You are on page 1of 171

THIRD DIVISION

LOURDES L. ERISTINGCOL, - versus CA and RANDOLPH C. LIMJOCO,

G.R. No. 167702


March 20, 2009
DECISION

NACHURA, J.:
The facts, as narrated by the CA, are simple.
[Petitioner Lourdes] Eristingcol is an owner of a residential lot in Urdaneta Village (or
village), Makati City and covered by Transfer Certificate of Title No. 208586. On the other hand,
[respondent Randolph] Limjoco, [Lorenzo] Tan and [June] Vilvestre were the former president
and chairman of the board of governors (or board), construction committee chairman and
village manager of [Urdaneta Village Association Inc.] UVAI, respectively. UVAI is an
association of homeowners at Urdaneta Village.
[Eristingcols] action [against UVAI, Limjoco, Tan and Vilvestre] is founded on the
allegations that in compliance with the National Building Code and after UVAIs approval of her
building plans and acceptance of the construction bond and architects fee, Eristingcol started
constructing a house on her lot with concrete canopy directly above the main door and
highway; that for alleged violation of its Construction Rules and Regulations (or CRR) on
Set Back Line vis-a-vis the canopy easement, UVAI imposed on her a penalty of P400,000.00
and barred her workers and contractors from entering the village and working on her property;
that the CRR, particularly on Set Back Line, is contrary to law; and that the penalty is
unwarranted and excessive.
On February 9, 1999, or a day after the filing of the complaint, the parties reached a
temporary settlement whereby UVAI, Limjoco, Tan and Vilvestre executed an undertaking which
allowed Eristingcols workers, contractors and suppliers to leave and enter the village, subject
only to normal security regulations of UVAI.
On February 26, 1999, UVAI, Limjoco, Tan and Vilvestre filed a motion to dismiss on
ground of lack of jurisdiction over the subject matter of the action. They argued that it is the
Home Insurance Guaranty Corporation (or HIGC) which has jurisdiction over intra-corporate
disputes involving homeowners associations, pursuant to Exec. Order No. 535, Series of 1979,
as amended by Exec. Order No. 90, Series of 1986.

Opposing the motion, Eristingcol alleged, among others, that UVAI, Limjoco, Tan and
Vilvestre did not comply with the mandatory provisions of Secs. 4 and 6, Rule 15 of the 1997
Rules of Civil Procedure and are estopped from questioning the jurisdiction of the [RTC] after
they voluntarily appeared therein and embraced its authority by agreeing to sign an
Undertaking.
On May 20, 1999, Eristingcol filed an amended complaint by (i) impleading Manuel
Carmona (or Carmona) and Rene Cristobal (or Cristobal), UVAIs newly-elected president
and chairman of the board and newly-designated construction committee chairman, respectively, as
additional defendants and (ii) increasing her claim for moral damages against each petitioner
from P500,000.00 to P1,000,000.00.
On May 25, 1999, Eristingcol filed a motion for production and inspection of documents,
which UVAI, Limjoco, Tan, Vilvestre, Carmona and Cristobal opposed. The motion sought to
compel [UVAI and its officers] to produce the documents used by UVAI as basis for the imposition
of the P400,000.00 penalty on Eristingcol as well as letters and documents showing that UVAI had
informed the other homeowners of their violations of the CRR.
RTC:
Favored Eristingcol
for lack of merit, the defendants Motion to Dismiss is Denied
plaintiffs motion to declare defendants in default and for contempt are Denied
ratiocinated that [UVAI, Limjoco, Tan and Vilvestre] may not assail its jurisdiction after
they voluntarily entered their appearance, sought reliefs therein, and embraced its
authority by agreeing to sign an undertaking to desist from prohibiting (Eristingcols)
workers from entering the village.
On June 7, 1999, Eristingcol filed a motion reiterating her earlier motion for
production and inspection of documents.
On June 8, 1999, [UVAI, Limjoco, Tan and Vilvestre] moved for partial
reconsideration of the order dated May 26, 1999. Eristingcol opposed the motion.
On March 24, 2001, the [RTC] issued an order granting Eristingcols motion for
production and inspection of documents, while on March 26, 2001, it issued an order
denying [UVAIs, Limjocos, Tans and Vilvestres] motion for partial reconsideration.
On May 10, 2001, [UVAI, Limjoco, Tan and Vilvestre] elevated the dispute before
[the CA] via [a] petition for certiorari alleging that the [RTC] acted without jurisdiction in
issuing the orders of May 26, 1999 and March 24 and 26, 2001. 1[3]
1

CA:
issued the herein assailed Decision reversing the RTC Order and dismissing Eristingcols
complaint for lack of jurisdiction.
Issue:
Whether it is the RTC or the Housing and Land Use Regulatory Board (HLURB) which has
jurisdiction over the subject matter of Eristingcols complaint.
Eristingcol explains that only respondent Limjoco was retained in the instant petition as her
discussions with UVAI and the other defendants revealed their lack of participation in the workstoppage order which was supposedly single-handedly thought of and implemented by Limjoco.

The foregoing clarification notwithstanding, the rest of the defendants should have been
impleaded as respondents in this petition considering that the complaint before the RTC,
where the petition before the CA and the instant petition originated, has yet to be amended.
Furthermore, the present petition maintains that it was serious error for the CA to have ruled that the
RTC did not have jurisdiction over a complaint for declaration of nullity of UVAIs Construction Rules.
Clearly, UVAI and the rest of the defendants should have been impleaded herein as
respondents.
Section 4(a), Rule 45 of the Rules of Court, requires that the petition shall state the full
name of the appealing party as petitioner and the adverse party as respondent, without
impleading the lower courts or judges thereof either as petitioners or respondents. As the
losing party in defendants petition for certiorari before the CA, Eristingcol should have impleaded all
petitioners, the winning and adverse parties therein.
On this score alone, the present petition could have been dismissed outright. 2[5]
However, to settle the issue of jurisdiction, we have opted to dispose of this case on the
merits.
2

Despite her having dropped UVAI, Lorenzo Tan (Tan) and June Vilvestre (Vilvestre) from this
suit, Eristingcol insists that her complaint against UVAI and the defendants was properly filed before
the RTC as it prays for the declaration of nullity of UVAIs Construction Rules and asks that damages
be paid by Limjoco and the other UVAI officers who had inflicted injury upon her. Eristingcol
asseverates that since the case before the RTC is one for declaration of nullity, the nature of the
question that is the subject of controversy, not just the status or relationship of the parties, should
determine which body has jurisdiction. In any event, Eristingcol submits that the RTCs jurisdiction
over the case was foreclosed by the prayer of UVAI and its officers, including Limjoco, for affirmative
relief from that court.
Well-settled in jurisprudence is the rule that in determining which body has jurisdiction
over a case, we should consider not only the status or relationship of the parties, but also the
nature of the question that is the subject of their controversy. To determine the nature of an
action and which court has jurisdiction, courts must look at the averments of the complaint or
petition and the essence of the relief prayed for.
XXX XXX XXX
At the outset, we note that the relationship between the parties is not in dispute and is, in fact,
admitted by Eristingcol in her complaint. Nonetheless, Eristingcol is adamant that the subject
matter of her complaint is properly cognizable by the regular courts and need not be filed
before a specialized body or commission.
SC:
Eristingcols contention is wrong.
Ostensibly, Eristingcols complaint, designated as one for declaration of nullity, falls
within the regular courts jurisdiction. However, we have, on more than one occasion, held that
the caption of the complaint is not determinative of the nature of the action.3[9]
A scrutiny of the allegations contained in Eristingcols complaint reveals that the nature
of the question subject of this controversy only superficially delves into the validity of UVAIs
3

Construction Rules. The complaint actually goes into the proper interpretation and application of
UVAIs by-laws, specifically its construction rules. Essentially, the conflict between the parties arose
as Eristingcol, admittedly a member of UVAI, now wishes to be exempt from the application of the
canopy requirement set forth in UVAIs Construction Rules. Significantly, Eristingcol does not assail
the height restriction of UVAIs Construction Rules, as she has readily complied therewith.
Distinctly in point is China Banking Corp. v. Court of Appeals,4[10] which upheld the
jurisdiction of the Securities and Exchange Commission (SEC) over the suit and recognized its
special competence to interpret and apply Valley Golf and Country Club, Inc.s (VGCCIs) by-laws.
We ruled, thus:
In this case, the need for the SECs technical expertise cannot be over-emphasized
involving as it does the meticulous analysis and correct interpretation of a corporations bylaws as well as the applicable provisions of the Corporation Code in order to determine the
validity of VGCCIs claims. The SEC, therefore, took proper cognizance of the instant case.
In stark contrast, the relationship between the parties in the instant case is well-established.
Given this admitted relationship, the privity of contract between UVAI and Eristingcol is palpable,
despite the latters deft phraseology of its primary cause of action as a declaration of nullity of UVAIs
Construction Rules. In short, the crux of Eristingcols complaint is UVAIs supposed arbitrary
implementation of its construction rules against Eristingcol, a member thereof.
As regards the defendants supposed embrace of the RTCs jurisdiction by appearing
thereat and undertaking to desist from prohibiting Eristingcols workers from entering the
village, suffice it to state that the invocation of the doctrine in Tijam, et al. v. Sibonghanoy, et
al.5[16] is quite a long stretch.
The factual milieu obtaining in Tijam and in the case at bench are worlds apart. As
found by the CA, defendants appearance before the RTC was pursuant to, and in compliance
with, a subpoena issued by that court in connection with Eristingcols application for a
Temporary Restraining Order (TRO). On defendants supposed agreement to sign the
Undertaking allowing Eristingcols workers, contractors, and suppliers to enter and exit the
4

village, this temporary settlement cannot be equated with full acceptance of the RTCs
authority, as what actually transpired in Tijam.
In fine, based on the allegations contained in Eristingcols complaint, it is the HLURB,
not the RTC, which has jurisdiction over this case.
WHEREFORE, premises considered, the petition is DENIED. The Decision of the Court of
Appeals in CA-G.R. SP. No. 64642 is hereby AFFIRMED. Costs against petitioner.
SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 131282

January 4, 2002

GABRIEL L. DUERO, petitioner,


vs.
HON.COURT OF APPEALS, and BERNARDO A. ERADEL, respondents.
QUISUMBING, J.:
The pertinent facts are as follow.
Sometime in 1988, according to petitioner, private respondent Bemardo Eradel2 entered and
occupied petitioner's land covered by Tax Declaration No. A-16-13-302, located in Baras, San
Miguel, Surigao del Sur. As shown in the tax declaration, the land had an assessed value of
P5,240. When petitioner politely informed private respondent that the land was his and
requested the latter to vacate the land, private respondent refused, but instead threatened him
with bodily harm. Despite repeated demands, private respondent remained steadfast in his
refusal to leave the land.
On June 16, 1995, petitioner filed before the RTC a complaint for Recovery of Possession and
Ownership with Damages and Attorney's Fees against private respondent and two others,
namely, Apolinario and Inocencio Ruena. Petitioner appended to the complaint the aforementioned
tax declaration. The counsel of the Ruenas asked for extension to file their Answer and was given
until July 18, 1995. Meanwhile, petitioner and the, Ruenas executed a compromise agreement, which
became the trial court's basis for a partial judgment rendered on January 12, 1996. In this agreement,
the Ruenas through their counsel, Atty. Eusebio Avila, entered into a Compromise Agreement with
herein petitioner, Gabriel Duero. Inter alia, the agreement stated that the Ruenas recognized
and bound themselves to respect the ownership and possession of Duero. 3 Herein private

respondent Eradel was not a party to the agreement, and he was declared in default for failure
to file his answer to the complaint. 4
Petitioner presented his evidence ex parte on February 13, 1996. On May 8, 1996, judgment
was rendered in his favor, and private respondent was ordered to peacefully vacate and turn
over Lot No.1065 Cad. 537-D to petitioner; pay petitioner P2,000 annual rental from 1988 up the
time he vacates the land, and P5,000 as attorney's fees and the cost of the suit.5 Private
respondent received a copy of the decision on May 25, 1996.
On June 10, 1996, private respondent filed a Motion for New Trial, alleging that he has been
occupying the land as a tenant of Artemio Laurente, Sr., since 1958. He explained that he
turned over the complaint and summons to Laurente in the honest belief that as landlord, the
latter had a better right to the land and was responsible to defend any adverse claim on it.
However, the trial court denied the motion for new trial.
Meanwhile, RED Conflict Case No.1029, an administrative case between petitioner and
applicant-contestants Romeo, Artemio and Jury Laurente, remained pending with the Office of
the Regional Director of the Department of Environment and Natural Resources in Davao City.
Eventually, it was forwarded to the DENR Regional Office in Prosperidad, Agusan del Sur .
On July 24, 1996, private respondent filed before the RTC a Petition for Relief from Judgment,
reiterating the same allegation in his Motion for New Trial. He averred that unless there is a
determination on who owned the land, he could not be made to vacate the land. He also
averred that the judgment of the trial court was void inasmuch as the heirs of Artemio
Laurente, Sr., who are indispensable parties, were not impleaded.
On September 24, 1996, Josephine, Ana Soledad and Virginia, all surnamed Laurente,
grandchildren of Artemio who were claiming ownership of the land, filed a Motion for
Intervention. The RTC denied the motion.
On October 8, 1996, the trial court issued an order denying the Petition for Relief from
Judgment. In a Motion for Reconsideration of said order, private respondent alleged that the
RTC had no jurisdiction over the case, since the value of the land was only P5,240 and
therefore it was under the jurisdiction of the municipal trial court. On November 22, 1996, the
RTC denied the motion for reconsideration.
On January 22, 1997, petitioner filed a Motion for Execution, which the RTC granted on January
28. On February 18, 1997, Entry of Judgment was made of record and a writ of execution was issued
by the RTC on February 27,1997. On March 12,1997, private respondent filed his petition for
certiorari before the Court of Appeals.
The Court of Appeals gave due course to the petition, maintaining that private respondent is not
estopped from assailing the jurisdiction 'of the RTC, Branch 27 in Tandag, Surigao del Sur, when
private respondent filed with said court his Motion for Reconsideration And/Or Annulment of
Judgment. The Court of Appeals decreed as follows:
IN THE LIGHT OF ALL THE FOREGOING, the Petition is GRANTED. All proceedings in
"Gabriel L. Duero vs. Bernardo Eradel, et. al. Civil Case 1075" filed in the Court a quo,
including its Decision, Annex "E" of the petition, and its Orders and Writ of Execution and the
turn over of the property to the Private Respondent by the Sheriff of the Court a quo, are
declared null and void and hereby SET ASIDE, No pronouncement as to costs.

SO ORDERED.6
Petitioner now comes before this Court, alleging that the Court of Appeals acted with grave abuse of
discretion amounting to lack or in excess of jurisdiction when it held that:
I.
...THE LOWER COURT HAS NO JURISDICTION OVER THE SUBJECT MA TTER OF THE
CASE.
II
...PRIVATE RESPONDENT WAS NOT THEREBY ESTOPPED FROM QUESTIONING THE
JURISDICTION OF THE LOWER COURT EVEN AFTER IT SUCCESSFULLY SOUGHT
AFFIRMATIVE RELIEF THEREFROM.
III
...THE FAlLURE OF PRIVATE RESPONDENT TO FILE HIS ANSWER IS JUSTIFIED.

The main issue before us is whether the Court of Appeals gravely abused its discretion when it held
that the municipal trial court had jurisdiction, and that private respondent was not estopped from
assailing the jurisdiction of the RTC after he had filed several motions before it. The secondary issue
is whether the Court of appeals erred in holding that private respondent's failure to file an answer to
the complaint was justified.
At the outset, however, we note that petitioner through counsel submitted to this Court pleadings that
contain inaccurate statements. Thus, on page 5 of his petition, 8 we find that to bolster the claim that
the appellate court erred in holding that the RTC had no jurisdiction, petitioner pointed to Annex E9 of
his petition which supposedly is the Certification issued by the Municipal Treasurer of San Miguel,
Surigao, specifically containing the notation, "Note: Subject for General Revision Effective 1994." But
it appears that Annex E of his petition is not a Certification but a xerox copy of a Declaration of Real
Property. Nowhere does the document contain a notation, "Note: Subject for General Revision
Effective 1994." Petitioner also asked this Court to refer to Annex F,10 where he said the zonal value
of the disputed land was P1.40 per sq.m., thus placing the computed value of the land at the time the
complaint was filed before the RTC at P57,113.98, hence beyond the jurisdiction of the municipal
court and within the jurisdiction of the regional trial court. However, we find that these annexes are
both merely xerox copies. They are obviously without evidentiary weight or value.
Coming now to the principal issue, petitioner contends that respondent appellate court acted with
grave abuse of discretion. By "grave abuse of discretion" is meant such capricious and whimsical
exercise of judgment which is equivalent to an excess or a lack of jurisdiction. The abuse of discretion
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. 11 But here we find that
in its decision holding that the municipal court has jurisdiction over the case and that private
respondent was not estopped from questioning the jurisdiction of the RTC, respondent Court of
Appeals discussed the facts on which its decision is grounded as well as the law and jurisprudence
on the matter.12 Its action was neither whimsical nor capricious.
Was private respondent estopped from questioning the jurisdiction of the RTC? In this case, we are in
agreement with the Court of Appeals that he was not. While participation in all stages of a case before

the trial court, including invocation of its authority in asking for affirmative relief, effectively bars a
party by estoppel from challenging the court's jurisdiction, 13 we note that estoppel has become an
equitable defense that is both substantive and remedial and its successful invocation can bar a right
and not merely its equitable enforcement. 14 Hence, estoppel ought to be applied with caution. For
estoppel to apply, the action giving rise thereto must be unequivocal and intentional because, if
misapplied, estoppel may become a tool of injustice. 15
In the present case, private respondent questions the jurisdiction of RTC in Tandag, Surigao del Sur,
on legal grounds. Recall that it was petitioner who filed the complaint against private respondent and
two other parties before the said court,16 believing that the RTC had jurisdiction over his complaint.
But by then, Republic Act 769117 amending BP 129 had become effective, such that jurisdiction
already belongs not to the RTC but to the MTC pursuant to said amendment. Private respondent, an
unschooled farmer, in the mistaken belief that since he was merely a tenant of the late Artemio
Laurente Sr., his landlord, gave the summons to a Hipolito Laurente, one of the surviving heirs of
Artemio Sr., who did not do anything about the summons. For failure to answer the complaint, private
respondent was declared in default. He then filed a Motion for New Trial in the same court and
explained that he defaulted because of his belief that the suit ought to be answered by his landlord. In
that motion he stated that he had by then the evidence to prove that he had a better right than
petitioner over the land because of his long, continuous and uninterrupted possession as bona-fide
tenant-lessee of the land.18But his motion was denied. He tried an alternative recourse. He filed
before the RTC a Motion for Relief from Judgment. Again, the same court denied his motion, hence
he moved for reconsideration of the denial. In his Motion for Reconsideration, he raised for the first
time the RTC's lack of jurisdiction. This motion was again denied. Note that private respondent raised
the issue of lack of jurisdiction, not when the case was already on appeal, but when the case, was still
before the RTC that ruled him in default, denied his motion for new trial as well as for relief from
judgment, and denied likewise his two motions for reconsideration. After the RTC still refused to
reconsider the denial of private respondent's motion for relief from judgment, it went on to issue the
order for entry of judgment and a writ of execution.
Under these circumstances, we could not fault the Court of Appeals in overruling the RTC and in
holding that private respondent was not estopped from questioning the jurisdiction of the regional trial
court. The fundamental rule is that, the lack of jurisdiction of the court over an action cannot be
waived by the parties, or even cured by their silence, acquiescence or even by their express
consent.19 Further, a party may assail the jurisdiction of the court over the action at any stage of the
proceedings and even on appeal.20 The appellate court did not err in saying that the RTC should have
declared itself barren of jurisdiction over the action. Even if private respondent actively participated in
the proceedings before said court, the doctrine of estoppel cannot still be properly invoked against
him because the question of lack of jurisdiction may be raised at anytime and at any stage of the
action.21 Precedents tell us that as a general rule, the jurisdiction of a court is not a question of
acquiescence as a matter of fact, but an issue of conferment as a matter of law.22 Also, neither waiver
nor estoppel shall apply to confer jurisdiction upon a court, barring highly meritorious and exceptional
circumstances.23 The Court of Appeals found support for its ruling in our decision in Javier vs. Court
of Appeals, thus:
x x x The point simply is that when a party commits error in filing his suit or proceeding in a
court that lacks jurisdiction to take cognizance of the same, such act may not at once be
deemed sufficient basis of estoppel. It could have been the result of an honest mistake, or of
divergent interpretations of doubtful legal provisions. If any fault is to be imputed to a party
taking such course of action, part of the blame should be placed on the court which
shall entertain the suit, thereby lulling the parties into believing that they pursued their
remedies in the correct forum. Under the rules, it is the duty of the court to dismiss an action
'whenever it appears that the court has no jurisdiction over the subject matter.' (Sec. 2, Rule 9,

Rules of Court) Should the Court render a judgment without jurisdiction, such judgment may be
impeached or annulled for lack of jurisdiction (Sec. 30, Rule 132, Ibid), within ten (10) years
from the finality of the same. [Emphasis ours.] 24
Indeed, "...the trial court was duty-bound to take judicial notice of the parameters of its jurisdiction and
its failure to do so, makes its decision a 'lawless' thing." 25
Since a decision of a court without jurisdiction is null and void, it could logically never become final
and executory, hence appeal therefrom by writ of error would be out of the question. Resort by private
respondent to a petition for certiorari before the Court of Appeals was in order .
In holding that estoppel did not prevent private respondent from questioning the RTC's jurisdiction,
the appellate court reiterated the doctrine that estoppel must be applied only in exceptional cases, as
its misapplication could result in a miscarriage of justice. Here, we find that petitioner, who claims
ownership of a parcel of land, filed his complaint before a court without appropriate jurisdiction.
Defendant, a farmer whose tenancy status is still pending before the proper administrative agency
concerned, could have moved for dismissal of the case on jurisdictional grounds. But the farmer as
defendant therein could not be expected to know the nuances of jurisdiction and related issues. This
farmer, who is now the private respondent, ought not to be penalized when he claims that he made
an honest mistake when he initially submitted his motions before the RTC, before he realized that the
controversy was outside the RTC's cognizance but within the jurisdiction of the municipal trial court.
To hold him in estoppel as the RTC did would amount to foreclosing his avenue to obtain a proper
resolution of his case. Furthermore, if the RTC's order were to be sustained, he would be evicted from
the land prematurely, while RED Conflict Case No.1029 would remain unresolved. Such eviction on a
technicality if allowed could result in an injustice, if it is later found that he has a legal right to till the
land he now occupies as tenant-lessee.1wphi1.nt
Having determined that there was no grave abuse of discretion by the appellate court in ruling that
private respondent was not estopped from questioning the jurisdiction of the RTC, we need not tarry
to consider in detail the second issue. Suffice it to say that, given the circumstances in this case, no
error was committed on this score by respondent appellate court. Since the RTC had no jurisdiction
over the case, private respondent had justifiable reason in law not to file an answer, aside from the
fact that he believed the suit was properly his landlord's concern.
WHEREFORE, the petition is DISMISSED. The assailed decision of the Court of Appeals is
AFFIRMED. The decision of the Regional Trial Court in Civil Case No.1075 entitled Gabriel L. Duero
vs. Bernardo Eradel, its Order that private respondent turn over the disputed land to petitioner, and
the Writ of Execution it issued, are ANNULLED and SET ASIDE. Costs against petitioner .
SO ORDERED.

THIRD DIVISION
[G.R. No. 144025. December 27, 2002]
SPS. RENE GONZAGA and LERIO GONZAGA, petitioners, vs. HON. COURT OF APPEALS,
Second Division, Manila, HON. QUIRICO G. DEFENSOR, Judge, RTC, Branch 36, Sixth Judicial
Region, Iloilo City, and LUCKY HOMES, INC., represented by WILSON JESENA, JR., as Manager,
respondents.
DECISION
CORONA, J.:
Before this Court is a petition for review on certiorari seeking the reversal of the decision 6[1] of the
Court of Appeals dated December 29, 1999 and its resolution dated June 1, 2000 in CA-G.R. SP No.
54587.
The records disclose that, sometime in 1970, petitioner-spouses purchased a parcel of land from
private respondent Lucky Homes, Inc., situated in Iloilo and containing an area of 240 square meters.
Said lot was specifically denominated as Lot No. 19 under Transfer Certificate of Title (TCT) No.
28254 and was mortgaged to the Social Security System (SSS) as security for their housing loan.
Petitioners then started the construction of their house, not on Lot No. 19 but on Lot No. 18, as
private respondent mistakenly identified Lot No. 18 as Lot No. 19. Upon realizing its error, private
6

respondent, through its general manager, informed petitioners of such mistake but the latter offered to
buy Lot No. 18 in order to widen their premises. Thus, petitioners continued with the construction of
their house. However, petitioners defaulted in the payment of their housing loan from SSS.
Consequently, Lot No. 19 was foreclosed by SSS and petitioners certificate of title was cancelled and
a new one was issued in the name of SSS. After Lot No. 19 was foreclosed, petitioners offered to
swap Lot Nos. 18 and 19 and demanded from private respondent that their contract of sale be
reformed and another deed of sale be executed with respect to Lot No. 18, considering that their
house was built therein. However, private respondent refused. This prompted petitioners to file, on
June 13, 1996, an action for reformation of contract and damages with the Regional Trial Court of
Iloilo City, Branch 36, which was docketed as Civil Case No. 17115.
On January 15, 1998, the trial court 7[2] rendered its decision dismissing the complaint for lack of merit
and ordering herein petitioners to pay private respondent the amount of P10,000 as moral damages
and another P10,000 as attorneys fees. The pertinent conclusion of the trial court reads as follows:
Aware of such fact, the plaintiff nonetheless continued to stay in the premises of Lot 18 on the
proposal that he would also buy the same. Plaintiff however failed to buy Lot 18 and likewise
defaulted in the payment of his loan with the SSS involving Lot 19. Consequently Lot 19 was
foreclosed and sold at public auction. Thereafter TCT No. T-29950 was cancelled and in lieu thereof
TCT No. T-86612 (Exh. 9) was issued in favor of SSS. This being the situation obtaining, the
reformation of instruments, even if allowed, or the swapping of Lot 18 and Lot 19 as earlier proposed
by the plaintiff, is no longer feasible considering that plaintiff is no longer the owner of Lot 19,
otherwise, defendant will be losing Lot 18 without any substitute therefore (sic). Upon the other hand,
plaintiff will be unjustly enriching himself having in its favor both Lot 19 which was earlier mortgaged
by him and subsequently foreclosed by SSS, as well as Lot 18 where his house is presently standing.
The logic and common sense of the situation lean heavily in favor of the defendant. It is evident that
what plaintiff had bought from the defendant is Lot 19 covered by TCT No. 28254 which parcel of land
has been properly indicated in the instruments and not Lot 18 as claimed by the plaintiff. The
contracts being clear and unmistakable, they reflect the true intention of the parties, besides the
plaintiff failed to assail the contracts on mutual mistake, hence the same need no longer be
reformed.8[3]
On June 22, 1998, a writ of execution was issued by the trial court. Thus, on September 17, 1998,
petitioners filed an urgent motion to recall writ of execution, alleging that the court a quo had no
jurisdiction to try the case as it was vested in the Housing and Land Use Regulatory Board (HLURB)
pursuant to PD 957 (The Subdivision and Condominium Buyers Protective Decree). Conformably,
petitioners filed a new complaint against private respondent with the HLURB. Likewise, on June 30,
1999, petitioner-spouses filed before the Court of Appeals a petition for annulment of judgment,
premised on the ground that the trial court had no jurisdiction to try and decide Civil Case No. 17115.
In a decision rendered on December 29, 1999, the Court of Appeals denied the petition for annulment
of judgment, relying mainly on the jurisprudential doctrine of estoppel as laid down in the case of
Tijam vs. Sibonghanoy.9[4]
7

Their subsequent motion for reconsideration having been denied, petitioners filed this instant petition,
contending that the Court of Appeals erred in dismissing the petition by applying the principle of
estoppel, even if the Regional Trial Court, Branch 36 of Iloilo City had no jurisdiction to decide Civil
Case No. 17115.
At the outset, it should be stressed that petitioners are seeking from us the annulment of a trial court
judgment based on lack of jurisdiction. Because it is not an appeal, the correctness of the judgment
is not in issue here. Accordingly, there is no need to delve into the propriety of the decision rendered
by the trial court.
Petitioners claim that the recent decisions of this Court have already abandoned the doctrine laid
down in Tijam vs. Sibonghanoy.10[5] We do not agree. In countless decisions, this Court has
consistently held that, while an order or decision rendered without jurisdiction is a total nullity and may
be assailed at any stage, active participation in the proceedings in the court which rendered the order
or decision will bar such party from attacking its jurisdiction. As we held in the leading case of Tijam
vs. Sibonghanoy:11[6]
A party may be estopped or barred from raising a question in different ways and for different reasons.
Thus we speak of estoppel in pais, or estoppel by deed or by record, and of estoppel by laches.
x

It has been held that a party cannot invoke the jurisdiction of a court to secure affirmative relief
against his opponent and, after obtaining or failing to obtain such relief, repudiate, or question that
same jurisdiction x x x x [T]he question whether the court had jurisdiction either of the subject matter
of the action or of the parties was not important in such cases because the party is barred from such
conduct not because the judgment or order of the court is valid and conclusive as an adjudication, but
for the reason that such a practice can not be tolerated obviously for reasons of public policy.
Tijam has been reiterated in many succeeding cases. Thus, in Orosa vs. Court of Appeals;12[7] Ang
Ping vs. Court of Appeals;13[8] Salva vs. Court of Appeals;14[9] National Steel Corporation vs. Court of
Appeals;15[10] Province of Bulacan vs. Court of Appeals;16[11] PNOC Shipping and Transport

10

11

12

13

14

15

Corporation vs. Court of Appeals,17[12] this Court affirmed the rule that a partys active participation in
all stages of the case before the trial court, which includes invoking the courts authority to grant
affirmative relief, effectively estops such party from later challenging that same courts jurisdiction.
In the case at bar, it was petitioners themselves who invoked the jurisdiction of the court a quo by
instituting an action for reformation of contract against private respondents. It appears that, in the
proceedings before the trial court, petitioners vigorously asserted their cause from start to finish. Not
even once did petitioners ever raise the issue of the courts jurisdiction during the entire proceedings
which lasted for two years. It was only after the trial court rendered its decision and issued a writ of
execution against them in 1998 did petitioners first raise the issue of jurisdiction and it was only
because said decision was unfavorable to them. Petitioners thus effectively waived their right to
question the courts jurisdiction over the case they themselves filed.
Petitioners should bear the consequence of their act. They cannot be allowed to profit from their
omission to the damage and prejudice of the private respondent. This Court frowns upon the
undesirable practice of a party submitting his case for decision and then accepting the judgment but
only if favorable, and attacking it for lack of jurisdiction if not. 18[13]
Public policy dictates that this Court must strongly condemn any double-dealing by parties who are
disposed to trifle with the courts by deliberately taking inconsistent positions, in utter disregard of the
elementary principles of justice and good faith. 19[14] There is no denying that, in this case, petitioners
never raised the issue of jurisdiction throughout the entire proceedings in the trial court. Instead, they
voluntarily and willingly submitted themselves to the jurisdiction of said court. It is now too late in the
day for them to repudiate the jurisdiction they were invoking all along.
WHEREFORE, the petition for review is hereby DENIED.
SO ORDERED.

16

17

18

19

SECOND DIVISION
[G.R. No. 124644. February 5, 2004]
ARNEL ESCOBAL, petitioner, vs. HON. FRANCIS GARCHITORENA, Presiding Justice of the
Sandiganbayan, Atty. Luisabel Alfonso-Cortez, Executive Clerk of Court IV of the Sandiganbayan,
Hon. David C. Naval, Presiding Judge of the Regional Trial Court of Naga City, Branch 21, Luz N.
Nueca, respondents.
DECISION
CALLEJO, SR., J.:
This is a petition for certiorari with a prayer for the issuance of a temporary restraining order and
preliminary injunction filed by Arnel Escobal seeking the nullification of the remand by the Presiding
Justice of the Sandiganbayan of the records of Criminal Case No. 90-3184 to the Regional Trial Court
(RTC) of Naga City, Branch 21.
The petition at bench arose from the following milieu:
The petitioner is a graduate of the Philippine Military Academy, a member of the Armed Forces of the
Philippines and the Philippine Constabulary, as well as the Intelligence Group of the Philippine
National Police. On March 16, 1990, the petitioner was conducting surveillance operations on drug
trafficking at the Sa Harong Caf Bar and Restaurant located along Barlin St., Naga City. He
somehow got involved in a shooting incident, resulting in the death of one Rodney Rafael N. Nueca.
On February 6, 1991, an amended Information was filed with the RTC of Naga City, Branch 21,
docketed as Criminal Case No. 90-3184 charging the petitioner and a certain Natividad Bombita, Jr.
alias Jun Bombita with murder. The accusatory portion of the amended Information reads:
That on or about March 16, 1990, in the City of Naga, Philippines, and within the jurisdiction of this
Honorable Court by virtue of the Presidential Waiver, dated June 1, 1990, with intent to kill, conspiring
and confederating together and mutually helping each other, did, then and there, willfully, unlawfully
and feloniously attack, assault and maul one Rodney Nueca and accused 2Lt Arnel Escobal armed
with a caliber .45 service pistol shoot said Rodney Nueca thereby inflicting upon him serious, mortal
and fatal wounds which caused his death, and as a consequence thereof, complainant LUZ N.
NUECA, mother of the deceased victim, suffered actual and compensatory damages in the amount of
THREE HUNDRED SIXTY-SEVEN THOUSAND ONE HUNDRED SEVEN & 95/100 ( P367,107.95)
PESOS, Philippine Currency, and moral and exemplary damages in the amount of ONE HUNDRED
THIRTY-FIVE THOUSAND (P135,000.00) PESOS, Philippine Currency.20[1]
20

On March 19, 1991, the RTC issued an Order preventively suspending the petitioner from the service
under Presidential Decree No. 971, as amended by P.D. No. 1847. When apprised of the said order,
the General Headquarters of the PNP issued on October 6, 1992 Special Order No. 91, preventively
suspending the petitioner from the service until the case was terminated. 21[2]
The petitioner was arrested by virtue of a warrant issued by the RTC, while accused Bombita
remained at large. The petitioner posted bail and was granted temporary liberty.
When arraigned on April 9, 1991,22[3] the petitioner, assisted by counsel, pleaded not guilty to the
offense charged. Thereafter, on December 23, 1991, the petitioner filed a Motion to Quash 23[4] the
Information alleging that as mandated by Commonwealth Act No. 408, 24[5] in relation to Section 1,
Presidential Decree No. 1822 and Section 95 of R.A. No. 6975, the court martial, not the RTC, had
jurisdiction over criminal cases involving PNP members and officers.
Pending the resolution of the motion, the petitioner on June 25, 1993 requested the Chief of the PNP
for his reinstatement. He alleged that under R.A. No. 6975, his suspension should last for only 90
days, and, having served the same, he should now be reinstated. On September 23, 1993, 25[6] the
PNP Region V Headquarters wrote Judge David C. Naval requesting information on whether he
issued an order lifting the petitioners suspension. The RTC did not reply. Thus, on February 22,
1994, the petitioner filed a motion in the RTC for the lifting of the order of suspension. He alleged that
he had served the 90-day preventive suspension and pleaded for compassionate justice. The RTC
denied the motion on March 9, 1994.26[7] Trial thereafter proceeded, and the prosecution rested its
case. The petitioner commenced the presentation of his evidence. On July 20, 1994, he filed a
Motion to Dismiss27[8] the case. Citing Republic of the Philippines v. Asuncion, et al., 28[9] he argued

21

22

23

24

25

26

27

28

that since he committed the crime in the performance of his duties, the Sandiganbayan had exclusive
jurisdiction over the case.
On October 28, 1994, the RTC issued an Order29[10] denying the motion to dismiss. It, however,
ordered the conduct of a preliminary hearing to determine whether or not the crime charged was
committed by the petitioner in relation to his office as a member of the PNP.
In the preliminary hearing, the prosecution manifested that it was no longer presenting any evidence
in connection with the petitioners motion. It reasoned that it had already rested its case, and that its
evidence showed that the petitioner did not commit the offense charged in connection with the
performance of his duties as a member of the Philippine Constabulary. According to the prosecution,
they were able to show the following facts: (a) the petitioner was not wearing his uniform during the
incident; (b) the offense was committed just after midnight; (c) the petitioner was drunk when the
crime was committed; (d) the petitioner was in the company of civilians; and, (e) the offense was
committed in a beerhouse called Sa Harong Caf Bar and Restaurant.30[11]
For his part, the petitioner testified that at about 10:00 p.m. on March 15, 1990, he was at the Sa
Harong Caf Bar and Restaurant at Barlin St., Naga City, to conduct surveillance on alleged drug
trafficking, pursuant to Mission Order No. 03-04 issued by Police Superintendent Rufo R. Pulido. The
petitioner adduced in evidence the sworn statements of Benjamin Cario and Roberto Fajardo who
corroborated his testimony that he was on a surveillance mission on the aforestated date. 31[12]
On July 31, 1995, the trial court issued an Order declaring that the petitioner committed the crime
charged while not in the performance of his official function. The trial court added that upon the
enactment of R.A. No. 7975,32[13] the issue had become moot and academic. The amendatory law
transferred the jurisdiction over the offense charged from the Sandiganbayan to the RTC since the
petitioner did not have a salary grade of 27 as provided for in or by Section 4(a)(1), (3) thereof. The
trial court nevertheless ordered the prosecution to amend the Information pursuant to the ruling in
Republic v. Asuncion33[14] and R.A. No. 7975. The amendment consisted in the inclusion therein of
an allegation that the offense charged was not committed by the petitioner in the performance of his
duties/functions, nor in relation to his office.

29

30

31

32

33

The petitioner filed a motion for the reconsideration 34[15] of the said order, reiterating that based on
his testimony and those of Benjamin Cario and Roberto Fajardo, the offense charged was
committed by him in relation to his official functions. He asserted that the trial court failed to consider
the exceptions to the prohibition. He asserted that R.A. No. 7975, which was enacted on March 30,
1995, could not be applied retroactively.35[16]
The petitioner further alleged that Luz Nacario Nueca, the mother of the victim, through counsel,
categorically and unequivocably admitted in her complaint filed with the Peoples Law Enforcement
Board (PLEB) that he was on an official mission when the crime was committed.
On November 24, 1995, the RTC made a volte face and issued an Order reversing and setting aside
its July 31, 1995 Order. It declared that based on the petitioners evidence, he was on official mission
when the shooting occurred. It concluded that the prosecution failed to adduce controverting
evidence thereto. It likewise considered Luz Nacario Nuecas admission in her complaint before the
PLEB that the petitioner was on official mission when the shooting happened.
The RTC ordered the public prosecutor to file a Re-Amended Information and to allege that the
offense charged was committed by the petitioner in the performance of his duties/functions or in
relation to his office; and, conformably to R.A. No. 7975, to thereafter transmit the same, as well as
the complete records with the stenographic notes, to the Sandiganbayan, to wit:
WHEREFORE, the Order dated July 31, 1995 is hereby SET ASIDE and RECONSIDERED, and it is
hereby declared that after preliminary hearing, this Court has found that the offense charged in the
Information herein was committed by the accused in his relation to his function and duty as member
of the then Philippine Constabulary.
Conformably with R.A. No. 7975 and the ruling of the Supreme Court in Republic v. Asuncion, et al.,
G.R. No. 180208, March 11, 1994:
(1)

The City Prosecutor is hereby ordered to file a Re-Amended Information alleging


that the offense charged was committed by the Accused in the performance of
his duties/functions or in relation to his office, within fifteen (15) days from receipt
hereof;

(2)

After the filing of the Re-Amended Information, the complete records of this case,
together with the transcripts of the stenographic notes taken during the entire
proceedings herein, are hereby ordered transmitted immediately to the
Honorable Sandiganbayan, through its Clerk of Court, Manila, for appropriate
proceedings.36[17]

On January 8, 1996, the Presiding Justice of the Sandiganbayan ordered the Executive Clerk of
Court IV, Atty. Luisabel Alfonso-Cortez, to return the records of Criminal Case No. 90-3184 to the
34

35

36

court of origin, RTC of Naga City, Branch 21. It reasoned that under P.D. No. 1606, as amended by
R.A. No. 7975,37[18] the RTC retained jurisdiction over the case, considering that the petitioner had a
salary grade of 23. Furthermore, the prosecution had already rested its case and the petitioner had
commenced presenting his evidence in the RTC; following the rule on continuity of jurisdiction, the
latter court should continue with the case and render judgment therein after trial.
Upon the remand of the records, the RTC set the case for trial on May 3, 1996, for the petitioner to
continue presenting his evidence. Instead of adducing his evidence, the petitioner filed a petition for
certiorari, assailing the Order of the Presiding Justice of the Sandiganbayan remanding the records of
the case to the RTC.
The threshold issue for resolution is whether or not the Presiding Justice of the Sandiganbayan
committed a grave abuse of his discretion amounting to excess or lack of jurisdiction in ordering the
remand of the case to the RTC.
The petitioner contends that when the amended information was filed with the RTC on February 6,
1991, P.D. No. 1606 was still in effect. Under Section 4(a) of the decree, the Sandiganbayan had
exclusive jurisdiction over the case against him as he was charged with homicide with the imposable
penalty of reclusion temporal, and the crime was committed while in the performance of his duties.
He further asserts that although P.D. No. 1606, as amended by P.D. No. 1861 and by R.A. No. 7975
provides that crimes committed by members and officers of the PNP with a salary grade below 27
committed in relation to office are within the exclusive jurisdiction of the proper RTC, the amendment
thus introduced by R.A. No. 7975 should not be applied retroactively. This is so, the petitioner
asserts, because under Section 7 of R.A. No. 7975, only those cases where trial has not begun in the
Sandiganbayan upon the effectivity of the law should be referred to the proper trial court.
The private complainant agrees with the contention of the petitioner. In contrast, the Office of the
Special Prosecutor contends that the Presiding Justice of the Sandiganbayan acted in accordance
with law when he ordered the remand of the case to the RTC. It asserts that R.A. No. 7975 should be
applied retroactively. Although the Sandiganbayan had jurisdiction over the crime committed by the
petitioner when the amended information was filed with the RTC, by the time it resolved petitioners
motion to dismiss on July 31, 1995, R.A. No. 7975 had already taken effect. Thus, the law should be
given retroactive effect.
The Ruling of the Court
The respondent Presiding Justice acted in accordance with law and the rulings of this Court when he
ordered the remand of the case to the RTC, the court of origin.
The jurisdiction of the court over criminal cases is determined by the allegations in the Information or
the Complaint and the statute in effect at the time of the commencement of the action, unless such
statute provides for a retroactive application thereof. The jurisdictional requirements must be alleged
in the Information.38[19] Such jurisdiction of the court acquired at the inception of the case continues
until the case is terminated.39[20]
37

38

39

Under Section 4(a) of P.D. No. 1606 as amended by P.D. No. 1861, the Sandiganbayan had exclusive
jurisdiction in all cases involving the following:
(1)
Violations of Republic Act No. 3019, as amended, otherwise known as the Anti-Graft and
Corrupt Practices Act, Republic Act No. 1379, and Chapter II, Section 2, Title VII of the Revised Penal
Code;
(2)
Other offenses or felonies committed by public officers and employees in relation to their office,
including those employed in government-owned or controlled corporations, whether simple or
complexed with other crimes, where the penalty prescribed by law is higher than prision correccional
or imprisonment for six (6) years, or a fine of P6,000.00 .40[21]
However, for the Sandiganbayan to have exclusive jurisdiction under the said law over crimes
committed by public officers in relation to their office, it is essential that the facts showing the intimate
relation between the office of the offender and the discharge of official duties must be alleged in the
Information. It is not enough to merely allege in the Information that the crime charged was
committed by the offender in relation to his office because that would be a conclusion of law. 41[22]
The amended Information filed with the RTC against the petitioner does not contain any allegation
showing the intimate relation between his office and the discharge of his duties. Hence, the RTC had
jurisdiction over the offense charged when on November 24, 1995, it ordered the re-amendment of
the Information to include therein an allegation that the petitioner committed the crime in relation to
office. The trial court erred when it ordered the elevation of the records to the Sandiganbayan. It
bears stressing that R.A. No. 7975 amending P.D. No. 1606 was already in effect and under Section 2
of the law:
In cases where none of the principal accused are occupying positions corresponding to salary grade
27 or higher, as prescribed in the said Republic Act No. 6758, or PNP officers occupying the rank of
superintendent or higher, or their equivalent, exclusive jurisdiction thereof shall be vested in the
proper Regional Trial Court, Metropolitan Trial Court, Municipal Trial Court, and Municipal Circuit Trial
Court, as the case may be, pursuant to their respective jurisdiction as provided in Batas Pambansa
Blg. 129.
Under the law, even if the offender committed the crime charged in relation to his office but occupies
a position corresponding to a salary grade below 27, the proper Regional Trial Court or Municipal
Trial Court, as the case may be, shall have exclusive jurisdiction over the case. In this case, the
petitioner was a Police Senior Inspector, with salary grade 23. He was charged with homicide
punishable by reclusion temporal. Hence, the RTC had exclusive jurisdiction over the crime charged
conformably to Sections 20 and 32 of Batas Pambansa Blg. 129, as amended by Section 2 of R.A.
No. 7691.
The petitioners contention that R.A. No. 7975 should not be applied retroactively has no legal basis.
It bears stressing that R.A. No. 7975 is a substantive procedural law which may be applied
retroactively.42[23]

40

41

IN LIGHT OF ALL THE FOREGOING, the petition is DISMISSED. No pronouncement as to costs.


SO ORDERED.
ESCOBAL vs. GARCHITORENA
SPECIAL SECOND DIVISION
Gentlemen:
Quoted hereunder, for your information, is a resolution of this Court dated DEC 8 2004.
G.R. No. 124644 (Arnel Escobal vs. The Hon. Francis Garchitorena, in his capacity as Presiding
Justice of the Sandiganbayan, Atty. Luisabel Alfonso-Cortez, Executive Clerk of Court IV of the
Sandiganbayan, Hon. David C. Naval, Presiding Judge of the Regional Trial Court of Naga City,
Branch 21, Luz N. Nueca.)
Petitioner Arnel Escobal seeks a reconsideration of the Court's Decision dated February 5, 2004,
dismissing his petition for the nullification of the remand of the records of Criminal Case No. 90-3184
to the Regional Trial Court (RTC) of Naga City, Branch 21, as ordered by the Presiding Justice of the
Sandiganbayan.
The petitioner asserts that the facts showing the intimate relation between the office of the offender
and the discharge of official duties were sufficiently established during the preliminary investigation
conducted by the trial court. He added that the same was adequately alleged in the Re-Amended
information dated December 11, 1995, and that it was particularly stated that the offense charged was
committed by the accused in the performance of his duties and/or functions, or in relation to his office.
The petitioner further insists that Presidential Decree (P.D.) No. 1606, the law which was in effect at
the time of the commission of the offense, should be applied.
A careful perusal of the motion shows that the arguments presented in this motion are mere
reiterations of the petitioner's arguments as contained in his previous pleadings. Furthermore, the
issues raised by the petitioner had been adequately passed upon in the February 5, 2004 Decision of
the Court, where the same arguments were found wanting in merit.
The Court reiterates that the jurisdiction of the court over criminal cases is determined by the
allegations in the Information or the Complaint and the statute in effect at the time of the
commencement of the action unless such statute provides for a retroactive application thereof. The
jurisdictional requirements must be alleged in the Information. 43[1] For the Sandiganbayan to have
exclusive jurisdiction under Section 4(a) of P.D. 1606, as amended by P.D. No. 1861 over crimes
committed by public officers in relation to their office, it is essential that the facts showing the intimate
relation between the office of the offender and discharge of official duties must be alleged in the

42

43

Information.44[2] It is not enough to merely allege in the Information that the crime charged was
committed by the offender in relation to his office because that would be a conclusion of law. 45[3]
It bears stressing that, in the case at bar, the facts showing the intimate relation between the
petitioner's office and the discharge of his duties were not alleged in the amended Information.
Hence, when the RTC ordered the re-amendment of the Information to include an allegation that the
petitioner committed the crime in relation to his office on November 24, 1995, such court had
jurisdiction over the offense charged. The trial court erred when it ordered the elevation of the records
to the Sandiganbayan because Republic Act (R.A.) No. 7975, amending P.D. No. 1606, 46[4] was
already in effect. The petitioner, a police senior inspector with salary grade "23," was charged with
homicide, a felony punishable by reclusion temporal. Hence, the RTC had exclusive jurisdiction over
the crime charged, conformably to Sections 20 and 32 of Batas Pambansa Blg. 129, as amended by
Section 2 of R.A. No. 7691.
WHEREFORE, the motion for reconsideration is hereby DENIED for lack or merit.
Very truly yours,
(Sgd.) LUDICHI YASAY-NUNAG
Clerk of Court

44

45

46

Republic of the Philippines


SUPREME COURT
Manila
EN BANC
G.R. No. 169914

April 18, 2008

ASIA'S EMERGING DRAGON CORPORATION, petitioner,


vs.
DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS, SECRETARY LEANDRO R.
MENDOZA and MANILA INTERNATIONAL AIRPORT AUTHORITY, respondents.
x ----------------------------------------- x
G.R. No. 174166

April 18, 2008

REPUBLIC OF THE PHILIPPINES, represented by the DEPARTMENT OF TRANSPORTATION


AND COMMUNICATIONS and MANILA INTERNATIONAL AIRPORT AUTHORITY, petitioner,
vs.
HON. COURT OF APPEALS and SALACNIB BATERINA, respondents.
DECISION
CHICO-NAZARIO, J.:
This Court is still continuously besieged by Petitions arising from the awarding of the Ninoy Aquino
International Airport International Passenger Terminal III (NAIA IPT III) Project to the Philippine
International Air Terminals Co., Inc. (PIATCO), despite the promulgation by this Court of Decisions
and Resolutions in two cases, Agan, Jr. v. Philippine International Air Terminals Co., Inc. 1 and
Republic v. Gingoyon,2 which already resolved the more basic and immediate issues arising from the
said award. The sheer magnitude of the project, the substantial cost of its building, the expected high
profits from its operations, and its remarkable impact on the Philippine economy, consequently raised
significant interest in the project from various quarters.
Once more, two new Petitions concerning the NAIA IPT III Project are before this Court. It is only
appropriate, however, that the Court first recounts its factual and legal findings in Agan and Gingoyon
to ascertain that its ruling in the Petitions at bar shall be consistent and in accordance therewith.
Agan, Jr. v. Philippine International Air Terminals Co., Inc. (G.R. Nos. 155001, 155547, and
155661)
Already established and incontrovertible are the following facts in Agan:
In August 1989, the [Department of Trade and Communications (DOTC)] engaged the services
of Aeroport de Paris (ADP) to conduct a comprehensive study of the Ninoy Aquino
International Airport (NAIA) and determine whether the present airport can cope with the traffic
development up to the year 2010. The study consisted of two parts: first, traffic forecasts,
capacity of existing facilities, NAIA future requirements, proposed master plans and
development plans; and second, presentation of the preliminary design of the passenger
terminal building. The ADP submitted a Draft Final Report to the DOTC in December 1989.

Some time in 1993, six business leaders consisting of John Gokongwei, Andrew Gotianun,
Henry Sy, Sr., Lucio Tan, George Ty and Alfonso Yuchengco met with then President Fidel V.
Ramos to explore the possibility of investing in the construction and operation of a new
international airport terminal. To signify their commitment to pursue the project, they formed the
Asia's Emerging Dragon Corp. (AEDC) which was registered with the Securities and Exchange
Commission (SEC) on September 15, 1993.
On October 5, 1994, AEDC submitted an unsolicited proposal to the Government through the
DOTC/[Manila International Airport Authority (MIAA)] for the development of NAIA International
Passenger Terminal III (NAIA IPT III) under a build-operate-and-transfer arrangement pursuant
to RA 6957 as amended by RA 7718 (BOT Law).
On December 2, 1994, the DOTC issued Dept. Order No. 94-832 constituting the
Prequalification Bids and Awards Committee (PBAC) for the implementation of the NAIA IPT III
project.
On March 27, 1995, then DOTC Secretary Jose Garcia endorsed the proposal of AEDC to the
National Economic and Development Authority (NEDA). A revised proposal, however, was
forwarded by the DOTC to NEDA on December 13, 1995. On January 5, 1996, the NEDA
Investment Coordinating Council (NEDA ICC) - Technical Board favorably endorsed the project
to the ICC - Cabinet Committee which approved the same, subject to certain conditions, on
January 19, 1996. On February 13, 1996, the NEDA passed Board Resolution No. 2 which
approved the NAIA IPT III project.
On June 7, 14, and 21, 1996, DOTC/MIAA caused the publication in two daily newspapers of
an invitation for competitive or comparative proposals on AEDC's unsolicited proposal, in
accordance with Sec. 4-A of RA 6957, as amended. The alternative bidders were required to
submit three (3) sealed envelopes on or before 5:00 p.m. of September 20, 1996. The first
envelope should contain the Prequalification Documents, the second envelope the Technical
Proposal, and the third envelope the Financial Proposal of the proponent.
On June 20, 1996, PBAC Bulletin No. 1 was issued, postponing the availment of the Bid
Documents and the submission of the comparative bid proposals. Interested firms were
permitted to obtain the Request for Proposal Documents beginning June 28, 1996, upon
submission of a written application and payment of a non-refundable fee of P50,000.00
(US$2,000).
The Bid Documents issued by the PBAC provided among others that the proponent must have
adequate capability to sustain the financing requirement for the detailed engineering, design,
construction, operation, and maintenance phases of the project. The proponent would be
evaluated based on its ability to provide a minimum amount of equity to the project, and its
capacity to secure external financing for the project.
On July 23, 1996, the PBAC issued PBAC Bulletin No. 2 inviting all bidders to a pre-bid
conference on July 29, 1996.
On August 16, 1996, the PBAC issued PBAC Bulletin No. 3 amending the Bid Documents. The
following amendments were made on the Bid Documents:
a. Aside from the fixed Annual Guaranteed Payment, the proponent shall include in its
financial proposal an additional percentage of gross revenue share of the Government,
as follows:

i.

First 5 years

5.0%

ii.

Next 10 years

7.5%

iii.

Next 10 years

10.0%

b. The amount of the fixed Annual Guaranteed Payment shall be subject of the price
challenge. Proponent may offer an Annual Guaranteed Payment which need not be of
equal amount, but payment of which shall start upon site possession.
c. The project proponent must have adequate capability to sustain the financing
requirement for the detailed engineering, design, construction, and/or operation and
maintenance phases of the project as the case may be. For purposes of prequalification, this capability shall be measured in terms of:
i. Proof of the availability of the project proponent and/or the consortium to
provide the minimum amount of equity for the project; and
ii. a letter testimonial from reputable banks attesting that the project proponent
and/or the members of the consortium are banking with them, that the project
proponent and/or the members are of good financial standing, and have
adequate resources.
d. The basis for the prequalification shall be the proponent's compliance with the
minimum technical and financial requirements provided in the Bid Documents and the
[Implementing Rules and Regulations (IRR)] of the BOT Law. The minimum amount of
equity shall be 30% of the Project Cost.
e. Amendments to the draft Concession Agreement shall be issued from time to time.
Said amendments shall only cover items that would not materially affect the preparation
of the proponent's proposal.
On August 29, 1996, the Second Pre-Bid Conference was held where certain clarifications
were made. Upon the request of prospective bidder People's Air Cargo & Warehousing Co.,
Inc (Paircargo), the PBAC warranted that based on Sec. 11.6, Rule 11 of the Implementing
Rules and Regulations of the BOT Law, only the proposed Annual Guaranteed Payment
submitted by the challengers would be revealed to AEDC, and that the challengers' technical
and financial proposals would remain confidential. The PBAC also clarified that the list of
revenue sources contained in Annex 4.2a of the Bid Documents was merely indicative and that
other revenue sources may be included by the proponent, subject to approval by DOTC/MIAA.
Furthermore, the PBAC clarified that only those fees and charges denominated as Public
Utility Fees would be subject to regulation, and those charges which would be actually deemed
Public Utility Fees could still be revised, depending on the outcome of PBAC's query on the
matter with the Department of Justice.
In September 1996, the PBAC issued Bid Bulletin No. 5, entitled "Answers to the Queries of
PAIRCARGO as Per Letter Dated September 3 and 10, 1996." Paircargo's queries and the
PBAC's responses were as follows:
1. It is difficult for Paircargo and Associates to meet the required minimum equity
requirement as prescribed in Section 8.3.4 of the Bid Documents considering that the
capitalization of each member company is so structured to meet the requirements and
needs of their current respective business undertaking/activities. In order to comply with

this equity requirement, Paircargo is requesting PBAC to just allow each member of
(sic) corporation of the Joint Venture to just execute an agreement that embodies a
commitment to infuse the required capital in case the project is awarded to the Joint
Venture instead of increasing each corporation's current authorized capital stock just for
prequalification purposes.
In prequalification, the agency is interested in one's financial capability at the time of
prequalification, not future or potential capability.
A commitment to put up equity once awarded the project is not enough to establish that
"present" financial capability. However, total financial capability of all member
companies of the Consortium, to be established by submitting the respective
companies' audited financial statements, shall be acceptable.
2. At present, Paircargo is negotiating with banks and other institutions for the extension
of a Performance Security to the joint venture in the event that the Concessions
Agreement (sic) is awarded to them. However, Paircargo is being required to submit a
copy of the draft concession as one of the documentary requirements. Therefore,
Paircargo is requesting that they'd (sic) be furnished copy of the approved negotiated
agreement between the PBAC and the AEDC at the soonest possible time.
A copy of the draft Concession Agreement is included in the Bid Documents. Any
material changes would be made known to prospective challengers through bid
bulletins. However, a final version will be issued before the award of contract.
The PBAC also stated that it would require AEDC to sign Supplement C of the Bid Documents
(Acceptance of Criteria and Waiver of Rights to Enjoin Project) and to submit the same with the
required Bid Security.
On September 20, 1996, the consortium composed of People's Air Cargo and Warehousing
Co., Inc. (Paircargo), Phil. Air and Grounds Services, Inc. (PAGS) and Security Bank Corp.
(Security Bank) (collectively, Paircargo Consortium) submitted their competitive proposal to the
PBAC. On September 23, 1996, the PBAC opened the first envelope containing the
prequalification documents of the Paircargo Consortium. On the following day, September 24,
1996, the PBAC prequalified the Paircargo Consortium.
On September 26, 1996, AEDC informed the PBAC in writing of its reservations as regards the
Paircargo Consortium, which include:
a. The lack of corporate approvals and financial capability of PAIRCARGO;
b. The lack of corporate approvals and financial capability of PAGS;
c. The prohibition imposed by RA 337, as amended (the General Banking Act) on the
amount that Security Bank could legally invest in the project;
d. The inclusion of Siemens as a contractor of the PAIRCARGO Joint Venture, for
prequalification purposes; and
e. The appointment of Lufthansa as the facility operator, in view of the Philippine
requirement in the operation of a public utility.

The PBAC gave its reply on October 2, 1996, informing AEDC that it had considered the
issues raised by the latter, and that based on the documents submitted by Paircargo and the
established prequalification criteria, the PBAC had found that the challenger, Paircargo, had
prequalified to undertake the project. The Secretary of the DOTC approved the finding of the
PBAC.
The PBAC then proceeded with the opening of the second envelope of the Paircargo
Consortium which contained its Technical Proposal.
On October 3, 1996, AEDC reiterated its objections, particularly with respect to Paircargo's
financial capability, in view of the restrictions imposed by Section 21-B of the General Banking
Act and Sections 1380 and 1381 of the Manual Regulations for Banks and Other Financial
Intermediaries. On October 7, 1996, AEDC again manifested its objections and requested that
it be furnished with excerpts of the PBAC meeting and the accompanying technical evaluation
report where each of the issues they raised were addressed.
On October 16, 1996, the PBAC opened the third envelope submitted by AEDC and the
Paircargo Consortium containing their respective financial proposals. Both proponents offered
to build the NAIA Passenger Terminal III for at least $350 million at no cost to the government
and to pay the government: 5% share in gross revenues for the first five years of operation,
7.5% share in gross revenues for the next ten years of operation, and 10% share in gross
revenues for the last ten years of operation, in accordance with the Bid Documents. However,
in addition to the foregoing, AEDC offered to pay the government a total of P135 million as
guaranteed payment for 27 years while Paircargo Consortium offered to pay the government a
total of P17.75 billion for the same period.
Thus, the PBAC formally informed AEDC that it had accepted the price proposal submitted by
the Paircargo Consortium, and gave AEDC 30 working days or until November 28, 1996 within
which to match the said bid, otherwise, the project would be awarded to Paircargo.
As AEDC failed to match the proposal within the 30-day period, then DOTC Secretary Amado
Lagdameo, on December 11, 1996, issued a notice to Paircargo Consortium regarding AEDC's
failure to match the proposal.
On February 27, 1997, Paircargo Consortium incorporated into Philippine International Airport
Terminals Co., Inc. (PIATCO).
AEDC subsequently protested the alleged undue preference given to PIATCO and reiterated
its objections as regards the prequalification of PIATCO.
On April 11, 1997, the DOTC submitted the concession agreement for the second-pass
approval of the NEDA-ICC.
On April 16, 1997, AEDC filed with the Regional Trial Court of Pasig a Petition for Declaration
of Nullity of the Proceedings, Mandamus and Injunction against the Secretary of the DOTC,
the Chairman of the PBAC, the voting members of the PBAC and Pantaleon D. Alvarez, in his
capacity as Chairman of the PBAC Technical Committee.
xxxx
On July 9, 1997, the DOTC issued the notice of award for the project to PIATCO.

On July 12, 1997, the Government, through then DOTC Secretary Arturo T. Enrile, and
PIATCO, through its President, Henry T. Go, signed the "Concession Agreement for the BuildOperate-and-Transfer Arrangement of the Ninoy Aquino International Airport Passenger
Terminal III" (1997 Concession Agreement). x x x.
On November 26, 1998, the Government and PIATCO signed an Amended and Restated
Concession Agreement (ARCA). x x x.
Subsequently, the Government and PIATCO signed three Supplements to the ARCA. The First
Supplement was signed on August 27, 1999; the Second Supplement on September 4, 2000;
and the Third Supplement on June 22, 2001 (collectively, Supplements).
xxxx
Meanwhile, the MIAA which is charged with the maintenance and operation of the NAIA
Terminals I and II, had existing concession contracts with various service providers to offer
international airline airport services, such as in-flight catering, passenger handling, ramp and
ground support, aircraft maintenance and provisions, cargo handling and warehousing, and
other services, to several international airlines at the NAIA. x x x.
On September 17, 2002, the workers of the international airline service providers, claiming that
they stand to lose their employment upon the implementation of the questioned agreements,
filed before this Court a petition for prohibition to enjoin the enforcement of said agreements.
On October 15, 2002, the service providers, joining the cause of the petitioning workers, filed a
motion for intervention and a petition-in-intervention.
On October 24, 2002, Congressmen Salacnib Baterina, Clavel Martinez and Constantino
Jaraula filed a similar petition with this Court.
On November 6, 2002, several employees of the MIAA likewise filed a petition assailing the
legality of the various agreements.
On December 11, 2002, another group of Congressmen, Hon. Jacinto V. Paras, Rafael P.
Nantes, Eduardo C. Zialcita, Willie B. Villarama, Prospero C. Nograles, Prospero A. Pichay, Jr.,
Harlin Cast Abayon and Benasing O. Macaranbon, moved to intervene in the case as
Respondents-Intervenors. They filed their Comment-In-Intervention defending the validity of
the assailed agreements and praying for the dismissal of the petitions.
During the pendency of the case before this Court, President Gloria Macapagal Arroyo, on
November 29, 2002, in her speech at the 2002 Golden Shell Export Awards at Malacaang
Palace, stated that she will not "honor (PIATCO) contracts which the Executive Branch's legal
offices have concluded (as) null and void."3
The Court first dispensed with the procedural issues raised in Agan, ruling that (a) the MIAA service
providers and its employees, petitioners in G.R. Nos. 155001 and 155661, had the requisite standing
since they had a direct and substantial interest to protect by reason of the implementation of the
PIATCO Contracts which would affect their source of livelihood; 4 and (b) the members of the House of
Representatives, petitioners in G.R. No. 155547, were granted standing in view of the serious legal
questions involved and their impact on public interest. 5
As to the merits of the Petitions in Agan, the Court concluded that:

In sum, this Court rules that in view of the absence of the requisite financial capacity of the
Paircargo Consortium, predecessor of respondent PIATCO, the award by the PBAC of the
contract for the construction, operation and maintenance of the NAIA IPT III is null and void.
Further, considering that the 1997 Concession Agreement contains material and substantial
amendments, which amendments had the effect of converting the 1997 Concession
Agreement into an entirely different agreement from the contract bidded upon, the 1997
Concession Agreement is similarly null and void for being contrary to public policy. The
provisions under Sections 4.04(b) and (c) in relation to Section 1.06 of the 1997 Concession
Agreement and Section 4.04(c) in relation to Section 1.06 of the ARCA, which constitute a
direct government guarantee expressly prohibited by, among others, the BOT Law and its
Implementing Rules and Regulations are also null and void. The Supplements, being
accessory contracts to the ARCA, are likewise null and void. 6
Hence, the fallo of the Court's Decision in Agan reads:
WHEREFORE, the 1997 Concession Agreement, the Amended and Restated Concession
Agreement and the Supplements thereto are set aside for being null and void. 7
In a Resolution8 dated 21 January 2004, the Court denied with finality the Motions for
Reconsideration of its 5 May 2003 Decision in Agan filed by therein respondents PIATCO and
Congressmen Paras, et al., and respondents-intervenors.9 Significantly, the Court declared in the
same Resolution that:
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.10 (Emphasis ours.)
It is these afore-quoted pronouncements that gave rise to the Petition in Gingoyon.
Republic v. Gingoyon (G.R. No. 166429)
According to the statement of facts in Gingoyon:
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. 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, although the
Government has raised jurisdictional questions before those two bodies.
Then, on 21 December 2004, the Government 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 (3 Billion) in Cash with the Land Bank of the Philippines,
representing the NAIA 3 terminal's assessed value for taxation purposes.

The case 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 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, 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.
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."
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 a Motion 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."
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 2005.11
The Court resolved the Petition of the Republic of the Philippines and Manila International Airport
Authority in Gingoyon in this wise:
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."
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 the
standards set under Rep. Act No. 8974 and its Implementing Rules. Considering that the NAIA
3 consists of structures and improvements, the valuation thereof shall be determined using the
replacements cost method, as prescribed under Section 10 of the Implementing Rules.

(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. 12
The decretal portion of the Court's Decision in Gingoyon thus reads:
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) The implementation of the Writ of Possession dated 21 December 2004 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;
2) Petitioners, upon the effectivity of the Writ of Possession, are authorized [to] 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;
3) 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.
The Temporary Restraining Order dated 14 January 2005 is hereby LIFTED.
No pronouncement as to costs.13
Motions for Partial Reconsideration of the foregoing Decision were filed by therein petitioners
Republic and MIAA, as well as the three other parties who sought to intervene, namely, Asakihosan
Corporation, Takenaka Corporation, and Congressman Baterina.
In a Resolution dated 1 February 2006, this Court denied with finality the Motion for Partial
Reconsideration of therein petitioners and remained faithful to its assailed Decision based on the
following ratiocination:
Admittedly, the 2004 Resolution in Agan could be construed as mandating the full payment of
the final amount of just compensation before the Government may be permitted to take over

the NAIA 3. However, the Decision ultimately rejected such a construction, acknowledging the
public good that would result from the immediate operation of the NAIA 3. Instead, the
Decision adopted an interpretation which is in consonance with Rep. Act No. 8974 and with
equitable standards as well, that allowed the Government to take possession of the NAIA 3
after payment of the proffered value of the facilities to PIATCO. Such a reading is substantially
compliant with the pronouncement in the 2004 Agan Resolution, and is in accord with law and
equity. In contrast, the Government's position, hewing to the strict application of Rule 67, would
permit the Government to acquire possession over the NAIA 3 and implement its operation
without having to pay PIATCO a single centavo, a situation that is obviously unfair. Whatever
animosity the Government may have towards PIATCO does not acquit it from settling its
obligations to the latter, particularly those which had already been previously affirmed by this
Court.14
The Court, in the same Resolution, denied all the three motions for intervention of Asakihosan
Corporation, Takenaka Corporation, and Congressman Baterina, and ruled as follows:
We now turn to the three (3) motions for intervention all of which were filed after the
promulgation of the Court's Decision. All three (3) motions must be denied. Under Section 2,
Rule 19 of the 1997 Rules of Civil Procedure the motion to intervene may be filed at any time
before rendition of judgment by the court. Since this case originated from an original action
filed before this Court, the appropriate time to file the motions-in-intervention in this case if ever
was before and not after resolution of this case. To allow intervention at this juncture would be
highly irregular. It is extremely improbable that the movants were unaware of the pendency of
the present case before the Court, and indeed none of them allege such lack of knowledge.
Takenaka and Asahikosan rely on Mago v. Court of Appeals wherein the Court took the
extraordinary step of allowing the motion for intervention even after the challenged order of the
trial court had already become final. Yet it was apparent in Mago that the movants therein were
not impleaded despite being indispensable parties, and had not even known of the existence
of the case before the trial court, and the effect of the final order was to deprive the movants of
their land. In this case, neither Takenaka nor Asahikosan stand to be dispossessed by reason
of the Court's Decision. There is no palpable due process violation that would militate the
suspension of the procedural rule.
Moreover, the requisite legal interest required of a party-in-intervention has not been
established so as to warrant the extra-ordinary step of allowing intervention at this late stage.
As earlier noted, the claims of Takenaka and Asahikosan have not been judicially proved or
conclusively established as fact by any trier of facts in this jurisdiction. Certainly, they could not
be considered as indispensable parties to the petition for certiorari. In the case of
Representative Baterina, he invokes his prerogative as legislator to curtail the disbursement
without appropriation of public funds to compensate PIATCO, as well as that as a taxpayer, as
the basis of his legal standing to intervene. However, it should be noted that the amount which
the Court directed to be paid by the Government to PIATCO was derived from the money
deposited by the Manila International Airport Authority, an agency which enjoys corporate
autonomy and possesses a legal personality separate and distinct from those of the National
Government and agencies thereof whose budgets have to be approved by Congress.
It is also observed that the interests of the movants-in-intervention may be duly litigated in
proceedings which are extant before lower courts. There is no compelling reason to disregard
the established rules and permit the interventions belatedly filed after the promulgation of the
Court's Decision.15

Asia's Emerging Dragon Corporation v. Department of Transportation and Communications


and Manila International Airport Authority (G.R. No. 169914)
Banking on this Court's declaration in Agan that the award of the NAIA IPT III Project to PIATCO is
null and void, Asia's Emerging Dragon Corporation (AEDC) filed before this Court the present Petition
for Mandamus and Prohibition (with Application for Temporary Restraining Order), praying of this
Court that:
(1) After due hearing, judgment be rendered commanding the Respondents, their officers,
agents, successors, representatives or persons or entities acting on their behalf, to formally
award the NAIA-APT [sic] III PROJECT to Petitioner AEDC and to execute and formalize with
Petitioner AEDC the approved Draft Concession Agreement embodying the agreed terms and
conditions for the operation of the NAIA-IPT III Project and directing Respondents to cease
and desist from awarding the NAIA-IPT Project to third parties or negotiating into any
concession contract with third parties.
(2) Pending resolution on the merits, a Temporary Restraining Order be issued enjoining
Respondents, their officers, agents, successors or representatives or persons or entities acting
on their behalf from negotiating, re-bidding, awarding or otherwise entering into any
concession contract with PIATCO and other third parties for the operation of the NAIA-IPT III
Project.
Other relief and remedies, just and equitable under the premises, are likewise prayed for. 16
AEDC bases its Petition on the following grounds:
I. PETITIONER AEDC, BEING THE RECOGNIZED AND UNCHALLENGED ORIGINAL
PROPONENT, HAS THE EXCLUSIVE, CLEAR AND VESTED STATUTORY RIGHT TO THE
AWARD OF THE NAIA-IPT III PROJECT;
II. RESPONDENTS HAVE A STATUTORY DUTY TO PROTECT PETITIONER AEDC AS THE
UNCHALLENGED ORIGINAL PROPONENT AS A RESULT OF THE SUPREME COURT'S
NULLIFICATION OF THE AWARD OF THE NAIA-IPT III PROJECT TO PIATCO[; and]
III. RESPONDENTS HAVE NO LEGAL BASIS OR AUTHORITY TO TAKE OVER THE NAIAIPT III PROJECT, TO THE EXCLUSION OF PETITIONER AEDC, OR TO AWARD THE
PROJECT TO THIRD PARTIES.17
At the crux of the Petition of AEDC is its claim that, being the recognized and unchallenged original
proponent of the NAIA IPT III Project, it has the exclusive, clear, and vested statutory right to the
award thereof. However, the Petition of AEDC should be dismissed for lack of merit, being as it is,
substantially and procedurally flawed.
SUBSTANTIVE INFIRMITY
A petition for mandamus is governed by Section 3 of Rule 65 of the Rules of Civil Procedure, which
reads
SEC. 3. Petition for mandamus. When any tribunal, corporation, board, officer or person
unlawfully neglects the performance of an act which the law specifically enjoins as a duty
resulting from an office, trust, or station, or unlawfully excludes another from the use and
enjoyment of a right or office to which such other is entitled, and there is no other plain, speedy

and adequate remedy in the ordinary course of law, the person aggrieved thereby may file a
verified petition in the proper court, alleging the facts with certainty and praying that judgment
be rendered commanding the respondent, immediately or some other time to be specified by
the court, to do the act required to be done to protect the rights of the petitioner, and to pay the
damages sustained by the petitioner by reason of the wrongful acts of the respondent.
It is well-established in our jurisprudence that only specific legal rights are enforceable by mandamus,
that the right sought to be enforced must be certain and clear, and that the writ will not issue in cases
where the right is doubtful. Just as fundamental is the principle governing the issuance of mandamus
that the duties to be performed must be such as are clearly and peremptorily enjoined by law or by
reason of official station.18
A rule long familiar is that mandamus never issues in doubtful cases. It requires a showing of a
complete and clear legal right in the petitioner to the performance of ministerial acts. In varying
language, the principle echoed and reechoed is that legal rights may be enforced by mandamus only
if those rights are well-defined, clear and certain. Otherwise, the mandamus petition must be
dismissed.19
The right that AEDC is seeking to enforce is supposedly enjoined by Section 4-A of Republic Act No.
6957,20 as amended by Republic Act No. 7718, on unsolicited proposals, which provides
SEC. 4-A. Unsolicited proposals. Unsolicited proposals for projects may be accepted by any
government agency or local government unit on a negotiated basis: Provided, That, all the
following conditions are met: (1) such projects involve a new concept or technology and/or are
not part of the list of priority projects, (2) no direct government guarantee, subsidy or equity is
required, and (3) the government agency or local government unit has invited by publication,
for three (3) consecutive weeks, in a newspaper of general circulation, comparative or
competitive proposals and no other proposal is received for a period of sixty (60) working days:
Provided, further, That in the event another proponent submits a lower price proposal, the
original proponent shall have the right to match the price within thirty (30) working days.
In furtherance of the afore-quoted provision, the Implementing Rules and Regulations (IRR) of
Republic Act No. 6957, as amended by Republic Act No. 7718, devoted the entire Rule 10 to
Unsolicited Proposals, pertinent portions of which are reproduced below
Sec. 10.1. Requisites for Unsolicited Proposals. Any Agency/LGU may accept unsolicited
proposals on a negotiated basis provided that all the following conditions are met:
a. the project involves a new concept or technology and/or is not part of the list of priority
projects;
b. no direct government guarantee, subsidy or equity is required; and
c. the Agency/LGU concerned has invited by publication, for three (3) consecutive weeks, in a
newspaper of general circulation, comparative or competitive proposals and no other proposal
is received for a period of sixty (60) working days. In the event that another project proponent
submits a price proposal lower than that submitted by the original proponent, the latter shall
have the right to match said price proposal within thirty (30) working days. Should the original
proponent fail to match the lower price proposal submitted within the specified period, the
contract shall be awarded to the tenderer of the lowest price. On the other hand, if the original
project proponent matches the submitted lowest price within the specified period, he shall be
immediately be awarded the project.

xxxx
Sec. 10.6. Evaluation of Unsolicited Proposals. The Agency/LGU is tasked with the initial
evaluation of the proposal. The Agency/LGU shall: 1) appraise the merits of the project; 2)
evaluate the qualification of the proponent; and 3) assess the appropriateness of the
contractual arrangement and reasonableness of the risk allocation. The Agency/LGU is given
sixty (60) days to evaluate the proposal from the date of submission of the complete proposal.
Within this 60-day period, the Agency/LGU, shall advise the proponent in writing whether it
accepts or rejects the proposal. Acceptance means commitment of the Agency/LGU to
pursue the project and recognition of the proponent as the "original proponent." At this
point, the Agency/LGU will no longer entertain other similar proposals until the
solicitation of comparative proposals. The implementation of the project, however, is still
contingent primarily on the approval of the appropriate approving authorities consistent with
Section 2.7 of these IRR, the agreement between the original proponent and the Agency/LGU
of the contract terms, and the approval of the contract by the [Investment Coordination
Committee (ICC)] or Local Sanggunian.
xxxx
Sec. 10.9. Negotiation With the Original Proponent. Immediately after ICC/Local
Sanggunian's clearance of the project, the Agency/LGU shall proceed with the in-depth
negotiation of the project scope, implementation arrangements and concession
agreement, all of which will be used in the Terms of Reference for the solicitation of
comparative proposals. The Agency/LGU and the proponent are given ninety (90) days upon
receipt of ICC's approval of the project to conclude negotiations. The Agency/LGU and the
original proponent shall negotiate in good faith. However, should there be unresolvable
differences during the negotiations, the Agency/LGU shall have the option to reject the
proposal and bid out the project. On the other hand, if the negotiation is successfully
concluded, the original proponent shall then be required to reformat and resubmit its
proposal in accordance with the requirements of the Terms of Reference to facilitate
comparison with the comparative proposals. The Agency/LGU shall validate the
reformatted proposal if it meets the requirements of the TOR prior to the issuance of the
invitation for comparative proposals.
xxxx
Sec. 10.11. Invitation for Comparative Proposals. The Agency/LGU shall publish the invitation
for comparative or competitive proposals only after ICC/Local Sanggunian issues a no
objection clearance of the draft contract. The invitation for comparative or competitive
proposals should be published at least once every week for three (3) weeks in at least one (1)
newspaper of general circulation. It shall indicate the time, which should not be earlier than the
last date of publication, and place where tender/bidding documents could be obtained. It shall
likewise explicitly specify a time of sixty (60) working days reckoned from the date of issuance
of the tender/bidding documents upon which proposals shall be received. Beyond said
deadline, no proposals shall be accepted. A pre-bid conference shall be conducted ten (10)
working days after the issuance of the tender/bidding documents.
Sec. 10.12. Posting of Bid Bond by Original Proponent. The original proponent shall be
required at the date of the first date of the publication of the invitation for comparative
proposals to submit a bid bond equal to the amount and in the form required of the
challengers.

Sec. 10.13. Simultaneous Qualification of the Original Proponent. The Agency/LGU shall
qualify the original proponent based on the provisions of Rule 5 hereof, within thirty (30) days
from start of negotiation. For consistency, the evaluation criteria used for qualifying the original
proponent should be the same criteria used for qualifying the original proponent should be the
criteria used in the Terms of Reference for the challengers.
xxxx
Sec. 10.16. Disclosure of the Price Proposal. The disclosure of the price proposal of the
original proponent in the Tender Documents will be left to the discretion of the Agency/LGU.
However, if it was not disclosed in the Tender Documents, the original proponent's price
proposal should be revealed upon the opening of the financial proposals of the challengers.
The right of the original proponent to match the best proposal within thirty (30) working
days starts upon official notification by the Agency/LGU of the most advantageous
financial proposal. (Emphasis ours.)
In her sponsorship speech on Senate Bill No. 1586 (the precursor of Republic Act No. 7718), then
Senator (now President of the Republic of the Philippines) Gloria Macapagal-Arroyo explained the
reason behind the proposed amendment that would later become Section 4-A of Republic Act No.
6957, as amended by Republic Act No. 7718:
The object of the amendment is to protect proponents which have already incurred costs in the
conceptual design and in the preparation of the proposal, and which may have adopted an
imaginative method of construction or innovative concept for the proposal. The amendment
also aims to harness the ingenuity of the private sector to come up with solutions to the
country's infrastructure problems.21
It is irrefragable that Section 4-A of Republic Act No. 6957, as amended by Republic Act No. 7718,
and Section 10 of its IRR, accord certain rights or privileges to the original proponent of an unsolicited
proposal for an infrastructure project. They are meant to encourage private sector initiative in
conceptualizing infrastructure projects that would benefit the public. Nevertheless, none of these
rights or privileges would justify the automatic award of the NAIA IPT III Project to AEDC after its
previous award to PIATCO was declared null and void by this Court in Agan.
The rights or privileges of an original proponent of an unsolicited proposal for an infrastructure project
are never meant to be absolute. Otherwise, the original proponent can hold the Government hostage
and secure the award of the infrastructure project based solely on the fact that it was the first to
submit a proposal. The absurdity of such a situation becomes even more apparent when considering
that the proposal is unsolicited by the Government. The rights or privileges of an original proponent
depends on compliance with the procedure and conditions explicitly provided by the statutes and their
IRR.
An unsolicited proposal is subject to evaluation, after which, the government agency or local
government unit (LGU) concerned may accept or reject the proposal outright.
Under Section 10.6 of the IRR, the "acceptance" of the unsolicited proposal by the agency/LGU is
limited to the "commitment of the [a]gency/LGU to pursue the project and recognition of the proponent
as the 'original proponent.'" Upon acceptance then of the unsolicited proposal, the original proponent
is recognized as such but no award is yet made to it. The commitment of the agency/LGU upon
acceptance of the unsolicited proposal is to the pursuit of the project, regardless of to whom it shall
subsequently award the same. The acceptance of the unsolicited proposal only precludes the
agency/LGU from entertaining other similar proposals until the solicitation of comparative proposals.

Consistent in both the statutes and the IRR is the requirement that invitations be published for
comparative or competitive proposals. Therefore, it is mandatory that a public bidding be held before
the awarding of the project. The negotiations between the agency/LGU and the original proponent, as
provided in Section 10.9 of the IRR, is for the sole purpose of coming up with draft agreements, which
shall be used in the Terms of Reference (TOR) for the solicitation of comparative proposals. Even at
this point, there is no definite commitment made to the original proponent as to the awarding of the
project. In fact, the same IRR provision even gives the concerned agency/LGU, in case of
unresolvable differences during the negotiations, the option to reject the original proponent's proposal
and just bid out the project.
Generally, in the course of processing an unsolicited proposal, the original proponent is treated in
much the same way as all other prospective bidders for the proposed infrastructure project. It is
required to reformat and resubmit its proposal in accordance with the requirements of the TOR. 22 It
must submit a bid bond equal to the amount and in the form required of the challengers. 23 Its
qualification shall be evaluated by the concerned agency/LGU, using evaluation criteria in accordance
with Rule 524 of the IRR, and which shall be the same criteria to be used in the TOR for the
challengers.25 These requirements ensure that the public bidding under Rule 10 of IRR on Unsolicited
Proposals still remain in accord with the three principles in public bidding, which are: the offer to the
public, an opportunity for competition, and a basis for exact comparison of bids. 26
The special rights or privileges of an original proponent thus come into play only when there are other
proposals submitted during the public bidding of the infrastructure project. As can be gleaned from the
plain language of the statutes and the IRR, the original proponent has: (1) the right to match the
lowest or most advantageous proposal within 30 working days from notice thereof, and (2) in the
event that the original proponent is able to match the lowest or most advantageous proposal
submitted, then it has the right to be awarded the project. The second right or privilege is contingent
upon the actual exercise by the original proponent of the first right or privilege. Before the project
could be awarded to the original proponent, he must have been able to match the lowest or most
advantageous proposal within the prescribed period. Hence, when the original proponent is able to
timely match the lowest or most advantageous proposal, with all things being equal, it shall enjoy
preference in the awarding of the infrastructure project.
This is the extent of the protection that Legislature intended to afford the original proponent, as
supported by the exchange between Senators Neptali Gonzales and Sergio Osmea during the
Second Reading of Senate Bill No. 1586:
Senator Gonzales:
xxxx
The concept being that in case of an unsolicited proposal and nonetheless public bidding has
been held, then [the original proponent] shall, in effect, be granted what is the equivalent
of the right of first refusal by offering a bid which shall equal or better the bid of the
winning bidder within a period of, let us say, 30 days from the date of bidding.
Senator Osmea:
xxxx
To capture the tenor of the proposal of the distinguished Gentleman, a subsequent paragraph
has to be added which says, "IF THERE IS A COMPETITIVE PROPOSAL, THE ORIGINAL

PROPONENT SHALL HAVE THE RIGHT TO EQUAL THE TERMS AND CONDITIONS OF
THE COMPETITIVE PROPOSAL."
In other words, if there is nobody who will submit a competitive proposal, then nothing is lost.
Everybody knows it, and it is open and transparent. But if somebody comes in with another
proposal and because it was the idea of the original proponent that proponent now has the
right to equal the terms of the original proposal.
SENATOR GONZALES:
That is the idea, Mr. President. Because it seems to me that it is utterly unfair for one who has
conceived an idea or a concept, spent and invested in feasibility studies, in the drawing of
plans and specifications, and the project is submitted to a public bidding, then somebody will
win on the basis of plans and specifications and concepts conceived by the original proponent.
He should at least be given the right to submit an equalizing bid. x x x.27 (Emphasis ours.)
As already found by this Court in the narration of facts in Agan, AEDC failed to match the more
advantageous proposal submitted by PIATCO by the time the 30-day working period expired on 28
November 1996;28 and, without exercising its right to match the most advantageous proposal, it
cannot now lay claim to the award of the project.
The bidding process as to the NAIA IPT III Project was already over after the award thereof to
PIATCO, even if eventually, the said award was nullified and voided. The nullification of the award to
PIATCO did not revive the proposal nor re-open the bidding. AEDC cannot insist that this Court turn
back the hands of time and award the NAIA IPT III Project to it, as if the bid of PIATCO never existed
and the award of the project to PIATCO did not take place. Such is a simplistic approach to a very
complex problem that is the NAIA IPT III Project.
In his separate opinion in Agan, former Chief Justice Artemio V. Panganiban noted that "[T]here was
effectively no public bidding to speak of, the entire bidding process having been flawed and tainted
from the very outset, therefore, the award of the concession to Paircargo's successor Piatco was
void, and the Concession Agreement executed with the latter was likewise void ab initio. x x x.29"
(Emphasis ours.) In consideration of such a declaration that the entire bidding process was flawed
and tainted from the very beginning, then, it would be senseless to re-open the same to determine to
whom the project should have been properly awarded to. The process and all proposals and bids
submitted in participation thereof, and not just PIATCO's, were placed in doubt, and it would be
foolhardy for the Government to rely on them again. At the very least, it may be declared that there
was a failure of public bidding.30
In addition, PIATCO is already close to finishing the building of the structures comprising NAIA IPT
III,31 a fact that this Court cannot simply ignore. The NAIA IPT III Project was proposed, subjected to
bidding, and awarded as a build-operate-transfer (BOT) project. A BOT project is defined as
A contractual arrangement whereby the project proponent undertakes the construction,
including financing, of a given infrastructure facility, and the operation and maintenance
thereof. The project proponent operates the facility over a fixed term during which it is allowed
to charge facility users appropriate tolls, fees, rentals, and charges not exceeding those
proposed in its bid or as negotiated and incorporated in the contract to enable the project
proponent to recover its investment, and operating and maintenance expenses in the project.
The project proponent transfers the facility to the government agency or local government unit
concerned at the end of the fixed term that shall not exceed fifty (50) years. This shall include a
supply-and-operate situation which is a contractual arrangement whereby the supplier of

equipment and machinery for a given infrastructure facility, if the interest of the Government so
requires, operates the facility providing in the process technology transfer and training to
Filipino nationals.32 (Emphasis ours.)
The original proposal of AEDC is for a BOT project, in which it undertook to build, operate, and
transfer to the Government the NAIA IPT III facilities. This is clearly no longer applicable or
practicable under the existing circumstances. It is undeniable that the physical structures comprising
the NAIA IPT III Project are already substantially built, and there is almost nothing left for AEDC to
construct. Hence, the project could no longer be awarded to AEDC based on the theory of legal
impossibility of performance.
Neither can this Court revert to the original proposal of AEDC and award to it only the unexecuted
components of the NAIA IPT III Project. Whoever shall assume the obligation to operate and maintain
NAIA IPT III and to subsequently transfer the same to the Government (in case the operation is not
assumed by the Government itself) shall have to do so on terms and conditions that would
necessarily be different from the original proposal of AEDC. It will no longer include any undertaking
to build or construct the structures. An amendment of the proposal of AEDC to address the present
circumstances is out of the question since such an amendment would be substantive and tantamount
to an entirely new proposal, which must again be subjected to competitive bidding.
AEDC's offer to reimburse the Government the amount it shall pay to PIATCO for the NAIA IPT III
Project facilities, as shall be determined in the ongoing expropriation proceedings before the RTC of
Pasay City, cannot restore AEDC to its status and rights as the project proponent. It must be stressed
that the law requires the project proponent to undertake the construction of the project, including
financing; financing, thus, is but a component of the construction of the structures and not the entirety
thereof.
Moreover, this "reimbursement arrangement" may even result in the unjust enrichment of AEDC. In its
original proposal, AEDC offered to construct the NAIA IPT III facilities for $350 million or P9 billion at
that time. In exchange, AEDC would share a certain percentage of the gross revenues with, and pay
a guaranteed annual income to the Government upon operation of the NAIA IPT III. In Gingoyon, the
proferred value of the NAIA IPT III facilities was already determined to be P3 billion. It seems
improbable at this point that the balance of the value of said facilities for which the Government is still
obligated to pay PIATCO shall reach or exceed P6 billion. There is thus the possibility that the
Government shall be required to pay PIATCO an amount less than P9 billion. If AEDC is to reimburse
the Government only for the said amount, then it shall acquire the NAIA IPT III facilities for a price
less than its original proposal of P9 billion. Yet, per the other terms of its original proposal, it may still
recoup a capital investment of P9 billion plus a reasonable rate of return of investment. A change in
the agreed value of the NAIA IPT III facilities already built cannot be done without a corresponding
amendment in the other terms of the original proposal as regards profit sharing and length of
operation; otherwise, AEDC will be unjustly enriched at the expense of the Government.
Again, as aptly stated by former Chief Justice Panganiban, in his separate opinion in Agan:
If the PIATCO contracts are junked altogether as I think they should be, should not AEDC
automatically be considered the winning bidder and therefore allowed to operate the facility?
My answer is a stone-cold 'No.' AEDC never won the bidding, never signed any contract, and
never built any facility. Why should it be allowed to automatically step in and benefit from the
greed of another?33
The claim of AEDC to the award of the NAIA IPT III Project, after the award thereof to PIATCO was
set aside for being null and void, grounded solely on its being the original proponent of the project, is

specious and an apparent stretch in the interpretation of Section 4-A of Republic Act No. 6957, as
amended by Republic Act No. 7718, and Rule 10 of the IRR.
In all, just as AEDC has no legal right to the NAIA IPT III Project, corollarily, it has no legal right over
the NAIA IPT III facility. AEDC does not own the NAIA IPT III facility, which this Court already
recognized in Gingoyon as owned by PIATCO; nor does AEDC own the land on which NAIA IPT III
stands, which is undisputedly owned by the Republic through the Bases Conversion Development
Authority (BCDA). AEDC did not fund any portion of the construction of NAIA IPT III, which was
entirely funded by PIATCO. AEDC also does not have any kind of lien over NAIA IPT III or any kind of
legal entitlement to occupy the facility or the land on which it stands. Therefore, nothing that the
Government has done or will do in relation to the project could possibly prejudice or injure AEDC.
AEDC then does not possess any legal personality to interfere with or restrain the activities of the
Government as regards NAIA IPT III. Neither does it have the legal personality to demand that the
Government deliver or sell to it the NAIA IPT III facility despite the express willingness of AEDC to
reimburse the Government the proferred amount it had paid PIATCO and complete NAIA IPT III
facility at its own cost.
AEDC invokes the Memorandum of Agreement, purportedly executed between the DOTC and AEDC
on 26 February 1996, following the approval of the NAIA IPT III Project by the National Economic
Development Authority Board in a Resolution dated 13 February 1996, which provided for the
following commitments by the parties:
a. commitment of Respondent DOTC to target mid 1996 as the time frame for the formal award
of the project and commencement of site preparation and construction activities with the view
of a partial opening of the Terminal by the first quarter of 1998;
b. commitment of Respondent DOTC to pursue the project envisioned in the unsolicited
proposal and commence and conclude as soon as possible negotiations with Petitioner AEDC
on the BOT contract;
c. commitment of Respondent DOTC to make appropriate arrangements through which the
formal award of the project can be affected[;]
d. commitment of Petitioner AEDC to a fast track approach to project implementation and to
commence negotiations with its financial partners, investors and creditors;
e. commitment of Respondent DOTC and Petitioner AEDC to fast track evaluation of
competitive proposals, screening and eliminating nuisance comparative bids; 34
It is important to note, however, that the document attached as Annex "E" to the Petition of AEDC is a
"certified photocopy of records on file." This Court cannot give much weight to said document
considering that its existence and due execution have not been established. It is not notarized, so it
does not enjoy the presumption of regularity of a public document. It is not even witnessed by
anyone. It is not certified true by its supposed signatories, Secretary Jesus B. Garcia, Jr. for DOTC
and Chairman Henry Sy, Sr. for AEDC, or by any government agency having its custody. It is certified
as a photocopy of records on file by an Atty. Cecilia L. Pesayco, the Corporate Secretary, of an
unidentified corporation.
Even assuming for the sake of argument, that the said Memorandum of Agreement, is in existence
and duly executed, it does little to support the claim of AEDC to the award of the NAIA IPT III Project.
The commitments undertaken by the DOTC and AEDC in the Memorandum of Agreement may be
simply summarized as a commitment to comply with the procedure and requirements provided in

Rules 10 and 11 of the IRR. It bears no commitment on the part of the DOTC to award the NAIA IPT
III Project to AEDC. On the contrary, the document includes express stipulations that negate any such
government obligation. Thus, in the first clause,35 the DOTC affirmed its commitment to pursue,
implement and complete the NAIA IPT III Project on or before 1998, noticeably without mentioning
that such commitment was to pursue the project specifically with AEDC. Likewise, in the second
clause,36 it was emphasized that the DOTC shall pursue the project under Rules 10 and 11 of the IRR
of Republic Act No. 6957, as amended by Republic Act No. 7718. And most significantly, the tenth
clause of the same document provided:
10. Nothing in this Memorandum of Understanding shall be understood, interpreted or
construed as permitting, allowing or authorizing the circumvention of, or non-compliance with,
or as waiving, the provisions of, and requirements and procedures under, existing laws, rules
and regulations.37
AEDC further decries that:
24. In carrying out its commitments under the DOTC-AEDC MOU, Petitioner AEDC undertook
the following activities, incurring in the process tremendous costs and expenses.
a. pre-qualified 46 design and contractor firms to assist in the NAIA-IPT III Project;
b. appointed a consortium of six (6) local banks as its financial advisor in June 1996;
c. hired the services of GAIA South, Inc. to prepare the Project Description Report and to
obtain the Environmental Clearance Certificate (ECC) for the NAIA-IPT III Project;
d. coordinated with the Airline Operators Association, Bases Conversion Development
Authority, Philippine Air Force, Bureau of Customs, Bureau of Immigration, relative to their
particular requirements regarding the NAIA-IPT III [P]roject; and
e. negotiated and entered into firm commitments with Ital Thai, Marubeni Corporation and
Mitsui Corporation as equity partners.38
While the Court may concede that AEDC, as the original proponent, already expended resources in
its preparation and negotiation of its unsolicited proposal, the mere fact thereof does not entitle it to
the instant award of the NAIA IPT III Project. AEDC was aware that the said project would have to
undergo public bidding, and there existed the possibility that another proponent may submit a more
advantageous bid which it cannot match; in which case, the project shall be awarded to the other
proponent and AEDC would then have no means to recover the costs and expenses it already
incurred on its unsolicited proposal. It was a given business risk that AEDC knowingly undertook.
Additionally, the very defect upon which this Court nullified the award of the NAIA IPT III Project to
PIATCO similarly taints the unsolicited proposal of AEDC. This Court found Paircargo Consortium
financially disqualified after striking down as incorrect the PBAC's assessment of the consortium's
financial capability. According to the Court's ratio in Agan:
As the minimum project cost was estimated to be US$350,000,000.00 or roughly
P9,183,650,000.00, the Paircargo Consortium had to show to the satisfaction of the PBAC that
it had the ability to provide the minimum equity for the project in the amount of at least
P2,755,095,000.00.
xxxx

Thus, the maximum amount that Security Bank could validly invest in the Paircargo
Consortium is only P528,525,656.55, representing 15% of its entire net worth. The total net
worth therefore of the Paircargo Consortium, after considering the maximum amounts that
may be validly invested by each of its members is P558,384,871.55 or only 6.08% of the
project cost, an amount substantially less than the prescribed minimum equity investment
required for the project in the amount of P2,755,095,000.00 or 30% of the project cost.
The purpose of pre-qualification in any public bidding is to determine, at the earliest
opportunity, the ability of the bidder to undertake the project. Thus, with respect to the bidder's
financial capacity at the pre-qualification stage, the law requires the government agency to
examine and determine the ability of the bidder to fund the entire cost of the project by
considering the maximum amounts that each bidder may invest in the project at the
time of pre-qualification.
xxxx
Thus, if the maximum amount of equity that a bidder may invest in the project at the time
the bids are submitted falls short of the minimum amounts required to be put up by the
bidder, said bidder should be properly disqualified. Considering that at the pre-qualification
stage, the maximum amounts which the Paircargo Consortium may invest in the project fell
short of the minimum amounts prescribed by the PBAC, we hold that Paircargo Consortium
was not a qualified bidder. Thus the award of the contract by the PBAC to the Paircargo
Consortium, a disqualified bidder, is null and void. 39
Pursuant to the above-quoted ruling, AEDC, like the Paircargo Consortium, would not be financially
qualified to undertake the NAIA IPT III Project. Based on AEDC's own submissions to the
Government, it had then a paid-in capital of only P150,000,000.00,40 which was less than the
P558,384,871.55 that Paircargo Consortium was capable of investing in the NAIA IPT III Project, and
even far less that what this Court prescribed as the minimum equity investment required for the
project in the amount of P2,755,095,000.00 or 30% of the project cost. AEDC had not sufficiently
demonstrated that it would have been financially qualified to undertake the project at the time of
submission of the bids.
Instead, AEDC took pains to present to this Court that allowing it to take over and operate NAIA IPT
III at present would be beneficial to the Government. This Court must point out, however, that AEDC
is precisely making a new proposal befitting the current status of the NAIA IPT III Project, contrary to
its own argument that it is merely invoking its original BOT proposal. And it is not for this Court to
evaluate AEDC's new proposal and assess whether it would truly be most beneficial for the
Government, for the same is an executive function rather than judicial, for which the statutes and
regulations have sufficiently provided standards and procedures for evaluation.
It can even be said that if the award of the NAIA IPT III Project was merely a matter of choosing
between PIATCO and AEDC (which it is not), there could be no doubt that PIATCO is more qualified
to operate the structure that PIATCO itself built and PIATCO's offer of P17.75 Billion in annual
guaranteed payments to the Government is far better that AEDC's offer of P135 Million.
Hence, AEDC is not entitled to a writ of mandamus, there being no specific, certain, and clear legal
right to be enforced, nor duty to be performed that is clearly and peremptorily enjoined by law or by
reason of official station.
PROCEDURAL LAPSES

In addition to the substantive weaknesses of the Petition of AEDC, the said Petition also suffers from
procedural defects.
AEDC revived its hope to acquire the NAIA IPT III Project when this Court promulgated its Decision in
Agan on 5 May 2003. The said Decision became final and executory on 17 February 2004 upon the
denial by this Court of the Motion for Leave to File Second Motion for Reconsideration submitted by
PIATCO. It is this Decision that declared the award of the NAIA IPT III Project to PIATCO as null and
void; without the same, then the award of the NAIA IPT III Project to PIATCO would still subsist and
other persons would remain precluded from acquiring rights thereto, including AEDC. Irrefutably, the
present claim of AEDC is rooted in the Decision of this Court in Agan. However, AEDC filed the
Petition at bar only 20 months after the promulgation of the Decision in Agan on 5 May 2003.
It must be emphasized that under Sections 2 and 3, Rule 65 of the revised Rules of Civil Procedure,
petitions for prohibition and mandamus, such as in the instant case, can only be resorted to when
there is no other plain, speedy and adequate remedy for the party in the ordinary course of law.
In Cruz v. Court of Appeals,41 this Court elucidates that
Although Rule 65 does not specify any period for the filing of a petition for certiorari and
mandamus, it must, nevertheless, be filed within a reasonable time. In certiorari cases, the
definitive rule now is that such reasonable time is within three months from the commission
of the complained act. The same rule should apply to mandamus cases.
The unreasonable delay in the filing of the petitioner's mandamus suit unerringly negates any
claim that the application for the said extraordinary remedy was the most expeditious and
speedy available to the petitioner. (Emphasis ours.)
As the revised Rules now stand, a petition for certiorari may be filed within 60 days from notice of the
judgment, order or resolution sought to be assailed. 42 Reasonable time for filing a petition for
mandamus should likewise be for the same period. The filing by the AEDC of its petition for
mandamus 20 months after its supposed right to the project arose is evidently beyond reasonable
time and negates any claim that the said petition for the extraordinary writ was the most expeditious
and speedy remedy available to AEDC.
AEDC contends that the "reasonable time" within which it should have filed its petition should be
reckoned only from 21 September 2005, the date when AEDC received the letter from the Office of
the Solicitor General refusing to recognize the rights of AEDC to provide the available funds for the
completion of the NAIA IPT III Project and to reimburse the costs of the structures already built by
PIATCO. It has been unmistakable that even long before said letter especially when the
Government instituted with the RTC of Pasay City expropriation proceedings for the NAIA IPT III on
21 December 2004 that the Government would not recognize any right that AEDC purportedly had
over the NAIA IPT III Project and that the Government is intent on taking over and operating the NAIA
IPT III itself.
Another strong argument against the AEDC's Petition is that it is already barred by res judicata.
In Agan,43 it was noted that on 16 April 1997, the AEDC instituted before the RTC of Pasig City Civil
Case No. 66213, a Petition for the Declaration of Nullity of the Proceedings, Mandamus and
Injunction, against the DOTC Secretary and the PBAC Chairman and members.
In Civil Case No. 66213, AEDC prayed for:

i) the nullification of the proceedings before the DOTC-PBAC, including its decision to qualify
Paircargo Consortium and to deny Petitioner AEDC's access to Paircargo Consortium's
technical and financial bid documents;
ii) the protection of Petitioner AEDC's right to match considering the void challenge bid of the
Paircargo Consortium and the denial by DOTC-PBAC of access to information vital to the
effective exercise of its right to match;
iii) the declaration of the absence of any other qualified proponent submitting a competitive bid
in an unsolicited proposal.44
Despite the pendency of Civil Case No. 66213, the DOTC issued the notice of award for the NAIA IPT
III Project to PIATCO on 9 July 1997. The DOTC and PIATCO also executed on 12 July 1997 the
1997 Concession Agreement. AEDC then alleges that:
k) On September 3, 1998, then Pres. Joseph Ejercito Estrada convened a meeting with the
members of the Board of Petitioner AEDC to convey his "desire" for the dismissal of the
mandamus case filed by Petition AEDC and in fact urged AEDC to immediately withdraw said
case.
l) The President's direct intervention in the disposition of this mandamus case was a clear
imposition that Petitioner AEDC had not choice but to accept. To do otherwise was to take a
confrontational stance against the most powerful man in the country then under the risk of
catching his ire, which could have led to untold consequences upon the business interests of
the stakeholders in AEDC. Thus, Petitioner AEDC was constrained to agree to the signing of a
Joint Motion to Dismiss and to the filing of the same in court.
m) Unbeknownst to AEDC at that time was that simultaneous with the signing of the July 12,
1997 Concession Agreement, the DOTC and PIATCO executed a secret side agreement
grossly prejudicial and detrimental to the interest of Government. It stipulated that in the event
that the Civil Case filed by AEDC on April 16, 1997 is not resolved in a manner favorable to the
Government, PIATCO shall be entitled to full reimbursement for all costs and expenses it
incurred in order to obtain the NAIA IPT III BOT project in an amount not less than One
Hundred Eighty Million Pesos (Php 180,000,000.00). This was apparently the reason why the
President was determined to have AEDC's case dismissed immediately.
n) On February 9, 1999, after the Amended and Restated Concession Agreement (hereinafter
referred to as "ARCA") was signed without Petitioner AEDC's knowledge, Petitioner AEDC
signed a Joint Motion to Dismiss upon the representation of the DOTC that it would provide
AEDC with a copy of the 1997 Concession Agreement. x x x. 45
On 30 April 1999, the RTC of Pasig City issued an Order dismissing with prejudice Civil Case No.
66213 upon the execution by the parties of a Joint Motion to Dismiss. According to the Joint Motion to
Dismiss
The parties, assisted by their respective counsel, respectfully state:
1. Philippine International Air Terminals Company, Inc. ("PIATCO") and the respondents have
submitted to petitioner, through the Office of the Executive Secretary, Malacaang, a copy of
the Concession Agreement which they executed for the construction and operation of the
Ninoy Aquino International Airport International Passenger Terminal III Project ("NAIA IPT III
Project), which petitioner requested.

2. Consequently, the parties have decided to amicably settle the instant case and jointly
move for the dismissal thereof without any of the parties admitting liability or conceding to
the position taken by the other in the instant case.
3. Petitioner, on the other hand, and the respondents, on the other hand, hereby release and
forever discharge each other from any and all liabilities, direct or indirect, whether criminal
or civil, which arose in connection with the instant case.
4. The parties agree to bear the costs, attorney's fees and other expenses they respectively
incurred in connection with the instant case. (Emphasis ours.)
AEDC, however, invokes the purported pressure exerted upon it by then President Joseph E.
Estrada, the alleged fraud committed by the DOTC, and paragraph 2 in the afore-quoted Joint Motion
to Dismiss to justify the non-application of the doctrine of res judicata to its present Petition.
The elements of res judicata, in its concept as a bar by former judgment, are as follows: (1) the
former judgment or order must be final; (2) it must be a judgment or order on the merits, that is, it was
rendered after a consideration of the evidence or stipulations submitted by the parties at the trial of
the case; (3) it must have been rendered by a court having jurisdiction over the subject matter and the
parties; and (4) there must be, between the first and second actions, identity of parties, of subject
matter and of cause of action.46 All of the elements are present herein so as to bar the present
Petition.
First, the Order of the RTC of Pasig City, dismissing Civil Case No. 66213, was issued on 30 April
1999. The Joint Motion to Dismiss, deemed a compromise agreement, once approved by the court is
immediately executory and not appealable.47
Second, the Order of the RTC of Pasig City dismissing Civil Case No. 66213 pursuant to the Joint
Motion to Dismiss filed by the parties constitutes a judgment on the merits.
The Joint Motion to Dismiss stated that the parties were willing to settle the case amicably and,
consequently, moved for the dismissal thereof. It also contained a provision in which the parties the
AEDC, on one hand, and the DOTC Secretary and PBAC, on the other released and forever
discharged each other from any and all liabilities, whether criminal or civil, arising in connection with
the case. It is undisputable that the parties entered into a compromise agreement, defined as "a
contract whereby the parties, by making reciprocal concessions, avoid a litigation or put an end to
one already commenced.48" Essentially, it is a contract perfected by mere consent, the latter being
manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to
constitute the contract. Once an agreement is stamped with judicial approval, it becomes more than a
mere contract binding upon the parties; having the sanction of the court and entered as its
determination of the controversy, it has the force and effect of any other judgment. 49 Article 2037 of
the Civil Code explicitly provides that a compromise has upon the parties the effect and authority of
res judicata.
Because of the compromise agreement among the parties, there was accordingly a judicial
settlement of the controversy, and the Order, dated 30 April 1999, of the RTC of Pasig City was no
less a judgment on the merits which may be annulled only upon the ground of extrinsic fraud. 50 Thus,
the RTC of Pasig City, in the same Order, correctly granted the dismissal of Civil Case No. 66213
with prejudice.
A scrutiny of the Joint Motion to Dismiss submitted to the RTC of Pasig City would reveal that the
parties agreed to discharge one another from any and all liabilities, whether criminal or civil, arising

from the case, after AEDC was furnished with a copy of the 1997 Concession Agreement between the
DOTC and PIATCO. This complete waiver was the reciprocal concession of the parties that puts to an
end the present litigation, without any residual right in the parties to litigate the same in the future.
Logically also, there was no more need for the parties to admit to any liability considering that they
already agreed to absolutely discharge each other therefrom, without necessarily conceding to the
other's position. For AEDC, it was a declaration that even if it was not conceding to the Government's
position, it was nonetheless waiving any legal entitlement it might have to sue the Government on
account of the NAIA IPT III Project. Conversely, for the Government, it was an avowal that even if it
was not accepting AEDC's stance, it was all the same relinquishing its right to file any suit against
AEDC in connection with the same project. That none of the parties admitted liability or conceded its
position is without bearing on the validity or binding effect of the compromise agreement, considering
that these were not essential to the said compromise.
Third, there is no question as to the jurisdiction of the RTC of Pasig City over the subject matter and
parties in Civil Case No. 66213. The RTC can exercise original jurisdiction over cases involving the
issuance of writs of certiorari, prohibition, mandamus, quo warranto, habeas corpus and injunction.51
To recall, the Petition of AEDC before the RTC of Pasig City was for the declaration of nullity of
proceedings, mandamus and injunction. The RTC of Pasig City likewise had jurisdiction over the
parties, with the voluntary submission by AEDC and proper service of summons on the DOTC
Secretary and the PBAC Chairman and members.
Lastly, there is, between Civil Case No. 66213 before the RTC of Pasig City and the Petition now
pending before this Court, an identity of parties, of subject matter, and of causes of action.
There is an identity of parties. In both petitions, the AEDC is the petitioner. The respondents in Civil
Case No. 66213 are the DOTC Secretary and the PBAC Chairman and members. The respondents
in the instant Petition are the DOTC, the DOTC Secretary, and the Manila International Airport
Authority (MIAA). While it may be conceded that MIAA was not a respondent and did not participate in
Civil Case No. 66213, it may be considered a successor-in-interest of the PBAC. When Civil Case
No. 66213 was initiated, PBAC was then in charge of the NAIA IPT III Project, and had the authority
to evaluate the bids and award the project to the one offering the lowest or most advantageous bid.
Since the bidding is already over, and the structures comprising NAIA IPT III are now built, then MIAA
has taken charge thereof. Furthermore, it is clear that it has been the intention of the AEDC to name
as respondents in their two Petitions the government agency/ies and official/s who, at the moment
each Petition was filed, had authority over the NAIA IPT III Project.
There is an identity of subject matter because the two Petitions involve none other than the award
and implementation of the NAIA IPT III Project.
There is an identity of cause of action because, in both Petitions, AEDC is asserting the violation of its
right to the award of the NAIA IPT III Project as the original proponent in the absence of any other
qualified bidders. As early as in Civil Case No. 66213, AEDC already sought a declaration by the
court of the absence of any other qualified proponent submitting a competitive bid for the NAIA IPT III
Project, which, ultimately, would result in the award of the said project to it.
AEDC attempts to evade the effects of its compromise agreement by alleging that it was compelled to
enter into such an agreement when former President Joseph E. Estrada asserted his influence and
intervened in Civil Case No. 66213. This allegation deserves scant consideration. Without any proof
that such events did take place, such statements remain mere allegations that cannot be given
weight. One who alleges any defect or the lack of a valid consent to a contract must establish the
same by full, clear and convincing evidence, not merely by preponderance thereof. 52 And, even
assuming arguendo, that the consent of AEDC to the compromise agreement was indeed vitiated,

then President Estrada was removed from office in January 2001. AEDC filed the present Petition
only on 20 October 2005. The four-year prescriptive period, within which an action to annul a voidable
contract may be brought, had already expired. 53
The AEDC further claims that the DOTC committed fraud when, without AEDC's knowledge, the
DOTC entered into an Amended and Restated Concession Agreement (ARCA) with PIATCO. The
fraud on the part of the DOTC purportedly also vitiated AEDC's consent to the compromise
agreement. It is true that a judicial compromise may be set aside if fraud vitiated the consent of a
party thereof; and that the extrinsic fraud, which nullifies a compromise, likewise invalidates the
decision approving it.54 However, once again, AEDC's allegations of fraud are unsubstantiated. There
is no proof that the DOTC and PIATCO willfully and deliberately suppressed and kept the information
on the execution of the ARCA from AEDC. The burden of proving that there indeed was fraud lies with
the party making such allegation. Each party must prove his own affirmative allegations. The burden
of proof lies on the party who would be defeated if no evidence were given on either side. In this
jurisdiction, fraud is never presumed.55
Moreover, a judicial compromise may be rescinded or set aside on the ground of fraud in accordance
with Rule 38 of the Rules on Civil Procedure on petition for relief from judgment. Section 3 thereof
prescribes the periods within which the petition for relief must be filed:
SEC. 3. Time for filing petition; contents and verification. A petition provided for in either of the
preceding sections of this Rule must be verified, filed within sixty (60) days after the petitioner
learns of the judgment, final order or other proceeding to be set aside, and not more than six
(6) months after such judgment or final order was entered, or such proceeding was taken, and
must be accompanied with affidavits showing the fraud, accident, mistake or excusable
negligence relied upon, and the facts constituting the petitioner's good and substantial cause
of action or defense, as the case may be.
According to this Court's ruling in Argana v. Republic,56 as applied to a judgment based on
compromise, both the 60-day and six-month reglementary periods within which to file a petition for
relief should be reckoned from the date when the decision approving the compromise agreement was
rendered because such judgment is considered immediately executory and entered on the date that it
was approved by the court. In the present case, the Order of the RTC of Pasig City granting the Joint
Motion to Dismiss filed by the parties in Civil Case No. 66213 was issued on 30 April 1999, yet AEDC
only spoke of the alleged fraud which vitiated its consent thereto in its Petition before this Court filed
on 20 October 2005, more than six years later.
It is obvious that the assertion by AEDC of its vitiated consent to the Joint Motion to Dismiss Civil
Case No. 66213 is nothing more than an after-thought and a desperate attempt to escape the legal
implications thereof, including the barring of its present Petition on the ground of res judicata.
It is also irrelevant to the legal position of AEDC that the Government asserted in Agan that the award
of the NAIA IPT III Project to PIATCO was void. That the Government eventually took such a position,
which this Court subsequently upheld, does not affect AEDC's commitments and obligations under its
judicially-approved compromise agreement in Civil Case No. 66213, which AEDC signed willingly,
knowingly, and ably assisted by legal counsel.
In addition, it cannot be said that there has been a fundamental change in the Government's position
since Civil Case No. 66213, contrary to the allegation of AEDC. The Government then espoused that
AEDC is not entitled to the award of the NAIA IPT III Project. The Government still maintains the
exact same position presently. That the Government eventually reversed its position on the validity of

its award of the project to PIATCO is not inconsistent with its position that neither should AEDC be
awarded the project.
For the foregoing substantive and procedural reasons, the instant Petition of AEDC should be
dismissed.
Republic of the Philippines v. Court of Appeals and Baterina (G.R. No. 174166)
As mentioned in Gingoyon, expropriation proceedings for the NAIA IPT III was instituted by the
Government with the RTC of Pasay City, docketed as Case No. 04-0876CFM. Congressman
Baterina, together with other members of the House of Representatives, sought intervention in Case
No. 04-0876CFM by filing a Petition for Prohibition in Intervention (with Application for Temporary
Restraining Order and Writ of Preliminary Injunction). Baterina, et al. believe that the Government
need not file expropriation proceedings to gain possession of NAIA IPT III and that PIATCO is not
entitled to payment of just compensation, arguing thus
A) Respondent PIATCO does not own Terminal III because BOT Contracts do not vest
ownership in PIATCO. As such, neither PIATCO nor FRAPORT are entitled to compensation.
B) Articles 448, ET SEQ., of the New Civil Code, as regards builders in good faith/bad faith, do
not apply to PIATCO's Construction of Terminal III.
C) Article 1412(2) of the New Civil Code allows the Government to demand the return of what
it has given without any obligation to comply with its promise.
D) The payment of compensation to PIATCO is unconstitutional, violative of the Build-OperateTransfer Law, and violates the Civil Code and other laws. 57
On 27 October 2005, the RTC of Pasay City issued an Order admitting the Petition in Intervention of
Baterina, et al., as well as the Complaint in Intervention of Manuel L. Fortes, Jr. and the Answer in
Intervention of Gina B. Alnas, et al. The Republic sought reconsideration of the 27 October 2005
Order of the RTC of Pasay City, which, in an Omnibus Order dated 13 December 2005, was denied
by the RTC of Pasay City as regards the intervention of Baterina, et al. and Fortes, but granted as to
the intervention of Alnas, et al. On 22 March 2006, Baterina, et al. filed with the RTC of Pasay City a
Motion to Declare in Default and/or Motion for Summary Judgment considering that the Republic and
PIATCO failed to file an answer or any responsive pleading to their Petition for Prohibition in
Intervention.
In the meantime, on 19 December 2005, the Court's Decision in Gingoyon was promulgated. Baterina
also filed a Motion for Intervention in said case and sought reconsideration of the Decision therein.
However, his Motion for Intervention was denied by this Court in a Resolution dated 1 February 2006.
On 27 March 2006, the RTC of Pasay City issued an Order and Writ of Execution, the dispositive
portion of which reads
WHEREFORE, let a writ of execution be issued in this case directing the Sheriff of this court to
immediately implement the Order dated January 4, 2005 and January 10, 2005, as affirmed by
the Decision of the Supreme Court in G.R. No. 166429 in the above-entitled case dated
December 19, 2005, in the following manner:
1. Ordering the General Manager, the Senior Assistant General Manager and the Vice
President of Finance of the Manila International Airport Authority (MIAA) to immediately

withdraw the amount of P3,002,125,000.00 from the above-mentioned Certificates of US Dollar


Time Deposits with the Land Bank of the Philippines, Baclaran Branch;
2. Ordering the Branch Manager, Land Bank of the Philippines, Baclaran Branch to
immediately release the sum of P3,002,125,000.00 to PIATCO;
Return of Service of the Writs shall be made by the Sheriff of this court immediately
thereafter;58
The RTC of Pasay City, in an Order, dated 15 June 2006, denied the Motions for Reconsideration of
its Order and Writ of Execution filed by the Government and Fortes. Baterina, meanwhile, went before
the Court of Appeals via a Petition for Certiorari and Prohibition (With Urgent Prayer for the Issuance
of a Temporary Restraining Order and Writ of Preliminary Injunction), docketed as CA-G.R. No.
95539, assailing the issuance, in grave abuse of discretion, by the RTC of Pasay City of its Orders
dated 27 March 2006 and 15 June 2006 and Writ of Execution dated 27 March 2006.
During the pendency of CA-G.R. No. 95539 with the Court of Appeals, the RTC of Pasay City issued
an Order, dated 7 August 2006, denying the Urgent Manifestation and Motion filed by the Republic in
which it relayed willingness to comply with the Order and Writ of Execution dated 27 March 2006,
provided that the trial court shall issue an Order expressly authorizing the Republic to award
concessions and lease portions of the NAIA IPT III to potential users. The following day, on 8 August
2006, the RTC of Pasay City issued an Order denying the intervention of Baterina, et al. and Fortes in
Case No. 04-0876CFM. In a third Order, dated 9 August 2006, the RTC of Pasay City directed
PIATCO to receive the amount of P3,002,125,000.00 from the Land Bank of the Philippines, Baclaran
Branch.
By 24 August 2006, the Republic was all set to comply with the 9 August 2006 Order of the RTC of
Pasay City. Hence, the representatives of the Republic and PIATCO met before the RTC of Pasay
City for the supposed payment by the former to the latter of the proferred amount. However, on the
same day, the Court of Appeals, in CA G.R. No. 95539, issued a Temporary Restraining Order (TRO)
enjoining, among other things, the RTC of Pasay City from implementing the questioned Orders,
dated 27 March 2006 and 15 June 2006, or "from otherwise causing payment and from further
proceeding with the determination of just compensation in the expropriation case involved herein,
until such time that petitioner's motion to declare in default and motion for partial summary judgment
shall have been resolved by the trial court; or it is clarified that PIATCO categorically disputes the
proferred value for NAIA Terminal 3." The TRO was to be effective for 30 days. Two days later, on 26
August 2006, the Republic filed with the Court of Appeals an Urgent Motion to Lift Temporary
Restraining Order, which the appellate court scheduled for hearing on 5 September 2006.
While the Urgent Motion to lift the TRO was still pending with the Court of Appeals, the Republic
already filed the present Petition for Certiorari and Prohibition With Urgent Application for a
Temporary Restraining Order and/or Writ of Preliminary Injunction, attributing to the Court of Appeals
grave abuse of discretion in granting the TRO and seeking a writ of prohibition against the Court of
Appeals to enjoin it from giving due course to Baterina's Petition in CA-G.R. No. 95539. The Republic
thus raises before this Court the following arguments:
I
THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO
AN EXCESS OR LACK OF JURISDICTION WHEN IT GRANTED THE TEMPORARY
RESTRAINING ORDER.

A. THIS HONORABLE COURT'S DECISION IN GINGOYON CONSTITUTES THE


"LAW OF THE CASE".
B. THE TRO IS IN DIRECT CONTRAVENTION OF THIS COURT'S DECISION WICH
HAD ATTAINED FINALITY.
II
THE REPUBLIC IS SUFFERING IRREPARABLE DAMAGE.
III
THE COURT OF APPEALS MUST BE PROHIBITED FROM GIVING DUE COURSE TO A
PETITION THAT IS DEFECTIVE IN FORM AND SUBSTANCE.
A. PRIVATE RESPONDENT HAS NO LEGAL STANDING.
1. THIS HONORABLE COURT HAS RULED THAT PRIVATE RESPONDENT
HAS NO LEGAL STANDING.
2. PRIVATE RESPONDENT HAS LOST HIS STANDING AS AN INTERVENOR.
B. PRIVATE RESPONDENT FAILED TO DEMONSTRATE THAT HE IS ENTITLED TO
THE INJUNCTIVE RELIEFS PRAYED FOR.
C. THE BOND POSTED IS INSUFFICIENT.
IV
GRANTING ARGUENDO THAT PRIVATE RESPONDENT'S PETITION IS SUFFICIENT IN
FORM AND SUBSTANCE, THE SAME HAS BECOME MOOT AND ACADEMIC.
A. THE MOTION TO DECLARE IN DEFAULT AND/OR MOTION FOR PARTIAL
SUMMARY JUDGMENT HAS ALREADY BEEN RESOLVED.
B. PIATCO HAS CATEGORICALLY DISPUTED THE PROFFERED VALUE FOR NAIA
TERMINAL III.59
The Republic prays of this Court that:
(a) Pending the determination of the merits of this petition, a temporary restraining order and/or
a writ of preliminary injunction be ISSUED restraining the Court of Appeals from implementing
the writ of preliminary injunction in CA-G.R. SP No. 95539 and proceeding in said case such
as hearing it on September 5, 2006. After both parties have been heard, the preliminary
injunction be MADE PERMANENT;
(b) The Resolution date 24 August 2006 of the Court of Appeals be SET ASIDE; and
(c) CA-G.R. SP No. 95539 be ORDERED DISMISSED.
Other just and equitable reliefs are likewise prayed for.60

On 4 September 2006, the Republic filed a Manifestation and Motion to Withdraw Urgent Motion to
Lift Temporary Restraining Order with the Court of Appeals stating, among other things, that it had
decided to withdraw the said Motion as it had opted to avail of other options and remedies. Despite
the Motion to Withdraw filed by the Government, the Court of Appeals issued a Resolution, dated 8
September 2006, lifting the TRO it issued, on the basis of the following
In view of the pronouncement of the Supreme Court in the Gingoyon case upholding the right
of PIATCO to be paid the proferred value in the amount of P3,002,125,000.00 prior to the
implementation of the writ of possession issued by the trial court on December 21, 2004 over
the NAIA Passenger Terminal III, and directing the determination of just compensation, there is
no practical and logical reason to maintain the effects of the Temporary Restraining Order
contained in our Resolution dated August 24, 2006. Thus, We cannot continue restraining what
has been mandated in a final and executory decision of the Supreme Court.
WHEREFORE, Our Resolution dated 24 August 2006 be SET ASIDE. Consequently, the
Motion to Withdraw the Motion to Lift the Temporary Restraining Order is rendered moot and
academic.61
There being no more legal impediment, the Republic tendered on 11 September 2006 Land Bank
check in the amount of P3,002,125,000.00 representing the proferred value of NAIA IPT III, which
was received by a duly authorized representative of PIATCO.
On 27 December 2006, the Court of Appeals rendered a Decision in CA G.R. No. 95539 dismissing
Baterina's Petition.
The latest developments before the Court of Appeals and the RTC of Pasay City render the present
Petition of the Republic moot.
Nonetheless, Baterina, as the private respondent in the instant Petition, presented his own prayer that
a judgment be rendered as follows:
A. For this Honorable Court, in the exercise of its judicial discretion to relax procedural rules
consistent with Metropolitan Traffic Command v. Gonong and deem that justice would be better
served if all legal issues involved in the expropriation case and in Baterina are resolved in this
case once and for all, to DECLARE that:
i. TERMINAL 3, as a matter of law, is public property and thus not a proper object of
eminent domain proceedings; and
ii. PIATCO, as a matter of law, is merely the builder of TERMINAL 3 and, as such, it may
file a claim for recovery on quantum meruit with the Commission on Audi[t] for
determination of the amount thereof, if any.
B. To DIRECT the Regional Trial Court of Pasay City, Branch 117 to dismiss the expropriation
case;
C. To DISMISS the instant Petition and DENY The Republic's application for TRO and/or writ of
preliminary injunction for lack of merit;
D. To DECLARE that the P3 Billion (representing the proferred value of TERMINAL 3) paid to
PIATCO on 11 September 2006 as funds held in trust by PIATCO for the benefit of the

Republic and subject to the outcome of the proceedings for the determination of recovery on
quantum meruit due to PIATCO, if any.
E. To DIRECT the Solicitor General to disclose the evidence it has gathered on corruption,
bribery, fraud, bad faith, etc., to this Honorable Court and the Commission on Audit, and to
DECLARE such evidence to be admissible in any proceeding for the determination of any
compensation due to PIATCO, if any.
[F]. In the alternative, to:
i. SET ASIDE the trial court's Order dated 08 August 2006 denying Private
Respondent's motion for intervention in the expropriation case, and
ii. Should this Honorable Court lend credence to the argument of the Solicitor General in
its Comment dated 20 April 2006 that "there are issues as to material fact that require
presentation of evidence", to REMAND the resolution of the legal issues raised by
Private Respondent to the trial court consistent with this Honorable Court's holding in
the Gingoyon Resolution that "the interests of the movants-in-intervention
[meaning Takenaka, Asahikosan, and herein Private Respondent] may be duly
litigated in proceedings which are extant before the lower courts."62
In essence, Baterina is opposing the expropriation proceedings on the ground that NAIA IPT III is
already public property. Hence, PIATCO is not entitled to just compensation for NAIA IPT III. He is
asking the Court to make a definitive ruling on this matter considering that it was not settled in either
Agan or Gingoyon.
We disagree. Contrary to Baterina's stance, PIATCO's entitlement to just and equitable consideration
for its construction of NAIA IPT III and the propriety of the Republic's resort to expropriation
proceedings were already recognized and upheld by this Court in Agan and Gingoyon.
The Court's Decisions in both Agan and Gingoyon had attained finality, the former on 17 February
2004 and the latter on 17 March 2006.
This Court already made an unequivocal pronouncement in its Resolution dated 21 January 2004 in
Agan that for the Government of the Republic to take over the NAIA IPT III facility, it has to
compensate PIATCO as a builder of the structures; and that "[t]he compensation must be just and in
accordance with law and equity for the government cannot unjustly enrich itself at the expense of
PIATCO and its investors."63 As between the Republic and PIATCO, the judgment on the need to
compensate PIATCO before the Government may take over NAIA IPT III is already conclusive and
beyond question.
Hence, in Gingoyon, this Court declared that:
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.
xxxx
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.64
The Court then, in Gingoyon, directly addressed the issue on the appropriateness of the Republic's
resort to expropriation proceedings:
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. 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.
xxxx
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. 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]."
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 Court's 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.65 (Emphasis ours.)
The Court, also in Gingoyon, categorically recognized PIATCO's ownership over the structures it had
built in NAIA IPT III, to wit:
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 PIATCO's 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.
xxxx
Thus, the property subject of expropriation, the NAIA 3 facilities, are real property
owned by PIATCO. x x x (Emphasis ours.)66
It was further settled in Gingoyon that the expropriation proceedings shall be held in accordance with
Republic Act No. 8974,67 thus:
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.
And finally, as to the determination of the amount due PIATCO, this Court ruled in Gingoyon that:
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." 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. 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]." 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, as well as the certainty of judicial determination of
the propriety of the proffered value.
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. 68
Gingoyon constitutes as the law of the case for the expropriation proceedings, docketed as Case No.
04-0876CFM, before the RTC of Pasay City. Law of the case has been defined in the following
manner
By "law of the case" is meant that "whatever is once irrevocably established as the controlling
legal rule or decision between the same parties in the same case continues to be the law of
the case" so long as the "facts on which such decision was predicated continue to be the facts
of the case before the court" (21 C.J.S. 330). And once the decision becomes final, it is binding
on all inferior courts and hence beyond their power and authority to alter or modify (Kabigting
vs. Acting Director of Prisons, G.R. L-15548, October 30, 1962).69
A ruling rendered on the first appeal, constitutes the law of the case, and, even if erroneous, it may no
longer be disturbed or modified since it has become final long ago. 70
The extensive excerpts from Gingoyon demonstrate and emphasize that the Court had already
adjudged the issues raised by Baterina, which he either conveniently overlooked or stubbornly
refused to accept.
The general rule precluding the relitigation of material facts or questions which were in issue and
adjudicated in former action are commonly applied to all matters essentially connected with the
subject matter of the litigation. Thus, it extends to questions necessarily involved in an issue, and
necessarily adjudicated, or necessarily implied in the final judgment, although no specific
finding may have been made in reference thereto, and although such matters were directly referred to
in the pleadings and were not actually or formally presented. Under this rule, if the record of the

former trial shows that the judgment could not have been rendered without deciding the particular
matter, it will be considered as having settled that matter as to all future actions between the parties
and if a judgment necessarily presupposes certain premises, they are as conclusive as the
judgment itself. Reasons for the rule are that a judgment is an adjudication on all the matters which
are essential to support it, and that every proposition assumed or decided by the court leading up to
the final conclusion and upon which such conclusion is based is as effectually passed upon as the
ultimate question which is finally solved. 71
Since the issues Baterina wishes to raise as an intervenor in Case No. 04-0876CFM were already
settled with finality in both Agan and Gingoyon, then there is no point in still allowing his intervention.
His Petition-in-Intervention would only be a relitigation of matters that had been previously
adjudicated by no less than the Highest Court of the land. And, in no manner can the RTC of Pasay
City in Case No. 04-0876CFM grant the reliefs he prayed for without departing from or running afoul
of the final and executory Decisions of this Court in Agan and Gingoyon.
While it is true that when this Court, in a Resolution dated 1 February 2006, dismissed the Motions for
Intervention in Gingoyon, including that of Baterina, it also observed that the interests of the movantsin-intervention may be duly litigated in proceedings which are extant before the lower courts. This
does not mean, however, that the said movants-in-interest were assured of being allowed as
intervenors or that the reliefs they sought as such shall be granted by the trial courts. The fate of their
intervention still rests on their interest or legal standing in the case and the merits of their arguments.
WHEREFORE, in view of the foregoing:
a. The Petition in G.R. No. 169914 is hereby DISMISSED for lack of merit; and
b. The Petition in G.R. No. 174166 is hereby likewise DISMISSED for being moot and academic.
No costs.
SO ORDERED.
EN BANC

[G.R. No. 155001. January 21, 2004]


DEMOSTHENES P. AGAN, JR., JOSEPH B. CATAHAN, JOSE MARI B. REUNILLA, MANUEL
ANTONIO B. BOE, MAMERTO S. CLARA, REUEL E. DIMALANTA, MORY V. DOMALAON,
CONRADO G. DIMAANO, LOLITA R. HIZON, REMEDIOS P. ADOLFO, BIENVENIDO C. HILARIO,
MIASCOR WORKERS UNION-NATIONAL LABOR UNION (MWU-NLU), and PHILIPPINE AIRLINES
EMPLOYEES ASSOCIATION (PALEA), petitioners, vs. PHILIPPINE INTERNATIONAL AIR
TERMINALS CO., INC., MANILA INTERNATIONAL AIRPORT AUTHORITY, DEPARTMENT OF
TRANSPORTATION AND COMMUNICATIONS and SECRETARY LEANDRO M. MENDOZA, in his
capacity as Head of the Department of Transportation and Communications, respondents,
MIASCOR GROUNDHANDLING CORPORATION, DNATA-WINGS AVIATION SYSTEMS
CORPORATION, MACROASIA-EUREST SERVICES, INC., MACROASIA-MENZIES AIRPORT
SERVICES CORPORATION, MIASCOR CATERING SERVICES CORPORATION, MIASCOR
AIRCRAFT MAINTENANCE CORPORATION, and MIASCOR LOGISTICS CORPORATION,
Petitioners-in-Intervention,
FLORESTE ALCONIS, GINA ALNAS, REY AMPOLOQUIO, ROSEMARIE ANG, EUGENE ARADA,
NENETTE BARREIRO, NOEL BARTOLOME, ALDRIN BASTADOR, ROLETTE DIVINE BERNARDO,
MINETTE BRAVO, KAREN BRECILLA, NIDA CAILAO, ERWIN CALAR, MARIFEL CONSTANTINO,
JANETTE CORDERO, ARNOLD FELICITAS, MARISSA GAYAGOY, ALEX GENERILLO, ELIZABETH
GRAY, ZOILO HERICO, JACQUELINE IGNACIO, THELMA INFANTE, JOEL JUMAO-AS, MARIETTA
LINCHOCO, ROLLY LORICO, FRANCIS AUGUSTO MACATOL, MICHAEL MALIGAT, DENNIS
MANALO, RAUL MANGALIMAN, JOEL MANLANGIT, CHARLIE MENDOZA, HAZNAH MENDOZA,
NICHOLS MORALES, ALLEN OLAO, CESAR ORTAL, MICHAEL ORTEGA, WAYNE PLAZA,
JOSELITO REYES, ROLANDO REYES, AILEEN SAPINA, RAMIL TAMAYO, PHILLIPS TAN,
ANDREW UY, WILLIAM VELASCO, EMILIO VELEZ, NOEMI YUPANO, MARY JANE ONG,
RICHARD RAMIREZ, CHERYLE MARIE ALFONSO, LYNDON BAUTISTA, MANUEL CABOCAN
AND NEDY LAZO, Respondents-in-Intervention,
NAGKAISANG MARALITA NG TAONG ASSOCIATION, INC., Respondents-in-Intervention,
[G.R. No. 155547. January 21, 2003]
SALACNIB F. BATERINA, CLAVEL A. MARTINEZ and CONSTANTINO G. JARAULA, petitioners, vs.
PHILIPPINE INTERNATIONAL AIR TERMINALS CO., INC., MANILA INTERNATIONAL AIRPORT
AUTHORITY, DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS, DEPARTMENT OF
PUBLIC WORKS AND HIGHWAYS, SECRETARY LEANDRO M. MENDOZA, in his capacity as Head
of the Department of Transportation and Communications, and SECRETARY SIMEON A.
DATUMANONG, in his capacity as Head of the Department of Public Works and Highways,
respondents, JACINTO V. PARAS, RAFAEL P. NANTES, EDUARDO C. ZIALCITA, WILLY BUYSON
VILLARAMA, PROSPERO C. NOGRALES, PROSPERO A. PICHAY, JR., HARLIN CAST ABAYON,
and BENASING O. MACARANBON, Respondents-Intervenors,
FLORESTE ALCONIS, GINA ALNAS, REY AMPOLOQUIO, ROSEMARIE ANG, EUGENE ARADA,
NENETTE BARREIRO, NOEL BARTOLOME, ALDRIN BASTADOR, ROLETTE DIVINE BERNARDO,
MINETTE BRAVO, KAREN BRECILLA, NIDA CAILAO, ERWIN CALAR, MARIFEL CONSTANTINO,
JANETTE CORDERO, ARNOLD FELICITAS, MARISSA GAYAGOY, ALEX GENERILLO, ELIZABETH

GRAY, ZOILO HERICO, JACQUELINE IGNACIO, THELMA INFANTE, JOEL JUMAO-AS, MARIETTA
LINCHOCO, ROLLY LORICO, FRANCIS AUGUSTO MACATOL, MICHAEL MALIGAT, DENNIS
MANALO, RAUL MANGALIMAN, JOEL MANLANGIT, CHARLIE MENDOZA, HAZNAH MENDOZA,
NICHOLS MORALES, ALLEN OLAO, CESAR ORTAL, MICHAEL ORTEGA, WAYNE PLAZA,
JOSELITO REYES, ROLANDO REYES, AILEEN SAPINA, RAMIL TAMAYO, PHILLIPS TAN,
ANDREW UY, WILLIAM VELASCO, EMILIO VELEZ, NOEMI YUPANO, MARY JANE ONG,
RICHARD RAMIREZ, CHERYLE MARIE ALFONSO, LYNDON BAUTISTA, MANUEL CABOCAN
AND NEDY LAZO, Respondents-in-Intervention,
NAGKAISANG MARALITA NG TAONG ASSOCIATION, INC., Respondents-in-Intervention,
[G.R. No. 155661. January 21, 2003]
CEFERINO C. LOPEZ, RAMON M. SALES, ALFREDO B. VALENCIA, MA. TERESA V. GAERLAN,
LEONARDO DE LA ROSA, DINA C. DE LEON, VIRGIE CATAMIN, RONALD SCHLOBOM,
ANGELITO SANTOS, MA. LUISA M. PALCON and SAMAHANG MANGGAGAWA SA PALIPARAN
NG PILIPINAS (SMPP), petitioners, vs. PHILIPPINE INTERNATIONAL AIR TERMINALS CO., INC.,
MANILA INTERNATIONAL AIRPORT AUTHORITY, DEPARTMENT OF
TRANSPORTATION AND
COMMUNICATIONS, SECRETARY LEANDRO M. MENDOZA, in his capacity as Head of the
Department of Transportation and Communications, respondents,
FLORESTE ALCONIS, GINA ALNAS, REY AMPOLOQUIO, ROSEMARIE ANG, EUGENE ARADA,
NENETTE BARREIRO, NOEL BARTOLOME, ALDRIN BASTADOR, ROLETTE DIVINE BERNARDO,
MINETTE BRAVO, KAREN BRECILLA, NIDA CAILAO, ERWIN CALAR, MARIFEL CONSTANTINO,
JANETTE CORDERO, ARNOLD FELICITAS, MARISSA GAYAGOY, ALEX GENERILLO, ELIZABETH
GRAY, ZOILO HERICO, JACQUELINE IGNACIO, THELMA INFANTE, JOEL JUMAO-AS, MARIETTA
LINCHOCO, ROLLY LORICO, FRANCIS AUGUSTO MACATOL, MICHAEL MALIGAT, DENNIS
MANALO, RAUL MANGALIMAN, JOEL MANLANGIT, CHARLIE MENDOZA, HAZNAH MENDOZA,
NICHOLS MORALES, ALLEN OLAO, CESAR ORTAL, MICHAEL ORTEGA, WAYNE PLAZA,
JOSELITO REYES, ROLANDO REYES, AILEEN SAPINA, RAMIL TAMAYO, PHILLIPS TAN,
ANDREW UY, WILLIAM VELASCO, EMILIO VELEZ, NOEMI YUPANO, MARY JANE ONG,
RICHARD RAMIREZ, CHERYLE MARIE ALFONSO, LYNDON BAUTISTA, MANUEL CABOCAN
AND NEDY LAZO, Respondents-in-Intervention,
NAGKAISANG MARALITA NG TAONG ASSOCIATION, INC., Respondents-in-Intervention.
RESOLUTION
Puno, J.:
Before this Court are the separate Motions for Reconsideration filed by respondent Philippine
International Air Terminals Co., Inc. (PIATCO), respondents-intervenors Jacinto V. Paras,
Rafael P. Nantes, Eduardo C. Zialcita, Willie Buyson Villarama, Prospero C. Nograles, Prospero
A. Pichay, Jr., Harlin Cast Abayon and Benasing O. Macaranbon, all members of the House of
Representatives (Respondent Congressmen), 47[1] respondents-intervenors who are
employees of PIATCO and other workers of the Ninoy Aquino International Airport
International Passenger Terminal III (NAIA IPT III) (PIATCO Employees) 48[2] and respondents47

48

intervenors Nagkaisang Maralita ng Taong Association, Inc., (NMTAI) 49[3] of the Decision of
this Court dated May 5, 2003 declaring the contracts for the NAIA IPT III project null and void.
Briefly, the proceedings. On October 5, 1994, Asias Emerging Dragon Corp. (AEDC)
submitted an unsolicited proposal to the Philippine Government through the Department of
Transportation and Communication (DOTC) and Manila International Airport Authority (MIAA)
for the construction and development of the NAIA IPT III under a build-operate-and-transfer
arrangement pursuant to R.A. No. 6957, as amended by R.A. No. 7718 (BOT Law). 50[4] In
accordance with the BOT Law and its Implementing Rules and Regulations (Implementing
Rules), the DOTC/MIAA invited the public for submission of competitive and comparative
proposals to the unsolicited proposal of AEDC. On September 20, 1996 a consortium
composed of the Peoples Air Cargo and Warehousing Co., Inc. (Paircargo), Phil. Air and
Grounds Services, Inc. (PAGS) and Security Bank Corp. (Security Bank) (collectively,
Paircargo Consortium), submitted their competitive proposal to the Prequalification Bids and
Awards Committee (PBAC).
After finding that the Paircargo Consortium submitted a bid superior to the unsolicited
proposal of AEDC and after failure by AEDC to match the said bid, the DOTC issued the notice
of award for the NAIA IPT III project to the Paircargo Consortium, which later organized into
herein respondent PIATCO. Hence, on July 12, 1997, the Government, through then DOTC
Secretary Arturo T. Enrile, and PIATCO, through its President, Henry T. Go, signed the
Concession Agreement for the Build-Operate-and-Transfer Arrangement of the Ninoy Aquino
International Airport Passenger Terminal III (1997 Concession Agreement). On November 26,
1998, the 1997 Concession Agreement was superseded by the Amended and Restated
Concession Agreement (ARCA) containing certain revisions and modifications from the
original contract. A series of supplemental agreements was also entered into by the
Government and PIATCO. The First Supplement was signed on August 27, 1999, the Second
Supplement on September 4, 2000, and the Third Supplement on June 22, 2001 (collectively,
Supplements) (the 1997 Concession Agreement, ARCA and the Supplements collectively
referred to as the PIATCO Contracts).
On September 17, 2002, various petitions were filed before this Court to annul the 1997
Concession Agreement, the ARCA and the Supplements and to prohibit the public
respondents DOTC and MIAA from implementing them.
In a decision dated May 5, 2003, this Court granted the said petitions and declared the 1997
Concession Agreement, the ARCA and the Supplements null and void.
Respondent PIATCO, respondent-Congressmen and respondents-intervenors now seek the
reversal of the May 5, 2003 decision and pray that the petitions be dismissed. In the
alternative, PIATCO prays that the Court should not strike down the entire 1997 Concession
Agreement, the ARCA and its supplements in light of their separability clause. RespondentCongressmen and NMTAI also pray that in the alternative, the cases at bar should be referred
to arbitration pursuant to the provisions of the ARCA. PIATCO-Employees pray that the

49

50

petitions be dismissed and remanded to the trial courts for trial on the merits or in the
alternative that the 1997 Concession Agreement, the ARCA and the Supplements be declared
valid and binding.
I
Procedural Matters
a. Lack of Jurisdiction
Private respondents and respondents-intervenors reiterate a number of procedural issues
which they insist deprived this Court of jurisdiction to hear and decide the instant cases on its
merits. They continue to claim that the cases at bar raise factual questions which this Court is
ill-equipped to resolve, hence, they must be remanded to the trial court for reception of
evidence. Further, they allege that although designated as petitions for certiorari and
prohibition, the cases at bar are actually actions for nullity of contracts over which the trial
courts have exclusive jurisdiction. Even assuming that the cases at bar are special civil
actions for certiorari and prohibition, they contend that the principle of hierarchy of courts
precludes this Court from taking primary jurisdiction over them.
We are not persuaded.
There is a question of fact when doubt or difference arises as to the truth or falsity of the facts
alleged.51[5] Even a cursory reading of the cases at bar will show that the Court decided them
by interpreting and applying the Constitution, the BOT Law, its Implementing Rules and other
relevant legal principles on the basis of clearly undisputed facts. All the operative facts were
settled, hence, there is no need for a trial type determination of their truth or falsity by a trial
court.
We reject the unyielding insistence of PIATCO Employees that the following factual issues are
critical and beyond the capability of this Court to resolve, viz: (a) whether the National
Economic Development Authority- Investment Coordinating Committee (NEDA-ICC) approved
the Supplements; (b) whether the First Supplement created ten (10) new financial obligations
on the part of the government; and (c) whether the 1997 Concession Agreement departed from
the draft Concession Agreement contained in the Bid Documents. 52[6]
The factual issue of whether the NEDA-ICC approved the Supplements is hardly relevant. It is
clear in our Decision that the PIATCO contracts were invalidated on other and more
substantial grounds. It did not rely on the presence or absence of NEDA-ICC approval of the
Supplements. On the other hand, the last two issues do not involve disputed facts. Rather,
they involve contractual provisions which are clear and categorical and need only to be
interpreted. The interpretation of contracts and the determination of whether their provisions
violate our laws or contravene any public policy is a legal issue which this Court may properly
pass upon.

51

52

Respondents corollary contention that this Court violated the hierarchy of courts when it
entertained the cases at bar must also fail. The rule on hierarchy of courts in cases falling
within the concurrent jurisdiction of the trial courts and appellate courts generally applies to
cases involving warring factual allegations. For this reason, litigants are required to repair to
the trial courts at the first instance to determine the truth or falsity of these contending
allegations on the basis of the evidence of the parties. Cases which depend on disputed facts
for decision cannot be brought immediately before appellate courts as they are not triers of
facts.
It goes without saying that when cases brought before the appellate courts do not involve
factual but legal questions, a strict application of the rule of hierarchy of courts is not
necessary. As the cases at bar merely concern the construction of the Constitution, the
interpretation of the BOT Law and its Implementing Rules and Regulations on undisputed
contractual provisions and government actions, and as the cases concern public interest, this
Court resolved to take primary jurisdiction over them. This choice of action follows the
consistent stance of this Court to settle any controversy with a high public interest
component in a single proceeding and to leave no root or branch that could bear the seeds of
future litigation. The suggested remand of the cases at bar to the trial court will stray away
from this policy.53[7]
b. Legal Standing
Respondent PIATCO stands pat with its argument that petitioners lack legal personality to file the
cases at bar as they are not real parties in interest who are bound principally or subsidiarily to the
PIATCO Contracts. Further, respondent PIATCO contends that petitioners failed to show any legally
demandable or enforceable right to justify their standing to file the cases at bar.
These arguments are not difficult to deflect. The determination of whether a person may institute an
action or become a party to a suit brings to fore the concepts of real party in interest, capacity to sue
and standing to sue. To the legally discerning, these three concepts are different although commonly
directed towards ensuring that only certain parties can maintain an action. 54[8] As defined in the Rules
of Court, a real party in interest is the party who stands to be benefited or injured by the judgment in
the suit or the party entitled to the avails of the suit. 55[9] Capacity to sue deals with a situation where a
person who may have a cause of action is disqualified from bringing a suit under applicable law or is
incompetent to bring a suit or is under some legal disability that would prevent him from maintaining
an action unless represented by a guardian ad litem. Legal standing is relevant in the realm of public
law. In certain instances, courts have allowed private parties to institute actions challenging the
validity of governmental action for violation of private rights or constitutional principles. 56[10] In these
cases, courts apply the doctrine of legal standing by determining whether the party has a direct and
53

54

55

56

personal interest in the controversy and whether such party has sustained or is in imminent
danger of sustaining an injury as a result of the act complained of, a standard which is distinct
from the concept of real party in interest.57[11] Measured by this yardstick, the application of the
doctrine on legal standing necessarily involves a preliminary consideration of the merits of the case
and is not purely a procedural issue.58[12]
Considering the nature of the controversy and the issues raised in the cases at bar, this Court affirms
its ruling that the petitioners have the requisite legal standing. The petitioners in G.R. Nos. 155001
and 155661 are employees of service providers operating at the existing international airports and
employees of MIAA while petitioners-intervenors are service providers with existing contracts with
MIAA and they will all sustain direct injury upon the implementation of the PIATCO Contracts. The
1997 Concession Agreement and the ARCA both provide that upon the commencement of operations
at the NAIA IPT III, NAIA Passenger Terminals I and II will cease to be used as international
passenger terminals.59[13] Further, the ARCA provides:
(d)
For the purpose of an orderly transition, MIAA shall not renew any expired concession
agreement relative to any service or operation currently being undertaken at the Ninoy Aquino
International Airport Passenger Terminal I, or extend any concession agreement which may expire
subsequent hereto, except to the extent that the continuation of the existing services and operations
shall lapse on or before the In-Service Date.60[14]
Beyond iota of doubt, the implementation of the PIATCO Contracts, which the petitioners and
petitioners-intervenors denounce as unconstitutional and illegal, would deprive them of their sources
of livelihood. Under settled jurisprudence, one's employment, profession, trade, or calling is a
property right and is protected from wrongful interference. 61[15] It is also self evident that the
petitioning service providers stand in imminent danger of losing legitimate business investments in
the event the PIATCO Contracts are upheld.
Over and above all these, constitutional and other legal issues with far-reaching economic and social
implications are embedded in the cases at bar, hence, this Court liberally granted legal standing to
the petitioning members of the House of Representatives. First, at stake is the build-operate-and
transfer contract of the countrys premier international airport with a projected capacity of 10 million
passengers a year. Second, the huge amount of investment to complete the project is estimated to
be P13,000,000,000.00. Third, the primary issues posed in the cases at bar demand a discussion
and interpretation of the Constitution, the BOT Law and its implementing rules which have not been
57

58

59

60

61

passed upon by this Court in previous cases. They can chart the future inflow of investment under
the BOT Law.
Before writing finis to the issue of legal standing, the Court notes the bid of new parties to participate
in the cases at bar as respondents-intervenors, namely, (1) the PIATCO Employees and (2) NMTAI
(collectively, the New Respondents-Intervenors). After the Courts Decision, the New RespondentsIntervenors filed separate Motions for Reconsideration-In-Intervention alleging prejudice and direct
injury. PIATCO employees claim that they have a direct and personal interest [in the controversy]...
since they stand to lose their jobs should the governments contract with PIATCO be declared null
and void.62[16] NMTAI, on the other hand, represents itself as a corporation composed of
responsible tax-paying Filipino citizens with the objective of protecting and sustaining the rights of its
members to civil liberties, decent livelihood, opportunities for social advancement, and to a good,
conscientious and honest government.63[17]
The Rules of Court govern the time of filing a Motion to Intervene. Section 2, Rule 19 provides that a
Motion to Intervene should be filed before rendition of judgment.... The New RespondentsIntervenors filed their separate motions after a decision has been promulgated in the present cases.
They have not offered any worthy explanation to justify their late intervention. Consequently, their
Motions for Reconsideration-In-Intervention are denied for the rules cannot be relaxed to await
litigants who sleep on their rights. In any event, a sideglance at these late motions will show that they
hoist no novel arguments.
c. Failure to Implead an Indispensable Party
PIATCO next contends that petitioners should have impleaded the Republic of the Philippines as an
indispensable party. It alleges that petitioners sued the DOTC, MIAA and the DPWH in their own
capacities or as implementors of the PIATCO Contracts and not as a contract party or as
representatives of the Government of the Republic of the Philippines. It then leapfrogs to the
conclusion that the absence of an indispensable party renders ineffectual all the proceedings
subsequent to the filing of the complaint including the judgment. 64[18]
PIATCOs allegations are inaccurate. The petitions clearly bear out that public respondents DOTC
and MIAA were impleaded as parties to the PIATCO Contracts and not merely as their
implementors. The separate petitions filed by the MIAA employees 65[19] and members of the House
of Representatives66[20] alleged that public respondents are impleaded herein because they either
executed the PIATCO Contracts or are undertaking acts which are related to the PIATCO Contracts.
62

63

64

65

66

They are interested and indispensable parties to this Petition. 67[21] Thus, public respondents DOTC
and MIAA were impleaded as parties to the case for having executed the contracts.
More importantly, it is also too late in the day for PIATCO to raise this issue. If PIATCO seriously
views the non-inclusion of the Republic of the Philippines as an indispensable party as fatal to the
petitions at bar, it should have raised the issue at the onset of the proceedings as a ground to
dismiss. PIATCO cannot litigate issues on a piecemeal basis, otherwise, litigations shall be like a
shore that knows no end. In any event, the Solicitor General, the legal counsel of the Republic,
appeared in the cases at bar in representation of the interest of the government.
II
Pre-qualification of PIATCO
The Implementing Rules provide for the unyielding standards the PBAC should apply to determine
the financial capability of a bidder for pre-qualification purposes: (i) proof of the ability of the project
proponent and/or the consortium to provide a minimum amount of equity to the project and (ii) a
letter testimonial from reputable banks attesting that the project proponent and/or members of the
consortium are banking with them, that they are in good financial standing, and that they have
adequate resources.68[22] The evident intent of these standards is to protect the integrity and insure
the viability of the project by seeing to it that the proponent has the financial capability to carry it out.
As a further measure to achieve this intent, it maintains a certain debt-to-equity ratio for the
project.
At the pre-qualification stage, it is most important for a bidder to show that it has the financial capacity
to undertake the project by proving that it can fulfill the requirement on minimum amount of equity.
For this purpose, the Bid Documents require in no uncertain terms:
The minimum amount of equity to which the proponents financial capability will be based shall be
thirty percent (30%) of the project cost instead of the twenty percent (20%) specified in
Section 3.6.4 of the Bid Documents. This is to correlate with the required debt-to-equity ratio of
70:30 in Section 2.01a of the draft concession agreement. The debt portion of the project financing
should not exceed 70% of the actual project cost.69[23]
In relation thereto, section 2.01 (a) of the ARCA provides:
Section 2.01 Project Scope.
The scope of the project shall include:
(a) Financing the project at an actual Project cost of not less than Three Hundred Fifty Million
United States Dollars (US$350,000,000.00) while maintaining a debt-to-equity ratio of 70:30,
67

68

69

provided that if the actual Project costs should exceed the aforesaid amount,
Concessionaire shall ensure that the debt-to-equity ratio is maintained; 70[24]
Under the debt-to-equity restriction, a bidder may only seek financing of the NAIA IPT III Project up to
70% of the project cost. Thirty percent (30%) of the cost must come in the form of equity or
investment by the bidder itself. It cannot be overly emphasized that the rules require a minimum
amount of equity to ensure that a bidder is not merely an operator or implementor of the project but
an investor with a substantial interest in its success. The minimum equity requirement also
guarantees the Philippine government and the general public, who are the ultimate beneficiaries of
the project, that a bidder will not be indifferent to the completion of the project. The discontinuance of
the project will irreparably damage public interest more than private interest.
In the cases at bar, after applying the investment ceilings provided under the General Banking Act
and considering the maximum amounts that each member of the consortium may validly invest in the
project, it is daylight clear that the Paircargo Consortium, at the time of pre-qualification, had a net
worth equivalent to only 6.08% of the total estimated project cost.71[25] By any reckoning, a
showing by a bidder that at the time of pre-qualification its maximum funds available for investment
amount to only 6.08% of the project cost is insufficient to satisfy the requirement prescribed by the
Implementing Rules that the project proponent must have the ability to provide at least 30% of the
total estimated project cost. In peso and centavo terms, at the time of pre-qualification, the Paircargo
Consortium had maximum funds available for investment to the NAIA IPT III Project only in the
amount of P558,384,871.55, when it had to show that it had the ability to provide at least
P2,755,095,000.00. The huge disparity cannot be dismissed as of de minimis importance
considering the high public interest at stake in the project.
PIATCO nimbly tries to sidestep its failure by alleging that it submitted not only audited financial
statements but also testimonial letters from reputable banks attesting to the good financial standing of
the Paircargo Consortium. It contends that in adjudging whether the Paircargo Consortium is a prequalified bidder, the PBAC should have considered not only its financial statements but other factors
showing its financial capability.
Anent this argument, the guidelines provided in the Bid Documents are instructive:
3.3.4 FINANCING AND FINANCIAL PREQUALIFICATIONS REQUIREMENTS

Minimum Amount of Equity

Each member of the proponent entity is to provide evidence of networth in cash and assets
representing the proportionate share in the proponent entity. Audited financial statements for the
past five (5) years as a company for each member are to be provided.

70

71

Project Loan Financing

Testimonial letters from reputable banks attesting that each of the members of the ownership
entity are banking with them, in good financial standing and having adequate resources are to be
provided.72[26]
It is beyond refutation that Paircargo Consortium failed to prove its ability to provide the amount of
at least P2,755,095,000.00, or 30% of the estimated project cost. Its submission of testimonial
letters attesting to its good financial standing will not cure this failure. At best, the said letters merely
establish its credit worthiness or its ability to obtain loans to finance the project. They do not,
however, prove compliance with the aforesaid requirement of minimum amount of equity in relation to
the prescribed debt-to-equity ratio. This equity cannot be satisfied through possible loans.
In sum, we again hold that given the glaring gap between the net worth of Paircargo and PAGS
combined with the amount of maximum funds that Security Bank may invest by equity in a non-allied
undertaking, Paircargo Consortium, at the time of pre-qualification, failed to show that it had the ability
to provide 30% of the project cost and necessarily, its financial capability for the project cannot pass
muster.
III
1997 Concession Agreement
Again, we brightline the principle that in public bidding, bids are submitted in accord with the
prescribed terms, conditions and parameters laid down by government and pursuant to the
requirements of the project bidded upon. In light of these parameters, bidders formulate competing
proposals which are evaluated to determine the bid most favorable to the government. Once the
contract based on the bid most favorable to the government is awarded, all that is left to be done by
the parties is to execute the necessary agreements and implement them. There can be no
substantial or material change to the parameters of the project, including the essential terms and
conditions of the contract bidded upon, after the contract award. If there were changes and the
contracts end up unfavorable to government, the public bidding becomes a mockery and the modified
contracts must be struck down.
Respondents insist that there were no substantial or material amendments in the 1997 Concession
Agreement as to the technical aspects of the project, i.e., engineering design, technical soundness,
operational and maintenance methods and procedures of the project or the technical proposal of
PIATCO. Further, they maintain that there was no modification of the financial features of the project,
i.e., minimum project cost, debt-to-equity ratio, the operations and maintenance budget, the schedule
and amount of annual guaranteed payments, or the financial proposal of PIATCO. A discussion of
some of these changes to determine whether they altered the terms and conditions upon which the
bids were made is again in order.
a.
Modification on Fees and
Charges to be collected by PIATCO
PIATCO clings to the contention that the removal of the groundhandling fees, airline office rentals and
porterage fees from the category of fees subject to MIAA regulation in the 1997 Concession
Agreement does not constitute a substantial amendment as these fees are not really public utility
fees. In other words, PIATCO justifies the re-classification under the 1997 Concession Agreement on
the ground that these fees are non-public utility revenues.
72

We disagree. The removal of groundhandling fees, airline office rentals and porterage fees from the
category of Public Utility Revenues under the draft Concession Agreement and its re-classification
to Non-Public Utility Revenues under the 1997 Concession Agreement is significant and has far
reaching consequence. The 1997 Concession Agreement provides that with respect to Non-Public
Utility Revenues, which include groundhandling fees, airline office rentals and porterage fees, 73[27]
[PIATCO] may make any adjustments it deems appropriate without need for the consent of GRP
or any government agency.74[28] In contrast, the draft Concession Agreement specifies these fees
as part of Public Utility Revenues and can be adjusted only once every two years and in
accordance with the Parametric Formula and the adjustments shall be made effective only after the
written express approval of the MIAA.75[29] The Bid Documents themselves clearly provide:
4.2.3 Mechanism for Adjustment of Fees and Charges
4.2.3.1

Periodic Adjustment in Fees and Charges


Adjustments in the fees and charges enumerated hereunder, whether or not falling
within the purview of public utility revenues, shall be allowed only once every two
years in accordance with the parametric formula attached hereto as Annex 4.2f. Provided
that the adjustments shall be made effective only after the written express approval of
MIAA. Provided, further, that MIAAs approval, shall be contingent only on conformity of
the adjustments to the said parametric formula.
The fees and charges to be regulated in the above manner shall consist of the following:

....
c) groundhandling fees;
d) rentals on airline offices;
....
(f) porterage fees;
. . . .76[30]
The plain purpose in re-classifying groundhandling fees, airline office rentals and porterage fees as
non-public utility fees is to remove them from regulation by the MIAA. In excluding these fees
from government regulation, the danger to public interest cannot be downplayed.
73

74

75

76

We are not impressed by the effort of PIATCO to depress this prejudice to public interest by its
contention that in the 1997 Concession Agreement governing Non-Public Utility Revenues, it is
provided that [PIATCO] shall at all times be judicious in fixing fees and charges constituting NonPublic Utility Revenues in order to ensure that End Users are not unreasonably deprived of
services.77[31] PIATCO then peddles the proposition that the said provision confers upon MIAA full
regulatory powers to ensure that PIATCO is charging non-public utility revenues at judicious
rates.78[32] To the trained eye, the argument will not fly for it is obviously non sequitur. Fairly read, it
is PIATCO that wields the power to determine the judiciousness of the said fees and charges. In the
draft Concession Agreement the power was expressly lodged with the MIAA and any adjustment can
only be done once every two years. The changes are not insignificant specks as interpreted by
PIATCO.
PIATCO further argues that there is no substantial change in the 1997 Concession Agreement with
respect to fees and charges PIATCO is allowed to impose which are not covered by Administrative
Order No. 1, Series of 199379[33] as the relevant provision of the 1997 Concession Agreement is
practically identical with the draft Concession Agreement. 80[34]
We are not persuaded. Under the draft Concession Agreement, PIATCO may impose fees and
charges other than those fees and charges previously imposed or collected at the Ninoy Aquino
International Airport Passenger Terminal I, subject to the written approval of MIAA. 81[35] Further, the
draft Concession Agreement provides that MIAA reserves the right to regulate these new fees and
charges if in its judgment the users of the airport shall be deprived of a free option for the services
they cover.82[36] In contrast, under the 1997 Concession Agreement, the MIAA merely retained the
right to approve any imposition of new fees and charges which were not previously collected at
the Ninoy Aquino International Airport Passenger Terminal I. The agreement did not contain an
equivalent provision allowing MIAA to reserve the right to regulate the adjustments of these
new fees and charges.83[37] PIATCO justifies the amendment by arguing that MIAA can establish
terms before approval of new fees and charges, inclusive of the mode for their adjustment.

77

78

79

80

81

82

83

PIATCOs stance is again a strained one. There would have been no need for an amendment if there
were no change in the power to regulate on the part of MIAA. The deletion of MIAAs reservation of its
right to regulate the price adjustments of new fees and charges can have no other purpose but to
dilute the extent of MIAAs regulation in the collection of these fees. Again, the amendment
diminished the authority of MIAA to protect the public interest in case of abuse by PIATCO.
b.
Assumption by the
Government of the liabilities
of PIATCO in the event of the latters
default
PIATCO posits the thesis that the new provisions in the 1997 Concession Agreement in case of
default by PIATCO on its loans were merely meant to prescribe and limit the rights of PIATCOs
creditors with regard to the NAIA Terminal III. PIATCO alleges that Section 4.04 of the 1997
Concession Agreement simply provides that PIATCOs creditors have no right to foreclose the NAIA
Terminal III.
We cannot concur. The pertinent provisions of the 1997 Concession Agreement state:
Section 4.04 Assignment.
....
(b)
In the event Concessionaire should default in the payment of an Attendant Liability, and
the default has resulted in the acceleration of the payment due date of the Attendant Liability prior to
its stated date of maturity, the Unpaid Creditors and Concessionaire shall immediately inform GRP in
writing of such default. GRP shall, within one hundred eighty (180) Days from receipt of the joint
written notice of the Unpaid Creditors and Concessionaire, either (i) take over the Development
Facility and assume the Attendant Liabilities, or (ii) allow the Unpaid Creditors, if qualified, to be
substituted as concessionaire and operator of the Development Facility in accordance with the terms
and conditions hereof, or designate a qualified operator acceptable to GRP to operate the
Development Facility, likewise under the terms and conditions of this Agreement; Provided that if at
the end of the 180-day period GRP shall not have served the Unpaid Creditors and Concessionaire
written notice of its choice, GRP shall be deemed to have elected to take over the Development
Facility with the concomitant assumption of Attendant Liabilities.
(c)
If GRP should, by written notice, allow the Unpaid Creditors to be substituted as
concessionaire, the latter shall form and organize a concession company qualified to take over the
operation of the Development Facility. If the concession company should elect to designate an
operator for the Development Facility, the concession company shall in good faith identify and
designate a qualified operator acceptable to GRP within one hundred eighty (180) days from receipt
of GRPs written notice. If the concession company, acting in good faith and with due diligence, is
unable to designate a qualified operator within the aforesaid period, then GRP shall at the end of the
180-day period take over the Development Facility and assume Attendant Liabilities.
A plain reading of the above provision shows that it spells out in limpid language the obligation of
government in case of default by PIATCO on its loans. There can be no blinking from the fact that in
case of PIATCOs default, the government will assume PIATCOs Attendant Liabilities as defined in
the 1997 Concession Agreement.84[38] This obligation is not found in the draft Concession
84

Agreement and the change runs roughshod to the spirit and policy of the BOT Law which was crafted
precisely to prevent government from incurring financial risk.
In any event, PIATCO pleads that the entire agreement should not be struck down as the 1997
Concession Agreement contains a separability clause.
The plea is bereft of merit. The contracts at bar which made a mockery of the bidding process cannot
be upheld and must be annulled in their entirety for violating law and public policy. As demonstrated,
the contracts were substantially amended after their award to the successful bidder on terms more
beneficial to PIATCO and prejudicial to public interest. If this flawed process would be allowed, public
bidding will cease to be competitive and worse, government would not be favored with the best bid.
Bidders will no longer bid on the basis of the prescribed terms and conditions in the bid documents
but will formulate their bid in anticipation of the execution of a future contract containing new and
better terms and conditions that were not previously available at the time of the bidding. Such a
public bidding will not inure to the public good. The resulting contracts cannot be given half a life but
must be struck down as totally lawless.
IV.
Direct Government Guarantee
The respondents further contend that the PIATCO Contracts do not contain direct government
guarantee provisions. They assert that section 4.04 of the ARCA, which superseded sections 4.04(b)
and (c), Article IV of the 1997 Concession Agreement, is but a clarification and explanation 85[39] of
the securities allowed in the bid documents. They allege that these provisions merely provide for
compensation to PIATCO86[40] in case of a government buy-out or takeover of NAIA IPT III. The
respondents, particularly respondent PIATCO, also maintain that the guarantee contained in the
contracts, if any, is an indirect guarantee allowed under the BOT Law, as amended. 87[41]
We do not agree. Section 4.04(c), Article IV 88[42] of the ARCA should be read in conjunction with
section 1.06, Article I,89[43] in the same manner that sections 4.04(b) and (c), Article IV of the 1997
Concession Agreement should be related to Article 1.06 of the same contract. Section 1.06, Article I
of the ARCA and its counterpart provision in the 1997 Concession Agreement define in no uncertain
terms the meaning of attendant liabilities. They tell us of the amounts that the Government has to
pay in the event respondent PIATCO defaults in its loan payments to its Senior Lenders and no
85

86

87

88

89

qualified transferee or nominee is chosen by the Senior Lenders or is willing to take over from
respondent PIATCO.
A reasonable reading of all these relevant provisions would reveal that the ARCA made the
Government liable to pay all amounts ... from time to time owed or which may become owing by
Concessionaire [PIATCO] to Senior Lenders or any other persons or entities who have
provided, loaned, or advanced funds or provided financial facilities to Concessionaire
[PIATCO] for the Project [NAIA Terminal 3].90[44] These amounts include without limitation, all
principal, interest, associated fees, charges, reimbursements, and other related expenses...
whether payable at maturity, by acceleration or otherwise. 91[45] They further include amounts owed
by respondent PIATCO to its professional consultants and advisers, suppliers, contractors and subcontractors as well as fees, charges and expenses of any agents or trustees of the Senior Lenders
or any other persons or entities who have provided loans or financial facilities to respondent PIATCO
in relation to NAIA IPT III.92[46] The counterpart provision in the 1997 Concession Agreement
specifying the attendant liabilities that the Government would be obligated to pay should PIATCO
default in its loan obligations is equally onerous to the Government as those contained in the ARCA.
According to the 1997 Concession Agreement, in the event the Government is forced to prematurely
take over NAIA IPT III as a result of respondent PIATCOs default in the payment of its loan
obligations to its Senior Lenders, it would be liable to pay the following amounts as attendant
liabilities:
Section 1.06. Attendant Liabilities
Attendant Liabilities refer to all amounts recorded and from time to time outstanding in the
books of the Concessionaire as owing to Unpaid Creditors who have provided, loaned or
advanced funds actually used for the Project, including all interests, penalties, associated fees,
charges, surcharges, indemnities, reimbursements and other related expenses, and further
including amounts owed by Concessionaire to its suppliers, contractors and sub-contractors. 93[47]
These provisions reject respondents contention that what the Government is obligated to pay, in the
event that respondent PIATCO defaults in the payment of its loans, is merely termination payment or
just compensation for its takeover of NAIA IPT III. It is clear from said section 1.06 that what the
Government would pay is the sum total of all the debts, including all interest, fees and
charges, that respondent PIATCO incurred in pursuance of the NAIA IPT III Project. This reading is
consistent with section 4.04 of the ARCA itself which states that the Government shall make a
termination payment to Concessionaire [PIATCO] equal to the Appraised Value (as hereinafter
defined) of the Development Facility [NAIA Terminal III] or the sum of the Attendant Liabilities, if
greater. For sure, respondent PIATCO will not receive any amount less than sufficient to
cover its debts, regardless of whether or not the value of NAIA IPT III, at the time of its turn
90

91

92

93

over to the Government, may actually be less than the amount of PIATCOs debts. The scheme
is a form of direct government guarantee for it is undeniable that it leaves the government no option
but to pay the attendant liabilities in the event that the Senior Lenders are unable or unwilling to
appoint a qualified nominee or transferee as a result of PIATCOs default in the payment of its Senior
Loans. As we stressed in our Decision, this Court cannot depart from the legal maxim that those that
cannot be done directly cannot be done indirectly.
This is not to hold, however, that indirect government guarantee is not allowed under the BOT Law,
as amended. The intention to permit indirect government guarantee is evident from the Senate
deliberations on the amendments to the BOT Law. The idea is to allow for reasonable government
undertakings, such as to authorize the project proponent to undertake related ventures within the
project area, in order to encourage private sector participation in development projects. 94[48] An
example cited by then Senator Gloria Macapagal-Arroyo, one of the sponsors of R.A. No. 7718, is the
Mandaluyong public market which was built under the Build-and-Transfer (BT) scheme wherein
instead of the government paying for the transfer, the project proponent was allowed to operate the
upper floors of the structure as a commercial mall in order to recoup their investments. 95[49] It was
repeatedly stressed in the deliberations that in allowing indirect government guarantee, the law seeks
to encourage both the government and the private sector to formulate reasonable and innovative
government undertakings in pursuance of BOT projects. In no way, however, can the government be
made liable for the debts of the project proponent as this would be tantamount to a direct government
guarantee which is prohibited by the law. Such liability would defeat the very purpose of the BOT
Law which is to encourage the use of private sector resources in the construction, maintenance
and/or operation of development projects with no, or at least minimal, capital outlay on the part of the
government.
The respondents again urge that should this Court affirm its ruling that the PIATCO Contracts contain
direct government guarantee provisions, the whole contract should not be nullified. They rely on the
separability clause in the PIATCO Contracts.
We are not persuaded.
The BOT Law and its implementing rules provide that there are three (3) essential requisites for an
unsolicited proposal to be accepted: (1) the project involves a new concept in technology and/or is
not part of the list of priority projects, (2) no direct government guarantee, subsidy or equity is
required, and (3) the government agency or local government unit has invited by publication other
interested parties to a public bidding and conducted the same. 96[50] The failure to fulfill any of the
requisites will result in the denial of the proposal. Indeed, it is further provided that a direct
government guarantee, subsidy or equity provision will necessarily disqualify a proposal from being
treated and accepted as an unsolicited proposal. 97[51] In fine, the mere inclusion of a direct
94

95

96

97

government guarantee in an unsolicited proposal is fatal to the proposal. There is more reason to
invalidate a contract if a direct government guarantee provision is inserted later in the contract via a
backdoor amendment. Such an amendment constitutes a crass circumvention of the BOT Law and
renders the entire contract void.
Respondent PIATCO likewise claims that in view of the fact that other BOT contracts such as the
JANCOM contract, the Manila Water contract and the MRT contract had been considered valid, the
PIATCO contracts should be held valid as well. 98[52] There is no parity in the cited cases. For
instance, a reading of Metropolitan Manila Development Authority v. JANCOM Environmental
Corporation99[53] will show that its issue is different from the issues in the cases at bar. In the
JANCOM case, the main issue is whether there is a perfected contract between JANCOM and the
Government. The resolution of the issue hinged on the following: (1) whether the conditions
precedent to the perfection of the contract were complied with; (2) whether there is a valid notice of
award; and (3) whether the signature of the Secretary of the Department of Environment and Natural
Resources is sufficient to bind the Government. These issue and sub-issues are clearly
distinguishable and different. For one, the issue of direct government guarantee was not considered
by this Court when it held the JANCOM contract valid, yet, it is a key reason for invalidating the
PIATCO Contracts. It is a basic principle in law that cases with dissimilar facts cannot have similar
disposition.
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.
II.
Temporary takeover of business affected with
public interest in times of national emergency
Section 17, Article XII of the 1987 Constitution grants the State in times of national emergency the
right to temporarily take over the operation of any business affected with public interest. This right is
an exercise of police power which is one of the inherent powers of the State.
Police power has been defined as the "state authority to enact legislation that may interfere with
personal liberty or property in order to promote the general welfare." 100[54] It consists of two essential
elements. First, it is an imposition of restraint upon liberty or property. Second, the power is
exercised for the benefit of the common good. Its definition in elastic terms underscores its allencompassing and comprehensive embrace.101[55] It is and still is the most essential, insistent, and
98

99

100

101

illimitable102[56] of the States powers. It is familiar knowledge that unlike the power of eminent
domain, police power is exercised without provision for just compensation for its paramount
consideration is public welfare. 103[57]
It is also settled that public interest on the occasion of a national emergency is the primary
consideration when the government decides to temporarily take over or direct the operation of a
public utility or a business affected with public interest. The nature and extent of the emergency is the
measure of the duration of the takeover as well as the terms thereof. It is the State that prescribes
such reasonable terms which will guide the implementation of the temporary takeover as dictated by
the exigencies of the time. As we ruled in our Decision, this power of the State can not be negated by
any party nor should its exercise be a source of obligation for the State.
Section 5.10(c), Article V of the ARCA provides that respondent PIATCO shall be entitled to
reasonable compensation for the duration of the temporary takeover by GRP, which compensation
shall take into account the reasonable cost for the use of the Terminal and/or Terminal
Complex.104[58] It clearly obligates the government in the exercise of its police power to compensate
respondent PIATCO and this obligation is offensive to the Constitution. Police power can not be
diminished, let alone defeated by any contract for its paramount consideration is public welfare and
interest.105[59]
Again, respondent PIATCOs reliance on the case of Heirs of Suguitan v. City of
Mandaluyong106[60] to justify its claim for reasonable compensation for the Governments temporary
takeover of NAIA IPT III in times of national emergency is erroneous. What was involved in Heirs of
Suguitan is the exercise of the states power of eminent domain and not of police power, hence, just
compensation was awarded. The cases at bar will not involve the exercise of the power of eminent
domain.
III.
Monopoly
Section 19, Article XII of the 1987 Constitution mandates that the State prohibit or regulate
monopolies when public interest so requires. Monopolies are not per se prohibited. Given its
susceptibility to abuse, however, the State has the bounden duty to regulate monopolies to protect

102

103

104

105

106

public interest. Such regulation may be called for, especially in sensitive areas such as the operation
of the countrys premier international airport, considering the public interest at stake.
By virtue of the PIATCO contracts, NAIA IPT III would be the only international passenger airport
operating in the Island of Luzon, with the exception of those already operating in Subic Bay Freeport
Special Economic Zone (SBFSEZ), Clark Special Economic Zone (CSEZ) and in Laoag City.
Undeniably, the contracts would create a monopoly in the operation of an international commercial
passenger airport at the NAIA in favor of PIATCO.
The grant to respondent PIATCO of the exclusive right to operate NAIA IPT III should not exempt it
from regulation by the government. The government has the right, indeed the duty, to protect the
interest of the public. Part of this duty is to assure that respondent PIATCOs exercise of its right
does not violate the legal rights of third parties. We reiterate our ruling that while the service
providers presently operating at NAIA Terminals I and II do not have the right to demand for the
renewal or extension of their contracts to continue their services in NAIA IPT III, those who have
subsisting contracts beyond the In-Service Date of NAIA IPT III can not be arbitrarily or unreasonably
treated.
Finally, the Respondent Congressmen assert that at least two (2) committee reports by the House of
Representatives found the PIATCO contracts valid and contend that this Court, by taking cognizance
of the cases at bar, reviewed an action of a co-equal body.107[61] They insist that the Court must
respect the findings of the said committees of the House of Representatives. 108[62] With due respect,
we cannot subscribe to their submission. There is a fundamental difference between a case in court
and an investigation of a congressional committee. The purpose of a judicial proceeding is to settle
the dispute in controversy by adjudicating the legal rights and obligations of the parties to the case.
On the other hand, a congressional investigation is conducted in aid of legislation. 109[63] Its aim is to
assist and recommend to the legislature a possible action that the body may take with regard to a
particular issue, specifically as to whether or not to enact a new law or amend an existing one.
Consequently, this Court cannot treat the findings in a congressional committee report as binding
because the facts elicited in congressional hearings are not subject to the rigors of the Rules of Court
on admissibility of evidence. The Court in assuming jurisdiction over the petitions at bar simply
performed its constitutional duty as the arbiter of legal disputes properly brought before it, especially
in this instance when public interest requires nothing less.
WHEREFORE, the motions for reconsideration filed by the respondent PIATCO, respondent
Congressmen and the respondents-in-intervention are DENIED with finality. SO ORDERED.
EN BANC
[G.R. No. 154599. January 21, 2004]

107

108

109

THE LIGA NG MGA BARANGAY NATIONAL, petitioner, vs. THE CITY MAYOR OF MANILA, HON.
JOSE ATIENZA, JR., and THE CITY COUNCIL OF MANILA, respondents.
DECISION
DAVIDE, JR., C.J.:
This petition for certiorari under Rule 65 of the Rules of Court seeks the nullification of Manila City
Ordinance No. 8039, Series of 2002,110[1] and respondent City Mayors Executive Order No. 011,
Series of 2002,111[2] dated 15 August 2002 , for being patently contrary to law.
The antecedents are as follows:
Petitioner Liga ng mga Barangay National (Liga for brevity) is the national organization of all the
barangays in the Philippines, which pursuant to Section 492 of Republic Act No. 7160, otherwise
known as The Local Government Code of 1991, constitutes the duly elected presidents of highlyurbanized cities, provincial chapters, the metropolitan Manila Chapter, and metropolitan political
subdivision chapters.
Section 493 of that law provides that [t]he liga at the municipal, city, provincial, metropolitan political
subdivision, and national levels directly elect a president, a vice-president, and five (5) members of
the board of directors. All other matters not provided for in the law affecting the internal organization
of the leagues of local government units shall be governed by their respective constitution and bylaws, which must always conform to the provisions of the Constitution and existing laws. 112[3]
On 16 March 2000, the Liga adopted and ratified its own Constitution and By-laws to govern its
internal organization.113[4] Section 1, third paragraph, Article XI of said Constitution and By-Laws
states:
All other election matters not covered in this Article shall be governed by the Liga Election Code or
such other rules as may be promulgated by the National Liga Executive Board in conformity with the
provisions of existing laws.
By virtue of the above-cited provision, the Liga adopted and ratified its own Election Code.114[5]
Section 1.2, Article I of the Liga Election Code states:
110

111

112

113

114

1.2
Liga ng mga Barangay Provincial, Metropolitan, HUC/ICC Chapters. There shall be nationwide
synchronized elections for the provincial, metropolitan, and HUC/ICC chapters to be held on the third
Monday of the month immediately after the month when the synchronized elections in paragraph 1.1
above was held. The incumbent Liga chapter president concerned duly assisted by the proper
government agency, office or department, e.g. Provincial/City/NCR/Regional Director, shall convene
all the duly elected Component City/Municipal Chapter Presidents and all the current elected Punong
Barangays (for HUC/ICC) of the respective chapters in any public place within its area of jurisdiction
for the purpose of reorganizing and electing the officers and directors of the provincial, metropolitan
or HUC/ICC Liga chapters. Said president duly assisted by the government officer aforementioned,
shall notify, in writing, all the above concerned at least fifteen (15) days before the scheduled election
meeting on the exact date, time, place and requirements of the said meeting.
The Liga thereafter came out with its Calendar of Activities and Guidelines in the Implementation of
the Liga Election Code of 2002,115[6] setting on 21 October 2002 the synchronized elections for highly
urbanized city chapters, such as the Liga Chapter of Manila, together with independent component
city, provincial, and metropolitan chapters.
On 28 June 2002, respondent City Council of Manila enacted Ordinance No. 8039, Series of 2002,
providing, among other things, for the election of representatives of the District Chapters in the City
Chapter of Manila and setting the elections for both chapters thirty days after the barangay elections.
Section 3 (A) and (B) of the assailed ordinance read:
SEC. 3. Representation Chapters. Every Barangay shall be represented in the said Liga Chapters
by the Punong Barangayor, in his absence or incapacity, by the kagawad duly elected for the
purpose among its members.
A.

District Chapter

All elected Barangay Chairman in each District shall elect from among themselves the President,
Vice-President and five (5) members of the Board.
B.

City Chapter

The District Chapter representatives shall automatically become members of the Board and they shall
elect from among themselves a President, Vice-President, Secretary, Treasurer, Auditor and create
other positions as it may deem necessary for the management of the chapter.
The assailed ordinance was later transmitted to respondent City Mayor Jose L. Atienza, Jr., for his
signature and approval.
On 16 July 2002, upon being informed that the ordinance had been forwarded to the Office of the City
Mayor, still unnumbered and yet to be officially released, the Liga sent respondent Mayor of Manila a
letter requesting him that said ordinance be vetoed considering that it encroached upon, or even
assumed, the functions of the Liga through legislation, a function which was clearly beyond the ambit
of the powers of the City Council.116[7]
115

116

Respondent Mayor, however, signed and approved the assailed city ordinance and issued on 15
August 2002 Executive Order No. 011, Series of 2002, to implement the ordinance.
Hence, on 27 August 2002, the Liga filed the instant petition raising the following issues:
I
WHETHER OR NOT THE RESPONDENT CITY COUNCIL OF MANILA COMMITTED GRAVE
ABUSE OF DISCRETION AMOUNTING TO LACK OF OR IN EXCESS OF JURISDICTION, WHEN
IT ENACTED CITY ORDINANCE NO. 8039 S. 2002 PURPOSELY TO GOVERN THE ELECTIONS
OF THE MANILA CHAPTER OF THE LIGA NG MGA BARANGAYS AND WHICH PROVIDES A
DIFFERENT MANNER OF ELECTING ITS OFFICERS, DESPITE THE FACT THAT SAID
CHAPTERS ELECTIONS, AND THE ELECTIONS OF ALL OTHER CHAPTERS OF THE LIGA NG
MGA BARANGAYS FOR THAT MATTER, ARE BY LAW MANDATED TO BE GOVERNED BY THE
LIGA CONSTITUTION AND BY-LAWS AND THE LIGA ELECTION CODE.
II
WHETHER OR NOT THE RESPONDENT CITY MAYOR OF MANILA COMMITTED GRAVE ABUSE
OF DISCRETION AMOUNTING TO LACK OF OR IN EXCESS OF JURISDICTION WHEN HE
ISSUED EXECUTIVE ORDER NO. 011 TO IMPLEMENT THE QUESTIONED CITY ORDINANCE
NO. 8039 S. 2002.
In support of its petition, the Liga argues that City Ordinance No. 8039, Series of 2002, and Executive
Order No. 011, Series of 2002, contradict the Liga Election Code and are therefore invalid. There
exists neither rhyme nor reason, not to mention the absence of legal basis, for the Manila City Council
to encroach upon, or even assume, the functions of the Liga by prescribing, through legislation, the
manner of conducting the Liga elections other than what has been provided for by the Liga
Constitution and By-laws and the Liga Election Code. Accordingly, the subject ordinance is an ultra
vires act of the respondents and, as such, should be declared null and void.
As for its prayer for the issuance of a temporary restraining order, the petitioner cites as reason
therefor the fact that under Section 5 of the assailed city ordinance, the Manila District Chapter
elections would be held thirty days after the regular barangay elections. Hence, it argued that the
issuance of a temporary restraining order and/or preliminary injunction would be imperative to prevent
the implementation of the ordinance and executive order.
On 12 September 2002, Barangay Chairman Arnel Pea, in his capacity as a member of the Liga ng
mga Barangay in the City Chapter of Manila, filed a Complaint in Intervention with Urgent Motion for
the Issuance of Temporary Restraining Order and/or Preliminary Injunction. 117[8] He supports the
position of the Liga and prays for the declaration of the questioned ordinance and executive order, as
well as the elections of the Liga ng mga Barangay pursuant thereto, to be null and void. The assailed
ordinance prescribing for an indirect manner of election amended, in effect, the provisions of the
Local Government Code of 1991, which provides for the election of the Liga officers at large. It also
violated and curtailed the rights of the petitioner and intervenor, as well as the other 896 Barangay
Chairmen in the City of Manila, to vote and be voted upon in a direct election.

117

On 25 October 2002, the Office of the Solicitor General (OSG) filed a Manifestation in lieu of
Comment.118[9] It supports the petition of the Liga, arguing that the assailed city ordinance and
executive order are clearly inconsistent with the express public policy enunciated in R.A. No. 7160.
Local political subdivisions are able to legislate only by virtue of a valid delegation of legislative power
from the national legislature. They are mere agents vested with what is called the power of
subordinate legislation. Thus, the enactments in question, which are local in origin, cannot prevail
against the decree, which has the force and effect of law.
On the issue of non-observance by the petitioners of the hierarchy-of-courts rule, the OSG posits that
technical rules of procedure should be relaxed in the instant petition. While Batas Pambansa Blg.
129, as amended, grants original jurisdiction over cases of this nature to the Regional Trial Court
(RTC), the exigency of the present petition, however, calls for the relaxation of this rule. Section 496
(should be Section 491) of the Local Government Code of 1991 primarily intended that the Liga ng
mga Barangay determine the representation of the Liga in the sanggunians for the immediate
ventilation, articulation, and crystallization of issues affecting barangay government administration.
Thus, the immediate resolution of this petition is a must.
On the other hand, the respondents defend the validity of the assailed ordinance and executive order
and pray for the dismissal of the present petition on the following grounds: (1) certiorari under Rule 65
of the Rules of Court is unavailing; (2) the petition should not be entertained by this Court in view of
the pendency before the Regional Trial Court of Manila of two actions or petitions questioning the
subject ordinance and executive order; (3) the petitioner is guilty of forum shopping; and (4) the act
sought to be enjoined is fait accompli.
The respondents maintain that certiorari is an extraordinary remedy available to one aggrieved by the
decision of a tribunal, officer, or board exercising judicial or quasi-judicial functions. The City Council
and City Mayor of Manila are not the board and officer contemplated in Rule 65 of the Rules of
Court because both do not exercise judicial functions. The enactment of the subject ordinance and
issuance of the questioned executive order are legislative and executive functions, respectively, and
thus, do not fall within the ambit of judicial functions. They are both within the prerogatives, powers,
and authority of the City Council and City Mayor of Manila, respectively. Furthermore, the petition
failed to show with certainty that the respondents acted without or in excess of jurisdiction or with
grave abuse of discretion.
The respondents also asseverate that the petitioner cannot claim that it has no other recourse in
addressing its grievance other than this petition for certiorari. As a matter of fact, there are two cases
pending before Branches 33 and 51 of the RTC of Manila (one is for mandamus; the other, for
declaratory relief) and three in the Court of Appeals (one is for prohibition; the two other cases, for
quo warranto), which are all akin to the present petition in the sense that the relief being sought
therein is the declaration of the invalidity of the subject ordinance. Clearly, the petitioner may ask the
RTC or the Court of Appeals the relief being prayed for before this Court. Moreover, the petitioner
failed to prove discernible compelling reasons attending the present petition that would warrant
cognizance of the present petition by this Court.
Besides, according to the respondents, the petitioner has transgressed the proscription against
forum-shopping in filing the instant suit. Although the parties in the other pending cases and in this
petition are different individuals or entities, they represent the same interest.

118

With regard to petitioner's prayer for temporary restraining order and/ or preliminary injunction in its
petition, the respondents maintain that the same had become moot and academic in view of the
elections of officers of the City Liga ng mga Barangay on 15 September 2002 and their subsequent
assumption to their respective offices.119[10] Since the acts to be enjoined are now fait accompli, this
petition for certiorari with an application for provisional remedies must necessarily fail. Thus, where
the records show that during the pendency of the case certain events or circumstances had taken
place that render the case moot and academic, the petition for certiorari must be dismissed.
After due deliberation on the pleadings filed, we resolve to dismiss this petition for certiorari.
First, the respondents neither acted in any judicial or quasi-judicial capacity nor arrogated unto
themselves any judicial or quasi-judicial prerogatives. A petition for certiorari under Rule 65 of the
1997 Rules of Civil Procedure is a special civil action that may be invoked only against a tribunal,
board, or officer exercising judicial or quasi-judicial functions.
Section 1, Rule 65 of the 1997 Rules of Civil Procedure provides:
SECTION 1. Petition for certiorari. When any tribunal, board or officer exercising judicial or quasijudicial functions has acted without or in excess of its or his jurisdiction, or with grave abuse of
discretion amounting to lack or excess of jurisdiction, and there is no appeal, or any plain, speedy,
and adequate remedy in the ordinary course of law, a person aggrieved thereby may file a verified
petition in the proper court, alleging the facts with certainty and praying that judgment be rendered
annulling or modifying the proceedings of such tribunal, board or officer, and granting such incidental
reliefs as law and justice may require.
Elsewise stated, for a writ of certiorari to issue, the following requisites must concur: (1) it must be
directed against a tribunal, board, or officer exercising judicial or quasi-judicial functions; (2) the
tribunal, board, or officer must have acted without or in excess of jurisdiction or with grave abuse of
discretion amounting lack or excess of jurisdiction; and (3) there is no appeal or any plain, speedy,
and adequate remedy in the ordinary course of law.
A respondent is said to be exercising judicial function where he has the power to determine what the
law is and what the legal rights of the parties are, and then undertakes to determine these questions
and adjudicate upon the rights of the parties. 120[11]
Quasi-judicial function, on the other hand, is a term which applies to the actions, discretion, etc., of
public administrative officers or bodies required to investigate facts or ascertain the existence of
facts, hold hearings, and draw conclusions from them as a basis for their official action and to
exercise discretion of a judicial nature.121[12]
Before a tribunal, board, or officer may exercise judicial or quasi-judicial acts, it is necessary that
there be a law that gives rise to some specific rights of persons or property under which adverse
119

120

121

claims to such rights are made, and the controversy ensuing therefrom is brought before a tribunal,
board, or officer clothed with power and authority to determine the law and adjudicate the respective
rights of the contending parties.122[13]
The respondents do not fall within the ambit of tribunal, board, or officer exercising judicial or quasijudicial functions. As correctly pointed out by the respondents, the enactment by the City Council of
Manila of the assailed ordinance and the issuance by respondent Mayor of the questioned executive
order were done in the exercise of legislative and executive functions, respectively, and not of judicial
or quasi-judicial functions. On this score alone, certiorari will not lie.
Second, although the instant petition is styled as a petition for certiorari, in essence, it seeks the
declaration by this Court of the unconstitutionality or illegality of the questioned ordinance and
executive order. It, thus, partakes of the nature of a petition for declaratory relief over which this
Court has only appellate, not original, jurisdiction. 123[14] Section 5, Article VIII of the Constitution
provides:
Sec. 5. The Supreme Court shall have the following powers:
(1)

Exercise original jurisdiction over cases affecting ambassadors, other public ministers
and consuls, and over petitions for certiorari, prohibition, mandamus, quo warranto, and
habeas corpus.

(2)

Review, revise, reverse, modify, or affirm on appeal or certiorari as the law or the Rules
of Court may provide, final judgments and orders of lower courts in:
(a) All cases in which the constitutionality or validity of any treaty, international or
executive agreement, law, presidential decree, proclamation, order, instruction,
ordinance, or regulation is in question. (Italics supplied).

As such, this petition must necessary fail, as this Court does not have original jurisdiction over a
petition for declaratory relief even if only questions of law are involved. 124[15]
Third, even granting arguendo that the present petition is ripe for the extraordinary writ of certiorari,
there is here a clear disregard of the hierarchy of courts. No special and important reason or
exceptional and compelling circumstance has been adduced by the petitioner or the intervenor why
direct recourse to this Court should be allowed.
We have held that this Courts original jurisdiction to issue a writ of certiorari (as well as of prohibition,
mandamus, quo warranto, habeas corpus and injunction) is not exclusive, but is concurrent with the
Regional Trial Courts and the Court of Appeals in certain cases. As aptly stated in People v.
Cuaresma:125[16]
122

123

124

125

This concurrence of jurisdiction is not, however, to be taken as according to parties seeking any of the
writs an absolute, unrestrained freedom of choice of the court to which application therefor0 will be
directed. There is after all a hierarchy of courts. That hierarchy is determinative of the venue of
appeals, and also serves as a general determinant of the appropriate forum for petitions for the
extraordinary writs. A becoming regard of that judicial hierarchy most certainly indicates that petitions
for the issuance of extraordinary writs against first level (inferior) courts should be filed with the
Regional Trial Court, and those against the latter, with the Court of Appeals. A direct invocation of the
Supreme Courts original jurisdiction to issue these writs should be allowed only when there are
special and important reasons therefor, clearly and specifically set out in the petition. This is [an]
established policy. It is a policy necessary to prevent inordinate demands upon the Courts time and
attention which are better devoted to those matters within its exclusive jurisdiction, and to prevent
further over-crowding of the Courts docket.
As we have said in Santiago v. Vasquez, 126[17] the propensity of litigants and lawyers to disregard the
hierarchy of courts in our judicial system by seeking relief directly from this Court must be put to a halt
for two reasons: (1) it would be an imposition upon the precious time of this Court; and (2) it would
cause an inevitable and resultant delay, intended or otherwise, in the adjudication of cases, which in
some instances had to be remanded or referred to the lower court as the proper forum under the
rules of procedure, or as better equipped to resolve the issues because this Court is not a trier of
facts.
Thus, we shall reaffirm the judicial policy that this Court will not entertain direct resort to it unless the
redress desired cannot be obtained in the appropriate courts, and exceptional and compelling
circumstances justify the availment of the extraordinary remedy of writ of certiorari, calling for the
exercise of its primary jurisdiction.127[18]
Petitioners reliance on Pimentel v. Aguirre128[19] is misplaced because the non-observance of the
hierarchy-of-courts rule was not an issue therein. Besides, what was sought to be nullified in the
petition for certiorari and prohibition therein was an act of the President of the Philippines, which
would have greatly affected all local government units. We reiterated therein that when an act of the
legislative department is seriously alleged to have infringed the Constitution, settling the controversy
becomes the duty of this Court. The same is true when what is seriously alleged to be
unconstitutional is an act of the President, who in our constitutional scheme is coequal with Congress.
We hesitate to rule that the petitioner and the intervenor are guilty of forum-shopping. Forumshopping exists where the elements of litis pendentia are present or when a final judgment in one
case will amount to res judicata in the other. For litis pendentia to exist, the following requisites must
be present: (1) identity of parties, or at least such parties as are representing the same interests in
both actions; (2) identity of rights asserted and reliefs prayed for, the reliefs being founded on the
same facts; and (3) identity with respect to the two preceding particulars in the two cases, such that

126

127

128

any judgment that may be rendered in the pending case, regardless of which party is successful,
would amount to res judicata in the other case.129[20]
In the instant petition, and as admitted by the respondents, the parties in this case and in the alleged
other pending cases are different individuals or entities; thus, forum-shopping cannot be said to exist.
Moreover, even assuming that those five petitions are indeed pending before the RTC of Manila and
the Court of Appeals, we can only guess the causes of action and issues raised before those courts,
considering that the respondents failed to furnish this Court with copies of the said petitions.
WHEREFORE, the petition is DISMISSED.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 162059

January 22, 2008

HANNAH EUNICE D. SERANA, petitioner,


vs.
SANDIGANBAYAN and PEOPLE OF THE PHILIPPINES, respondents.
DECISION
REYES, R.T., J.:
CAN the Sandiganbayan try a government scholaran ** accused, along with her brother, of swindling
government funds?
MAAARI bang litisin ng Sandiganbayan ang isang iskolar ng bayan, at ang kanyang kapatid,
na kapwa pinararatangan ng estafa ng pera ng bayan?
The jurisdictional question is posed in this petition for certiorari assailing the Resolutions 1 of the
Sandiganbayan, Fifth Division, denying petitioners motion to quash the information and her motion
for reconsideration.
The Antecedents
Petitioner Hannah Eunice D. Serana was a senior student of the University of the Philippines-Cebu. A
student of a state university is known as a government scholar. She was appointed by then President
Joseph Estrada on December 21, 1999 as a student regent of UP, to serve a one-year term starting
January 1, 2000 and ending on December 31, 2000.
In the early part of 2000, petitioner discussed with President Estrada the renovation of Vinzons Hall
Annex in UP Diliman.2 On September 4, 2000, petitioner, with her siblings and relatives, registered
129

with the Securities and Exchange Commission the Office of the Student Regent Foundation, Inc.
(OSRFI).3
One of the projects of the OSRFI was the renovation of the Vinzons Hall Annex. 4 President Estrada
gave Fifteen Million Pesos (P15,000,000.00) to the OSRFI as financial assistance for the proposed
renovation. The source of the funds, according to the information, was the Office of the President.
The renovation of Vinzons Hall Annex failed to materialize. 5 The succeeding student regent, Kristine
Clare Bugayong, and Christine Jill De Guzman, Secretary General of the KASAMA sa U.P., a systemwide alliance of student councils within the state university, consequently filed a complaint for
Malversation of Public Funds and Property with the Office of the Ombudsman. 6
On July 3, 2003, the Ombudsman, after due investigation, found probable cause to indict petitioner
and her brother Jade Ian D. Serana for estafa, docketed as Criminal Case No. 27819 of the
Sandiganbayan.7 The Information reads:
The undersigned Special Prosecution Officer III, Office of the Special Prosecutor, hereby
accuses HANNAH EUNICE D. SERANA and JADE IAN D. SERANA of the crime of Estafa,
defined and penalized under Paragraph 2(a), Article 315 of the Revised Penal Code, as
amended committed as follows:
That on October, 24, 2000, or sometime prior or subsequent thereto, in Quezon City, Metro
Manila, Philippines, and within the jurisdiction of this Honorable Court, above-named accused,
HANNAH EUNICE D. SERANA, a high-ranking public officer, being then the Student Regent of
the University of the Philippines, Diliman, Quezon City, while in the performance of her official
functions, committing the offense in relation to her office and taking advantage of her position,
with intent to gain, conspiring with her brother, JADE IAN D. SERANA, a private individual, did
then and there wilfully, unlawfully and feloniously defraud the government by falsely and
fraudulently representing to former President Joseph Ejercito Estrada that the renovation of the
Vinzons Hall of the University of the Philippines will be renovated and renamed as "President
Joseph Ejercito Estrada Student Hall," and for which purpose accused HANNAH EUNICE D.
SERANA requested the amount of FIFTEEN MILLION PESOS (P15,000,000.00), Philippine
Currency, from the Office of the President, and the latter relying and believing on said false
pretenses and misrepresentation gave and delivered to said accused Land Bank Check No.
91353 dated October 24, 2000 in the amount of FIFTEEN MILLION PESOS (P15,000,000.00),
which check was subsequently encashed by accused Jade Ian D. Serana on October 25, 2000
and misappropriated for their personal use and benefit, and despite repeated demands made
upon the accused for them to return aforesaid amount, the said accused failed and refused to
do so to the damage and prejudice of the government in the aforesaid amount.
CONTRARY TO LAW. (Underscoring supplied)
Petitioner moved to quash the information. She claimed that the Sandiganbayan does not have any
jurisdiction over the offense charged or over her person, in her capacity as UP student regent.
Petitioner claimed that Republic Act (R.A.) No. 3019, as amended by R.A. No. 8249, enumerates the
crimes or offenses over which the Sandiganbayan has jurisdiction. 8 It has no jurisdiction over the
crime of estafa.9 It only has jurisdiction over crimes covered by Title VII, Chapter II, Section 2 (Crimes
Committed by Public Officers), Book II of the Revised Penal Code (RPC). Estafa falling under Title X,
Chapter VI (Crimes Against Property), Book II of the RPC is not within the Sandiganbayans
jurisdiction.

She also argued that it was President Estrada, not the government, that was duped. Even assuming
that she received the P15,000,000.00, that amount came from Estrada, not from the coffers of the
government.10
Petitioner likewise posited that the Sandiganbayan had no jurisdiction over her person. As a student
regent, she was not a public officer since she merely represented her peers, in contrast to the other
regents who held their positions in an ex officio capacity. She addsed that she was a simple student
and did not receive any salary as a student regent.
She further contended that she had no power or authority to receive monies or funds. Such power
was vested with the Board of Regents (BOR) as a whole. Since it was not alleged in the information
that it was among her functions or duties to receive funds, or that the crime was committed in
connection with her official functions, the same is beyond the jurisdiction of the Sandiganbayan citing
the case of Soller v. Sandiganbayan.11
The Ombudsman opposed the motion.12 It disputed petitioners interpretation of the law. Section 4(b)
of Presidential Decree (P.D.) No. 1606 clearly contains the catch -all phrase "in relation to office,"
thus, the Sandiganbayan has jurisdiction over the charges against petitioner. In the same breath, the
prosecution countered that the source of the money is a matter of defense. It should be threshed out
during a full-blown trial.13
According to the Ombudsman, petitioner, despite her protestations, iwas a public officer. As a
member of the BOR, she hads the general powers of administration and exerciseds the corporate
powers of UP. Based on Mechems definition of a public office, petitioners stance that she was not
compensated, hence, not a public officer, is erroneous. Compensation is not an essential part of
public office. Parenthetically, compensation has been interpreted to include allowances. By this
definition, petitioner was compensated.14
Sandiganbayan Disposition
In a Resolution dated November 14, 2003, the Sandiganbayan denied petitioners motion for lack of
merit.15 It ratiocinated:
The focal point in controversy is the jurisdiction of the Sandiganbayan over this case.
It is extremely erroneous to hold that only criminal offenses covered by Chapter II, Section 2,
Title VII, Book II of the Revised Penal Code are within the jurisdiction of this Court. As correctly
pointed out by the prosecution, Section 4(b) of R.A. 8249 provides that the Sandiganbayan
also has jurisdiction over other offenses committed by public officials and employees in relation
to their office. From this provision, there is no single doubt that this Court has jurisdiction over
the offense of estafa committed by a public official in relation to his office.
Accused-movants claim that being merely a member in representation of the student body,
she was never a public officer since she never received any compensation nor does she fall
under Salary Grade 27, is of no moment, in view of the express provision of Section 4 of
Republic Act No. 8249 which provides:
Sec. 4. Jurisdiction The Sandiganbayan shall exercise exclusive original jurisdiction in all
cases involving:
(A) x x x

(1) Officials of the executive branch occupying the positions of regional director and higher,
otherwise classified as Grade "27" and higher, of the Compensation and Position Classification
Act of 1989 (Republic Act No. 6758), specifically including:
xxxx
(g) Presidents, directors or trustees, or managers of government-owned or controlled
corporations, state universities or educational institutions or foundations. (Italics supplied)
It is very clear from the aforequoted provision that the Sandiganbayan has original exclusive
jurisdiction over all offenses involving the officials enumerated in subsection (g), irrespective of
their salary grades, because the primordial consideration in the inclusion of these officials is
the nature of their responsibilities and functions.
Is accused-movant included in the contemplated provision of law?
A meticulous review of the existing Charter of the University of the Philippines reveals that the
Board of Regents, to which accused-movant belongs, exclusively exercises the general
powers of administration and corporate powers in the university, such as: 1) To receive and
appropriate to the ends specified by law such sums as may be provided by law for the support
of the university; 2) To prescribe rules for its own government and to enact for the government
of the university such general ordinances and regulations, not contrary to law, as are
consistent with the purposes of the university; and 3) To appoint, on recommendation of the
President of the University, professors, instructors, lecturers and other employees of the
University; to fix their compensation, hours of service, and such other duties and conditions as
it may deem proper; to grant to them in its discretion leave of absence under such regulations
as it may promulgate, any other provisions of law to the contrary notwithstanding, and to
remove them for cause after an investigation and hearing shall have been had.
It is well-established in corporation law that the corporation can act only through its board of
directors, or board of trustees in the case of non-stock corporations. The board of directors or
trustees, therefore, is the governing body of the corporation.
It is unmistakably evident that the Board of Regents of the University of the Philippines is
performing functions similar to those of the Board of Trustees of a non-stock corporation. This
draws to fore the conclusion that being a member of such board, accused-movant undoubtedly
falls within the category of public officials upon whom this Court is vested with original
exclusive jurisdiction, regardless of the fact that she does not occupy a position classified as
Salary Grade 27 or higher under the Compensation and Position Classification Act of 1989.
Finally, this court finds that accused-movants contention that the same of P15 Million was
received from former President Estrada and not from the coffers of the government, is a matter
a defense that should be properly ventilated during the trial on the merits of this case. 16
On November 19, 2003, petitioner filed a motion for reconsideration. 17 The motion was denied with
finality in a Resolution dated February 4, 2004. 18
Issue
Petitioner is now before this Court, contending that "THE RESPONDENT COURT COMMITTED
GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK AND/OR EXCESS OF JURISDICTION IN

NOT QUASHING THE INFORMATION AND DISMISING THE CASE NOTWITHSTANDING THAT IS
HAS NO JURISDICTION OVER THE OFFENSE CHARGED IN THE INFORMATION." 19
In her discussion, she reiterates her four-fold argument below, namely: (a) the Sandiganbayan has no
jurisdiction over estafa; (b) petitioner is not a public officer with Salary Grade 27 and she paid her
tuition fees; (c) the offense charged was not committed in relation to her office; (d) the funds in
question personally came from President Estrada, not from the government.
Our Ruling
The petition cannot be granted.
Preliminarily, the denial of a motion to
quash is not correctible by certiorari.
We would ordinarily dismiss this petition for certiorari outright on procedural grounds. Wellestablished is the rule that when a motion to quash in a criminal case is denied, the remedy is not a
petition for certiorari, but for petitioners to go to trial, without prejudice to reiterating the special
defenses invoked in their motion to quash. 20 Remedial measures as regards interlocutory orders,
such as a motion to quash, are frowned upon and often dismissed. 21 The evident reason for this rule
is to avoid multiplicity of appeals in a single action. 22
In Newsweek, Inc. v. Intermediate Appellate Court,23 the Court clearly explained and illustrated the
rule and the exceptions, thus:
As a general rule, an order denying a motion to dismiss is merely interlocutory and cannot be
subject of appeal until final judgment or order is rendered. (Sec. 2 of Rule 41). The ordinary
procedure to be followed in such a case is to file an answer, go to trial and if the decision is
adverse, reiterate the issue on appeal from the final judgment. The same rule applies to an
order denying a motion to quash, except that instead of filing an answer a plea is entered and
no appeal lies from a judgment of acquittal.
This general rule is subject to certain exceptions. If the court, in denying the motion to dismiss
or motion to quash, acts without or in excess of jurisdiction or with grave abuse of discretion,
then certiorari or prohibition lies. The reason is that it would be unfair to require the defendant
or accused to undergo the ordeal and expense of a trial if the court has no jurisdiction over the
subject matter or offense, or is not the court of proper venue, or if the denial of the motion to
dismiss or motion to quash is made with grave abuse of discretion or a whimsical and
capricious exercise of judgment. In such cases, the ordinary remedy of appeal cannot be plain
and adequate. The following are a few examples of the exceptions to the general rule.
In De Jesus v. Garcia (19 SCRA 554), upon the denial of a motion to dismiss based on lack of
jurisdiction over the subject matter, this Court granted the petition for certiorari and prohibition
against the City Court of Manila and directed the respondent court to dismiss the case.
In Lopez v. City Judge (18 SCRA 616), upon the denial of a motion to quash based on lack of
jurisdiction over the offense, this Court granted the petition for prohibition and enjoined the
respondent court from further proceeding in the case.
In Enriquez v. Macadaeg (84 Phil. 674), upon the denial of a motion to dismiss based on
improper venue, this Court granted the petition for prohibition and enjoined the respondent
judge from taking cognizance of the case except to dismiss the same.

In Manalo v. Mariano (69 SCRA 80), upon the denial of a motion to dismiss based on bar by
prior judgment, this Court granted the petition for certiorari and directed the respondent judge
to dismiss the case.
In Yuviengco v. Dacuycuy (105 SCRA 668), upon the denial of a motion to dismiss based on
the Statute of Frauds, this Court granted the petition for certiorari and dismissed the amended
complaint.
In Tacas v. Cariaso (72 SCRA 527), this Court granted the petition for certiorari after the motion
to quash based on double jeopardy was denied by respondent judge and ordered him to desist
from further action in the criminal case except to dismiss the same.
In People v. Ramos (83 SCRA 11), the order denying the motion to quash based on
prescription was set aside on certiorari and the criminal case was dismissed by this Court. 24
We do not find the Sandiganbayan to have committed a grave abuse of discretion.
The jurisdiction of the Sandiganbayan is
set by P.D. No. 1606, as amended, not by
R.A. No. 3019, as amended.
We first address petitioners contention that the jurisdiction of the Sandiganbayan is determined by
Section 4 of R.A. No. 3019 (The Anti-Graft and Corrupt Practices Act, as amended). We note that
petitioner refers to Section 4 of the said law yet quotes Section 4 of P.D. No. 1606, as amended, in
her motion to quash before the Sandiganbayan. 25 She repeats the reference in the instant petition for
certiorari26 and in her memorandum of authorities.27
We cannot bring ourselves to write this off as a mere clerical or typographical error. It bears stressing
that petitioner repeated this claim twice despite corrections made by the Sandiganbayan. 28
Her claim has no basis in law. It is P.D. No. 1606, as amended, rather than R.A. No. 3019, as
amended, that determines the jurisdiction of the Sandiganbayan. A brief legislative history of the
statute creating the Sandiganbayan is in order. The Sandiganbayan was created by P.D. No. 1486,
promulgated by then President Ferdinand E. Marcos on June 11, 1978. It was promulgated to attain
the highest norms of official conduct required of public officers and employees, based on the concept
that public officers and employees shall serve with the highest degree of responsibility, integrity,
loyalty and efficiency and shall remain at all times accountable to the people. 29
P.D. No. 1486 was, in turn, amended by P.D. No. 1606 which was promulgated on December 10,
1978. P.D. No. 1606 expanded the jurisdiction of the Sandiganbayan. 30
P.D. No. 1606 was later amended by P.D. No. 1861 on March 23, 1983, further altering the
Sandiganbayan jurisdiction. R.A. No. 7975 approved on March 30, 1995 made succeeding
amendments to P.D. No. 1606, which was again amended on February 5, 1997 by R.A. No. 8249.
Section 4 of R.A. No. 8249 further modified the jurisdiction of the Sandiganbayan. As it now stands,
the Sandiganbayan has jurisdiction over the following:
Sec. 4. Jurisdiction. - The Sandiganbayan shall exercise exclusive original jurisdiction in all
cases involving:
A. Violations of Republic Act No. 3019, as amended, other known as the Anti-Graft and Corrupt
Practices Act, Republic Act No. 1379, and Chapter II, Section 2, Title VII, Book II of the

Revised Penal Code, where one or more of the accused are officials occupying the following
positions in the government, whether in a permanent, acting or interim capacity, at the time of
the commission of the offense:
(1) Officials of the executive branch occupying the positions of regional director and higher,
otherwise classified as Grade "27" and higher, of the Compensation and Position Classification
Act of 989 (Republic Act No. 6758), specifically including:
" (a) Provincial governors, vice-governors, members of the sangguniang panlalawigan, and
provincial treasurers, assessors, engineers, and other city department heads;
" (b) City mayor, vice-mayors, members of the sangguniang panlungsod, city treasurers,
assessors, engineers, and other city department heads;
"(c ) Officials of the diplomatic service occupying the position of consul and higher;
" (d) Philippine army and air force colonels, naval captains, and all officers of higher rank;
" (e) Officers of the Philippine National Police while occupying the position of provincial director
and those holding the rank of senior superintended or higher;
" (f) City and provincial prosecutors and their assistants, and officials and prosecutors in the
Office of the Ombudsman and special prosecutor;
" (g) Presidents, directors or trustees, or managers of government-owned or controlled
corporations, state universities or educational institutions or foundations.
" (2) Members of Congress and officials thereof classified as Grade "27'" and up under the
Compensation and Position Classification Act of 1989;
" (3) Members of the judiciary without prejudice to the provisions of the Constitution;
" (4) Chairmen and members of Constitutional Commission, without prejudice to the provisions
of the Constitution; and
" (5) All other national and local officials classified as Grade "27'" and higher under the
Compensation and Position Classification Act of 1989.
B. Other offenses of felonies whether simple or complexed with other crimes committed by the
public officials and employees mentioned in subsection a of this section in relation to their
office.
C. Civil and criminal cases filed pursuant to and in connection with Executive Order Nos. 1, 2,
14 and 14-A, issued in 1986.
" In cases where none of the accused are occupying positions corresponding to Salary Grade
"27'" or higher, as prescribed in the said Republic Act No. 6758, or military and PNP officer
mentioned above, exclusive original jurisdiction thereof shall be vested in the proper regional
court, metropolitan trial court, municipal trial court, and municipal circuit trial court, as the case
may be, pursuant to their respective jurisdictions as provided in Batas Pambansa Blg. 129, as
amended.

" The Sandiganbayan shall exercise exclusive appellate jurisdiction over final judgments,
resolutions or order of regional trial courts whether in the exercise of their own original
jurisdiction or of their appellate jurisdiction as herein provided.
" The Sandiganbayan shall have exclusive original jurisdiction over petitions for the issuance of
the writs of mandamus, prohibition, certiorari, habeas corpus, injunctions, and other ancillary
writs and processes in aid of its appellate jurisdiction and over petitions of similar nature,
including quo warranto, arising or that may arise in cases filed or which may be filed under
Executive Order Nos. 1, 2, 14 and 14-A, issued in 1986: Provided, That the jurisdiction over
these petitions shall not be exclusive of the Supreme Court.
" The procedure prescribed in Batas Pambansa Blg. 129, as well as the implementing rules
that the Supreme Court has promulgated and may thereafter promulgate, relative to
appeals/petitions for review to the Court of Appeals, shall apply to appeals and petitions for
review filed with the Sandiganbayan. In all cases elevated to the Sandiganbayan and from the
Sandiganbayan to the Supreme Court, the Office of the Ombudsman, through its special
prosecutor, shall represent the People of the Philippines, except in cases filed pursuant to
Executive Order Nos. 1, 2, 14 and 14-A, issued in 1986.
" In case private individuals are charged as co-principals, accomplices or accessories with the
public officers or employees, including those employed in government-owned or controlled
corporations, they shall be tried jointly with said public officers and employees in the proper
courts which shall exercise exclusive jurisdiction over them.
" Any provisions of law or Rules of Court to the contrary notwithstanding, the criminal action
and the corresponding civil action for the recovery of civil liability shall, at all times, be
simultaneously instituted with, and jointly determined in, the same proceeding by the
Sandiganbayan or the appropriate courts, the filing of the criminal action being deemed to
necessarily carry with it the filing of the civil action, and no right to reserve the filing such civil
action separately from the criminal action shall be recognized: Provided, however, That where
the civil action had heretofore been filed separately but judgment therein has not yet been
rendered, and the criminal case is hereafter filed with the Sandiganbayan or the appropriate
court, said civil action shall be transferred to the Sandiganbayan or the appropriate court, as
the case may be, for consolidation and joint determination with the criminal action, otherwise
the separate civil action shall be deemed abandoned."
Upon the other hand, R.A. No. 3019 is a penal statute approved on August 17, 1960. The said law
represses certain acts of public officers and private persons alike which constitute graft or corrupt
practices or which may lead thereto.31 Pursuant to Section 10 of R.A. No. 3019, all prosecutions for
violation of the said law should be filed with the Sandiganbayan. 32
R.A. No. 3019 does not contain an enumeration of the cases over which the Sandiganbayan has
jurisdiction. In fact, Section 4 of R.A. No. 3019 erroneously cited by petitioner, deals not with the
jurisdiction of the Sandiganbayan but with prohibition on private individuals. We quote:
Section 4. Prohibition on private individuals. (a) It shall be unlawful for any person having
family or close personal relation with any public official to capitalize or exploit or take
advantage of such family or close personal relation by directly or indirectly requesting or
receiving any present, gift or material or pecuniary advantage from any other person having
some business, transaction, application, request or contract with the government, in which
such public official has to intervene. Family relation shall include the spouse or relatives by
consanguinity or affinity in the third civil degree. The word "close personal relation" shall

include close personal friendship, social and fraternal connections, and professional
employment all giving rise to intimacy which assures free access to such public officer.
(b) It shall be unlawful for any person knowingly to induce or cause any public official to
commit any of the offenses defined in Section 3 hereof.
In fine, the two statutes differ in that P.D. No. 1606, as amended, defines the jurisdiction of the
Sandiganbayan while R.A. No. 3019, as amended, defines graft and corrupt practices and provides
for their penalties.
Sandiganbayan has jurisdiction over
the offense of estafa.
Relying on Section 4 of P.D. No. 1606, petitioner contends that estafa is not among those crimes
cognizable by the Sandiganbayan. We note that in hoisting this argument, petitioner isolated the first
paragraph of Section 4 of P.D. No. 1606, without regard to the succeeding paragraphs of the said
provision.
The rule is well-established in this jurisdiction that statutes should receive a sensible construction so
as to avoid an unjust or an absurd conclusion. 33 Interpretatio talis in ambiguis semper fienda est, ut
evitetur inconveniens et absurdum. Where there is ambiguity, such interpretation as will avoid
inconvenience and absurdity is to be adopted. Kung saan mayroong kalabuan, ang
pagpapaliwanag ay hindi dapat maging mahirap at katawa-tawa.
Every section, provision or clause of the statute must be expounded by reference to each other in
order to arrive at the effect contemplated by the legislature. 34 The intention of the legislator must be
ascertained from the whole text of the law and every part of the act is to be taken into view. 35 In other
words, petitioners interpretation lies in direct opposition to the rule that a statute must be interpreted
as a whole under the principle that the best interpreter of a statute is the statute itself. 36 Optima statuti
interpretatrix est ipsum statutum. Ang isang batas ay marapat na bigyan ng kahulugan sa
kanyang kabuuan sa ilalim ng prinsipyo na ang pinakamainam na interpretasyon ay ang
mismong batas.
Section 4(B) of P.D. No. 1606 reads:
B. Other offenses or felonies whether simple or complexed with other crimes committed by the
public officials and employees mentioned in subsection a of this section in relation to their
office.
Evidently, the Sandiganbayan has jurisdiction over other felonies committed by public officials in
relation to their office. We see no plausible or sensible reason to exclude estafa as one of the
offenses included in Section 4(bB) of P.D. No. 1606. Plainly, estafa is one of those other felonies. The
jurisdiction is simply subject to the twin requirements that (a) the offense is committed by public
officials and employees mentioned in Section 4(A) of P.D. No. 1606, as amended, and that (b) the
offense is committed in relation to their office.
In Perlas, Jr. v. People,37 the Court had occasion to explain that the Sandiganbayan has jurisdiction
over an indictment for estafa versus a director of the National Parks Development Committee, a
government instrumentality. The Court held then:
The National Parks Development Committee was created originally as an Executive
Committee on January 14, 1963, for the development of the Quezon Memorial, Luneta and

other national parks (Executive Order No. 30). It was later designated as the National Parks
Development Committee (NPDC) on February 7, 1974 (E.O. No. 69). On January 9, 1966,
Mrs. Imelda R. Marcos and Teodoro F. Valencia were designated Chairman and ViceChairman respectively (E.O. No. 3). Despite an attempt to transfer it to the Bureau of Forest
Development, Department of Natural Resources, on December 1, 1975 (Letter of
Implementation No. 39, issued pursuant to PD No. 830, dated November 27, 1975), the NPDC
has remained under the Office of the President (E.O. No. 709, dated July 27, 1981).
Since 1977 to 1981, the annual appropriations decrees listed NPDC as a regular government
agency under the Office of the President and allotments for its maintenance and operating
expenses were issued direct to NPDC (Exh. 10-A, Perlas, Item Nos. 2, 3).
The Sandiganbayans jurisdiction over estafa was reiterated with greater firmness in Bondoc v.
Sandiganbayan.38 Pertinent parts of the Courts ruling in Bondoc read:
Furthermore, it is not legally possible to transfer Bondocs cases to the Regional Trial Court, for
the simple reason that the latter would not have jurisdiction over the offenses. As already
above intimated, the inability of the Sandiganbayan to hold a joint trial of Bondocs cases and
those of the government employees separately charged for the same crimes, has not altered
the nature of the offenses charged, as estafa thru falsification punishable by penalties higher
than prision correccional or imprisonment of six years, or a fine of P6,000.00, committed by
government employees in conspiracy with private persons, including Bondoc. These crimes
are within the exclusive, original jurisdiction of the Sandiganbayan. They simply cannot be
taken cognizance of by the regular courts, apart from the fact that even if the cases could be
so transferred, a joint trial would nonetheless not be possible.
Petitioner UP student regent
is a public officer.
Petitioner also contends that she is not a public officer. She does not receive any salary or
remuneration as a UP student regent. This is not the first or likely the last time that We will be called
upon to define a public officer. In Khan, Jr. v. Office of the Ombudsman, We ruled that it is difficult to
pin down the definition of a public officer.39 The 1987 Constitution does not define who are public
officers. Rather, the varied definitions and concepts are found in different statutes and jurisprudence.
In Aparri v. Court of Appeals,40 the Court held that:
A public office is the right, authority, and duty created and conferred by law, by which for a
given period, either fixed by law or enduring at the pleasure of the creating power, an individual
is invested with some portion of the sovereign functions of the government, to be exercise by
him for the benefit of the public ([Mechem Public Offices and Officers,] Sec. 1). The right to
hold a public office under our political system is therefore not a natural right. It exists, when it
exists at all only because and by virtue of some law expressly or impliedly creating and
conferring it (Mechem Ibid., Sec. 64). There is no such thing as a vested interest or an estate
in an office, or even an absolute right to hold office. Excepting constitutional offices which
provide for special immunity as regards salary and tenure, no one can be said to have any
vested right in an office or its salary (42 Am. Jur. 881).
In Laurel v. Desierto,41 the Court adopted the definition of Mechem of a public office:
"A public office is the right, authority and duty, created and conferred by law, by which, for a
given period, either fixed by law or enduring at the pleasure of the creating power, an individual

is invested with some portion of the sovereign functions of the government, to be exercised by
him for the benefit of the public. The individual so invested is a public officer." 42
Petitioner claims that she is not a public officer with Salary Grade 27; she is, in fact, a regular tuition
fee-paying student. This is likewise bereft of merit. It is not only the salary grade that determines the
jurisdiction of the Sandiganbayan. The Sandiganbayan also has jurisdiction over other officers
enumerated in P.D. No. 1606. In Geduspan v. People,43 We held that while the first part of Section
4(A) covers only officials with Salary Grade 27 and higher, its second part specifically includes other
executive officials whose positions may not be of Salary Grade 27 and higher but who are by express
provision of law placed under the jurisdiction of the said court. Petitioner falls under the jurisdiction of
the Sandiganbayan as she is placed there by express provision of law.44
Section 4(A)(1)(g) of P.D. No. 1606 explictly vested the Sandiganbayan with jurisdiction over
Presidents, directors or trustees, or managers of government-owned or controlled corporations, state
universities or educational institutions or foundations. Petitioner falls under this category. As the
Sandiganbayan pointed out, the BOR performs functions similar to those of a board of trustees of a
non-stock corporation.45 By express mandate of law, petitioner is, indeed, a public officer as
contemplated by P.D. No. 1606.
Moreover, it is well established that compensation is not an essential element of public office. 46 At
most, it is merely incidental to the public office.47
Delegation of sovereign functions is essential in the public office. An investment in an individual of
some portion of the sovereign functions of the government, to be exercised by him for the benefit of
the public makes one a public officer.48
The administration of the UP is a sovereign function in line with Article XIV of the Constitution. UP
performs a legitimate governmental function by providing advanced instruction in literature,
philosophy, the sciences, and arts, and giving professional and technical training. 49 Moreover, UP is
maintained by the Government and it declares no dividends and is not a corporation created for
profit.50
The offense charged was committed
in relation to public office, according
to the Information.
Petitioner likewise argues that even assuming that she is a public officer, the Sandiganbayan would
still not have jurisdiction over the offense because it was not committed in relation to her office.
According to petitioner, she had no power or authority to act without the approval of the BOR. She
adds there was no Board Resolution issued by the BOR authorizing her to contract with then
President Estrada; and that her acts were not ratified by the governing body of the state university.
Resultantly, her act was done in a private capacity and not in relation to public office.
It is axiomatic that jurisdiction is determined by the averments in the information. 51 More than that,
jurisdiction is not affected by the pleas or the theories set up by defendant or respondent in an
answer, a motion to dismiss, or a motion to quash. 52 Otherwise, jurisdiction would become dependent
almost entirely upon the whims of defendant or respondent. 53
In the case at bench, the information alleged, in no uncertain terms that petitioner, being then a
student regent of U.P., "while in the performance of her official functions, committing the offense in
relation to her office and taking advantage of her position, with intent to gain, conspiring with her

brother, JADE IAN D. SERANA, a private individual, did then and there wilfully, unlawfully and
feloniously defraud the government x x x." (Underscoring supplied)
Clearly, there was no grave abuse of discretion on the part of the Sandiganbayan when it did not
quash the information based on this ground.
Source of funds is a defense that should
be raised during trial on the merits.
It is contended anew that the amount came from President Estradas private funds and not from the
government coffers. Petitioner insists the charge has no leg to stand on.
We cannot agree. The information alleges that the funds came from the Office of the President and
not its then occupant, President Joseph Ejercito Estrada. Under the information, it is averred that
"petitioner requested the amount of Fifteen Million Pesos (P15,000,000.00), Philippine Currency, from
the Office of the President, and the latter relying and believing on said false pretenses and
misrepresentation gave and delivered to said accused Land Bank Check No. 91353 dated October
24, 2000 in the amount of Fifteen Million Pesos (P15,000,000.00)."
Again, the Court sustains the Sandiganbayan observation that the source of the P15,000,000 is a
matter of defense that should be ventilated during the trial on the merits of the instant case. 54
A lawyer owes candor, fairness
and honesty to the Court.
As a parting note, petitioners counsel, Renato G. dela Cruz, misrepresented his reference to Section
4 of P.D. No. 1606 as a quotation from Section 4 of R.A. No. 3019. A review of his motion to quash,
the instant petition for certiorari and his memorandum, unveils the misquotation. We urge petitioners
counsel to observe Canon 10 of the Code of Professional Responsibility, specifically Rule 10.02 of
the Rules stating that "a lawyer shall not misquote or misrepresent."
The Court stressed the importance of this rule in Pangan v. Ramos,55 where Atty Dionisio D. Ramos
used the name Pedro D.D. Ramos in connection with a criminal case. The Court ruled that Atty.
Ramos resorted to deception by using a name different from that with which he was authorized. We
severely reprimanded Atty. Ramos and warned that a repetition may warrant suspension or
disbarment.56
We admonish petitioners counsel to be more careful and accurate in his citation. A lawyers conduct
before the court should be characterized by candor and fairness. 57 The administration of justice would
gravely suffer if lawyers do not act with complete candor and honesty before the courts. 58
WHEREFORE, the petition is DENIED for lack of merit.
SO ORDERED.

FIRST DIVISION
RUPERTO A. AMBIL, JR.,

G.R. No. 175457


Petitioner,

- versus -

SANDIGANBAYAN and PEOPLE OF THE


PHILIPPINES,
Respondent.
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 175482

ALEXANDRINO R. APELADO, SR.,

Present:

Petitioner,
CORONA, C.J.,
Chairperson,
CARPIO,
- versus -

BERSAMIN,
DEL CASTILLO, and
VILLARAMA, JR., JJ.

Promulgated:
PEOPLE OF THE PHILIPPINES,
Respondent.

July 6, 2011

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION
VILLARAMA, JR., J.:
Before us are two consolidated petitions for review on certiorari filed by petitioner Ruperto A.
Ambil, Jr.130[1] and petitioner Alexandrino R. Apelado Sr.131[2] assailing the Decision132[3] promulgated

130

131

132

on September 16, 2005 and Resolution133[4] dated November 8, 2006 of the Sandiganbayan in
Criminal Case No. 25892.
The present controversy arose from a letter 134[5] of Atty. David B. Loste, President of the
Eastern Samar Chapter of the Integrated Bar of the Philippines (IBP), to the Office of the
Ombudsman, praying for an investigation into the alleged transfer of then Mayor Francisco Adalim, an
accused in Criminal Case No. 10963 for murder, from the provincial jail of Eastern Samar to the
residence of petitioner, then Governor Ruperto A. Ambil, Jr. In a Report 135[6] dated January 4, 1999,
the National Bureau of Investigation (NBI) recommended the filing of criminal charges against
petitioner Ambil, Jr. for violation of Section 3(e) 136[7] of Republic Act (R.A.) No. 3019, otherwise known
as the Anti-Graft and Corrupt Practices Act, as amended.

On September 22, 1999, the new

President of the IBP, Eastern Samar Chapter, informed the Ombudsman that the IBP is no longer
interested in pursuing the case against petitioners. Thus, he recommended the dismissal of the
complaint against petitioners.137[8]
Nonetheless, in an Information138[9] dated January 31, 2000, petitioners Ambil, Jr. and
Alexandrino R. Apelado, Sr. were charged with violation of Section 3(e) of R.A. No. 3019, together
with SPO3 Felipe A. Balano.

Upon reinvestigation, the Office of the Ombudsman issued a

Memorandum139[10] dated August 4, 2000, recommending the dismissal of the complaint as regards
Balano and the amendment of the Information to include the charge of Delivering Prisoners from Jail
133

134

135

136

137

138

139

under Article 156140[11] of the Revised Penal Code, as amended, (RPC) against the remaining
accused. The Amended Information141[12] reads:
That on or about the 6th day of September 1998, and for sometime prior [or]
subsequent thereto, [in] the Municipality of Borongan, Province of Eastern Samar,
Philippines, and within the jurisdiction of this Honorable Court, [the] above-named
accused, Ruperto A. Ambil, Jr.[,] being then the Provincial Governor of Eastern Samar,
and Alexandrino R. Apelado, being then the Provincial Warden of Eastern Samar, both
having been public officers, duly elected, appointed and qualified as such, committing
the offense in relation to office, conniving and confederating together and mutually
helping x x x each other, with deliberate intent, manifest partiality and evident bad faith,
did then and there wilfully, unlawfully and criminally order and cause the release from
the Provincial Jail of detention prisoner Mayor Francisco Adalim, accused in Criminal
Case No. 10963, for Murder, by virtue of a warrant of Arrest issued by Honorable
Arnulfo P. Bugtas, Presiding Judge, RTC-Branch 2, Borongan, Eastern Samar, and
thereafter placed said detention prisoner (Mayor Francisco Adalim) under accused
RUPERTO A. AMBIL, JR.s custody, by allowing said Mayor Adalim to stay at accused
Ambils residence for a period of Eighty-Five (85) days, more or less which act was
done without any court order, thus accused in the performance of official functions had
given unwarranted benefits and advantage to detainee Mayor Francisco Adalim to the
prejudice of the government.
CONTRARY TO LAW.
BAIL BOND RECOMMENDED:

P30,000.00 each.142[13]

On arraignment, petitioners pleaded not guilty and posted bail.


At the pre-trial, petitioners admitted the allegations in the Information. They reason, however,
that Adalims transfer was justified considering the imminent threats upon his person and the dangers
posed by his detention at the provincial jail. According to petitioners, Adalims sister, Atty. Juliana A.
Adalim-White, had sent numerous prisoners to the same jail where Mayor Adalim was to be held.

140

141

142

Consequently, the prosecution no longer offered testimonial evidence and rested its case after
the admission of its documentary exhibits. Petitioners filed a Motion for Leave to File Demurrer to
Evidence with Reservation to Present Evidence in Case of Denial 143[14] but the same was denied.
At the trial, petitioners presented three witnesses: petitioner Ambil, Jr., Atty. Juliana A. AdalimWhite and Mayor Francisco C. Adalim.
Petitioner Ambil, Jr. testified that he was the Governor of Eastern Samar from 1998 to 2001.
According to him, it was upon the advice of Adalims lawyers that he directed the transfer of Adalims
detention to his home. He cites poor security in the provincial jail as the primary reason for taking
personal custody of Adalim considering that the latter would be in the company of inmates who were
put away by his sister and guards identified with his political opponents. 144[15]
For her part, Atty. White stated that she is the District Public Attorney of Eastern Samar and the
sister of Mayor Adalim. She recounted how Mayor Adalim was arrested while they were attending a
wedding in Sulat, Eastern Samar, on September 6, 1998. According to Atty. White, she sought the
alternative custody of Gov. Ambil, Jr. after Provincial Warden and herein petitioner Apelado, Sr. failed
to guarantee the mayors safety.145[16]
Meanwhile, Francisco Adalim introduced himself as the Mayor of Taft, Eastern Samar. He
confirmed his arrest on September 6, 1998 in connection with a murder case filed against him in the
Regional Trial Court (RTC) of Borongan, Eastern Samar. Adalim confirmed Atty. Whites account that
he spotted inmates who served as bodyguards for, or who are associated with, his political rivals at
the provincial jail. He also noticed a prisoner, Roman Akyatan, gesture to him with a raised clenched
fist.

Sensing danger, he called on his sister for help.

Adalim admitted staying at Ambil, Jr.s

residence for almost three months before he posted bail after the charge against him was
downgraded to homicide.146[17]
143

144

145

146

Petitioner Apelado, Sr. testified that he was the Provincial Jail Warden of Eastern Samar. He
recalls that on September 6, 1998, SPO3 Felipe Balano fetched him at home to assist in the arrest of
Mayor Adalim. Allegedly, Atty. White was contesting the legality of Mayor Adalims arrest and arguing
with the jail guards against booking him for detention. At the provincial jail, petitioner was confronted
by Atty. White who informed him that he was under the governor, in the latters capacity as a
provincial jailer. Petitioner claims that it is for this reason that he submitted to the governors order to
relinquish custody of Adalim.147[18]
Further, petitioner Apelado, Sr. described the physical condition of the jail to be dilapidated and
undermanned. According to him, only two guards were incharge of looking after 50 inmates. There
were two cells in the jail, each housing 25 inmates, while an isolation cell of 10 square meters was
unserviceable at the time. Also, there were several nipa huts within the perimeter for use during
conjugal visits.148[19]
On September 16, 2005, the Sandiganbayan, First Division, promulgated the assailed
Decision149[20] finding petitioners guilty of violating Section 3(e) of R.A. No. 3019.

The court ruled

that in moving Adalim to a private residence, petitioners have conspired to accord him unwarranted
benefits in the form of more comfortable quarters with access to television and other privileges that
other detainees do not enjoy. It stressed that under the Rules, no person under detention by legal
process shall be released or transferred except upon order of the court or when he is admitted to
bail.150[21]
The Sandiganbayan brushed aside petitioners defense that Adalims transfer was made to
ensure his safety. It observed that petitioner Ambil, Jr. did not personally verify any actual threat on
Adalims life but relied simply on the advice of Adalims lawyers. The Sandiganbayan also pointed out
the availability of an isolation cell and nipa huts within the 10-meter-high perimeter fence of the jail

147

148

149

150

which could have been used to separate Adalim from other prisoners. Finally, it cited petitioner Ambil,
Jr.s failure to turn over Adalim despite advice from Assistant Secretary Jesus Ingeniero of the
Department of Interior and Local Government.
Consequently, the Sandiganbayan sentenced petitioner Ambil, Jr. to an indeterminate penalty
of imprisonment for nine (9) years, eight (8) months and one (1) day to twelve (12) years and four (4)
months.

In favor of petitioner Apelado, Sr., the court appreciated the incomplete justifying

circumstance of obedience to a superior order and sentenced him to imprisonment for six (6) years
and one (1) month to nine (9) years and eight (8) months.
Hence, the present petitions.
Petitioner Ambil, Jr. advances the following issues for our consideration:
I
WHETHER OR NOT SECTION 3(e) REPUBLIC ACT NO. 3019, AS AMENDED,
APPLIES TO PETITIONERS CASE BEFORE THE SANDIGANBAYAN.
II
WHETHER OR NOT A PUBLIC OFFICER SUCH AS PETITIONER IS A PRIVATE
PARTY FOR PURPOSES OF SECTION 3(e), REPUBLIC ACT NO. 3019, AS
AMENDED.
III
WHETHER OR NOT PETITIONER ACTED WITH DELIBERATE INTENT, MANIFEST
PARTIALITY, EVIDENT BAD FAITH OR GROSS INEXCUSABLE NEGLIGENCE IN
THE CONTEXT OF SAID SECTION 3(e).
IV
WHETHER OR NOT PETITIONER AS PROVINCIAL GOVERNOR AND JAILER
UNDER SECTIONS 1730 AND 1733, ARTICLE III, CHAPTER 45 OF THE
ADMINISTRATIVE CODE OF 1917 AND SECTION 61, CHAPTER V, REPUBLIC ACT
6975 HAS THE AUTHORITY TO TAKE CUSTODY OF A DETENTION PRISONER.
V
WHETHER OR NOT PETITIONER IS ENTITLED TO THE JUSTIFYING
CIRCUMSTANCE OF FULFILLMENT OF A DUTY OR THE LAWFUL EXERCISE OF A
RIGHT OR OFFICE.
VI

WHETHER OR NOT PETITIONER SHOULD HAVE BEEN ACQUITTED BECAUSE


THE PROSECUTION EVIDENCE DID NOT ESTABLISH HIS GUILT BEYOND
REASONABLE DOUBT.151[22]
For his part, petitioner Apelado, Sr. imputes the following errors on the Sandiganbayan:
I
THERE WAS MISAPPREHENSION OF FACTS AND/OR MISAPPLICATION OF THE
LAW AND JURISPRUDENCE IN CONVICTING ACCUSED APELADO, EITHER AS
PRINCIPAL OR IN CONSPIRACY WITH HIS CO-ACCUSED AMBIL.
II
IN THE ABSENCE OF COMPETENT PROOF BEYOND REASONABLE DOUBT OF
CONSPIRACY BETWEEN ACCUSED AMBIL AND HEREIN PETITIONER, THE
LATTER SHOULD BE ACCORDED FULL CREDIT FOR THE JUSTIFYING
CIRCUMSTANCE UNDER PARAGRAPH 6, ARTICLE 11 OF THE REVISED PENAL
CODE.
III
THE COURT A QUOS BASIS IN CONVICTING BOTH ACCUSED AMBIL AND HEREIN
PETITIONER OF HAVING GIVEN MAYOR ADALIM UNWARRANTED BENEFITS AND
ADVANTAGE TO THE PREJUDICE x x x OF THE GOVERNMENT IS, AT THE MOST,
SPECULATIVE.152[23]
The issues raised by petitioner Ambil, Jr. can be summed up into three: (1) Whether he is guilty
beyond reasonable doubt of violating Section 3(e), R.A. No. 3019; (2) Whether a provincial governor
has authority to take personal custody of a detention prisoner; and (3) Whether he is entitled to the
justifying circumstance of fulfillment of duty under Article 11(5) 153[24] of the RPC.
Meanwhile, petitioner Apelado, Sr.s assignment of errors can be condensed into two: (1)
Whether he is guilty beyond reasonable doubt of violating Section 3(e), R.A. No. 3019; and (2)
Whether he is entitled to the justifying circumstance of obedience to an order issued by a superior for
some lawful purpose under Article 11(6)154[25] of the RPC.
151

152

153

154

Fundamentally, petitioner Ambil, Jr. argues that Section 3(e), R.A. No. 3019 does not apply to
his case because the provision contemplates only transactions of a pecuniary nature. Since the law
punishes a public officer who extends unwarranted benefits to a private person, petitioner avers that
he cannot be held liable for extending a favor to Mayor Adalim, a public officer. Further, he claims
good faith in taking custody of the mayor pursuant to his duty as a Provincial Jailer under the
Administrative Code of 1917. Considering this, petitioner believes himself entitled to the justifying
circumstance of fulfillment of duty or lawful exercise of duty.
Petitioner Apelado, Sr., on the other hand, denies allegations of conspiracy between him and
petitioner Ambil, Jr. Petitioner Apelado, Sr. defends that he was merely following the orders of a
superior when he transferred the detention of Adalim. As well, he invokes immunity from criminal
liability.
For the State, the Office of the Special Prosecutor (OSP) points out the absence of
jurisprudence that restricts the application of Section 3(e), R.A. No. 3019 to transactions of a
pecuniary nature. The OSP explains that it is enough to show that in performing their functions,
petitioners have accorded undue preference to Adalim for liability to attach under the provision.
Further, the OSP maintains that Adalim is deemed a private party for purposes of applying Section
3(e), R.A. No. 3019 because the unwarranted benefit redounded, not to his person as a mayor, but to
his person as a detention prisoner accused of murder. It suggests further that petitioners were
motivated by bad faith as evidenced by their refusal to turn over Adalim despite instruction from Asst.
Sec. Ingeniero. The OSP also reiterates petitioners lack of authority to take custody of a detention
prisoner without a court order. Hence, it concludes that petitioners are not entitled to the benefit of
any justifying circumstance.
After a careful review of this case, the Court finds the present petitions bereft of merit.
Petitioners were charged with violation of Section 3(e) of R.A. No. 3019 or the Anti-Graft and
Corrupt Practices Act which provides:
Section. 3. Corrupt practices of public officers. - In addition to acts or omissions
of public officers already penalized by existing law, the following shall constitute corrupt
practices of any public officer and are hereby declared to be unlawful:
xxxx
(e) Causing any undue injury to any party, including the Government, or giving
any private party any unwarranted benefits, advantage or preference in the discharge of

his official, administrative or judicial functions through manifest partiality, evident bad
faith or gross inexcusable negligence. This provision shall apply to officers and
employees of offices or government corporations charged with the grant of licenses or
permits or other concessions.
In order to hold a person liable under this provision, the following elements must concur: (1)
the accused must be a public officer discharging administrative, judicial or official functions; (2) he
must have acted with manifest partiality, evident bad faith or gross inexcusable negligence; and (3)
his action caused any undue injury to any party, including the government, or gave any private party
unwarranted benefits, advantage or preference in the discharge of his functions. 155[26]
As to the first element, there is no question that petitioners are public officers discharging
official functions and that jurisdiction over them lay with the Sandiganbayan.

Jurisdiction of the

Sandiganbayan over public officers charged with violation of the Anti-Graft Law is provided under
Section 4 of Presidential Decree No. 1606, 156[27] as amended by R.A. No. 8249. 157[28] The pertinent
portions of Section 4, P.D. No. 1606, as amended, read as follows:
SEC. 4. Jurisdiction.The Sandiganbayan shall exercise exclusive original
jurisdiction in all cases involving:
a. Violations of Republic Act No. 3019, as amended, otherwise known as the AntiGraft and Corrupt Practices Act, Republic Act No. 1379, and Chapter II, Section 2, Title
VII, Book II of the Revised Penal Code, where one or more of the accused are officials
occupying the following positions in the government, whether in a permanent, acting or
interim capacity, at the time of the commission of the offense:
(1) Officials of the executive branch occupying the positions of regional
director and higher, otherwise classified as Grade 27 and higher, of the
Compensation and Position Classification Act of 1989 (Republic Act No. 6758),
specifically including:
(a) Provincial governors, vice-governors, members of the
sangguniang panlalawigan and provincial treasurers, assessors,
engineers and other provincial department heads[;]
xxxx

155

156

157

In cases where none of the accused are occupying positions corresponding to


Salary Grade 27 or higher, as prescribed in the said Republic Act No. 6758, or military
and PNP officers mentioned above, exclusive original jurisdiction thereof shall be vested
in the proper regional trial court, metropolitan trial court,
municipal trial court, and
municipal circuit trial court, as the case may be, pursuant to their respective jurisdiction
as provided in Batas Pambansa Blg. 129, as amended.
xxxx
Thus, the jurisdiction of the Sandiganbayan over petitioner Ambil, Jr. is beyond question. The
same is true as regards petitioner Apelado, Sr. As to him, a Certification 158[29] from the Provincial
Government Department Head of the HRMO shows that his position as Provincial Warden is
classified as Salary Grade 22. Nonetheless, it is only when none of the accused are occupying
positions corresponding to salary grade 27 or higher shall exclusive jurisdiction be vested in the
lower courts. Here, petitioner Apelado, Sr. was charged as a co-principal with Governor Ambil, Jr.,
over whose position the Sandiganbayan has jurisdiction. Accordingly, he was correctly tried jointly
with said public officer in the proper court which had exclusive original jurisdiction over them the
Sandiganbayan.
The second element, for its part, describes the three ways by which a violation of Section 3(e)
of R.A. No. 3019 may be committed, that is, through manifest partiality, evident bad faith or gross
inexcusable negligence.
In Sison v. People,159[30] we defined partiality, bad faith and gross negligence as follows:
Partiality is synonymous with bias which excites a disposition to see and
report matters as they are wished for rather than as they are. Bad faith does not
simply connote bad judgment or negligence; it imputes a dishonest purpose or some
moral obliquity and conscious doing of a wrong; a breach of sworn duty through some
motive or intent or ill will; it partakes of the nature of fraud. Gross negligence has been
so defined as negligence characterized by the want of even slight care, acting or
omitting to act in a situation where there is a duty to act, not inadvertently but wilfully
and intentionally with a conscious indifference to consequences in so far as other
persons may be affected. It is the omission of that care which even inattentive and
thoughtless men never fail to take on their own property. x x x 160[31]
158

159

160

In this case, we find that petitioners displayed manifest partiality and evident bad faith in
transferring the detention of Mayor Adalim to petitioner Ambil, Jr.s house. There is no merit to
petitioner Ambil, Jr.s contention that he is authorized to transfer the detention of prisoners by virtue of
his power as the Provincial Jailer of Eastern Samar.
Section 28 of the Local Government Code draws the extent of the power of local chief
executives over the units of the Philippine National Police within their jurisdiction:
SEC. 28. Powers of Local Chief Executives over the Units of the Philippine
National Police.The extent of operational supervision and control of local chief
executives over the police force, fire protection unit, and jail management personnel
assigned in their respective jurisdictions shall be governed by the provisions of Republic
Act Numbered Sixty-nine hundred seventy-five (R.A. No. 6975), otherwise known as
The Department of the Interior and Local Government Act of 1990, and the rules and
regulations issued pursuant thereto.
In particular, Section 61, Chapter 5 of R.A. No. 6975 161[32] on the Bureau of Jail Management
and Penology provides:
Sec. 61. Powers and Functions. - The Jail Bureau shall exercise supervision and
control over all city and municipal jails. The provincial jails shall be supervised and
controlled by the provincial government within its jurisdiction, whose expenses shall
be subsidized by the National Government for not more than three (3) years after the
effectivity of this Act.
The power of control is the power of an officer to alter or modify or set aside what a
subordinate officer had done in the performance of his duties and to substitute the judgment of the
former for that of the latter.162[33] An officer in control lays down the rules in the doing of an act. If
they are not followed, he may, in his discretion, order the act undone or re-done by his subordinate or
he may even decide to do it himself.163[34]

161

162

163

On the other hand, the power of supervision means overseeing or the authority of an officer to
see to it that the subordinate officers perform their duties. 164[35] If the subordinate officers fail or
neglect to fulfill their duties, the official may take such action or step as prescribed by law to make
them perform their duties. Essentially, the power of supervision means no more than the power of
ensuring that laws are faithfully executed, or that subordinate officers act within the law. 165[36] The
supervisor or superintendent merely sees to it that the rules are followed, but he does not lay down
the rules, nor does he have discretion to modify or replace them. 166[37]
Significantly, it is the provincial government and not the governor alone which has authority to
exercise control and supervision over provincial jails. In any case, neither of said powers authorizes
the doing of acts beyond the parameters set by law. On the contrary, subordinates must be enjoined
to act within the bounds of law. In the event that the subordinate performs an act ultra vires, rules
may be laid down on how the act should be done, but always in conformity with the law.
In a desperate attempt to stretch the scope of his powers, petitioner Ambil, Jr. cites Section
1731, Article III of the Administrative Code of 1917 on Provincial jails in support. Section 1731
provides:
SEC. 1731. Provincial governor as keeper of jail.The governor of the
province shall be charged with the keeping of the provincial jail, and it shall be
his duty to administer the same in accordance with law and the regulations
prescribed for the government of provincial prisons. The immediate custody and
supervision of the jail may be committed to the care of a jailer to be appointed by the
provincial governor. The position of jailer shall be regarded as within the unclassified
civil service but may be filled in the manner in which classified positions are filled, and if
so filled, the appointee shall be entitled to all the benefits and privileges of classified
employees, except that he shall hold office only during the term of office of the
appointing governor and until a successor in the office of the jailer is appointed and
qualified, unless sooner separated. The provincial governor shall, under the
direction of the provincial board and at the expense of the province, supply
proper food and clothing for the prisoners; though the provincial board may, in its
discretion, let the contract for the feeding of the prisoners to some other person.
(Emphasis supplied.)

164

165

166

This provision survived the advent of the Administrative Code of 1987. But again, nowhere did
said provision designate the provincial governor as the provincial jailer, or even slightly suggest that
he is empowered to take personal custody of prisoners. What is clear from the cited provision is that
the provincial governors duty as a jail keeper is confined to the administration of the jail and the
procurement of food and clothing for the prisoners. After all, administrative acts pertain only to those
acts which are necessary to be done to carry out legislative policies and purposes already declared
by the legislative body or such as are devolved upon it 167[38] by the Constitution. Therefore, in the
exercise of his administrative powers, the governor can only enforce the law but not supplant it.
Besides, the only reference to a transfer of prisoners in said article is found in Section
1737168[39] under which prisoners may be turned over to the jail of the neighboring province in case
the provincial jail be insecure or insufficient to accommodate all provincial prisoners. However, this
provision has been superseded by Section 3, Rule 114 of the Revised Rules of Criminal Procedure,
as amended. Section 3, Rule 114 provides:
SEC. 3. No release or transfer except on court order or bail.-No person under
detention by legal process shall be released or transferred except upon order of the
court or when he is admitted to bail.
Indubitably, the power to order the release or transfer of a person under detention by legal
process is vested in the court, not in the provincial government, much less the governor. This was
amply clarified by Asst. Sec. Ingeniero in his communication 169[40] dated October 6, 1998 addressed
to petitioner Ambil, Jr. Asst. Sec. Ingeniero wrote:
06 October 1996
GOVERNOR RUPERTO AMBIL
Provincial Capitol
Borongan, Eastern Samar
Dear Sir:

167

168

169

This has reference to the letter of Atty. Edwin B. Docena, and the reports earlier
received by this Department, relative to your alleged action in taking into custody Mayor
Francisco Aising Adalim of Taft, that province, who has been previously arrested by
virtue by a warrant of arrest issued in Criminal Case No. 10963.
If the report is true, it appears that your actuation is not in accord with the provision of
Section 3, Rule 113 of the Rules of Court, which mandates that an arrested person be
delivered to the nearest police station or jail.
Moreover, invoking Section 61 of RA 6975 as legal basis in taking custody of the
accused municipal mayor is misplaced. Said section merely speaks of the power of
supervision vested unto the provincial governor over provincial jails. It does not,
definitely, include the power to take in custody any person in detention.
In view of the foregoing, you are hereby enjoined to conduct yourself within the bounds
of law and to immediately deliver Mayor Adalim to the provincial jail in order to avoid
legal complications.
Please be guided accordingly.
Very truly yours,
(SGD.)
JESUS I. INGENIERO
Assistant Secretary
Still, petitioner Ambil, Jr. insisted on his supposed authority as a provincial jailer.

Said

petitioners usurpation of the court's authority, not to mention his open and willful defiance to official
advice in order to accommodate a former political party mate, 170[41] betray his unmistakable bias and
the evident bad faith that attended his actions.
Likewise amply established beyond reasonable doubt is the third element of the crime. As
mentioned above, in order to hold a person liable for violation of Section 3(e), R.A. No. 3019, it is
required that the act constituting the offense consist of either (1) causing undue injury to any party,
including the government, or (2) giving any private party any unwarranted benefits, advantage or
preference in the discharge by the accused of his official, administrative or judicial functions.
In the case at hand, the Information specifically accused petitioners of giving unwarranted
benefits and advantage to Mayor Adalim, a public officer charged with murder, by causing his release
from prison and detaining him instead at the house of petitioner Ambil, Jr. Petitioner Ambil, Jr.
170

negates the applicability of Section 3(e), R.A. No. 3019 in this case on two points. First, Section 3(e)
is not applicable to him allegedly because the last sentence thereof provides that the provision shall
apply to officers and employees of offices or government corporations charged with the grant of
licenses, permits or other concessions and he is not such government officer or employee. Second,
the purported unwarranted benefit was accorded not to a private party but to a public officer.
However, as regards his first contention, it appears that petitioner Ambil, Jr. has obviously lost
sight, if he is not altogether unaware, of our ruling in Mejorada v. Sandiganbayan171[42] where we held
that a prosecution for violation of Section 3(e) of the Anti-Graft Law will lie regardless of whether or
not the accused public officer is charged with the grant of licenses or permits or other concessions.
Following is an excerpt of what we said in Mejorada,
Section 3 cited above enumerates in eleven subsections the corrupt practices of
any public officers (sic) declared unlawful. Its reference to any public officer is without
distinction or qualification and it specifies the acts declared unlawful. We agree with the
view adopted by the Solicitor General that the last sentence of paragraph [Section 3] (e)
is intended to make clear the inclusion of officers and employees of officers (sic) or
government corporations which, under the ordinary concept of public officers may not
come within the term. It is a strained construction of the provision to read it as applying
exclusively to public officers charged with the duty of granting licenses or permits or
other concessions.172[43] (Italics supplied.)
In the more recent case of Cruz v. Sandiganbayan,173[44] we affirmed that a prosecution for
violation of said provision will lie regardless of whether the accused public officer is charged with the
grant of licenses or permits or other concessions.174[45]
Meanwhile, regarding petitioner Ambil, Jr.s second contention, Section 2(b) of R.A. No. 3019
defines a public officer to include elective and appointive officials and employees, permanent or
temporary, whether in the classified or unclassified or exemption service receiving compensation,
171

172

173

174

even nominal from the government. Evidently, Mayor Adalim is one. But considering that Section
3(e) of R.A. No. 3019 punishes the giving by a public officer of unwarranted benefits to a private party,
does the fact that Mayor Adalim was the recipient of such benefits take petitioners case beyond the
ambit of said law?
We believe not.
In drafting the Anti-Graft Law, the lawmakers opted to use private party rather than private
person to describe the recipient of the unwarranted benefits, advantage or preference for a reason.
The term party is a technical word having a precise meaning in legal parlance 175[46] as
distinguished from person which, in general usage, refers to a human being. 176[47] Thus, a private
person simply pertains to one who is not a public officer.

While a private party is more

comprehensive in scope to mean either a private person or a public officer acting in a private capacity
to protect his personal interest.
In the present case, when petitioners transferred Mayor Adalim from the provincial jail and
detained him at petitioner Ambil, Jr.s residence, they accorded such privilege to Adalim, not in his
official capacity as a mayor, but as a detainee charged with murder. Thus, for purposes of applying
the provisions of Section 3(e), R.A. No. 3019, Adalim was a private party.
Moreover, in order to be found guilty under the second mode, it suffices that the accused has
given unjustified favor or benefit to another in the exercise of his official, administrative or judicial
functions.177[48] The word unwarranted means lacking adequate or official support; unjustified;
unauthorized or without justification or adequate reason. Advantage means a more favorable or
improved position or condition; benefit, profit or gain of any kind; benefit from some course of action.
Preference signifies priority or higher evaluation or desirability; choice or estimation above
another.178[49]
175

176

177

178

Without a court order, petitioners transferred Adalim and detained him in a place other than the
provincial jail.

The latter was housed in much more comfortable quarters, provided better

nourishment, was free to move about the house and watch television. Petitioners readily extended
these benefits to Adalim on the mere representation of his lawyers that the mayors life would be put
in danger inside the provincial jail.
As the Sandiganbayan ruled, however, petitioners were unable to establish the existence of
any risk on Adalims safety. To be sure, the latter would not be alone in having unfriendly company in
lockup. Yet, even if we treat Akyatans gesture of raising a closed fist at Adalim as a threat of
aggression, the same would still not constitute a special and compelling reason to warrant Adalims
detention outside the provincial jail. For one, there were nipa huts within the perimeter fence of the
jail which could have been used to separate Adalim from the rest of the prisoners while the isolation
cell was undergoing repair. Anyhow, such repair could not have exceeded the 85 days that Adalim
stayed in petitioner Ambil, Jr.s house.

More importantly, even if Adalim could have proven the

presence of an imminent peril on his person to petitioners, a court order was still indispensable for his
transfer.
The foregoing, indeed, negates the application of the justifying circumstances claimed by
petitioners.
Specifically, petitioner Ambil, Jr. invokes the justifying circumstance of fulfillment of duty or
lawful exercise of right or office. Under paragraph 5, Article 11 of the RPC, any person who acts in
the fulfillment of a duty or in the lawful exercise of a right or office does not incur any criminal liability.
In order for this justifying circumstance to apply, two requisites must be satisfied: (1) the accused
acted in the performance of a duty or in the lawful exercise of a right or office; and (2) the injury
caused or the offense committed be the necessary consequence of the due performance of duty or
the lawful exercise of such right or office. 179[50] Both requisites are lacking in petitioner Ambil, Jr.s
case.
As we have earlier determined, petitioner Ambil, Jr. exceeded his authority when he ordered
the transfer and detention of Adalim at his house. Needless to state, the resulting violation of the
Anti-Graft Law did not proceed from the due performance of his duty or lawful exercise of his office.

179

In like manner, petitioner Apelado, Sr. invokes the justifying circumstance of obedience to an
order issued for some lawful purpose. Under paragraph 6, Article 11 of the RPC, any person who
acts in obedience to an order issued by a superior for some lawful purpose does not incur any
criminal liability. For this justifying circumstance to apply, the following requisites must be present: (1)
an order has been issued by a superior; (2) such order must be for some lawful purpose; and (3) the
means used by the subordinate to carry out said order is lawful. 180[51] Only the first requisite is
present in this case.
While the order for Adalims transfer emanated from petitioner Ambil, Jr., who was then
Governor, neither said order nor the means employed by petitioner Apelado, Sr. to carry it out was
lawful. In his capacity as the Provincial Jail Warden of Eastern Samar, petitioner Apelado, Sr. fetched
Mayor Adalim at the provincial jail and, unarmed with a court order, transported him to the house of
petitioner Ambil, Jr. This makes him liable as a principal by direct participation under Article 17(1) 181
[52] of the RPC.
An accepted badge of conspiracy is when the accused by their acts aimed at the same object,
one performing one part of and another performing another so as to complete it with a view to the
attainment of the same object, and their acts although apparently independent were in fact concerted
and cooperative, indicating closeness of personal association, concerted action and concurrence of
sentiments.182[53]
Conspiracy was sufficiently demonstrated by petitioner Apelado, Sr.s willful cooperation in
executing petitioner Ambil, Jr.s order to move Adalim from jail, despite the absence of a court order.
Petitioner Apelado, Sr., a law graduate, cannot hide behind the cloak of ignorance of the law. The
Rule requiring a court order to transfer a person under detention by legal process is elementary.
Truth be told, even petitioner governor who is unschooled in the intricacies of the law expressed
reservations on his power to transfer Adalim. All said, the concerted acts of petitioners Ambil, Jr. and
Apelado, Sr. resulting in the violation charged, makes them equally responsible as conspirators.

180

181

182

As regards the penalty imposed upon petitioners, Section 9(a) of R.A. No. 3019 punishes a
public officer or a private person who violates Section 3 of R.A. No. 3019 with imprisonment for not
less than six (6) years and one (1) month to not more than fifteen (15) years and perpetual
disqualification from public office. Under Section 1 of the Indeterminate Sentence Law or Act No.
4103, as amended by Act No. 4225, if the offense is punished by a special law, the court shall
sentence the accused to an indeterminate sentence, the maximum term of which shall not exceed the
maximum fixed by said law and the minimum shall not be less than the minimum term prescribed by
the same.
Thus, the penalty imposed by the Sandiganbayan upon petitioner Ambil, Jr. of imprisonment
for nine (9) years, eight (8) months and one (1) day to twelve (12) years and four (4) months is in
accord with law. As a co-principal without the benefit of an incomplete justifying circumstance to his
credit, petitioner Apelado, Sr. shall suffer the same penalty.
WHEREFORE, the consolidated petitions are DENIED. The Decision of the Sandiganbayan in
Criminal Case No. 25892 is AFFIRMED WITH MODIFICATION. We find petitioners Ruperto A. Ambil, Jr.
and Alexandrino R. Apelado, Sr. guilty beyond reasonable doubt of violating Section 3(e), R.A. No. 3019.
Petitioner Alexandrino R. Apelado, Sr. is, likewise, sentenced to an indeterminate penalty of imprisonment
for nine (9) years, eight (8) months and one (1) day to twelve (12) years and four (4) months.
With costs against the petitioners.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

CLARITA DEPAKAKIBO GARCIA,

G.R. No. 170122

Petitioner,

- versus -

SANDIGANBAYAN and REPUBLIC


OF THE PHILIPPINES,
Respondents.
x-----------------------------------------x
CLARITA DEPAKAKIBO GARCIA,
Petitioner,

G.R. No. 171381


- versus Present:

SANDIGANBAYAN and REPUBLIC


OF THE PHILIPPINES,
Respondents.

CARPIO, J., Chairperson,


CHICO-NAZARIO,
VELASCO, JR.,
LEONARDO-DE CASTRO,* and

PERALTA, JJ.

Promulgated:

October 12, 2009


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

DECISION

VELASCO, JR., J.:


The Case

Before us are these two (2) consolidated petitions under Rule 65, each interposed by petitioner
Clarita D. Garcia, with application for injunctive relief.

In the first petition for mandamus and/or

certiorari, docketed as G.R. No. 170122, petitioner seeks to nullify and set aside the August 5, 2005
Order,183[1] as reiterated in another Order dated August 26, 2005, both issued by the Sandiganbayan,
Fourth Division, which effectively denied the petitioners motion to dismiss and/or to quash Civil Case
No. 0193, a suit for forfeiture commenced by the Republic of the Philippines against the petitioner
and her immediate family. The second petition for certiorari, docketed as G.R. No. 171381, seeks to
nullify and set aside the November 9, 2005 Resolution 184[2] of the Sandiganbayan, Fourth Division,
insofar as it likewise denied the petitioners motion to dismiss and/or quash Civil Case No. 0196,
another forfeiture case involving the same parties but for different properties.

183

184

The Facts

To recover unlawfully acquired funds and properties in the aggregate amount of PhP
143,052,015.29 that retired Maj. Gen. Carlos F. Garcia, his wife, herein petitioner Clarita, children Ian
Carl, Juan Paulo and Timothy Mark (collectively, the Garcias) had allegedly amassed and acquired,
the Republic, through the Office of the Ombudsman (OMB), pursuant to Republic Act No. (RA)
1379,185[3] filed with the Sandiganbayan (SB) on October 29, 2004 a petition for the forfeiture of those
properties. This petition, docketed as Civil Case No. 0193, was eventually raffled to the Fourth
Division of the anti-graft court.

Civil Case No. 0193 was followed by the filing on July 5, 2005 of another forfeiture case,
docketed as Civil Case No. 0196, this time to recover funds and properties amounting to PhP
202,005,980.55. Civil Case No. 0196 would eventually be raffled also to the Fourth Division of the
SB. For convenience and clarity, Civil Case No. 0193 shall hereinafter be also referred to as
Forfeiture I and Civil Case No. 0196 as Forfeiture II.

Prior to the filing of Forfeiture II, but subsequent to the filing of Forfeiture I, the OMB charged
the Garcias and three others with violation of RA 7080 (plunder) under an Information dated April 5,
2005 which placed the value of the property and funds plundered at PhP 303,272,005.99. Docketed
as Crim. Case No. 28107, the Information was raffled off to the Second Division of the SB. The
plunder charge, as the parties pleadings seem to indicate, covered substantially the same properties
identified in both forfeiture cases.

After the filing of Forfeiture I, the following events transpired in relation to the case:

185

(1) The corresponding summons were issued and all served on Gen.
Garcia at his place of detention. Per the Sheriffs Return186[4] dated November 2,
2005, the summons were duly served on respondent Garcias. Earlier, or on October
29, 2004, the SB issued a writ of attachment in favor of the Republic, an issuance which
Gen. Garcia challenged before this Court, docketed as G.R. No. 165835.

Instead of an answer, the Garcias filed a motion to dismiss on the ground of the
SBs lack of jurisdiction over separate civil actions for forfeiture. The OMB countered
with a motion to expunge and to declare the Garcias in default. To the OMBs motion,
the Garcias interposed an opposition in which they manifested that they have
meanwhile repaired to the Court on certiorari, docketed as G.R. No. 165835 to nullify
the writ of attachment SB issued in which case the SB should defer action on the
forfeiture case as a matter of judicial courtesy.

(2) By Resolution187[5] of January 20, 2005, the SB denied the motion to


dismiss; declared the same motion as pro forma and hence without tolling effect on the
period to answer. The same resolution declared the Garcias in default.

Another resolution188[6] denied the Garcias motion for reconsideration and/or to


admit answer, and set a date for the ex-parte presentation of the Republics evidence.

A second motion for reconsideration was also denied on February 23, 2005,
pursuant to the prohibited pleading rule.

(3) Despite the standing default order, the Garcias moved for the transfer and
consolidation of Forfeiture I with the plunder case which were respectively pending in
different divisions of the SB, contending that such consolidation is mandatory under RA
8249.189[7]

On May 20, 2005, the SB 4 th Division denied the motion for the reason that the
forfeiture case is not the corresponding civil action for the recovery of civil liability arising
from the criminal case of plunder.
186

187

188
189

(4) On July 26, 2005, the Garcias filed another motion to dismiss and/or to
quash Forfeiture I on, inter alia, the following grounds: (a) the filing of the plunder case
ousted the SB 4th Division of jurisdiction over the forfeiture case; and (b) that the
consolidation is imperative in order to avoid possible double jeopardy entanglements.

By Order190[8] of August 5, 2005, the SB merely noted the motion in view of


movants having been declared in default which has yet to be lifted.

It is upon the foregoing factual antecedents that petitioner Clarita has interposed her first
special civil action for mandamus and/or certiorari docketed as G.R. No. 170122, raising the
following issues:
I. Whether or not the [SB] 4 th Division acted without or in excess of jurisdiction or
with grave abuse of discretion x x x in issuing its challenged order of August 5, 2005
and August 26 2005 that merely Noted without action, hence refused to resolve
petitioners motion to dismiss and/or to quash by virtue of petitioners prior
default in that:

A. For lack of proper and valid service of summons, the [SB] 4th Division
could not have acquired jurisdiction over petitioners, [and her childrens] x x x
persons, much less make them become the true parties-litigants, contestants
or legal adversaries in forfeiture I. As the [SB] has not validly acquired
jurisdiction over the petitioners [and her childrens] x x x persons, they could
not possibly be declared in default, nor can a valid judgment by default be
rendered against them.

B. Even then, mere declaration in default does not per se bar petitioner from
challenging the [SB] 4th Divisions lack of jurisdiction over the subject matter of
forfeiture I as the same can be raised anytime, even after final judgment. In
the absence of jurisdiction over the subject matter, any and all proceedings
before the [SB] are null and void.

C. Contrary to its August 26, 2005 rejection of petitioners motion for reconsideration of the first
challenged order that the issue of jurisdiction raised therein had already been passed upon by [the
190

SB 4th Divisions] resolution of May 20, 2005, the records clearly show that the grounds relied upon by
petitioner in her motion to dismiss and/or to quash dated July 26, 2005 were entirely different,
separate and distinct from the grounds set forth in petitioners manifestation and motion [to
consolidate] dated April 15, 2005 that was denied by it per its resolution of May 20, 2005.

D. In any event, the [SB] 4 th Division has been ousted of jurisdiction over the
subject matter of forfeiture I upon the filing of the main plunder case against
petitioner that mandates the automatic forfeiture of the subject properties in
forfeiture cases I & II as a function or adjunct of any conviction for plunder.

E. Being incompatible, the forfeiture law (RA No. 1379 [1955]) was impliedly repealed by the plunder
law (RA No. 7080 [1991]) with automatic forfeiture mechanism.

F. Since the sought forfeiture includes properties purportedly located in the USA, any penal conviction
for forfeiture in this case cannot be enforced outside of the Philippines x x x.

G. Based on orderly procedure and sound administration of justice, it is


imperative that the matter of forfeiture be exclusively tried in the main plunder
case to avoid possible double jeopardy entanglements, and to avoid possible
conflicting decisions by 2 divisions of the [SB] on the matter of forfeiture as a
penal sanction.191[9] (Emphasis added.)

With respect to Forfeiture II, the following events and proceedings occurred or were taken
after the petition for Forfeiture II was filed:

(1) On July 12, 2005, the SB sheriff served the corresponding summons. In his
return of July 13, 2005, the sheriff stated giving the copies of the summons to the
OIC/Custodian of the PNP Detention Center who in turn handed them to Gen.
Garcia. The general signed his receipt of the summons, but as to those pertaining to
the other respondents, Gen. Garcia acknowledged receiving the same, but with the
following qualifying note: Im receiving the copies of Clarita, Ian Carl, Juan Paolo &
Timothy but these copies will not guarantee it being served to the above-named (sic).

191

(2) On July 26, 2005, Clarita and her children, thru special appearance of
counsel, filed a motion to dismiss and/or to quash Forfeiture II primarily for lack of
jurisdiction over their persons and on the subject matter thereof which is now covered
by the plunder case.

To the above motion, the Republic filed its opposition with a motion for alternative
service of summons. The motion for alternative service would be repeated in another
motion of August 25, 2005.
(3) By Joint Resolution of November 9, 2005, the SB denied both the petitioners
motion to dismiss and/or to quash and the Republics motion for alternative service of
summons.
On January 24, 2006, the SB denied petitioners motion for partial
reconsideration.192[10]

From the last two issuances adverted to, Clarita has come to this Court via the instant
petition for certiorari, docketed as GR No. 171381. As there submitted, the SB 4th Division acted
without or in excess of jurisdiction or with grave abuse of discretion in issuing its Joint Resolution
dated November 9, 2005 and its Resolution of January 24, 2006 denying petitioners motion to
dismiss and/or to quash in that:

A. Based on its own finding that summons was improperly served on petitioner, the
[SB] ought to have dismissed forfeiture II for lack of jurisdiction over petitioners person
x x x.
B. By virtue of the plunder case filed with the [SB] Second Division that mandates the
automatic forfeiture of unlawfully acquired properties upon conviction, the [SB] Fourth
Division has no jurisdiction over the subject matter of forfeiture.

C. Being incompatible, the forfeiture law (RA No. 1379 [1955]) was impliedly repealed
by the plunder law (RA No. 7080 [1991]) with automatic forfeiture mechanism.

D. Based on orderly procedure and sound administration of justice, it is imperative that


the matter of forfeiture be exclusively tried in the main plunder case to avoid possible
192

double jeopardy entanglements and worse conflicting decisions by 2 divisions of the


Sandiganbayan on the matter of forfeiture as a penal sanction. 193[11] (Emphasis
added.)

Per Resolution of the Court dated March 13, 2006, G.R. No. 170122 and G.R. No. 171381
were consolidated.

The Courts Ruling

The petitions are partly meritorious.

The core issue tendered in these consolidated cases ultimately boils down to the question of
jurisdiction and may thusly be couched into whether the Fourth Division of the SB has acquired
jurisdiction over the person of petitionerand her three sons for that matterconsidering that, first,
vis--vis Civil Case Nos. 0193 (Forfeiture I) and 0196 (Forfeiture II), summons against her have been
ineffectively or improperly served and, second, that the plunder caseCrim. Case No. 28107has
already been filed and pending with another division of the SB, i.e., Second Division of the SB.

Plunder Case in Crim. Case No. 28107 Did Not Absorb


the Forfeiture Cases in Civil Case Nos. 0193 and 0196

Petitioner maintains that the SB 4th Division has no jurisdiction over the subject matter of
Forfeitures I and II as both cases are now covered or included in the plunder case against the
Garcias. Or as petitioner puts it a bit differently, the filing of the main plunder case (Crim. Case No.
193

28107), with its automatic forfeiture mechanism in the event of conviction, ousted the SB 4 th Division
of its jurisdiction over the subject matter of the forfeiture cases. The inclusion of the forfeiture cases
with the plunder case is necessary, so petitioner claims, to obviate possible double jeopardy
entanglements and colliding case dispositions. Prescinding from these premises, petitioner would
ascribe grave abuse of discretion on the SB 4 th Division for not granting its separate motions to
dismiss the two forfeiture petitions and/or to consolidate them with the plunder case on the foregoing
ground.

Petitioners contention is untenable. And in response to what she suggests in some of her
pleadings, let it be stated at the outset that the SB has jurisdiction over actions for forfeiture under RA
1379, albeit the proceeding thereunder is civil in nature.

We said so in Garcia v.

Sandiganbayan194[12] involving no less than petitioners husband questioning certain orders issued in
Forfeiture I case.
Petitioners posture respecting Forfeitures I and II being absorbed by

the plunder case, thus

depriving the 4th Division of the SB of jurisdiction over the civil cases, is flawed by the assumptions
holding it together, the first assumption being that the forfeiture cases are the corresponding civil
action for recovery of civil liability ex delicto. As correctly ruled by the SB 4 th Division in its May 20,
2005 Resolution,195[13] the civil liability for forfeiture cases does not arise from the commission of a
criminal offense, thus:

Such liability is based on a statute that safeguards the right of the State to
recover unlawfully acquired properties. The action of forfeiture arises when a public
officer or employee [acquires] during his incumbency an amount of property which is
manifestly out of proportion of his salary x x x and to his other lawful income x x
x.196[14] Such amount of property is then presumed prima facie to have been
unlawfully acquired.197[15] Thus if the respondent [public official] is unable to show to
194

195

196

197

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. 198[16] x x x
(Citations in the original.)

Lest it be overlooked, Executive Order No. (EO) 14, Series of 1986, albeit defining only the
jurisdiction over cases involving ill-gotten wealth of former President Marcos, his immediate family
and business associates, authorizes under its Sec. 3 199[17] the filing of forfeiture suits under RA 1379
which will proceed independently of any criminal proceedings.

The Court, in Republic v.

Sandiganbayan,200[18] interpreted this provision as empowering the Presidential Commission on


Good Government to file independent civil actions separate from the criminal actions.

Forfeiture Cases and the Plunder Case Have Separate Causes of Action; the Former Is Civil in
Nature while the Latter Is Criminal

It bears stressing, as a second point, that a forfeiture case under RA 1379 arises out of a
cause of action separate and different from a plunder case, thus negating the notion that the crime of
plunder charged in Crim. Case No. 28107 absorbs the forfeiture cases. In a prosecution for plunder,
what is sought to be established is the commission of the criminal acts in furtherance of the
acquisition of ill-gotten wealth. In the language of Sec. 4 of RA 7080, for purposes of establishing the
crime of plunder, it is sufficient to establish beyond reasonable doubt a pattern of overt or criminal
acts indicative of the overall unlawful scheme or conspiracy [to amass, accumulate or acquire illgotten wealth]. On the other hand, all that the court needs to determine, by preponderance of
evidence, under RA 1379 is the disproportion of respondents properties to his legitimate income, it
being unnecessary to prove how he acquired said properties. As correctly formulated by the Solicitor
General, the forfeitable nature of the properties under the provisions of RA 1379 does not proceed

198

199

200

from a determination of a specific overt act committed by the respondent public officer leading to the
acquisition of the illegal wealth. 201[19]

Given the foregoing considerations, petitioners thesis on possible double jeopardy


entanglements should a judgment of conviction ensue in Crim. Case 28107 collapses entirely.
Double jeopardy, as a criminal law concept, refers to jeopardy of punishment for the same offense, 202
[20] suggesting that double jeopardy presupposes two separate criminal prosecutions. Proceedings
under RA 1379 are, to repeat, civil in nature. As a necessary corollary, one who is sued under RA
1379 may be proceeded against for a criminal offense. Thus, the filing of a case under that law is not
barred by the conviction or acquittal of the defendant in Crim. Case 28107 for plunder.

Moreover, given the variance in the nature and subject matter of the proceedings between the
plunder case and the subject forfeiture cases, petitioners apprehension about the likelihood of
conflicting decisions of two different divisions of the anti-graft court on the matter of forfeiture as a
penal sanction is specious at best. What the SB said in this regard merits approving citation:

On the matter of forfeiture as a penal sanction, respondents argue that the


division where the plunder case is pending may issue a decision that would collide or be
in conflict with the decision by this division on the forfeiture case. They refer to a
situation where this Courts Second Division may exonerate the respondents in the
plunder case while the Fourth Division grant the petition for forfeiture for the same
properties in favor of the state or vice versa.

Suffice it to say that the variance in the decisions of both divisions does not give
rise to a conflict. After all, forfeiture in the plunder case requires the attendance of facts
and circumstances separate and distinct from that in the forfeiture case. Between the
two (2) cases, there is no causal connection in the facts sought to be established and
the issues sought to be addressed. As a result, the decision of this Court in one does
not have a bearing on the other.

201

202

There is also no conflict even if the decisions in both cases result in an order for
the forfeiture of the subject properties. The forfeiture following a conviction in the
plunder case will apply only to those ill-gotten wealth not recovered by the forfeiture
case and vise (sic) versa. This is on the assumption that the information on plunder and
the petition for forfeiture cover the same set of properties. 203[21]

RA 7080 Did Not Repeal RA 1379

Petitioner takes a different tack in her bid to prove that SB erred in not dismissing Forfeitures I
and II with her assertion that RA 7080 impliedly repealed RA 1379. We are not convinced.

Nowhere in RA 7080 can we find any provision that would indicate a repeal, expressly or
impliedly, of RA 1379. RA 7080 is a penal statute which, at its most basic, aims to penalize the act of
any public officer who by himself or in connivance with members of his family amasses, accumulates
or acquires ill-gotten wealth in the aggregate amount of at least PhP 50 million. On the other hand,
RA 1379 is not penal in nature, in that it does not make a crime the act of a public official acquiring
during his incumbency an amount of property manifestly out of proportion of his salary and other
legitimate income. RA 1379 aims to enforce the right of the State to recover the properties which
were not lawfully acquired by the officer.
It has often been said that all doubts must be resolved against any implied repeal and all
efforts should be exerted to harmonize and give effect to all laws and provisions on the same subject.
To be sure, both RA 1379 and RA 7080 can very well be harmonized. The Court perceives no
irreconcilable conflict between them. One can be enforced without nullifying the other.

Sandiganbayan Did Not Acquire Jurisdiction over


the Persons of Petitioner and Her Children

203

On the issue of lack of jurisdiction, petitioner argues that the SB did not acquire jurisdiction
over her person and that of her children due to a defective substituted service of summons. There is
merit in petitioners contention.

Sec. 7, Rule 14 of the 1997 Revised Rules of Civil Procedure clearly provides for the
requirements of a valid substituted service of summons, thus:

SEC. 7. Substituted service.If the defendant cannot be served within a


reasonable time as provided in the preceding section [personal service on defendant],
service may be effected (a) by leaving copies of the summons at the defendants
residence with some person of suitable age and discretion then residing therein, or (b)
by leaving the copies at defendants office or regular place of business with some
competent person in charge thereof.

It is basic that a court must acquire jurisdiction over a party for the latter to be bound by its
decision or orders. Valid service of summons, by whatever mode authorized by and proper under the
Rules, is the means by which a court acquires jurisdiction over a person. 204[22]

In the instant case, it is undisputed that summons for Forfeitures I and II were served
personally on Maj. Gen. Carlos Flores Garcia, who is detained at the PNP Detention Center, who
acknowledged receipt thereof by affixing his signature. It is also undisputed that substituted service
of summons for both Forfeitures I and II were made on petitioner and her children through Maj. Gen.
Garcia at the PNP Detention Center. However, such substituted services of summons were invalid
for being irregular and defective.

204

In Manotoc v. Court of Appeals,205[23] we broke down the requirements to be:

(1)

Impossibility of prompt personal service, i.e., the party relying on substituted service or

the sheriff must show that defendant cannot be served promptly or there is impossibility of prompt
service within a reasonable time. Reasonable time being so much time as is necessary under the
circumstances for a reasonably prudent and diligent man to do, conveniently, what the contract or
duty requires that should be done, having a regard for the rights and possibility of loss, if any[,] to the
other party. 206[24] Moreover, we indicated therein that the sheriff must show several attempts for
personal service of at least three (3) times on at least two (2) different dates.

(2)

Specific details in the return, i.e., the sheriff must describe in the Return of Summons

the facts and circumstances surrounding the attempted personal service.

(3)

Substituted service effected on a person of suitable age and discretion residing at

defendants house or residence; or on a competent person in charge of defendants office or regular


place of business.

From the foregoing requisites, it is apparent that no valid substituted service of summons was
made on petitioner and her children, as the service made through Maj. Gen. Garcia did not comply
with the first two (2) requirements mentioned above for a valid substituted service of summons.
Moreover, the third requirement was also not strictly complied with as the substituted service was
made not at petitioners house or residence but in the PNP Detention Center where Maj. Gen. Garcia
is detained, even if the latter is of suitable age and discretion. Hence, no valid substituted service of
summons was made.

205

206

The stringent rules on valid service of summons for the court to acquire jurisdiction over the
person of the defendants, however, admits of exceptions, as when the party voluntarily submits
himself to the jurisdiction of the court by asking affirmative relief. 207[25] In the instant case, the
Republic asserts that petitioner is estopped from questioning improper service of summons since the
improvident service of summons in both forfeiture cases had been cured by their (petitioner and her
children) voluntary appearance in the forfeiture cases. The Republic points to the various pleadings
filed by petitioner and her children during the subject forfeiture hearings. We cannot subscribe to the
Republics views.

Special Appearance to Question a Courts Jurisdiction


Is Not Voluntary Appearance

The second sentence of Sec. 20, Rule 14 of the Revised Rules of Civil Procedure clearly
provides:

Sec. 20. Voluntary appearance.The defendants voluntary appearance in the


action shall be equivalent to service of summons. The inclusion in a motion to
dismiss of other grounds aside from lack of jurisdiction over the person of the
defendant shall not be deemed a voluntary appearance. (Emphasis ours.)

Thus, a defendant who files a motion to dismiss, assailing the jurisdiction of the court over his
person, together with other grounds raised therein, is not deemed to have appeared voluntarily before
the court. What the rule on voluntary appearancethe first sentence of the above-quoted rule
means is that the voluntary appearance of the defendant in court is without qualification, in which
207

case he is deemed to have waived his defense of lack of jurisdiction over his person due to improper
service of summons.

The pleadings filed by petitioner in the subject forfeiture cases, however, do not show that she
voluntarily appeared without qualification. Petitioner filed the following pleadings in Forfeiture I: (a)
motion to dismiss; (b) motion for reconsideration and/or to admit answer; (c) second motion for
reconsideration; (d) motion to consolidate forfeiture case with plunder case; and (e) motion to dismiss
and/or to quash Forfeiture I. And in Forfeiture II: (a) motion to dismiss and/or to quash Forfeiture II;
and (b) motion for partial reconsideration.

The foregoing pleadings, particularly the motions to dismiss, were filed by petitioner solely for
special appearance with the purpose of challenging the jurisdiction of the SB over her person
and that of her three children. Petitioner asserts therein that SB did not acquire jurisdiction over
her person and of her three children for lack of valid service of summons through improvident
substituted service of summons in both Forfeiture I and Forfeiture II. This stance the petitioner never
abandoned when she filed her motions for reconsideration, even with a prayer to admit their attached
Answer Ex Abundante Ad Cautelam dated January 22, 2005 setting forth affirmative defenses with a
claim for damages. And the other subsequent pleadings, likewise, did not abandon her stance and
defense of lack of jurisdiction due to improper substituted services of summons in the forfeiture
cases. Evidently, from the foregoing Sec. 20, Rule 14 of the 1997 Revised Rules on Civil Procedure,
petitioner and her sons did not voluntarily appear before the SB constitutive of or equivalent to service
of summons.

Moreover, the leading La Naval Drug Corp. v. Court of Appeals 208[26] applies to the instant
case. Said case elucidates the current view in our jurisdiction that a special appearance before the
courtchallenging its jurisdiction over the person through a motion to dismiss even if the movant
invokes other groundsis not tantamount to estoppel or a waiver by the movant of his objection to
jurisdiction over his person; and such is not constitutive of a voluntary submission to the jurisdiction of
the court.
208

Thus, it cannot be said that petitioner and her three children voluntarily appeared before the
SB to cure the defective substituted services of summons. They are, therefore, not estopped from
questioning the jurisdiction of the SB over their persons nor are they deemed to have waived such
defense of lack of jurisdiction. Consequently, there being no valid substituted services of summons
made, the SB did not acquire jurisdiction over the persons of petitioner and her children.

And

perforce, the proceedings in the subject forfeiture cases, insofar as petitioner and her three children
are concerned, are null and void for lack of jurisdiction. Thus, the order declaring them in default
must be set aside and voided insofar as petitioner and her three children are concerned.

For the

forfeiture case to proceed against them, it is, thus, imperative for the SB to serve anew summons or
alias summons on the petitioner and her three children in order to acquire jurisdiction over their
persons.

WHEREFORE, the petitions for certiorari and mandamus are PARTIALLY GRANTED. The
Sandiganbayan, Fourth Division has not acquired jurisdiction over petitioner Clarita D. Garcia and her
three children. The proceedings in Civil Case Nos. 0193 and 0196 before the Sandiganbayan, Fourth
Division, insofar as they pertain to petitioner and her three children, are VOID for lack of jurisdiction
over their persons. No costs.

SO ORDERED.

THIRD DIVISION
[G.R. No. 133365. September 16, 2003]
PLATINUM TOURS AND TRAVEL, INCORPORATED, petitioner, vs. JOSE M. PANLILIO, respondent.

DECISION
CORONA, J.:
Before us is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the
January 15, 1998 decision209[1] of the Court of Appeals which ruled that:
xxx
Consequently, the respondent judge committed grave abuse of discretion in allowing the
consolidation of Civil Case No. 96-635 with Civil Case No. 94-1634.
x x x We also leave it to the respondent Judge to decide whether he will return Civil Case No. 96-635
to Branch 146 or keep it in his docket but should he opt for the latter, he should act on it as a separate
case from Civil Case No. 94-1634.
WHEREFORE, the petition is partially granted and the assailed Orders dated July 23, 1996 and
September 17, 1996, allowing the consolidation of Civil Case No. 96-635 with Civil Case No. 94-1634
and denying petitioners motion for reconsideration, respectively, are ANNULLED and SET ASIDE,
with the consequent complete severance of the two (2) cases. 210[2]
The facts follow:
On April 27, 1994, petitioner Platinum Tours and Travel Inc. (Platinum) filed a complaint for a sum of
money with damages against Pan Asiatic Travel Corporation (PATC) and its president Nelida G.
Galvez. Platinum sought to collect payment for the airline tickets which PATC bought from it. The
case was docketed as Civil Case No. 94-1634.
On October 24, 1994, the Regional Trial Court of Makati City, Branch 62, rendered a judgment 211[3] by
default in favor of Platinum and ordered PATC and Nelida G. Galvez to solidarily pay Platinum actual
damages of P 359,621.03 with legal interest, P 50,000 attorneys fees and cost of suit.
On February 10, 1995, a writ of execution was issued on motion of Platinum. Pursuant to the writ,
Manila Polo Club Proprietary Membership Certificate No. 2133 in the name of Nelida G. Galvez was
levied upon and sold for P479,888.48 to a certain Ma. Rosario Khoo.
On June 2, 1995, private respondent Jose M. Panlilio filed a motion to intervene in Civil Case No. 941634. Panlilio claimed that, in October 1992, Galvez had executed in his favor a chattel mortgage
over her shares of stock in the Manila Polo Club to secure her P1 million loan and that Galvez had
already delivered to him the stock certificates valued at P5 million.
On June 9, 1995, the trial court denied Panlilios motion for intervention:
Submitted for resolution is Jose M. Panlilios Motion for Intervention dated May 31, 1995.
209

210

211

This Court has to deny the motion because (1) a decision had already been rendered in this case
and that the only matters at issue is the propriety of the execution; (2) it will only delay or prejudice
the adjudication of the rights of the original parties; and, (3) the Intervenors rights may be fully
protected in a separate action.212[4]
On January 29, 1996, the trial court declared the execution sale null and void due to irregularities in
the conduct thereof.
On May 3, 1996, Panlilio filed against Galvez a collection case with application for a writ of
preliminary attachment of the disputed Manila Polo Club shares, docketed as Civil Case No. 96-365.
The case was raffled to Branch 146 of the Regional Trial Court of Makati City 213[5]. In the meantime,
Panlilio again attempted to intervene in Civil Case No. 94-1634, this time by incorporating in his
complaint a motion to consolidate Civil Case No. 96-365 and Civil Case No. 94-1634.
On June 13, 1996, Judge Salvador Tensuan of Branch 146 granted the motion for consolidation on
condition that Judge Roberto Diokno of Branch 62, who was trying Civil Case No. 94-1634, would not
object thereto. Judge Diokno later issued an order, dated July 23, 1996, allowing the consolidation of
the two cases and setting for hearing Panlilios application for a writ of preliminary attachment.
Platinum, as plaintiff in Civil Case No. 94-1634, moved to reconsider the July 23, 1996 order of Judge
Diokno but its motion was denied.
On January 31, 1997, Platinum filed a petition for certiorari at the Court of Appeals assailing, among
others, the July 23, 1996 order of Judge Diokno allowing the consolidation of Civil Case No. 96-365
and Civil Case No. 94-1634.
In a decision dated January 15, 1998, the Court of Appeals annulled the assailed order but left it to
Judge Diokno to decide whether to return Civil Case No. 96-365 to Judge Tensuan in Branch 146, or
to keep it in his docket and decide it as a separate case.
Platinum filed a motion for partial reconsideration of the decision of the Court of Appeals, praying that
Civil Case No. 96-365 be returned to Branch 146 or re-raffled to another RTC Branch of Makati.
However, the motion was denied by the Court of Appeals on April 2, 1998.
In the instant petition, Platinum insists that the Makati RTC, Branch 62, has no jurisdiction to try Civil
Case No. 96-365. It argues that, when Judge Dioknos July 23, 1996 order allowing the consolidation
of the two cases was annulled and set aside, RTC Branch 62s basis for acquiring jurisdiction over
Civil Case No. 96-365 was likewise extinguished.
We disagree.
Jurisdiction is the power and authority of the court to hear, try and decide a case. 214[6] In general,
jurisdiction may either be over the nature of the action, over the subject matter, over the person of the
defendants or over the issues framed in the pleadings.
212

213

214

Jurisdiction over the nature of the action and subject matter is conferred by law. It is determined by
the allegations of the complaint, irrespective of whether or not the plaintiff is entitled to recover upon
all or some of the claims asserted therein. 215[7] Jurisdiction over the person of the plaintiff is acquired
from the time he files his complaint; while jurisdiction over the person of the defendant is acquired by
his voluntary appearance in court and his submission to its authority, or by the coercive power of legal
processes exerted over his person.
Since jurisdiction is the power to hear and determine a particular case, it does not depend upon the
regularity of the exercise by the court of that power or on the correctness of its decisions.
In the case at bar, there is no doubt that Panlilios collection case docketed as Civil Case No. 96-365
falls within the jurisdiction of the RTC of Makati, Branch 62. The fact that the Court of Appeals
subsequently annulled Judge Dioknos order granting the consolidation of Civil Case No. 96-365 and
Civil Case No. 94-1634, did not affect the jurisdiction of the court which issued the said order.
Jurisdiction should be distinguished from the exercise of jurisdiction. Jurisdiction refers to the
authority to decide a case, not the orders or the decision rendered therein. Accordingly, where a
court has jurisdiction over the person and the subject matter, as in the instant case, the decision on all
questions arising from the case is but an exercise of such jurisdiction. Any error that the court may
commit in the exercise of its jurisdiction is merely an error of judgment which does not affect its
authority to decide the case, much less divest the court of the jurisdiction over the case.
We find no reversible error on the part of the Court of Appeals when it left to Judge Diokno of Branch
62 the discretion on whether to return Civil Case No. 96-365 to Branch 146 or to decide the same as
a separate case in his own sala.
Moreover, we find the instant petition premature and speculative. Had Platinum waited until Judge
Diokno decided on what to do with Civil Case No. 96-365, the parties would have been spared the
trouble and the expense of seeking recourse from this Court, which in turn would have had one
petition less in its docket.
The unfounded fear that Civil Case No. 96-365 would unduly delay the final resolution of Civil Case
No. 94-1634, if the former were retained by Branch 62, made Platinum act with haste. In so doing, it
wasted the precious time not only of the parties but also of this Court.
All told, nothing legally prevents the RTC of Makati, Branch 62, from proceeding with Civil Case No.
96-365. Should it decide to retain the case, it is hereby directed to resolve the same with dispatch.
WHEREFORE, petition is hereby DENIED.
SO ORDERED.

215

THIRD DIVISION
[G.R. No. 139791. December 12, 2003]
MANILA BANKERS LIFE INSURANCE CORPORATION, petitioner, vs. EDDY NG KOK WEI,
respondent.
DECISION
SANDOVAL-GUTIERREZ, J.:
Before us is a petition for review on certiorari assailing the Decision216[1] dated March 26, 1999 and
Resolution217[2] dated August 5, 1999 of the Court of Appeals in CA-G.R. CV No. 40504, entitled
Eddy Ng Kok Wei vs. Manila Bankers Life Insurance Corporation.
The factual antecedents as borne by the records are:
Eddy Ng Kok Wei, respondent, is a Singaporean businessman who ventured into investing in the
Philippines. On November 29, 1988, respondent, in a Letter of Intent addressed to Manila Bankers
Life Insurance Corporation, petitioner, expressed his intention to purchase a condominium unit at
Valle Verde Terraces.
Subsequently or on December 5, 1988, respondent paid petitioner a reservation fee of P50,000.00 for
the purchase of a 46-square meter condominium unit (Unit 703) valued at P860,922.00. On January
16, 1989, respondent paid 90% of the purchase price in the sum of P729,830.00.
Consequently, petitioner, through its President, Mr. Antonio G. Puyat, executed a Contract to Sell in
favor of the respondent. The contract expressly states that the subject condominium unit shall
substantially be completed and delivered to the respondent within fifteen (15) months from
February 8, 1989 or on May 8, 1990, and that (S)hould there be no substantial completion and
216

217

fail(ure) to deliver the unit on the date specified, a penalty of 1% of the total amount paid (by
respondent) shall be charged against (petitioner).
Considering that the stipulated 15-month period was at hand, respondent returned to the Philippines
sometime in April, 1990.
In a letter dated April 5, 1990, petitioner, through its Senior Assistant Vice-President, Mr. Mario G.
Zavalla, informed respondent of the substantial completion of his condominium unit, however, due to
various uncontrollable forces (such as coup d etat attempts, typhoon and steel and cement
shortage), the final turnover is reset to May 31, 1990.
Meanwhile, on July 5, 1990, upon receipt of petitioners notice of delivery dated May 31, 1990,
respondent again flew back to Manila. He found the unit still uninhabitable for lack of water and
electric facilities.
Once more, petitioner issued another notice to move-in addressed to its building administrator
advising the latter that respondent is scheduled to move in on August 22, 1990.
On October 5, 1990, respondent returned to the Philippines only to find that his condominium unit
was still unlivable. Exasperated, he was constrained to send petitioner a letter dated November 21,
1990 demanding payment for the damages he sustained. But petitioner ignored such demand,
prompting respondent to file with the Regional Trial Court, Branch 150, Makati City, a complaint
against the former for specific performance and damages, docketed as Civil Case No. 90-3440.
Meanwhile, during the pendency of the case, respondent finally accepted the condominium unit and
on April 12, 1991, occupied the same. Thus, respondents cause of action has been limited to his
claim for damages.
On December 18, 1992, the trial court rendered a Decision 218[3] finding the petitioner liable for
payment of damages due to the delay in the performance of its obligation to the respondent. The
dispositive portion reads:
WHEREFORE, judgment is hereby rendered in favor of plaintiff and against defendant, ordering
Manila Bankers Life Insurance Corporation to pay plaintiff Eddy Ng Kok Wei the following:
1.

One percent (1%) of the total amount plaintiff paid defendant;

2.

P100,000.00 as moral damages;

3.

P50,000.00 as exemplary damages;

4.

P25,000.00 by way of attorneys fees; and

Cost of suit.
SO ORDERED.
On appeal, the Court of Appeals, in a Decision dated March 26, 1999, affirmed in toto the trial courts
award of damages in favor of the respondent.
218

Unsatisfied, petitioner filed a motion for reconsideration but was denied by the Appellate Court in a
Resolution dated August 5, 1999.
Hence, this petition for review on certiorari. Petitioner contends that the trial court has no jurisdiction
over the instant case; and that the Court of Appeals erred in affirming the trial courts finding that
petitioner incurred unreasonable delay in the delivery of the condominium unit to respondent.
On petitioners contention that the trial court has no jurisdiction over the instant case, Section 1 (c) of
Presidential Decree No. 1344, as amended, provides:
SECTION 1. In the exercise of its functions to regulate the real estate trade and business and in
addition to its powers provided for in Presidential Decree No. 957, the National Housing Authority
[now Housing and Land Use Regulatory Board (HLURB)] 219[4] shall have exclusive jurisdiction to hear
and decide cases of the following nature:
xxx
C. Cases involving specific performance of contractual and statutory obligations filed by buyers of
subdivision lots or condominium units against the owner, developer, dealer, broker or salesman.
x x x.
Pursuant to the above provisions, it is the HLURB which has jurisdiction over the instant case. We
have consistently held that complaints for specific performance with damages by a lot or
condominium unit buyer against the owner or developer falls under the exclusive jurisdiction of the
HLURB.220[5]
While it may be true that the trial court is without jurisdiction over the case, petitioners active
participation in the proceedings estopped it from assailing such lack of it. We have held that it is an
undesirable practice of a party participating in the proceedings and submitting its case for decision
and then accepting the judgment, only if favorable, and attacking it for lack of jurisdiction, when
adverse.221[6]
Here, petitioner failed to raise the question of jurisdiction before the trial court and the Appellate
Court. In effect, petitioner confirmed and ratified the trial courts jurisdiction over this case. Certainly,
it is now in estoppel and can no longer question the trial courts jurisdiction.
On petitioners claim that it did not incur delay, suffice it to say that this is a factual issue. Time and
again, we have ruled that the factual findings of the trial court are given weight when supported by
substantial evidence and carries more weight when affirmed by the Court of Appeals. 222[7] Whether
or not petitioner incurred delay and thus, liable to pay damages as a result thereof, are indeed
factual questions.
219

220
221
222

The jurisdiction of this Court in a petition for review on certiorari under Rule 45 of the 1997 Rules of
Civil Procedure, as amended, is limited to reviewing only errors of law, not of fact, unless the factual
findings being assailed are not supported by evidence on record or the impugned judgment is based
on a misapprehension of facts.223[8] These exceptions are not present here.
WHEREFORE, the petition is DENIED. The assailed Decision dated March 26, 1999 and Resolution
dated August 5, 1999 of the Court of Appeals are hereby AFFIRMED IN TOTO.
Costs against the petitioner.
SO ORDERED.

SECOND DIVISION
[G.R. No. 155206. October 28, 2003]
GOVERNMENT SERVICE INSURANCE SYSTEM, petitioner, vs. EDUARDO M. SANTIAGO,
substituted by his widow ROSARIO ENRIQUEZ VDA. DE SANTIAGO, respondent.
DECISION
CALLEJO, SR., J.:
223

Before the Court is the petition for review on certiorari filed by the Government Service Insurance
System (GSIS), seeking to reverse and set aside the Decision 224[1] dated February 22, 2002 of the
Court of Appeals (CA) in CA-G.R. CV No. 62309 and its Resolution dated September 5, 2002 denying
its motion for reconsideration.
The antecedent facts of the case, as culled from the assailed CA decision and that of the trial court,
are as follows:
Deceased spouses Jose C. Zulueta and Soledad Ramos obtained various loans from defendant
GSIS for (the) period September, 1956 to October, 1957 in the total amount of P3,117,000.00 secured
by real estate mortgages over parcels of land covered by TCT Nos. 26105, 37177 and 50365. The
Zuluetas failed to pay their loans to defendant GSIS and the latter foreclosed the real estate
mortgages dated September 25, 1956, March 6, 1957, April 4, 1957 and October 15, 1957.
On August 14, 1974, the mortgaged properties were sold at public auction by defendant GSIS
submitting a bid price of P5,229,927.84. Not all lots covered by the mortgaged titles, however, were
sold. Ninety-one (91) lots were expressly excluded from the auction since the lots were sufficient to
pay for all the mortgage debts. A Certificate of Sale (Annex F, Records, Vol. I, pp. 23-28) was
issued by then Provincial Sheriff Nicanor D. Salaysay.
The Certificate of Sale dated August 14, 1974 had been annotated and inscribed in TCT Nos. 26105,
37177 and 50356, with the following notations: (T)he following lots which form part of this title (TCT
No. 26105) are not covered by the mortgage contract due to sale to third parties and donation to the
government: 50-H-5-C-9-J-65-H-8, 50-H-5-C-9J-M-7; 50-H-5-C-9-J-65-H-5; 1 lots Nos. 1 to 13, Block
No. 1 -6,138 sq.m. 2. Lots Nos. 1 to 11, Block No. 2 4,660 sq.m. 3. Lot No. 15, Block No. 3 487
sq.m. 4. Lot No. 17, Block No. 4 263 sq.m. 5. Lot No. 1, Block No. 7 402 sq.m. 6. Road Lots
Nos. 1, 2, 3, & 4 2,747 sq.m.
In another NOTE: The following lots in the Antonio Subdivision were already released by the GSIS
and therefore are not included in this sale, namely: LOT NO. 1, 6, 7, 8, 9, 10, and 13 (Old Plan) Block
I; 1, 3, 4, 5, 7, 8 and 10 (Old Plan) Block II; 3, 10, 12 and 13 (New Plan) Block I (Old Plan) Block III; 7,
14 and 20 (New Plan) Block III (Old Plan) Block V; 13 and 20 (New Plan) Block IV (Old Plan) Block
VI; 1, 2, 3 and 10 (New Plan) Block V (Old Plan) Block VII; 1, 5, 8, 15, 26 and 27 (New Plan) Block VI
(Old Plan) Block VIII; 7, 12 and 20 (New Plan) Block VII (Old Plan) Block II; 1, 4 and 6 (New Plan)
Block VIII (Old Plan) Block X; 5 (New Plan) Block X (Old Plan) Block ZXII; 6 (New Plan) Block XI (Old
Plan) Block XII; 1, Block 9; 12 Block 1; 11 Block 2; 19 Block 1; 10 Block 6; 23 Block 3.
And the lots on ADDITIONAL EXCLUSION FROM PUBLIC SALE are LOTS NO. 6 Block 4; 2 Block
2; 5 Block 5; 1, 2 and 3 Block 11, 1, 2, 3 and 4 Block 10; 5 Block 11 (New); 1 Block 3; 5 Block 1; 15
Block 7; 11 Block 9; 13 Block 5; 12 Block 5; 3 Block 10; 6.
On November 25, 1975, an Affidavit of Consolidation of Ownership (Annex G, Records, Vol. I, pp.
29-31) was executed by defendant GSIS over Zuluetas lots, including the lots, which as earlier
stated, were already excluded from the foreclosure.
On March 6, 1980, defendant GSIS sold the foreclosed properties to Yorkstown Development
Corporation which sale was disapproved by the Office of the President of the Philippines. The sold
properties were returned to defendant GSIS.
224

The Register of Deeds of Rizal cancelled the land titles issued to Yorkstown Development
Corporation. On July 2, 1980, TCT No. 23552 was issued cancelling TCT No. 21926; TCT No. 23553
cancelled TCT No. 21925; and TCT No. 23554 cancelling TCT No. 21924, all in the name of
defendant GSIS.
After defendant GSIS had re-acquired the properties sold to Yorkstown Development Corporation, it
began disposing the foreclosed lots including the excluded ones.
On April 7, 1990, representative Eduardo Santiago and then plaintiff Antonio Vic Zulueta executed an
agreement whereby Zulueta transferred all his rights and interests over the excluded lots. Plaintiff
Eduardo Santiagos lawyer, Atty. Wenceslao B. Trinidad, wrote a demand letter dated May 11, 1989
(Annex H, Records, Vol. I, pp. 32-33) to defendant GSIS asking for the return of the eighty-one (81)
excluded lots.225[2]
On May 7, 1990, Antonio Vic Zulueta, represented by Eduardo M. Santiago, filed with the Regional
Trial Court (RTC) of Pasig City, Branch 71, a complaint for reconveyance of real estate against the
GSIS. Spouses Alfeo and Nenita Escasa, Manuel III and Sylvia G. Urbano, and Marciana P.
Gonzales and the heirs of Mamerto Gonzales moved to be included as intervenors and filed their
respective answers in intervention. Subsequently, the petitioner, as defendant therein, filed its
answer alleging inter alia that the action was barred by the statute of limitations and/or laches and
that the complaint stated no cause of action. Subsequently, Zulueta was substituted by Santiago as
the plaintiff in the complaint a quo. Upon the death of Santiago on March 6, 1996, he was substituted
by his widow, Rosario Enriquez Vda. de Santiago, as the plaintiff.
After due trial, the RTC rendered judgment against the petitioner ordering it to reconvey to the
respondent, Rosario Enriquez Vda. de Santiago, in substitution of her deceased husband Eduardo,
the seventy-eight lots excluded from the foreclosure sale. The dispositive portion of the RTC decision
reads:
WHEREFORE, judgment is hereby rendered in favor of plaintiff and against the defendant:
1.
Ordering defendant to reconvey to plaintiff the seventy-eight (78) lots released and excluded
from the foreclosure sale including the additional exclusion from the public sale, namely:
a.
b.
c.
d.
e.
f.
g.
h.
i.
j.
k.
l.
m.
n.
225

Lot Nos. 1, 6, 7, 8, 0, 10, 13, Block I (Old Plan).


Lot Nos. 1, 3, 4, 5, 7, 8 and 10, Block II (Old Plan).
Lot Nos. 3, 10, 12, and 13, Block I (New Plan), Block III (Old Plan),
Lot Nos. 7, 14 and 20, Block III (New Plan), Block V (Old Plan).
Lot Nos. 13 and 20, Block IV (New Plan), Block VI (Old Plan).
Lot Nos. 1, 2, 3 and 10, Block V (New Plan), Block VII (Old Plan).
Lot Nos. 1, 5, 8, 15, 26 and 27, Block VI (New Plan), Block VIII (Old
Plan).
Lot Nos. 7 and 12, Block VII (New Plan), Block II (Old Plan).
Lot Nos. 1, 4 and 6, Block VIII (New Plan), Block X (Old Plan).
Lot 5, Block X (New Plan), Block XII (Old Plan).
Lot 6, Block XI (New Plan), Block XII (Old Plan).
Lots 2, 5, 12 and 15, Block I.
Lots 6, 9 and 11, Block 2.
Lots 1, 5, 6, 7, 16 and 23, Block 3.

o.
p.
q.
r.
s.
t.
u.
v.

Lot 6, Block 4.
Lots 5, 12, 13 and 24, Block 5.
Lots 10 and 16, Block 6.
Lots 6 and 15, Block 7.
Lots 13, 24, 28 and 29, Block 8.
Lots 1, 11, 17 and 22, Block 9.
Lots 1, 2, 3 and 4, Block 10.
Lots 1, 2, 3 and 5 (New), Block 11.

2.
Ordering defendant to pay plaintiff, if the seventy-eight (78) excluded lots could not be
reconveyed, the fair market value of each of said lots.
3.
Ordering the Registry of Deeds of Pasig City to cancel the land titles covering the excluded lots
in the name of defendant or any of its successors-in-interest including all derivative titles therefrom
and to issue new land titles in plaintiffs name.
4.
Ordering the Registry of Deeds of Pasig City to cancel the Notices of Lis Pendens inscribed in
TCT No. PT-80342 under Entry No. PT-12267/T-23554; TCT No. 81812 under Entry No. PT-12267/T23554; and TCT No. PT-84913 under Entry No. PT-12267/T-23554.
5.

Costs of suit.226[3]

The petitioner elevated the case to the CA which rendered the assailed decision affirming that of the
RTC. The dispositive portion of the assailed decision reads:
WHEREFORE, premises considered, the herein appeal is DISMISSED for lack of merit. The
Decision of December 17, 1997 of Branch 71 of the Regional Trial Court of Pasig City is hereby
AFFIRMED.227[4]
The petitioner moved for a reconsideration of the aforesaid decision but the same was denied in the
assailed CA Resolution of September 5, 2002.
The petitioner now comes to this Court alleging that:
THE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR IN RULING THAT A)
PETITIONER WAS GUILTY OF BAD FAITH WHEN IN TRUTH AND IN FACT, THERE WAS NO
SUFFICIENT GROUND TO SUPPORT SUCH CONCLUSION; AND B) THERE WAS NO
PRESCRIPTION IN THIS CASE.228[5]
In its petition, the petitioner maintains that it did not act in bad faith when it erroneously included in its
certificate of sale, and subsequently consolidated the titles in its name over the seventy-eight lots
(subject lots) that were excluded from the foreclosure sale. There was no proof of bad faith nor

226

227
228

could fraud or malice be attributed to the petitioner when it erroneously caused the issuance of
certificates of title over the subject lots despite the fact that these were expressly excluded from the
foreclosure sale.
The petitioner asserts that the action for reconveyance instituted by the respondent had already
prescribed after the lapse of ten years from November 25, 1975 when the petitioner consolidated its
ownership over the subject lots. According to the petitioner, an action for reconveyance based on
implied or constructive trust prescribes in ten years from the time of its creation or upon the alleged
fraudulent registration of the property. In this case, when the action was instituted on May 7, 1990,
more than fourteen years had already lapsed. Thus, the petitioner contends that the same was
already barred by prescription as well as laches.
The petitioner likewise takes exception to the holding of the trial court and the CA that it (the
petitioner) failed to apprise or return to the Zuluetas, the respondents predecessors-in-interest, the
seventy-eight lots excluded from the foreclosure sale because the petitioner had no such obligation
under the pertinent loan and mortgage agreement.
The petitioners arguments fail to persuade.
At the outset, it bears emphasis that the jurisdiction of this Court in a petition for review on certiorari
under Rule 45 of the Rules of Court, as amended, is limited to reviewing only errors of law. This
Court is not a trier of facts. Case law has it that the findings of the trial court especially when affirmed
by the CA are binding and conclusive upon this Court. Although there are exceptions to the said rule,
we find no reason to deviate therefrom.229[6] By assailing the findings of facts of the trial court as
affirmed by the CA, that it acted in bad faith, the petitioner thereby raised questions of facts in its
petition.
Nonetheless, even if we indulged the petition and delved into the factual issues, we find the petition
barren of merit.
That the petitioner acted in bad faith in consolidating ownership and causing the issuance of titles in
its name over the subject lots, notwithstanding that these were expressly excluded from the
foreclosure sale was the uniform ruling of the trial court and appellate court. As declared by the CA:
The acts of defendant-appellant GSIS in concealing from the Zuluetas [the respondents
predecessors-in-interest] the existence of these lots, in failing to notify or apprise the spouses Zulueta
about the excluded lots from the time it consolidated its titles on their foreclosed properties in 1975, in
failing to inform them when it entered into a contract of sale of the foreclosed properties to Yorkstown
Development Corporation in 1980 as well as when the said sale was revoked by then President
Ferdinand E. Marcos during the same year demonstrated a clear effort on its part to defraud the
spouses Zulueta and appropriate for itself the subject properties. Even if titles over the lots had been
issued in the name of the defendant-appellant, still it could not legally claim ownership and absolute
dominion over them because indefeasibility of title under the Torrens system does not attach to titles
secured by fraud or misrepresentation. The fraud committed by defendant-appellant in the form of
concealment of the existence of said lots and failure to return the same to the real owners after their
exclusion from the foreclosure sale made defendant-appellant holders in bad faith. It is well-settled
that a holder in bad faith of a certificate of title is not entitled to the protection of the law for the law
cannot be used as a shield for fraud. 230[7]
229

The Court agrees with the findings and conclusion of the trial court and the CA. The petitioner is not
an ordinary mortgagee. It is a government financial institution and, like banks, is expected to exercise
greater care and prudence in its dealings, including those involving registered lands. 231[8] The Courts
ruling in Rural Bank of Compostela v. CA232[9] is apropos:
Banks, indeed, should exercise more care and prudence in dealing even with registered lands, than
private individuals, for their business is one affected with public interest, keeping in trust money
belonging to their depositors, which they should guard against loss by not committing any act of
negligence which amounts to lack of good faith by which they would be denied the protective mantle
of land registration statute, Act [No.] 496, extended only to purchasers for value and in good faith, as
well as to mortgagees of the same character and description. 233[10]
Due diligence required of banks extend even to persons, or institutions like the petitioner, regularly
engaged in the business of lending money secured by real estate mortgages. 234[11]
In this case, the petitioner executed an affidavit in consolidating its ownership and causing the
issuance of titles in its name over the subject lots despite the fact that these were expressly excluded
from the foreclosure sale. By so doing, the petitioner acted in gross and evident bad faith. It cannot
feign ignorance of the fact that the subject lots were excluded from the sale at public auction. At the
least, its act constituted gross negligence amounting to bad faith. Further, as found by the CA, the
petitioners acts of concealing the existence of these lots, its failure to return them to the Zuluetas and
even its attempt to sell them to a third party is proof of the petitioners intent to defraud the Zuluetas
and appropriate for itself the subject lots.
On the issue of prescription, generally, an action for reconveyance of real property based on fraud
prescribes in four years from the discovery of fraud; such discovery is deemed to have taken place
upon the issuance of the certificate of title over the property. Registration of real property is a
constructive notice to all persons and, thus, the four-year period shall be counted therefrom. 235[12] On
the other hand, Article 1456 of the Civil Code provides:
Art. 1456. If property is acquired through mistake or fraud, the person obtaining it is, by force of law,
considered a trustee of an implied trust for the benefit of the person from whom the property comes.
An action for reconveyance based on implied or constructive trust prescribes in ten years from the
alleged fraudulent registration or date of issuance of the certificate of title over the property. 236[13]
230

231
232
233
234
235

The petitioners defense of prescription is untenable. As held by the CA, the general rule that the
discovery of fraud is deemed to have taken place upon the registration of real property because it is
considered a constructive notice to all persons does not apply in this case. The CA correctly cited
the cases of Adille v. Court of Appeals237[14] and Samonte v. Court of Appeals,238[15] where this Court
reckoned the prescriptive period for the filing of the action for reconveyance based on implied trust
from the actual discovery of fraud.
In ruling that the action had not yet prescribed despite the fact that more than ten years had lapsed
between the date of registration and the institution of the action for reconveyance, the Court in Adille
ratiocinated:
It is true that registration under the Torrens system is constructive notice of title, but it has likewise
been our holding that the Torrens title does not furnish a shield for fraud. It is therefore no argument
to say that the act of registration is equivalent to notice of repudiation, assuming there was one,
notwithstanding the long-standing rule that registration operates as a universal notice of title.
For the same reason, we cannot dismiss private respondents claims commenced in 1974 over the
estate registered in 1955. While actions to enforce a constructive trust prescribes in ten years,
reckoned from the date of the registration of the property, we, as we said, are not prepared to count
the period from such a date in this case. We note the petitioners sub rosa efforts to get hold of the
property exclusively for himself beginning with his fraudulent misrepresentation in his unilateral
affidavit of extrajudicial settlement that he is the only heir and child of his mother Feliza with the
consequence that he was able to secure title in his name [alone]. Accordingly, we hold that the right
of the private respondents commenced from the time they actually discovered the petitioners act of
defraudation. According to the respondent Court of Appeals, they came to know [of it] apparently
only during the progress of the litigation. Hence, prescription is not a bar. 239[16]
The above ruling was reiterated in the more recent case of Samonte. In this case, as established by
the CA, the respondent actually discovered the fraudulent act of the petitioner only in 1989:
... [T]he prescriptive period of the action is to be reckoned from the time plaintiff-appellee (then
Eduardo M. Santiago) had actually discovered the fraudulent act of defendant-appellant which was,
as borne out by the records, only in 1989. Plaintiff-appellee Eduardo M. Santiago categorically
testified (TSN of July 11, 1995, pp. 14-15) that he came to know that there were 91 excluded lots in
Antonio Village which were foreclosed by the GSIS and included in its consolidation of ownership in
1975 when, in 1989, he and Antonio Vic Zulueta discussed it and he was given by Zulueta a special
power of attorney to represent him to recover the subject properties from GSIS. The complaint for
reconveyance was filed barely a year from the discovery of the fraud. 240[17]
236

237

238

239

240

Following the Courts pronouncements in Adille and Samonte, the institution of the action for
reconveyance in the court a quo in 1990 was thus well within the prescriptive period. Having acted in
bad faith in securing titles over the subject lots, the petitioner is a holder in bad faith of certificates of
title over the subject lots. The petitioner is not entitled to the protection of the law for the law cannot
be used as a shield for frauds.241[18]
Contrary to its claim, the petitioner unarguably had the legal duty to return the subject lots to the
Zuluetas. The petitioners attempts to justify its omission by insisting that it had no such duty under
the mortgage contract is obviously clutching at straw. Article 22 of the Civil Code explicitly provides
that every person who, through an act of performance by another, or any other means, acquires or
comes into possession of something at the expense of the latter without just or legal ground, shall
return the same to him.
WHEREFORE, the petition is DENIED for lack of merit. The assailed Decision dated February 22,
2002 and Resolution dated September 5, 2002 of the Court of Appeals in CA-G.R. CV No. 62309 are
AFFIRMED IN TOTO. Costs against the petitioner.
SO ORDERED.

THIRD DIVISION
[G.R. No. 151149. September 7, 2004]
GEORGE KATON, petitioner, vs. MANUEL PALANCA JR., LORENZO AGUSTIN, JESUS
GAPILANGO and JUAN FRESNILLO, respondents.
DECISION

241

PANGANIBAN, J.:
Where prescription, lack of jurisdiction or failure to state a cause of action clearly appear from the
complaint filed with the trial court, the action may be dismissed motu proprio by the Court of Appeals,
even if the case has been elevated for review on different grounds. Verily, the dismissal of such
cases appropriately ends useless litigations.
The Case
Before us is a Petition for Review242[1] under Rule 45 of the Rules of Court, assailing the December 8,
2000 Decision243[2] and the November 20, 2001 Resolution244[3] of the Court of Appeals in CA-GR SP
No. 57496. The assailed Decision disposed as follows:
Assuming that petitioner is correct in saying that he has the exclusive right in applying for the patent
over the land in question, it appears that his action is already barred by laches because he slept on
his alleged right for almost 23 years from the time the original certificate of title has been issued to
respondent Manuel Palanca, Jr., or after 35 years from the time the land was certified as agricultural
land. In addition, the proper party in the annulment of patents or titles acquired through fraud is the
State; thus, the petitioners action is deemed misplaced as he really does not have any right to assert
or protect. What he had during the time he requested for the re-classification of the land was the
privilege of applying for the patent over the same upon the lands conversion from forest to
agricultural.
WHEREFORE, the petition is hereby DISMISSED. No pronouncement as to cost.245[4]
The assailed Resolution, on the other hand, denied the Motion for Reconsideration filed by petitioner.
It affirmed the RTCs dismissal of his Complaint in Civil Case No. 3231, not on the grounds relied
upon by the trial court, but because of prescription and lack of jurisdiction.
The Antecedent Facts
The CA narrates the antecedent facts as follows:
On August 2, 1963, herein [P]etitioner [George Katon] filed a request with the District Office of the
Bureau of Forestry in Puerto Princesa, Palawan, for the re-classification of a piece of real property
known as Sombrero Island, located in Tagpait, Aborlan, Palawan, which consists of approximately 18
hectares. Said property is within Timberland Block of LC Project No. 10-C of Aborlan, Palawan, per
BF Map LC No. 1582.
Thereafter, the Bureau of Forestry District Office, Puerto Princesa, Palawan, ordered the inspection,
investigation and survey of the land subject of the petitioners request for eventual conversion or reclassification from forest to agricultural land, and thereafter for George Katon to apply for a
homestead patent.
242

243
244
245

Gabriel Mandocdoc (now retired Land Classification Investigator) undertook the investigation,
inspection and survey of the area in the presence of the petitioner, his brother Rodolfo Katon
(deceased) and his cousin, [R]espondent Manuel Palanca, Jr. During said survey, there were no
actual occupants on the island but there were some coconut trees claimed to have been planted by
petitioner and [R]espondent Manuel Palanca, Jr. (alleged overseer of petitioner) who went to the
island from time to time to undertake development work, like planting of additional coconut trees.
The application for conversion of the whole Sombrero Island was favorably endorsed by the Forestry
District Office of Puerto Princesa to its main office in Manila for appropriate action. The names of
Felicisimo Corpuz, Clemente Magdayao and Jesus Gapilango and Juan Fresnillo were included in
the endorsement as co-applicants of the petitioner.
In a letter dated September 23, 1965, then Asst. Director of Forestry R.J.L. Utleg informed the
Director of Lands, Manila, that since the subject land was no longer needed for forest purposes, the
same is therefore certified and released as agricultural land for disposition under the Public Land Act.
Petitioner contends that the whole area known as Sombrero Island had been classified from forest
land to agricultural land and certified available for disposition upon his request and at his instance.
However, Mr. Lucio Valera, then [l]and investigator of the District Land Office, Puerto Princesa,
Palawan, favorably endorsed the request of [R]espondents Manuel Palanca Jr. and Lorenzo Agustin,
for authority to survey on November 15, 1965. On November 22, a second endorsement was issued
by Palawan District Officer Diomedes De Guzman with specific instruction to survey vacant portions
of Sombrero Island for the respondents consisting of five (5) hectares each. On December 10, 1965,
Survey Authority No. R III-342-65 was issued authorizing Deputy Public Land Surveyor Eduardo
Salvador to survey ten (10) hectares of Sombrero Island for the respondents. On December 23,
1990, [R]espondent Lorenzo Agustin filed a homestead patent application for a portion of the subject
island consisting of an area of 4.3 hectares.
Records show that on November 8, 1996, [R]espondent Juan Fresnillo filed a homestead patent
application for a portion of the island comprising 8.5 hectares. Records also reveal that [R]espondent
Jesus Gapilango filed a homestead application on June 8, 1972. Respondent Manuel Palanca, Jr.
was issued Homestead Patent No. 145927 and OCT No. G-7089 on March 3, 1977 246[5] with an area
of 6.84 hectares of Sombrero Island.
Petitioner assails the validity of the homestead patents and original certificates of title covering
certain portions of Sombrero Island issued in favor of respondents on the ground that the same were
obtained through fraud. Petitioner prays for the reconveyance of the whole island in his favor.
On the other hand, [R]espondent Manuel Palanca, Jr. claims that he himself requested for the
reclassification of the island in dispute and that on or about the time of such request, [R]espondents
Fresnillo, Palanca and Gapilango already occupied their respective areas and introduced numerous
improvements. In addition, Palanca said that petitioner never filed any homestead application for the
island. Respondents deny that Gabriel Mandocdoc undertook the inspection and survey of the island.
According to Mandocdoc, the island was uninhabited but the respondents insist that they already had
their respective occupancy and improvements on the island. Palanca denies that he is a mere
overseer of the petitioner because he said he was acting for himself in developing his own area and
not as anybodys caretaker.
246

Respondents aver that they are all bona fide and lawful possessors of their respective portions and
have declared said portions for taxation purposes and that they have been faithfully paying taxes
thereon for twenty years.
Respondents contend that the petitioner has no legal capacity to sue insofar as the island is
concerned because an action for reconveyance can only be brought by the owner and not a mere
homestead applicant and that petitioner is guilty of estoppel by laches for his failure to assert his right
over the land for an unreasonable and unexplained period of time.
In the instant case, petitioner seeks to nullify the homestead patents and original certificates of title
issued in favor of the respondents covering certain portions of the Sombrero Island as well as the
reconveyance of the whole island in his favor. The petitioner claims that he has the exclusive right to
file an application for homestead patent over the whole island since it was he who requested for its
conversion from forest land to agricultural land. 247[6]
Respondents filed their Answer with Special and/or Affirmative Defenses and Counterclaim in due
time. On June 30, 1999, they also filed a Motion to Dismiss on the ground of the alleged defiance by
petitioner of the trial courts Order to amend his Complaint so he could thus effect a substitution by
the legal heirs of the deceased, Respondent Gapilango. The Motion to Dismiss was granted by the
RTC in its Order dated July 29, 1999.
Petitioners Motion for Reconsideration of the July 29, 1999 Order was denied by the trial court in its
Resolution dated December 17, 1999, for being a third and prohibited motion. In his Petition for
Certiorari before the CA, petitioner charged the trial court with grave abuse of discretion on the
ground that the denied Motion was his first and only Motion for Reconsideration of the aforesaid
Order.
Ruling of the Court of Appeals
Instead of limiting itself to the allegation of grave abuse of discretion, the CA ruled on the merits. It
held that while petitioner had caused the reclassification of Sombrero Island from forest to agricultural
land, he never applied for a homestead patent under the Public Land Act. Hence, he never acquired
title to that land.
The CA added that the annulment and cancellation of a homestead patent and the reversion of the
property to the State were matters between the latter and the homestead grantee. Unless and until
the government takes steps to annul the grant, the homesteaders right thereto stands.
Finally, granting arguendo that petitioner had the exclusive right to apply for a patent to the land in
question, he was already barred by laches for having slept on his right for almost 23 years from the
time Respondent Palancas title had been issued.
In the Assailed Resolution, the CA acknowledged that it had erred when it ruled on the merits of the
case. It agreed with petitioner that the trial court had acted without jurisdiction in perfunctorily
dismissing his September 10, 1999 Motion for Reconsideration, on the erroneous ground that it was a
third and prohibited motion when it was actually only his first motion.

247

Nonetheless, the Complaint was dismissed motu proprio by the challenged Resolution of the CA
Special Division of five members with two justices dissenting pursuant to its residual prerogative
under Section 1 of Rule 9 of the Rules of Court.
From the allegations of the Complaint, the appellate court opined that petitioner clearly had no
standing to seek reconveyance of the disputed land, because he neither held title to it nor even
applied for a homestead patent. It reiterated that only the State could sue for cancellation of the title
issued upon a homestead patent, and for reversion of the land to the public domain.
Finally, it ruled that prescription had already barred the action for reconveyance. First, petitioners
action was brought 24 years after the issuance of Palancas homestead patent. Under the Public
Land Act, such action should have been taken within ten years from the issuance of the homestead
certificate of title. Second, it appears from the submission (Annex F of the Complaint) of petitioner
himself that Respondents Fresnillo and Palanca had been occupying six hectares of the island since
1965, or 33 years before he took legal steps to assert his right to the property. His action was filed
beyond the 30-year prescriptive period under Articles 1141 and 1137 of the Civil Code.
Hence, this Petition.248[7]
Issues
In his Memorandum, petitioner raises the following issues:
1. Is the Court of Appeals correct in resolving the Petition for Certiorari based on an issue not raised
(the merits of the case) in the Petition?
2. Is the Court of Appeals correct in invoking its alleged residual prerogative under Section 1, Rule
9 of the 1997 Rules of Civil Procedure in resolving the Petition on an issue not raised in the
Petition?249[8]
The Courts Ruling
The Petition has no merit.
First Issue:
Propriety of Ruling on the Merits
This is not the first time that petitioner has taken issue with the propriety of the CAs ruling on the
merits. He raised it with the appellate court when he moved for reconsideration of its December 8,
2000 Decision. The CA even corrected itself in its November 20, 2001 Resolution, as follows:
Upon another review of the case, the Court concedes that it may indeed have lost its way and been
waylaid by the variety, complexity and seeming importance of the interests and issues involved in the
case below, the apparent reluctance of the judges, five in all, to hear the case, and the volume of the
conflicting, often confusing, submissions bearing on incidental matters. We stand corrected. 250[9]
248

249
250

That explanation should have been enough to settle the issue. The CAs Resolution on this point has
rendered petitioners issue moot. Hence, there is no need to discuss it further. Suffice it to say that
the appellate court indeed acted ultra jurisdictio in ruling on the merits of the case when the only issue
that could have been, and was in fact, raised was the alleged grave abuse of discretion committed by
the trial court in denying petitioners Motion for Reconsideration. Settled is the doctrine that the sole
office of a writ of certiorari is the correction of errors of jurisdiction. Such writ does not include a
review of the evidence,251[10] more so when no determination of the merits has yet been made by the
trial court, as in this case.
Second Issue:
Dismissal for Prescription
and Lack of Jurisdiction
Petitioner next submits that the CA erroneously invoked its residual prerogatives under Section 1 of
Rule 9 of the Rules of Court when it motu proprio dismissed the Petition for lack of jurisdiction and
prescription. According to him, residual prerogative refers to the power that the trial court, in the
exercise of its original jurisdiction, may still validly exercise even after perfection of an appeal. It
follows that such powers are not possessed by an appellate court.
Petitioner has confused what the CA adverted to as its residual prerogatives under Section 1 of Rule
9 of the Rules of Court with the residual jurisdiction of trial courts over cases appealed to the CA.
Under Section 1 of Rule 9 of the Rules of Court, defenses and objections not pleaded either in a
motion to dismiss or in the answer are deemed waived, except when (1) lack of jurisdiction over the
subject matter, (2) litis pendentia, (3) res judicata and (4) prescription are evident from the pleadings
or the evidence on record. In the four excepted instances, the court shall motu proprio dismiss the
claim or action. In Gumabon v. Larin252[11] we explained thus:
x x x [T]he motu proprio dismissal of a case was traditionally limited to instances when the court
clearly had no jurisdiction over the subject matter and when the plaintiff did not appear during trial,
failed to prosecute his action for an unreasonable length of time or neglected to comply with the rules
or with any order of the court. Outside of these instances, any motu proprio dismissal would amount
to a violation of the right of the plaintiff to be heard. Except for qualifying and expanding Section 2,
Rule 9, and Section 3, Rule 17, of the Revised Rules of Court, the amendatory 1997 Rules of Civil
Procedure brought about no radical change. Under the new rules, a court may motu proprio dismiss
a claim when it appears from the pleadings or evidence on record that it has no jurisdiction over the
subject matter; when there is another cause of action pending between the same parties for the same
cause, or where the action is barred by a prior judgment or by statute of limitations. x x x.253[12]
(Italics supplied)
On the other hand, residual jurisdiction is embodied in Section 9 of Rule 41 of the Rules of Court, as
follows:

251
252
253

SEC. 9. Perfection of appeal; effect thereof. A partys appeal by notice of appeal is deemed
perfected as to him upon the filing of the notice of appeal in due time.
A partys appeal by record on appeal is deemed perfected as to him with respect to the subject
matter thereof upon the approval of the record on appeal filed in due time.
In appeals by notice of appeal, the court loses jurisdiction over the case upon the perfection of the
appeals filed in due time and the expiration of the time to appeal of the other parties.
In appeals by record on appeal, the court loses jurisdiction only over the subject matter thereof upon
the approval of the records on appeal filed in due time and the expiration of the time to appeal of the
other parties.
In either case, prior to the transmittal of the original record or the record on appeal, the court may
issue orders for the protection and preservation of the rights of the parties which do not involve any
matter litigated by the appeal, approve compromises, permit appeals of indigent litigants, order
execution pending appeal in accordance with Section 2 of Rule 39, and allow withdrawal of the
appeal. (Italics supplied)
The residual jurisdiction of trial courts is available at a stage in which the court is normally deemed
to have lost jurisdiction over the case or the subject matter involved in the appeal. This stage is
reached upon the perfection of the appeals by the parties or upon the approval of the records on
appeal, but prior to the transmittal of the original records or the records on appeal. 254[13] In either
instance, the trial court still retains its so-called residual jurisdiction to issue protective orders,
approve compromises, permit appeals of indigent litigants, order execution pending appeal, and allow
the withdrawal of the appeal.
The CAs motu proprio dismissal of petitioners Complaint could not have been based, therefore, on
residual jurisdiction under Rule 41. Undeniably, such order of dismissal was not one for the
protection and preservation of the rights of the parties, pending the disposition of the case on appeal.
What the CA referred to as residual prerogatives were the general residual powers of the courts to
dismiss an action motu proprio upon the grounds mentioned in Section 1 of Rule 9 of the Rules of
Court and under authority of Section 2 of Rule 1 255[14] of the same rules.
To be sure, the CA had the excepted instances in mind when it dismissed the Complaint motu proprio
on more fundamental grounds directly bearing on the lower courts lack of jurisdiction 256[15] and for
prescription of the action. Indeed, when a court has no jurisdiction over the subject matter, the only
power it has is to dismiss the action.257[16]

254
255

256

257

Jurisdiction over the subject matter is conferred by law and is determined by the allegations in the
complaint and the character of the relief sought. 258[17] In his Complaint for Nullification of
Applications for Homestead and Original Certificate of Title No. G-7089 and for Reconveyance of
Title,259[18] petitioner averred:
2. That on November 10, 1965, without the knowledge of [petitioner, Respondent] Manuel Palanca
Jr., [petitioners] cousin, in connivance with his co-[respondent], Lorenzo Agustin, x x x fraudulently
and in bad faith:
2.1. x x x made the request for authority to survey as a pre-requisite to the filing of an application for
homestead patent in his name and that of his Co-[Respondent] Agustin, [despite being] fully aware
that [Petitioner] KATON had previously applied or requested for re-classification and certification of
the same land from forest land to agricultural land which request was favorably acted upon and
approved as mentioned earlier; a clear case of intrinsic fraud and misrepresentation;
xxx

xxx

xxx

2.3. In stating in his application for homestead patent that he was applying for the VACANT PORTION
of Sombrero Island where there was none, the same constituted another clear case of fraud and
misrepresentation;
3. That the issuance of Homestead Patent No. 145927 and OCT No. G-7089 in the name of
[Respondent] Manuel Palanca Jr. and the filing of Homestead Patent Applications in the names of
[respondents], Lorenzo Agustin, Jesus Gapilango and Juan Fresnillo[,] having been done fraudulently
and in bad faith, are ipso facto null and void and of no effect whatsoever. 260[19]
xxx

xxx

xxx

x x x. By a wrongful act or a willful omission and intending the effects with natural necessity arise
knowing from such act or omission, [Respondent Palanca] on account of his blood relation, first
degree cousins, trust, interdependence and intimacy is guilty of intrinsic fraud [sic]. x x x. 261[20]
Thereupon, petitioner prayed, among others, for a judgment (1) nullifying the homestead patent
applications of Respondents Agustin, Fresnillo and Gapilango as well as Homestead Patent No.
145927 and OCT No. G-7089 in the name of Respondent Palanca; and (2) ordering the director of
the Land Management Bureau to reconvey the Sombrero Island to petitioner. 262[21]
The question is, did the Complaint sufficiently allege an action for declaration of nullity of the free
patent and certificate of title or, alternatively, for reconveyance? Or did it plead merely for reversion?
258
259
260
261

262

The Complaint did not sufficiently make a case for any of such actions, over which the trial court
could have exercised jurisdiction.
In an action for nullification of title or declaration of its nullity, the complaint must contain the
following allegations: 1) that the contested land was privately owned by the plaintiff prior to the
issuance of the assailed certificate of title to the defendant; and 2) that the defendant
perpetuated a fraud or committed a mistake in obtaining a document of title over the parcel
of land claimed by the plaintiff. 263 [22] In these cases, the nullity arises not from fraud or
deceit, but from the fact that the director of the Land Management Bureau had no jurisdiction
to bestow title; hence, the issued patent or certificate of title was void ab initio.264[23]
In an alternative action for reconveyance, the certificate of title is also respected as incontrovertible,
but the transfer of the property or title thereto is sought to be nullified on the ground that it was
wrongfully or erroneously registered in the defendants name. 265[24] As with an annulment of title, a
complaint must allege two facts that, if admitted, would entitle the plaintiff to recover title to the
disputed land: (1) that the plaintiff was the owner of the land, and (2) that the defendant illegally
dispossessed the plaintiff of the property.266[25] Therefore, the defendant who acquired the property
through mistake or fraud is bound to hold and reconvey to the plaintiff the property or the title
thereto.267[26]
In the present case, nowhere in the Complaint did petitioner allege that he had previously held title to
the land in question. On the contrary, he acknowledged that the disputed island was public land, 268
[27] that it had never been privately titled in his name, and that he had not applied for a homestead
under the provisions of the Public Land Act. 269[28] This Court has held that a complaint by a private
party who alleges that a homestead patent was obtained by fraudulent means, and who consequently
prays for its annulment, does not state a cause of action; hence, such complaint must be dismissed.
270
[29]

263
264
265
266

267

268

269

270

Neither can petitioners case be one for reversion. Section 101 of the Public Land Act categorically
declares that only the solicitor general or the officer in his stead may institute such an action. 271[30] A
private person may not bring an action for reversion or any other action that would have the effect of
canceling a free patent and its derivative title, with the result that the land thereby covered would
again form part of the public domain. 272[31]
Thus, when the plaintiff admits in the complaint that the disputed land will revert to the public domain
even if the title is canceled or amended, the action is for reversion; and the proper party who may
bring action is the government, to which the property will revert. 273[32] A mere homestead applicant,
not being the real party in interest, has no cause of action in a suit for reconveyance. 274[33] As it is,
vested rights over the land applied for under a homestead may be validly claimed only by the
applicant, after approval by the director of the Land Management Bureau of the formers final proof of
homestead patent. 275[34]
Consequently, the dismissal of the Complaint is proper not only because of lack of jurisdiction, but
also because of the utter absence of a cause of action, 276[35] a defense raised by respondents in their
Answer.277[36] Section 2 of Rule 3 of the Rules of Court 278[37] ordains that every action must be
prosecuted or defended in the name of the real party in interest, who stands to be benefited or injured
by the judgment in the suit. Indeed, one who has no right or interest to protect has no cause of action
by which to invoke, as a party-plaintiff, the jurisdiction of the court. 279[38]
Finally, assuming that petitioner is the proper party to bring the action for annulment of title or its
reconveyance, the case should still be dismissed for being time-barred. 280[39] It is not disputed that a
271

272
273
274
275

276

277

278

279

280

homestead patent and an Original Certificate of Title was issued to Palanca on February 21, 1977, 281
[40] while the Complaint was filed only on October 6, 1998. Clearly, the suit was brought way past
ten years from the date of the issuance of the Certificate, the prescriptive period for reconveyance of
fraudulently registered real property.282[41]
It must likewise be stressed that Palancas title -- which attained the status of indefeasibility one year
from the issuance of the patent and the Certificate of Title in February 1977 -- is no longer open to
review on the ground of actual fraud. Ybanez v. Intermediate Appellate Court283[42] ruled that a
certificate of title, issued under an administrative proceeding pursuant to a homestead patent, is as
indefeasible as one issued under a judicial registration proceeding one year from its issuance;
provided, however, that the land covered by it is disposable public land, as in this case.
In Aldovino v. Alunan,284[43] the Court has held that when the plaintiffs own complaint shows clearly
that the action has prescribed, such action may be dismissed even if the defense of prescription has
not been invoked by the defendant. In Gicano v. Gegato,285[44] we also explained thus:
"x x x [T]rial courts have authority and discretion to dismiss an action on the ground of prescription
when the parties' pleadings or other facts on record show it to be indeed time-barred; (Francisco v.
Robles, Feb. 15, 1954; Sison v. McQuaid, 50 O.G. 97; Bambao v. Lednicky, Jan. 28, 1961; Cordova v.
Cordova, Jan. 14, 1958; Convets, Inc. v. NDC, Feb. 28, 1958; 32 SCRA 529; Sinaon v. Sorongan,
136 SCRA 408); and it may do so on the basis of a motion to dismiss (Sec. 1,f, Rule 16, Rules of
Court), or an answer which sets up such ground as an affirmative defense (Sec. 5, Rule 16), or even
if the ground is alleged after judgment on the merits, as in a motion for reconsideration (Ferrer v.
Ericta, 84 SCRA 705); or even if the defense has not been asserted at all, as where no statement
thereof is found in the pleadings (Garcia v. Mathis, 100 SCRA 250; PNB v. Pacific Commission
House, 27 SCRA 766; Chua Lamco v. Dioso, et al., 97 Phil. 821); or where a defendant has been
declared in default (PNB v. Perez, 16 SCRA 270). What is essential only, to repeat, is that the facts
demonstrating the lapse of the prescriptive period be otherwise sufficiently and satisfactorily apparent
on the record; either in the averments of the plaintiff's complaint, or otherwise established by the
evidence."286[45] (Italics supplied)
Clearly then, the CA did not err in dismissing the present case. After all, if and when they are able to
do so, courts must endeavor to settle entire controversies before them to prevent future litigations. 287
281

282
283
284

285

286

287

[46]
WHEREFORE, the Petition is hereby DENIED, and the assailed Resolution AFFIRMED. The
dismissal of the Complaint in Civil Case No. 3231 is SUSTAINED on the grounds of lack of
jurisdiction, failure to state a cause of action and prescription. Costs against petitioner.
SO ORDERED.

EN BANC
ROMULO F. PECSON,
Petitioner,

G.R. No. 182865

Present:

PUNO, C.J.,
QUISUMBING,
- versus -

YNARES-SANTIAGO,
CARPIO,
AUSTRIA-MARTINEZ,
CORONA,
CARPIO MORALES,

COMMISSION
ON
ELECTIONS,
DEPARTMENT OF INTERIOR AND
LOCAL GOVERNMENT and LYNDON A.
CUNANAN,
Respondents.

AZCUNA,
TINGA,
CHICO-NAZARIO,
VELASCO, JR.,
NACHURA,
REYES,
LEONARDO-DE CASTRO, and
BRION, JJ.

Promulgated:

December 24, 2008

x --------------------------------------------------------------------------------------------x
DECISION
BRION, J.:

This petition for certiorari filed by Romulo F. Pecson (Pecson) under Rule 64, in relation with
Rule 65 of the Revised Rules of Court seeks to set aside and annul the Resolution dated May 21,
2008 of the Commission on Elections en banc (COMELEC) in SPR 60-2007.288[1] The assailed
Resolution nullified the grant (via a Special Order) by the Regional Trial Court (RTC), Branch 56,
Angeles City, of the execution pending appeal of its Decision in the election contest between Pecson
and the private respondent Lyndon A. Cunanan (Cunanan), the proclaimed winner in the 2007
mayoralty election in Magalang, Pampanga.
THE ANTECEDENTS

Pecson and Cunanan were candidates for the mayoralty position in the Municipality of
Magalang, Province of Pampanga in the May 2007 elections. On May 17, 2007, Cunanan was
proclaimed the winning candidate, garnering a total of 12,592 votes as against Pecsons 12,531, or a
margin of 61 votes. Cunanan took his oath and assumed the position of Mayor of Magalang. Soon
thereafter, Pecson filed an election protest, docketed as EPE No. 07-51, with the RTC.

On November 23, 2007, the RTC rendered a Decision in Pecsons favor. The RTC ruled that
Pecson received a total of 14,897 votes as against Cunanans 13,758 a vote margin of 1,139.

Cunanan received a copy of the Decision on November 26, 2007 and filed a Notice of Appeal
the day after. The RTC issued on November 27, 2008 an Order noting the filing of the notice of
appeal and the payment of appeal fee and directing the transmittal of the records of the case to the
Electoral Contests Adjudication Department (ECAD) of the COMELEC. Pecson, on the other hand,
filed on November 28, 2007 an Urgent Motion for Immediate Execution Pending Appeal, claiming that
Section 11, Rule 14 of the Rules of Procedure in Election Contests before the Courts Involving
Elective Municipal and Barangay Officials289[2] (Rules) allows this remedy.

288

289

The RTC granted Pecsons motion for execution pending appeal via a Special Order dated
December 3, 2007 (Special Order) but suspended, pursuant to the Rules, the actual issuance of the
writ of execution for twenty (20) days. The Special Order states the following reasons:
1.
The result of the judicial revision show[s] that the protestant garnered
14,897 votes as against protestees 13,758 votes or a plurality of 1,139 votes. The
victory of the protestant is clearly and manifestly established by the rulings and
tabulation of results made by the Court x x x;

2.
It is settled jurisprudence that execution pending appeal in election cases
should be granted to give as much recognition to the worth of a trial judges decision as
that which is initially ascribed by the law to the proclamation by the board of
canvassers. The Court holds that this wisp of judicial wisdom of the Supreme Court
enunciated in the Gahol case and subsequent cases citing it is borne by the recognition
that the decision of the trial court in an election case is nothing but the court upholding
the mandate of the voter, which has as its source no other than the exercise of the
constitutional right to vote. While it is true that the protestee can avail of the remedy of
appeal before the COMELEC, the Court is more convinced that between upholding the
mandate of the electorate of Magalang, Pampanga which is the fruit of the exercise of
the constitutional right to vote and a procedural remedy, the Court is more inclined to
uphold and give effect to and actualize the mandate of the electorate of Magalang. To
the mind of the Court, in granting execution pending appeal the Court is being true to its
bounden duty to uphold the exercise of constitutional rights and gives flesh to the
mandate of the people. The foregoing is, as far as the Court is concerned, considered
far superior circumstance that convinces the Court to grant protestants motion;

3.
meaning;

Public interest and the will of the electorate must be respected and given

4.
In the case of Navarosa v. Comelec, the Supreme Court held that In the
Gahol case, the Court gave an additional justification for allowing execution pending
appeal of decisions of trial courts, thus: Public policy underlies it, x x x [S]omething had
to be done to strike the death blow at the pernicious grab-the-proclamation-prolong-theprotest technique often, if not invariably, resorted to by unscrupulous politicians who
would render nugatory the peoples verdict against them and persist in continuing in an
office they very well know they have no legitimate right to hold. x x x. A primordial
public interest is served by the grant of the protestants motion, i.e., to obviate a hollow
victory for the duly elected candidate. In the words of Chief Justice Cesar Bengzon,
The well known delay in the adjudication of election protests often gave the successful
contestant a mere pyrrhic victory, i.e., a vindication when the term of office is about to
expire or has expired.

Expectedly, Cunanan moved to reconsider the Order, arguing that the RTC gravely abused its
discretion: (1) in ruling that there were good reasons to issue a writ of execution pending appeal; and
(2) in entertaining and subsequently granting the motion for execution pending appeal despite the
issuance of an order transmitting the records of the case.

Thereupon, Cunanan filed with the COMELEC a Petition for Application of Preliminary
Injunction with Prayer for Status Quo Ante Order/Temporary Restraining Order (TRO) with Prayer for
Immediate Raffle. He argued in his petition that: (1) the RTC Decision did not clearly establish
Pecsons victory or his (Cunanans) defeat a requirement of Section 11, Rule 14 of the Rules;
among other reasons, the number of votes the RTC tallied and tabulated exceeded the number of
those who actually voted and the votes cast for the position of Mayor, and (2) the RTC had
constructively relinquished its jurisdiction by the issuance of the Order dated November 27, 2007
directing the transmittal of the records of the case.

The Second Division of the COMELEC issued on January 4, 2008 a 60-day TRO directing: (1)
the RTC to cease and desist from issuing or causing the issuance of a writ of execution or
implementing the Special Order; and (2) Cunanan to continue performing the functions of Mayor of
Magalang.

In his Answer and/or Opposition, with Prayer for Immediate Lifting of TRO, Pecson argued
that: (1) preliminary injunction cannot exist except as part or incident of an independent action, being
a mere ancillary remedy that exists only as an incident of the main proceeding; (2) the petition for
application of preliminary injunction, as an original action, should be dismissed outright; and (3)
Cunanan is guilty of forum shopping, as he filed a motion for reconsideration of the Special Order
simultaneously with the petition filed with the COMELEC.

The COMELECs Second Division denied Cunanans petition in a Resolution dated March 6,
2008. It ruled that: (1) the resolution of the motion for execution pending appeal is part of the residual
jurisdiction of the RTC to settle pending incidents; the motion was filed prior to the expiration of the

period to appeal and while the RTC was still in possession of the original record; and (2) there is good
reason to justify the execution of the Decision pending appeal, as Pecsons victory was clearly and
manifestly established. Ruling on the alleged defect in the RTC count, the Second Division ruled:
[A]fter a careful scrutiny of the Decision, We found that the error lies in the trial
courts computation of the results. In its Decision, the trial court, to the votes obtained
by the party (as per proclamation of the MBOC), deducted the votes per physical count
after revision and deducted further the invalid/nullified ballots per the trial courts
appreciation and thereafter added the valid claimed ballots per the trial courts
appreciation, thus:

Votes obtained per proclamation of the MBOC (-) Votes per physical count (-)
Invalid or nullified ballots (+) Valid claimed ballots = Total Votes Obtained

The formula used by the trial court is erroneous as it used as its reference the
votes obtained by the parties as per the proclamation of the MBOC. It complicated an
otherwise simple and straightforward computation, thus leading to the error. The correct
formula should have been as follows:

Total Number of Uncontested Ballots (+) Valid Contested Ballots (+) Valid Claimed
Ballots = Total Votes Obtained

Using this formula and applying the figures in pages 744 and 745 of the trial
courts Decision, the results will be as follows:

For the Petitioner Cunanan


Total Number of Uncontested Ballots

9,656

Add: Valid Contested Ballots


Add: Valid Claimed Ballots
Total Votes of Petitioner

2,058
36
11,750

For the Private Respondent (Pecson)


Total Number of Uncontested Ballots

9,271

Add: Valid Contested Ballots


Add: Valid Claimed Ballots
Total Votes of Petitioner

2,827
39
12,134

Using the correct formula, private respondent still obtained a plurality of the votes
cast and enjoys a margin of 384 votes over the petitioner. Although not as wide as the
margin found by the trial court, We are nevertheless convinced that the victory of private
respondent has been clearly established in the trial courts decision for the following
reasons:

First, the error lies merely in the computation and does not put in issue the
appreciation and tabulation of votes. The error is purely mathematical which will
not involve the opening of ballot boxes or an examination and appreciation of
ballots. It is a matter of arithmetic which calls for the mere clerical act of
reflecting the true and correct votes of the candidates.

Second, the error did not affect the final outcome of the election protest as
to which candidate obtained the plurality of the votes cast.

We are likewise convinced that the assailed order states good or special reasons
justifying the execution pending appeal, to wit:

(1) The victory of the protestant was clearly and manifestly established;
(2)

Execution pending appeal in election cases should be granted to give as


much recognition to the worth of a trial judges decision as that which is
initially ascribed by the law to the proclamation by the board of canvassers;

(3) Public interest and the will of the electorate must be respected and given
meaning; and
(4) Public policy underlies it, as something had to be done to strike the death
blow at the pernicious grab-the-proclamation-prolong-the-protest technique
often, if not invariably resorted to by unscrupulous politicians.

Such reasons to Our mind constitute superior circumstances as to warrant the


execution of the trial courts decision pending appeal.

Pecson thus asked for the issuance of a writ of execution via an Ex-Parte Motion. Despite
Cunanans opposition, the RTC granted Pecsons motion and issued the writ of execution on March
11, 2008. Pecson thereafter assumed the duties and functions of Mayor of Magalang.

The Assailed Resolution

On Cunanans motion, the COMELEC en banc issued its Resolution dated May 21, 2008
reversing the ruling of the Second Division insofar as it affirmed the RTCs findings of good reasons to
execute the decision pending appeal. It affirmed the authority of the RTC to order execution pending
appeal; it however nullified the March 11, 2008 writ of execution on the ground that the RTC could no
longer issue the writ because it had lost jurisdiction over the case after transmittal of the records and
the perfection of the appeals of both Cunanan and Pecson (to be accurate, the lapse of Pecsons
period to appeal).

On the propriety of executing the RTC Decision pending appeal, the COMELEC en banc ruled
that it was not convinced of the good reasons stated by the RTC in its Special Order. It ruled that
recognition of the worth of a trial judges decision, on the one hand, and the right to appeal, including
the Commissions authority to review the decision of the trial court, on the other, requires a
balancing act; and not every invocation of public interest will suffice to justify an execution pending
appeal. It added that at a stage when the decision of the trial court has yet to attain finality, both the
protestee and the protestant are to be considered presumptive winners.

It noted too that the

Second Division already cast a doubt on the correctness of the number of votes obtained by the
parties after the trial courts revision; thus, the resolution of the pending appeal becomes all the more
important. Between two presumptive winners, considering the pending appeal of the election protest
to the Commission and public service being the prime consideration, the balance should tilt in favor
of non-disruption of government service. The execution of the RTC Decision pending appeal
would necessarily entail the unseating of the protestee, resulting not only in the disruption of public
service, but also in confusion in running the affairs of the government; a subsequent reversal too of
the RTC Decision also results in the unseating of the protestant. This situation (i.e., the series of turnover of the seat of power from one presumptive winner to another) cannot but cause irreparable
damage to the people of Magalang, and overweighs the reasons asserted by the RTC in its Special
Order. In the end, according to the COMELEC, public interest is best served when he who was really
voted for the position is proclaimed and adjudged as winner with finality.

The Petition and the Prayer for the issuance of a Status Quo Order

In imputing grave abuse of discretion to the COMELEC en banc, Pecson argues that: (1) the
RTC Decision clearly showed Pecsons victory; (2) the reasons for the reversal of the RTC Decision
practically render impossible a grant of an execution pending appeal; and (3) the RTC correctly found
the presence of the requisites for execution pending appeal.

Threatened to be unseated, Pecson asked, as interim relief, for the issuance of a Status Quo
Order. He claimed that: (1) the Department of Interior and Local Government already recognized
(based on the issuance of the assailed Resolution) Cunanans assumption of office even if the
assailed Resolution had not attained finality; and (2) in order to prevent grave and irreparable injury to
Pecson and the perpetuation of a travesty of justice, a Status Quo Order must immediately issue.

THE COURTS RULING


We find the petition meritorious.
The remedy of executing court decisions pending appeal in election contests is provided under
the Rules as follows:
SEC. 11. Execution pending appeal . On motion of the prevailing party with
notice to the adverse party, the court, while still in possession of the original records,
may, at its discretion, order the execution of the decision in an election contest before
the expiration of the period to appeal, subject to the following rules:
(a)
There must be a motion by the prevailing party with three-day notice
to the adverse party. Execution pending appeal shall not issue without prior notice and
hearing. There must be good reasons for the execution pending appeal. The court, in a
special order, must state the good or special reasons justifying the execution pending
appeal. Such reasons must:
(1)
constitute superior circumstances demanding urgency that will
outweigh the injury or damage should the losing party secure a reversal of the
judgment on appeal; and
(2)
be manifest, in the decision sought to be executed, that the defeat of
the protestee or the victory of the protestant has been clearly established.
(b)
If the court grants execution pending appeal, an aggrieved party
shall have twenty working days from notice of the special order within which to secure a
restraining order or status quo order from the Supreme Court of the Commission on

Elections. The corresponding writ of execution shall issue after twenty days, if no
restraining order or status quo order is issued. During such period, the writ of execution
pending appeal shall be stayed. 290[3]

This remedy is not new. Under prevailing jurisprudence, 291[4] the remedy may be resorted to
pursuant to the suppletory application of the Rules of Court, specifically its Section 2, Rule 39. 292[5]
What the Rules (A.M. No. 07-4-15-C) has done is to give the availability of the remedy the element of
certainty. Significantly, the Rules similarly apply the good reason standard (in fact, the even greater
superior circumstances standard) for execution pending appeal under the Rules of Court, making the
remedy an exception rather than the rule.
At the heart of the present controversy is the question of whether there has been compliance
with the standards required for an execution pending appeal in an election contest. As heretofore
cited, the RTC found all these requisites present. The Second Division of the COMELEC supported
the RTCs ruling, but the COMELEC en banc held a contrary view and nullified the execution pending
appeal. This en banc ruling is now before us.
Our review of a COMELEC ruling or decision is via a petition for certiorari. This is a limited
review on jurisdictional grounds, specifically of the question on whether the COMELEC has
jurisdiction, or whether the assailed order or resolution is tainted with grave abuse of discretion
amounting to lack or excess of jurisdiction. Correctly understood, grave abuse of discretion is such
capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction, or [an] exercise
of power in an arbitrary and despotic manner by reason of passion or personal hostility, or an
exercise of judgment so patent and gross as to amount to an evasion of a positive duty or to a virtual
refusal to perform the duty enjoined, or to act in a manner not at all in contemplation of law. 293[6]

290

291

292

293

Because this case is essentially about the implementation of an RTC decision pending appeal,
we must first dwell on the writ the RTC issued. The COMELEC ruled in this regard that the writ of
execution the RTC issued on March 11, 2008 was void; the RTC could no longer issue the writ
because of the lapse of the period for appeal, and because the RTC no longer held the records of the
election contest which had then been transmitted to the ECAD-COMELEC.
Cunanan argues in his Comment that this ruling has become final and executory because
Pecson did not question it in the present petition. In Cunanans view, the finality of this aspect of the
COMELEC ruling renders the issue of the nullification of the Special Order moot and academic, as
any ruling we shall render would serve no practical purpose; it can no longer be implemented since
the means (obviously referring to the writ the RTC issued on March 11, 2008) of executing the RTC
decision (i.e., seating Pecson as Mayor of Magalang) has, to all intents and purposes, been nullified
and rendered ineffective.
We see no merit in Cunanans argument. The writ of execution issued by the RTC is a mere
administrative enforcement medium of the Special Order the main order supporting Pecsons
motion for the issuance of a writ of execution. The writ itself cannot and does not assume a life of its
own independent from the Special Order on which it is based. Certainly, its nullification does not
carry with it the nullification of the Special Order. This consequence does not of course hold true in
the reverse situation the nullification of the Special Order effectively carries with it the nullification of
its implementing writ and removes the basis for the issuance of another implementing writ. In the
present case, the reality is that if and when we ultimately affirm the validity of the Special Order,
nothing will thereafter prevent the RTC from issuing another writ.
Another legal reality is that the COMELEC is wrong in its ruling that the RTC could no longer
actually issue the writ on March 11, 2008 because it no longer had jurisdiction to do so after the
appeal period lapsed and after the records were transmitted to the ECAD-COMELEC. That the RTC
is still in possession of the records and that the period to appeal (of both contending parties) must
have not lapsed are important for jurisdictional purposes if the issue is the authority of the RTC to
grant a Special Order allowing execution pending appeal; they are requisite elements for the
exercise by the RTC of its residual jurisdiction to validly order an execution pending appeal, not for
the issuance of the writ itself. This is clearly evident from the cited provision of the Rules which does
not require the issuance of the implementing writ within the above limited jurisdictional period. The
RTC cannot legally issue the implementing writ within this limited period for two reasons: (1) the cited

twenty-day waiting period under Section 11(b); and (2) the mandatory immediate transmittal of the
records to the ECAD of the COMELEC under Section 10 of the Rules. 294[7]

On the substantive issue of whether a writ of execution pending appeal should issue, we do
not agree with the COMELECs view that there are two presumptive winners prior to its ruling on the
protest case. We likewise cannot support its balancing act view that essentially posits that given the
pendency of the appeal and the lack of finality of a decision in the election protest, the unseating of
the protestee, and the need for continuity of public service, the balance should tilt in favor of
continuity or non-disruption of public service; hence, the execution pending appeal should be denied.

As Pecson correctly argued, this reasoning effectively prevents a winner (at the level of the
courts) of an election protest from ever availing of an execution pending appeal; it gives too much
emphasis to the COMELECs authority to decide the election contest and the losing partys right to
appeal. What is there to execute pending appeal if, as the COMELEC suggested, a party should
await a COMELEC final ruling on the protest case? Effectively, the two presumptive winners and
the balancing act views negate the execution pending appeal that we have categorically and
unequivocally recognized in our rulings and in the Rules we issued. To be sure, the COMELEC
cannot, on its own, render ineffective a rule of procedure we established by formulating its own ruling
requiring a final determination at its level before an RTC decision in a protest case can be
implemented.

We additionally note that disruption of public service necessarily results from any order
allowing execution pending appeal and is a concern that this Court was aware of when it expressly
provided the remedy under the Rules.

Such disruption is therefore an element that has been

weighed and factored in and cannot be per se a basis to deny execution pending appeal.
What comes out clearly from this examination of the COMELEC ruling is that it looked at the
wrong material considerations when it nullified the RTCs Special Order.

They are the wrong

considerations because they are not the standards outlined under Section 11, Rule 14 of the Rules

294

against which the validity of

a Special Order must be tested.

Significantly, the use of wrong

considerations in arriving at a decision constitutes grave abuse of discretion. 295[8]


The proper consideration that the COMELEC made relates to the correctness of the RTCs
Decision in light of the Rules requirement that the victory of the protestant and the defeat of the
protestee be clearly established for execution pending appeal to issue. According to the COMELEC,
no less than the Second Division cast a doubt on the correctness of the number of votes obtained by
the parties after the revision of ballots when the Second Division proposed a mathematical formula to
correct the RTC count. At the same time, the COMELEC noted that the Second Division could not
have corrected the RTC count, as the petition before it was one for certiorari while the correction of
errors in computation properly pertained to the resolution of Cunanans pending appeal. To the
COMELEC, all these showed that the correctness of the RTC Decision in favor of Pecson was far
from clear and cannot support an execution pending appeal.
We disagree once more with the COMELEC en banc in this conclusion, as it failed to
accurately and completely appreciate the Second Divisions findings. The RTC Decision, on its face,
shows that Pecson

garnered more valid votes than Cunanan after the revision of ballots. The

Second Division properly recognized, however, that the RTC computation suffered from a facial defect
that did not affect the final results; as Cunanan pointed out, the votes for Pecson and Cunanan, if
totally summed up, exceeded the total number of valid votes for mayor.
Duly alerted, the Second Division looked into the purported error, analyzed it, and found the
error to be merely mathematical; the RTC formula would necessarily exceed the total number of votes
cast for mayor because it counted some votes twice. In making this finding, the Second Division was
guided by the rule that one of the requisites for an execution pending appeal is a clear showing in the
decision of the protestants victory and the protestees defeat. Its examination of the RTC Decision
was only for this limited purpose and this was what it did, no more no less. Specifically, it did not
review the RTCs appreciation of the ballots on revision; it did not review the intrinsic merits of the
RTC Decision issues that properly belong to the appeal that is currently pending. It merely found
that the defect Cunanan noted was actually inconsequential with respect to the results, thus showing
Pecsons clear victory under the RTC Decision. In other words, the Second Divisions corrected view
of the RTC count confirmed, rather than contradicted or placed in doubt, the conclusion that Pecson
won.
295

Other than the clarity of Pecsons victory under the RTC Decision, the Special Order cited good
and special reasons that justified an execution pending appeal, specifically: (1) the need to give as
much recognition to the worth of a trial judges decision as that which is initially given by the law to the
proclamation by the board of canvassers; (2) public interest and/or respect for and giving meaning to
the will of the electorate; and (3) public policy something had to be done to deal a death blow to the
pernicious grab-the-proclamation-prolong-the-protest technique often, if not invariably, resorted to by
unscrupulous politicians who would render nugatory the peoples verdict against them.
Unfortunately, the COMELEC en banc simply glossed over the RTCs cited reasons and did not
fully discuss why these reasons were not sufficient to justify execution pending appeal. A combination,
however, of the reasons the RTC cited, to our mind, justifies execution of the RTC Decision pending
appeal.
A striking feature of the present case is the time element involved. We have time and again
noted the well known delay in the adjudication of election contests that, more often than not, gives the
protestant an empty or hollow victory in a long drawn-out legal battle. 296[9] Some petitions before us
involving election contests have been in fact dismissed for being moot, the term for the contested
position having long expired before the final ruling on the merits came. 297[10] In the present case, the
term for mayor consists of only three (3) years. One year and six months has lapsed since the May
2007 election; thus, less than two years are left of the elected mayors term. The election protest,
while already decided at the RTC level, is still at the execution-pending-appeal stage and is still far
from the finality of any decision on the merits, given the available appellate remedies and the
recourses available through special civil actions. To be sure, there is nothing definite in the horizon
on who will finally be declared the lawfully elected mayor.
Also, we reiterate here our consistent ruling that decisions of the courts in election protest
cases, resulting as they do from a judicial evaluation of the ballots and after full-blown adversarial
proceedings, should at least be given similar worth and recognition as decisions of the board of

296

297

canvassers.298[11] This is especially true when attended by other equally weighty circumstances of
the case, such as the shortness of the term of the contested elective office, of the case.
In light of all these considerations, we conclude that the COMELEC erred in nullifying the
RTCs Special Order in a manner sufficiently gross to affect its exercise of jurisdiction. Specifically, it
committed grave abuse of discretion when it looked at wrong considerations and when it acted
outside of the contemplation of the law in nullifying the Special Order.
WHEREFORE, premises considered, we GRANT the petition and accordingly ANNUL the
assailed COMELEC Resolution.

SO ORDERED.

298