ordered the
petitioner Republic of the Philippines to pay private respondent Tarcila L. Mendoza the sum of
One Billion Four Hundred Eighty Million Six Hundred Twenty Seven Thousand Six Hundred
Eighty Eight Pesos (P1,480,627,688.00) representing the purported rental use of the property

in question, the interest thereon and the opportunity cost at the rate of 3% per annum plus the
interest at the legal rate added thereon is nullified. The portion assessing the petitioner
Republic for costs of suit is also declared null and void.
2. The Order of the respondent court dated December 19, 2003 for the issuance of a
writ of execution and the Writ of Execution dated December 22, 2003 against government
funds are hereby declared null and void. Accordingly, the presiding judge of the respondent
court, the private respondent, their agents and persons acting for and in their behalves are
permanently enjoined from enforcing said writ of execution.
However, consistent with the basic tenets of justice, fairness and equity, petitioner
Republic, thru the Office of the President, is hereby strongly enjoined to take the necessary
steps, and, with reasonable dispatch, make the appropriate budgetary arrangements to pay
private respondent Tarcila L. Mendoza or her assigns the amount adjudged due her under this
disposition.
SO ORDERED.

SECOND DIVISION
TERESITA M. YUJUICO,
Petitioner,

G.R. No. 164282

TINGA, J.:

DECISION

This is a Petition for Review on Certiorari instituted by Teresita M.


Yujuico, petitioner in the case for mandamus docketed as Civil Case No. 02103748 before the Regional Trial Court (RTC) of Manila, Branch 15.
Petitioner is questioning the propriety of the Order[1] dated 25 June 2004,
granting respondents Petition for Relief from Judgment under Section 2, Rule
38 of the 1997 Rules of Civil Procedure.
The operative facts are not disputed.

Present:
- versus -

ISABELITA SANTOS, Secretary,


City School Board of Manila,
VICENTE MACARUBBO
(In substitution of ISABELITA CHING),
Assistant Secretary, City School
Board of Manila, CITY SCHOOL BOARD OF
MANILA and JUDGE MERCEDES
POSADA-LACAP, in her capacity as
PRESIDING JUDGE OF THE REGIONAL
TRIAL COURT OF MANILA, BRANCH 15,
Respondents.
x-------------------------------------------------------------------x

PUNO, J.,
Chairman,
AUSTRIA-MARTINEZ,
CALLEJO, SR.,
TINGA, and
CHICO-NAZARIO, JJ.

HON. JOSE L. ATIENZA, JR.,


Chairman, City School
Board of Manila, DR. MA.
LUISA S. QUIONES,
Co-Chairman, City School Board,
and Schools Division
Superintendent, ROGER
Promulgated:
GERNALE, Member, City
School Board of Manila,
HON. MANUEL M. ZARCAL,
October 12, 2005
(in substitution of ARLENE ORTIZ),
Member, City School Board
of Manila, BENJAMIN VALBUENA
(In substitution of MILES ROCES),
Member, City School Board of
Manila, LIBERTY TOLEDO, Member,
City School Board of Manila,
HON. FRANCESCA GERNALE
(In substitution of PERCIVAL FLORIENDO),
Member, City School Board of Manila,

On 8 December 1995, the City Council of Manila enacted


an Ordinance[2] authorizing the City Mayor to acquire by negotiation or
expropriation certain parcels of land for utilization as a site for the Francisco
Benitez Elementary School.[3] The property chosen is located along Solis St.
near Juan Luna St. in the Second District of Manila and contains an
approximate area of 3,979.10 square meters. It is covered by Transfer
Certificates of Title Nos. 71541, 71548, 24423, 71544 and 71546, all in the
name of petitioner. The Ordinance provides that an amount not to exceed the
fair market value of the land then prevailing in the area will be allocated out
of the Special Education Fund (SEF) of the City of Manila (City) to defray the
cost of the propertys acquisition.[4]
Failing to acquire the land by negotiation, the City filed a case for
eminent domain against petitioner as owner of the property. Filed on 22
August 1996, the case was raffled to Branch 15, RTC of Manila and docketed
as Civil Case No. 96-79699.[5]
On 30 June 2000, the RTC rendered a Decision[6] in the expropriation
case in favor of the City. The dispositive portion reads:
WHEREFORE, judgment is hereby rendered as follows:
1.)

The lots including the improvements therein of


defendant Teresita M. Yujuico, as described in the
complaint, are declared expropriated for public use;

2.)

The fair market value of the lots of defendant is fixed


at P18,164.80 per square meter. The fair market value
of the improvements of lots subject of this action is
fixed at P 978,000.00;

3.)

The plaintiff must pay defendant the sum


of P72,279,555.68 (3,979.10 sq. m. x P18,164.80)
representing
the
value
of
the
subject
lots plus P978,000.00 representing the value of the
improvements or the total amount of P73,257,555.00
as just compensation for the whole property (including
the improvements) minus the sum of P5,363,289.00
that plaintiff deposited in Court per Order dated April
30, 1997, hence the balance of P67,894,266.00 with
interest at the rate of 6% per annum from July 15,
1997 (date of possession of subject property for the
purpose of this proceedings) until the day full payment
is made to defendant or deposited in Court.[7]

The judgment became final and executory, no appeal having been


interposed by either party.[8]
On 6 April 2001, petitioner filed a Motion for Execution of
Judgment[9] which the trial court granted. Pursuant to a Writ of
Execution[10]dated 28 June 2001, the branch sheriff served a Notice
of Garnishment on the funds of the City deposited with the Land Bank of the
Philippines, YMCA Branch, Manila (Land Bank) to satisfy the judgment
amount of P67,894,226.00, with interest at 6% per annum.[11]
Invoking jurisprudence holding that public funds cannot be made
subject to garnishment, the City filed a motion to quash the Notice of
Garnishment.[12] Acting on the motion, the trial court issued an Order dated 2
August 2001.
In the Order, the lower court recalled that during the hearing on the
motion, the counsel for the City manifested that the amount
ofP36,403,170.00 had been appropriated by the City School Board (CSB)
under CSB Resolutions Nos. 613 and 623, of which P31,039,881.00 was
available for release. The amount of P5,363,269.00, representing fifteen
percent (15%) of the assessed value of the property, had been deposited in
court at the start of the expropriation proceedings and subsequently received
by petitioner. In line with the manifestation made by the counsel for the City,
the trial court ordered the release to petitioner of the amount
of P31,039,881.00 deposited with the Land Bank, in partial payment of the
just compensation adjudged in favor of petitioner.[13]
The trial court further stated in the Order:
Considering that this case is on all fours with the
case of the Municipality of Makati vs. Court of Appeals (190

SCRA 206), wherein it was ruled that x x x Public funds are


not subject to levy and execution, the Court therefore grants
plaintiffs Motion to Quash the Notice of Garnishment and the
Notice of Garnishment to the Landbank of the Philippines
issued by the Branch Sheriff of this Court is hereby ordered
lifted.
There being no opposition for the release of the Thirty
One Million Thirty Nine Thousand Eight Hundred Eighty One
Pesos (P31,039,881.00) deposited with the Land Bank, YMCA
Branch as Special Education Fund, the Manager of the
Landbank of the Philippines, YMCA, Manila is hereby directed
to release the said amount to defendant Teresita M. Yujuico
in partial payment of the just compensation adjudged by this
Court in its Decision dated June 30, 2000.
Upon manifestation of the counsel for the plaintiff
that it is the City School Board which has the authority to
pass a resolution allocating funds for the full satisfaction of
the just compensation fixed, the said body is hereby given
thirty (30) days from receipt of this Order to pass the
necessary resolution for the payments of the remaining
balance due to defendant Teresita M. Yujuico.[14]
A copy of the Order dated 2 August 2001 was served on the CSB on 3
August 2001.[15]
On 30 August 2001, petitioner submitted a manifestation before the
trial court requesting that she be informed by both the City and the CSB if a
resolution had already been passed by the latter in compliance with
the Order.[16] Earlier, petitioner sent a letter to the Superintendent of City
Schools of Manila to verify the CSBs compliance with the Order.[17]
Not having been favored with a reply to her queries even after the lapse
of the thirty (30)-day compliance period, petitioner sent a letter to the CSB
dated 10 September 2001, demanding compliance with the Order.[18]
As there was no action from the CSB, on 1 February 2002, petitioner
filed a petition for contempt of court against respondents Hon. Jose L.
Atienza, Jr., Dr. Ma. Luisa S. Quioes, Roger Gernale, Arlene Ortiz, Miles
Roces, Percival Floriendo, Liberty Toledo, Isabelita Santos and Isabelita Ching
in their capacities as officers and members of the CSB. [19] The case was
docketed as Civil Case No. 02-102837 of the Manila RTC.[20]
Countering the petition for contempt, respondents filed a Motion to
Dismiss,[21] wherein they alleged inter alia that they never disregarded
the Order as the matter had in fact been calendared and deliberated upon
during the meetings of the CSB.[22] In their subsequent Omnibus
Reply,[23] respondents argued that petitioners failure to avail of the proper
recourse to enforce the final and executory judgment[24] should not be a

ground to hold them in contempt of court. Citing the case of Municipality of


Makati v. Court of Appeals,[25] respondents asserted that petitioner should
have filed a petition for mandamus to force the CSB to pass the necessary
resolution for immediate payment of the balance of the just compensation
awarded in her favor.[26]
According to respondents, petitioner took the Order as a writ of
mandamus when in fact it was a mere order in furtherance of the Writ of
Execution.[27] This interpretation, respondents insisted, should never be
allowed since petitioner merely wanted to escape the payment of docket fees
in the filing of the petition for mandamus.[28]
In an Order[29] dated 17 May 2002, the trial court denied the petition for
contempt of court.

On 6 June 2002, petitioner filed a Petition for Mandamus[30] against


the members of the CSB, the same respondents in the petition for contempt
of court, seeking to compel them to pass a resolution appropriating the
amount necessary to pay the balance of the just compensation awarded to
petitioner in the expropriation case, Civil Case No. 96-79699. The petition
was docketed as Spl. Civil Action No. 02-103748 and raffled to Branch 51 of
the RTC of Manila. [31]
Upon petitioners motion,[32] Branch 51 of the Manila RTC before
which the mandamus case was pending, in an Order[33] dated 23 August
2002, directed its consolidation with the expropriation case before Branch
15.[34]
In a Decision[35] dated 9 October 2002, the lower court (Branch 15)
granted the petition for mandamus. Specifically, it ordered respondents to
immediately pass a resolution appropriating the necessary amount and the
corresponding disbursement thereof for the full and complete payment of the
balance of the court-adjudged compensation still due petitioner, ratiocinating
as follows:[36]
This case is on all fours with the case of
Municipality of Makati v. Court of Appeals (190 SCRA 206).
....
The States power of eminent domain should be
exercised within the bounds of fair play and justice. In the
case at bar, considering that valuable property has been
taken, the compensation to be paid fixed and the
municipality is in full possession and utilizing the property
for the public purpose, for three (3) years, the Court finds

that the municipality has had more than reasonable time to


pay full compensation.
The arguments of the herein respondents that
passing the ordinance or the act of appropriating special
educational fund is a discretionary act that could not be
compelled by mandamus should be thrown overboard. It
must be stressed that what we have here is a final and
executory judgment, establishing a legal right for the
petitioner to demand fulfillment which on the other hand
became an imperative duty on the part of the respondent to
perform the act required.
WHEREFORE, premises considered, the petition is
GRANTED, and the respondents are hereby ordered to
immediately pass a resolution appropriating the necessary
amount; and the corresponding disbursement thereof, for the
full and complete payment of the remaining balance of the
court-adjudged compensation due and owing to petitioner
Teresita M. Yujuico.
SO ORDERED.[37]
Respondents filed a motion for reconsideration, which the trial court
denied in an Order[38] dated 13 December 2002.
With respondents not interposing an appeal, the Decision became
final and executory on 2 January 2003 [39] and eventually, the
corresponding Entry of Judgment was issued on 15 January 2003.[40] The
court granted petitioners Motion for Execution[41] in an Order[42]dated 12
March 2003.
However, on 14 March 2003, respondents filed a Petition for Relief
from Judgment,[43] wherein they also prayed for a temporary restraining order
(TRO) and a writ of preliminary injunction. Respondents invoked excusable
negligence as a ground for their failure to seasonably file an appeal. [44] While
it denied the application for TRO in view of its prior order granting
petitioners Motion for Execution, the court granted thePetition for Relief from
Judgment in an Order[45] dated 25 June 2004. This had the effect of giving
due course to respondents appeal despite the fact that the decision of the
trial court had already attained finality.
Finding the Order unacceptable, petitioner elevated it to this Court
by way of a petition for certiorari under Rule 45. In her petition, petitioner
asks that the order of the lower court giving due course to respondents
appeal be reversed and set aside on a pure question of law.[46]
Before resolving the substantive issues raised by the parties, the
Court will first address the procedural infirmities ascribed by respondents to
the petition at bar.

Respondents assail the correctness and propriety of the mode of


appeal resorted to by petitioner.[47] According to them, the order granting the
petition for relief from judgment is an interlocutory order which cannot be
made the subject of an appeal.[48] Respondents likewise argue that petitioner
failed to respect the rule on hierarchy of courts. This Court, they aver, had
consistently held that its original jurisdiction to issue a writ of certiorari is
not exclusive but is concurrent with that of the RTC and the Court of
Appeals in certain cases.[49]
Respondents have correctly pointed out that an interlocutory order
cannot be made subject to an appeal. However, when viewed in context, the
recitals of the petition clearly disclose and the Court is convinced that the
lower court committed grave abuse of discretion amounting to lack or excess
of jurisdiction when it granted respondents petition for relief from judgment.
While this case should have been elevated to this Court not by way of a
petition for review under Rule 45 but through a special civil action for
certiorari under Rule 65, in the exercise of our sound discretion and in order
to write finis to this case which has needlessly dragged on for so long, we
shall treat the petition as a special civil action for certiorari. After all, it was
filed within the reglementary period for the filing of a Rule 65 petition. As we
held in Salinas v. NLRC,[50] in the interest of justice, this Court has often
judiciously treated petitions erroneously captioned as petitions for review on
certiorari as special civil actions for certiorari. This is in line with the
principle that the strict application of procedural technicalities should not
hinder the speedy disposition of the case on the merits.[51]
Accordingly, facial allegations of reversible error in the petition will
be treated, as they should be, as contextual averments of grave abuse of
discretion on the part of the court a quo. Appropriately, petitioner impleaded
the RTC Presiding Judge as party-respondent in the instant petition.
Anent the alleged breach of the rule on hierarchy of courts, the
doctrine is not an iron-clad dictum.[52] The rule may be relaxed when
exceptional and compelling circumstances warrant the exercise of this
Courts primary jurisdiction.[53] In this case, the judgment sought to be
satisfied has long attained finality and the expropriated property has been
utilized as a school site for five (5) years now; yet, the awarded just
compensation has not been fully paid. These circumstances, in the Courts
estimation, merit the relaxation of the technical rules of procedure to ensure
that substantial justice will be served.
Concerning petitioners alleged failure to implead the CSB or its new
members before the trial court,[54] respondents argue that since there are five
(5) new members in the CSB any decision in the case requiring the CSB to
act as a body would prove to be legally impossible. The former members of
the CSB could no longer be compelled to act according to the orders of the
Court since they no longer have the capacity to do so. On the other hand,
respondents continue, the new members cannot be directed to comply with
the Courts judgment either; they have never been impleaded in the case;
thus, the Court never acquired jurisdiction over their persons. [55]

The arguments were effectively neutered in our Resolution dated 8


August 2005. There, we declared:
Considering the arguments posited by both parties,
this Court is of the view that a substitution of the original
respondents by the members of the CSB who replaced them
is warranted. The phrase or such time as may be granted
by the Court in Sec. 17, Rule 3 of the 1997 Rules of Civil
Procedure denotes that the Court before whom the motion
for substitution is filed may grant a period longer than thirty
(30) days for the purpose. In any event, technical rules on
substitution of a party should not be so narrowly construed
as to prevent this Court from taking cognizance of a case
and deciding it on the merits. Moreover, petitioner did make
an attempt to implead the new members of the CSB by
making the CSB itself a respondent before this Court. There
is also no showing that the new members of the CSB have
deviated from the stand of their predecessors-in-interest;
hence, there is a substantial need for continuing or
maintaining petitioners action against them.[56]
In the same Resolution, the Court ordered the impleading of the new
CSB members Roger Gernale, Manuel M. Zarcal, Benjamin Valbuena and
Francesca Gernale as party respondentsthe last three in substitution of
Arlene Ortiz, Percival Floriendo, Miles Rocesand the new CSB Assistant
Secretary Vicente Macarubbo in substitution of Isabelita Ching. [57] Only
Manuel Zarcal filed a Comment[58] dated 30 August 2005 through a new
counsel, adopting in toto the comment of his co-respondents. Hence, the
other four newly impleaded party respondents are deemed to have retained
the Office of the City Legal Officer (OCLO) as their counsel and to have
adopted the Comment already filed by the OCLO in behalf of their corespondents.
Thus, the proper substitutions of some party respondents have
already taken place in this case.
The last procedural hurdle thrown petitioners way by respondents
refers to the supposed failure of the petition to comply with the requirements
of Section 4, Rule 7 and Section 4, Rule 45 of the 1997 Rules of Civil
Procedure[59] as amended by Supreme Court Circular A.M. No. 00-2-10SC.[60] Respondents claim that there was failure to include a verified
statement indicating the material dates relative to the receipt of the
judgments and the filing of the pleadings. The verification, moreover,
allegedly failed to state that petitioner has read the petition [61] and that the
copies attached thereto are based on authentic records. [62] The defects of the
verification allegedly render the petition without legal effect and constitute
grounds for its dismissal.
The purpose of requiring a verification is to secure an assurance that
the allegations of the petition have been made in good faith; or are true and

correct, not merely speculative.[63] This requirement is simply a condition


affecting the form of pleadings and non-compliance therewith does not
necessarily render it fatally defective.[64] Perusal of the verification in question
shows that there was sufficient compliance with the requirements of the
Rules and the alleged defects are not so material as to justify the dismissal of
the petition.
Now, the substantial issues.
Up for determination is the tenability of the RTCs favorable action on
respondents petition for relief from judgment. This engenders a look at the
grounds and defenses relied upon by respondents in support of their petition.
Sections 2 and 3, Rule 38 of the 1997 Rules of Civil Procedure provide that a
petition for relief may be granted upon a showing that (1) through fraud,
accident, mistake or excusable negligence, a party has been prevented from
taking an appeal, and (2) the party has a good and substantial cause of
action or defense.
The above requisites notwithstanding, it bears stressing that relief
from judgment is premised on equity. It is an act of grace which is allowed
only in exceptional cases.[65]
In this case, according to respondents they were unable to
seasonably file a notice of appeal due to excusable negligence. [66] One
Ronald Silva (Silva), an employee of the OCLO, allegedly failed to forward
the Order denying respondents motion for reconsideration in Civil Case No.
02-103748 to the handling lawyers. When the order was delivered to the
OCLO on 17 December 2002,[67] Silva was the one who received it because
the employee designated to do so was out on official business.[68] Since the
employees were busy preparing for the office Christmas party that
day,[69] Silva forgot all about the order. He only remembered it when the order
for entry of judgment in the case was received on 29 January 2003. By that
time, however, the order dated 17 December 2002 had already been
misplaced.[70]
Clearly, the situation does not present a case of excusable negligence
which would warrant relief under Rule 38. Time and again, this Court has
ruled that the inability to perfect an appeal in due time by reason of failure of
a counsels clerk to notify the handling lawyer is not a pardonable
oversight.[71] As held in one case:
. . . The excuse offered by respondent . . . as reason
for his failure to perfect in due time his appeal from the
judgment of the Municipal Court, that counsels clerk forgot
to hand him the court notice, is the most hackneyed and
habitual subterfuge employed by litigants who fail to observe
the procedural requirements prescribed by the Rules of
Court. The uncritical acceptance of this kind of commonplace excuses, in the face of the Supreme Courts repeated
rulings that they are neither credible nor constitutive of
excusable negligence (Gaerlan v. Bernal, L-4039, 29 January

1952; Mercado v. Judge Domingo, L-19457, 17 December


1966) is certainly such whimsical exercise of judgment as to
be a grave abuse of discretion.
....
In the face of all these facts and circumstances, . . .
the respondent judge revealed a simple-minded willingness to
swallow a story patently concocted to delay as much as
possible the satisfaction of a judgment against respondent . .
. .This indiscriminating credulity does not conform to what is
to be expected of a judicial mind.[72]
Reiterated in numerous cases is the rule that the clerks faults are
attributable to the handling lawyers.[73] Thus, excuses offered based on the
formers negligence are not deemed excusable. That the admonitions issued
out by this Court were mostly directed against lawyers in law firms does not
exempt respondents herein from the same treatment. For all intents and
purposes, the set-up at the OCLO is akin to that of a law firm, the only
difference being that the former serves a public entity while the latter caters
to private clients. The following pronouncement inNegros Stevedoring Co., Inc.
v. Court of Appeals[74] is apropos:
The negligence committed in the case at bar cannot
be considered excusable, nor is it unavoidable. Time and
again, the Court has admonished law firms to adopt a system
of distributing pleadings and notices, whereby lawyers
working therein receive promptly notices and pleadings
intended for them, so that they will always be informed of the
status of their cases. The Court has also often repeated that
the negligence of clerks which adversely affect the cases
handled by lawyers is binding upon the latter.[75]
Without doubt, it was grave abuse of discretion for the lower court to
have given due course to respondents appeal through the grant of their
petition for relief from judgment based on the flimsy ground they proferred.
Even assuming that the negligence invoked by respondents could be
considered excusable, still the petition should not have been granted. It must
be borne in mind that two requisites must be satisfied before a petition under
Rule 38 may be granted, the other being the existence of a good and
substantial cause of action or defense.
Respondents defense consisted of their claim that the CSB has a
personality separate and distinct from the City such that it should not be
made to pay for the Citys obligations.[76] However, the argument is undercut
by the particular circumstances of this case.

It is worthy of note that the records of this case clearly show that the
same counsel, the OCLO, represented the City in the expropriation case and
now, all except one of the individual respondents in the case at bar. Worthy
of note are the following manifestations relied upon by the lower court in
issuing the order on the motion to quash the Notice of Garnishment over the
funds of the City, to wit:
The Motion to Quash Notice of Garnishment was heard
by this court this morning and Atty. Joseph Aquino appeared
for the plaintiff (City of Manila) and Atty. Federico Alday, for
the defendant. Atty. Aquino manifested that the amount
of Thirty Six Million Four Hundred Three Thousand One
Hundred Seventy Pesos (P36,403,170.00) had been
appropriated by the City School Board (CSB) under CSB
Resolution Nos. 613 and 623 for this purpose.
....
Upon manifestation of the counsel for the
plaintiff that it is the City School Board which has the
authority to pass a resolution allocating funds for the full
satisfaction of the just compensation fixed, the said body
is hereby given thirty (30) days from receipt of this Order to
pass the necessary resolution for the payments of the
remaining balance due to defendant Teresita M. Yujuico.
(Emphasis supplied.)[77]
The manifestation was made by the same counsel now claiming that
it is actually the City which should be made liable for the payment of its own
obligations. This, after it trotted out the CSB as the entity with authority to
pass a resolution that would satisfy the obligation it had vigorously pursued.
The above circumstances, coupled with the rule that an act
performed by counsel within the scope of a general or implied authority is
regarded as an act of the client,[78] render the City and, through it,
respondents in estoppel. By estoppel is meant that an admission or
representation is rendered conclusive upon the person making it and cannot
be denied or disproved as against the person relying thereon. [79] Petitioner
and the courts acted in accordance with the Citys own manifestations by
running after the CSB. At this point, respondents and the OCLO can no
longer turn around and toss the obligation back to the City. After all, it was
the legal counsel of both the City and respondents who made a big
production out of showing that the liability incurred by the City will be borne
by the CSB.
Contrary to respondents claim, the law does not make the CSB an
entity independent from the City of Manila. This is evident from the
provisions of the Local Government Code of 1991, the law providing for the
creation of school boards. It states:

TITLE IV.- LOCAL SCHOOL BOARDS


Section
Compensation.-

98. Creation,

Composition

and

(a)
There shall be established in
every province, city or municipality a provincial, city, or
municipal school board, respectively.
(b)
The composition of local
school boards shall be as follows:
...
(2) The city school board shall be composed of the
city mayor and the city superintendent of schools as
co-chairmen; the chairman of the education
committee of the sangguniang panlungsod, the city
treasurer, the representative of the pederasyon ng
mga sangguniang kabataan in the sangguniang
panlungsod, the duly elected president of the city
federation of parents-teachers associations, the duly
elected
representative
of
the
non-academic
personnel of public schools in the city, as members;
...
Section 101. Compensation and Remuneration.The co-chairmen and members of the provincial, city or
municipal school board shall perform their duties as such
without compensation or remuneration. Members thereof
who are not government officials or employees shall be
entitled to traveling expenses and allowances chargeable
against the funds of the local school board concerned,
subject to existing accounting and auditing rules and
regulations.[80]
The fact that the highest ranking official of a local government unit
(LGU) is designated as co-chairman of the school board negates the claim in
this case that the CSB has a personality separate and distinct from the City.
The other fact that government officials in the school board do not receive
any compensation or remuneration while NGO representatives merely receive
allowances underscores the absurdity of respondents argument all the more.
Indeed, such would not be the situation if the school board has a personality
separate and distinct from the LGU.

Respondents also argue that the members of the CSB cannot be


directed to decide a discretionary function in the specific manner the court
desires.[81] The question of whether the enactment of an ordinance to satisfy
the appropriation of a final money judgment rendered against an LGU may

be compelled by mandamus has already been settled in Municipality of


Makati v. Court of Appeals.[82]
Nevertheless, this is not to say that private
respondent and PSB are left with no legal recourse. Where a
municipality fails or refuses, without justifiable reason, to
effect payment of a final money judgment rendered against it,
the claimant may avail of the remedy of mandamus in order
to compel the enactment and approval of the necessary
appropriation
ordinance,
and
the
corresponding
disbursement of municipal funds therefore [See Viuda De
Tan Toco v. The Municipal Council of Iloilo, supra, Baldivia v.
Lota, 107 Phil 1099 (1960); Yuviengco v. Gonzales, 108 Phil
247 (1960)].[83]
Clearly, mandamus is a remedy available to a property owner when a
money judgment is rendered in its favor and against a municipality or city,
as in this case.

Moreover, the very ordinance authorizing the expropriation of


petitioners property categorically states that the payment of the expropriated
property will be defrayed from the SEF. To quote:
An amount not to exceed the current fair market
value, prevailing in the area appraised in accordance with the
requirements of existing laws, rules and regulations, of the
property to be acquired or so much thereof as may be
necessary for the purpose shall be allocated out of the
Special Education Fund of the City to defray the cost of
acquisition of the above-mentioned parcels of land.[84]
The legality of the above-quoted provision is presumed. The source of
the amount necessary to acquire petitioners property having in fact been
specified by the City Council of Manila, the passage of the resolution for the
allocation and disbursement thereof is indeed a ministerial duty of the CSB.
Furthermore, respondents had argued in the petition for contempt
filed against them by petitioner that the latters failure to invoke the proper
remedy of mandamus should not be a ground to penalize them with
contempt. In their haste to have the contempt petition dismissed,
respondents consistently contended that what petitioner should have filed
was a case for mandamus to compel passage of the corresponding resolution
of the CSB if she wanted immediate payment.[85] Having relied on these
representations of respondents and having filed the action they adverted to,
petitioner cannot now be sent by respondents on another wild goose chase to
obtain ultimate recovery of what she is legally entitled to.

While this Court recognizes the power of LGU to expropriate private


property for public use, it will not stand idly by while the expropriating
authority maneuvers to evade the payment of just compensation of property
already in its possession.
The notion of expropriation is hard enough to take for a private
owner. He is compelled to give up his property for the common weal. But to
give it up and wait in vain for the just compensation decreed by the courts is
too much to bear. In cases like these, courts will not hesitate to step in to
ensure that justice and fair play are served. As we have already ruled:
. . . This Court will not condone petitioners blatant
refusal to settle its legal obligation arising from expropriation
proceedings it had in fact initiated. It cannot be overemphasized that within the context of the States inherent
power of eminent domain,
. . . (j)ust compensation means not only the correct
determination of the amount to be paid to the owner of the
land but also the payment of the land within a reasonable
time from its taking. Without prompt payment, compensation
cannot be considered just for the property owner is made to
suffer the consequence of being immediately deprived of his
land while being made to wait for a decade or more before
actually receiving the amount necessary to cope with his loss
(Consculluela v. The Honorable Court of Appeals, G.R. No.
77765, August 15, 1988, 164 SCRA 393, 400. See also
Provincial Government of Sorsogon v. Vda. De Villaroya, G.R.
No. 64037, August 27, 1987, 153 SCRA 291).[86]
The decision rendering just compensation in petitioners favor was
promulgated way back in the year 2000.[87] Five years have passed, yet the
award still has not been fully satisfied. Recently, in Republic v. Lim,[88] this
Court made the following pronouncement:
. . . while the prevailing doctrine is that the non-payment of
just compensation does not entitle the private landowner to
recover possession of the expropriated lots, however, in
cases where the government failed to pay just
compensation within five (5) years from the finality of
judgment in the expropriation proceedings, the owners
concerned shall have the right to recover possession of their
property. This is in consonance with the principle that the
government cannot keep the property and dishonor the
judgment. To be sure, the five-year period limitation will
encourage the government to pay just compensation
punctually. This is in keeping with justice and equity. After
all, it is the duty of the government, whenever it takes

property from private persons against their will, to facilitate


the payment of just compensation.[89] (Citations omitted)

MAGTAAS, CAROLINA DIONCO,


CHRISTOPHER RAMOS, MELVIN
DELA PAZ, RANDY TAMAYO and
EDGARDO RAMILLO,
Respondents.

Given the above ruling, the reversion of the expropriated property to


the petitioner would prove not to be a remote prospect should respondents
and the City they represent insist on trudging on their intransigent course.

x----------------------------------------------------------------------------x

One final note. Respondents appeal from the Decision dated 9 October
2002 of the lower court, made possible by its grant of their petition for relief,
is before the Court of Appeals where it is docketed as CA-G.R. No.
86692.[90] The courts Decision in this case would have obvious consequences
on said appeal; hence, referral of this Decision to the Court of Appeals is in
order.

TINGA, J.:

WHEREFORE, the petition is GRANTED. The Order of the trial court


dated 25 June 2004, granting respondents Petition for Relief from
Judgment is REVERSED and SET ASIDE and its Decision dated 9 October
2002, ordering respondents to immediately pass a resolution for the payment
of the balance of the court-adjudged compensation due petitioner,
is REINSTATED.
Let a copy of this Decision be furnished the Court of Appeals for its
information and guidance in relation to CA-G.R. No. 86692 entitled Teresita
M. Yujuico v. Hon. Jose L. Atienza, Jr., et al.
SO ORDERED.

SECOND DIVISION
DEUTSCHE GESELLSCHAFT FR
G.R. No. 152318
TECHNISCHE ZUSAMMENARBEIT,
also known as GERMAN AGENCY
Present:
FOR TECHNICAL COOPERATION,
(GTZ) HANS PETER PAULENZ and
QUISUMBING, J.,
ANNE NICOLAY,
Chairperson,
Petitioners,
CARPIO MORALES,
TINGA,
VELASCO, and
- versus BRION, JJ.

DECISION

On 7 September 1971, the governments of the Federal Republic of Germany and the
Republic of the Philippines ratified an Agreement concerning Technical Co-operation
(Agreement) in Bonn, capital of what was then West Germany. The Agreement affirmed the
countries common interest in promoting the technical and economic development of their
States, and recogni[zed] the benefits to be derived by both States from closer technical cooperation, and allowed for the conclusion of arrangements concerning individual projects of
technical co-operation.[1] While the Agreement provided for a limited term of effectivity of
five (5) years, it nonetheless was stated that [t]he Agreement shall be tacitly extended for
successive periods of one year unless either of the two Contracting Parties denounces it in
writing three months prior to its expiry, and that even upon the Agreements expiry, its
provisions would continue to apply to any projects agreed upon x x x until their
completion.[2]
On 10 December 1999, the Philippine government, through then Foreign Affairs
Secretary Domingo Siazon, and the German government, agreed to an Arrangement in
furtherance of the 1971 Agreement. This Arrangement affirmed the common commitment of
both governments to promote jointly a project called, Social Health InsuranceNetworking
and Empowerment (SHINE), which was designed to enable Philippine familiesespecially
poor onesto maintain their health and secure health care of sustainable quality. [3] It appears
that SHINE had already been in existence even prior to the effectivity of the Arrangement,
though the record does not indicate when exactly SHINE was constituted. Nonetheless, the
Arrangement stated the various obligations of the Filipino and German governments. The
relevant provisions of the Arrangement are reproduced as follows:
3.
The Government of the Federal Republic of Germany shall
make the following contributions to the project.
It shall
(a)
-

second

one expert in health economy, insurance and health systems for up


to 48 expert/months,

Promulgated:
HON. COURT OF APPEALS, HON.
ARIEL CADIENTE SANTOS, Labor
Arbiter of the Arbitration Branch,
National Labor Relations Commission,
and BERNADETTE CARMELLA

one expert in system development for up to 10 expert/months

April 16, 2009


-

short-term experts to deal with special tasks for a total of up to 18


expert/months,

project assistants/guest students as required, who shall work on the


project as part of their basic and further training and assume specific
project tasks under the separately financed junior staff promotion
programme of the Deutsche Gesellschaft fr Technische
Zusammenarbeit (GTZ);
(b)

provide in situ

short-term experts to deal with diverse special tasks for a total of up


to 27 expert/months,

five local experts in health economy, health insurance, community


health systems, information technology, information systems, training
and community mobilization for a total of up to 240 expert/months,

two cross-country vehicles,

ten computers with accessories,

office furnishings and equipment

up to a total value of DM 310,000 (three hundred and ten thousand


Deutsche Mark);
(c)

the cost of official travel by the experts referred to in sub-paragraph


(a) above within and outside the Republic of the Philippines,
the cost of seminars and courses,
the cost of transport and insurance to the project site of inputs to be
supplied pursuant to sub-paragraph (c) above, excluding the charges
and storage fees referred to in paragraph 4(d) below,

a proportion of the operating and administrative costs;

xxx
4.
The Government of the Republic of the Philippines shall
make the following contributions to the project:
It shall

(b)
assume an increasing proportion of the running and operating
costs of the project;
(c)
afford the seconded experts any assistance they may require in
carrying out the tasks assigned to them and place at their disposal all
necessary records and documents;
(d)
guarantee that
the project is provided with an itemized budget of its own in order
to ensure smooth continuation of the project.
the necessary legal and administrative framework is created for the
project,

meet

the cost of accommodation for the seconded experts and their


families in so far as this cost is not met by the seconded experts
themselves,

release suitably qualified experts from their duties for attendance


at the envisaged basic and further training activities; it shall only nominate
such candidates as have given an undertaking to work on the project for at
least five years after completing their training and shall ensure that these
Philippine experts receive appropriate remuneration,
ensure that the project field offices have sufficient expendables,
make available the land and buildings required for the project;

local and auxiliary personnel for a total of up to 120 months;

(c) supply inputs, in particular

(a)
provide the necessary Philippine experts for the project, in
particular one project coordinator in the Philippine Health Insurance
Corporation (Philhealth), at least three further experts and a sufficient
number of administrative and auxiliary personnel, as well as health
personnel in the pilot provinces and in the other project partners, in
particular one responsible expert for each pilot province and for each
association representing the various target groups,

the project is coordinated in close cooperation with other national


and international agencies relevant to implementation,
the inputs supplied for the project on behalf of the Government of
the Federal Republic of Germany are exempted from the cost of licenses,
harbour dues, import and export duties and other public charges and fees, as
well as storage fees, or that any costs thereof are met, and that they are
cleared by customs without delay. The aforementioned exemptions shall, at
the request of the implementing agencies also apply to inputs procured in
the Republic of the Philippines,
the tasks of the seconded experts are taken over as soon as
possible by Philippine experts,
examinations passed by Philippine nationals pursuant to this
Arrangement are recognized in accordance with their respective standards
and that the persons concerned are afforded such opportunities with regard
to careers, appointments and advancement as are commensurate with their
training.[4]
In the arraignment, both governments likewise named their respective implementing
organizations for SHINE. The Philippines designated the Department of Health (DOH) and the
Philippine Health Insurance Corporation (Philhealth) with the implementation of SHINE. For

their part, the German government charge[d] the Deustche Gesellschaft fr Technische
Zusammenarbeit[[5]] (GTZ[[6]]) GmbH, Eschborn, with the implementation of its
contributions.[7]
Private respondents were engaged as contract employees hired by GTZ to work for
SHINE on various dates between December of 1998 to September of 1999. Bernadette
Carmela Magtaas was hired as an information systems manager and project officer of
SHINE;[8] Carolina Dionco as a Project Assistant of SHINE; [9] Christopher Ramos as a
project assistant and liason personnel of NHI related SHINE activities by GTZ; [10] Melvin
Dela Paz and Randy Tamayo as programmers;[11] and Edgardo Ramilo as driver, messenger
and multipurpose service man.[12] The employment contracts of all six private respondents all
specified Dr. Rainer Tollkotter, identified as an adviser of GTZ, as the employer. At the
same time, all the contracts commonly provided that [i]t is mutually agreed and understood
that [Dr. Tollkotter, as employer] is a seconded GTZ expert who is hiring the Employee on
behalf of GTZ and for a Philippine-German bilateral project named Social Health
InsuranceNetworking and Empowerment (SHINE) which will end at a given time. [13]
In September of 1999, Anne Nicolay (Nicolay), a Belgian national, assumed the post of
SHINE Project Manager. Disagreements eventually arose between Nicolay and private
respondents in matters such as proposed salary adjustments, and the course Nicolay was taking
in the implementation of SHINE different from her predecessors. The dispute culminated in a
letter[14] dated 8 June 2000, signed by the private respondents, addressed to Nicolay, and
copies furnished officials of the DOH, Philheath, and the director of the Manila office of GTZ.
The letter raised several issues which private respondents claim had been brought up several
times in the past, but have not been given appropriate response. It was claimed that SHINE
under Nicolay had veered away from its original purpose to facilitate the development of
social health insurance by shoring up the national health insurance program and strengthening
local initiatives, as Nicolay had refused to support local partners and new initiatives on the
premise that community and local government unit schemes were not sustainablea
philosophy that supposedly betrayed Nicolays lack of understanding of the purpose of the
project. Private respondents further alleged that as a result of Nicolays new thrust, resources
have been used inappropriately; that the new management style was not congruent with the
original goals of the project; that Nicolay herself suffered from cultural insensitivity that
consequently failed to sustain healthy relations with SHINEs partners and staff.
The letter ended with these ominous words:
The issues that we [the private respondents] have stated here are
very crucial to us in working for the project. We could no longer find any
reason to stay with the project unless ALL of these issues be addressed
immediately and appropriately. [15]
In response, Nicolay wrote each of the private respondents a letter dated 21 June 2000,
all similarly worded except for their respective addressees. She informed private respondents
that the projects orientations and evolution were decided in consensus with partner
institutions, Philhealth and the DOH, and thus no longer subject to modifications. More
pertinently, she stated:
You have firmly and unequivocally stated in the last paragraph of
your 8th June 2000 letter that you and the five other staff could no longer
find any reason to stay with the project unless ALL of these issues be
addressed immediately and appropriately. Under the foregoing premises

and circumstances, it is now imperative that I am to accept your


resignation, which I expect to receive as soon as possible. [16]
Taken aback, private respondents replied with a common letter, clarifying that their
earlier letter was not intended as a resignation letter, but one that merely intended to raise
attention to what they perceived as vital issues. [17] Negotiations ensued between private
respondents and Nicolay, but for naught. Each of the private respondents received a letter from
Nicolay dated 11 July 2000, informing them of the pre-termination of their contracts of
employment on the grounds of serious and gross insubordination, among others, resulting to
loss of confidence and trust.[18]
On 21 August 2000, the private respondents filed a complaint for illegal dismissal with
the NLRC. Named as respondents therein where GTZ, the Director of its Manilaoffice Hans
Peter Paulenz, its Assistant Project Manager Christian Jahn, and Nicolay.
On 25 October 2005, GTZ, through counsel, filed a Motion to Dismiss, on the ground
that the Labor Arbiter had no jurisdiction over the case, as its acts were undertaken in the
discharge of the governmental functions and sovereign acts of the Government of the Federal
Republic of Germany. This was opposed by private respondents with the arguments
that GTZ had failed to secure a certification that it was immune from suit from the Department
of Foreign Affairs, and that it was GTZ and not the German government which had
implemented the SHINE Project and entered into the contracts of employment.
On 27 November 2000, the Labor Arbiter issued an Order [19] denying the Motion to
Dismiss. The Order cited, among others, that GTZ was a private corporation which entered into
an employment contract; and that GTZ had failed to secure from the DFA a certification as to
its diplomatic status.
On 7 February 2001, GTZ filed with the Labor Arbiter a Reiterating Motion to
Dismiss, again praying that the Motion to Dismiss be granted on the jurisdictional ground,
and reprising the arguments for dismissal it had earlier raised. [20] No action was taken by the
Labor Arbiter on this new motion. Instead, on 15 October 2001, the Labor Arbiter rendered a
Decision[21] granting the complaint for illegal dismissal. The Decision concluded that
respondents were dismissed without lawful cause, there being a total lack of due process both
substantive and procedural [sic].[22] GTZ was faulted for failing to observe the notice
requirements in the labor law. The Decision likewise proceeded from the premise that GTZ
had treated the letter dated 8 June 2000 as a resignation letter, and devoted some focus in
debunking this theory.
The Decision initially offered that it need not discuss the jurisdictional aspect
considering that the same had already been lengthily discussed in the Order de[n]ying
respondents Motion to Dismiss.[23] Nonetheless, it proceeded to discuss the jurisdictional
aspect, in this wise:
Under pain of being repetitious, the undersigned Labor Arbiter
has jurisdiction to entertain the complaint on the following grounds:
Firstly, under the employment contract entered into between
complainants and respondents, specifically Section 10 thereof, it provides
that contract partners agree that his contract shall be subject to the LAWS
of the jurisdiction of the locality in which the service is performed.

Secondly, respondent having entered into contract, they can no


longer invoke the sovereignty of the Federal Republic of Germany.
Lastly, it is imperative to be immune from suit, respondents
should have secured from the Department of Foreign Affairs a certification
of respondents diplomatic status and entitlement to diplomatic privileges
including immunity from suits. Having failed in this regard, respondents
cannot escape liability from the shelter of sovereign immunity.[sic][24]
Notably, GTZ did not file a motion for reconsideration to the Labor Arbiters Decision
or elevate said decision for appeal to the NLRC. Instead, GTZ opted to assail the decision by
way of a special civil action for certiorari filed with the Court of Appeals. [25] On 10 December
2001, the Court of Appeals promulgated a Resolution [26] dismissing GTZs petition, finding
that judicial recourse at this stage of the case is uncalled for[,] [t]he appropriate remedy of the
petitioners [being] an appeal to the NLRC x x x. [27] A motion for reconsideration to this
Resolution proved fruitless for GTZ. [28]
Thus, the present petition for review under Rule 45, assailing the decision and
resolutions of the Court of Appeals and of the Labor Arbiter. GTZs arguments center on
whether the Court of Appeals could have entertained its petition for certiorari despite its not
having undertaken an appeal before the NLRC; and whether the complaint for illegal dismissal
should have been dismissed for lack of jurisdiction on account of GTZs insistence that it
enjoys immunity from suit. No special arguments are directed with respect to petitioners Hans
Peter Paulenz and Anne Nicolay, respectively the then Director and the then Project Manager
of GTZ in the Philippines; so we have to presume that the arguments raised in behalf of GTZs
alleged immunity from suit extend to them as well.
The Court required the Office of the Solicitor General (OSG) to file a Comment on
the petition. In its Comment dated 7 November 2005, the OSG took the side of GTZ, with the
prayer that the petition be granted on the ground that GTZ was immune from suit, citing in
particular its assigned functions in implementing the SHINE programa joint undertaking of
the Philippine and German governments which was neither proprietary nor commercial in
nature.
The Court of Appeals had premised the dismissal of GTZs petition on its procedural
misstep in bypassing an appeal to NLRC and challenging the Labor Arbiters Decision directly
with the appellate court by way of a Rule 65 petition. In dismissing the petition, the
Court of Appeals relied on our ruling in Air Service Cooperative v. Court of
Appeals.[29] The central issue in that case was whether a decision of a Labor Arbiter rendered
without jurisdiction over the subject matter may be annulled in a petition before a Regional
Trial Court. That case may be differentiated from the present case, since the Regional Trial
Court does not have original or appellate jurisdiction to review a decision rendered by a Labor
Arbiter. In contrast, there is no doubt, as affirmed by jurisprudence, that the Court of Appeals
has jurisdiction to review, by way of its original certiorari jurisdiction, decisions ruling on
complaints for illegal dismissal.
Nonetheless, the Court of Appeals is correct in pronouncing the general rule that the
proper recourse from the decision of the Labor Arbiter is to first appeal the same to the
NLRC. Air Services is in fact clearly detrimental to petitioners position in one regard. The
Court therein noted that on account of the failure to correctly appeal the decision of the Labor
Arbiter to the NLRC, such judgment consequently became final and executory. [30] GTZ goes as

far as to request that the Court re-examine Air Services, a suggestion that is needlessly
improvident under the circumstances. Air Services affirms doctrines grounded in sound
procedural rules that have allowed for the considered and orderly disposition of labor cases.
The OSG points out, citing Heirs of Mayor Nemencio Galvez v. Court of Appeals,[31] that
even when appeal is available, the Court has nonetheless allowed a writ of certiorari when the
orders of the lower court were issued either in excess of or without jurisdiction. Indeed, the
Court has ruled before that the failure to employ available intermediate recourses, such as a
motion for reconsideration, is not a fatal infirmity if the ruling assailed is a patent nullity. This
approach suggested by the OSG allows the Court to inquire directly into what is the main
issuewhether GTZ enjoys immunity from suit.
The arguments raised by GTZ and the OSG are rooted in several indisputable facts.
The SHINE project was implemented pursuant to the bilateral agreements between the
Philippine and German governments. GTZ was tasked, under the 1991 agreement, with the
implementation of the contributions of the German government. The activities performed by
GTZ pertaining to the SHINE project are governmental in nature, related as they are to the
promotion of health insurance in the Philippines. The fact that GTZ entered into employment
contracts with the private respondents did not disqualify it from invoking immunity from suit,
as held in cases such as Holy See v. Rosario, Jr.,[32]which set forth what remains valid
doctrine:
Certainly, the mere entering into a contract by a foreign state with
a private party cannot be the ultimate test. Such an act can only be the start
of the inquiry. The logical question is whether the foreign state is engaged
in the activity in the regular course of business. If the foreign state is not
engaged regularly in a business or trade, the particular act or transaction
must then be tested by its nature. If the act is in pursuit of a sovereign
activity, or an incident thereof, then it is an act jure imperii, especially
when it is not undertaken for gain or profit. [33]
Beyond dispute is the tenability of the comment points raised by GTZ and the OSG
that GTZ was not performing proprietary functions notwithstanding its entry into the particular
employment contracts. Yet there is an equally fundamental premise which GTZ and the OSG
fail to address, namely: Is GTZ, by conception, able to enjoy the FederalRepublics immunity
from suit?
The principle of state immunity from suit, whether a local state or a foreign state, is
reflected in Section 9, Article XVI of the Constitution, which states that the State may not be
sued without its consent. Who or what consists of the State? For one, the doctrine is
available to foreign States insofar as they are sought to be sued in the courts of the local
State,[34] necessary as it is to avoid unduly vexing the peace of nations.
If the instant suit had been brought directly against the Federal Republic of Germany,
there would be no doubt that it is a suit brought against a State, and the only necessary inquiry
is whether said State had consented to be sued. However, the present suit was brought against
GTZ. It is necessary for us to understand what precisely are the parameters of the legal
personality of GTZ.

Counsel for GTZ characterizes GTZ as the implementing agency of the Government
of the Federal Republic of Germany, a depiction similarly adopted by the OSG. Assuming
that characterization is correct, it does not automatically invest GTZ with the ability to invoke
State immunity from suit. The distinction lies in whether the agency is incorporated or
unincorporated. The following lucid discussion from Justice Isagani Cruz is pertinent:

Where suit is filed not against the government itself or its


officials but against one of its entities, it must be ascertained whether or not
the State, as the principal that may ultimately be held liable, has given its
consent to be sued. This ascertainment will depend in the first instance
on whether the government agency impleaded is incorporated or
unincorporated.
An incorporated agency has a charter of its own that invests it
with a separate juridical personality, like the Social Security System, the
University of the Philippines, and the City of Manila. By contrast, the
unincorporated agency is so called because it has no separate juridical
personality but is merged in the general machinery of the government, like
the Department of Justice, the Bureau of Mines and the Government
Printing Office.
If the agency is incorporated, the test of its suability is found
in its charter. The simple rule is that it is suable if its charter says so,
and this is true regardless of the functions it is performing. Municipal
corporations, for example, like provinces and cities, are agencies of the
State when they are engaged in governmental functions and therefore
should enjoy the sovereign immunity from suit. Nevertheless, they are
subject to suit even in the performance of such functions because their
charter provides that they can sue and be sued.[35]
State immunity from suit may be waived by general or special law. [36] The special law
can take the form of the original charter of the incorporated government agency. Jurisprudence
is replete with examples of incorporated government agencies which were ruled not
entitled to invoke immunity from suit, owing to provisions in their
charters manifesting their consent to be sued. These include the National Irrigation
Administration,[37] the former Central Bank, [38] and the National Power Corporation. [39] InSSS
v. Court of Appeals,[40] the Court through Justice Melencio-Herrera explained that by virtue of
an express provision in its charter allowing it to sue and be sued, the Social Security System
did not enjoy immunity from suit:
We come now to the amendability of the SSS to judicial action
and legal responsibility for its acts. To our minds, there should be no
question on this score considering that the SSS is a juridical entity with a
personality of its own. It has corporate powers separate and distinct from
the Government. SSS' own organic act specifically provides that it can sue
and be sued in Court. These words "sue and be sued" embrace all civil
process incident to a legal action. So that, even assuming that the SSS, as it
claims, enjoys immunity from suit as an entity performing governmental
functions, by virtue of the explicit provision of the aforecited enabling law,
the Government must be deemed to have waived immunity in respect of the

SSS, although it does not thereby concede its liability. That statutory law
has given to the private citizen a remedy for the enforcement and protection
of his rights. The SSS thereby has been required to submit to the
jurisdiction of the Courts, subject to its right to interpose any lawful
defense. Whether the SSS performs governmental or proprietary functions
thus becomes unnecessary to belabor. For by that waiver, a private citizen
may bring a suit against it for varied objectives, such as, in this case, to
obtain compensation in damages arising from contract, and even for tort.
A recent case squarely in point anent the principle, involving the
National Power Corporation, is that of Rayo v. Court of First Instance of
Bulacan, 110 SCRA 457 (1981), wherein this Court, speaking through Mr.
Justice Vicente Abad Santos, ruled:
"It is not necessary to write an extended dissertation on whether
or not the NPC performs a governmental function with respect
to the management and operation of the Angat Dam. It is
sufficient to say that the government has organized a private
corporation, put money in it and has allowed it to sue and be
sued in any court under its charter. (R.A. No. 6395, Sec. 3[d]).
As a government, owned and controlled corporation, it has a
personality of its own, distinct and separate from that of the
Government. Moreover, the charter provision that the NPC can
'sue and be sued in any court' is without qualification on the
cause of action and accordingly it can include a tort claim such
as the one instituted by the petitioners."[41]
It is useful to note that on the part of the Philippine government, it had designated two
entities, the Department of Health and the Philippine Health Insurance Corporation (PHIC), as
the implementing agencies in behalf of the Philippines. The PHIC was established under
Republic Act No. 7875, Section 16(g) of which grants the corporation the power to sue and be
sued in court. Applying the previously cited jurisprudence, PHIC would not enjoy immunity
from suit even in the performance of its functions connected with SHINE, however,
governmental in nature as they may be.
Is GTZ an incorporated agency of the German government? There is some mystery
surrounding that question. Neither GTZ nor the OSG go beyond the claim that petitioner is
the implementing agency of the Government of the Federal Republic of Germany. On the
other hand, private respondents asserted before the Labor Arbiter that GTZ was a private
corporation engaged in the implementation of development projects. [42] The Labor Arbiter
accepted that claim in his Order denying the Motion to Dismiss, [43] though he was silent on that
point in his Decision. Nevertheless, private respondents argue in their Comment that the
finding that GTZ was a private corporation was never controverted, and is therefore deemed
admitted.[44] In its Reply, GTZ controverts that finding, saying that it is a matter of public
knowledge that the status of petitioner GTZ is that of the implementing agency, and not that
of a private corporation. [45]
In truth, private respondents were unable to adduce any evidence to substantiate their
claim that GTZ was a private corporation, and the Labor Arbiter acted rashly in accepting
such claim without explanation. But neither has GTZ supplied any evidence defining its legal
nature beyond that of the bare descriptive implementing agency. There is no doubt that the
1991 Agreement designated GTZ as the implementing agency in behalf of the German

government. Yet the catch is that such term has no precise definition that is responsive to our
concerns. Inherently, an agent acts in behalf of a principal, and the GTZ can be said to act in
behalf of the German state. But that is as far as implementing agency could take us. The term
by itself does not supply whether GTZ is incorporated or unincorporated, whether it is owned
by the German state or by private interests, whether it has juridical personality independent of
the German government or none at all.
GTZ itself provides a more helpful clue, inadvertently, through its own official Internet
website.[46] In the Corporate Profile section of the English language version of its site, GTZ
describes itself as follows:
As an international cooperation enterprise for sustainable
development with worldwide operations, the federally owned Deutsche
Gesellschaft fr Technische Zusammenarbeit (GTZ) GmbH supports the
German Government in achieving its development-policy objectives. It
provides viable, forward-looking solutions for political, economic,
ecological and social development in a globalised world. Working under
difficult conditions, GTZ promotes complex reforms and change processes.
Its corporate objective is to improve peoples living conditions on a
sustainable basis.
GTZ is a federal enterprise based in Eschborn near Frankfurt am
Main. It was founded in 1975 as a company under private law. The German
Federal Ministry for Economic Cooperation and Development (BMZ) is its
major client. The company also operates on behalf of other German
ministries, the governments of other countries and international clients,
such as the European Commission, the United Nations and the World Bank,
as well as on behalf of private enterprises. GTZ works on a public-benefit
basis. All surpluses generated are channeled [sic] back into its own
international cooperation projects for sustainable development.[47]
GTZs own website elicits that petitioner is federally owned, a federal enterprise,
and founded in 1975 as a company under private law. GTZ clearly has a very meaningful
relationship with the Federal Republic of Germany, which apparently owns it. At the same
time, it appears that GTZ was actually organized not through a legislative public charter, but
under private law, in the same way that Philippine corporations can be organized under the
Corporation Code even if fully owned by the Philippine government.
This self-description of GTZ in its own official website gives further cause for pause in
adopting petitioners argument that GTZ is entitled to immunity from suit because it is an
implementing agency. The above-quoted statement does not dispute the characterization of
GTZ as an implementing agency of the Federal Republic of Germany, yet it bolsters the
notion that as a company organized under private law, it has a legal personality independent of
that of the Federal Republic of Germany.
The Federal Republic of Germany, in its own official website, [48] also makes reference to
GTZ and describes it in this manner:
x x x Going by the principle of sustainable development, the
German Technical Cooperation (Deutsche Gesellschaft fr Technische
Zusammenarbeit GmbH, GTZ) takes on non-profit projects in international

technical cooperation. The GTZ is a private company owned by the


Federal Republic of Germany.[49]
Again, we are uncertain of the corresponding legal implications under German law
surrounding a private company owned by the Federal Republic of Germany. Yet taking the
description on face value, the apparent equivalent under Philippine law is that of a corporation
organized under the Corporation Code but owned by the Philippine government, or a
government-owned or controlled corporation without original charter. And it bears notice that
Section 36 of the Corporate Code states that [e]very corporation incorporated under this Code
has the power and capacity x x x to sue and be sued in its corporate name. [50]
It is entirely possible that under German law, an entity such as GTZ or particularly GTZ
itself has not been vested or has been specifically deprived the power and capacity to sue
and/or be sued. Yet in the proceedings below and before this Court, GTZ has failed to establish
that under German law, it has not consented to be sued despite it being owned by the Federal
Republic of Germany. We adhere to the rule that in the absence of evidence to the
contrary,
foreign laws on a particular subject are presumed to be the same as those of
the Philippines,[51] and following the most intelligent assumption we can gather, GTZ is akin to
a governmental owned or controlled corporation without original charter which, by virtue of
the Corporation Code, has expressly consented to be sued. At the very least, like the Labor
Arbiter and the Court of Appeals, this Court has no basis in fact to conclude or presume that
GTZ enjoys immunity from suit.
This absence of basis in fact leads to another important point, alluded to by the Labor
Arbiter in his rulings. Our ruling in Holy See v. Del Rosario[52] provided a template on how a
foreign entity desiring to invoke State immunity from suit could duly prove such immunity
before our local courts. The principles enunciated in that case were derived from public
international law. We stated then:
In Public International Law, when a state or international agency
wishes to plead sovereign or diplomatic immunity in a foreign court, it
requests the Foreign Office of the state where it is sued to convey to the
court that said defendant is entitled to immunity.
In the United States, the procedure followed is the process of
"suggestion," where the foreign state or the international organization sued
in an American court requests the Secretary of State to make a
determination as to whether it is entitled to immunity. If the Secretary of
State finds that the defendant is immune from suit, he, in turn, asks the
Attorney General to submit to the court a "suggestion" that the defendant is
entitled to immunity. In England, a similar procedure is followed, only the
Foreign Office issues a certification to that effect instead of submitting a
"suggestion" (O'Connell, I International Law 130 [1965]; Note: Immunity
from Suit of Foreign Sovereign Instrumentalities and Obligations, 50 Yale
Law Journal 1088 [1941]).
In the Philippines, the practice is for the foreign government or
the international organization to first secure an executive endorsement of its
claim of sovereign or diplomatic immunity. But how the Philippine Foreign
Office conveys its endorsement to the courts varies. In International
Catholic Migration Commission v. Calleja, 190 SCRA 130 (1990), the

Secretary of Foreign Affairs just sent a letter directly to the Secretary of


Labor and Employment, informing the latter that the respondent-employer
could not be sued because it enjoyed diplomatic immunity. InWorld Health
Organization v. Aquino, 48 SCRA 242 (1972), the Secretary of Foreign
Affairs sent the trial court a telegram to that effect. In Baer v. Tizon, 57
SCRA 1 (1974), the U.S. Embassy asked the Secretary of Foreign Affairs to
request the Solicitor General to make, in behalf of the Commander of the
United States Naval Base at Olongapo City, Zambales, a "suggestion" to
respondent Judge. The Solicitor General embodied the "suggestion" in a
Manifestation and Memorandum as amicus curiae.[53]
It is to be recalled that the Labor Arbiter, in both of his rulings, noted that it was
imperative for petitioners to secure from the Department of Foreign Affairs a certification of
respondents diplomatic status and entitlement to diplomatic privileges including immunity
from suits.[54] The requirement might not necessarily be imperative. However, had GTZ
obtained such certification from the DFA, it would have provided factual basis for its claim of
immunity that would, at the very least, establish a disputable evidentiary presumption that the
foreign party is indeed immune which the opposing party will have to overcome with its own
factual evidence. We do not see why GTZ could not have secured such certification or
endorsement from the DFA for purposes of this case. Certainly, it would have been highly
prudential for GTZ to obtain the same after the Labor Arbiter had denied the motion to dismiss.
Still, even at this juncture, we do not see any evidence that the DFA, the office of the executive
branch in charge of our diplomatic relations, has indeed endorsed GTZs claim of immunity. It
may be possible that GTZ tried, but failed to secure such certification, due to the same
concerns that we have discussed herein.
Would the fact that the Solicitor General has endorsed GTZs claim of States immunity
from suit before this Court sufficiently substitute for the DFA certification? Note that the rule
in public international law quoted in Holy See referred to endorsement by the Foreign Office of
the State where the suit is filed, such foreign office in the Philippinesbeing the Department of
Foreign Affairs. Nowhere in the Comment of the OSG is it manifested that the DFA has
endorsed GTZs claim, or that the OSG had solicited the DFAs views on the issue. The
arguments raised by the OSG are virtually the same as the arguments raised by GTZ without
any indication of any special and distinct perspective maintained by the Philippine government
on the issue. The Comment filed by the OSG does not inspire the same degree of confidence as
a certification from the DFA would have elicited.
Holy See made reference to Baer v. Tizon,[55] and that in the said case, the United States
Embassy asked the Secretary of Foreign Affairs to request the Solicitor General to make a
suggestion to the trial court, accomplished by way of a Manifestation and Memorandum, that
the petitioner therein enjoyed immunity as the Commander of the Subic Bay Naval Base. Such
circumstance is actually not narrated in the text of Baer itself and was likely supplied in Holy
See because its author, Justice Camilio Quiason, had appeared as the Solicitor in behalf of the
OSG in Baer. Nonetheless, as narrated in Holy See, it was the Secretary of Foreign Affairs
which directed the OSG to intervene in behalf of the United States government in
the Baer case, and such fact is manifest enough of the endorsement by the Foreign Office. We
do not find a similar circumstance that bears here.
The Court is thus holds and so rules that GTZ consistently has been unable to establish
with satisfaction that it enjoys the immunity from suit generally enjoyed by its parent country,
the Federal Republic of Germany. Consequently, both the Labor Arbiter and the Court of
Appeals acted within proper bounds when they refused to acknowledge that GTZ is so immune

by dismissing the complaint against it. Our finding has additional ramifications on the failure
of GTZ to properly appeal the Labor Arbiters decision to the NLRC. As pointed out by the
OSG, the direct recourse to the Court of Appeals while bypassing the NLRC could have been
sanctioned had the Labor Arbiters decision been a patent nullity. Since the Labor Arbiter
acted properly in deciding the complaint, notwithstanding GTZs claim of immunity, we
cannot see how the decision could have translated into a patent nullity.
As a result, there was no basis for petitioners in foregoing the appeal to the NLRC by
filing directly with the Court of Appeals the petition for certiorari. It then follows that the
Court of Appeals acted correctly in dismissing the petition on that ground. As a further
consequence, since petitioners failed to perfect an appeal from the Labor Arbiters Decision,
the same has long become final and executory. All other questions related to this case, such as
whether or not private respondents were illegally dismissed, are no longer susceptible to
review, respecting as we do the finality of the Labor Arbiters Decision.
A final note. This decision should not be seen as deviation from the more common
methodology employed in ascertaining whether a party enjoys State immunity from suit, one
which focuses on the particular functions exercised by the party and determines whether these
are proprietary or sovereign in nature. The nature of the acts performed by the entity invoking
immunity remains the most important barometer for testing whether the privilege of State
immunity from suit should apply. At the same time, our Constitution stipulates that a State
immunity from suit is conditional on its withholding of consent; hence, the laws and
circumstances pertaining to the creation and legal personality of an instrumentality or agency
invoking immunity remain relevant. Consent to be sued, as exhibited in this decision, is often
conferred by the very same statute or general law creating the instrumentality or agency.
WHEREFORE, the petition is DENIED. No pronouncement as to costs.
SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila
EN BANC
G.R. No. 169777*

April 20, 2006

SENATE OF THE PHILIPPINES, represented by FRANKLIN M. DRILON, in his


capacity as Senate President, JUAN M. FLAVIER, in his capacity as Senate
President Pro Tempore, FRANCIS N. PANGILINAN, in his capacity as Majority
Leader, AQUILINO Q. PIMENTEL, JR., in his capacity as Minority Leader,
SENATORS RODOLFO G. BIAZON, "COMPANERA" PIA S. CAYETANO,
JINGGOY EJERCITO ESTRADA, LUISA "LOI" EJERCITO ESTRADA, JUAN
PONCE ENRILE, RICHARD J. GORDON, PANFILO M. LACSON, ALFREDO S.LIM,
M. A. MADRIGAL, SERGIO OSMENA III, RALPH G. RECTO, and MAR
ROXAS, Petitioners,
vs.

EDUARDO R. ERMITA, in his capacity as Executive Secretary and alter-ego of


President Gloria Macapagal-Arroyo, and anyone acting in his stead and in
behalf of the President of the Philippines,Respondents.
x-------------------------x
G.R. No. 169659

April 20, 2006

BAYAN MUNA represented by DR. REYNALDO LESACA, JR., Rep. SATUR


OCAMPO, Rep. CRISPIN BELTRAN, Rep. RAFAEL MARIANO, Rep. LIZA MAZA,
Rep. TEODORO CASINO, Rep. JOEL VIRADOR, COURAGE represented by
FERDINAND GAITE, and COUNSELS FOR THE DEFENSE OF LIBERTIES
(CODAL) represented by ATTY. REMEDIOS BALBIN, Petitioners,
vs.
EDUARDO ERMITA, in his capacity as Executive Secretary and alter-ego of
President Gloria Macapagal-Arroyo, Respondent.
x-------------------------x
G.R. No. 169660

April 20, 2006

FRANCISCO I. CHAVEZ, Petitioner,


vs.
EDUARDO R. ERMITA, in his capacity as Executive Secretary, AVELINO J.
CRUZ, JR., in his capacity as Secretary of Defense, and GENEROSO S. SENGA,
in his capacity as AFP Chief of Staff, Respondents.
x-------------------------x
G.R. No. 169667

April 20, 2006

ALTERNATIVE LAW GROUPS, INC. (ALG), Petitioner,


vs.
HON. EDUARDO R. ERMITA, in his capacity as Executive
Secretary, Respondent.
x-------------------------x
G.R. No. 169834

April 20, 2006

PDP- LABAN, Petitioner,


vs.
EXECUTIVE SECRETARY EDUARDO R. ERMITA, Respondent.
x-------------------------x
G.R. No. 171246

April 20, 2006

JOSE ANSELMO I. CADIZ, FELICIANO M. BAUTISTA, ROMULO R. RIVERA,


JOSE AMOR AMORANDO, ALICIA A. RISOS-VIDAL, FILEMON C. ABELITA III,
MANUEL P. LEGASPI, J. B. JOVY C. BERNABE, BERNARD L. DAGCUTA,
ROGELIO V. GARCIA, and the INTEGRATED BAR FOR THE
PHILIPPINES,Petitioners,
vs.
HON. EXECUTIVE SECRETARY EDUARDO R. ERMITA, Respondent.
DECISION
CARPIO MORALES, J.:
A transparent government is one of the hallmarks of a truly republican state. Even in
the early history of republican thought, however, it has been recognized that the head
of government may keep certain information confidential in pursuit of the public
interest. Explaining the reason for vesting executive power in only one magistrate, a
distinguished delegate to the U.S. Constitutional Convention said: "Decision, activity,
secrecy, and dispatch will generally characterize the proceedings of one man, in a
much more eminent degree than the proceedings of any greater number; and in
proportion as the number is increased, these qualities will be diminished."1
History has been witness, however, to the fact that the power to withhold information
lends itself to abuse, hence, the necessity to guard it zealously.
The present consolidated petitions for certiorari and prohibition proffer that the
President has abused such power by issuing Executive Order No. 464 (E.O. 464) last
September 28, 2005. They thus pray for its declaration as null and void for being
unconstitutional.
In resolving the controversy, this Court shall proceed with the recognition that the
issuance under review has come from a co-equal branch of government, which thus
entitles it to a strong presumption of constitutionality. Once the challenged order is
found to be indeed violative of the Constitution, it is duty-bound to declare it so. For
the Constitution, being the highest expression of the sovereign will of the Filipino
people, must prevail over any issuance of the government that contravenes its
mandates.
In the exercise of its legislative power, the Senate of the Philippines, through its
various Senate Committees, conducts inquiries or investigations in aid of legislation
which call for, inter alia, the attendance of officials and employees of the executive
department, bureaus, and offices including those employed in Government Owned
and Controlled Corporations, the Armed Forces of the Philippines (AFP), and the
Philippine National Police (PNP).
On September 21 to 23, 2005, the Committee of the Senate as a whole issued
invitations to various officials of the Executive Department for them to appear on
September 29, 2005 as resource speakers in a public hearing on the railway project
of the North Luzon Railways Corporation with the China National Machinery and
Equipment Group (hereinafter North Rail Project). The public hearing was sparked by

a privilege speech of Senator Juan Ponce Enrile urging the Senate to investigate the
alleged overpricing and other unlawful provisions of the contract covering the North
Rail Project.
The Senate Committee on National Defense and Security likewise issued
2
invitations dated September 22, 2005 to the following officials of the AFP: the
Commanding General of the Philippine Army, Lt. Gen. Hermogenes C. Esperon;
Inspector General of the AFP Vice Admiral Mateo M. Mayuga; Deputy Chief of Staff
for Intelligence of the AFP Rear Admiral Tirso R. Danga; Chief of the Intelligence
Service of the AFP Brig. Gen. Marlu Q. Quevedo; Assistant Superintendent of the
Philippine Military Academy (PMA) Brig. Gen. Francisco V. Gudani; and Assistant
Commandant, Corps of Cadets of the PMA, Col. Alexander F. Balutan, for them to
attend as resource persons in a public hearing scheduled on September 28, 2005 on
the following: (1) Privilege Speech of Senator Aquilino Q. Pimentel Jr., delivered on
June 6, 2005 entitled "Bunye has Provided Smoking Gun or has Opened a Can of
Worms that Show Massive Electoral Fraud in the Presidential Election of May 2005";
(2) Privilege Speech of Senator Jinggoy E. Estrada delivered on July 26, 2005 entitled
"The Philippines as the Wire-Tapping Capital of the World"; (3) Privilege Speech of
Senator Rodolfo Biazon delivered on August 1, 2005 entitled "Clear and Present
Danger"; (4) Senate Resolution No. 285 filed by Senator Maria Ana Consuelo
Madrigal Resolution Directing the Committee on National Defense and Security to
Conduct an Inquiry, in Aid of Legislation, and in the National Interest, on the Role of
the Military in the So-called "Gloriagate Scandal"; and (5) Senate Resolution No. 295
filed by Senator Biazon Resolution Directing the Committee on National Defense
and Security to Conduct an Inquiry, in Aid of Legislation, on the Wire-Tapping of the
President of the Philippines.
Also invited to the above-said hearing scheduled on September 28 2005 was the AFP
Chief of Staff, General Generoso S. Senga who, by letter 3 dated September 27, 2005,
requested for its postponement "due to a pressing operational situation that demands
[his utmost personal attention" while "some of the invited AFP officers are currently
attending to other urgent operational matters."
On September 28, 2005, Senate President Franklin M. Drilon received from Executive
4
Secretary Eduardo R. Ermita a letter dated September 27, 2005 "respectfully
request[ing] for the postponement of the hearing [regarding the NorthRail project] to
which various officials of the Executive Department have been invited" in order to
"afford said officials ample time and opportunity to study and prepare for the various
issues so that they may better enlighten the Senate Committee on its investigation."
Senate President Drilon, however, wrote5 Executive Secretary Ermita that the
Senators "are unable to accede to [his request]" as it "was sent belatedly" and "[a]ll
preparations and arrangements as well as notices to all resource persons were
completed [the previous] week."
6

Senate President Drilon likewise received on September 28, 2005 a letter from the
President of the North Luzon Railways Corporation Jose L. Cortes, Jr. requesting that
the hearing on the NorthRail project be postponed or cancelled until a copy of the
report of the UP Law Center on the contract agreements relative to the project had
been secured.

On September 28, 2005, the President issued E.O. 464, "Ensuring Observance of the
Principle of Separation of Powers, Adherence to the Rule on Executive Privilege and
Respect for the Rights of Public Officials Appearing in Legislative Inquiries in Aid of
7
Legislation Under the Constitution, and For Other Purposes," which, pursuant to
Section 6 thereof, took effect immediately. The salient provisions of the Order are as
follows:
SECTION 1. Appearance by Heads of Departments Before Congress. In
accordance with Article VI, Section 22 of the Constitution and to implement the
Constitutional provisions on the separation of powers between co-equal branches of
the government, all heads of departments of the Executive Branch of the government
shall secure the consent of the President prior to appearing before either House of
Congress.
When the security of the State or the public interest so requires and the President so
states in writing, the appearance shall only be conducted in executive session.
SECTION. 2. Nature, Scope and Coverage of Executive Privilege.
(a) Nature and Scope. - The rule of confidentiality based on executive privilege is
fundamental to the operation of government and rooted in the separation of powers
under the Constitution (Almonte vs. Vasquez, G.R. No. 95367, 23 May 1995). Further,
Republic Act No. 6713 or the Code of Conduct and Ethical Standards for Public
Officials and Employees provides that Public Officials and Employees shall not use or
divulge confidential or classified information officially known to them by reason of their
office and not made available to the public to prejudice the public interest.
Executive privilege covers all confidential or classified information between the
President and the public officers covered by this executive order, including:
Conversations and correspondence between the President and the public official
covered by this executive order (Almonte vs. Vasquez G.R. No. 95367, 23 May 1995;
Chavez v. Public Estates Authority, G.R. No. 133250, 9 July 2002);
Military, diplomatic and other national security matters which in the interest of national
security should not be divulged (Almonte vs. Vasquez, G.R. No. 95367, 23 May 1995;
Chavez v. Presidential Commission on Good Government, G.R. No. 130716, 9
December 1998).
Information between inter-government agencies prior to the conclusion of treaties and
executive agreements (Chavez v. Presidential Commission on Good Government,
G.R. No. 130716, 9 December 1998);
Discussion in close-door Cabinet meetings (Chavez v. Presidential Commission on
Good Government, G.R. No. 130716, 9 December 1998);
Matters affecting national security and public order (Chavez v. Public Estates
Authority, G.R. No. 133250, 9 July 2002).

(b) Who are covered. The following are covered by this executive order:
Senior officials of executive departments who in the judgment of the department
heads are covered by the executive privilege;
Generals and flag officers of the Armed Forces of the Philippines and such other
officers who in the judgment of the Chief of Staff are covered by the executive
privilege;
Philippine National Police (PNP) officers with rank of chief superintendent or higher
and such other officers who in the judgment of the Chief of the PNP are covered by
the executive privilege;
Senior national security officials who in the judgment of the National Security Adviser
are covered by the executive privilege; and
Such other officers as may be determined by the President.
SECTION 3. Appearance of Other Public Officials Before Congress. All public
officials enumerated in Section 2 (b) hereof shall secure prior consent of the President
prior to appearing before either House of Congress to ensure the observance of the
principle of separation of powers, adherence to the rule on executive privilege and
respect for the rights of public officials appearing in inquiries in aid of legislation.
(Emphasis and underscoring supplied)
Also on September 28, 2005, Senate President Drilon received from Executive
Secretary Ermita a copy of E.O. 464, and another letter 8 informing him "that officials
of the Executive Department invited to appear at the meeting [regarding the NorthRail
project] will not be able to attend the same without the consent of the President,
pursuant to [E.O. 464]" and that "said officials have not secured the required consent
from the President." On even date which was also the scheduled date of the hearing
on the alleged wiretapping, Gen. Senga sent a letter 9 to Senator Biazon, Chairperson
of the Committee on National Defense and Security, informing him "that per
instruction of [President Arroyo], thru the Secretary of National Defense, no officer of
the [AFP] is authorized to appear before any Senate or Congressional hearings
without seeking a written approval from the President" and "that no approval has been
granted by the President to any AFP officer to appear before the public hearing of the
Senate Committee on National Defense and Security scheduled [on] 28 September
2005."
Despite the communications received from Executive Secretary Ermita and Gen.
Senga, the investigation scheduled by the Committee on National Defense and
Security pushed through, with only Col. Balutan and Brig. Gen. Gudani among all the
AFP officials invited attending.
For defying President Arroyos order barring military personnel from testifying before
legislative inquiries without her approval, Brig. Gen. Gudani and Col. Balutan were
relieved from their military posts and were made to face court martial proceedings.

As to the NorthRail project hearing scheduled on September 29, 2005, Executive


Secretary Ermita, citing E.O. 464, sent letter of regrets, in response to the invitations
sent to the following government officials: Light Railway Transit Authority
Administrator Melquiades Robles, Metro Rail Transit Authority Administrator Roberto
Lastimoso, Department of Justice (DOJ) Chief State Counsel Ricardo V. Perez, then
Presidential Legal Counsel Merceditas Gutierrez, Department of Transportation and
Communication (DOTC) Undersecretary Guiling Mamonding, DOTC Secretary
Leandro Mendoza, Philippine National Railways General Manager Jose Serase II,
Monetary Board Member Juanita Amatong, Bases Conversion Development Authority
Chairperson Gen. Narciso Abaya and Secretary Romulo L. Neri. 10 NorthRail
President Cortes sent personal regrets likewise citing E.O. 464. 11
On October 3, 2005, three petitions, docketed as G.R. Nos. 169659, 169660, and
169667, for certiorari and prohibition, were filed before this Court challenging the
constitutionality of E.O. 464.
In G.R. No. 169659, petitioners party-list Bayan Muna, House of Representatives
Members Satur Ocampo, Crispin Beltran, Rafael Mariano, Liza Maza, Joel Virador
and Teodoro Casino, Courage, an organization of government employees, and
Counsels for the Defense of Liberties (CODAL), a group of lawyers dedicated to the
promotion of justice, democracy and peace, all claiming to have standing to file the
suit because of the transcendental importance of the issues they posed, pray, in their
petition that E.O. 464 be declared null and void for being unconstitutional; that
respondent Executive Secretary Ermita, in his capacity as Executive Secretary and
alter-ego of President Arroyo, be prohibited from imposing, and threatening to impose
sanctions on officials who appear before Congress due to congressional summons.
Additionally, petitioners claim that E.O. 464 infringes on their rights and impedes them
from fulfilling their respective obligations. Thus, Bayan Muna alleges that E.O. 464
infringes on its right as a political party entitled to participate in governance; Satur
Ocampo, et al. allege that E.O. 464 infringes on their rights and duties as members of
Congress to conduct investigation in aid of legislation and conduct oversight functions
in the implementation of laws; Courage alleges that the tenure of its members in
public office is predicated on, and threatened by, their submission to the requirements
of E.O. 464 should they be summoned by Congress; and CODAL alleges that its
members have a sworn duty to uphold the rule of law, and their rights to information
and to transparent governance are threatened by the imposition of E.O. 464.
In G.R. No. 169660, petitioner Francisco I. Chavez, claiming that his constitutional
rights as a citizen, taxpayer and law practitioner, are affected by the enforcement of
E.O. 464, prays in his petition that E.O. 464 be declared null and void for being
unconstitutional.
In G.R. No. 169667, petitioner Alternative Law Groups, Inc. 12 (ALG), alleging that as a
coalition of 17 legal resource non-governmental organizations engaged in
developmental lawyering and work with the poor and marginalized sectors in different
parts of the country, and as an organization of citizens of the Philippines and a part of
the general public, it has legal standing to institute the petition to enforce its
constitutional right to information on matters of public concern, a right which was
13
denied to the public by E.O. 464, prays, that said order be declared null and void for

being unconstitutional and that respondent Executive Secretary Ermita be ordered to


cease from implementing it.

their petition for certiorari and prohibition, docketed as G.R. No. 171246, and pray that
E.O. 464 be declared null and void.

On October 11, 2005, Petitioner Senate of the Philippines, alleging that it has a vital
interest in the resolution of the issue of the validity of E.O. 464 for it stands to suffer
imminent and material injury, as it has already sustained the same with its continued
enforcement since it directly interferes with and impedes the valid exercise of the
Senates powers and functions and conceals information of great public interest and
concern, filed its petition for certiorari and prohibition, docketed as G.R. No. 169777
and prays that E.O. 464 be declared unconstitutional.

All the petitions pray for the issuance of a Temporary Restraining Order enjoining
respondents from implementing, enforcing, and observing E.O. 464.

On October 14, 2005, PDP-Laban, a registered political party with members duly
elected into the Philippine Senate and House of Representatives, filed a similar
petition for certiorari and prohibition, docketed as G.R. No. 169834, alleging that it is
affected by the challenged E.O. 464 because it hampers its legislative agenda to be
implemented through its members in Congress, particularly in the conduct of inquiries
in aid of legislation and transcendental issues need to be resolved to avert a
constitutional crisis between the executive and legislative branches of the
government.
Meanwhile, by letter14 dated February 6, 2006, Senator Biazon reiterated his invitation
to Gen. Senga for him and other military officers to attend the hearing on the alleged
wiretapping scheduled on February 10, 2005. Gen. Senga replied, however, by
letter15 dated February 8, 2006, that "[p]ursuant to Executive Order No. 464, th[e]
Headquarters requested for a clearance from the President to allow [them] to appear
before the public hearing" and that "they will attend once [their] request is approved
by the President." As none of those invited appeared, the hearing on February 10,
2006 was cancelled.16
In another investigation conducted jointly by the Senate Committee on Agriculture and
Food and the Blue Ribbon Committee on the alleged mismanagement and use of the
fertilizer fund under the Ginintuang Masaganang Ani program of the Department of
Agriculture (DA), several Cabinet officials were invited to the hearings scheduled on
October 5 and 26, November 24 and December 12, 2005 but most of them failed to
attend, DA Undersecretary Belinda Gonzales, DA Assistant Secretary Felix Jose
Montes, Fertilizer and Pesticide Authority Executive Director Norlito R. Gicana, 17 and
those from the Department of Budget and Management18 having invoked E.O. 464.

In the oral arguments on the petitions conducted on February 21, 2006, the following
substantive issues were ventilated: (1) whether respondents committed grave abuse
of discretion in implementing E.O. 464 prior to its publication in the Official Gazette or
in a newspaper of general circulation; and (2) whether E.O. 464 violates the following
provisions of the Constitution: Art. II, Sec. 28, Art. III, Sec. 4, Art. III, Sec. 7, Art. IV.
Sec. 1, Art. VI, Sec. 21, Art. VI, Sec. 22, Art. XI, Sec. 1, and Art. XIII, Sec. 16. The
procedural issue of whether there is an actual case or controversy that calls for
judicial review was not taken up; instead, the parties were instructed to discuss it in
their respective memoranda.
After the conclusion of the oral arguments, the parties were directed to submit their
respective memoranda, paying particular attention to the following propositions: (1)
that E.O. 464 is, on its face, unconstitutional; and (2) assuming that it is not, it is
unconstitutional as applied in four instances, namely: (a) the so called Fertilizer scam;
(b) the NorthRail investigation (c) the Wiretapping activity of the ISAFP; and (d) the
investigation on the Venable contract. 22
Petitioners in G.R. No. 16966023 and G.R. No. 16977724 filed their memoranda on
March 7, 2006, while those in G.R. No. 16966725 and G.R. No. 16983426 filed theirs
the next day or on March 8, 2006. Petitioners in G.R. No. 171246 did not file any
memorandum.
Petitioners Bayan Muna et al. in G.R. No. 169659, after their motion for extension to
file memorandum27 was granted, subsequently filed a manifestation28 dated March
14, 2006 that it would no longer file its memorandum in the interest of having the
issues resolved soonest, prompting this Court to issue a Resolution reprimanding
29
them.
Petitioners submit that E.O. 464 violates the following constitutional provisions:
Art. VI, Sec. 2130

In the budget hearings set by the Senate on February 8 and 13, 2006, Press
19
Secretary and Presidential Spokesperson Ignacio R. Bunye, DOJ Secretary Raul M.
20
Gonzalez and Department of Interior and Local Government Undersecretary Marius
P. Corpus21 communicated their inability to attend due to lack of appropriate
clearance from the President pursuant to E.O. 464. During the February 13, 2005
budget hearing, however, Secretary Bunye was allowed to attend by Executive
Secretary Ermita.
On February 13, 2006, Jose Anselmo I. Cadiz and the incumbent members of the
Board of Governors of the Integrated Bar of the Philippines, as taxpayers, and the
Integrated Bar of the Philippines as the official organization of all Philippine lawyers,
all invoking their constitutional right to be informed on matters of public interest, filed

Art. VI, Sec. 22

31

Art. VI, Sec. 132


Art. XI, Sec. 1

33

Art. III, Sec. 7

34

Art. III, Sec. 4

35

Art. XIII, Sec. 16

36

Art. II, Sec. 2837


Respondents Executive Secretary Ermita et al., on the other hand, pray in their
consolidated memorandum38 on March 13, 2006 for the dismissal of the petitions for
lack of merit.
The Court synthesizes the issues to be resolved as follows:
1. Whether E.O. 464 contravenes the power of inquiry vested in Congress;
2. Whether E.O. 464 violates the right of the people to information on
matters of public concern; and
3. Whether respondents have committed grave abuse of discretion when
they implemented E.O. 464 prior to its publication in a newspaper of general
circulation.
Essential requisites for judicial review
Before proceeding to resolve the issue of the constitutionality of E.O. 464,
ascertainment of whether the requisites for a valid exercise of the Courts power of
judicial review are present is in order.
Like almost all powers conferred by the Constitution, the power of judicial review is
subject to limitations, to wit: (1) there must be an actual case or controversy calling for
the exercise of judicial power; (2) the person challenging the act must have standing
to challenge the validity of the subject act or issuance; otherwise stated, he must have
a personal and substantial interest in the case such that he has sustained, or will
sustain, direct injury as a result of its enforcement; (3) the question of constitutionality
must be raised at the earliest opportunity; and (4) the issue of constitutionality must
be the very lis mota of the case.39
Except with respect to the requisites of standing and existence of an actual case or
controversy where the disagreement between the parties lies, discussion of the rest of
the requisites shall be omitted.
Standing
Respondents, through the Solicitor General, assert that the allegations in G.R. Nos.
169659, 169660 and 169667 make it clear that they, adverting to the non-appearance
of several officials of the executive department in the investigations called by the
different committees of the Senate, were brought to vindicate the constitutional duty of
the Senate or its different committees to conduct inquiry in aid of legislation or in the
exercise of its oversight functions. They maintain that Representatives Ocampo et al.
have not shown any specific prerogative, power, and privilege of the House of

Representatives which had been effectively impaired by E.O. 464, there being no
mention of any investigation called by the House of Representatives or any of its
committees which was aborted due to the implementation of E.O. 464.
As for Bayan Munas alleged interest as a party-list representing the marginalized and
underrepresented, and that of the other petitioner groups and individuals who profess
to have standing as advocates and defenders of the Constitution, respondents
contend that such interest falls short of that required to confer standing on them as
parties "injured-in-fact."40
Respecting petitioner Chavez, respondents contend that Chavez may not claim an
interest as a taxpayer for the implementation of E.O. 464 does not involve the
exercise of taxing or spending power.41
With regard to the petition filed by the Senate, respondents argue that in the absence
of a personal or direct injury by reason of the issuance of E.O. 464, the Senate and its
individual members are not the proper parties to assail the constitutionality of E.O.
464.
Invoking this Courts ruling in National Economic Protectionism Association v.
Ongpin42 and Valmonte v. Philippine Charity Sweepstakes Office, 43 respondents
assert that to be considered a proper party, one must have a personal and substantial
interest in the case, such that he has sustained or will sustain direct injury due to the
enforcement of E.O. 464.44
That the Senate of the Philippines has a fundamental right essential not only for
intelligent public decision-making in a democratic system, but more especially for
45
sound legislation is not disputed. E.O. 464, however, allegedly stifles the ability of
46
the members of Congress to access information that is crucial to law-making. Verily,
the Senate, including its individual members, has a substantial and direct interest over
the outcome of the controversy and is the proper party to assail the constitutionality of
E.O. 464. Indeed, legislators have standing to maintain inviolate the prerogative,
powers and privileges vested by the Constitution in their office and are allowed to sue
to question the validity of any official action which they claim infringes their
prerogatives as legislators.47
In the same vein, party-list representatives Satur Ocampo (Bayan Muna), Teodoro
Casino (Bayan Muna), Joel Virador (Bayan Muna), Crispin Beltran (Anakpawis),
Rafael Mariano (Anakpawis), and Liza Maza (Gabriela) are allowed to sue to question
the constitutionality of E.O. 464, the absence of any claim that an investigation called
by the House of Representatives or any of its committees was aborted due to the
implementation of E.O. 464 notwithstanding, it being sufficient that a claim is made
that E.O. 464 infringes on their constitutional rights and duties as members of
Congress to conduct investigation in aid of legislation and conduct oversight functions
in the implementation of laws.
The national political party, Bayan Muna, likewise meets the standing requirement as
it obtained three seats in the House of Representatives in the 2004 elections and is,
therefore, entitled to participate in the legislative process consonant with the declared

policy underlying the party list system of affording citizens belonging to marginalized
and underrepresented sectors, organizations and parties who lack well-defined
political constituencies to contribute to the formulation and enactment of legislation
48
that will benefit the nation.
As Bayan Muna and Representatives Ocampo et al. have the standing to file their
petitions, passing on the standing of their co-petitioners Courage and Codal is
rendered unnecessary.49
In filing their respective petitions, Chavez, the ALG which claims to be an organization
of citizens, and the incumbent members of the IBP Board of Governors and the IBP in
behalf of its lawyer members, 50 invoke their constitutional right to information on
matters of public concern, asserting that the right to information, curtailed and violated
by E.O. 464, is essential to the effective exercise of other constitutional rights 51 and to
the maintenance of the balance of power among the three branches of the
52
government through the principle of checks and balances.
It is well-settled that when suing as a citizen, the interest of the petitioner in assailing
the constitutionality of laws, presidential decrees, orders, and other regulations, must
be direct and personal. In Franciso v. House of Representatives, 53 this Court held that
when the proceeding involves the assertion of a public right, the mere fact that he is a
citizen satisfies the requirement of personal interest.
As for petitioner PDP-Laban, it asseverates that it is clothed with legal standing in
view of the transcendental issues raised in its petition which this Court needs to
resolve in order to avert a constitutional crisis. For it to be accorded standing on the
ground of transcendental importance, however, it must establish (1) the character of
the funds (that it is public) or other assets involved in the case, (2) the presence of a
clear case of disregard of a constitutional or statutory prohibition by the public
respondent agency or instrumentality of the government, and (3) the lack of any party
with a more direct and specific interest in raising the questions being raised. 54 The
first and last determinants not being present as no public funds or assets are involved
and petitioners in G.R. Nos. 169777 and 169659 have direct and specific interests in
the resolution of the controversy, petitioner PDP-Laban is bereft of standing to file its
petition. Its allegation that E.O. 464 hampers its legislative agenda is vague and
uncertain, and at best is only a "generalized interest" which it shares with the rest of
the political parties. Concrete injury, whether actual or threatened, is that
indispensable element of a dispute which serves in part to cast it in a form traditionally
55
capable of judicial resolution. In fine, PDP-Labans alleged interest as a political
party does not suffice to clothe it with legal standing.
Actual Case or Controversy
Petitioners assert that an actual case exists, they citing the absence of the executive
officials invited by the Senate to its hearings after the issuance of E.O. 464,
particularly those on the NorthRail project and the wiretapping controversy.
Respondents counter that there is no case or controversy, there being no showing
that President Arroyo has actually withheld her consent or prohibited the appearance

56

of the invited officials. These officials, they claim, merely communicated to the
Senate that they have not yet secured the consent of the President, not that the
President prohibited their attendance. 57 Specifically with regard to the AFP officers
who did not attend the hearing on September 28, 2005, respondents claim that the
instruction not to attend without the Presidents consent was based on its role as
Commander-in-Chief of the Armed Forces, not on E.O. 464.
Respondents thus conclude that the petitions merely rest on an unfounded
apprehension that the President will abuse its power of preventing the appearance of
officials before Congress, and that such apprehension is not sufficient for challenging
the validity of E.O. 464.
The Court finds respondents assertion that the President has not withheld her
consent or prohibited the appearance of the officials concerned immaterial in
determining the existence of an actual case or controversy insofar as E.O. 464 is
concerned. For E.O. 464 does not require either a deliberate withholding of consent
or an express prohibition issuing from the President in order to bar officials from
appearing before Congress.
As the implementation of the challenged order has already resulted in the absence of
officials invited to the hearings of petitioner Senate of the Philippines, it would make
no sense to wait for any further event before considering the present case ripe for
adjudication. Indeed, it would be sheer abandonment of duty if this Court would now
refrain from passing on the constitutionality of E.O. 464.
Constitutionality of E.O. 464
E.O. 464, to the extent that it bars the appearance of executive officials before
Congress, deprives Congress of the information in the possession of these officials.
To resolve the question of whether such withholding of information violates the
Constitution, consideration of the general power of Congress to obtain information,
otherwise known as the power of inquiry, is in order.
The power of inquiry
The Congress power of inquiry is expressly recognized in Section 21 of Article VI of
the Constitution which reads:
SECTION 21. The Senate or the House of Representatives or any of its respective
committees may conduct inquiries in aid of legislation in accordance with its duly
published rules of procedure. The rights of persons appearing in or affected by such
inquiries shall be respected. (Underscoring supplied)
This provision is worded exactly as Section 8 of Article VIII of the 1973 Constitution
except that, in the latter, it vests the power of inquiry in the unicameral legislature
established therein the Batasang Pambansa and its committees.

The 1935 Constitution did not contain a similar provision. Nonetheless, in Arnault v.
Nazareno,58 a case decided in 1950 under that Constitution, the Court already
recognized that the power of inquiry is inherent in the power to legislate.
Arnault involved a Senate investigation of the reportedly anomalous purchase of the
Buenavista and Tambobong Estates by the Rural Progress Administration. Arnault,
who was considered a leading witness in the controversy, was called to testify
thereon by the Senate. On account of his refusal to answer the questions of the
senators on an important point, he was, by resolution of the Senate, detained for
contempt. Upholding the Senates power to punish Arnault for contempt, this Court
held:
Although there is no provision in the Constitution expressly investing either House of
Congress with power to make investigations and exact testimony to the end that it
may exercise its legislative functions advisedly and effectively, such power is so far
incidental to the legislative function as to be implied. In other words, the power of
inquiry with process to enforce it is an essential and appropriate auxiliary to the
legislative function. A legislative body cannot legislate wisely or effectively in the
absence of information respecting the conditions which the legislation is intended to
affect or change; and where the legislative body does not itself possess the requisite
information which is not infrequently true recourse must be had to others who do
possess it. Experience has shown that mere requests for such information are often
unavailing, and also that information which is volunteered is not always accurate or
complete; so some means of compulsion is essential to obtain what is needed. 59 . . .
(Emphasis and underscoring supplied)
That this power of inquiry is broad enough to cover officials of the executive branch
may be deduced from the same case. The power of inquiry, the Court therein ruled, is
60
co-extensive with the power to legislate. The matters which may be a proper subject
of legislation and those which may be a proper subject of investigation are one. It
follows that the operation of government, being a legitimate subject for legislation, is a
proper subject for investigation.
Thus, the Court found that the Senate investigation of the government transaction
involved in Arnault was a proper exercise of the power of inquiry. Besides being
related to the expenditure of public funds of which Congress is the guardian, the
transaction, the Court held, "also involved government agencies created by Congress
and officers whose positions it is within the power of Congress to regulate or even
abolish."
Since Congress has authority to inquire into the operations of the executive branch, it
would be incongruous to hold that the power of inquiry does not extend to executive
officials who are the most familiar with and informed on executive operations.
As discussed in Arnault, the power of inquiry, "with process to enforce it," is grounded
on the necessity of information in the legislative process. If the information possessed
by executive officials on the operation of their offices is necessary for wise legislation
on that subject, by parity of reasoning, Congress has the right to that information and
the power to compel the disclosure thereof.

As evidenced by the American experience during the so-called "McCarthy era,"


however, the right of Congress to conduct inquiries in aid of legislation is, in theory,
no less susceptible to abuse than executive or judicial power. It may thus be
subjected to judicial review pursuant to the Courts certiorari powers under Section 1,
Article VIII of the Constitution.
For one, as noted in Bengzon v. Senate Blue Ribbon Committee,61 the inquiry itself
might not properly be in aid of legislation, and thus beyond the constitutional power of
Congress. Such inquiry could not usurp judicial functions. Parenthetically, one
possible way for Congress to avoid such a result as occurred in Bengzon is to
indicate in its invitations to the public officials concerned, or to any person for that
matter, the possible needed statute which prompted the need for the inquiry. Given
such statement in its invitations, along with the usual indication of the subject of
inquiry and the questions relative to and in furtherance thereof, there would be less
room for speculation on the part of the person invited on whether the inquiry is in aid
of legislation.
Section 21, Article VI likewise establishes crucial safeguards that proscribe the
legislative power of inquiry. The provision requires that the inquiry be done in
accordance with the Senate or Houses duly published rules of procedure, necessarily
implying the constitutional infirmity of an inquiry conducted without duly published
rules of procedure. Section 21 also mandates that the rights of persons appearing in
or affected by such inquiries be respected, an imposition that obligates Congress to
adhere to the guarantees in the Bill of Rights.
These abuses are, of course, remediable before the courts, upon the proper suit filed
by the persons affected, even if they belong to the executive branch. Nonetheless,
there may be exceptional circumstances, none appearing to obtain at present,
wherein a clear pattern of abuse of the legislative power of inquiry might be
established, resulting in palpable violations of the rights guaranteed to members of
the executive department under the Bill of Rights. In such instances, depending on
the particulars of each case, attempts by the Executive Branch to forestall these
abuses may be accorded judicial sanction.
Even where the inquiry is in aid of legislation, there are still recognized exemptions to
the power of inquiry, which exemptions fall under the rubric of "executive privilege."
Since this term figures prominently in the challenged order, it being mentioned in its
provisions, its preambular clauses,62 and in its very title, a discussion of executive
privilege is crucial for determining the constitutionality of E.O. 464.
Executive privilege
The phrase "executive privilege" is not new in this jurisdiction. It has been used even
prior to the promulgation of the 1986 Constitution. 63 Being of American origin, it is
best understood in light of how it has been defined and used in the legal literature of
the United States.
Schwartz defines executive privilege as "the power of the Government to withhold
information from the public, the courts, and the Congress."64 Similarly, Rozell defines

it as "the right of the President and high-level executive branch officers to withhold
information from Congress, the courts, and ultimately the public."65
66

Executive privilege is, nonetheless, not a clear or unitary concept. It has


encompassed claims of varying kinds.67 Tribe, in fact, comments that while it is
customary to employ the phrase "executive privilege," it may be more accurate to
speak of executive privileges "since presidential refusals to furnish information may
be actuated by any of at least three distinct kinds of considerations, and may be
asserted, with differing degrees of success, in the context of either judicial or
legislative investigations."
One variety of the privilege, Tribe explains, is the state secrets privilege invoked by
U.S. Presidents, beginning with Washington, on the ground that the information is of
such nature that its disclosure would subvert crucial military or diplomatic objectives.
Another variety is the informers privilege, or the privilege of the Government not to
disclose the identity of persons who furnish information of violations of law to officers
charged with the enforcement of that law. Finally, a generic privilege for internal
deliberations has been said to attach to intragovernmental documents reflecting
advisory opinions, recommendations and deliberations comprising part of a process
by which governmental decisions and policies are formulated. 68
Tribes comment is supported by the ruling in In re Sealed Case, thus:
Since the beginnings of our nation, executive officials have claimed a variety of
privileges to resist disclosure of information the confidentiality of which they felt was
crucial to fulfillment of the unique role and responsibilities of the executive branch of
our government. Courts ruled early that the executive had a right to withhold
documents that might reveal military or state secrets. The courts have also granted
the executive a right to withhold the identity of government informers in some
circumstances and a qualified right to withhold information related to pending
investigations. x x x"69 (Emphasis and underscoring supplied)
The entry in Blacks Law Dictionary on "executive privilege" is similarly instructive
regarding the scope of the doctrine.
This privilege, based on the constitutional doctrine of separation of powers, exempts
the executive from disclosure requirements applicable to the ordinary citizen or
organization where such exemption is necessary to the discharge of highly important
executive responsibilities involved in maintaining governmental operations, and
extends not only to military and diplomatic secrets but also to documents integral to
an appropriate exercise of the executive domestic decisional and policy making
functions, that is, those documents reflecting the frank expression necessary in intra70
governmental advisory and deliberative communications. (Emphasis and
underscoring supplied)
That a type of information is recognized as privileged does not, however, necessarily
mean that it would be considered privileged in all instances. For in determining the
validity of a claim of privilege, the question that must be asked is not only whether the

requested information falls within one of the traditional privileges, but also whether
that privilege should be honored in a given procedural setting.71
The leading case on executive privilege in the United States is U.S. v.
Nixon, 72 decided in 1974. In issue in that case was the validity of President Nixons
claim of executive privilege against a subpoena issued by a district court requiring the
production of certain tapes and documents relating to the Watergate investigations.
The claim of privilege was based on the Presidents general interest in the
confidentiality of his conversations and correspondence. The U.S. Court held that
while there is no explicit reference to a privilege of confidentiality in the U.S.
Constitution, it is constitutionally based to the extent that it relates to the effective
discharge of a Presidents powers. The Court, nonetheless, rejected the Presidents
claim of privilege, ruling that the privilege must be balanced against the public interest
in the fair administration of criminal justice. Notably, the Court was careful to clarify
that it was not there addressing the issue of claims of privilege in a civil litigation or
against congressional demands for information.
Cases in the U.S. which involve claims of executive privilege against Congress are
rare.73 Despite frequent assertion of the privilege to deny information to Congress,
beginning with President Washingtons refusal to turn over treaty negotiation records
to the House of Representatives, the U.S. Supreme Court has never adjudicated the
issue.74 However, the U.S. Court of Appeals for the District of Columbia Circuit, in a
case decided earlier in the same year as Nixon, recognized the Presidents privilege
over his conversations against a congressional subpoena. 75 Anticipating the
balancing approach adopted by the U.S. Supreme Court in Nixon, the Court of
Appeals weighed the public interest protected by the claim of privilege against the
interest that would be served by disclosure to the Committee. Ruling that the balance
favored the President, the Court declined to enforce the subpoena. 76
In this jurisdiction, the doctrine of executive privilege was recognized by this Court in
Almonte v. Vasquez.77Almonte used the term in reference to the same privilege
subject of Nixon. It quoted the following portion of the Nixon decision which explains
the basis for the privilege:
"The expectation of a President to the confidentiality of his conversations and
correspondences, like the claim of confidentiality of judicial deliberations, for example,
has all the values to which we accord deference for the privacy of all citizens and,
added to those values, is the necessity for protection of the public interest in candid,
objective, and even blunt or harsh opinions in Presidential decision-making. A
President and those who assist him must be free to explore alternatives in the
process of shaping policies and making decisions and to do so in a way many would
be unwilling to express except privately. These are the considerations justifying a
presumptive privilege for Presidential communications. The privilege is fundamental
to the operation of government and inextricably rooted in the separation of powers
under the Constitution x x x " (Emphasis and underscoring supplied)
Almonte involved a subpoena duces tecum issued by the Ombudsman against the
therein petitioners. It did not involve, as expressly stated in the decision, the right of
78
the people to information. Nonetheless, the Court recognized that there are certain
types of information which the government may withhold from the public, thus

acknowledging, in substance if not in name, that executive privilege may be claimed


against citizens demands for information.
79

In Chavez v. PCGG, the Court held that this jurisdiction recognizes the common law
holding that there is a "governmental privilege against public disclosure with respect
to state secrets regarding military, diplomatic and other national security
matters."80 The same case held that closed-door Cabinet meetings are also a
recognized limitation on the right to information.
Similarly, in Chavez v. Public Estates Authority,81 the Court ruled that the right to
information does not extend to matters recognized as "privileged information under
the separation of powers,"82 by which the Court meant Presidential conversations,
correspondences, and discussions in closed-door Cabinet meetings. It also held that
information on military and diplomatic secrets and those affecting national security,
and information on investigations of crimes by law enforcement agencies before the
prosecution of the accused were exempted from the right to information.
From the above discussion on the meaning and scope of executive privilege, both in
the United States and in this jurisdiction, a clear principle emerges. Executive
privilege, whether asserted against Congress, the courts, or the public, is recognized
only in relation to certain types of information of a sensitive character. While executive
privilege is a constitutional concept, a claim thereof may be valid or not depending on
the ground invoked to justify it and the context in which it is made. Noticeably absent
is any recognition that executive officials are exempt from the duty to disclose
information by the mere fact of being executive officials. Indeed, the extraordinary
character of the exemptions indicates that the presumption inclines heavily against
executive secrecy and in favor of disclosure.
Validity of Section 1
Section 1 is similar to Section 3 in that both require the officials covered by them to
secure the consent of the President prior to appearing before Congress. There are
significant differences between the two provisions, however, which constrain this
Court to discuss the validity of these provisions separately.
Section 1 specifically applies to department heads. It does not, unlike Section 3,
require a prior determination by any official whether they are covered by E.O. 464.
The President herself has, through the challenged order, made the determination that
they are. Further, unlike also Section 3, the coverage of department heads under
Section 1 is not made to depend on the department heads possession of any
information which might be covered by executive privilege. In fact, in marked contrast
to Section 3 vis--vis Section 2, there is no reference to executive privilege at all.
Rather, the required prior consent under Section 1 is grounded on Article VI, Section
22 of the Constitution on what has been referred to as the question hour.
SECTION 22. The heads of departments may upon their own initiative, with the
consent of the President, or upon the request of either House, as the rules of each
House shall provide, appear before and be heard by such House on any matter
pertaining to their departments. Written questions shall be submitted to the President

of the Senate or the Speaker of the House of Representatives at least three days
before their scheduled appearance. Interpellations shall not be limited to written
questions, but may cover matters related thereto. When the security of the State or
the public interest so requires and the President so states in writing, the appearance
shall be conducted in executive session.
Determining the validity of Section 1 thus requires an examination of the meaning of
Section 22 of Article VI. Section 22 which provides for the question hour must be
interpreted vis--vis Section 21 which provides for the power of either House of
Congress to "conduct inquiries in aid of legislation." As the following excerpt of the
deliberations of the Constitutional Commission shows, the framers were aware that
these two provisions involved distinct functions of Congress.
MR. MAAMBONG. x x x When we amended Section 20 [now Section 22 on the
Question Hour] yesterday, I noticed that members of the Cabinet cannot be
compelled anymore to appear before the House of Representatives or before the
Senate. I have a particular problem in this regard, Madam President, because in our
experience in the Regular Batasang Pambansa as the Gentleman himself has
experienced in the interim Batasang Pambansa one of the most competent inputs
that we can put in our committee deliberations, either in aid of legislation or in
congressional investigations, is the testimonies of Cabinet ministers. We usually invite
them, but if they do not come and it is a congressional investigation, we usually issue
subpoenas.
I want to be clarified on a statement made by Commissioner Suarez when he said
that the fact that the Cabinet ministers may refuse to come to the House of
Representatives or the Senate [when requested under Section 22] does not mean
that they need not come when they are invited or subpoenaed by the committee of
either House when it comes to inquiries in aid of legislation or congressional
investigation. According to Commissioner Suarez, that is allowed and their presence
can be had under Section 21. Does the gentleman confirm this, Madam President?
MR. DAVIDE. We confirm that, Madam President, because Section 20 refers only to
what was originally the Question Hour, whereas, Section 21 would refer specifically to
inquiries in aid of legislation, under which anybody for that matter, may be summoned
and if he refuses, he can be held in contempt of the House. 83 (Emphasis and
underscoring supplied)
A distinction was thus made between inquiries in aid of legislation and the question
hour. While attendance was meant to be discretionary in the question hour, it was
compulsory in inquiries in aid of legislation. The reference to Commissioner Suarez
bears noting, he being one of the proponents of the amendment to make the
appearance of department heads discretionary in the question hour.
So clearly was this distinction conveyed to the members of the Commission that the
Committee on Style, precisely in recognition of this distinction, later moved the
provision on question hour from its original position as Section 20 in the original draft
down to Section 31, far from the provision on inquiries in aid of legislation. This gave
rise to the following exchange during the deliberations:

MR. GUINGONA. [speaking in his capacity as Chairman of the Committee on Style]


We now go, Mr. Presiding Officer, to the Article on Legislative and may I request the
chairperson of the Legislative Department, Commissioner Davide, to give his reaction.
THE
PRESIDING
OFFICER
recognized.|avvphi|.net

(Mr.

Jamir).

Commissioner

Davide

is

MR. DAVIDE. Thank you, Mr. Presiding Officer. I have only one reaction to the
Question Hour. I propose that instead of putting it as Section 31, it should follow
Legislative Inquiries.
THE PRESIDING OFFICER. What does the committee say?
MR. GUINGONA. I ask Commissioner Maambong to reply, Mr. Presiding Officer.
MR. MAAMBONG. Actually, we considered that previously when we sequenced this
but we reasoned that in Section 21, which is Legislative Inquiry, it is actually a power
of Congress in terms of its own lawmaking; whereas, a Question Hour is not actually
a power in terms of its own lawmaking power because in Legislative Inquiry, it is in aid
of legislation. And so we put Question Hour as Section 31. I hope Commissioner
Davide will consider this.
MR. DAVIDE. The Question Hour is closely related with the legislative power, and it is
precisely as a complement to or a supplement of the Legislative Inquiry. The
appearance of the members of Cabinet would be very, very essential not only in the
application of check and balance but also, in effect, in aid of legislation.
MR. MAAMBONG. After conferring with the committee, we find merit in the
suggestion of Commissioner Davide. In other words, we are accepting that and so
this Section 31 would now become Section 22. Would it be, Commissioner Davide?
84

MR. DAVIDE. Yes. (Emphasis and underscoring supplied)


Consistent with their statements earlier in the deliberations, Commissioners Davide
and Maambong proceeded from the same assumption that these provisions pertained
to two different functions of the legislature. Both Commissioners understood that the
power to conduct inquiries in aid of legislation is different from the power to conduct
inquiries during the question hour. Commissioner Davides only concern was that the
two provisions on these distinct powers be placed closely together, they being
complementary to each other. Neither Commissioner considered them as identical
functions of Congress.
The foregoing opinion was not the two Commissioners alone. From the above-quoted
exchange, Commissioner Maambongs committee the Committee on Style shared
the view that the two provisions reflected distinct functions of Congress.
Commissioner Davide, on the other hand, was speaking in his capacity as Chairman
of the Committee on the Legislative Department. His views may thus be presumed as
representing that of his Committee.

In the context of a parliamentary system of government, the "question hour" has a


definite meaning. It is a period of confrontation initiated by Parliament to hold the
Prime Minister and the other ministers accountable for their acts and the operation of
85
the government, corresponding to what is known in Britain as the question period.
86
There was a specific provision for a question hour in the 1973 Constitution which
made the appearance of ministers mandatory. The same perfectly conformed to the
parliamentary system established by that Constitution, where the ministers are also
members of the legislature and are directly accountable to it.
An essential feature of the parliamentary system of government is the immediate
accountability of the Prime Minister and the Cabinet to the National Assembly. They
shall be responsible to the National Assembly for the program of government and
shall determine the guidelines of national policy. Unlike in the presidential system
where the tenure of office of all elected officials cannot be terminated before their
term expired, the Prime Minister and the Cabinet remain in office only as long as they
enjoy the confidence of the National Assembly. The moment this confidence is lost
the Prime Minister and the Cabinet may be changed. 87
The framers of the 1987 Constitution removed the mandatory nature of such
appearance during the question hour in the present Constitution so as to conform
more fully to a system of separation of powers. 88 To that extent, the question hour, as
it is presently understood in this jurisdiction, departs from the question period of the
parliamentary system. That department heads may not be required to appear in a
question hour does not, however, mean that the legislature is rendered powerless to
elicit information from them in all circumstances. In fact, in light of the absence of a
mandatory question period, the need to enforce Congress right to executive
information in the performance of its legislative function becomes more imperative. As
Schwartz observes:
Indeed, if the separation of powers has anything to tell us on the subject under
discussion, it is that the Congress has the right to obtain information from any source
even from officials of departments and agencies in the executive branch. In the
United States there is, unlike the situation which prevails in a parliamentary system
such as that in Britain, a clear separation between the legislative and executive
branches. It is this very separation that makes the congressional right to obtain
information from the executive so essential, if the functions of the Congress as the
elected representatives of the people are adequately to be carried out. The absence
of close rapport between the legislative and executive branches in this country,
comparable to those which exist under a parliamentary system, and the nonexistence
in the Congress of an institution such as the British question period have perforce
made reliance by the Congress upon its right to obtain information from the executive
essential, if it is intelligently to perform its legislative tasks. Unless the Congress
possesses the right to obtain executive information, its power of oversight of
administration in a system such as ours becomes a power devoid of most of its
practical content, since it depends for its effectiveness solely upon information
parceled out ex gratia by the executive. 89 (Emphasis and underscoring supplied)
Sections 21 and 22, therefore, while closely related and complementary to each
other, should not be considered as pertaining to the same power of Congress. One
specifically relates to the power to conduct inquiries in aid of legislation, the aim of

which is to elicit information that may be used for legislation, while the other pertains
to the power to conduct a question hour, the objective of which is to obtain information
in pursuit of Congress oversight function.
When Congress merely seeks to be informed on how department heads are
implementing the statutes which it has issued, its right to such information is not as
imperative as that of the President to whom, as Chief Executive, such department
heads must give a report of their performance as a matter of duty. In such instances,
Section 22, in keeping with the separation of powers, states that Congress may only
request their appearance. Nonetheless, when the inquiry in which Congress requires
their appearance is "in aid of legislation" under Section 21, the appearance is
mandatory for the same reasons stated in Arnault.90
In fine, the oversight function of Congress may be facilitated by compulsory process
only to the extent that it is performed in pursuit of legislation. This is consistent with
the intent discerned from the deliberations of the Constitutional Commission.
Ultimately, the power of Congress to compel the appearance of executive officials
under Section 21 and the lack of it under Section 22 find their basis in the principle of
separation of powers. While the executive branch is a co-equal branch of the
legislature, it cannot frustrate the power of Congress to legislate by refusing to comply
with its demands for information.
When Congress exercises its power of inquiry, the only way for department heads to
exempt themselves therefrom is by a valid claim of privilege. They are not exempt by
the mere fact that they are department heads. Only one executive official may be
exempted from this power the President on whom executive power is vested,
hence, beyond the reach of Congress except through the power of impeachment. It is
based on her being the highest official of the executive branch, and the due respect
accorded to a co-equal branch of government which is sanctioned by a long-standing
custom.

The requirement then to secure presidential consent under Section 1, limited as it is


only to appearances in the question hour, is valid on its face. For under Section 22,
Article VI of the Constitution, the appearance of department heads in the question
hour is discretionary on their part.
Section 1 cannot, however, be applied to appearances of department heads in
inquiries in aid of legislation. Congress is not bound in such instances to respect the
refusal of the department head to appear in such inquiry, unless a valid claim of
privilege is subsequently made, either by the President herself or by the Executive
Secretary.
Validity of Sections 2 and 3
Section 3 of E.O. 464 requires all the public officials enumerated in Section 2(b) to
secure the consent of the President prior to appearing before either house of
Congress. The enumeration is broad. It covers all senior officials of executive
departments, all officers of the AFP and the PNP, and all senior national security
officials who, in the judgment of the heads of offices designated in the same section
(i.e. department heads, Chief of Staff of the AFP, Chief of the PNP, and the National
Security Adviser), are "covered by the executive privilege."
The enumeration also includes such other officers as may be determined by the
President. Given the title of Section 2 "Nature, Scope and Coverage of Executive
Privilege" , it is evident that under the rule of ejusdem generis, the determination by
the President under this provision is intended to be based on a similar finding of
coverage under executive privilege.
En passant, the Court notes that Section 2(b) of E.O. 464 virtually states that
executive privilege actually covers persons. Such is a misuse of the doctrine.
Executive privilege, as discussed above, is properly invoked in relation to specific
categories of information and not to categories of persons.

By the same token, members of the Supreme Court are also exempt from this power
of inquiry. Unlike the Presidency, judicial power is vested in a collegial body; hence,
each member thereof is exempt on the basis not only of separation of powers but also
on the fiscal autonomy and the constitutional independence of the judiciary. This point
is not in dispute, as even counsel for the Senate, Sen. Joker Arroyo, admitted it
during the oral argument upon interpellation of the Chief Justice.

In light, however, of Sec 2(a) of E.O. 464 which deals with the nature, scope and
coverage of executive privilege, the reference to persons being "covered by the
executive privilege" may be read as an abbreviated way of saying that the person is in
possession of information which is, in the judgment of the head of office concerned,
privileged as defined in Section 2(a). The Court shall thus proceed on the assumption
that this is the intention of the challenged order.

Having established the proper interpretation of Section 22, Article VI of the


Constitution, the Court now proceeds to pass on the constitutionality of Section 1 of
E.O. 464.

Upon a determination by the designated head of office or by the President that an


official is "covered by the executive privilege," such official is subjected to the
requirement that he first secure the consent of the President prior to appearing before
Congress. This requirement effectively bars the appearance of the official concerned
unless the same is permitted by the President. The proviso allowing the President to
give its consent means nothing more than that the President may reverse a
prohibition which already exists by virtue of E.O. 464.

Section 1, in view of its specific reference to Section 22 of Article VI of the


Constitution and the absence of any reference to inquiries in aid of legislation, must
be construed as limited in its application to appearances of department heads in the
question hour contemplated in the provision of said Section 22 of Article VI. The
reading is dictated by the basic rule of construction that issuances must be
interpreted, as much as possible, in a way that will render it constitutional.

Thus, underlying this requirement of prior consent is the determination by a head of


office, authorized by the President under E.O. 464, or by the President herself, that

such official is in possession of information that is covered by executive privilege. This


determination then becomes the basis for the officials not showing up in the
legislative investigation.
In view thereof, whenever an official invokes E.O. 464 to justify his failure to be
present, such invocation must be construed as a declaration to Congress that the
President, or a head of office authorized by the President, has determined that the
requested information is privileged, and that the President has not reversed such
determination. Such declaration, however, even without mentioning the term
"executive privilege," amounts to an implied claim that the information is being
withheld by the executive branch, by authority of the President, on the basis of
executive privilege. Verily, there is an implied claim of privilege.
The letter dated September 28, 2005 of respondent Executive Secretary Ermita to
Senate President Drilon illustrates the implied nature of the claim of privilege
authorized by E.O. 464. It reads:
In connection with the inquiry to be conducted by the Committee of the Whole
regarding the Northrail Project of the North Luzon Railways Corporation on 29
September 2005 at 10:00 a.m., please be informed that officials of the Executive
Department invited to appear at the meeting will not be able to attend the same
without the consent of the President, pursuant to Executive Order No. 464 (s. 2005),
entitled "Ensuring Observance Of The Principle Of Separation Of Powers, Adherence
To The Rule On Executive Privilege And Respect For The Rights Of Public Officials
Appearing In Legislative Inquiries In Aid Of Legislation Under The Constitution, And
For Other Purposes". Said officials have not secured the required consent from the
President. (Underscoring supplied)
The letter does not explicitly invoke executive privilege or that the matter on which
these officials are being requested to be resource persons falls under the recognized
grounds of the privilege to justify their absence. Nor does it expressly state that in
view of the lack of consent from the President under E.O. 464, they cannot attend the
hearing.
Significant premises in this letter, however, are left unstated, deliberately or not. The
letter assumes that the invited officials are covered by E.O. 464. As explained earlier,
however, to be covered by the order means that a determination has been made, by
the designated head of office or the President, that the invited official possesses
information that is covered by executive privilege. Thus, although it is not stated in the
letter that such determination has been made, the same must be deemed implied.
Respecting the statement that the invited officials have not secured the consent of the
President, it only means that the President has not reversed the standing prohibition
against their appearance before Congress.
Inevitably, Executive Secretary Ermitas letter leads to the conclusion that the
executive branch, either through the President or the heads of offices authorized
under E.O. 464, has made a determination that the information required by the
Senate is privileged, and that, at the time of writing, there has been no contrary
pronouncement from the President. In fine, an implied claim of privilege has been
made by the executive.

While there is no Philippine case that directly addresses the issue of whether
executive privilege may be invoked against Congress, it is gathered from Chavez v.
PEA that certain information in the possession of the executive may validly be
claimed as privileged even against Congress. Thus, the case holds:
There is no claim by PEA that the information demanded by petitioner is privileged
information rooted in the separation of powers. The information does not cover
Presidential conversations, correspondences, or discussions during closed-door
Cabinet meetings which, like internal-deliberations of the Supreme Court and other
collegiate courts, or executive sessions of either house of Congress, are recognized
as confidential. This kind of information cannot be pried open by a co-equal branch of
government. A frank exchange of exploratory ideas and assessments, free from the
glare of publicity and pressure by interested parties, is essential to protect the
independence of decision-making of those tasked to exercise Presidential, Legislative
and Judicial power. This is not the situation in the instant case. 91 (Emphasis and
underscoring supplied)
Section 3 of E.O. 464, therefore, cannot be dismissed outright as invalid by the mere
fact that it sanctions claims of executive privilege. This Court must look further and
assess the claim of privilege authorized by the Order to determine whether it is valid.
While the validity of claims of privilege must be assessed on a case to case basis,
examining the ground invoked therefor and the particular circumstances surrounding
it, there is, in an implied claim of privilege, a defect that renders it invalid per se. By its
very nature, and as demonstrated by the letter of respondent Executive Secretary
quoted above, the implied claim authorized by Section 3 of E.O. 464 is not
accompanied by any specific allegation of the basis thereof (e.g., whether the
information demanded involves military or diplomatic secrets, closed-door Cabinet
meetings, etc.). While Section 2(a) enumerates the types of information that are
covered by the privilege under the challenged order, Congress is left to speculate as
to which among them is being referred to by the executive. The enumeration is not
even intended to be comprehensive, but a mere statement of what is included in the
phrase "confidential or classified information between the President and the public
officers covered by this executive order."
Certainly, Congress has the right to know why the executive considers the requested
information privileged. It does not suffice to merely declare that the President, or an
authorized head of office, has determined that it is so, and that the President has not
overturned that determination. Such declaration leaves Congress in the dark on how
the requested information could be classified as privileged. That the message is
couched in terms that, on first impression, do not seem like a claim of privilege only
makes it more pernicious. It threatens to make Congress doubly blind to the question
of why the executive branch is not providing it with the information that it has
requested.
A claim of privilege, being a claim of exemption from an obligation to disclose
information, must, therefore, be clearly asserted. As U.S. v. Reynolds teaches:
The privilege belongs to the government and must be asserted by it; it can neither be
claimed nor waived by a private party. It is not to be lightly invoked. There must be a

formal claim of privilege, lodged by the head of the department which has control over
the matter, after actual personal consideration by that officer. The court itself must
determine whether the circumstances are appropriate for the claim of privilege, and
yet do so without forcing a disclosure of the very thing the privilege is designed to
92
protect. (Underscoring supplied)

instant case because it is legally insufficient to allow the Court to make a just and
reasonable determination as to its applicability. To recognize such a broad claim in
which the Defendant has given no precise or compelling reasons to shield these
documents from outside scrutiny, would make a farce of the whole
101
procedure. (Emphasis and underscoring supplied)

Absent then a statement of the specific basis of a claim of executive privilege, there is
no way of determining whether it falls under one of the traditional privileges, or
whether, given the circumstances in which it is made, it should be respected.93 These,
in substance, were the same criteria in assessing the claim of privilege asserted
against the Ombudsman in Almonte v. Vasquez94 and, more in point, against a
committee of the Senate in Senate Select Committee on Presidential Campaign
Activities v. Nixon.95

Due respect for a co-equal branch of government, moreover, demands no less than a
claim of privilege clearly stating the grounds therefor. Apropos is the following ruling in
McPhaul v. U.S:102

A.O. Smith v. Federal Trade Commission is enlightening:


[T]he lack of specificity renders an assessment of the potential harm resulting from
disclosure impossible, thereby preventing the Court from balancing such harm against
plaintiffs needs to determine whether to override any claims of
privilege.96 (Underscoring supplied)
And so is U.S. v. Article of Drug:97
On the present state of the record, this Court is not called upon to perform this
balancing operation. In stating its objection to claimants interrogatories, government
asserts, and nothing more, that the disclosures sought by claimant would inhibit the
free expression of opinion that non-disclosure is designed to protect. The government
has not shown nor even alleged that those who evaluated claimants product were
involved in internal policymaking, generally, or in this particular instance. Privilege
cannot be set up by an unsupported claim. The facts upon which the privilege is
based must be established. To find these interrogatories objectionable, this Court
would have to assume that the evaluation and classification of claimants products
was a matter of internal policy formulation, an assumption in which this Court is
98
unwilling to indulge sua sponte. (Emphasis and underscoring supplied)
Mobil Oil Corp. v. Department of Energy99 similarly emphasizes that "an agency must
provide precise and certain reasons for preserving the confidentiality of requested
information."
100

Black v. Sheraton Corp. of America

amplifies, thus:

A formal and proper claim of executive privilege requires a specific designation and
description of the documents within its scope as well as precise and certain reasons
for preserving their confidentiality. Without this specificity, it is impossible for a court to
analyze the claim short of disclosure of the very thing sought to be protected. As the
affidavit now stands, the Court has little more than its sua sponte speculation with
which to weigh the applicability of the claim. An improperly asserted claim of privilege
is no claim of privilege. Therefore, despite the fact that a claim was made by the
proper executive as Reynolds requires, the Court can not recognize the claim in the

We think the Courts decision in United States v. Bryan, 339 U.S. 323, 70 S. Ct. 724,
is highly relevant to these questions. For it is as true here as it was there, that if
(petitioner) had legitimate reasons for failing to produce the records of the
association, a decent respect for the House of Representatives, by whose authority
the subpoenas issued, would have required that (he) state (his) reasons for
noncompliance upon the return of the writ. Such a statement would have given the
Subcommittee an opportunity to avoid the blocking of its inquiry by taking other
appropriate steps to obtain the records. To deny the Committee the opportunity to
consider the objection or remedy is in itself a contempt of its authority and an
obstruction of its processes. His failure to make any such statement was "a patent
evasion of the duty of one summoned to produce papers before a congressional
committee[, and] cannot be condoned." (Emphasis and underscoring supplied;
citations omitted)
Upon the other hand, Congress must not require the executive to state the reasons
for the claim with such particularity as to compel disclosure of the information which
the privilege is meant to protect. 103 A useful analogy in determining the requisite
degree of particularity would be the privilege against self-incrimination. Thus, Hoffman
104
v. U.S. declares:
The witness is not exonerated from answering merely because he declares that in so
doing he would incriminate himself his say-so does not of itself establish the hazard
of incrimination. It is for the court to say whether his silence is justified, and to require
him to answer if it clearly appears to the court that he is mistaken. However, if the
witness, upon interposing his claim, were required to prove the hazard in the sense in
which a claim is usually required to be established in court, he would be compelled to
surrender the very protection which the privilege is designed to guarantee. To sustain
the privilege, it need only be evident from the implications of the question, in the
setting in which it is asked, that a responsive answer to the question or an explanation
of why it cannot be answered might be dangerous because injurious disclosure could
result." x x x (Emphasis and underscoring supplied)
The claim of privilege under Section 3 of E.O. 464 in relation to Section 2(b) is thus
invalid per se. It is not asserted. It is merely implied. Instead of providing precise and
certain reasons for the claim, it merely invokes E.O. 464, coupled with an
announcement that the President has not given her consent. It is woefully insufficient
for Congress to determine whether the withholding of information is justified under the
circumstances of each case. It severely frustrates the power of inquiry of Congress.
In fine, Section 3 and Section 2(b) of E.O. 464 must be invalidated.

No infirmity, however, can be imputed to Section 2(a) as it merely provides guidelines,


binding only on the heads of office mentioned in Section 2(b), on what is covered by
executive privilege. It does not purport to be conclusive on the other branches of
government. It may thus be construed as a mere expression of opinion by the
President regarding the nature and scope of executive privilege.
Petitioners, however, assert as another ground for invalidating the challenged order
the alleged unlawful delegation of authority to the heads of offices in Section 2(b).
Petitioner Senate of the Philippines, in particular, cites the case of the United States
where, so it claims, only the President can assert executive privilege to withhold
information from Congress.
Section 2(b) in relation to Section 3 virtually provides that, once the head of office
determines that a certain information is privileged, such determination is presumed to
bear the Presidents authority and has the effect of prohibiting the official from
appearing before Congress, subject only to the express pronouncement of the
President that it is allowing the appearance of such official. These provisions thus
allow the President to authorize claims of privilege by mere silence.
Such presumptive authorization, however, is contrary to the exceptional nature of the
privilege. Executive privilege, as already discussed, is recognized with respect to
information the confidential nature of which is crucial to the fulfillment of the unique
105
role and responsibilities of the executive branch, or in those instances where
exemption from disclosure is necessary to the discharge of highly important executive
106
responsibilities. The doctrine of executive privilege is thus premised on the fact that
certain informations must, as a matter of necessity, be kept confidential in pursuit of
the public interest. The privilege being, by definition, an exemption from the obligation
to disclose information, in this case to Congress, the necessity must be of such high
degree as to outweigh the public interest in enforcing that obligation in a particular
case.
In light of this highly exceptional nature of the privilege, the Court finds it essential to
limit to the President the power to invoke the privilege. She may of course authorize
the Executive Secretary to invoke the privilege on her behalf, in which case the
Executive Secretary must state that the authority is "By order of the President," which
means that he personally consulted with her. The privilege being an extraordinary
power, it must be wielded only by the highest official in the executive hierarchy. In
other words, the President may not authorize her subordinates to exercise such
power. There is even less reason to uphold such authorization in the instant case
where the authorization is not explicit but by mere silence. Section 3, in relation to
Section 2(b), is further invalid on this score.
It follows, therefore, that when an official is being summoned by Congress on a matter
which, in his own judgment, might be covered by executive privilege, he must be
afforded reasonable time to inform the President or the Executive Secretary of the
possible need for invoking the privilege. This is necessary in order to provide the
President or the Executive Secretary with fair opportunity to consider whether the
matter indeed calls for a claim of executive privilege. If, after the lapse of that
reasonable time, neither the President nor the Executive Secretary invokes the
privilege, Congress is no longer bound to respect the failure of the official to appear

before Congress and may then opt to avail of the necessary legal means to compel
his appearance.
The Court notes that one of the expressed purposes for requiring officials to secure
the consent of the President under Section 3 of E.O. 464 is to ensure "respect for the
rights of public officials appearing in inquiries in aid of legislation." That such rights
must indeed be respected by Congress is an echo from Article VI Section 21 of the
Constitution mandating that "[t]he rights of persons appearing in or affected by such
inquiries shall be respected."
In light of the above discussion of Section 3, it is clear that it is essentially an
authorization for implied claims of executive privilege, for which reason it must be
invalidated. That such authorization is partly motivated by the need to ensure respect
for such officials does not change the infirm nature of the authorization itself.
Right to Information
E.O 464 is concerned only with the demands of Congress for the appearance of
executive officials in the hearings conducted by it, and not with the demands of
citizens for information pursuant to their right to information on matters of public
concern. Petitioners are not amiss in claiming, however, that what is involved in the
present controversy is not merely the legislative power of inquiry, but the right of the
people to information.
There are, it bears noting, clear distinctions between the right of Congress to
information which underlies the power of inquiry and the right of the people to
information on matters of public concern. For one, the demand of a citizen for the
production of documents pursuant to his right to information does not have the same
obligatory force as a subpoena duces tecum issued by Congress. Neither does the
right to information grant a citizen the power to exact testimony from government
officials. These powers belong only to Congress and not to an individual citizen.
Thus, while Congress is composed of representatives elected by the people, it does
not follow, except in a highly qualified sense, that in every exercise of its power of
inquiry, the people are exercising their right to information.
To the extent that investigations in aid of legislation are generally conducted in public,
however, any executive issuance tending to unduly limit disclosures of information in
such investigations necessarily deprives the people of information which, being
presumed to be in aid of legislation, is presumed to be a matter of public concern. The
citizens are thereby denied access to information which they can use in formulating
their own opinions on the matter before Congress opinions which they can then
communicate to their representatives and other government officials through the
various legal means allowed by their freedom of expression. Thus holds Valmonte v.
Belmonte:
It is in the interest of the State that the channels for free political discussion be
maintained to the end that the government may perceive and be responsive to the
peoples will. Yet, this open dialogue can be effective only to the extent that the

citizenry is informed and thus able to formulate its will intelligently. Only when the
participants in the discussion are aware of the issues and have access to information
relating thereto can such bear fruit.107(Emphasis and underscoring supplied)
The impairment of the right of the people to information as a consequence of E.O.
464 is, therefore, in the sense explained above, just as direct as its violation of the
legislatures power of inquiry.

Resort to any means then by which officials of the executive branch could refuse to
divulge information cannot be presumed valid. Otherwise, we shall not have merely
nullified the power of our legislature to inquire into the operations of government, but
we shall have given up something of much greater value our right as a people to
take part in government.

Implementation of E.O. 464 prior to its publication

WHEREFORE, the petitions are PARTLY GRANTED. Sections 2(b) and 3 of


Executive Order No. 464 (series of 2005), "Ensuring Observance of the Principle of
Separation of Powers, Adherence to the Rule on Executive

While E.O. 464 applies only to officials of the executive branch, it does not follow that
the same is exempt from the need for publication. On the need for publishing even
those statutes that do not directly apply to people in general, Taada v. Tuvera states:

Privilege and Respect for the Rights of Public Officials Appearing in Legislative
Inquiries in Aid of Legislation Under the Constitution, and For Other Purposes," are
declared VOID. Sections 1 and 2(a) are, however, VALID.

The term "laws" should refer to all laws and not only to those of general application,
for strictly speaking all laws relate to the people in general albeit there are some that
do not apply to them directly. An example is a law granting citizenship to a particular
individual, like a relative of President Marcos who was decreed instant naturalization.
It surely cannot be said that such a law does not affect the public although it
unquestionably does not apply directly to all the people. The subject of such law is a
matter of public interest which any member of the body politic may question in the
political forums or, if he is a proper party, even in courts of justice. 108 (Emphasis and
underscoring supplied)

SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila
EN BANC

Although the above statement was made in reference to statutes, logic dictates that
the challenged order must be covered by the publication requirement. As explained
above, E.O. 464 has a direct effect on the right of the people to information on
matters of public concern. It is, therefore, a matter of public interest which members of
the body politic may question before this Court. Due process thus requires that the
people should have been apprised of this issuance before it was implemented.
Conclusion
Congress undoubtedly has a right to information from the executive branch whenever
it is sought in aid of legislation. If the executive branch withholds such information on
the ground that it is privileged, it must so assert it and state the reason therefor and
why it must be respected.
The infirm provisions of E.O. 464, however, allow the executive branch to evade
congressional requests for information without need of clearly asserting a right to do
so and/or proffering its reasons therefor. By the mere expedient of invoking said
provisions, the power of Congress to conduct inquiries in aid of legislation is
frustrated. That is impermissible. For
[w]hat republican theory did accomplishwas to reverse the old presumption in favor
of secrecy, based on the divine right of kings and nobles, and replace it with a
presumption in favor of publicity, based on the doctrine of popular sovereignty.
(Underscoring supplied)109

G.R. No. 167798

April 19, 2006

KILUSANG MAYO UNO, NATIONAL FEDERATION OF LABOR UNIONSKILUSANG MAYO UNO (NAFLU-KMU), JOSELITO V. USTAREZ, EMILIA P.
DAPULANG, SALVADOR T. CARRANZA, MARTIN T. CUSTODIO, JR. and
ROQUE
M.
TAN, Petitioners,
vs.
THE
DIRECTOR-GENERAL,
NATIONAL
ECONOMIC
DEVELOPMENT
AUTHORITY, and THE SECRETARY, DEPARTMENT OF BUDGET and
MANAGEMENT, Respondents.
x-----------------------------------x
G.R. No. 167930

April 19, 2006

BAYAN MUNA Representatives SATUR C. OCAMPO, TEODORO A. CASIO, and


JOEL G. VIRADOR, GABRIELA WOMENS PARTY Representative LIZA L. MAZA,
ANAKPAWIS Representatives RAFAEL V. MARIANO and CRISPIN B. BELTRAN,
Rep. FRANCIS G. ESCUDERO, Rep. EDUARDO C. ZIALCITA, Rep. LORENZO R.
TAADA III, DR. CAROL PAGADUAN-ARAULLO and RENATO M. REYES, JR. of
BAYAN, MARIE HILAO-ENRIQUEZ of KARAPATAN, ANTONIO L. TINIO of ACT,
FERDINAND GAITE of COURAGE, GIOVANNI A. TAPANG of AGHAM,
WILFREDO MARBELLA GARCIA, of KMP, LANA LINABAN of GABRIELA,

AMADO GAT INCIONG, RENATO CONSTANTINO, JR., DEAN PACIFICO H.


AGABIN, SHARON R. DUREMDES of the NATIONAL COUNCIL OF CHURCHES
IN THE PHILIPPINES, and BRO. EDMUNDO L. FERNANDEZ (FSC) of the
ASSOCIATION OF MAJOR RELIGIOUS SUPERIORS OF THE PHILIPPINES
(AMRSP), Petitioners,
vs.
EDUARDO ERMITA, in his capacity as Executive Secretary, ROMULO NERI, in
his capacity as Director-General of the NATIONAL ECONOMIC and
DEVELOPMENT AUTHORITY (NEDA) and the Administrator of the NATIONAL
STATISTICS OFFICE (NSO), Respondents.
DECISION
CARPIO, J.:
This case involves two consolidated petitions for certiorari, prohibition, and
mandamus under Rule 65 of the Rules of Court, seeking the nullification of Executive
Order No. 420 (EO 420) on the ground that it is unconstitutional.
EO 420, issued by President Gloria Macapagal-Arroyo on 13 April 2005, reads:
REQUIRING ALL GOVERNMENT AGENCIES AND GOVERNMENT-OWNED AND
CONTROLLED CORPORATIONS TO STREAMLINE AND HARMONIZE THEIR
IDENTIFICATION (ID) SYSTEMS, AND AUTHORIZING FOR SUCH PURPOSE THE
DIRECTOR-GENERAL, NATIONAL ECONOMIC AND DEVELOPMENT AUTHORITY
TO IMPLEMENT THE SAME, AND FOR OTHER PURPOSES
WHEREAS, good governance is a major thrust of this Administration;
WHEREAS, the existing multiple identification systems in government have created
unnecessary and costly redundancies and higher costs to government, while making
it inconvenient for individuals to be holding several identification cards;

and controlled corporations, are hereby directed to adopt a unified multi-purpose ID


system to ensure the attainment of the following objectives:
a. To reduce costs and thereby lessen the financial burden on both the
government and the public brought about by the use of multiple ID cards and
the maintenance of redundant database containing the same or related
information;
b. To ensure greater convenience for those transacting business with the
government and those availing of government services;
c. To facilitate private businesses and promote the wider use of the unified
ID card as provided under this executive order;
d. To enhance the integrity and reliability of government-issued ID cards;
and
e. To facilitate access to and delivery of quality and effective government
service.
Section 2. Coverage All government agencies and government-owned and
controlled corporations issuing ID cards to their members or constituents shall be
covered by this executive order.
Section 3. Data requirement for the unified ID system The data to be collected
and recorded by the participating agencies shall be limited to the following:
Name
Home Address
Sex

WHEREAS, there is urgent need to streamline and integrate the processes and
issuance of identification cards in government to reduce costs and to provide greater
convenience for those transacting business with government;

Picture
Signature

WHEREAS, a unified identification system will facilitate private businesses, enhance


the integrity and reliability of government-issued identification cards in private
transactions, and prevent violations of laws involving false names and identities.
NOW, THEREFORE, I, GLORIA MACAPAGAL-ARROYO, President of the Republic
of the Philippines by virtue of the powers vested in me by law, do hereby direct the
following:
Section 1. Adoption of a unified multi-purpose identification (ID) system for
government.1avvphil.net All government agencies, including government-owned

Date of Birth
Place of Birth
Marital Status
Names of Parents
Height

Weight
Two index fingers and two thumbmarks
Any prominent distinguishing features like moles and others
Tax Identification Number (TIN)
Provided that a corresponding ID number issued by the participating agency and a
common reference number shall form part of the stored ID data and, together with at
least the first five items listed above, including the print of the right thumbmark, or any
of the fingerprints as collected and stored, shall appear on the face or back of the ID
card for visual verification purposes.
Section 4. Authorizing the Director-General, National Economic and
Development Authority, to Harmonize All Government Identification Systems.
The Director-General, National Economic Development Authority, is hereby
authorized to streamline and harmonize all government ID systems.
Section 5. Functions and responsibilities of the Director-General, National
Economic and Development Authority. In addition to his organic functions and
responsibilities, the Director-General, National Economic and Development Authority,
shall have the following functions and responsibilities:
a. Adopt within sixty (60) days from the effectivity of this executive order a
unified government ID system containing only such data and features, as
indicated in Section 3 above, to validly establish the identity of the card
holder:

a. The data to be recorded and stored, which shall be used only for purposes
of establishing the identity of a person, shall be limited to those specified in
Section 3 of this executive order;
b. In no case shall the collection or compilation of other data in violation of a
persons right to privacy shall be allowed or tolerated under this order;
c. Stringent systems of access control to data in the identification system
shall be instituted;
d. Data collected and stored for this purpose shall be kept and treated as
strictly confidential and a personal or written authorization of the Owner shall
be required for access and disclosure of data;
e. The identification card to be issued shall be protected by advanced
security features and cryptographic technology; and
f. A written request by the Owner of the identification card shall be required
for any correction or revision of relevant data, or under such conditions as
the participating agency issuing the identification card shall prescribe.
Section 7. Funding. Such funds as may be recommended by the Department of
Budget and Management shall be provided to carry out the objectives of this
executive order.
Section 8. Repealing clause. All executive orders or issuances, or portions
thereof, which are inconsistent with this executive order, are hereby revoked,
amended or modified accordingly.

b. Enter into agreements with local governments, through their respective


leagues of governors or mayors, the Commission on Elections (COMELEC),
and with other branches or instrumentalities of the government, for the
purpose of ensuring government-wide adoption of and support to this effort
to streamline the ID systems in government;

Section 9. Effectivity. This executive order shall take effect fifteen (15) days after
its publication in two (2) newspapers of general circulation.

b. Call on any other government agency or institution, or create sub


committees or technical working groups, to provide such assistance as may
be necessary or required for the effective performance of its functions; and

Thus, under EO 420, the President directs all government agencies and governmentowned and controlled corporations to adopt a uniform data collection and format for
their existing identification (ID) systems.

d. Promulgate such rules or regulations as may be necessary in pursuance


of the objectives of this executive order.

Petitioners in G.R. No. 167798 allege that EO 420 is unconstitutional because it


constitutes usurpation of legislative functions by the executive branch of the
government. Furthermore, they allege that EO 420 infringes on the citizens right to
1
privacy.

Section 6. Safeguards. The Director-General, National Economic and


Development Authority, and the pertinent agencies shall adopt such safeguard as
may be necessary and adequate to ensure that the right to privacy of an individual
takes precedence over efficient public service delivery. Such safeguards shall, as a
minimum, include the following:

DONE in the City of Manila, this 13th day of April, in the year of Our Lord, Two
Thousand and Five.

Petitioners in G.R. No. 167930 allege that EO 420 is void based on the following
grounds:

1. EO 420 is contrary to law. It completely disregards and violates the


decision of this Honorable Court inOple v. Torres et al., G.R. No. 127685,
July 23, 1998. It also violates RA 8282 otherwise known as the Social
Security Act of 1997.
2. The Executive has usurped the legislative power of Congress as she has
no power to issue EO 420. Furthermore, the implementation of the EO will
use public funds not appropriated by Congress for that purpose.
3. EO 420 violates the constitutional provisions on the right to privacy
(i) It allows access to personal confidential data without the owners
consent.
(ii) EO 420 is vague and without adequate safeguards or penalties
for any violation of its provisions.
(iii) There are no compelling reasons that will legitimize the
necessity of EO 420.
4. Granting without conceding that the President may issue EO 420, the
Executive Order was issued without public hearing.
5. EO 420 violates the Constitutional provision on equal protection of laws
and results in the discriminatory treatment of and penalizes those without
ID.2
Issues
Essentially, the petitions raise two issues. First, petitioners claim that EO 420 is a
usurpation of legislative power by the President. Second, petitioners claim that EO
420 infringes on the citizens right to privacy.
Respondents question the legal standing of petitioners and the ripeness of the
petitions. Even assuming that petitioners are bereft of legal standing, the Court
considers the issues raised under the circumstances of paramount public concern or
of transcendental significance to the people. The petitions also present a justiciable
controversy ripe for judicial determination because all government entities currently
issuing identification cards are mandated to implement EO 420, which petitioners
claim is patently unconstitutional. Hence, the Court takes cognizance of the petitions.
The Courts Ruling
The petitions are without merit.
On the Alleged Usurpation of Legislative Power

Section 2 of EO 420 provides, "Coverage. All government agencies and


government-owned and controlled corporations issuing ID cards to their members or
constituents shall be covered by this executive order." EO 420 applies only to
government entities that issue ID cards as part of their functions under existing laws.
These government entities have already been issuing ID cards even prior to EO 420.
3
4
5
Examples of these government entities are the GSIS, SSS, Philhealth, Mayors
6
7
8
Office, LTO, PRC, and similar government entities.
Section 1 of EO 420 directs these government entities to "adopt a unified multipurpose ID system." Thus, all government entities that issue IDs as part of their
functions under existing laws are required to adopt a uniform data collection and
format for their IDs. Section 1 of EO 420 enumerates the purposes of the uniform data
collection and format, namely:
a. To reduce costs and thereby lessen the financial burden on both the
government and the public brought about by the use of multiple ID cards and
the maintenance of redundant database containing the same or related
information;
b. To ensure greater convenience for those transacting business with the
government and those availing of government services;
c. To facilitate private businesses and promote the wider use of the unified
ID card as provided under this executive order;
d. To enhance the integrity and reliability of government-issued ID cards;
and
e. To facilitate access to and delivery of quality and effective government
service.
In short, the purposes of the uniform ID data collection and ID format are to reduce
costs, achieve efficiency and reliability, insure compatibility, and provide convenience
to the people served by government entities.
Section 3 of EO 420 limits the data to be collected and recorded under the uniform ID
system to only 14 specific items, namely: (1) Name; (2) Home Address; (3) Sex; (4)
Picture; (5) Signature; (6) Date of Birth; (7) Place of Birth; (8) Marital Status; (9) Name
of Parents; (10) Height; (11) Weight; (12) Two index fingers and two thumbmarks;
(13) Any prominent distinguishing features like moles or others; and (14) Tax
Identification Number.
These limited and specific data are the usual data required for personal identification
by government entities, and even by the private sector. Any one who applies for or
renews a drivers license provides to the LTO all these 14 specific data.
At present, government entities like LTO require considerably more data from
applicants for identification purposes. EO 420 will reduce the data required to be

collected and recorded in the ID databases of the government entities. Government


entities cannot collect or record data, for identification purposes, other than the 14
specific data.
Various laws allow several government entities to collect and record data for their ID
systems, either expressly or impliedly by the nature of the functions of these
government entities. Under their existing ID systems, some government entities
collect and record more data than what EO 420 allows. At present, the data collected
and recorded by government entities are disparate, and the IDs they issue are
dissimilar.
In the case of the Supreme Court,9 the IDs that the Court issues to all its employees,
including the Justices, contain 15 specific data, namely: (1) Name; (2) Picture; (3)
Position; (4) Office Code Number; (5) ID Number; (6) Height; (7) Weight; (8)
Complexion; (9) Color of Hair; (10) Blood Type; (11) Right Thumbmark; (12) Tax
Identification Number; (13) GSIS Policy Number; (14) Name and Address of Person
to be Notified in Case of Emergency; and (15) Signature. If we consider that the
picture in the ID can generally also show the sex of the employee, the Courts ID
actually contains 16 data.
In contrast, the uniform ID format under Section 3 of EO 420 requires only "the first
five items listed" in Section 3, plus the fingerprint, agency number and the common
reference number, or only eight specific data. Thus, at present, the Supreme Courts
ID contains far more data than the proposed uniform ID for government entities under
EO 420. The nature of the data contained in the Supreme Court ID is also far more
financially sensitive, specifically the Tax Identification Number.

Second, the President may by executive or administrative order direct the government
entities under the Executive department to adopt a uniform ID data collection and
format. Section 17, Article VII of the 1987 Constitution provides that the "President
shall have control of all executive departments, bureaus and offices." The same
Section also mandates the President to "ensure that the laws be faithfully executed."
Certainly, under this constitutional power of control the President can direct all
government entities, in the exercise of their functions under existing laws, to adopt a
uniform ID data collection and ID format to achieve savings, efficiency, reliability,
compatibility, and convenience to the public. The Presidents constitutional power of
control is self-executing and does not need any implementing legislation.
Of course, the Presidents power of control is limited to the Executive branch of
government and does not extend to the Judiciary or to the independent constitutional
commissions. Thus, EO 420 does not apply to the Judiciary, or to the COMELEC
10
which under existing laws is also authorized to issue voters ID cards. This only
shows that EO 420 does not establish a national ID system because legislation is
needed to establish a single ID system that is compulsory for all branches of
government.
The Constitution also mandates the President to ensure that the laws are faithfully
executed. There are several laws mandating government entities to reduce costs,
11
increase efficiency, and in general, improve public services. The adoption of a
uniform ID data collection and format under EO 420 is designed to reduce costs,
increase efficiency, and in general, improve public services. Thus, in issuing EO 420,
the President is simply performing the constitutional duty to ensure that the laws are
faithfully executed.

Making the data collection and recording of government entities unified, and making
their ID formats uniform, will admittedly achieve substantial benefits. These benefits
are savings in terms of procurement of equipment and supplies, compatibility in
systems as to hardware and software, ease of verification and thus increased
reliability of data, and the user-friendliness of a single ID format for all government
entities.

Clearly, EO 420 is well within the constitutional power of the President to promulgate.
The President has not usurped legislative power in issuing EO 420. EO 420 is an
exercise of Executive power the Presidents constitutional power of control over the
Executive department. EO 420 is also compliance by the President of the
constitutional duty to ensure that the laws are faithfully executed.

There is no dispute that government entities can individually limit the collection and
recording of their data to the 14 specific items in Section 3 of EO 420. There is also
no dispute that these government entities can individually adopt the ID format as
specified in Section 3 of EO 420. Such an act is certainly within the authority of the
heads or governing boards of the government entities that are already authorized
under existing laws to issue IDs.

Legislative power is the authority to make laws and to alter or repeal them. In issuing
EO 420, the President did not make, alter or repeal any law but merely implemented
and executed existing laws. EO 420 reduces costs, as well as insures efficiency,
reliability, compatibility and user-friendliness in the implementation of current ID
systems of government entities under existing laws. Thus, EO 420 is simply an
executive issuance and not an act of legislation.

A unified ID system for all these government entities can be achieved in either of two
ways. First, the heads of these existing government entities can enter into a
memorandum of agreement making their systems uniform. If the government entities
can individually adopt a format for their own ID pursuant to their regular functions
under existing laws, they can also adopt by mutual agreement a uniform ID format,
especially if the uniform format will result in substantial savings, greater efficiency,
and optimum compatibility. This is purely an administrative matter, and does not
involve the exercise of legislative power.

The act of issuing ID cards and collecting the necessary personal data for imprinting
on the ID card does not require legislation. Private employers routinely issue ID cards
to their employees. Private and public schools also routinely issue ID cards to their
students. Even private clubs and associations issue ID cards to their members. The
purpose of all these ID cards is simply to insure the proper identification of a person
as an employee, student, or member of a club. These ID cards, although imposed as
a condition for exercising a privilege, are voluntary because a person is not compelled
to be an employee, student or member of a club.

What require legislation are three aspects of a government maintained ID card


system. First, when the implementation of an ID card system requires a special
appropriation because there is no existing appropriation for such purpose. Second,
when the ID card system is compulsory on all branches of government, including the
independent constitutional commissions, as well as compulsory on all citizens
whether they have a use for the ID card or not. Third, when the ID card system
requires the collection and recording of personal data beyond what is routinely or
usually required for such purpose, such that the citizens right to privacy is infringed.

In fact, petitioners in the present cases do not claim that the ID systems of
government entities prior to EO 420 violate their right to privacy. Since petitioners do
not make such claim, they even have less basis to complain against the unified ID
system under EO 420. The data collected and stored for the unified ID system under
EO 420 will be limited to only 14 specific data, and the ID card itself will show only
eight specific data. The data collection, recording and ID card system under EO 420
will even require less data collected, stored and revealed than under the disparate
systems prior to EO 420.

In the present case, EO 420 does not require any special appropriation because the
existing ID card systems of government entities covered by EO 420 have the proper
appropriation or funding. EO 420 is not compulsory on all branches of government
and is not compulsory on all citizens. EO 420 requires a very narrow and focused
collection and recording of personal data while safeguarding the confidentiality of
such data. In fact, the data collected and recorded under EO 420 are far less than the
data collected and recorded under the ID systems existing prior to EO 420.

Prior to EO 420, government entities had a free hand in determining the kind, nature
and extent of data to be collected and stored for their ID systems. Under EO 420,
government entities can collect and record only the 14 specific data mentioned in
Section 3 of EO 420. In addition, government entities can show in their ID cards only
eight of these specific data, seven less data than what the Supreme Courts ID
shows.

EO 420 does not establish a national ID card system. EO 420 does not compel all
citizens to have an ID card. EO 420 applies only to government entities that under
existing laws are already collecting data and issuing ID cards as part of their
governmental functions. Every government entity that presently issues an ID card will
still issue its own ID card under its own name. The only difference is that the ID card
will contain only the five data specified in Section 3 of EO 420, plus the fingerprint, the
agency ID number, and the common reference number which is needed for crossverification to ensure integrity and reliability of identification.
This Court should not interfere how government entities under the Executive
department should undertake cost savings, achieve efficiency in operations, insure
compatibility of equipment and systems, and provide user-friendly service to the
public. The collection of ID data and issuance of ID cards are day-to-day functions of
many government entities under existing laws. Even the Supreme Court has its own
ID system for employees of the Court and all first and second level courts. The Court
is even trying to unify its ID system with those of the appellate courts, namely the
Court of Appeals, Sandiganbayan and Court of Tax Appeals.
There is nothing legislative about unifying existing ID systems of all courts within the
Judiciary. The same is true for government entities under the Executive department. If
government entities under the Executive department decide to unify their existing ID
data collection and ID card issuance systems to achieve savings, efficiency,
compatibility and convenience, such act does not involve the exercise of any
legislative power. Thus, the issuance of EO 420 does not constitute usurpation of
legislative power.
On the Alleged Infringement of the Right to Privacy
All these years, the GSIS, SSS, LTO, Philhealth and other government entities have
been issuing ID cards in the performance of their governmental functions. There have
been no complaints from citizens that the ID cards of these government entities
violate their right to privacy. There have also been no complaints of abuse by these
government entities in the collection and recording of personal identification data.

Also, prior to EO 420, there was no executive issuance to government entities


prescribing safeguards on the collection, recording, and disclosure of personal
identification data to protect the right to privacy. Now, under Section 5 of EO 420, the
following safeguards are instituted:
a. The data to be recorded and stored, which shall be used only for purposes
of establishing the identity of a person, shall be limited to those specified in
Section 3 of this executive order;
b. In no case shall the collection or compilation of other data in violation of a
persons right to privacy be allowed or tolerated under this order;
c. Stringent systems of access control to data in the identification system
shall be instituted;
d. Data collected and stored for this purpose shall be kept and treated as
strictly confidential and a personal or written authorization of the Owner shall
be required for access and disclosure of data;
e. The identification card to be issued shall be protected by advanced
security features and cryptographic technology;
f. A written request by the Owner of the identification card shall be required
for any correction or revision of relevant data, or under such conditions as
the participating agency issuing the identification card shall prescribe.
On its face, EO 420 shows no constitutional infirmity because it even narrowly limits
the data that can be collected, recorded and shown compared to the existing ID
systems of government entities. EO 420 further provides strict safeguards to protect
the confidentiality of the data collected, in contrast to the prior ID systems which are
bereft of strict administrative safeguards.

The right to privacy does not bar the adoption of reasonable ID systems by
government entities. Some one hundred countries have compulsory national ID
systems, including democracies such as Spain, France, Germany, Belgium, Greece,
Luxembourg, and Portugal. Other countries which do not have national ID systems,
like the United States, Canada, Australia, New Zealand, Ireland, the Nordic Countries
12
and Sweden, have sectoral cards for health, social or other public services. Even
with EO 420, the Philippines will still fall under the countries that do not have
compulsory national ID systems but allow only sectoral cards for social security,
health services, and other specific purposes.
Without a reliable ID system, government entities like GSIS, SSS, Philhealth, and
LTO cannot perform effectively and efficiently their mandated functions under existing
laws. Without a reliable ID system, GSIS, SSS, Philhealth and similar government
entities stand to suffer substantial losses arising from false names and identities. The
integrity of the LTOs licensing system will suffer in the absence of a reliable ID
system.
The dissenting opinion cites three American decisions on the right to privacy, namely,
Griswold v. Connecticut,13U.S. Justice Department v. Reporters Committee for
Freedom of the Press,14 and Whalen v. Roe.15 The last two decisions actually support
the validity of EO 420, while the first is inapplicable to the present case.
In Griswold, the U.S. Supreme Court declared unconstitutional a state law that
prohibited the use and distribution of contraceptives because enforcement of the law
would allow the police entry into the bedrooms of married couples. Declared the U.S.
Supreme Court: "Would we allow the police to search the sacred precincts of the
marital bedrooms for telltale signs of the use of contraceptives? The very idea is
repulsive to the notions of privacy surrounding the marriage relationship." Because
the facts and the issue involved in Griswold are materially different from the present
case, Griswold has no persuasive bearing on the present case.
In U.S. Justice Department, the issue was not whether the State could collect and
store information on individuals from public records nationwide but whether the State
could withhold such information from the press. The premise of the issue in U.S.
Justice Department is that the State can collect and store in a central database
information on citizens gathered from public records across the country. In fact, the
law authorized the Department of Justice to collect and preserve fingerprints and
other criminal identification records nationwide. The law also authorized the
Department of Justice to exchange such information with "officials of States, cities
and other institutions." The Department of Justice treated such information as
confidential. A CBS news correspondent and the Reporters Committee demanded the
criminal records of four members of a family pursuant to the Freedom of Information
Act. The U.S. Supreme Court ruled that the Freedom of Information Act expressly
exempts release of information that would "constitute an unwarranted invasion of
personal privacy," and the information demanded falls under that category of exempt
information.
With the exception of the 8 specific data shown on the ID card, the personal data
collected and recorded under EO 420 are treated as "strictly confidential" under
Section 6(d) of EO 420. These data are not only strictly confidential but also personal

matters. Section 7, Article III of the 1987 Constitution grants the "right of the people to
information on matters of public concern." Personal matters are exempt or outside the
coverage of the peoples right to information on matters of public concern. The data
treated as "strictly confidential" under EO 420 being private matters and not matters
of public concern, these data cannot be released to the public or the press. Thus, the
ruling in U.S. Justice Department does not collide with EO 420 but actually supports
the validity EO 420.
Whalen v. Roe is the leading American case on the constitutional protection for
control over information. In Whalen, the U.S. Supreme Court upheld the validity of a
New York law that required doctors to furnish the government reports identifying
patients who received prescription drugs that have a potential for abuse. The
government maintained a central computerized database containing the names and
addresses of the patients, as well as the identity of the prescribing doctors. The law
was assailed because the database allegedly infringed the right to privacy of
individuals who want to keep their personal matters confidential. The U.S. Supreme
Court rejected the privacy claim, and declared:
Disclosures of private medical information to doctors, to hospital personnel, to
insurance companies, and to public health agencies are often an essential part of
modern medical practice even when the disclosure may reflect unfavorably on the
character of the patient. Requiring such disclosures to representatives of the State
having responsibility for the health of the community does not automatically amount to
an impermissible invasion of privacy. (Emphasis supplied)
Compared to the personal medical data required for disclosure to the New York State
in Whalen, the 14 specific data required for disclosure to the Philippine government
under EO 420 are far less sensitive and far less personal. In fact, the 14 specific data
required under EO 420 are routine data for ID systems, unlike the sensitive and
potentially embarrassing medical records of patients taking prescription drugs.
Whalen, therefore, carries persuasive force for upholding the constitutionality of EO
420 as non-violative of the right to privacy.
Subsequent U.S. Supreme Court decisions have reiterated Whalen. In Planned
Parenthood of Central Missouri v. Danforth,16 the U.S. Supreme Court upheld the
validity of a law that required doctors performing abortions to fill up forms, maintain
records for seven years, and allow the inspection of such records by public health
officials. The U.S. Supreme Court ruled that "recordkeeping and reporting
requirements that are reasonably directed to the preservation of maternal health and
that properly respect a patients confidentiality and privacy are permissible."
Again, in Planned Parenthood of Southeastern Pennsylvania v. Casey, 17 the U.S.
Supreme Court upheld a law that required doctors performing an abortion to file a
report to the government that included the doctors name, the womans age, the
number of prior pregnancies and abortions that the woman had, the medical
complications from the abortion, the weight of the fetus, and the marital status of the
woman. In case of state-funded institutions, the law made such information publicly
available. In Casey, the U.S. Supreme Court stated: "The collection of information
with respect to actual patients is a vital element of medical research, and so it cannot

EN BANC

be said that the requirements serve no purpose other than to make abortion more
difficult."

REPUBLIC vs. GINGOYON


Compared to the disclosure requirements of personal data that the U.S. Supreme
Court have upheld in Whalen, Danforth and Casey as not violative of the right to
privacy, the disclosure requirements under EO 420 are far benign and cannot
therefore constitute violation of the right to privacy. EO 420 requires disclosure of 14
personal data that are routine for ID purposes, data that cannot possibly embarrass or
humiliate anyone.
Petitioners have not shown how EO 420 will violate their right to privacy. Petitioners
cannot show such violation by a mere facial examination of EO 420 because EO 420
narrowly draws the data collection, recording and exhibition while prescribing
comprehensive safeguards. Ople v. Torres18 is not authority to hold that EO 420
violates the right to privacy because in that case the assailed executive issuance,
broadly drawn and devoid of safeguards, was annulled solely on the ground that the
subject matter required legislation. As then Associate Justice, now Chief Justice
Artemio V. Panganiban noted in his concurring opinion in Ople v. Torres, "The voting
is decisive only on the need for appropriate legislation, and it is only on this ground
that the petition is granted by this Court."
EO 420 applies only to government entities that already maintain ID systems and
issue ID cards pursuant to their regular functions under existing laws. EO 420 does
not grant such government entities any power that they do not already possess under
existing laws. In contrast, the assailed executive issuance in Ople v. Torres sought to
establish a "National Computerized Identification Reference System,"19 a national ID
system that did not exist prior to the assailed executive issuance. Obviously, a
national ID card system requires legislation because it creates a new national data
collection and card issuance system where none existed before.
In the present case, EO 420 does not establish a national ID system but makes the
existing sectoral card systems of government entities like GSIS, SSS, Philhealth and
LTO less costly, more efficient, reliable and user-friendly to the public. Hence, EO 420
is a proper subject of executive issuance under the Presidents constitutional power of
control over government entities in the Executive department, as well as under the
Presidents constitutional duty to ensure that laws are faithfully executed.
WHEREFORE, the petitions are DISMISSED. Executive Order No. 420 is
declared VALID.
SO ORDERED.

December 19, 2005


x---------------------------------------------------------------------- x
TINGA, J.:

DECISION

The Ninoy Aquino International Airport Passenger Terminal III (NAIA 3)


was conceived, designed and constructed to serve as the countrys show
window to the world. Regrettably, it has spawned controversies. Regrettably
too, despite the apparent completion of the terminal complex way back it has
not yet been operated. This has caused immeasurable economic damage to
the country, not to mention its deplorable discredit in the international
community.
In the first case that reached this Court, Agan v. PIATCO,[1] the
contracts which the Government had with the contractor were voided for
being contrary to law and public policy. The second case now before the
Court involves the matter of just compensation due the contractor for the
terminal complex it built. We decide the case on the basis of fairness, the
same norm that pervades both the Courts 2004 Resolution in the first case
and the latest expropriation law.
The present controversy has its roots with the promulgation of the
Courts decision in Agan v. PIATCO,[2] promulgated in 2003 (2003 Decision).
This decision nullified the Concession Agreement for the Build-Operate-andTransfer Arrangement of the Ninoy Aquino International Airport Passenger
Terminal III entered into between the Philippine Government (Government)
and the Philippine International Air Terminals Co., Inc. (PIATCO), as well as
the amendments and supplements thereto. The agreement had authorized
PIATCO to build a new international airport terminal (NAIA 3), as well as a
franchise to operate and maintain the said terminal during the concession
period of 25 years. The contracts were nullified, among others, that Paircargo
Consortium, predecessor of PIATCO, did not possess the requisite financial
capacity when it was awarded the NAIA 3 contract and that the agreement
was contrary to public policy.[3]
At the time of the promulgation of the 2003 Decision, the NAIA 3
facilities had already been built by PIATCO and were nearing
completion.[4] However, the ponencia was silent as to the legal status of the
NAIA 3 facilities following the nullification of the contracts, as well as
whatever rights of PIATCO for reimbursement for its expenses in the
construction of the facilities. Still, in his Separate Opinion, Justice
Panganiban, joined by Justice Callejo, declared as follows:

Should government pay at all for reasonable expenses


incurred in the construction of the Terminal? Indeed it
should, otherwise it will be unjustly enriching itself at the
expense of Piatco and, in particular, its funders, contractors
and investors both local and foreign. After all, there is no
question that the State needs and will make use of Terminal III,
it being part and parcel of the critical infrastructure and
transportation-related programs of government.[5]
PIATCO and several respondents-intervenors filed their respective
motions for the reconsideration of the 2003 Decision. These motions were
denied by the Court in its Resolution dated 21 January 2004 (2004
Resolution).[6] However, the Court this time squarely addressed the issue of
the rights of PIATCO to refund, compensation or reimbursement for its
expenses in the construction of the NAIA 3 facilities. The holding of the Court
on this crucial point follows:
This Court, however, is not unmindful of the reality
that the structures comprising the NAIA IPT III facility are
almost complete and that funds have been spent by
PIATCO in their construction. For the government to take
over the said facility, it has to compensate respondent
PIATCO as builder of the said structures. The compensation
must be just and in accordance with law and equity for the
government can not unjustly enrich itself at the expense of
PIATCO and its investors.[7]
After the promulgation of the rulings in Agan, the NAIA 3 facilities
have remained in the possession of PIATCO, despite the avowed intent of the
Government to put the airport terminal into immediate operation. The
Government and PIATCO conducted several rounds of negotiation regarding
the NAIA 3 facilities.[8] It also appears that arbitral proceedings were
commenced before the International Chamber of Commerce International
Court of Arbitration and the International Centre for the Settlement of
Investment Disputes,[9] although the Government has raised jurisdictional
questions before those two bodies.[10]
Then, on 21 December 2004, the Government[11] filed a Complaint for
expropriation with the Pasay City Regional Trial Court (RTC), together with
an Application for Special Raffle seeking the immediate holding of a special
raffle. The Government sought upon the filing of the complaint the issuance
of a writ of possession authorizing it to take immediate possession and
control over the NAIA 3 facilities.
The Government also declared that it had deposited the amount
of P3,002,125,000.00[12] (3 Billion)[13] in Cash with the Land Bank of
thePhilippines, representing the NAIA 3 terminals assessed value for taxation
purposes.[14]

The case[15] was raffled to Branch 117 of the Pasay City RTC,
presided by respondent judge Hon. Henrick F. Gingoyon (Hon. Gingoyon). On
the same day that the Complaint was filed, the RTC issued
an Order[16] directing the issuance of a writ of possession to the Government,
authorizing it to take or enter upon the possession of the NAIA 3 facilities.
Citing the case of City of Manila v. Serrano,[17] the RTC noted that it had the
ministerial duty to issue the writ of possession upon the filing of a complaint
for expropriation sufficient in form and substance, and upon deposit made by
the government of the amount equivalent to the assessed value of the
property subject to expropriation. The RTC found these requisites present,
particularly noting that [t]he case record shows that [the Government has]
deposited the assessed value of the [NAIA 3 facilities] in the Land Bank of the
Philippines, an authorized depositary, as shown by the certification attached
to their complaint. Also on the same day, the RTC issued a Writ of
Possession. According to PIATCO, the Government was able to take
possession over the NAIA 3 facilities immediately after the Writ of
Possession was issued.[18]
However, on 4 January 2005, the RTC issued another Order designed to
supplement its 21 December 2004 Order and the Writ of Possession. In the 4
January 2005 Order, now assailed in the present petition, the RTC noted that
its earlier issuance of its writ of possession was pursuant to Section 2, Rule
67 of the 1997 Rules of Civil Procedure. However, it was observed that
Republic Act No. 8974 (Rep. Act No. 8974), otherwise known as An Act to
Facilitate the Acquisition of Right-of-Way, Site or Location for National
Government Infrastructure Projects and For Other Purposes and its
Implementing Rules and Regulations (Implementing Rules) had amended
Rule 67 in many respects.
There are at least two crucial differences between the respective
procedures under Rep. Act No. 8974 and Rule 67. Under the statute, the
Government is required to make immediate payment to the property owner
upon the filing of the complaint to be entitled to a writ of possession,
whereas in Rule 67, the Government is required only to make an initial
deposit with an authorized government depositary. Moreover, Rule 67
prescribes that the initial deposit be equivalent to the assessed value of the
property for purposes of taxation, unlike Rep. Act No. 8974 which provides,
as the relevant standard for initial compensation, the market value of the
property as stated in the tax declaration or the current relevant zonal
valuation of the Bureau of Internal Revenue (BIR), whichever is higher, and
the value of the improvements and/or structures using the replacement cost
method.
Accordingly, on the basis of Sections 4 and 7 of Rep. Act No. 8974
and Section 10 of the Implementing Rules, the RTC made key qualifications
to its earlier issuances. First, it directed the Land Bank of the Philippines,
Baclaran Branch (LBP-Baclaran), to immediately release the amount of
US$62,343,175.77 to PIATCO, an amount which the RTC characterized as
that which the Government specifically made available for the purpose of
this expropriation; and such amount to be deducted from the amount of just
compensation due PIATCO as eventually determined by the RTC. Second, the

Government was directed to submit to the RTC a Certificate of Availability of


Funds signed by authorized officials to cover the payment of just
compensation. Third, the Government was directed to maintain, preserve
and safeguard the NAIA 3 facilities or perform such as acts or activities in
preparation for their direct operation of the airport terminal, pending
expropriation proceedings and full payment of just compensation. However,
the Government was prohibited from performing acts of ownership like
awarding concessions or leasing any part of [NAIA 3] to other parties.[19]
The very next day after the issuance of the assailed 4 January
2005 Order, the Government filed an Urgent Motion for Reconsideration,
which was set for hearing on 10 January 2005. On 7 January 2005, the RTC
issued another Order, the second now assailed before this Court, which
appointed three (3) Commissioners to ascertain the amount of just
compensation for the NAIA 3 Complex. That same day, the Government filed
aMotion for Inhibition of Hon. Gingoyon.
The RTC heard the Urgent Motion for Reconsideration and Motion for
Inhibition on 10 January 2005. On the same day, it denied these motions in
an Omnibus Order dated 10 January 2005. This is the third Order now
assailed before this Court. Nonetheless, while the Omnibus Order affirmed
the earlier dispositions in the 4 January 2005 Order, it excepted from
affirmance the superfluous part of the Order prohibiting the plaintiffs from
awarding concessions or leasing any part of [NAIA 3] to other parties. [20]
Thus, the present Petition for Certiorari and Prohibition under Rule 65
was filed on 13 January 2005. The petition prayed for the nullification of the
RTC orders dated 4 January 2005, 7 January 2005, and 10 January 2005,
and for the inhibition of Hon. Gingoyon from taking further action on the
expropriation case. A concurrent prayer for the issuance of a temporary
restraining order and preliminary injunction was granted by this Court in
a Resolution dated 14 January 2005.[21]
The Government, in imputing grave abuse of discretion to the acts of
Hon. Gingoyon, raises five general arguments, to wit:
(i) that Rule 67,
expropriation proceedings;

not Rep. Act No. 8974, governs the present

(ii) that Hon. Gingoyon erred when he ordered the immediate release
of the amount of US$62.3 Million to PIATCO considering that the assessed
value as alleged in the complaint was only P3 Billion;
(iii) that the RTC could not have prohibited the Government from
enjoining the performance of acts of ownership;
and

(iv) that the appointment of the three commissioners was erroneous;

(v) that Hon. Gingoyon should be compelled to inhibit himself from


the expropriation case.[22]

Before we delve into the merits of the issues raised by the Government,
it is essential to consider the crucial holding of the Court in its 2004
Resolution in Agan, which we repeat below:
This Court, however, is not unmindful of the reality that
the structures comprising the NAIA IPT III facility are almost
complete and that funds have been spent by PIATCO in their
construction. For the government to take over the said
facility, it has to compensate respondent PIATCO as builder
of the said structures. The compensation must be just and in
accordance with law and equity for the government can not
unjustly enrich itself at the expense of PIATCO and its
investors.[23]
This pronouncement contains the fundamental premises which
permeate this decision of the Court. Indeed, Agan, final and executory as it is,
stands as governing law in this case, and any disposition of the present
petition must conform to the conditions laid down by the Court in its
2004 Resolution.
The 2004 Resolution Which Is
Law of This Case Generally
Permits Expropriation
The pronouncement in the 2004 Resolution is especially
significant to this case in two aspects, namely: (i) that PIATCO must
receive payment of just compensation determined in accordance with
law and equity; and (ii) that the government is barred from taking over
NAIA 3 until such just compensation is paid. The parties cannot be allowed
to evade the directives laid down by this Court through any mode of judicial
action, such as the complaint for eminent domain.
It cannot be denied though that the Court in the 2004 Resolution
prescribed mandatory guidelines which the Government must observe before
it could acquire the NAIA 3 facilities. Thus, the actions of respondent judge
under review, as well as the arguments of the parties must, to merit
affirmation, pass the threshold test of whether such propositions are in
accord with the 2004 Resolution.
The Government does not contest the efficacy of this pronouncement
in the 2004 Resolution,[24] thus its application to the case at bar is not a
matter of controversy. Of course, questions such as what is the standard of
just compensation and which particular laws and equitable principles are
applicable, remain in dispute and shall be resolved forthwith.
The Government has chosen to resort to expropriation, a remedy
available under the law, which has the added benefit of an integrated
process for the determination of just compensation and the payment thereof
to PIATCO. We appreciate that the case at bar is a highly unusual case,

whereby the Government seeks to expropriate a building complex


constructed on land which the State already owns.[25] There is an inherent
illogic in the resort to eminent domain on property already owned by the
State. At first blush, since the State already owns the property on which
NAIA 3 stands, the proper remedy should be akin to an action for ejectment.
However, the reason for the resort by the Government to expropriation
proceedings is understandable in this case. The 2004 Resolution, in requiring
the payment of just compensation prior to the takeover by the
Government of NAIA 3, effectively precluded it from acquiring possession or
ownership of the NAIA 3 through the unilateral exercise of its rights as the
owner of the ground on which the facilities stood. Thus, as things stood after
the 2004 Resolution, the right of the Government to take over the NAIA 3
terminal was preconditioned by lawful order on the payment of just
compensation to PIATCO as builder of the structures.
The determination of just compensation could very well be agreed
upon by the parties without judicial intervention, and it appears that steps
towards that direction had been engaged in. Still, ultimately, the Government
resorted to its inherent power of eminent domain through expropriation
proceedings. Is eminent domain appropriate in the first place, with due regard
not only to the law on expropriation but also to the Courts 2004 Resolution
in Agan?
The right of eminent domain extends to personal and real property,
and the NAIA 3 structures, adhered as they are to the soil, are considered as
real property.[26] The public purpose for the expropriation is also beyond
dispute. It should also be noted that Section 1 of Rule 67 (on Expropriation)
recognizes the possibility that the property sought to be expropriated may
be titled in the name of the Republic of the Philippines, although occupied by
private individuals, and in such case an averment to that effect should be
made in the complaint. The instant expropriation complaint did aver that the
NAIA 3 complex stands on a parcel of land owned by the Bases Conversion
Development
Authority,
another
agency
of
[the
Republic
of
the Philippines].[27]
Admittedly, eminent domain is not the sole judicial recourse by which
the Government may have acquired the NAIA 3 facilities while satisfying the
requisites in the 2004 Resolution. Eminent domain though may be the most
effective, as well as the speediest means by which such goals may be
accomplished. Not only does it enable immediate possession after satisfaction
of the requisites under the law, it also has a built-in procedure through which
just compensation may be ascertained. Thus, there should be no question as
to the propriety of eminent domain proceedings in this case.
Still, in applying the laws and rules on expropriation in the case at
bar, we are impelled to apply or construe these rules in accordance with the
Courts prescriptions in the 2004 Resolution to achieve the end effect that the
Government may validly take over the NAIA 3 facilities. Insofar as this case is
concerned, the 2004 Resolution is effective not only as a legal precedent, but
as the source of rights and prescriptions that must be guaranteed, if not

enforced, in the resolution of this petition. Otherwise, the integrity and


efficacy of the rulings of this Court will be severely diminished.
It is from these premises that we resolve the first question, whether Rule
67 of the Rules of Court or Rep. Act No. 8974 governs the expropriation
proceedings in this case.
Application of Rule 67 Violates
the 2004 Agan Resolution
The Government insists that Rule 67 of the Rules of Court governs the
expropriation proceedings in this case to the exclusion of all other laws. On
the other hand, PIATCO claims that it is Rep. Act No. 8974 which does apply.
Earlier, we had adverted to the basic differences between the statute and the
procedural rule. Further elaboration is in order.
Rule 67 outlines the procedure under which eminent domain may be
exercised by the Government. Yet by no means does it serve at present as the
solitary guideline through which the State may expropriate private property.
For example, Section 19 of the Local Government Code governs as to the
exercise by local government units of the power of eminent domain through
an enabling ordinance. And then there is Rep. Act No. 8974, which covers
expropriation proceedings intended for national government infrastructure
projects.
Rep. Act No. 8974, which provides for a procedure eminently more
favorable to the property owner than Rule 67, inescapably applies in
instances when the national government expropriates property for national
government infrastructure projects.[28] Thus, if expropriation is engaged in by
the national government for purposes other than national infrastructure
projects, the assessed value standard and the deposit mode prescribed in
Rule 67 continues to apply.
Under both Rule 67 and Rep. Act No. 8974, the Government commences
expropriation proceedings through the filing of a complaint. Unlike in the case
of local governments which necessitate an authorizing ordinance before
expropriation may be accomplished, there is no need under Rule 67 or Rep.
Act No. 8974 for legislative authorization before the Government may proceed
with a particular exercise of eminent domain. The most crucial difference
between Rule 67 and Rep. Act No. 8974 concerns the particular essential step
the Government has to undertake to be entitled to a writ of possession.
The first paragraph of Section 2 of Rule 67 provides:
SEC. 2. Entry of plaintiff upon depositing value with
authorized government depository. Upon the filing of the
complaint or at any time thereafter and after due notice to the
defendant, the plaintiff shall have the right to take or enter upon
the possession of the real property involved if he deposits with
the authorized government depositary an amount equivalent

to the assessed value of the property for purposes of taxation


to be held by such bank subject to the orders of the court.
Such deposit shall be in money, unless in lieu thereof the
court authorizes the deposit of a certificate of deposit of a
government bank of the Republic of the Philippines payable
on demand to the authorized government depositary.
In contrast, Section 4 of Rep. Act No. 8974 relevantly states:
SEC. 4. Guidelines for Expropriation Proceedings. Whenever
it is necessary to acquire real property for the right-of-way, site
or location for any national government infrastructure project
through expropriation, the appropriate proceedings before the
proper court under the following guidelines:
a) Upon the filing of the complaint, and after due notice
to the defendant, the implementing agency shall
immediately pay the owner of the property the amount
equivalent to the sum of (1) one hundred percent (100%)
of the value of the property based on the current relevant
zonal valuation of the Bureau of Internal Revenue (BIR);
and (2) the value of the improvements and/or structures
as determined under Section 7 hereof;
...
c) In case the completion of a government infrastructure
project is of utmost urgency and importance, and there is
no existing valuation of the area concerned, the
implementing agency shall immediately pay the owner of
the property its proffered value taking into consideration
the standards prescribed in Section 5 hereof.
Upon completion with the guidelines abovementioned,
the court shall immediately issue to the implementing agency an
order to take possession of the property and start the
implementation of the project.
Before the court can issue a Writ of Possession, the
implementing agency shall present to the court a certificate of
availability of funds from the proper official concerned.
...
As can be gleaned from the above-quoted texts, Rule 67 merely requires
the Government to deposit with an authorized government depositary the
assessed value of the property for expropriation for it to be entitled to a writ of
possession. On the other hand, Rep. Act No. 8974 requires that the
Government make a direct payment to the property owner before the writ may
issue. Moreover, such payment is based on the zonal valuation of the BIR in
the case of land, the value of the improvements or structures under the

replacement cost method,[29] or if no such valuation is available and in cases


of utmost urgency, the proffered value of the property to be seized.
It is quite apparent why the Government would prefer to apply Rule
67 in lieu of Rep. Act No. 8974. Under Rule 67, it would not be obliged to
immediately pay any amount to PIATCO before it can obtain the writ of
possession since all it need do is deposit the amount equivalent to the
assessed value with an authorized government depositary. Hence, it devotes
considerable effort to point out that Rep. Act No. 8974 does not apply in this
case, notwithstanding the undeniable reality that NAIA 3 is a national
government project. Yet, these efforts fail, especially considering the
controlling effect of the 2004 Resolution in Agan on the adjudication of this
case.
It is the finding of this Court that the staging of expropriation
proceedings in this case with the exclusive use of Rule 67 would allow for the
Government to take over the NAIA 3 facilities in a fashion that directly
rebukes our 2004 Resolution in Agan. This Court cannot sanction deviation
from its own final and executory orders.
Section 2 of Rule 67 provides that the State shall have the right to
take or enter upon the possession of the real property involved if [the plaintiff]
deposits with the authorized government depositary an amount equivalent to
the assessed value of the property for purposes of taxation to be held by such
bank subject to the orders of the court.[30] It is thus apparent that under the
provision, all the Government need do to obtain a writ of possession is to
deposit the amount equivalent to the assessed value with an authorized
government depositary.
Would the deposit under Section 2 of Rule 67 satisfy the requirement
laid down in the 2004 Resolution that [f]or the government to take over the
said facility, it has to compensate respondent PIATCO as builder of the said
structures? Evidently not.
If Section 2 of Rule 67 were to apply, PIATCO would be enjoined from
receiving a single centavo as just compensation before the Government takes
over the NAIA 3 facility by virtue of a writ of possession. Such an injunction
squarely contradicts the letter and intent of the 2004 Resolution. Hence, the
position of the Government sanctions its own disregard or violation the
prescription laid down by this Court that there must first be just
compensation paid to PIATCO before the Government may take over the NAIA
3 facilities.
Thus, at the very least, Rule 67 cannot apply in this case without
violating the 2004 Resolution. Even assuming that Rep. Act No. 8974 does
not govern in this case, it does not necessarily follow that Rule 67 should
then apply. After all, adherence to the letter of Section 2, Rule 67 would in
turn violate the Courts requirement in the 2004 Resolution that there must
first be payment of just compensation to PIATCO before the Government may
take over the property.

It is the plain intent of Rep. Act No. 8974 to supersede the system of
deposit under Rule 67 with the scheme of immediate payment in cases
involving national government infrastructure projects. The following portion of
the Senate deliberations, cited by PIATCO in its Memorandum, is worth
quoting to cogitate on the purpose behind the plain meaning of the law:
THE CHAIRMAN (SEN. CAYETANO). x x x Because the
Senate believes that, you know, we have to pay the
landowners immediately not by treasury bills but by cash.
Since we are depriving them, you know, upon payment, no,
of possession, we might as well pay them as much, no, hindi
lang 50 percent.
xxx
THE CHAIRMAN (REP. VERGARA). Accepted.
xxx
THE CHAIRMAN (SEN. CAYETANO). Oo. Because this is really
in favor of the landowners, e.
THE CHAIRMAN (REP. VERGARA). Thats why we need to really
secure the availability of funds.
xxx
THE CHAIRMAN (SEN. CAYETANO). No, no. Its the same. It
says here: iyong first paragraph, diba? Iyong zonal
talagang magbabayad muna. In other words, you know,
there must be a payment kaagad. (TSN, Bicameral Conference
on the Disagreeing Provisions of House Bill 1422 and Senate Bill
2117, August 29, 2000, pp. 14-20)
xxx
THE CHAIRMAN (SEN. CAYETANO). Okay, okay, no. Unanguna, it is not deposit, no. Its payment.
REP. BATERINA. Its payment, ho, payment. (Id., p. 63)[31]

It likewise bears noting that the appropriate standard of just


compensation is a substantive matter. It is well within the province of the
legislature to fix the standard, which it did through the enactment of Rep. Act
No. 8974. Specifically, this prescribes the new standards in determining the
amount of just compensation in expropriation cases relating to national
government infrastructure projects, as well as the manner of payment thereof.
At the same time, Section 14 of the Implementing Rules recognizes the

continued applicability of Rule 67 on procedural aspects when it provides all


matters regarding defenses and objections to the complaint, issues on
uncertain ownership and conflicting claims, effects of appeal on the rights of
the parties, and such other incidents affecting the complaint shall be resolved
under the provisions on expropriation of Rule 67 of the Rules of Court.[32]
Given that the 2004 Resolution militates against the continued use of
the norm under Section 2, Rule 67, is it then possible to apply Rep. Act No.
8974? We find that it is, and moreover, its application in this case
complements rather than contravenes the prescriptions laid down in the 2004
Resolution.
Rep. Act No. 8974 Fits
to the Situation at Bar
and Complements the
2004 Agan Resolution
Rep. Act No. 8974 is entitled An Act To Facilitate The Acquisition Of
Right-Of-Way, Site Or Location For National Government Infrastructure
Projects And For Other Purposes. Obviously, the law is intended to cover
expropriation proceedings intended for national government infrastructure
projects. Section 2 of Rep. Act No. 8974 explains what are considered as
national government projects.
Sec. 2. National Government Projects. The term
national government projects shall refer to all national
government infrastructure, engineering works and service
contracts, including projects undertaken by government-owned
and controlled corporations, all projects covered by Republic
Act No. 6957, as amended by Republic Act No. 7718, otherwise
known as the Build-Operate-and-Transfer Law, and other
related and necessary activities, such as site acquisition,
supply and/or installation of equipment and materials,
implementation,
construction,
completion,
operation,
maintenance,
improvement,
repair
and
rehabilitation,
regardless of the source of funding.
As acknowledged in the 2003 Decision, the development of NAIA 3 was
made pursuant to a build-operate-and-transfer arrangement pursuant to
Republic Act No. 6957, as amended,[33] which pertains to infrastructure or
development projects normally financed by the public sector but which are
now wholly or partly implemented by the private sector. [34] Under the buildoperate-and-transfer scheme, it is the project proponent which undertakes
the construction, including the financing, of a given infrastructure
facility.[35] In Tatad v. Garcia,[36] the Court acknowledged that the operator of
the EDSA Light Rail Transit project under a BOT scheme was the owner of the
facilities such as the rail tracks, rolling stocks like the coaches, rail stations,
terminals and the power plant.[37]
There can be no doubt that PIATCO has ownership rights over the
facilities which it had financed and constructed. The 2004 Resolution

squarely recognized that right when it mandated the payment of just


compensation to PIATCO prior to the takeover by the Government of NAIA 3.
The fact that the Government resorted to eminent domain proceedings in the
first place is a concession on its part of PIATCOs ownership. Indeed, if no
such right is recognized, then there should be no impediment for the
Government to seize control of NAIA 3 through ordinary ejectment
proceedings.
Since the rights of PIATCO over the NAIA 3 facilities are established, the
nature of these facilities should now be determined. Under Section 415(1) of
the Civil Code, these facilities are ineluctably immovable or real property, as
they constitute buildings, roads and constructions of all kinds adhered to the
soil.[38] Certainly, the NAIA 3 facilities are of such nature that they cannot just
be packed up and transported by PIATCO like a traveling circus caravan.
Thus, the property subject of expropriation, the NAIA 3 facilities, are
real property owned by PIATCO. This point is critical, considering the
Governments insistence that the NAIA 3 facilities cannot be deemed as the
right-of-way, site or location of a national government infrastructure
project, within the coverage of Rep. Act No. 8974.
There is no doubt that the NAIA 3 is not, under any sensible
contemplation, a right-of-way. Yet we cannot agree with the Governments
insistence that neither could NAIA 3 be a site or location. The petition
quotes the definitions provided in Blacks Law Dictionary of location as the
specific place or position of a person or thing and site as pertaining to a
place or location or a piece of property set aside for specific use. [39] Yet even
Blacks Law Dictionary provides that [t]he term [site] does not of itself
necessarily mean a place or tract of land fixed by definite boundaries. [40] One
would assume that the Government, to back up its contention, would be able
to point to a clear-cut rule that a site or location exclusively refers to soil,
grass, pebbles and weeds. There is none.
Indeed, we cannot accept the Governments proposition that the only
properties that may be expropriated under Rep. Act No. 8974 are parcels of
land. Rep. Act No. 8974 contemplates within its coverage such real property
constituting land, buildings, roads and constructions of all kinds adhered to
the soil. Section 1 of Rep. Act No. 8974, which sets the declaration of the
laws policy, refers to real property acquired for national government
infrastructure projects are promptly paid just compensation.[41] Section 4 is
quite explicit in stating that the scope of the law relates to the acquisition of
real property, which under civil law includes buildings, roads and
constructions adhered to the soil.
It is moreover apparent that the law and its implementing rules
commonly provide for a rule for the valuation of improvements and/or
structures thereupon separate from that of the land on which such are
constructed. Section 2 of Rep. Act No. 8974 itself recognizes that the
improvements or structures on the land may very well be the subject of
expropriation proceedings. Section 4(a), in relation to Section 7 of the law
provides for the guidelines for the valuation of the improvements or

structures to be expropriated. Indeed, nothing in the law would prohibit the


application of Section 7, which provides for the valuation method of the
improvements and or structures in the instances wherein it is necessary for
the Government to expropriate only the improvements or structures, as in
this case.
The law classifies the NAIA 3 facilities as real properties just like the
soil to which they are adhered. Any sub-classifications of real property and
divergent treatment based thereupon for purposes of expropriation must be
based on substantial distinctions, otherwise the equal protection clause of the
Constitution is violated. There may be perhaps a molecular distinction
between soil and the inorganic improvements adhered thereto, yet there are
no purposive distinctions that would justify a variant treatment for purposes
of expropriation. Both the land itself and the improvements thereupon are
susceptible to private ownership independent of each other, capable of
pecuniary estimation, and if taken from the owner, considered as a
deprivation of property. The owner of improvements seized through
expropriation suffers the same degree of loss as the owner of land seized
through similar means. Equal protection demands that all persons or things
similarly situated should be treated alike, both as to rights conferred and
responsibilities imposed. For purposes of expropriation, parcels of land are
similarly situated as the buildings or improvements constructed thereon, and
a disparate treatment between those two classes of real property infringes the
equal protection clause.
Even as the provisions of Rep. Act No. 8974 call for that laws
application in this case, the threshold test must still be met whether its
implementation would conform to the dictates of the Court in the 2004
Resolution. Unlike in the case of Rule 67, the application of Rep. Act No. 8974
will not contravene the 2004 Resolution, which requires the payment of just
compensation before any takeover of the NAIA 3 facilities by the Government.
The 2004 Resolution does not particularize the extent such payment must be
effected before the takeover, but it unquestionably requires at least some
degree of payment to the private property owner before a writ of possession
may issue. The utilization of Rep. Act No. 8974 guarantees compliance with
this bare minimum requirement, as it assures the private property owner the
payment of, at the very least, the proffered value of the property to be seized.
Such payment of the proffered value to the owner, followed by the issuance of
the writ of possession in favor of the Government, is precisely the schematic
under Rep. Act No. 8974, one which facially complies with the prescription
laid down in the 2004 Resolution.
Clearly then, we see no error on the part of the RTC when it ruled
that Rep. Act No. 8974 governs the instant expropriation proceedings.
The Proper Amount to be Paid
under Rep. Act No. 8974

Then, there is the matter of the proper amount which should be paid
to PIATCO by the Government before the writ of possession may issue,
consonant to Rep. Act No. 8974.
At this juncture, we must address the observation made by the Office
of the Solicitor General in behalf of the Government that there could be no
BIR zonal valuations on the NAIA 3 facility, as provided in Rep. Act No.
8974, since zonal valuations are only for parcels of land, not for airport
terminals. The Court agrees with this point, yet does not see it as an
impediment for the application of Rep. Act No. 8974.
It must be clarified that PIATCO cannot be reimbursed or justly
compensated for the value of the parcel of land on which NAIA 3 stands.
PIATCO is not the owner of the land on which the NAIA 3 facility is
constructed, and it should not be entitled to just compensation that is
inclusive of the value of the land itself. It would be highly disingenuous to
compensate PIATCO for the value of land it does not own. Its entitlement to
just compensation should be limited to the value of the improvements and/or
structures themselves. Thus, the determination of just compensation cannot
include the BIR zonal valuation under Section 4 of Rep. Act No. 8974.
Under Rep. Act No. 8974, the Government is required to immediately
pay the owner of the property the amount equivalent to the sum of (1) one
hundred percent (100%) of the value of the property based on the current
relevant zonal valuation of the [BIR]; and (2) the value of the improvements
and/or structures as determined under Section 7. As stated above, the BIR
zonal valuation cannot apply in this case, thus the amount subject to
immediate payment should be limited to the value of the improvements
and/or structures as determined under Section 7, with Section 7 referring to
the implementing rules and regulations for the equitable valuation of the
improvements and/or structures on the land. Under the present
implementing rules in place, the valuation of the improvements/structures
are to be based using the replacement cost method. [42] However, the
replacement cost is only one of the factors to be considered in determining
the just compensation.
In addition to Rep. Act No. 8974, the 2004 Resolution in Agan also
mandated that the payment of just compensation should be in accordance
with equity as well. Thus, in ascertaining the ultimate amount of just
compensation, the duty of the trial court is to ensure that such amount
conforms not only to the law, such as Rep. Act No. 8974, but to principles of
equity as well.
Admittedly, there is no way, at least for the present, to immediately
ascertain the value of the improvements and structures since such valuation
is a matter for factual determination.[43] Yet Rep. Act No. 8974 permits an
expedited means by which the Government can immediately take possession
of the property without having to await precise determination of the valuation.
Section 4(c) of Rep. Act No. 8974 states that in case the completion of a
government infrastructure project is of utmost urgency and importance, and
there is no existing valuation of the area concerned, the implementing

agency shall immediately pay the owner of the property its proferred value,
taking into consideration the standards prescribed in Section 5 [of the
law].[44] The proffered value may strike as a highly subjective standard
based solely on the intuition of the government, but Rep. Act No. 8974 does
provide relevant standards by which proffered value should be based,[45] as
well as the certainty of judicial determination of the propriety of the proffered
value.[46]
In filing the complaint for expropriation, the Government alleged to
have deposited the amount of P3 Billion earmarked for expropriation,
representing the assessed value of the property. The making of the deposit,
including the determination of the amount of the deposit, was undertaken
under the erroneous notion that Rule 67, and not Rep. Act No. 8974, is the
applicable law. Still, as regards the amount, the Court sees no impediment to
recognize this sum of P3 Billion as the proffered value under Section 4(b) of
Rep. Act No. 8974. After all, in the initial determination of the proffered value,
the Government is not strictly required to adhere to any predetermined
standards, although its proffered value may later be subjected to judicial
review using the standards enumerated under Section 5 of Rep. Act No. 8974.
How should we appreciate the questioned order of Hon. Gingoyon,
which pegged the amount to be immediately paid to PIATCO at around $62.3
Million? The Order dated 4 January 2005, which mandated such amount,
proves problematic in that regard. While the initial sum of P3 Billion may
have been based on the assessed value, a standard which should not however
apply in this case, the RTC cites without qualification Section 4(a) of Rep. Act
No. 8974 as the basis for the amount of $62.3 Million, thus leaving the
impression that the BIR zonal valuation may form part of the basis for just
compensation, which should not be the case. Moreover, respondent judge
made no attempt to apply the enumerated guidelines for determination of just
compensation under Section 5 of Rep. Act No. 8974, as required for judicial
review of the proffered value.
The Court notes that in the 10 January 2005 Omnibus Order, the
RTC noted that the concessions agreement entered into between the
Government and PIATCO stated that the actual cost of building NAIA 3 was
not less than US$350 Million.[47] The RTC then proceeded to observe that
while Rep. Act No. 8974 required the immediate payment to PIATCO the
amount equivalent to 100% of the value of NAIA 3, the amount deposited by
the Government constituted only 18% of this value. At this point, no binding
import should be given to this observation that the actual cost of building
NAIA 3 was not less than US$350 Million, as the final conclusions on the
amount of just compensation can come only after due ascertainment in
accordance with the standards set under Rep. Act No. 8974, not the
declarations of the parties. At the same time, the expressed linkage between
the BIR zonal valuation and the amount of just compensation in this case, is
revelatory of erroneous thought on the part of the RTC.
We have already pointed out the irrelevance of the BIR zonal
valuation as an appropriate basis for valuation in this case, PIATCO not being

the owner of the land on which the NAIA 3 facilities stand. The subject order
is flawed insofar as it fails to qualify that such standard is inappropriate.
It does appear that the amount of US$62.3 Million was based on the
certification issued by the LBP-Baclaran that the Republic of the Philippines
maintained a total balance in that branch amounting to such amount. Yet the
actual representation of the $62.3 Million is not clear. The Land Bank
Certification expressing such amount does state that it was issued upon
request of the Manila International Airport Authority purportedly as
guaranty deposit for the expropriation complaint.[48] The Government claims
in its Memorandum that the entire amount was made available as a guaranty
fund for the final and executory judgment of the trial court, and not merely
for the issuance of the writ of possession.[49] One could readily conclude that
the entire amount of US$62.3 Million was intended by the Government to
answer for whatever guaranties may be required for the purpose of the
expropriation complaint.
Still, such intention the Government may have had as to the entire
US$62.3 Million is only inferentially established. In ascertaining the proffered
value adduced by the Government, the amount of P3 Billion as the amount
deposited characterized in the complaint as to be held by [Land Bank]
subject to the [RTCs] orders,[50] should be deemed as controlling. There is no
clear evidence that the Government intended to offer US$62.3 Million as the
initial payment of just compensation, the wording of the Land Bank
Certification notwithstanding, and credence should be given to the consistent
position of the Government on that aspect.
In any event, for the RTC to be able to justify the payment of US$62.3
Million to PIATCO and not P3 Billion Pesos, he would have to establish that
the higher amount represents the valuation of the structures/improvements,
and not the BIR zonal valuation on the land wherein NAIA 3 is built.
The Order dated 5 January 2005 fails to establish such integral fact, and in
the absence of contravening proof, the proffered value of P3 Billion, as
presented by the Government, should prevail.
Strikingly, the Government submits that assuming that Rep. Act No.
8974 is applicable, the deposited amount of P3 Billion should be considered
as the proffered value, since the amount was based on comparative values
made by the City Assessor.[51] Accordingly, it should be deemed as having
faithfully complied with the requirements of the statute. [52] While the Court
agrees that P3 Billion should be considered as the correct proffered value, still
we cannot deem the Government as having faithfully complied with Rep. Act
No. 8974. For the law plainly requires direct payment to the property owner,
and not a mere deposit with the authorized government depositary. Without
such direct payment, no writ of possession may be obtained.
Writ of Possession May Not
Be Implemented Until Actual
Receipt by PIATCO of Proferred
Value

The Court thus finds another error on the part of the RTC. The RTC
authorized the issuance of the writ of possession to the Government
notwithstanding the fact that no payment of any amount had yet been made
to PIATCO, despite the clear command of Rep. Act No. 8974 that there must
first be payment before the writ of possession can issue. While the RTC did
direct the LBP-Baclaran to immediately release the amount of US$62 Million
to PIATCO, it should have likewise suspended the writ of possession, nay,
withdrawn it altogether, until the Government shall have actually paid
PIATCO. This is the inevitable consequence of the clear command of Rep. Act
No. 8974 that requires immediate payment of the initially determined amount
of just compensation should be effected. Otherwise, the overpowering
intention of Rep. Act No. 8974 of ensuring payment first before transfer of
repossession would be eviscerated.
Rep. Act No. 8974 represents a significant change from previous
expropriation laws such as Rule 67, or even Section 19 of the Local
Government Code. Rule 67 and the Local Government Code merely provided
that the Government deposit the initial amounts [53] antecedent to acquiring
possession of the property with, respectively, an authorized
Government depositary[54] or the proper court.[55] In both cases, the private
owner does not receive compensation prior to the deprivation of property. On
the other hand, Rep. Act No. 8974 mandates immediate payment of the initial
just compensation prior to the issuance of the writ of possession in favor of
the Government.
Rep. Act No. 8974 is plainly clear in imposing the requirement of
immediate prepayment, and no amount of statutory deconstruction can evade
such requisite. It enshrines a new approach towards eminent domain that
reconciles the inherent unease attending expropriation proceedings with a
position of fundamental equity. While expropriation proceedings have always
demanded just compensation in exchange for private property, the previous
deposit requirement impeded immediate compensation to the private owner,
especially in cases wherein the determination
of the final amount of compensation would prove highly disputed. Under the
new modality prescribed by Rep. Act No. 8974, the private owner sees
immediate monetary recompense with the same degree of speed as the taking
of his/her property.
While eminent domain lies as one of the inherent powers of the State,
there is no requirement that it undertake a prolonged procedure, or that the
payment of the private owner be protracted as far as practicable. In fact, the
expedited procedure of payment, as highlighted under Rep. Act No. 8974, is
inherently more fair, especially to the layperson who would be hard-pressed
to fully comprehend the social value of expropriation in the first place.
Immediate payment placates to some degree whatever ill-will that arises from
expropriation, as well as satisfies the demand of basic fairness.
The Court has the duty to implement Rep. Act No. 8974 and to direct
compliance with the requirement of immediate payment in this case.
Accordingly, the Writ of Possession dated 21 December 2004 should be held

in abeyance, pending proof of actual payment by the Government to PIATCO


of the proffered value of the NAIA 3 facilities, which totals P3,002,125,000.00.
Rights of the Government
upon Issuance of the Writ
of Possession
Once the Government pays PIATCO the amount of the proffered value
of P3 Billion, it will be entitled to the Writ of Possession. However, the
Government questions the qualification imposed by the RTC in its 4 January
2005 Order consisting of the prohibition on the Government from performing
acts of ownership such as awarding concessions or leasing any part of NAIA 3
to other parties.
To be certain, the RTC, in its 10 January 2005 Omnibus
Order, expressly stated that it was not affirming the superfluous part of the
Order [of 4 January 2005] prohibiting the plaintiffs from awarding
concessions or leasing any part of NAIA [3] to other parties. [56] Still, such
statement was predicated on the notion that since the Government was not
yet the owner of NAIA 3 until final payment of just compensation, it was
obviously incapacitated to perform such acts of ownership.
In deciding this question, the 2004 Resolution in Agan cannot be
ignored, particularly the declaration that [f]or the government to take over
the said facility, it has to compensate respondent PIATCO as builder of the
said structures. The obvious import of this holding is that unless PIATCO is
paid just compensation, the Government is barred from taking over, a
phrase which in the strictest sense could encompass even a bar of physical
possession of NAIA 3, much less operation of the facilities.
There are critical reasons for the Court to view the 2004 Resolution less
stringently, and thus allow the operation by the Government of NAIA 3 upon
the effectivity of the Writ of Possession. For one, the national prestige is
diminished every day that passes with the NAIA 3 remaining mothballed. For
another, the continued non-use of the facilities contributes to its physical
deterioration, if it has not already. And still for another, the economic benefits
to the Government and the country at large are beyond dispute once the NAIA
3 is put in operation.
Rep. Act No. 8974 provides the appropriate answer for the standard that
governs the extent of the acts the Government may be authorized to perform
upon the issuance of the writ of possession. Section 4 states that the court
shall immediately issue to the implementing agency an order to take
possession of the property and start the implementation of the project.
We hold that accordingly, once the Writ of Possession is effective, the
Government itself is authorized to perform the acts that are essential to the
operation of the NAIA 3 as an international airport terminal upon the
effectivity of the Writ of Possession. These would include the repair,
reconditioning and improvement of the complex, maintenance of the existing
facilities and equipment, installation of new facilities and equipment,
provision of services and facilities pertaining to the facilitation of air traffic
and transport, and other services that are integral to a modern-day
international airport.

The Governments position is more expansive than that adopted by


the Court. It argues that with the writ of possession, it is enabled to perform
acts de jure on the expropriated property. It cites Republic v. Tagle,[57] as well
as the statement therein that the expropriation of real property does not
include mere physical entry or occupation of land, and from them concludes
that its mere physical entry and occupation of the property fall short of the
taking of title, which includes all the rights that may be exercised by an
owner over the subject property.
This conclusion is indeed lifted directly from statements
in Tagle,[58] but not from the ratio decidendi of that case. Tagle concerned
whether a writ of possession in favor of the Government was still necessary in
light of the fact that it was already in actual possession of the property. In
ruling that the Government was entitled to the writ of possession, the Court
in Tagle explains that such writ vested not only physical possession, but also
the legal right to possess the property. Continues the Court, such legal right
to possess was particularly important in the case, as there was a pending suit
against the Republic for unlawful detainer, and the writ of possession would
serve to safeguard the Government from eviction.[59]
At the same time, Tagle conforms to the obvious, that there is no
transfer of ownership as of yet by virtue of the writ of possession. Taglemay
concede that the Government is entitled to exercise more than just the right
of possession by virtue of the writ of possession, yet it cannot be construed to
grant the Government the entire panoply of rights that are available to the
owner. Certainly, neither Tagle nor any other case or law, lends support to
the Governments proposition that it acquires beneficial or equitable
ownership of the expropriated property merely through the writ of possession.
Indeed, this Court has been vigilant in defense of the rights of the
property owner who has been validly deprived of possession, yet retains legal
title over the expropriated property pending payment of just compensation.
We reiterated the various doctrines of such import in our recent holding
in Republic v. Lim:[60]
The recognized rule is that title to the property
expropriated shall pass from the owner to the expropriator
only upon full payment of the just compensation.
Jurisprudence on this settled principle is consistent both here
and in other democratic jurisdictions. In Association of Small
Landowners in the Philippines, Inc. et al., vs. Secretary of Agrarian
Reform[[61]], thus:
Title to property which is the subject
of condemnation proceedings does not vest
the condemnor until the judgment fixing just
compensation is entered and paid, but the
condemnors title relates back to the date on
which the petition under the Eminent Domain

Act, or the commissioners report under the Local


Improvement Act, is filed.
x x x Although the right to appropriate
and use land taken for a canal is complete at
the time of entry, title to the property taken
remains in the owner until payment is
actually made. (Emphasis supplied.)
In Kennedy v. Indianapolis, the US
Supreme Court cited several cases holding that
title to property does not pass to the condemnor
until just compensation had actually been made.
In fact, the decisions appear to be uniform to this
effect. As early as 1838, in Rubottom v. McLure, it
was held that actual payment to the owner of
the condemned property was a condition
precedent to the investment of the title to
the property in the State albeit not to the
appropriation of it to public use. In Rexford v.
Knight, the Court of Appeals of New York said
that the construction upon the statutes was that
the fee did not vest in the State until the
payment of the compensation although the
authority to enter upon and appropriate the land
was complete prior to the payment. Kennedy
further said that both on principle and
authority the rule is . . . that the right to
enter on and use the property is complete, as
soon as the property is actually appropriated
under the authority of law for a public use,
but that the title does not pass from the
owner without his consent, until just
compensation has been made to him.
Our own Supreme Court has held
in Visayan Refining Co. v. Camus and Paredes,
that:
If the laws which we have exhibited or
cited in the preceding discussion are
attentively examined it will be apparent that
the method of expropriation adopted in this
jurisdiction is such as to afford absolute
reassurance that no piece of land can be
finally and irrevocably taken from an
unwilling owner until compensation is
paid....(Emphasis supplied.)

Clearly, without full payment of just compensation, there


can be no transfer of title from the landowner to the expropriator.

Otherwise stated, the Republics acquisition of ownership is


conditioned upon the full payment of just compensation within a
reasonable time.
Significantly, in Municipality of Bian v. Garcia[[62]] this
Court ruled that the expropriation of lands consists of two
stages, to wit:
x x x The first is concerned with the
determination of the authority of the plaintiff to
exercise the power of eminent domain and the
propriety of its exercise in the context of the facts
involved in the suit. It ends with an order, if not
of dismissal of the action, of condemnation
declaring that the plaintiff has a lawful right to
take the property sought to be condemned, for
the public use or purpose described in the
complaint,
upon
the
payment
of
just
compensation to be determined as of the date of
the filing of the complaint x x x.
The second phase of the eminent domain
action is concerned with the determination by
the court of the just compensation for the
property sought to be taken. This is done by the
court with the assistance of not more than three
(3) commissioners. x x x.
It is only upon the completion of these two stages that
expropriation is said to have been completed. In Republic v.
Salem Investment Corporation[[63]] , we ruled that, the process is
not completed until payment of just compensation. Thus, here,
the failure of the Republic to pay respondent and his
predecessors-in-interest for a period of 57 years rendered the
expropriation process incomplete.
Lim serves fair warning to the Government and its agencies who
consistently refuse to pay just compensation due to the private property
owner whose property had been
expropriated. At the same time, Lim emphasizes the fragility of the rights of
the Government as possessor pending the final payment of just
compensation, without diminishing the potency of such rights. Indeed, the
public policy, enshrined foremost in the Constitution, mandates that the
Government must pay for the private property it expropriates. Consequently,
the proper judicial attitude is to guarantee compliance with this primordial
right to just compensation.
Final Determination of Just
Compensation Within 60 Days

The issuance of the writ of possession does not write finis to the
expropriation proceedings. As earlier pointed out, expropriation is not
completed until payment to the property owner of just compensation. The
proffered value stands as merely a provisional determination of the amount
of just compensation, the payment of which is sufficient to transfer
possession of the property to the Government. However, to effectuate the
transfer of ownership, it is necessary for the Government to pay the property
owner the final just compensation.

Appointment of Commissioners

In Lim, the Court went as far as to countenance, given the exceptional


circumstances of that case, the reversion of the validly expropriated property
to private ownership due to the failure of the Government to pay just
compensation in that case.[64] It was noted in that case that the Government
deliberately refused to pay just compensation. The Court went on to rule that
in cases where the government failed to pay just compensation within five (5)
years from the finality of the judgment in the expropriation proceedings, the
owners concerned shall have the right to recover possession of their
property.[65]

It must be noted that Rep. Act No. 8974 is silent on the appointment of
commissioners tasked with the ascertainment of just compensation. [67] This
protocol though is sanctioned under Rule 67. We rule that the appointment of
commissioners under Rule 67 may be resorted to, even in expropriation
proceedings under Rep. Act No. 8974, since the application of the provisions
of Rule 67 in that regard do not conflict with the statute. As earlier stated,
Section 14 of the Implementing Rules does allow such other incidents
affecting the complaint to be resolved under the provisions on expropriation of
Rule 67 of the Rules of Court. Even without Rule 67, reference during trial to
a commissioner of the examination of an issue of fact is sanctioned under
Rule 32 of the Rules of Court.

Rep. Act No. 8974 mandates a speedy method by which the final
determination of just compensation may be had. Section 4 provides:
In the event that the owner of the property contests the
implementing agencys proffered value, the court shall determine
the just compensation to be paid the owner within sixty (60) days
from the date of filing of the expropriation case. When the
decision of the court becomes final and executory, the
implementing agency shall pay the owner the difference between
the amount already paid and the just compensation as
determined by the court.
We hold that this provision should apply in this case. The sixty (60)day period prescribed in Rep. Act No. 8974 gives teeth to the laws avowed
policy to ensure that owners of real property acquired for national
government
infrastructure
projects
are promptly
paid just
compensation.[66] In this case, there already has been irreversible delay in
the prompt payment of PIATCO of just compensation, and it is no longer
possible for the RTC to determine the just compensation due PIATCO within
sixty (60) days from the filing of the complaint last 21 December 2004, as
contemplated by the law. Still, it is feasible to effectuate the spirit of the law
by requiring the trial court to make such determination within sixty (60) days
from finality of this decision, in accordance with the guidelines laid down
in Rep. Act No. 8974 and its Implementing Rules.
Of course, once the amount of just compensation has been finally
determined, the Government is obliged to pay PIATCO the said amount. As
shown in Lim and other like-minded cases, the Governments refusal to make
such payment is indubitably actionable in court.

The next argument for consideration is the claim of the Government that
the RTC erred in appointing the three commissioners in its 7 January
2005 Order without prior consultation with either the Government or PIATCO,
or without affording the Government the opportunity to object to the
appointment of these commissioners. We can dispose of this argument
without complication.

But while the appointment of commissioners under the aegis of Rule 67


may be sanctioned in expropriation proceedings under Rep. Act No. 8974, the
standards to be observed for the determination of just compensation are
provided not in Rule 67 but in the statute. In particular, the governing
standards for the determination of just compensation for the NAIA 3 facilities
are found in Section 10 of the Implementing Rules for Rep. Act No. 8974,
which provides for the replacement cost method in the valuation of
improvements and structures.[68]
Nothing in Rule 67 or Rep. Act No. 8974 requires that the RTC consult
with the parties in the expropriation case on who should be appointed as
commissioners. Neither does the Court feel that such a requirement should
be imposed in this case. We did rule in Municipality of Talisay v.
Ramirez[69] that there is nothing to prevent [the trial court] from seeking the
recommendations of the parties on [the] matter [of appointment of
commissioners], the better to ensure their fair representation. [70] At the same
time, such solicitation of recommendations is not obligatory on the part of the
court, hence we cannot impute error on the part of the RTC in its exercise of
solitary discretion in the appointment of the commissioners.
What Rule 67 does allow though is for the parties to protest the
appointment of any of these commissioners, as provided under Section 5 of
the Rule. These objections though must be made filed within ten (10) days
from service of the order of appointment of the commissioners.[71] In this case,
the proper recourse of the Government to challenge the choice of the
commissioners is to file an objection with the trial court, conformably with
Section 5, Rule 67, and not as it has done, assail the same through a special
civil action for certiorari. Considering that the expropriation proceedings in
this case were effectively halted seven (7) days after the Order appointing the

commissioners,[72] it is permissible to allow the parties to file their objections


with the RTC within five (5) days from finality of this decision.
Insufficient Ground for Inhibition
of Respondent Judge
The final argument for disposition is the claim of the Government is that
Hon. Gingoyon has prejudged the expropriation case against the
Governments cause and, thus, should be required to inhibit himself. This
grave charge is predicated on facts which the Government characterizes as
undeniable. In particular, the Government notes that the 4 January
2005 Order was issued motu proprio, without any preceding motion, notice or
hearing. Further, such order, which directed the payment of US$62 Million to
PIATCO, was attended with error in the computation of just compensation.
The Government also notes that the said Order was issued even before
summons had been served on PIATCO.
The disqualification of a judge is a deprivation of his/her judicial
power[73] and should not be allowed on the basis of mere speculations and
surmises. It certainly cannot be predicated on the adverse nature of the
judges rulings towards the movant for inhibition, especially if these rulings
are in accord with law. Neither could inhibition be justified merely on the
erroneous nature of the rulings of the judge. We emphasized inWebb v.
People:[74]
To prove bias and prejudice on the part of respondent
judge, petitioners harp on the alleged adverse and erroneous
rulings of respondent judge on their various motions. By
themselves, however, they do not sufficiently prove bias and
prejudice to disqualify respondent judge. To be disqualifying,
the bias and prejudice must be shown to have stemmed from
an extrajudicial source and result in an opinion on the
merits on some basis other than what the judge learned from
his participation in the case. Opinions formed in the course of
judicial proceedings, although erroneous, as long as they are
based on the evidence presented and conduct observed by the
judge, do not prove personal bias or prejudice on the part of the
judge. As a general rule, repeated rulings against a litigant,
no matter how erroneous and vigorously and consistently
expressed, are not a basis for disqualification of a judge on
grounds of bias and prejudice. Extrinsic evidence is required
to establish bias, bad faith, malice or corrupt purpose, in
addition to the palpable error which may be inferred from
the decision or order itself. Although the decision may seem
so erroneous as to raise doubts concerning a judge's
integrity, absent extrinsic evidence, the decision itself would
be insufficient to establish a case against the judge. The only
exception to the rule is when the error is so gross and patent
as to produce an ineluctable inference of bad faith or
malice.[75]

The Governments contentions against Hon. Gingoyon are severely


undercut by the fact that the 21 December 2004 Order, which the 4 January
2005 Order sought to rectify, was indeed severely flawed as it erroneously
applied the provisions of Rule 67 of the Rules of Court, instead of Rep. Act No.
8974,
in
ascertaining
compliance
with
the
requisites
for the issuance of the writ of possession. The 4 January 2005 Order,
which according to the Government establishes Hon. Gingoyons bias, was
promulgated precisely to correct the previous error by applying the correct
provisions of law. It would not speak well of the Court if it sanctions a judge
for wanting or even attempting to correct a previous erroneous order which
precisely is the right move to take.
Neither are we convinced that the motu proprio issuance of the 4
January 2005 Order, without the benefit of notice or hearing, sufficiently
evinces bias on the part of Hon. Gingoyon. The motu proprio amendment by a
court of an erroneous order previously issued may be sanctioned depending
on the circumstances, in line with the long-recognized principle that every
court has inherent power to do all things reasonably necessary for the
administration of justice within the scope of its jurisdiction. [76] Section 5(g),
Rule 135 of the Rules of Court further recognizes the inherent power of courts
to amend and control its process and orders so as to make them conformable
to law and justice,[77] a power which Hon. Gingoyon noted in his 10 January
2005 Omnibus Order.[78] This inherent power includes the right of the court to
reverse itself, especially when in its honest opinion it has committed an error
or mistake in judgment, and that to adhere to its decision will cause injustice
to a party litigant.[79]
Certainly, the 4 January 2005 Order was designed to make the RTCs
previous order conformable to law and justice, particularly to apply the
correct law of the case. Of course, as earlier established, this effort proved
incomplete, as the 4 January 2005 Order did not correctly apply Rep. Act No.
8974 in several respects. Still, at least, the 4 January 2005 Order correctly
reformed the most basic premise of the case that Rep. Act No. 8974 governs
the expropriation proceedings.
Nonetheless, the Government belittles Hon. Gingoyons invocation of
Section 5(g), Rule 135 as patently without merit. Certainly merit can be seen
by the fact that the 4 January 2005 Order reoriented the expropriation
proceedings towards the correct governing law. Still, the Government claims
that the unilateral act of the RTC did not conform to law or justice, as it was
not afforded the right to be heard.
The Court would be more charitably disposed towards this argument
if not for the fact that the earlier order with the 4 January 2005 Ordersought
to correct was itself issued without the benefit of any hearing. In fact, nothing
either in Rule 67 or Rep. Act No. 8975 requires the conduct of a hearing prior
to the issuance of the writ of possession, which by design is available
immediately upon the filing of the complaint provided that the requisites
attaching thereto are present. Indeed, this expedited process for the obtention
of a writ of possession in expropriation cases comes at the expense of the
rights of the property owner to be heard or to be deprived of possession.

Considering these predicates, it would be highly awry to demand that an


order modifying the earlier issuance of a writ of possession in an
expropriation case be barred until the staging of a hearing, when the issuance
of the writ of possession itself is not subject to hearing. Perhaps the conduct
of a hearing under these circumstances would be prudent. However, hearing
is not mandatory, and the failure to conduct one does not establish the
manifest bias required for the inhibition of the judge.
The Government likewise faults Hon. Gingoyon for using the amount of
US$350 Million as the basis for the 100% deposit under Rep. Act No. 8974.
The Court has noted that this statement was predicated on the erroneous
belief that the BIR zonal valuation applies as a standard for determination of
just compensation in this case. Yet this is manifest not of bias, but merely of
error on the part of the judge. Indeed, the Government was not the only
victim of the errors of the RTC in the assailed orders. PIATCO itself was
injured by the issuance by the RTC of the writ of possession, even though the
former had yet to be paid any amount of just compensation. At the same
time, the Government was also prejudiced by the erroneous ruling of the RTC
that the amount of US$62.3 Million, and not P3 Billion, should be released to
PIATCO.
The Court has not been remiss in pointing out the multiple errors
committed by the RTC in its assailed orders, to the prejudice of both parties.
This attitude of error towards all does not ipso facto negate the charge of bias.
Still, great care should be had in requiring the inhibition of judges simply
because the magistrate did err. Incompetence may be a ground for
administrative sanction, but not for inhibition, which requires lack of
objectivity or impartiality to sit on a case.
The Court should necessarily guard against adopting a standard that
a judge should be inhibited from hearing the case if one litigant loses trust in
the judge. Such loss of trust on the part of the Government may be palpable,
yet inhibition cannot be grounded merely on the feelings of the party-litigants.
Indeed, every losing litigant in any case can resort to claiming that the judge
was biased, and he/she will gain a sympathetic ear from friends, family, and
people who do not understand the judicial process. The test in believing such
a proposition should not be the vehemence of the litigants claim of bias, but
the Courts judicious estimation, as people who know better than to believe
any old cry of wolf!, whether such bias has been irrefutably exhibited.
The Court acknowledges that it had been previously held that at the
very first sign of lack of faith and trust in his actions, whether well-grounded
or not, the judge has no other alternative but to inhibit himself from the
case.[80] But this doctrine is qualified by the entrenched rule that a judge
may not be legally prohibited from sitting in a litigation, but when
circumstances appear that will induce doubt to his honest actuations and
probity in favor of either party, or incite such state of mind, he should
conduct a careful self-examination. He should exercise his discretion in a way
that the people's faith in the Courts of Justice is not impaired. [81] And a selfassessment by the judge that he/she is not impaired to hear the case will be

respected by the Court absent any evidence to the contrary. As held in Chin v.
Court of Appeals:
An allegation of prejudgment, without more, constitutes
mere conjecture and is not one of the "just and valid reasons"
contemplated in the second paragraph of Rule 137 of the Rules
of Court for which a judge may inhibit himself from hearing the
case. We have repeatedly held that mere suspicion that a judge is
partial to a party is not enough. Bare allegations of partiality and
prejudgment will not suffice in the absence of clear and
convincing evidence to overcome the presumption that the judge
will undertake his noble role to dispense justice according to law
and evidence and without fear or favor. There should be
adequate evidence to prove the allegations, and there must be
showing that the judge had an interest, personal or otherwise, in
the prosecution of the case. To be a disqualifying circumstance,
the bias and prejudice must be shown to have stemmed from an
extrajudicial source and result in an opinion on the merits on
some basis other than what the judge learned from his
participation in the case.[82]
The mere vehemence of the Governments claim of bias does not
translate to clear and convincing evidence of impairing bias. There is no
sufficient ground to direct the inhibition of Hon. Gingoyon from hearing the
expropriation case.
In conclusion, the Court summarizes its rulings as follows:
(1) The 2004 Resolution in Agan sets the base requirement that has to be
observed before the Government may take over the NAIA 3, that there must
be payment to PIATCO of just compensation in accordance with law and
equity. Any ruling in the present expropriation case must be conformable to
the dictates of the Court as pronounced in the Agan cases.
(2) Rep. Act No. 8974 applies in this case, particularly insofar as it
requires the immediate payment by the Government of at least the proffered
value of the NAIA 3 facilities to PIATCO and provides certain valuation
standards or methods for the determination of just compensation.
(3) Applying Rep. Act No. 8974, the implementation of Writ of Possession
in favor of the Government over NAIA 3 is held in abeyance until PIATCO is
directly paid the amount of P3 Billion, representing the proffered value of
NAIA 3 under Section 4(c) of the law.
(4) Applying Rep. Act No. 8974, the Government is authorized to start
the implementation of the NAIA 3 Airport terminal project by performing the
acts that are essential to the operation of the NAIA 3 as an international
airport terminal upon the effectivity of the Writ of Possession, subject to the
conditions above-stated. As prescribed by the Court, such authority
encompasses the repair, reconditioning and improvement of the complex,
maintenance of the existing facilities and equipment, installation of new

facilities and equipment, provision of services and facilities pertaining to the


facilitation of air traffic and transport, and other services that are integral to a
modern-day international airport.[83]
(5) The RTC is mandated to complete its determination of the just
compensation within sixty (60) days from finality of this Decision. In doing so,
the RTC is obliged to comply with law and equity as ordained in Again and
the standard set under Implementing Rules of Rep. Act No. 8974 which is the
replacement cost method as the standard of valuation of structures and
improvements.

The Temporary Restraining Order dated 14 January 2005 is hereby


LIFTED.
No pronouncement as to costs.
SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila

(6) There was no grave abuse of discretion attending the


RTC Order appointing the commissioners for the purpose of determining just
compensation. The provisions on commissioners under Rule 67 shall apply
insofar as they are not inconsistent with Rep. Act No. 8974, its Implementing
Rules, or the rulings of the Court in Agan.
(7) The Government shall pay the just compensation fixed in the decision
of the trial court to PIATCO immediately upon the finality of the said decision.
(8) There is no basis for the Court to direct the inhibition of Hon.
Gingoyon.
All told, the Court finds no grave abuse of discretion on the part of
the RTC to warrant the nullification of the questioned orders. Nonetheless,
portions of these orders should be modified to conform with law and the
pronouncements made by the Court herein.
WHEREFORE, the Petition is GRANTED in PART with respect to the
orders dated 4 January 2005 and 10 January 2005 of the lower court. Said
orders are AFFIRMED with the following MODIFICATIONS:
1)

2)

3)

The implementation of the Writ of Possession dated 21 December


2005 is HELD IN ABEYANCE, pending payment by petitioners to
PIATCO of the amount of Three Billion Two Million One Hundred
Twenty Five Thousand Pesos (P3,002,125,000.00), representing
the proffered value of the NAIA 3 facilities;
Petitioners, upon the effectivity of the Writ of Possession, are
authorized start the implementation of the Ninoy Aquino
International Airport Pasenger Terminal III project by performing
the acts that are essential to the operation of the said
International Airport Passenger Terminal project;
RTC Branch 117 is hereby directed, within sixty (60) days from
finality of this Decision, to determine the just compensation to
be paid to PIATCO by the Government.

The Order dated 7 January 2005 is AFFIRMED in all respects subject


to the qualification that the parties are given ten (10) days from finality of
this Decision to file, if they so choose, objections to the appointment of the
commissioners decreed therein.

FIRST DIVISION
G.R. No. 174689

October 22, 2007

ROMMEL JACINTO DANTES SILVERIO, petitioner,


vs.
REPUBLIC OF THE PHILIPPINES, respondent.
DECISION
CORONA, J.:
When God created man, He made him in the likeness of God; He created
them male and female. (Genesis 5:1-2)
Amihan gazed upon the bamboo reed planted by Bathala and she heard
voices coming from inside the bamboo. "Oh North Wind! North Wind! Please
let us out!," the voices said. She pecked the reed once, then twice. All of a
sudden, the bamboo cracked and slit open. Out came two human beings;
one was a male and the other was a female. Amihan named the man
"Malakas" (Strong) and the woman "Maganda" (Beautiful). (The Legend of
Malakas and Maganda)
When is a man a man and when is a woman a woman? In particular, does the law
recognize the changes made by a physician using scalpel, drugs and counseling with
regard to a persons sex? May a person successfully petition for a change of name
and sex appearing in the birth certificate to reflect the result of a sex reassignment
surgery?
On November 26, 2002, petitioner Rommel Jacinto Dantes Silverio filed a petition for
the change of his first name and sex in his birth certificate in the Regional Trial Court
of Manila, Branch 8. The petition, docketed as SP Case No. 02-105207, impleaded
the civil registrar of Manila as respondent.

Petitioner alleged in his petition that he was born in the City of Manila to the spouses
Melecio Petines Silverio and Anita Aquino Dantes on April 4, 1962. His name was
registered as "Rommel Jacinto Dantes Silverio" in his certificate of live birth (birth
certificate). His sex was registered as "male."

Likewise, the [c]ourt believes that no harm, injury [or] prejudice will be
caused to anybody or the community in granting the petition. On the
contrary, granting the petition would bring the much-awaited happiness on
the part of the petitioner and her [fianc] and the realization of their dreams.

He further alleged that he is a male transsexual, that is, "anatomically male but feels,
thinks and acts as a female" and that he had always identified himself with girls since
childhood.1 Feeling trapped in a mans body, he consulted several doctors in the
United States. He underwent psychological examination, hormone treatment and
breast augmentation. His attempts to transform himself to a "woman" culminated on
January 27, 2001 when he underwent sex reassignment surgery2 in Bangkok,
Thailand. He was thereafter examined by Dr. Marcelino Reysio-Cruz, Jr., a plastic
and reconstruction surgeon in the Philippines, who issued a medical certificate
attesting that he (petitioner) had in fact undergone the procedure.

Finally, no evidence was presented to show any cause or ground to deny the
present petition despite due notice and publication thereof. Even the State,
through the [OSG] has not seen fit to interpose any [o]pposition.

From then on, petitioner lived as a female and was in fact engaged to be married. He
then sought to have his name in his birth certificate changed from "Rommel Jacinto"
to "Mely," and his sex from "male" to "female."

On August 18, 2003, the Republic of the Philippines (Republic), thru the OSG, filed a
6
petition for certiorari in the Court of Appeals. It alleged that there is no law allowing
the change of entries in the birth certificate by reason of sex alteration.

An order setting the case for initial hearing was published in the Peoples Journal
Tonight, a newspaper of general circulation in Metro Manila, for three consecutive
weeks.3 Copies of the order were sent to the Office of the Solicitor General (OSG)
and the civil registrar of Manila.

On February 23, 2006, the Court of Appeals7 rendered a decision8 in favor of the
Republic. It ruled that the trial courts decision lacked legal basis. There is no law
allowing the change of either name or sex in the certificate of birth on the ground of
sex reassignment through surgery. Thus, the Court of Appeals granted the Republics
petition, set aside the decision of the trial court and ordered the dismissal of SP Case
No. 02-105207. Petitioner moved for reconsideration but it was denied. 9 Hence, this
petition.

On the scheduled initial hearing, jurisdictional requirements were established. No


opposition to the petition was made.
During trial, petitioner testified for himself. He also presented Dr. Reysio-Cruz, Jr. and
his American fianc, Richard P. Edel, as witnesses.
On June 4, 2003, the trial court rendered a decision4 in favor of petitioner. Its relevant
portions read:
Petitioner filed the present petition not to evade any law or judgment or any
infraction thereof or for any unlawful motive but solely for the purpose of
making his birth records compatible with his present sex.
The sole issue here is whether or not petitioner is entitled to the relief asked
for.
The [c]ourt rules in the affirmative.
Firstly, the [c]ourt is of the opinion that granting the petition would be more in
consonance with the principles of justice and equity. With his sexual [reassignment], petitioner, who has always felt, thought and acted like a
woman, now possesses the physique of a female. Petitioners misfortune to
be trapped in a mans body is not his own doing and should not be in any
way taken against him.

WHEREFORE, judgment is hereby rendered GRANTING the petition and


ordering the Civil Registrar of Manila to change the entries appearing in the
Certificate of Birth of [p]etitioner, specifically for petitioners first name from
"Rommel Jacinto" to MELY and petitioners gender from "Male"
to FEMALE. 5

Petitioner essentially claims that the change of his name and sex in his birth
certificate is allowed under Articles 407 to 413 of the Civil Code, Rules 103 and 108 of
the Rules of Court and RA 9048.10
The petition lacks merit.
A Persons First Name Cannot Be Changed On the Ground of Sex
Reassignment
Petitioner invoked his sex reassignment as the ground for his petition for change of
name and sex. As found by the trial court:
Petitioner filed the present petition not to evade any law or judgment or any
infraction thereof or for any unlawful motive but solely for the purpose of
making his birth records compatible with his present sex. (emphasis
supplied)
Petitioner believes that after having acquired the physical features of a female, he
became entitled to the civil registry changes sought. We disagree.

The State has an interest in the names borne by individuals and entities for purposes
of identification.11 A change of name is a privilege, not a right. 12 Petitions for change
of name are controlled by statutes.13 In this connection, Article 376 of the Civil Code
provides:
ART. 376. No person can change his name or surname without judicial
authority.
This Civil Code provision was amended by RA 9048 (Clerical Error Law). In particular,
Section 1 of RA 9048 provides:
SECTION 1. Authority to Correct Clerical or Typographical Error and Change
of First Name or Nickname. No entry in a civil register shall be changed or
corrected without a judicial order, except for clerical or typographical errors
and change of first name or nickname which can be corrected or changed by
the concerned city or municipal civil registrar or consul general in
accordance with the provisions of this Act and its implementing rules and
regulations.
RA 9048 now governs the change of first name.14 It vests the power and authority to
entertain petitions for change of first name to the city or municipal civil registrar or
consul general concerned. Under the law, therefore, jurisdiction over applications for
change of first name is now primarily lodged with the aforementioned administrative
officers. The intent and effect of the law is to exclude the change of first name from
the coverage of Rules 103 (Change of Name) and 108 (Cancellation or Correction of
Entries in the Civil Registry) of the Rules of Court, until and unless an administrative
petition for change of name is first filed and subsequently denied. 15 It likewise lays
down the corresponding venue,16 form17 and procedure. In sum, the remedy and the
proceedings regulating change of first name are primarily administrative in nature, not
judicial.

Petitioners basis in praying for the change of his first name was his sex
reassignment. He intended to make his first name compatible with the sex he thought
he transformed himself into through surgery. However, a change of name does not
18
alter ones legal capacity or civil status. RA 9048 does not sanction a change of first
name on the ground of sex reassignment. Rather than avoiding confusion, changing
petitioners first name for his declared purpose may only create grave complications in
the civil registry and the public interest.
Before a person can legally change his given name, he must present proper or
reasonable cause or any compelling reason justifying such change. 19 In addition, he
must show that he will be prejudiced by the use of his true and official name. 20 In this
case, he failed to show, or even allege, any prejudice that he might suffer as a result
of using his true and official name.
In sum, the petition in the trial court in so far as it prayed for the change of petitioners
first name was not within that courts primary jurisdiction as the petition should have
been filed with the local civil registrar concerned, assuming it could be legally done. It
was an improper remedy because the proper remedy was administrative, that is, that
provided under RA 9048. It was also filed in the wrong venue as the proper venue
was in the Office of the Civil Registrar of Manila where his birth certificate is kept.
More importantly, it had no merit since the use of his true and official name does not
prejudice him at all. For all these reasons, the Court of Appeals correctly dismissed
petitioners petition in so far as the change of his first name was concerned.
No Law Allows The Change of Entry In The Birth Certificate As To Sex On the
Ground of Sex Reassignment
The determination of a persons sex appearing in his birth certificate is a legal issue
and the court must look to the statutes. 21 In this connection, Article 412 of the Civil
Code provides:

RA 9048 likewise provides the grounds for which change of first name may be
allowed:

ART. 412. No entry in the civil register shall be changed or corrected without
a judicial order.

SECTION 4. Grounds for Change of First Name or Nickname. The petition


for change of first name or nickname may be allowed in any of the following
cases:

Together with Article 376 of the Civil Code, this provision was amended by RA 9048
in so far as clerical or typographical errors are involved. The correction or change of
such matters can now be made through administrative proceedings and without the
need for a judicial order. In effect, RA 9048 removed from the ambit of Rule 108 of the
Rules of Court the correction of such errors. 22 Rule 108 now applies only to
23
substantial changes and corrections in entries in the civil register.

(1) The petitioner finds the first name or nickname to be ridiculous, tainted
with dishonor or extremely difficult to write or pronounce;
(2) The new first name or nickname has been habitually and continuously
used by the petitioner and he has been publicly known by that first name or
nickname in the community; or

Section 2(c) of RA 9048 defines what a "clerical or typographical error" is:


SECTION 2. Definition of Terms. As used in this Act, the following terms
shall mean:

(3) The change will avoid confusion.


xxx

xxx

xxx

(3) "Clerical or typographical error" refers to a mistake committed in


the performance of clerical work in writing, copying, transcribing or
typing an entry in the civil register that is harmless and innocuous,
such as misspelled name or misspelled place of birth or the like,
which is visible to the eyes or obvious to the understanding, and
can be corrected or changed only by reference to other existing
record or records: Provided, however, That no correction must
involve the change of nationality, age, status or sex of the
petitioner. (emphasis supplied)
Under RA 9048, a correction in the civil registry involving the change of sex is not a
mere clerical or typographical error. It is a substantial change for which the applicable
procedure is Rule 108 of the Rules of Court.
The entries envisaged in Article 412 of the Civil Code and correctable under Rule 108
24
of the Rules of Court are those provided in Articles 407 and 408 of the Civil Code:
ART. 407. Acts, events and judicial decrees concerning the civil status of
persons shall be recorded in the civil register.
ART. 408. The following shall be entered in the civil register:
(1) Births; (2) marriages; (3) deaths; (4) legal separations; (5) annulments of
marriage; (6) judgments declaring marriages void from the beginning; (7)
legitimations; (8) adoptions; (9) acknowledgments of natural children; (10)
naturalization; (11) loss, or (12) recovery of citizenship; (13) civil interdiction;
(14) judicial determination of filiation; (15) voluntary emancipation of a minor;
and (16) changes of name.
The acts, events or factual errors contemplated under Article 407 of the Civil Code
include even those that occur after birth. 25 However, no reasonable interpretation of
the provision can justify the conclusion that it covers the correction on the ground of
sex reassignment.
To correct simply means "to make or set aright; to remove the faults or error from"
while to change means "to replace something with something else of the same kind or
with something that serves as a substitute."26 The birth certificate of petitioner
contained no error. All entries therein, including those corresponding to his first name
and sex, were all correct. No correction is necessary.
Article 407 of the Civil Code authorizes the entry in the civil registry of
certain acts (such as legitimations, acknowledgments of illegitimate children and
naturalization), events (such as births, marriages, naturalization and deaths)
and judicial decrees (such as legal separations, annulments of marriage, declarations
of nullity of marriages, adoptions, naturalization, loss or recovery of citizenship, civil
interdiction, judicial determination of filiation and changes of name). These acts,
events and judicial decrees produce legal consequences that touch upon the legal
capacity, status and nationality of a person. Their effects are expressly sanctioned by
the laws. In contrast, sex reassignment is not among those acts or events mentioned

in Article 407. Neither is it recognized nor even mentioned by any law, expressly or
impliedly.
"Status" refers to the circumstances affecting the legal situation (that is, the sum total
of capacities and incapacities) of a person in view of his age, nationality and his family
27
membership.
The status of a person in law includes all his personal qualities and
relations, more or less permanent in nature, not ordinarily terminable at
his own will, such as his being legitimate or illegitimate, or his being married
or not. The comprehensive term status include such matters as the
beginning and end of legal personality, capacity to have rights in general,
family relations, and its various aspects, such as birth, legitimation, adoption,
emancipation,
marriage,
divorce,
and
sometimes
even
succession.28 (emphasis supplied)
A persons sex is an essential factor in marriage and family relations. It is a part of a
persons legal capacity and civil status. In this connection, Article 413 of the Civil
Code provides:
ART. 413. All other matters pertaining to the registration of civil status shall
be governed by special laws.
But there is no such special law in the Philippines governing sex reassignment and its
effects. This is fatal to petitioners cause.
Moreover, Section 5 of Act 3753 (the Civil Register Law) provides:
SEC. 5. Registration and certification of births. The declaration of the
physician or midwife in attendance at the birth or, in default thereof, the
declaration of either parent of the newborn child, shall be sufficient for the
registration of a birth in the civil register. Such declaration shall be exempt
from documentary stamp tax and shall be sent to the local civil registrar not
later than thirty days after the birth, by the physician or midwife in attendance
at the birth or by either parent of the newborn child.
In such declaration, the person above mentioned shall certify to the following
facts: (a) date and hour of birth; (b) sex and nationality of infant; (c) names,
citizenship and religion of parents or, in case the father is not known, of the
mother alone; (d) civil status of parents; (e) place where the infant was born;
and (f) such other data as may be required in the regulations to be issued.
xxx

xxx

xxx (emphasis supplied)

Under the Civil Register Law, a birth certificate is a historical record of the facts as
29
they existed at the time of birth. Thus, the sex of a person is determined at
birth, visually done by the birth attendant (the physician or midwife) by examining the
genitals of the infant. Considering that there is no law legally recognizing sex

reassignment, the determination of a persons sex made at the time of his or her birth,
if not attended by error, 30is immutable.31
When words are not defined in a statute they are to be given their common and
ordinary meaning in the absence of a contrary legislative intent. The words "sex,"
"male" and "female" as used in the Civil Register Law and laws concerning the civil
registry (and even all other laws) should therefore be understood in their common and
ordinary usage, there being no legislative intent to the contrary. In this connection,
sex is defined as "the sum of peculiarities of structure and function that distinguish a
male from a female"32 or "the distinction between male and female."33 Female is "the
sex that produces ova or bears young"34 and male is "the sex that has organs to
produce spermatozoa for fertilizing ova."35 Thus, the words "male" and "female" in
everyday understanding do not include persons who have undergone sex
reassignment. Furthermore, "words that are employed in a statute which had at the
time a well-known meaning are presumed to have been used in that sense unless the
context compels to the contrary."36 Since the statutory language of the Civil Register
Law was enacted in the early 1900s and remains unchanged, it cannot be argued that
the term "sex" as used then is something alterable through surgery or something that
allows a post-operative male-to-female transsexual to be included in the category
"female."
For these reasons, while petitioner may have succeeded in altering his body and
appearance through the intervention of modern surgery, no law authorizes the change
of entry as to sex in the civil registry for that reason. Thus, there is no legal basis for
his petition for the correction or change of the entries in his birth certificate.
Neither May Entries in the Birth Certificate As to First Name or Sex Be Changed
on the Ground of Equity
The trial court opined that its grant of the petition was in consonance with the
principles of justice and equity. It believed that allowing the petition would cause no
harm, injury or prejudice to anyone. This is wrong.
The changes sought by petitioner will have serious and wide-ranging legal and public
policy consequences. First, even the trial court itself found that the petition was but
petitioners first step towards his eventual marriage to his male fianc. However,
marriage, one of the most sacred social institutions, is a special contract of permanent
37
union between a man and a woman. One of its essential requisites is the legal
capacity of the contracting parties who must be a male and a female.38 To grant the
changes sought by petitioner will substantially reconfigure and greatly alter the laws
on marriage and family relations. It will allow the union of a man with another man
who has undergone sex reassignment (a male-to-female post-operative transsexual).
Second, there are various laws which apply particularly to women such as the
provisions of the Labor Code on employment of women, 39 certain felonies under the
40
Revised Penal Code and the presumption of survivorship in case of calamities
41
under Rule 131 of the Rules of Court, among others. These laws underscore the
public policy in relation to women which could be substantially affected if petitioners
petition were to be granted.

It is true that Article 9 of the Civil Code mandates that "[n]o judge or court shall
decline to render judgment by reason of the silence, obscurity or insufficiency of the
law." However, it is not a license for courts to engage in judicial legislation. The duty
of the courts is to apply or interpret the law, not to make or amend it.
In our system of government, it is for the legislature, should it choose to do so, to
determine what guidelines should govern the recognition of the effects of sex
reassignment. The need for legislative guidelines becomes particularly important in
this case where the claims asserted are statute-based.
To reiterate, the statutes define who may file petitions for change of first name and for
correction or change of entries in the civil registry, where they may be filed, what
grounds may be invoked, what proof must be presented and what procedures shall be
observed. If the legislature intends to confer on a person who has undergone sex
reassignment the privilege to change his name and sex to conform with his
reassigned sex, it has to enact legislation laying down the guidelines in turn governing
the conferment of that privilege.
It might be theoretically possible for this Court to write a protocol on when a person
may be recognized as having successfully changed his sex. However, this Court has
no authority to fashion a law on that matter, or on anything else. The Court cannot
enact a law where no law exists. It can only apply or interpret the written word of its
co-equal branch of government, Congress.
Petitioner pleads that "[t]he unfortunates are also entitled to a life of happiness,
contentment and [the] realization of their dreams." No argument about that. The Court
recognizes that there are people whose preferences and orientation do not fit neatly
into the commonly recognized parameters of social convention and that, at least for
them, life is indeed an ordeal. However, the remedies petitioner seeks involve
questions of public policy to be addressed solely by the legislature, not by the courts.
WHEREFORE, the petition is hereby DENIED.
Costs against petitioner.
SO ORDERED.
Puno, C.J., Chairperson, Sandoval-Gutierrez, Azcuna, Garcia, JJ., concur.

EN BANC

Commission held public hearings and conducted its own investigation, then on 13
March 2002, issued its Formal Investigation Report (Report). The Report determined
as follows:
The elements of serious injury and imminent threat of serious injury not having been
established, it is hereby recommended that no definitive general safeguard measure be
imposed on the importation of gray Portland cement. [7]

[G.R. No. 158540. August 3, 2005]

SOUTHERN CROSS CEMENT CORPORATION, petitioner, vs. CEMENT


MANUFACTURERS ASSOCIATION OF THE PHILIPPINES, THE
SECRETARY OF THE DEPARTMENT OF TRADE AND INDUSTRY, THE
SECRETARY OF THE DEPARTMENT OF FINANCE and THE
COMMISSIONER OF THE BUREAU OF CUSTOMS, respondents.
RESOLUTION
TINGA, J.:
Cement is hardly an exciting subject for litigation. Still, the parties in this case
have done their best to put up a spirited advocacy of their respective positions,
throwing in everything including the proverbial kitchen sink. At present, the burden of
passion, if not proof, has shifted to public respondents Department of Trade and
Industry (DTI) and private respondent Philippine Cement Manufacturers Corporation
(Philcemcor),[1] who now seek reconsideration of our Decision dated 8 July 2004
(Decision), which granted the petition of petitioner Southern Cross Cement
Corporation (Southern Cross).
This case, of course, is ultimately not just about cement. For respondents, it is
about love of country and the future of the domestic industry in the face of foreign
competition. For this Court, it is about elementary statutory construction, constitutional
limitations on the executive power to impose tariffs and similar measures, and
obedience to the law. Just as much was asserted in the Decision, and the same
holds true with this present Resolution.
[2]

An extensive narration of facts can be found in the Decision. As can well be


recalled, the case centers on the interpretation of provisions of Republic Act No.
8800, the Safeguard Measures Act (SMA), which was one of the laws enacted by
Congress soon after the Philippines ratified the General Agreement on Tariff and
[3]
Trade (GATT) and the World Trade Organization (WTO) Agreement. The SMA
provides the structure and mechanics for the imposition of emergency measures,
including tariffs, to protect domestic industries and producers from increased imports
which inflict or could inflict serious injury on them. [4]
A brief summary as to how the present petition came to be filed by Southern
Cross. Philcemcor, an association of at least eighteen (18) domestic cement
manufacturers filed with the DTI a petition seeking the imposition of safeguard
[5]
measures on gray Portland cement, in accordance with the SMA. After the DTI
issued a provisional safeguard measure, [6] the application was referred to the Tariff
Commission for a formal investigation pursuant to Section 9 of the SMA and its
Implementing Rules and Regulations, in order to determine whether or not to impose
a definitive safeguard measure on imports of gray Portland cement. The Tariff

The DTI sought the opinion of the Secretary of Justice whether it could still
impose a definitive safeguard measure notwithstanding the negative finding of the
Tariff Commission. After the Secretary of Justice opined that the DTI could not do so
under the SMA,[8] the DTI Secretary then promulgated a Decision[9] wherein he
expressed the DTIs disagreement with the conclusions of the Tariff Commission, but
at the same time, ultimately denying Philcemcors application for safeguard measures
on the ground that the he was bound to do so in light of the Tariff Commissions
[10]
negative findings.
Philcemcor challenged this Decision of the DTI Secretary by filing with the Court
of Appeals a Petition for Certiorari, Prohibition and Mandamus[11] seeking to set aside
the DTIDecision, as well as the Tariff Commissions Report. It prayed that the Court
of Appeals direct the DTI Secretary to disregard the Report and to render judgment
independently of the Report. Philcemcor argued that the DTI Secretary, vested as he
is under the law with the power of review, is not bound to adopt the recommendations
of the Tariff Commission; and, that the Report is void, as it is predicated on a flawed
framework, inconsistent inferences and erroneous methodology. [12]
[13]

The Court of Appeals Twelfth Division, in a Decision penned by Court of


Appeals Associate Justice Elvi John Asuncion,[14] partially granted Philcemcors
petition. The appellate court ruled that it had jurisdiction over the petition for certiorari
since it alleged grave abuse of discretion. While it refused to annul the findings of the
Tariff Commission,[15] it also held that the DTI Secretary was not bound by the factual
findings of the Tariff Commission since such findings are merely recommendatory and
they fall within the ambit of the Secretarys discretionary review. It determined that
the legislative intent is to grant the DTI Secretary the power to make a final decision
[16]
on the Tariff Commissions recommendation.
On 23 June 2003, Southern Cross filed the present petition, arguing that the
Court of Appeals has no jurisdiction over Philcemcors petition, as the proper remedy
is a petition for review with the CTA conformably with the SMA, and; that the factual
findings of the Tariff Commission on the existence or non-existence of conditions
warranting the imposition of general safeguard measures are binding upon the DTI
Secretary.
Despite the fact that the Court of Appeals Decision had not yet become final, its
binding force was cited by the DTI Secretary when he issued a new Decision on 25
June 2003, wherein he ruled that that in light of the appellate courts Decision, there
was no longer any legal impediment to his deciding Philcemcors application for
[17]
definitive safeguard measures. He made a determination that, contrary to the
findings of the Tariff Commission, the local cement industry had suffered serious
[18]
injury as a result of the import surges. Accordingly, he imposed a definitive
safeguard measure on the importation of gray Portland cement, in the form of a

definitive safeguard duty in the amount of P20.60/40 kg. bag for three years on
imported gray Portland Cement.[19]
On 7 July 2003, Southern Cross filed with the Court a Very Urgent Application
for a Temporary Restraining Order and/or A Writ of Preliminary Injunction
(TRO Application), seeking to enjoin the DTI Secretary from enforcing
his Decision of 25 June 2003 in view of the pending petition before this
Court. Philcemcor filed an opposition, claiming, among others, that it is not this Court
but the CTA that has jurisdiction over the application under the law.
On 1 August 2003, Southern Cross filed with the CTA a Petition for Review,
assailing the DTI Secretarys 25 June 2003 Decision which imposed the definite
safeguard measure. Yet Southern Cross did not promptly inform this Court about this
filing. The first time the Court would learn about this Petition with the CTA was when
Southern Cross mentioned such fact in a pleading dated 11 August 2003 and filed the
next day with this Court.[20]
Philcemcor argued before this Court that Southern Cross had deliberately and
willfully resorted to forum-shopping; that the CTA, being a special court of limited
jurisdiction, could only review the ruling of the DTI Secretary when a safeguard
measure is imposed; and that the factual findings of the Tariff Commission are not
binding on the DTI Secretary.[21]
After giving due course to Southern Crosss Petition, the Court called the case
[22]
for oral argument on 18 February 2004. At the oral argument, attended by the
counsel for Philcemcor and Southern Cross and the Office of the Solicitor General,
the Court simplified the issues in this wise: (i) whether the Decision of the DTI
Secretary is appealable to the CTA or the Court of Appeals; (ii) assuming that the
Court of Appeals has jurisdiction, whether its Decision is in accordance with law; and,
whether a Temporary Restraining Order is warranted.[23]
After the parties had filed their respective memoranda, the Courts Second
Division, to which the case had been assigned, promulgated its Decision granting
[24]
Southern Crosss Petition. The Decision was unanimous, without any separate or
concurring opinion.
The Court ruled that the Court of Appeals had no jurisdiction over
Philcemcors Petition, the proper remedy under Section 29 of the SMA being a
petition for review with the CTA; and that the Court of Appeals erred in ruling that the
DTI Secretary was not bound by the negative determination of the Tariff Commission
and could therefore impose the general safeguard measures, since Section 5 of the
SMA precisely required that the Tariff Commission make a positive final determination
before the DTI Secretary could impose these measures. Anent the argument that
Southern Cross had committed forum-shopping, the Court concluded that there was
no evident malicious intent to subvert procedural rules so as to match the standard
under Section 5, Rule 7 of the Rules of Court of willful and deliberate forum shopping.
Accordingly, the Decision of the Court of Appeals dated 5 June 2003 was declared
null and void.
The Court likewise found it necessary to nullify the Decision of the DTI Secretary
dated 25 June 2003, rendered after the filing of this present Petition. This Decision by
the DTI Secretary had cited the obligatory force of the null and void Court of
Appeals Decision, notwithstanding the fact that the decision of the appellate court
was not yet final and executory. Considering that the decision of the Court of Appeals

was a nullity to begin with, the inescapable conclusion was that the new decision of
the DTI Secretary, prescinding as it did from the imprimatur of the decision of the
Court of Appeals, was a nullity as well.
After the Decision was reported in the media, there was a flurry of newspaper
articles citing alleged negative reactions to the ruling by the counsel for Philcemcor,
the DTI Secretary, and others. [25] Both respondents promptly filed their respective
motions for reconsideration.
On 21 September 2004, the Court En Banc resolved, upon motion of
respondents,
to
accept
the
petition
and
resolve
the Motions
for
Reconsideration.[26] The case was then reheard[27] on oral argument on 1 March 2005.
During the hearing, the Court elicited from the parties their arguments on the two
central issues as discussed in the assailed Decision, pertaining to the jurisdictional
aspect and to the substantive aspect of whether the DTI Secretary may impose a
general safeguard measure despite a negative determination by the Tariff
Commission. The Court chose not to hear argumentation on the peripheral issue of
[28]
forum-shopping, although this question shall be tackled herein shortly. Another
point of concern emerged during oral arguments on the exercise of quasi-judicial
powers by the Tariff Commission, and the parties were required by the Court to
discuss in their respective memoranda whether the Tariff Commission could validly
exercise quasi-judicial powers in the exercise of its mandate under the SMA.
The Court has likewise been notified that subsequent to the rendition of the
Courts Decision, Philcemcor filed a Petition for Extension of the Safeguard
Measure with the DTI, which has been referred to the Tariff Commission. [29] In
an Urgent Motion dated 21 December 2004, Southern Cross prayed that Philcemcor,
the DTI, the Bureau of Customs, and the Tariff Commission be directed to cease and
desist from taking any and all actions pursuant to or under the null and void CA
Decision and DTI Decision, including proceedings to extend the safeguard
[30]
measure. In a Manifestation and Motion dated 23 June 2004, the Tariff
Commission informed the Court that since no prohibitory injunction or order of such
nature had been issued by any court against the Tariff Commission, the Commission
proceeded to complete its investigation on the petition for extension, pursuant to
Section 9 of the SMA, but opted to defer transmittal of its report to the DTI Secretary
pending guidance from this Court on the propriety of such a step considering this
pending Motion for Reconsideration. In a Resolutiondated 5 July 2005, the Court
directed the parties to maintain the status quo effective of even date, and until further
orders from this Court. The denial of the pending motions for reconsideration will
obviously render the pending petition for extension academic.

I. Jurisdiction of the Court of Tax Appeals


Under Section 29 of the SMA

The first core issue resolved in the assailed Decision was whether the Court of
Appeals had jurisdiction over the special civil action for certiorari filed by Philcemcor
assailing the 5 April 2002 Decision of the DTI Secretary. The general jurisdiction of
the Court of Appeals over special civil actions for certiorari is beyond doubt. The
Constitution itself assures that judicial review avails to determine whether or not there
has been a grave abuse of discretion amounting to lack or excess of jurisdiction on

the part of any branch or instrumentality of the Government. At the same time, the
special civil action of certiorari is available only when there is no plain, speedy and
adequate remedy in the ordinary course of law.[31] Philcemcors recourse of special
civil action before the Court of Appeals to challenge the Decision of the DTI Secretary
not to impose the general safeguard measures is not based on the SMA, but on the
general rule on certiorari. Thus, the Court proceeded to inquire whether indeed there
was no other plain, speedy and adequate remedy in the ordinary course of law that
would warrant the allowance of Philcemcors special civil action.
The answer hinged on the proper interpretation of Section 29 of the SMA, which
reads:
Section 29. Judicial Review. Any interested party who is adversely affected by the ruling of
the Secretary in connection with the imposition of a safeguard measure may file with the
CTA, a petition for review of such ruling within thirty (30) days from receipt thereof.
Provided, however, that the filing of such petition for review shall not in any way stop,
suspend or otherwise toll the imposition or collection of the appropriate tariff duties or the
adoption of other appropriate safeguard measures, as the case may be.
The petition for review shall comply with the same requirements and shall follow the same
rules of procedure and shall be subject to the same disposition as in appeals in connection with
adverse rulings on tax matters to the Court of Appeals.[32] (Emphasis supplied)
The matter is crucial for if the CTA properly had jurisdiction over the petition
challenging the DTI Secretarys ruling not to impose a safeguard measure, then the
special civil action of certiorari resorted to instead by Philcemcor would not avail,
owing to the existence of a plain, speedy and adequate remedy in the ordinary course
of law.[33] The Court of Appeals, in asserting that it had jurisdiction, merely cited the
general rule on certiorari jurisdiction without bothering to refer to, or possibly even
study, the import of Section 29. In contrast, this Court duly considered the meaning
and ramifications of Section 29, concluding that it provided for a plain, speedy and
adequate remedy that Philcemcor could have resorted to instead of filing the special
civil action before the Court of Appeals.
Philcemcor still holds on to its hypothesis that the petition for review allowed
under Section 29 lies only if the DTI Secretarys ruling imposes a safeguard measure.
If, on the other hand, the DTI Secretarys ruling is not to impose a safeguard
measure, judicial review under Section 29 could not be resorted to since the provision
refers to rulings in connection with the imposition of the safeguard measure, as
opposed to the non-imposition. Since the Decision dated 5 April 2002 resolved
against imposing a safeguard measure, Philcemcor claims that the proper remedial
recourse is a petition for certiorari with the Court of Appeals.
Interestingly, Republic Act No. 9282, promulgated on 30 March 2004, expressly
vests unto the CTA jurisdiction over [d]ecisions of the Secretary of Trade and
Industry, in case of nonagricultural product, commodity or article . . . involving . .
. safeguard measures under Republic Act No. 8800, where either party may
[34]
appeal the decision to impose or not to impose said duties. It is clear that any
future attempts to advance the literalist position of the respondents would
consequently
fail.
However,
since
Republic
Act
No.
9282
has no retroactive effect, this Court had to decide whether Section 29 vests
jurisdiction on the CTA over rulings of the DTI Secretary not to impose a safeguard

measure. And the Court, in its assailed Decision, ruled that the CTA is endowed with
such jurisdiction.
Both respondents reiterate their fundamentalist reading that Section 29
authorizes the petition for review before the CTA only when the DTI Secretary
decides to impose a safeguard measure, but not when he decides not to. In doing so,
they fail to address what the Court earlier pointed out would be the absurd
consequences if their interpretation is followed to its logical end. But in affirming, as
the Court now does, its previous holding that the CTA has jurisdiction over petitions
for review questioning the non-imposition of safeguard measures by the DTI
Secretary, the Court relies on the plain reading that Section 29 explicitly vests
jurisdiction over such petitions on the CTA.
Under Section 29, there are three requisites to enable the CTA to acquire
jurisdiction over the petition for review contemplated therein: (i) there must be a ruling
by the DTI Secretary; (ii) the petition must be filed by an interested party adversely
affected by the ruling; and (iii) such ruling must be in connection with the imposition
of a safeguard measure. Obviously, there are differences between a ruling for the
imposition of a safeguard measure, and one issued in connection with the imposition
of a safeguard measure. The first adverts to a singular type of ruling, namely one
that imposes a safeguard measure. The second does not contemplate only one kind
of ruling, but a myriad of rulings issued in connection with the imposition of a
safeguard measure.
Respondents argue that the Court has given an expansive interpretation to
Section 29, contrary to the established rule requiring strict construction against the
existence of jurisdiction in specialized courts. [35] But it is the express provision of
Section 29, and not this Court, that mandates CTA jurisdiction to be broad
enough to encompass more than just a ruling imposing the safeguard measure.
The key phrase remains in connection with. It has connotations that are
obvious even to the layman. A ruling issued in connection with the imposition of a
safeguard measure would be one that bears some relation to the imposition of a
safeguard measure. Obviously, a ruling imposing a safeguard measure is covered by
the phrase in connection with, but such ruling is by no means exclusive. Rulings
which modify, suspend or terminate a safeguard measure are necessarily in
connection with the imposition of a safeguard measure. So does a ruling allowing for
a provisional safeguard measure. So too, a ruling by the DTI Secretary refusing to
refer the application for a safeguard measure to the Tariff Commission. It is clear that
there is an entire subset of rulings that the DTI Secretary may issue in connection
with the imposition of a safeguard measure, including those that are provisional,
interlocutory, or dispositive in character. [36] By the same token, a ruling not to impose
a safeguard measure is also issued in connection with the imposition of a safeguard
measure.
In arriving at the proper interpretation of in connection with, the Court referred
to the U.S. Supreme Court cases of Shaw v. Delta Air Lines, Inc.[37] and New York
[38]
State Blue Cross Plans v. Travelers Ins. Both cases considered the interpretation
of the phrase relates to as used in a federal statute, the Employee Retirement
Security Act of 1974. Respondents criticize the citations on the premise that the
cases are not binding in our jurisdiction and do not involve safeguard measures. The
criticisms are off-tangent considering that our ruling did not call for the application of
the Employee Retirement Security Act of 1974 in the Philippine milieu. The American

cases are not relied upon as precedents, but as guides of interpretation. Certainly, if
there are applicable local precedents pertaining to the interpretation of the phrase in
connection with, then these certainly would have some binding force. But none avail,
and neither do the respondents demonstrate a countervailing holding in Philippine
jurisprudence.
Yet we should consider the claim that an expansive interpretation was favored
in Shaw because the law in question was an employees benefit law that had to be
given an interpretation favorable to its intended beneficiaries. [39] In the next breath,
Philcemcor notes that the U.S. Supreme Court itself was alarmed by the expansive
interpretation in Shaw and thus in Blue Cross, the Shaw ruling was reversed and a
more restrictive interpretation was applied based on congressional intent. [40]
Respondents would like to make it appear that the Court acted rashly in applying
a discarded precedent in Shaw, a non-binding foreign precedent nonetheless. But the
Court did make the following observation in its Decision pertaining to Blue Cross:
Now, let us determine the maximum scope and reach of the phrase in connection with as
used in Section 29 of the SMA. A literalist reading or linguistic survey may not satisfy. Even
the U.S. Supreme Court in New York State Blue Cross Plans v. Travelers Ins.[41] conceded that
the phrases relate to or in connection with may be extended to the farthest stretch of
indeterminacy for, universally, relations or connections are infinite and stop
nowhere.[42] Thus, in the case the U.S. High Court, examining the same phrase of the
same provision of law involved in Shaw, resorted to looking at the statute and its
objectives as the alternative to an uncritical literalism. A similar inquiry into the other
provisions of the SMA is in order to determine the scope of review accorded therein to
the CTA.[43]
In the next four paragraphs of the Decision, encompassing four pages, the Court
proceeded to inquire into the SMA and its objectives as a means to determine the
scope of rulings to be deemed as in connection with the imposition of a safeguard
measure. Certainly, this Court did not resort to the broadest interpretation possible of
the phrase in connection with, but instead sought to bring it into the context of the
scope and objectives of the SMA. The ultimate conclusion of the Court was that the
phrase includes all rulings of the DTI Secretary which arise from the time an
application or motu proprio initiation for the imposition of a safeguard measure is
taken.[44] This conclusion was derived from the observation that the imposition of a
general safeguard measure is a process, initiated motu proprio or through application,
which undergoes several stages upon which the DTI Secretary is obliged or may be
called upon to issue a ruling.
It should be emphasized again that by utilizing the phrase in connection with, it
is the SMA that expressly vests jurisdiction on the CTA over petitions questioning the
non-imposition by the DTI Secretary of safeguard measures. The Court is simply
asserting, as it should, the clear intent of the legislature in enacting the SMA. Without
in connection with or a synonymous phrase, the Court would be compelled to favor
the respondents position that only rulings imposing safeguard measures may be
elevated on appeal to the CTA. But considering that the statute does make use of the
phrase, there is little sense in delving into alternate scenarios.
Respondents fail to convincingly address the absurd consequences pointed out
by the Decision had their proposed interpretation been adopted. Indeed, suffocated

beneath the respondents legalistic tinsel is the elemental questionwhat sense is


there in vesting jurisdiction on the CTA over a decision to impose a safeguard
measure, but not on one choosing not to impose. Of course, it is not for the Court to
inquire into the wisdom of legislative acts, hence the rule that jurisdiction must be
expressly vested and not presumed. Yet ultimately, respondents muddle the issue by
making it appear that the Decision has uniquely expanded the jurisdictional rules. For
the respondents, the proper statutory interpretation of the crucial phrase in
connection with is to pretend that the phrase did not exist at all in the statute. The
Court, in taking the effort to examine the meaning and extent of the phrase, is merely
giving breath to the legislative will.
The Court likewise stated that the respondents position calls for split jurisdiction,
which is judicially abhorred. In rebuttal, the public respondents cite Sections 2313 and
2402 of the Tariff and Customs Code (TCC), which allegedly provide for a splitting of
jurisdiction of the CTA. According to public respondents, under Section 2313 of the
TCC, a decision of the Commissioner of Customs affirming a decision of the Collector
of Customs adverse to the government is elevated for review to the Secretary of
Finance. However, under Section 2402 of the TCC, a ruling of the Commissioner of
the Bureau of Customs against a taxpayer must be appealed to the Court of Tax
Appeals, and not to the Secretary of Finance.
Strictly speaking, the review by the Secretary of Finance of the decision of the
Commissioner of Customs is not judicial review, since the Secretary of Finance holds
an executive and not a judicial office. The contrast is apparent with the situation in
this case, wherein the interpretation favored by the respondents calls for the exercise
of judicial review by two different courts over essentially the same questionwhether
the DTI Secretary should impose general safeguard measures. Moreover, as
petitioner points out, the executive department cannot appeal against itself. The
Collector of Customs, the Commissioner of Customs and the Secretary of Finance
are all part of the executive branch. If the Collector of Customs rules against the
government, the executive cannot very well bring suit in courts against itself. On the
other hand, if a private person is aggrieved by the decision of the Collector of
Customs, he can have proper recourse before the courts, which now would be called
upon to exercise judicial review over the action of the executive branch.
More fundamentally, the situation involving split review of the decision of the
Collector of Customs under the TCC is not apropos to the case at bar. The TCC in
that instance is quite explicit on the divergent reviewing body or official depending on
which party prevailed at the Collector of Customs level. On the other hand, there is
no such explicit expression of bifurcated appeals in Section 29 of the SMA.
Public respondents likewise cite Fabian v. Ombudsman[45] as another instance
wherein the Court purportedly allowed split jurisdiction. It is argued that the Court, in
ruling that it was the Court of Appeals which possessed appellate authority to review
decisions of the Ombudsman in administrative cases while the Court retaining
appellate jurisdiction of decisions of the Ombudsman in non-administrative cases,
effectively sanctioned split jurisdiction between the Court and the Court of Appeals. [46]
Nonetheless, this argument is successfully undercut by Southern Cross, which
points out the essential differences in the power exercised by the Ombudsman in
administrative cases and non-administrative cases relating to criminal complaints. In
the former, the Ombudsman may impose an administrative penalty, while in acting
upon a criminal complaint what the Ombudsman undertakes is a preliminary

investigation. Clearly, the capacity in which the Ombudsman takes on in deciding an


administrative complaint is wholly different from that in conducting a preliminary
investigation. In contrast, in ruling upon a safeguard measure, the DTI Secretary acts
in one and the same role. The variance between an order granting or denying an
application for a safeguard measure is polar though emanating from the same
equator, and does not arise from the distinct character of the putative actions
involved.
Philcemcor imputes intelligent design behind the alleged intent of Congress to
limit CTA review only to impositions of the general safeguard measures. It claims that
there is a necessary tax implication in case of an imposition of a tariff where the
CTAs expertise is necessary, but there is no such tax implication, hence no need for
the assumption of jurisdiction by a specialized agency, when the ruling rejects the
imposition of a safeguard measure. But of course, whether the ruling under review
calls for the imposition or non-imposition of the safeguard measure, the common
question for resolution still is whether or not the tariff should be imposed an issue
definitely fraught with a tax dimension. The determination of the question will call
upon the same kind of expertise that a specialized body as the CTA presumably
possesses.
In response to the Courts observation that the setup proposed by respondents
was novel, unusual, cumbersome and unwise, public respondents invoke the maxim
that courts should not be concerned with the wisdom and efficacy of legislation. [47] But
this prescinds from the bogus claim that the CTA may not exercise judicial review
over a decision not to impose a safeguard measure, a prohibition that finds no
statutory support. It is likewise settled in statutory construction that an interpretation
that would cause inconvenience and absurdity is not favored. Respondents do not
address the particular illogic that the Court pointed out would ensue if their position on
judicial review were adopted. According to the respondents, while a ruling by the DTI
Secretary imposing a safeguard measure may be elevated on review to the CTA and
assailed on the ground of errors in fact and in law, a ruling denying the imposition of
safeguard measures may be assailed only on the ground that the DTI Secretary
committed grave abuse of discretion. As stressed in the Decision, [c]ertiorari is a
remedy narrow in its scope and inflexible in its character. It is not a general utility tool
in the legal workshop.[48]
It is incorrect to say that the Decision bars any effective remedy should the Tariff
Commission act or conclude erroneously in making its determination whether the
factual conditions exist which necessitate the imposition of the general safeguard
measure. If the Tariff Commission makes a negative final determination, the DTI
Secretary, bound as he is by this negative determination, has to render a decision
denying the application for safeguard measures citing the Tariff Commissions
findings as basis. Necessarily then, such negative determination of the Tariff
Commission being an integral part of the DTI Secretarys ruling would be open for
review before the CTA, which again is especially qualified by reason of its expertise to
examine the findings of the Tariff Commission. Moreover, considering that the Tariff
Commission is an instrumentality of the government, its actions (as opposed to those
undertaken by the DTI Secretary under the SMA) are not beyond the pale of certiorari
jurisdiction. Unfortunately for Philcemcor, it hinged its cause on the claim that the DTI
Secretarys actions may be annulled on certiorari, notwithstanding the explicit grant of
judicial review over that cabinet members actions under the SMA to the CTA.

Finally on this point, Philcemcor argues that assuming this Courts interpretation
of Section 29 is correct, such ruling should not be given retroactive effect, otherwise,
a gross violation of the right to due process would be had. This erroneously
presumes that it was this Court, and not Congress, which vested jurisdiction on the
CTA over rulings of non-imposition rendered by the DTI Secretary. We have
repeatedly stressed that Section 29 expressly confers CTA jurisdiction over rulings in
connection with the imposition of the safeguard measure, and the reassertion of this
point in the Decision was a matter of emphasis, not of contrivance. The due process
protection does not shield those who remain purposely blind to the express rules that
ensure the sporting play of procedural law.
Besides, respondents claim would also apply every time this Court is compelled
to settle a novel question of law, or to reverse precedent. In such cases, there would
always be litigants whose causes of action might be vitiated by the application of
newly formulated judicial doctrines. Adopting their claim would unwisely force this
Court to treat its dispositions in unprecedented, sometimes landmark decisions not as
resolutions to the live cases or controversies, but as legal doctrine applicable only to
future litigations.

II. Positive Final Determination


By the Tariff Commission an
Indispensable Requisite to the
Imposition of General Safeguard Measures

The second core ruling in the Decision was that contrary to the holding of the
Court of Appeals, the DTI Secretary was barred from imposing a general safeguard
measure absent a positive final determination rendered by the Tariff Commission. The
fundamental premise rooted in this ruling is based on the acknowledgment that the
required positive final determination of the Tariff Commission exists as a properly
enacted constitutional limitation imposed on the delegation of the legislative power to
impose tariffs and imposts to the President under Section 28(2), Article VI of the
Constitution.

Congressional Limitations Pursuant


To Constitutional Authority on the
Delegated Power to Impose
Safeguard Measures

The safeguard measures imposable under the SMA generally involve duties on
imported products, tariff rate quotas, or quantitative restrictions on the importation of a
product into the country. Concerning as they do the foreign importation of products
into the Philippines, these safeguard measures fall within the ambit of Section 28(2),
Article VI of the Constitution, which states:
The Congress may, by law, authorize the President to fix within specified limits, and
subject to such limitations and restrictions as it may impose, tariff rates, import and export

quotas, tonnage and wharfage dues, and other duties or imposts within the framework of the
national development program of the Government. [49]
The Court acknowledges the basic postulates ingrained in the provision, and,
hence, governing in this case. They are:
(1) It is Congress which authorizes the President to impose tariff rates,
import and export quotas, tonnage and wharfage dues, and other duties or
imposts. Thus, the authority cannot come from the Finance Department, the
National Economic Development Authority, or the World Trade Organization, no
matter how insistent or persistent these bodies may be.
(2) The authorization granted to the President must be embodied in a law.
Hence, the justification cannot be supplied simply by inherent executive powers. It
cannot arise from administrative or executive orders promulgated by the executive
branch or from the wisdom or whim of the President.
(3) The authorization to the President can be exercised only within the
specified limits set in the law and is further subject to limitations and
restrictions which Congress may impose. Consequently, if Congress specifies
that the tariff rates should not exceed a given amount, the President cannot impose a
tariff rate that exceeds such amount. If Congress stipulates that no duties may be
imposed on the importation of corn, the President cannot impose duties on corn, no
matter how actively the local corn producers lobby the President. Even the most
picayune of limits or restrictions imposed by Congress must be observed by the
President.
There is one fundamental principle that animates these constitutional
postulates. These impositions under Section 28(2), Article VI fall within the realm
of the power of taxation, a power which is within the sole province of the
legislature under the Constitution.
Without Section 28(2), Article VI, the executive branch has no authority to
impose tariffs and other similar tax levies involving the importation of foreign
goods. Assuming that Section 28(2) Article VI did not exist, the enactment of the
SMA by Congress would be voided on the ground that it would constitute an undue
delegation of the legislative power to tax. The constitutional provision shields such
delegation from constitutional infirmity, and should be recognized as an exceptional
grant of legislative power to the President, rather than the affirmation of an inherent
executive power.
This being the case, the qualifiers mandated by the Constitution on this
presidential authority attain primordial consideration. First, there must be a law, such
as the SMA. Second, there must be specified limits, a detail which would be filled in
by the law. And further, Congress is further empowered to impose limitations and
restrictions on this presidential authority. On this last power, the provision does not
provide for specified conditions, such as that the limitations and restrictions must
conform to prior statutes, internationally accepted practices, accepted jurisprudence,
or the considered opinion of members of the executive branch.
The Court recognizes that the authority delegated to the President under
Section 28(2), Article VI may be exercised, in accordance with legislative sanction, by
the alter egos of the President, such as department secretaries. Indeed, for purposes

of the Presidents exercise of power to impose tariffs under Article VI, Section 28(2), it
is generally the Secretary of Finance who acts as alter ego of the President. The
SMA provides an exceptional instance wherein it is the DTI or Agriculture Secretary
who is tasked by Congress, in their capacities as alter egosof the President, to
impose such measures. Certainly, the DTI Secretary has no inherent power, even
as alter ego of the President, to levy tariffs and imports.
Concurrently, the tasking of the Tariff Commission under the SMA should be
likewise construed within the same context as part and parcel of the legislative
delegation of its inherent power to impose tariffs and imposts to the executive branch,
subject to limitations and restrictions. In that regard, both the Tariff Commission and
the DTI Secretary may be regarded as agents of Congress within their limited
respective spheres, as ordained in the SMA, in the implementation of the said law
which significantly draws its strength from the plenary legislative power of
taxation. Indeed, even the President may be considered as an agent of
Congress for the purpose of imposing safeguard measures. It is Congress, not
the President, which possesses inherent powers to impose tariffs and imposts.
Without legislative authorization through statute, the President has no power,
authority or right to impose such safeguard measures because taxation is
inherently legislative, not executive.
When Congress tasks the President or his/her alter egos to impose
safeguard measures under the delineated conditions, the President or the alter
egos may be properly deemed as agents of Congress to perform an act that
inherently belongs as a matter of right to the legislature. It is basic agency law
that the agent may not act beyond the specifically delegated powers or disregard the
restrictions imposed by the principal. In short, Congress may establish the procedural
framework under which such safeguard measures may be imposed, and assign the
various offices in the government bureaucracy respective tasks pursuant to the
imposition of such measures, the task assignment including the factual determination
of whether the necessary conditions exists to warrant such impositions. Under the
SMA, Congress assigned the DTI Secretary and the Tariff Commission their
respective functions[50] in the legislatures scheme of things.
There is only one viable ground for challenging the legality of the limitations and
restrictions imposed by Congress under Section 28(2) Article VI, and that is such
limitations and restrictions are themselves violative of the Constitution. Thus, no
matter how distasteful or noxious these limitations and restrictions may seem, the
Court has no choice but to uphold their validity unless their constitutional infirmity can
be demonstrated.
What are these limitations and restrictions that are material to the present case?
The entire SMA provides for a limited framework under which the President, through
the DTI and Agriculture Secretaries, may impose safeguard measures in the form of
tariffs and similar imposts. The limitation most relevant to this case is contained in
Section 5 of the SMA, captioned Conditions for the Application of General Safeguard
Measures, and stating:
The Secretary shall apply a general safeguard measure upon a positive final
determination of the [Tariff] Commission that a product is being imported into the country
in increased quantities, whether absolute or relative to the domestic production, as to be a
substantial cause of serious injury or threat thereof to the domestic industry; however, in the

case of non-agricultural products, the Secretary shall first establish that the application of such
safeguard measures will be in the public interest. [51]

Positive Final Determination


By Tariff Commission Plainly
Required by Section 5 of SMA

There is no question that Section 5 of the SMA operates as a limitation validly


[52]
imposed by Congress on the presidential authority under the SMA to impose tariffs
and imposts. That the positive final determination operates as an indispensable
requisite to the imposition of the safeguard measure, and that it is the Tariff
Commission which makes such determination, are legal propositions plainly
expressed in Section 5 for the easy comprehension for everyone but respondents.
Philcemcor attributes this Courts conclusion on the indispensability of the
positive final determination to flawed syllogism in that we read the proposition if A
then B as if it stated if A, and only A, then B. [53] Translated in practical terms, our
conclusion, according to Philcemcor, would have only been justified had Section 5
read shall apply a general safeguard measure upon, and only upon, a positive final
determination of the Tariff Commission.
Statutes are not designed for the easy comprehension of the five-year old child.
Certainly, general propositions laid down in statutes need not be expressly qualified
by clauses denoting exclusivity in order that they gain efficacy. Indeed, applying this
argument, the President would, under the Constitution, be authorized to declare
martial law despite the absence of the invasion, rebellion or public safety requirement
just because the first paragraph of Section 18, Article VII fails to state the magic word
only.[54]
But let us for the nonce pursue Philcemcors logic further. It claims that since
Section 5 does not allegedly limit the circumstances upon which the DTI Secretary
may impose general safeguard measures, it is a worthy pursuit to determine whether
the entire context of the SMA, as discerned by all the other familiar indicators of
legislative intent supplied by norms of statutory interpretation, would justify safeguard
measures absent a positive final determination by the Tariff Commission.
The first line of attack employed is on Section 5 itself, it allegedly not being as
clear as it sounds. It is advanced that Section 5 does not relate to the legal ability of
either the Tariff Commission or the DTI Secretary to bind or foreclose review and
reversal by one or the other. Such relationship should instead be governed by
domestic administrative law and remedial law. Philcemcor thus would like to cast the
proposition in this manner: Does it run contrary to our legal order to assert, as the
Court did in its Decision, that a body of relative junior competence as the Tariff
Commission can bind an administrative superior and cabinet officer, the DTI
Secretary? It is easy to see why Philcemcor would like to divorce this DTI SecretaryTariff Commission interaction from the confines of the SMA. Shorn of context, the
notion would seem radical and unjustifiable that the lowly Tariff Commission can bind
the hands and feet of the DTI Secretary.

It can be surmised at once that respondents preferred interpretation is based


not on the express language of the SMA, but from implications derived in a
roundabout manner. Certainly, no provision in the SMA expressly authorizes the DTI
Secretary to impose a general safeguard measure despite the absence of a positive
final recommendation of the Tariff Commission. On the other hand, Section 5
expressly states that the DTI Secretary shall apply a general safeguard measure
upon a positive final determination of the [Tariff] Commission. The causal connection
in Section 5 between the imposition by the DTI Secretary of the general safeguard
measure and the positive final determination of the Tariff Commission is patent, and
even respondents do not dispute such connection.
As stated earlier, the Court in its Decision found Section 5 to be clear, plain and
free from ambiguity so as to render unnecessary resort to the congressional records
to ascertain legislative intent. Yet respondents, on the dubitable premise that Section
5 is not as express as it seems, again latch on to the record of legislative
deliberations in asserting that there was no legislative intent to bar the DTI Secretary
from imposing the general safeguard measure anyway despite the absence of a
positive final determination by the Tariff Commission.
Let us take the bait for a moment, and examine respondents commonly cited
portion of the legislative record. One would presume, given the intense advocacy for
the efficacy of these citations, that they contain a smoking gun express
declarations from the legislators that the DTI Secretary may impose a general
safeguard measure even if the Tariff Commission refuses to render a positive final
determination. Such smoking gun, if it exists, would characterize our Decision as
disingenuous for ignoring such contrary expression of intent from the legislators who
enacted the SMA. But as with many things, the anticipation is more dramatic than the
truth.
The excerpts cited by respondents are derived from the interpellation of the late
Congressman Marcial Punzalan Jr., by then (and still is) Congressman Simeon
Datumanong.[55]Nowhere in these records is the view expressed that the DTI
Secretary may impose the general safeguard measures if the Tariff Commission
issues a negative final determination or otherwise is unable to make a positive final
determination. Instead, respondents hitch on the observations of Congressman
Punzalan Jr., that the results of the [Tariff] Commissions findings . . . is subsequently
submitted to [the DTI Secretary] for the [DTI Secretary] to impose or not to impose;
and that the [DTI Secretary] here iswho would make the final decision on the
recommendation that is made by a more technical body [such as the Tariff
Commission].[56]
There is nothing in the remarks of Congressman Punzalan which contradict
our Decision. His observations fall in accord with the respective roles of the Tariff
Commission and the DTI Secretary under the SMA. Under the SMA, it is the Tariff
Commission that conducts an investigation as to whether the conditions exist to
warrant the imposition of the safeguard measures. These conditions are enumerated
in Section 5, namely; that a product is being imported into the country in increased
quantities, whether absolute or relative to the domestic production, as to be a
substantial cause of serious injury or threat thereof to the domestic industry. After the
investigation of the Tariff Commission, it submits a report to the DTI Secretary which
states, among others, whether the above-stated conditions for the imposition of the
general safeguard measures exist. Upon a positive final determination that these
conditions are present, the Tariff Commission then is mandated to recommend what

appropriate safeguard measures should be undertaken by the DTI


Secretary. Section 13 of the SMA gives five (5) specific options on the type of
safeguard measures the Tariff Commission recommends to the DTI Secretary.
At the same time, nothing in the SMA obliges the DTI Secretary to adopt the
recommendations made by the Tariff Commission. In fact, the SMA requires that the
DTI Secretary establish that the application of such safeguard measures is in the
public interest, notwithstanding the Tariff Commissions recommendation on the
appropriate safeguard measure upon its positive final determination. Thus, even if
the Tariff Commission makes a positive final determination, the DTI Secretary may
opt not to impose a general safeguard measure, or choose a different type of
safeguard measure other than that recommended by the Tariff Commission.
Congressman Punzalan was cited as saying that the DTI Secretary makes the
decision to impose or not to impose, which is correct since the DTI Secretary may
choose not to impose a safeguard measure in spite of a positive final determination
by the Tariff Commission. Congressman Punzalan also correctly stated that it is the
DTI Secretary who makes the final decision on the recommendation that is made [by
the Tariff Commission], since the DTI Secretary may choose to impose a general
safeguard measure different from that recommended by the Tariff Commission or not
to impose a safeguard measure at all. Nowhere in these cited deliberations was
Congressman Punzalan, or any other member of Congress for that matter, quoted as
saying that the DTI Secretary may ignore a negative determination by the Tariff
Commission as to the existence of the conditions warranting the imposition of general
safeguard measures, and thereafter proceed to impose these measures
nonetheless. It is too late in the day to ascertain from the late Congressman
Punzalan himself whether he had made these remarks in order to assure the other
legislators that the DTI Secretary may impose the general safeguard measures
notwithstanding a negative determination by the Tariff Commission. But certainly, the
language of Section 5 is more resolutory to that question than the recorded remarks
of Congressman Punzalan.
Respondents employed considerable effort to becloud Section 5 with
undeserved ambiguity in order that a proper resort to the legislative deliberations may
be had. Yet assuming that Section 5 deserves to be clarified through an inquiry into
the legislative record, the excerpts cited by the respondents are far more ambiguous
than the language of the assailed provision regarding the key question of whether the
DTI Secretary may impose safeguard measures in the face of a negative
determination by the Tariff Commission. Moreover, even Southern Cross counters
with its own excerpts of the legislative record in support of their own view. [57]
It will not be difficult, especially as to heavily-debated legislation, for two sides
with contrapuntal interpretations of a statute to highlight their respective citations from
[58]
the legislative debate in support of their particular views. A futile exercise of
second-guessing is happily avoided if the meaning of the statute is clear on its
face. It is evident from the text of Section 5 that there must be a positive final
determination by the Tariff Commission that a product is being imported into
the country in increased quantities (whether absolute or relative to domestic
production), as to be a substantial cause of serious injury or threat to the
domestic industry. Any disputation to the contrary is, at best, the product of wishful
thinking.

For the same reason that Section 5 is explicit as regards the essentiality of a
positive final determination by the Tariff Commission, there is no need to refer to the
Implementing Rules of the SMA to ascertain a contrary intent. If there is indeed a
provision in the Implementing Rules that allows the DTI Secretary to impose a general
safeguard measure even without the positive final determination by the Tariff
Commission, said rule is void as it cannot supplant the express language of the
legislature. Respondents essentially rehash their previous arguments on this point,
and there is no reason to consider them anew. The Decision made it clear that
nothing in Rule 13.2 of the Implementing Rules, even though captioned Final
Determination by the Secretary, authorizes the DTI Secretary to impose a general
safeguard measure in the absence of a positive final determination by the Tariff
[59]
Commission. Similarly, the Rules and Regulations to Govern the Conduct of
Investigation by the Tariff Commission Pursuant to Republic Act No. 8800 now cited
by the respondent does not contain any provision that the DTI Secretary may impose
the general safeguard measures in the absence of a positive final determination by
the Tariff Commission.
Section 13 of the SMA further bolsters the interpretation as argued by Southern
Cross and upheld by the Decision. The first paragraph thereof states that [u]pon its
positive determination, the [Tariff] Commission shall recommend to the Secretary an
appropriate definitive measure, clearly referring to the Tariff Commission as the
entity that makes the positive determination. On the other hand, the penultimate
paragraph of the same provision states that [i]n the event of a negative final
determination, the DTI Secretary is to immediately issue through the Secretary of
Finance, a written instruction to the Commissioner of Customs authorizing the return
of the cash bonds previously collected as a provisional safeguard measure. Since the
first paragraph of the same provision states that it is the Tariff Commission which
makes the positive determination, it necessarily follows that it, and not the DTI
Secretary, makes the negative final determination as referred to in the penultimate
paragraph of Section 13.[60]
The Separate Opinion considers as highly persuasive of former Tariff
Commission Chairman Abon, who stated that the Commissions findings are merely
recommendatory.[61] Again, the considered opinion of Chairman Abon is of no
operative effect if the statute plainly states otherwise, and Section 5 bluntly does
require a positive final determination by the Tariff Commission before the DTI
Secretary may impose a general safeguard measure. [62]Certainly, the Court cannot
give controlling effect to the statements of any public officer in serious denial of his
duties if the law otherwise imposes the duty on the public office or officer.
Nonetheless, if we are to render persuasive effect on the considered opinion of
the members of the Executive Branch, it bears noting that the Secretary of the
Department of Justice rendered an Opinion wherein he concluded that the DTI
Secretary could not impose a general safeguard measure if the Tariff Commission
made a negative final determination.[63] Unlike Chairman Abons impromptu remarks
made during a hearing, the DOJ Opinion was rendered only after a thorough study of
the question after referral to it by the DTI. The DOJ Secretary is the alter ego of the
President with a stated mandate as the head of the principal law agency of the
[64]
government. As the DOJ Secretary has no denominated role in the SMA, he was
able to render his Opinion from the vantage of judicious distance. Should not his
Opinion, studied and direct to the point as it is, carry greater weight than the
spontaneous remarks of the Tariff Commissions Chairman which do not even

expressly disavow the binding power


determination?

of the Commissions positive final

III. DTI Secretary has No Power of Review


Over Final Determination of the Tariff Commission

We should reemphasize that it is only because of the SMA, a legislative


enactment, that the executive branch has the power to impose safeguard
measures. At the same time, by constitutional fiat, the exercise of such power is
subjected to the limitations and restrictions similarly enforced by the SMA. In
examining the relationship of the DTI and the Tariff Commission as established in the
SMA, it is essential to acknowledge and consider these predicates.
It is necessary to clarify the paradigm established by the SMA and affirmed by
the Constitution under which the Tariff Commission and the DTI operate, especially in
light of the suggestions that the Courts rulings on the functions of quasi-judicial power
find application in this case. Perhaps the reflexive application of the quasi-judicial
doctrine in this case, rooted as it is in jurisprudence, might allow for some
convenience in ruling, yet doing so ultimately betrays ignorance of the fundamental
power of Congress to reorganize the administrative structure of governance in ways it
sees fit.
The Separate Opinion operates from wholly different premises which are
incomplete. Its main stance, similar to that of respondents, is that the DTI Secretary,
acting as alter ego of the President, may modify and alter the findings of the Tariff
Commission, including the latters negative final determination by substituting it with
his own negative final determination to pave the way for his imposition of a safeguard
measure.[65] Fatally, this conclusion is arrived at without considering the fundamental
constitutional precept under Section 28(2), Article VI, on the ability of Congress to
impose restrictions and limitations in its delegation to the President to impose tariffs
and imposts, as well as the express condition of Section 5 of the SMA requiring a
positive final determination of the Tariff Commission.
Absent Section 5 of the SMA, the President has no inherent, constitutional,
or statutory power to impose a general safeguard measure. Tellingly,
the Separate Opinion does not directly confront the inevitable question as to how the
DTI Secretary may get away with imposing a general safeguard measure absent a
positive final determination from the Tariff Commission without violating Section 5 of
the SMA, which along with Section 13 of the same law, stands as the only direct legal
authority for the DTI Secretary to impose such measures. This is a constitutionally
guaranteed limitation of the highest order, considering that the presidential authority
exercised under the SMA is inherently legislative.
Nonetheless, the Separate Opinion brings to fore the issue of whether the DTI
Secretary, acting either as alter ego of the President or in his capacity as head of an
executive department, may review, modify or otherwise alter the final determination of
the Tariff Commission under the SMA. The succeeding discussion shall focus on that
question.

Preliminarily, we should note that none of the parties question the designation of
the DTI or Agriculture secretaries under the SMA as the imposing authorities of the
safeguard measures, even though Section 28(2) Article VI states that it is the
President to whom the power to impose tariffs and imposts may be delegated by
Congress. The validity of such designation under the SMA should not be in doubt. We
recognize that the authorization made by Congress in the SMA to the DTI and
Agriculture Secretaries was made in contemplation of their capacities as alter egos of
the President.
[66]

Indeed, in Marc Donnelly & Associates v. Agregado the Court upheld the
validity of a Cabinet resolution fixing the schedule of royalty rates on metal exports
and providing for their collection even though Congress, under Commonwealth Act
No. 728, had specifically empowered the President and not any other official of the
executive branch, to regulate and curtail the export of metals. In so ruling, the Court
held that the members of the Cabinet were acting as alter egos of the President. [67] In
this case, Congress itself authorized the DTI Secretary as alter ego of the President
to impose the safeguard measures. If the Court was previously willing to uphold the
alter egos tariff authority despite the absence of explicit legislative grant of such
authority on the alter ego, all the more reason now when Congress itself expressly
authorized the alter ego to exercise these powers to impose safeguard measures.
Notwithstanding, Congress in enacting the SMA and prescribing the roles to be
played therein by the Tariff Commission and the DTI Secretary did not envision that
the President, or his/her alter ego, could exercise supervisory powers over the Tariff
Commission. If truly Congress intended to allow the traditional alter ego principle to
come to fore in the peculiar setup established by the SMA, it would have assigned the
role now played by the DTI Secretary under the law instead to the NEDA. The Tariff
Commission is an attached agency of the National Economic Development
[68]
[69]
Authority, which in turn is the independent planning agency of the government.
The Tariff Commission does not fall under the administrative supervision of the
DTI.[70] On the other hand, the administrative relationship between the NEDA and the
Tariff Commission is established not only by the Administrative Code, but similarly
affirmed by the Tariff and Customs Code.
[71]

Justice Florentino Feliciano, in his ponencia in Garcia v. Executive Secretary ,


acknowledged the interplay between the NEDA and the Tariff Commission under the
Tariff and Customs Code when he cited the relevant provisions of that law evidencing
such setup. Indeed, under Section 104 of the Tariff and Customs Code, the rates of
duty fixed therein are subject to periodic investigation by the Tariff Commission and
[72]
may be revised by the President upon recommendation of the NEDA. Moreover,
under Section 401 of the same law, it is upon periodic investigations by the Tariff
Commission and recommendation of the NEDA that the President may cause a
[73]
gradual reduction of protection levels granted under the law.
At the same time, under the Tariff and Customs Code, no similar role or
influence is allocated to the DTI in the matter of imposing tariff duties. In fact, the
long-standing tradition has been for the Tariff Commission and the DTI to proceed
independently in the exercise of their respective functions. Only very recently have
our statutes directed any significant interplay between the Tariff Commission and the
DTI, with the enactment in 1999 of Republic Act No. 8751 on the imposition of
countervailing duties and Republic Act No. 8752 on the imposition of anti-dumping
duties, and of course the promulgation a year later of the SMA. In all these three

[77]

laws, the Tariff Commission is tasked, upon referral of the matter by the DTI, to
determine whether the factual conditions exist to warrant the imposition by the DTI of
a countervailing duty, an anti-dumping duty, or a general safeguard measure,
respectively. In all three laws, the determination by the Tariff Commission that these
required factual conditions exist is necessary before the DTI Secretary may impose
the corresponding duty or safeguard measure. And in all three laws, there is no
express provision authorizing the DTI Secretary to reverse the factual determination
of the Tariff Commission.[74]

Department of Agriculture. The same law establishes the Mines and Geo-Sciences
Bureau as one of the Sectoral Staff Bureaus[78] that forms part of the organizational
structure of the DENR.[79]

In fact, the SMA indubitably establishes that the Tariff Commission is no mere
flunky of the DTI Secretary when it mandates that the positive final recommendation
of the former be indispensable to the latters imposition of a general safeguard
measure. What the law indicates instead is a relationship of interdependence
between two bodies independent of each other under the Administrative Code and
the SMA alike. Indeed, even the ability of the DTI Secretary to disregard the Tariff
Commissions recommendations as to the particular safeguard measures to be
imposed evinces the independence from each other of these two bodies. This is
properly so for two reasons the DTI and the Tariff Commission are independent of
each other under the Administrative Code; and impropriety is avoided in cases
wherein the DTI itself is the one seeking the imposition of the general safeguard
measures, pursuant to Section 6 of the SMA.

Nonetheless, the Separate Opinion asserts that the SMA created a functional
relationship between the Tariff Commission and the DTI Secretary, sufficient to allow
the DTI Secretary to exercise alter ego powers to reverse the determination of the
Tariff Commission. Again, considering that the power to impose tariffs in the first
place is not inherent in the President but arises only from congressional grant, we
should affirm the congressional prerogative to impose limitations and restrictions on
such powers which do not normally belong to the executive in the first place. Nowhere
in the SMA does it state that the DTI Secretary may impose general safeguard
measures without a positive final determination by the Tariff Commission, or that the
DTI Secretary may reverse or even review the factual determination made by the
Tariff Commission.

As repeatedly stated, the Tariff Commission does not fall under the
administrative control of the DTI, but under the NEDA, pursuant to the Administrative
Code. The reliance made by the Separate Opinion to those three examples are thus
misplaced.

Thus, in ascertaining the appropriate legal milieu governing the relationship


between the DTI and the Tariff Commission, it is imperative to apply foremost, if not
exclusively, the provisions of the SMA. The argument that the usual rules on
administrative control and supervision apply between the Tariff Commission and the
DTI as regards safeguard measures is severely undercut by the plain fact that there is
no long-standing tradition of administrative interplay between these two entities.

Congress in enacting the SMA and prescribing the roles to be played therein by
the Tariff Commission and the DTI Secretary did not envision that the President, or
his/her alter egocould exercise supervisory powers over the Tariff Commission. If
truly Congress intended to allow the traditional alter ego principle to come to fore in
the peculiar setup established by the SMA, it would have assigned the role now
played by the DTI Secretary under the law instead to the NEDA, the body to which the
Tariff Commission is attached under the Administrative Code.

Within the administrative apparatus, the Tariff Commission appears to be a


lower rank relative to the DTI. But does this necessarily mean that the DTI has the
intrinsic right, absent statutory authority, to reverse the findings of the Tariff
Commission? To insist that it does, one would have to concede for instance that,
applying the same doctrinal guide, the Secretary of the Department of Science and
Technology (DOST) has the right to reverse the rulings of the Civil Aeronautics Board
(CAB) or the issuances of the Philippine Coconut Authority (PCA). As with the Tariff
Commission-DTI, there is no statutory authority granting the DOST Secretary the right
to overrule the CAB or the PCA, such right presumably arising only from the position
of subordinacy of these bodies to the DOST. To insist on such a right would be to
invite department secretaries to interfere in the exercise of functions by administrative
agencies, even in areas wherein such secretaries are bereft of specialized
competencies.

The Court has no issue with upholding administrative control and supervision
exercised by the head of an executive department, but only over those subordinate
offices that are attached to the department, or which are, under statute, relegated
under its supervision and control. To declare that a department secretary, even if
acting as alter ego of the President, may exercise such control or supervision over all
executive offices below cabinet rank would lead to absurd results such as those
adverted to above. As applied to this case, there is no legal justification for the DTI
Secretary to exercise control, supervision, review or amendatory powers over the
Tariff Commission and its positive final determination. In passing, we note that there
is, admittedly, a feasible mode by which administrative review of the Tariff
Commissions final determination could be had, but it is not the procedure adopted by
respondents and now suggested for affirmation. This mode shall be discussed in a
forthcoming section.

The Separate Opinion notes that notwithstanding above, the Secretary of


Department of Transportation and Communication may review the findings of the
CAB, the Agriculture Secretary may review those of the PCA, and that the Secretary
of the Department of Environment and Natural Resources may pass upon decisions
of the Mines and Geosciences Board.[75] These three officers may be alter egos of the
President, yet their authority to review is limited to those agencies or bureaus which
are, pursuant to statutes such as the Administrative Code of 1987, under the
administrative control and supervision of their respective departments. Thus, under
the express provision of the Administrative Code expressly provides that the CAB is
an attached agency of the DOTC[76], and that the PCA is an attached agency of the

The Separate Opinion asserts that the President, or his/her alter ego cannot be
made a mere rubber stamp of the Tariff Commission since Section 17, Article VII of
the Constitution denominates the Chief Executive exercises control over all executive
departments, bureaus and offices.[80] But let us be clear that such executive control
is not absolute. The definition of the structure of the executive branch of government,
and the corresponding degrees of administrative control and supervision, is not the
exclusive preserve of the executive. It may be effectively be limited by the
Constitution, by law, or by judicial decisions.
The Separate Opinion cites the respected constitutional law authority Fr.
Joaquin Bernas, in support of the proposition that such plenary power of executive

control of the President cannot be restricted by a mere statute passed by


Congress. However, the cited passage from Fr. Bernas actually states, Since the
Constitution has given the President the power of control, with all its awesome
[81]
implications, it is the Constitution alone which can curtail such power. Does the
President have such tariff powers under the Constitution in the first place which may
be curtailed by the executive power of control? At the risk of redundancy, we quote
Section 28(2), Article VI: The Congress may, by law, authorize the President to fix
within specified limits, and subject to such limitations and restrictions as it may
impose, tariff rates, import and export quotas, tonnage and wharfage dues, and other
duties or imposts within the framework of the national development program of the
Government. Clearly the power to impose tariffs belongs to Congress and not to the
President.
It is within reason to assume the framers of the Constitution deemed it too
onerous to spell out all the possible limitations and restrictions on this presidential
authority to impose tariffs. Hence, the Constitution especially allowed Congress itself
to prescribe such limitations and restrictions itself, a prudent move considering that
such authority inherently belongs to Congress and not the President. Since Congress
has no power to amend the Constitution, it should be taken to mean that such
limitations and restrictions should be provided by mere statute. Then again, even
the presidential authority to impose tariffs arises only by mere statute. Indeed, this
presidential privilege is both contingent in nature and legislative in origin.
These characteristics, when weighed against the aspect of executive control
and supervision, cannot militate against Congresss exercise of its inherent
power to tax.
The bare fact is that the administrative superstructure, for all its unwieldiness, is
mere putty in the hands of Congress. The functions and mandates of the particular
executive departments and bureaus are not created by the President, but by the
legislative branch through the Administrative Code. [82] The President is the
administrative head of the executive department, as such obliged to see that every
government office is managed and maintained properly by the persons in charge of it
in accordance with pertinent laws and regulations, and empowered to promulgate
rules and issuances that would ensure a more efficient management of the executive
branch, for so long as such issuances are not contrary to law. [83] Yet the legislature
has the concurrent power to reclassify or redefine the executive bureaucracy,
including the relationship between various administrative agencies, bureaus and
departments, and ultimately, even the power to abolish executive departments and
their components, hamstrung only by constitutional limitations. The DTI itself can be
abolished with ease by Congress through deleting Title X, Book IV of the
Administrative Code. The Tariff Commission can similarly be abolished through
legislative enactment. [84]
At the same time, Congress can enact additional tasks or responsibilities on
either the Tariff Commission or the DTI Secretary, such as their respective roles on
the imposition of general safeguard measures under the SMA. In doing so, the
same Congress, which has the putative authority to abolish the Tariff
Commission or the DTI, is similarly empowered to alter or expand its functions
through modalities which do not align with established norms in the
bureaucratic structure. The Court is bound to recognize the legislative prerogative
to prescribe such modalities, no matter how atypical they may be, in affirmation of the
legislative power to restructure the executive branch of government.

There are further limitations on the executive control adverted to by


the Separate Opinion. The President, in the exercise of executive control, cannot
order a subordinate to disobey a final decision of this Court or any courts. If the
subordinate chooses to disobey, invoking sole allegiance to the President, the judicial
processes can be utilized to compel obeisance. Indeed, when public officers of the
executive department take their oath of office, they swear allegiance and obedience
not to the President, but to the Constitution and the laws of the land. The invocation of
executive control must yield when under its subsumption includes an act that violates
the law.
The Separate Opinion concedes that the exercise of executive control and
supervision by the President is bound by the Constitution and law. [85] Still, just three
sentences after asserting that the exercise of executive control must be within the
bounds of the Constitution and law, the Separate Opinion asserts, the control power
of the Chief Executive emanates from the Constitution; no act of Congress may
validly curtail it.[86] Laws are acts of Congress, hence valid confusion arises whether
the Separate Opinion truly believes the first proposition that executive control is
bound by law. This is a quagmire for the Separate Opinion to resolve for itself
The Separate Opinion unduly considers executive control as the ne plus
ultra constitutional standard which must govern in this case. But while the President
may generally have the power to control, modify or set aside the actions of a
subordinate, such powers may be constricted by the Constitution, the legislature, and
the judiciary. This is one of the essences of the check-and-balance system in our tripartite constitutional democracy. Not one head of a branch of government may
operate as a Caesar within his/her particular fiefdom.
Assuming there is a conflict between the specific limitation in Section 28 (2),
Article VI of the Constitution and the general executive power of control and
supervision, the former prevails in the specific instance of safeguard measures such
as tariffs and imposts, and would thus serve to qualify the general grant to the
President of the power to exercise control and supervision over his/her subalterns.
Thus, if the Congress enacted the law so that the DTI Secretary is bound by
the Tariff Commission in the sense the former cannot impose general safeguard
measures absent a final positive determination from the latter the Court is obliged to
respect such legislative prerogative, no matter how such arrangement deviates from
traditional norms as may have been enshrined in jurisprudence. The only ground
under which such legislative determination as expressed in statute may be
successfully challenged is if such legislation contravenes the Constitution. No such
argument is posed by the respondents, who do not challenge the validity or
constitutionality of the SMA.
Given these premises, it is utterly reckless to examine the interrelationship
between the Tariff Commission and the DTI Secretary beyond the context of the
SMA, applying instead traditional precepts on administrative control, review and
supervision. For that reason, the Decision deemed inapplicable respondents
previous citations of Cario v. Commissioner on Human Rights and Lamb v. Phipps,
since the executive power adverted to in those cases had not been limited by
constitutional restrictions such as those imposed under Section 28(2), Article VI. [87]
A similar observation can be made on the case of Sharp International Marketing
v. Court of Appeals,[88] now cited by Philcemcor, wherein the Court asserted that the
Land Bank of the Philippines was required to exercise independent judgment and not

merely rubber-stamp deeds of sale entered into by the Department of Agrarian


Reform in connection with the agrarian reform program. Philcemcor attempts to
demonstrate that the DTI Secretary, as with the Land Bank of the Philippines, is
required to exercise independent discretion and is not expected to just merely accede
to DAR-approved compensation packages. Yet again, such grant of independent
discretion is expressly called for by statute, particularly Section 18 of Rep. Act No.
6657 which specifically requires the joint concurrence of the landowner and the DAR
and the [Land Bank of the Philippines] on the amount of compensation. Such power
of review by the Land Bank is a consequence of clear statutory language, as is our
holding in the Decision that Section 5 explicitly requires a positive final determination
by the Tariff Commission before a general safeguard measure may be
imposed. Moreover, such limitations under the SMA are coated by the constitutional
authority of Section 28(2), Article VI of the Constitution.

the law mandated that the decision be made on the sole discretion of an executive
officer, such as the DTI Secretary, it would be markedly easier for safeguard
measures to be imposed or withheld based solely on political considerations and not
on the factual conditions that are supposed to predicate the decision.

Nonetheless, is this administrative setup, as envisioned by Congress and


enshrined into the SMA, truly noxious to existing legal standards?
The Decision acknowledged the internal logic of the statutory framework, considering
that the DTI cannot exercise review powers over an agency such as the Tariff
Commission which is not within its administrative jurisdiction; that the mechanism
employed establishes a measure of check and balance involving two government
offices with different specializations; and that safeguard measures are the exception
rather than the rule, pursuant to our treaty obligations. [89]

We recognize that Congress deemed it necessary to insulate the process in


requiring that the factual determination to be made by an ostensibly independent body
of specialized competence, the Tariff Commission. This prescribed framework,
constitutionally sanctioned, is intended to prevent the baseless, whimsical, or
consideration-induced imposition of safeguard measures. It removes from the DTI
Secretary jurisdiction over a matter beyond his putative specialized aptitude, the
compilation and analysis of picayune facts and determination of their limited causal
relations, and instead vests in the Secretary the broad choice on a matter within his
unquestionable competence, the selection of what particular safeguard measure
would assist the duly beleaguered local industry yet at the same time conform to
national trade policy. Indeed, the SMA recognizes, and places primary importance on
the DTI Secretarys mandate to formulate trade policy, in his capacity as the
Presidents alter ego on trade, industry and investment-related matters.

We see no reason to deviate from these observations, and indeed can add
similarly oriented comments. Corollary to the legislative power to decree policies
through legislation is the ability of the legislature to provide for means in the statute
itself to ensure that the said policy is strictly implemented by the body or office tasked
so tasked with the duty. As earlier stated, our treaty obligations dissuade the State for
now from implementing default protectionist trade measures such as tariffs, and allow
the same only under specified conditions.[90]The conditions enumerated under the
GATT Agreement on Safeguards for the application of safeguard measures by a
member country are the same as the requisites laid down in Section 5 of the
SMA.[91] To insulate the factual determination from political pressure, and to assure
that it be conducted by an entity especially qualified by reason of its general functions
to undertake such investigation, Congress deemed it necessary to delegate to the
Tariff Commission the function of ascertaining whether or not the those factual
conditions exist to warrant the atypical imposition of safeguard measures. After all,
the Tariff Commission retains a degree of relative independence by virtue of its
attachment to the National Economic Development Authority, an independent
planning agency of the government,[92] and also owing to its vaunted expertise and
specialization.
The matter of imposing a safeguard measure almost always involves not just
one industry, but the national interest as it encompasses other industries as well. Yet
in all candor, any decision to impose a safeguard measure is susceptible to all sorts
of external pressures, especially if the domestic industry concerned is well-organized.
Unwarranted impositions of safeguard measures may similarly be detrimental to the
national interest. Congress could not be blamed if it desired to insulate the
investigatory process by assigning it to a body with a putative degree of
independence and traditional expertise in ascertaining factual conditions. Affected
industries would have cause to lobby for or against the safeguard measures. The
decision-maker is in the unenviable position of having to bend an ear to listen to all
concerned voices, including those which may speak softly but carry a big stick. Had

Reference of the binding positive final determination to the Tariff Commission is


of course, not a fail-safe means to ensure a bias-free determination. But at least the
legislated involvement of the Commission in the process assures some measure of
measure of check and balance involving two different governmental agencies with
disparate specializations. There is no legal or constitutional demand for such a setup,
but its wisdom as policy should be acknowledged. As prescribed by Congress, both
the Tariff Commission and the DTI Secretary operate within limited frameworks, under
which nobody acquires an undue advantage over the other.

At the same time, the statutory limitations on this authorized power of the DTI
Secretary must prevail since the Constitution itself demands the enforceability of
those limitations and restrictions as imposed by Congress. Policy wisdom will not
save a law from infirmity if the statutory provisions violate the Constitution. But since
the Constitution itself provides that the President shall be constrained by the limits
and restrictions imposed by Congress and since these limits and restrictions are so
clear and categorical, then the Court has no choice but to uphold the reins.
Even assuming that this prescribed setup made little sense, or seemed
uncommonly silly,[93] the Court is bound by propriety not to dispute the wisdom of the
legislature as long as its acts do not violate the Constitution. Since there is no
convincing demonstration that the SMA contravenes the Constitution, the Court is
wont to respect the administrative regimen propounded by the law, even if it allots the
Tariff Commission a higher degree of puissance than normally expected. It is for this
reason that the traditional conceptions of administrative review or quasi-judicial power
cannot control in this case.
Indeed, to apply the latter concept would cause the Court to fall into a linguistic
trap owing to the multi-faceted denotations the term quasi-judicial has come to
acquire.
Under the SMA, the Tariff Commission undertakes formal hearings, [94] receives
and evaluates testimony and evidence by interested parties, [95] and renders a
decision is rendered on the basis of the evidence presented, in the form of the final
determination. The final determination requires a conclusion whether the importation
of the product under consideration is causing serious injury or threat to a domestic

industry producing like products or directly competitive products, while evaluating all
relevant factors having a bearing on the situation of the domestic industry.[96] This
process aligns conformably with definition provided by Blacks Law Dictionary of
quasi-judicial as the action, discretion, etc., of public administrative officers or
bodies, who are required to investigate facts, or ascertain the existence of facts, hold
hearings, weigh evidence, and draw conclusions from them, as a basis for their
official action, and to exercise discretion of a judicial nature.[97]
However, the Tariff Commission is not empowered to hear actual cases or
controversies lodged directly before it by private parties. It does not have the power
to issue writs of injunction or enforcement of its determination. These considerations
militate against a finding of quasi-judicial powers attributable to the Tariff Commission,
considering the pronouncement that quasi-judicial adjudication would mean a
determination of rights privileges and duties resulting in a decision or order which
applies to a specific situation.[98]
Indeed, a declaration that the Tariff Commission possesses quasi-judicial
powers, even if ascertained for the limited purpose of exercising its functions under
the SMA, may have the unfortunate effect of expanding the Commissions powers
beyond that contemplated by law. After all, the Tariff Commission is by convention, a
fact-finding body, and its role under the SMA, burdened as it is with factual
determination, is but a mere continuance of this tradition. However, Congress through
the SMA offers a significant deviation from this traditional role by tying the decision by
the DTI Secretary to impose a safeguard measure to the required positive factual
determination by the Tariff Commission. Congress is not bound by past traditions, or
even by the jurisprudence of this Court, in enacting legislation it may deem as suited
for the times. The sole benchmark for judicial substitution of congressional wisdom is
constitutional transgression, a standard which the respondents do not even attempt to
match.

Respondents Suggested Interpretation


Of the SMA Transgresses Fair Play
Respondents have belabored the argument that the Decisions interpretation of
the SMA, particularly of the role of the Tariff Commission vis--vis the DTI Secretary,
is noxious to traditional notions of administrative control and supervision. But in doing
so, they have failed to acknowledge the congressional prerogative to redefine
administrative relationships, a license which falls within the plenary province of
Congress under our representative system of democracy. Moreover, respondents
own suggested interpretation falls wayward of expectations of practical fair play.
Adopting respondents suggestion that the DTI Secretary may disregard the
factual findings of the Tariff Commission and investigatory process that preceded it, it
would seem that the elaborate procedure undertaken by the Commission under the
SMA, with all the attendant guarantees of due process, is but an inutile spectacle. As
Justice Garcia noted during the oral arguments, why would the DTI Secretary bother
[99]
with the Tariff Commission and instead conduct the investigation himself.
Certainly, nothing in the SMA authorizes the DTI Secretary, after making the
preliminary determination, to personally oversee the investigation, hear out the

[100]

interested parties, or receive evidence.


In fact, the SMA does not even require the
Tariff Commission, which is tasked with the custody of the submitted evidence, [101] to
turn over to the DTI Secretary such evidence it had evaluated in order to make its
[102]
factual determination.
Clearly, as Congress tasked it to be, it is the Tariff
Commission and not the DTI Secretary which acquires the necessary intimate
acquaintance with the factual conditions and evidence necessary for the imposition of
the general safeguard measure. Why then favor an interpretation of the SMA that
leaves the findings of the Tariff Commission bereft of operative effect and makes
them subservient to the wishes of the DTI Secretary, a personage with lesser working
familiarity with the relevant factual milieu? In fact, the bare theory of the respondents
would effectively allow the DTI Secretary to adopt, under the subterfuge of his
discretion, the factual determination of a private investigative group hired by the
industry concerned, and reject the investigative findings of the Tariff Commission as
mandated by the SMA. It would be highly irregular to substitute what the law clearly
provides for a dubious setup of no statutory basis that would be readily susceptible to
rank chicanery.
Moreover, the SMA guarantees the right of all concerned parties to be heard, an
elemental requirement of due process, by the Tariff Commission in the context of its
investigation. The DTI Secretary is not similarly empowered or tasked to hear out the
concerns of other interested parties, and if he/she does so, it arises purely out of
volition and not compulsion under law.
Indeed, in this case, it is essential that the position of other than that of the local
cement industry should be given due consideration, cement being an indispensable
need for the operation of other industries such as housing and construction. While the
general safeguard measures may operate to the better interests of the domestic
cement industries, its deprivation of cheaper cement imports may similarly work to the
detriment of these other domestic industries and correspondingly, the national
interest. Notably, the Tariff Commission in this case heard the views on the
application of representatives of other allied industries such as the housing,
construction, and cement-bag industries, and other interested parties such as
consumer groups and foreign governments.[103] It is only before the Tariff Commission
that their views had been heard, and this is because it is only the Tariff Commission
which is empowered to hear their positions. Since due process requires a judicious
consideration of all relevant factors, the Tariff Commission, which is in a better
position to hear these parties than the DTI Secretary, is similarly more capable to
render a determination conformably with the due process requirements than the DTI
Secretary.
In a similar vein, Southern Cross aptly notes that in instances when it is the DTI
Secretary who initiates motu proprio the application for the safeguard measure
pursuant to Section 6 of the SMA, respondents suggested interpretation would result
in the awkward situation wherein the DTI Secretary would rule upon his own
application after it had been evaluated by the Tariff Commission. Pertinently cited is
our ruling in Corona v. Court of Appeals[104] that no man can be at once a litigant and
judge.[105] Certainly, this anomalous situation is avoided if it is the Tariff Commission
which is tasked with arriving at the final determination whether the conditions exist to
warrant the general safeguard measures. This is the setup provided for by the
express provisions of the SMA, and the problem would arise only if we adopt the
interpretation urged upon by respondents.

The Possibility for Administrative Review


Of the Tariff Commissions Determination

The Court has been emphatic that a positive final determination from the Tariff
Commission is required in order that the DTI Secretary may impose a general
safeguard measure, and that the DTI Secretary has no power to exercise control and
supervision over the Tariff Commission and its final determination. These conclusions
are the necessary consequences of the applicable provisions of the Constitution, the
SMA, and laws such as the Administrative Code. However, the law is silent though
on whether this positive final determination may otherwise be subjected to
administrative review.
There is no evident legislative intent by the authors of the SMA to provide for a
procedure of administrative review. If ever there is a procedure for administrative
review over the final determination of the Tariff Commission, such procedure must be
done in a manner that does not contravene or disregard legislative prerogatives as
expressed in the SMA or the Administrative Code, or fundamental constitutional
limitations.
In order that such procedure of administrative review would not contravene the
law and the constitutional scheme provided by Section 28(2), Article VI, it is essential
to assert that the positive final determination by the Tariff Commission is
indispensable as a requisite for the imposition of a general safeguard measure. The
submissions of private respondents and theSeparate Opinion cannot be sustained
insofar as they hold that the DTI Secretary can peremptorily ignore or disregard the
determinations made by the Tariff Commission. However, if the mode of
administrative review were in such a manner that the administrative superior of the
Tariff Commission were to modify or alter its determination, then such reversal may
still be valid within the confines of Section 5 of the SMA, for technically it is still the
Tariff Commissions determination, administratively revised as it may be, that would
serve as the basis for the DTI Secretarys action.
However, and fatally for the present petitions, such administrative review cannot
be conducted by the DTI Secretary. Even if conceding that the Tariff Commissions
findings may be administratively reviewed, the DTI Secretary has no authority to
review or modify the same. We have been emphatic on the reasons such as that
there is no traditional or statutory basis placing the Commission under the control and
supervision of the DTI; that to allow such would contravene due process, especially if
the DTI itself were to apply for the safeguard measuresmotu proprio. To hold
otherwise would destroy the administrative hierarchy, contravene constitutional due
process, and disregard the limitations or restrictions provided in the SMA.
Instead, assuming administrative review were available, it is the NEDA that may
conduct such review following the principles of administrative law, and the NEDAs
decision in turn is reviewable by the Office of the President. The decision of the Office
of the President then effectively substitutes as the determination of the Tariff
Commission, which now forms the basis of the DTI Secretarys decision, which now
would be ripe for judicial review by the CTA under Section 29 of the SMA. This is the
only way that administrative review of the Tariff Commissions determination may be
sustained without violating the SMA and its constitutional restrictions and limitations,
as well as administrative law.

In bare theory, the NEDA may review, alter or modify the Tariff Commissions
final determination, the Commission being an attached agency of the NEDA.
Admittedly, there is nothing in the SMA or any other statute that would prevent the
NEDA to exercise such administrative review, and successively, for the President to
exercise in turn review over the NEDAs decision.
Nonetheless, in acknowledging this possibility, the Court, without denigrating the
bare principle that administrative officers may exercise control and supervision over
the acts of the bodies under its jurisdiction, realizes that this comes at the expense of
a speedy resolution to an application for a safeguard measure, an application
dependent on fluctuating factual conditions. The further delay would foster uncertainty
and insecurity within the industry concerned, as well as with all other allied industries,
which in turn may lead to some measure of economic damage. Delay is certain, since
judicial review authorized by law and not administrative review would have the final
say. The fact that the SMA did not expressly prohibit administrative review of the final
determination of the Tariff Commission does not negate the supreme advantages of
engendering exclusive judicial review over questions arising from the imposition of a
general safeguard measure.
In any event, even if we conceded the possibility of administrative review of the
Tariff Commissions final determination by the NEDA, such would not deny merit to
the present petition. It does not change the fact that the Court of Appeals erred in
ruling that the DTI Secretary was not bound by the negative final determination of the
Tariff Commission, or that the DTI Secretary acted without jurisdiction when he
imposed general safeguard measures despite the absence of the statutory positive
final determination of the Commission.

IV. Courts Interpretation of SMA


In Harmony with Other
Constitutional Provisions

In response to our citation of Section 28(2), Article VI, respondents elevate two
arguments grounded in constitutional law. One is based on another constitutional
provision, Section 12, Article XIII, which mandates that [t]he State shall promote the
preferential use of Filipino labor, domestic materials and locally produced goods and
adopt measures that help make them competitive. By no means does this provision
dictate that the Court favor the domestic industry in all competing claims that it may
bring before this Court. If it were so, judicial proceedings in this country would be
rendered a mockery, resolved as they would be, on the basis of the personalities of
the litigants and not their legal positions.
Moreover, the duty imposed on by Section 12, Article XIII falls primarily with
Congress, which in that regard enacted the SMA, a law designed to protect domestic
industries from the possible ill-effects of our accession to the global trade order.
Inconveniently perhaps for respondents, the SMA also happens to provide for a
procedure under which such protective measures may be enacted. The Court cannot
just impose what it deems as the spirit of the law without giving due regard to its
letter.

In like-minded manner, the Separate Opinion loosely states that the purpose of
the SMA is to protect or safeguard local industries from increased importation of
foreign products.[106]This inaccurately leaves the impression that the SMA ipso
facto unravels a protective cloak that shelters all local industries and producers, no
matter the conditions. Indeed, our country has knowingly chosen to accede to the
world trade regime, as expressed in the GATT and WTO Agreements, despite the
understanding that local industries might suffer ill-effects, especially with the easier
entry of competing foreign products. At the same time, these international agreements
were designed to constrict protectionist trade policies by its member-countries.
Hence, the median, as expressed by the SMA, does allow for the application of
protectionist measures such as tariffs, but only after an elaborate process of
investigation that ensures factual basis and indispensable need for such measures.
More accurately, the purpose of the SMA is to provide a process for the protection or
safeguarding of domestic industries that have duly established that there is
substantial injury or threat thereof directly caused by the increased imports. In short,
domestic industries are not entitled to safeguard measures as a matter of right or
influence.
Respondents also make the astounding argument that the imposition of general
safeguard measures should not be seen as a taxation measure, but instead as an
exercise of police power. The vain hope of respondents in divorcing the safeguard
measures from the concept of taxation is to exclude from consideration Section 28(2),
Article VI of the Constitution.
This argument can be debunked at length, but it deserves little attention. The
motivation behind many taxation measures is the implementation of police power
goals. Progressive income taxes alleviate the margin between rich and poor; the socalled sin taxes on alcohol and tobacco manufacturers help dissuade the consumers
from excessive intake of these potentially harmful products. Taxation is
distinguishable from police power as to the means employed to implement these
public good goals. Those doctrines that are unique to taxation arose from peculiar
considerations such as those especially punitive effects of taxation, [107] and the belief
that taxes are the lifeblood of the state. [108] These considerations necessitated the
evolution of taxation as a distinct legal concept from police power. Yet at the same
time, it has been recognized that taxation may be made the implement of the states
[109]
police power.
Even assuming that the SMA should be construed exclusively as a police power
measure, the Court recognizes that police power is lodged primarily in the national
legislature, though it may also be exercised by the executive branch by virtue of a
[110]
valid delegation of legislative power.
Considering these premises, it is clear that
police power, however illimitable in theory, is still exercised within the confines of
implementing legislation. To declare otherwise is to sanction rule by whim instead of
rule of law. The Congress, in enacting the SMA, has delegated the power to impose
general safeguard measures to the executive branch, but at the same time subjected
such imposition to limitations, such as the requirement of a positive final
determination by the Tariff Commission under Section 5. For the executive branch to
ignore these boundaries imposed by Congress is to set up an ignoble clash between
the two co-equal branches of government. Considering that the exercise of police
power emanates from legislative authority, there is little question that the prerogative
of the legislative branch shall prevail in such a clash.

V. Assailed Decision Consistent


With Ruling in Taada v. Angara

Public respondents allege that the Decision is contrary to our holding in Taada
[111]
v. Angara,
since the Court noted therein that the GATT itself provides built-in
protection from unfair foreign competition and trade practices, which according to the
public respondents, was a reason why the Honorable [Court] ruled the way it did. On
the other hand, the Decisioneliminates safeguard measures as a mode of defense.
This is balderdash, as with any and all claims that the Decision allows foreign
industries to ride roughshod over our domestic enterprises. The Decision does not
prohibit the imposition of general safeguard measures to protect domestic industries
in need of protection. All it affirms is that the positive final determination of the Tariff
Commission is first required before the general safeguard measures are imposed and
implemented, a neutral proposition that gives no regard to the nationalities of the
parties involved. A positive determination by the Tariff Commission is hardly the
elusive Shangri-la of administrative law. If a particular industry finds it difficult to
obtain a positive final determination from the Tariff Commission, it may be simply
because the industry is still sufficiently competitive even in the face of foreign
competition. These safeguard measures are designed to ensure salvation, not
avarice.
Respondents well have the right to drape themselves in the colors of the
flag. Yet these postures hardly advance legal claims, or nationalism for that matter.
The fineries of the costume pageant are no better measure of patriotism than simple
obedience to the laws of the Fatherland. And even assuming that respondents are
motivated by genuine patriotic impulses, it must be remembered that under the setup
provided by the SMA, it is the facts, and not impulse, that determine whether the
protective safeguard measures should be imposed. As once orated, facts are
stubborn things; and whatever may be our wishes, our inclinations, or the dictates of
our passions, they cannot alter the state of facts and evidence. [112]
It is our goal as judges to enforce the law, and not what we might deem as
correct economic policy. Towards this end, we should not construe the SMA to
unduly favor or disfavor domestic industries, simply because the law itself provides for
a mechanism by virtue of which the claims of these industries are thoroughly
evaluated before they are favored or disfavored. What we must do is to simply uphold
what the law says. Section 5 says that the DTI Secretary shall impose the general
safeguard measures upon the positive final determination of the Tariff Commission.
Nothing in the whereas clauses or the invisible ink provisions of the SMA can
magically delete the words positive final determination and Tariff Commission from
Section 5.

VI. On Forum-Shopping

We remain convinced that there was no willful and deliberate forum-shopping in


this case by Southern Cross. The causes of action that animate this present petition
for review and the petition for review with the CTA are distinct from each other, even
though they relate to similar factual antecedents. Yet it also appears that contrary to

the undertaking signed by the President of Southern Cross, Hironobu Ryu, to inform
this Court of any similar action or proceeding pending before any court, tribunal or
agency within five (5) days from knowledge thereof, Southern Cross informed this
Court only on 12 August 2003 of the petition it had filed with the CTA eleven days
earlier. An appropriate sanction is warranted for such failure, but not the dismissal of
the petition.

VII. Effects of Courts Resolution


Philcemcor argues that the granting of Southern Crosss Petition should not
necessarily lead to the voiding of the Decision of the DTI Secretary dated 5 August
2003 imposing the general safeguard measures. For Philcemcor, the availability of
appeal to the CTA as an available and adequate remedy would have made the Court
of Appeals Decision merely erroneous or irregular, but not void. Moreover, the
said Decision merely required the DTI Secretary to render a decision, which could
have very well been a decision not to impose a safeguard measure; thus, it could not
be said that the annulled decision resulted from the judgment of the Court of Appeals.

Respondent DTI Secretary is hereby ENJOINED from taking any further action
on the pending Petition for Extension of the Safeguard Measure.
Hironobu Ryu, President of petitioner Southern Cross Cement Corporation, and
Angara Abello Concepcion Regala & Cruz, counsel petitioner, are hereby given FIVE
(5) days from receipt of this Resolution to EXPLAIN why they should not be meted
disciplinary sanction for failing to timely inform the Court of the filing of Southern
Crosss Petition for Review with the Court of Tax Appeals, as adverted to earlier in
this Resolution.
SO ORDERED.
Puno, Quisumbing, Austria-Martinez, Callejo, Sr., Azcuna, ChicoNazario, and Garcia, JJ., concur.
Davide, Jr., C.J., Ynares-Santiago, Sandoval-Gutierrez, and Carpio-Morales,
JJ., joins J. Panganiban in his Separate Opinion.
Panganiban, J., see separate opinion.
Carpio, J., no part.
Corona, J., on official leave.

The Court of Appeals Decision was annulled precisely because the appellate
court did not have the power to rule on the petition in the first place. Jurisdiction is
necessarily the power to decide a case, and a court which does not have the power to
adjudicate a case is one that is bereft of jurisdiction. We find no reason to disturb our
earlier finding that the Court of Appeals Decision is null and void.
At the same time, the Court in its Decision paid particular heed to the
peculiarities attaching to the 5 August 2003 Decision of the DTI Secretary. In the DTI
Secretarys Decision, he expressly stated that as a result of the Court of
Appeals Decision, there is no legal impediment for the Secretary to decide on the
application. Yet the truth remained that there was a legal impediment, namely, that
the decision of the appellate court was not yet final and executory. Moreover, it was
declared null and void, and since the DTI Secretary expressly denominated the Court
of Appeals Decision as his basis for deciding to impose the safeguard measures, the
latter decision must be voided as well. Otherwise put, without the Court of
AppealsDecision, the DTI Secretarys Decision of 5 August 2003 would not have
been rendered as well.
Accordingly, the Court reaffirms as a nullity the DTI Secretarys Decision dated 5
August 2003. As a necessary consequence, no further action can be taken on
Philcemcors Petition for Extension of the Safeguard Measure. Obviously, if the
imposition of the general safeguard measure is void as we declared it to be, any
extension thereof should likewise be fruitless. The proper remedy instead is to file a
new application for the imposition of safeguard measures, subject to the conditions
prescribed by the SMA. Should this step be eventually availed of, it is only hoped that
the parties involved would content themselves in observing the proper procedure,
instead of making a mockery of the rule of law.
WHEREFORE, respondents Motions for Reconsideration are DENIED WITH
FINALITY.

EN BANC

[G.R. No. 161414. January 17, 2005]

SULTAN OSOP B. CAMID, petitioner, vs. THE OFFICE OF THE PRESIDENT,


DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT,
AUTONOMOUS REGION IN MUSLIM MINDANAO, DEPARTMENT of
FINANCE, DEPARTMENT of BUDGET AND MANAGEMENT,
COMMISSION ON AUDIT, and the CONGRESS OF THE PHILIPPINES
(HOUSE of REPRESENTATIVES AND SENATE), respondents.
DECISION
TINGA, J.:
This Petition for Certiorari presents this Court with the prospect of our
[1]
own Brigadoon the municipality of Andong, Lanao del Surwhich like its
counterpart in filmdom, is a town that is not supposed to exist yet is anyway insisted
by some as actually alive and thriving. Yet unlike in the movies, there is nothing
mystical, ghostly or anything even remotely charming about the purported existence
of Andong. The creation of the putative municipality was declared void ab initio by this
Court four decades ago, but the present petition insists that in spite of this
insurmountable obstacle Andong thrives on, and hence, its legal personality should
be given judicial affirmation. We disagree.

The factual antecedents derive from the promulgation of our ruling in Pelaez v.
Auditor General[2] in 1965. As discussed therein, then President Diosdado Macapagal
issued several Executive Orders[3] creating thirty-three (33) municipalities in
Mindanao. Among them was Andong in Lanao del Sur which was created by virtue of
[4]
Executive Order No. 107.
These executive orders were issued after legislative bills for the creation of
municipalities involved in that case had failed to pass Congress. [5] President
Diosdado Macapagal justified the creation of these municipalities citing his powers
under Section 68 of the Revised Administrative Code. Then Vice-President
Emmanuel Pelaez filed a special civil action for a writ of prohibition, alleging in main
that the Executive Orders were null and void, Section 68 having been repealed by
Republic Act No. 2370,[6] and said orders constituting an undue delegation of
[7]
legislative power.
After due deliberation, the Court unanimously held that the challenged Executive
Orders were null and void. A majority of five justices, led by the ponente, Justice (later
Chief Justice) Roberto Concepcion, ruled that Section 68 of the Revised
Administrative Code did not meet the well-settled requirements for a valid delegation
of legislative power to the executive branch, [8] while three justices opined that the
nullity of the issuances was the consequence of the enactment of the 1935
Constitution, which reduced the power of the Chief Executive over local
governments.[9] Pelaez was disposed in this wise:
WHEREFORE, the Executive Orders in question are declared null and void ab initio and the
respondent permanently restrained from passing in audit any expenditure of public funds in
implementation of said Executive Orders or any disbursement by the municipalities above
referred to. It is so ordered. [10]
Among the Executive Orders annulled was Executive Order No. 107 which
created the Municipality of Andong. Nevertheless, the core issue presented in the
present petition is the continued efficacy of the judicial annulment of the Municipality
of Andong.
Petitioner Sultan Osop B. Camid (Camid) represents himself as a current
[11]
resident of Andong, suing as a private citizen and taxpayer whose locus standi is
of public and paramount interest especially to the people of the Municipality of
[12]
Andong, Province of Lanao del Sur. He alleges that Andong has metamorphosed
into a full-blown municipality with a complete set of officials appointed to handle
essential services for the municipality and its constituents, [13] even though he
concedes that since 1968, no person has been appointed, elected or qualified to
[14]
serve any of the elective local government positions of Andong. Nonetheless, the
municipality of Andong has its own high school, Bureau of Posts, a Department of
Education, Culture and Sports office, and at least seventeen (17) barangay units
with their own respective chairmen.[15] From 1964 until 1972, according to Camid, the
public officials of Andong have been serving their constituents through the minimal
means and resources with least (sic) honorarium and recognition from the Office of
the then former President Diosdado Macapagal. Since the time of Martial Law in
1972, Andong has allegedly been getting by despite the absence of public funds, with
[16]
the Interim Officials serving their constituents in their own little ways and means.

In support of his claim that Andong remains in existence, Camid presents to this
Court a Certification issued by the Office of the Community Environment and Natural
Resources (CENRO) of the Department of Environment and Natural Resources
(DENR) certifying the total land area of the Municipality of Andong, created under
[17]
Executive Order No. 107 issued [last] October 1, 1964. He also submits
a Certification issued by the Provincial Statistics Office of Marawi City concerning the
population of Andong, which is pegged at fourteen thousand fifty nine (14,059) strong.
Camid also enumerates a list of governmental agencies and private groups that
allegedly recognize Andong, and notes that other municipalities have recommended
to the Speaker of the Regional Legislative Assembly for the immediate
implementation of the revival or re-establishment of Andong.[18]
The petition assails a Certification dated 21 November 2003, issued by the
Bureau of Local Government Supervision of the Department of Interior and Local
Government (DILG).[19] TheCertification enumerates eighteen (18) municipalities
certified as existing, per DILG records. Notably, these eighteen (18) municipalities
are among the thirty-three (33), along with Andong, whose creations were voided by
this Court in Pelaez. These municipalities are Midaslip, Pitogo, Naga, and Bayog in
Zamboanga del Sur; Siayan and Pres. Manuel A. Roxas in Zamboanga del Norte;
Magsaysay, Sta. Maria and New Corella in Davao; Badiangan and Mina in Iloilo;
Maguing in Lanao del Sur; Gloria in Oriental Mindoro; Maasim in Sarangani;
Kalilangan and Lantapan in Bukidnon; and Maco in Compostela Valley.[20]
Camid imputes grave abuse of discretion on the part of the DILG in not
classifying [Andong] as a regular existing municipality and in not including said
municipality in its records and official database as [an] existing regular
municipality.[21] He characterizes such non-classification as unequal treatment to the
detriment of Andong, especially in light of the current recognition given to the eighteen
(18) municipalities similarly annulled by reason of Pelaez. As appropriate relief,
Camid prays that the Court annul the DILG Certification dated 21 November 2003;
direct the DILG to classify Andong as a regular existing municipality; all public
respondents, to extend full recognition and support to Andong; the Department of
Finance and the Department of Budget and Management, to immediately release the
internal revenue allotments of Andong; and the public respondents, particularly the
DILG, to recognize the Interim Local Officials of Andong. [22]
Moreover, Camid insists on the continuing validity of Executive Order No. 107.
He argues that Pelaez has already been modified by supervening events consisting of
subsequent laws and jurisprudence. Particularly cited is our Decision in Municipality
of San Narciso v. Hon. Mendez,[23] wherein the Court affirmed the unique status of the
[24]
municipality of San Andres in Quezon as a de facto municipal corporation. Similar
to Andong, the municipality of San Andres was created by way of executive order,
precisely the manner which the Court in Pelaez had declared as unconstitutional.
Moreover, San Narciso cited, as Camid does, Section 442(d) of the Local
Government Code of 1991 as basis for the current recognition of the impugned
municipality. The provision reads:
Section 442. Requisites for Creation. - xxx
(d) Municipalities existing as of the date of the effectivity of this Code shall continue to exist
and operate as such. Existing municipal districts organized pursuant to presidential issuances
or executive orders and which have their respective sets of elective municipal officials holding

office at the time of the effectivity of (the) Code shall henceforth be considered as regular
municipalities.[25]
There are several reasons why the petition must be dismissed. These can be
better discerned upon examination of the proper scope and application of Section
442(d), which does not sanction the recognition of just any municipality. This point
shall be further explained further on.
Notably, as pointed out by the public respondents, through the Office of the
Solicitor General (OSG), the case is not a fit subject for the special civil actions of
certiorari and mandamus, as it pertains to the de novo appreciation of factual
questions. There is indeed no way to confirm several of Camids astonishing factual
allegations pertaining to the purported continuing operation of Andong in the decades
since it was annulled by this Court. No trial court has had the opportunity to ascertain
the validity of these factual claims, the appreciation of which is beyond the function of
this Court since it is not a trier of facts.
The importance of proper factual ascertainment cannot be gainsaid, especially
in light of the legal principles governing the recognition of de facto municipal
corporations. It has been opined that municipal corporations may exist by prescription
where it is shown that the community has claimed and exercised corporate functions,
with the knowledge and acquiescence of the legislature, and without interruption or
objection for period long enough to afford title by prescription. [26] These municipal
corporations have exercised their powers for a long period without objection on the
part of the government that although no charter is in existence, it is presumed that
they were duly incorporated in the first place and that their charters had been
lost.[27] They are especially common in England, which, as well-worth noting, has
existed as a state for over a thousand years. The reason for the development of that
rule in England is understandable, since that country was settled long before the
Roman conquest by nomadic Celtic tribes, which could have hardly been expected to
obtain a municipal charter in the absence of a national legal authority.

serve Camids ultimate cause the recognition of Andong. Neither does


the Certification even expressly refute the claim that Andong still exists, as there is
nothing in the document that comments on the present status of Andong. Perhaps
theCertification is assailed before this Court if only to present an actual issuance,
rather than a long-standing habit or pattern of action that can be annulled through the
special civil action of certiorari. Still, the relation of the Certification to Camids central
argument is forlornly strained.
These disquisitions aside, the central issue remains whether a municipality
whose creation by executive fiat was previously voided by this Court may attain
recognition in the absence of any curative or reimplementing statute. Apparently, the
question has never been decided before, San Narciso and its kindred cases
pertaining as they did to municipalities whose bases of creation were dubious yet
were never judicially nullified. The effect of Section 442(d) of the Local Government
Code on municipalities such as Andong warrants explanation. Besides, the residents
of Andong who belabor under the impression that their town still exists, much less
those who may comport themselves as the municipalitys Interim Government,
would be well served by a rude awakening.
The Court can employ a simplistic approach in resolving the substantive aspect
of the petition, merely by pointing out that the Municipality of Andong never
existed.[29] Executive Order No. 107, which established Andong, was declared null
and void ab initio in 1965 by this Court in Pelaez, along with thirty-three (33) other
executive orders. The phrase ab initio means from the beginning,[30] at
[31]
[32]
first, from the inception.
Pelaez was never reversed by this Court but rather it
was expressly affirmed in the cases of Municipality of San Joaquin v.
Siva,[33] Municipality of Malabang v. Benito,[34] and Municipality of Kapalong v.
Moya.[35] No subsequent ruling by this Court declared P