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DOMINGO NEYPES, LUZ G.R. No.

141524
FAUSTINO, ROGELIO FAUSTINO, On August 4, 1998, the court a quo denied the notice of appeal, holding that it was filed eight days
LOLITO VICTORIANO, JACOB late.[5] This was received by petitioners on July 31, 1998. Petitioners filed a motion for reconsideration but this
OBANIA AND DOMINGO Present : too was denied in an order dated September 3, 1998.[6]
CABACUNGAN,
Petitioners, DAVIDE, JR., C.J. Via a petition for certiorari and mandamus under Rule 65 of the 1997 Rules of Civil Procedure,
PUNO, petitioners assailed the dismissal of the notice of appeal before the Court of Appeals.
PANGANIBAN,
QUISUMBING, In the appellate court, petitioners claimed that they had seasonably filed their notice of appeal.
YNARES-SANTIAGO, They argued that the 15-day reglementary period to appeal started to run only on July 22, 1998 since this was
SANDOVAL-GUTIERREZ, the day they received the final order of the trial court denying their motion for reconsideration. When they filed
CARPIO, their notice of appeal on July 27, 1998, only five days had elapsed and they were well within the reglementary
- v e r s u s - AUSTRIA-MARTINEZ, period for appeal.[7]
CORONA,
CARPIO MORALES, On September 16, 1999, the Court of Appeals (CA) dismissed the petition. It ruled that the 15-day
CALLEJO, SR., period to appeal should have been reckoned from March 3, 1998 or the day they received the February 12,
AZCUNA, 1998 order dismissing their complaint. According to the appellate court, the order was the final order
TINGA, appealable under the Rules. It held further:
CHICO-NAZARIO and
GARCIA, JJ. Perforce the petitioners tardy appeal was correctly dismissed for the
HON. COURT OF APPEALS, HEIRS (P)erfection of an appeal within the reglementary period and in the manner prescribed
OF BERNARDO DEL MUNDO, by law is jurisdictional and non-compliance with such legal requirement is fatal and
namely: FE, CORAZON, JOSEFA, effectively renders the judgment final and executory.[8]
SALVADOR and CARMEN, all
surnamed DEL MUNDO, LAND BANK
OF THE PHILIPPINES AND HON. Petitioners filed a motion for reconsideration of the aforementioned decision. This was denied by the Court of
ANTONIO N. ROSALES, Presiding Appeals on January 6, 2000.
Judge, Branch 43, Regional Trial
Court, Roxas, Oriental Mindoro, In this present petition for review under Rule 45 of the Rules, petitioners ascribe the following errors allegedly
Respondents. Promulgated : committed by the appellate court:
September 14, 2005
x-----------------------------------------x

DECISION
I
CORONA, J.:
THE HONORABLE COURT OF APPEALS ERRED IN DISMISSING THE
Petitioners Domingo Neypes, Luz Faustino, Rogelio Faustino, Lolito Victoriano, Jacob Obania and PETITIONERS PETITION FOR CERTIORARI AND MANDAMUS AND IN AFFIRMING
Domingo Cabacungan filed an action for annulment of judgment and titles of land and/or reconveyance and/or THE ORDER OF THE HON. JUDGE ANTONIO N. ROSALES WHICH DISMISSED
reversion with preliminary injunction before the Regional Trial Court, Branch 43, of Roxas, Oriental Mindoro, THE PETITIONERS APPEAL IN CIVIL CASE NO. C-36 OF THE REGIONAL TRIAL
against the Bureau of Forest Development, Bureau of Lands, Land Bank of the Philippines and the heirs of COURT, BRANCH 43, ROXAS, ORIENTAL MINDORO, EVEN AFTER THE
Bernardo del Mundo, namely, Fe, Corazon, Josefa, Salvador and Carmen. PETITIONERS HAD PAID THE APPEAL DOCKET FEES.

In the course of the proceedings, the parties (both petitioners and respondents) filed various II
motions with the trial court. Among these were: (1) the motion filed by petitioners to declare the respondent
heirs, the Bureau of Lands and the Bureau of Forest Development in default and (2) the motions to dismiss THE HONORABLE COURT OF APPEALS LIKEWISE ERRED IN RULING AND
filed by the respondent heirs and the Land Bank of the Philippines, respectively. AFFIRMING THE DECISION OR ORDER OF THE RESPONDENT HON. ANTONIO M.
ROSALES THAT PETITIONERS APPEAL WAS FILED OUT OF TIME WHEN
In an order dated May 16, 1997, the trial court, presided by public respondent Judge Antonio N. PETITIONERS RECEIVED THE LAST OR FINAL ORDER OF THE COURT ON JULY
Rosales, resolved the foregoing motions as follows: (1) the petitioners motion to declare respondents Bureau 22, 1998 AND FILED THEIR NOTICE OF APPEAL ON JULY 27, 1998 AND PAID THE
of Lands and Bureau of Forest Development in default was granted for their failure to file an answer, but APPEAL DOCKET FEE ON AUGUST 3, 1998.
denied as against the respondent heirs of del Mundo because the substituted service of summons on them
was improper; (2) the Land Banks motion to dismiss for lack of cause of action was denied because there III
were hypothetical admissions and matters that could be determined only after trial, and (3) the motion to
dismiss filed by respondent heirs of del Mundo, based on prescription, was also denied because there were THE HONORABLE COURT OF APPEALS FURTHER ERRED IN RULING THAT THE
factual matters that could be determined only after trial.[1] WORDS FINAL ORDER IN SECTION 3, RULE 41, OF THE 1997 RULES OF CIVIL
PROCEDURE WILL REFER TO THE [FIRST] ORDER OF RESPONDENT JUDGE
The respondent heirs filed a motion for reconsideration of the order denying their motion to dismiss HON. ANTONIO M. MORALES DATED FEBRUARY 12, 1998 INSTEAD OF THE
on the ground that the trial court could very well resolve the issue of prescription from the bare allegations of LAST AND FINAL ORDER DATED JULY 1, 1998 COPY OF WHICH WAS RECEIVED
the complaint itself without waiting for the trial proper. BY PETITIONERS THROUGH COUNSEL ON JULY 22, 1998.

In an order[2] dated February 12, 1998, the trial court dismissed petitioners complaint on the ground IV.
that the action had already prescribed. Petitioners allegedly received a copy of the order of dismissal on March
3, 1998 and, on the 15th day thereafter or on March 18, 1998, filed a motion for reconsideration. On July 1, THE HONORABLE COURT OF APPEALS FINALLY ERRED IN FINDING THAT THE
1998, the trial court issued another order dismissing the motion for reconsideration[3] which petitioners DECISION IN THE CASE OF DENSO, INC. V. IAC, 148 SCRA 280, IS APPLICABLE
received on July 22, 1998. Five days later, on July 27, 1998, petitioners filed a notice of appeal [4] and paid the IN THE INSTANT CASE THEREBY IGNORING THE PECULIAR FACTS AND
appeal fees on August 3, 1998. CIRCUMSTANCES OF THIS CASE AND THE FACT THAT THE SAID DECISION
WAS RENDERED PRIOR TO THE ENACTMENT OF THE 1997 RULES OF CIVIL last day of the 15-day reglementary period to appeal, had only one (1) day left to file the notice of appeal upon
PROCEDURE.[9] receipt of the notice of denial of their MR. Petitioners, however, argue that they were entitled under the Rules
to a fresh period of 15 days from receipt of the final order or the order dismissing their motion for
The foregoing issues essentially revolve around the period within which petitioners should have filed their reconsideration.
notice of appeal. In Quelnan and Apuyan, both petitioners filed a motion for reconsideration of the decision of the
First and foremost, the right to appeal is neither a natural right nor a part of due process. It is merely a trial court. We ruled there that they only had the remaining time of the 15-day appeal period to file the notice of
statutory privilege and may be exercised only in the manner and in accordance with the provisions of law. appeal. We consistently applied this rule in similar cases,[16] premised on the long-settled doctrine that the
Thus, one who seeks to avail of the right to appeal must comply with the requirements of the Rules. Failure to perfection of an appeal in the manner and within the period permitted by law is not only mandatory but also
do so often leads to the loss of the right to appeal.[10] The period to appeal is fixed by both statute and jurisdictional.[17] The rule is also founded on deep-seated considerations of public policy and sound practice
procedural rules. BP 129,[11] as amended, provides: that, at risk of occasional error, the judgments and awards of courts must become final at some definite time
fixed by law.[18]
Sec. 39. Appeals. The period for appeal from final orders, resolutions, awards, judgments, or
decisions of any court in all these cases shall be fifteen (15) days counted from the Prior to the passage of BP 129, Rule 41, Section 3 of the 1964 Revised Rules of Court read:
notice of the final order, resolution, award, judgment, or decision appealed from.
Provided, however, that in habeas corpus cases, the period for appeal shall be (48) Sec. 3. How appeal is taken. Appeal maybe taken by serving upon the
forty-eight hours from the notice of judgment appealed from. x x x adverse party and filing with the trial court within thirty (30) days from notice of
order or judgment, a notice of appeal, an appeal bond, and a record on
appeal. The time during which a motion to set aside the judgment or order or for new
Rule 41, Section 3 of the 1997 Rules of Civil Procedure states: trial has been pending shall be deducted, unless such motion fails to satisfy the
requirements of Rule 37.
SEC. 3. Period of ordinary appeal. ― The appeal shall be taken within fifteen (15)
days from the notice of the judgment or final order appealed from. Where a record But where such motion has been filed during office hours of the last day of
on appeal is required, the appellant shall file a notice of appeal and a record on appeal the period herein provided, the appeal must be perfected within the day following that
within thirty (30) days from the notice of judgment or final order. in which the party appealing received notice of the denial of said motion.[19] (emphasis
supplied)
The period to appeal shall be interrupted by a timely motion for new trial or
reconsideration. No motion for extension of time to file a motion for new trial or
reconsideration shall be allowed. (emphasis supplied) According to the foregoing provision, the appeal period previously consisted of 30 days. BP 129, however,
reduced this appeal period to 15 days. In the deliberations of the Committee on Judicial Reorganization[20] that
drafted BP 129, the raison d etre behind the amendment was to shorten the period of appeal[21] and enhance
Based on the foregoing, an appeal should be taken within 15 days from the notice of judgment or final order the efficiency and dispensation of justice. We have since required strict observance of this reglementary
appealed from. A final judgment or order is one that finally disposes of a case, leaving nothing more for the period of appeal. Seldom have we condoned late filing of notices of appeal,[22] and only in very exceptional
court to do with respect to it. It is an adjudication on the merits which, considering the evidence presented at instances to better serve the ends of justice.
the trial, declares categorically what the rights and obligations of the parties are; or it may be an order or
judgment that dismisses an action.[12] In National Waterworks and Sewerage Authority and Authority v. Municipality of
Libmanan,[23] however, we declared that appeal is an essential part of our judicial system and the rules of
As already mentioned, petitioners argue that the order of July 1, 1998 denying their motion for reconsideration procedure should not be applied rigidly. This Court has on occasion advised the lower courts to be cautious
should be construed as the final order, not the February 12, 1998 order which dismissed their complaint. Since about not depriving a party of the right to appeal and that every party litigant should be afforded the amplest
they received their copy of the denial of their motion for reconsideration only on July 22, 1998, the 15-day opportunity for the proper and just disposition of his cause, free from the constraint of technicalities.
reglementary period to appeal had not yet lapsed when they filed their notice of appeal on July 27, 1998.
In de la Rosa v. Court of Appeals,[24] we stated that, as a rule, periods which require litigants to do
What therefore should be deemed as the final order, receipt of which triggers the start of the 15- certain acts must be followed unless, under exceptional circumstances, a delay in the filing of an appeal may
day reglementary period to appeal the February 12, 1998 order dismissing the complaint or the July 1, 1998 be excused on grounds of substantial justice. There, we condoned the delay incurred by the appealing party
order dismissing the MR? due to strong considerations of fairness and justice.
In the recent case of Quelnan v. VHF Philippines, Inc.,[13] the trial court declared In setting aside technical infirmities and thereby giving due course to tardy appeals, we have not
petitioner Quelnan non-suited and accordingly dismissed his complaint. Upon receipt of the order of dismissal, been oblivious to or unmindful of the extraordinary situations that merit liberal application of the Rules. In those
he filed an omnibus motion to set it aside. When the omnibus motion was filed, 12 days of the 15-day period to situations where technicalities were dispensed with, our decisions were not meant to undermine the force and
appeal the order had lapsed. He later on received another order, this time dismissing his omnibus motion. He effectivity of the periods set by law. But we hasten to add that in those rare cases where procedural rules were
then filed his notice of appeal. But this was likewise dismissed ― for having been filed out of time. not stringently applied, there always existed a clear need to prevent the commission of a grave injustice. Our
The court a quo ruled that petitioner should have appealed within 15 days after the dismissal of his judicial system and the courts have always tried to maintain a healthy balance between the strict enforcement
complaint since this was the final order that was appealable under the Rules. We reversed the trial court and of procedural laws and the guarantee that every litigant be given the full opportunity for the just and proper
declared that it was the denial of the motion for reconsideration of an order of dismissal of a complaint which disposition of his cause.[25]
constituted the final order as it was what ended the issues raised there. The Supreme Court may promulgate procedural rules in all courts.[26] It has the sole prerogative to
amend, repeal or even establish new rules for a more simplified and inexpensive process, and the speedy
This pronouncement was reiterated in the more recent case of Apuyan v. Haldeman et al.[14] where we again disposition of cases. In the rules governing appeals to it and to the Court of Appeals, particularly Rules
considered the order denying petitioner Apuyans motion for reconsideration as the final order which finally 42,[27] 43[28] and 45,[29] the Court allows extensions of time, based on justifiable and compelling reasons, for
disposed of the issues involved in the case. parties to file their appeals. These extensions may consist of 15 days or more.

Based on the aforementioned cases, we sustain petitioners view that the order dated July 1, 1998 denying To standardize the appeal periods provided in the Rules and to afford litigants fair opportunity to
their motion for reconsideration was the final order contemplated in the Rules. appeal their cases, the Court deems it practical to allow a fresh period of 15 days within which to file the notice
We now come to the next question: if July 1, 1998 was the start of the 15-day reglementary period of appeal in the Regional Trial Court, counted from receipt of the order dismissing a motion for a new trial or
to appeal, did petitioners in fact file their notice of appeal on time? motion for reconsideration. [30]

Under Rule 41, Section 3, petitioners had 15 days from notice of judgment or final order to appeal Henceforth, this fresh period rule shall also apply to Rule 40 governing appeals from the Municipal
the decision of the trial court. On the 15th day of the original appeal period (March 18, 1998), petitioners did not Trial Courts to the Regional Trial Courts; Rule 42 on petitions for review from the Regional Trial Courts to the
file a notice of appeal but instead opted to file a motion for reconsideration. According to the trial court, the MR Court of Appeals; Rule 43 on appeals from quasi-judicial agencies[31] to the Court of Appeals and Rule 45
only interrupted the running of the 15-day appeal period.[15] It ruled that petitioners, having filed their MR on the governing appeals by certiorari to the Supreme Court.[32] The new rule aims to regiment or make the appeal
period uniform, to be counted from receipt of the order denying the motion for new trial, motion for The Facts
reconsideration (whether full or partial) or any final order or resolution.
We thus hold that petitioners seasonably filed their notice of appeal within the fresh period of 15
days, counted from July 22, 1998 (the date of receipt of notice denying their motion for reconsideration). This Petitioner, a corporation duly organized and existing under the laws of Germany, applied for various trademark
pronouncement is not inconsistent with Rule 41, Section 3 of the Rules which states that the appeal shall be registrations before the IPO, namely: (a) "BIRKENSTOCK" under Trademark Application Serial No. (TASN) 4-
taken within 15 days from notice of judgment or final order appealed from. The use of the disjunctive word or 1994-091508 for goods falling under Class 25 of the International Classification of Goods and Services (Nice
signifies disassociation and independence of one thing from another. It should, as a rule, be construed in the Classification) with filing date of March 11, 1994; (b) "BIRKENSTOCK BAD HONNEF -RHEIN & DEVICE
sense in which it ordinarily implies.[33] Hence, the use of or in the above provision supposes that the notice of COMPRISING OF ROUND COMPANY SEAL AND REPRESENTATION OF A FOOT, CROSS AND SUNBEA
appeal may be filed within 15 days from the notice of judgment or within 15 days from notice of the final order, M" under TASN 4-1994-091509 for goods falling under Class 25 of the Nice Classification with filing date of
which we already determined to refer to the July 1, 1998 order denying the motion for a new trial or March 11, 1994; and (c) "BIRKENSTOCK BAD HONNEF-RHEIN & DEVICE COMPRISING OF ROUND
reconsideration. COMPANY SEAL AND REPRESENTATION OF A FOOT, CROSS AND SUNBEAM" under TASN 4-1994-
095043 for goods falling under Class 10 of the Nice Classification with filing date of September 5, 1994
Neither does this new rule run counter to the spirit of Section 39 of BP 129 which shortened the (subject applications).5
appeal period from 30 days to 15 days to hasten the disposition of cases. The original period of appeal (in this
case March 3-18, 1998) remains and the requirement for strict compliance still applies. The fresh period of 15
However, registration proceedings of the subject applications were suspended in view of an existing
days becomes significant only when a party opts to file a motion for new trial or motion for reconsideration. In
registration of the mark "BIRKENSTOCK AND DEVICE" under Registration No. 56334 dated October 21, 1993
this manner, the trial court which rendered the assailed decision is given another opportunity to review the
(Registration No. 56334) in the name of Shoe Town International and Industrial Corporation, the predecessor-
case and, in the process, minimize and/or rectify any error of judgment. While we aim to resolve cases with
in-interest of respondent Philippine Shoe Expo Marketing Corporation.6 In this regard, on May 27, 1997
dispatch and to have judgments of courts become final at some definite time, we likewise aspire to deliver
petitioner filed a petition for cancellation of Registration No. 56334 on the ground that it is the lawful and
justice fairly.
rightful owner of the Birkenstock marks (Cancellation Case).7 During its pendency, however, respondent
and/or its predecessor-in-interest failed to file the required 10th Year Declaration of Actual Use (10th Year
In this case, the new period of 15 days eradicates the confusion as to when the 15-day appeal
DAU) for Registration No. 56334 on or before October 21, 2004,8 thereby resulting in the cancellation of such
period should be counted from receipt of notice of judgment (March 3, 1998) or from receipt of notice of final
mark.9 Accordingly, the cancellation case was dismissed for being moot and academic.10
order appealed from (July 22, 1998).

To recapitulate, a party litigant may either file his notice of appeal within 15 days from receipt of the The aforesaid cancellation of Registration No. 56334 paved the way for the publication of the subject
Regional Trial Courts decision or file it within 15 days from receipt of the order (the final order) denying his applications in the IPO e-Gazette on February 2, 2007.11 In response, respondent filed three (3) separate
motion for new trial or motion for reconsideration. Obviously, the new 15-day period may be availed of only if verified notices of oppositions to the subject applications docketed as Inter Partes Case Nos. 14-2007-00108,
either motion is filed; otherwise, the decision becomes final and executory after the lapse of the original appeal 14-2007-00115, and 14-2007-00116,12 claiming, inter alia, that: (a) it, together with its predecessor-in-interest,
period provided in Rule 41, Section 3. has been using Birkenstock marks in the Philippines for more than 16 years through the mark
Petitioners here filed their notice of appeal on July 27, 1998 or five days from receipt of the order "BIRKENSTOCK AND DEVICE"; (b) the marks covered by the subject applications are identical to the one
denying their motion for reconsideration on July 22, 1998. Hence, the notice of appeal was well within the covered by Registration No. 56334 and thus, petitioner has no right to the registration of such marks; (c) on
fresh appeal period of 15 days, as already discussed.[34] November 15, 1991, respondent’s predecessor-in-interest likewise obtained a Certificate of Copyright
Registration No. 0-11193 for the word "BIRKENSTOCK" ; (d) while respondent and its predecessor-in-interest
We deem it unnecessary to discuss the applicability of Denso (Philippines), Inc. v. IAC[35]since the Court of failed to file the 10th Yea r DAU, it continued the use of "BIRKENSTOCK AND DEVICE" in lawful commerce;
Appeals never even referred to it in its assailed decision. and (e) to record its continued ownership and exclusive right to use the "BIRKENSTOCK" marks, it has filed
TASN 4-2006-010273 as a " re-application " of its old registration, Registration No. 56334.13 On November 13,
WHEREFORE, the petition is hereby GRANTED and the assailed decision of the Court of 2007, the Bureau of Legal Affairs (BLA) of the IPO issued Order No. 2007-2051 consolidating the aforesaid
Appeals REVERSED and SET ASIDE. Accordingly, let the records of this case be remanded to the Court of inter partes cases (Consolidated Opposition Cases).14
Appeals for further proceedings.

No costs. The Ruling of the BLA

SO ORDERED.
In its Decision15 dated May 28, 2008, the BLA of the IPO sustained respondent’s opposition, thus, ordering the
rejection of the subject applications. It ruled that the competing marks of the parties are confusingly similar
since they contained the word "BIRKENSTOCK" and are used on the same and related goods. It found
G.R. No. 194307 November 20, 2013 respondent and its predecessor-in-interest as the prior user and adopter of "BIRKENSTOCK" in the
Philippines, while on the other hand, petitioner failed to present evidence of actual use in the trade and
business in this country. It opined that while Registration No. 56334 was cancelled, it does not follow that prior
BIRKENSTOCK ORTHOPAEDIE GMBH AND CO. KG (formerly BIRKENSTOCK ORTHOPAEDIE right over the mark was lost, as proof of continuous and uninterrupted use in trade and business in the
GMBH),Petitioner, Philippines was presented. The BLA likewise opined that petitioner’s marks are not well -known in the
vs. Philippines and internationally and that the various certificates of registration submitted by petitioners were all
PHILIPPINE SHOE EXPO MARKETING CORPORATION, Respondent. photocopies and, therefore, not admissible as evidence.16

DECISION Aggrieved, petitioner appealed to the IPO Director General.

PERLAS-BERNABE, J.: The Ruling of the IPO Director General

Assailed in this Petition for Review on Certiorari1 are the Court of Appeals (CA) Decision2 dated June 25, 2010 In his Decision17 dated December 22, 2009, the IPO Director General reversed and set aside the ruling of the
and Resolution3 dated October 27, 2010 in CA-G.R. SP No. 112278 which reversed and set aside the BLA, thus allowing the registration of the subject applications. He held that with the cancellation of Registration
Intellectual Property Office (IPO) Director General’s Decision4 dated December 22, 2009 that allowed the No. 56334 for respondent’s failure to file the 10th Year DAU, there is no more reason to reject the subject
registration of various trademarks in favor of petitioner Birkenstock Orthopaedie GmbH & Co. KG. applications on the ground of prior registration by another proprietor.18 More importantly, he found that the
evidence presented proved that petitioner is the true and lawful owner and prior user of "BIRKENSTOCK"
marks and thus, entitled to the registration of the marks covered by the subject applications.19 The IPO
Director General further held that respondent’s copyright for the word "BIRKENSTOCK" is of no moment since with the requirements of fair play and conducive to the just, speedy and inexpensive disposition of cases, and
copyright and trademark are different forms of intellectual property that cannot be interchanged.20 which will give the Bureau the greatest possibility to focus on the contentious issues before it. (Emphasis and
underscoring supplied)

Finding the IPO Director General’s reversal of the BLA unacceptable, respondent filed a petition for review
with the CA. In the case at bar, while petitioner submitted mere photocopies as documentary evidence in the Consolidated
Opposition Cases, it should be noted that the IPO had already obtained the originals of such documentary
evidence in the related Cancellation Case earlier filed before it. Under this circumstance and the merits of the
Ruling of the CA instant case as will be subsequently discussed, the Court holds that the IPO Director General’s relaxation of
procedure was a valid exercise of his discretion in the interest of substantial justice.33
In its Decision21 dated June 25, 2010, the CA reversed and set aside the ruling of the IPO Director General
and reinstated that of the BLA. It disallowed the registration of the subject applications on the ground that the Having settled the foregoing procedural matter, the Court now proceeds to resolve the substantive issues.
marks covered by such applications "are confusingly similar, if not outright identical" with respondent’s
mark.22 It equally held that respondent’s failure to file the 10th Year DAU for Registration No. 56334 "did not
deprive petitioner of its ownership of the ‘BIRKENSTOCK’ mark since it has submitted substantial evidence B. Registration and ownership of "BIRKENSTOCK."
showing its continued use, promotion and advertisement thereof up to the present." 23 It opined that when
respondent’s predecessor-in-interest adopted and started its actual use of "BIRKENSTOCK," there is neither
an existing registration nor a pending application for the same and thus, it cannot be said that it acted in bad Republic Act No. (RA) 166,34 the governing law for Registration No. 56334, requires the filing of a DAU on
faith in adopting and starting the use of such mark.24 Finally, the CA agreed with respondent that petitioner’s specified periods,35 to wit:
documentary evidence, being mere photocopies, were submitted in violation of Section 8.1 of Office Order No.
79, Series of 2005 (Rules on Inter Partes Proceedings).
Section 12. Duration. – Each certificate of registration shall remain in force for twenty years: Provided, That
registrations under the provisions of this Act shall be cancelled by the Director, unless within one year
Dissatisfied, petitioner filed a Motion for Reconsideration25 dated July 20, 2010, which was, however, denied in following the fifth, tenth and fifteenth anniversaries of the date of issue of the certificate of registration, the
a Resolution26 dated October 27, 2010. Hence, this petition.27 registrant shall file in the Patent Office an affidavit showing that the mark or trade-name is still in use or
showing that its non-use is due to special circumstance which excuse such non-use and is not due to any
intention to abandon the same, and pay the required fee.
Issues Before the Court

The Director shall notify the registrant who files the above- prescribed affidavits of his acceptance or refusal
The primordial issue raised for the Court’s resolution is whether or not the subject marks should be allowed thereof and, if a refusal, the reasons therefor. (Emphasis and underscoring supplied)
registration in the name of petitioner.

The aforementioned provision clearly reveals that failure to file the DAU within the requisite period results in
The Court’s Ruling the automatic cancellation of registration of a trademark. In turn, such failure is tantamount to the
abandonment or withdrawal of any right or interest the registrant has over his trademark.36

The petition is meritorious.


In this case, respondent admitted that it failed to file the 10th Year DAU for Registration No. 56334 within the
requisite period, or on or before October 21, 2004. As a consequence, it was deemed to have abandoned or
A. Admissibility of Petitioner’s Documentary Evidence. withdrawn any right or interest over the mark "BIRKENSTOCK." Neither can it invoke Section 23637 of the IP
Code which pertains to intellectual property rights obtained under previous intellectual property laws, e.g., RA
166, precisely because it already lost any right or interest over the said mark.
In its Comment28 dated April 29, 2011, respondent asserts that the documentary evidence submitted by
petitioner in the Consolidated Opposition Cases, which are mere photocopies, are violative of Section 8.1 of
the Rules on Inter Partes Proceedings, which requires certified true copies of documents and evidence Besides, petitioner has duly established its true and lawful ownership of the mark "BIRKENSTOCK."
presented by parties in lieu of originals.29 As such, they should be deemed inadmissible.

Under Section 238 of RA 166, which is also the law governing the subject applications, in order to register a
The Court is not convinced. trademark, one must be the owner thereof and must have actually used the mark in commerce in the
Philippines for two (2) months prior to the application for registration. Section 2-A39 of the same law sets out to
define how one goes about acquiring ownership thereof. Under the same section, it is clear that actual use in
It is well-settled that "the rules of procedure are mere tools aimed at facilitating the attainment of justice, rather
commerce is also the test of ownership but the provision went further by saying that the mark must not have
than its frustration. A strict and rigid application of the rules must always be eschewed when it would subvert
been so appropriated by another. Significantly, to be an owner, Section 2-A does not require that the actual
the primary objective of the rules, that is, to enhance fair trials and expedite justice. Technicalities should
use of a trademark must be within the Philippines. Thus, under RA 166, one may be an owner of a mark due
never be used to defeat the substantive rights of the other party. Every party-litigant must be afforded the
to its actual use but may not yet have the right to register such ownership here due to the owner’s failure to
amplest opportunity for the proper and just determination of his cause, free from the constraints of
use the same in the Philippines for two (2) months prior to registration.40
technicalities."30 "Indeed, the primordial policy is a faithful observance of [procedural rules], and their relaxation
or suspension should only be for persuasive reasons and only in meritorious cases, to relieve a litigant of an
injustice not commensurate with the degree of his thoughtlessness in not complying with the procedure It must be emphasized that registration of a trademark, by itself, is not a mode of acquiring
prescribed."31 This is especially true with quasi-judicial and administrative bodies, such as the IPO, which are ownership.1âwphi1 If the applicant is not the owner of the trademark, he has no right to apply for its
not bound by technical rules of procedure.32 On this score, Section 5 of the Rules on Inter Partes Proceedings registration. Registration merely creates a prima facie presumption of the validity of the registration, of the
provides: registrant’s ownership of the trademark, and of the exclusive right to the use thereof. Such presumption, just
like the presumptive regularity in the performance of official functions, is rebuttable and must give way to
evidence to the contrary.41
Sec. 5. Rules of Procedure to be followed in the conduct of hearing of Inter Partes cases. – The rules of
procedure herein contained primarily apply in the conduct of hearing of Inter Partes cases. The Rules of Court
may be applied suppletorily. The Bureau shall not be bound by strict technical rules of procedure and evidence Clearly, it is not the application or registration of a trademark that vests ownership thereof, but it is the
but may adopt, in the absence of any applicable rule herein, such mode of proceedings which is consistent ownership of a trademark that confers the right to register the same. A trademark is an industrial property over
which its owner is entitled to property rights which cannot be appropriated by unscrupulous entities that, in one MARILYN MENDOZA VDA. DE EREDEROS, CATALINA ALINGASA and PORFERIO I.
way or another, happen to register such trademark ahead of its true and lawful owner. The presumption of MENDOZA,Respondents.
ownership accorded to a registrant must then necessarily yield to superior evidence of actual and real
ownership of a trademark.
DECISION

The Court’s pronouncement in Berris Agricultural Co., Inc. v. Abyadang 42


is instructive on this point:
BRION, J.:

The ownership of a trademark is acquired by its registration and its actual use by the manufacturer or
distributor of the goods made available to the purchasing public. x x x A certificate of registration of a mark, We resolve the petition for review on certiorari1 assailing the decision2 dated November 22 2005 and the
once issued, constitutes prima facie evidence of the validity of the registration, of the registrant’s ownership of resolution3dated April 21 2006 of the Court of Appeals CA) in CA-G.R. SP Nos. 83149 83150 and 83576.
the mark, and of the registrant’s exclusive right to use the same in connection with the goods or services and
those that are related thereto specified in the certificate. x x x In other words, the prima facie presumption
The CA decision reversed and set aside the joint decision4 dated January 9 2004 of the Deputy Ombudsman
brought about by the registration of a mark may be challenged and overcome in an appropriate action, x x x by
for the Visayas (Deputy Ombudsman), Primo C. Miro in OMB-V-A-02-0414-H finding respondents Marilyn
evidence of prior use by another person, i.e. , it will controvert a claim of legal appropriation or of ownership
Mendoza Vda. de Erederos Catalina Alingasa and Porferio I Mendoza guilty of the administrative charge of
based on registration by a subsequent user. This is because a trademark is a creation of use and belongs to
Grave Misconduct. The Deputy Ombudsman also found Oscar Peque guilty of Simple Misconduct.
one who first used it in trade or commerce.43(Emphasis and underscoring supplied)

The Factual Antecedents


In the instant case, petitioner was able to establish that it is the owner of the mark "BIRKENSTOCK." It
submitted evidence relating to the origin and history of "BIRKENSTOCK" and its use in commerce long before
respondent was able to register the same here in the Philippines. It has sufficiently proven that As culled from the records, the antecedents of the present case are as follows:
"BIRKENSTOCK" was first adopted in Europe in 1774 by its inventor, Johann Birkenstock, a shoemaker, on
his line of quality footwear and thereafter, numerous generations of his kin continuously engaged in the
manufacture and sale of shoes and sandals bearing the mark "BIRKENSTOCK" until it became the entity now Mendoza, Director of the Regional Office VII of the Land Transportation Office, Cebu City (LTO Cebu),
known as the petitioner. Petitioner also submitted various certificates of registration of the mark Erederos, Mendoza's niece and secretary, Alingasa, LTO clerk, and Peque, Officer-in-Charge, Operation
"BIRKENSTOCK" in various countries and that it has used such mark in different countries worldwide, Division of LTO Cebu, were administratively charged with Grave Misconduct before the Deputy Ombudsman
including the Philippines.44 by private complainants, namely: Maricar G Huete (Liaison Officer of GCY Parts), Ernesto R Cantillas (Liaison
Officer of Isuzu Cebu, Inc.), Leonardo Villaraso (General Manager of TBS Trading), and Romeo C. Climaco
(Corporate Secretary of Penta Star).5 They were likewise charged with criminal complaints for violation of
On the other hand, aside from Registration No. 56334 which had been cancelled, respondent only presented Section 3(e) of Republic Act No. 3019, otherwise known as the Anti Graft and Corrupt Practices Act."
copies of sales invoices and advertisements, which are not conclusive evidence of its claim of ownership of
the mark "BIRKENSTOCK" as these merely show the transactions made by respondent involving the same.45
The administrative and criminal charges arose from the alleged anomalies in the distribution at the LTO Cebu
of confirmation certificates, an indispensable requirement in the processing of documents for the registration of
In view of the foregoing circumstances, the Court finds the petitioner to be the true and lawful owner of the motor vehicle with the LTO.
mark "BIRKENSTOCK" and entitled to its registration, and that respondent was in bad faith in having it
registered in its name. In this regard, the Court quotes with approval the words of the IPO Director General,
viz.: Specifically, the private complainants accused Alingasa of selling the confirmation certificates, supposed to be
issued by the LTO free of charge. This scheme allegedly existed upon Mendoza's assumption in office as
Regional Director of LTO Cebu. They observed that:
The facts and evidence fail to show that [respondent] was in good faith in using and in registering the mark
BIRKENSTOCK. BIRKENSTOCK, obviously of German origin, is a highly distinct and arbitrary mark. It is very
remote that two persons did coin the same or identical marks. To come up with a highly distinct and (1) Confirmation certificates were sold for the amount of ₱2,500.00 per pad without official receipt;
uncommon mark previously appropriated by another, for use in the same line of business, and without any
plausible explanation, is incredible. The field from which a person may select a trademark is practically
unlimited. As in all other cases of colorable imitations, the unanswered riddle is why, of the millions of terms (2) Alingasa would usually remit the collections to Erederos who would, in turn, remit all the
and combinations of letters and designs available, [respondent] had to come up with a mark identical or so collections to Mendoza;6
closely similar to the [petitioner’s] if there was no intent to take advantage of the goodwill generated by the
[petitioner’s] mark. Being on the same line of business, it is highly probable that the [respondent] knew of the (3) The official receipt for the processing of the confirmation certificates issued to the private
existence of BIRKENSTOCK and its use by the [petitioner], before [respondent] appropriated the same mark complainants acknowledged only the amount of ₱40.00 which they paid for each engine, chassis
and had it registered in its name.46
or new vehicle, as MR. (Miscellaneous Receipt-LTO Form 67);

WHEREFORE, the petition is GRANTED. The Decision dated June 25, 2010 and Resolution dated October 27, (4) Said amount was separate and distinct from the ₱2,500.00 required to be paid for each pad;
2010 of the Court of Appeals in CA-G.R. SP No. 112278 are REVERSED and SET ASIDE. Accordingly, the
Decision dated December 22, 2009 of the IPO Director General is hereby REINSTATED.
(5) The official receipt also served as the basis for the individual stock/sales reports evaluation of
Erederos;7and
SO ORDERED.

(6) The confirmation certificates processed during the previous administration were no longer
G.R. Nos. 172532 172544-45 November 20, 2013
honored; thus, the private complainants were constrained to reprocess the same by purchasing
new ones.
PRIMO C. MIRO, in his capacity as Deputy Ombudsman for the Visayas, Petitioner,
vs.
The NBI/Progress report submitted to the LTO Manila also revealed that the confirmation certificates were
given to the representatives of car dealers, who were authorized to supply the needed data therein. In the
Requisition and Issue Voucher, it was Roque who received the forms. On August 19, 2002, Cantillas executed The Deputy Ombudsman believed the complainants allegations that Alingasa collected ₱2,500.00 for the
an Affidavit of Desi stance on the ground that he was no longer interested in prosecuting the case. issuance of confirmation certificates and, thereafter, remitted the collections to Erederos and to Mendoza. He
relied largely on the affidavits supporting the respondents guilt. He found the affidavits and the NBI/Progress
report strong enough to establish the respondents guilt. The Deputy Ombudsman also explained that while the
On September 25, 2002, the Deputy Ombudsman ordered the respondents to file their respective counter- distribution of confirmation certificates to authorized car dealers is not prohibited, the demand and the
affidavits. The respondents complied with the order and made the required submission. collection of payment during their distribution are anomalous.

On December 12, 2002, the case was called for preliminary conference. At the conference, the respondents, The respondents separately moved for reconsideration, but the Deputy Ombudsman denied their motions on
thru their counsels, manifested their intention to submit the case for decision on the basis of the evidence on March 5, 2004.9
record after the submission of their memoranda/position papers.

The respondents separately appealed to the CA to challenge the rulings against them.
In the interim, additional administrative and criminal complaints for the same charges were filed by Rova
Carmelotes (Liaison Officer of ZC Trading Center), Mildred Regidor (Liaison Officer of Grand Ace Commercial),
Estrella dela Cerna (Liaison Officer of JRK Automotive Supply), and Vevencia Pedroza (Liaison Officer of The CA’s Ruling
Winstar Motor Sales) against the respondents. These new complaints were consolidated with the complaints
already then pending.
On November 22, 2005, the CA granted the respondents petition and reversed the Deputy Ombudsman s joint
decision in the administrative aspect. The CA ruled that the Deputy Ombudsman s finding of grave misconduct
In their complaints, the new complainants commonly alleged that they had to pay ₱2,500.00 per pad to was not supported by substantial evidence because the affidavits, on which the decision was mainly anchored,
Alingasa before they could be issued confirmation certificates by the LTO Cebu. Alingasa would give her were not corroborated by any other documentary evidence. Additionally, the affiants did not appear during the
collections to Erederos and to Mendoza. When they protested, Erederos and Alingasa pointed to Mendoza as scheduled hearings. The CA also found that the affiants failed to categorically specify that the respondents
the source of the instructions. They were also told that the confirmation certificates processed during the personally demanded from them the payment of ₱2,500.00 -an allegation that the appellate court deemed
previous administration would no longer be honored under Mendoza s administration; hence, they had to buy material in establishing their personal knowledge. Without this allegation of personal knowledge, the CA held
new sets of confirmation certificates to process the registration of their motor vehicles with the LTO. that the statements in the affidavits were hearsay and, thus, should not be given any evidentiary weight. The
dispositive portion of the decision reads:

In his counter-affidavit, Mendoza vehemently denied the accusations. He alleged that the confirmation
certificates actual distribution and processing were assigned to Alingasa; the processing entails the payment WHEREFORE, in light of the foregoing premises, the consolidated petitions are GRANTED and accordingly
of ₱40.00 per confirmation certificate, as administrative fee; payment is only made when the confirmation the assailed Joint Decision dated January 9, 2004 (administrative aspect of the cases filed by the private
certificates are filled up and submitted for processing with the LTO, not upon issuance; and he did not give any respondents) is REVERSED and SET ASIDE.
instructions to impose additional fees for their distribution.

Consequently, the administrative charges against petitioners are DISMISSED for lack of merit.
He also alleged that the case against him was instigated by Assistant Secretary Roberto T. Lastimosa of the
LTO Head Office so that a certain Atty. Manuel I way could replace him as Regional Director of the L TO
Cebu.8 With respect to the assailed Joint Resolution also dated January 9, 2004 (criminal aspect) issued by the public
respondent, this Court has no jurisdiction to review the same.10

Mendoza additionally submitted the affidavits of desistance of Carmelotes and Dela Cerna. Carmelotes
testified that she has no evidence to support her allegations against Mendoza. Dela Cerna, on the other hand, The Deputy Ombudsman moved for the reconsideration of the decision, but the CA denied the motion in its
stated that she was merely told to sign a document which turned out to be an affidavit-complaint against the resolution of April 21, 2006. The denial led to the filing of the present petition.
respondents. Subsequently, however, Dela Cerna executed a second affidavit, retracting her previous
statements and narrating how she was threatened by Peque to sign an affidavit of desistance (1st affidavit).
The Petitioner’s Arguments

Erederos and Alingasa commonly contended that they did not collect, demand and receive any money from
The Deputy Ombudsman posits that the evidence adduced by the complainants satisfied the requisite
the complainants as payment for the confirmation certificates.
quantum of proof. He argues that the complainants personal knowledge can be gleaned from the preface of
their narration; hence, their affidavits could not have been hearsay. Their affidavits read:
Erederos stated that the case against her was initiated by Huete because she found several discrepancies in
the documents she had processed. According to her, the present case was Huete s ploy to avoid any liability.
3. That in doing my job, I have noticed and witnessed the following anomalies concerning the processing of
vehicle registration, x x x, as follows:
For their part, Alingasa stressed that her act of maintaining a control book for the releases of the confirmation
certificate pads negates her liability, while Peque denied any participation in the distribution and sale of the
a. That in order to secure the forms of Confirmation of Certificates, you have to buy the same at
confirmation certificates.
the present price of ₱2,500.00 per pad from Catalina Alingasa, an L TO personnel, who will remit
her collections to a certain Marilyn Mendoza Vda. de Erederos, a niece and the Secretary of the
On January 9, 2004, the Deputy Ombudsman rendered a joint decision on the administrative aspect of the Regional Director, Porferio Mendoza;
cases filed against the respondents, and a joint resolution on the criminal aspect of the cases.
b. That Confirmation Certificates processed during previous administration would not be honored
The Deputy Ombudsman s Ruling and under such situations, they would require that the same be reprocessed which means that we
have to buy and use the new forms supplied by the present administration.11

In its joint decision, the Deputy Ombudsman found Mendoza, Erederos and Alingasa guilty of grave
misconduct and imposed the penalty of dismissal from the service. Peque, on the other hand, was only found The Deputy Ombudsman also argues that his joint decision was not solely based on the complainants
guilty of simple misconduct and was meted the penalty of reprimand. affidavits since he also took into account the NBI/Progress report, which uncovered the alleged anomalies. He
posits that these pieces of evidence, taken together, more than satisfy the required quantum of proof to hold Before proceeding to the merits of the case, this Court deems it necessary to emphasize that a petition for
the respondents administratively liable for grave misconduct. review under Rule 45 is limited only to questions of law. Factual questions are not the proper subject of an
appeal by certiorari. This Court will not review facts, as it is not our function to analyze or weigh all over again
evidence already considered in the proceedings below. As held in Diokno v. Hon. Cacdac,16 a re-examination
The Case for the Respondents of factual findings is outside the province of a petition for review on certiorari to wit:

In their respective comments, the respondents separately argue that the complainants statements in their It is aphoristic that a re-examination of factual findings cannot be done through a petition for review on
affidavits lack material details and particulars, particularly on the time, the date, and the specific transactions. certiorari under Rule 45 of the Rules of Court because as earlier stated, this Court is not a trier of facts. xxx
The Supreme Court is not duty-bound to analyze and weigh again the evidence considered in the proceedings
below. This is already outside the province of the instant Petition for Certiorari.
They commonly alleged that the affidavits, which contained general averments, and the NBI/Progress report
that was based on the same affidavits, failed to meet the quantum of proof required to hold them
administratively liable. There is a question of law when the doubt or difference arises as to what the law is on a certain set of facts; a
question of fact, on the other hand, exists when the doubt or difference arises as to the truth or falsehood of
the alleged facts.17 Unless the case falls under any of the recognized exceptions, we are limited solely to the
For his part, Mendoza argues that since the affidavits failed to categorically state that the complainants
review of legal questions.18
personally witnessed the transfer of money from Alingasa to Erederos and eventually to him, his participation
in the anomalous scheme has not been sufficiently shown; hence, he should not have been found liable.
b. Rule 45 petition is limited to errors of the appellate court
The Issue
Furthermore, the "errors" which we may review in a petition for review on certiorari are those of the CA, and
not directly those of the trial court or the quasi-judicial agency, tribunal, or officer which rendered the decision
The case presents to us the issue of whether the CA committed a reversible error in dismissing the
in the first instance.19 It is imperative that we refrain from conducting further scrutiny of the findings of fact
administrative charge against the respondents.
made by trial courts, lest we convert this Court into a trier of facts. As held in Reman Recio v. Heirs of the
Spouses Agueda and Maria Altamirano etc. et al.20 our review is limited only to the errors of law committed by
The Court's Ruling the appellate court, to wit:

We deny the petition. The CA committed no reversible error in setting aside the findings and conclusions of Under Rule 45 of the Rules of Court, jurisdiction is generally limited to the review of errors of law committed by
the Deputy Ombudsman on the ground that they were not supported by substantial evidence. the appellate court. The Supreme Court is not obliged to review all over again the evidence which the parties
adduced in the court a quo. Of course, the general rule admits of exceptions, such as where the factual
findings of the CA and the trial court are conflicting or contradictory.
Doctrine of conclusiveness of administrative findings of fact is not absolute

In Montemayor v. Bundalian,21 this Court laid down the guidelines for the judicial review of decisions rendered
It is well settled that findings of fact by the Office of the Ombudsman are conclusive when supported by by administrative agencies in the exercise of their quasi-judicial powers, as follows:
substantial evidence.12 Their factual findings are generally accorded with great weight and respect, if not
finality by the courts, by reason of their special knowledge and expertise over matters falling under their
jurisdiction. First, the burden is on the complainant to prove by substantial evidence the allegations in his complaint.
Substantial evidence is more than a mere scintilla of evidence. It means such relevant evidence as a
reasonable mind might accept as adequate to support a conclusion, even if other minds equally reasonable
This rule was reiterated in Cabalit v. Commission on Audit-Region VII,13 where we held that: When the findings might conceivably opine otherwise. Second, in reviewing administrative decisions of the executive branch of
of fact of the Ombudsman are supported by substantial evidence, it should be considered as conclusive. This the government, the findings of facts made therein are to be respected so long as they are supported by
Court recognizes the expertise and independence of the Ombudsman and will avoid interfering with its substantial evidence. Hence, it is not for the reviewing court to weigh the conflicting evidence, determine the
findings absent a finding of grave abuse of discretion. Hence, being supported by substantial evidence, we credibility of witnesses, or otherwise substitute its judgment for that of the administrative agency with respect
find no reason to disturb the factual findings of the Ombudsman which are affirmed by the CA. to the sufficiency of evidence.

This rule on conclusiveness of factual findings, however, is not an absolute one. Despite the respect given to Third, administrative decisions in matters within the executive jurisdiction can only be set aside on proof of
administrative findings of fact, the CA may resolve factual issues, review and re-evaluate the evidence on gross abuse of discretion, fraud, or error of law. These principles negate the power of the reviewing court to
record and reverse the administrative agency s findings if not supported by substantial evidence. Thus, when re-examine the sufficiency of the evidence in an administrative case as if originally instituted therein, and do
the findings of fact by the administrative or quasi-judicial agencies (like the Office of the Ombudsman/Deputy not authorize the court to receive additional evidence that was not submitted to the administrative agency
Ombudsman) are not adequately supported by substantial evidence, they shall not be binding upon the concerned. [emphases ours]
courts.14

The present petition directly raises, as issue, the propriety of the CA s reversal of the Deputy Ombudsman s
In the present case, the CA found no substantial evidence to support the conclusion that the respondents are decision that found the respondents guilty of grave misconduct. While this issue may be one of law, its
guilty of the administrative charges against them. Mere allegation and speculation is not evidence, and is not resolution also requires us to resolve the underlying issue of whether or not substantial evidence exists to hold
equivalent to proof.15 Since the Deputy Ombudsman’s findings were found wanting by the CA of substantial the respondents liable for the charge of grave misconduct. The latter question is one of fact, but a review is
evidence, the same shall not bind this Court. warranted considering the conflicting findings of fact of the Deputy Ombudsman and of the CA. Accordingly,
we now focus on and assess the findings of fact of the Deputy Ombudsman and of the CA for their merits.
Parameters of a judicial review under a Rule 45 petition
The Deputy Ombudsman’s appreciation of evidence
a. Rule 45 petition is limited to questions of law
The Deputy Ombudsman found the respondents guilty of grave misconduct based on the affidavits submitted The records show that not one of the complainants actually witnessed the transfer of money from Alingasa to
by the complainants and the NBI/Progress report. In giving credence to the affidavits, the Deputy Ombudsman Erederos and Mendoza. Nowhere in their affidavits did they specifically allege that they saw Alingasa remit the
ruled that the complainants have amply established their accusations by substantial evidence. collections to Erederos. In fact, there is no specific allegation that they saw or witnessed Erederos or Mendoza
receive money. That the complainants alleged in the preface of their affidavits that they "noticed and
witnessed" the anomalous act complained of does not take their statements out of the coverage of the hearsay
The CA’s appreciation of evidence evidence rule. Their testimonies are still "evidence not of what the witness knows himself but of what he has
heard from others."29 Mere uncorroborated hearsay or rumor does not constitute substantial evidence.30
The CA, on the other hand, reversed the Deputy Ombudsman s findings and ruled that no substantial
evidence exists to support the latter’s decision as the affidavits upon which said decision was based are The affidavits also show that the complainants did not allege any specific act of the respondents. All that the
hearsay evidence. It found that the affidavits lack the important element of personal knowledge and were not affidavits allege is a description of the allegedly anomalous scheme and the arrangement whereby payments
supported by corroborating evidence. were to be made to Alingasa. There is no averment relating to any "personal demand" for the amount of
₱2,500.00.
We agree with the CA. The findings of fact of the Deputy Ombudsman are not supported by substantial
evidence on record. Based on these considerations, we cannot conclude that the complainants have personal knowledge of
Erederos' and Mendoza's participation in the anomalous act. At most, their personal knowledge only extends
to the acts of Alingasa who is the recipient of all payments for the processing of confirmation certificates. This
Substantial evidence, quantum of proof in administrative cases
situation, however, is affected by the complainants' failure to specify Alingasa's act of personally demanding
₱2,500.00 -a crucial element in determining her guilt or innocence of the grave misconduct charged.
Substantial evidence is defined as such amount of relevant evidence which a reasonable mind might accept
as adequate to support a conclusion. It is more than a mere scintilla of evidence.22 The standard of substantial
With respect to Pedroza's allegation in her affidavit31 that Alingasa and Erederos categorically told them that it
evidence is satisfied when there is reasonable ground to believe, based on the evidence submitted, that the
was Mendoza who instructed them to collect the ₱2,500.00 for the confirmation certificates, we once again
respondent is responsible for the misconduct complained of. It need not be overwhelming or preponderant, as
draw a distinction between utterances or testimonies that are merely hearsay in character or "non-hearsay,"
is required in an ordinary civil case,23 or evidence beyond reasonable doubt, as is required in criminal cases,
and those that are considered as legal hearsay.
but the evidence must be enough for a reasonable mind to support a conclusion.

Non-hearsay v. legal hearsay, distinction


Section 27 of The Ombudsman Act of 198924 provides that:

To the former belongs the fact that utterances or statements were made; this class of extrajudicial utterances
Findings of fact by the Officer of the Ombudsman when supported by substantial evidence are conclusive. Any
or statements is offered not s an assertion to prove the truth of the matter asserted, but only as to the fact of
order, directive or decision imposing the penalty of public censure or reprimand, suspension of not more than
the utterance made. The latter class, on the other hand, consists of the truth of the facts asserted in the
one (1) month's salary shall be final and unappealable. [emphasis ours]
statement; this kind pertains to extrajudicial utterances and statements that are offered as evidence of the
truth of the fact asserted.
The only pieces of evidence presented by the complainants to establish the respondents' guilt of the act
charged are: (1) their complaint-affidavits and the (2) NBl/Progress report. As correctly found by the CA, these
The difference between these two classes of utterances lies in the applicability of the rule on exclusion of
pieces of evidence do not meet the quantum of proof required in administrative cases.
hearsay evidence. The first class, i.e. the fact that the statement was made, is not covered by the hearsay rule,
while the second class, i.e. the truth of the facts asserted in the statement, is covered by the hearsay rule.
The Evidence Against Mendoza, Erederos and Alingasa Pedroza's allegation belongs to the first class; hence, it is inadmissible to prove the truth of the facts asserted
in the statement. The following discussion, made m Patula v. People of the Philippines32 is particularly
instructive:
i. Private complainants affidavits

Moreover, the theory of the hearsay rule is that when a human utterance is offered as evidence of the truth of
The affidavits show that the complainants lack personal knowledge of the participation of Mendoza and the fact asserted, the credit of the assertor becomes the basis of inference, and, therefore, the assertion can
Erederos in the allegedly anomalous act. These affidavits indicate that the complainants have commonly be received s evidence only when made on the witness stand, subject to the test of cross-examination.
noticed and witnessed the anomalous sale transaction concerning the confirmation certificates. Without going However, if an extrajudicial utterance is offered, not as an assertion to prove the matter asserted but without
into details, they uniformly allege that to secure the confirmation certificates, an amount of ₱2,500.00 would be reference to the truth of the matter asserted, the hearsay rule does not apply. For example, in a slander case,
paid to Alingasa, an L TO personnel, "who will remit her collections to a certain Marilyn Mendoza vda. if a prosecution witness testifies that he heard the accused say that the complainant was a thief, this testimony
Erederos, a niece and the Secretary of the Regional Director, Porferio Mendoza."25 While the payment to is admissible not to prove that the complainant was really a thief, but merely to show that the accused uttered
Alingasa might be considered based on personal knowledge, the alleged remittance to Erederos and Mendoza those words. This kind of utterance is hearsay in character but is not legal hearsay. The distinction is,
-on its face - is hearsay. therefore, between (a) the fact that the statement was made, to which the hearsay rule does not apply, and (b)
the truth of the facts asserted in the statement, to which the hearsay rule applies. [citations omitted]
Any evidence, whether oral or documentary, is hearsay if its probative value is not based on the personal
knowledge of he witness Failure to identify the affidavits renders them inadmissible under the hearsay evidence rule

It is a basic rule in evidence that a witness can testify only on the facts that he knows of his own Rersonal We additionally note that the affidavits were never identified by the complainants. All the allegations contained
knowledge, i.e. those which are derived from his own perception.26 A witness may not testify on what he therein were likewise uncorroborated by evidence, other than the NBI/Progress report.
merely learned, read or heard from others because such testimony is considered hearsay and may not be
received as proof of the truth of what he has learned, read or heard.27 Hearsay evidence is evidence, not of
what the witness knows himself but, of what he has heard from others; it is not only limited to oral testimony or In Tapiador v. Office of the Ombudsman,33 we had the occasion to rule on the implications of the affiants'
statements but likewise applies to written statements, such as affidavits.28 failure to appear during the preliminary investigation and to identify their respective sworn statements, to wit:
Notably, the instant administrative complaint was resolved by the Ombudsman merely on the basis of the There are three requisites for admissibility under the rule just mentioned: (a) that the entry was made by a
evidence extant in the record of OMB-ADM-0-94-0983. The preliminary conference required under Republic public officer, or by another person specially enjoined by law to do so; (b) that it was made by the public officer
Act No. 6770 was dispensed with after the nominal complainant, then BID Resident Ombudsman Ronaldo P. in the performance of his duties, or by such other person in the performance of a duty specially enjoined by
Ledesma, manifested on July 29, 1996 that he was submitting the case for resolution on the basis of the law; and (c) that the public officer or other person had sufficient knowledge of the facts by him stated, which
documents on record while the petitioner agreed to simply file his memorandum. Consequently, the only basis must have been acquired by him personally or through official information. (Moran, Comments on the Rules of
for the questioned resolution of the Ombudsman dismissing the petitioner from the government service was Court, Vol. 3 [1957] p. 383.)
the unverified complaint-affidavit of Walter H. Beck and that of his alleged witness, Purisima Terencio.

Of the three requisites just stated, only the last need be considered here. Obviously the material facts recited
A thorough review of the records, however, showed that the subject affidavits of Beck and Terencio were not in the reports as to the cause and circumstances of the fire were not within the personal knowledge of the
even identified by the respective affiants during the fact-finding investigation conducted by the BID Resident officers who conducted the investigation. Was knowledge of such facts, however, acquired by them through
Ombudsman at the BID office in Manila. Neither did they appear during the preliminary investigation to identify official information? xxx.
their respective sworn statements despite prior notice before the investigating officer who subsequently
dismissed the criminal aspect of the case upon finding that the charge against the petitioner "was not
supported by any evidence." Hence, Beck's affidavit is hearsay and inadmissible in evidence. On this basis The reports in question do not constitute an exception to the hearsay rule; the facts stated therein were not
alone, the Administrative Adjudication Bureau of the Office of the Ombudsman should have dismissed the acquired by the reporting officers through official information, not having been given by the informants
administrative complaint against the petitioner in the first instance. (emphasis supplied) pursuant to any duty to do so. [emphases ours]

For the affiants' failure to identify their sworn statements, and considering the seriousness of the charges filed, The NBI/Progress report, having been submitted by the officials in the performance of their duties not on the
their affidavits must not be accepted at face value and should be treated as inadmissible under the hearsay basis of their own personal observation of the facts reported but merely on the basis of the complainants
evidence rule. affidavits, is hearsay. Thus, the Deputy Ombudsman cannot rely on it.

ii. NBI/Progress report Non-applicability of strict technical rules of procedure in administrative or quasi-judicial bodies is not a license
to disregard certain fundamental evidentiary rules

With regard to the NBI/Progress report submitted by the complainants as corroborating evidence, the same
should not be given any weight. Contrary to the Ombudsman's assertions, the report cannot help its case While administrative or quasi-judicial bodies, such as the Office of the Ombudsman, are not bound by the
under the circumstances of this case as it is insufficient to serve as substantial basis. The pertinent portion of technical rules of procedure, this rule cannot be taken as a license to disregard fundamental evidentiary rules;
this report reads: the decision of the administrative agencies and the evidence it relies upon must, at the very least, be
substantial. that:

04. P/Sinsp. JESUS KABIGTING and Senior TRO ALFONSO ALIANZA visited JAGNA District Office at Jagna,
Bohol wherein they were able to conduct interview with MR. RODOLFO SANTOS, Officer-In-Charge who has In Lepanto Consolidated Mining Company v. Dumapis,36 we ruled that:
assumed his new post only in February 2002. During the conduct of the interview, Mr. SANTOS revealed that
the anomalous Dos-por-Dos transactions have been prevented and eliminated when the previous District
While it is true that administrative or quasi-judicial bodies like the NLRC are not bound by the technical rules of
Manager in the person of Mr. LEONARDO G. OLAIVAR, who was transferred to Tagbilaran District Office
procedure in the adjudication of cases, this procedural rule should not be construed as a license to disregard
allegedly on a floating status and under the direct control and supervision of its District Manager, Mr. GA VINO
certain fundamental evidentiary rules. The evidence presented must at least have a modicum of admissibility
PADEN, Mr. SANTOS allegations of the existence of "Dos-por-Dos" transactions were supported by the
for it to have probative value. Not only must there be some evidence to support a finding or conclusion, but the
records/documents gathered of which the signatures of Mr. OLAIVAR affixed thereof. Copies are hereto
evidence must be substantial. Substantial evidence is more than a mere scintilla. It means such relevant
attached marked as Annexes D-D-6.
evidence as a reasonable mind might accept as adequate to support a conclusion.

xxxx
Conclusion

06. Submitted Affidavits of Ms. MARICAR G. HUETE, a resident of Lahug, Cebu City and liaison Officer of
With a portion of the complainants affidavits and the NBI/Progress report being hearsay evidence, the only
GCY Parts, Kabancalan Mandaue City and Mr. ERNESTO R. CARTILLAS a resident of Basak, Mandaue City
question that remains is whether the respondents conduct, based on the evidence on record, amounted to
and liaison Officer of Isuzu Cebu, Inc. in Jagobiao, Mandaue City stated among others and both attested that:
grave misconduct, warranting their dismissal in office.
Annexes "E-E-1."

Misconduct is a transgression of some established and definite rule of action, more particularly, unlawful
In order to secure the forms of Confirmation of Certificates, you have to buy the same at the present cost of
behavior or gross negligence by a public officer.37 The misconduct is considered as grave if it involves
₱2,500.00 per pad from CATALINA ALINGASA, an LTO Personnel, who will remit her collections to a certain
additional elements such as corruption or willful intent to violate the law or to disregard established rules,
MARILYN MENDOZA V da De EREDEROS, a niece and secretary of the Regional Director, PORFERIO
which must be proven by substantial evidence; otherwise, the misconduct is only simple. Corruption, as an
MENDOZA.34
element of grave misconduct, consists in the act of an official or fiduciary person who unlawfully and
wrongfully uses his station or character to procure some benefit for himself or for another person, contrary to
This quoted portion shows that it was based on complainant Huete's and Cantillas' affidavits. It constitutes duty and the rights of others.38
double hearsay because the material facts recited were not within the personal knowledge of the officers who
conducted the investigation. As held in Africa, et al. v. Caltex Phil.) Inc., et al.,35 reports of investigations made
Based on these rulings, the Deputy Ombudsman failed to establish the elements of grave
by law enforcement officers or other public officials are hearsay unless they fall within the scope of Section 44,
misconduct.1âwphi1 To reiterate, no substantial evidence exists to show that Erederos and Mendoza received
Rule 130 of the Rules of Court, to wit: The first question before Us refers to the admissibility of certain reports
collected payments from Alingasa Their involvement or complicity in the allegedly anomalous scheme cannot
on the fire prepared by the Manila Police and Fire Departments and by a certain Captain Tinio of the Armed
be justified under the affidavits of the complainants and the NBI/Progress report, which are both hearsay.
Forces of the Philippines. xxx.

xxxx
With respect to Alingasa, in view of the lack of substantial evidence showing that she personally demanded challenging the Court's jurisdiction; and (5) there is no certainty that the law on capital punishment will not be
the payment of ₱2,500.00 – a crucial factor in the wrongdoing alleged – we find that the elements of repealed or modified until Congress convenes and considers all the various resolutions and bills filed before it.
misconduct, simple or grave, to be wanting and unproven.
Prefatorily, the Court likes to emphasize that the instant motions concern matters that are not incidents
in G.R. No. 117472, where the death penalty was imposed on petitioner on automatic review of his conviction
WHEREFORE, in view of the foregoing, we hereby AFFIRM the assailed decision dated November 22, 2005 by this Court. The instant motions were filed in this case, G.R. No. 132601, where the constitutionality of R.A.
and the resolution dated April 21, 2006 of the Court of Appeals in CA-G.R. SP Nos. 83149, 83150 and 83576. No. 8177 (Lethal Injection Law) and its implementing rules and regulations was assailed by petitioner. For this
reason, the Court in its Resolution of January 4, 1999 merely noted the Motion to Set Aside of Rodessa
"Baby" R. Echegaray dated January 7, 1999 and Entry of Appearance of her counsel dated January 5, 1999.
SO ORDERED.
Clearly, she has no legal standing to intervene in the case at bar, let alone the fact that the interest of the
State is properly represented by the Solicitor General.
LEO ECHEGARAY, petitioner, vs. SECRETARY OF JUSTICE, ET AL., respondents.
We shall now resolve the basic issues raised by the public respondents.

RESOLUTION I

PUNO, J.: First. We do not agree with the sweeping submission of the public respondents that this Court lost its
jurisdiction over the case at bar and hence can no longer restrain the execution of the petitioner. Obviously,
public respondents are invoking the rule that final judgments can no longer be altered in accord with the
For resolution are public respondents' Urgent Motion for Reconsideration of the Resolution of this Court principle that "it is just as important that there should be a place to end as there should be a place to begin
dated January 4, 1999 temporarily restraining the execution of petitioner and Supplemental Motion to Urgent litigation."[1] To start with, the Court is not changing even a comma of its final Decision. It is appropriate to
Motion for Reconsideration. It is the submission of public respondents that: examine with precision the metes and bounds of the Decision of this Court that became final. These metes
and bounds are clearly spelled out in the Entry of Judgment in this case, viz:

"(1) The Decision in this case having become final and executory, its execution enters the exclusive ambit of
authority of the executive authority. The issuance of the TRO may be construed as trenching on that sphere of "ENTRY OF JUDGMENT
executive authority;
This is to certify that on October 12, 1998 a decision rendered in the above-entitled case was filed in this
(2) The issuance of the temporary restraining order x x x creates dangerous precedent as there will never be Office, the dispositive part of which reads as follows:
an end to litigation because there is always a possibility that Congress may repeal a law.
`WHEREFORE, the petition is DENIED insofar as petitioner seeks to declare the assailed statute (Republic
(3) Congress had earlier deliberated extensively on the death penalty bill. To be certain, whatever question Act No. 8177) as unconstitutional; but GRANTED insofar as Sections 17 and 19 of the Rules and Regulations
may now be raised on the Death Penalty Law before the present Congress within the 6-month period given by to Implement Republic Act No. 8177 are concerned, which are hereby declared INVALID because (a) Section
this Honorable Court had in all probability been fully debated upon x x x. 17 contravenes Article 83 of the Revised Penal Code, as amended by Section 25 of Republic Act No. 7659;
and (b) Section 19 fails to provide for review and approval of the Lethal Injection Manual by the Secretary of
Justice, and unjustifiably makes the manual confidential, hence unavailable to interested parties including the
(4) Under the time honored maxim lex futuro, judex praeterito, the law looks forward while the judge looks at accused/convict and counsel. Respondents are hereby enjoined from enforcing and implementing Republic
the past, x x x the Honorable Court in issuing the TRO has transcended its power of judicial review. Act No. 8177 until the aforesaid Sections 17 and 19 of the Rules and Regulations to Implement Republic Act
No. 8177 are appropriately amended, revised and/or corrected in accordance with this Decision.
(5) At this moment, certain circumstances/supervening events transpired to the effect that the repeal or
modification of the law imposing death penalty has become nil, to wit: SO ORDERED.'

a. The public pronouncement of President Estrada that he will veto any law imposing the death and that the same has, on November 6, 1998 become final and executory and is hereby recorded in the Book
penalty involving heinous crimes. of Entries of Judgment.

b. The resolution of Congressman Golez, et al., that they are against the repeal of the law; Manila, Philippines.

c. The fact that Senator Roco's resolution to repeal the law only bears his signature and that of Clerk of Court
Senator Pimentel."

By: (SGD) TERESITA G.


In their Supplemental Motion to Urgent Motion for Reconsideration, public respondents attached a copy of DIMAISIP
House Resolution No. 629 introduced by Congressman Golez entitled "Resolution expressing the sense of the Acting Chief
House of Representative to reject any move to review Republic Act No. 7659 which provided for the re- Judicial Records
imposition of death penalty, notifying the Senate, the Judiciary and the Executive Department of the position of Office"
the House of Representatives on this matter, and urging the President to exhaust all means under the law to
immediately implement the death penalty law." The Resolution was concurred in by one hundred thirteen (113)
congressmen. The records will show that before the Entry of Judgment, the Secretary of Justice, the Honorable Serafin
Cuevas, filed with this Court on October 21, 1998 a Compliance where he submitted the Amended Rules and
In their Consolidated Comment, petitioner contends: (1) the stay order x x x is within the scope of Regulations implementing R.A. No. 8177 in compliance with our Decision. On October 28, 1998, Secretary
judicial power and duty and does not trench on executive powers nor on congressional prerogatives; (2) the Cuevas submitted a Manifestation informing the Court that he has caused the publication of the said Amended
exercise by this Court of its power to stay execution was reasonable; (3) the Court did not lose jurisdiction to Rules and Regulations as required by the Administrative Code. It is crystalline that the Decision of this
address incidental matters involved or arising from the petition; (4) public respondents are estopped from Court that became final and unalterable mandated: (1) that R.A. No. 8177 is not unconstitutional; (2) that
sections 17 and 19 of the Rules and Regulations to Implement R.A. No. 8177 are invalid, and (3) R.A. petitioner. The Court, contrary to popular misimpression, did not restrain the effectivity of a law enacted by
No. 8177 cannot be enforced and implemented until sections 17 and 19 of the Rules and Regulations to Congress.
Implement R.A. No. 8177 are amended. It is also daylight clear that this Decision was not altered a whit by
this Court. Contrary to the submission of the Solicitor General, the rule on finality of judgment cannot The more disquieting dimension of the submission of the public respondents that this Court has
divest this Court of its jurisdiction to execute and enforce the same judgment.Retired Justice Camilo no jurisdiction to restrain the execution of petitioner is that it can diminish the independence of the
Quiason synthesized the well established jurisprudence on this issue as follows:[2] judiciary. Since the implant of republicanism in our soil, our courts have been conceded the jurisdiction to
enforce their final decisions. In accord with this unquestioned jurisdiction, this Court promulgated rules
xxx concerning pleading, practice and procedure which, among others, spelled out the rules on execution of
judgments. These rules are all predicated on the assumption that courts have the inherent,
necessary and incidental power to control and supervise the process of execution of their
"the finality of a judgment does not mean that the Court has lost all its powers nor the case. By the decisions. Rule 39 governs execution, satisfaction and effects of judgments in civil cases. Rule 120 governs
finality of the judgment, what the court loses is its jurisdiction to amend, modify or alter the same. Even after judgments in criminal cases. It should be stressed that the power to promulgate rules of pleading,
the judgment has become final the court retains its jurisdiction to execute and enforce it.[3] There is a practice and procedure was granted by our Constitutions to this Court to enhance its
difference between the jurisdiction of the court to execute its judgment and its jurisdiction to amend, independence, for in the words of Justice Isagani Cruz "without independence and integrity, courts will lose
modify or alter the same. The former continues even after the judgment has become final for the that popular trust so essential to the maintenance of their vigor as champions of justice." [9] Hence, our
purpose of enforcement of judgment; the latter terminates when the judgment becomes final.[4] x x x Constitutions continuously vested this power to this Court for it enhances its independence. Under
For after the judgment has become final facts and circumstances may transpire which can render the the 1935 Constitution, the power of this Court to promulgate rules concerning pleading, practice and
execution unjust or impossible.[5] procedure was granted but it appeared to be co-existent with legislative power for it was subject to the
power of Congress to repeal, alter or supplement. Thus, its Section 13, Article VIII provides:
In truth, the argument of the Solicitor General has long been rejected by this Court. As aptly pointed
out by the petitioner, as early as 1915, this Court has unequivocably ruled in the case of Director of Prisons "Sec. 13. The Supreme Court shall have the power to promulgate rules concerning pleading, practice and
v. Judge of First Instance,[6] viz: procedure in all courts, and the admission to the practice of law. Said rules shall be uniform for all courts of the
same grade and shall not diminish, increase, or modify substantive rights. The existing laws on pleading,
practice and procedure are hereby repealed as statutes, and are declared Rules of Court, subject to the power
"This Supreme Court has repeatedly declared in various decisions, which constitute jurisprudence on the
of the Supreme Court to alter and modify the same. The Congress shall have the power to repeal, alter or
subject, that in criminal cases, after the sentence has been pronounced and the period for reopening the same
supplement the rules concerning pleading, practice and procedure, and the admission to the practice
has elapsed, the court cannot change or alter its judgment, as its jurisdiction has terminated . . . When in
of law in the Philippines."
cases of appeal or review the cause has been returned thereto for execution, in the event that the judgment
has been affirmed, it performs a ministerial duty in issuing the proper order. But it does not follow from this
cessation of functions on the part of the court with reference to the ending of the cause that the The said power of Congress, however, is not as absolute as it may appear on its surface. In In re
judicial authority terminates by having then passed completely to the Executive. The particulars of the Cunanan[10] Congress in the exercise of its power to amend rules of the Supreme Court regarding admission
execution itself, which are certainly not always included in the judgment and writ of execution, in any event are to the practice of law, enacted the Bar Flunkers Act of 1953[11] which considered as a passing grade, the
absolutely under the control of the judicial authority, while the executive has no power over the person of the average of 70% in the bar examinations after July 4, 1946 up to August 1951 and 71% in the 1952 bar
convict except to provide for carrying out of the penalty and to pardon. examinations. This Court struck down the law as unconstitutional. In his ponencia, Mr. Justice Diokno
held that "x x x the disputed law is not a legislation; it is a judgment - a judgment promulgated by this Court
during the aforecited years affecting the bar candidates concerned; and although this Court certainly can
Getting down to the solution of the question in the case at bar, which is that of execution of a capital
revoke these judgments even now, for justifiable reasons, it is no less certain that only this Court, and not the
sentence, it must be accepted as a hypothesis that postponement of the date can be requested. There
legislative nor executive department, that may do so. Any attempt on the part of these departments would be a
can be no dispute on this point. It is a well-known principle that notwithstanding the order of execution
clear usurpation of its function, as is the case with the law in question." [12] The venerable jurist further ruled: "It
and the executory nature thereof on the date set or at the proper time, the date therefor can be
is obvious, therefore, that the ultimate power to grant license for the practice of law belongs exclusively to this
postponed, even in sentences of death. Under the common law this postponement can be ordered in three
Court, and the law passed by Congress on the matter is of permissive character, or as other authorities say,
ways: (1) By command of the King; (2) by discretion (arbitrio) of the court; and (3) by mandate of the law. It is
merely to fix the minimum conditions for the license." By its ruling, this Court qualified the absolutist tone
sufficient to state this principle of the common law to render impossible that assertion in absolute terms that
of the power of Congress to "repeal, alter or supplement the rules concerning pleading, practice and
after the convict has once been placed in jail the trial court can not reopen the case to investigate the facts
procedure, and the admission to the practice of law in the Philippines.
that show the need for postponement. If one of the ways is by direction of the court, it is acknowledged
that even after the date of the execution has been fixed, and notwithstanding the general rule that after The ruling of this Court in In re Cunanan was not changed by the 1973 Constitution. For the 1973
the (court) has performed its ministerial duty of ordering the execution . . . and its part is ended, if Constitution reiteratedthe power of this Court "to promulgate rules concerning pleading, practice and
however a circumstance arises that ought to delay the execution, and there is an imperative duty to procedure in all courts, x x x which, however, may be repealed, altered or supplemented by the Batasang
investigate the emergency and to order a postponement. Then the question arises as to whom the
Pambansa x x x." More completely, Section 5(2)5 of its Article X provided:
application for postponing the execution ought to be addressed while the circumstances is under investigation
and as to who has jurisdiction to make the investigation." xxxxxxxxx

The power to control the execution of its decision is an essential aspect of jurisdiction. It cannot be the "Sec. 5. The Supreme Court shall have the following powers.
subject of substantial subtraction for our Constitution[7] vests the entirety of judicial power in one Supreme
Court and in such lower courts as may be estabished by law. To be sure, the most important part of a
litigation, whether civil or criminal, is the process of execution of decisions where supervening events xxxxxxxxx
may change the circumstance of the parties and compel courts to intervene and adjust the rights of
the litigants to prevent unfairness. It is because of these unforseen, supervening contingencies that
courts have been conceded the inherent and necessary power of control of its processes and orders (5) Promulgate rules concerning pleading, practice, and procedure in all courts, the admission to the practice
to make them conformable to law and justice.[8] For this purpose, Section 6 of Rule 135 provides that of law, and the integration of the Bar, which, however, may be repealed, altered, or supplemented by the
"when by law jurisdiction is conferred on a court or judicial officer, all auxiliary writs, processes and other Batasang Pambansa. Such rules shall provide a simplified and inexpensive procedure for the speedy
means necessary to carry it into effect may be employed by such court or officer and if the procedure to be disposition of cases, shall be uniform for all courts of the same grade, and shall not diminish, increase, or
followed in the exercise of such jurisdiction is not specifically pointed out by law or by these rules, modify substantive rights."
any suitable process or mode of proceeding may be adopted which appears conformable to the spirit
of said law or rules." It bears repeating that what the Court restrained temporarily is the execution of its own
Decision to give itreasonble time to check its fairness in light of supervening events in Congress as alleged by
Well worth noting is that the 1973 Constitution further strengthened the independence of the work to the prejudice of the convict and defeat the purpose of the Constitution and the applicable statute as
judiciary by giving to it theadditional power to promulgate rules governing the integration of the Bar.[13] when the date of execution set by the President would be earlier than that designated by the court.

The 1987 Constitution molded an even stronger and more independent judiciary. Among others, it
enhanced the rule making power of this Court. Its Section 5(5), Article VIII provides: 8. Moreover, the deliberate non-disclosure of information about the date of execution to herein respondent and
the public violates Section 7, Article III (Bill of Rights) and Section 28, Article II (Declaration of Principles and
xxxxxxxxx State Policies) of the 1987 Philippine Constitution which read:

"Section 5. The Supreme Court shall have the following powers: SEC. 7. The right of the people to information on matters of public concern shall be recognized. Access to
official records, and to documents and papers pertaining to official acts, transactions, or decisions, as well as
to government research data used as basis for policy development, shall be afforded the citizen, subject to
xxxxxxxxx such limitations as may be provided by law.

(5) Promulgate rules concerning the protection and enforcement of constitutional rights, pleading, SEC. 28. Subject to reasonable conditions prescribed by law, the State adopts and implements a policy of full
practice and procedure in all courts, the admission to the practice of law, the Integrated Bar, and legal public disclosure of all its transactions involving public interest.
assistance to the underprivileged. Such rules shall provide a simplified and inexpensive procedure for the
speedy disposition of cases, shall be uniform for all courts of the same grade, and shall not diminish, increase,
or modify substantive rights. Rules of procedure of special courts and quasi-judicial bodies shall remain 9. The `right to information' provision is self-executing. It supplies 'the rules by means of which the right to
effective unless disapproved by the Supreme Court." information may be enjoyed (Cooley, A Treatise on the Constitutional Limitations, 167 [1972]) by guaranteeing
the right and mandating the duty to afford access to sources of information. Hence, the fundamental right
therein recognized may be asserted by the people upon the ratification of the Constitution without need for any
The rule making power of this Court was expanded. This Court for the first time was given the ancillary act of the Legislature (Id., at p. 165) What may be provided for by the Legislature are reasonable
power to promulgate rules concerning the protection and enforcement of constitutional rights. The Court was conditions and limitations upon the access to be afforded which must, of necessity, be consistent with the
also granted for the first time the power to disapprove rules of procedure of special courts and quasi-judicial declared State policy of full public disclosure of all transactions involving public interest (Constitution, Art. II,
bodies. But most importantly, the 1987 Constitution took away the power of Congress to repeal, alter, Sec. 28).However, it cannot be overemphasized that whatever limitation may be prescribed by the Legislature,
or supplement rules concerning pleading, practice and procedure. In fine, the power to promulgate rules the right and the duty under Art. III, Sec. 7 have become operative and enforceable by virtue of the adoption of
of pleading, practice and procedure is no longer shared by this Court with Congress, more so with the the New Charter." (Decision of the Supreme Court En Banc in Legaspi v. Civil Service Commission, 150
Executive. If the manifest intent of the 1987 Constitution is to strengthen the independence of the judiciary, it is SCRA 530, 534-535 [1987]."
inutile to urge, as public respondents do, that this Court has no jurisdiction to control the process of execution
of its decisions, a power conceded to it and which it has exercised since time immemorial.
The same motion to compel Judge Ponferrada to reveal the date of execution of petitioner Echegaray
To be sure, it is too late in the day for public respondents to assail the jurisdiction of this Court was filed by his counsel, Atty. Theodore Te, on December 7, 1998. He invoked his client's right to due process
to control and supervise the implementation of its decision in the case at bar. As aforestated, our Decision and the public's right to information. The Solicitor General, as counsel for public respondents, did not
became final and executory on November 6, 1998.The records reveal that after November 6, 1998, or on oppose petitioner's motion on the ground that this Court has no more jurisdiction over the process of
December 8, 1998, no less than the Secretary of Justice recognized the jurisdiction of this Court by execution of Echegaray. This Court granted the relief prayed for by the Secretary of Justice and by the
filing a Manifestation and Urgent Motion to compel the trial judge, the Honorable Thelma A. Ponferrada, RTC, counsel of the petitioner in its Resolution of December 15, 1998. There was not a whimper of protest from the
Br. 104, Quezon City to provide him "x x x a certified true copy of the Warrant of Execution dated November public respondents and they are now estopped from contending that this Court has lost its jurisdiction to grant
17, 1998 bearing the designated execution day of death convict Leo Echegaray and allow (him) to reveal or said relief. The jurisdiction of this Court does not depend on the convenience of litigants.
announce the contents thereof, particularly the execution date fixed by such trial court to the public when
requested." The relevant portions of the Manifestation and Urgent Motion filed by the Secretary of II
Justice beseeching this Court "to provide the appropriate relief" state:
Second. We likewise reject the public respondents' contention that the "decision in this case having
xxxxxxxxx become final and executory, its execution enters the exclusive ambit of authority of the executive
department x x x. By granting the TRO, the Honorable Court has in effect granted reprieve which is an
executive function."[14] Public respondents cite as their authorityfor this proposition, Section 19, Article VII of
5. Instead of filing a comment on Judge Ponferrada's Manifestation however, herein respondent is submitting the Constitution which reads:
the instant Manifestation and Motion (a) to stress, inter alia, that the non-disclosure of the date of execution
deprives herein respondent of vital information necessary for the exercise of his statutory powers, as well as
renders nugatory the constitutional guarantee that recognizes the people's right to information of public "Except in cases of impeachment, or as otherwise provided in this Constitution, the President may grant
concern, and (b) to ask this Honorable Court to provide the appropriate relief. reprieves, commutations, and pardons, and remit fines and forfeitures after conviction by final judgment. He
shall also have the power to grant amnesty with the concurrence of a majority of all the members of the
Congress."
6. The non-disclosure of the date of execution deprives herein respondent of vital information necessary for
the exercise of his power of supervision and control over the Bureau of Corrections pursuant to Section 39,
Chapter 8, Book IV of the Administrative Code of 1987, in relation to Title III, Book IV of such The text and tone of this provision will not yield to the interpretation suggested by the public
Administrative Code, insofar as the enforcement of Republic Act No. 8177 and the Amended Rules and respondents. The provision is simply the source of power of the President to grant reprieves, commutations,
Regulations to Implement Republic Act No. 8177 is concerned and for the discharge of the mandate of seeing and pardons and remit fines and forfeitures after conviction by final judgment. It also provides the authority for
to it that laws and rules relative to the execution of sentence are faithfully observed. the President to grant amnesty with the concurrence of a majority of all the members of the Congress. The
provision, however, cannot be interpreted as denying the power of courts to control the enforcement of their
decisions after their finality. In truth, an accused who has been convicted by final judgment still
7. On the other hand, the willful omission to reveal the information about the precise day of execution limits the possesses collateral rights and these rights can be claimed in the appropriate courts. For instance, a
exercise by the President of executive clemency powers pursuant to Section 19, Article VII (Executive death convict who becomes insane after his final conviction cannot be executed while in a state of
Department) of the 1987 Philippine Constitution and Article 81 of the Revised Penal Code, as amended, which insanity.[15] As observed by Antieau, "today, it is generally assumed that due process of law will prevent the
provides that the death sentence shall be carried out `without prejudice to the exercise by the President of his government from executing the death sentence upon a person who is insane at the time of execution." [16] The
executive clemency powers at all times." (Underscoring supplied) For instance, the President cannot grant suspension of such a death sentence is undisputably an exercise of judicial power. It is not a usurpation of the
reprieve, i.e., postpone the execution of a sentence to a day certain (People v. Vera, 65 Phil. 56, 110 [1937]) presidential power of reprieve though its effect is the same -- the temporary suspension of the execution of the
in the absence of a precise date to reckon with. The exercise of such clemency power, at this time, might even death convict. In the same vein, it cannot be denied that Congress can at any time amend R.A. No. 7659 by
reducing the penalty of death to life imprisonment. The effect of such an amendment is like that of In their Supplemental Motion to Urgent Motion for Reconsideration, the Solicitor General cited House
commutation of sentence. But by no stretch of the imagination can the exercise by Congress of its Resolution No. 629 introduced by Congressman Golez entitled "Resolution expressing the sense of the House
plenary power to amend laws be considered as a violation of the power of the President to commute of Representatives to reject any move to review R.A. No. 7659 which provided for the reimposition of death
final sentences of conviction. The powers of the Executive, the Legislative and the Judiciary to save the penalty, notifying the Senate, the Judiciary and the Executive Department of the position of the House of
life of a death convict do not exclude each other for the simple reason that there is no higher right Representatives on this matter and urging the President to exhaust all means under the law to immediately
than the right to life.Indeed, in various States in the United States, laws have even been enacted expressly implement the death penalty law." The Golez resolution was signed by 113 congressmen as of January 11,
granting courts the power to suspend execution of convicts and their constitutionality has been upheld over 1999. In a marathon session yesterday that extended up to 3 o'clock in the morning, the House of
arguments that they infringe upon the power of the President to grant reprieves. For the public respondents Representatives with minor amendments formally adopted the Golez resolution by an overwhelming
therefore to contend that only the Executive can protect the right to life of an accused after his final conviction vote. House Resolution No. 25 expressed the sentiment that the House "x x x does not desire at this time to
is to violate the principle of co-equal and coordinate powers of the three branches of our government. review Republic Act 7659." In addition, the President has stated that he will not request Congress to ratify the
Second Protocol in view of the prevalence of heinous crimes in the country. In light of these developments, the
III Court's TRO should now be lifted as it has served its legal and humanitarian purpose.

Third. The Court's resolution temporarily restraining the execution of petitioner must be put in A last note. In 1922, the famous Clarence Darrow predicted that "x x x the question of capital
its proper perspective as it has been grievously distorted especially by those who make a living by punishment has been the subject of endless discussion and will probably never be settled so long as men
vilifying courts. Petitioner filed his Very Urgent Motion for Issuance of TRO on December 28, 1998 at about believe in punishment."[19] In our clime and time when heinous crimes continue to be unchecked, the debate
11:30 p.m. He invoked several grounds, viz: (1) that his execution has been set on January 4, the first working on the legal and moral predicates of capital punishment has beenregrettably blurred by emotionalism because
day of 1999; (b) that members of Congress had either sought for his executive clemency and/or review or of the unfaltering faith of the pro and anti-death partisans on the right andrighteousness of their postulates. To
repeal of the law authorizing capital punishment; (b.1) that Senator Aquilino Pimentel's resolution asking that be sure, any debate, even if it is no more than an exchange of epithets is healthy in a democracy. But when
clemency be granted to the petitioner and that capital punishment be reviewed has been concurred by thirteen the debate deteriorates to discord due to the overuse of words that wound, when anger threatens to
(13) other senators; (b.2) Senate President Marcelo Fernan and Senator Miriam S. Defensor have publicly turn the majority rule to tyranny, it is the especial duty of this Court to assure that the guarantees of
declared they would seek a review of the death penalty law; (b.3) Senator Raul Roco has also sought the the Bill of Rights to the minority fully hold. As Justice Brennan reminds us "x x x it is the very purpose of
repeal of capital punishment, and (b.4) Congressman Salacrib Baterina, Jr., and thirty five (35) other the Constitution - - - and particularly the Bill of Rights - - - to declare certain values transcendent, beyond the
congressmen are demanding review of the same law. reach of temporary political majorities."[20] Man has yet to invent a better hatchery of justice than the
courts. It is a hatchery where justice will bloom only when we can prevent the roots of reason to be
When the Very Urgent Motion was filed, the Court was already in its traditional recess and would only blown away by the winds of rage. The flame of the rule of law cannot be ignited by rage, especially the
resume session on January 18, 1999. Even then, Chief Justice Hilario Davide, Jr. called the Court to a Special rage of the mob which is the mother of unfairness. The business of courts in rendering justice is to be
Session on January 4, 1999[17] at 10. a.m. to deliberate on petitioner's Very Urgent Motion. The Court hardly fair and they can pass their litmus test only when they can be fair to him who is momentarily the most
had five (5) hours to resolve petitioner's motion as he was due to be executed at 3 p.m. Thus, the Court had hated by society.[21]
the difficult problem of resolving whether petitioner's allegations about the moves in Congress to repeal or
amend the Death Penalty Law are mere speculations or not. To the Court's majority, there were good IN VIEW WHEREOF, the Court grants the public respondents' Urgent Motion for Reconsideration and
reasons why the Court should not immediately dismiss petitioner's allegations as mere speculations and Supplemental Motion to Urgent Motion for Reconsideration and lifts the Temporary Restraining Order issued
surmises. Theynoted that petitioner's allegations were made in a pleading under oath and were widely in its Resolution of January 4, 1999.
publicized in the print and broadcast media. It was also of judicial notice that the 11th Congress is a new
Congress and has no less than one hundred thirty (130) new members whose views on capital The Court also orders respondent trial court judge (Hon. Thelma A. Ponferrada, Regional Trial Court,
punishment are still unexpressed. The present Congress is therefore different from theCongress that Quezon City, Branch 104) to set anew the date for execution of the convict/petitioner in accordance with
enacted the Death Penalty Law (R.A. No. 7659) and the Lethal Injection Law (R.A. No. 8177). In contrast, the applicable provisions of law and the Rules of Court, without further delay.
Court's minority felt that petitioner's allegations lacked clear factual bases. There was hardly a time to verify
petitioner's allegations as his execution was set at 3 p.m. And verification from Congress was impossible SO ORDERED.
as Congress was not in session. Given these constraints, the Court's majority did not rush to judgment but
took an extremely cautious stance by temporarily restraining the execution of petitioner. The suspension APO Fruits Corporation, Inc. vs Land Bank of The Phil
was temporary - - - "until June 15, 1999, coeval with the constitutional duration of the present regular session
of Congress, unless it sooner becomes certain that no repeal or modification of the law is going to be APO Fruits Corporation, Inc. (AFC) and Hijo Plantation Inc. (HPI) were owners of 5 parcels of land (1338.60
made." The extreme caution taken by the Court was compelled, among others, by the fear that any error of has.) located in San Isidro, Tagum, Davao. On 12 October 1995, the two voluntarily offered to sell the
the Court in not stopping the execution of the petitioner will preclude any further relief for all rights properties to the DAR. DAR offered P86.9 million for AFC’s land and P164.40 million for HPI’s land (total of
stop at the graveyard. As life was at stake, the Court refused to constitutionalize haste and the hysteria of about P251.3 million). AFC, HPI and DAR cannot agree on a price hence the Complaint for Determination of
some partisans. The Court's majority felt it needed the certainty that the legislature will not change the Just Compensation was filed before the DAR Adjudication Board on 14 February 1997. The DARAB failed to
circumstance of petitioner as alleged by his counsel. It was believed that law and equitable considerations render a decision on the valuation of the land for three years. But nevertheless, the government, through the
demand no less before allowing the State to take the life of one its citizens. Land Bank of the Philippines, deposited P26M into AFC’s account and P45M into HPI’s account as down
payment in 1996. The DAR also caused the titling of the land in the name of the Republic of the Philippines in
The temporary restraining order of this Court has produced its desired result, i.e., December 1996. Later, titles were given to farmers under the CARP (Comprehensive Agrarian Reform
the crystallization of the issue whether Congress is disposed to review capital punishment. The public Program).
respondents, thru the Solicitor General, cite posterior events that negate beyond doubt the possibility that
Due to DARAB’s failure to adjudicate, AFC and HPI filed a complaint for determination of just compensation
Congress will repeal or amend the death penalty law. He names these supervening events as follows:
before the RTC of Davao which rendered a decision in favor of AFC and HPI. The RTC ruled, based on the
xxx reports it gathered from assessors, that the purchase price should be higher than what was offered by DAR;
that the purchase price should be at P103.33/ sq. m; that DAR is to pay AFC and HPI a total of P1.38 billion.
DAR appealed to the CA, the CA reversed the RTC.
"a. The public pronouncement of President Estrada that he will veto any law repealing the death penalty
involving heinous crimes.
607 SCRA 200 – Remedial Law – Second Motion for Reconsideration – Immutability of Judgment
b. The resolution of Congressman Golez, et al., that they are against the repeal of the law;
Not satisfied, on May 28, 2008, AFC and HPI filed a Motion for Leave to file and admit a Second Motion for
Reconsideration (unlike Land Bank which filed a 2nd MFR without asking for leave of court first). This is
c. The fact that Senator Roco's resolution to repeal the law only bears his signature and that of Senator notwithstanding the fact that the decision of the Thrid Division already became final on May 16, 2008. AFC
Pimentel."[18] and HPI readily attached their MFR.
AFC and HPI are assailing the deletion of the award of interest and attorney’s fees. In its follow through action, the DAR requested the Land Bank of the Philippines (LBP) to deposit
₱26,409,549.86 in AFC’s bank account and ₱45,481,706.76 in HPI’s bank account, which amounts the
This time also, the Third Division of the Supreme Court referred this case to the Supreme Court en banc. petitioners then withdrew. The titles over AFC and HPI’s properties were thereafter cancelled, and new ones
were issued on December 9, 1996 in the name of the Republic of the Philippines.
ISSUE: Whether or not the motion for leave should be granted.

HELD: No. The Supreme Court, via majority decision, reiterated the ruling of the Third Division of the Supreme
On February 14, 1997, AFC and HPI filed separate petitions for determination of just compensation with the
Court – that AFC/HPI are not entitled to the award of interest and attorney’s fees.
DAR Adjudication Board (DARAB). When the DARAB failed to act on these petitions for more than three years,
It also emphasized that the parties cannot be allowed to file a second motion for reconsideration because of AFC and HPI filed separate complaints for determination and payment of just compensation with the Regional
the doctrine of immutability of judgment. A judgment that has acquired finality becomes immutable and Trial Court (RTC) of Tagum City, acting as a Special Agrarian Court. These complaints were subsequently
unalterable, and may no longer be modified in any respect even if the modification is meant to correct consolidated.
erroneous conclusions of fact or law and whether it will be made by the court that rendered it or by the highest
court of the land. In this case, the judgment already became final on May 16, 2008. Sure there are exceptions
On September 25, 2001, the RTC resolved the consolidated cases, fixing the just compensation for the
to this rule, to wit:
petitioners’ 1,338.6027 hectares of land1 at ₱1,383,179,000.00, with interest on this amount at the prevailing
(1) the correction of clerical errors; market interest rates, computed from the taking of the properties on December 9, 1996 until fully paid, minus
the amounts the petitioners already received under the initial valuation. The RTC also awarded attorney’s fees.
(2) the so-called nunc pro tunc entries that cause no prejudice to any party;

(3) void judgments; and LBP moved for the reconsideration of the decision. The RTC, in its order of December 5, 2001, modified its
ruling and fixed the interest at the rate of 12% per annum from the time the complaint was filed until finality of
(4) whenever circumstances transpire after the finality of the decision rendering its execution unjust and the decision. The Third Division of this Court, in its Decision of February 6, 2007, affirmed this RTC decision.
inequitable.

But none of these exceptions are applicable in this case. In fact, the private claim by AFC and HPI does not On motion for reconsideration, the Third Division issued its Resolution of December 19, 2007, modifying its
even qualify either as a substantial or transcendental matter, or as an issue of paramount public interest, for February 6, 2007 Decision by deleting the 12% interest due on the balance of the awarded just compensation.
no special or compelling circumstance has been presented to warrant the relaxation of the doctrine of The Third Division justified the deletion by the finding that the LBP did not delay the payment of just
immutability in their favor. compensation as it had deposited the pertinent amounts due to AFC and HPI within fourteen months after they
filed their complaints for just compensation with the RTC. The Court also considered that AFC had already
collected approximately ₱149.6 million, while HPI had already collected approximately ₱262 million from the
LBP. The Third Division also deleted the award of attorney’s fees.
G.R. No. 164195 October 12, 2010
All parties moved for the reconsideration of the modified ruling. The Court uniformly denied all the motions in
APO FRUITS CORPORATION and HIJO PLANTATION, INC., Petitioners, its April 30, 2008 Resolution. Entry of Judgment followed on May 16, 2008.
vs.
LAND BANK OF THE PHILIPPINES, Respondent.
Notwithstanding the Entry of Judgment, AFC and HPI filed the following motions on May 28, 2008: (1) Motion
for Leave to File and Admit Second Motion for Reconsideration; (2) Second Motion for Reconsideration, with
RESOLUTION respect to the denial of the award of legal interest and attorney’s fees; and (3) Motion to Refer the Second
Motion for Reconsideration to the Honorable Court En Banc.

BRION, J.:
The Third Division found the motion to admit the Second Motion for Reconsideration and the motion to refer
this second motion to the Court En Banc meritorious, and accordingly referred the case to the Court En Banc.
We resolve the petitioners’ motion for reconsideration addressing our Resolution of December 4, 2009 whose On September 8, 2009, the Court En Banc accepted the referral.
dispositive portion directs:

The Court En Banc Resolution


WHEREFORE, the Court denies the petitioners’ second motion for reconsideration (with respect to the denial
of the award of legal interest and attorney’s fees), and reiterates the decision dated February 6, 2007 and the
resolution dated December 19, 2007 of the Third Division. On December 4, 2009, the Court En Banc, by a majority vote, denied the petitioners’ second motion for
reconsideration based on two considerations.

For a fuller and clearer presentation and appreciation of this Resolution, we hark back to the roots of this case.
First, the grant of the second motion for reconsideration runs counter to the immutability of final decisions.
Moreover, the Court saw no reason to recognize the case as an exception to the immutability principle as the
Factual Antecedents petitioners’ private claim for the payment of interest does not qualify as either a substantial or transcendental
matter or an issue of paramount public interest.

Apo Fruits Corporation (AFC) and Hijo Plantation, Inc. (HPI), together also referred to as petitioners, were
registered owners of vast tracks of land; AFC owned 640.3483 hectares, while HPI owned 805.5308 hectares. Second, on the merits, the petitioners are not entitled to recover interest on the just compensation and
On October 12, 1995, they voluntarily offered to sell these landholdings to the government via Voluntary Offer attorney’s fees because they caused the delay in the payment of the just compensation due them; they
to Sell applications filed with the Department of Agrarian Reform (DAR). erroneously filed their complaints with the DARAB when they should have directly filed these with the RTC
acting as an agrarian court. Furthermore, the Court found it significant that the LBP deposited the pertinent
amounts in the petitioners’ favor within fourteen months after the petitions were filed with the RTC. Under
On October 16, 1996, AFC and HPI received separate notices of land acquisition and valuation of their these circumstances, the Court found no unreasonable delay on the part of LBP to warrant the award of 12%
properties from the DAR’s Provincial Agrarian Reform Officer (PARO). At the assessed valuation of interest.
₱165,484.47 per hectare, AFC’s land was valued at ₱86,900,925.88, while HPI’s property was valued at
₱164,478,178.14. HPI and AFC rejected these valuations for being very low.
The Chico-Nazario Dissent We find the petitioners’ arguments meritorious and accordingly GRANT the present motion for reconsideration.

Justice Minita V. Chico-Nazario,2 the ponente of the original December 19, 2007 Resolution (deleting the 12% Just compensation – a Basic Limitation on the State’s
interest), dissented from the Court En Banc’s December 4, 2009 Resolution.
Power of Eminent Domain
On the issue of immutability of judgment, Justice Chico-Nazario pointed out that under extraordinary
circumstances, this Court has recalled entries of judgment on the ground of substantial justice. Given the
special circumstances involved in the present case, the Court En Banc should have taken a second hard look At the heart of the present controversy is the Third Division’s December 19, 2007 Resolution which held that
at the petitioners’ positions in their second motion for reconsideration, and acted to correct the clearly the petitioners are not entitled to 12% interest on the balance of the just compensation belatedly paid by the
erroneous December 19, 2007 Resolution. LBP. In the presently assailed December 4, 2009 Resolution, we affirmed the December 19, 2007
Resolution’s findings that: (a) the LBP deposited "pertinent amounts" in favor of the petitioners within fourteen
months after they filed their complaint for determination of just compensation; and (b) the LBP had already
Specifically, Justice Chico-Nazario emphasized the obligation of the State, in the exercise of its inherent power paid the petitioners ₱411,769,168.32. We concluded then that these circumstances refuted the petitioners’
of eminent domain, to pay just compensation to the owner of the expropriated property. To be just, the assertion of unreasonable delay on the part of the LBP.
compensation must not only be the correct amount to be paid; it must also be paid within a reasonable time
from the time the land is taken from the owner. If not, the State must pay the landowner interest, by way of
damages, from the time the property was taken until just compensation is fully paid. This interest, deemed a A re-evaluation of the circumstances of this case and the parties’ arguments, viewed in light of the just
part of just compensation due, has been established by prevailing jurisprudence to be 12% per annum. compensation requirement in the exercise of the State’s inherent power of eminent domain, compels us to re-
examine our findings and conclusions.

On these premises, Justice Nazario pointed out that the government deprived the petitioners of their property
on December 9, 1996, and paid the balance of the just compensation due them only on May 9, 2008. The Eminent domain is the power of the State to take private property for public use.3 It is an inherent power of
delay of almost twelve years earned the petitioners interest in the total amount of ₱1,331,124,223.05. State as it is a power necessary for the State’s existence; it is a power the State cannot do without.4 As an
inherent power, it does not need at all to be embodied in the Constitution; if it is mentioned at all, it is solely for
purposes of limiting what is otherwise an unlimited power. The limitation is found in the Bill of Rights5 – that
Despite this finding, Justice Chico-Nazario did not see it fit to declare the computed interest to be totally due; part of the Constitution whose provisions all aim at the protection of individuals against the excessive exercise
she found it unconscionable to apply the full force of the law on the LBP because of the magnitude of the of governmental powers.
amount due. She thus reduced the awarded interest to ₱400,000,000.00, or approximately 30% of the
computed interest.
Section 9, Article III of the 1987 Constitution (which reads "No private property shall be taken for public use
without just compensation.") provides two essential limitations to the power of eminent domain, namely, that (1)
The Present Motion for Reconsideration the purpose of taking must be for public use and (2) just compensation must be given to the owner of the
private property.

In their motion to reconsider the Court En Banc’s December 4, 2009 Resolution (the present Motion for
Reconsideration), the petitioners principally argue that: (a) the principle of immutability of judgment does not It is not accidental that Section 9 specifies that compensation should be "just" as the safeguard is there to
apply since the Entry of Judgment was issued even before the lapse of fifteen days from the parties’ receipt of ensure a balance – property is not to be taken for public use at the expense of private interests; the public,
the April 30, 2008 Resolution and the petitioners timely filed their second motion for reconsideration within through the State, must balance the injury that the taking of property causes through compensation for what is
fifteen days from their receipt of this resolution; (b) the April 30, 2008 Resolution cannot be considered taken, value for value.
immutable considering the special and compelling circumstances attendant to the present case which fall
within the exceptions to the principle of immutability of judgments; (c) the legal interest due is at 12% per
annum, reckoned from the time of the taking of the subject properties and this rate is not subject to reduction. Nor is it accidental that the Bill of Rights is interpreted liberally in favor of the individual and strictly against the
The power of the courts to equitably reduce interest rates applies solely to liquidated damages under a government. The protection of the individual is the reason for the Bill of Rights’ being; to keep the exercise of
contract and not to interest set by the Honorable Court itself as due and owing in just compensation cases; the powers of government within reasonable bounds is what it seeks.6
and (d) the Honorable Court’s fears that the interest payments due to the petitioners will produce more harm
than good to the system of agrarian reform are misplaced and are based merely on conjectures.
The concept of "just compensation" is not new to Philippine constitutional law,7 but is not original to the
Philippines; it is a transplant from the American Constitution.8 It found fertile application in this country
The Comment of the Land Bank of the Philippines particularly in the area of agrarian reform where the taking of private property for distribution to landless
farmers has been equated to the "public use" that the Constitution requires. In Land Bank of the Philippines v.
Orilla,9 a valuation case under our agrarian reform law, this Court had occasion to state:
The LBP commented on the petitioners’ motion for reconsideration on April 28, 2010. It maintained that: (a)
the doctrine of immutability of the decisions of the Supreme Court clearly applies to the present case; (b) the
LBP is not guilty of undue delay in the payment of just compensation as the petitioners were promptly paid Constitutionally, "just compensation" is the sum equivalent to the market value of the property, broadly
once the Court had determined the final value of the properties expropriated; (c) the Supreme Court rulings described as the price fixed by the seller in open market in the usual and ordinary course of legal action and
invoked by the petitioners are inapplicable to the present case; (d) since the obligation to pay just competition, or the fair value of the property as between the one who receives and the one who desires to sell,
compensation is not a forbearance of money, interest should commence only after the amount due becomes it being fixed at the time of the actual taking by the government. Just compensation is defined as the full and
ascertainable or liquidated, and the 12% interest per annum applies only to the liquidated amount, from the fair equivalent of the property taken from its owner by the expropriator. It has been repeatedly stressed by this
date of finality of judgment; (e) the imposition of 12% interest on the balance of P971,409,831.68 is Court that the true measure is not the taker's gain but the owner's loss. The word "just" is used to modify the
unwarranted because there was no unjustified refusal by LBP to pay just compensation, and no contractual meaning of the word "compensation" to convey the idea that the equivalent to be given for the property to be
breach is involved; (f) the deletion of the attorney’s fees equivalent to 10% of the amount finally awarded as taken shall be real, substantial, full and ample.10 [Emphasis supplied.]
just compensation is proper; (g) this case does not involve a violation of substantial justice to justify the
alteration of the immutable resolution dated December 19, 2007 that deleted the award of interest and
In the present case, while the DAR initially valued the petitioners’ landholdings at a total of
attorney’s fees.
₱251,379,104.02,11 the RTC, acting as a special agrarian court, determined the actual value of the petitioners’
landholdings to be ₱1,383,179,000.00. This valuation, a finding of fact, has subsequently been affirmed by this
The Court’s Ruling
Court, and is now beyond question. In eminent domain terms, this amount is the "real, substantial, full and In Republic, the Court recognized that the just compensation due to the landowners for their expropriated
ample" compensation the government must pay to be "just" to the landowners. property amounted to an effective forbearance on the part of the State. Applying the Eastern Shipping Lines
ruling,17 the Court fixed the applicable interest rate at 12% per annum, computed from the time the property
was taken until the full amount of just compensation was paid, in order to eliminate the issue of the constant
Significantly, this final judicial valuation is far removed from the initial valuation made by the DAR; their values fluctuation and inflation of the value of the currency over time. In the Court’s own words:
differ by ₱1,131,799,897.00 – in itself a very substantial sum that is roughly four times the original DAR
valuation. We mention these valuations as they indicate to us how undervalued the petitioners’ lands had been
at the start, particularly at the time the petitioners’ landholdings were "taken". This reason apparently The Bulacan trial court, in its 1979 decision, was correct in imposing interest[s] on the zonal value of the
compelled the petitioners to relentlessly pursue their valuation claims all they way up to the level of this Court. property to be computed from the time petitioner instituted condemnation proceedings and "took" the property
in September 1969. This allowance of interest on the amount found to be the value of the property as of the
time of the taking computed, being an effective forbearance, at 12% per annum should help eliminate the
While the LBP deposited the total amount of ₱71,891,256.62 into the petitioners’ accounts (₱26,409,549.86 issue of the constant fluctuation and inflation of the value of the currency over time.18 [Emphasis
for AFC and ₱45,481,706.76 for HPI) at the time the landholdings were taken, these amounts were mere supplied.]1avvphi1
partial payments that only amounted to 5% of the ₱1,383,179,000.00 actual value of the expropriated
properties. We point this aspect out to show that the initial payments made by the LBP when the petitioners’
landholdings were taken, although promptly withdrawn by the petitioners, could not by any means be We subsequently upheld Republic’s 12% per annum interest rate on the unpaid expropriation compensation in
considered a fair exchange of values at the time of taking; in fact, the LBP’s actual deposit could not be said to the following cases: Reyes v. National Housing Authority,19 Land Bank of the Philippines v.
be substantial even from the original LBP valuation of ₱251,379,103.90. Wycoco,20 Republic v. Court of Appeals,21 Land Bank of the Philippines v. Imperial,22 Philippine Ports Authority
v. Rosales-Bondoc,23 and Curata v. Philippine Ports Authority.24

Thus, the deposits might have been sufficient for purposes of the immediate taking of the landholdings but
cannot be claimed as amounts that would excuse the LBP from the payment of interest on the unpaid balance These were the established rulings that stood before this Court issued the currently assailed Resolution of
of the compensation due. As discussed at length below, they were not enough to compensate the petitioners December 4, 2009. These would be the rulings this Court shall reverse and de-establish if we maintain and
for the potential income the landholdings could have earned for them if no immediate taking had taken place. affirm our ruling deleting the 12% interest on the unpaid balance of compensation due for properties already
Under the circumstances, the State acted oppressively and was far from "just" in their position to deny the taken.
petitioners of the potential income that the immediate taking of their properties entailed.

Under the circumstances of the present case, we see no compelling reason to depart from the rule that
Just Compensation from the Prism of the Element of Taking. Republic firmly established. Let it be remembered that shorn of its eminent domain and social justice aspects,
what the agrarian land reform program involves is the purchase by the government, through the LBP, of
agricultural lands for sale and distribution to farmers. As a purchase, it involves an exchange of values – the
Apart from the requirement that compensation for expropriated land must be fair and reasonable, landholdings in exchange for the LBP’s payment. In determining the just compensation for this exchange,
compensation, to be "just," must also be made without delay.12 Without prompt payment, compensation cannot however, the measure to be borne in mind is not the taker's gain but the owner's loss25 since what is involved
be considered "just" if the property is immediately taken as the property owner suffers the immediate is the takeover of private property under the State’s coercive power. As mentioned above, in the value-for-
deprivation of both his land and its fruits or income. value exchange in an eminent domain situation, the State must ensure that the individual whose property is
taken is not shortchanged and must hence carry the burden of showing that the "just compensation"
requirement of the Bill of Rights is satisfied.
This is the principle at the core of the present case where the petitioners were made to wait for more than a
decade after the taking of their property before they actually received the full amount of the principal of the just
compensation due them.13 What they have not received to date is the income of their landholdings The owner’s loss, of course, is not only his property but also its income-generating potential. Thus, when
corresponding to what they would have received had no uncompensated taking of these lands been property is taken, full compensation of its value must immediately be paid to achieve a fair exchange for the
immediately made. This income, in terms of the interest on the unpaid principal, is the subject of the current property and the potential income lost. The just compensation is made available to the property owner so that
litigation. he may derive income from this compensation, in the same manner that he would have derived income from
his expropriated property. If full compensation is not paid for property taken, then the State must make up for
the shortfall in the earning potential immediately lost due to the taking, and the absence of replacement
We recognized in Republic v. Court of Appeals14 the need for prompt payment and the necessity of the
property from which income can be derived; interest on the unpaid compensation becomes due as compliance
payment of interest to compensate for any delay in the payment of compensation for property already taken.
with the constitutional mandate on eminent domain and as a basic measure of fairness.
We ruled in this case that:

In the context of this case, when the LBP took the petitioners’ landholdings without the corresponding full
The constitutional limitation of "just compensation" is considered to be the sum equivalent to the market value
payment, it became liable to the petitioners for the income the landholdings would have earned had they not
of the property, broadly described to be the price fixed by the seller in open market in the usual and ordinary
immediately been taken from the petitioners. What is interesting in this interplay, under the developments of
course of legal action and competition or the fair value of the property as between one who receives, and one
this case, is that the LBP, by taking landholdings without full payment while holding on at the same time to the
who desires to sell, i[f] fixed at the time of the actual taking by the government. Thus, if property is taken for
interest that it should have paid, effectively used or retained funds that should go to the landowners and
public use before compensation is deposited with the court having jurisdiction over the case, the final
thereby took advantage of these funds for its own account.
compensation must include interest[s] on its just value to be computed from the time the property is taken to
the time when compensation is actually paid or deposited with the court. In fine, between the taking of the
property and the actual payment, legal interest[s] accrue in order to place the owner in a position as good as From this point of view, the December 19, 2007 Resolution deleting the award of 12% interest is not only
(but not better than) the position he was in before the taking occurred.15 [Emphasis supplied.] patently and legally wrong, but is also morally unconscionable for being grossly unfair and unjust. If the
interest on the just compensation due – in reality the equivalent of the fruits or income of the landholdings
would have yielded had these lands not been taken – would be denied, the result is effectively a confiscatory
Aside from this ruling, Republic notably overturned the Court’s previous ruling in National Power Corporation v.
action by this Court in favor of the LBP. We would be allowing the LBP, for twelve long years, to have free use
Angas16 which held that just compensation due for expropriated properties is not a loan or forbearance of
of the interest that should have gone to the landowners. Otherwise stated, if we continue to deny the
money but indemnity for damages for the delay in payment; since the interest involved is in the nature of
petitioners’ present motion for reconsideration, we would – illogically and without much thought to the fairness
damages rather than earnings from loans, then Art. 2209 of the Civil Code, which fixes legal interest at 6%,
that the situation demands – uphold the interests of the LBP, not only at the expense of the landowners but
shall apply.
also that of substantial justice as well.
Lest this Court be a party to this monumental unfairness in a social program aimed at fostering balance in our 1997. Despite the lapse of more than three years from the filing of the complaint, the DARAB failed to render a
society, we now have to ring the bell that we have muted in the past, and formally declare that the LBP’s decision on the valuation of the land. Meantime, the titles over the properties of AFC and HPI had already
position is legally and morally wrong. To do less than this is to leave the demands of the constitutional just been cancelled and in their place a new certificate of title was issued in the name of the Republic of the
compensation standard (in terms of law) and of our own conscience (in terms of morality) wanting and Philippines, even as far back as 9 December 1996. A period of almost 10 years has lapsed. For this reason,
unsatisfied. there is no dispute that this case has truly languished for a long period of time, the delay being mainly
attributable to both official inaction and indecision, particularly on the determination of the amount of just
compensation, to the detriment of AFC and HPI, which to date, have yet to be fully compensated for the
The Delay in Payment Issue properties which are already in the hands of farmer-beneficiaries, who, due to the lapse of time, may have
already converted or sold the land awarded to them.
Separately from the demandability of interest because of the failure to fully pay for property already taken, a
recurring issue in the case is the attribution of the delay. Verily, these two cases could have been disposed with dispatch were it not for LBP’s counsel causing
unnecessary delay. At the inception of this case, DARAB, an agency of the DAR which was commissioned by
law to determine just compensation, sat on the cases for three years, which was the reason that AFC and HPI
That delay in payment occurred is not and cannot at all be disputed. While the LBP claimed that it made initial
filed the cases before the RTC. We underscore the pronouncement of the RTC that "the delay by DARAB in
payments of ₱411,769,168.32 (out of the principal sum due of P1,383,179,000.00), the undisputed fact is that
the determination of just compensation could only mean the reluctance of the Department of Agrarian Reform
the petitioners were deprived of their lands on December 9, 1996 (when titles to their landholdings were
and the Land Bank of the Philippines to pay the claim of just compensation by corporate landowners."
cancelled and transferred to the Republic of the Philippines), and received full payment of the principal
amount due them only on May 9, 2008.
To allow the taking of landowners’ properties, and to leave them empty-handed while government withholds
compensation is undoubtedly oppressive. [Emphasis supplied.]
In the interim, they received no income from their landholdings because these landholdings had been taken.
Nor did they receive adequate income from what should replace the income potential of their landholdings
because the LBP refused to pay interest while withholding the full amount of the principal of the just These statements cannot but be true today as they were when we originally decided the case and awarded 12%
compensation due by claiming a grossly low valuation. This sad state continued for more than a decade. In interest on the balance of the just compensation due. While the petitioners were undisputedly mistaken in
any language and by any measure, a lengthy delay in payment occurred. initially seeking recourse through the DAR, this agency itself – hence, the government – committed a graver
transgression when it failed to act at all on the petitioners’ complaints for determination of just compensation.
An important starting point in considering attribution for the delay is that the petitioners voluntarily offered to
sell their landholdings to the government’s land reform program; they themselves submitted their Voluntary In sum, in a balancing of the attendant delay-related circumstances of this case, delay should be laid at the
Offer to Sell applications to the DAR, and they fully cooperated with the government’s program. The present doorsteps of the government, not at the petitioners’. We conclude, too, that the government should not be
case therefore is not one where substantial conflict arose on the issue of whether expropriation is proper; the allowed to exculpate itself from this delay and should suffer all the consequences the delay caused.
petitioners voluntarily submitted to expropriation and surrendered their landholdings, although they contested
the valuation that the government made.
The LBP’s arguments on the applicability of cases imposing 12% interest

Presumably, had the landholdings been properly valued, the petitioners would have accepted the payment of
just compensation and there would have been no need for them to go to the extent of filing a valuation case. The LBP claims in its Comment that our rulings in Republic v. Court of Appeals,26 Reyes v. National Housing
But, as borne by the records, the petitioners’ lands were grossly undervalued by the DAR, leaving the Authority,27 and Land Bank of the Philippines v. Imperial,28 cannot be applied to the present case.
petitioners with no choice but to file actions to secure what is justly due them.

According to the LBP, Republic is inapplicable because, first, the landowners in Republic remained unpaid,
The DAR’s initial gross undervaluation started the cycle of court actions that followed, where the LBP notwithstanding the fact that the award for just compensation had already been fixed by final judgment; in the
eventually claimed that it could not be faulted for seeking judicial recourse to defend the government’s and its present case, the Court already acknowledged that "pertinent amounts" were deposited in favor of the
own interests in light of the petitioners’ valuation claims. This LBP claim, of course, conveniently forgets that at landowners within 14 months from the filing of their complaint. Second, while Republic involved an ordinary
the root of all these valuation claims and counterclaims was the initial gross undervaluation by DAR that the expropriation case, the present case involves expropriation for agrarian reform. Finally, the just compensation
LBP stoutly defended. At the end, this undervaluation was proven incorrect by no less than this Court; the in Republic remained unpaid notwithstanding the finality of judgment, while the just compensation in the
petitioners were proven correct in their claim, and the correct valuation – more than five-fold the initial DAR present case was immediately paid in full after LBP received a copy of the Court’s resolution
valuation – was decreed and became final.

We find no merit in these assertions.


All these developments cannot now be disregarded and reduced to insignificance. In blunter terms, the
government and the LBP cannot now be heard to claim that they were simply protecting their interests when
they stubbornly defended their undervalued positions before the courts. The more apt and accurate statement As we discussed above, the "pertinent amounts" allegedly deposited by LBP were mere partial payments that
is that they adopted a grossly unreasonable position and the adverse developments that followed, particularly amounted to a measly 5% of the actual value of the properties expropriated. They could be the basis for the
the concomitant delay, should be directly chargeable to them. immediate taking of the expropriated property but by no stretch of the imagination can these nominal amounts
be considered "pertinent" enough to satisfy the full requirement of just compensation – i.e., the full and fair
equivalent of the expropriated property, taking into account its income potential and the foregone income lost
To be sure, the petitioners were not completely correct in the legal steps they took in their valuation claims. because of the immediate taking.
They initially filed their valuation claim before the DARAB instead of immediately seeking judicial intervention.
The DARAB, however, contributed its share to the petitioners’ error when it failed or refused to act on the
valuation petitions for more than three (3) years. Thus, on top of the DAR undervaluation was the DARAB We likewise find no basis to support the LBP’s theory that Republic and the present case have to be treated
inaction after the petitioners’ landholdings had been taken. This Court’s Decision of February 6, 2007 duly differently because the first involves a "regular" expropriation case, while the present case involves
noted this and observed: expropriation pursuant to the country’s agrarian reform program. In both cases, the power of eminent domain
was used and private property was taken for public use. Why one should be different from the other, so that
the just compensation ruling in one should not apply to the other, truly escapes us. If there is to be a difference,
It is not controverted that this case started way back on 12 October 1995, when AFC and HPI voluntarily the treatment of agrarian reform expropriations should be stricter and on a higher plane because of the
offered to sell the properties to the DAR. In view of the failure of the parties to agree on the valuation of the government’s societal concerns and objectives. To be sure, the government cannot attempt to remedy the ills
properties, the Complaint for Determination of Just Compensation was filed before the DARAB on 14 February of one sector of society by sacrificing the interests of others within the same society.
Finally, we note that the finality of the decision (that fixed the value of just compensation) in Republic was not While we have equitably reduced the amount of interest awarded in numerous cases in the past, those cases
a material consideration for the Court in awarding the landowners 12% interest. The Court, in Republic, simply involved interest that was essentially consensual in nature, i.e., interest stipulated in signed agreements
affirmed the RTC ruling imposing legal interest on the amount of just compensation due. In the process, the between the contracting parties. In contrast, the interest involved in the present case "runs as a matter of law
Court determined that the legal interest should be 12% after recognizing that the just compensation due was and follows as a matter of course from the right of the landowner to be placed in as good a position as money
effectively a forbearance on the part of the government. Had the finality of the judgment been the critical factor, can accomplish, as of the date of taking."33
then the 12% interest should have been imposed from the time the RTC decision fixing just compensation
became final. Instead, the 12% interest was imposed from the time that the Republic commenced
condemnation proceedings and "took" the property. Furthermore, the allegedly considerable payments made by the LBP to the petitioners cannot be a proper
premise in denying the landowners the interest due them under the law and established jurisprudence. If the
just compensation for the landholdings is considerable, this compensation is not undue because the
The LBP additionally asserts that the petitioners erroneously relied on the ruling in Reyes v. National Housing landholdings the owners gave up in exchange are also similarly considerable – AFC gave up an aggregate
Authority. The LBP claims that we cannot apply Reyes because it involved just compensation that remained landholding of 640.3483 hectares, while HPI’s gave up 805.5308 hectares. When the petitioners surrendered
unpaid despite the finality of the expropriation decision. LBP’s point of distinction is that just compensation was these sizeable landholdings to the government, the incomes they gave up were likewise sizeable and cannot
immediately paid in the present case upon the Court’s determination of the actual value of the expropriated in any way be considered miniscule. The incomes due from these properties, expressed as interest, are what
properties. LBP claims, too, that in Reyes, the Court established that the refusal of the NHA to pay just the government should return to the petitioners after the government took over their lands without full payment
compensation was unfounded and unjustified, whereas the LBP in the present case clearly demonstrated its of just compensation. In other words, the value of the landholdings themselves should be equivalent to the
willingness to pay just compensation. Lastly, in Reyes, the records showed that there was an outstanding principal sum of the just compensation due; interest is due and should be paid to compensate for the unpaid
balance that ought to be paid, while the element of an outstanding balance is absent in the present case. balance of this principal sum after taking has been completed. This is the compensation arrangement that
should prevail if such compensation is to satisfy the constitutional standard of being "just."

Contrary to the LBP’s opinion, the imposition of the 12% interest in Reyes did not depend on either the finality
of the decision of the expropriation court, or on the finding that the NHA’s refusal to pay just compensation Neither can LBP’s payment of the full compensation due before the finality of the judgment of this Court justify
was unfounded and unjustified. Quite clearly, the Court imposed 12% interest based on the ruling in Republic the reduction of the interest due them. To rule otherwise would be to forget that the petitioners had to wait
v. Court of Appeals that "x x x if property is taken for public use before compensation is deposited with the twelve years from the time they gave up their lands before the government fully paid the principal of the just
court having jurisdiction over the case, the final compensation must include interest[s] on its just value to be compensation due them. These were twelve years when they had no income from their landholdings because
computed from the time the property is taken to the time when compensation is actually paid or deposited with these landholdings have immediately been taken; no income, or inadequate income, accrued to them from the
the court. In fine, between the taking of the property and the actual payment, legal interest[s] accrue in order to proceeds of compensation payment due them because full payment has been withheld by government.
place the owner in a position as good as (but not better than) the position he was in before the taking
occurred."29 This is the same legal principle applicable to the present case, as discussed above.
If the full payment of the principal sum of the just compensation is legally significant at all under the
circumstances of this case, the significance is only in putting a stop to the running of the interest due because
While the LBP immediately paid the remaining balance on the just compensation due to the petitioners after the principal of the just compensation due has been paid. To close our eyes to these realities is to condone
this Court had fixed the value of the expropriated properties, it overlooks one essential fact – from the time that what is effectively a confiscatory action in favor of the LBP.
the State took the petitioners’ properties until the time that the petitioners were fully paid, almost 12 long years
passed. This is the rationale for imposing the 12% interest – in order to compensate the petitioners for the
income they would have made had they been properly compensated for their properties at the time of the That the legal interest due is now almost equivalent to the principal to be paid is not per se an inequitable or
taking. unconscionable situation, considering the length of time the interest has remained unpaid – almost twelve long
years. From the perspective of interest income, twelve years would have been sufficient for the petitioners to
double the principal, even if invested conservatively, had they been promptly paid the principal of the just
Finally, the LBP insists that the petitioners quoted our ruling in Land Bank of the Philippines v. Imperial out of compensation due them. Moreover, the interest, however enormous it may be, cannot be inequitable and
context. According to the LBP, the Court imposed legal interest of 12% per annum only after December 31, unconscionable because it resulted directly from the application of law and jurisprudence – standards that
2006, the date when the decision on just compensation became final. have taken into account fairness and equity in setting the interest rates due for the use or forebearance of
money.

The LBP is again mistaken. The Imperial case involved land that was expropriated pursuant to Presidential
Decree No. 27,30 and fell under the coverage of DAR Administrative Order (AO) No. 13.31 This AO provided for If the LBP sees the total interest due to be immense, it only has itself to blame, as this interest piled up
the payment of a 6% annual interest if there is any delay in payment of just compensation. However, Imperial because it unreasonably acted in its valuation of the landholdings and consequently failed to promptly pay the
was decided in 2007 and AO No. 13 was only effective up to December 2006. Thus, the Court, relying on our petitioners. To be sure, the consequences of this failure – i.e., the enormity of the total interest due and the
ruling in the Republic case, applied the prevailing 12% interest ruling to the period when the just compensation alleged financial hemorrhage the LBP may suffer – should not be the very reason that would excuse it from full
remained unpaid after December 2006. It is for this reason that December 31, 2006 was important, not compliance. To so rule is to use extremely flawed logic. To so rule is to disregard the question of how the LBP,
because it was the date of finality of the decision on just compensation. a government financial institution that now professes difficulty in paying interest at 12% per annum, managed
the funds that it failed to pay the petitioners for twelve long years.

The 12% Interest Rate and the Chico-Nazario Dissent


It would be utterly fallacious, too, to argue that this Court should tread lightly in imposing liabilities on the LBP
because this bank represents the government and, ultimately, the public interest. Suffice it to say that public
To fully reflect the concerns raised in this Court’s deliberations on the present case, we feel it appropriate to interest refers to what will benefit the public, not necessarily the government and its agencies whose task is to
discuss the Justice Minita Chico-Nazario’s dissent from the Court’s December 4, 2009 Resolution. contribute to the benefit of the public. Greater public benefit will result if government agencies like the LBP are
conscientious in undertaking its tasks in order to avoid the situation facing it in this case. Greater public
interest would be served if it can contribute to the credibility of the government’s land reform program through
While Justice Chico-Nazario admitted that the petitioners were entitled to the 12% interest, she saw it
the conscientious handling of its part of this program.
appropriate to equitably reduce the interest charges from ₱1,331,124,223.05 to ₱400,000,000.00. In support
of this proposal, she enumerated various cases where the Court, pursuant to Article 1229 of the Civil
Code,32 equitably reduced interest charges. As our last point, equity and equitable principles only come into full play when a gap exists in the law and
jurisprudence.34 As we have shown above, established rulings of this Court are in place for full application to
the present case. There is thus no occasion for the equitable consideration that Justice Chico-Nazario
We differ with our esteemed colleague’s views on the application of equity.
suggested.
The Amount Due the Petitioners as Just Compensation suspend or even disregard rules can be so pervasive and compelling as to alter even that which this Court
itself had already declared to be final.48 [Emphasis supplied.]

As borne by the records, the 12% interest claimed is only on the difference between the price of the
expropriated lands (determined with finality to be ₱1,383,179,000.00) and the amount of ₱411,769,168.32 That the issues posed by this case are of transcendental importance is not hard to discern from these
already paid to the petitioners. The difference between these figures amounts to the remaining balance of discussions. A constitutional limitation, guaranteed under no less than the all-important Bill of Rights, is at
₱971,409,831.68 that was only paid on May 9, 2008. stake in this case: how can compensation in an eminent domain be "just" when the payment for the
compensation for property already taken has been unreasonably delayed? To claim, as the assailed
Resolution does, that only private interest is involved in this case is to forget that an expropriation involves the
As above discussed, this amount should bear interest at the rate of 12% per annum from the time the government as a necessary actor. It forgets, too, that under eminent domain, the constitutional limits or
petitioners’ properties were taken on December 9, 1996 up to the time of payment. At this rate, the LBP now standards apply to government who carries the burden of showing that these standards have been met. Thus,
owes the petitioners the total amount of One Billion Three Hundred Thirty-One Million One Hundred Twenty- to simply dismiss this case as a private interest matter is an extremely shortsighted view that this Court should
Four Thousand Two Hundred Twenty-Three and 05/100 Pesos (₱1,331,124,223.05), computed as follows: not leave uncorrected.

Just Compensation ₱971,409,831.68 As duly noted in the above discussions, this issue is not one of first impression in our jurisdiction; the
consequences of delay in the payment of just compensation have been settled by this Court in past rulings.
Our settled jurisprudence on the issue alone accords this case primary importance as a contrary ruling would
Legal Interest from 12/09/1996
unsettle, on the flimsiest of grounds, all the rulings we have established in the past.

To 05/09/2008 @ 12%/annum
More than the stability of our jurisprudence, the matter before us is of transcendental importance to the nation
because of the subject matter involved – agrarian reform, a societal objective that the government has
12/09/1996 to 12/31/1996 23 days 7,345,455.17 unceasingly sought to achieve in the past half century. This reform program and its objectives would suffer a
major setback if the government falters or is seen to be faltering, wittingly or unwittingly, through lack of good
faith in implementing the needed reforms. Truly, agrarian reform is so important to the national agenda that the
01/01/1997 to 12/31/2007 11 years 1,282,260,977.82 Solicitor General, no less, pointedly linked agricultural lands, its ownership and abuse, to the idea of
revolution.49 This linkage, to our mind, remains valid even if the landowner, not the landless farmer, is at the
receiving end of the distortion of the agrarian reform program.
01/01/2008 to 05/09/2008 130 days 41,517,790.07

As we have ruled often enough, rules of procedure should not be applied in a very rigid, technical sense; rules
₱1,331,124,223.0535 of procedure are used only to help secure, not override, substantial justice.50 As we explained in Ginete v.
Court of Appeals:51
The Immutability of Judgment Issue
Let it be emphasized that the rules of procedure should be viewed as mere tools designed to facilitate the
attainment of justice. Their strict and rigid application, which would result in technicalities that tend to frustrate
As a rule, a final judgment may no longer be altered, amended or modified, even if the alteration, amendment
rather than promote substantial justice, must always be eschewed. Even the Rules of Court reflect this
or modification is meant to correct what is perceived to be an erroneous conclusion of fact or law and
principle. The power to suspend or even disregard rules can be so pervasive and compelling as to alter even
regardless of what court, be it the highest Court of the land, rendered it.36 In the past, however, we have
that which this Court itself has already declared to be final, as we are now constrained to do in the instant case.
recognized exceptions to this rule by reversing judgments and recalling their entries in the interest of
substantial justice and where special and compelling reasons called for such actions.
xxxx
Notably, in San Miguel Corporation v. National Labor Relations Commission,37 Galman v.
Sandiganbayan,38Philippine Consumers Foundation v. National Telecommunications Commission,39 and The emerging trend in the rulings of this Court is to afford every party litigant the amplest opportunity for the
Republic v. de los Angeles,40 we reversed our judgment on the second motion for reconsideration, while in Vir- proper and just determination of his cause, free from the constraints of technicalities. Time and again, this
Jen Shipping and Marine Services v. National Labor Relations Commission,41 we did so on a third motion for Court has consistently held that rules must not be applied rigidly so as not to override substantial
reconsideration. In Cathay Pacific v. Romillo42 and Cosio v. de Rama,43 we modified or amended our ruling on justice.52 [Emphasis supplied.]
the second motion for reconsideration. More recently, in the cases of Munoz v. Court of Appeals,44 Tan Tiac
Chiong v. Hon. Cosico,45Manotok IV v. Barque,46 and Barnes v. Padilla,47 we recalled entries of judgment after
finding that doing so was in the interest of substantial justice. In Barnes, we said: Similarly, in de Guzman v. Sandiganbayan,53 we had occasion to state:

x x x Phrased elsewise, a final and executory judgment can no longer be attacked by any of the parties or be The Rules of Court was conceived and promulgated to set forth guidelines in the dispensation of justice but
modified, directly or indirectly, even by the highest court of the land. not to bind and chain the hand that dispenses it, for otherwise, courts will be mere slaves to or robots of
technical rules, shorn of judicial discretion. That is precisely why courts in rendering justice have always been,
as they ought to be, conscientiously guided by the norm that when on the balance, technicalities take a
However, this Court has relaxed this rule in order to serve substantial justice considering (a) matters of life, backseat against substantive rights, and not the other way around. Truly then, technicalities, in the appropriate
liberty, honor or property, (b) the existence of special or compelling circumstances, (c) the merits of the case, language of Justice Makalintal, "should give way to the realities of the situation. 54 [Emphasis supplied.]
(d) a cause not entirely attributable to the fault or negligence of the party favored by the suspension of the
rules, (e) a lack of any showing that the review sought is merely frivolous and dilatory, and (f) the other party
will not be unjustly prejudiced thereby. We made the same recognition in Barnes,55 on the underlying premise that a court’s primordial and most
important duty is to render justice; in discharging the duty to render substantial justice, it is permitted to re-
examine even a final and executory judgment.
Invariably, rules of procedure should be viewed as mere tools designed to facilitate the attainment of justice.
Their strict and rigid application, which would result in technicalities that tend to frustrate rather than promote
substantial justice, must always be eschewed. Even the Rules of Court reflects this principle. The power to
Based on all these considerations, particularly the patently illegal and erroneous conclusion that the petitioners
are not entitled to 12% interest, we find that we are duty-bound to re-examine and overturn the assailed The information3 reads:chanRoblesvirtualLawlibrary
Resolution. We shall completely and inexcusably be remiss in our duty as defenders of justice if, given the The undersigned Assistant Ombudsman and Graft Investigation and Prosecution Officer III, Office of the
chance to make the rectification, we shall let the opportunity pass. Ombudsman, hereby accuse GLORIA MACAPAGAL-ARROYO, ROSARIO C. URIARTE, SERGIO O.
VALENCIA, MANUEL L. MORATO, JOSE R. TARUC V, RAYMUNDO T. ROQUERO, MA. FATIMA A.S.
VALDES, BENIGNO B. AGUAS, REYNALDO A. VILLAR and NILDA B. PLARAS, of the crime of PLUNDER,
Attorney’s Fees as defined by, and penalized under Section 2 of Republic Act (R.A.) No. 7080, as amended by R.A. No. 7659,
committed, as follows:
We are fully aware that the RTC has awarded the petitioners attorney’s fees when it fixed the just
That during the period from January 2008 to June 2010 or sometime prior or subsequent thereto, in Quezon
compensation due and decreed that interest of 12% should be paid on the balance outstanding after the taking
City, Philippines, and within the jurisdiction of this Honorable Court, accused GLORIA MACAPAGAL-
of the petitioners’ landholdings took place. The petitioners, however, have not raised the award of attorney’s
ARROYO, then the President of the Philippines, ROSARIO C. URIARTE, then General Manager and Vice
fees as an issue in the present motion for reconsideration. For this reason, we shall not touch on this issue at
Chairman, SERGIO O. VALENCIA, then Chairman of the Board of Directors, MANUEL L. MORATO, JOSE R.
all in this Resolution.
TARUC V, RAYMUNDO T. ROQUERO, MA. FATIMA A.S. VALDES, then members of the Board of Directors,
BENIGNO B. AGUAS, then Budget and Accounts Manager, all of the Philippine Charity Sweepstakes Office
WHEREFORE, premises considered, we GRANT the petitioners’ motion for reconsideration. The Court En (PCSO), REYNALDO A. VILLAR, then Chairman, and NILDA B. PLARAS, then Head of
Banc’s Resolution dated December 4, 2009, as well as the Third Division’s Resolutions dated April 30, 2008 Intelligence/Confidential Fund Fraud Audit Unit, both of the Commission on Audit, all public officers committing
and December 19, 2007, are hereby REVERSED and SET ASIDE. the offense in relation to their respective offices and taking undue advantage of their respective official
positions, authority, relationships, connections or influence, conniving, conspiring and confederating with one
another, did then and there willfully, unlawfully and criminally amass, accumulate and/or acquire. Directly or
The respondent Land Bank of the Philippines is hereby ORDERED to pay petitioners Apo Fruits Corporation indirectly, ill-gotten wealth in the aggregate amount or total value of THREE HUNDRED SIXTY FIVE MILLION
and Hijo Plantation, Inc. interest at the rate of 12% per annum on the unpaid balance of the just compensation, NINE HUNDRED NINETY SEVEN THOUSAND NINE HUNDRED FIFTEEN PESOS (PHP365,997,915.00),
computed from the date the Government took the properties on December 9, 1996, until the respondent Land more or less, through any or a combination or a series of overt or criminal acts, or similar schemes or means,
Bank of the Philippines paid on May 9, 2008 the balance on the principal amount. described as follows:

Unless the parties agree to a shorter payment period, payment shall be in monthly installments at the rate of
₱60,000,000.00 per month until the whole amount owing, including interest on the outstanding balance, is fully (a) diverting in several instances, funds from the operating budget of PCSO to its Confidential/Intelligence
paid. Fund that could be accessed and withdrawn at any time with minimal restrictions, and converting,
misusing, and/or illegally conveying or transferring the proceeds drawn from said fund in the
aforementioned sum, also in several instances, to themselves, in the guise of fictitious expenditures, for
Costs against the respondent Land Bank of the Philippines. their personal gain and benefit;

SO ORDERED.
(b) raiding the public treasury by withdrawing and receiving, in several instances, the above-mentioned
amount from the Confidential/Intelligence Fund from PCSO's accounts, and or unlawfully transferring or
G.R. No. 220598, July 19, 2016 conveying the same into their possession and control through irregularly issued disbursement vouchers
and fictitious expenditures; and
GLORIA MACAPAGAL-ARROYO, Petitioner, v. PEOPLE OF THE PHILIPPINES AND THE
SANDIGANBAYAN (FIRST DIVISION), Respondents.
(c) taking advantage of their respective official positions, authority, relationships, connections or influence,
G.R. No. 220953 in several instances, to unjustly enrich themselves in the aforementioned sum, at the expense of, and
the damage and prejudice of the Filipino people and the Republic of the Philippines.
BENIGNO B. AGUAS, Petitioner, v. SANDIGANBAYAN (FIRST DIVISION), Respondent.

CONTRARY TO LAW.cralawred
DECISION
By the end of October 2012, the Sandiganbayan already acquired jurisdiction over GMA, Valencia, Morato and
Aguas. Plaras, on the other hand, was able to secure a temporary restraining order (TRO) from this Court
BERSAMIN, J.: in Plaras v. Sandiganbayan docketed as G.R. Nos. 203693-94. Insofar as Roquero is concerned,
the Sandiganbayan acquired jurisdiction as to him by the early part of 2013. Uriarte and Valdes remained at
large.
We resolve the consolidated petitions for certiorari separately brought to assail and annul the resolutions
issued on April 6, 20151 and September 10, 2015,2 whereby the Sandiganbayan respectively denied their Thereafter, several of the accused separately filed their respective petitions for bail. On June 6, 2013,
demurrer to evidence, and their motions for reconsideration, asserting such denials to be tainted with grave the Sandiganbayan granted the petitions for bail of Valencia, Morato and Roquero upon finding that the
abuse of discretion amounting to lack or excess of jurisdiction. evidence of guilt against them was not strong.4 In the case of petitioners GMA and Aguas, the Sandiganbayan,
through the resolution dated November 5, 2013, denied their petitions for bail on the ground that the evidence
of guilt against them was strong.5 The motions for reconsideration filed by GMA and Aguas were denied by
Antecedents
the Sandiganbayan on February 19, 2014.6 Accordingly, GMA assailed the denial of her petition for bail in this
Court, but her challenge has remained pending and unresolved to date.
On July 10, 2012, the Ombudsman charged in the Sandiganbayan former President Gloria Macapagal-Arroyo
(GMA); Philippine Charity Sweepstakes Office (PCSO) Budget and Accounts Officer Benigno Aguas; PCSO
Personal jurisdiction over Taruc and Villar was acquired by the Sandiganbayan in 2014. Thereafter, said
General Manager and Vice Chairman Rosario C. Uriarte; PCSO Chairman of the Board of Directors Sergio O.
accused sought to be granted bail, and their motions were granted on different dates, specifically on March 31,
Valencia; Members of the PCSO Board of Directors, namely: Manuel L. Morato, Jose R. Taruc V, Raymundo
20147 and May 9, 2014,8 respectively.
T. Roquero, and Ma. Fatima A.S. Valdes; Commission on Audit (COA) Chairman Reynaldo A. Villar; and COA
Head of Intelligence/Confidential Fund Fraud Audit Unit Nilda B. Plaras with plunder. The case was docketed
The case proceeded to trial, at which the State presented Atty. Aleta Tolentino as its main witness against all
as Criminal Case No. SB-12-CRM-0174 and assigned to the First Division of the Sandiganbayan.
the accused. The Sandiganbayan rendered the following summary of her testimony and evidence in its
resolution dated November 5, 2013 denying the petitions for bail of GMA and Aguas, to In the Comparative Income Statement (Exh. "K"), the 2008 Confidential/Intelligence Expense budget was
wit:chanRoblesvirtualLawlibrary approved for P28 million. The Confidential and Extra-Ordinary Miscellaneous Expenses is the account being
She is a certified public accountant and a lawyer. She is a member of the Philippine Institute of Certified Public used for confidential and intelligence expenses. The amount in the financial statements is over the budgeted
Accountants and the Integrated Bar of the Philippines. She has been a CPA for 30 years and a lawyer for 20 amount of P28 million. Further, the real disbursement is more than that, based on a summary of expenditures
years. She has practiced accountancy and law. She became accounting manager of several companies. She she had asked the treasurer to prepare.
has also taught subjects in University of Santo Tomas, Manuel L. Quezon University, Adamson University and
the Ateneo de Manila Graduate School. She currently teaches Economics, Taxation and Land Reform. In the Comparative Income Statement for 2009 Budget against the 2008 Actual Budget (Exh. "L"), the budget
for CIF and expenses was P60 million.
Presently, she is a Member of the Board of Directors of the PCSO. The Board appointed her as Chairman of
an Audit Committee. The audit review proceeded when she reviewed the COA Annual Reports of the PCSO In the 2009 COA report, it was noted that there was still no deposit to the prize and charity funds, despite the
for 2006, 2007, 2008 and 2009 (Exhibits "D", "E", "F" and "G", respectively), and the annual financial instruction or recommendation of COA. The funds were still deposited in one account. The COA observation in
statements contained therein for the years 2005 to 2009. The reports were given to them by the COA. These 2007 states that there is juggling or commingling of funds.
are transmitted to the PCSO annually after the subject year of audit.
After she had concluded the audit review, she reported her findings to the Board of Directors in one of their
One of her major findings was that the former management of the PCSO was commingling the charity fund, executive meetings. The Board instructed her to go in-depth in the investigation of the disbursements of CIF.
the prize fund and the operating fund. By commingling she means that the funds were maintained in only one
main account. This violates Section 6 of Republic Act 1169 (PCSO Charter) and generally accepted The Audit Committee also asked Aguas why there were disbursements in excess of P10 million. He explained
accounting principles. that there were board resolutions confirming additional CIF which were approved by former President Arroyo.
Aguas mentioned this in one of their meetings with the directors and corporate secretary. The board secretary,
The Audit Committee also found out that there was excessive disbursement of the Confidential and Atty. Ed Araullo, gave them the records of those resolutions.
Intelligence Fund (CIF). There were also excessive disbursements for advertising expenses. The internal audit
department was also merged with the budget and accounting department, which is a violation of internal audit In the records that Araullo submitted to her, it appears that Uriarte would ask for additional CIF, by letter and
rules. President Arroyo approves it by affixing her signature on that same letter-request. There were seven letters or
memoranda to then President Arroyo, with the subject "Request for Intelligence Fund."
There was excessive disbursement of the CIF because the PCSO was given only P10 million in 2002, i.e. P5
million for the Office of the Chairman and P5 million for the Office of the General Manager. Such allocation She then asked their Treasurer, Mercy Hinayon, to give her a summary of all the disbursements from CIF from
was based on the letters of then Chairman Lopez (Exh. "I") and then General Manager Golpeo (Exh. "J"), 2007 to 2010. The total of all the amounts in the summaries for three years is P365,997,915.
asking for P5 million intelligence fund each. Both were dated February 21, 2000, and sent to then President
Estrada, who approved them. This allocation should have been the basis for the original allocation of the CIF After receiving the summaries of the disbursed checks, she asked Hinayon to give her the checks or copies
in the PCSO, but there were several subsequent requests made by the General Manager during the time of, thereof. She also asked Dorothy Robles, Budget and Accounting Manager, to give her the corresponding
and which were approved by, former President Arroyo. vouchers. Only two original checks were given to her, as the rest were with the bank. She asked her to
request certified true copies of the checks.
The allocation in excess of P10 million was in violation of the PCSO Charter. PCSO did not have a budget for
this. They were working on a deficit from 2004 to 2009. The charter allows only 15% of the revenue as They were then called to the Senate Blue Ribbon Committee, which was then investigating the operation of
operating fund, which was already exceeded. The financial statements indicate that they were operating on a PCSO, including the CIF. She was invited as a resource speaker in an invitation from Chairman Tcoilsto
deficit in the years 2006 to 2009. Guingona III (Exh. "DD"). Before the hearing, the Committee Chairman went to the PCSO and got some
documents regarding the subject matter being investigated. Araullo was tasked to prepare all the documents
It is within the power of the General Manager to ask for additional funds from the President, but there should needed by the Committee. These documents included the CIF summary of disbursements, letters of Uriarte
be a budget for it. The CIF should come from the operating fund, such that, when there is no more operating and the approval of the former president.
fund, the other funds cannot be used.
She attended whenever there were committee hearings. Among those who also attended were the incoming
The funds were maintained in a commingled main account and PCSO did not have a registry of budget members if the PCSO Board Directors and the directors. Accused Valencia and Aguas were also present in
utilization. The excess was not taken from the operating fund, but from the prize fund and the charity fund. some hearings as resources speakers. They were invited in connection with the past disbursements of PCSO
related to advertising expenses, CIF, vehicles for the bishops, and the commingling of funds.
In 2005, the deficit was P916 million; in 2006, P1,000,078,683.23. One of the causes of the deficit for 2006
was the CIF expense of P215 million, which was in excess of the approved allocation of P10 million. The net The proceedings in the Committee were recorded and she secured a copy of the transcript of stenographic
cash provided by operating expenses in 2006 is negative, which means that there were more expenses than notes from the Office of the Blue Ribbon Committee. In the proceeding on June 7, 2011 (Exh. "EE"), Uriarte
what was received. testified. The witness was about two to three meters away from Uriarte when the latter testified, and using a
microphone.
In the 2007 COA report, it was found that there was still no deposit to the prize and charity funds. The COA
made a recommendation regarding the deposits in one main account. There were also excessive According to the witness, Uriarte testified that all the confidential intelligence projects she had proposed were
disbursements of CIF amounting to P77,478,705. approved by President Arroyo; all the requests she gave to the President were approved and signed by the
latter personally in her (Uriarte's) presence; and all the documents pertaining to the CIF were submitted to
She received a copy of the PCSO corporate operating budget (COB) for the year 2008 in 2010 because she President Arroyo. On the other hand, Valencia and Taruc said they did not know about the projects.
was already a member of its Board of Directors. The 2008 approved COB has a comparative analysis of the Statements before the Committee are under oath.
actual budget for 2007 (Exh. "K"). It is stated there that the budget for CIF in 2007 is only P25,480,550. But the
financial statements reflect P77 million. The budget was prepared and signed by then PCSO General Manager After the Committee hearings, she then referred to the laws and regulations involved to check whether the
Rosario Uriarte. It had accompanying Board Resolution No. 305, Series of 2008, which was approved by then disbursements were in accordance with law. One of the duties and responsibilities of the audit committee was
Chairperson Valencia, and board members Valdes, Morato, Domingo, and attested to by Board Secretary Atty. to verify compliance with the laws.
Ronald T. Reyes.
She considered the following laws: R.A. 1169, as amended (PCSO Charter); P.D. 1445 (COA Code); LOI
In the 2008 COA report, it was noted that there was still no deposit to the prize and charity funds, adverted in 1282; COA Circular 92-385, as amended by Circular 2003-002, which provides the procedure for approval of
the 2007 COA report. There was already a recommendation by the COA to separate the deposits or funds in disbursements and liquidation of confidential intelligence funds. She made a handwritten flowchart (Exh. "II")
2007. But the COA noted that this was not followed. The financial statements show the Confidential and the of the allocations/disbursements/liquidation and audit of the CIF, based on LOI 1282 and the COA Circulars. A
Extra-Ordinary Miscellaneous Expenses account is P38,293,137, which is more than the P10 million that was digital presentation of this flowchart was made available.
approved.
The first step is the provision or allotment of a budget because no CIF fund can be disbursed without the
allocation. This is provided in the second whereas clause of Circular 92-385. For GOCCs, applying Circular care of the funds which are to be handled with utmost confidentiality. The witness is familiar with Valencia's
2003-002, there must be allocation or budget for the CIF and it should be specifically in the corporate signature because it appears on PCSO official documents. Under COA rules, the Board of Directors has
operating budget or would be taken from savings authorized by special provisions. authority to designate the SDO. The chairman could not do this by himself.

This was not followed in the PCSO CIF disbursement in 2008. The disbursement for that year was Plaras wrote a letter dated December 15, 2008 to Valencia. It appears in the letter that to substantiate the
P86,555,060. The CIF budget for that year was only P28 million, and there were no savings because they liquidation report, Plaras told Valencia to designate himself as SDO because there was no disbursing officer. It
were on deficit. This was also not followed for the year 2009. The CIF disbursement for that year was was the suggestion of Plaras. Plaras is the head of the CIF Unit under then COA Chairman Villar. Liquidation
P139,420,875. But the CIF budget was only P60 million, and there was also no savings, as they were in deficit. vouchers and supporting papers were submitted to them, with corresponding fidelity bond.
For the year 2010, the total disbursement, as of June 2010, was P141,021,980. The budget was only P60
million. COA Circulars 92-385 and 2003-002 indicate that to disburse CIF, one must be a special disbursing officer or
SDO. All disbursing officers of the government must have fidelity bonds. The bond is to protect the
The requirements in the disbursement of the CIF are the budget and the approval of the President. If the government from and answer for misappropriation that the disbursing officer may do. The bond amount
budget is correct, the President will approve the disbursement or release of the CIF. In this case, the President required is the same as the amount that may be disbursed by the officer. It is based on total accountability and
approved the release of the fund without a budget and savings. Also, the President approved the same in not determined by the head of the agency as a matter of discretion. The head determines the accountability
violation of LOI 1282, because there were no detailed specific project proposals and specifications which will be the basis of the bond amount.
accompanying the request for additional CIF. The requests for the year 2008, 2009 and 2010 were uniform
and just enumerated the purposes, not projects. They did not contain what was required in the LOI. The Charter states that the head of the agency is the Board of Directors, headed by the Chairman. But now,
under the Governance of Government Corporation law, it is the general manager.
The purpose of this requirement is stated in the LOI itself. The request for allocations must contain full details
and specific purposes for which the fund will be used. A detailed presentation is made to avoid duplication of Plaras should have disallowed or suspended the cash advances because there was no fidelity bond and the
expenditures, as what had happened in the past, because of a lack of centralized planning and organization or disbursing officer was not authorized. There was no bond put up for Valencia. The records show that the bond
intelligence fund. for Uriarte was only for the amount of P1.5 million. This is shown in a letter dated August 23, 2010, to COA
Chairman Villar through Plaras from Aguas (Exh. "B5"), with an attachment from the Bureau of Treasury, dated
There was no reason for each additional intelligence fund that was approved by then President Arroyo. March 2, 2009. It appears there that the bond for Uriarte for the CIF covering the period February 2009 to
February 2010 was only P1.5 million.
The third step is the designation of the disbursing officer. In this case, the Board of Directors designated
Uriarte as Special Disbursing Officer (SDO) for the portion of the CIF that she withdrew. For the portion Aguas submitted this fidelity bond certification, which was received on August 24, 2010, late, because under
withdrawn by Valencia, there was no special disbursing officer designated on record. the COA Circulars, it should have been submitted when the disbursing officer was designated. It should have
been submitted to COA because a disbursing officer cannot get cash advances if they do not have a fidelity
The designation of Uriarte was in violation of internal control which is the responsibility of the department head, bond.
as required by Section 3 of Circular 2003-002. When she went through copies of the checks and disbursement
vouchers submitted to her, she found out that Uriarte was both the SDO and the authorized officer to sign the Once an SDO is designated, the specimen signature must be submitted to COA, together with the fidelity bond
vouchers and checks. She was also the payee of the checks. All the checks withdrawn by Uriarte were paid to and the signatories for the cash advances.
her and she was also the signatory of the checks.
The approval of the President pertains to the release of the budget, not its allocation. She thinks the action of
Aside from Uriarte, Valencia also disbursed funds in the CIF. For the funds withdrawn by Valencia, he was the Board was done because there was no budget. The Board's confirmation was needed because it was in
also the authorized officer to sign the vouchers and checks. He was also the payee of the checks. excess of the budget that was approved. They were trying to give a color of legality to them approval of the
CIF in excess of the approved corporate operating budget. The Board approval was required for the amount to
The confidential funds were withdrawn through cash advance. She identified the vouchers and checks be released, which amount was approved in excess of the allotted budget for the year. The President cannot
pertaining to the disbursements made by Uriarte and Valencia in 2008, 2009 and 2010. approve an additional amount, unless there is an appropriation or a provision saying a particular savings will
be used for the CIF. The approvals here were all in excess of the approved budget.
The checks of Uriarte and Valencia had the treasurer as cosignatory. The treasurer who signed depends on
when the checks were issued Cash advances can be given on a per project basis for CIF. For one to get a cash advance, one must state
what the project is as to that cash advance. No subsequent cash advance should be given, until previous cash
She knows the signatures of Uriarte, Valencia and Aguas because they have their signatures on the records. advances have been liquidated and accounted for. If it is a continuing project, monthly liquidation reports must
be given. The difference in liquidation process between CIF and regular cash advances is that for CIF, the
Uriarte and Valencia signed the vouchers to certify to the necessity and legality of the vouchers; they also liquidation goes to the Chair and not to the resident auditor of the agency or the GOCC. All of the liquidation
signed to approve the same, signify they are "okay" for payment and claim the amount certified and approved papers should go to the COA Chair, given on a monthly basis.
as payee. Gloria P. Araullo signed as releasing officer, giving the checks to the claimants.
In this case, the vouchers themselves are couched generally and just say cash advance from CIF of the
Accused Aguas signed the vouchers to certify that there are adequate funds and budgetary allotment, that the Chairman or from the GM's office in accordance with her duties. There is no particular project indicated for the
expenditures were properly certified and supported by documents, and that the previous cash advances were cash advance. Also, the requirement that prior advances be liquidated first for subsequent advances to be
liquidated and accounted for. This certification means that the cash advance voucher can be released. This is given was not followed. The witness prepared a summary of the cash advances withdrawn by the two
because the COA rule on cash advance is that before any subsequent cash advance is released, the previous disbursing officers covering the years 2008, 2009 and 2010 (Exh. "D5"). The basis for this summary is the
cash advance must be liquidated first. This certification allowed the requesting party and payee to get the cash record submitted to them by Aguas, which were supposedly submitted to COA. It shows that there were
advance from the voucher. Without this certification, Uriarte and Valencia could not have been able to get the subsequent cash advances, even if a prior advance has not yet been liquidated. Valencia submitted liquidation
cash advance. Otherwise, it was a violation of P.D. 1445 (Government Auditing Code). reports to Villar, which consists of a letter, certification and schedule of cash advances, and liquidation reports.
One is dated July 24, 2008 (Exh. "G5") and another is dated February 13, 2009 (Exh. "H5").
The third box in the flowchart is the designation of the SDO. Board Resolutions No. 217, Series of 2009
(Exh."M"), No. 2356, Series of 2009 (Exh."N"), and No. 029, Series of 2010 (Exh. "O"), resolved to designate When she secured Exhibit "G5", together with the attached documents, she did not find any supporting
Uriarte as SDO for the CIF. These resolutions were signed and approved by Valencia, Taruc, Valdes, Uriarte, documents despite the statement in Exhibit "G5" that the supporting details of the expenses that were incurred
Roquero and Morato. The witness is familiar with these persons' signature because their signatures appear on from the fund can be made available, if required. Aguas, the person who processed the cash advances said
PCSO official records. he did not have the details or supporting details of documents of the expenditures.

Valencia designated himself as SDO upon the recommendation of COA Auditor Plaras. There was no board Normally, when liquidating CIF, the certification of the head of the agency is necessary. If there were vouchers
resolution for this designation. There was just a certification dated February 2, 2009 (Exh. "Z4"). This or receipts involved, then all these should be attached to the liquidation report. There should also be an
certification was signed by Valencia himself and designates himself as the SDO since he is personally taking accomplishment report which should be done on a monthly basis. All of these should be enclosed in a sealed
envelope and sent to the Chairman of the COA, although the agency concerned must retain a photocopy of Since these cash advances were in excess of the appropriation, in effect, they were disbursed without any
the documents. The report should have a cover/transmittal letter itemizing the documents, as well as appropriation. These cash advances were also made without any specific project, in violation of par. 2 of COA
liquidation vouchers and other supporting papers. If the liquidation voucher and the supporting papers are in Circular No. 92-385. In this case, the cash advances were not for a specific project. The vouchers only
order, then the COA Chairman or his representative shall issue a credit memorandum. Supporting papers indicate the source of the fund. The vouchers did not specify specific projects.
consist of receipts and sales invoices. The head of the agency would have to certify that those were all
actually incurred and are legal. In this case, there were no supporting documents submitted with respect to The total cash advances for the years 2008, 2009 and 2010 to accused Uriarte and Valencia is more than
Valencia's cash advances in 2008. Only the certifications by the SDO were submitted. These certifications P366,000,000. Valencia cash advanced P13.3 million. The rest was made by Uriarte.
stated that he has the documents in his custody and they can be made available, if and when necessary.
The memoranda to President Arroyo stated only the problems encountered by the PCSO. These problems, as
When she reviewed the CIF, she asked Aguas to produce the supporting documents which were indicated in stated in each memorandum, included donated medicines sometimes ending up in store for sale, unofficial
Valencia's certification and Aguas's own certification in the cash advance vouchers, where he also certified use of ambulances, rise of expenditures of endowment fund, lotto sweepstakes scams, fixers for programs of
that the documents supporting the cash advance were in their possession and that there was proper the PCSO, and other fraudulent schemes. No projects were mentioned.
liquidation. Aguas replied that he did not have them.
As regards the sixth step - the credit notice, the same was not validly issued by the COA. The credit notice is a
She identified the letter of Uriarte to Villar dated July 24, 2008 as well as a transmittal letter by Uriarte for settlement or an action made by the COA Auditors and is given once the Chairman, in the case of CIF Fund,
August 1, 2008, a certification and schedule of cash advances and an undetailed liquidation report. Among the finds that the liquidation report and all the supporting papers are in order. In this case, the supporting papers
attachments is Board Resolution 305, a copy of the COB for 2008, a document for the second half of 2008, a and the liquidation report were not in order, hence, the credit notice should not have been issued. Further, the
document dated April 2, 2009, and a document for liquidation of P2,295,000. She also identified another letter credit notice has to follow a specific form. The COA Chairman or his representative can: 1) settle the cash
for P50 million, dated February 13, 2009, attached to the transmittal letter. There is a certification attached to advance when everything is in order; 2) suspend the settlement if there are deficiencies and then ask for
those two letters amounting to P2,295,000. Also attached is the schedule of cash advances by Aguas and a submission of the deficiencies; or 3) out rightly disallow it in case said cash advances are illegal, irregular or
liquidation report where Aguas certified that the supporting documents are complete and proper although the unconscionable, extravagant or excessive. Instead of following this form, the COA issued a document dated
supporting documents and papers are not attached to the liquidation report, only the general statement. These January 10, 2011, which stated that there is an irregular use of the price fund and the charity fund for CIF
documents were submitted to them by Aguas. Fund. The document bears an annotation which says, "wait for transmittal, draft" among others. The document
was not signed by Plaras, who was the Head of the Confidential and Intelligence Fund Unit under COA
She was shown the four liquidation reports (Exhibits "M5", "N5", "O5" and "P5") attached to the transmittal letter Chairman Villar. Instead, she instructed her staff to "please ask Aguas to submit the supplemental budget."
and was asked whether they were properly and legally accomplished. She replied that they were couched in This document was not delivered to PCSO General Manager J.M. Roxas. They instead received another letter
general terms and the voucher for which the cash advance was liquidated is not indicated and only the dated January 13, 2011 which was almost identical to the first document, except it was signed by Plaras, and
voucher number is specified. She adds that the form of the liquidation is correct, but the details are not there the finding of the irregular use of the prize fund and the charity fund was omitted. Instead, the work "various"
and neither are the supporting papers. was substituted and then the amount of P137,500,000. Therefore, instead of the earlier finding of irregularity,
suddenly, the COA issued a credit notice as regards the total of P140,000,000. The credit notice also did not
The liquidation report was dated July 24, 2008, but it was submitted only on August 1, 2008 to COA, and it specify that the transaction had been audited, indicating that no audit was made.
supposedly covered the cash advances of Uriarte from January to May 2008. This is stated in her summary of
liquidation that was earlier marked. There were no supporting papers stated on or attached to the liquidation A letter dated May 11, 2009 from the COA and signed by Plaras, states that the credit notice is hereby issued.
report. Thus, it is equivalent to the credit notice, although it did not come in the required form. It merely stated that the
credit notice is issued for P29,700,000, without specifying for which vouchers and for which project the credit
She identified a set of documents to liquidate the cash advances from the CIF for the second semester of notice was being given. It merely says "First Semester of 2008". In other words, it is a "global" credit notice
2008 by Uriarte. The transmittal letter of Uriarte was received by the COA on April 2, 2009. Upon inquiry with that she issued and it did not state that she made an audit.
Aguas, he said that he did not have any of the supporting papers that he supposedly had according to the
certification. According to him, they are with Uriarte. Uriarte, on the other hand, said, during the Senate Another letter, dated July 14, 2010 and signed by Plaras, supposedly covers all the cash advances in 2009,
hearing, that she gave them to President Arroyo. but only up to the amount of P116,386,800. It also did not state that an audit was made.

When Plaras wrote Valencia on December 15, 2008, Aguas wrote back on behalf of Valencia, who had There were no supporting papers attached to the voucher, and the certification issued is not in conformity with
designated himself as SDO. However, their designations, or in what capacity they signed the voucher are not the required certification by COA Circular 2003-002. The certification dated July 24, 2008 by Valencia was not
stated. Among the attachments is also a memorandum dated April 2, 2008 (Exhibit "P 5"), containing the in conformity with the certification required by COA. The required form should specify the project for which the
signature of Arroyo, indicating her approval to the utilization of funds. Another memorandum, dated August 13, certification was being issued, and file code of the specific project. The certification dated July 24, 2008,
2008, indicating the approval of Arroyo was also attached to the transmittal letter of Aguas on April 4, 2009. however, just specified that it was to certify that the P2 million from the 2008 CIF Fund was incurred by the
These two memoranda bear the reasons for the cash advances, couched in general terms. The reasons were undersigned, in the exercise of his functions as PCSO Chairman for the various projects, projects and
donated medicines that were sold and authorized expenditures on endowment fund. The reasons stated in the activities related to the operation of the office, and there was no specific project or program or file code of the
memoranda are practically the same. Uriarte did not submit any accomplishment reports regarding the intelligence fund, as required by COA. Furthermore, the certification also did not contain the last paragraph as
intelligence fund. Aguas submitted an accomplishment report, but the accomplishments were not indicated in required by COA. Instead, the following was stated in the certification: "He further certifies that the details and
definite fashion or with specificity. supporting documents and papers on these highly confidential missions and assignments are in our custody
and kept in our confidential file which can be made available if circumstances so demand." No details or
The witness narrated, based on her Summary of Liquidation Reports in 2009, that the total cash advance supporting documents were reviewed by the witness, and though she personally asked Aguas, the latter said
made by Uriarte was P132,760,096. Arroyo approved P90 million for release. P10 million in January 2009 and that he did not have the supporting papers, and they were not in the official files of the PCSO. Two people
April 27, 2009, and then P50 million in May 6, 2009 in July 2, 2009, P10 million or a total of P70 million. In should have custody of the papers, namely, The Chairman of COA and the PCSO or its Special Disbursing
October 2009, P20 million or a total of P90 million. The amount that was cash advanced by Valencia was Officer. The witness asked Aguas because Valencia was not there, and also because Aguas was the one who
P5,660,779. Therefore, the total cash advances by these two officials were P138,420,875, but all of these made the certification and was in-charge of accounting. The vouchers, supposedly certified by Aguas, as
were never liquidated in 2009. Uriarte and Valencia only submitted a liquidation voucher and a report to COA Budget and Accounting Department Manager, each time cash advances were issued, stated that the
on April 12, 2010. For the January 22, 2009 disbursements, the date of the liquidation voucher was June 30, supporting documents are complete, so the witness went to him to procure the documents.
2009, but it was submitted to COA on April 12, 2010. Witness identified the transmittal letter for P28 million by
Uriarte, dated October 19, 2009, which was received by the COA only on April 12, 2010, with an A certification dated February 13, 2009, stating that P2,857,000 was incurred by Valencia in the exercise of his
accompanying certification from Uriarte as to some of the documents from which the witness's Summary of function as PCSO Chairman, related to the operations of his office without the specific intelligence project. In
Liquidation was based. the same document, there is a certification similar to one in the earlier voucher. No details of this certification
were submitted by Aguas.
The cash advances made by Uriarte and Valencia violated par. 1, Sec. 4 and Sec. 84 of P.D. 1445 and par. 2,
III, COA Circular No. 92-385. Another certification dated July 24, 2008 was presented, and it also did not specify the intelligence and
confidential project, and it did not contain any certification that the amount was disbursed legally or that no
benefits was given to any person. Similarly, the fourth paragraph of the same document states that Uriarte Such form was in COA Circular 2003-002, and should specify the liquidation report number, the amount,
certified that details and supporting papers of the cash advance that she made of P27,700,000 are "kept in check numbers, and the action taken by the auditor. The auditor should also include a certification that these
their confidential" (sic). The same were not in the PCSO official records. have been audited. In this instance, no certification that the transaction was audited was given by Plaras.
Other similar letters did not conform with the COA Circular. All transactions of the government must be subject
The certification dated October 19, 2009 for the amount of P2,498,300, was submitted to the witness by Aguas. to audit in accordance with the provisions of the Constitution. Nevertheless, the requirements for audit are the
It also did not conform to the COA requirements, as it also did not specify the use of the cash advance, did not same.
contain any certification that the cash advance was incurred for legal purposes, or that no benefits to other
people were paid out of it. Again, no supporting documents were found and none were given by Aguas. The effect of the issuance of the credit notice by the COA was that the agency will take it up in the books and
Similarly, a certification dated February 8, 2010 for the amount of P2,394,654 was presented, and it also does credit the cash advance. This is the seventh step in the flowchart. Once there is a cash advance, the liability of
not conform with the COA circular, as it only stated that the amount was spent or incurred by Valencia for the officers who obtained the cash advance would be recorded in the books. The credit notice, when received,
projects covering the period of July 1 to December 31, 2009 to exercise his function as PCSO Chairman, thus would indicate that the account was settled. The agency will credit the receivable or the cash advance, and
no particular intelligence fund or project was stated. As in the other certifications, though it was stated that the remove from the books as a liability of the person liable lor the cash advance. The effect of this was that the
details were in the confidential file, it appeared that these were not in the possession of PCSO. Another financial liabilities of Uriarte and Valencia were removed from the books, but they could still be subject to
certification dated October 19, 2009 submitted by Uriarte was examined by the witness in the course of her criminal liability based on Sec. 10 of COA Circular 91-368 (Government Accounting and Auditing Manuals, Vol.
audit, and found that it also did not conform to the requirements, as it only stated that the P25 million and P10 1, implementing P.D. 1445), which states: "The settlement of an account whether or not on appeal has been
million intelligence and confidential fund dated January 29, 2009 and April 27, 2009 were used in the exercise made within the statutory period is no bar to criminal prosecution against persons liable." From the 2008 COA
of her function as PCSO Vice Chairman and General Manager. Annual Audited Financial Statements of PCSO, it was seen that the procedure was not followed because the
liability of the officers was already credited even before the credit notice was received. In the financial
All the documents were furnished by Aguas during the course of the audit of the financial transactions of statements, it was stated that the amount due from officers and employees, which should include the cash
PCSO. Other documents given by Aguas include a letter by Valencia to COA Chairman Villar, which was advances obtained by Uriarte and Valencia, were not included because the amount stated therein was P35
attached to the letter dated July 24, 2008. For the Certification issued by Valencia for P2,857,000, there was million, while the total vouchers of Uriarte and Valencia was P86 million.
also a certification attached dated February 13, 2009. As to Exhibit "J5", together with the certification, there
was a letter but no other documents were submitted. Similarly, as to Exhibit "M 6", it was attached to a letter The witness also related that she traced the records of the CIF fund (since such was no longer stated as a
dated October 19, 2009 and was submitted to the witness by Aguas. Exhibit "N 6" was attached to the letter of receivable), and reviewed whether it was recorded as an expense in 2008. She found out that the recorded
Valencia dated February 8, 2010, the October 19, 2009 certification was attached to the October 19, 2009 CIF fund expense, as recorded in the corporate operating budget as actually disbursed, was only P21,102,000.
letter to Chairman Villar. As such, she confronted her accountants and asked them "Saan tinago itong amount na to?" The personnel in
the accounting office said that the balance of the P86 million or the additional P21 million was not recorded in
The certification dated June 29, 2010, signed by Valencia in the amount of P2,075,000, also does not conform the operating fund budget because they used the prize fund and charity fund as instructed by Aguas. Journal
with the COA requirement as it only specifies that the fund was disbursed by Valencia under his office for Entry Voucher No. 8121443 dated December 31, 2008, signed by Elmer Camba, Aguas (Head of the
various programs in the exercise of his function as Chairman. Though there was a certification that the Accounting Department), and Hutch Balleras (one of the staff in the Accounting Department), showed that this
supporting papers were kept in the office, these papers were not found in the records of the PCSO and Aguas procedure was done.
did not have any of the records. The certification was attached to the letter of Valencia to Villar dated June 29,
2010. The contents of the Journal Entry Voucher are as follows:chanRoblesvirtualLawlibrary

In the certification dated June 29, 2010 signed by Uriarte in the amount of P137,500,000, the witness also said (a) Accounts and Explanation: Due to other funds. This means that the amount of P63,750,000 was
that the certification did not conform to the COA Circular because it only stated that the amount was disbursed credited as confidential expense from the operating fund. The amount was then removed from the
from a special intelligence fund, authorized and approved by the President under the disposition of the Office operating fund, and it was passed on to other funds.
of the Vice Chairman. Despite the statement certifying that there were documents for the audit, no documents
were provided and the same were not in the official files of PCSO. The certification was attached to a letter by
Uriarte dated July 1, 2010 addressed to Villar.
(b) PF Miscellaneous, Account No. 424-1-L P41,250,000 and CF Miscellaneous for 424-2-G for
In the certification dated October 19, 2009 signed by Uriarte in the amount of P2,500,000, the witness made P22,500,000. PF Miscellaneous means Prize Fund Miscellaneous and CF stands for Charity Fund
the same finding that it also did not conform to the COA Circular, as it did not specify the project for which the Miscellaneous. This means that funds used to release the cash advances to Uriarte and Valencia were
cash advance was obtained and there were also no records in the PCSO. It was attached to the letter dated from the prize fund and charity.
October 19, 2009.
Attached to the Journal Entry Voucher was a document which reads "Allocation of Confidential and
Finally, in the certification dated February 9, 2010 signed by Uriarte in the amount of P73,993,846, the witness Intelligence Fund Expenses", and was the basis of Camba in doing the Journal Entry Voucher. In the same
likewise found that it did not conform with the requirements of the COA, as all it said was the amount was used document, there was a written annotation dated 12-31-2008 which reads that the adjustment of CIF, CF and IF,
for the exercise of the functions of the PCSO Chairman and General Manager. The documents related to this beneficiary of the fund is CF and PF and signed by Aguas.
were also not in the PCSO records and Aguas did not submit the same. It was attached to a letter dated
February 8, 2010 from Uriarte to Villar. The year 2009 was a similar case, as the witness traced the recording of the credit notice at the end of 2009,
and despite the absence of the credit notice, the Accounting Department removed from the books of PCSO
There are two kinds of audit on disbursements of government funds: pre-audit and post-audit. Both are the liability of Uriarte and Valencia, corresponding to the cash advances obtained in 2009. She based this
defined in COA Circular 2009-002. Pre-audit is the examination of documents supporting the transaction, finding on the COA Annual Audit Report on the PCSO for the year ended December 31, 2009. It was stated in
before these are paid for and recorded. The auditor determines whether: (1) the proposed expenditure was in the Audit Report that the total liability due from officers and employees was only P87,747,280 and it was less
compliance with the appropriate law, specific statutory authority or regulations; (2) sufficient funds are than the total cash advances of Uriarte and Valencia, which was P138 million. As a result, the witness
available to enable payment of the claim; (3) the proposed expenditure is not illegal, irregular, extravagant, checked the corresponding entry for the expenses in the corporate operating budget and found out that the
unconscionable or unnecessary, and (4) the transaction is approved by the proper authority and duly same was understated. The CIF expenses were only P24,968,300, as against the actual amount per vouchers,
supported by authentic underlying evidence. On the other hand, the post-audit requirement is the process which was P138,420,875. Upon checking with the Accounting Department, the department showed her
where the COA or the auditor will have to do exactly what was done in the pre-audit, and in addition, the another Journal Entry Voucher No. 9121157, dated December 29, 2009, where the personnel removed
auditor must supplement what she did by tracing the transaction under audit to the books of accounts, and that immediately the expense and recorded it as expense for the prize fund and charity fund by the end of
the transaction is all recorded in the books of accounts. The auditor, in post-audit, also makes the final December 31.
determination of whether the transaction was not illegal, irregular, extravagant, excessive, unconscionable or
unnecessary. The contents of the Journal Entry Voucher, especially the notation "due from", means the accountability of
those who had cash advance was instead credited. It was removed, and the amount was P106 million. The
In this case, no audit was conducted. In a letter dated May 11, 2009 signed by Plaras, it was stated that a entry was confidential expense for P15,958,020 and then the due to other funds was P90,428,780. The
credit advice was given. However, the letter did not conform to the requirements or form of a credit notice. explanation for "424" was found in the middle part, stating: "424-1-L" of miscellaneous prize fund was used in
the amount of P58,502,740 and the charity fund was used in the amount of P31,916,040. The total amount of any criminal design; and that the fact that Plaras had signed "by authority" of Villar as the COA Chairman
the receivables from Uriarte and Valencia that was removed was P106,386,800 and P90,428,780 respectively could not criminally bind him in the absence of any showing of conspiracy.
which came from the prize fund and charity fund.
However, the Sandiganbayan denied the demurrers of GMA, Aguas and Valencia, holding that there was
The witness reported the discrepancy because there were violations of R.A. 1169, Sec. 6, which provides for sufficient evidence showing that they had conspired to commit plunder; and that the Prosecution had
the different funds of PCSO namely: prize fund (55% of the net receipts), charity fund (30% of the net receipts), sufficiently established a case of malversation against Valencia, pertinently
and operating fund (15%). The proceeds of the lotto and sweepstakes ticket sales provide the money for these saying:chanRoblesvirtualLawlibrary
different funds, removing first the printing cost and the net proceeds (98%) is divided among the three funds Demurrer to evidence is an objection by one of the parties in an action, to the effect that the evidence which
mentioned. The prize fund is the fund set aside to be used to pay the prizes for the winnings in the lotto or his adversary produced is insufficient in point of law, whether true or not, to make out a case or sustain the
sweepstakes draws, whether they are jackpot or consolation prizes. Incentives to the lotto operators or horse issue. The party demurring challenges the sufficiency of the whole evidence to sustain a verdict. The
owners are also drawn from this fund, as all of the expenses connected to the winnings of the draw. On the court then ascertains whether there is a competent or sufficient evidence to sustain the indictment or
other hand, the charity fund is reserved for charity programs approved by the board of PCSO, and constitutes to support a verdict of guilt.
hospital and medical assistance to individuals, or to help facilities and other charities of national character.
Operating expenses are charged to the expenses to operate, personnel services, and MOOE. One kind of xxxx
fund cannot be used for another kind, as they become a trust fund which should only be used for the purpose
for which it was authorized, not even with the approval of the board. Sufficient evidence for purposes of frustrating a demurrer thereto is such evidence in character, weight or
amount as will legally justify the judicial or official action demanded to accord to circumstances. To be
The amounts obtained from the charity fund and prize fund for 2008 was P63,750,000, and in 2009 considered sufficient therefore, the evidence must prove (a) the commission of the crime, and (b) the precise
P90,428,780. The Board of Directors was given a copy of the COA Audit Reports for years 2008 and 2009. degree of participation therein by the accused (Gutib v. CA, 110 SCAD 743, 312 SCRA 365 [1999]).
The Board of Directors for both years was composed of: Chairman Valencia, and Board Members Morato,
Roquero, Taruc and Valdez. Uriarte was the Vice Chairman of the Board of Directors. The witness did not
xxx xxx xxx
know whether the Board checked the COA reports, but there was no action on their part, and neither did they
question the correctness of the statements. They also had the Audit Committee (which was composed of
A. Demurrer filed by Arroyo and Aguas:
members of the board) at that time, and one of the duties of the Audit Committee was to verify the balances.
It must be remembered that in Our November 5, 2013 Resolution, We found strong evidence of guilt
The witness identified the documents referring to the confirmation by the Board of Directors of PCSO of the
against Arroyo and Aguas, only as to the second predicate act charged in the Information, which
GIF. Board Resolution No. 217, approved on February 18, 2009, confirms the CIF approved by the President.
reads:chanRoblesvirtualLawlibrary
It did not state which CIF they were approving. They also assigned Uriarte as the Special Disbursing Officer of
the CIF, but it did say for what year. The signatories to the same Board Resolution were Valencia, Taruc, (b) raiding the public treasury by withdrawing and receiving, in several instances, the above-mentioned
Valdes, Uriarte, Roquero and Morato. The same were the witness's findings for Board Resolution No. 2356 S. amount from the Confidential/Intelligence Fund from PCSO's accounts, and/or unlawfully transferring or
2009, approved on December 9, 2009. As for Board Resolution No. 29, S. 2010, approved on January 6, 2010, conveying the same into their possession and control through irregularly issued disbursement vouchers
the Board confirmed the fund approved by the President for 2010, though the approval of the President was and fictitious expenditures.
only received on August 13, 2010 as shown in the Memorandum dated January 4. In effect, the Board was
aware of the requests, and because they ratified the cash advances, they agreed to the act of obtaining the In the November 5, 2013 Resolution, We said:chanRoblesvirtualLawlibrary
same. It should be noted that in both R.A. No. 7080 and the PCGG rules, the enumeration of the possible predicate
acts in the commission of plunder did not associate or require the concept of personal gain/benefit or unjust
Apart from the President violating LOI 1282, the witness also observed that the President directly dealt with enrichment with respect to raids on the public treasury, as a means to commit plunder. It would, therefore,
the PCSO, although the President, by Executive Order No. 383 dated November 14, 2004, and Executive appear that a "raid on the public treasury" is consummated where all the acts necessary for its execution and
Order No. 455 dated August 22, 2005, transferred the direct control and supervision of the PCSO to the accomplishment are present. Thus a "raid on the public treasury" can be said to have been achieved thru the
Department of Social Welfare and Development (DSWD), and later to the Department of Health (DOH). A pillaging or looting of public coffers either through misuse, misappropriation or conversion, without need of
project should first be approved by the Supervising and Controlling Secretary of the Secretary of Health; that establishing gain or profit to the raider. Otherwise stated, once a "raider" gets material possession of
the President had transferred her direct control and supervision, and lost the same. The witness said her basis a government asset through improper means and has free disposal of the same, the raid or pillage is
was administrative procedure. In this regard, President Aquino now has transferred the control and completed. x x x
supervision of the PCSO back to the Office of the President through Executive Order No. 14, S. 2010, dated
November 19, 2010. xxxx
Uriarte should not have gone directly to the President to ask for the latter's approval for allocation. Clearly, the improper acquisition and illegal use of CIF funds, which is obviously a government asset, will
Nonetheless, the release of the CIF must still be approved by the President.9cralawred amount to a raid on the public treasury, and therefore fall into the category of ill-gotten wealth.
The State also presented evidence consisting in the testimonies of officers coming from different law
enforcement agencies10 to corroborate Tolentino's testimony to the effect that the PCSO had not requested xxxx
from their respective offices any intelligence operations contrary to the liquidation report submitted by Uriarte
and Aguas. x x x It is not disputed that Uriarte asked for and was granted authority by Arroyo to use additional CIF funds
during the period 2008-2010. Uriarte was able [to] accumulate during that period CIF funds in the total
To complete the evidence for the Prosecution, Atty. Anamarie Villaluz Gonzales, Office-in-Charge and amount of P352,681,646. This was through a series of withdrawals as cash advances of the CIF funds from
Department Manager of the Human Resources of PCSO; Flerida Africa Jimenez, Head of the Intelligence and the PCSO coffers, as evidenced by the disbursement vouchers and checks issued and encashed by her,
Confidential Fund Audit Unit of the COA; and Noel Clemente, Director of COA were presented as additional through her authorized representative.
witnesses.
These flagrant violations of the rules on the use of CIF funds evidently characterize the series of withdrawals
After the Prosecution rested its case, GMA, Aguas, Valencia, Morato, Taruc V, Roquero and Villar separately by and releases to Uriarte as "raids" on the PCSO coffers, which is part of the public treasury. These
filed their demurrers to evidence asserting that the Prosecution did not establish a case for plunder against were, in every sense, "pillage," as Uriarte looted government funds and appears to have not been able to
them. account for it. The monies came into her possession and, admittedly, she disbursed it for purposes other
than what these were intended for, thus, amounting to "misuse" of the same. Therefore, the additional CIF
On April 6, 2015, the Sandiganbayan granted the demurrers to evidence of Morato, Roquero, Taruc and Villar, funds are ill-gotten, as defined by R.A. 7080, the PCGG rules, and Republic v. Sandiganbayan. The
and dismissed the charge against them. It held that said accused who were members of the PCSO Board of encashment of the checks, which named her as the "payee," gave Uriarte material possession of the
Directors were not shown to have diverted any PCSO funds to themselves, or to have raided the public CIF funds which she disposed of at will.
treasury by conveying and transferring into their possession and control any money or funds from PCSO
account; that as to Villar, there had been no clear showing that his designation of Plaras had been tainted with
As to the determination whether the threshold amount of P50 million was met by the prosecution's evidence,
the Court believes this to have been established. Even if the computation is limited only to the cash On the basis of the above Resolutions, the Sandiganbayan has denied petitioner Arroyo's Demurrer to
advances/releases made by accused Uriarte alone AFTER Arroyo had approved her requests and the PCSO Evidence and considering the reasons for doing so, would find petitioner Arroyo guilty of the offense
Board approved CIF budget and the "regular" P5 million CIF budget accorded to the PCSO Chairman and of plunder under Republic Act No. 7080 as charged in the Information notwithstanding the following:
Vice Chairman are NOT taken into account, still the total cash advances through accused Uriarte's scries While the gravamen, indeed corpus delicti of the offense of plunder under R.A. No. 7080, and as
of withdrawals will total P189,681,646. This amount surpasses the P50 million threshold. charged in the Information, is that the public officer . . . "amasses, accumulates or acquires ill-gotten
wealth through a combination or series of overt or criminal acts as described in Section 1(d) hereof, in
The evidence shows that for the year 2010 alone, Uriarte asked for P150 million additional CIF funds, and the aggregate amount or total value of at least Fifty million pesos (P50,000,000.00)", the
Arroyo granted such request and authorized its use. From January 8, 2010 up to June 18, 2010, Uriarte made Sandiganbayan Resolutions extirpate this vital element of the offense of plunder;
a series of eleven (11) cash advances in the total amount of P138,223,490. According to Uriarte's
testimony before the Senate, the main purpose for these cash advances was for the "roll-out" of the small In point of fact, not a single exhibit of the 637 exhibits offered by the prosecution nor a single
town lottery program. However, the accomplishment report submitted by Aguas shows that P137,500,000 was testimony of the 21 witnesses of the prosecution was offered by the prosecution to prove that
spent on non-related PCSO activities, such as "bomb threat, kidnapping, terrorism and bilateral and security petitioner amassed, accumulated or acquired even a single peso of the alleged ill-gotten wealth
relations." All the cash advances made by Uriarte in 2010 were made in violation of LOI 1282, and CO A amounting to P365,997,915.00 or any part of that amount alleged in the Information;
Circulars 2003-002 and 92-385. These were thus improper use of the additional CIF funds amounting to raids
on the PCSO coffers and were ill-gotten because Uriarte had encashed the checks and came into possession Implicitly confirming the above, and aggravating its error, on the basis solely of petitioner Arroyo's
of the monies, which she had complete freedom to dispose of, but was not able to properly account authorization of the release of the Confidential/Intelligence Fund from PCSO's accounts,
for.cralawred the Sandiganbayan ruled that she has committed the offense of plunder under R.A. No. 7080 for the
These findings of the Court clearly point out the commission by Uriarte of the crime of Plunder under the reason that her release of CIF funds to the PCSO amount to a violation of Sec. 1(d) [1] of R.A. No. 7080
second predicate act charged in the Information. As to Arroyo's participation, the Court stated in its which reads, as follows:
November 5, 2013 Resolution that:chanRoblesvirtualLawlibrary 1) Through misappropriation, conversion, misuse, or malversation of public funds or raids on the
The evidence shows that Arroyo approved not only Uriarte's request for additional CIF funds in 2008-2010, but public treasury;cralawred
also authorized the latter to use such funds. Arroyo's "OK" notation and signature on Uriarte's letter- which, "did not associate or require the concept of personal gain/benefit or unjust enrichment with
requests signified unqualified approval of Uriarte's request to use the additional CIF funds because respect to raids on the public treasury", thereby disregarding the gravamen or the corpus delicti of the
the last paragraph of Uriarte's requests uniformly ended with this phrase: With the use of intelligence offense of plunder under R.A. No. 7080.
fund, PCSO can protect its image and integrity of its operations.
Second Ground
The letter-request of Uriarte in 2010 was more explicit because it categorically asked for: "The approval on the
use of the fifty percent of the PR Fund as PCSO Intelligence Fund will greatly help PCSO in the disbursement
Worsening the above error of the Sandiganbayan, the Resolutions, with absolutely no justification in
of funds to immediately address urgent issues."
law or in the evidence, purportedly as the "mastermind" of a conspiracy, and without performing any
overt act, would impute to petitioner Arroyo the "series of withdrawals as cash advances of the CIF
Arroyo cannot, therefore, successfully argue that what she approved were only the request for the grant or
funds from the PCSO coffers" by Uriarte as "raids on the PCSO coffers, which is part of the public
allocation of additional CIF funds, because Arroyo's "OK" notation was unqualified and, therefore,
treasury" and "in every sense, 'pillage' as Uriarte looted government funds and appears to have not
covered also the request to use such funds, through releases of the same in favor of
been able to account for it". Parenthetically, Uriarte has not been arrested, was not arraigned and did
Uriarte.11cralawred
not participate in the trial of the case.
The Sandiganbayan later also denied the respective Motions for Reconsideration of GMA and Aguas,
observing that:chanRoblesvirtualLawlibrary
In this case, to require proof that monies went to a plunderer's bank account or was used to acquire Third Ground
real or personal properties or used for any other purpose to personally benefit the plunderer, is absurd.
Suppose a plunderer had already illegally amassed, acquired or accumulated P50 Million or more of That as an obvious consequence of the above, denial of petitioner Arroyo's Demurrer To Evidence for
government funds and just decided to keep it in his vault and never used such funds for any purpose to benefit the reasons stated in the Sandiganbayan Resolutions, amounting no less to convicting her on the
him, would that not be plunder? Or, if immediately right after such amassing, the monies went up in flames or basis of a disjointed reading of the crime of plunder as defined in R.A. No. 7080, aggravated by the
recovered by the police, negating any opportunity for the person to actually benefit, would that not still be extirpation in the process of its "corpus delicti" - the amassing, accumulation or acquisition of ill-
plunder? Surely, in such cases, a plunder charge could still prosper and the argument that the fact of personal gotten wealth, hence, of a crime that does not exist in law and consequently a blatant deprivation of
benefit should still be evidence-based must fail. liberty without due process of law.

Also, accused Arroyo insists that there was no proof of the fact of amassing the ill-gotten wealth, and that the
Fourth Ground
"overt act" of approving the disbursement is not the "overt act" contemplated by law. She further stresses that
there was no proof of conspiracy between accused Arroyo and her co-accused and that the Prosecution was
The Information alleges that the ten (10) persons accused in Crim. Case No. SB-12-CRM-0174, namely:
unable to prove their case against accused Arroyo. What accused Arroyo forgets is that although she did
Gloria Macapagal-Arroyo, Rosario C. Uriarte, Sergio O. Valencia, Manuel L. Morato, Jose R. Taruc V,
not actually commit any "overt act" of illegally amassing CIF funds, her act of approving not only the
Raymundo T. Roquero, [M]a. Fatima A.S. Valdes, Benigno B. Aguas, Reynaldo A. Villar and Nilda B.
additional CIF funds but also their releases, aided and abetted accused Uriarte's successful raids on
Plaras . . . all public officers committing the offense in relation to their respective offices and taking
the public treasury. Accused Arroyo is therefore rightly charged as a co-conspirator of Uriarte who
undue advantage of their respective official positions, authority, relationships, connections or
accumulated the CIF funds. Moreover, the performance of an overt act is not indispensable when a
influence, conniving, conspiring and confederating with one another, did then and there willfully,
conspirator is the mastermind.12cralawred
unlawfully and criminally amass, accumulate and/or acquire, directly or indirectly, ill-gotten wealth in
Considering that the Sandiganbayan denied the demurrers to evidence of GMA and Aguas, they have come to
the aggregate amount or total value of THREE HUNDRED SIXTY FIVE MILLION NINE HUNDRED
the Court on certiorari to assail and set aside said denial, claiming that the denial was with grave abuse of
NINETY SEVEN THOUSAND NINE HUNDRED FIFTEEN PESOS (PHP365,997,915.00), more or less,
discretion amounting to lack or excess of jurisdiction.
through any or a combination or a series of overt or criminal acts, or similar schemes or means,
described as follows . . . or each of them, P36,599,791.50 which would not qualify the offense charged
Issues as "plunder" under R.A. No. 7080 against all ten (10) accused together, for which reason the
Information docs not charge the offense of plunder and, as a consequence, all proceedings thereafter
GMA pleads that the denial of her demurrer to evidence was in patent and flagrant violation of Republic Act No. held under the Information are void.13cralawred
7080, the law on plunder, and was consequently arbitrary and oppressive, not only in grave abuse of On his part, Aguas contends that:chanRoblesvirtualLawlibrary
discretion but rendered without jurisdiction because:chanRoblesvirtualLawlibrary
First Ground
A. In light of the factual setting described above and the evidence offered and admitted, does Substantive Issues:
proof beyond reasonable doubt exist to warrant a holding that Prosecution proved the guilt
of the accused such that there is legal reason to deny Petitioner's Demurrer?
1. Whether or not the State sufficiently established the existence of conspiracy among GMA, Aguas,
and Uriarte;
B. Did the Prosecution's offered evidence squarely and properly support the allegations in the
Information?
2. Whether or not the State sufficiently established all the elements of the crime of plunder:
a. Was there evidence of amassing, accumulating or acquiring ill-gotten wealth in the total
PETITIONER STRONGLY SUBMITS THAT PROSECUTION FAILED TO ESTABLISH BY PROOF BEYOND amount of not less than P50,000,000.00?
REASONABLE DOUBT THE EXISTENCE OF THE CORE ELEMENTS OF THE CRIME OF
PLUNDER.14cralawred
b. Was the predicate act of raiding the public treasury alleged in the information proved
On the other hand, the Prosecution insists that the petitions for certiorari should be dismissed upon the by the Prosecution?
following grounds, namely:chanRoblesvirtualLawlibrary
Ruling of the Court
A. CERTIORARI IS NOT THE PROPER REMEDY FROM AN ORDER OR RESOLUTION DENYING
DEMURRER TO EVIDENCE. The consolidated petitions for certiorari are meritorious.

B. THERE IS NO GRAVE ABUSE OF DISCRETION BECAUSE THE SANDIGANBAYAN MERELY I.


INTERPRETED WHAT CONSTITUTES PLUNDER UNDER LAW AND JURISPRUDENCE IN The Court cannot be deprived of its jurisdiction to correct grave abuse of discretion
LIGHT OF FACTS OF THE CASE. IT DID NOT JUDICIALLY LEGISLATE A "NEW" OFFENSE.
1. ACTUAL PERSONAL GAIN, BENEFIT OR ENRICHMENT IS NOT AN ELEMENT OF The Prosecution insists that the petition for certiorari of GMA was improper to challenge the denial of her
PLUNDER UNDER R.A. NO. 7080. demurrer to evidence; that she also thereby failed to show that there was grave abuse of discretion on the part
of the Sandiganbayan in denying her demurrer to evidence; and that, on the contrary, the Sandiganbayan only
interpreted what constituted plunder under the law and jurisprudence in light of the established facts, and did
2. EVIDENCE SHOWS THAT ARROYO, BY INDISPENSABLE COOPERATION, not legislate a new offense, by extensively discussing how she had connived with her co-accused to commit
CONSPIRED WITH HER CO-ACCUSED AND PARTICIPATED IN THE COMPLEX, plunder.16ChanRoblesVirtualawlibrary
ILLEGAL SCHEME WHICH DEFRAUDED PCSO IN HUNDREDS OF MILLIONS OF
PESOS, WHICH CONSTITUTES PLUNDER. The Court holds that it should take cognizance of the petitions for certiorari because the Sandiganbayan, as
shall shortly be demonstrated, gravely abused its discretion amounting to lack or excess of jurisdiction.
3. ARROYO IS NOT SIMILARLY SITUATED WITH ACCUSED PCSO BOARD
MEMBERS AND CANNOT THUS DEMAND THAT THE SANDIGANBAYAN DISMISS The special civil action for certiorari is generally not proper to assail such an interlocutory order issued by the
THE PLUNDER CASE AGAINST HER. trial court because of the availability of another remedy in the ordinary course of law.17 Moreover, Section 23,
Rule 119 of the Rules of Court expressly provides that "the order denying the motion for leave of court to file
demurrer to evidence or the demurrer itself shall not be reviewable by appeal or by certiorari before judgment."
It is not an insuperable obstacle to this action, however, that the denial of the demurrers to evidence of the
petitioners was an interlocutory order that did not terminate the proceedings, and the proper recourse of the
demurring accused was to go to trial, and that in case of their conviction they may then appeal the conviction,
C. ARROYO'S BELATED, COLLATERAL ATTACK ON THE INFORMATION CHARGING HER
and assign the denial as among the errors to be reviewed.18 Indeed, it is doctrinal that the situations in which
AND CO-ACCUSED FOR PLUNDER IS HIGHLY IMPROPER, ESPECIALLY AT THIS LATE
the writ of certiorari may issue should not be limited,19 because to do so -
STAGE OF THE PROCEEDING. x x x would be to destroy its comprehensiveness and usefulness. So wide is the discretion of the court that
1. THE FACTS CONSTITUTING THE OFFENSE ARE CLEARLY ALLEGED IN THE authority is not wanting to show that certiorari is more discretionary than either prohibition or mandamus. In
INFORMATION. the exercise of our superintending control over other courts, we are to be guided by all the
circumstances of each particular case 'as the ends of justice may require.' So it is that the writ will be
2. ARROYO'S ACTIVE PARTICIPATION IN THE PROCEEDINGS ARISING FROM OR granted where necessary to prevent a substantial wrong or to do substantial justice. 20cralawred
RELATING TO SB- 12-CRM-0174 PROVES THAT SHE HAS ALWAYS KNOWN The Constitution itself has imposed upon the Court and the other courts of justice the duty to correct errors of
AND UNDERSTOOD THE NATURE AND SCOPE OF THE ACCUSATIONS jurisdiction as a result of capricious, arbitrary, whimsical and despotic exercise of discretion by expressly
AGAINST HER. incorporating in Section 1 of Article VIII the following provision:chanRoblesvirtualLawlibrary
Section 1. The judicial power shall be vested in one Supreme Court and in such lower courts as may be
established by law.

Judicial power includes the duty of the courts of justice to settle actual controversies involving rights which are
legally demandable and enforceable, and to determine whether or not there has been a grave abuse of
D. ARROYO IS NOT ENTITLED TO A TEMPORARY RESTRAINING ORDER BECAUSE THE
discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the
CRIMINAL PROSECUTION IN SB-12-CRM-0174 CANNOT BE ENJOINED.15
Government.cralawred
The exercise of this power to correct grave abuse of discretion amounting to lack or excess of jurisdiction on
Based on the submissions of the parties, the Court synthesizes the decisive issues to be considered and the part of any branch or instrumentality of the Government cannot be thwarted by rules of procedure to the
resolved, as follows: contrary or for the sake of the convenience of one side. This is because the Court has the bounden
constitutional duty to strike down grave abuse of discretion whenever and wherever it is committed. Thus,
Procedural Issue: notwithstanding the interlocutory character and effect of the denial of the demurrers to evidence, the
petitioners as the accused could avail themselves of the remedy of certiorari when the denial was tainted with
grave abuse of discretion.21 As we shall soon show, the Sandiganbayan as the trial court was guilty of grave
1. Whether or not the special civil action for certiorari is proper to assail the denial of the demurrers to abuse of discretion when it capriciously denied the demurrers to evidence despite the absence of competent
evidence. and sufficient evidence to sustain the indictment for plunder, and despite the absence of the factual bases to
expect a guilty verdict.22ChanRoblesVirtualawlibrary
II. It is in this regard that the Sandiganbayan gravely abused its discretion amounting to lack or excess of its
The Prosecution did not properly allege and prove the existence of conspiracy among GMA, Aguas jurisdiction. To start with, its conclusion that GMA had been the mastermind of plunder was plainly conjectural
and Uriarte and outrightly unfounded considering that the information did not aver at all that she had been the mastermind;
hence, the Sandiganbayan thereby acted capriciously and arbitrarily. In the second place, the treatment by
Conspiracy exists when two or more persons come to an agreement concerning the commission of a felony, the Sandiganbayan of her handwritten unqualified "OK" as an overt act of plunder was absolutely unwarranted
and decide to commit it.23 In this jurisdiction, conspiracy is either a crime in itself or a mere means to commit a considering that such act was a common legal and valid practice of signifying approval of a fund release by
crime. the President. Indeed, pursuant to People v. Lizada, supra, an act or conduct becomes an overt act of a crime
only when it evinces a causal relation to the intended crime because the act or conduct will not be an overt act
As a rule, conspiracy is not a crime unless the law considers it a crime, and prescribes a penalty for it.24The of the crime if it does not have an immediate and necessary relation to the offense.
exception is exemplified in Article 115 (conspiracy and proposal to commit treason), Article 136 (conspiracy
and proposal to commit coup d'etat, rebellion or insurrection) and Article 141 (conspiracy to commit sedition) In Estrada v. Sandiganbayan,31 the Court recognized two nuances of appreciating conspiracy as a means to
of the Revised Penal Code. When conspiracy is a means to commit a crime, it is indispensable that the commit a crime, the wheel conspiracy and the chain conspiracy.
agreement to commit the crime among all the conspirators, or their community of criminal design must be
alleged and competently shown. The wheel conspiracy occurs when there is a single person or group (the hub) dealing individually with two or
more other persons or groups (the spokes). The spoke typically interacts with the hub rather than with another
We also stress that the community of design to commit an offense must be a conscious one.25 Conspiracy spoke. In the event that the spoke shares a common purpose to succeed, there is a single conspiracy.
transcends mere companionship, and mere presence at the scene of the crime does not in itself amount to However, in the instances when each spoke is unconcerned with the success of the other spokes, there are
conspiracy. Even knowledge of, or acquiescence in, or agreement to cooperate is not enough to constitute multiple conspiracies.32ChanRoblesVirtualawlibrary
one a party to a conspiracy, absent any active participation in the commission of the crime with a view to the
furtherance of the common design and purpose.26 Hence, conspiracy must be established, not by conjecture, An illustration of wheel conspiracy wherein there is only one conspiracy involved was the conspiracy alleged in
but by positive and conclusive evidence. the information for plunder filed against former President Estrada and his co-conspirators. Former President
Estrada was the hub while the spokes were all the other accused individuals. The rim that enclosed the
In terms of proving its existence, conspiracy takes two forms. The first is the express form, which requires spokes was the common goal in the overall conspiracy, i.e., the amassing, accumulation and acquisition of ill-
proof of an actual agreement among all the co-conspirators to commit the crime. However, conspiracies are gotten wealth.
not always shown to have been expressly agreed upon. Thus, we have the second form, the implied
conspiracy. An implied conspiracy exists when two or more persons are shown to have aimed by their acts On the other hand, the American case of Kotteakos v. United States33 illustrates a wheel conspiracy where
towards the accomplishment of the same unlawful object, each doing a part so that their combined acts, multiple conspiracies were established instead of one single conspiracy. There, Simon Brown, the hub,
though apparently independent, were in fact connected and cooperative, indicating closeness of personal assisted 31 independent individuals to obtain separate fraudulent loans from the US Government. Although all
association and a concurrence of sentiment.27 Implied conspiracy is proved through the mode and manner of the defendants were engaged in the same type of illegal activity, there was no common purpose or overall
the commission of the offense, or from the acts of the accused before, during and after the commission of the plan among them, and they were not liable for involvement in a single conspiracy. Each loan was an end in
crime indubitably pointing to a joint purpose, a concert of action and a community of itself, separate from all others, although all were alike in having similar illegal objects. Except for Brown, the
interest.28ChanRoblesVirtualawlibrary common figure, no conspirator was interested in whether any loan except his own went through. Thus, the US
Supreme Court concluded that there existed 32 separate conspiracies involving Brown rather than one
But to be considered a part of the conspiracy, each of the accused must be shown to have performed at least common conspiracy.34ChanRoblesVirtualawlibrary
an overt act in pursuance or in furtherance of the conspiracy, for without being shown to do so none of them
will be liable as a co-conspirator, and each may only be held responsible for the results of his own acts. In this The chain conspiracy recognized in Estrada v. Sandiganbayan exists when there is successive
connection, the character of the overt act has been explained in People v. Lizada:29 communication and cooperation in much the same way as with legitimate business operations between
An overt or external act is defined as some physical activity or deed, indicating the intention to commit a manufacturer and wholesaler, then wholesaler and retailer, and then retailer and
particular crime, more than a mere planning or preparation, which if carried out to its complete termination consumer.35ChanRoblesVirtualawlibrary
following its natural course, without being frustrated by external obstacles nor by the spontaneous desistance
of the perpetrator, will logically and necessarily ripen into a concrete offense. The raison d'etre for the law This involves individuals linked together in a vertical chain to achieve a criminal objective.36 Illustrative of chain
requiring a direct overt act is that, in a majority of cases, the conduct of the accused consisting merely conspiracy was that involved in United States v. Bruno,37 of the US Court of Appeals for the Second Circuit.
of acts of preparation has never ceased to be equivocal; and this is necessarily so, irrespective of his There, 88 defendants were indicted for a conspiracy to import, sell, and possess narcotics. This case involved
declared intent. It is that quality of being equivocal that must be lacking before the act becomes one several smugglers who had brought narcotics to retailers who, in turn, had sold the narcotics to operatives in
which may be said to be a commencement of the commission of the crime, or an overt act or before Texas and Louisiana for distribution to addicts. The US Court of Appeals for the Second Circuit ruled that what
any fragment of the crime itself has been committed, and this is so for the reason that so long as the transpired was a single chain conspiracy in which the smugglers knew that the middlemen must sell to
equivocal quality remains, no one can say with certainty what the intent of the accused is. It is retailers for distribution to addicts, and the retailers knew that the middle men must purchase drugs from
necessary that the overt act should have been the ultimate step towards the consummation of the design. It is smugglers. As reasoned by the court, "the conspirators at one end of the chain knew that the unlawful
sufficient if it was the "first or some subsequent step in a direct movement towards the commission of the business would not and could not, stop with their buyers; and those at the other end knew that it had not
offense after the preparations are made." The act done need not constitute the last proximate one for begun with their sellers." Each conspirator knew that "the success of that part with which he was immediately
completion. It is necessary, however, that the attempt must have a causal relation to the intended concerned was dependent upon success of the whole." This means, therefore, that "every member of the
crime. In the words of Viada, the overt acts must have an immediate and necessary relation to the conspiracy was liable for every illegal transaction carried out by other members of the conspiracy in Texas and
offense. (Bold underscoring supplied for emphasis)cralawred in Louisiana."38ChanRoblesVirtualawlibrary
In her case, GMA points out that all that the State showed was her having affixed her unqualified "OK" on the
requests for the additional CIFs by Uriarte. She argues that such act was not even an overt act of plunder Once the State proved the conspiracy as a means to commit a crime, each co-conspirator is as criminally
because it had no immediate and necessary relation to plunder by virtue of her approval not being per liable as the others, for the act of one is the act of all. A co-conspirator does not have to participate in every
se illegal or irregular. However, the Sandiganbayan, in denying the Motions for Reconsideration of GMA and detail of the execution; neither does he have to know the exact part performed by the co-conspirator in the
Aguas vis-a-vis the denial of the demurrers, observed that:chanRoblesvirtualLawlibrary execution of the criminal act.39 Otherwise, the criminal liability of each accused is individual and independent.
x x x x accused Arroyo insists that there was no proof of the feet of amassing the ill-gotten wealth, and that the
"overt act" of approving the disbursement is not the "overt act" contemplated by law. She further stresses that The Prosecution insisted that a conspiracy existed among GMA, Uriarte, Valencia and the Members of the
there was no proof of conspiracy between accused Arroyo and her co-accused and that the Prosecution was PCSO Board of Directors, Aguas, Villar and Plaras. The Sandiganbayan agreed with the Prosecution as to the
unable to prove their case against accused Arroyo. What accused Arroyo forgets is that although she did not conspirators involved, declaring that GMA, Aguas, and Uriarte had conspired and committed plunder.
actually commit any "overt act" of illegally amassing CIF funds, her act of approving not only the additional CIF
funds but also their releases, aided and abetted accused Uriarte's successful raids on the public treasury. A review of the records of the case compels us to reject the Sandiganbayan's declaration in light of the
Accused Arroyo is therefore rightly charged as a co-conspirator of Uriarte who accumulated the CIF funds. information filed against the petitioners, and the foregoing exposition on the nature, forms and extent of
Moreover, the performance of an overt act is not indispensable when a conspirator is the conspiracy. On the contrary, the Prosecution did not sufficiently allege the existence of a conspiracy among
mastermind.30cralawred GMA, Aguas and Uriarte.
There is no denying the fact that the "plunder of an entire nation resulting in material damage to the national
A perusal of the information suggests that what the Prosecution sought to show was an implied conspiracy to economy" is made up of a complex and manifold network of crimes. In the crime of plunder, therefore, different
commit plunder among all of the accused on the basis of their collective actions prior to, during and after the parties may be united by a common purpose. In the case at bar, the different accused and their different
implied agreement. It is notable that the Prosecution did not allege that the conspiracy among all of the criminal acts have a commonality - to help the former President amass, accumulate or acquire ill-gotten wealth.
accused was by express agreement, or was a wheel conspiracy or a chain conspiracy. Sub-paragraphs (a) to (d) in the Amended Information alleged the different participation of each accused in the
conspiracy. The gravamen of the conspiracy charge, therefore, is not that each accused agreed to receive
This was another fatal flaw of the Prosecution. protection money from illegal gambling, that each misappropriated a portion of the tobacco excise tax, that
each accused ordered the GSIS and SSS to purchase shares of Belle Corporation and receive commissions
In its present version, under which the petitioners were charged, Section 2 of Republic Act No. 7080 (Plunder from such sale, nor that each unjustly enriched himself from commissions, gifts and kickbacks; rather, it is that
Law) states:chanRoblesvirtualLawlibrary each of them, by their individual acts, agreed to participate, directly or indirectly, in the amassing,
Section 2. Definition of the Crime of Plunder; Penalties. - Any public officer who, by himself or in connivance accumulation and acquisition of ill-gotten wealth of and/or for former President Estrada. [bold
with members of his family, relatives by affinity or consanguinity, business associates, subordinates or other underscoring supplied for emphasis]cralawred
persons, amasses, accumulates or acquires ill-gotten wealth through a combination or series of overt criminal Here, considering that 10 persons have been accused of amassing, accumulating and/or acquiring ill-gotten
acts as described in Section 1 (d) hereof in the aggregate amount or total value of at least Fifty million pesos wealth aggregating P365,997,915.00, it would be improbable that the crime charged was plunder if none of
(P50,000,000.00) shall be guilty of the crime of plunder and shall be punished by reclusion perpetua to death. them was alleged to be the main plunderer. As such, each of the 10 accused would account for the aliquot
Any person who participated with the said public officer in the commission of an offense contributing to the amount of only P36,599,791.50, or exactly 1/10 of the alleged aggregate ill-gotten wealth, which is far below
crime of plunder shall likewise be punished for such offense. In the imposition of penalties, the degree of the threshold value of ill-gotten wealth required for plunder.
participation and the attendance of mitigating and extenuating circumstances, as provided by the Revised
Penal Code, shall be considered by the court. The court shall declare any and all ill-gotten wealth and their We are not unmindful of the holding in Estrada v. Sandiganabayan41 to the effect that an information alleging
interests and other incomes and assets including the properties and shares of stocks derived from the deposit conspiracy is sufficient if the information alleges conspiracy either: (1) with the use of the word conspire, or its
or investment thereof forfeited in favor of the State. [As Amended by Section 12, Republic Act No. 7659 (The derivatives or synonyms, such as confederate, connive, collude, etc.; or (2) by allegations of the basic facts
Death Penalty Law)]cralawred constituting the conspiracy in a manner that a person of common understanding would know what is being
Section 1(d) of Republic Act No. 7080 provides:chanRoblesvirtualLawlibrary conveyed, and with such precision as would enable the accused to competently enter a plea to a subsequent
Section 1. Definition of terms. - As used in this Act, the term: indictment based on the same facts. We are not talking about the sufficiency of the information as to the
allegation of conspiracy, however, but rather the identification of the main plunderer sought to be prosecuted
xxxx under R.A. No. 7080 as an element of the crime of plunder. Such identification of the main plunderer was not
only necessary because the law required such identification, but also because it was essential in safeguarding
d. "Ill-gotten wealth" means any asset, property, business enterprise or material possession of any person the rights of all of the accused to be properly informed of the charges they were being made answerable for.
within the purview of Section two (2) hereof, acquired by him directly or indirectly through dummies, nominees, The main purpose of requiring the various elements of the crime charged to be set out in the information is to
agents, subordinates and/or business associates by any combination or series of the following means or enable all the accused to suitably prepare their defense because they are presumed to have no independent
similar schemes: knowledge of the facts that constituted the offense charged.42ChanRoblesVirtualawlibrary

1. Through misappropriation, conversion, misuse, or malversation of public funds or raids on the public For sure, even the Sandiganbayan was at a loss in this respect. Despite the silence of the information on who
treasury; the main plunderer or the mastermind was, the Sandiganbayan readily condemned GMA in its resolution
dated September 10, 2015 as the mastermind despite the absence of the specific allegation in the information
2. By receiving, directly or indirectly, any commission, gilt, share, percentage, kickbacks or any/or entity in to that effect. Even worse, there was no evidence that substantiated such sweeping generalization.
connection with any government contract or project or by reason of the office or position of the public officer
concerned; In fine, the Prosecution's failure to properly allege the main plunderer should be fatal to the cause of the State
against the petitioners for violating the rights of each accused to be informed of the charges against each of
3. By the illegal or fraudulent conveyance or disposition of assets belonging to the National Government or them.
any of its subdivisions, agencies or instrumentalities or government-owned or controlled corporations and their
subsidiaries; Nevertheless, the Prosecution insists that GMA, Uriarte and Aguas committed acts showing the existence of
an implied conspiracy among themselves, thereby making all of them the main plunderers. On this score, the
4. By obtaining, receiving or accepting directly or indirectly any shares of stock, equity or any other form of Prosecution points out that the sole overt act of GMA to become a part of the conspiracy was her approval via
interest or participation including the promise of future employment in any business enterprise or undertaking; the marginal note of "OK" of all the requests made by Uriarte for the use of additional intelligence fund. The
Prosecution stresses that by approving Uriarte's requests in that manner, GMA violated the
5. By establishing agricultural, industrial or commercial monopolies or other combinations and/or following:chanRoblesvirtualLawlibrary
implementation of decrees and orders intended to benefit particular persons or special interests; or Letter of Instruction 1282, which required requests for additional confidential and intelligence funds (CIFs) to
be accompanied with detailed, specific project proposals and specifications; and
6. By taking undue advantage of official position, authority, relationship, connection or influence to unjustly
enrich himself or themselves at the expense and to the damage and prejudice of the Filipino people and the COA Circular No. 92-385, which allowed the President to approve the release of additional CIFs only if there
Republic of the Philippines.cralawred was an existing budget to cover the request.
The law on plunder requires that a particular public officer must be identified as the one who amassed, The insistence of the Prosecution is unwarranted. GMA's approval of Uriarte's requests for additional CIFs did
acquired or accumulated ill-gotten wealth because it plainly states that plunder is committed by any public not make her part of any design to raid the public treasury as the means to amass, accumulate and acquire ill-
officer who, by himself or in connivance with members of his family, relatives by affinity or consanguinity, gotten wealth. Absent the specific allegation in the information to that effect, and competent proof thereon,
business associates, subordinates or other persons, amasses, accumulates or acquires ill-gotten wealth in the GMA's approval of Uriarte's requests, even if unqualified, could not make her part of any criminal conspiracy to
aggregate amount or total value of at least P50,000,000.00 through a combinationor series of overt criminal commit plunder or any other crime considering that her approval was not by any means irregular or illegal.
acts as described in Section 1(d) hereof. Surely, the law requires in the criminal charge for plunder against
several individuals that there must be a main plunderer and her co-conspirators, who may be members of her The Prosecution takes GMA to task for approving Uriarte's request despite the requests failing to provide "the
family, relatives by affinity or consanguinity, business associates, subordinates or other persons. In other full detail [of] the specific purposes for which said funds shall be spent and shall explain the circumstances
words, the allegation of the wheel conspiracy or express conspiracy in the information was appropriate giving rise to the necessity for the expenditure and the particular aims to be accomplished." It posits that the
because the main plunderer would then be identified in either manner. Of course, implied conspiracy could requests were not specific enough, contrary to what is required by LOI 1282.
also identify the main plunderer, but that fact must be properly alleged and duly proven by the Prosecution.
LOI 1282 reads:chanRoblesvirtualLawlibrary
This interpretation is supported by Estrada v. Sandiganbayan,40 where the Court explained the nature of the LETTER OF INSTRUCTION NO. 1282
conspiracy charge and the necessity for the main plunderer for whose benefit the amassment, accumulation
and acquisition was made, thus:chanRoblesvirtualLawlibrary To: All Ministries and Offices Concerned
was imputed to GMA by virtue of her power of control over PCSO.
In recent years intelligence funds appropriated for the various ministries and certain offices have been, as
reports reaching me indicate, spent with less than full regard for secrecy and prudence. On the one hand, The Prosecution seems to be relying on the doctrine of command responsibility to impute the actions of
there have been far too many leakages of information on expenditures of said funds; and on the other hand, subordinate officers to GMA as the superior officer. The reliance is misplaced, for incriminating GMA under
where secrecy has been observed, the President himself was often left unaware of how these funds had been those terms was legally unacceptable and incomprehensible. The application of the doctrine of command
utilized. responsibility is limited, and cannot be true for all litigations. The Court ruled in Rodriguez v. Macapagal-
Arroyo44 that command responsibility pertains to the responsibility of commanders for crimes committed by
Effective immediately, all requests for the allocation or release of intelligence funds shall indicate in full detail subordinate members of the armed forces or other persons subject to their control in international wars or
the specific purposes for which said funds shall be spent and shall explain the circumstances giving rise to the domestic conflict. The doctrine has also found application in civil actions for human rights abuses. But this
necessity for the expenditure and the particular aims to be accomplished. case involves neither a probe of GMA's actions as the Commander-in-Chief of the Armed Forces of the
Philippines, nor of a human rights issue. As such, it is legally improper to impute the actions of Uriarte to GMA
The requests and the detailed explanations shall be submitted to the President personally. in the absence of any conspiracy between them.

It is imperative that such detailed presentations be made to the President in order to avoid such duplication of On the part of Aguas, the Sandiganbayan pronounced him to be as much a member of the implied conspiracy
expenditures as has taken place in the past because of the lack of centralized planning and organized as GMA was, and detailed his participation in this manner:chanRoblesvirtualLawlibrary
disposition of intelligence funds. In all of the disbursement vouchers covering the cash advances/releases to Uriarte of the CIF funds, Aguas
certified that:chanRoblesvirtualLawlibrary
Full compliance herewith is desired. CERTIFIED: Adequate available funds/budgetary allotment in the amount of P_________; expenditure
properly certified; supported by documents marked (X) per checklist and back hereof; account codes proper;
Manila, January 12, 1983. previous cash advance liquidated/accounted for.cralawred
These certifications, after close scrutiny, were not true because: 1.) there were no documents which lent
support to the cash advances on a per project basis. The particulars of payment simply read: "To draw cash
(Sgd.) FERDINAND E. MARCOS
advance form the CIF Fund of the Office of the Vice-Chairman and General Manager". No particular purpose
President of the Philippines
or project was specified contrary to the requirement under CO A Circular 2003-002 that cash advances must
However, an examination of Uriarte's several requests indicates their compliance with LOI No. 1282. The
be on a per project basis. Without specifics on the project covered by each cash advance. Aguas could not
requests, similarly worded, furnished: (a) the full details of the specific purposes for which the funds would be
certify that supporting documents existed simply because he would not know what project was being funded
spent; (b) the explanations of the circumstances giving rise to the necessity of the expenditure; and (c) the
by the cash advances; and 2.) There were no previous liquidations made of prior cash advances when Aguas
particular aims to be accomplished.
made the certifications. COA circular 2003-002 required that cash advances be liquidated within one (1) month
from the date the purpose of the cash advance was accomplished. If the completion of the projects mentioned
The specific purposes and circumstances for the necessity of the expenditures were laid down as
were for more than one month, a monthly progress liquidation report was necessary. In the case of Uriarte's
follows:chanRoblesvirtualLawlibrary
cash advances certified to by Aguas, the liquidation made was wholesale, i.e. these were done on a semi-
In dispensing its mandate, PCSO has been constantly encountering a number of fraudulent schemes and
annual basis without a monthly liquidation or at least a monthly liquidation progress report. How then could
nefarious activities on a continuing basis which affect the integrity of our operations, to wit:
Aguas correctly certify that previous liquidations were accounted for? Aguas's certification also violated Sec.
Donated medicines sometimes end up in drug stores for sale even if they were labeled "Donated by PCSO -
89 of P.D. 1445 which states:chanRoblesvirtualLawlibrary
Not for Sale";
Limitations on cash advance. No cash advance shall be given unless for a legally authorized specific purpose.
A cash advance shall be reported on and liquidated as soon as the purpose for which it was given has been
Unwarranted or unofficial use of ambulances by beneficiary-donees;
served. No additional cash advance shall be allowed to any official or employee unless the previous cash
advance given to him is first settled or a proper accounting thereof is made.cralawred
Unauthorized expenditures of endowment fund for charity patients and organizations;
There is a great presumption of guilt against Aguas, as his action aided and abetted Uriarte's being able to
draw these irregular CIF funds in contravention of the rules on CIF funds. Without Aguas's certification, the
Lotto and sweepstakes scams victimizing innocent people of winning the jackpot and selling tampered tickets
disbursement vouchers could not have been processed for payment. Accordingly, the certification that there
as winning tickets;
were supporting documents and prior liquidation paved the way for Uriarte to acquire ill-gotten wealth by
raiding the public coffers of the PCSO.
Fixers for the different programs of PCSO such as Ambulance Donation Project, Endowment Fund Program
and Individual Medical Assistance Program;
By just taking cognizance of the series and number of cash advances and the staggering amounts involved,
Aguas should have been alerted that something was greatly amiss and that Uriarte was up to something. If
Other fraudulent schemes and activities which put the PCSO in bad light.43
Aguas was not into the scheme, it would have been easy for him to refuse to sign the certification, but he did
A reading of the requests also reveals that the additional CIFs requested were to be used to protect PCSO's
not. The conspiracy "gravamen" is therefore present in the case of Aguas. Moreover, Aguas's attempt to
image and the integrity of its operations. The Court thus cannot share the Prosecution's dismissiveness of the
cover-up Uriarte's misuse of these CIF funds in his accomplishment report only contributed to unmasking the
requests for not being compliant with LOI No. 1282. According to its terms, LOI No. 1282 did not detail any
actual activities for which these funds were utilized. Aguas's accomplishment report, which was conformed to
qualification as to how specific the requests should be made. Hence, we should not make any other
by Uriarte, made it self-evidence that the bulk of the CIF funds in 2009 and 2010 were allegedly spend for non-
pronouncement than to rule that Uriarte's requests were compliant with LOI No. 1282.
PCSO related activities, e.g. bomb threats, kidnapping, terrorism, and others.45cralawred
Thus, the Sandiganbayan concluded that Aguas became a part of the implied conspiracy when he signed the
COA Circular No. 92-385 required that additional request for CIFs would be approved only when there was
disbursement vouchers despite the absence of certain legal requirements, and issued certain certifications to
available budget. In this regard, the Prosecution suggests that there was no longer any budget when GMA
the effect that the budgetary allotment/funds for cash advance to be withdrawn were available; that the
approved Uriarte's requests because the budget had earmarked intelligence funds that had already
expenditures were supported by documents; and that the previous cash advances had been liquidated or
been maxed out and used. The suggestion is not acceptable, however, considering that the funds of the
accounted for.
PCSO were co-mingled into one account as early as 2007. Consequently, although only 15% of PCSO's
revenues was appropriated to an operation fund from which the CIF could be sourced, the remaining 85% of
We opine and declare, however, that Aguas' certifications and signatures on the disbursement vouchers were
PCSO's revenues, already co-mingled with the operating fund, could still sustain the additional requests. In
insufficient bases to conclude that he was into any conspiracy to commit plunder or any other crime. Without
short, there was available budget from which to draw the additional requests for CIFs.
GMA's participation, he could not release any money because there was then no budget available for the
additional CIFs. Whatever irregularities he might have committed did not amount to plunder, or to any implied
It is notable that the COA, although frowning upon PCSO's co-mingling of funds, did not rule such co-mingling
conspiracy to commit plunder.
as illegal. As such, sourcing the requested additional CIFs from one account was far from illegal.
Under the circumstances, the Sandiganbayan's finding on the existence of the conspiracy to commit plunder
Lastly, the Prosecution's effort to show irregularities as badges of bad faith has led it to claim that GMA had
was unsustainable. It then becomes unavoidable for the Court to rule that because the Prosecution failed to
known that Uriarte would raid the public treasury, and would misuse the amounts disbursed. This knowledge
properly allege the elements of the crime, as well as to prove that any implied conspiracy to commit plunder or
any other crime existed among GMA, Aguas and Uriarte there was no conspiracy to commit plunder among After Atty. Tolentino, as the Prosecution's main witness, conceded lack of any knowledge of the amassing,
them. As a result, GMA and Aguas could be criminally responsible only for their own respective actions, if any. accumulating or acquiring of ill-gotten wealth of at least P50,000,000.00, nothing more remained of the
criminal prosecution for plunder. Hence, the Sandiganbayan should have granted the demurrers of GMA and
Aguas, and dismissed the criminal action against them.
III.
No proof of amassing, or accumulating, or acquiring ill-gotten wealth of at least P50 Million was
adduced against GMA and Aguas IV.
The Prosecution failed to prove the predicate act of raiding the public treasury
The Sandiganbayan sustained the sufficiency of the evidence to convict the petitioners for plunder on the
basis that the Prosecution established all the elements of plunder. The Sandiganbayan observed that the Prosecution established the predicate act of raiding the public treasury,
to wit:chanRoblesvirtualLawlibrary
After a review of the records, we find and rule that the Prosecution had no case for plunder against the Secondly, the terms "unjust enrichment," "benefit," and "pecuniary benefit" are only mentioned in the predicate
petitioners. acts mentioned in par. 2, 5 and 6 of Section 1 (d) of the Plunder Law. Paragraph 1 of the same section where
"raids on the public treasury" is mentioned did not mention "unjust enrichment" or "personal benefit". Lastly,
To successfully mount a criminal prosecution for plunder, the State must allege and establish the following the predicate act covering "raids on the public treasury" is lumped up with the phrases misappropriation,
elements, namely:chanRoblesvirtualLawlibrary conversion, misuse and malversation of public funds. Thus, once public funds, as in the case of CIF funds, are
illegally accumulated, amassed or acquired. To the tune of P50 Million or more, there will be no need to
establish any motive to gain, or much more establish where the money eventually ended up. As stated in Our
1. That the offender is a public officer who acts by herself or in connivance with members of her Resolution dated November 5, 2013:
family, relatives by affinity or consanguinity, business associates, subordinates or other persons;
It should be noted that in both R.A. No. 7080 and the PCGG rules, the enumeration of the possible predicate
2. That the offender amasses, accumulates or acquires ill- gotten wealth through a combination or acts in the commission of plunder did not associate or require the concept of personal gain/benefit or unjust
series of the following overt or criminal acts: (a) through misappropriation, conversion, misuse, or enrichment with respect to raids on the public treasury, as a means to commit plunder. It would, therefore,
malversation of public funds or raids on the public treasury; (b) by receiving, directly or indirectly, appear that a "raid on the public treasury" is consummated where all the acts necessary for its execution and
any commission, gift, share, percentage, kickback or any other form of pecuniary benefits from any accomplishment are present. Thus a "raid on the public treasury" can be said to have been achieved thru the
person and/or entity in connection with any government contract or project or by reason of the pillaging or looting of public coffers either through misuse, misappropriation or conversion, without need of
office or position of the public officer; (c) by the illegal or fraudulent conveyance or disposition of establishing gain or profit to the "raider" gets material possession of a government asset through improper
assets belonging to the National Government or any of its subdivisions, agencies or means and has free disposal of the same, the raid or pillage is completed.
instrumentalities of Government owned or controlled corporations or their subsidiaries; (d) by
obtaining, receiving or accepting directly or indirectly any shares of stock, equity or any other form xxxx
of interest or participation including the promise of future employment in any business enterprise or
undertaking; (e) by establishing agricultural, industrial or commercial monopolies or other Clearly, the improper acquisition and illegal use of CIF funds, which is obviously a government asset, will
combinations and/or implementation of decrees and orders intended to benefit particular persons amount to a raid on the public treasury, and therefore fall into the category of ill-gotten wealth.
or special interests; or (f) by taking advantage of official position, authority, relationship, connection
or influence to unjustly enrich himself or themselves at the expense and to the damage and xxxx
prejudice of the Filipino people and the Republic of the Philippines; and.
x x x It is not disputed that Uriarte asked for and was granted authority by Arroyo to use additional CIF funds
during the period 2008-2010. Uriarte was able to accumulate during that period CIF funds in the total amount
3. That the aggregate amount or total value of the ill-gotten wealth amassed, accumulated or of P352,681,646. This was through a series of withdrawals as cash advances of the CIF funds from the PCSO
acquired is at least P50,000,000.00.46 coffers, as evidenced by the disbursement vouchers and checks issued and encashed by her, through her
authorized representatives.
The corpus delicti of plunder is the amassment, accumulation or acquisition of ill-gotten wealth valued at not
These flagrant violations of the rules on the use of CIF funds evidently characterize the series of withdrawals
less than P50,000,000.00. The failure to establish the corpus delicti should lead to the dismissal of the criminal
by and releases to Uriarte as "raids" on the PCSO coffers, which is part of the public treasury. These were, in
prosecution.
every sense, "pillage," as Uriarte looted government funds and appears to have not been able to account for it.
The monies came into her possession and, admittedly, she disbursed it for purposes other than what these
As regards the element that the public officer must have amassed, accumulated or acquired ill-gotten wealth
were intended for, thus amounting to "misuse" of the same. x x x
worth at least P50,000,000.00, the Prosecution adduced no evidence showing that either GMA or Aguas or
even Uriarte, for that matter, had amassed, accumulated or acquired ill-gotten wealth of any amount. There
In this case, to require proof that monies went to a plunderer's bank account or was used to acquire real or
was also no evidence, testimonial or otherwise, presented by the Prosecution showing even the remotest
personal properties or used for any other purpose to personally benefit the plunderer, is absurd. Suppose a
possibility that the CIFs of the PCSO had been diverted to either GMA or Aguas, or Uriarte.
plunderer had already amassed, acquired or accumulated P50 Million or more of government funds and just
decide to keep it in his vault and never used such funds for any purpose to benefit him, would that not be
The absolute lack of evidence on this material but defining and decisive aspect of the criminal prosecution was
plunder? Or, if immediately right after such amassing, the monies went up in flames or recovered by the police,
explicitly noted in the concurring and partial dissenting opinion of Justice Rodolfo A. Ponferrada of
negating any opportunity for the purpose to actually benefit, would that not still be plunder? Surely, in such
the Sandiganbayan, to wit:chanRoblesvirtualLawlibrary
cases, a plunder charge could still prosper and the argument that the fact of personal benefit should still be
Here the evidence of the prosecution failed to show the existence of the crime of plunder as no evidence was
evidence-based must fail.48cralawred
presented that any of the accused, accumulated and/or acquired ill-gotten wealth. In fact, the principal witness
The Sandiganbayan contended that in order to prove the predicate act of raids of the public treasury, the
of the prosecution when asked, said that she does not know the existence or whereabouts of the alleged ill-
Prosecution need not establish that the public officer had benefited from such act; and that what was
gotten wealth, to wit:chanRoblesvirtualLawlibrary
necessary was proving that the public officer had raided the public coffers. In support of this, it referred to the
Q: Of course, you don't know where is this ill-gotten wealth are (sic) now? records of the deliberations of Congress to buttress its observation.

We do not share the Sandiganbayan's contention.

A: Yes, Your Honors. We don't know whether they saved it, squandered it or what? We don't know, The phrase raids on the public treasury is found in Section 1 (d) of R.A. No. 7080, which
Your Honor.47 [bold Emphasis supplied] provides:chanRoblesvirtualLawlibrary
Section 1. Definition of Terms. - x x x
xxxx and Aguas had personally benefited from the same. Hence, the Prosecution did not prove the predicate act
of raids on the public treasury beyond reasonable doubt.
d) Ill-gotten wealth means any asset, property, business enterprise or material possession of any person
within the purview of Section Two (2) hereof, acquired by him directly or indirectly through dummies, nominees,
V.
agents, subordinates and/or business associates by any combination or series of the following means or
Summation
similar schemes:
In view of the foregoing, the Court inevitably concludes that the Sandiganbayan completely ignored the failure
1) Through misappropriation, conversion, misuse, or malversation of public funds or raids on the public of the information to sufficiently charge conspiracy to commit plunder against the petitioners; and ignored the
treasury; lack of evidence establishing the corpus delicti of amassing, accumulation and acquisition of ill-gotten wealth
in the total amount of at least P50,000,000.00 through any or all of the predicate crimes.
x x x xcralawred The Sandiganbayan thereby acted capriciously, thus gravely abusing its discretion amounting to lack or
To discern the proper import of the phrase raids on the public treasury, the key is to look at the accompanying excess of jurisdiction.
words: misappropriation, conversion, misuse or malversation of public funds. This process is conformable with
the maxim of statutory construction noscitur a sociis, by which the correct construction of a particular word or Grave abuse of discretion means such capricious or whimsical exercise of judgment which is equivalent to
phrase that is ambiguous in itself or is equally susceptible of various meanings may be made by considering lack of jurisdiction.54 To justify the issuance of the writ of certiorari, the abuse of discretion must be grave, as
the company of the words in which the word or phrase is found or with which it is associated. Verily, a word or when the power is exercised in an arbitrary or despotic manner by reason of passion or personal hostility, and
phrase in a statute is always used in association with other words or phrases, and its meaning may, therefore, the abuse must be so patent and gross as to amount to an evasion of a positive duty or to a virtual refusal to
be modified or restricted by the latter.49ChanRoblesVirtualawlibrary perform the duty enjoined, or to act at all, in contemplation of law, as to be equivalent to having acted without
jurisdiction.55ChanRoblesVirtualawlibrary
To convert connotes the act of using or disposing of another's property as if it were one's own; to
misappropriate means to own, to take something for one's own benefit;50misuse means "a good, substance, WHEREFORE, the Court GRANTS the petitions for certiorari; ANNULS and SETS ASIDE the resolutions
privilege, or right used improperly, unforeseeably, or not as intended;"51 and malversationoccurs when "any issued in Criminal Case No. SB-12-CRM-0174 by the Sandiganbayan on April 6, 2015 and September 10,
public officer who, by reason of the duties of his office, is accountable for public funds or property, shall 2015; GRANTS the petitioners' respective demurrers to evidence; DISMISSES Criminal Case No. SB-12-
appropriate the same or shall take or misappropriate or shall consent, through abandonment or negligence, CRM-0174 as to the petitioners GLORIA MACAPAGAL-ARROYO and BENIGNO AGUAS for insufficiency of
shall permit any other person to take such public funds, or property, wholly or partially."52 The common thread evidence; ORDERS the immediate release from detention of said petitioners; and MAKES no
that binds all the four terms together is that the public officer usedthe property taken. Considering that raids on pronouncements on costs of suit.
the public treasury is in the company of the four other terms that require the use of the property taken, the
phrase raids on the public treasury similarly requires such use of the property taken. Accordingly, SO ORDERED.
the Sandiganbayan gravely erred in contending that the mere accumulation and gathering constituted the
forbidden act of raids on the public treasury. Pursuant to the maxim of noscitur a sociis, raids on the public
treasury requires the raider to use the property taken impliedly for his personal benefit. G.R. No. 198172

The Prosecution asserts that the Senate deliberations removed personal benefit as a requirement for plunder.
REGULUS DEVELOPMENT, INC., Petitioner,
In not requiring personal benefit, the Sandiganbayan quoted the following exchanges between Senator Enrile
vs.
and Senator Tañada, viz.:chanRoblesvirtualLawlibrary
ANTONIO DELA CRUZ, Respondent.
Senator Enrile. The word here, Mr. President, "such public officer or person who conspired or knowingly
benefited". One docs not have to conspire or rescheme. The only element needed is that he "knowingly
benefited". A candidate for the Senate for instance, who received a political contribution from a plunderer, DECISION
knowing that the contributor is a plunderer and therefore, he knowingly benefited from the plunder, would he
also suffer the penalty, Mr. President, for life imprisonment?
BRION, J.:
Senator Tañada. In the committee amendments, Mr. President, we have deleted these lines 1 to 4 and part of
line 5, on page 3. But, in a way, Mr. President, it is good that the Gentleman is bringing out these questions, I
believe that under the examples he has given, the Court will have to . . . Before us is a petition for review on certiorari filed by petitioner Regulus Development, Inc. (petitioner) to
challenge the November 23, 2010 Decision1 and August 10, 2011 resolution2 of the Court of Appeals (CA) in
Senator Enrile. How about the wife, Mr. President, he may not agree with the plunderer to plunder the country CA-G.R. SP No. 105290. CA Associate Justice Juan Q. Enriquez, Jr. penned the rulings, concurred in by
but because she is a dutiful wife or a faithful husband, she has to keep her or his vow of fidelity to the spouse. Associate Justices Ramon M. Bato, Jr. and Fiorito S. Macalino.
And, of course, she enjoys the benefits out of the plunder. Would the Gentleman now impute to her or him the
crime of plunder simply because she or he knowingly benefited out of the fruits of the plunder and, therefore, ANTECEDENT FACTS
he must suffer or he must suffer the penalty of life imprisonment?

The President. That was stricken out already in the Committee amendment. The petitioner is the owner of an apartment (San Juan Apartments) located at San Juan Street, Pasay City.
Antonio dela Cruz (respondent) leased two units (Unit 2002-A and Unit 2002-B) of the San Juan Apartments in
Senator Tañada. Yes, Mr. President. Lines 1 to 4 and part of line 5 were stricken out in the Committee 1993 and 1994. The contract of lease for each of the two units similarly provides a lease period of one (1)
amendment. But, as I said, the camples of the Minority Floor Leader are still worth spreading the Record. And, month, subject to automatic renewals, unless terminated by the petitioner upon written notice.
I believe that in those examples, the Court will have just to take into consideration all the other circumstances
prevailing in the case and the evidence that will be submitted.
The petitioner sent the respondent a letter to terminate the lease of the two subject units. Due to the
The President. In any event, 'knowingly benefited' has already been stricken off.53cralawred respondent’s refusal to vacate the units, the petitioner filed a complaint3 for ejectment before the Metropolitan
The exchanges between Senator Enrile and Senator Tañada reveal, therefore, that what was removed from Trial Court (MTC) of Pasay City, Manila, on May 1, 2001.
the coverage of the bill and the final version that eventually became the law was a person who was not the
main plunderer or a co-conspirator, but one who personally benefited from the plunderers' action. The
requirement of personal benefit on the part of the main plunderer or his co-conspirators by virtue of their The MTC resolved the case in the petitioner’s favor and ordered the respondent to vacate the premises,
plunder was not removed. and pay the rentals due until the respondent actually complies.4

As a result, not only did the Prosecution fail to show where the money went but, more importantly, that GMA
The respondent appealed to the Regional Trial Court (RTC). Pending appeal, the respondent consigned the The petitioner claimed that the withdrawn deposits, supersedeas bond, and payments directly made by the
monthly rentals to the RTC due to the petitioner’s refusal to receive the rentals. respondent to the petitioner, were insufficient to cover rentals due for the period of May 2001 to May 2004.
Hence, the petitioner filed a manifestation and motion22 dated October 23, 2007, praying that the RTC levy
upon the respondent’s property covered by Transfer Certificate of Title (TCT) No. 136829 to satisfy the
The RTC affirmed5 the decision of the MTC in toto and denied the motion for reconsideration filed by the judgment credit.
respondent.

The RTC granted the petitioner’s motion in an order dated June 30, 2008.23 The respondent filed a motion for
CA-G.R. SP No. 69504: Dismissal of Ejectment Case reconsideration which was denied by the RTC in an order dated August 26, 2008.24

In a Petition for Review filed by the respondent, the CA reversed the lower courts’ decisions and CA-G.R. SP No. 105290: Assailed the levy of the respondent’s property
dismissed the ejectment case.6 On March 19, 2003, the dismissal of the case became final and
executory.7
On October 3, 2008, the respondent filed with the CA a Petition for Certiorari25 with application for issuance of
a temporary restraining order. The petition sought to nullify and set aside the orders of the RTC directing the
Orders dated July 25, 2003 and November 28, 2003 for payment of rentals due under lease contracts levy of the respondent’s real property. The CA dismissed the petition. Thereafter, the respondent filed a
motion for reconsideration26 dated November 3, 2008.
The petitioner filed a motion (to withdraw funds deposited by the defendant-appellant as lessee)8 praying for
the withdrawal of the rentals consigned by the respondent with the RTC. Pursuant to the order dated June 30, 2008, a public auction for the respondent’s property covered by TCT No.
136829 was held on November 4, 2008,27 where the petitioner was declared highest bidder. Subsequently, the
Certificate of Sale28 in favor of the petitioner was registered.
In an order dated July 25, 2003,9 the RTC granted the petitioner’s motion. The RTC explained that the effect
of the complaint’s dismissal would mean that there was no complaint filed at all. The petitioner, however, is
entitled to the amount of rentals for the use and occupation of the subject units, as provided in the executed Meanwhile, on January 7, 2010, the respondent redeemed the property with the RTC Clerk of Court, paying
contracts of lease and on the basis of justice and equity. the equivalent of the petitioner’s bid price with legal interest. The petitioner filed a motion to release funds29 for
the release of the redemption price paid. The RTC granted30 the motion.
The court denied the respondent’s motion for reconsideration10 in an order dated November 28, 2003.11
On February 12, 2010, the respondent filed a manifestation and motion31 before the CA to withdraw the
petition for the reason that the redemption of the property and release of the price paid rendered the petition
On the petitioner’s motion, the RTC issued a writ of execution on December 18, 2003, to cause the
moot and academic.
enforcement of its order dated July 25, 2003.12

Thereafter, the petitioner received the CA decision dated November 23, 2010, which reversed and set aside
CA-G.R. SP No. 81277: Affirmed RTC Orders
the orders of the RTC directing the levy of the respondent’s property. The CA held that while the approval of
the petitioner’s motion to withdraw the consigned rentals and the posted supersedeas bond was within the
The respondent filed a petition for certiorari under Rule 65 before the CA to assail the RTC Orders dated July RTC’s jurisdiction, the RTC had no jurisdiction to levy on the respondent’s real property.
25, 2003 and November 28, 2003 (RTC orders), which granted the petitioner’s motion to withdraw funds.
The CA explained that the approval of the levy on the respondent’s real property could not be considered as a
The CA dismissed13 the petition and held that the assailed RTC Orders were issued pursuant to its equity case pending appeal, because the decision of the MTC had already become final and executory. As such, the
jurisdiction, in accordance with Section 5, Rule 39,14 and Rules 515 and 616 of Rule 135 of the Rules of Court. matter of execution of the judgment lies with the MTC where the complaint for ejectment was originally filed
The respondent’s motion for reconsideration was similarly denied. and presented.

G.R. SP No. 171429: Affirmed CA Ruling on RTC Orders The CA ordered the RTC to remand the case to the MTC for execution. The petitioner filed its motion for
reconsideration which was denied32 by the CA.

The respondent filed a petition for review on certiorari before this Court to assail the decision of the CA in CA-
G.R. SP No. 81277. In a resolution dated June 7, 2006,17 we denied the petition for insufficiency in form and THE PETITION
for failure to show any reversible error committed by the CA.
The petitioner filed the present petition for review on certiorari to challenge the CA ruling in CA-G.R. SP No.
Our resolution became final and executory and an entry of judgment18 was issued. 105290 which held that the RTC had no jurisdiction to levy on the respondent’s real property.

Execution of RTC Orders The petitioner argues: first, that the RTC’s release of the consigned rentals and levy were ordered in the
exercise of its equity jurisdiction; second, that the respondent’s petition in CA-G.R. SP No. 105290 was
already moot and academic with the conduct of the auction sale and redemption of the respondent’s real
The petitioner returned to the RTC and moved for the issuance of a writ of execution to allow it to proceed property; third, that the petition in CAG. R. SP No. 105290 should have been dismissed outright for lack of
against the supersedeas bond the respondent posted, representing rentals for the leased properties from May signature under oath on the Verification and Certification against Forum Shopping.
2001 to October 2001, and to withdraw the lease payments deposited by respondent from November 2001
until August 2003.19 The RTC granted the motion.20
The respondent duly filed its comment33 and refuted the petitioner’s arguments. On the first argument,
respondent merely reiterated the CA’s conclusion that the RTC had no jurisdiction to order the levy on
21
The RTC issued an Alias Writ of Execution dated April 26, 2007, allowing the withdrawal of the rental respondent’s real property as it no longer falls under the allowed execution pending appeal. On
deposits and the value of the supersedeas bond. the second argument, the respondent contended that the levy on execution and sale at public auction were
null and void, hence the CA decision is not moot and academic. On the third argument, the respondent simply practical use or value.39 Courts generally decline jurisdiction over such case or dismiss it on the ground of
argued that it was too late to raise the alleged formal defect as an issue. mootness except when, among others, the case is capable of repetition yet evades judicial review.40

THE ISSUE The CA found that there is an issue on whether the RTC had jurisdiction to issue the orders directing the levy
of the respondent’s property. The issue on jurisdiction is a justiciable controversy that prevented the assailed
CA petition from becoming moot and academic.
The petitioner poses the core issue of whether the RTC had jurisdiction to levy on the respondent’s real
property.
It is well-settled in jurisprudence that jurisdiction is vested by law and cannot be conferred or waived by the
parties. "Even on appeal and even if the reviewing parties did not raise the issue of jurisdiction, the reviewing
OUR RULING court is not precluded from ruling that the lower court had no jurisdiction over the case."41

We grant the petition. Even assuming that the case has been rendered moot due to the respondent’s redemption of the property, the
CA may still entertain the jurisdictional issue since it poses a situation capable of repetition yet evading judicial
review.
Procedural issue: Lack of notarial seal on the Verification and Certification against Forum Shopping is
not fatal to the petition.
Under this perspective, the CA correctly exercised its jurisdiction over the petition.
The petitioner alleged that the assailed CA petition should have been dismissed since the notary public failed
to affix his seal on the attached Verification and Certification against Forum Shopping. Equity jurisdiction versus appellate jurisdiction of the RTC

We cannot uphold the petitioner’s argument. The appellate jurisdiction of courts is conferred by law. The appellate court acquires jurisdiction over the
subject matter and parties when an appeal is perfected.42
The lack of notarial seal in the notarial certificate34 is a defect in a document that is required to be executed
under oath. On the other hand, equity jurisdiction aims to provide complete justice in cases where a court of law is unable
to adapt its judgments to the special circumstances of a case because of a resulting legal inflexibility when the
law is applied to a given situation. The purpose of the exercise of equity jurisdiction, among others, is to
Nevertheless, a defect in the verification does not necessarily render the pleading fatally defective. The court
prevent unjust enrichment and to ensure restitution.43
may order its submission or correction, or act on the pleading if the attending circumstances are such that
strict compliance with the Rule may be dispensed with in order that the ends of justice may be served.35
The RTC orders which allowed the withdrawal of the deposited funds for the use and occupation of the subject
units were issued pursuant to the RTC’s equity jurisdiction, as the CA held in the petition docketed as CA-G.R.
Noncompliance or a defect in a certification against forum shopping, unlike in the case of a verification, is
SP No. 81277.
generally not curable by its subsequent submission or correction, unless the covering Rule is relaxed on the
ground of "substantial compliance" or based on the presence of "special circumstances or compelling
reasons."36 Although the submission of a certificate against forum shopping is deemed obligatory, it is not The RTC’s equity jurisdiction is separate and distinct from its appellate jurisdiction on the ejectment case. The
however jurisdictional.37 RTC could not have issued its orders in the exercise of its appellate jurisdiction since there was nothing more
to execute on the dismissed ejectment case. As the RTC orders explained, the dismissal of the ejectment
case effectively and completely blotted out and cancelled the complaint. Hence, the RTC orders were clearly
In the present case, the Verification and Certification against Forum Shopping were in fact submitted. An
issued in the exercise of the RTC’s equity jurisdiction, not on the basis of its appellate jurisdiction.
examination of these documents shows that the notary public’s signature and stamp were duly affixed. Except
for the notarial seal, all the requirements for the verification and certification documents were complied with.
This Court takes judicial notice44 that the validity of the RTC Orders has been upheld in a separate petition
before this Court, under G.R. SP No. 171429 entitled Antonio Dela Cruz v. Regulus Development, Inc.
The rule is that courts should not be unduly strict on procedural lapses that do not really impair the proper
administration of justice. The higher objective of procedural rules is to ensure that the substantive rights of the
parties are protected. Litigations should, as much as possible, be decided on the merits and not on The levy of real property was ordered by the RTC in the exercise of its equity jurisdiction.
technicalities. Every party-litigant must be afforded ample opportunity for the proper and just determination of
his case, free from the unacceptable plea of technicalities.38
The levy of the respondent’s property was made pursuant to the RTC orders issued in the exercise of its
equity jurisdiction, independent of the ejectment case originally filed with the MTC.
The CA correctly refused to dismiss and instead gave due course to the petition as it substantially complied
with the requirements on the Verification and Certification against Forum Shopping.
An examination of the RTC order dated June 30, 2008, directing the levy of the respondent’s real property
shows that it was based on the RTC order dated July 25, 2003. The levy of the respondent’s property was
An issue on jurisdiction prevents the petition from becoming "moot and academic." issued to satisfy the amounts due under the lease contracts, and not as a result of the decision in the
ejectment case.
The petitioner claims that the assailed CA petition should have been dismissed because the subsequent
redemption of the property by the respondent and the release of the price paid to the petitioner rendered the The CA erred when it concluded that the RTC exercised its appellate jurisdiction in the ejectment case when it
case moot and academic. directed the levy of the respondent’s property.

A case or issue is considered moot and academic when it ceases to present a justiciable controversy because Furthermore, the order to levy on the respondent’s real property was consistent with the first writ of execution
of supervening events, rendering the adjudication of the case or the resolution of the issue without any issued by the RTC on December 18, 2003, to implement the RTC orders. The writ of execution states that:
xxx In case of [sic] sufficient personal property of the defendant cannot be found whereof to satisfy the amount of First Instance founded its judgment touching the guilt and condemning the defendants. While, on the other
of the said judgment, you are directed to levy [on] the real property of said defendant and to sell the hand, it is contended that the questions of fact, which we are [not] authorized to examine, are those which are
same or so much thereof in the manner provided by law for the satisfaction of the said judgment and to essential to be examined for the purpose of determining the legality of Ordinance No. 35 and the penalties
make return of your proceedings together with this Writ within sixty (60) days from receipt hereof. (emphasis provided for therein, and no other.
supplied)

At the outset it may be well to briefly out line the criminal procedure in force in this jurisdiction prior to the
The subsequent order of the RTC to levy on the respondent’s property was merely a reiteration and an promulgation on the 23d of April, 1900, of General Orders No. 58.
enforcement of the original writ of execution issued.1âwphi1

The royal order dated December 17, 1886, directing the execution of the royal decree of September 4, 1884,
Since the order of levy is clearly rooted on the RTC Orders, the only question that needs to be resolved is wherein it was ordered that the Penal Code in force in the Peninsula, as amended in accordance with the
which court has jurisdiction to order the execution of the RTC orders. recommendations of the code committee, be published and applied in the Philippine Islands, as well as the
Provisional Law of Criminal Procedure which accompanied it. These two laws, having been published in the
Official Gazette of Manila on March 13 and 14, 1887, became effective four months thereafter.
The RTC, as the court of origin, has jurisdiction to order the levy of the respondent's real property.

According to the provisions of Rule No. 1 of the above-mentioned provisional law, the justices of the peace, or
Execution shall be applied for in the court of origin, in accordance with Section 1,45 Rule 39 of the Rules of gobernadorcillos, had original jurisdiction over the offenses set forth in Book 3 of the Penal Code.
Court.

Rule 2 provided that "when the justice of the peace or the gobernadorcillo receives notice that there has been
The court of origin with respect to the assailed RTC orders is the court which issued these orders. The RTC is committed any one of the offenses provided for in Book 3 of the Penal Code which can be prosecuted by the
the court with jurisdiction to order the execution of the issued RTC orders. Government, he shall issue summons for an oral trial to the complainant, if any, to the alleged culprit, and to
the witnesses who may be able to testify as to the facts, fixing the day and hour for holding the trial. If this (the
trial) takes place at the residence of the promotor fiscal, he shall also be summoned." Rule 3 provided that the
Hence, the petitioner correctly moved for the issuance of the writ of execution and levy of the respondent's real
same procedure should be followed in those cases which can only be prosecuted at the instance of a private
property before the RTC as the court of origin.
party, except that the promotor fiscal was not cited.

WHEREFORE, we hereby GRANT the petition for review on certiorari. The decision dated November 23,
Neither the Provisional Law, the criminal procedural laws of the Peninsula, nor the autos acordados prescribed
2010, and the resolution dated August 10, 2011, of the Court of Appeals in CA-G.R. SP No. 105290 are
any special form for the complaint to be presented to the justice of the peace or the gobernadorcillo. As to this
hereby REVERSED and SET ASIDE. The orders dated June 30, 2008, and August 26, 2008, of Branch 108 of
point, it seems that the Compilation of the Laws of Criminal Procedure of 1879 was applicable. Articles 405,
the Regional Trial Court of Pasay City, are hereby REINSTATED. Costs against respondent Antonio dela Cruz.
406, and 412 read: "ART. 405. The complaint made in writing must be signed by the complainant, and if he
cannot do so, by some other person at his request. The authority or official who receives it shall rubricate and
SO ORDERED. seal every page in the presence of the person who presents it, which also he may do himself or through
another person at his request.

G.R. No. L-9527 August 23, 1915


ART. 406. When the complaint is oral, it shall be reduced to writing in the form of a declaration,
shall be set forth such information as the complainant may have regarding the fact complained of
THE UNITED STATES, plaintiff-appellee, and the circumstances thereof, and both shall sign it at the bottom. If the complainant cannot sign
vs. his name, some other person shall do so at his request.
JOSE TAMPORONG, ET AL., defendants-appellants.

ART. 412. Criminal cases that are not instituted by the Government must begin with a complaint.
The appellant in their own behalf.
Acting Attorney-General Harvey for appellee.
The oral trial referred to in Rule 2 was held within three days next following the date when the justice of the
peace or the gobernadorcillo received information that the offense had bee committed (Rule 4), the procedure
TRENT, J.: being that provided for in Rule 9, which reads: "The trial shall be public, beginning with the reading of the
complaint, if any there be, followed by the examination of the witnesses summoned and the introduction of
such other evidence as the complainant, accuser, and the public prosecutor, if he take part, may request and
The defendants were convicted by the justice of the peace of Baguio for having played the game of chance the justice of the peace or the gobernadorcillo may regard as pertinent. Immediately thereafter the accused
called "monte" in violation of Ordinance No. 35. They appealed to the Court of First Instance, where they were shall be given a hearing, the witnesses who appear in his defense shall be examined, and such other
again tried and convicted upon the same charge. An appeal was allowed to this court because the validity of evidence as the justice of the peace or the gobernadorcillo may declare to the admissible shall be adduced.
Ordinance No. 35 was drawn in question during the trial of the cause in the court below. The parties shall forthwith make such pleas as they think expedient in support of their respective contentions,
the first to speak being the public prosecutor, if he take part, then the private complainant, and finally the
accused.
Two questions are raised by this appeal: (1) Is Ordinance No. 35 valid, and (2) is this court required under the
law to examine the evidence for the purpose of determining the guilt or innocence of the defendants?
The representative of the public prosecutor shall attend the trial for misdemeanors, whenever he is
cited thereto, in accordance with Rule 2.
The first question is answered in the affirmative by this court in the case of the United States vs. Joson (26
Phil. Rep., 1.) The cases are on all fours, and a further discussion of this branch of the case is unnecessary.
A record of the trial was made, wherein the whole procedure was clearly and succinctly set forth, and signed
by all the parties participating in the trial. (Rule 11.)
With reference to the second question, it is said that by reason of the defendants' having in the lower court
questioned the legality of Ordinance No. 35, for the violation of which they have been convicted, this case has
been brought to us in all its details of law and fact, including the evidence taken at the trial, on which the Court
After trial and rendition of judgment, either of the parties could appeal to the Court of First Instance within the The distinction between a "writ of error," which brings up the record in an action of law for a review
first day next following that on which notice of the rendition of judgment was served. The appeal suspended of questions of law only, and an "appeal," which involves a rehearing upon both the facts and the
the judgment. After the appeal had been allowed, the justice of the peace or the gobernadorcillo remitted to law, is vital. These remedies have their origin and functions in the inherent difference between
the Court of First Instance the original record and cited the parties to appear within the period of five days courts of law and courts of equity, differences which are recognized in the Constitution of the
before the appellate court. This time could be extended, if the circumstances of the case required. (Rule 14.) If United States and the laws of Congress. The "writ of error" is a common-law writ, and searches the
the appellant appealed, a day was fixed for the trial; but if he did not appear, the appeal was dismissed. (Rule record for errors of law in the final judgment of a common-law court. If error is found, the judgment
15.) Rule 16 provides the procedure for the trial in the second instance. This rule reads: "The hearing at the awards a venire facias de novo. The "appeal" is a procedure which comes to us from the civil law
trial shall be public, and all the proceedings in the case shall be read therein; then the parties or their attorneys along with the fundamentals which go to make up the jurisprudence of a court of equity. Its office is
may speak in their turn, and thereafter the judgment shall be pronounced and communicated to them. to remove the entire cause, and its subjects the transcript to a scrutiny of fact and law and as is in
substance a new trial.

A record of the trial shall be drawn up in the same manner as fixed by Rule 11.
Under the system of procedure which obtains in the Philippine Islands, both legal and equitable relief is
dispensed in the same tribunal. We have no courts of law in England and the United States. All cases (law and
Rule 17 reads: "In this second instance no evidence may be admitted other than that which, offered in the first equity) are presented and tried in the same manner, including their final disposition in the Supreme Court.
instance, was not taken for reasons independent of the will of the parties who had offered it." Therefore, the word "appeal," as used in section 43 (supra), does not necessarily imply the removal of the
cause from one tribunal to another in its entirety, subjecting the facts, as well as the law, to a review or a retrial,
but it is to be interpreted by the ordinary rules of construction.
Rule 19 provides: "The judgment of the Court of First Instance will be executory, and there will be no recourse
from the same except that of responsibility before the audencia del territorio."
The intention of the framers of General Orders No. 58 is the law. In order to ascertain that intention the visions
of the order must be construed in the light of existing law and the circumstances at the time of its promulgation.
The provisions of General Orders No. 58 pertinent to the question under consideration, are as follows:

At the time General Orders No. 58 went into effect, criminal cases originating in Courts of First Instance came
SEC. 43. From all final judgments of the Courts of First Instance or courts of similar jurisdiction,
to the audiencia in their entirety, subjecting both the law and the facts to a review or retrial. But the audiencia,
and in all cases in which the law now provides for appeals from said courts an appeal may be
or Philippine Supreme Court, could not review the judgment of a Court of First Instance in any case tried on
taken to the Supreme Court as hereinafter prescribed. Appeals shall also lie from the final
appeal from court of justice of the peace wherein the latter courts had jurisdiction. Such judgments were final
judgments of justices of the peace in criminal cases to the courts of the next superior grade, and
and conclusive. The aggrieved party could go no further with the case. The only recourse he had was that
the decisions of the latter thereon shall be final and conclusive except in cases involving the
mentioned in Rule 19 (supra). The penalties for violations of the provisions of Book 3 of the Penal Code over
validity or constitutionality of a statute, wherein appeal may be made to the Supreme Court.
which justices of the peace then had jurisdiction were generally arresto or arresto menor and small fines. This
was the law in force at the time section 43 (supra) was framed and these were the conditions confronting the
SEC. 54. All cases appealed from a justice's court shall be tried in all respects anew in the court to framers of that section at that time. What changes did the section make?
which the same are appealed; but on the hearing of such appeals it shall not be necessary, unless
the appeal shall involve the constitutionality or legality of a statute, that a written record of the
Section 43 authorizes appeals to the Supreme Court from all final judgments of Courts of First Instance "and in
proceedings be kept; but shall be sufficient if the appellate court keeps a docket of the proceedings
all cases in which the law now provides for appeals from said courts." This part of the section is limited to
in the form prescribed in the next preceding section.
judgments rendered in criminal cases originating in Courts of First Instance. This is necessarily true because
the latter part of the section makes the decisions of the "courts of next superior grade (which were Courts of
Section 43 has been amended by section 34 of Act No. 1627 so as to read as follows: First Instance) rendered in cases appealed from justices' courts final and conclusive, except in cases involving
the validity or constitutionality of a statute." The result is that the former procedure was amended by section 43
so as to also authorize appeal to the Supreme Court in the cases mentioned in the latter part thereof when the
From all final judgments of the Court of First Instance or courts of similar jurisdiction, and in all validity or constitutionality of a statute was drawn in question. To this extent only was the former procedural
cases in which the land now provides for appeals from said courts, an appeal may be taken to the law changed in so far as the question at issue is concerned. Among the reasons which induced the lawmakers
Supreme Court as hereinafter prescribed. The convicted party may appeal from any final judgment to make this change was the fact that the jurisdiction of justices of the peace was "extended to all offenses
of a justice of the peace in criminal cause to the Court of First Instance by filing a notice of appeal which the Penal Code designates as punishable by arresto mayor in all of its grades." (Sec. 108.)
with such justice within fifteen days after the entry of judgment. Upon such notice being so filed,
the justice shall forward to the Court of First Instance all original papers and a transcript of all
docket entries in the cause, and the provincial fiscal shall thereupon take charge of the cause in If we had found the ordinance attacked in the case at bar to be illegal and unconstitutional, the judgment
behalf of the prosecution. The judgment of the Court of First Instance in such appeals shall be appealed from would necessarily have to be set aside and defendants would have no interest in presenting to
fined and conclusive, except in cases involving the validity of a municipal or township ordinance. us the evidence taken at the trial. But we have maintained the legality of that ordinance, and in so doing have
we exhausted our powers and reached the limit of our inquiry? Section 43 does not expressly so limit our
power. Neither does not expressly authorize us to review the testimony touching the guilt or innocence of the
In view of the fact that this court took the view, prior to the passage of Act No. 1627, that the military governor defendants.
and the framers of General Orders No. 58 intended by the use of the word "statute" found in section 43 (supra)
to include "ordinances," the amendment of this section by section 34 of that Act does not affect the issue in the
instant case. The original section provided that "an appeal may be made to the Supreme Court in cases The distinction between the illegality of a penalty imposed by a municipal corporation and the correctness of
involving the validity or constitutionality of a statute," and the section, as amended, authorizes appeals to the that imposed by a justice of the peace under a municipal ordinance, and between the illegality of the ordinance
Supreme Court in the same class of cases. and that of the proceedings or actions taken under it, is plain and broad. an ordinance may, from the
standpoint of the regularity of all the proceedings leading up to and inclusive of its enactment, be absolutely
faultless and yet the ultimate act done or enacted may be inherently or intrinsically illegal or unconstitutional.
It is urged that as the civil law term "appeal" is used in section 43 (supra), we must apply the same rule of On the other hand, the latter may be perfectly unassailable and yet the ordinance be illegal or unconstitutional
construction that the courts in England and the United States have almost uniformly applied to the same term by reason of some fact or circumstance connected with its passage. It may, for instance, have been presented
and thus derive an unqualified review of both the law and the facts. This doubtless would be a correct position in a wrong manner, at a wrong time, or not voted for as directed by law. It is to facts of this class or character
in some jurisdictions in the American Union, as there the technical civil-law meaning of the term "appeal" is that section 43 refers when it says "the latter thereon shall be final and conclusive except in cases involving
followed. The reason for so doing is set forth in the case of Nashville Ry. & Light Co. vs. Bunn (168 Fed. Rep., the validity or constitutionality of a statute."
862), wherein the court said:
Such appears to be the meaning and intention manifested from the provisions of the latter part of section 43, In the case of The United States vs. Espiritusanto (23 Phil. Rep., 610), we examined the facts touching the
already quoted, especially when they are considered in the light of the former practice above indicated. Under due enactment of the ordinance. After so doing, the ordinance was held valid, but the facts touching the guilt
that practice no appeals whatever were allowed to the Supreme Court from judgments of Courts of First or innocence of the appellant were not gone into.
Instance in cases originating in justices' courts. We must assume that the framers of section 43 had
knowledge of this practice and its effects. The framers desired to amend this practice to the extent only of
providing a way by which statutory questions, which might arise in these cases, could be reviewed by the In United States vs. Ten Yu (24 Phil. Rep., 1), the court used this language at page 12: "While we have
Supreme Court. This object could be very imperfectly obtained, if, when the court assumed jurisdiction of such discussed at length each of the assignments of error made by the appellants, nevertheless, the only question,
a case, it would not only determine the statutory questions, but also inquire into and determine every other in fact, presented by the appeal under the law, in the first instance, is whether or not the ordinance under
question raised during the progress of the trial. In effect, this would entirely destroy the former practice, which the defendants were sentenced is legal. Having concluded that said ordinance is legal and within the
because it would render it possible to bring every case here in its entity. All that would be necessary would be express powers of the Municipal Board to enact, the appeal must be dismissed, with costs in this instance
to raise some statutory question, whether material to the decision of the case or not, and the right of appeal against the appellants in equal parts."
and re-examination of the whole case would be assured. Clearly, no such result was intended, nor it is
manifest from the language employed in section 43. But it is urged that our ruling in this matter "involves the
In United States vs. Abendan (24 Phil. Rep., 165), the court, after quoting the testimony of a sanitary inspector
legal absurdity of disjoining a single case and turning over one fragment to one court and another parcel to
and after holding the ordinance valid, said: "The evidence in the case, which is undisputed, is sufficient, in our
another court." (Elliott on Appellate Procedure, sec. 17.) In this section the author is speaking of appellate
judgment, to warrant the order complained of. It does not appear therefrom, the defendant himself having
jurisdiction where the distinction between law and equity is rigidly maintained. He says: "Where a court of
introduced substantially no proof in the case, that he was treated differently from other persons in that locality,
equity retains jurisdiction for one purpose, it will retain it for all purposes." The same author recognizes a
or that he was required to do a thing that the others had not been required to do, or that he had in any way
difference in the two systems of appellate jurisdiction — that is, the one where the distinction between law and
been discriminated against in the application of this ordinance to the facts of his case, or that its application
equity is maintained and, the other, where the two are blended. (Section 24.) In this last section the author
was oppressive or unreasonable in this particular instance.
says: "In some respects an appeal under the code system may be less comprehensive in its scope than an
appeal under the old system," citing Judge Curtis, wherein he said that "it is evident that an appeal under the
code system does not necessarily bring up the entire case." In view of the fact that the code system prevails in The judgment appealed from is affirmed, with costs.
the Philippine Islands, blending legal and equitable rights and providing for one remedial system, our holding
in the instant case is not in conflict with Elliott on Appellate Procedure.
Considering this language, together with that used in the opinion wherein the court said, "The sole question
raised on this appeal is that presented by the claim of the appellant that the ordinance in question is
It is also urged that the rule announced in the case of Loeb vs. Columbia township Trustees (179 U.S., 472), unreasonable and oppressive," it is clear that the court did not intend to hold that it had authority to examine
and followed in the late case of Boise Artesian Hot and Cold Water Co., Ltd. vs. Boise City (230 U.S., 84), is into the question of the guilt or innocence of the appellant.
directly opposed to our holding in the case under consideration. These two cases went to the Supreme Court
of the United States on writs of error directly from the circuit courts in accordance with the provisions of section
5 of the Judiciary Act of March 3, 1891. This section provides "that appeals or writs of error may be taken from In United States vs. Co Chee (R. G. No. 8269, not reported) the appellants were convicted of a violation of
the district courts, or from the existing circuit courts, direct to the Supreme Court in the following cases: ...." Ordinance No. 152 of the city of Manila and, having drawn in question the validity of that ordinance, an appeal
Here Congress maintains the distinction between "appeals" and "writs of error." In each case above cited the was allowed to this court. In disposing of this case the court said: "Precisely this question was presented in the
Supreme Court of the United States held that it not only had jurisdiction to review the constitutional questions, case of the United States vs. Ten Yu (24 Phil. Rep., 1), just decided by this court, in which we held that said
but also every other question properly arising. The court then proceeded to review all legal questions in those Ordinance No. 152 of the city of Manila was valid and constitutional. That case is on all fours with the present
cases and not questions of fact, for the reason that the cases were before the court on writs of error. Even one, and the judgment of conviction of the Court of First Instance is hereby affirmed, with costs against the
granting that the Supreme Court has jurisdiction under the Act above mentioned to review both questions of appellants, on the authority of that case."
law and fact in cases appealed to that court, such holding would not be antagonistic to our views in the instant
case for the reason that our power to review the facts touching the guilt or innocence of the defendants must
be found in section 43 of General Orders No. 58. Our view is, as above indicated, that the framers of that No attempt was made to examine or pass upon the testimony touching the guilt or innocence of the appellants.
section did not intend to confer upon this court that power. And all must admit that the military governor at the
time he promulgated General Orders No. 58 had the power to limit or restrict the jurisdiction of the Supreme
In United States vs. Tiu Un (R.G., No. 7804); United States vs. Gaw Kee (R.G., No. 7816; United
Court to statutory questions in cases of the character of the one under consideration.
States vs. Lim Cui (R.G., no. 7815; United States vs. See Kea R.G., No. 7828); United States vs. Go tin (R.G.,
No. 7481); United States vs. Sia Kim (R.G., No. 7716); United States vs. Lim Baey (R.G., No. 7915); United
Our ruling in the case at bar is fully supported by the adjudicated cases of this Supreme Court. States vs. Li Tia (R.G., no. 7826; and United States vs. Tam Bak (R.G., No. 7814), not reported, the
appellants were convicted for a violation of Municipal Ordinance No. 152 of the city of Manila and, having
drawn in question the validity of that ordinance, appeals were allowed to this court. This court, upon the
In the case of Trinidad vs. Sweeney (4 Phil. Rep., 531), the court said: "Upon the facts stated in the complaint authority of the United States vs. Ten Yu (supra), dismissed the appeal and directed the records to be
the plaintiff is entitled to prosecute an appeal to this court; but upon such appeal the only question to be returned to the court below for execution of the sentences.
considered will be that of the validity or invalidity of the ordinance. We cannot review the evidence nor pass
upon any other question of law which may appear in the record."
Other cases might be cited, but we think the above are sufficient to show that we have followed in the instant
case the uniform holding of this court for more than ten years. In fact, the court has not, since its organization,
In United States vs. Trinidad (7 Phil. Rep., 325), the defendant was convicted in the municipal court of the city held in any case that it has the power to review the facts touching the guilt of an accused person in cases of
of Manila for violating a municipal ordinance. He appealed to the Court of First Instance, where he was again the character of the one under consideration.
convicted. An appeal was allowed to the Supreme Court on the ground that the constitutionality or validity of
the ordinance was drawn in question. On appeal the appellant insisted, among other things, that the trial court
erred in deciding the case without first consulting with the two assessors. This court held the ordinance valid Some discussion has arisen in regard to the language we should use in the final disposition of cases wherein
and, after quoting with approval the language used in the case of Trinidad vs. Sweeney (supra), said: "In the statute or ordinance has been upheld. Sometimes we say, "The judgment is affirmed," and at other times
cases where the appeal involves the constitutionality or validity of a statute, the disagreement of the assessors we have said "the appeal is dismissed," etc. The result is the same and it is of little importance which
with the judgment of the Court of First Instance on appeal does not authorize this court to review the evidence, expression we use. But, as the case comes to us on appeal for the purpose of testing the legality of the statute
but its decision shall be confined only to the question of the validity of the Act or statute in question, as occurs or ordinance upon which the judgments rests and as the judgment cannot be executed without the sanction of
in the present case." this court, it is perfectly legal to "affirm" or "reverse" the judgment as the case may be.

For the foregoing reasons the judgment appealed from is affirmed, with costs against the defendants. So
ordered.
[G.R. No. 131277. February 2, 1999] The Facts

As found by the Court of Appeals, the facts of the case are as follows:

Spouses FRANCISCO and ANGELA C. TANKIKO and Spouses ISAIAS and ANITA E.
VALDEHUEZA, petitioners, vs. JUSTINIANO CEZAR, EUGENIO ENDAN, BONIFACIO ACLE, x x x Plaintiffs-appellants [herein respondents] are the actual occupants and residents of a portion [of land]
EUSEBIO ANTIG, JULIO ASENERO, PILAR ARBOLADURA, JUANA BALISTOY, consisting of 1 ha. 7552 sq. m. (Appellants Brief, p. 28, Rollo) of the controverted lot, Lot No. 3714 of the
APOLINARIO BAHADE, REMEGIO CAGADAS, TEODORO CAGANTAS, ALEJANDRO DE LA Cadastral Survey of Cagayan [(]Cadastral Case No. 18, L.R.C. Rec. No. 1562[)] with the improvements
CERNA, NILO DE LA CRUZ, REMEDIOS F. COLLERA, TERESITA COLLERA, ANASTACIO thereon, situated in the Barrio of Lapasan, City of Cagayan de Oro x x x containing an area of ONE
DAGANDARA, HEIRS OF SOTERO ESCOLANA represented by LUZ ESCOLANA, HEIRS OF HUNDRED TWENTY SIX THOUSAND ONE HUNDRED AND TWELVE (126,112) SQUARE METERS, more
FELICISIMO EXCLAMADO represented by ALFREDO EXCLAMADO, CARLOS GOMEZ, or less (Exhibit 2; Records, pp. 12-13).
ELEUTERIO GUIWAN, HEIRS OF TEODORO JANDAYAN represented by MARINA ANAYA
VDA. DE JANDAYAN, HEIRS OF GUILLERMO NARISMA, IGNACIO OPAON, ANTONIO
PALMA, ELADIO RAAGAS, HEIRS OF MARTIN RODRIGUEZ represented by LUZMINDA Plaintiffs-appellants are miscellaneous sales patent applicants of their respective portions of the
RODRIGUEZ ABEJARON, RUFINO SUMAMPONG, HEIRS OF ASUNCION aforedescribed lot occupied by them [(]some as far back as 1965[)] and have been religiously paying taxes on
TACDER represented by EUSEBIO ANTIG, DOMINGO TORDILLO, LUCIANO UAYAN and the property. The action for reconveyance with damages filed before the Regional Trial Court, Misamis
JULIO WALAG, respondents. Oriental, Cagayan de Oro City springs from the fact that the lot in question [(]Lot 3714[)] had been titled under
Original Certificate of Title No. O-740 issued by the then Land Registration Commission on December 13,
1977 in the name of Patricio Salcedo married to Pilar Nagac. Said OCT was issued pursuant to Decree of
DECISION Registration No. N-168305 in accordance with a decision of the Cadastral Court in Cadastral Case No. 18,
LRC Cad. Rec. No. 1562 dated August 6, 1941 penned by the Hon. Lope Consing (Pre-Trial Brief for
PANGANIBAN, J.: Defendant Spouses Francisco and Angela Tankiko and Spouses Isaias and Anita Valdehueza, Records, p.
258). Subsequently, separate titles (Transfer Certificates of Title NO. T-55515 and T-55516) were issued to
defendant-appellee Tankiko after the latter purchased Lots 3714-B, 3714-C of the subdivision plan from the
Equity may be invoked only in the absence of law; it may supplement the law, but it can neither Heirs of Patricio Salcedo represented by Atty. Godofredo Cabildo, their attorney-in-fact. In turn, defendant-
contravene nor supplant it. appellee Francisco Tankiko sold Lot 3714-C to defendant-appellees Isaias and Anita Valdehueza.

Plaintiff-appellants contest the existence of the Consing decision and cite the decision of the Hon. Eulalio
Statement of the Case
Rosete dated April 18, 1980 [in] Civil Case No. 6759 involving the neighboring lot (Lot No. 3715) likewise
(formerly) covered by OCT O-740 which makes the following observation regarding Lot 3714:

There is no record showing that a decision has been rendered in Cadastral Case No. 18; G.L.T.O Record No.
This principle is stressed by this Court in granting the Petition for Review on Certiorari before us
1562 adjudicating Lots Nos. 3714 and 3715 in favor of Patricio Salcedo married to Pilar Nagac. (Exh UU and
seeking the nullity of the April 16, 1997 Decision of the Court of Appeals [1] in CA-GR CV No. 50025 and its
VV). If there was such a decision it would have been with the records of the Land Registration Commission
October 13, 1997 Resolution denying reconsideration. The dispositive portion of the assailed Decision reads
inasmuch [as] the decree was issued only on December 13, 1977 so that decision was still available on that
as follows: date.

WHEREFORE, the foregoing considered, the appealed decision is SET ASIDE and another one entered
On the contrary, it was the decision rendered in Epediente (sic) Catastro No. 18, G.L.R.P Record No. 1562,
allowing plaintiffs-appellants to stay in the premises pending final termination of the administrative proceedings entitled, Commonwealth De Pilipinas, Solicitante, Antonia Abaday, et al. Reclamantes, rendered on December
for cancellation of defendants-appellees titles and final termination of the action for reversion and annulment of
19, 1940 which was found.This decision shows that Lots Nos. 3714 and 3715 were declared public lands.
title. Let notice of lis pendens be annotated on Original Certificate of Title Nos. T-55515 and T-55516.
(Exh. WW-2). Said decision, rendered by Judge Ricardo Summers, reads, among others.

Let a copy of this decision be furnished to the Director of Lands and the Office of the Solicitor General for the
xxx xxx xxx
administrative investigation of plaintiff-appellants complaint and [for] the eventual filing of the petition for the
cancellation of defendants-appellees title [to] be initiated, expedited if still pending, and resolved without
further delay.[2] Lote No. 3714 - Declarado terreno publico por haber sido reclamado unicamente por los Directores de
Terrenos y Montes.
By the foregoing disposition, the Court of Appeals effectively reversed the February 9, 1995
Decision[3] of the Regional Trial Court of Misamis Oriental, Branch 17, which disposed: Lote No. 3715 - Declarado toreno publico por haber sido reclamado unificamente porlos Directores de
Terrenos y Montes. (Exh WW-2-A).
WHEREFORE, premises considered, the complaint filed in this case against the defendants by the plaintiffs
should be, as it is hereby ordered, DISMISSED, for lack of merit. Accordingly, the defendants are hereby xxx (Underscoring Supplied).
declared as owners of the property in litigation as evidenced by their certificates of title covering their
respective portions of Lot No. 3714 and the plaintiffs, who are now possessing and occupying said parcel of
land, are hereby ordered to vacate the same within ninety (90) days, so that the defendants can take xxx xxx xxx
possession of their respective portions and enjoy the same as owners thereof.
The Court notes that Original Certificate of Title No. [O-]740 covers not only Lot 3715, but also Lot No. 3714, a
The counter-claims are, likewise, dismissed for failure to prove the same. Costs against the plaintiffs.[4] parcel of land which has been occupied and [is] now being used by the Don Mariano Marcos Polytechnic
College. Before this College, the Misamis Oriental School of Arts and Trades, has been occupying and using
the Lot No. 3714 since before the war. This lot was also declared public land by the Cadastral Court in
Hence, this recourse to this Court.[5] Expediente Catastro No. 18 G.L.R.O. Record No. 1562, because only the Directors of Land and Forestry were
the claimants (Exh WW-2-A). It would seem therefore that Original Certificate of Title No. [O-]740 is likewise 5. Prescription.[7]
void ab initio as regards this lot. But, this Court cannot make any pronouncement on this lot because it has not
been admitted for determination.
This Court believes that the pivotal issue in this case is whether the private respondents may be
deemed the proper parties to initiate the present suit.
(Records, pp. 41-43)

In the course of the presentation plaintiffs evidence in this appealed case, the parties submitted a stipulation of
The Courts Ruling
facts (Records, pp. 392, 427, 429) wherein the parties admitted the existence of Civil Case No. 6646, Regional
Trial Court Branch 24, Misamis Oriental; and the Decision-Adjudicando Lotes No Controvertidos rendered by
Judge Ricardo Summers in Expediente Cat. No. 18 G.L.R.O. Rec. No. 1562 on December 14, 1940 which
shows on page 6 thereof that Lot 3714 was declarado terreno publico.However[,] defendants asserted that Lot
The petition is meritorious.
3714 was subsequently adjudicated to and ordered registered in the name of Patricio Salcedo pursuant to
Decree of Registration No. 168305 issued on August 6, 1941 by Judge Lope Consing but the Original
Certificate of Title No. O-740 was actually issued only on December 13, 1977. Parties further stipulated to the
existence of Civil Case No. 6759 referring to the neighboring Lot 3715 and the decision rendered
therein supra declaring null and void Original Certificate of Title No. O-740 as regards Lot No. 3715 and Main Issue: Personality to Sue

containing the opinion that OCT-O740 was likewise void respecting Lot No. 3714; the existence of Civil Case
No. 89-243 entitled Heirs of Bartolome Calderon, et al. vs. Salcedo, et al. which was terminated by a
Judgment on Compromise Agreement recognizing Miscellaneous Sales Patent No. 4744 in favor of the Heirs
of Bartolome Calderon over a 750 square meter portion of the land covered by OCT No. O-740; the existence Although the respondents had no personality to file the action for reconveyance with damages, the
of tax declarations and tax receipts of the plaintiff; the existence of OCT No. O-740 over Lot 3714, Subdivision Court of Appeals still ruled that the particular circumstances of this case necessitated the exercise of equity
Plan of Patricio Salcedo over Lot 3714, Extra-judicial Settlement of [the] Estate of Patricio Salcedo, and the jurisdiction, in order to avoid leaving unresolved the matter of possession of the land in question.
Special Power of Attorney in favor of Atty. Godofredo Cabildo as attorney-in-fact of the Salcedos (pp. 4298-
430, Record).[6] On the other hand, petitioners insist that respondents had no legal capacity to file
the Complaint, because they were not the owners of the land but mere applicants for sales patent
thereon. Therefore, petitioners argue that respondents, not being the real parties in interest, have no legal
standing to institute the Complaint in the trial court.
Ruling of the Court of Appeals We agree with petitioners. The Court is not persuaded that the circumstances of this case justify the
exercise of equity jurisdiction that would allow a suit to be filed by one who is not a real party in interest.

First, equity is invoked only when the plaintiff, on the basis of the action filed and the relief sought, has
The Court of Appeals (CA) found that Patricio Salcedo did not acquire any right or title over the a clear right that he seeks to enforce, or that would obviously be violated if the action filed were to be
disputed land and, consequently, did not transmit any registrable title to herein petitioners. Never presented as dismissed for lack of standing. In the present case, respondents have no clear enforceable right, since their
evidence was any copy of the Consing Decision, which had allegedly authorized the Decree of Registration of claim over the land in question is merely inchoate and uncertain.Admitting that they are only applicants for
the property in favor of Patricio Salcedo. Evidence also shows that the land that Patricio Salcedo succeeded in sales patents on the land, they are not and they do not even claim to be owners thereof.In fact, there is no
registering in his name had been previously declared public land on December 19, 1940, in Expediente Cat. certainty that their applications would even be ruled upon favorably, considering that some of the applications
No. 18 penned by Judge Ricardo Summers. Under the Regalian Doctrine, no public land can be acquired by have been pending for more than ten years already.
private persons without a grant from the government; since petitioners did not present any evidence that
Patricio Salcedo had acquired the property from the government as a favored recipient -- by homestead, free Second, it is evident that respondents are not the real parties in interest. Because they admit that they
patent or sales patent -- said property could not have been acquired by him. are not the owners of the land but mere applicants for sales patents thereon, it is daylight clear that the land is
public in character and that it should revert to the State. This being the case, Section 101 of the Public Land
As the property in dispute is still part of the public domain, respondents are not the proper parties to file Act categorically declares that only the government may institute an action to recover ownership of a public
an action for reconveyance, as they are not owners of the land, but only applicants for sales patent land.[8] In Sumail v. CFI,[9] a case involving facts identical to the present controversy, the Court held that a
thereon. However, equitable considerations persuaded the CA to allow plaintiffs-appellants to remain on the private party had no personality to institute an action for reversion of a parcel of land to the public domain, viz.:
land in question, so that future litigation may be avoided.

Under section 101 above reproduced, only the Solicitor General or the officer acting in his stead may bring the
action for reversion. Consequently, Sumail may not bring such action or any action which would have the
Statement of the Issues
effect of cancelling a free patent and the corresponding certificate of title issued on the basis thereof, with the
result that the land covered thereby will again form part of the public domain. Furthermore, there is another
reason for withholding legal personality from Sumail. He does not claim the land to be his private property. X x
x Consequently, even if the parcel were declared reverted to the public domain, Sumail does not automatically
In their Memorandum, petitioners claim that the CA erred in its ruling on the following issues: become owner thereof. He is a mere public land applicant like others who might apply for the same.

1. Respondents legal personality to sue; Under Section 2, Rule 3 of the Rules of Court,[10] every action must be prosecuted or defended in the
name of the real party in interest. It further defines a real party in interest as one who stands to be benefited or
injured by the judgment in the suit. In Joya v. Presidential Commission on Good Government, this Court
2. Decree of Registration; explained that legal standing means a personal and substantial interest in the case such that the party has
sustained or will sustain direct injury as a result of x x x the act being challenged. The term interest is material
interest, an interest in issue and to be affected by the decree, as distinguished from mere interest in the
3. Petitioners as innocent purchasers for value; question involved, or a mere incidental interest. Moreover, the interest of the party must be personal and not
one based on a desire to vindicate the constitutional right of some third and unrelated party.[11]
4. Allowing respondents to stay in the premises; and
Clearly, a suit filed by a person who is not a party in interest must be dismissed. Thus, in Lucas v. This is a petition for review of decision of the Court of Appeals dated March 22, 1996 in CA-G.R. CV No.
Durian,[12] the Court affirmed the dismissal of a Complaint filed by a party who alleged that the patent was 30381, reversing and setting aside the decision of the then Court of First instance of Cagayan de Oro City,
obtained by fraudulent means and, consequently, prayed for the annulment of said patent and the cancellation Branch 17.
of a certificate of title. The Court declared that the proper party to bring the action was the government, to
which the property would revert. Likewise affirming the dismissal of a Complaint for failure to state a cause of The spouses Felix Radaza and Estefania Abrogar were the owners of a ten-hectare agricultural land
action, the Court in Nebrada v. Heirs of Alivio[13] noted that the plaintiff, being a mere homestead situated in Puntod, Macasandig, Cagayan de Oro City. Upon their death, ownership of the land passed by
applicant, was not the real party in interest to institute an action for reconveyance. In Gabila v. Bariga,[14] the intestate succession to their surviving children namely - Ramona, Severo, Filomeno and Jacoba, - and
Court further declared: grandchildren by their son, Jose, Sr. namely - Vicente, Felicito, Rosario and Jose, Jr. On March 12, 1938, the
land was registered under Original Certificate of Title No. 7678[1] in the names of: Severo Radaza, 1/5 share;
Filomeno Radaza, 1/5 share; Jacoba Radaza, 1/5share; Ramona Radaza, 1/5 share; Vicente Radaza, 1/20
The present motion to dismiss is actually predicated on Section 1(g), Rule 16 of the Revised Rules of Court, share; Felicito Radaza, 1/20 share; Rosario Radaza, 1/20 share; and Jose Radaza, Jr., 1/20 share.
i.e., failure of the complaint to state a cause of action, for it alleged in paragraph 12 thereof that the plaintiff
admits that he has no right to demand the cancellation or amendment of the defendants title, because, even if On April 14, 1975, respondents, the surviving children of Ramona Radaza-Demetrio and Jose Radaza,
the said title were cancelled or amended, the ownership of the land embraced therein, or the portion thereof Sr., instituted a complaint for Partition of Real Estate with Damages against petitioners, the heirs of the late
affected by the amendment would revert to the public domain. In his amended complaint, the plaintiff makes Mariano Velez, Sr., docketed as Civil Case No. 4686 of the Court of First Instance of Cagayan de Oro City,
no pretense at all that any part of the land covered by the defendants title was privately owned by him or by Branch 17. They alleged that sometime in 1947, they discovered that the property had been claimed and
his predecessors-in-interest. Indeed, it is admitted therein that the said land was at all times a part of the fenced in by Mariano Velez, Sr., and that they were denied entry thereto. Due to financial reasons, it took them
public domain until December 18, 1964, when the government issued a title thereon in favor of the several years before instituting the complaint. In the meantime, they tried earnestly to recover ownership and
defendant. Thus, if there is any person or entity in relief, it can only by the government. possession of the land through extra-legal means.[2]

On the other hand, petitioners averred that the property had been partitioned among the heirs of Felix
Verily, the Court stressed that [i]f the suit is not brought in the name of or against the real party in Radaza and Estefania Abrogar; that Mariano Velez, Sr. purchased the shares of Severo Radaza and Jacoba
interest, a motion to dismiss may be filed on the ground that the complaint states no cause of action. [15] In fact, Radaza in 1936; that on May 30, 1947, Filomeno sold his share as well as Ramonas share to Mariano Velez,
a final judgment may be invalidated if the real parties in interest are not included. This was underscored by the Sr.; that the share of Jose was likewise sold to Mariano Velez, Sr. by his wife Ciriaca Bacarro Radaza; and
Court in Arcelona v. CA,[16] in which a final judgment was nullified because indispensable parties were not that since his acquisition of the property, Mariano Velez, Sr., by himself and through his heirs, has been in
impleaded. open, notorious, public and uninterrupted possession of the same in the concept of owners, and have
exercised fully the attributes of its ownership.[3]
In the present dispute, only the State can file a suit for reconveyance of a public land. Therefore, not
being the owners of the land but mere applicants for sales patents thereon, respondents have no personality After trial, the court a quo rendered judgment as follows:
to file the suit. Neither will they be directly affected by the judgment in such suit.

Indeed, [f]or all its conceded merits, equity is available only in the absence of law and not as its WHEREFORE, for all the foregoing considerations, judgment is hereby rendered in favor of the defendants
replacement. Equity is described as justice without legality, which simply means that it cannot supplant and against the plaintiffs and the Court hereby:
although it may, as often happens, supplement the law.[17] To grant respondents standing in the present case
is to go against the express language of the law. Equity cannot give them this privilege. Equity can only
supplement the law, not supplant it. 1. Orders the dismissal of the complaint filed by the plaintiffs;

Having resolved that the respondents have no legal standing to sue and are not the real parties in
interest, we find no more necessity to take up the other issues. They shall become important only if a proper 2. Declares the defendants as the absolute owners of the property in litigation;
suit is instituted by the solicitor general in the future.
3. Declares the plaintiffs never again to molest nor disturb the defendants in their lawful, peaceful and rightful
WHEREFORE, the petition is hereby GRANTED and the assailed Decision is REVERSED and SET
ownership, possession and enjoyment of the property in litigation;
ASIDE. The Complaint filed in Civil Case No. 91-241 before the Regional Trial Court of Misamis Oriental,
Branch 17, is DISMISSED. No costs.
4. On the counterclaim, orders the plaintiffs, jointly and severally, to pay the defendants the amount of
SO ORDERED. P20,000.00 as moral damages and P5,000.00 as attorneys fee; and

5. Orders the plaintiffs to pay the costs.

[G.R. No. 128576. August 13, 2002] SO ORDERED.[4]

Respondents appealed to the Court of Appeals, which reversed and set aside the lower courts decision, to wit:

MARIANO A. VELEZ, SR. (deceased), ATTY. PURO M. VELEZ, ATTY. ALEJANDRO M. VELEZ, ENGR. WHEREFORE, the judgment appealed from is hereby REVERSED and SET ASIDE, and a new one entered
PLUTARCO M. VELEZ and SARAH VDA. DE VELEZ (for herself and her children by the late directing the partition of the property covered by OCT No. 7678 in the portion of 2/5 to the plaintiffs-appellants
HOMER M. VELEZ, namely PATRICIA, HAYDEE, HOMER, JR., RUBY, FE VAL and HANAH, and 3/5 to the defendants-appellees. Costs against the appellees.[5]
all surnamed VELEZ), petitioners, vs. REV. FRANCISCO DEMETRIO (deceased), CELERINA
DEMETRIO FIANZA, TARCILO DEMETRIO, LEVITA FERNANDEZ DEMETRIO JUAN (for
herself and her children), ANGELA, VALDEHUEZA RADAZA, FELECITO RADAZA and JOSE The motion for reconsideration filed by petitioner was denied by the appellate court.[6]
RADAZA, JR., respondents.
Hence, the instant petition for review.

DECISION The issues raised by petitioners are: whether the shares of Ramona Radaza and Jose Radaza were
sold to Mariano Velez, Sr. and whether respondents are guilty of laches.
YNARES-SANTIAGO, J.:
As regards the first issue, the findings of facts by the trial court conflict with those of the Court of the 2/5 share of the land does not belong to them. Article 494 of the Civil Code provides that prescription does
Appeals. The trial court was morally convinced that the shares of Ramona Radaza and Jose Radaza, Sr. were not run against a co-owner so long as he expressly or impliedly recognizes the co-ownership.
sold to Mariano Velez, Sr. on two different transactions and occasions. On the other hand, the Court of
Appeals held that the alleged sale made by Ramona Radaza to Filomeno of her 1/5 share and the subsequent Moreover, laches may not prevail against specific provision of law, since equity, which has been
sale made by Filomeno to Mariano Velez, Sr. of his share and that of Ramonas and the sale made by Ciriaca defined as justice outside legality is applied in the absence of and not against statutory law or rules of
Radaza to Mariano Velez of the shares of the heirs of Jose Radaza, Sr., were of no force and effect [7] for there procedure.[14] Under the Property Registration Decree, no title to registered land in derogation to that of the
was no evidence presented in support thereof. The testimonies offered by petitioners to establish the alleged registered owner shall be acquired by prescription or adverse possession.[15] It is well-settled that prescription
transactions were pure hearsay. and laches can not apply to registered land covered by the Torrens system.[16] Applying the above principles,
respondents being the registered owner of the land can rest secure, without the necessity of waiting in the
To prove the alleged sale of Ramonas share to Filomeno, petitioners capitalized on the affidavit and portals of the court, or sitting in the mirador de su casa, to avoid the possibility of losing his land.[17]
testimony of Francisco, who stated that in the middle 1930s, Ramona sold her share to his father, Filomeno,
who paid Ramona three cows in consideration thereof; and that since then they had been in exclusive WHEREFORE, in view of the foregoing, the petition is DENIED. The decision of the Court of Appeals
possession of the said property up to the time the same was sold to Mariano Velez, Sr. by his father. On the dated March 22, 1996 in CA-G.R. CV No. 30381 is AFFIRMED.
witness stand, Francisco testified that he returned to the disputed land sometime in 1936 and that his father
built a house inside the lot.[8] However, the Court of Appeals ruled that it is improbable that he witnessed or SO ORDERED.
could have had personal knowledge of the alleged sale because he started residing on the land in question
from 1930 up to 1935 and that for three years thereafter, or up to February 28, 1938, he was enlisted in the
G.R. No. 211737, January 13, 2016
Philippine Constabulary at Camp Kethly in Lanao. Such facts do not directly and convincingly establish the
alleged sale of the portion of Ramona Radaza to Filomeno Radaza, hence, the same cannot be logically
inferred. SERGIO R. OSMEÑA III, Petitioner, v. DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS
SECRETARY JOSEPH EMILIOI A. ABAYA, MACTAN-CEBU INTERNATIONAL AIRPORT AUTHORITY
As regards the shares of Jose Radaza, Sr.s children which were allegedly sold by their mother, the (MCIAA), THE PRE-QUALIFICATION, BIDS AND AWARDS COMMITTEE (PBAC) FOR THE MACTAN-
Court of Appeals found nothing in the record to indicate that Ciriaca was authorized by Vicente, Felicito, CEBU INTERNATIONAL AIRPORT PROJECT THROUGH ITS CHAIRMAN, UNDERSECRETARY JOSE
Rosario and Jose, Jr. to make the alleged sale to Mariano Velez, Sr. Petitioners insist that Ciriaca sold her PERPETUO M. LOTILLA, GMR INFRASTRUCTURE, LTD. AND MEGAWIDE CONSTRUCTION
childrens shares but the pertinent documents were lost during the war. To prove this alleged sale, petitioners CORPORATION, Respondents.
again invoke Francisco Radazas statement that the wife and heirs of Jose Radaza, Sr. sold their respective
shares to the spouses Mariano Velez, Sr. and Patricia Mercado. However, the Court of Appeals observed that G.R. NO. 214756
even Felicito, the son of Ciriaca, had no knowledge of the sale. With more reason, Francisco Radaza, who is a
stranger to such alleged sale, cannot have any basis in making this statement.
BUSINESS FOR PROGRESS MOVEMENT AS REPRESENTED BY MEDARDO C. DEACOSTA,
Another piece of evidence petitioners offered to prove the alleged sale was the testimony of Isabelo JR., Petitioner, v. DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS, GMR-MEGAWIDE
Tabian, a former tenant of Ciriaca Radaza, who testified that Ciriaca told him, Beloy I am going to take the CEBU AIRPORT CORPORATION, Respondents.
land from you because there is difficulty in coming over this place and I am afraid I might get drown(ed). I
might as well sell the land to Etoy (Mariano Velez, Sr.). Tabian further testified that he delivered the land to
Ciriaca. Thereafter, Sario Echem, a tenant of Mariano Velez, Sr., approached him asking for help in plowing DECISION
the land which he was formerly cultivating.[9]While the Court of Appeals did not squarely rule on the weight of
Tabians testimony, the same was likewise hearsay and cannot serve as proof of the alleged sale.
VILLARAMA, JR., J.:
Anent the second issue, the principle of laches finds no application in this case.

Laches is the failure of or neglect for an unreasonable and unexplained length of time to do that which Before us are the consolidated petitions for certiorari and injunction to restrain public respondents from
by exercising due diligence, could or should have been done earlier, or to assert a right within reasonable time, awarding the Mactan-Cebu International Airport (MCIA) Project to private respondents GMR Infrastructure
warranting a presumption that the party entitled thereto has either abandoned it or declined to assert it.[10] Limited (GMR) and Megawide Construction Corporation (MCC). Petitioners subsequently prayed for
invalidation of the award after private respondents won the public bidding.
Fundamentally, laches is an equitable doctrine, its application is controlled by equitable
considerations.[11]Concomitantly, it is a better rule that courts, under the principle of equity, will not be guided The Facts
or bound strictly by the statute of limitations or the doctrine of laches when to do so, manifest wrong or
injustice would result.[12] The MCI A Project consists of the construction of a new passenger terminal with all associated infrastructure
facilities; construction of apron for the new passenger terminal; rehabilitation and expansion of the existing
Petitioners invoke laches against the respondents for their failure to protest their occupation of the terminal along with all associated infrastructure and facilities; installation of all the required equipment and
subject land since 1947. They allege that respondents slept on their rights because it took them twenty eight other associated facilities; installation of the required information technology and other equipment
(28) years before they instituted this case. commensurate with the operations; and operation and maintenance of both passenger terminals during the
concession period.1 The project is being implemented by the Department of Transportation and
The Court of Appeals held that laches could not have set in because the specific act of repudiation of
Communications (DOTC) under the provisions of Republic Act (R.A.) No. 6957 as amended by R.A. No. 7718,
the co-ownership was made only on March 27, 1974, when petitioners registered the affidavit of adverse claim
otherwise known as the "Build-Operate-and-Transfer (BOT) Law."
executed by Mariano Velez and had the same annotated on respondents title with respect to the 3/5 portion of
the land. It held that only then did the period of prescription start to run. However, since this case was filed on
On December 21, 2012, the Pre-qualification, Bids and Awards Committee (PBAC) caused the publication of
April 14, 1975 and only for a 3/5 portion thereof, then no prescription can be counted in favor of petitioners for
the invitation to pre-qualify and bid for the MCIA Project.2 PBAC sets as criteria the following: (1) legal
the remaining 2/5.[13]
qualification; (2) technical qualification; and (3) financial capability requirements.3 On December 27, 2012, the
DOTC and Mactan-Cebu International Airport Authority (MCIAA) issued the Instructions to Prospective
We agree with the Court of Appeals.
Bidders (ITPB).4chanroblesvirtuallawlibrary
The land involved was registered under the Torrens system in the name of respondents and their
predecessor-in-interest in 1938. The evidence shows that only 3/5 of the land was sold to Mariano Velez, Sr. On February 13, 2013, the PBAC conducted a Pre-Qualification Conference. In its Resolution5 dated May 14,
and the 2/5 thereof remains in the name of respondents. The land being undivided, only the rights of the co- 2013, the PBAC recommended the pre-qualification of the following prospective bidders:
owners were transferred, thereby making the buyer another co-owner of the property. It is noteworthy that
petitioners did not transfer the title of the land in their name. Instead, they merely annotated their claim over 1. AAA Airport Partners;
the 3/5 portion of the land. This leads to no other conclusion but a tacit recognition that ownership over
2. Filinvest-CAI Consortium; Qualification Documents, Bid Letter, Technical Proposal and Financial Proposal and recommendation of the
3. First Philippine Airports; TWG [Technical Working Group] under its report dated 2 April 2014, (i) the PBAC has not found any
4. GMR Infrastructure & Megawide Consortium; deficiency in the Financial Proposal, (ii) nor has any misrepresentation been found in the information,
5. MPIC-JGS Airport Consortium; representations and statements made by the GMR Infrastructure & Megawide Consortium in its Qualification
6. Premier Airport Group; and Documents, Technical Proposal, Financial Proposal, and (iii) nor has the Consortium been found to have
7. San Miguel & Incheon Airport Consortium. engaged in any Corrupt Practice, Fraud, Collusion, Coercion, Undesirable and Restrictive Practice, Conflict of
Interest, or violated the Lock-up Rules. A copy of the TWG Report dated 2 April 2014 is attached as Annex
"DD";

After the submission and approval of the technical proposals submitted by the pre-qualified bidders, the PBAC NOW THEREFORE, upon review and deliberation, pursuant to and in accordance with the provisions,
proceeded with accepting their financial proposals. The financial bids were ranked in terms of "premium" to the constraints and limitations under the BOX Law, BOT Law IRR, and the rules under the ITPB and ITB, the
government such that "[a]ll bids received by the DOTC were 'premium' offers, meaning the money would go PBAC hereby resolves to recommend to the Honorable Secretary of the DOTC and the Board of the MCIAA: (i)
directly to the government and would come on top of the cost to develop the airport."6 The seven bids, from to designate GMR Infrastructure & Megawide Consortium as the Winning Bidder for the Project, and (ii) to
highest to lowest, are: consequently issue the Notice of Award to GMR Infrastructure & Megawide Consortium.9chanrobleslaw

On the same day, Senator Sergio R. Osmeña III (petitioner Osmeña III) filed in this Court a petition for
1 GMR-Megawide Consortium Php 14,404,570,002.00 certiorari and prohibition with application for temporary restraining order and/or writ of preliminary injunction
(G.R. No. 211737) praying that this Court (a) immediately issue an order restraining the public respondents
from further acting on the bid of private respondents; (b) issue an order enjoining public respondents, their
2 Filinvest-Changi Airport Consortium Php 13,999,999,999.99
agents, representatives or assigns from issuing a Notice of Award and executing a Concession Agreement for
the MCIA Project for private respondents; and (c) give due course to his petition, and after due proceedings to
3 Premier Airport Group Php 12,500,088,888.88 render judgment declaring private respondents as unqualified bidder and making the injunction permanent.

4 MPIC-JGS Airport Holdings, Inc. Php 11,230,000.000.00 On April 4, 2014, DOTC and MCIAA issued the Notice of Award10 to GMR-Megawide Consortium. Pursuant to
Section 8.1 of the Instruction to Bidders (ITB), private respondents were directed to submit the required
documents and pay the Bid Amount to MCIAA.
5 AAA Airport Partners Php 11,088,888,889.00
On April 7, 2014, petitioner Osmeña III filed a Supplemental Petition reiterating his prayer for injunctive reliefs
6 San Miguel & Incheon Airport Php 9,050,000,000.00 and for this Court to further restrain the implementation of the Notice of Award and render judgment declaring
the same as null and void.
7 First Philippine Airports Php 4,700,000,000.007
Private respondents GMR and MCC, and public respondents DOTC, MCIAA and PBAC filed their respective
Comments.
On April 3, 2014, PBAC issued a Resolution8 recommending GMR-Megawide Consortium as the winning
bidder for the MCIA Project. The resolution reads in part: Meanwhile, private respondents complied with the post-award requirements, including the payment of the Php
14.4 Billion bid amount to MCIAA. On April 22, 2014, the Concession Agreement was executed between
DOTC and MCIAA, and GMR-Megawide Consortium.
WHEREAS, the GMR Infrastructure & Megawide Consortium, formed by Megawide Construction Corporation
("Megawide") and GMR Infrastructure Limited ("GMR") qualified under the Technical and Financial On October 31, 2014, a petition for injunction was filed by Business for Progress Movement (BPM),
Qualification requirements, through the following entities: represented by Medardo C. Deacosta, Jr. (G.R. No. 214756). Petitioner BPM sought to restrain the turn-over
of the operation and maintenance of the MCIA to GMR-Megawide Consortium. With the simultaneous
imposition of increased terminal fees, BPM claims that it stands to suffer great and irreparable damage and
Development Experience injury once GMR-Megawide Consortium takes over the operation and management of the MCIA.

On November 1, 2014, DOTC turned over to GMR-Megawide Consortium the operation and maintenance of
* Delhi International Airport (P) Limited (DIAL) Affiliate of GMR Infrastructure Limited the MCIA.

* GMR Hyderabad International Airport Limited Affiliate of GMR Infrastructure Limited Petitioners' Arguments
(GHIAL)

Operation and Maintenance G.R. No. 211737

* Delhi International Airport (P) Limited (DIAL) Affiliate of GMR Infrastructure Limited The following grounds are set forth in the petition:

* GMR Hyderabad International Airport Limited Affiliate of GMR Infrastructure Limited I


(GHIAL)
THE PBAC ILLEGALLY QUALIFIED THE GMR-MEGAWIDE CONSORTIUM DESPITE ITS PATENT
VIOLATION OF THE CONFLICT OF INTEREST RULE.chanRoblesvirtualLawlibrary
Financial Qualification

II
* Megawide Construction Corp. Consortium Member
THE PBAC ILLEGALLY REFUSED TO DISQUALIFY THE GMR-MEGAWIDE CONSORTIUM IN THE FACE
OF UNREFUTED EVIDENCE OF GMR'S POOR FINANCIAL HEALTH AND TRACK RECORD IN ITS
xxxx
INTERNATIONAL AIRPORT OPERATIONS.chanRoblesvirtualLawlibrary
WHEREAS, upon completion of verification of the information, representations and statements made in its
III MCIA Project on March 12, 2014, it was revealed that MCC failed to complete its school building project
despite two extensions granted to it. This is relevant because under the Procurement Law (R.A. No. 9184), if a
PUBLIC RESPONDENTS ILLEGALLY FAILED TO AND LATER REFUSED TO DISQUALIFY PRIVATE bidder is more than 15% delayed in any of its infrastructure projects, it cannot be awarded a new contract.
RESPONDENTS FOR VIOLATING THE CONFLICT OF INTEREST RULE AND THEIR OTHER While the MCIA Project is under the BOT Law, the underlying principle still holds for the simple reason that
INCAPACITIES EVEN IF IT WAS THEIR MINISTERIAL DUTY TO DO SO.chanRoblesvirtualLawlibrary what is involved is a public contract. The foregoing negative findings affecting both partners in the GMR-
Megawide Consortium should have compelled the PBAC, at the very least, to disqualify said consortium
during the post-qualification as they were unable to demonstrate viable commercial operations.
IV
G.R. No. 214756
THE PUBLIC RESPONDENTS ILLEGALLY ACCORDED PRIVATE RESPONDENTS AN UNDUE
ADVANTAGE AND/OR ACTED WITH UNDUE BIAS IN FAVOR OF PRIVATE RESPONDENTS.
Petitioner BPM also expressed doubts on the financial capacity of the winning bidder, GMR-Megawide
Consortium, to undertake the construction, development, operation and maintenance of the MCIA in view of
Petitioner Osmeña III argues that PBAC should have disqualified GMR-Megawide Consortium because it
several news reports about GMR Infrastructure's state of being "debt-ridden," as it had to raise funds through
violated the conflict of interest rule when it failed to disclose that Mr. Tan Shri Bashir Ahmad bin Abdul Majid
sale, equity issue and divest a few road and power plants in order to pay its corporate loans. It was also
was a director of two subsidiaries of the GMR-Megawide Consortium, and is also the Managing Director of
reported that GMR asked the US private equity firm KKR & Co. LP to provide about $175 Million in a debt and
Malaysia Airport Holdings Berhad (MAHB), which joined the bidding for MCIA Project as member of the First
equity deal. Apparently, the cancellation by the Maldives Government of GMR's contract for modernizing the
Philippine Airports Consortium. He asserts that this rule is mala prohibita; hence, it does not matter whether
MIA had greatly affected GMR's revenues coming from its airport business.
the violation was intentional or not, and the penalty of disqualification should be imposed. GMR-Megawide's
violation disadvantaged the other bidders as they were restricted from entering into similar arrangements, and
With GMR's lack of financial capacity, BPM contends that the GMR-Megawide Consortium had come up with a
thus deprived them of an even playing field or a fair and competitive bidding.
scheme of imposing increased terminal fees to cover the operating costs and expansion of the MCIA. From a
news report published in the Business Mirror on October 13, 2014, BPM learned that the MCIA board
Another ground of disqualification raised by petitioner Osmeña III concerns the financial and technical
approved on October 10, 2014 higher passenger service charge (PSC) rates, commonly known as terminal
capabilities of GMR as his investigation and online research showed that GMR was in dire financial health and
fees, "to help fund the expansion and cover increasing operating costs as well as comply with the 25-year
has been offloading several assets and its stake in various infrastructure projects to meet its financial
concession agreement between MCIAA and private airport operator GMR-Megawide Cebu Airport Corp.
obligations. He likewise discovered GMR's unsavory record involving the Delhi International Airport Pvt. Ltd.
(GMCAC)," and that effective November 1, a domestic passenger would have to pay Php220, Php20 more
(DIAL), which is the concessionaire for GMR's Indira Gandhi International Airport at Delhi. According to the
than the current Php200 fee, while an international passenger would have to shell out Php750, or Php200
Auditor General of India, (i) 27% of the project cost for Delhi Airport was not funded by DIAL but charged to
more than the current Php550; the domestic PSC rate will increase further to Php300 effective January 1,
the travelling public; (ii) outsourcing of contracts to GMR joint venture companies was not on arms-length
2016.12chanroblesvirtuallawlibrary
basis in violation of contract; and (iii) DIAL violated the master plan and incurred delay in the completion of the
project. The Male International Airport (MIA) case also proves GMR's lack of technical qualification to
Petitioner maintains that all the requisites for the issuance of a writ of preliminary injunction are present in this
undertake the MCIA Project. GMR Male International Airport Pvt. Ltd. (GMIAL), an indirect subsidiary of GMR,
case. Petitioner as taxpayer has a clear and unmistakable right to be protected as the imposition of the
through its direct subsidiary GMR Infrastructure (Mauritius) Limited, entered into a Concession Agreement
terminal fees in the increased amount as well as the turn-over of the MCIA to private respondents despite the
dated June 28, 2010 with the Maldives Airport Company Ltd. (MACL) and the Maldives Government Ministry
fact that the latter has no financial capacity will be prejudicial to petitioners. There is also an urgent and
of Finance and Treasury for the Rehabilitation, Expansion, Modernization, Operation and Maintenance of Male
paramount necessity for the issuance of the writ considering the scheduled turn-over on November 1, 2014,
International Airport for a period of 25 years. However, on November 27, 2012, the Maldives Government and
and petitioner has no other plain, speedy and adequate remedy in the course of law except this petition, for
MACL declared the Concession Agreement void ab initio and gave GMIAL seven days to vacate the MIA,
which purpose it is ready, able and willing to post the necessary bond in the amount that this Court may
which prompted GMIAL to initiate arbitration proceedings. GMIAL sought a declaration that it was entitled to
determine. BMP claims that there appears a clear and present danger that the instant petition will be rendered
adjust the fees payable to MACL by virtue of the invalidity of portions of the Concession Agreement, while
nugatory and ineffectual, and that the highest interest of justice will not be served if the act complained of —
MACL sought the declaration of the Concession Agreement as void ab initio. GMIAL had applied for an
that is, the immediate turn-over of the operations of the MCIA to private respondents, would not be enjoined.
injunction before the courts of Singapore to restrain the Maldives Government from interfering with the
performance of the Concession Agreement pending arbitration proceedings. On appeal, the Singapore Court
In its Consolidated Reply, BPM argues that the petition has not been mooted by the actual turnover of MCIA's
of Appeal set aside the preliminary injunction issued by a High Court judge of Singapore. Thus, effective
operation to private respondents since the terminal fees will continue to increase in 2016 to defray the cost of
December 8, 2012, the Maldives Government and MACL took control of the MIA.
the project. GMR's financial incapacity, as confirmed by online articles on GMR's moves to bring down its debt
burden and finance its projects, will thus continue to cause grave and irreparable damage to BPM. Direct
Following a privilege speech he delivered at the Senate, petitioner Osmeña III said that the Senate Committee
injury is being suffered by BPM members who are taxpayers frequently travelling to Cebu and Mactan from the
on Public Services, in fact, conducted two hearings on the matter where all the respondents were represented.
increased terminal fees.
It was alleged that during these hearings, it was established that: (a) PB AC did not compare the submissions
of the various members of consortia or bidders in order to determine the existence of conflict of interest; (b)
public respondents did not look into cross-directorships or conflict of interest violations of GMR even if the Respondents' Arguments
rules compel an inspection based on the submission of private respondents, and even refused to impose the
penalty of disqualification when the violation was pointed out; (c) GMR admitted that MAHB is GMR's partner
in several of its airport operations and that the Managing Director of MAHB is indeed a member of at least two G.R. No. 211737
subsidiaries of GMR; and (d) granting there was doubt in the existence of a violation of the conflict of interest
rule, public respondents did not take the precaution of asking for the opinion of the Department of Justice Megawide Construction Corp.
(DOJ).
On procedural grounds, MCC contends that the petition should be dismissed for fatal defects or infirmities.
Citing the case of Agan v. PIATCO,11 petitioner Osrnena III claims the parallelisms between said case and the First, the petition raises several factual questions which this Court is not required to entertain, particularly in a
present controversy are too uncanny to ignore, and as in Agan, the Court should exercise its solemn petition for certiorari and prohibition. Second, the petition for certiorari under Rule 65 of the Rules of Court is
constitutional duty to nullify the award of the MCIA Project to private respondents and avert serious damage to improper and cannot be pursued against the public respondents, more so against GMR and MCC, which do
a project that the Province of Cebu looks forward to. GMR also confirmed its operating losses during the not exercise quasi-judicial or ministerial functions vis-a-vis the bidding process for the MCI A Project. And third,
Senate hearings, and its present financial situation indicates that GMR Infra may not be earning enough petitioner has no locus standi to file the petition, and neither has he shown any justification for this Court to
money to meet its interest payments on time. As to the Airport Development Fund being levied by DIAL, the disregard his lack of personality to maintain this suit.
Supreme Court of India found that the levy made by DIAL during the period March 1, 2009 to April 23, 2010,
prior to the notice from Airport Economic Regulatory Authority (AERA) permitting DIAL to subsequently MCC argues that the petition lacks merit considering that: (a) the petition assails matters which require to be
continue the levy, was made contrary to law. left to the sole determination of the executive department, particularly the PBAC and DOTC, and thus is
beyond judicial cognizance; (b) petitioner's prayer to enjoin the public respondents from issuing a Notice of
Petitioner Osmeña III further avers that during the hearing conducted by the House of Representatives on the Award or executing a Concession Agreement - both of which have already occurred - is already moot and thus
is not a proper subject of controversy; (c) even assuming that this Court can take cognizance of the petition, determined that no conflict of interest exists for GMR-Megawide Consortium.
petitioner failed to allege, much less establish a violation of law but rather, merely relies on DOTC and MCIAA
issuances - the ITPB and ITB - both of which the PBAC has faithfully applied in this instance, in accordance GMR further contends that petitioner is not entitled to a writ of preliminary injunction, as petitioner Osmeña III
with its intent and interpretation, thus negating any grave abuse of discretion; (d) contrary to petitioner's own has no clear and unmistakable right, not being a bidder himself and having failed to establish any grave abuse
interpretation of PBACs ITPB and ITB, which interpretation finds no basis therein and in law, there is no of discretion committed by the public respondents in the performance of their duty. The alleged grave and
conflict of interest; and (e) contrary to petitioner's allegations, GMR-Megawide Consortium is financially and irreparable injury, what petitioner feared as "bad precedent" in public bidding, is not irreparable but imaginary.
technically capable of undertaking the MCIA Project, and developing, maintaining, and operating the On the contrary, it is the government and the public who will suffer irreparable injury if an injunction is issued
renovated MCIA. that will further delay the project for the expansion and development of an international airport in the Province
of Cebu.
Opposing the application for a writ of preliminary injunction, MCC asserts that petitioner failed to show (1) a
clear, unmistakable legal right that demands protection nor a prima facie entitlement to the relief demanded in G.R. No. 214756
the petition, and hence no injunctive relief must issue; and (2) that he, or even the other bidders, the public
and the State, will suffer grave and irreparable injury from the continuation of the Award, the execution of the GMR and Megawide
Concession Agreement, and/or the MCIA Project. On the contrary, grave and irreparable injury will result (GMR-Megawide Cebu Airport Corp.)
should the bidding process be enjoined and, consequently, the project be delayed. MCC contends that under
previous and existing laws, the policy has been that a national government infrastructure project may not be The consortium now called the GMR-Megawide Cebu Airport Corp. (GMCAC), reiterates its previous
enjoined save for exceptional circumstances, in order to avoid unnecessary costs and, more importantly, delay arguments, given the similar procedural infirmities of the present petition, and those addressing the issue of its
in the enjoyment of benefits from such project. In this case, the government agencies have regularly alleged lack of financial capacity. The consortium's financial capability has already been evaluated by the
performed their duty and the winning Consortium is eager to comply with their orders. All the queries raised by PBAC -- including the controversies or issues raised by the other bidders -- which finally determined that
the other bidders have been addressed by private respondents and what remains to be done is the work that GMR-Megawide Consortium is the most qualified to undertake the MCIA Project.
ought to be the result from the bidding procedure. The MCIA Project, among the present administration's
Public-Private Partnership (PPP) projects should not be delayed any further on the basis of unsubstantiated GMCAC asserts that BMP's prayer to enjoin the turn-over of MCIA's operation and maintenance to GMCAC
allegations. and the imposition of the increased PSC rates have already occurred. Hence, this issue is already moot and
academic, and not the proper subject of this petition for injunction. More, there is no grave and irreparable
GMR Infrastructure Ltd. injury that will be inflicted upon the State and the general public should the turn-over of the MCIA and
increased PSC rates be implemented as these are part of the MCIA Project and in pursuance of the
GMR points out similar defects in the petition such as the failure to attach certified true copy of the assailed Concession Agreement. Since the alleged financial incapacity of GMR was unfounded, based merely on news
order, judgment or resolution since petitioner only attached the transcripts of stenographic notes taken during reports and online materials, in contrast to official documents submitted to and evaluated by the PBAC,
the Senate hearings which are mere recording of the proceedings therein; lack of requisite standing of petitioner's fear that it will be prejudiced by GMR's financial incapacity is likewise baseless.
petitioner who has not raised any constitutional issue nor alleged any violation of application of a law, but
merely points to a supposed unequal enforcement of PBAC's instructions to the bidders; non-submission of his G.R. Nos. 211737 & 214756
income tax return, having sued as a taxpayer; no other Filipino, local or foreign bidder, joined his petition
despite his self-serving claim that the petition involves issues of transcendental importance; and lack of any DOTC, MCIAA and PBAC
allegation whatsoever that respondents usurped legislative powers.
Public respondents argue that a direct resort to this Court is premature and improper under the doctrine of
On the merits of the case, GMR emphasizes that the assailed acts involve policy decisions that are not subject hierarchy of courts. Having failed to establish special and important reasons to support petitioners' invocation
to judicial review. The situation in Agan v. PIATCO is also not the same herein because the public of this Court's original jurisdiction, the petitions should be dismissed. It is likewise asserted that the mere claim
respondents did not disregard any legal requirement when they determined that GMR-Megawide was the most that the case is of transcendental importance or that it has an economic impact would not present a special
qualified to undertake the MCIA Project. Assuming that the assailed acts can be reviewed by this Court, and important ground that would justify the exercise of this Court's original jurisdiction and ignoring the
petitioner nevertheless chose an improper remedy as his petition raises several questions of fact while relying hierarchy of courts.
merely on online/internet sources. This notwithstanding, GMR addressed the concerns regarding its financial
capability in its letter to PBAC dated December 20, 2013 and also during the Senate hearings attended by its There is also no showing that Medardo Deacosta, Jr. was authorized to file the petition in behalf of petitioner
representatives. Notably, GMR-Megawide already paid the upfront premium to the government in the amount BPM. The certification of non-forum shopping submitted by Deacosta did not include proof of his authority to
of Php14,404,570,002.99 which shows the consortium has the financial strength and capacity to deliver the sign the said certificate for BPM.
Project.
Both petitioners have no legal standing to institute the present petitions. The petition in G.R. No. 211737 does
On the conflict of interest issue, GMR explains that this was already clarified by public respondents during the not identify any specific constitutional question or issue, the principal requirement for legal standing in public
Senate hearings. It points out that having a "common director" is obviously not the same as a director of one suits. The invocation of violation of the equal protection clause does not qualify as a constitutional question or
Consortium member being "also directly involved in any capacity related to the Bidding Process" for another issue. Neither has petitioner Osmefia III sufficiently shown that the funds to be expended are derived from
Bidder. Citing the verified petition of Osmefia III, GMR avers that petitioner could not truthfully allege having taxation and that he will be directly injured by the award of the MCIA Project to GMCAC, and eventually, by
information and personal knowledge that Mr. Bashir was also directly involved in the Bidding Process for the the implementation thereof. Further, there is no allegation of disregard of specific constitutional or statutory
GMR-Megawide Consortium, because he was not. To remove all doubts and as required by PBAC, GMR prohibition, nor of direct injury to be sustained by petitioner.
submitted sworn certifications to that effect. GMR maintains that the conflict of interest rule and the
examples/instances cited therein do not apply automatically, but are always subject to discretion and G.R. No. 214756 should also be dismissed on the same ground as BPM failed to show how the increase in
evaluation by the PBAC, and more importantly, there has to be a finding by the DOTC/MC1AA that a conflict terminal fees will constitute an illegal disbursement of public funds. Besides, the petition has become moot
of interest exists before any Bidder is disqualified. and academic with the turn-over of the MCIA to GMCAC on November 1, 2014. Hence, there is nothing more
to enjoin and there is no more justiciable controversy to be resolved. Even assuming that this case has not
On petitioner's claim that respondents violated the Equal Protection Clause, GMR argues that concededly become moot, injunction is clearly not proper as the requisites for the issuance of the writ have not been
there is no statute or law here that infringed the constitutional principle. What clearly emerges is petitioner's satisfied.
grievance that the Conflict of Interest provision in the bidding rules was supposedly not followed, and on that
premise private respondents should be disqualified and the award in their favor set aside. These On the merits of the case, public respondents contend that petitioner Osmeña's reliance on Agan v. PIATCO is
consequences are not only harsh but unwarranted. For assuming the said rule may be considered as "statute" improper as the ruling therein is not on all fours with the present case. This Court ruled in Aganthat "the crucial
that public respondents had breached, such breach is not a violation of the Equal Protection Clause that will issues submitted for resolution are of first impression and they entail the proper legal interpretation of key
give rise to a constitutional issue. Citing jurisprudence, GMR asserts that "an erroneous or mistaken provisions of the Constitution, the BOT Law and its Implementing Rules and Regulations" 13 and hence, the
performance of a statutory duty, although a violation of the statute, is not without more a denial of the equal specific provisions of law violated by PIATCO were identified. In stark contrast, the present case does not
protection of the laws." Public respondents' acts in this regard do not amount to violation of the Equal present constitutional issues. Moreover, this Court in Agan ruled that the PBAC erroneously evaluated
Protection Clause, as the facts do not show there was "intentional or purposeful discrimination" when they PIATCO's financial ability to fund the subject project when it speculated on PIATCO's future financial ability on
the basis of the documents it submitted. Here, however, the proper procedure was observed in evaluating the The difficulty of determining locus standi arises in public suits. Here, the plaintiff who asserts a "public
qualifications of all the bidders. right" in assailing an allegedly illegal official action, does so as a representative of the general
public.THE ACTING CHAIRMAN (SEN. OSMEÑA)He may be a person who is affected no differently from
Public respondents maintain that they exercised due diligence and strictly complied with the rules in evaluating any other person. He could be suing as a "stranger," or in the category of a "citizen," or "taxpayer." In either
the submitted bids. In concluding that GMR-Megawide Consortium did not violate Conflict of Interest Rule, case, he has to adequately show that he is entitled to seek judicial protection. In other words, he has to make
they applied the clear words of the ITPB, ITB and Special Bid Bulletins. The interpretation of the rule is lodged out a sufficient interest in the vindication of the public order and the securing of relief as a "citizen" or
in the DOTC being the government agency tasked to implement the MCI A Project. No advantage was given "taxpayer."
to GMR-Megawide Consortium or to First Philippine Airports Consortium which had in fact given the lowest bid
in terms of premium. Case law in most jurisdictions now allows both "citizen" and "taxpayer" standing in public actions. The
distinction was first laid down in Beauchamp v. Silk, where it was held that the plaintiff in a taxpayer's suit is in
As to GMR-Megawide Consortium's qualifications for the MCIA Project, public respondents assert that they a different category from the plaintiff in a citizen's suit. In the former, the plaintiff is affected by the expenditure
exercised due diligence and acted within jurisdiction when the PBAC determined that GMR-Megawide of public funds, while in the latter, he is but the mere instrument of the public concern. As held by the New
Consortium is the most qualified in terms of technical experience and financial capability. It was stressed that York Supreme Court in People ex rel Case v. Collins: "In matter of mere public right, however ... the people
under the ITPB, the detailed evaluation of the compliance by the Prospective Bidder with the Legal, Technical are the real parties.... It is at least the right, if not the duty, of every citizen to interfere and see that a public
and Financial Qualification Requirements shall be based solely upon the qualification documents submitted. offence be properly pursued and punished, and that a public grievance be remedied." With respect to
taxpayer's suits, Terr v. Jordan held that "the right of a citizen and a taxpayer to maintain an action in courts to
As to the issues concerning GMR's dispute with the Maldives Government over the Male International Airport, restrain the unlawful use of public funds to his injury cannot be denied."
as well as the alleged violations of DIAL, the concessionaire for the Indira Gandhi International Airport, these
have already been threshed out and addressed by GMR during the post-qualification stage. On the other hand, However, to prevent just about any person from seeking judicial interference in any official policy or act with
petitioner's reference to online articles that pertain to MCC deserves no consideration. Said materials are which he disagreed with, and thus hinders the activities of governmental agencies engaged in public service,
hearsay and unofficial and do not warrant the disqualification of a Bidder. As between those online articles and the United State Supreme Court laid down the more stringent "direct injury" test in Ex Parte Levitt, later
the official submissions -certifications, qualifications, documents and financial statements submitted by the reaffirmed in Tileston v. Ullman. The same Court ruled that for a private individual to invoke the judicial
bidders, respondent PBAC is mandated by law to give preference and weight to the latter in determining the power to determine the validity of an executive or legislative action, he must show that he has
track record or technical qualifications of a prospective bidder. Indeed, PBAC would do injustice against a sustained a direct injury as a result of that action, and it is not sufficient that he has a general interest
prospective bidder if, notwithstanding that it passed all the qualifications provided by law and the applicable common to all members of the public.
rules, it will be disqualified merely on the basis of hearsay evidence. While PBAC has the right to seek
clarifications and make inquiries regarding information supplied by the prospective bidders in the qualification This Court adopted the "direct injury" test in our jurisdiction. In People v. Vera, it held that the person who
documents, it cannot be expected to consider every possible allegation as it would just delay the entire bidding impugns the validity of a statute must have "a personal and substantial interest in the case such that he
process. Having exercised its function within the parameters of the law, relevant rules and regulations and the has sustained, or will sustain direct injury as a result." The Vera doctrine was upheld in a litany of cases,
ITPB, the PBAC cannot be faulted if it finds that GMR passed all the qualifications requirements provided by such as, Custodio v. President of the Senate, Manila Race Horse Trainers' Association v. De la Fuente,
the rules and the ITPB. Hence, there is no merit in petitioner Osmeña's argument that public respondents Pascual v. Secretary of Public Works and Anti-Chinese League of the Philippines v. Felix.18 (Italics in the
"illegally refused to disqualify" the GMR-Megawide Consortium.chanRoblesvirtualLawlibrary original; emphasis and underscoring supplied)

The nature of personal interest in public suits was summarized as follows:


Issues

From the foregoing, the core issues to be resolved in the present controversy are: (1) whether GMR- For a party to have locus standi, one must allege "such a personal stake in the outcome of the controversy as
Megawide Consortium is a qualified bidder; (2) whether the increased terminal fees imposed by the winning to assure that concrete adverseness which sharpens the presentation of issues upon which the court so
bidder, GMCAC, is legal; (3) whether petitioners are entitled to injunctive relief. largely depends for illumination of difficult constitutional questions."

Because constitutional cases are often public actions in which the relief sought is likely to affect other persons,
Our Ruling
a preliminary question frequently arises as to this interest in the constitutional question raised.

When suing as a citizen, the person complaining must allege that he has been or is about to be denied
The petitions are without merit.
some right or privilege to which he is lawfully entitled or that he is about to be subjected to some
burdens or penalties by reason of the statute or act complained of. When the issue concerns a public
Preliminaries
right, it is sufficient that the petitioner is a citizen and has an interest in the execution of the laws.
A. Legal Standing
For a taxpayer, one is allowed to sue where there is an assertion that public funds are illegally disbursed or
deflected to an illegal purpose, or that there is a wastage of public funds through the enforcement of an invalid
Legal standing or locus standi refers to a personal and substantial interest in a case such that the party has
or unconstitutional law. The Court retains discretion whether or not to allow a taxpayer's suit.
sustained or will sustain direct injury because of the challenged governmental act.14 The requirement of
standing, which necessarily sharpens the presentation of issues, relates to the constitutional mandate that this
In the case of a legislator or member of Congress, an act of the Executive that injures the institution of
Court settle only actual cases or controversies.15 Thus, generally, a party will be allowed to litigate only when
Congress causes a derivative but nonetheless substantial injury that can be questioned by legislators. A
(1) he can show that he has personally suffered some actual or threatened injury because of the allegedly
member of the House of Representatives has standing to maintain inviolate the prerogatives, powers and
illegal conduct of the government; (2) the injury is fairly traceable to the challenged action; and (3) the injury is
privileges vested by the Constitution in his office.
likely to be redressed by a favorable action.16chanroblesvirtuallawlibrary
An organization may be granted standing to assert the rights of its members, but the mere invocation by
In David v. Macapagal-Arroyo,17 we explained the rules on locus standi, as follows:
the Integrated Bar of the Philippines or any member of the legal profession of the duty to preserve the rule of
law does not suffice to clothe it with standing.
Locus standi is defined as "a right of appearance in a court of justice on a given question." In private suits,
standing is governed by the "real-parties-in interest rule" as contained in Section 2, Rule 3 of the 1997 Rules As regards a local government unit (LGU), it can seek relief in order to protect or vindicate an interest of its
of Civil Procedure, as amended. It provides that "every action must be prosecuted or defended in the name of own, and of the other LGUs.19 (Emphasis supplied; citations omitted)
the real party in interest." Accordingly, the "real-party-in interest" is "the parly who stands to be benefited or
injured by the judgment in the suit or the party entitled to the avails of the suit." Succinctly put, the plaintiffs Here, BPM alleges a direct personal injury for its members who as frequent travelers to Cebu and Mactan will
standing is based on his own right to the relief sought. be burdened by the increased terminal fees imposed by the private respondents upon taking over the
operation and management of MCIA. On the other hand, petitioner Osmeña III claims to be suing as a
legislator, taxpayer and citizen asserting a public right in the stringent application of the bidding rules on the No Grave Abuse of Discretion
qualifications of private respondents for the MCIA Project. in PBAC's Determination that GMR-Megawide Consortium
was a Qualified Bidder
In any case, locus standi being a mere procedural technicality,20 the Court has, in the exercise of its discretion,
relaxed the rules on standing when the issues involved as of "transcendental importance" to the public.21 The For public biddings of PPP contracts under the BOT Law and Implementing Rules and Regulations (IRR), the
Court, through Associate Justice Florentino P. Feliciano (retired and now deceased), provided the following evaluation of bids is undertaken in two stages. The first-stage evaluation involves the assessment of the
instructive guides as determinants in determining whether a matter is of transcendental importance: (1) the technical, operational, environmental and financing viability of the proposal as contained in the bidder's first
character of the funds or other assets involved in the case; (2) the presence of a clear case of disregard of a envelopes vis-a-vis the prescribed requirements and criteria/minimum standards and basic parameters
constitutional or statutory prohibition by the public respondent agency or instrumentality of the government; prescribed in the bidding documents. The second stage evaluation shall involve the assessment and
and (3) the lack of any other party with a more direct and specific interest in the questions being comparison of the financial proposals of the bidders. Within three days from completion of the financial
raised.22chanroblesvirtuallawlibrary evaluation, the PB AC submits its recommendation to the head of the Implementing Agency (IA) or Local
Government Unit (LGU). Upon approval of the recommendation, the head of the IA or LGU will issue a notice
In not a few cases, the Court, in keeping with its duty under the Constitution to determine whether the other of award to a winning proponent. Subject to compliance with the post-award requirements in the notice of
branches of government have kept themselves within the limits of the Constitution and the laws and have not award, the PPP contract shall be executed and signed by the winning bidder and the head of the IA or
abused the discretion given them, has brushed aside technical rules of procedure.23chanroblesvirtuallawlibrary LGU.31chanroblesvirtuallawlibrary

In Agan v. PIATCO, also involving a controversy in the qualifications of the winning bidder for the construction During the post-qualification evaluation and prior to the final award to GMR-Megawide Consortium as the
and operation of the country's premier international airport, the Court resolved to grant standing to the Highest Bidder, the latter's disqualification was sought by the Second Highest Bidder, Filinvest Development
petitioners in view of "the serious legal questions involved and their impact on public interest." 24 Although the Corporation (FDC), on the following grounds: (a) GMR's questionable record in airport construction and
factual milieu in this case is not similar and no constitutional issue was raised by petitioners, we hold that the development; (2) GMR's financial incapacity; and (3) violation of the Conflict of Interest Rule.
same rationale in Agan justifies the relaxation of the rules on standing.
In its letters32 dated December 13, 2013 and December 16, 2013 addressed to PBAC Chairman
B. Hierarchy of Courts Undersecretary Jose Perpetuo M. Lotilla, FDC, citing published newspaper reports, brought up the following
issues: (1) cancellation by the Maldives Government of the GMR Group's contract for modernizing the Male
While this Court has original jurisdiction over petitions for certiorari, prohibition, mandamus, quo warranto, Ibrahim Nasir International Airport (Male International Airport) and which cancellation was affirmed in a
and habeas corpus, such jurisdiction is shared with the Court of Appeals and the Regional Trial Courts. It is Singapore court; (2) the rapid rise of GMR's debt level and MCC's equity of only roughly P8 Billion; (3) GMR's
judicial policy that — exit from the management of Istanbul Gokcen International Airport in Istanbul, Turkey, supposedly as part of
the GMR Group's articulated strategy of "develop-build-create value-divest," which does not augur well for the
long-term commitment intended for the 25-year concession period of the MCIA Project; (4) critical findings of
x x x a direct invocation of the Supreme Court's jurisdiction is allowed only when there are special and
the Comptroller and Auditor General of India based on the performance audit of the implementation of the
important reasons therefor, clearly and especially set out in the petition. Reasons of practicality, dictated
public-private partnership for the Indira Gandhi International Airport at Delhi, India, including the development
by an increasingly overcrowded docket and the need to prioritize in favor of matters within our exclusive
fee imposed on travelers which was used by DIAL (Delhi Airport concessionaire) to finance 27% of the project
jurisdiction, justify the existence of this rule otherwise known as the "principle of hierarchy of courts." More
cost, outsourcing of numerous contracts which are not arms-length transactions and in violation of the
generally stated, the principle requires that recourse must first be made to the lower-ranked court exercising
Operation Management and Development Agreement (OMDA) because these were given to joint venture
concurrent jurisdiction with a higher court.25 (Italics omitted; Emphasis supplied)
companies in which DIAL had substantial equity interest, violation of the Master Plan and delay in project
completion, financial documents showing GMR posting net loss from operations in the last three years and
The Court thus declared in Heirs of Bertuldo Hinog v. Melicor,26 that it will not entertain direct resort to it unless
debt levels increasing in relation to its equity; and (4) concern as to MCC's equity in view of several PPP
the redress desired cannot be obtained in the appropriate courts, and exceptional and compelling
projects awarded to it which involve substantial amount in project costs.
circumstances, such as cases of national interest and of serious implications, justify the availment of the
extraordinary remedy of writ of certiorari, calling for the exercise of its primary
As part of the Technical Qualifications, the ITPB mandates compliance with certain supporting documents
jurisdiction.27chanroblesvirtuallawlibrary
from entities who fulfill the requirements for Development Experience, and Operation and Maintenance
Experience:
After a thorough study and evaluation of the issues involved, the Court is of the view that exceptional
circumstances exist in this case to warrant the relaxation of the rule. The Court can resolve the factual issues
from the available evidence on record. 3. The entity whose experience is being submitted in fulfillment of this requirement - whether the
Prospective Bidder or a Consortium Member and any Affiliates of any of these entities, should
Mactan-Cebu International Airport is the second busiest airport in the country after the Ninoy Aquino submit a certificate from an Auditor, as per the format provided at Annex QD-11 to satisfactorily
International Airport, handling millions of passengers and thousands of aircraft movements every year. establish its claim.
Opened in the mid-1960s, it is owned by the DOTC and managed by the MCIAA.28 The multi-billion expansion
and development project for MCI A is being implemented through the PPP program. The Government's PPP
program has two objectives: (1) increase private investment in infrastructure through solicited mode; and (2) 4. The entity, whose experience is being submitted in fulfillment of this requirement - whether the
follow good governance practices in preparing, bidding and implementing the PPP projects.29 There is no Prospective Bidder or a Consortium Member and any Affiliates of any of these entities must
dispute then that this case is of paramount national interest for it raises serious questions on the evaluation of certify that they have no Unsatisfactory Performance Record as per the format provided at
bids by the public respondents. Annex QD-4A or Annex QD-4B.33 (Emphasis supplied)

C. Mootness
The certificate from an Auditor, as per the format provided in Annex QD-11, serves as evidence of having the
Respondents' contention that the case was mooted by the Notice of Award and turnover of operations of the
claimed Development Experience, and in Annex QD-13, a certificate for details of eligible projects for
MCIA to GMCAC likewise deserves scant consideration. For even in cases where the supervening events had
Operation and Maintenance Experience, such as the number of years in operation of the airport and the
made the cases moot, the Court did not hesitate to resolve the legal or constitutional issues raised to
annual passenger throughout registered by the airport.34 The more relevant document is the certificate from
formulate controlling principles to guide the bench and the bar, and the public.30 Hence, the subsequent
the entities whose experience is being submitted in fulfillment of the Development Experience, and Operation
issuance of Notice of Award, execution of the Concession Agreement and turn-over to GMCAC of the
and Maintenance Experience, of "No Unsatisfactory Performance Record."
operation and maintenance of MCIA, did not remove the issue of GMCAC's qualifications from the ambit of
judicial review.
As per the format prescribed in Annex QD-4A, the Notarized Certification of Absence of Unsatisfactory
Performance Record, the entity fulfilling the Development Experience, and Operation and Maintenance
Substantive Issues
Experience, certifies that it does not have any record of unsatisfactory performance in any of its projects and
contracts.
xxx "Unsatisfactory Performance" means any of the following:
It has been reported as well that the Ministry of Civil Aviation has contested the findings under the CAG Report.
Briefly, the Ministry has said that: (i) the charging of the development fee is authorized under the relevant law
1. within the last five (5) years prior to the Qualification Documents Submission Date - and known to all bidders prior to bid submission, (ii) there was no deviation from the Master Plan, particularly
as regards the extent of permissible commercial development as follows:
a. failure to satisfactorily perform any of its material obligations on any contract, as
evidenced by an imposition of a judicial pronouncement or arbitration award; "Ministry of Civil Aviation has gone through the report of the CAG on Indira Gandhi International Airport, Delhi
as tabled in Parliament today and strongly refutes the loss figures and other allegations as made in the report.
b. expulsion from any project or contract; "The calculation of presumptive gain from the commercial use of land at the Delhi Airport is totally erroneous
and misleading as it simply adds the nominal value of the projected revenue, without taking the net present
c. termination or suspension of any of its projects or contracts due to breach of its value. In fact the net present value of the figure quoted by CAG is Rs 13795 crores only. CAG has further
obligations; or failed to appreciate that 46% of this amount would be payable to AAI as revenue share.

"It is also pointed out that the levy of Development Fee is under Section 22 (A) of AAI Act, 1994 and was in the
d. material violations of laws and/or regulations applicable to any of its projects or knowledge of all the bidders prior to the bidding process. Hence, contrary to what the CAG has said, the levy
contracts x x x.35chanroblesvirtuallawlibrary of Development Fee by DIAL was not a post contractual benefit provided to DIAL at the cost of passengers.
Further, the levy of the Development Fee has been upheld by the Supreme Court, which has already
examined and rejected all the issues now being raised by CAG in its report.
Evaluating the information provided by FDC and the explanation given by private respondents concerning the
latter's performance record, PBAC in its Resolution dated April 3, 2014, stated its findings and conclusion, viz. : "On the issue of lease of Airport land, it is clarified that the land has not been given to DIAL on rental basis.
RslOO is just a token amount for the purpose of the Conveyance Deed. The determining factor for grant of
concession to the bidder was the Gross Revenue share quoted by the bidders. As a result, Airports Authority
I. Existence of Unsatisfactory Performance in relation to GMR-Male of India (AAI) now receives 45.99% share of Gross Revenues of DIAL and 26% of all Dividends. Benefit to AAI
is likely to be more than Rs 3 lakh crores in this process during the entire Concession period. AAI has already
got its revenue share of Rs.2936 crores in the last 6 years and likely to get Rs. 1770 crores in the year 2012-
Pursuant to QD-4A of the ITPB, the relevant project or contract refers to any project or contract of the entity or 13 and Rs. 2287 crores in the year 2013-14. The AAI share of revenue from DIAL is further going to constantly
entities whose experience is being used to meet any of the Technical Qualification Requirements which was rise every year in the balance concession period.
commenced or in the process of implementation within the last five (5) years before the Qualification
Documents Submission Date, and not just to the particular projects or contracts being submitted to meet such "It may also be noted that the right to use 5% of Airport land for commercial purpose was also defined in the
Technical Qualification Requirements. Based on the clear reading of the provisions under QD-4A, the bid and known to all bidders."
performance record of GMR-Male is not relevant to the Project, considering its credentials were not used to
satisfy any qualification requirement. The PBAC also appreciated that -
III. Misrepresentation as to financial capacity of GMR Infrastructure & Megawide Consortium

 the information pertaining to the Male Airport Contract was disclosed by GMR during the Pre-
qualification process, even if it was not a required submission; and Pursuant to the ITPB and ITB, to be financially qualified to bid for the Project, a bidder must meet the following
 in a letter dated 23 December 2013 addressed to the DOTC, through Undersecretary Rene K. Financial Qualification requirements: (a) (i) Net Worth of at least Php 2.0 billion, or its equivalent as of its latest
Limcaoco, Isabel Chaterton of the International Finance Corporation ("IFC") Public-Private audited financial statements, which must be for financial year ending not earlier than 31 December 2011, or (ii)
Partnership Advisory Services for South Asia said that "IFC has been consistently of the view that a Set-Aside Deposit equivalent to the same amount, and (b) a letter testimonial from a domestic
the sanctity of the Male airport concession agreement should be upheld and have noted publicly universal/commercial bank or an international bank with a subsidiary/branch in the Philippines or any
our strong belief that the process leading to the award of the concession for that project was international bank recognized by the BSP attesting that the Prospective Bidder and/or members of the
conducted in an open and transparent manner and in accordance with international best practice. Consortium are banking with them, and that they are in good financial standing and/or are qualified to obtain
We understand the matter is now under arbitration which is the appropriate dispute resolution credit accommodations from such banks to finance the Project. These parameters for the determination of
mechanism provided for in the concession agreement. We should also point out, that in June 2013, financial qualification requirements are consistent with Section 5.4(c) of the BOT Law IRR.
the Anti-Corruption Commission of the Maldives concluded that there was no corruption involved in
the award and concession of the Male airport to GMR-MAHB." IFC is a member of the World Bank On further evaluation, the PBAC determined that, for purposes of meeting the Financial Qualification
Group and the largest global development institution focused exclusively on the private sector in requirement, QD-8, with supporting information, was submitted by Megawide for the GMR Infrastructure &
developing countries. A copy of IFC's letter dated 20 December 2013 is attached hereto as Annex Megawide Consortium. Megawide's submission was previously determined to have fulfilled these
"AA." requirements. Furthermore, in the course of completing the financial evaluation, the PBAC examined the
Financial Proposal comprising the Bid Amount and the Final Draft Concession Agreement signed and
executed by the Authorized Representative of the GMR Infrastructure & Megawide Consortium pursuant to the
ITB, and the PBAC has not found any deficiency in the financial proposal.

II. Misrepresentation as to the Absence of Unsatisfactory Performance of DIAL IV. Long term commitment to Project

Based on the definition of unsatisfactory performance under the ITPB and ITB, absence of unsatisfactory Filinvest-CAI Consortium also shared its observation that it doubts the long term commitment of GMR
performance must be evidenced by the imposition of a judicial pronouncement or arbitration award. The CAG Infrastructure & Megawide Consortium to the Project in view of its reported intention to withdraw from the
Report is neither a judicial pronouncement nor an arbitration award. Therefore, based on the definition, the ISGIA. The PBAC noted this observation and resolved that the reported divestment from Istanbul Airport does
CAG Report is not sufficient basis for an adverse finding. On further evaluation of the documentary not affect the evaluation of GMR Infrastructure & Megawide Consortium's qualification to undertake the Project
submissions and at the close of several discussions, it was determined that the CAG Report is primarily under the terms of the Concession Agreement. Divestment or withdrawal by a Consortium Member from the
addressed to the relevant government agencies of India. The PBAC noted, among others, that the charging of Project is permitted, subject to the applicable Lock-up Rules under V-05 and V-06 of the ITPB, as well, as
development fee and outsourcing to service providers through a procurement process is allowed under the under the Concession Agreement. This is an important provision in the ITB, ITPB and Concession Agreement,
contract. validated in the course of the market sounding exercise undertaken for the Project and in keeping with the
declared policy under the BOT Law to provide the most appropriate incentives to mobilize private resources
for the purpose of financing the construction, operation and maintenance of infrastructure and development PBAC to further confirm that for purposes of Section 5.6(c) of the Instructions to Bidders, "direct involvement"
projects. Further, under Annex BL-1, GMR Infrastructure & Megawide Consortium has certified that it will shall mean actual participation in the deliberations and decision-making for the bidding process of the Bidder
undertake the project in accordance with the Concession Agreement, including the applicable Lock-up Rules, that would give the director, officer, advisor, employee or agent knowledge or information regarding the bid of
which undertaking was affirmed in a letter addressed to PBAC dated 20 December 2013. the Bidder, as previously clarified by the PBAC in SBB 6-2013, Query 4.

There is no reason to doubt the commitment in view of the certificate of good standing from the Ministry of The Consortium, further suggested the following revision to the ITB:
Defence of Turkey, which states that the operating company founded by Limak Holding, GMR Infrastructure
Limited and MAHB has been operating the Istanbul Sabiha Gocken International Airport Terminal satisfactorily A member of the board of directors, partner, officer, employee or agent of a Bidder, any Consortium Member,
per the provisions of the Implementation Agreement executed in 2008 and that the transfer of the forty percent or any of their Affiliates (of either the Bidder or any of Consortium Members), who is directly involved in the
(40%) shares held by GMR and its affiliates to Malaysia Airports MSC Sdn Bhd has been duly approved by the Bidding Process for the Project with respect to a Bidder, is also directly involved in any capacity related to the
Undersecretary for Defense Industries on 20 March 2014, consistent with the terms of the Implementation Bidding Process for the Project for another Bidder, any Consortium Member of any other Bidder, or any of
Agreement. their Affiliates (of either the Bidder or any of its Consortium Members), within a period of two (2) years prior to
the publication of the Invitation to Pre-Qualify and Bid and one (I) year after award of the Project.

V. Violation of Conflict of Interest The same conflict of interest arises in case of professional advisors except when prior written disclosure was
made to their client-Bidders, DOTC/MCIAA, and the Public-Private Partnership Centre, including the
submission of a Conjlict Management Plan for this purpose. A written consent or clearance to this effect shall
The ITB, in Section 5.6(c) states in part:
likewise be secured from DOTC.

Each Bidder may submit only one Bid Proposal. To ensure a level playing field and a competitive Bidding For purposes of this provision, direct involvement shall mean actual participation in the deliberations and
Process, Bidders (in the case of Consortia, each Consortium Members), including their Affiliates, must not decision-making for the bidding process of the Bidder that would give the director, officer, advisor, employee,
have any Conflict of Interest. Without limiting the generality of what would constitute a Conflict of Interest, any or agent knowledge or information regarding the bid of the Bidder.
of the following will be considered a Conflict of Interest:chanRoblesvirtualLawlibrary
The PBAC, under SBB No. 11-2013 Query No. 5 released in August 2013, replied as follows:
xxx xxx xxx
a member of the board of directors, partner, officer, employee or agent of a Bidder, any Consortium Member, Please be guided that in cases of conflict of interest under ITB, Sec. 5.6(c), Bidders who may be affected are
or any of their Affiliates (of either the Didder or any of its Consortium Members), is also directly involved in any advised to comply with SBB02-2013, Amendments to the ITPB, No. 10, with respect to the compliance
capacity related to the Bidding Process for the Project for another Bidder, any Consortium Member of any requirements for professional advisors. Thus, Bidder, is advised, so that there will be no conflict of interest, to
other Bidder, or any of their Affiliates (of either the Bidder or any of its Consortium Members), within a period make a prior written disclosure to the affected Bidders, DOTC, and the PPPC, and submit a Conjlict
of two (2) years prior to the publication of the Invitation to Pre-Qualify and Bid and one (1) year after award of Management Plan. A written consent or clearance must be likewise secured from DOTC.
the Project. Based on the relevant rule, there must be direct involvement or participation in the deliberations and decision-
making as to the Bid Process of two or more bidders and that mere partnership or common directorship, or
The same conflict of interest arises in case of professional advisors except when prior written disclosure was direct involvement in one bidder is not enough.
made to their client-Bidders, DOTC/MCIAA and the Public-Private Partnership Center, including the
submission of a Conflict Management Plan for this purpose. A written consent or clearance to this effect shall The rule under Section 5.6(c), as previously explained under SBB No. 06-2013 (Query No. 4), is that the
likewise be secured from DOTC. existence of common partners, directors or officers between two Bidders is not of itself ground for a finding of
xxx xxx xxx Conflict of Interest. In SBB No. 07-2013 (Query No. 36), the PBAC reiterated that "[t]he position in the ITPB is
(This is similar to the Conflict of Interest provision appearing in the ITPB, Section V04-d.) reiterated. However, please note that Section V-04(d) shall only apply if the common director is directly
involved in the bidding process for another Prospective Bidder. The PBAC provided guidance as to what
Consequently, in Annex BL-1 of the ITB, or the Form of Bid Letter, a bidder is required to state under oath that would constitute direct involvement in our response to Query No. 4 in SBB No. 06-ANNEX A." There must be
it "including all of its Consortium Members, and all of the entities it has proposed to comply with the (1) common partner, director, officer, or employee and (2) direct involvement by such partner, director, officer,
Qualification Requirements under the ITPB, have not at any time (i) engaged in any Corrupt Practice, Fraud, or employee, which consists of actual participation in the deliberations and decision-making for the Bidding
Collusion, Coercion, Undesirable Practice, or Restrictive Practice, (ii) have a Conflict of Interest (iii) violated Process of both Bidders affected, that would give the director knowledge or information regarding the bid of
the Lock-Up Rules or (iv) has Unsatisfactory Performance Record." such Bidder.

During the pre-qualification stage, a question was submitted seeking clarification on Section V04-d of the ITPB The PBAC adopted and approved the Conflict of Interest provision in the ITPB(V04-d) and later in the ITB
on Conflict of Interest. In its answer to the query under SBB No. 06-2013, the PBAC stated that "without (5.6c) pursuant to its authority and function under the BOT Law IRR, Section 3.2, which states that the PBAC
limiting the discretion of the PBAC to determine what constitutes Conflict of Interest, direct involvement shall shall be responsible for all aspects of the pre-bidding and bidding process, including among others, the
mean actual participation in the deliberations and decision-making for the bidding process of the Prospective interpretation of the rules regarding the bidding. In adopting the ITPB and ITB provisions on conflict of interest,
Bidder that would give the director knowledge / information regarding the bid of such Prospective Bidder." the PBAC was aware that in its implementation it would require direct involvement or actual participation in the
deliberations and decision-making process as to the Bid for both affected bidders, for the following reasons.
In June 2013, GMR Infrastructure & Megawide Consortium submitted the following query:

PBAC to please confirm our understanding that a conflict of interest shall arise with respect to a director,  The clear expression of this intention in the use of the adverb "also," indicating similarity and
partner, officer, advisor, employee, or agent if: further action of the same nature, in the qualifying phrase "is also directly involved," meaning that
in requiring such action on the part of one bidder, the same action should have been taken in
1. such director, partner, officer, advisor, employee, or agent of a Bidder (Bidder "A ") is directly involved in the behalf of or in relation to another bidder.
Bidding Process for the Project; and

2. such director, partner, officer, advisor, employee, or agent is also directly involved in any capacity related to  The PBAC also noted that this meaning has been carried in the language of the provision as used
the Bidding Process for the Project for another Bidder ("Bidder B"), any Consortium Member of Bidder B, or in several other PPP projects implemented prior to the Project and from which reference
any of their Affiliates. documents the provision was drawn. Significant in this regard is SBB No. 3, Response No. 4 to
Metro Pacific Tollways Corporation (see attached), issued in September 2012 for the NAIA
Accordingly, a conflict of interest will arise only if such director, partner, officer, advisor, employee, or agent is Expressway Project, where it is clear that for conflict of interest to arise there has to be actual
directly involved in the Bidding Process for the Project with respect to both Bidders A and B. participation for or in both bidders involved. The meaning of the provision as explained in the SBB
No. 3 has been retained and carried in its use in the Project's ITB and ITPB. A copy of SBB No. 3 within three (3) days a certification affirming under oath the absence of conflict of interest, specifically that
issued in September 2012 for the NAIA Expressway Project is attached hereto as Annex "BB." neither MAHB nor Mr. Tansri Bashir Ahmad was directly involved in any capacity related to the Bidding
Process for the Project for both GMR-Megawide Consortium and the Consortium of First Philippine Holdings
Corporation and MAHB at the same time, or any of their respective Consortium members, or any of their
respective Affiliates, through actual participation in the deliberations and decision-making for the Bidding
That this is the proper interpretation is supported by the PBAC's application of the same principle in the Process of both GMR-Megawide Consortium and First Philippine Airports Consortium that would give MAHB
treatment of professional advisers. The ITPB and ITB in stating that "the same conflict of interest arises in or Mr. Tansri Bashir Ahmad knowledge / information regarding the bid of both GMR Infrastructure & Megawide
case of professional advisors" has been implemented by the PBAC by requiring the disclosure and clearance Consortium and First Philippine Airports Consortium, within a period of two (2) years prior to the publication of
where the professional adviser is under "the same conflict of interest," meaning they are involved in that the Invitation to Pre-Qualify and Bid. Through its letter dated 8 January 2013, GMR Infrastructure & Megawide
capacity for two or more bidders. A written consent, clearance and compliance with conflict management plan Consortium submitted the requested certification.36chanrobleslaw
was required in the case of a professional adviser who was understood to have taken such a role for two
bidders in the Project. Otherwise, if at least two bidders are not involved, the PBAC would not have required a On the basis of the foregoing, the PBAC resolved to recommend to public respondents to designate GMR-
conflict management plan for the simple reason that a conflict of interest, in that case, would not exist. Megawide Consortium as the Winning Bidder for the MCIA Project, and to issue the corresponding Notice of
Award.
In relation to the history of the conflict of interest provision, the PBAC also discussed that, due to the
numerous interlocking directors prevalent among the Philippine conglomerates, an interpretation not requiring It is well-settled in our jurisprudence that the government is granted broad discretion in choosing who among
direct participation in both companies may possibly lead to the disqualification of a large number of bidders. the bidders can offer the most advantageous terms and courts will not interfere therewith or direct the
The result would be extremely detrimental for the government, and surely this cannot be the purpose of the committee on bids to do a particular act or to enjoin such act within its prerogatives, except when in the
provision. exercise of its authority, it gravely abuses or exceeds its jurisdiction,37 or otherwise commits injustice,
unfairness, arbitrariness or fraudulent acts.38 We have recognized that the exercise of that discretion is a
The purpose of specifying Section 5.6(c) as a form of Conflict of Interest is to prevent collusion among the policy decision that necessitates prior inquiry, investigation, comparison, evaluation, and deliberation. This
bidders that may arise from the specific conflict of interest scenarios (as differentiated from Collusion as task can best be discharged by the concerned government agencies, not by the
defined under the ITPB and ITB), which may prejudice or defeat competition in the Bidding Process. courts.39chanroblesvirtuallawlibrary
Particularly, Section 5.6(c) seeks to prevent a situation in which the common partner, director, or officer of two
(or more) Bidders will have information and involvement in the preparation of the bids of both Bidders. By The Court thus expounded at length in Bureau Veritas v. Office of the President40:
actual participation, the common partner, director, or officer can influence the bids of both bidders, which will
not be achieved if a common director does not have direct involvement in both bids.
x x x It must be stressed, as held in the case of A.C. Esguerra & Sons v. Aytona, et al., (L-18751, 28 April
It is, therefore erroneous, to conclude that the PBAC has taken a different view solely on the basis of the 1962, 4 SCRA 1245), that in an "invitation to bid, there is a condition imposed upon the bidders to the effect
response given under SBB No. 11-2013, Query No. 5. The PBAC responded only to the query with regard to that the bidding shall be subject to the right of the government to reject any and all bids subject to its discretion.
professional advisers without taking action on the rest considering the lack of concrete factual scenario to In the case at bar, the government has made its choice and unless an unfairness or injustice is shown, the
support the qviery, apart from the fact that it is not necessary to adopt the proposed revision by the bidder losing bidders have no cause to complain nor right to dispute that choice. This is a well-settled doctrine in this
under Query No. 5. The provision as it appears in the ITPB and ITB sufficiently conveys the meaning that for jurisdiction and elsewhere."
Conflict of Interest to arise under Section 5.6(c) of the ITB there must be direct involvement or participation in
the deliberations and decision-making as to the Bid Process of two or more bidders. Mere partnership or The discretion to accept or reject a bid and award contracts is vested in the Government agencies
common directorship, or direct involvement in only one bidder is not enough. It is worth recalling Section 6.1 of entrusted with that function. The discretion given to the authorities on this matter is of such wide
the BOT Law IRR, which states that the implementing agency concerned shall not assume any responsibility latitude that the Courts will not interfere therewith, unless it is apparent that it is used as a shield to a
regarding erroneous interpretations or conclusions by the prospective bidder out of data furnished or indicated fraudulent award(Jalandoni v. NARRA, 108 Phil. 486 [I960]), x x x The choice of who among the bidders is
in the bidding documents. best qualified to perform this task should be left to the sound discretion of the proper Government authorities
in the executive branch since they are in a better position than the Courts to make the determination owing to
Applying the foregoing interpretation, therefore, the sworn certifications submitted by GMR Infrastructure & the experience and knowledge that they have acquired by virtue of their functions. The exercise of this
Megawide Consortium set out the required certification on facts which indicate compliance with the rules on discretion is a policy decision that necessitates prior inquiry, investigation, comparison, evaluation, and
Conflict of Interest. deliberation. This task can best be discharged by the Government agencies concerned, not by the Courts. The
role of the Courts is to ascertain whether a branch or instrumentality of the Government has transgressed its
Upon further consideration of this issue, the PBAC noted that GMR Infrastructure & Megawide Consortium, in constitutional boundaries. But the Courts will not interfere with executive or legislative discretion exercised
its comment on Filinvest-CA Consortium's letters dated 2 and 3 January, confirmed that Mr. Tansri Bashir within those boundaries. Otherwise, it strays into the realm of policy decision-making.
Ahmad bin Abdul Majid ("Mr. Tansri Bashir Ahmad") is the Managing Director of MAHB, but not a member of
the board of directors of GMR. While Mr. Tansri Bashir Ahmad sits on the board of DIAL, GHIAL, and GMR- It is only upon a clear showing of grave abuse of discretion that the Courts will set aside the award of
Male, as well as ISGIA, GMR Infrastructure & Megawide Consortium, in its letter dated 6 January 2014, a contract made by a government entity. Grave abuse of discretion implies a capricious, arbitrary and
explained that "[a]side from using the Hyderabad and Delhi airports for meeting the technical requirements for whimsical exercise of power (Filinvest Credit Corp. v. Intermediate Appellate Court, No. 65935, 30 September
the bid, DIAL, GHIAL, [GMR-Male] or ISGIA themselves were never involved in the bidding process and 1988, 166 SCRA 155). The abuse of discretion must be so patent and gross as to amount to an evasion of
anything remotely connected with the bid was never discussed in the boards of these companies." positive duty or to a virtual refusal to perform a duty enjoined by law, as to act at all in contemplation of law,
where the power is exercised in an arbitrary and despotic manner by reason of passion or hostility (Litton Mills,
It is also worth noting that at the time the GMR Infrastructure & Megawide Consortium submitted its Inc. v. Galleon Trader, Inc., et al., L-40867, 26 July 1988, 163 SCRA 489).41 (Emphasis supplied)
Qualification Documents on 22 April 2013, when it indicated that it is fulfilling the Qualification Requirements
through Affiliates of GMR, namely DIAL and GHIAL, First Philippine Airport Consortium had as its members Under the ITPB, the PBAC reserves the right to waive any minor defects in the Qualification Documents, and
First Philippine Holdings Corporation and Infratil (of New Zealand). The First Philippine Airports Consortium accept the offer it deems most advantageous to the government.42 Verily, a reservation of the government of
requested the change in its consortium membership, with the replacement of Infratil by MAHB was approved its right to reject any bid, generally vests in the authorities a wide discretion as to who is the best and most
only in September 2013, following the evaluation of the pre-qualification documents submitted by MAHB. In advantageous bidder. The exercise of such discretion involves inquiry, investigation, comparison, deliberation
their respective Bid Letters (Annex BL-1), each of the GMR Infrastructure & Megawide Consortium and First and decision, which are quasi-judicial functions, and when honestly exercised, may not be reviewed by the
Philippine Airport Consortium declared under oath the absence of Conflict of Interest. The PBAC further noted court.43chanroblesvirtuallawlibrary
that the respective boards of DIAL and GHIAL authorized their respective Chief Financial Officers ("CFO") to
sign and execute relevant documents on their behalf from a board meeting back in 2011 and 2012, way before We find no patent error or arbitrariness in the DOTC's decision to award the contract to private respondents
the bid for the MCIA was published. The same CFOs signed on behalf of each of their boards for the use of after the PBAC had carefully verified and evaluated FDC's allegations regarding GMR's expulsion from the
their O&M experience as an affiliate of GMR. Male International Airport by the Maldives Government, DIAL'S financing and operation of the Delhi Airport,
GMR's poor financial health and violation of the Conflict of Interest Rule.
The PBAC, in its meeting on 6 January 2013, resolved to require GMR Infrastructure & Megawide to submit
On GMR's supposed fiasco from the cancellation of the concession agreement of its subsidiary, GMR Male modernisation and operation of Ibrahim Nasir International Airport in 2010.
International Airport Private Ltd. (GMIAL), with the Maldives Government in 2010, more recent online news
reports showed that GMIAL had won the arbitration case and is seeking compensation from the wrongful However, the Maldives government terminated the contract and subsequently started off arbitration
termination of its contract. Two of such published articles/reports reads: proceedings on November 29, 2012, seeking a declaration that the concession agreement was void ab initio.
GMIAL had disputed this termination.
GMR wins maldives airport case, seeks compensation
Shares of the GMR Infrastructure were trading at Rs 33.15, up 0.91 per cent on the BSE from their previous
close, in a flat Mumbai market on Thursday. GMR Infrastructure runs airports in Hyderabad and New Delhi.
Anirban Chowdhury, ET Bureau Jun 20, 2014, 04.26AM 1ST
(Edited by Joby Puthuparampil Johnson)45chanrobleslaw
MUMBAI: GMR Infra on Thursday said it has won a more than 18-month long legal battle with the Maldives
While the foregoing information was not yet available during the post-qualification stage, we find no unfairness
government which started after the government cancelled the company's contract to develop and operate the
or arbitrariness on the part of public respondents when they relied on the opinion of the IFC PPP Services for
country's main airport.
Southeast Asia that the Male project "was conducted in an open and transparent manner and in accordance
with international best practice," citing the June 2013 report of the Anti-Corruption Commission of the Maldives
According to GMR's filing on the National Stock Exchange, a Maldives' tribunal has judged the government's
which concluded that "there was no corruption involved in the award and concession of the Male airport to
rejection of the contract "wrongful".
GMR-MAHB." As the lead advisor for the project, IFC has in fact, included the Male International Airport as
among the successful PPPs in various infrastructure sectors.46 Public respondents thus committed no grave
The tribunal has directed Maldives and the state-owned Maldives Airports Company (MACL) to pay $4 million
abuse of discretion in determining that GMR has complied with the technical qualifications insofar as the
legal damages to GMR within 42 days.
absence of Unsatisfactory Performance Record is concerned.
GMR has in addition, demanded a compensation of $ 1.4 billion for losses incurred in the last one year on its
As to the financial incapacity of private respondents, this, too, has been sufficiently addressed by PBAC when
bid amount and investments in developing the airport.
it further evaluated the financial proposal of MCC prior to the execution of the Final Concession Agreement.
And contrary to the claims of petitioner Osmefia III, representatives from GMR have satisfactorily answered
Hassan Areef, a spokesman for the MACL didn't immediately respond to emailed queries.
the issue raised on their financial capability for the MCIA Project during the Senate hearing held on March 25,
2014. What petitioner Osmefia III chiefly assailed was DOTC's due diligence which to him, fell short because
The ruling and possible compensation will bring much-needed relief for GMR whose international airport
they did not "dig in" and made a more in-depth investigation into GMR's background, specifically on the
projects have been facing trouble.
negative findings of India's Comptroller and General Auditor. Herein reproduced are relevant portions of the
transcript taken during said hearing:
After winning its latest project the Phillipines Mactan-Cebu International airport last year, the company had
faced trouble when a rival bidder raised issues of conflict of interest. GMR, however, subsequently bagged the
project. THE ACTING CHAIRMAN (SEN. OSMEÑA). All right. Now, let's go to GMR so that they'll have a chance to
explain.
Last December, the company sold its 40% stake in its second Turkey's Istanbul Sabiha Gokcen International
Airport for 220 million. The company had invested 90 million (7737 crore) in the airport but lost/123 crore on it You wanted to react to a certain point we raised earlier. You're Mr. Kapur?
in 2012-13.
MR. KAPUR. Yes, sir.
On July 28, 2010, a joint venture between GMR Infra (77%) and Malaysia Airports (Labuan) Private Limited
(23%) bagged a development and operations contract for Ibrahim Nasir International Airport a brownfield THE ACTING CHAIRMAN (SEN. OSMEÑA). Yes. Yes, please.
airport at Male. The venture had bid $511 million.
MR. KAPUR. I think there have been three points which were raised. One was about the financial.
The new terminal development project was on track for an early 2014 commercial opening date before it had
to be halted due to a 'Stop-Work' order by the Maldives aviation ministry in August, 2012, according to GMR's And just to react to that point, as far as GMR is concerned, as I had mentioned in my last hearing also, the
latest annual report.44chanroblesvirtuallawlibrary group is absolutely financially sound. It's rated BBB investment grade by the rating agencies. It has not
departed to any lender. It has got letters of good standing from Asian Development Bank and Standard
GMR's Maldives airport concession pact was not void: Singapore-based tribunal Chartered Bank which have been submitted at the time of our submission. That was primarily about the GMR
Group. And, in fact, last time, I had also made a very detailed submission about its financials, its operating
The tribunal has said that Maldives government and MACL should pay GMR $4 million as profits and its cash profits and the group is very much profitable. It has the ability to meet the finances required
compensation within 42 days. to complete this project.

BY ANURADHA VERMA Having said that, the prime criteria of financial capability was that of Megawide because they were the 60
percent partner as far as this project is concerned.
GMR Infrastructure Limited's subsidiary GMR Male International Airport Ltd (GMIAL), whose contract for
modernisation of Male international airport was unilaterally terminated by the Maldives government in 2012, xxxx
has got relief as an international tribunal has declared its concession agreement for Maldives airport as valid.
THE ACTING CHAIRMAN (SEN. OSMEÑA).
In a filing to the stock exchanges, GMR Infrastructure said that the Singapore-based Rt Hon Hoffman's
Tribunal declared that the concession agreement "was not void for any mistake of law or discharged by xxxx
frustration".
Your net losses increased -- surged to 10.7 billion rupees during the nine-month period ending December
"Government of Maldives and Maldives Airport Co. Ltd (MACL) are jointly and severally liable in damages to 31st 2013, is that correct?
GMIAL for loss caused by wrongful repudiation of the agreement as per the concession agreement," GMR
Infrastructure said. xxxx

After detailed proceedings lasting more than 18 months, the tribunal has said that Maldives government and MR. KAPUR. ... Just give me a moment.
MACL should pay GMR $4 million of compensation within 42 days.
Our GMR's consolidated net loss for the 9-month period ending December of 2013 was about 4 billion Indian
GMIAL had signed a concession agreement with the government of Maldives and MACL for the $500 million rupees.
THE ACTING CHAIRMAN (SEN. OSMEÑA). I think you responded to that already in the previous hearing.
THE ACTING CHAIRMAN (SEN. OSMEÑA). That's your net loss.
MR. KAPUR. We have not responded. Last time we did not respond. It was not an issue raised last time.
MR. KAPUR. Net loss. This is the net loss.
THE ACTING CHAIRMAN (SEN. OSMEÑA). All right. Please respond to it.
THE ACTING CHAIRMAN (SEN. OSMEÑA). Okay. And your EBITDA increased to 18 billion-
MR. KAPUR. Let me explain the process of-
MR. KAPUR. Yeah. It is about 7 billion profit. There's a positive of 7 billion Indian rupees.
THE ACTING CHAIRMAN (SEN. OSMEÑA). You know, the whole point I'm trying to make is that there's
THE ACTING CHAIRMAN (SEN. OSMEÑA). No. I'm giving you more. I'm giving you 18 billion in EBITDA. always a response to any charge that's made. There are two sides in a question: There is the prosecutor;
That's Earnings Before Income Tax, Depreciation and Amortization. there is the defense. You can always come up with a defense. It will always sound very rational and very
logical. But what I am questioning is that why the DOTC did not exercise the due diligence to pick up
MR. KAPUR. Ah, okay. That is 17 billion. Nine months is 17 billion—It's about 18.8 billion. the Comptroller and Auditor General's Report with regard to the performance of GMR. That's all I am
saying. Whether it's valid or not, whether you will dispute it or not, we expected you to dispute that, we
THE ACTING CHAIRMAN (SEN. OSMEÑA). Eighteen point eight billion. And your interest expenses jumped expected you to have answers, and we have read your answers. But what I am saying is why didn't you know
to 20.5 billion in that same period. about it? Why didn't you take the effort to do more in-depth due diligence on whoever bidders came before you
in order to protect the interest of the Filipino people. That's what I am saying. So, whether you can answer it or
MR. KAPUR. That's right, that's right. not is really beside the point. It's why did they not pick it up? And you can answer that, you can answer
me why DOTC didn't pick it up?
THE ACTING CHAIRMAN (SEN. OSMEÑA). So, therefore, you don't even have-generate enough cash,
operating profit to cover your interest expense? MR. KAPUR. No, sir.

It's just a simple question. Twenty billion is more than 18 billion, right? THE ACTING CHAIRMAN (SEN. OSMEÑA). So, I think you'll have to hold your comments first, Mr. Kapur,
because we know what you're going to say, and we are not saying that they're not valid answers. My concern
MR. KAPUR. Your Honor, I think one has to understand this is a consolidated balance sheet. is why didn't they pick it up.

THE ACTING CHAIRMAN (SEN. OSMEÑA). I'm just asking. I know it's a consolidated balance sheet, I know MR. KAPUR. Can I respond to that?
it's a mother company.
THE ACTING CHAIRMAN (SEN. OSMEÑA). I don't think you can answer that question why they didn't pick it
MR. KAPUR. So, I think what is really the element is that the GMR has the ability to implement this project up. That's the DOTC's question.
whether it is credit rating because everybody has their own discretion to analyze what the profitability is and
come to their own subjective judgment. But the subjective judgment has to be based upon a credible third MR. KAPUR. No, sir. I just wanted to say something which is relevant for that purpose. He had submitted a
party. And the credible third party in this case are the rating agencies who continuously rate any listed entity. letter which is dated 19 December from the government of India, Ministry of Civil Aviation to the DOTC and
And if found giving that information in public domain, other purpose of consumption of people who are going to PBAC, which actually is that DIAL has been operating the airport from May 2006 satisfactorily as per the
deal with that entity. And the rating of GMR is something which is the most important and should be relied provisions of the UNDA, executed between DIAL and airport authority. Further, we have also been operating
upon. Because if any point of time, GMR is potentially and financially distressed, it would impact the rating. the Flyderabad Airport, and the airport also has been operating satisfactorily.
And automatically, the rating agencies are going to come back and change the rating, and that has not
happened. The rating agencies have maintained consistently the investment credit rating of GMR THE ACTING CHAIRMAN (SEN. OSMEÑA). Yes. That's a good side. Did you disclose it? Did you disclose
Group. And I would just like to reiterate that the GMR Group is not in financial distress. It is robust, it the CAG findings to DOTC?
has got the ability to meet its long-term debt as well as the short-term debt.
MR. KAPUR. That is for the letter of good standing from the government of India.
THE ACTING CHAIRMAN (SEN. OSMEÑA). By borrowing some more.
THE ACTING CHAIRMAN (SEN. OSMEÑA). And you disclosed that we were charged by the Comptroller and
MR. KAPUR. I think, sir, that is the- Auditor General of India with this, and this is our response. Did you disclose that you were charged?

THE ACTING CHAIRMAN (SEN. OSMEÑA). I'm not saying you're going belly up. What I am saying is that MR. KAPUR. Sir, let me make a correction here, sir, may I request?
there are always warnings that those of us who understand the-how to read financial statements can always
come to preliminary conclusions. We do ratios, we do analysis. And right here, this is very clear that you're THE ACTING CHAIRMAN (SEN. OSMEÑA). No. Just answer the question. Yes or no. Did you disclose it?
spending more in interest than what you are earning. So, if things were to stand still today, you wouldn't be
able to pay 2 billion in interest, 2 billion rupees interest. MR. KAPUR. We were not charged by the CAG.

That's all I'm saying. I'm not saying you're not going to pay it because you can always borrow some more THE ACTING CHAIRMAN (SEN. OSMEÑA). Did you disclose the existence of the CAG report?
tomorrow. But this is a situation that's been obtaining for some time. This is not just 2013. This happened in
2012, this happened in 2011. So, you've had operating losses for three years running. MR. KAPUR. No, we were not required to disclose.

MR. KAPUR. The EBITDA is before other income also. If you actually see the financial statement, there is THE ACTING CHAIRMAN (SEN. OSMEÑA). You're not required.
another income also which is below the line after EBITDA. And that is also used to meet the interest and the
payment liabilities. MR. KAPUR. The charge is not on us.47 (Emphasis supplied)

THE ACTING CHAIRMAN (SEN. OSMEÑA). I understand what's below the line. Thank you for that. Anyway- The issues raised against DIAL, as contained in the CAG's report had been addressed and resolved by the
PBAC. In the same vein, GMR's alleged violation of the conflict of interest rule was found to be non-existent.
MR. KAPUR. And sir, I think can I also respond on the CAG report which you raised? Contrary to petitioners' asseveration, the interpretation made by PBAC on this bidding rule was reasonable,
fair and practical. Under the BOT Law IRR, the PBAC shall be responsible for all aspects of the bidding
THE ACTING CHAIRMAN (SEN. OSMEÑA). On the...? process, including the interpretation of the rules regarding the bidding, the conduct of bidding, evaluation of
bids, resolution of disputes between bidders, and recommendation for the acceptance of the bid award and/or
MR. KAPUR. The report of the Comptroller and Auditor General-Indian government audited. for the award of the project.48chanroblesvirtuallawlibrary
Petitioner Osmeña contends that the DOTC may not apply its own bidding rules in a manner that puts bidders
on unequal footing. He emphasizes that the grounds raised to disqualify private respondents are not minor For the writ of injunction to issue, the existence of a clear and positive right especially calling for judicial
defects that may be waived by the PBAC in order to qualify a disqualified bidder. He points out that the protection must be shown; injunction is not to protect contingent or future rights; nor is it a remedy to enforce
arbitrariness of PBAC is apparent because despite its knowledge of grounds to disqualify private an abstract right. An injunction will not issue to protect a right not in esse and which may never arise or to
respondents, i.e., the existence of a violation of the rule on conflict of interest and a showing of private restrain an act which does not give rise to cause of action. There must exist an actual right.
respondents' poor financial health and track record, the resulting decision nevertheless declared them as
qualified bidders.49chanroblesvirtuallawlibrary Petitioners failed to establish such actual right that needs to be protected by injunctive relief. There being no
violation of any law, regulation or the bidding rules, nor any arbitrariness or unfairness committed by public
The contention has no merit. respondents, the presumption of regularity of the bidding for the MCI A Project must stand.

As earlier stated, PBAC's interpretation of the Conflict of Interest provision requiring direct involvement or WHEREFORE, the petition in G.R. No. 211737 is hereby DISMISSED for lack of merit. The petition in G.R. No.
participation in the deliberations and decision-making related to the bidding for the MCIA Project was fair, 214756 is DENIED for lack of sufficient legal and factual bases.
reasonable and practical. The issues regarding GMR's Male airport case and MCC's financial capability have
been fully ventilated during the post-qualification stage. Both private respondents and the second highest No pronouncement as to costs.
bidder, FDC, argued their respective positions which were duly considered, including a detailed evaluation of
their technical and financial qualification documents. That PBAC's own inquiry did not yield any concrete SO ORDERED.cralawlawlibrary
evidence of GMR's unsatisfactory performance, as defined in the ITPB, and MCC's poor financial health does
not necessarily indicate preference for one bidder over the others, especially as the bidding in this case was
conducted with transparency. G.R. No. 174385 February 20, 2013

Increased Terminal Fees Valid and Legal REPUBLIC OF THE PHILIPPINES, Petitioner,
vs.
On the legality of the increased terminal fees imposed by GMCAC, this is based on the right granted under the HON. RAMON S. CAGUIOA, Presiding Judge, Branch 74, Regional Trial Court, Third Judicial Region,
Concession Agreement to collect such fees. For this kind of BOT projects, the law expressly provides that the Olongapo City, META TRANS TRADING INTERNATIONAL CORPORATION, and HUNDRED YOUNG
project proponent operates the facility over a fixed term during which it is allowed to charge facility users SUBIC INTERNATIONAL, INC., Respondents.
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.50chanroblesvirtuallawlibrary DECISION

At any rate, the Concession Agreement provided for a formula and procedure to be applied should there be an
BRION, J.:
increase in Passenger Service Charge, Aircraft Parking Fees and Tacking Fees, thus:

We resolve in this petition for certiorari and prohibition 1 (the present petition) the challenge to the
24.2.c Unless otherwise provided by any Relevant Rules and Procedure promulgated by MCIAA or by August 11, 2005 and July 5, 2006 orders2 of respondent Judge Ramon S. Caguioa, Regional Trial
any Government Authority, the following procedure shall apply for every increase in the Court (RTC) of Olongapo City, Branch 74, in Civil Case No. 102-0-05. The August 11, 2005 order granted the
Passenger Service Charge, aircraft Parking Fees, and Tacking Fees, after the expiration of the motion to intervene filed by private respondents Metatrans Trading International Corporation and Hundred
first (1st) Contract Year: Young Subic International, Inc., while the July 5, 2006 order denied the motion for reconsideration and the
motion to suspend the proceedings filed by the petitioner Republic of the Philippines (Republic).
24.2.c The Concessionaire shall file with the MCIAA an application for such increase no later
(1) than six (6) months prior to the date that the relevant increase in the Passenger The Factual Antecedents
Service Charge, Aircraft Parking Fees, and Tacking Fees shall take effect.

On March 14, 2005,3 Indigo Distribution Corporation and thirteen other petitioners (collectively referred to
24.2.c The Concessionaire shall publish the application in a newspaper of general circulation
as lower court petitioners) filed before the respondent judge a petition for declaratory relief with prayer for
(2) at least two (2) weeks before the first hearing on the application.
temporary restraining order (TRO) and preliminary mandatory injunction4 against the Honorable Secretary of
Finance, et al. The petition sought to nullify the implementation of Section 6 of Republic Act (R.A.) No. 9334,
24.2.c MCIAA shall conduct a public hearing on the said application in accordance with any otherwise known as "AN ACT INCREASING THE EXCISE TAX RATES IMPOSED ON ALCOHOL AND
(3) rule of procedure that it may promulgate. TOBACCO PRODUCTS, AMENDING FOR THE PURPOSE SECTIONS 131, 141, 142, 143, 144, 145 AND
288 OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED," as unconstitutional. Section
24.2.c The Concessionaire shall comply with all other requirements of Relevant Rules and 6 of R.A. No. 9334, in part, reads:
(4) Procedures that may be promulgated by MCIAA or any Government Authority for the
increase of the Passenger Service Charge, Aircraft Parking Fees, and Tacking Fees.
SEC. 6. Section 131 of the National Internal Revenue Code of 1997, as amended, is hereby amended to read
as follows:
24.2.c The Grantors and the Concessionaire shall conduct the procedure for implementing
(5) the increase in Passenger Service Charge, Aircraft Parking Fees, and Tacking Fees
in such a manner as to ensure that all Relevant Consents are secured promptly to SEC. 131. Payment of Excise Taxes on Imported Articles. –
enable the Concessionaire to implement a timely increase in Passenger Service
Charge, Aircraft Parking Fees, and Tacking Fees in accordance with the parametric
(A) Persons Liable. – x x x.
formula and at such times as contemplated in Annex 21-A (Parametric Formula for
Passenger Service Charge) or Annex 21-B (Parametric Formula for Aircraft Parking
Fee and Tacking Fee), as the case may be.51 xxxx

Petitioners Not Entitled to Preliminary Injunction The provision of any special or general law to the contrary notwithstanding, the importation of cigars
and cigarettes, distilled spirits, fermented liquors and wines into the Philippines, even if destined for
tax and duty-free shops, shall be subject to all applicable taxes, duties, charges, including excise The present petition charges that the respondent judge acted with manifest partiality and with grave abuse of
taxes due thereon. This shall apply to cigars and cigarettes, distilled spirits, fermented liquors and discretion when he issued his August 11, 2005 and July 5, 2006 orders. In particular, the Republic contends
wines brought directly into the duly chartered or legislated freeports of the Subic Special Economic that the respondent judge violated its right to due process when he peremptorily allowed the private
and Freeport Zone, created under Republic Act No. 7227; the Cagayan Special Economic Zone and respondents’ motions and complaints-in-intervention and proceeded with their hearing ex parte despite the
Freeport, created under Republic Act No. 7922; and the Zamboanga City Special Economic Zone, created absence of any prior notice to it. The Republic maintains that it never received any notice of hearing, nor any
under Republic Act No. 7903, and such other freeports as may hereafter be established or created by copy of the questioned motions and complaints-in-intervention.7
law: Provided, further, That importations of cigars and cigarettes, distilled spirits, fermented liquors and wines
made directly by a government- owned and operated duty-free shop, like the Duty-Free Philippines (DFP),
shall be exempted from all applicable duties only[.] [emphasis ours; italics supplied] Further, the Republic posits that the respondent judge abused his discretion when he extended to the private
respondents the benefits of the preliminary injunction earlier issued to the lower court petitioners under the
same ₱1,000,000.00 bond the lower court petitioners posted. The Republic labels this action as a violation of
The lower court petitioners are importers and traders duly licensed to operate inside the Subic Special Section 4, Rule 58 of the Rules of Court, claiming at the same time that the bond is manifestly disproportionate
Economic and Freeport Zone (SSEFZ). to the resulting damage the Republic stood to incur considering the number of the original and the additional
lower court petitioners.8

By way of background, Congress enacted, in 1992, R.A. No. 7227, otherwise known as "The BASES
CONVERSION AND DEVELOPMENT ACT OF 1992," which provided, among others, for the creation of the Finally, in support of its prayer for the issuance of a TRO and/or a writ of preliminary injunction, the Republic
SSEFZ, as well as the Subic Bay Metropolitan Authority (SBMA). Pursuant to this law, the SBMA granted the stresses that the assailed orders continue to cause it multi-million tax losses. It justifies its prayer for the
lower court petitioners Certificates of Registration and Tax Exemption. The certificates allowed them to respondent judge’s inhibition by pointing to the latter’s act of continuously allowing parties to intervene despite
engage in the business of import and export of general merchandise (including alcohol and tobacco products) the absence of notice and to the inclusion of non-parties to the original case.
and uniformly granted them tax exemptions for these importations.

During the pendency of the present petition, the Court en banc partially granted the Republic’s petition in G.R.
On January 1, 2005, Congress passed R.A. No. 9334. Based on Section 6 of R.A. No. 9334, the SBMA issued No. 168584. By a Decision9 dated October 15, 2007, this Court set aside and nullified the respondent judge’s
a Memorandum on February 7, 2005 directing its various departments to require importers in the SSEFZ to order of May 4, 2005 and the subsequent May 11, 2005 writ of preliminary injunction. On January 15, 2008,
pay the applicable duties and taxes on their importations of tobacco and alcohol products before these the Court denied with finality the lower court petitioners’ motion for reconsideration.10
importations are cleared and released from the freeport. The memorandum prompted the lower court
petitioners to bring before the RTC their petition for declaratory relief (Civil Case No. 102-0- 05). The petition
included a prayer for the issuance of a writ of preliminary injunction and/or a TRO to enjoin the Republic The Respondent’s Position
(acting through the SBMA) from enforcing the challenged memorandum.
In their defense, the private respondents point to the procedural defects in the petition, specifically: first, the
On May 4, 2005,5 the respondent judge granted the lower court petitioners’ application for preliminary petition was filed out of time, arguing that the Republic only had 53 remaining days to file the petition from
injunction despite the Republic’s opposition, and on May 11, 2005, he issued the preliminary injunction. notice of the denial of its motion for reconsideration, maintaining that the 60-day period within which to file the
petition is counted from the notice of the denial of the August 11, 2005 order; second, the petition did not
comply with the rules on proof of filing and service; third, the Republic failed to properly serve their counsel of
The Republic filed before this Court a petition for certiorari and prohibition – docketed in this Court as G.R. record a copy of the petition; and fourth, the Republic did not observe the hierarchy of courts in filing the
No. 168584 – to annul the respondent judge’s order and the writ issued pursuant to this order. The petition instant petition.11
asked for the issuance of a TRO and/or a writ of preliminary injunction. By motion dated July 21, 2005 filed
before the lower court, the Republic asked the respondent judge to suspend the proceedings pending the
resolution of G.R. No. 168584. The private respondents further contend that the respondent judge correctly allowed their complaints-in-
intervention as the matter of intervention is addressed to the courts’ discretion; as noted in the assailed orders,
the records show that the notice of hearing was addressed to all of the parties in the original case.12
On August 5, 2005, the private respondents (in the present petition now before us) filed before the respondent
judge motions for leave to intervene and to admit complaints-in-intervention. They also asked in these motions
that the respondent judge extend to them the effects and benefits of his May 4, 2005 order, in the lower court Finally, on the Republic’s prayer for prohibition, the private respondents maintain that prohibition is improper
petitioners’ favor, and the subsequently issued May 11, 2005 writ of preliminary mandatory injunction. since this Court, in G.R. No. 168584, denied the Republic’s prayer for a writ of prohibition, noting that the
respondent judge had been suspended, pending resolution of this petition.13

Without acting on the Republic’s motion to suspend the proceedings, the respondent judge granted on August
11, 2005 the private respondents’ motions and complaints-in-intervention. The respondent judge found the The Court’s Ruling
private respondents to be similarly situated as the lower court petitioners; they stood, too, to be adversely
affected by the implementation of R.A. No. 9334.
We resolve to PARTLY GRANT the petition.

The Republic moved to reconsider6 the respondent judge’s August 11, 2005 order, arguing that it had been
Relaxation of procedural rules for compelling reasons
denied due process because it never received copies of the private respondents’ motions and complaints-in-
intervention.
We disagree with the private respondents’ procedural objections.
On July 5, 2006, the respondent judge denied the Republic’s motion for reconsideration and the previously
filed motion to suspend the proceedings. The respondent judge held that all of the parties in the case had First, we find that the present petition was filed within the reglementary period. Contrary to the private
been duly notified per the records. To justify the denial of the motion to suspend the proceedings, the respondents’ position, the 60- day period within which to file the petition for certiorari is counted from the
respondent judge pointed to the absence of any restraining order in G.R. No. 168584. The Republic Republic’s receipt of the July 5, 2006 order denying the latter’s motion for reconsideration. Section 4, Rule 65
responded to the respondent judge’s actions by filing the present petition. of the Rules of Court is clear on this point – "In case a motion for reconsideration or new trial is timely filed,
whether such motion is required or not, the sixty (60) day period shall be counted from notice of the
denial of said motion."14 We find too that the present petition complied with the rules on proof of filing and
The Petition
service of the petition. Attached to the petition – in compliance with Sections 12 and 13, Rule 13 of the Rules
of Court – are the registry receipts and the affidavit of the person who filed and served the petition by The notice requirement is even more mandatory when the movant asks for the issuance of a preliminary
registered mail. injunction and/or a TRO. Under Section 5, Rule 58 of the Rules of Court, no preliminary injunction shall be
granted without a hearing and without prior notice to the party sought to be enjoined. The prior notice under
this requirement is as important as the hearing, as no hearing can meaningfully take place, with both parties
Second, while the principle of hierarchy of courts does indeed require that recourses should be made to the present or represented, unless a prior notice of the hearing is given.
lower courts before they are made to the higher courts,15 this principle is not an absolute rule and admits of
exceptions under well-defined circumstances. In several cases, we have allowed direct invocation of this
Court’s original jurisdiction to issue writs of certiorari on the ground of special and important reasons clearly Additionally, in the same way that an original complaint must be served on the defendant, a copy of the
stated in the petition;16when dictated by public welfare and the advancement of public policy; when demanded complaint-in-intervention must be served on the adverse party with the requisite proof of service duly filed prior
by the broader interest of justice; when the challenged orders were patent nullities;17 or when analogous to any valid court action. Absent these or any reason duly explained and accepted excusing strict compliance,
exceptional and compelling circumstances called for and justified our immediate and direct handling of the the court is without authority to act on such complaint; any action taken without the required service
case.18 contravenes the law and the rules, and violates the adverse party’s basic and constitutional right to due
process.

The Republic claims that the respondent judge violated and continues to violate its right to due process by
allowing the private respondents and several others to intervene in the case sans notice to the Republic; by In the present case, records show that the OSG had never received – contrary to the private respondents’
extending to them the benefit of the original injunction without the requisite injunction bond applicable to them claim – a copy of the motions and complaints-in-intervention.31 The Republic duly and fully manifested the
as separate injunction applicants; and by continuing to suspend the Republic’s right to collect excise taxes irregularity before the respondent judge.32 Thus, the mere statement in the assailed orders that the parties
from the private respondents and from the lower court petitioners, thus adversely affecting the government’s were duly notified is insufficient on the face of the appropriate manifestation made and the supporting proof
revenues. To our mind, the demonstrated extent of the respondent judge’s actions and their effects constitute that the Republic submitted. In these lights, the motions and complaints-in-intervention cannot but be mere
special and compelling circumstances calling for our direct and immediate attention. scraps of paper that the respondent judge had no reason to consider; in admitting them despite the absence of
prior notice, the respondent judge denied the Republic of its right to due process.

Lastly, under our rules of procedure,19 service of the petition on a party, when that party is represented by a
counsel of record, is a patent nullity and is not binding upon the party wrongfully served.20 This rule, however, While we may agree with the private respondents’ claim that the matter of intervention is addressed to the
is a procedural standard that may admit of exceptions when faced with compelling reasons of substantive sound discretion of the court,33 what should not be forgotten is the requirement that the exercise of discretion
justice manifest in the petition and in the surrounding circumstances of the case.21 Procedural rules can bow to must in the first place be "sound." In other words, the basic precepts of fair play and the protection of all
substantive considerations through a liberal construction aimed at promoting their objective of securing a just, interests involved must always be considered in the exercise of discretion. Under the circumstances of the
speedy and inexpensive disposition of every action and proceeding.22 present case, these considerations demand that the original parties to the action, which include the Republic,
must have been properly informed to give them a chance to protect their interests. These interests include,
among others, the protection of the Republic’s revenue-generating authority that should have been insulated
The Republic has consistently and repeatedly maintained that it never received a copy of the motions and against damage through the filing of a proper bond. Thus, even from this narrow view that does not yet
complaints-in-intervention, as evidenced by the certification of the Docket Division of the Office of the Solicitor consider the element of fair play, the private respondents’ case must fail; judicial discretion cannot override a
General (OSG); it learned of the private respondents’ presence in this case only after it received copies of the party litigant’s right to due process.
assailed orders, and it even had to inquire from the lower court for the private respondents’ addresses.
Although their counsels did not formally receive any copy of the petition, the private respondents themselves
admitted that they received their copy of the present petition. The records show that the Republic All told, the respondent judge acted with grave abuse of discretion warranting the issuance of the corrective
subsequently complied with the rules on service when, after the private respondents’ comment, the Republic writ of certiorari. Grave abuse of discretion arises when a lower court or tribunal violates the Constitution or
served copies of its reply and memorandum to the respondents’ counsel of record. grossly disregards the law or existing jurisprudence.34 The term refers to such capricious and whimsical
exercise of judgment equivalent to lack of jurisdiction, as when the act amounts to an evasion of a positive
duty or to a virtual refusal to perform a duty enjoined by law, or to act at all in contemplation of law .35 The
Under these circumstances, we are satisfied with the Republic’s explanation on why it failed to initially comply respondent judge so acted so that the orders he issued should be declared void and of no effect.
with the rule on service of the present petition; its subsequent compliance with the rule after being informed of
the presence of counsels of record sufficiently warrants the rule’s relaxed application.23 The lack of a proper
service – unlike the situation when the Republic was simply confronted with already-admitted complaints-in- Petition for prohibition and prayer for inhibition are denied for having been mooted by subsequent events
intervention – did not result in any prejudice; the private respondents themselves were actually served with,
and duly received, their copies of the present petition, allowing them to comment and to be heard on the
petition. On November 9, 2006, the Republic filed an administrative case against the respondent judge for gross
ignorance of the law, manifest partiality and conduct prejudicial to the best interest of the service. The case,
docketed as A.M. No. RTJ-07-2063, is likewise related to Civil Case No. 102-0-05 that underlie the present
The Republic was denied due process; the respondent judge issued the assailed orders with grave petition. By a decision dated June 26, 2009, and while this case was still pending, this Court found the
abuse of discretion respondent judge guilty of gross ignorance of the law and conduct prejudicial to the best interest of the service.
The Court accordingly dismissed the respondent judge from the service.

Due process of law is a constitutionally guaranteed right reserved to every litigant.1âwphi1 Even the Republic
as a litigant is entitled to this constitutional right, in the same manner and to the same extent that this right is In light of these supervening events, the Court sees no reason to resolve the other matters raised in this
guaranteed to private litigants. The essence of due process is the opportunity to be heard, logically petition for being moot.
preconditioned on prior notice, before judgment is rendered.24

WHEREFORE, under these premises, we PARTIALLY GRANT the petition. We GRANT the writ
A motion for intervention, like any other motion, has to comply with the mandatory requirements of notice and of certiorari and accordingly SET ASIDE the orders dated August 11, 2005 and July 5, 2006 of respondent
hearing, as well as proof of its service,25 save only for those that the courts can act upon without prejudice to Judge Ramon S. Caguioa in Civil Case No. 102-0-05 for being NULL and VOID. We DISMISS the prayer for
the rights of the other parties.26 A motion which fails to comply with these requirements is a worthless piece of writ of prohibition on the ground of mootness. Costs against Metatrans Trading International Corporation and
paper that cannot and should not be acted upon.27 The reason for this is plain: a movant asks the court to take Hundred Young Subic International, Inc.
a specific course of action, often contrary to the interest of the adverse party and which the latter must then be
given the right and opportunity to oppose.28 The notice of hearing to the adverse party thus directly services
the required due process as it affords the adverse party the opportunity to properly state his agreement or SO ORDERED.
opposition to the action that the movant asks for.29 Consequently, our procedural rules provide that a motion
that does not afford the adverse party this kind of opportunity should simply be disregarded.30
Petitioners alleged too in their complaint that the JVAs fall under management contracts prohibited
FELIXBERTO CUBERO, NERISSA C. NATIVIDAD, JUDY U. G.R. No. 166833 under Republic Act No. 6657.
LIM, MANUEL R. LAHOZ, SOTERO DIOLA and BELLE
CORPORATION, Present: Invoking Article 1409[13] of the Civil Code, petitioners urged the RTC to declare the JVAs inexistent
Petitioners, and void for being contrary to law and public policy.
QUISUMBING, J., Chairperson,
CARPIO, By Order of September 15, 2004, the RTC dismissed petitioners complaint, finding
- versus - CARPIO MORALES, . . . that [as] the JVAs cover or involve land grants under the Presidential Decree No.
TINGA, and 27 and allied agrarian reform laws, the Department of Agrarian Reform, through its
LAGUNA WEST MULTI-PURPOSE COOPERATIVE, INC., and VELASCO, JR., JJ. adjudication board (DARAB), has primary jurisdiction to determine the validity or
ATTY. ABRAHAM BERMUDEZ, in his capacity as Registrar of invalidity thereof.[14]
Deeds, Tanauan City, Batangas
Respondents.
For lack of merit, the RTC denied petitioners motion for reconsideration, hence, the present
Promulgated: petition for review on certiorari which raises a pure question of law.
November 30, 2006
The petition fails.
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
It is axiomatic that what determines the nature of an action, as well as which court has jurisdiction
over it, are the allegations in the complaint and the character of the relief sought.[15] In the determination of
DECISION jurisdiction, the status or relationship of the parties, as well as the nature of the question that is the subject of
their controversy, is also considered.[16]
The Department of Agrarian Reform (DAR) is vested with primary jurisdiction to determine and
CARPIO MORALES, J.: adjudicate agrarian reform matters, with exclusive original jurisdiction over all matters involving the
The present petition raises the issue of jurisdiction over the subject matter. implementation of agrarian reform except those falling under the exclusive jurisdiction of the Department of
Agriculture and the Department of Environment and Natural Resources.[17] Original jurisdiction means
Individual petitioners Felixberto Cubero, Nerrisa[1] C. Natividad, Judy U. Lim, Manuel R. Lahoz and jurisdiction to take cognizance of a cause at its inception, try it and pass judgment upon the law and facts,
Sotero Diola are the registered owners of various parcels of land covered by twelve (12) Transfer Certificates while exclusive jurisdiction precludes the idea of co-existence and refers to jurisdiction possessed to the
of Title (TCTs).[2] The properties cover a total land area of about 78,178 square meters located in Barangay exclusion of others.[18]
Suplang, Tanauan, Batangas.
The DARAB has been created to assume the adjudicative powers and functions of the
In August 2003, each of the individual petitioners entered into a Joint Venture Development DAR.[19] Thus, the DARAB has been vested with jurisdiction to try and decide all agrarian disputes, cases,
Agreement with co-petitioner Belle Corporation to develop the properties as part of an agricultural farm lot controversies, and matters or incidents involving the implementation of the Comprehensive Agrarian Reform
subdivision project known as Plantation Hills at Tagaytay Greenlands Phase I (the Project) for eventual sale to Program (CARP).[20] Its jurisdiction encompasses cases involving the rights and obligations of persons,
the public.[3] whether natural or juridical, engaged in the management, cultivation and use of all agricultural lands covered
by Republic Act No. 6657 and other agrarian laws.[21]
With the development of the Project in full swing in mid-2004, respondent Laguna West Multi-
Purpose Cooperative, Inc. (Laguna West Cooperative) filed 9 ex-parte petitions[4] with the Regional Trial Court The RTC amplified its dismissal of petitioners complaint in this wise:
(RTC) of Tanauan City, for inscription of an adverse claim, the annotation of which the Registrar of Deeds
allegedly failed to carry over to the TCTs of individual petitioners under the Property Registration Decree[5]. There is no question that the instant case does not involve agrarian dispute
and that the parties have no tenurial relationship. The Court dismissed the complaint
In its petitions before the RTC, respondent Laguna West Cooperative claimed that as early as April not because the subject of the questioned JVAs is an agricultural land as erroneously
1996 it entered into separate Joint Venture Agreements (JVAs) with the herein individual petitioners assumed by the plaintiffs. The complaint was dismissed because it involves
predecessors-in-interest Zacarias P. Narvaez, Filizardo[6] N. Contreras, Eladio Contreras, Anacleto P. Narvaez, controversy or issue in the implementation of R.A. 6657 that is whether or not the
Victor P. Ortilla, Rafael Maranan, Felipe Maranan, Elino B. Mangubat, Joaquin N. Olaes and Salvador agricultural land beneficiaries has reneged its (sic) obligation by entering in the joint
Alberto;[7] and that it registered the JVAs in August 2000 on the previous owners titles by way of an Adverse venture agreements and whether the terms thereof are violative of Sections 27 and 73
Claim under Entry No. 199352 and/or 168016. of the said Act including the restrictions annotated on the emancipation patents
certificates[.][22] (Underscoring supplied)
Laguna West Cooperative added that the petitions were filed to rectify the omission or error and to
protect its vested, subsisting and valid rights under the JVAs.
The finding of the RTC that petitioners complaint does not involve an agrarian dispute is a narrow
Accompanying the petitions were Notices of Lis Pendens[8] addressed to the Register of Deeds, and restrictive view of the nature of an agrarian dispute. In the recent case of Islanders CARP-Farmers
Tanauan, Batangas.[9] Beneficiaries Multi-Purpose Cooperative Development, Inc. v. Lapanday Agricultural and Development
Corp.,[23] this Court elucidated on the scope of an agrarian dispute, viz:
Getting wind of the petitions filed by Laguna West Cooperative, petitioners also filed a
Complaint[10]with the RTC of Tanauan, for Annulment of Joint Venture Agreements with prayer for the The Department of Agrarian Reform Adjudication Board (DARAB) has
issuance of a TRO and/or writs of Preliminary Injunction and Preliminary Mandatory Injunction and for jurisdiction to determine and adjudicate all agrarian disputes involving the
Damages against herein respondents Laguna West Cooperative and Atty. Abraham Bermudez[11] in the latters implementation of the Comprehensive Agrarian Reform Law (CARL). Included in the
capacity as Registrar of Deeds of Tanauan. definition of agrarian disputes are those arising from
other tenurial arrangements beyond the traditional landowner-tenant or lessor-lessee
In their Complaint, petitioners asserted that the April 1996 JVAs between Laguna West relationship. Expressly, these arrangements are recognized by Republic Act No. 6657
Cooperative and individual petitioners predecessors-in-interest are void ab initio since they were executed as essential parts of agrarian reform. Thus, the DARAB has jurisdiction over disputes
within the 10-year prohibitory period under Republic Act No. 6657 (COMPREHENSIVE AGRARIAN REFORM arising from the instant Joint Production Agreement entered into by the present
LAW OF 1988),[12] the titles covering the properties having emanated from emancipation patents granted in parties.[24] (Emphasis and underscoring supplied).
November 1988 pursuant to Presidential Decree No. 27.
In that case, the petitioner filed with the RTC a complaint for declaration of nullity of a Joint
Production Agreement. Upon motion, the case was dismissed for lack of jurisdiction. The Court of Appeals
affirmed the dismissal. The petitioner elevated the matter to this Court, contending that there being no tenancy
or leasehold relationship between the parties, the case does not constitute an agrarian dispute cognizable by
the DARAB.

In denying the petition in Islanders, this Court held that while the relationship between the parties
was not one of tenancy or agricultural leasehold, the controversy nonetheless fell within the sphere of agrarian
disputes, citing, among other authorities, Department of Agrarian Reform v. Cuenca,[25] which held:

All controversies on the implementation of the Comprehensive Agrarian Reform


Program (CARP) fall under the jurisdiction of the Department of Agrarian
Reform (DAR), even though they raise questions that are
also legal or constitutional in nature. All doubts should be resolved in favor of the
DAR, since the law has granted it special and original authority to hear and
adjudicate agrarian matters.[26]

The JVAs subject of the petition for annulment of petitioners precisely involve the development and
utilization of the subject agricultural lands. As successors-in-interest of the beneficiaries of the agricultural
lands, individual petitioners seek to nullify the JVAs. Since the controversy involves the rights and obligations
of persons engaged in the management, cultivation and use of an agricultural land covered by CARP, the
case falls squarely within the jurisdictional ambit of the DAR.[27]

It bears emphasis that a resolution of the instant case principally entails a determination of the
alleged commission of prohibited acts under Sections 27 and 73[28] of Republic Act No. 6645. In cases where
allegations of violation or circumvention of land reform laws have been raised, this Court has declined to
address them, it stating that petitioners must first plead their case with the DARAB.[29] There is no reason why
this Court should now hold otherwise.

WHEREFORE, the petition is hereby DENIED.

SO ORDERED.

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