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SECOND DIVISION Petitioner presented his evidence ex parte on February 13, 1996.

On May 8,
1996, judgment was rendered in his favor, and private respondent was
[G.R. No. 131282. January 4, 2002] ordered to peacefully vacate and turn over Lot No. 1065 Cad. 537-D to
petitioner; pay petitioner P2,000 annual rental from 1988 up the time he
GABRIEL L. DUERO, petitioner, vs. HON. COURT OF APPEALS, and vacates the land, and P5,000 as attorneys fees and the cost of the
BERNARDO A. ERADEL, respondents. suit.[5]Private respondent received a copy of the decision on May 25, 1996.
DECISION On June 10, 1996, private respondent filed a Motion for New Trial, alleging
QUISUMBING, J.: that he has been occupying the land as a tenant of Artemio Laurente, Sr.,
since 1958. He explained that he turned over the complaint and summons to
This petition for certiorari assails the Decision[1] dated September 17, 1997, Laurente in the honest belief that as landlord, the latter had a better right to
of the Court of Appeals in CA-G.R. No. SP No. 2340- UDK, the land and was responsible to defend any adverse claim on it.However, the
entitled Bernardo Eradel vs. Hon. Ermelino G. Andal, setting aside all trial court denied the motion for new trial.
proceedings in Civil Case No. 1075, Gabriel L. Duero vs. Bernardo
Eradel, before the Branch 27 of the Regional Trial Court of Tandag, Surigao Meanwhile, RED Conflict Case No. 1029, an administrative case between
del Sur. petitioner and applicant-contestants Romeo, Artemio and Jury Laurente,
remained pending with the Office of the Regional Director of the Department
The pertinent facts are as follows: of Environment and Natural Resources in Davao City. Eventually, it was
forwarded to the DENR Regional Office in Prosperidad, Agusan del Sur.
Sometime in 1988, according to petitioner, private respondent Bernardo
Eradel[2] entered and occupied petitioners land covered by Tax Declaration On July 24, 1996, private respondent filed before the RTC a Petition for
No. A-16-13-302, located in Baras, San Miguel, Surigao del Sur. As shown Relief from Judgment, reiterating the same allegation in his Motion for New
in the tax declaration, the land had an assessed value of P5,240. When Trial. He averred that unless there is a determination on who owned the land,
petitioner politely informed private respondent that the land was his and he could not be made to vacate the land. He also averred that the judgment of
requested the latter to vacate the land, private respondent refused, but instead the trial court was void inasmuch as the heirs of Artemio Laurente, Sr., who
threatened him with bodily harm. Despite repeated demands, private are indispensable parties, were not impleaded.
respondent remained steadfast in his refusal to leave the land.
On September 24, 1996, Josephine, Ana Soledad and Virginia, all surnamed
On June 16, 1995, petitioner filed before the RTC a complaint for Recovery Laurente, grandchildren of Artemio who were claiming ownership of the
of Possession and Ownership with Damages and Attorneys Fees against land, filed a Motion for Intervention. The RTC denied the motion.
private respondent and two others, namely, Apolinario and Inocencio
Ruena. Petitioner appended to the complaint the aforementioned tax On October 8, 1996, the trial court issued an order denying the Petition for
declaration. The counsel of the Ruenas asked for extension to file their Relief from Judgment. In a Motion for Reconsideration of said order, private
Answer and was given until July 18, 1995. Meanwhile, petitioner and the respondent alleged that the RTC had no jurisdiction over the case, since the
Ruenas executed a compromise agreement, which became the trial courts value of the land was only P5,240 and therefore it was under the jurisdiction
basis for a partial judgment rendered on January 12, 1996. In this agreement, of the municipal trial court. On November 22, 1996, the RTC denied the
the Ruenas through their counsel, Atty. Eusebio Avila, entered into a motion for reconsideration.
Compromise Agreement with herein petitioner, Gabriel Duero. Inter alia, the On January 22, 1997, petitioner filed a Motion for Execution, which the RTC
agreement stated that the Ruenas recognized and bound themselves to respect granted on January 28. On February 18, 1997, Entry of Judgment was made
the ownership and possession of Duero.[3] Herein private respondent Eradel of record and a writ of execution was issued by the RTC on February 27,
was not a party to the agreement, and he was declared in default for failure to 1997. On March 12, 1997, private respondent filed his petition for certiorari
file his answer to the complaint.[4] before the Court of Appeals.
The Court of Appeals gave due course to the petition, maintaining that At the outset, however, we note that petitioner through counsel submitted to
private respondent is not estopped from assailing the jurisdiction of the RTC, this Court pleadings that contain inaccurate statements. Thus, on page 5 of
Branch 27 in Tandag, Surigao del Sur, when private respondent filed with his petition,[8] we find that to bolster the claim that the appellate court erred
said court his Motion for Reconsideration And/Or Annulment of in holding that the RTC had no jurisdiction, petitioner pointed to Annex
Judgment. The Court of Appeals decreed as follows: E [9] of his petition which supposedly is the Certification issued by the
Municipal Treasurer of San Miguel, Surigao, specifically containing the
IN THE LIGHT OF ALL THE FOREGOING, the Petition is notation, Note: Subject for General Revision Effective 1994. But it appears
GRANTED. All proceedings in Gabriel L. Duero vs. Bernardo Eradel, et. al. that Annex E of his petition is not a Certification but a xerox copy of a
Civil Case 1075 filed in the Court a quo, including its Decision, Annex E of Declaration of Real Property. Nowhere does the document contain a
the petition, and its Orders and Writ of Execution and the turn over of the notation, Note: Subject for General Revision Effective 1994. Petitioner also
property to the Private Respondent by the Sheriff of the Court a quo, are asked this Court to refer to Annex F,[10] where he said the zonal value of the
declared null and void and hereby SET ASIDE, No pronouncement as to disputed land was P1.40 per sq.m., thus placing the computed value of the
costs. land at the time the complaint was filed before the RTC at P57,113.98, hence
beyond the jurisdiction of the municipal court and within the jurisdiction of
SO ORDERED.[6] the regional trial court. However, we find that these annexes are both merely
Petitioner now comes before this Court, alleging that the Court of Appeals xerox copies. They are obviously without evidentiary weight or value.
acted with grave abuse of discretion amounting to lack or in excess of Coming now to the principal issue, petitioner contends that respondent
jurisdiction when it held that: appellate court acted with grave abuse of discretion. By grave abuse of
I. discretion is meant such capricious and whimsical exercise of judgment
which is equivalent to an excess or a lack of jurisdiction. The abuse of
THE LOWER COURT HAS NO JURISDICTION OVER THE SUBJECT discretion must be so patent and gross as to amount to an evasion of a
MATTER OF THE CASE. positive duty or a virtual refusal to perform a duty enjoined by law, or to act
at all in contemplation of law as where the power is exercised in an arbitrary
II and despotic manner by reason of passion or hostility.[11] But here we find
that in its decision holding that the municipal court has jurisdiction over the
PRIVATE RESPONDENT WAS NOT THEREBY ESTOPPED FROM case and that private respondent was not estopped from questioning the
QUESTIONING THE JURISDICTION OF THE LOWER COURT EVEN jurisdiction of the RTC, respondent Court of Appeals discussed the facts on
AFTER IT SUCCESSFULLY SOUGHT AFFIRMATIVE RELIEF which its decision is grounded as well as the law and jurisprudence on the
THEREFROM. matter.[12] Its action was neither whimsical nor capricious.
III Was private respondent estopped from questioning the jurisdiction of the
RTC? In this case, we are in agreement with the Court of Appeals that he
THE FAILURE OF PRIVATE RESPONDENT TO FILE HIS ANSWER IS
was not. While participation in all stages of a case before the trial court,
JUSTIFIED.[7]
including invocation of its authority in asking for affirmative relief,
The main issue before us is whether the Court of Appeals gravely abused its effectively bars a party by estoppel from challenging the courts
discretion when it held that the municipal trial court had jurisdiction, and that jurisdiction,[13] we note that estoppel has become an equitable defense that is
private respondent was not estopped from assailing the jurisdiction of the both substantive and remedial and its successful invocation can bar a right
RTC after he had filed several motions before it. The secondary issue is and not merely its equitable enforcement.[14] Hence, estoppel ought to be
whether the Court of Appeals erred in holding that private respondents applied with caution. For estoppel to apply, the action giving rise thereto
failure to file an answer to the complaint was justified. must be unequivocal and intentional because, if misapplied, estoppel may
become a tool of injustice.[15]
In the present case, private respondent questions the jurisdiction of RTC in court is not a question of acquiescence as a matter of fact, but an issue of
Tandag, Surigao del Sur, on legal grounds. Recall that it was petitioner who conferment as a matter of law.[22] Also, neither waiver nor estoppel shall
filed the complaint against private respondent and two other parties before apply to confer jurisdiction upon a court, barring highly meritorious and
the said court,[16] believing that the RTC had jurisdiction over his exceptional circumstances.[23] The Court of Appeals found support for its
complaint. But by then, Republic Act 7691[17] amending BP 129 had become ruling in our decision in Javier vs. Court of Appeals, thus:
effective, such that jurisdiction already belongs not to the RTC but to the
MTC pursuant to said amendment. Private respondent, an unschooled farmer, x x x The point simply is that when a party commits error in filing his suit or
in the mistaken belief that since he was merely a tenant of the late Artemio proceeding in a court that lacks jurisdiction to take cognizance of the same,
Laurente Sr., his landlord, gave the summons to a Hipolito Laurente, one of such act may not at once be deemed sufficient basis of estoppel. It could have
the surviving heirs of Artemio Sr., who did not do anything about the been the result of an honest mistake, or of divergent interpretations of
summons. For failure to answer the complaint, private respondent was doubtful legal provisions. If any fault is to be imputed to a party taking
declared in default. He then filed a Motion for New Trial in the same court such course of action, part of the blame should be placed on the court
and explained that he defaulted because of his belief that the suit ought to be which shall entertain the suit, thereby lulling the parties into believing
answered by his landlord. In that motion he stated that he had by then the that they pursued their remedies in the correct forum. Under the rules, it
evidence to prove that he had a better right than petitioner over the land is the duty of the court to dismiss an action whenever it appears that the court
because of his long, continuous and uninterrupted possession as bona- has no jurisdiction over the subject matter. (Sec. 2, Rule 9, Rules of
fide tenant-lessee of the land.[18] But his motion was denied. He tried an Court) Should the Court render a judgment without jurisdiction, such
alternative recourse. He filed before the RTC a Motion for Relief from judgment may be impeached or annulled for lack of jurisdiction (Sec. 30,
Judgment. Again, the same court denied his motion, hence he moved for Rule 132, Ibid), within ten (10) years from the finality of the same.
reconsideration of the denial. In his Motion for Reconsideration, he raised for [Emphasis ours.][24]
the first time the RTCs lack of jurisdiction. This motion was again
denied. Note that private respondent raised the issue of lack of jurisdiction, Indeed, the trial court was duty-bound to take judicial notice of the
not when the case was already on appeal, but when the case was still before parameters of its jurisdiction and its failure to do so, makes its decision a
the RTC that ruled him in default, denied his motion for new trial as well as lawless thing.[25]
for relief from judgment, and denied likewise his two motions for Since a decision of a court without jurisdiction is null and void, it could
reconsideration. After the RTC still refused to reconsider the denial of logically never become final and executory, hence appeal therefrom by writ
private respondents motion for relief from judgment, it went on to issue the of error would be out of the question.Resort by private respondent to a
order for entry of judgment and a writ of execution. petition for certiorari before the Court of Appeals was in order.
Under these circumstances, we could not fault the Court of Appeals in In holding that estoppel did not prevent private respondent from questioning
overruling the RTC and in holding that private respondent was not estopped the RTCs jurisdiction, the appellate court reiterated the doctrine that estoppel
from questioning the jurisdiction of the regional trial court. The fundamental must be applied only in exceptional cases, as its misapplication could result
rule is that, the lack of jurisdiction of the court over an action cannot be in a miscarriage of justice. Here, we find that petitioner, who claims
waived by the parties, or even cured by their silence, acquiescence or even by ownership of a parcel of land, filed his complaint before a court without
their express consent.[19] Further, a party may assail the jurisdiction of the appropriate jurisdiction. Defendant, a farmer whose tenancy status is still
court over the action at any stage of the proceedings and even on pending before the proper administrative agency concerned, could have
appeal.[20] The appellate court did not err in saying that the RTC should have moved for dismissal of the case on jurisdictional grounds. But the farmer as
declared itself barren of jurisdiction over the action. Even if private defendant therein could not be expected to know the nuances of jurisdiction
respondent actively participated in the proceedings before said court, the and related issues. This farmer, who is now the private respondent, ought not
doctrine of estoppel cannot still be properly invoked against him because the to be penalized when he claims that he made an honest mistake when he
question of lack of jurisdiction may be raised at anytime and at any stage of initially submitted his motions before the RTC, before he realized that the
the action.[21] Precedents tell us that as a general rule, the jurisdiction of a controversy was outside the RTCs cognizance but within the jurisdiction of
the municipal trial court. To hold him in estoppel as the RTC did would
amount to foreclosing his avenue to obtain a proper resolution of his
case. Furthermore, if the RTCs order were to be sustained, he would be
evicted from the land prematurely, while RED Conflict Case No. 1029 would
remain unresolved. Such eviction on a technicality if allowed could result in
an injustice, if it is later found that he has a legal right to till the land he now
occupies as tenant-lessee.

Having determined that there was no grave abuse of discretion by the


appellate court in ruling that private respondent was not estopped from
questioning the jurisdiction of the RTC, we need not tarry to consider in
detail the second issue. Suffice it to say that, given the circumstances in this
case, no error was committed on this score by respondent appellate
court. Since the RTC had no jurisdiction over the case, private respondent
had justifiable reason in law not to file an answer, aside from the fact that he
believed the suit was properly his landlords concern.

WHEREFORE, the petition is DISMISSED. The assailed decision of the


Court of Appeals is AFFIRMED. The decision of the Regional Trial Court in
Civil Case No. 1075 entitled Gabriel L. Duero vs. Bernardo Eradel, its Order
that private respondent turn over the disputed land to petitioner, and the Writ
of Execution it issued, are ANNULLED and SET ASIDE. Costs against
petitioner.

SO ORDERED.
SECOND DIVISION purchase the subject property; and that there was a negotiation for the
purchase of the lots occupied by them but when the negotiation reached a
[G.R. No. 129638. December 8, 2003] passive stage, they decided to continue payment of rentals and tendered
payment to petitioners counsel and thereafter initiated a petition for
ANTONIO T. DONATO, petitioner, vs. COURT OF APPEALS, consignation of the rentals in Civil Case No. 144049 while they await the
FILOMENO ARCEPE, TIMOTEO BARCELONA, IGNACIO outcome of the negotiation to purchase.
BENDOL, THELMA P. BULICANO, ROSALINDA CAPARAS,
ROSITA DE COSTO, FELIZA DE GUZMAN, LETICIA DE LOS Following trial under the Rule on Summary Procedure, the MeTC rendered
REYES, ROGELIO GADDI, PAULINO GAJARDO, GERONIMO judgment on September 19, 1994 against the 23 non-answering defendants,
IMPERIAL, HOMER IMPERIAL, ELVIRA LESLIE, CEFERINO ordering them to vacate the premises occupied by each of them, and to pay
LUGANA, HECTOR PIMENTEL, NIMFA PIMENTEL, AURELIO G. jointly and severally P10,000.00 per month from the date they last paid their
ROCERO, ILUMINADA TARA, JUANITO VALLESPIN, AND rent until the date they actually vacate, plus interest thereon at the legal rate
NARCISO YABUT, respondents. allowed by law, as well as P10,000.00 as attorneys fees and the costs of the
suit. As to the 20 private respondents, the MeTC issued a separate
DECISION judgment[6] on the same day sustaining their rights under the Land Reform
AUSTRIA-MARTINEZ, J.: Law, declaring petitioners cause of action as not duly warranted by the facts
and circumstances of the case and dismissing the case without prejudice.
Before us is a petition for review on certiorari filed on July 17, 1997 which
should be a petition for certiorari under Rule 65 of the Rules of Court. It Not satisfied with the judgment dismissing the complaint as against the
assails the Resolutions[1] dated March 21, 1997 and June 23, 1997 issued by private respondents, petitioner appealed to the Regional Trial Court (Branch
the Court of Appeals in CA-G.R. SP No. 41394.[2] 47) of Manila (RTC).[7] In a Decision[8] dated July 5, 1996, the RTC
sustained the decision of the MeTC.
The factual background of the case is as follows:
Undaunted, petitioner filed a petition for review with the Court of Appeals
Petitioner Antonio T. Donato is the registered owner of a real property (CA for brevity), docketed as CA-G.R. SP No. 41394. In a Resolution dated
located at Ciriaco Tuason Street, San Andres, Manila, covered by Transfer March 21, 1997, the CA dismissed the petition on two grounds: (a) the
Certificate of Title No. 131793 issued by the Register of Deeds of the City certification of non-forum shopping was signed by petitioners counsel and
of Manila on November 24, 1978. On June 7, 1994, petitioner filed a not by petitioner himself, in violation of Revised Circular No. 28-91;[9] and,
complaint before the Metropolitan Trial Court (Branch 26) (b) the only annex to the petition is a certified copy of the questioned
of Manila (MeTC) for forcible entry and unlawful detainer against 43 named decision but copies of the pleadings and other material portions of the record
defendants and all unknown occupants of the subject property.[3] as would support the allegations of the petition are not annexed, contrary to
Section 3, paragraph b, Rule 6 of the Revised Internal Rules of the Court of
Petitioner alleges that: private respondents had oral contracts of lease that Appeals (RIRCA).[10]
expired at the end of each month but were impliedly renewed under the same
terms by mere acquiescence or tolerance; sometime in 1992, they stopped On April 17, 1997, petitioner filed a Motion for Reconsideration,[11] attaching
paying rent; on April 7, 1994, petitioner sent them a written demand to thereto a photocopy of the certification of non-forum shopping duly signed
vacate; the non-compliance with said demand letter constrained him to file by petitioner himself[12] and the relevant records of the MeTC and the
the ejectment case against them.[4] RTC.[13] Five days later, or on April 22, 1997, petitioner filed a
Supplement[14] to his motion for reconsideration submitting the duly
Of the 43 named defendants, only 20 (private respondents,[5] for brevity) authenticated original of the certification of non-forum shopping signed by
filed a consolidated Answer dated June 29, 1994 wherein they denied non- petitioner.[15]
payment of rentals. They contend that they cannot be evicted because the
Urban Land Reform Law guarantees security of tenure and priority right to
In a Resolution[16] dated June 23, 1997 the CA denied petitioners motion for TENURE EVEN IF THE TERM OF THE LEASE IS MONTH-TO-MONTH
reconsideration and its supplement, ruling that petitioners subsequent WHICH EXPIRES AT THE END OF EACH MONTH. IN THIS REGARD,
compliance did not cure the defect in the instant petition.[17]
A. RESPONDENT COURT OF APPEALS SHOULD HAVE RULED
Hence, the present petition anchored on the following grounds: THAT THE RTC MANILA COMMITTED REVERSIBLE ERROR IN
NOT RULING THAT TENANTS UNDER P.D. 1517 MAY BE EVICTED
I. FOR NON-PAYMENT OF RENT, TERMINATION OF LEASE OR
OTHER GROUNDS FOR EJECTMENT.
RESPONDENT COURT OF APPEALS GRAVELY ERRED IN
DISMISSING THE PETITION BASED ON HYPER-TECHNICAL B. RESPONDENT COURT OF APPEALS SHOULD HAVE RULED
GROUNDS BECAUSE: THAT THE RTC MANILA COMMITTED REVERSIBLE ERROR IN
NOT RULING THAT THE ALLEGED PRIORITY RIGHT TO BUY
A. PETITIONER HAS SUBSTANTIALLY COMPLIED WITH SUPREME THE LOT THEY OCCUPY DOES NOT APPLY WHERE THE
COURT CIRCULAR NO. 28-91. MORE, PETITIONER SUBSEQUENTLY LANDOWNER DOES NOT INTEND TO SELL THE SUBJECT
SUBMITTED DURING THE PENDENCY OF THE PROCEEDINGS A PROPERTY, AS IN THE CASE AT BAR.
DULY AUTHENTICATED CERTIFICATE OF NON-FORUM SHOPPING
WHICH HE HIMSELF SIGNED AND EXECUTED IN THE UNITED C. RESPONDENT COURT OF APPEALS SHOULD HAVE RULED
STATES. THAT THE RTC MANILA COMMITTED REVERSIBLE ERROR IN
RULING THAT THE SUBJECT PROPERTY IS LOCATED WITHIN A
B. PETITIONER HAS SUBSTANTIALLY COMPLIED WITH SECTION ZONAL IMPROVEMENT AREA OR APD.
3, RULE 6 OF THE REVISED INTERNAL RULES OF THE COURT OF
APPEALS. MORE, PETITIONER SUBSEQUENTLY SUBMITTED D. RESPONDENT COURT OF APPEALS SHOULD HAVE RULED
DURING THE PENDENCY OF THE PROCEEDINGS COPIES OF THE THAT THE RTC MANILA COMMITTED REVERSIBLE ERROR IN
RELEVANT DOCUMENTS IN THE CASES BELOW. NOT RULING THAT PRIVATE RESPONDENTS NON-COMPLIANCE
WITH THE CONDITIONS UNDER THE LAW RESULT IN THE
C. PETITIONER HAS A MERITORIOUS APPEAL, AND HE STANDS WAIVER OF PROTECTION AGAINST EVICTION.
TO LOSE SUBSTANTIAL PROPERTY IF THE APPEAL IS NOT GIVEN
DUE COURSE. THE RULES OF PROCEDURE MUST BE LIBERALLY E. RESPONDENT COURT OF APPEALS SHOULD HAVE RULED
CONSTRUED TO DO SUBSTANTIAL JUSTICE. THAT THE RTC MANILA COMMITTED REVERSIBLE ERROR IN
NOT RULING THAT PRIVATE RESPONDENTS CANNOT BE
II. ENTITLED TO PROTECTION UNDER P.D. 2016 SINCE THE
RESPONDENT COURT OF APPEALS GRAVELY ERRED IN NOT GOVERNMENT HAS NO INTENTION OF ACQUIRING THE SUBJECT
RULING THAT ALL THE ELEMENTS OF UNLAWFUL DETAINER PROPERTY.
ARE PRESENT IN THE CASE AT BAR. F. RESPONDENT COURT OF APPEALS SHOULD HAVE RULED
III. THAT THE RTC MANILA COMMITTED REVERSIBLE ERROR IN
FINDING THAT THERE IS AN ON-GOING NEGOTIATION FOR
RESPONDENT COURT OF APPEALS ERRED IN NOT RULING THAT THE SALE OF THE SUBJECT PROPERTY AND THAT IT RENDERS
THE RTC MANILA, BRANCH 47, COMMITTED REVERSIBLE ERROR THE EVICTION OF PRIVATE RESPONDENTS PREMATURE.
IN AFFIRMING THE FINDING OF MTC MANILA, BRANCH 26, THAT
PRIVATE RESPONDENTS CANNOT BE EJECTED FROM THE G. RESPONDENT COURT OF APPEALS SHOULD HAVE RULED
SUBJECT PROPERTY WITHOUT VIOLATING THEIR SECURITY OF THAT THE RTC MANILA COMMITTED REVERSIBLE ERROR IN
NOT RULING THAT THE ALLEGED CASE FOR CONSIGNATION
DOES NOT BAR THE EVICTION OF PRIVATE RESPONDENTS.
IV. Inasmuch as the present petition principally assails the dismissal of the
petition on ground of procedural flaws involving the jurisdiction of the
RESPONDENT COURT OF APPEALS GRAVELY ERRED IN NOT court a quo to entertain the petition, it falls within the ambit of a special civil
FINDING THAT RESPONDENTS SHOULD PAY PETITIONER A action for certiorari under Rule 65 of the Rules of Court.
REASONABLE COMPENSATION FOR THEIR USE AND OCCUPANCY
OF THE SUBJECT PROPERTY IN THE AMOUNT OF AT At the time the instant petition for certiorari was filed, i.e., on July 17, 1997,
LEAST P10,000.00 PER MONTH FROM THE DATE THEY LAST PAID the prevailing rule is the newly promulgated 1997 Rules of Civil
RENT UNTIL THE TIME THEY ACTUALLY VACATE THE SAME, Procedure. However, considering that the CA Resolution being assailed was
WITH LEGAL INTEREST AT THE MAXIMUM RATE ALLOWED BY rendered on March 21, 1997, the applicable rule is the three-
LAW UNTIL PAID. month reglementary period, established by jurisprudence.[21] Petitioner
received notice of the assailed CA Resolution dismissing his petition for
V. review on April 4, 1997. He filed his motion reconsideration on April 17,
1997, using up only thirteen days of the 90-day period. Petitioner received
RESPONDENT COURT OF APPEALS GRAVELY ERRED IN NOT the CA Resolution denying his motion on July 3, 1997 and fourteen days
FINDING THAT RESPONDENTS SHOULD PAY PETITIONER later, or on July 17, 1997, he filed a motion for 30-day extension of time to
ATTORNEYS FEES AND EXPENSES OF LITIGATION OF AT file a petition for review which was granted by us; and petitioner duly filed
LEAST P20,000.00, PLUS COSTS.[18] his petition on August 15, 1997, which is well-within the period of extension
Petitioner submits that a relaxation of the rigid rules of technical procedure is granted to him.
called for in view of the attendant circumstances showing that the objectives We now go to the merits of the case.
of the rule on certification of non-forum shopping and the rule requiring
material portions of the record be attached to the petition have not been We find the instant petition partly meritorious.
glaringly violated and, more importantly, the petition is meritorious.
The requirement regarding the need for a certification of non-forum shopping
The proper recourse of an aggrieved party from a decision of the CA is a in cases filed before the CA and the corresponding sanction for non-
petition for review on certiorari under Rule 45 of the Rules of compliance thereto are found in the then prevailing Revised Circular No. 28-
Court. However, if the error, subject of the recourse, is one of jurisdiction, or 91.[22] It provides that the petitioner himself must make the certification
the act complained of was perpetrated by a court with grave abuse of against forum shopping and a violation thereof shall be a cause for the
discretion amounting to lack or excess of jurisdiction, the proper remedy summary dismissal of the multiple petition or complaint. The rationale for
available to the aggrieved party is a petition for certiorari under Rule 65 of the rule of personal execution of the certification by the petitioner himself is
the said Rules. As enunciated by the Court in Fortich vs. Corona:[19] that it is only the petitioner who has actual knowledge of whether or not he
has initiated similar actions or proceedings in other courts or tribunals; even
Anent the first issue, in order to determine whether the recourse of petitioners counsel of record may be unaware of such fact.[23] The Court has ruled that
is proper or not, it is necessary to draw a line between an error of judgment with respect to the contents of the certification, the rule on substantial
and an error of jurisdiction. An error of judgment is one which the court may compliance may be availed of. This is so because the requirement of strict
commit in the exercise of its jurisdiction, and which error is reviewable only compliance with the rule regarding the certification of non-forum shopping
by an appeal. On the other hand, an error of jurisdiction is one where the act simply underscores its mandatory nature in that the certification cannot be
complained of was issued by the court, officer or a quasi-judicial altogether dispensed with or its requirements completely disregarded, but it
body without or in excess of jurisdiction, or with grave abuse of discretion does not thereby interdict substantial compliance with its provisions under
which is tantamount to lack or in excess of jurisdiction. This error is justifiable circumstances.[24]
correctible only by the extraordinary writ of certiorari.[20] (Emphasis
supplied). The petition for review filed before the CA contains a certification against
forum shopping but said certification was signed by petitioners counsel. In
submitting the certification of non-forum shopping duly signed by himself in Truly, in dismissing the petition for review, the CA had committed grave
his motion for reconsideration,[25] petitioner has aptly drawn the Courts abuse of discretion amounting to lack of jurisdiction in putting a premium on
attention to the physical impossibility of filing the petition for review within technicalities at the expense of a just resolution of the case.
the 15-day reglementary period to appeal considering that he is a resident of
1125 South Jefferson Street, Roanoke, Virginia, U.S.A. were he to personally Needless to stress, "a litigation is not a game of technicalities."[34] When
accomplish and sign the certification. technicality deserts its function of being an aid to justice, the Court is
justified in exempting from its operations a particular case.[35] Technical rules
We fully agree with petitioner that it was physically impossible for the of procedure should be used to promote, not frustrate justice. While the swift
petition to have been prepared and sent to the petitioner in the United States, unclogging of court dockets is a laudable objective, granting substantial
for him to travel from Virginia, U.S.A. to the nearest Philippine Consulate in justice is an even more urgent ideal.[36]
Washington, D.C., U.S.A., in order to sign the certification before the
Philippine Consul, and for him to send back the petition to the Philippines The Courts pronouncement in Republic vs. Court of Appeals[37] is worth
within the 15-day reglementary period. Thus, we find that petitioner has echoing: cases should be determined on the merits, after full opportunity
adequately explained his failure to personally sign the certification which to all parties for ventilation of their causes and defenses, rather than on
justifies relaxation of the rule. technicality or some procedural imperfections. In that way, the ends of
justice would be better served.[38] Thus, what should guide judicial action is
We have stressed that the rules on forum shopping, which were precisely that a party litigant is given the fullest opportunity to establish the merits of
designed to promote and facilitate the orderly administration of justice, his action or defense rather than for him to lose life, honor or property on
should not be interpreted with such absolute literalness as to subvert its own mere technicalities.[39]This guideline is especially true when the petitioner
ultimate and legitimate objective[26] which is simply to prohibit and penalize has satisfactorily explained the lapse and fulfilled the requirements in his
the evils of forum-shopping.[27] The subsequent filing of the certification duly motion for reconsideration,[40] as in this case.
signed by the petitioner himself should thus be deemed substantial
compliance, pro hac vice. In addition, petitioner prays that we decide the present petition on the merits
without need of remanding the case to the CA. He insists that all the elements
In like manner, the failure of the petitioner to comply with Section 3, of unlawful detainer are present in the case. He further argues that the alleged
paragraph b, Rule 6 of the RIRCA, that is, to append to his petition copies of priority right to buy the lot they occupy does not apply where the landowner
the pleadings and other material portions of the records as would support the does not intend to sell the subject property, as in the case; that respondents
petition, does not justify the outright dismissal of the petition. It must be cannot be entitled to protection under P.D. No. 2016 since the government
emphasized that the RIRCA gives the appellate court a certain leeway to has no intention of acquiring the subject property, nor is the subject property
require parties to submit additional documents as may be necessary in the located within a zonal improvement area; and, that assuming that there is a
interest of substantial justice. Under Section 3, paragraph d of Rule 3 of the negotiation for the sale of the subject property or a pending case for
RIRCA,[28] the CA may require the parties to complete the annexes as the consignation of rentals, these do not bar the eviction of respondents.
court deems necessary, and if the petition is given due course, the CA may
require the elevation of a complete record of the case as provided for under We are not persuaded. We shall refrain from ruling on the foregoing issues in
Section 3(d)(5) of Rule 6 of the RIRCA.[29] At any rate, petitioner attached the present petition for certiorari. The issues involved are factual issues
copies of the pleadings and other material portions of the records below with which inevitably require the weighing of evidence. These are matters that are
his motion for reconsideration.[30] In Jaro vs. Court of Appeals,[31] the Court beyond the province of this Court in a special civil action for certiorari.
reiterated the doctrine laid down in Cusi-Hernandez vs. Diaz[32] and Piglas- These issues are best addressed to the CA in the petition for review filed
Kamao vs. National Labor Relations Commission[33] that subsequent before it. As an appellate court, it is empowered to require parties to submit
submission of the missing documents with the motion for reconsideration additional documents, as it may find necessary, or to receive evidence, to
amounts to substantial compliance which calls for the relaxation of the rules promote the ends of justice, pursuant to the last paragraph of Section 9,
of procedure. We find no cogent reason to depart from this doctrine. B.P. Blg. 129, otherwise known as The Judiciary Reorganization Act of
1980, to wit:
The Intermediate Appellate Court shall have the power to try cases and
conduct hearings, receive evidence and perform any and all acts necessary to
resolve factual issues raised in cases falling within its original and appellate
jurisdiction, including the power to grant and conduct new trials or further
proceedings.

WHEREFORE, the petition is PARTLY GRANTED. The Resolutions


dated March 21, 1997 and June 23, 1997 of the Court of Appeals in CA-G.R.
SP No. 41394 are REVERSED and SET ASIDE. The case is REMANDED
to the Court of Appeals for further proceedings in CA-G.R. No. 41394,
entitled, Antonio T. Donato vs. Hon. Judge of the Regional Trial Court of
Manila, Branch 47, Filomeno Arcepe, et al.

SO ORDERED.
THIRD DIVISION Aware of such fact, the plaintiff nonetheless continued to stay in the premises
of Lot 18 on the proposal that he would also buy the same. Plaintiff however
[G.R. No. 144025. December 27, 2002] failed to buy Lot 18 and likewise defaulted in the payment of his loan with
the SSS involving Lot 19. Consequently Lot 19 was foreclosed and sold at
SPS. RENE GONZAGA and LERIO GONZAGA, petitioners, vs. HON. public auction. Thereafter TCT No. T-29950 was cancelled and in lieu
COURT OF APPEALS, Second Division, Manila, HON. QUIRICO G. thereof TCT No. T-86612 (Exh. 9) was issued in favor of SSS. This being the
DEFENSOR, Judge, RTC, Branch 36, Sixth Judicial Region, Iloilo City, situation obtaining, the reformation of instruments, even if allowed, or the
and LUCKY HOMES, INC., represented by WILSON JESENA, JR., as swapping of Lot 18 and Lot 19 as earlier proposed by the plaintiff, is no
Manager, respondents. longer feasible considering that plaintiff is no longer the owner of Lot 19,
DECISION otherwise, defendant will be losing Lot 18 without any substitute therefore
(sic). Upon the other hand, plaintiff will be unjustly enriching himself having
CORONA, J.: in its favor both Lot 19 which was earlier mortgaged by him and
subsequently foreclosed by SSS, as well as Lot 18 where his house is
Before this Court is a petition for review on certiorari seeking the reversal of presently standing.
the decision[1] of the Court of Appeals dated December 29, 1999 and its
resolution dated June 1, 2000 in CA-G.R. SP No. 54587. The logic and common sense of the situation lean heavily in favor of the
defendant. It is evident that what plaintiff had bought from the defendant is
The records disclose that, sometime in 1970, petitioner-spouses purchased a Lot 19 covered by TCT No. 28254 which parcel of land has been properly
parcel of land from private respondent Lucky Homes, Inc., situated in Iloilo indicated in the instruments and not Lot 18 as claimed by the plaintiff. The
and containing an area of 240 square meters. Said lot was specifically contracts being clear and unmistakable, they reflect the true intention of the
denominated as Lot No. 19 under Transfer Certificate of Title (TCT) No. parties, besides the plaintiff failed to assail the contracts on mutual mistake,
28254 and was mortgaged to the Social Security System (SSS) as security for hence the same need no longer be reformed.[3]
their housing loan. Petitioners then started the construction of their house, not
on Lot No. 19 but on Lot No. 18, as private respondent mistakenly identified On June 22, 1998, a writ of execution was issued by the trial court. Thus, on
Lot No. 18 as Lot No. 19.Upon realizing its error, private respondent, September 17, 1998, petitioners filed an urgent motion to recall writ of
through its general manager, informed petitioners of such mistake but the execution, alleging that the court a quo had no jurisdiction to try the case as
latter offered to buy Lot No. 18 in order to widen their premises. Thus, it was vested in the Housing and Land Use Regulatory Board (HLURB)
petitioners continued with the construction of their house. However, pursuant to PD 957 (The Subdivision and Condominium Buyers Protective
petitioners defaulted in the payment of their housing loan from Decree). Conformably, petitioners filed a new complaint against private
SSS. Consequently, Lot No. 19 was foreclosed by SSS and petitioners respondent with the HLURB. Likewise, on June 30, 1999, petitioner-spouses
certificate of title was cancelled and a new one was issued in the name of filed before the Court of Appeals a petition for annulment of judgment,
SSS. After Lot No. 19 was foreclosed, petitioners offered to swap Lot Nos. premised on the ground that the trial court had no jurisdiction to try and
18 and 19 and demanded from private respondent that their contract of sale decide Civil Case No. 17115.
be reformed and another deed of sale be executed with respect to Lot No. 18,
considering that their house was built therein.However, private respondent In a decision rendered on December 29, 1999, the Court of Appeals denied
refused. This prompted petitioners to file, on June 13, 1996, an action for the petition for annulment of judgment, relying mainly on the jurisprudential
reformation of contract and damages with the Regional Trial Court of Iloilo doctrine of estoppel as laid down in the case of Tijam vs. Sibonghanoy.[4]
City, Branch 36, which was docketed as Civil Case No. 17115. Their subsequent motion for reconsideration having been denied, petitioners
[2]
On January 15, 1998, the trial court rendered its decision dismissing the filed this instant petition, contending that the Court of Appeals erred in
complaint for lack of merit and ordering herein petitioners to pay private dismissing the petition by applying the principle of estoppel, even if the
respondent the amount of P10,000 as moral damages and another P10,000 as Regional Trial Court, Branch 36 of Iloilo City had no jurisdiction to decide
attorneys fees. The pertinent conclusion of the trial court reads as follows: Civil Case No. 17115.
At the outset, it should be stressed that petitioners are seeking from us the proceedings which lasted for two years. It was only after the trial court
annulment of a trial court judgment based on lack of jurisdiction. Because it rendered its decision and issued a writ of execution against them in 1998 did
is not an appeal, the correctness of the judgment is not in issue petitioners first raise the issue of jurisdiction ─ and it was only because said
here. Accordingly, there is no need to delve into the propriety of the decision decision was unfavorable to them. Petitioners thus effectively waived their
rendered by the trial court. right to question the courts jurisdiction over the case they themselves filed.

Petitioners claim that the recent decisions of this Court have already Petitioners should bear the consequence of their act. They cannot be allowed
abandoned the doctrine laid down in Tijam vs. Sibonghanoy.[5] We do not to profit from their omission to the damage and prejudice of the private
agree. In countless decisions, this Court has consistently held that, while an respondent. This Court frowns upon the undesirable practice of a party
order or decision rendered without jurisdiction is a total nullity and may be submitting his case for decision and then accepting the judgment but only if
assailed at any stage, active participation in the proceedings in the court favorable, and attacking it for lack of jurisdiction if not.[13]
which rendered the order or decision will bar such party from attacking its
jurisdiction. As we held in the leading case of Tijam vs. Sibonghanoy:[6] Public policy dictates that this Court must strongly condemn any double-
dealing by parties who are disposed to trifle with the courts by deliberately
A party may be estopped or barred from raising a question in different ways taking inconsistent positions, in utter disregard of the elementary principles
and for different reasons. Thus we speak of estoppel in pais, or estoppel by of justice and good faith.[14] There is no denying that, in this case, petitioners
deed or by record, and of estoppel by laches. never raised the issue of jurisdiction throughout the entire proceedings in the
trial court. Instead, they voluntarily and willingly submitted themselves to
xxx the jurisdiction of said court. It is now too late in the day for them to
repudiate the jurisdiction they were invoking all along.
It has been held that a party cannot invoke the jurisdiction of a court to
secure affirmative relief against his opponent and, after obtaining or failing WHEREFORE, the petition for review is hereby DENIED.
to obtain such relief, repudiate, or question that same jurisdiction x x x x
[T]he question whether the court had jurisdiction either of the subject matter SO ORDERED.
of the action or of the parties was not important in such cases because the
party is barred from such conduct not because the judgment or order of the
court is valid and conclusive as an adjudication, but for the reason that such
a practice can not be tolerated obviously for reasons of public policy.

Tijam has been reiterated in many succeeding cases. Thus, in Orosa vs. Court
of Appeals;[7] Ang Ping vs. Court of Appeals;[8] Salva vs. Court of
Appeals;[9] National Steel Corporation vs. Court of Appeals;[10] Province of
Bulacan vs. Court of Appeals;[11] PNOC Shipping and Transport Corporation
vs. Court of Appeals,[12] this Court affirmed the rule that a partys active
participation in all stages of the case before the trial court, which includes
invoking the courts authority to grant affirmative relief, effectively estops
such party from later challenging that same courts jurisdiction.

In the case at bar, it was petitioners themselves who invoked the jurisdiction
of the court a quo by instituting an action for reformation of contract against
private respondents. It appears that, in the proceedings before the trial court,
petitioners vigorously asserted their cause from start to finish. Not even once
did petitioners ever raise the issue of the courts jurisdiction during the entire
SECOND DIVISION THOUSAND ONE HUNDRED SEVEN & 95/100 (P367,107.95) PESOS,
Philippine Currency, and moral and exemplary damages in the amount of
[G.R. No. 124644. February 5, 2004] ONE HUNDRED THIRTY-FIVE THOUSAND (P135,000.00) PESOS,
Philippine Currency.[1]
ARNEL ESCOBAL, petitioner, vs. HON. FRANCIS GARCHITORENA,
Presiding Justice of the Sandiganbayan, Atty. Luisabel Alfonso-Cortez, On March 19, 1991, the RTC issued an Order preventively suspending the
Executive Clerk of Court IV of the Sandiganbayan, Hon. David C. petitioner from the service under Presidential Decree No. 971, as amended by
Naval, Presiding Judge of the Regional Trial Court of Naga City, Branch P.D. No. 1847. When apprised of the said order, the General Headquarters of
21, Luz N. Nueca, respondents. the PNP issued on October 6, 1992 Special Order No. 91, preventively
suspending the petitioner from the service until the case was terminated.[2]
DECISION
The petitioner was arrested by virtue of a warrant issued by the RTC, while
CALLEJO, SR., J.: accused Bombita remained at large. The petitioner posted bail and was
This is a petition for certiorari with a prayer for the issuance of a temporary granted temporary liberty.
restraining order and preliminary injunction filed by Arnel Escobal seeking When arraigned on April 9, 1991,[3] the petitioner, assisted by counsel,
the nullification of the remand by the Presiding Justice of the Sandiganbayan pleaded not guilty to the offense charged. Thereafter, on December 23, 1991,
of the records of Criminal Case No. 90-3184 to the Regional Trial Court the petitioner filed a Motion to Quash[4] the Information alleging that as
(RTC) of Naga City, Branch 21. mandated by Commonwealth Act No. 408,[5] in relation to Section 1,
The petition at bench arose from the following milieu: Presidential Decree No. 1822 and Section 95 of R.A. No. 6975, the court
martial, not the RTC, had jurisdiction over criminal cases involving PNP
The petitioner is a graduate of the Philippine Military Academy, a member of members and officers.
the Armed Forces of the Philippines and the Philippine Constabulary, as well
as the Intelligence Group of the Philippine National Police. On March 16, Pending the resolution of the motion, the petitioner on June 25, 1993
1990, the petitioner was conducting surveillance operations on drug requested the Chief of the PNP for his reinstatement. He alleged that under
trafficking at the Sa Harong Caf Bar and Restaurant located along Barlin St., R.A. No. 6975, his suspension should last for only 90 days, and, having
Naga City. He somehow got involved in a shooting incident, resulting in the served the same, he should now be reinstated. On September 23, 1993,[6] the
death of one Rodney Rafael N. Nueca. On February 6, 1991, an amended PNP Region V Headquarters wrote Judge David C. Naval requesting
Information was filed with the RTC of Naga City, Branch 21, docketed as information on whether he issued an order lifting the petitioners
Criminal Case No. 90-3184 charging the petitioner and a certain Natividad suspension. The RTC did not reply. Thus, on February 22, 1994, the
Bombita, Jr. alias Jun Bombita with murder. The accusatory portion of the petitioner filed a motion in the RTC for the lifting of the order of suspension.
amended Information reads: He alleged that he had served the 90-day preventive suspension and pleaded
for compassionate justice. The RTC denied the motion on March 9,
That on or about March 16, 1990, in the City of Naga, Philippines, and 1994.[7] Trial thereafter proceeded, and the prosecution rested its case. The
within the jurisdiction of this Honorable Court by virtue of the Presidential petitioner commenced the presentation of his evidence. On July 20, 1994, he
Waiver, dated June 1, 1990, with intent to kill, conspiring and confederating filed a Motion to Dismiss[8] the case. Citing Republic of the Philippines v.
together and mutually helping each other, did, then and there, willfully, Asuncion, et al.,[9] he argued that since he committed the crime in the
unlawfully and feloniously attack, assault and maul one Rodney Nueca and performance of his duties, the Sandiganbayan had exclusive jurisdiction over
accused 2Lt Arnel Escobal armed with a caliber .45 service pistol shoot said the case.
Rodney Nueca thereby inflicting upon him serious, mortal and fatal wounds
which caused his death, and as a consequence thereof, complainant LUZ N. On October 28, 1994, the RTC issued an Order[10] denying the motion to
NUECA, mother of the deceased victim, suffered actual and compensatory dismiss. It, however, ordered the conduct of a preliminary hearing to
damages in the amount of THREE HUNDRED SIXTY-SEVEN
determine whether or not the crime charged was committed by the petitioner The petitioner further alleged that Luz Nacario Nueca, the mother of the
in relation to his office as a member of the PNP. victim, through counsel, categorically and unequivocably admitted in her
complaint filed with the Peoples Law Enforcement Board (PLEB) that he
In the preliminary hearing, the prosecution manifested that it was no longer was on an official mission when the crime was committed.
presenting any evidence in connection with the petitioners motion. It
reasoned that it had already rested its case, and that its evidence showed that On November 24, 1995, the RTC made a volte face and issued an Order
the petitioner did not commit the offense charged in connection with the reversing and setting aside its July 31, 1995 Order. It declared that based on
performance of his duties as a member of the Philippine Constabulary. the petitioners evidence, he was on official mission when the shooting
According to the prosecution, they were able to show the following facts: (a) occurred. It concluded that the prosecution failed to adduce controverting
the petitioner was not wearing his uniform during the incident; (b) the evidence thereto. It likewise considered Luz Nacario Nuecas admission in
offense was committed just after midnight; (c) the petitioner was drunk when her complaint before the PLEB that the petitioner was on official mission
the crime was committed; (d) the petitioner was in the company of civilians; when the shooting happened.
and, (e) the offense was committed in a beerhouse called Sa Harong Caf Bar
and Restaurant.[11] The RTC ordered the public prosecutor to file a Re-Amended Information
and to allege that the offense charged was committed by the petitioner in the
For his part, the petitioner testified that at about 10:00 p.m. on March 15, performance of his duties/functions or in relation to his office; and,
1990, he was at the Sa Harong Caf Bar and Restaurant at Barlin St., Naga conformably to R.A. No. 7975, to thereafter transmit the same, as well as the
City, to conduct surveillance on alleged drug trafficking, pursuant to Mission complete records with the stenographic notes, to the Sandiganbayan, to wit:
Order No. 03-04 issued by Police Superintendent Rufo R. Pulido. The
petitioner adduced in evidence the sworn statements of Benjamin Cario and WHEREFORE, the Order dated July 31, 1995 is hereby SET ASIDE and
Roberto Fajardo who corroborated his testimony that he was on a RECONSIDERED, and it is hereby declared that after preliminary hearing,
surveillance mission on the aforestated date.[12] this Court has found that the offense charged in the Information herein was
committed by the accused in his relation to his function and duty as member
On July 31, 1995, the trial court issued an Order declaring that the petitioner of the then Philippine Constabulary.
committed the crime charged while not in the performance of his official
function. The trial court added that upon the enactment of R.A. No. Conformably with R.A. No. 7975 and the ruling of the Supreme Court in
7975,[13] the issue had become moot and academic. The amendatory law Republic v. Asuncion, et al., G.R. No. 180208, March 11, 1994:
transferred the jurisdiction over the offense charged from the Sandiganbayan
to the RTC since the petitioner did not have a salary grade of 27 as provided (1) The City Prosecutor is hereby ordered to file a Re-Amended Information
for in or by Section 4(a)(1), (3) thereof. The trial court nevertheless ordered alleging that the offense charged was committed by the Accused in the
the prosecution to amend the Information pursuant to the ruling in Republic performance of his duties/functions or in relation to his office, within fifteen
v. Asuncion[14] and R.A. No. 7975. The amendment consisted in the inclusion (15) days from receipt hereof;
therein of an allegation that the offense charged was not committed by the (2) After the filing of the Re-Amended Information, the complete records of
petitioner in the performance of his duties/functions, nor in relation to his this case, together with the transcripts of the stenographic notes taken during
office. the entire proceedings herein, are hereby ordered transmitted immediately to
The petitioner filed a motion for the reconsideration[15] of the said order, the Honorable Sandiganbayan, through its Clerk of Court, Manila, for
reiterating that based on his testimony and those of Benjamin Cario and appropriate proceedings.[17]
Roberto Fajardo, the offense charged was committed by him in relation to his On January 8, 1996, the Presiding Justice of the Sandiganbayan ordered the
official functions. He asserted that the trial court failed to consider the Executive Clerk of Court IV, Atty. Luisabel Alfonso-Cortez, to return the
exceptions to the prohibition. He asserted that R.A. No. 7975, which was records of Criminal Case No. 90-3184 to the court of origin, RTC of Naga
enacted on March 30, 1995, could not be applied retroactively.[16] City, Branch 21. It reasoned that under P.D. No. 1606, as amended by R.A.
No. 7975,[18] the RTC retained jurisdiction over the case, considering that the
petitioner had a salary grade of 23. Furthermore, the prosecution had already The respondent Presiding Justice acted in accordance with law and the
rested its case and the petitioner had commenced presenting his evidence in rulings of this Court when he ordered the remand of the case to the RTC, the
the RTC; following the rule on continuity of jurisdiction, the latter court court of origin.
should continue with the case and render judgment therein after trial.
The jurisdiction of the court over criminal cases is determined by the
Upon the remand of the records, the RTC set the case for trial on May 3, allegations in the Information or the Complaint and the statute in effect at the
1996, for the petitioner to continue presenting his evidence. Instead of time of the commencement of the action, unless such statute provides for a
adducing his evidence, the petitioner filed a petition for certiorari, assailing retroactive application thereof. The jurisdictional requirements must be
the Order of the Presiding Justice of the Sandiganbayan remanding the alleged in the Information.[19] Such jurisdiction of the court acquired at the
records of the case to the RTC. inception of the case continues until the case is terminated.[20]

The threshold issue for resolution is whether or not the Presiding Justice of Under Section 4(a) of P.D. No. 1606 as amended by P.D. No. 1861, the
the Sandiganbayan committed a grave abuse of his discretion amounting to Sandiganbayan had exclusive jurisdiction in all cases involving the
excess or lack of jurisdiction in ordering the remand of the case to the RTC. following:

The petitioner contends that when the amended information was filed with (1) Violations of Republic Act No. 3019, as amended, otherwise known as
the RTC on February 6, 1991, P.D. No. 1606 was still in effect. Under the Anti-Graft and Corrupt Practices Act, Republic Act No. 1379, and
Section 4(a) of the decree, the Sandiganbayan had exclusive jurisdiction over Chapter II, Section 2, Title VII of the Revised Penal Code;
the case against him as he was charged with homicide with the imposable
penalty of reclusion temporal, and the crime was committed while in the (2) Other offenses or felonies committed by public officers and employees in
performance of his duties. He further asserts that although P.D. No. 1606, as relation to their office, including those employed in government-owned or
amended by P.D. No. 1861 and by R.A. No. 7975 provides that crimes controlled corporations, whether simple or complexed with other crimes,
committed by members and officers of the PNP with a salary grade below 27 where the penalty prescribed by law is higher than prision correccional or
committed in relation to office are within the exclusive jurisdiction of the imprisonment for six (6) years, or a fine of P6,000.00 .[21]
proper RTC, the amendment thus introduced by R.A. No. 7975 should not be
applied retroactively. This is so, the petitioner asserts, because under Section However, for the Sandiganbayan to have exclusive jurisdiction under the said
7 of R.A. No. 7975, only those cases where trial has not begun in the law over crimes committed by public officers in relation to their office, it is
Sandiganbayan upon the effectivity of the law should be referred to the essential that the facts showing the intimate relation between the office of the
proper trial court. offender and the discharge of official duties must be alleged in the
Information. It is not enough to merely allege in the Information that the
The private complainant agrees with the contention of the petitioner. In crime charged was committed by the offender in relation to his office
contrast, the Office of the Special Prosecutor contends that the Presiding because that would be a conclusion of law.[22] The amended Information filed
Justice of the Sandiganbayan acted in accordance with law when he ordered with the RTC against the petitioner does not contain any allegation showing
the remand of the case to the RTC. It asserts that R.A. No. 7975 should be the intimate relation between his office and the discharge of his
applied retroactively. Although the Sandiganbayan had jurisdiction over the duties. Hence, the RTC had jurisdiction over the offense charged when on
crime committed by the petitioner when the amended information was filed November 24, 1995, it ordered the re-amendment of the Information to
with the RTC, by the time it resolved petitioners motion to dismiss on July include therein an allegation that the petitioner committed the crime in
31, 1995, R.A. No. 7975 had already taken effect. Thus, the law should be relation to office. The trial court erred when it ordered the elevation of the
given retroactive effect. records to the Sandiganbayan. It bears stressing that R.A. No. 7975 amending
P.D. No. 1606 was already in effect and under Section 2 of the law:
The Ruling of the Court
In cases where none of the principal accused are occupying positions
corresponding to salary grade 27 or higher, as prescribed in the said Republic
Act No. 6758, or PNP officers occupying the rank of superintendent or SERVICES, INC., MACROASIA-MENZIES AIRPORT SERVICES
higher, or their equivalent, exclusive jurisdiction thereof shall be vested in CORPORATION, MIASCOR CATERING SERVICES
the proper Regional Trial Court, Metropolitan Trial Court, Municipal Trial CORPORATION, MIASCOR AIRCRAFT MAINTENANCE
Court, and Municipal Circuit Trial Court, as the case may be, pursuant to CORPORATION, and MIASCOR LOGISTICS
their respective jurisdiction as provided in Batas Pambansa Blg. 129. CORPORATION, petitioners-in-intervention,

Under the law, even if the offender committed the crime charged in relation x---------------------------------------------------------x
to his office but occupies a position corresponding to a salary grade below
27, the proper Regional Trial Court or Municipal Trial Court, as the case may G.R. No. 155547 May 5, 2003
be, shall have exclusive jurisdiction over the case. In this case, the petitioner
was a Police Senior Inspector, with salary grade 23. He was charged with SALACNIB F. BATERINA, CLAVEL A. MARTINEZ and
homicide punishable by reclusion temporal. Hence, the RTC had exclusive CONSTANTINO G. JARAULA, petitioners,
jurisdiction over the crime charged conformably to Sections 20 and 32 of vs.
Batas Pambansa Blg. 129, as amended by Section 2 of R.A. No. 7691. PHILIPPINE INTERNATIONAL AIR TERMINALS CO., INC.,
MANILA INTERNATIONAL AIRPORT AUTHORITY,
The petitioners contention that R.A. No. 7975 should not be applied DEPARTMENT OF TRANSPORTATION AND
retroactively has no legal basis. It bears stressing that R.A. No. 7975 is a COMMUNICATIONS, DEPARTMENT OF PUBLIC WORKS AND
substantive procedural law which may be applied retroactively.[23] HIGHWAYS, SECRETARY LEANDRO M. MENDOZA, in his
capacity as Head of the Department of Transportation and
IN LIGHT OF ALL THE FOREGOING, the petition is DISMISSED. No Communications, and SECRETARY SIMEON A. DATUMANONG, in
pronouncement as to costs. his capacity as Head of the Department of Public Works and
Highways, respondents,
SO ORDERED. JACINTO V. PARAS, RAFAEL P. NANTES, EDUARDO C.
ZIALCITA, WILLY BUYSON VILLARAMA, PROSPERO C.
EN BANC
NOGRALES, PROSPERO A. PICHAY, JR., HARLIN CAST
G.R. No. 155001 May 5, 2003 ABAYON, and BENASING O. MACARANBON, respondents-
intervenors,
DEMOSTHENES P. AGAN, JR., JOSEPH B. CATAHAN, JOSE MARI
B. REUNILLA, MANUEL ANTONIO B. BOÑE, MAMERTO S. x---------------------------------------------------------x
CLARA, REUEL E. DIMALANTA, MORY V. DOMALAON, G.R. No. 155661 May 5, 2003
CONRADO G. DIMAANO, LOLITA R. HIZON, REMEDIOS P.
ADOLFO, BIENVENIDO C. HILARIO, MIASCOR WORKERS CEFERINO C. LOPEZ, RAMON M. SALES, ALFREDO B.
UNION - NATIONAL LABOR UNION (MWU-NLU), and VALENCIA, MA. TERESA V. GAERLAN, LEONARDO DE LA
PHILIPPINE AIRLINES EMPLOYEES ASSOCIATION ROSA, DINA C. DE LEON, VIRGIE CATAMIN RONALD
(PALEA), petitioners, SCHLOBOM, ANGELITO SANTOS, MA. LUISA M. PALCON and
vs. SAMAHANG MANGGAGAWA SA PALIPARAN NG PILIPINAS
PHILIPPINE INTERNATIONAL AIR TERMINALS CO., INC., (SMPP), petitioners,
MANILA INTERNATIONAL AIRPORT AUTHORITY, vs.
DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS PHILIPPINE INTERNATIONAL AIR TERMINALS CO., INC.,
and SECRETARY LEANDRO M. MENDOZA, in his capacity as Head MANILA INTERNATIONAL AIRPORT AUTHORITY,
of the Department of Transportation and Communications, respondents, DEPARTMENT OF TRANSPORTATION AND
MIASCOR GROUNDHANDLING CORPORATION, DNATA-WINGS COMMUNICATIONS, SECRETARY LEANDRO M. MENDOZA, in
AVIATION SYSTEMS CORPORATION, MACROASIA-EUREST
his capacity as Head of the Department of Transportation and and-transfer arrangement pursuant to RA 6957 as amended by RA 7718
Communications, respondents. (BOT Law).1

PUNO, J.: On December 2, 1994, the DOTC issued Dept. Order No. 94-832 constituting
the Prequalification Bids and Awards Committee (PBAC) for the
Petitioners and petitioners-in-intervention filed the instant petitions for implementation of the NAIA IPT III project.
prohibition under Rule 65 of the Revised Rules of Court seeking to prohibit
the Manila International Airport Authority (MIAA) and the Department of On March 27, 1995, then DOTC Secretary Jose Garcia endorsed the proposal
Transportation and Communications (DOTC) and its Secretary from of AEDC to the National Economic and Development Authority (NEDA). A
implementing the following agreements executed by the Philippine revised proposal, however, was forwarded by the DOTC to NEDA on
Government through the DOTC and the MIAA and the Philippine December 13, 1995. On January 5, 1996, the NEDA Investment
International Air Terminals Co., Inc. (PIATCO): (1) the Concession Coordinating Council (NEDA ICC) – Technical Board favorably endorsed
Agreement signed on July 12, 1997, (2) the Amended and Restated the project to the ICC – Cabinet Committee which approved the same,
Concession Agreement dated November 26, 1999, (3) the First Supplement subject to certain conditions, on January 19, 1996. On February 13, 1996, the
to the Amended and Restated Concession Agreement dated August 27, 1999, NEDA passed Board Resolution No. 2 which approved the NAIA IPT III
(4) the Second Supplement to the Amended and Restated Concession project.
Agreement dated September 4, 2000, and (5) the Third Supplement to the
Amended and Restated Concession Agreement dated June 22, 2001 On June 7, 14, and 21, 1996, DOTC/MIAA caused the publication in two
(collectively, the PIATCO Contracts). daily newspapers of an invitation for competitive or comparative proposals
on AEDC's unsolicited proposal, in accordance with Sec. 4-A of RA 6957, as
The facts are as follows: amended. The alternative bidders were required to submit three (3) sealed
envelopes on or before 5:00 p.m. of September 20, 1996. The first envelope
In August 1989, the DOTC engaged the services of Aeroport de Paris (ADP) should contain the Prequalification Documents, the second envelope the
to conduct a comprehensive study of the Ninoy Aquino International Airport Technical Proposal, and the third envelope the Financial Proposal of the
(NAIA) and determine whether the present airport can cope with the traffic proponent.
development up to the year 2010. The study consisted of two parts: first,
traffic forecasts, capacity of existing facilities, NAIA future requirements, On June 20, 1996, PBAC Bulletin No. 1 was issued, postponing the
proposed master plans and development plans; and second, presentation of availment of the Bid Documents and the submission of the comparative bid
the preliminary design of the passenger terminal building. The ADP proposals. Interested firms were permitted to obtain the Request for Proposal
submitted a Draft Final Report to the DOTC in December 1989. Documents beginning June 28, 1996, upon submission of a written
application and payment of a non-refundable fee of P50,000.00 (US$2,000).
Some time in 1993, six business leaders consisting of John Gokongwei,
Andrew Gotianun, Henry Sy, Sr., Lucio Tan, George Ty and Alfonso The Bid Documents issued by the PBAC provided among others that the
Yuchengco met with then President Fidel V. Ramos to explore the possibility proponent must have adequate capability to sustain the financing requirement
of investing in the construction and operation of a new international airport for the detailed engineering, design, construction, operation, and
terminal. To signify their commitment to pursue the project, they formed the maintenance phases of the project. The proponent would be evaluated based
Asia's Emerging Dragon Corp. (AEDC) which was registered with the on its ability to provide a minimum amount of equity to the project, and its
Securities and Exchange Commission (SEC) on September 15, 1993. capacity to secure external financing for the project.

On October 5, 1994, AEDC submitted an unsolicited proposal to the On July 23, 1996, the PBAC issued PBAC Bulletin No. 2 inviting all bidders
Government through the DOTC/MIAA for the development of NAIA to a pre-bid conference on July 29, 1996.
International Passenger Terminal III (NAIA IPT III) under a build-operate-
On August 16, 1996, the PBAC issued PBAC Bulletin No. 3 amending the On August 29, 1996, the Second Pre-Bid Conference was held where certain
Bid Documents. The following amendments were made on the Bid clarifications were made. Upon the request of prospective bidder People's Air
Documents: Cargo & Warehousing Co., Inc (Paircargo), the PBAC warranted that based
on Sec. 11.6, Rule 11 of the Implementing Rules and Regulations of the BOT
a. Aside from the fixed Annual Guaranteed Payment, the proponent shall Law, only the proposed Annual Guaranteed Payment submitted by the
include in its financial proposal an additional percentage of gross revenue challengers would be revealed to AEDC, and that the challengers' technical
share of the Government, as follows: and financial proposals would remain confidential. The PBAC also clarified
that the list of revenue sources contained in Annex 4.2a of the Bid
i. First 5 years 5.0% Documents was merely indicative and that other revenue sources may be
included by the proponent, subject to approval by DOTC/MIAA.
ii. Next 10 years 7.5% Furthermore, the PBAC clarified that only those fees and charges
denominated as Public Utility Fees would be subject to regulation, and those
iii. Next 10 years 10.0% charges which would be actually deemed Public Utility Fees could still be
revised, depending on the outcome of PBAC's query on the matter with the
b. The amount of the fixed Annual Guaranteed Payment shall be subject of Department of Justice.
the price challenge. Proponent may offer an Annual Guaranteed Payment
which need not be of equal amount, but payment of which shall start upon In September 1996, the PBAC issued Bid Bulletin No. 5, entitled "Answers
site possession. to the Queries of PAIRCARGO as Per Letter Dated September 3 and 10,
1996." Paircargo's queries and the PBAC's responses were as follows:
c. The project proponent must have adequate capability to sustain the
financing requirement for the detailed engineering, design, construction, 1. It is difficult for Paircargo and Associates to meet the required minimum
and/or operation and maintenance phases of the project as the case may be. equity requirement as prescribed in Section 8.3.4 of the Bid Documents
For purposes of pre-qualification, this capability shall be measured in terms considering that the capitalization of each member company is so structured
of: to meet the requirements and needs of their current respective business
undertaking/activities. In order to comply with this equity requirement,
i. Proof of the availability of the project proponent and/or the consortium to Paircargo is requesting PBAC to just allow each member of (sic)
provide the minimum amount of equity for the project; and corporation of the Joint Venture to just execute an agreement that embodies
a commitment to infuse the required capital in case the project is awarded to
ii. a letter testimonial from reputable banks attesting that the project the Joint Venture instead of increasing each corporation's current authorized
proponent and/or the members of the consortium are banking with them, that capital stock just for prequalification purposes.
the project proponent and/or the members are of good financial standing, and
have adequate resources. In prequalification, the agency is interested in one's financial capability at the
time of prequalification, not future or potential capability.
d. The basis for the prequalification shall be the proponent's compliance with
the minimum technical and financial requirements provided in the Bid A commitment to put up equity once awarded the project is not enough to
Documents and the IRR of the BOT Law. The minimum amount of equity establish that "present" financial capability. However, total financial
shall be 30% of the Project Cost. capability of all member companies of the Consortium, to be established by
submitting the respective companies' audited financial statements, shall be
e. Amendments to the draft Concession Agreement shall be issued from time acceptable.
to time. Said amendments shall only cover items that would not materially
affect the preparation of the proponent's proposal. 2. At present, Paircargo is negotiating with banks and other institutions for
the extension of a Performance Security to the joint venture in the event that
the Concessions Agreement (sic) is awarded to them. However, Paircargo is
being required to submit a copy of the draft concession as one of the The PBAC then proceeded with the opening of the second envelope of the
documentary requirements. Therefore, Paircargo is requesting that they'd Paircargo Consortium which contained its Technical Proposal.
(sic) be furnished copy of the approved negotiated agreement between the
PBAC and the AEDC at the soonest possible time. On October 3, 1996, AEDC reiterated its objections, particularly with respect
to Paircargo's financial capability, in view of the restrictions imposed by
A copy of the draft Concession Agreement is included in the Bid Documents. Section 21-B of the General Banking Act and Sections 1380 and 1381 of the
Any material changes would be made known to prospective challengers Manual Regulations for Banks and Other Financial Intermediaries. On
through bid bulletins. However, a final version will be issued before the October 7, 1996, AEDC again manifested its objections and requested that it
award of contract. be furnished with excerpts of the PBAC meeting and the accompanying
technical evaluation report where each of the issues they raised were
The PBAC also stated that it would require AEDC to sign Supplement C of addressed.
the Bid Documents (Acceptance of Criteria and Waiver of Rights to Enjoin
Project) and to submit the same with the required Bid Security. On October 16, 1996, the PBAC opened the third envelope submitted by
AEDC and the Paircargo Consortium containing their respective financial
On September 20, 1996, the consortium composed of People's Air Cargo and proposals. Both proponents offered to build the NAIA Passenger Terminal III
Warehousing Co., Inc. (Paircargo), Phil. Air and Grounds Services, Inc. for at least $350 million at no cost to the government and to pay the
(PAGS) and Security Bank Corp. (Security Bank) (collectively, Paircargo government: 5% share in gross revenues for the first five years of operation,
Consortium) submitted their competitive proposal to the PBAC. On 7.5% share in gross revenues for the next ten years of operation, and 10%
September 23, 1996, the PBAC opened the first envelope containing the share in gross revenues for the last ten years of operation, in accordance with
prequalification documents of the Paircargo Consortium. On the following the Bid Documents. However, in addition to the foregoing, AEDC offered to
day, September 24, 1996, the PBAC prequalified the Paircargo Consortium. pay the government a total of P135 million as guaranteed payment for 27
years while Paircargo Consortium offered to pay the government a total of
On September 26, 1996, AEDC informed the PBAC in writing of its P17.75 billion for the same period.
reservations as regards the Paircargo Consortium, which include:
Thus, the PBAC formally informed AEDC that it had accepted the price
a. The lack of corporate approvals and financial capability of PAIRCARGO; proposal submitted by the Paircargo Consortium, and gave AEDC 30
b. The lack of corporate approvals and financial capability of PAGS; working days or until November 28, 1996 within which to match the said
bid, otherwise, the project would be awarded to Paircargo.
c. The prohibition imposed by RA 337, as amended (the General Banking
Act) on the amount that Security Bank could legally invest in the project; As AEDC failed to match the proposal within the 30-day period, then DOTC
Secretary Amado Lagdameo, on December 11, 1996, issued a notice to
d. The inclusion of Siemens as a contractor of the PAIRCARGO Joint Paircargo Consortium regarding AEDC's failure to match the proposal.
Venture, for prequalification purposes; and
On February 27, 1997, Paircargo Consortium incorporated into Philippine
e. The appointment of Lufthansa as the facility operator, in view of the International Airport Terminals Co., Inc. (PIATCO).
Philippine requirement in the operation of a public utility.
AEDC subsequently protested the alleged undue preference given to
The PBAC gave its reply on October 2, 1996, informing AEDC that it had PIATCO and reiterated its objections as regards the prequalification of
considered the issues raised by the latter, and that based on the documents PIATCO.
submitted by Paircargo and the established prequalification criteria, the
PBAC had found that the challenger, Paircargo, had prequalified to On April 11, 1997, the DOTC submitted the concession agreement for the
undertake the project. The Secretary of the DOTC approved the finding of second-pass approval of the NEDA-ICC.
the PBAC.
On April 16, 1997, AEDC filed with the Regional Trial Court of Pasig a Subsequently, the Government and PIATCO signed three Supplements to the
Petition for Declaration of Nullity of the Proceedings, Mandamus and ARCA. The First Supplement was signed on August 27, 1999; the Second
Injunction against the Secretary of the DOTC, the Chairman of the PBAC, Supplement on September 4, 2000; and the Third Supplement on June 22,
the voting members of the PBAC and Pantaleon D. Alvarez, in his capacity 2001 (collectively, Supplements).
as Chairman of the PBAC Technical Committee.
The First Supplement to the ARCA amended Sec. 1.36 of the ARCA
On April 17, 1997, the NEDA-ICC conducted an ad referendum to facilitate defining "Revenues" or "Gross Revenues"; Sec. 2.05 (d) of the ARCA
the approval, on a no-objection basis, of the BOT agreement between the referring to the obligation of MIAA to provide sufficient funds for the
DOTC and PIATCO. As the ad referendum gathered only four (4) of the upkeep, maintenance, repair and/or replacement of all airport facilities and
required six (6) signatures, the NEDA merely noted the agreement. equipment which are owned or operated by MIAA; and further providing
additional special obligations on the part of GRP aside from those already
On July 9, 1997, the DOTC issued the notice of award for the project to enumerated in Sec. 2.05 of the ARCA. The First Supplement also provided a
PIATCO. stipulation as regards the construction of a surface road to connect NAIA
Terminal II and Terminal III in lieu of the proposed access tunnel crossing
On July 12, 1997, the Government, through then DOTC Secretary Arturo T. Runway 13/31; the swapping of obligations between GRP and PIATCO
Enrile, and PIATCO, through its President, Henry T. Go, signed the regarding the improvement of Sales Road; and the changes in the timetable.
"Concession Agreement for the Build-Operate-and-Transfer Arrangement of It also amended Sec. 6.01 (c) of the ARCA pertaining to the Disposition of
the Ninoy Aquino International Airport Passenger Terminal III" (1997 Terminal Fees; Sec. 6.02 of the ARCA by inserting an introductory
Concession Agreement). The Government granted PIATCO the franchise to paragraph; and Sec. 6.02 (a) (iii) of the ARCA referring to the Payments of
operate and maintain the said terminal during the concession period and to Percentage Share in Gross Revenues.
collect the fees, rentals and other charges in accordance with the rates or
schedules stipulated in the 1997 Concession Agreement. The Agreement The Second Supplement to the ARCA contained provisions concerning the
provided that the concession period shall be for twenty-five (25) years clearing, removal, demolition or disposal of subterranean structures
commencing from the in-service date, and may be renewed at the option of uncovered or discovered at the site of the construction of the terminal by the
the Government for a period not exceeding twenty-five (25) years. At the end Concessionaire. It defined the scope of works; it provided for the procedure
of the concession period, PIATCO shall transfer the development facility to for the demolition of the said structures and the consideration for the same
MIAA. which the GRP shall pay PIATCO; it provided for time extensions,
incremental and consequential costs and losses consequent to the existence of
On November 26, 1998, the Government and PIATCO signed an Amended such structures; and it provided for some additional obligations on the part of
and Restated Concession Agreement (ARCA). Among the provisions of the PIATCO as regards the said structures.
1997 Concession Agreement that were amended by the ARCA were: Sec.
1.11 pertaining to the definition of "certificate of completion"; Sec. 2.05 Finally, the Third Supplement provided for the obligations of the
pertaining to the Special Obligations of GRP; Sec. 3.02 (a) dealing with the Concessionaire as regards the construction of the surface road connecting
exclusivity of the franchise given to the Concessionaire; Sec. 4.04 Terminals II and III.
concerning the assignment by Concessionaire of its interest in the
Development Facility; Sec. 5.08 (c) dealing with the proceeds of Meanwhile, the MIAA which is charged with the maintenance and operation
Concessionaire's insurance; Sec. 5.10 with respect to the temporary take-over of the NAIA Terminals I and II, had existing concession contracts with
of operations by GRP; Sec. 5.16 pertaining to the taxes, duties and other various service providers to offer international airline airport services, such
imposts that may be levied on the Concessionaire; Sec. 6.03 as regards the as in-flight catering, passenger handling, ramp and ground support, aircraft
periodic adjustment of public utility fees and charges; the entire Article VIII maintenance and provisions, cargo handling and warehousing, and other
concerning the provisions on the termination of the contract; and Sec. 10.02 services, to several international airlines at the NAIA. Some of these service
providing for the venue of the arbitration proceedings in case a dispute or providers are the Miascor Group, DNATA-Wings Aviation Systems Corp.,
controversy arises between the parties to the agreement. and the MacroAsia Group. Miascor, DNATA and MacroAsia, together with
Philippine Airlines (PAL), are the dominant players in the industry with an petitions be given due course and that judgment be rendered declaring the
aggregate market share of 70%. 1997 Concession Agreement, the ARCA and the Supplements thereto void
for being contrary to the Constitution, the BOT Law and its Implementing
On September 17, 2002, the workers of the international airline service Rules and Regulations.
providers, claiming that they stand to lose their employment upon the
implementation of the questioned agreements, filed before this Court a On March 6, 2003, respondent PIATCO informed the Court that on March 4,
petition for prohibition to enjoin the enforcement of said agreements.2 2003 PIATCO commenced arbitration proceedings before the International
Chamber of Commerce, International Court of Arbitration (ICC) by filing a
On October 15, 2002, the service providers, joining the cause of the Request for Arbitration with the Secretariat of the ICC against the
petitioning workers, filed a motion for intervention and a petition-in- Government of the Republic of the Philippines acting through the DOTC and
intervention. MIAA.
On October 24, 2002, Congressmen Salacnib Baterina, Clavel Martinez and In the present cases, the Court is again faced with the task of resolving
Constantino Jaraula filed a similar petition with this Court.3 complicated issues made difficult by their intersecting legal and economic
implications. The Court is aware of the far reaching fall out effects of the
On November 6, 2002, several employees of the MIAA likewise filed a ruling which it makes today. For more than a century and whenever the
petition assailing the legality of the various agreements.4 exigencies of the times demand it, this Court has never shirked from its
On December 11, 2002. another group of Congressmen, Hon. Jacinto V. solemn duty to dispense justice and resolve "actual controversies involving
Paras, Rafael P. Nantes, Eduardo C. Zialcita, Willie B. Villarama, Prospero rights which are legally demandable and enforceable, and to determine
C. Nograles, Prospero A. Pichay, Jr., Harlin Cast Abayon and Benasing O. whether or not there has been grave abuse of discretion amounting to lack or
Macaranbon, moved to intervene in the case as Respondents-Intervenors. excess of jurisdiction."6 To be sure, this Court will not begin to do otherwise
They filed their Comment-In-Intervention defending the validity of the today.
assailed agreements and praying for the dismissal of the petitions. We shall first dispose of the procedural issues raised by respondent
During the pendency of the case before this Court, President Gloria PIATCO which they allege will bar the resolution of the instant controversy.
Macapagal Arroyo, on November 29, 2002, in her speech at the 2002 Golden Petitioners' Legal Standing to File
Shell Export Awards at Malacañang Palace, stated that she will not "honor
(PIATCO) contracts which the Executive Branch's legal offices have the present Petitions
concluded (as) null and void."5
a. G.R. Nos. 155001 and 155661
Respondent PIATCO filed its Comments to the present petitions on
November 7 and 27, 2002. The Office of the Solicitor General and the Office In G.R. No. 155001 individual petitioners are employees of various service
of the Government Corporate Counsel filed their respective Comments in providers7 having separate concession contracts with MIAA and continuing
behalf of the public respondents. service agreements with various international airlines to provide in-flight
catering, passenger handling, ramp and ground support, aircraft maintenance
On December 10, 2002, the Court heard the case on oral argument. After the and provisions, cargo handling and warehousing and other services. Also
oral argument, the Court then resolved in open court to require the parties to included as petitioners are labor unions MIASCOR Workers Union-National
file simultaneously their respective Memoranda in amplification of the issues Labor Union and Philippine Airlines Employees Association. These
heard in the oral arguments within 30 days and to explore the possibility of petitioners filed the instant action for prohibition as taxpayers and as parties
arbitration or mediation as provided in the challenged contracts. whose rights and interests stand to be violated by the implementation of the
PIATCO Contracts.
In their consolidated Memorandum, the Office of the Solicitor General and
the Office of the Government Corporate Counsel prayed that the present
Petitioners-Intervenors in the same case are all corporations organized and obligation to permit such carry over except through a separate agreement
existing under Philippine laws engaged in the business of providing in-flight duly entered into with PIATCO.8
catering, passenger handling, ramp and ground support, aircraft maintenance
and provisions, cargo handling and warehousing and other services to several With respect to the petitioning service providers and their employees, upon
international airlines at the Ninoy Aquino International Airport. Petitioners- the commencement of operations of the NAIA IPT III, they allege that they
Intervenors allege that as tax-paying international airline and airport-related will be effectively barred from providing international airline airport services
service operators, each one of them stands to be irreparably injured by the at the NAIA Terminals I and II as all international airlines and passengers
implementation of the PIATCO Contracts. Each of the petitioners- will be diverted to the NAIA IPT III. The petitioning service providers will
intervenors have separate and subsisting concession agreements with MIAA thus be compelled to contract with PIATCO alone for such services, with no
and with various international airlines which they allege are being interfered assurance that subsisting contracts with MIAA and other international
with and violated by respondent PIATCO. airlines will be respected. Petitioning service providers stress that despite the
very competitive market, the substantial capital investments required and the
In G.R. No. 155661, petitioners constitute employees of MIAA and high rate of fees, they entered into their respective contracts with the MIAA
Samahang Manggagawa sa Paliparan ng Pilipinas - a legitimate labor union with the understanding that the said contracts will be in force for the
and accredited as the sole and exclusive bargaining agent of all the stipulated period, and thereafter, renewed so as to allow each of the
employees in MIAA. Petitioners anchor their petition for prohibition on the petitioning service providers to recoup their investments and obtain a
nullity of the contracts entered into by the Government and PIATCO reasonable return thereon.
regarding the build-operate-and-transfer of the NAIA IPT III. They filed the
petition as taxpayers and persons who have a legitimate interest to protect in Petitioning employees of various service providers at the NAIA Terminals I
the implementation of the PIATCO Contracts. and II and of MIAA on the other hand allege that with the closure of the
NAIA Terminals I and II as international passenger terminals under the
Petitioners in both cases raise the argument that the PIATCO Contracts PIATCO Contracts, they stand to lose employment.
contain stipulations which directly contravene numerous provisions of the
Constitution, specific provisions of the BOT Law and its Implementing Rules The question on legal standing is whether such parties have "alleged such a
and Regulations, and public policy. Petitioners contend that the DOTC and personal stake in the outcome of the controversy as to assure that concrete
the MIAA, by entering into said contracts, have committed grave abuse of adverseness which sharpens the presentation of issues upon which the court
discretion amounting to lack or excess of jurisdiction which can be remedied so largely depends for illumination of difficult constitutional
only by a writ of prohibition, there being no plain, speedy or adequate questions."9 Accordingly, it has been held that the interest of a person
remedy in the ordinary course of law. assailing the constitutionality of a statute must be direct and personal. He
must be able to show, not only that the law or any government act is invalid,
In particular, petitioners assail the provisions in the 1997 Concession but also that he sustained or is in imminent danger of sustaining some direct
Agreement and the ARCA which grant PIATCO the exclusive right to injury as a result of its enforcement, and not merely that he suffers thereby in
operate a commercial international passenger terminal within the Island of some indefinite way. It must appear that the person complaining has been or
Luzon, except those international airports already existing at the time of the is about to be denied some right or privilege to which he is lawfully entitled
execution of the agreement. The contracts further provide that upon the or that he is about to be subjected to some burdens or penalties by reason of
commencement of operations at the NAIA IPT III, the Government shall the statute or act complained of.10
cause the closure of Ninoy Aquino International Airport Passenger Terminals
I and II as international passenger terminals. With respect to existing We hold that petitioners have the requisite standing. In the above-mentioned
concession agreements between MIAA and international airport service cases, petitioners have a direct and substantial interest to protect by reason of
providers regarding certain services or operations, the 1997 Concession the implementation of the PIATCO Contracts. They stand to lose their source
Agreement and the ARCA uniformly provide that such services or operations of livelihood, a property right which is zealously protected by the
will not be carried over to the NAIA IPT III and PIATCO is under no Constitution. Moreover, subsisting concession agreements between MIAA
and petitioners-intervenors and service contracts between international
airlines and petitioners-intervenors stand to be nullified or terminated by the constitutional questions raised."18 In view of the serious legal questions
operation of the NAIA IPT III under the PIATCO Contracts. The financial involved and their impact on public interest, we resolve to grant standing to
prejudice brought about by the PIATCO Contracts on petitioners and the petitioners.
petitioners-intervenors in these cases are legitimate interests sufficient to
confer on them the requisite standing to file the instant petitions. Other Procedural Matters

b. G.R. No. 155547 Respondent PIATCO further alleges that this Court is without jurisdiction to
review the instant cases as factual issues are involved which this Court is ill-
In G.R. No. 155547, petitioners filed the petition for prohibition as members equipped to resolve. Moreover, PIATCO alleges that submission of this
of the House of Representatives, citizens and taxpayers. They allege that as controversy to this Court at the first instance is a violation of the rule on
members of the House of Representatives, they are especially interested in hierarchy of courts. They contend that trial courts have concurrent
the PIATCO Contracts, because the contracts compel the Government and/or jurisdiction with this Court with respect to a special civil action for
the House of Representatives to appropriate funds necessary to comply with prohibition and hence, following the rule on hierarchy of courts, resort must
the provisions therein.11 They cite provisions of the PIATCO Contracts first be had before the trial courts.
which require disbursement of unappropriated amounts in compliance with
the contractual obligations of the Government. They allege that the After a thorough study and careful evaluation of the issues involved, this
Government obligations in the PIATCO Contracts which compel government Court is of the view that the crux of the instant controversy involves
expenditure without appropriation is a curtailment of their prerogatives as significant legal questions. The facts necessary to resolve these legal
legislators, contrary to the mandate of the Constitution that "[n]o money shall questions are well established and, hence, need not be determined by a trial
be paid out of the treasury except in pursuance of an appropriation made by court.
law."12
The rule on hierarchy of courts will not also prevent this Court from
Standing is a peculiar concept in constitutional law because in some cases, assuming jurisdiction over the cases at bar. The said rule may be relaxed
suits are not brought by parties who have been personally injured by the when the redress desired cannot be obtained in the appropriate courts or
operation of a law or any other government act but by concerned citizens, where exceptional and compelling circumstances justify availment of a
taxpayers or voters who actually sue in the public interest. Although we are remedy within and calling for the exercise of this Court's primary
not unmindful of the cases of Imus Electric Co. v. Municipality of jurisdiction.19
Imus13 and Gonzales v. Raquiza14 wherein this Court held that
appropriation must be made only on amounts immediately It is easy to discern that exceptional circumstances exist in the cases at bar
demandable, public interest demands that we take a more liberal view in that call for the relaxation of the rule. Both petitioners and respondents agree
that these cases are of transcendental importance as they involve the
determining whether the petitioners suing as legislators, taxpayers and
citizens have locus standi to file the instant petition. In Kilosbayan, Inc. construction and operation of the country's premier international airport.
v. Guingona,15 this Court held "[i]n line with the liberal policy of this Court Moreover, the crucial issues submitted for resolution are of first impression
on locus standi, ordinary taxpayers, members of Congress, and even and they entail the proper legal interpretation of key provisions of the
association of planters, and non-profit civic organizations were allowed to Constitution, the BOT Law and its Implementing Rules and Regulations.
initiate and prosecute actions before this Court to question the Thus, considering the nature of the controversy before the Court, procedural
constitutionality or validity of laws, acts, decisions, rulings, or orders of bars may be lowered to give way for the speedy disposition of the instant
various government agencies or instrumentalities."16 Further, "insofar as cases.
taxpayers' suits are concerned . . . (this Court) is not devoid of discretion as Legal Effect of the Commencement
to whether or not it should be entertained."17 As such ". . . even if, strictly
speaking, they [the petitioners] are not covered by the definition, it is still of Arbitration Proceedings by
within the wide discretion of the Court to waive the requirement and so
remove the impediment to its addressing and resolving the serious PIATCO
There is one more procedural obstacle which must be overcome. The Court is Is PIATCO a qualified bidder?
aware that arbitration proceedings pursuant to Section 10.02 of the ARCA
have been filed at the instance of respondent PIATCO. Again, we hold that Public respondents argue that the Paircargo Consortium, PIATCO's
the arbitration step taken by PIATCO will not oust this Court of its predecessor, was not a duly pre-qualified bidder on the unsolicited proposal
jurisdiction over the cases at bar. submitted by AEDC as the Paircargo Consortium failed to meet the financial
capability required under the BOT Law and the Bid Documents. They allege
In Del Monte Corporation-USA v. Court of Appeals,20 even after finding that that in computing the ability of the Paircargo Consortium to meet the
the arbitration clause in the Distributorship Agreement in question is valid minimum equity requirements for the project, the entire net worth of
and the dispute between the parties is arbitrable, this Court affirmed the trial Security Bank, a member of the consortium, should not be considered.
court's decision denying petitioner's Motion to Suspend Proceedings pursuant
to the arbitration clause under the contract. In so ruling, this Court held that PIATCO relies, on the other hand, on the strength of the Memorandum dated
as contracts produce legal effect between the parties, their assigns and heirs, October 14, 1996 issued by the DOTC Undersecretary Primitivo C. Cal
only the parties to the Distributorship Agreement are bound by its terms, stating that the Paircargo Consortium is found to have a combined net worth
including the arbitration clause stipulated therein. This Court ruled that of P3,900,000,000.00, sufficient to meet the equity requirements of the
arbitration proceedings could be called for but only with respect to the project. The said Memorandum was in response to a letter from Mr. Antonio
parties to the contract in question. Considering that there are parties to the Henson of AEDC to President Fidel V. Ramos questioning the financial
case who are neither parties to the Distributorship Agreement nor heirs or capability of the Paircargo Consortium on the ground that it does not have
assigns of the parties thereto, this Court, citing its previous ruling in Salas, Jr. the financial resources to put up the required minimum equity of
v. Laperal Realty Corporation,21 held that to tolerate the splitting of P2,700,000,000.00. This contention is based on the restriction under R.A.
proceedings by allowing arbitration as to some of the parties on the one hand No. 337, as amended or the General Banking Act that a commercial bank
and trial for the others on the other hand would, in effect, result cannot invest in any single enterprise in an amount more than 15% of its net
in multiplicity of suits, duplicitous procedure and unnecessary worth. In the said Memorandum, Undersecretary Cal opined:
delay.22 Thus, we ruled that the interest of justice would best be served if the
trial court hears and adjudicates the case in a single and complete The Bid Documents, as clarified through Bid Bulletin Nos. 3 and 5, require
proceeding. that financial capability will be evaluated based on total financial capability
of all the member companies of the [Paircargo] Consortium. In this
It is established that petitioners in the present cases who have presented connection, the Challenger was found to have a combined net worth of
legitimate interests in the resolution of the controversy are not parties to the P3,926,421,242.00 that could support a project costing approximately P13
PIATCO Contracts. Accordingly, they cannot be bound by the arbitration Billion.
clause provided for in the ARCA and hence, cannot be compelled to submit
to arbitration proceedings. A speedy and decisive resolution of all the It is not a requirement that the net worth must be "unrestricted." To impose
critical issues in the present controversy, including those raised by that as a requirement now will be nothing less than unfair.
petitioners, cannot be made before an arbitral tribunal. The object of The financial statement or the net worth is not the sole basis in establishing
arbitration is precisely to allow an expeditious determination of a dispute. financial capability. As stated in Bid Bulletin No. 3, financial capability may
This objective would not be met if this Court were to allow the parties to also be established by testimonial letters issued by reputable banks. The
settle the cases by arbitration as there are certain issues involving non-parties Challenger has complied with this requirement.
to the PIATCO Contracts which the arbitral tribunal will not be equipped to
resolve. To recap, net worth reflected in the Financial Statement should not be taken
as the amount of the money to be used to answer the required thirty percent
Now, to the merits of the instant controversy. (30%) equity of the challenger but rather to be used in establishing if there is
I enough basis to believe that the challenger can comply with the required 30%
equity. In fact, proof of sufficient equity is required as one of the conditions
for award of contract (Section 12.1 IRR of the BOT Law) but not for pre- Accordingly, based on the above provisions of law, the Paircargo
qualification (Section 5.4 of the same document).23 Consortium or any challenger to the unsolicited proposal of AEDC has to
show that it possesses the requisite financial capability to undertake the
Under the BOT Law, in case of a build-operate-and-transfer arrangement, the project in the minimum amount of 30% of the project cost through (i)
contract shall be awarded to the bidder "who, having satisfied the minimum proof of the ability to provide a minimum amount of equity to the project,
financial, technical, organizational and legal standards" required by the and (ii) a letter testimonial from reputable banks attesting that the project
law, has submitted the lowest bid and most favorable terms of the proponent or members of the consortium are banking with them, that they are
project.24 Further, the 1994 Implementing Rules and Regulations of the BOT in good financial standing, and that they have adequate resources.
Law provide:
As the minimum project cost was estimated to be US$350,000,000.00 or
Section 5.4 Pre-qualification Requirements. roughly P9,183,650,000.00,25 the Paircargo Consortium had to show to the
satisfaction of the PBAC that it had the ability to provide the minimum
xxx xxx xxx equity for the project in the amount of at least P2,755,095,000.00.
c. Financial Capability: The project proponent must have adequate capability Paircargo's Audited Financial Statements as of 1993 and 1994 indicated that
to sustain the financing requirements for the detailed engineering design, it had a net worth of P2,783,592.00 and P3,123,515.00 respectively.26 PAGS'
construction and/or operation and maintenance phases of the project, as the Audited Financial Statements as of 1995 indicate that it has approximately
case may be. For purposes of pre-qualification, this capability shall be P26,735,700.00 to invest as its equity for the project.27 Security Bank's
measured in terms of (i) proof of the ability of the project proponent Audited Financial Statements as of 1995 show that it has a net worth
and/or the consortium to provide a minimum amount of equity to the equivalent to its capital funds in the amount of P3,523,504,377.00.28
project, and (ii) a letter testimonial from reputable banks attesting that
the project proponent and/or members of the consortium are banking We agree with public respondents that with respect to Security Bank,
with them, that they are in good financial standing, and that they have the entire amount of its net worth could not be invested in a single
adequate resources. The government agency/LGU concerned shall undertaking or enterprise, whether allied or non-allied in accordance with the
determine on a project-to-project basis and before pre-qualification, the provisions of R.A. No. 337, as amended or the General Banking Act:
minimum amount of equity needed. (emphasis supplied)
Sec. 21-B. The provisions in this or in any other Act to the contrary
Pursuant to this provision, the PBAC issued PBAC Bulletin No. 3 dated notwithstanding, the Monetary Board, whenever it shall deem appropriate
August 16, 1996 amending the financial capability requirements for pre- and necessary to further national development objectives or support national
qualification of the project proponent as follows: priority projects, may authorize a commercial bank, a bank authorized to
provide commercial banking services, as well as a government-owned
6. Basis of Pre-qualification and controlled bank, to operate under an expanded commercial banking
The basis for the pre-qualification shall be on the compliance of the authority and by virtue thereof exercise, in addition to powers
proponent to the minimum technical and financial requirements provided in authorized for commercial banks, the powers of an Investment House as
the Bid Documents and in the IRR of the BOT Law, R.A. No. 6957, as provided in Presidential Decree No. 129, invest in the equity of a non-
amended by R.A. 7718. allied undertaking, or own a majority or all of the equity in a financial
intermediary other than a commercial bank or a bank authorized to provide
The minimum amount of equity to which the proponent's financial capability commercial banking services: Provided, That (a) the total investment in
will be based shall be thirty percent (30%) of the project cost instead of equities shall not exceed fifty percent (50%) of the net worth of the bank; (b)
the twenty percent (20%) specified in Section 3.6.4 of the Bid the equity investment in any one enterprise whether allied or non-allied
Documents. This is to correlate with the required debt-to-equity ratio of shall not exceed fifteen percent (15%) of the net worth of the bank; (c)
70:30 in Section 2.01a of the draft concession agreement. The debt portion of the equity investment of the bank, or of its wholly or majority-owned
the project financing should not exceed 70% of the actual project cost. subsidiary, in a single non-allied undertaking shall not exceed thirty-five
percent (35%) of the total equity in the enterprise nor shall it exceed thirty- only be 15% of its net worth in view of the restrictions imposed by the
five percent (35%) of the voting stock in that enterprise; and (d) the equity General Banking Act. Disregarding the investment ceilings provided by
investment in other banks shall be deducted from the investing bank's net applicable law would not result in a proper evaluation of whether or not a
worth for purposes of computing the prescribed ratio of net worth to risk bidder is pre-qualified to undertake the project as for all intents and purposes,
assets. such ceiling or legal restriction determines the true maximum
amount which a bidder may invest in the project.
xxx xxx xxx
Further, the determination of whether or not a bidder is pre-qualified to
Further, the 1993 Manual of Regulations for Banks provides: undertake the project requires an evaluation of the financial capacity of the
said bidder at the time the bid is submitted based on the required
SECTION X383. Other Limitations and Restrictions. — The following documents presented by the bidder. The PBAC should not be allowed to
limitations and restrictions shall also apply regarding equity investments of speculate on the future financial ability of the bidder to undertake the
banks. project on the basis of documents submitted. This would open doors to abuse
a. In any single enterprise. — The equity investments of banks in any single and defeat the very purpose of a public bidding. This is especially true in the
enterprise shall not exceed at any time fifteen percent (15%) of the net worth case at bar which involves the investment of billions of pesos by the project
of the investing bank as defined in Sec. X106 and Subsec. X121.5. proponent. The relevant government authority is duty-bound to ensure that
the awardee of the contract possesses the minimum required financial
Thus, the maximum amount that Security Bank could validly invest in the capability to complete the project. To allow the PBAC to estimate the
Paircargo Consortium is only P528,525,656.55, representing 15% of its bidder's future financial capability would not secure the viability and
entire net worth. The total net worth therefore of the Paircargo Consortium, integrity of the project. A restrictive and conservative application of the rules
after considering the maximum amounts that may be validly invested by and procedures of public bidding is necessary not only to protect the
each of its members is P558,384,871.55 or only 6.08% of the project impartiality and regularity of the proceedings but also to ensure the financial
cost,29 an amount substantially less than the prescribed minimum equity and technical reliability of the project. It has been held that:
investment required for the project in the amount of P2,755,095,000.00 or
30% of the project cost. The basic rule in public bidding is that bids should be evaluated based on the
required documents submitted before and not after the opening of bids.
The purpose of pre-qualification in any public bidding is to determine, at the Otherwise, the foundation of a fair and competitive public bidding would be
earliest opportunity, the ability of the bidder to undertake the project. Thus, defeated. Strict observance of the rules, regulations, and guidelines of the
with respect to the bidder's financial capacity at the pre-qualification stage, bidding process is the only safeguard to a fair, honest and competitive
the law requires the government agency to examine and determine the ability public bidding.30
of the bidder to fund the entire cost of the project by considering the
maximum amounts that each bidder may invest in the project at the Thus, if the maximum amount of equity that a bidder may invest in the
time of pre-qualification. project at the time the bids are submittedfalls short of the minimum
amounts required to be put up by the bidder, said bidder should be properly
The PBAC has determined that any prospective bidder for the construction, disqualified. Considering that at the pre-qualification stage, the maximum
operation and maintenance of the NAIA IPT III project should prove that it amounts which the Paircargo Consortium may invest in the project fell short
has the ability to provide equity in the minimum amount of 30% of the of the minimum amounts prescribed by the PBAC, we hold that Paircargo
project cost, in accordance with the 70:30 debt-to-equity ratio prescribed in Consortium was not a qualified bidder. Thus the award of the contract by the
the Bid Documents. Thus, in the case of Paircargo Consortium, the PBAC PBAC to the Paircargo Consortium, a disqualified bidder, is null and void.
should determine the maximum amounts that each member of the
consortium may commit for the construction, operation and maintenance of While it would be proper at this juncture to end the resolution of the instant
the NAIA IPT III project at the time of pre-qualification. With respect to controversy, as the legal effects of the disqualification of respondent
Security Bank, the maximum amount which may be invested by it would PIATCO's predecessor would come into play and necessarily result in the
nullity of all the subsequent contracts entered by it in pursuance of the competition in the public bidding is destroyed. A public bidding would
project, the Court feels that it is necessary to discuss in full the pressing indeed be a farce if after the contract is awarded, the winning bidder may
issues of the present controversy for a complete resolution thereof. modify the contract and include provisions which are favorable to it that
were not previously made available to the other bidders. Thus:
II
It is inherent in public biddings that there shall be a fair competition among
Is the 1997 Concession Agreement valid? the bidders. The specifications in such biddings provide the common ground
or basis for the bidders. The specifications should, accordingly, operate
Petitioners and public respondents contend that the 1997 Concession equally or indiscriminately upon all bidders.32
Agreement is invalid as it contains provisions that substantially depart from
the draft Concession Agreement included in the Bid Documents. They The same rule was restated by Chief Justice Stuart of the Supreme Court of
maintain that a substantial departure from the draft Concession Agreement is Minnesota:
a violation of public policy and renders the 1997 Concession Agreement null
and void. The law is well settled that where, as in this case, municipal authorities can
only let a contract for public work to the lowest responsible bidder, the
PIATCO maintains, however, that the Concession Agreement attached to the proposals and specifications therefore must be so framed as to permit free
Bid Documents is intended to be a draft, i.e., subject to change, alteration or and full competition. Nor can they enter into a contract with the best
modification, and that this intention was clear to all participants, including bidder containing substantial provisions beneficial to him, not included
AEDC, and DOTC/MIAA. It argued further that said intention is expressed or contemplated in the terms and specifications upon which the bids
in Part C (6) of Bid Bulletin No. 3 issued by the PBAC which states: were invited.33
6. Amendments to the Draft Concessions Agreement In fact, in the PBAC Bid Bulletin No. 3 cited by PIATCO to support its
argument that the draft concession agreement is subject to amendment, the
Amendments to the Draft Concessions Agreement shall be issued from time pertinent portion of which was quoted above, the PBAC also clarified
to time. Said amendments shall only cover items that would not materially that "[s]aid amendments shall only cover items that would not materially
affect the preparation of the proponent's proposal.
affect the preparation of the proponent's proposal."
By its very nature, public bidding aims to protect the public interest by While we concede that a winning bidder is not precluded from modifying or
giving the public the best possible advantages through open competition. amending certain provisions of the contract bidded upon, such changes must
Thus:
not constitute substantial or material amendments that would alter the
Competition must be legitimate, fair and honest. In the field of government basic parameters of the contract and would constitute a denial to the
contract law, competition requires, not only `bidding upon a common other bidders of the opportunity to bid on the same terms. Hence, the
standard, a common basis, upon the same thing, the same subject matter, the determination of whether or not a modification or amendment of a contract
same undertaking,' but also that it be legitimate, fair and honest; and not bidded out constitutes a substantial amendment rests on whether the contract,
designed to injure or defraud the government.31 when taken as a whole, would contain substantially different terms and
conditions that would have the effect of altering the technical and/or financial
An essential element of a publicly bidded contract is that all bidders must be proposals previously submitted by other bidders. The alterations and
on equal footing. Not simply in terms of application of the procedural rules modifications in the contract executed between the government and the
and regulations imposed by the relevant government agency, but more winning bidder must be such as to render such executed contract to be an
importantly, on the contract bidded upon. Each bidder must be able to bid on entirely different contract from the one that was bidded upon.
the same thing. The rationale is obvious. If the winning bidder is allowed to
later include or modify certain provisions in the contract awarded such that In the case of Caltex (Philippines), Inc. v. Delgado Brothers, Inc.,34 this
the contract is altered in any material respect, then the essence of fair Court quoted with approval the ruling of the trial court that an amendment to
a contract awarded through public bidding, when such subsequent the extent of the supervision and regulation which MIAA is allowed to
amendment was made without a new public bidding, is null and void: exercise in relation thereto.

The Court agrees with the contention of counsel for the plaintiffs that the due For fees under the first category, i.e., those which are subject to periodic
execution of a contract after public bidding is a limitation upon the right of adjustment in accordance with a prescribed parametric formula and effective
the contracting parties to alter or amend it without another public bidding, for only upon written approval by MIAA, the draft Concession
otherwise what would a public bidding be good for if after the execution Agreementincludes the following:36
of a contract after public bidding, the contracting parties may alter or
amend the contract, or even cancel it, at their will?Public biddings are (1) aircraft parking fees;
held for the protection of the public, and to give the public the best possible
advantages by means of open competition between the bidders. He who bids (2) aircraft tacking fees;
or offers the best terms is awarded the contract subject of the bid, and it is (3) groundhandling fees;
obvious that such protection and best possible advantages to the public will
disappear if the parties to a contract executed after public bidding may alter (4) rentals and airline offices;
or amend it without another previous public bidding.35
(5) check-in counter rentals; and
Hence, the question that comes to fore is this: is the 1997 Concession
Agreement the same agreement that was offered for public bidding, i.e., the (6) porterage fees.
draft Concession Agreement attached to the Bid Documents? A close
comparison of the draft Concession Agreement attached to the Bid Under the 1997 Concession Agreement, fees which are subject to
Documents and the 1997 Concession Agreement reveals that the documents adjustment and effective upon MIAA approval are classified as "Public
differ in at least two material respects: Utility Revenues" and include:37

a. Modification on the Public (1) aircraft parking fees;

Utility Revenues and Non-Public (2) aircraft tacking fees;

Utility Revenues that may be (3) check-in counter fees; and

collected by PIATCO (4) Terminal Fees.

The fees that may be imposed and collected by PIATCO under the draft The implication of the reduced number of fees that are subject to MIAA
Concession Agreement and the 1997 Concession Agreement may be approval is best appreciated in relation to fees included in the second
classified into three distinct categories: (1) fees which are subject to periodic category identified above. Under the 1997 Concession Agreement, fees
adjustment of once every two years in accordance with a prescribed which PIATCO may adjust whenever it deems necessary without need for
parametric formula and adjustments are made effective only upon written consent of DOTC/MIAA are "Non-Public Utility Revenues" and is defined
approval by MIAA; (2) fees other than those included in the first category as "all other income not classified as Public Utility Revenues derived from
which maybe adjusted by PIATCO whenever it deems necessary without operations of the Terminal and the Terminal Complex."38 Thus, under the
need for consent of DOTC/MIAA; and (3) new fees and charges that may be 1997 Concession Agreement, ground handling fees, rentals from airline
imposed by PIATCO which have not been previously imposed or collected at offices and porterage fees are no longer subject to MIAA regulation.
the Ninoy Aquino International Airport Passenger Terminal I, pursuant to
Further, under Section 6.03 of the draft Concession Agreement, MIAA
Administrative Order No. 1, Series of 1993, as amended. The glaring
reserves the right to regulate (1) lobby and vehicular parking fees and (2)
distinctions between the draft Concession Agreement and the 1997
other new fees and charges that may be imposed by PIATCO. Such
Concession Agreement lie in the types of fees included in each category and
regulation may be made by periodic adjustment and is effective only upon regulation by MIAA with respect to the particular fees that may be charged
written approval of MIAA. The full text of said provision is quoted below: by PIATCO.

Section 6.03. Periodic Adjustment in Fees and Charges. Adjustments in the Moreover, with respect to the third category of fees that may be imposed
aircraft parking fees, aircraft tacking fees, groundhandling fees, rentals and and collected by PIATCO, i.e., new fees and charges that may be imposed by
airline offices, check-in-counter rentals and porterage fees shall be allowed PIATCO which have not been previously imposed or collected at the Ninoy
only once every two years and in accordance with the Parametric Formula Aquino International Airport Passenger Terminal I, under Section 6.03 of
attached hereto as Annex F. Provided that adjustments shall be made the draft Concession Agreement MIAA has reserved the right to regulate
effective only after the written express approval of the MIAA. Provided, the same under the same conditions that MIAA may regulate fees under the
further, that such approval of the MIAA, shall be contingent only on the first category, i.e., periodic adjustment of once every two years in accordance
conformity of the adjustments with the above said parametric formula. The with a prescribed parametric formula and effective only upon written
first adjustment shall be made prior to the In-Service Date of the Terminal. approval by MIAA. However, under the 1997 Concession
Agreement, adjustment of fees under the third category is not subject to
The MIAA reserves the right to regulate under the foregoing terms and MIAA regulation.
conditions the lobby and vehicular parking fees and other new fees and
charges as contemplated in paragraph 2 of Section 6.01 if in its judgment With respect to terminal fees that may be charged by PIATCO,41 as shown
the users of the airport shall be deprived of a free option for the services earlier, this was included within the category of "Public Utility Revenues"
they cover.39 under the 1997 Concession Agreement. This classification is significant
because under the 1997 Concession Agreement, "Public Utility Revenues"
On the other hand, the equivalent provision under the 1997 Concession are subject to an "Interim Adjustment" of fees upon the occurrence of certain
Agreement reads: extraordinary events specified in the agreement.42 However, under the draft
Concession Agreement, terminal fees are not included in the types of fees
Section 6.03 Periodic Adjustment in Fees and Charges. that may be subject to "Interim Adjustment."43
xxx xxx xxx Finally, under the 1997 Concession Agreement, "Public Utility Revenues,"
(c) Concessionaire shall at all times be judicious in fixing fees and charges except terminal fees, are denominated in US Dollars44 while payments to the
constituting Non-Public Utility Revenues in order to ensure that End Users Government are in Philippine Pesos. In the draft Concession Agreement,no
are not unreasonably deprived of services. While the vehicular parking fee, such stipulation was included. By stipulating that "Public Utility Revenues"
porterage fee and greeter/well wisher fee constitute Non-Public Utility will be paid to PIATCO in US Dollars while payments by PIATCO to the
Revenues of Concessionaire, GRP may intervene and require Government are in Philippine currency under the 1997 Concession
Concessionaire to explain and justify the fee it may set from time to Agreement, PIATCO is able to enjoy the benefits of depreciations of the
time, if in the reasonable opinion of GRP the said fees have become Philippine Peso, while being effectively insulated from the detrimental
exorbitant resulting in the unreasonable deprivation of End Users of such effects of exchange rate fluctuations.
services.40 When taken as a whole, the changes under the 1997 Concession Agreement
Thus, under the 1997 Concession Agreement, with respect to (1) vehicular with respect to reduction in the types of fees that are subject to MIAA
parking fee, (2) porterage fee and (3) greeter/well wisher fee, all that MIAA regulation and the relaxation of such regulation with respect to other fees are
can do is to require PIATCO to explain and justify the fees set by PIATCO. significant amendments that substantially distinguish the draft Concession
In the draft Concession Agreement, vehicular parking fee is subject to Agreement from the 1997 Concession Agreement. The 1997 Concession
MIAA regulation and approval under the second paragraph of Section 6.03 Agreement, in this respect, clearly gives PIATCO more favorable terms
thereof while porterage fee is covered by the first paragraph of the same than what was available to other bidders at the time the contract was
provision. There is an obvious relaxation of the extent of control and bidded out. It is not very difficult to see that the changes in the 1997
Concession Agreement translate to direct and concrete financial
advantages for PIATCO which were not available at the time the contract of the 180-day period GRP shall not have served the Unpaid Creditors and
was offered for bidding. It cannot be denied that under the 1997 Concession Concessionaire written notice of its choice, GRP shall be deemed to have
Agreement only "Public Utility Revenues" are subject to MIAA regulation. elected to take over the Development Facility with the concomitant
Adjustments of all other fees imposed and collected by PIATCO are entirely assumption of Attendant Liabilities.
within its control. Moreover, with respect to terminal fees, under the 1997
Concession Agreement, the same is further subject to "Interim Adjustments" (c) If GRP should, by written notice, allow the Unpaid Creditors to be
not previously stipulated in the draft Concession Agreement. Finally, the substituted as concessionaire, the latter shall form and organize a concession
change in the currency stipulated for "Public Utility Revenues" under the company qualified to take over the operation of the Development Facility. If
1997 Concession Agreement, except terminal fees, gives PIATCO an added the concession company should elect to designate an operator for the
benefit which was not available at the time of bidding. Development Facility, the concession company shall in good faith identify
and designate a qualified operator acceptable to GRP within one hundred
b. Assumption by the eighty (180) days from receipt of GRP's written notice. If the concession
company, acting in good faith and with due diligence, is unable to designate
Government of the liabilities of a qualified operator within the aforesaid period, then GRP shall at the end of
the 180-day period take over the Development Facility and assume Attendant
PIATCO in the event of the latter's Liabilities.
default thereof The term "Attendant Liabilities" under the 1997 Concession Agreement is
Under the draft Concession Agreement, default by PIATCO of any of its defined as:
obligations to creditors who have provided, loaned or advanced funds for the Attendant Liabilities refer to all amounts recorded and from time to time
NAIA IPT III project does not result in the assumption by the Government of outstanding in the books of the Concessionaire as owing to Unpaid
these liabilities. In fact, nowhere in the said contract does default of Creditors who have provided, loaned or advanced funds actually used
PIATCO's loans figure in the agreement. Such default does not directly result for the Project, including all interests, penalties, associated fees, charges,
in any concomitant right or obligation in favor of the Government. surcharges, indemnities, reimbursements and other related expenses, and
However, the 1997 Concession Agreement provides: further including amounts owed by Concessionaire to its suppliers,
contractors and sub-contractors.
Section 4.04 Assignment.
Under the above quoted portions of Section 4.04 in relation to the definition
xxx xxx xxx of "Attendant Liabilities," default by PIATCO of its loans used to finance
the NAIA IPT III project triggers the occurrence of certain events that
(b) In the event Concessionaire should default in the payment of an leads to the assumption by the Government of the liability for the loans.
Attendant Liability, and the default has resulted in the acceleration of the Only in one instance may the Government escape the assumption of
payment due date of the Attendant Liability prior to its stated date of PIATCO's liabilities, i.e., when the Government so elects and allows a
maturity, the Unpaid Creditors and Concessionaire shall immediately inform qualified operator to take over as Concessionaire. However, this
GRP in writing of such default. GRP shall, within one hundred eighty (180) circumstance is dependent on the existence and availability of a qualified
Days from receipt of the joint written notice of the Unpaid Creditors and operator who is willing to take over the rights and obligations of
Concessionaire, either (i) take over the Development Facility and assume the PIATCO under the contract, a circumstance that is not entirely within
Attendant Liabilities, or (ii) allow the Unpaid Creditors, if qualified, to be the control of the Government.
substituted as concessionaire and operator of the Development Facility in
accordance with the terms and conditions hereof, or designate a qualified Without going into the validity of this provision at this juncture, suffice it to
operator acceptable to GRP to operate the Development Facility, likewise state that Section 4.04 of the 1997 Concession Agreement may be considered
under the terms and conditions of this Agreement; Provided that if at the end a form of security for the loans PIATCO has obtained to finance the project,
an option that was not made available in the draft Concession Agreement. contracts and avoid suspicion of anomalies and it places all bidders in equal
Section 4.04 is an important amendment to the 1997 Concession Agreement footing.47 Any government action which permits any substantial variance
because it grants PIATCO a financial advantage or benefit which was not between the conditions under which the bids are invited and the contract
previously made available during the bidding process. This financial executed after the award thereof is a grave abuse of discretion
advantage is a significant modification that translates to better terms and amounting to lack or excess of jurisdiction which warrants proper
conditions for PIATCO. judicial action.

PIATCO, however, argues that the parties to the bidding procedure In view of the above discussion, the fact that the foregoing substantial
acknowledge that the draft Concession Agreement is subject to amendment amendments were made on the 1997 Concession Agreement renders the
because the Bid Documents permit financing or borrowing. They claim that same null and void for being contrary to public policy. These amendments
it was the lenders who proposed the amendments to the draft Concession convert the 1997 Concession Agreement to an entirely different
Agreement which resulted in the 1997 Concession Agreement. agreement from the contract bidded out or the draft Concession Agreement.
It is not difficult to see that the amendments on (1) the types of fees or
We agree that it is not inconsistent with the rationale and purpose of the BOT charges that are subject to MIAA regulation or control and the extent thereof
Law to allow the project proponent or the winning bidder to obtain financing and (2) the assumption by the Government, under certain conditions, of the
for the project, especially in this case which involves the construction, liabilities of PIATCO directly translates concrete financial advantages to
operation and maintenance of the NAIA IPT III. Expectedly, compliance by PIATCO that were previously not available during the bidding process.
the project proponent of its undertakings therein would involve a substantial These amendments cannot be taken as merely supplements to or
amount of investment. It is therefore inevitable for the awardee of the implementing provisions of those already existing in the draft Concession
contract to seek alternate sources of funds to support the project. Be that as it Agreement. The amendments discussed above present new terms and
may, this Court maintains that amendments to the contract bidded upon conditions which provide financial benefit to PIATCO which may have
should always conform to the general policy on public bidding if such altered the technical and financial parameters of other bidders had they
procedure is to be faithful to its real nature and purpose. By its very nature known that such terms were available.
and characteristic, competitive public bidding aims to protect the public
interest by giving the public the best possible advantages through open III
competition.45 It has been held that the three principles in public bidding are
(1) the offer to the public; (2) opportunity for competition; and (3) a basis for Direct Government Guarantee
the exact comparison of bids. A regulation of the matter which excludes any
of these factors destroys the distinctive character of the system and thwarts Article IV, Section 4.04(b) and (c), in relation to Article 1.06, of the 1997
the purpose of its adoption.46 These are the basic parameters which every Concession Agreement provides:
awardee of a contract bidded out must conform to, requirements of financing Section 4.04 Assignment
and borrowing notwithstanding. Thus, upon a concrete showing that, as in
this case, the contract signed by the government and the contract-awardee is xxx xxx xxx
an entirely different contract from the contract bidded, courts should not
hesitate to strike down said contract in its entirety for violation of public (b) In the event Concessionaire should default in the payment of an
policy on public bidding. A strict adherence on the principles, rules and Attendant Liability, and the default resulted in the acceleration of the
regulations on public bidding must be sustained if only to preserve the payment due date of the Attendant Liability prior to its stated date of
integrity and the faith of the general public on the procedure. maturity, the Unpaid Creditors and Concessionaire shall immediately inform
GRP in writing of such default. GRP shall within one hundred eighty (180)
Public bidding is a standard practice for procuring government contracts for days from receipt of the joint written notice of the Unpaid Creditors and
public service and for furnishing supplies and other materials. It aims to Concessionaire, either (i) take over the Development Facility and assume the
secure for the government the lowest possible price under the most favorable Attendant Liabilities, or (ii) allow the Unpaid Creditors, if qualified to be
terms and conditions, to curtail favoritism in the award of government substituted as concessionaire and operator of the Development facility in
accordance with the terms and conditions hereof, or designate a qualified to designate a qualified operator within the prescribed period.51 In
operator acceptable to GRP to operate the Development Facility, likewise effect, whatever option the Government chooses to take in the event of
under the terms and conditions of this Agreement; Provided, that if at the end PIATCO's failure to fulfill its loan obligations, the Government is still at
of the 180-day period GRP shall not have served the Unpaid Creditors and a risk of assuming PIATCO's outstanding loans. This is due to the fact
Concessionaire written notice of its choice, GRP shall be deemed to have that the Government would only be free from assuming PIATCO's debts if
elected to take over the Development Facility with the concomitant the unpaid creditors would be able to designate a qualified operator within
assumption of Attendant Liabilities. the period provided for in the contract. Thus, the Government's assumption
of liability is virtually out of its control. The Government under the
(c) If GRP, by written notice, allow the Unpaid Creditors to be substituted as circumstances provided for in the 1997 Concession Agreement is at the
concessionaire, the latter shall form and organize a concession company mercy of the existence, availability and willingness of a qualified operator.
qualified to takeover the operation of the Development Facility. If the The above contractual provisions constitute a direct government guarantee
concession company should elect to designate an operator for the which is prohibited by law.
Development Facility, the concession company shall in good faith identify
and designate a qualified operator acceptable to GRP within one hundred One of the main impetus for the enactment of the BOT Law is the lack of
eighty (180) days from receipt of GRP's written notice. If the concession government funds to construct the infrastructure and development projects
company, acting in good faith and with due diligence, is unable to designate necessary for economic growth and development. This is why private sector
a qualified operator within the aforesaid period, then GRP shall at the end of resources are being tapped in order to finance these projects. The BOT law
the 180-day period take over the Development Facility and assume allows the private sector to participate, and is in fact encouraged to do so by
Attendant Liabilities. way of incentives, such as minimizing the unstable flow of
returns,52 provided that the government would not have to unnecessarily
…. expend scarcely available funds for the project itself. As such, direct
guarantee, subsidy and equity by the government in these projects are strictly
Section 1.06. Attendant Liabilities prohibited.53 This is but logical for if the government would in the end
Attendant Liabilities refer to all amounts recorded and from time to time still be at a risk of paying the debts incurred by the private entity in the
outstanding in the books of the Concessionaire as owing to Unpaid BOT projects, then the purpose of the law is subverted.
Creditors who have provided, loaned or advanced funds actually used for Section 2(n) of the BOT Law defines direct guarantee as follows:
the Project, including all interests, penalties, associated fees, charges,
surcharges, indemnities, reimbursements and other related expenses, and (n) Direct government guarantee — An agreement whereby the government
further including amounts owed by Concessionaire to its suppliers, or any of its agencies or local government units assume responsibility for
contractors and sub-contractors.48 the repayment of debt directly incurred by the project proponent in
implementing the project in case of a loan default.
It is clear from the above-quoted provisions that Government, in the event
that PIATCO defaults in its loan obligations, is obligated to pay "all Clearly by providing that the Government "assumes" the attendant liabilities,
amounts recorded and from time to time outstanding from the books" of which consists of PIATCO's unpaid debts, the 1997 Concession Agreement
PIATCO which the latter owes to its creditors.49 These amounts include "all provided for a direct government guarantee for the debts incurred by
interests, penalties, associated fees, charges, surcharges, indemnities, PIATCO in the implementation of the NAIA IPT III project. It is of no
reimbursements and other related expenses."50 This obligation of the moment that the relevant sections are subsumed under the title of
Government to pay PIATCO's creditors upon PIATCO's default would arise "assignment". The provisions providing for direct government guarantee
if the Government opts to take over NAIA IPT III. It should be noted, which is prohibited by law is clear from the terms thereof.
however, that even if the Government chooses the second option, which is to
allow PIATCO's unpaid creditors operate NAIA IPT III, the Government is
still at a risk of being liable to PIATCO's creditors should the latter be unable
The fact that the ARCA superseded the 1997 Concession Agreement did not [PIATCO] equal to the Appraised Value (as hereinafter defined) of the
cure this fatal defect. Article IV, Section 4.04(c), in relation to Article I, Development Facility [NAIA Terminal 3] or the sum of the Attendant
Section 1.06, of the ARCA provides: Liabilities, if greater. Notwithstanding Section 8.01(c) hereof, this
Agreement shall be deemed terminated upon the transfer of the Development
Section 4.04 Security Facility [NAIA Terminal 3] to GRP pursuant hereto;
xxx xxx xxx xxx xxx xxx
(c) GRP agrees with Concessionaire (PIATCO) that it shall negotiate in Section 1.06. Attendant Liabilities
good faith and enter into direct agreement with the Senior Lenders, or
with an agent of such Senior Lenders (which agreement shall be subject to Attendant Liabilities refer to all amounts in each case supported by
the approval of the Bangko Sentral ng Pilipinas), in such form as may be verifiable evidence from time to time owed or which may become owing by
reasonably acceptable to both GRP and Senior Lenders, with regard, inter Concessionaire [PIATCO] to Senior Lenders or any other persons or
alia, to the following parameters: entities who have provided, loaned, or advanced funds or provided
financial facilities to Concessionaire [PIATCO] for the Project [NAIA
xxx xxx xxx Terminal 3], including, without limitation, all principal, interest,
associated fees, charges, reimbursements, and other related
(iv) If the Concessionaire [PIATCO] is in default under a payment expenses (including the fees, charges and expenses of any agents or trustees
obligation owed to the Senior Lenders, and as a result thereof the Senior of such persons or entities), whether payable at maturity, by acceleration or
Lenders have become entitled to accelerate the Senior Loans, the Senior otherwise, and further including amounts owed by Concessionaire [PIATCO]
Lenders shall have the right to notify GRP of the same, and without prejudice to its professional consultants and advisers, suppliers, contractors and sub-
to any other rights of the Senior Lenders or any Senior Lenders' agent may contractors.54
have (including without limitation under security interests granted in favor of
the Senior Lenders), to either in good faith identify and designate a nominee It is clear from the foregoing contractual provisions that in the event that
which is qualified under sub-clause (viii)(y) below to operate the PIATCO fails to fulfill its loan obligations to its Senior Lenders, the
Development Facility [NAIA Terminal 3] or transfer the Concessionaire's Government is obligated to directly negotiate and enter into an agreement
[PIATCO] rights and obligations under this Agreement to a transferee which relating to NAIA IPT III with the Senior Lenders, should the latter fail to
is qualified under sub-clause (viii) below; appoint a qualified nominee or transferee who will take the place of
PIATCO. If the Senior Lenders and the Government are unable to enter into
xxx xxx xxx an agreement after the prescribed period, the Government must then pay
(vi) if the Senior Lenders, acting in good faith and using reasonable efforts, PIATCO, upon transfer of NAIA IPT III to the Government, termination
are unable to designate a nominee or effect a transfer in terms and conditions payment equal to the appraised value of the project or the value of the
satisfactory to the Senior Lenders within one hundred eighty (180) days after attendant liabilities whichever is greater. Attendant liabilities as defined in
giving GRP notice as referred to respectively in (iv) or (v) above, then GRP the ARCA includes all amounts owed or thereafter may be owed by PIATCO
and the Senior Lenders shall endeavor in good faith to enter into any other not only to the Senior Lenders with whom PIATCO has defaulted in its loan
arrangement relating to the Development Facility [NAIA Terminal 3] (other obligations but to all other persons who may have loaned, advanced funds or
than a turnover of the Development Facility [NAIA Terminal 3] to GRP) provided any other type of financial facilities to PIATCO for NAIA IPT III.
within the following one hundred eighty (180) days. If no The amount of PIATCO's debt that the Government would have to pay as a
agreement relating to the Development Facility [NAIA Terminal 3] is result of PIATCO's default in its loan obligations -- in case no qualified
arrived at by GRP and the Senior Lenders within the said 180-day period, nominee or transferee is appointed by the Senior Lenders and no other
then at the end thereof the Development Facility [NAIA Terminal 3] shall agreement relating to NAIA IPT III has been reached between the
be transferred by the Concessionaire [PIATCO] to GRP or its designee Government and the Senior Lenders -- includes, but is not limited to, "all
and GRP shall make a termination payment to Concessionaire principal, interest, associated fees, charges, reimbursements, and other
related expenses . . . whether payable at maturity, by acceleration or liable for PIATCO's loans should the conditions as set forth in the ARCA
otherwise."55 arise. This is a form of direct government guarantee.

It is clear from the foregoing that the ARCA provides for a direct The BOT Law and its implementing rules provide that in order for an
guarantee by the government to pay PIATCO's loans not only to its unsolicited proposal for a BOT project may be accepted, the following
Senior Lenders but all other entities who provided PIATCO funds or conditions must first be met: (1) the project involves a new concept in
services upon PIATCO's default in its loan obligation with its Senior technology and/or is not part of the list of priority projects, (2) no direct
Lenders. The fact that the Government's obligation to pay PIATCO's lenders government guarantee, subsidy or equity is required, and (3) the
for the latter's obligation would only arise after the Senior Lenders fail to government agency or local government unit has invited by publication other
appoint a qualified nominee or transferee does not detract from the fact that, interested parties to a public bidding and conducted the same.56 The failure to
should the conditions as stated in the contract occur, the ARCA still obligates meet any of the above conditions will result in the denial of the proposal. It is
the Government to pay any and all amounts owed by PIATCO to its lenders further provided that the presence of direct government guarantee, subsidy or
in connection with NAIA IPT III. Worse, the conditions that would make the equity will "necessarily disqualify a proposal from being treated and
Government liable for PIATCO's debts is triggered by PIATCO's own accepted as an unsolicited proposal."57 The BOT Law clearly and strictly
default of its loan obligations to its Senior Lenders to which loan contracts prohibits direct government guarantee, subsidy and equity in unsolicited
the Government was never a party to. The Government was not even given proposals that the mere inclusion of a provision to that effect is fatal and is
an option as to what course of action it should take in case PIATCO sufficient to deny the proposal. It stands to reason therefore that if a proposal
defaulted in the payment of its senior loans. The Government, upon can be denied by reason of the existence of direct government guarantee,
PIATCO's default, would be merely notified by the Senior Lenders of the then its inclusion in the contract executed after the said proposal has been
same and it is the Senior Lenders who are authorized to appoint a qualified accepted is likewise sufficient to invalidate the contract itself. A prohibited
nominee or transferee. Should the Senior Lenders fail to make such an provision, the inclusion of which would result in the denial of a proposal
appointment, the Government is then automatically obligated to "directly cannot, and should not, be allowed to later on be inserted in the contract
deal and negotiate" with the Senior Lenders regarding NAIA IPT III. The resulting from the said proposal. The basic rules of justice and fair play alone
only way the Government would not be liable for PIATCO's debt is for a militate against such an occurrence and must not, therefore, be countenanced
qualified nominee or transferee to be appointed in place of PIATCO to particularly in this instance where the government is exposed to the risk of
continue the construction, operation and maintenance of NAIA IPT III. This shouldering hundreds of million of dollars in debt.
"pre-condition", however, will not take the contract out of the ambit of a
direct guarantee by the government as the existence, availability and This Court has long and consistently adhered to the legal maxim that those
willingness of a qualified nominee or transferee is totally out of the that cannot be done directly cannot be done indirectly.58 To declare the
government's control. As such the Government is virtually at the mercy of PIATCO contracts valid despite the clear statutory prohibition against a
PIATCO (that it would not default on its loan obligations to its Senior direct government guarantee would not only make a mockery of what
Lenders), the Senior Lenders (that they would appoint a qualified nominee or the BOT Law seeks to prevent -- which is to expose the government to
transferee or agree to some other arrangement with the Government) and the the risk of incurring a monetary obligation resulting from a contract of
existence of a qualified nominee or transferee who is able and willing to take loan between the project proponent and its lenders and to which the
the place of PIATCO in NAIA IPT III. Government is not a party to -- but would also render the BOT Law
useless for what it seeks to achieve –- to make use of the resources of the
The proscription against government guarantee in any form is one of the private sector in the "financing, operation and maintenance of
policy considerations behind the BOT Law. Clearly, in the present case, infrastructure and development projects"59which are necessary for
the ARCA obligates the Government to pay for all loans, advances and national growth and development but which the government,
obligations arising out of financial facilities extended to PIATCO for the unfortunately, could ill-afford to finance at this point in time.
implementation of the NAIA IPT III project should PIATCO default in its
loan obligations to its Senior Lenders and the latter fails to appoint a IV
qualified nominee or transferee. This in effect would make the Government
Temporary takeover of business affected with public interest reasonable cost for the use of the Terminal and/or Terminal Complex,
(which is in the amount at least equal to the debt service requirements of
Article XII, Section 17 of the 1987 Constitution provides: Concessionaire, if the temporary take over should occur at the time when
Concessionaire is still servicing debts owed to project lenders), any loss or
Section 17. In times of national emergency, when the public interest so damage to the Development Facility, and other consequential damages. If the
requires, the State may, during the emergency and under reasonable terms parties cannot agree on the reasonable compensation of Concessionaire, or on
prescribed by it, temporarily take over or direct the operation of any privately the liability of GRP as aforesaid, the matter shall be resolved in accordance
owned public utility or business affected with public interest. with Section 10.01 [Arbitration]. Any amount determined to be payable by
The above provision pertains to the right of the State in times of national GRP to Concessionaire shall be offset from the amount next payable by
emergency, and in the exercise of its police power, to temporarily take over Concessionaire to GRP.62
the operation of any business affected with public interest. In the 1986 PIATCO cannot, by mere contractual stipulation, contravene the
Constitutional Commission, the term "national emergency" was defined to
Constitutional provision on temporary government takeover and
include threat from external aggression, calamities or national disasters, but
obligate the government to pay "reasonable cost for the use of the
not strikes "unless it is of such proportion that would paralyze government Terminal and/or Terminal Complex."63 Article XII, section 17 of the 1987
service."60 The duration of the emergency itself is the determining factor as Constitution envisions a situation wherein the exigencies of the times
to how long the temporary takeover by the government would last.61 The necessitate the government to "temporarily take over or direct the operation
temporary takeover by the government extends only to the operation of the of any privately owned public utility or business affected with public
business and not to the ownership thereof. As such the government is not interest." It is the welfare and interest of the public which is the paramount
required to compensate the private entity-owner of the said business as consideration in determining whether or not to temporarily take over a
there is no transfer of ownership, whether permanent or temporary. The particular business. Clearly, the State in effecting the temporary takeover is
private entity-owner affected by the temporary takeover cannot, likewise, exercising its police power. Police power is the "most essential, insistent, and
claim just compensation for the use of the said business and its properties as illimitable of powers."64 Its exercise therefore must not be unreasonably
the temporary takeover by the government is in exercise of its police hampered nor its exercise be a source of obligation by the government in the
power and not of its power of eminent domain. absence of damage due to arbitrariness of its exercise.65 Thus, requiring the
Article V, Section 5.10 (c) of the 1997 Concession Agreement provides: government to pay reasonable compensation for the reasonable use of the
property pursuant to the operation of the business contravenes the
Section 5.10 Temporary Take-over of operations by GRP. Constitution.

…. V

(c) In the event the development Facility or any part thereof and/or the Regulation of Monopolies
operations of Concessionaire or any part thereof, become the subject matter
of or be included in any notice, notification, or declaration concerning or A monopoly is "a privilege or peculiar advantage vested in one or more
relating to acquisition, seizure or appropriation by GRP in times of war or persons or companies, consisting in the exclusive right (or power) to carry on
national emergency, GRP shall, by written notice to Concessionaire, a particular business or trade, manufacture a particular article, or control the
immediately take over the operations of the Terminal and/or the Terminal sale of a particular commodity."66 The 1987 Constitution strictly regulates
Complex. During such take over by GRP, the Concession Period shall be monopolies, whether private or public, and even provides for their
suspended; provided, that upon termination of war, hostilities or national prohibition if public interest so requires. Article XII, Section 19 of the 1987
emergency, the operations shall be returned to Concessionaire, at which time, Constitution states:
the Concession period shall commence to run again. Concessionaire shall be
entitled to reasonable compensation for the duration of the temporary
take over by GRP, which compensation shall take into account the
Sec. 19. The state shall regulate or prohibit monopolies when the public the MIAA, which is the government agency authorized to operate the NAIA
interest so requires. No combinations in restraint of trade or unfair complex, as well as DOTC, the department to which MIAA is attached.74
competition shall be allowed.
This is in accord with the Constitutional mandate that a monopoly which is
Clearly, monopolies are not per se prohibited by the Constitution but may be not prohibited must be regulated.75 While it is the declared policy of the BOT
permitted to exist to aid the government in carrying on an enterprise or to aid Law to encourage private sector participation by "providing a climate of
in the performance of various services and functions in the interest of the minimum government regulations,"76 the same does not mean that
public.67 Nonetheless, a determination must first be made as to whether Government must completely surrender its sovereign power to protect public
public interest requires a monopoly. As monopolies are subject to abuses that interest in the operation of a public utility as a monopoly. The operation of
can inflict severe prejudice to the public, they are subject to a higher level of said public utility can not be done in an arbitrary manner to the detriment of
State regulation than an ordinary business undertaking. the public which it seeks to serve. The right granted to the public utility may
be exclusive but the exercise of the right cannot run riot. Thus, while
In the cases at bar, PIATCO, under the 1997 Concession Agreement and the PIATCO may be authorized to exclusively operate NAIA IPT III as an
ARCA, is granted the "exclusive rightto operate a commercial international international passenger terminal, the Government, through the MIAA, has
passenger terminal within the Island of Luzon" at the NAIA IPT III.68 This is the right and the duty to ensure that it is done in accord with public interest.
with the exception of already existing international airports in Luzon such as PIATCO's right to operate NAIA IPT III cannot also violate the rights of
those located in the Subic Bay Freeport Special Economic Zone third parties.
("SBFSEZ"), Clark Special Economic Zone ("CSEZ") and in Laoag
City.69 As such, upon commencement of PIATCO's operation of NAIA IPT Section 3.01(e) of the 1997 Concession Agreement and the ARCA provide:
III, Terminals 1 and 2 of NAIA would cease to function as international
passenger terminals. This, however, does not prevent MIAA to use Terminals 3.01 Concession Period
1 and 2 as domestic passenger terminals or in any other manner as it may
deem appropriate except those activities that would compete with NAIA IPT xxx xxx xxx
III in the latter's operation as an international passenger terminal.70 The right (e) GRP confirms that certain concession agreements relative to certain
granted to PIATCO to exclusively operate NAIA IPT III would be for a services and operations currently being undertaken at the Ninoy Aquino
period of twenty-five (25) years from the In-Service Date71 and renewable International Airport passenger Terminal I have a validity period extending
for another twenty-five (25) years at the option of the government.72 Both beyond the In-Service Date. GRP through DOTC/MIAA, confirms that
the 1997 Concession Agreement and the ARCA further provide that, in these services and operations shall not be carried over to the Terminal and
view of the exclusive right granted to PIATCO, the concession contracts the Concessionaire is under no legal obligation to permit such carry-
of the service providers currently servicing Terminals 1 and 2 would no over except through a separate agreement duly entered into with
longer be renewed and those concession contracts whose expiration are Concessionaire. In the event Concessionaire becomes involved in any
subsequent to the In-Service Date would cease to be effective on the said litigation initiated by any such concessionaire or operator, GRP undertakes
date.73 and hereby holds Concessionaire free and harmless on full indemnity basis
The operation of an international passenger airport terminal is no doubt an from and against any loss and/or any liability resulting from any such
undertaking imbued with public interest. In entering into a Build–Operate- litigation, including the cost of litigation and the reasonable fees paid or
and-Transfer contract for the construction, operation and maintenance of payable to Concessionaire's counsel of choice, all such amounts shall be fully
NAIA IPT III, the government has determined that public interest would be deductible by way of an offset from any amount which the Concessionaire is
served better if private sector resources were used in its construction and an bound to pay GRP under this Agreement.
exclusive right to operate be granted to the private entity undertaking the said During the oral arguments on December 10, 2002, the counsel for the
project, in this case PIATCO. Nonetheless, the privilege given to PIATCO is petitioners-in-intervention for G.R. No. 155001 stated that there are two
subject to reasonable regulation and supervision by the Government through service providers whose contracts are still existing and whose validity
extends beyond the In-Service Date. One contract remains valid until 2008 and its Implementing Rules and Regulations are also null and void. The
and the other until 2010.77 Supplements, being accessory contracts to the ARCA, are likewise null and
void.
We hold that while the service providers presently operating at NAIA
Terminal 1 do not have an absolute right for the renewal or the extension of WHEREFORE, the 1997 Concession Agreement, the Amended and
their respective contracts, those contracts whose duration extends beyond Restated Concession Agreement and the Supplements thereto are set aside
NAIA IPT III's In-Service-Date should not be unduly prejudiced. These for being null and void.
contracts must be respected not just by the parties thereto but also by third
parties. PIATCO cannot, by law and certainly not by contract, render a valid SO ORDERED.
and binding contract nugatory. PIATCO, by the mere expedient of claiming
an exclusive right to operate, cannot require the Government to break its Davide, Jr., C.J., Bellosillo, Ynares-Santiago, Sandoval-Gutierrez, Austria-
contractual obligations to the service providers. In contrast to the arrastre and Martinez, Corona, and Carpio-Morales, JJ., concur.
stevedoring service providers in the case of Anglo-Fil Trading Corporation Vitug, J., see separate (dissenting) opinion.
v. Lazaro78 whose contracts consist of temporary hold-over permits, the Panganiban, J., please see separate opinion.
affected service providers in the cases at bar, have a valid and binding Quisumbing, J., no jurisdiction, please see separate opinion of J. Vitug in
contract with the Government, through MIAA, whose period of effectivity, which he concurs.
as well as the other terms and conditions thereof, cannot be violated. Carpio, J., no part.
Callejo, Sr., J., also concur in the separate opinion of J. Panganiban.
In fine, the efficient functioning of NAIA IPT III is imbued with public Azcuna, J., joins the separate opinion of J. Vitug.
interest. The provisions of the 1997 Concession Agreement and the ARCA
did not strip government, thru the MIAA, of its right to supervise the
operation of the whole NAIA complex, including NAIA IPT III. As the
primary government agency tasked with the job,79 it is MIAA's responsibility SEPARATE OPINIONS
to ensure that whoever by contract is given the right to operate NAIA IPT III
will do so within the bounds of the law and with due regard to the rights of VITUG, J.:
third parties and above all, the interest of the public.
This Court is bereft of jurisdiction to hear the petitions at bar. The
VI Constitution provides that the Supreme Court shall exercise original
jurisdiction over, among other actual controversies, petitions for certiorari,
CONCLUSION prohibition, mandamus, quo warranto, and habeas corpus.1 The cases in
In sum, this Court rules that in view of the absence of the requisite financial question, although denominated to be petitions for prohibition, actually pray
capacity of the Paircargo Consortium, predecessor of respondent PIATCO, for the nullification of the PIATCO contracts and to restrain respondents
the award by the PBAC of the contract for the construction, operation and from implementing said agreements for being illegal and unconstitutional.
maintenance of the NAIA IPT III is null and void. Further, considering that Section 2, Rule 65 of the Rules of Court states:
the 1997 Concession Agreement contains material and substantial
amendments, which amendments had the effect of converting the 1997 "When the proceedings of any tribunal, corporation, board, officer or person,
Concession Agreement into an entirely different agreement from the contract whether exercising judicial, quasi-judicial or ministerial functions, are
bidded upon, the 1997 Concession Agreement is similarly null and void for without or in excess of its or his jurisdiction, or with grave abuse of
being contrary to public policy. The provisions under Sections 4.04(b) and discretion amounting to lack or excess of jurisdiction, and there is no appeal
(c) in relation to Section 1.06 of the 1997 Concession Agreement and Section or any other plain, speedy and adequate remedy in the ordinary course of
4.04(c) in relation to Section 1.06 of the ARCA, which constitute a direct law, a person aggrieved thereby may file a verified petition in the proper
government guarantee expressly prohibited by, among others, the BOT Law court, alleging the facts with certainty and praying that judgment be rendered
commanding the respondent to desist from further proceedings in the action The five contracts for the construction and the operation of Ninoy Aquino
or matter specified therein, or otherwise granting such incidental reliefs as International Airport (NAIA) Terminal III, the subject of the consolidated
law and justice may require." Petitions before the Court, are replete with outright violations of law, public
policy and the Constitution. The only proper thing to do is declare them all
The rule is explicit. A petition for prohibition may be filed against a tribunal, null and void ab initio and let the chips fall where they may. Fiat iustitia ruat
corporation, board, officer or person, exercising judicial, quasi-judicial or coelum.
ministerial functions. What the petitions seek from respondents do not
involve judicial, quasi-judicial or ministerial functions. In prohibition, only The facts leading to this controversy are already well presented in
legal issues affecting the jurisdiction of the tribunal, board or officer the ponencia. I shall not burden the readers with a retelling thereof. Instead, I
involved may be resolved on the basis of undisputed facts.2 The parties will cut to the chase and directly address the two sets of gut issues:
allege, respectively, contentious evidentiary facts. It would be difficult, if not
anomalous, to decide the jurisdictional issue on the basis of the contradictory 1. The first issue is procedural: Does the Supreme Court have original
factual submissions made by the parties.3 As the Court has so often exhorted, jurisdiction to hear and decide the Petitions? Corollarily, do petitioners have
it is not a trier of facts. locus standi and should this Court decide the cases without any mandatory
referral to arbitration?
The petitions, in effect, are in the nature of actions for declaratory relief
under Rule 63 of the Rules of Court. The Rules provide that any person 2. The second one is substantive in character: Did the subject contracts
interested under a contract may, before breach or violation thereof, bring an violate the Constitution, the laws, and public policy to such an extent as to
action in the appropriate Regional Trial Court to determine any question of render all of them void and inexistent?
construction or validity arising, and for a declaration of his rights or duties
thereunder.4 The Supreme Court assumes no jurisdiction over petitions for My answer to all the above questions is a firm "Yes."
declaratory relief which are cognizable by regional trial courts.5 The Procedural Issue:
As I have so expressed in Tolentino vs. Secretary of Finance,6 reiterated in Jurisdiction, Standing and Arbitration
Santiago vs. Guingona, Jr.7 , the Supreme Court should not be thought of as Definitely and surely, the issues involved in these Petitions are clearly of
having been tasked with the awesome responsibility of overseeing the entire transcendental importance and of national interest. The subject contracts
bureaucracy. Pervasive and limitless, such as it may seem to be under the pertain to the construction and the operation of the country's premiere
1987 Constitution, judicial power still succumbs to the paramount doctrine of international airport terminal - an ultramodern world-class public utility that
separation of powers. The Court may not at good liberty intrude, in the guise will play a major role in the country's economic development and serve to
of sovereign imprimatur, into every affair of government. What significance project a positive image of our country abroad. The five build-operate-&-
can still then remain of the time-honored and widely acclaimed principle of transfer (BOT) contracts, while entailing the investment of billions of pesos
separation of powers if, at every turn, the Court allows itself to pass upon at in capital and the availment of several hundred millions of dollars in loans,
will the disposition of a co-equal, independent and coordinate branch in our contain provisions that tend to establish a monopoly, require the
system of government. I dread to think of the so varied uncertainties that disbursements of public funds sans appropriations, and provide government
such an undue interference can lead to. guarantees in violation of statutory prohibitions, as well as other provisions
Accordingly, I vote for the dismissal of the petition. equally offensive to law, public policy and the Constitution. Public interest
will inevitably be affected thereby.
Quisumbing, and Azcuna, JJ., concur.
Thus, objections to these Petitions, grounded upon (a) the hierarchy of
courts, (b) the need for arbitration prior to court action, and (c) the alleged
lack of sufficient personality, standing or interest, being in the main
procedural matters, must now be set aside, as they have been in past cases.
PANGANIBAN, J.: This Court must be permitted to perform its constitutional duty of
determining whether the other agencies of government have acted within the agreement will not be rendered operative by the parties' alleged performance
limits of the Constitution and the laws, or if they have gravely abused the (partial or full) of their respective prestations. A contract that violates the
discretion entrusted to them.1 Constitution and the law is null and void ab initio and vests no rights and
creates no obligations. It produces no legal effect at all."
Hierarchy of Courts
As will be discussed at length later, the Piatco contracts are indeed void in
The Court has, in the past, held that questions relating to gargantuan their entirety; thus, a resort to the aforesaid provision on arbitration is
government contracts ought to be settled without delay.2 This holding applies unavailing. Besides, petitioners and petitioners-in-intervention have pointed
with greater force to the instant cases. Respondent Piatco is partly correct in out that, even granting arguendo that the arbitration clause remained a valid
averring that petitioners can obtain relief from the regional trial courts via an provision, it still cannot bind them inasmuch as they are not parties to the
action to annul the contracts. Piatco contracts. And in the final analysis, it is unarguable that the arbitration
process provided for under Section 10.02 of the ARCA, to be undertaken by
Nevertheless, the unavoidable consequence of having to await the rendition a panel of three (3) arbitrators appointed in accordance with the Rules of
and the finality of any such judgment would be a prolonged state of Arbitration of the International Chamber of Commerce, will not be able to
uncertainty that would be prejudicial to the nation, the parties and the general address, determine and definitively resolve the constitutional and legal
public. And, in light of the feared loss of jobs of the petitioning workers, questions that have been raised in the Petitions before us.
consequent to the inevitable pretermination of contracts of the petitioning
service providers that will follow upon the heels of the impending opening of Locus Standi
NAIA Terminal III, the need for relief is patently urgent, and therefore, direct
resort to this Court through the special civil action of prohibition is thus Given this Court's previous decisions in cases of similar import, no one will
justified.3 seriously doubt that, being taxpayers and members of the House of
Representatives, Petitioners Baterina et al. have locus standi to bring the
Contrary to Piatco's argument that the resolution of the issues raised in the Petition in GR No. 155547. In Albano v. Reyes,7 this Court held that the
Petitions will require delving into factual questions,4 I submit that their petitioner therein, suing as a citizen, taxpayer and member of the House of
disposition ultimately turns on questions of law.5 Further, many of the Representatives, was sufficiently clothed with standing to bring the suit
significant and relevant factual questions can be easily addressed by an questioning the validity of the assailed contract. The Court cited the fact that
examination of the documents submitted by the parties. In any event, the public interest was involved, in view of the important role of the Manila
Petitions raise some novel questions involving the application of the International Container Terminal (MICT) in the country's economic
amended BOT Law, which this Court has seen fit to tackle. development and the magnitude of the financial consideration. This,
notwithstanding the fact that expenditure of public funds was not required
Arbitration under the assailed contract.
Should the dispute be referred to arbitration prior to judicial recourse? In the cases presently under consideration, petitioners' personal and
Respondent Piatco claims that Section 10.02 of the Amended and Restated substantial interest in the controversy is shown by the fact that certain
Concession Agreement (ARCA) provides for arbitration under the auspices provisions in the Piatco contracts create obligations on the part of
of the International Chamber of Commerce to settle any dispute or government (through the DOTC and the MIAA) to disburse public funds
controversy or claim arising in connection with the Concession Agreement, without prior congressional appropriations.
its amendments and supplements. The government disagrees, however,
insisting that there can be no arbitration based on Section 10.02 of the Petitioners thus correctly assert that the injury to them has a twofold aspect:
ARCA, since all the Piatco contracts are void ab initio. Therefore, all (1) they are adversely affected as taxpayers on account of the illegal
contractual provisions, including Section 10.02 of the ARCA, are likewise disbursement of public funds; and (2) they are prejudiced qua legislators,
void, inexistent and inoperative. To support its stand, the government since the contractual provisions requiring the government to incur
cites Chavez v. Presidential Commission on Good Government:6"The void expenditures without appropriations also operate as limitations upon the
exclusive power and prerogative of Congress over the public purse. As The Substantive Issue:
members of the House of Representatives, they are actually deprived of Violations of the Constitution and the Laws
discretion insofar as the inclusion of those items of expenditure in the budget
is concerned. To prevent such encroachment upon the legislative privilege From the Outset, the Bidding Process Was Flawed and Tainted
and obviate injury to the institution of which they are members, petitioners-
legislators have locus standi to bring suit. After studying the documents submitted and arguments advanced by the
parties, I have no doubt that, right at the outset, Piatco was not qualified to
Messrs. Agan et al. and Lopez et al., are likewise taxpayers and thus participate in the bidding process for the Terminal III project, but was
possessed of standing to challenge the illegal disbursement of public funds. nevertheless permitted to do so. It even won the bidding and was helped
Messrs. Agan et al., in particular, are employees (or representatives of along by what appears to be a series of collusive and corrosive acts.
employees) of various service providers that have (1) existing concession
agreements with the MIAA to provide airport services necessary to the The build-operate-and-transfer (BOT) project for the NAIA Passenger
operation of the NAIA and (2) service agreements to furnish essential Terminal III comes under the category of an "unsolicited proposal," which is
support services to the international airlines operating at the NAIA. the subject of Section 4-A of the BOT Law.10 The unsolicited proposal was
originally submitted by the Asia's Emerging Dragon Corporation (AEDC) to
On the other hand, Messrs. Lopez et al. are employees of the MIAA. These the Department of Transportation and Communications (DOTC) and the
petitioners (Messrs. Agan et al. and Messrs. Lopez et al.) are confronted with Manila International Airport Authority (MIAA), which reviewed and
the prospect of being laid off from their jobs and losing their means of approved the proposal.
livelihood when their employer-companies are forced to shut down or
otherwise retrench and cut back on manpower. Such development would The draft of the concession agreement as negotiated between AEDC and
result from the imminent implementation of certain provisions in the DOTC/MIAA was endorsed to the National Economic Development
contracts that tend toward the creation of a monopoly in favor of Piatco, its Authority (NEDA-ICC), which in turn reviewed it on the basis of its scope,
subsidiaries and related companies. economic viability, financial indicators and risks; and thereafter approved it
for bidding.
Petitioners-in-intervention are service providers in the business of furnishing
airport-related services to international airlines and passengers in the NAIA The DOTC/MIAA then prepared the Bid Documents, incorporating therein
and are therefore competitors of Piatco as far as that line of business is the negotiated Draft Concession Agreement, and published invitations for
concerned. On account of provisions in the Piatco contracts, petitioners-in- public bidding, i.e., for the submission of comparative or competitive
intervention have to enter into a written contract with Piatco so as not to be proposals. Piatco's predecessor-in-interest, the Paircargo Consortium, was the
shut out of NAIA Terminal III and barred from doing business there. Since only company that submitted a competitive bid or price challenge.
there is no provision to ensure or safeguard free and fair competition, they At this point, I must emphasize that the law requires the award of a BOT
are literally at its mercy. They claim injury on account of their deprivation of project to the bidder that has satisfied the minimum requirements; and met
property (business) and of the liberty to contract, without due process of law. the technical, financial, organizational and legal standards provided in the
And even if petitioners and petitioners-in-intervention were not sufficiently BOT Law. Section 5 of this statute states:
clothed with legal standing, I have at the outset already established that, "Sec. 5. Public bidding of projects. - . . .
given its impact on the public and on national interest, this controversy is
laden with transcendental importance and constitutional significance. Hence, "In the case of a build-operate-and-transfer arrangement, the contract shall be
I do not hesitate to adopt the same position as was enunciated in Kilosbayan awarded to the bidder who, having satisfied the minimum financial,
v. Guingona Jr.8 that "in cases of transcendental importance, the Court may technical, organizational and legal standards required by this Act, has
relax the standing requirements and allow a suit to prosper even when there submitted the lowest bid and most favorable terms for the project, based on
is no direct injury to the party claiming the right of judicial review."9 the present value of its proposed tolls, fees, rentals and charges over a fixed
term for the facility to be constructed, rehabilitated, operated and maintained
according to the prescribed minimum design and performance standards, basis, and before prequalification, the minimum amount of equity needed. . .
plans and specifications. . . ." (Emphasis supplied.) . ." (Italics supplied)

The same provision requires that the price challenge via public bidding "must Since the minimum amount of equity for the project was set at 30
be conducted under a two-envelope/two-stage system: the first envelope to percent12 of the minimum project cost of US$350 million, the minimum
contain the technical proposal and the second envelope to contain the amount of equity required of any proponent stood at US$105 million.
financial proposal." Moreover, the 1994 Implementing Rules and Converted to pesos at the exchange rate then of P26.239 to US$1.00 (as
Regulations (IRR) provide that only those bidders that have passed the quoted by the Bangko Sentral ng Pilipinas), the peso equivalent of the
prequalification stage are permitted to have their two envelopes reviewed. minimum equity was P2,755,095,000.

In other words, prospective bidders must prequalify by submitting their However, the combined equity or net worth of the Paircargo consortium
prequalification documents for evaluation; and only the pre-qualified bidders stood at only P558,384,871.55.13 This amount was only slightly over 6
would be entitled to have their bids opened, evaluated and appreciated. On percent of the minimum project cost and very much short of the required
the other hand, disqualified bidders are to be informed of the reason for their minimum equity, which was equivalent to 30 percent of the project cost.
disqualification. This procedure was confirmed and reiterated in the Bid Such deficiency should have immediately caused the disqualification of the
Documents, which I quote thus: "Prequalified proponents will be considered Paircargo consortium. This matter was brought to the attention of the
eligible to move to second stage technical proposal evaluation. The second Prequalification and Bidding Committee (PBAC).
and third envelopes of pre-disqualified proponents will be returned."11
Notwithstanding the glaring deficiency, DOTC Undersecretary Primitivo C.
Aside from complying with the legal and technical requirements (track Cal, concurrent chair of the PBAC, declared in a Memorandum dated 14
record or experience of the firm and its key personnel), a project proponent October 1996 that "the Challenger (Paircargo consortium) was found to
desiring to prequalify must also demonstrate its financial capacity to have a combined net worth of P3,926,421,242.00 that could support a
undertake the project. To establish such capability, a proponent must prove project costing approximately P13 billion." To justify his conclusion, he
that it is able to raise the minimum amount of equity required for the project asserted: "It is not a requirement that the networth must be `unrestricted'. To
and to procure the loans or financing needed for it. Section 5.4(c) of the 1994 impose this as a requirement now will be nothing less than unfair."
IRR provides:
He further opined, "(T)he networth reflected in the Financial Statement
"Sec. 5.4. Prequalification Requirements. - To pre-qualify, a project should not be taken as the amount of money to be used to answer the
proponent must comply with the following requirements: required thirty (30%) percent equity of the challenger but rather to be used
in establishing if there is enough basis to believe that the challenger can
xxx xxx xxx comply with the required 30% equity. In fact, proof of sufficient equity is
required as one of the conditions for award of contract (Sec. 12.1 of IRR of
"c. Financial Capability. The project proponent must have adequate the BOT Law) but not for prequalification (Sec. 5.4 of same document)."
capability to sustain the financing requirements for the detailed engineering
design, construction, and/or operation and maintenance phases of the project, On the basis of the foregoing dubious declaration, the Paircargo consortium
as the case may be. For purposes of prequalification, this capability shall be was deemed prequalified and thus permitted to proceed to the other stages of
measured in terms of: (i) proof of the ability of the project proponent and/or the bidding process.
the consortium to provide a minimum amount of equity to the project, and (ii)
a letter testimonial from reputable banks attesting that the project proponent By virtue of the prequalified status conferred upon the Paircargo,
and/or members of the consortium are banking with them, that they are in Undersecretary Cal's findings in effect relieved the consortium of the need to
good financial standing, and that they have adequate resources. The comply with the financial capability requirement imposed by the BOT Law
government Agency/LGU concerned shall determine on a project-to-project and IRR. This position is unmistakably and squarely at odds with the
Supreme Court's consistent doctrine emphasizing the strict application of
pertinent rules, regulations and guidelines for the public bidding process, in This pronouncement, I believe, was a grievous misapplication of the
order to place each bidder - actual or potential - on the same footing. Thus, it mentioned provision. The "proprietary information" referred to in Section
is unarguably irregular and contrary to the very concept of public bidding to 11.6 of the IRR pertains only to the proprietary information of
permit a variance between the conditions under which bids are invited and the originator of an unsolicited proposal, and not to those belonging to
those under which proposals are submitted and approved. a challenger. The reason for the protection accorded proprietary information
at all is the fact that, according to Section 4-A of the BOT Law as amended,
Republic v. Capulong,14 teaches that if one bidder is relieved from having to a proposal qualifies as an "unsolicited proposal" when it pertains to a project
conform to the conditions that impose some duty upon it, that bidder is not that involves "a new concept or technology", and/or a project that is not on
contracting in fair competition with those bidders that propose to be bound the government's list of priority projects.
by all conditions. The essence of public bidding is, after all, an opportunity
for fair competition and a basis for the precise comparison of bids.15 Thus, To be considered as utilizing a new concept or technology, a project must
each bidder must bid under the same conditions; and be subject to the same involve the possession of exclusive rights (worldwide or regional) over a
guidelines, requirements and limitations. The desired result is to be able to process; or possession of intellectual property rights over a design,
determine the best offer or lowest bid, all things being equal. methodology or engineering concept.18 Patently, the intent of the BOT Law
is to encourage individuals and groups to come up with creative innovations,
Inasmuch as the Paircargo consortium did not possess the minimum equity fresh ideas and new technology. Hence, the significance and necessity of
equivalent to 30 percent of the minimum project cost, it should not have been protecting proprietary information in connection with unsolicited proposals.
prequalified or allowed to participate further in the bidding. The And to make the encouragement real, the law also extends to such
Prequalification and Bidding Committee (PBAC) should therefore not have individuals and groups what amounts to a "right of first refusal" to undertake
opened the two envelopes of the consortium containing its technical and the project they conceptualized, involving the use of new technology or
financial proposals; required AEDC to match the consortium's bid; 16 or concepts, through the mechanism of matching a price challenge.
awarded the Concession Agreement to the consortium's successor-in-interest,
Piatco. A competing bid is never just any figure conjured from out of the blue; it is
arrived at after studying economic, financial, technical and other, factors; it is
As there was effectively no public bidding to speak of, the entire bidding likewise based on certain assumptions as to the nature of the business, the
process having been flawed and tainted from the very outset, therefore, the market potentials, the probable demand for the product or service, the future
award of the concession to Paircargo's successor Piatco was void, and the behavior of cost items, political and other risks, and so on. It is thus self-
Concession Agreement executed with the latter was likewise void ab initio. evident that in order to be able to intelligently match a bid or price challenge,
For this reason, Piatco cannot and should not be allowed to benefit from that a bidder must be given access to the assumptions and the calculations that
Agreement.17 went into crafting the competing bid.
AEDC Was Deprived of the Right to Match PIATCO's Price Challenge In this instance, the financial and technical proposals of Piatco would have
provided AEDC with the necessary information to enable it to make a
In DOTC PBAC Bid Bulletin No. 4 (par. 3), Undersecretary Cal declared reasonably informed matching bid. To put it more simply, a bidder unable to
that, for purposes of matching the price challenge of Piatco, AEDC as access the competitor's assumptions will never figure out how the competing
originator of the unsolicited proposal would be permitted access only to the bid came about; requiring him to "counter-propose" is like having him shoot
schedule of proposed Annual Guaranteed Payments submitted by Piatco, and at a target in the dark while blindfolded.
not to the latter's financial and technical proposals that constituted the basis
for the price challenge in the first place. This was supposedly in keeping with By withholding from AEDC the challenger's financial and technical
Section 11.6 of the 1994 IRR, which provides that proprietary information is proposals containing the critical information it needed, Undersecretary Cal
to be respected, protected and treated with utmost confidentiality, and is actually and effectively deprived AEDC of the ability to match the price
therefore not to form part of the bidding/tender and related documents. challenge. One could say that AEDC did not have the benefit of a "level
playing field." It seems to me, though, that AEDC was actually shut out of clearance on a no-objection basis. If the draft contract includes government
the game altogether. undertakings already previously approved, then the submission shall be for
information only.
At the end of the day, the bottom line is that the validity and the propriety of
the award to Piatco had been irreparably impaired. However, should there be additional or new provisions different from the
original government undertakings, the draft shall have to be reviewed and
Delayed Issuance of the Notice of Award Violated the BOT Law and the approved. The ICC has 15 working days to act thereon, and unless otherwise
IRR specified, its failure to act on the contract within the specified time frame
signifies that the agency or LGU may proceed with the award. The head of
Section 9.5 of the IRR requires that the Notice of Award must indicate the agency or LGU shall approve the Notice of Award within seven days of the
time frame within which the winner of the bidding (and therefore the clearance by the ICC on a no-objection basis, and the Notice itself has to be
prospective awardee) shall submit the prescribed performance security, proof issued within seven days thereafter.
of commitment of equity contributions, and indications of sources of
financing (loans); and, in the case of joint ventures, an agreement showing The highly regulated time-frames within which the agents of government
that the members are jointly and severally responsible for the obligations of were to act evinced the intent to impose upon them the duty to act
the project proponent under the contract. expeditiously throughout the process, to the end that the project be
prosecuted and implemented without delay. This regulated scenario was
The purpose of having a definite and firm timetable for the submission of the likewise intended to discourage collusion and substantially reduce the
aforementioned requirements is not only to prevent delays in the project opportunity for agents of government to abuse their discretion in the course
implementation, but also to expose and weed out unqualified proponents, of the award process.
who might have unceremoniously slipped through the earlier prequalification
process, by compelling them to put their money where their mouths are, so to Despite the clear timetables set out in the IRR, several lengthy and still-
speak. unexplained delays occurred in the award process, as can be observed from
the presentation made by the counsel for public respondents,19 quoted
Nevertheless, this provision can be easily circumvented by merely hereinbelow:
postponing the actual issuance of the Notice of Award, in order to give the
favored proponent sufficient time to comply with the requirements. Hence, to "11 Dec. 1996 - The Paircargo Joint Venture was informed by the PBAC that
avert or minimize the manipulation of the post-bidding process, the IRR not AEDC failed to match and that negotiations preparatory to Notice of Award
only set out the precise sequence of events occurring between the completion should be commenced. This was the decision to award that should have
of the evaluation of the technical bids and the issuance of the Notice of commenced the running of the 7-day period to approve the Notice of Award,
Award, but also specified the timetables for each such event. Definite as per Section 9.1 of the IRR, or to submit the draft contract to the ICC for
allowable extensions of time were provided for, as were the consequences of approval conformably with Section 9.2.
a failure to meet a particular deadline.
"01 April 1997 - The PBAC resolved that a copy of the final draft of the
In particular, Section 9.1 of the 1994 IRR prescribed that within 30 calendar Concession Agreement be submitted to the NEDA for clearance on a no-
days from the time the second-stage evaluation shall have been completed, objection basis. This resolution came more than 3 months too late as it
the Committee must come to a decision whether or not to award the contract should have been made on the 20th of December 1996 at the latest.
and, within 7 days therefrom, the Notice of Award must be approved by the
head of agency or local government unit (LGU) concerned, and its issuance "16 April 1997 - The PBAC resolved that the period of signing the
must follow within another 7 days thereafter. Concession Agreement be extended by 15 days.

Section 9.2 of the IRR set the procedure applicable to projects involving "18 April 1997 - NEDA approved the Concession Agreement. Again this is
substantial government undertakings as follows: Within 7 days after the more than 3 months too late as the NEDA's decision should have been
decision to award is made, the draft contract shall be submitted to the ICC for
released on the 16th of January 1997 or fifteen days after it should have been 3. The CA provided that in case of termination of the contract due to the fault
submitted to it for review. of government, government shall pay all expenses that Piatco incurred for the
project plus the appraised value of the Terminal.23
"09 July 1997 - The Notice of Award was issued to PIATCO. Following the
provisions of the IRR, the Notice of Award should have been issued fourteen 4. The CA imposed new and special obligations on government, including
days after NEDA's approval, or the 28th of January 1997. In any case, even if delivery of clean possession of the site for the terminal; acquisition of
it were to be assumed that the release of NEDA's approval on the 18th of additional land at the government's expense for construction of road
April was timely, the Notice of Award should have been issued on the 9th of networks required by Piatco's approved plans and specifications; and
May 1997. In both cases, therefore, the release of the Notice of Award assistance to Piatco in securing site utilities, as well as all necessary permits,
occurred in a decidedly less than timely fashion." licenses and authorizations.24

This chronology of events bespeaks an unmistakable disregard, if not 5. Where Section 3.02 of the DCA requires government to refrain from
disdain, by the persons in charge of the award process for the time limitations competing with the contractor with respect to the operation of NAIA
prescribed by the IRR. Their attitude flies in the face of this Court's solemn Terminal III, Section 3.02(b) of the CA excludes and prohibits everyone,
pronouncement in Republic v. Capulong,20 that "strict observance of the including government, from directly or indirectly competing with Piatco,
rules, regulations and guidelines of the bidding process is the only safeguard with respect to the operation of, as well as operations in, NAIA Terminal
to a fair, honest and competitive public bidding." III. Operations in is sufficiently broad to encompass all retail and other
commercial business enterprises operating within Terminal III, inclusive of
From the foregoing, the only conclusion that can possibly be drawn is that the businesses of providing various airport-related services to international
the BOT law and its IRR were repeatedly violated with unmitigated impunity airlines, within the scope of the prohibition.
- and by agents of government, no less! On account of such violation, the
award of the contract to Piatco, which undoubtedly gained time and benefited 6. Under Section 6.01 of the DCA, the following fees are subject to the
from the delays, must be deemed null and void from the beginning. written approval of MIAA: lease/rental charges, concession privilege fees for
passenger services, food services, transportation utility concessions,
Further Amendments Resulted in a Substantially Different Contract, groundhandling, catering and miscellaneous concession fees, porterage fees,
Awarded Without Public Bidding greeter/well-wisher fees, carpark fees, advertising fees, VIP facilities fees
and others. Moreover, adjustments to the groundhandling fees, rentals and
But the violations and desecrations did not stop there. After the PBAC made porterage fees are permitted only once every two years and in accordance
its decision on December 11, 1996 to award the contract to Piatco, the latter with a parametric formula, per DCA Section 6.03. However, the CA as
negotiated changes to the Contract bidded out and ended up with what executed with Piatco provides in Section 6.06 that all the aforesaid fees,
amounts to a substantially new contract without any public bidding. This rentals and charges may be adjusted without MIAA's approval or
Contract was subsequently further amended four more times through intervention. Neither are the adjustments to these fees and charges subject to
negotiation and without any bidding. Thus, the contract actually executed or limited by any parametric formula.25
between Piatco and DOTC/MIAA on July 12, 1997 (the Concession
Agreement or "CA") differed from the contract bidded out (the draft 7. Section 1.29 of the DCA provides that the terminal fees, aircraft tacking
concession agreement or "DCA") in the following very significant respects: fees, aircraft parking fees, check-in counter fees and other fees are to be
quoted and paid in Philippine pesos. But per Section 1.33 of the CA, all the
1. The CA inserted stipulations creating a monopoly in favor of Piatco in the aforesaid fees save the terminal fee are denominated in US Dollars.
business of providing airport-related services for international airlines and
passengers.21 8. Under Section 8.07 of the DCA, the term attendant liabilities refers
to liabilities pertinent to NAIA Terminal III, such as payment of lease rentals
2. The CA provided that government is to answer for Piatco's unpaid loans and performance of other obligations under the Land Lease Agreement; the
and debts (lumped under the term Attendant Liabilities) in the event Piatco obligations under the Tenant Agreements; and payment of all taxes, fees,
fails to pay its senior lenders.22
charges and assessments of whatever kind that may be imposed on NAIA best deal possible by fostering transparency and preventing favoritism,
Terminal III or parts thereof. But in Section 1.06 of the CA, Attendant collusion and fraud in the awarding of contracts. That is the reason why
Liabilities refers to unpaid debts of Piatco: "All amounts recorded and from procedural rules pertaining to public bidding demand strict observance.26
time to time outstanding in the books of (Piatco) as owing to Unpaid
Creditors who have provided, loaned or advanced funds actually used for the In a relatively early case, Caltex v. Delgado Brothers,27 this Court made it
Project, including all interests, penalties, associated fees, charges, clear that substantive amendments to a contract for which a public bidding
surcharges, indemnities, reimbursements and other related expenses, and has already been finished should only be awarded after another public
further including amounts owed by [Piatco] to its suppliers, contractors and bidding:
subcontractors."
"The due execution of a contract after public bidding is a limitation upon the
9. Per Sections 8.04 and 8.06 of the DCA, government may, on account of right of the contracting parties to alter or amend it without another public
the contractors breach, rescind the contract and select one of four options: bidding, for otherwise what would a public bidding be good for if after the
(a) take over the terminal and assume all its attendant liabilities; (b) allow the execution of a contract after public bidding, the contracting parties may alter
contractor's creditors to assign the Project to another entity acceptable to or amend the contract, or even cancel it, at their will? Public biddings are
DOTC/MIAA; (c) pay the contractor rent for the facilities and equipment the held for the protection of the public, and to give the public the best possible
DOTC may utilize; or (d) purchase the terminal at a price established by advantages by means of open competition between the bidders. He who bids
independent appraisers. Depending on the option selected, government may or offers the best terms is awarded the contract subject of the bid, and it is
take immediate possession and control of the terminal and its operations. obvious that such protection and best possible advantages to the public will
Government will be obligated to compensate the contractor for the disappear if the parties to a contract executed after public bidding may alter
"equivalent or proportionate contract costs actually disbursed," but only or amend it without another previous public bidding."28
where government is the one in breach of the contract. But under Section
8.06(a) of the CA, whether on account of Piatco's breach of contract or its The aforementioned case dealt with the unauthorized amendment of a
inability to pay its creditors, government is obliged to either (a) take over contract executed after public bidding; in the situation before us, the
Terminal III and assume all of Piatco's debts or (b) permit the qualified amendments were made also after the bidding, but prior to execution. Be that
unpaid creditors to be substituted in place of Piatco or to designate a new as it may, the same rationale underlying Caltex applies to the present
operator. And in the event of government's breach of contract, Piatco may situation with equal force. Allowing the winning bidder to renegotiate the
compel it to purchase the terminal at fair market value, per Section 8.06(b) of contract for which the bidding process has ended is tantamount to permitting
the CA. it to put in anything it wants. Here, the winning bidder (Piatco) did not even
bother to wait until after actual execution of the contract before rushing to
10. Under the DCA, any delay by Piatco in the payment of the amounts due amend it. Perhaps it believed that if the changes were made to a contract
the government constitutes breach of contract. However, under the CA, such already won through bidding (DCA) instead of waiting until it is executed,
delay does not necessarily constitute breach of contract, since Piatco is the amendments would not be noticed or discovered by the public.
permitted to suspend payments to the government in order to first satisfy the
claims of its secured creditors, per Section 8.04(d) of the CA. In a later case, Mata v. San Diego,29 this Court reiterated its ruling as
follows:
It goes without saying that the amendment of the Contract bidded out (the
DCA or draft concession agreement) - in such substantial manner, without "It is true that modification of government contracts, after the same had been
any public bidding, and after the bidding process had been concluded on awarded after a public bidding, is not allowed because such modification
December 11, 1996 - is violative of public policy on public biddings, as well serves to nullify the effects of the bidding and whatever advantages the
as the spirit and intent of the BOT Law. The whole point of going through the Government had secured thereby and may also result in manifest injustice to
public bidding exercise was completely lost. Its very rationale was totally the other bidders. This prohibition, however, refers to a change in vital and
subverted by permitting Piatco to amend the contract for which public essential particulars of the agreement which results in a substantially new
bidding had already been concluded. Competitive bidding aims to obtain the contract."
Piatco's counter-argument may be summed up thus: There was nothing in the answer, are no longer limited to only those loans recorded in Piatco's books
1994 IRR that prohibited further negotiations and eventual amendments to or loans whose proceeds were actually used in the Terminal III project.30
the DCA even after the bidding had been concluded. In fact, PBAC Bid
Bulletin No. 3 states: "[A]mendments to the Draft Concession Agreement 2. Although the contract may be terminated due to breach by Piatco, it will
shall be issued from time to time. Said amendments will only cover items that not be liable to pay the government any Liquidated Damages if a new
would not materially affect the preparation of the proponent's proposal." operator is designated to take over the operation of the terminal.31

I submit that accepting such warped argument will result in perverting the 3. The Liquidated Damages which government becomes liable for in case of
policy underlying public bidding. The BOT Law cannot be said to allow the its breach of contract were substantially increased.32
negotiation of contractual stipulations resulting in a substantially new
contract after the bidding process and price challenge had been concluded. In 4. Government's right to appoint a comptroller for Piatco in case the latter
fact, the BOT Law, in recognition of the time, money and effort invested in encounters liquidity problems was deleted.33
an unsolicited proposal, accords its originator the privilege of matching the 5. Government is made liable for Incremental and Consequential Costs and
challenger's bid. Losses in case it fails to comply or cause any third party under its direct or
Section 4-A of the BOT Law specifically refers to a "lower price proposal" indirect control to comply with the special obligations imposed on
by a competing bidder; and to the right of the original proponent "to match government.34
the price" of the challenger. Thus, only the price proposals are in play. 6. The insurance policies obtained by Piatco covering the terminal are now
The terms, conditions and stipulations in the contract for which public required to be assigned to the Senior Lenders as security for the loans;
bidding has been concluded are understood to remain intact and not be previously, their proceeds were to be used to repair and rehabilitate the
subject to further negotiation. Otherwise, the very essence of public bidding facility in case of damage.35
will be destroyed - there will be no basis for an exact comparison between
bids. 7. Government bound itself to set the initial rate of the terminal fee, to be
charged when Terminal III begins operations, at an amount higher than
Moreover, Piatco misinterpreted the meaning behind PBAC Bid Bulletin No. US$20.36
3. The phrase amendments . . . from time to time refers only to those
amendments to the draft concession agreement issued by the PBAC prior to 8. Government waived its defense of the illegality of the contract and even
the submission of the price challenge; it certainly does not include or permit agreed to be liable to pay damages to Piatco in the event the contract was
amendments negotiated for and introduced after the bidding process, has declared illegal.37
been terminated.
9. Even though government may be entitled to terminate the ARCA on
Piatco's Concession Agreement Was Further Amended, (ARCA) Again account of breach by Piatco, government is still liable to pay Piatco the
Without Public Bidding appraised value of Terminal III or the Attendant Liabilities, if the termination
occurs before the In-Service Date.38 This condition contravenes the BOT
Not satisfied with the Concession Agreement, Piatco - once more without Law provision on termination compensation.
bothering with public bidding - negotiated with government for still more
substantial changes. The result was the Amended and Restated Concession 10. Government is obligated to take the administrative action required for
Agreement (ARCA) executed on November 26, 1998. The following changes Piatco's imposition, collection and application of all Public Utility
were introduced: Revenues.39 No such obligation existed previously.
1. The definition of Attendant Liabilities was further amended with the result 11. Government is now also obligated to perform and cause other persons
that the unpaid loans of Piatco, for which government may be required to and entities under its direct or indirect control to perform all acts necessary to
perfect the security interests to be created in favor of Piatco's Senior The Three Supplements Imposed New Obligations on Government, Also
Lenders.40 No such obligation existed previously. Without Prior Public Bidding

12. DOTC/MIAA's right of intervention in instances where Piatco's Non- After Piatco had managed to breach the protective rampart of public bidding,
Public Utility Revenues become exorbitant or excessive has been removed.41 it recklessly went on a rampage of further assaults on the ARCA.

13. The illegality and unenforceability of the ARCA or any of its material The First Supplement Is as Void as the ARCA
provisions was made an event of default on the part of government only, thus
constituting a ground for Piatco to terminate the ARCA.42 In the First Supplement ("FS") executed on August 27, 1999, the following
changes were made to the ARCA:
14. Amounts due from and payable by government under the contract were
made payable on demand - net of taxes, levies, imposts, duties, charges or 1. The amounts payable by Piatco to government were reduced by allowing
fees of any kind except as required by law.43 additional exceptions to the Gross Revenues in which government is
supposed to participate.45
15. The Parametric Formula in the contract, which is utilized to compute for
adjustments/increases to the public utility revenues (i.e., aircraft parking and 2. Made part of the properties which government is obliged to construct
tacking fees, check-in counter fee and terminal fee), was revised to permit and/or maintain and keep in good repair are (a) the access road connecting
Piatco to input its more costly short-term borrowing rates instead of the Terminals II and III - the construction of this access road is the obligation of
longer-terms rates in the computations for adjustments, with the end result Piatco, in lieu of its obligation to construct an Access Tunnel connecting
that the changes will redound to its greater financial benefit. Terminals II and III; and (b) the taxilane and taxiway - these are likewise part
of Piatco's obligations, since they are part and parcel of the project as
16. The Certificate of Completion simply deleted the successful described in Clause 1.3 of the Bid Documents .46
performance-testing of the terminal facility in accordance with defined
performance standards as a pre-condition for government's acceptance of the 3. The MIAA is obligated to provide funding for the maintenance and repair
terminal facility.44 of the airports and facilities owned or operated by it and by third persons
under its control. It will also be liable to Piatco for the latter's losses,
In sum, the foregoing revisions and amendments as embodied in the ARCA expenses and damages as well as liability to third persons, in case MIAA
constitute very material alterations of the terms and conditions of the CA, fails to perform such obligations. In addition, MIAA will also be liable for
and give further manifestly undue advantage to Piatco at the expense of the incremental and consequential costs of the remedial work done by Piatco
government. Piatco claims that the changes to the CA were necessitated by on account of the former's default.47
the demands of its foreign lenders. However, no proof whatsoever has been
adduced to buttress this claim. 4. The FS also imposed on government ten (10) "Additional Special
Obligations," including the following:
In any event, it is quite patent that the sum total of the aforementioned
changes resulted in drastically weakening the position of government to a (a) Working for the removal of the general aviation traffic from the NAIA
degree that seems quite excessive, even from the standpoint of a airport complex48
businessperson who regularly transacts with banks and foreign lenders, is
familiar with their mind-set, and understands what motivates them. On the (b) Providing through MIAA the land required by Piatco for the taxilane and
other hand, whatever it was that impelled government officials concerned to one taxiway at no cost to Piatco49
accede to those grossly disadvantageous changes, I can only hazard a guess. (c) Implementing the government's existing storm drainage master plan50
There is no question in my mind that the ARCA was unauthorized and illegal (d) Coordinating with DPWH the financing, the implementation and the
for lack of public bidding and for being patently disadvantageous to completion of the following works before the In-Service Date: three left-
government.
turning overpasses (EDSA to Tramo St., Tramo to Andrews Ave., and The scope of the works, the procedures involved, and the obligations of the
Manlunas Road to Sales Ave.);51 and a road upgrade and improvement contractor are provided for in Parts II and III of the SS. Section 4.1 sets out
program involving widening, repair and resurfacing of Sales Road, Andrews the compensation to be paid, listing specific rates per cubic meter of
Avenue and Manlunas Road; improvement of Nichols Interchange; and materials for each phase of the work - excavation, leveling, removal and
removal of squatters along Andrews Avenue.52 disposal, backfilling and dewatering. The amounts collectible by Piatco are
to be offset against the Annual Guaranteed Payments it must pay
(e) Dealing directly with BCDA and the Phil. Air Force in acquiring government.
additional land or right of way for the road upgrade and improvement
program.53 Though denominated as Second Supplement, it was nothing less than an
entirely new public works contract. Yet it, too, did not undergo any public
5. Government is required to work for the immediate reversion to MIAA of bidding, for which reason it is also void and inoperative.
the Nayong Pilipino National Park.54
Not surprisingly, Piatco had to subcontract the works to a certain Wintrack
6. Government's share in the terminal fees collected was revised from a flat Builders, a firm reputedly owned by a former high-ranking DOTC official.
rate of P180 to 36 percent thereof; together with government's percentage But that is another story altogether.
share in the gross revenues of Piatco, the amount will be remitted to
government in pesos instead of US dollars.55 This amendment enables Piatco The Third Supplement Is Likewise Void and Inexistent
to benefit from the further erosion of the peso-dollar exchange rate, while
preventing government from building up its foreign exchange reserves. The Third Supplement ("TS"), executed between the government and Piatco
on June 22, 2001, passed on to the government certain obligations of Piatco
7. All payments from Piatco to government are now to be invoiced to MIAA, as Terminal III concessionaire, with respect to the surface road connecting
and payments are to accrue to the latter's exclusive benefit.56 This move Terminals II and III.
appears to be in support of the funds MIAA advanced to DPWH.
By way of background, at the inception of and forming part of the NAIA
I must emphasize that the First Supplement is void in two respects. First, it is Terminal III project was the proposed construction of an access tunnel
merely an amendment to the ARCA, upon which it is wholly dependent; crossing Runway 13/31, which. would connect Terminal III to Terminal II.
therefore, since the ARCA is void, inexistent and not capable of being The Bid Documents in Section 4.1.2.3[B][i] declared that the said access
ratified or amended, it follows that the FS too is void, inexistent and tunnel was subject to further negotiation; but for purposes of the bidding, the
inoperative. Second, even assuming arguendo that the ARCA is somehow proponent should submit a bid for it as well. Therefore, the tunnel was
remotely valid, nonetheless the FS, in imposing significant new obligations supposed to be part and parcel of the Terminal III project.
upon government, altered the fundamental terms and stipulations of the
ARCA, thus necessitating a public bidding all over again. That the FS was However, in Section 5 of the First Supplement, the parties declared that the
entered into sans public bidding renders it utterly void and inoperative. access tunnel was not economically viable at that time. In lieu thereof, the
parties agreed that a surface access road (now called the T2-T3 Road) was to
The Second Supplement Is Similarly Void and Inexistent be constructed by Piatco to connect the two terminals. Since it was plainly in
substitution of the tunnel, the surface road construction should likewise be
The Second Supplement ("SS") was executed between the government and considered part and parcel of the same project, and therefore part of Piatco's
Piatco on September 4, 2000. It calls for Piatco, acting not as concessionaire obligation as well. While the access tunnel was estimated to cost about P800
of NAIA Terminal III but as a public works contractor, to undertake - in the million, the surface road would have a price tag in the vicinity of about P100
government's stead - the clearing, removal, demolition and disposal of million, thus producing significant savings for Piatco.
improvements, subterranean obstructions and waste materials at the project
site.57 Yet, the Third Supplement, while confirming that Piatco would construct the
T2-T3 Road, nevertheless shifted to government some of the obligations
pertaining to the former, as follows:
1. Government is now obliged to remove at its own expense all tenants, required. In short, such guarantee is prohibited in unsolicited proposals.
squatters, improvements and/or waste materials on the site where the T2-T3 Section 2(n) of the same legislation defines direct government guarantee as
road is to be constructed.58 There was no similar obligation on the part of "an agreement whereby the government or any of its agencies or local
government insofar as the access tunnel was concerned. government units (will) assume responsibility for the repayment of debt
directly incurred by the project proponent in implementing the project in case
2. Should government fail to carry out its obligation as above described, of a loan default."
Piatco may undertake it on government's behalf, subject to the terms and
conditions (including compensation payments) contained in the Second Both the CA and the ARCA have provisions that undeniably create such
Supplement.59 prohibited government guarantee. Section 4.04 (c)(iv) to (vi) of the ARCA,
which is similar to Section 4.04 of the CA, provides thus:
3. MIAA will answer for the operation, maintenance and repair of the T2-T3
Road.60 "(iv) that if Concessionaire is in default under a payment obligation owed to
the Senior Lenders, and as a result thereof the Senior Lenders have become
The TS depends upon and is intended to supplement the ARCA as well as the entitled to accelerate the Senior Loans, the Senior Lenders shall have the
First Supplement, both of which are void and inexistent and not capable of right to notify GRP of the same . . .;
being ratified or amended. It follows that the TS is likewise void, inexistent
and inoperative. And even if, hypothetically speaking, both ARCA and FS (v) . . . the Senior Lenders may after written notification to GRP, transfer the
are valid, still, the Third Supplement - imposing as it does significant new Concessionaire's rights and obligations to a transferee . . .;
obligations upon government - would in effect alter the terms and
stipulations of the ARCA in material respects, thus necessitating another (vi) if the Senior Lenders . . . are unable to . . . effect a transfer . . ., then GRP
public bidding. Since the TS was not subjected to public bidding, it is and the Senior Lenders shall endeavor . . . to enter into any other
consequently utterly void as well. At any rate, the TS created new monetary arrangement relating to the Development Facility . . . If no agreement
obligations on the part of government, for which there were no prior relating to the Development Facility is arrived at by GRP and the Senior
appropriations. Hence it follows that the same is void ab initio. Lenders within the said 180-day period, then at the end thereof the
Development Facility shall be transferred by the Concessionaire to GRP or
In patiently tracing the progress of the Piatco contracts from their inception its designee and GRP shall make a termination payment to Concessionaire
up to the present, I noted that the whole process was riddled with significant equal to the Appraised Value (as hereinafter defined) of the Development
lapses, if not outright irregularity and wholesale violations of law and public Facility or the sum of the Attendant Liabilities, if greater. . . ."
policy. The rationale of beginning at the beginning, so to speak, will become
evident when the question of what to do with the five Piatco contracts is In turn, the term Attendant Liabilities is defined in Section 1.06 of the ARCA
discussed later on. as follows:

In the meantime, I shall take up specific, provisions or changes in the "Attendant Liabilities refer to all amounts in each case supported by
contracts and highlight the more prominent objectionable features. verifiable evidence from time to time owed or which may become, owing by
Concessionaire to Senior Lenders or any other persons or entities who have
Government Directly Guarantees Piatco Debts provided, loaned or advanced funds or provided financial facilities to
Concessionaire for the Project, including, without limitation, all principal,
Certainly the most discussed provision in the parties' arguments is the one interest, associated fees, charges, reimbursements, and other related expenses
creating an unauthorized, direct government guarantee of Piatco's obligations (including the fees, charges and expenses of any agents or trustees of such
in favor of the lenders. persons or entities), whether payable at maturity, by acceleration or
otherwise, and further including amounts owed by Concessionaire to its
Section 4-A of the BOT Law as amended states that unsolicited proposals, professional consultants and advisers, suppliers, contractors and sub-
such as the NAIA Terminal III Project, may be accepted by government contractors."
provided inter alia that no direct government guarantee, subsidy or equity is
Government's agreement to pay becomes effective in the event of Consequently, the Piatco contracts are also objectionable for grievously
a default by Piatco on any of its loan obligations to the Senior Lenders, and failing to adequately protect government's interests. More accurately, the
the amount to be paid by government is the greater of either the Appraised contracts would consistently weaken and do away with protection of
Value of Terminal III or the aggregate amount of the moneys owed by government interests. As such, they are therefore grossly lopsided in favor of
Piatco - whether to the Senior Lenders or to other entities, including its Piatco and/or its Senior Lenders.
suppliers, contractors and subcontractors. In effect, therefore, this agreement
already constitutes the prohibited assumption by government of While on this subject, it is well to recall the earlier discussion regarding a
responsibility for repayment of Piatco's debts in case of a loan default. In particularly noticeable alteration of the concept of "Attendant Liabilities." In
fine, a direct government guarantee. Section 1.06 of the CA defining the term, the Piatco debts to be assumed/paid
by government were qualified by the phrases recorded and from time to time
It matters not that there is a roundabout procedure prescribed by Section outstanding in the books of the Concessionaire and actually used for the
4.04(c)(iv), (v) and (vi) that would require, first, an attempt (albeit project. These phrases were eliminated from the ARCA's definition of
unsuccessful) by the Senior Lenders to transfer Piatco's rights to a transferee Attendant Liabilities.
of their choice; and, second, an effort (equally unsuccessful) to "enter into
any other arrangement" with the government regarding the Terminal III Since no explanation has been forthcoming from Piatco as to the possible
facility, before government is required to make good on its guarantee. What justification for such a drastic change, the only conclusion, possible is that it
is abundantly clear is the fact that, in the devious labyrinthine process intends to have all of its debts covered by the guarantee, regardless of
detailed in the aforesaid section, it is entirely within the Senior Lenders' whether or not they are disclosed in its books. This has particular reference to
power, prerogative and control - exercisable via a mere refusal or inability to those borrowings which were obtained in violation of the loan covenants
agree upon "a transferee" or "any other arrangement" regarding the terminal requiring Piatco to maintain a minimum 70:30 debt-to-equity ratio, and even
facility - to push the process forward to the ultimate contractual cul-de-sac, if the loan proceeds were not actually used for the project itself.
wherein government will be compelled to abjectly surrender and make good
on its guarantee of payment. This point brings us back to the guarantee itself. In Section 4.04(c)(vi) of
ARCA, the amount which government has guaranteed to pay as termination
Piatco also argues that there is no proviso requiring government to pay the payment is the greater of either (i) the Appraised Value of the terminal
Senior Lenders in the event of Piatco's default. This is literally true, in the facility or (ii) the aggregate of the Attendant Liabilities. Given that the
sense that Section 4.04(c)(vi) of ARCA speaks of government making the Attendant Liabilities may include practically any Piatco debt under the sun, it
termination payment to Piatco, not to the lenders. However, it is almost a is highly conceivable that their sum may greatly exceed the appraised value
certainty that the Senior Lenders will already have made Piatco sign over to of the facility, and government may end up paying very much more than the
them, ahead of time, its right to receive such payments from government; real worth of Terminal III. (So why did government have to bother with
and/or they may already have had themselves appointed its attorneys-in-fact public bidding anyway?)
for the purpose of collecting and receiving such payments.
In the final analysis, Section 4.04(c)(iv) to (vi) of the ARCA is diametrically
Nevertheless, as petitioners-in-intervention pointed out in their at odds with the spirit and the intent of the BOT Law. The law meant to
Memorandum,61 the termination payment is to be made to Piatco, not to the mobilize private resources (the private sector) to take on the burden and the
lenders; and there is no provision anywhere in the contract documents to risks of financing the construction, operation and maintenance of relevant
prevent it from diverting the proceeds to its own benefit and/or to ensure that infrastructure and development projects for the simple reason that
it will necessarily use the same to pay off the Senior Lenders and other government is not in a position to do so. By the same token, government
creditors, in order to avert the foreclosure of the mortgage and other liens on guarantee was prohibited, since it would merely defeat the purpose and
the terminal facility. Such deficiency puts the interests of government at raison d'être of a build-operate-and-transfer project to be undertaken by the
great risk. Indeed, if the unthinkable were to happen, government would be private sector.
paying several hundreds of millions of dollars, but the mortgage liens on the
facility may still be foreclosed by the Senior Lenders just the same.
To the extent that the project proponent is able to obtain loans to fund the To emphasize, the law does not permit compensation for the project
project, those risks are shared between the project proponent on the one proponent when contract termination is due to the proponent's own fault or
hand, and its banks and other lenders on the other. But where the proponent breach of contract.
or its lenders manage to cajol or coerce the government into extending a
guarantee of payment of the loan obligations, the risks assumed by the This principle was clearly violated in the Piatco Contracts. The ARCA
lenders are passed right back to government. I cannot understand why, in the stipulates that government is to pay termination compensation to Piatco even
instant case, government cheerfully assented to re-assuming the risks of the when termination is initiated by government for the following causes:
project when it gave the prohibited guarantee and thus simply negated the
very purpose of the BOT Law and the protection it gives the government. "(i) Failure of Concessionaire to finish the Works in all material respects in
accordance with the Tender Design and the Timetable;
Contract Termination Provisions in the Piatco Contracts Are Void
(ii) Commission by Concessionaire of a material breach of this Agreement . .
The BOT Law as amended provides for contract termination as follows: .;

"Sec. 7. Contract Termination. - In the event that a project is revoked, (iii) . . . a change in control of Concessionaire arising from the sale,
cancelled or terminated by the government through no fault of the project assignment, transfer or other disposition of capital stock which results in an
proponent or by mutual agreement, the Government shall compensate the ownership structure violative of statutory or constitutional limitations;
said project proponent for its actual expenses incurred in the project plus a
reasonable rate of return thereon not exceeding that stated in the contract as (iv) A pattern of continuing or repeated non-compliance, willful violation, or
of the date of such revocation, cancellation or termination: Provided, That non-performance of other terms and conditions hereof which is hereby
the interest of the Government in this instances [sic] shall be duly insured deemed a material breach of this Agreement . . ."62
with the Government Service Insurance System or any other insurance entity As if that were not bad enough, the ARCA also inserted into Section 8.01 the
duly accredited by the Office of the Insurance Commissioner: Provided, phrase "Subject to Section 4.04." The effect of this insertion is that in those
finally, That the cost of the insurance coverage shall be included in the terms instances where government may terminate the contract on account of
and conditions of the bidding referred to above. Piatco's breach, and it is nevertheless required under the ARCA to make
"In the event that the government defaults on certain major obligations in the termination compensation to Piatco even though unauthorized by law, such
contract and such failure is not remediable or if remediable shall remain compensation is to be equivalent to the payment amount guaranteed by
unremedied for an unreasonable length of time, the project government - either a) the Appraised Value of the terminal facility or (b) the
proponent/contractor may, by prior notice to the concerned national aggregate of the Attendant Liabilities, whichever amount is greater!
government agency or local government unit specifying the turn-over date, Clearly, this condition is not in line with Section 7 of the BOT Law. That
terminate the contract. The project proponent/contractor shall be reasonably provision permits a project proponent to recover the actual expenses it
compensated by the Government for equivalent or proportionate contract cost incurred in the prosecution of the project plus a reasonable rate of return not
as defined in the contract." in excess of that provided in the contract; or to be compensated for the
The foregoing statutory provision in effect provides for the following limited equivalent or proportionate contract cost as defined in the contract, in case
instances when termination compensation may be allowed: the government is in default on certain major contractual obligations.

1. Termination by the government through no fault of the project proponent Furthermore, in those instances where such termination compensation is
authorized by the BOT Law, it is indispensable that the interest of
2. Termination upon the parties' mutual agreement government be duly insured. Section 5.08 the ARCA mandates insurance
coverage for the terminal facility; but all insurance policies are to be
3. Termination by the proponent due to government's default on certain assigned, and all proceeds are payable, to the Senior Lenders. In brief, the
major contractual obligations
interest being secured by such coverage is that of the Senior Lenders, not that to meet its maturing obligations, then the provisions set forth under this
of government. This can hardly be considered compliance with law. Section 8.01(d) shall cease to apply. The foregoing remedial measures shall
be applicable only while there remains unpaid and outstanding amounts
In essence, the ARCA provisions on termination compensation result in owed to the Senior Lenders." (Emphasis supplied)
another unauthorized government guarantee, this time in favor of Piatco.
By any manner of interpretation or application, Section 8.01(d) of the ARCA
A Prohibited Direct Government Subsidy, Which at the Same Time Is an clearly mandates the indefinitepostponement of payment of all of Piatco's
Assault on the National Honor obligations to the government, in order to ensure that Piatco's obligations to
the Senior Lenders are paid in full first. That is nothing more or less than the
Still another contractual provision offensive to law and public policy is direct government subsidy prohibited by the BOT Law and the IRR. The fact
Section 8.01(d) of the ARCA, which is a "bolder and badder" version of that Piatco will pay interest on the unpaid amounts owed to government does
Section 8.04(d) of the CA. not change the situation or render the prohibited subsidy any less
It will be recalled that Section 4-A of the BOT Law as amended prohibits not unacceptable.
only direct government guarantees, but likewise a direct government But beyond the clear violations of law, there are larger issues involved in the
subsidy for unsolicited proposals. Section 13.2. b. iii. of the 1999 IRR defines ARCA. Earlier, I mentioned that Section 8.01(d) of the ARCA completely
a direct government subsidy as encompassing "an agreement whereby the eliminated the proviso in Section 8.04(d) of the CA which gave government
Government . . . will . . . postpone any payments due from the proponent." the right to appoint a financial controller to manage the cash position of
Despite the statutory ban, Section 8.01 (d) of the ARCA provides thus: Piatco during situations of financial distress. Not only has government been
deprived of any means of monitoring and managing the situation; worse, as
"(d) The provisions of Section 8.01(a) notwithstanding, and for the purpose can be seen from Section 8.01(d) above-quoted, the Senior Lenders have
of preventing a disruption of the operations in the Terminal and/or Terminal effectively locked in on the right to exercise financial controllership over
Complex, in the event that at any time Concessionaire is of the reasonable Piatco and to allocate its cash resources to the payment of all amounts owed
opinion that it shall be unable to meet a payment obligation owed to the to the Senior Lenders before allowing any payment to be made to
Senior Lenders, Concessionaire shall give prompt notice to GRP, through government.
DOTC/MIAA and to the Senior Lenders. In such circumstances, the Senior
Lenders (or the Senior Lenders' Representative) may ensure that after making In brief, this particular provision of the ARCA has placed in the hands of
provision for administrative expenses and depreciation, the cash resources of foreign lenders the power and the authority to determine how much (if at all)
Concessionaire shall first be used and applied to meet all payment and when the Philippine government (as grantor of the franchise) may be
obligations owed to the Senior Lenders. Any excess cash, after meeting such allowed to receive from Piatco. In that situation, government will be at the
payment obligations, shall be earmarked for the payment of all sums payable mercy of the foreign lenders. This is a situation completely contrary to the
by Concessionaire to GRP under this Agreement. If by reason of the rationale of the BOT Law and to public policy.
foregoing GRP should be unable to collect in full all payments due to GRP
The aforesaid provision rouses mixed emotions - shame and disgust at
under this Agreement, then the unpaid balance shall be payable within a 90-
the parties' (especially the government officials') docile submission and
day grace period counted from the relevant due date, with interest per annum abject servitude and surrender to the imperious and excessive demands
at the rate equal to the average 91-day Treasury Bill Rate as of the auction of the foreign lenders, on the one hand; and vehement outrage at the
date immediately preceding the relevant due date. If payment is not effected affront to the sovereignty of the Republic and to the national honor, on
by Concessionaire within the grace period, then a spread of five (5%) percent the other. It is indeed time to put an end to such an unbearable,
over the applicable 91-day Treasury Bill Rate shall be added on the unpaid
dishonorable situation.
amount commencing on the expiry of the grace period up to the day of full
payment. When the temporary illiquidity of Concessionaire shall have been The Piatco Contracts Unarguably Violate Constitutional Injunctions
corrected and the cash position of Concessionaire should indicate its ability
I will now discuss the manner in which the Piatco Contracts offended the of ten (10) million passenger capacity per year for three (3) consecutive years
Constitution. during the concession period.

The Exclusive Right Granted to Piatco to Operate a Public Utility Is "This is an onerous and disadvantageous provision. It effectively grants
Prohibited by the Constitution PIATCO a monopoly in Luzon and ties the hands of government in the matter
of developing new airports which may be found expedient and necessary in
While Section 2.02 of the ARCA spoke of granting to Piatco "a franchise to carrying out any future plan for an inter-modal transportation system in
operate and maintain the Terminal Complex," Section 3.02(a) of the same Luzon.
ARCA granted to Piatco, for the entire term of the concession agreement,
"the exclusive right to operate a commercial international passenger "Additionally, it imposes an unreasonable restriction on the operation of the
terminal within the Island of Luzon" with the exception of those three Clark International Airport which could adversely affect the operation and
terminals already existing63 at the time of execution of the ARCA. development of the Clark Special Economic Zone to the economic prejudice
of the local constituencies that are being benefited by its operation."
Section 11 of Article XII of the Constitution prohibits the grant of a (Emphasis supplied)
"franchise, certificate, or any other form of authorization for the operation of
a public utility" that is "exclusive in character." While it cannot be gainsaid that an enterprise that is a public utility may
happen to constitute a monopoly on account of the very nature of its business
In its Opinion No. 078, Series of 1995, the Department of justice held that and the absence of competition, such a situation does not however constitute
"the NAIA Terminal III which . . . is a 'terminal for public use' is a public justification to violate the constitutional prohibition and grant an exclusive
utility." Consequently, the constitutional prohibition against the exclusivity franchise or exclusive right to operate a public utility.
of a franchise applies to the franchise for the operation of NAIA Terminal III
as well. Piatco's contention that the Constitution does not actually prohibit
monopolies is beside the point. As correctly argued,64 the existence of a
What was granted to Piatco was not merely a franchise, but an "exclusive monopoly by a public utility is a situation created by circumstances that do
right" to operate an international passenger terminal within the "Island of not encourage competition. This situation is different from the grant of a
Luzon." What this grant effectively means is that the government is now franchise to operate a public utility, a privilege granted by government. Of
estopped from exercising its inherent power to award any other person course, the grant of a franchise may result in a monopoly. But making such
another franchise or a right to operate such a public utility, in the event franchise exclusive is what is expressly proscribed by the Constitution.
public interest in Luzon requires it. This restriction is highly detrimental to
government and to the public interest. Former Secretary of Justice Hernando Actually, the aforementioned Section 3.02 of the ARCA more than just
B. Perez expressed this point well in his Memorandum for the President guaranteed exclusivity; it also guaranteed that the government will not
dated 21 May 2002: improve or expand the facilities at Clark - and in fact is required to put a cap
on the latter's operations - until after Terminal III shall have been operated at
"Section 3.02 on 'Exclusivity' or beyond its peak capacity for three consecutive years.65 As counsel for
public respondents pointed out, in the real world where the rate of influx of
"This provision gives to PIATCO (the Concessionaire) the exclusive right to international passengers can fluctuate substantially from year to year, it may
operate a commercial international airport within the Island of Luzon with take many years before Terminal III sees three consecutive years' operations
the exception of those already existing at the time of the execution of the at peak capacity. The Diosdado Macapagal International Airport may thus
Agreement, such as the airports at Subic, Clark and Laoag City. In the case end up stagnating for a long time. Indeed, in order to ensure greater profits
of the Clark International Airport, however, the provision restricts its for Piatco, the economic progress of a region has had to be sacrificed.
operation beyond its design capacity of 850,000 passengers per annum and
the operation of new terminal facilities therein until after the new NAIA The Piatco Contracts Violate the Time Limitation on Franchises
Terminal III shall have consistently reached or exceeded its design capacity
Section 11 of Article XII of the Constitution also provides that "no franchise, paraphernalia, immigrations and customs processing areas; and amenities
certificate or any other form of authorization for the operation of a public such as comfort rooms, restaurants and shops.
utility shall be . . . for a longer period than fifty years." After all, a franchise
held for an unreasonably long time would likely give rise to the same evils as In furtherance of the first monopoly, the Piatco Contracts stipulate that the
a monopoly. NAIA Terminal III will be the only facility to be operated as an international
passenger terminal;66 that NAIA Terminals I and II will no longer be
The Piatco Contracts have come up with an innovative way to circumvent the operated as such;67 and that no one (including the government) will be
prohibition and obtain an extension. This fact can be gleaned from Section allowed to compete with Piatco in the operation of an international passenger
8.03(b) of the ARCA, which I quote thus: terminal in the NAIA Complex.68 Given that, at this time, the government
and Piatco are the only ones engaged in the business of operating an
"Sec. 8.03. Termination Procedure and Consequences of Termination. - international passenger terminal, I am not acutely concerned with this
particular monopolistic situation.
a) x x x xxx xxx
There was however another monopoly within the NAIA created by the
b) In the event the Agreement is terminated pursuant to Section 8.01 (b) subject contracts for Piatco - in the business of providing international
hereof, Concessionaire shall be entitled to collect the Liquidated Damages airlines with the following: groundhandling, in-flight catering, cargo
specified in Annex 'G'. The full payment by GRP to Concessionaire of the handling, and aircraft repair and maintenance services. These are lines of
Liquidated Damages shall be a condition precedent to the transfer by business activity in which are engaged many service providers (including the
Concessionaire to GRP of the Development Facility. Prior to the full petitioners-in-intervention), who will be adversely affected upon full
payment of the Liquidated Damages, Concessionaire shall to the extent implementation of the Piatco Contracts, particularly Sections 3.01(d)69 and
practicable continue to operate the Terminal and the Terminal Complex and (e)70 of both the ARCA and the CA.
shall be entitled to retain and withhold all payments to GRP for the purpose
of offsetting the same against the Liquidated Damages. Upon full payment of On the one hand, Section 3.02(a) of the ARCA makes Terminal III the only
the Liquidated Damages, Concessionaire shall immediately transfer the international passenger terminal at the NAIA, and therefore the only place
Development Facility to GRP on 'as-is-where-is' basis." within the NAIA Complex where the business of providing airport-related
services to international airlines may be conducted. On the other hand,
The aforesaid easy payment scheme is less beneficial than it first appears. Section 3.01(d) of the ARCA requires government, through the MIAA, not to
Although it enables government to avoid having to make outright payment of allow service providers with expired MIAA contracts to renew or extend
an obligation that will likely run into billions of pesos, this easy payment their contracts to render airport-related services to airlines. Meanwhile,
plan will nevertheless cost government considerable loss of income, which it Section 3.01(e) of the ARCA requires government, through the DOTC and
would earn if it were to operate Terminal III by itself. Inasmuch as payments MIAA, not to allow service providers - those with subsisting concession
to the concessionaire (Piatco) will be on "installment basis," interest charges agreements for services and operations being conducted at Terminal I - to
on the remaining unpaid balance would undoubtedly cause the total carry over their concession agreements, services and operations to Terminal
outstanding balance to swell. Piatco would thus be entitled to remain in the III, unless they first enter into a separate agreement with Piatco.
driver's seat and keep operating the terminal for an indefinite length of time.
The aforementioned provisions vest in Piatco effective and exclusive control
The Contracts Create Two Monopolies for Piatco over which service provider may and may not operate at Terminal III and
By way of background, two monopolies were actually created by the Piatco render the airport-related services needed by international airlines. It thereby
contracts. The first and more obvious one refers to the business of operating possesses the power to exclude competition. By necessary implication, it also
an international passenger terminal in Luzon, the business end of which has effective control over the fees and charges that will be imposed and
involves providing international airlines with parking space for their aircraft, collected by these service providers.
and airline passengers with the use of departure and arrival areas, check-in
counters, information systems, conveyor systems, security equipment and
This intention is exceedingly clear in the declaration by Piatco that it is barriers to the entry of other service providers into Terminal III. In Tatad v.
"completely within its rights to exclude any party that it has not contracted Secretary of the Department of Energy,80 the Court ruled:
with from NAIA Terminal III."71
". . . [S]ection 19 of Article XII of the Constitution . . . mandates: 'The State
Worse, there is nothing whatsoever in the Piatco Contracts that can serve to shall regulate or prohibit monopolies when the public interest so requires. No
restrict, control or regulate the concessionaire's discretion and power to reject combinations in restraint of trade or unfair competition shall be allowed.'
any service provider and/or impose any term or condition it may see fit in
any contract it enters into with a service provider. In brief, there is no "A monopoly is a privilege or peculiar advantage vested in one or more
safeguard whatsoever to ensure free and fair competition in the service- persons or companies, consisting in the exclusive right or power to carry on a
provider sector. particular business or trade, manufacture a particular article, or control the
sale or the whole supply of a particular commodity. It is a form of market
In the meantime, and not surprisingly, Piatco is first in line, ready to exploit structure in which one or only a few firms dominate the total sales of a
the unique business opportunity. It announced72 that it has accredited three product or service. On the other hand, a combination in restraint of trade is
groundhandlers for Terminal III. Aside from the Philippine Airlines, the an agreement or understanding between two or more persons, in the form of
other accredited entities are the Philippine Airport and Ground Services a contract, trust, pool, holding company, or other form of association, for the
Globeground, Inc. ("PAGSGlobeground") and the Orbit Air Systems, Inc. purpose of unduly restricting competition, monopolizing trade and commerce
("Orbit"). PAGSGlobeground is a wholly-owned subsidiary of the Philippine in a certain commodity, controlling its production, distribution and price, or
Airport and Ground Services, Inc. or PAGS,73 while Orbit is a wholly-owned otherwise interfering with freedom of trade without statutory authority.
subsidiary of Friendship Holdings, Inc.,74 which is in turn owned 80 percent Combination in restraint of trade refers to the means while monopoly refers
by PAGS.75 PAGS is a service provider owned 60 percent by the Cheng to the end.
Family;76 it is a stockholder of 35 percent of Piatco77 and is the latter's
designated contractor-operator for NAIA Terminal III.78 "x x x xxx xxx

Such entry into and domination of the airport-related services sector appear "Section 19, Article XII of our Constitution is anti-trust in history and in
to be very much in line with the following provisions contained in the First spirit. It espouses competition. The desirability of competition is the reason
Addendum to the Piatco Shareholders Agreement,79 executed on July 6, for the prohibition against restraint of trade, the reason for the interdiction of
1999, which appear to constitute a sort of master plan to create a monopoly unfair competition, and the reason for regulation of unmitigated monopolies.
and combinations in restraint of trade: Competition is thus the underlying principle of [S]ection 19, Article XII of
our Constitution, . . ."81
"11. The Shareholders shall ensure:
Gokongwei Jr. v. Securities and Exchange Commission82 elucidates the
a. x x x xxx x x x.; criteria to be employed: "A 'monopoly' embraces any combination the
tendency of which is to prevent competition in the broad and general sense,
b. That (Phil. Airport and Ground Services, Inc.) PAGS and/or its designated or to control prices to the detriment of the public. In short, it is the
Affiliates shall, at all times during the Concession Period, be exclusively concentration of business in the hands of a few. The material consideration
authorized by (PIATCO) to engage in the provision of ground-handling, in determining its existence is not that prices are raised and competition
catering and fueling services within the Terminal Complex. actually excluded, but that power exists to raise prices or exclude
competition when desired."83 (Emphasis supplied)
c. That PAIRCARGO and/or its designated Affiliate shall, during the
Concession Period, be the only entities authorized to construct and operate a The Contracts Encourage Monopolistic Pricing, Too
warehouse for all cargo handling and related services within the Site."
Aside from creating a monopoly, the Piatco contracts also give the
Precisely, proscribed by our Constitution are the monopoly and the restraint concessionaire virtually limitless power over the charging of fees, rentals and
of trade being fostered by the Piatco Contracts through the erection of so forth. What little "oversight function" the government might be able and
minded to exercise is less than sufficient to protect the public interest, as can Consequently, government through the DOTC/MIAA will be compelled to
be gleaned from the following provisions: cease honoring existing contracts with service providers after the In-Service
Date, as they cannot be allowed to operate in Terminal III.
"Sec. 6.06. Adjustment of Non-Public Utility Fees and Charges
In short, the CA and the ARCA obligate and constrain government to break
"For fees, rentals and charges constituting Non-Public Utility Revenues, its existing contracts with these service providers.
Concessionaire may make any adjustments it deems appropriate without need
for the consent of GRP or any government agency subject to Sec. 6.03(c)." Notably, government is not in a position to require Piatco to accommodate
the displaced service providers, and it would be unrealistic to think that these
Section 6.03(c) in turn provides: service providers can perform their service contracts in some other
international airport outside Luzon. Obviously, then, these displaced service
"(c) Concessionaire shall at all times be judicious in fixing fees and charges providers are - to borrow a quaint expression - up the river without a paddle.
constituting Non-Public Utility Revenues in order to ensure that End Users In plainer terms, they will have lost their businesses entirely, in the blink of
are not unreasonably deprived of services. While the vehicular parking fee, an eye.
porterage fee and greeter/wellwisher fee constitute Non-Public Utility
Revenues of Concessionaire, GRP may require Concessionaire to explain What we have here is a set of contractual provisions that impair the
and justify the fee it may set from time to time, if in the reasonable opinion obligation of contracts and contravene the constitutional prohibition against
of GRP the said fees have become exorbitant resulting in the unreasonable deprivation of property without due process of law.88
deprivation of End Users of such services."
Moreover, since the displaced service providers, being unable to operate, will
It will be noted that the above-quoted provision has no teeth, so the be forced to close shop, their respective employees - among them Messrs.
concessionaire can defy the government without fear of any sanction. Agan and Lopez et al. - have very grave cause for concern, as they will find
Moreover, Section 6.06 - taken together with Section 6.03(c) of the ARCA - themselves out of employment and bereft of their means of livelihood. This
falls short of the standard set by the BOT Law as amended, which expressly situation comprises still another violation of the constitution prohibition
requires in Section 2(b) that the project proponent is "allowed to charge against deprivation of property without due process.
facility users appropriate tolls, fees, rentals and charges not exceeding those
proposed in its bid or as negotiated and incorporated in the contract x x x." True, doing business at the NAIA may be viewed more as a privilege than as
a right. Nonetheless, where that privilege has been availed of by the
The Piatco Contracts Violate Constitutional Prohibitions Against petitioners-in-intervention service providers for years on end, a situation
Impairment of Contracts and Deprivation of Property Without Due Process arises, similar to that in American Inter-fashion v. GTEB.89 We held therein
that a privilege enjoyed for seven years "evolved into some form of property
Earlier, I discussed how Section 3.01(e)84 of both the CA and the ARCA right which should not be removed x x x arbitrarily and without due
requires government, through DOTC/MIAA, not to permit the carry-over to process." Said pronouncement is particularly relevant and applicable to the
Terminal III of the services and operations of certain service providers situation at bar because the livelihood of the employees of petitioners-
currently operating at Terminal I with subsisting contracts. intervenors are at stake.
By the In-Service Date, Terminal III shall be the only facility to be operated The Piatco Contracts Violate Constitutional Prohibition
as an international passenger terminal at the NAIA;85 thus, Terminals I and II
Against Deprivation of Liberty Without Due Process
shall no longer operate as such,86 and no one shall be allowed to compete
with Piatco in the operation of an international passenger terminal in the The Piatco Contracts by locking out existing service providers from entry
NAIA.87 The bottom line is that, as of the In-Service Date, Terminal III will into Terminal III and restricting entry of future service providers, thereby
be the only terminal where the business of providing airport-related services infringed upon the freedom - guaranteed to and heretofore enjoyed by
to international airlines and passengers may be conducted at all. international airlines - to contract with local service providers of their choice,
and vice versa.
Both the service providers and their client airlines will be deprived of to or conditions sine qua non for the execution of government contracts. The
the right to liberty, which includes the right to enter into all obvious intent is to impose such conditions as a priori requisites to the
contracts,90 and/or the right to make a contract in relation to one's business.91 validity of the proposed contract."93

By Creating New Financial Obligations for Government, Notwithstanding the constitutional ban, statutory mandates and
Supplements to the ARCA Violate the Constitutional Jurisprudential precedents, the three Supplements to the ARCA, which were
Ban on Disbursement of Public Funds Without Valid Appropriation not approved by NEDA, imposed on government the additional burden of
spending public moneys without prior appropriation.
Clearly prohibited by the Constitution is the disbursement of public funds out
of the treasury, except in pursuance of an appropriation made by law.92 The In the First Supplement ("FS") dated August 27, 1999, the following
immediate effect of this constitutional ban is that all the various agencies of requirements were imposed on the government:
government are constrained to limit their expenditures to the amounts
appropriated by law for each fiscal year; and to carefully count their cash • To construct, maintain and keep in good repair and operating condition all
before taking on contractual commitments. Giving flesh and form to the airport support services, facilities, equipment and infrastructure owned
injunction of the fundamental law, Sections 46 and 47 of Executive Order and/or operated by MIAA, which are not part of the Project or which are
292, otherwise known as the Administrative Code of 1987, provide as located outside the Site, even though constructed by Concessionaire -
follows: including the access road connecting Terminals II and III and the taxilane,
taxiways and runways
"Sec. 46. Appropriation Before Entering into Contract. - (1) No contract
involving the expenditure of public funds shall be entered into unless there is • To obligate the MIAA to provide funding for the upkeep, maintenance and
an appropriation therefor, the unexpended balance of which, free of other repair of the airports and facilities owned or operated by it and by third
obligations, is sufficient to cover the proposed expenditure; and . . persons under its control in order to ensure compliance with international
standards; and holding MIAA liable to Piatco for the latter's losses, expenses
"Sec. 47. Certificate Showing Appropriation to Meet Contract. - Except in and damages as well as for the latter's liability to third persons, in case MIAA
the case of a contract for personal service, for supplies for current fails to perform such obligations; in addition, MIAA will also be liable for
consumption or to be carried in stock not exceeding the estimated the incremental and consequential costs of the remedial work done by Piatco
consumption for three (3) months, or banking transactions of government- on account of the former's default.
owned or controlled banks, no contract involving the expenditure of public
funds by any government agency shall be entered into or authorized unless • Section 4 of the FS imposed on government ten (10) "Additional Special
the proper accounting official of the agency concerned shall have certified to Obligations," including the following:
the officer entering into the obligation that funds have been duly appropriated
o Providing thru MIAA the land required by Piatco for the
for the purpose and that the amount necessary to cover the proposed contract
for the current calendar year is available for expenditure on account thereof, taxilane and one taxiway, at no cost to Piatco
subject to verification by the auditor concerned. The certificate signed by the o Implementing the government's existing storm drainage
proper accounting official and the auditor who verified it, shall be attached to master plan
and become an integral part of the proposed contract, and the sum so
certified shall not thereafter be available for expenditure for any other o Coordinating with DPWH the financing, implementation and
purpose until the obligation of the government agency concerned under the completion of the following works before the In-Service
contract is fully extinguished." Date: three left-turning overpasses (Edsa to Tramo St.,
Tramo to Andrews Ave., and Manlunas Road to Sales Ave.)
Referring to the aforequoted provisions, this Court has held that "(I)t is quite and a road upgrade and improvement program involving
evident from the tenor of the language of the law that the existence of widening, repair and resurfacing of Sales Road, Andrews
appropriations and the availability of funds are indispensable pre-requisites Avenue and Manlunas Road; improvement of Nichols
Interchange; and removal of squatters along Andrews three left-turning overpasses before the In-Service Date, as well as
Avenue acquisition and delivery of additional land for the construction of the T2-T3
access road.
o Dealing directly with BCDA and the Philippine Air Force in
acquiring additional land or right of way for the road Conversely, failure to deliver on any of these obligations may conceivably
upgrade and improvement program result in substantial prejudice to the concessionaire, to such an extent as to
constitute a material breach of the Piatco Contracts. Whereupon, the
o Requiring government to work for the immediate reversion concessionaire may outrightly terminate the Contracts pursuant to Section
to MIAA of the Nayong Pilipino National Park, in order to 8.01(b)(i) and (ii) of the ARCA and seek payment of Liquidated Damages in
permit the building of the second west parallel taxiway accordance with Section 8.02(a) of the ARCA; or the concessionaire may
instead require government to pay the Incremental and Consequential Losses
• Section 5 of the FS also provides that in lieu of the access tunnel, a surface under Section 1.23 of the ARCA.94The logical conclusion then is that the
access road (T2-T3) will be constructed. This provision requires government obligations in the Supplements are not to be performed on a best-efforts basis
to expend funds to purchase additional land from Nayong Pilipino and to only, but are unarguably mandatory in character.
clear the same in order to be able to deliver clean possession of the site to
Piatco, as required in Section 5(c) of the FS. Regarding MIAA's obligation to coordinate with the DPWH for the complete
implementation of the road upgrading and improvement program for Sales,
On the other hand, the Third Supplement ("TS") obligates the government to Andrews and Manlunas Roads (which provide access to the Terminal III site)
deliver, within 120 days from date thereof, clean possession of the land on prior to the In-Service Date, it is essential to take note of the fact that there
which the T2-T3 Road is to be constructed. was a pressing need to complete the program before the opening of Terminal
The foregoing contractual stipulations undeniably impose on government the III.95 For that reason, the MIAA was compelled to enter into a memorandum
expenditures of public funds not included in any congressional appropriation of agreement with the DPWH in order to ensure the timely completion of the
or authorized by any other statute. Piatco however attempts to take these road widening and improvement program. MIAA agreed to advance the total
stipulations out of the ambit of Sections 46 and 47 of the Administrative amount of P410.11 million to DPWH for the works, while the latter was
Code by characterizing them as stipulations for compliance on a "best-efforts committed to do the following:
basis" only. "2.2.8. Reimburse all advance payments to MIAA including but not limited
To determine whether the additional obligations under the Supplements may to interest, fees, plus other costs of money within the periods CY2004 and
really be undertaken on a best-efforts basis only, the nature of each of these CY2006 with payment of no less than One Hundred Million Pesos
obligations must be examined in the context of its relevance and significance (PhP100M) every year.
to the Terminal III Project, as well as of any adverse impact that may result if "2.2.9. Perform all acts necessary to include in its CY2004 to CY2006
such obligation is not performed or undertaken on time. In short, the criteria budget allocation the repayments for the advances made by MIAA, to ensure
for determining whether the best-efforts basis will apply is whether the that the advances are fully repaid by CY2006. For this purpose, DPWH shall
obligations are critical to the success of the Project and, accordingly, include the amounts to be appropriated for reimbursement to MIAA in the
whether failure to perform them (or to perform them on time) could result in "Not Needing Clearance" column of their Agency Budget Matrix (ABM)
a material breach of the contract. submitted to the Department of Budget and Management."
Viewed in this light, the "Additional Special Obligations" set out in Section 4 It can be easily inferred, then, that DPWH did not set aside enough funds to
of the FS take on a different aspect. In particular, each of the following may be able to complete the upgrading program for the crucially situated access
all be deemed to play a major role in the successful and timely prosecution of roads prior to the targeted opening date of Terminal III; and that, had MIAA
the Terminal III Project: the obtention of land required by PIATCO for the not agreed to lend the P410 Million, DPWH would not have been able to
taxilane and taxiway; the implementation of government's existing storm complete the program on time. As a consequence, government would have
drainage master plan; and coordination with DPWH for the completion of the
been in breach of a material obligation. Hence, this particular undertaking of government executed was the Concession Agreement which is entirely
government may likewise not be construed as being for best-efforts different from the Draft Concession Agreement.
compliance only.
Ultimately, though, it would be tantamount to an outrageous, grievous and
They also Infringe on the Legislative Prerogative and Power Over the unforgivable mutilation of public policy and an insult to ourselves if we opt
Public Purse to keep in place a contract - any contract - for to do so would assume that we
agree to having Piatco continue as the concessionaire for Terminal III.
But the particularly sad thing about this transaction between MIAA and
DPWH is the fact that both agencies were maneuvered into (or allowed Despite all the insidious contraventions of the Constitution, law and public
themselves to be maneuvered into) an agreement that would ensure delivery policy Piatco perpetrated, keeping Piatco on as concessionaire and even
of upgraded roads for Piatco's benefit, using funds not allocated for that rewarding it by allowing it to operate and profit from Terminal III - instead
purpose. The agreement would then be presented to Congress as a done deal. of imposing upon it the stiffest sanctions permissible under the laws - is
Congress would thus be obliged to uphold the agreement and support it with unconscionable.
the necessary allocations and appropriations for three years, in order to
enable DPWH to deliver on its committed repayments to MIAA. The net It is no exaggeration to say that Piatco may not really mind which contract
result is an infringement on the legislative power over the public purse and a we decide to keep in place. For all it may care, we can do just as well without
diminution of Congress' control over expenditures of public funds - a one, if we only let it continue and operate the facility. After all, the real
development that would not have come about, were it not for the money will come not from building the Terminal, but from actually
Supplements. Very clever but very illegal! operating it for fifty or more years and charging whatever it feels like,
without any competition at all. This scenario must not be allowed to happen.
EPILOGUE
What Do We Do Now? If the Piatco contracts are junked altogether as I think they should be, should
not AEDC automatically be considered the winning bidder and therefore
In the final analysis, there remains but one ultimate question, which I raised allowed to operate the facility? My answer is a stone-cold 'No'. AEDC never
during the Oral Argument on December 10, 2002: What do we do with the won the bidding, never signed any contract, and never built any facility. Why
Piatco Contracts and Terminal III?96 (Feeding directly into the resolution should it be allowed to automatically step in and benefit from the greed of
of the decisive question is the other nagging issue: Why should we bother another?
with determining the legality and validity of these contracts, when the
Terminal itself has already been built and is practically complete?) Should government pay at all for reasonable expenses incurred in the
construction of the Terminal? Indeed it should, otherwise it will be unjustly
Prescinding from all the foregoing disquisition, I find that all the Piatco enriching itself at the expense of Piatco and, in particular, its funders,
contracts, without exception, are void ab initio, and therefore inoperative. contractors and investors - both local and foreign. After all, there is no
Even the very process by which the contracts came into being - the bidding question that the State needs and will make use of Terminal III, it being part
and the award - has been riddled with irregularities galore and blatant and parcel of the critical infrastructure and transportation-related programs of
violations of law and public policy, far too many to ignore. There is thus no government.
conceivable way, as proposed by some, of saving one (the original
Concession Agreement) while junking all the rest. In Melchor v. Commission on Audit,97 this Court held that even if the contract
therein was void, the principle of payment by quantum meruit was found
Neither is it possible to argue for the retention of the Draft Concession applicable, and the contractor was allowed to recover the reasonable value of
Agreement (referred to in the various pleadings as the Contract Bidded Out) the thing or services rendered (regardless of any agreement as to
as the contract that should be kept in force and effect to govern the situation, the supposed value), in order to avoid unjust enrichment on the part of
inasmuch as it was never executed by the parties. What Piatco and the government. The principle of quantum meruit was likewise applied in Eslao
v. Commission on Audit,98 because to deny payment for a building almost
completed and already occupied would be to permit government to unjustly
enrich itself at the expense of the contractor. The same principle was applied
in Republic v. Court of Appeals.99

One possible practical solution would be for government - in view of the


nullity of the Piatco contracts and of the fact that Terminal III has already
been built and is almost finished - to bid out the operation of the facility
under the same or analogous principles as build-operate-and-transfer
projects. To be imposed, however, is the condition that the winning bidder
must pay the builder of the facility a price fixed by government based
on quantum meruit; on the real, reasonable - not inflated - value of the built
facility.

How the payment or series of payments to the builder, funders, investors and
contractors will be staggered and scheduled, will have to be built into the
bids, along with the annual guaranteed payments to government. In this
manner, this whole sordid mess could result in something truly beneficial for
all, especially for the Filipino people.

WHEREFORE, I vote to grant the Petitions and to declare the subject


contracts NULL and VOID.
EN BANC By virtue of the above-cited provision, the Liga adopted and ratified its own
Election Code.5 Section 1.2, Article I of the Liga Election Code states:
G.R. No. 154599 January 21, 2004
1.2 Liga ng mga Barangay Provincial, Metropolitan, HUC/ICC
THE LIGA NG MGA BARANGAY NATIONAL, petitioner, Chapters. There shall be nationwide synchronized elections for the
vs. provincial, metropolitan, and HUC/ICC chapters to be held on the third
THE CITY MAYOR OF MANILA, HON. JOSE ATIENZA, JR., and Monday of the month immediately after the month when the synchronized
THE CITY COUNCIL OF MANILA, respondents. elections in paragraph 1.1 above was held. The incumbent Liga chapter
president concerned duly assisted by the proper government agency, office or
DECISION department, e.g. Provincial/City/NCR/Regional Director, shall convene all
DAVIDE, JR., C.J.: the duly elected Component City/Municipal Chapter Presidents and all the
current elected Punong Barangays (for HUC/ICC) of the respective chapters
This petition for certiorari under Rule 65 of the Rules of Court seeks the in any public place within its area of jurisdiction for the purpose of
nullification of Manila City Ordinance No. 8039, Series of 2002,1 and reorganizing and electing the officers and directors of the provincial,
respondent City Mayor’s Executive Order No. 011, Series of 2002,2 dated 15 metropolitan or HUC/ICC Liga chapters. Said president duly assisted by the
August 2002 , for being patently contrary to law. government officer aforementioned, shall notify, in writing, all the above
concerned at least fifteen (15) days before the scheduled election meeting on
The antecedents are as follows: the exact date, time, place and requirements of the said meeting.
Petitioner Liga ng mga Barangay National (Liga for brevity) is the national The Liga thereafter came out with its Calendar of Activities and Guidelines
organization of all the barangays in the Philippines, which pursuant to in the Implementation of the Liga Election Code of 2002,6 setting on 21
Section 492 of Republic Act No. 7160, otherwise known as The Local October 2002 the synchronized elections for highly urbanized city chapters,
Government Code of 1991, constitutes the duly elected presidents of highly- such as the Liga Chapter of Manila, together with independent component
urbanized cities, provincial chapters, the metropolitan Manila Chapter, and city, provincial, and metropolitan chapters.lawphi1.net
metropolitan political subdivision chapters.
On 28 June 2002, respondent City Council of Manila enacted Ordinance No.
Section 493 of that law provides that "[t]he liga at the municipal, city, 8039, Series of 2002, providing, among other things, for the election of
provincial, metropolitan political subdivision, and national levels directly representatives of the District Chapters in the City Chapter of Manila and
elect a president, a vice-president, and five (5) members of the board of setting the elections for both chapters thirty days after the barangay elections.
directors." All other matters not provided for in the law affecting the internal Section 3 (A) and (B) of the assailed ordinance read:
organization of the leagues of local government units shall be governed by
their respective constitution and by-laws, which must always conform to the SEC. 3. Representation Chapters. — Every Barangay shall be represented in
provisions of the Constitution and existing laws.3 the said Liga Chapters … by the Punong Barangay…or, in his absence or
incapacity, by the kagawad duly elected for the purpose among its
On 16 March 2000, the Liga adopted and ratified its own Constitution and members….
By-laws to govern its internal organization.4 Section 1, third paragraph,
Article XI of said Constitution and By-Laws states: A. District Chapter

All other election matters not covered in this Article shall be governed by the All elected Barangay Chairman in each District shall elect from among
"Liga Election Code" or such other rules as may be promulgated by the themselves the President, Vice-President and five (5) members of the
National Liga Executive Board in conformity with the provisions of existing Board….
laws.
B. City Chapter
The District Chapter representatives shall automatically become members of EXECUTIVE ORDER NO. 011 TO IMPLEMENT THE QUESTIONED
the Board and they shall elect from among themselves a President, Vice- CITY ORDINANCE NO. 8039 S. 2002.
President, Secretary, Treasurer, Auditor and create other positions as it may
deem necessary for the management of the chapter. In support of its petition, the Liga argues that City Ordinance No. 8039,
Series of 2002, and Executive Order No. 011, Series of 2002, contradict the
The assailed ordinance was later transmitted to respondent City Mayor Jose Liga Election Code and are therefore invalid. There exists neither rhyme nor
L. Atienza, Jr., for his signature and approval. reason, not to mention the absence of legal basis, for the Manila City Council
to encroach upon, or even assume, the functions of the Liga by prescribing,
On 16 July 2002, upon being informed that the ordinance had been through legislation, the manner of conducting the Liga elections other than
forwarded to the Office of the City Mayor, still unnumbered and yet to be what has been provided for by the Liga Constitution and By-laws and the
officially released, the Liga sent respondent Mayor of Manila a letter Liga Election Code. Accordingly, the subject ordinance is an ultra vires act
requesting him that said ordinance be vetoed considering that it encroached of the respondents and, as such, should be declared null and void.
upon, or even assumed, the functions of the Liga through legislation, a
function which was clearly beyond the ambit of the powers of the City As for its prayer for the issuance of a temporary restraining order, the
Council.7 petitioner cites as reason therefor the fact that under Section 5 of the assailed
city ordinance, the Manila District Chapter elections would be held thirty
Respondent Mayor, however, signed and approved the assailed city days after the regular barangay elections. Hence, it argued that the issuance
ordinance and issued on 15 August 2002 Executive Order No. 011, Series of of a temporary restraining order and/or preliminary injunction would be
2002, to implement the ordinance. imperative to prevent the implementation of the ordinance and executive
order.
Hence, on 27 August 2002, the Liga filed the instant petition raising the
following issues: On 12 September 2002, Barangay Chairman Arnel Peña, in his capacity as a
member of the Liga ng mga Barangay in the City Chapter of Manila, filed a
I Complaint in Intervention with Urgent Motion for the Issuance of Temporary
WHETHER OR NOT THE RESPONDENT CITY COUNCIL OF MANILA Restraining Order and/or Preliminary Injunction.8 He supports the position of
COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO the Liga and prays for the declaration of the questioned ordinance and
LACK OF OR IN EXCESS OF JURISDICTION, WHEN IT ENACTED executive order, as well as the elections of the Liga ng mga Barangay
CITY ORDINANCE NO. 8039 S. 2002 PURPOSELY TO GOVERN THE pursuant thereto, to be null and void. The assailed ordinance prescribing for
ELECTIONS OF THE MANILA CHAPTER OF THE LIGA NG MGA an "indirect manner of election" amended, in effect, the provisions of the
BARANGAYS AND WHICH PROVIDES A DIFFERENT MANNER OF Local Government Code of 1991, which provides for the election of the Liga
ELECTING ITS OFFICERS, DESPITE THE FACT THAT SAID officers at large. It also violated and curtailed the rights of the petitioner and
CHAPTER’S ELECTIONS, AND THE ELECTIONS OF ALL OTHER intervenor, as well as the other 896 Barangay Chairmen in the City of
CHAPTERS OF THE LIGA NG MGA BARANGAYS FOR THAT Manila, to vote and be voted upon in a direct election.
MATTER, ARE BY LAW MANDATED TO BE GOVERNED BY THE On 25 October 2002, the Office of the Solicitor General (OSG) filed a
LIGA CONSTITUTION AND BY-LAWS AND THE LIGA ELECTION Manifestation in lieu of Comment.9 It supports the petition of the Liga,
CODE. arguing that the assailed city ordinance and executive order are clearly
II inconsistent with the express public policy enunciated in R.A. No. 7160.
Local political subdivisions are able to legislate only by virtue of a valid
WHETHER OR NOT THE RESPONDENT CITY MAYOR OF MANILA delegation of legislative power from the national legislature. They are mere
COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO agents vested with what is called the power of subordinate legislation. Thus,
LACK OF OR IN EXCESS OF JURISDICTION WHEN HE ISSUED the enactments in question, which are local in origin, cannot prevail against
the decree, which has the force and effect of law.
On the issue of non-observance by the petitioners of the hierarchy-of-courts attending the present petition that would warrant cognizance of the present
rule, the OSG posits that technical rules of procedure should be relaxed in the petition by this Court.
instant petition. While Batas Pambansa Blg. 129, as amended, grants original
jurisdiction over cases of this nature to the Regional Trial Court (RTC), the Besides, according to the respondents, the petitioner has transgressed the
exigency of the present petition, however, calls for the relaxation of this rule. proscription against forum-shopping in filing the instant suit. Although the
Section 496 (should be Section 491) of the Local Government Code of 1991 parties in the other pending cases and in this petition are different individuals
primarily intended that the Liga ng mga Barangay determine the or entities, they represent the same interest.
representation of the Liga in the sanggunians for the immediate ventilation,
articulation, and crystallization of issues affecting barangay government With regard to petitioner's prayer for temporary restraining order and/ or
administration. Thus, the immediate resolution of this petition is a must. preliminary injunction in its petition, the respondents maintain that the same
had become moot and academic in view of the elections of officers of the
On the other hand, the respondents defend the validity of the assailed City Liga ng mga Barangay on 15 September 2002 and their subsequent
ordinance and executive order and pray for the dismissal of the present assumption to their respective offices.10 Since the acts to be enjoined are now
petition on the following grounds: (1) certiorari under Rule 65 of the Rules fait accompli, this petition for certiorari with an application for provisional
of Court is unavailing; (2) the petition should not be entertained by this Court remedies must necessarily fail. Thus, where the records show that during the
in view of the pendency before the Regional Trial Court of Manila of two pendency of the case certain events or circumstances had taken place that
actions or petitions questioning the subject ordinance and executive order; render the case moot and academic, the petition for certiorari must be
(3) the petitioner is guilty of forum shopping; and (4) the act sought to be dismissed.
enjoined is fait accompli.
After due deliberation on the pleadings filed, we resolve to dismiss this
The respondents maintain that certiorari is an extraordinary remedy available petition for certiorari.
to one aggrieved by the decision of a tribunal, officer, or board exercising
judicial or quasi-judicial functions. The City Council and City Mayor of First, the respondents neither acted in any judicial or quasi-judicial capacity
Manila are not the "board" and "officer" contemplated in Rule 65 of the nor arrogated unto themselves any judicial or quasi-judicial prerogatives. A
Rules of Court because both do not exercise judicial functions. The petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure is a
enactment of the subject ordinance and issuance of the questioned executive special civil action that may be invoked only against a tribunal, board, or
order are legislative and executive functions, respectively, and thus, do not officer exercising judicial or quasi-judicial functions.
fall within the ambit of "judicial functions." They are both within the Section 1, Rule 65 of the 1997 Rules of Civil Procedure provides:
prerogatives, powers, and authority of the City Council and City Mayor of
Manila, respectively. Furthermore, the petition failed to show with certainty SECTION 1. Petition for certiorari. — When any tribunal, board or officer
that the respondents acted without or in excess of jurisdiction or with grave exercising judicial or quasi-judicial functions has acted without or in excess
abuse of discretion. of its or his jurisdiction, or with grave abuse of discretion amounting to lack
or excess of jurisdiction, and there is no appeal, or any plain, speedy, and
The respondents also asseverate that the petitioner cannot claim that it has no adequate remedy in the ordinary course of law, a person aggrieved thereby
other recourse in addressing its grievance other than this petition for may file a verified petition in the proper court, alleging the facts with
certiorari. As a matter of fact, there are two cases pending before Branches certainty and praying that judgment be rendered annulling or modifying the
33 and 51 of the RTC of Manila (one is for mandamus; the other, for proceedings of such tribunal, board or officer, and granting such incidental
declaratory relief) and three in the Court of Appeals (one is for prohibition; reliefs as law and justice may require.
the two other cases, for quo warranto), which are all akin to the present
petition in the sense that the relief being sought therein is the declaration of Elsewise stated, for a writ of certiorari to issue, the following requisites must
the invalidity of the subject ordinance. Clearly, the petitioner may ask the concur: (1) it must be directed against a tribunal, board, or officer exercising
RTC or the Court of Appeals the relief being prayed for before this Court. judicial or quasi-judicial functions; (2) the tribunal, board, or officer must
Moreover, the petitioner failed to prove discernible compelling reasons have acted without or in excess of jurisdiction or with grave abuse of
discretion amounting lack or excess of jurisdiction; and (3) there is no appeal (2) Review, revise, reverse, modify, or affirm on appeal or certiorari as the
or any plain, speedy, and adequate remedy in the ordinary course of law. law or the Rules of Court may provide, final judgments and orders of lower
courts in:
A respondent is said to be exercising judicial function where he has the
power to determine what the law is and what the legal rights of the parties (a) All cases in which the constitutionality or validity of any treaty,
are, and then undertakes to determine these questions and adjudicate upon international or executive agreement, law, presidential decree, proclamation,
the rights of the parties.11 order, instruction, ordinance, or regulation is in question. (Italics supplied).

Quasi-judicial function, on the other hand, is "a term which applies to the As such, this petition must necessary fail, as this Court does not have original
actions, discretion, etc., of public administrative officers or bodies … jurisdiction over a petition for declaratory relief even if only questions of law
required to investigate facts or ascertain the existence of facts, hold hearings, are involved.15
and draw conclusions from them as a basis for their official action and to
exercise discretion of a judicial nature."12 Third, even granting arguendo that the present petition is ripe for the
extraordinary writ of certiorari, there is here a clear disregard of the
Before a tribunal, board, or officer may exercise judicial or quasi-judicial hierarchy of courts. No special and important reason or exceptional and
acts, it is necessary that there be a law that gives rise to some specific rights compelling circumstance has been adduced by the petitioner or the intervenor
of persons or property under which adverse claims to such rights are made, why direct recourse to this Court should be allowed.
and the controversy ensuing therefrom is brought before a tribunal, board, or
officer clothed with power and authority to determine the law and adjudicate We have held that this Court’s original jurisdiction to issue a writ
the respective rights of the contending parties.13 of certiorari (as well as of prohibition, mandamus, quo warranto, habeas
corpus and injunction) is not exclusive, but is concurrent with the Regional
The respondents do not fall within the ambit of tribunal, board, or officer Trial Courts and the Court of Appeals in certain cases. As aptly stated in
exercising judicial or quasi-judicial functions. As correctly pointed out by the People v. Cuaresma:16
respondents, the enactment by the City Council of Manila of the assailed
ordinance and the issuance by respondent Mayor of the questioned executive This concurrence of jurisdiction is not, however, to be taken as according to
order were done in the exercise of legislative and executive functions, parties seeking any of the writs an absolute, unrestrained freedom of choice
respectively, and not of judicial or quasi-judicial functions. On this score of the court to which application therefor0 will be directed. There is after all
alone, certiorari will not lie. a hierarchy of courts. That hierarchy is determinative of the venue of appeals,
and also serves as a general determinant of the appropriate forum for
Second, although the instant petition is styled as a petition for certiorari, in petitions for the extraordinary writs. A becoming regard of that judicial
essence, it seeks the declaration by this Court of the unconstitutionality or hierarchy most certainly indicates that petitions for the issuance of
illegality of the questioned ordinance and executive order. It, thus, partakes extraordinary writs against first level ("inferior") courts should be filed with
of the nature of a petition for declaratory relief over which this Court has the Regional Trial Court, and those against the latter, with the Court of
only appellate, not original, jurisdiction.14 Section 5, Article VIII of the Appeals. A direct invocation of the Supreme Court’s original jurisdiction to
Constitution provides: issue these writs should be allowed only when there are special and
important reasons therefor, clearly and specifically set out in the petition.
Sec. 5. The Supreme Court shall have the following powers: This is [an] established policy. It is a policy necessary to prevent inordinate
demands upon the Court’s time and attention which are better devoted to
(1) Exercise original jurisdiction over cases affecting ambassadors, other those matters within its exclusive jurisdiction, and to prevent further over-
public ministers and consuls, and over petitions for certiorari, prohibition, crowding of the Court’s docket.
mandamus, quo warranto, and habeas corpus.
As we have said in Santiago v. Vasquez,17 the propensity of litigants and
lawyers to disregard the hierarchy of courts in our judicial system by seeking
relief directly from this Court must be put to a halt for two reasons: (1) it WHEREFORE, the petition is DISMISSED.
would be an imposition upon the precious time of this Court; and (2) it would
cause an inevitable and resultant delay, intended or otherwise, in the SO ORDERED.
adjudication of cases, which in some instances had to be remanded or
referred to the lower court as the proper forum under the rules of procedure, THIRD DIVISION
or as better equipped to resolve the issues because this Court is not a trier of [G.R. No. 139791. December 12, 2003]
facts.
MANILA BANKERS LIFE INSURANCE CORPORATION, petitioner,
Thus, we shall reaffirm the judicial policy that this Court will not entertain vs. EDDY NG KOK WEI, respondent.
direct resort to it unless the redress desired cannot be obtained in the
appropriate courts, and exceptional and compelling circumstances justify the DECISION
availment of the extraordinary remedy of writ of certiorari, calling for the
exercise of its primary jurisdiction.18 SANDOVAL-GUTIERREZ, J.:

Petitioner’s reliance on Pimentel v. Aguirre19 is misplaced because the non- Before us is a petition for review on certiorari assailing the
observance of the hierarchy-of-courts rule was not an issue therein. Besides, Decision[1] dated March 26, 1999 and Resolution[2] dated August 5, 1999 of
what was sought to be nullified in the petition for certiorari and prohibition the Court of Appeals in CA-G.R. CV No. 40504, entitled Eddy Ng Kok Wei
therein was an act of the President of the Philippines, which would have vs. Manila Bankers Life Insurance Corporation.
greatly affected all local government units. We reiterated therein that when
an act of the legislative department is seriously alleged to have infringed the The factual antecedents as borne by the records are:
Constitution, settling the controversy becomes the duty of this Court. The
Eddy Ng Kok Wei, respondent, is a Singaporean businessman who ventured
same is true when what is seriously alleged to be unconstitutional is an act of
into investing in the Philippines. On November 29, 1988, respondent, in a
the President, who in our constitutional scheme is coequal with Congress.
Letter of Intent addressed to Manila Bankers Life Insurance Corporation,
We hesitate to rule that the petitioner and the intervenor are guilty of forum- petitioner, expressed his intention to purchase a condominium unit at Valle
shopping. Forum-shopping exists where the elements of litis pendentia are Verde Terraces.
present or when a final judgment in one case will amount to res judicata in
Subsequently or on December 5, 1988, respondent paid petitioner a
the other. For litis pendentia to exist, the following requisites must be
reservation fee of P50,000.00 for the purchase of a 46-square meter
present: (1) identity of parties, or at least such parties as are representing the
condominium unit (Unit 703) valued at P860,922.00. On January 16, 1989,
same interests in both actions; (2) identity of rights asserted and reliefs
respondent paid 90% of the purchase price in the sum of P729,830.00.
prayed for, the reliefs being founded on the same facts; and (3) identity with
respect to the two preceding particulars in the two cases, such that any Consequently, petitioner, through its President, Mr. Antonio G. Puyat,
judgment that may be rendered in the pending case, regardless of which party executed a Contract to Sell in favor of the respondent. The contract expressly
is successful, would amount to res judicata in the other case.20 states that the subject condominium unit shall substantially be completed and
delivered to the respondent within fifteen (15) months from February 8, 1989
In the instant petition, and as admitted by the respondents, the parties in this
or on May 8, 1990, and that (S)hould there be no substantial completion and
case and in the alleged other pending cases are different individuals or
fail(ure) to deliver the unit on the date specified, a penalty of 1% of the total
entities; thus, forum-shopping cannot be said to exist. Moreover, even
amount paid (by respondent) shall be charged against (petitioner).
assuming that those five petitions are indeed pending before the RTC of
Manila and the Court of Appeals, we can only guess the causes of action and Considering that the stipulated 15-month period was at hand, respondent
issues raised before those courts, considering that the respondents failed to returned to the Philippines sometime in April, 1990.
furnish this Court with copies of the said petitions.
In a letter dated April 5, 1990, petitioner, through its Senior Assistant Vice- On appeal, the Court of Appeals, in a Decision dated March 26, 1999,
President, Mr. Mario G. Zavalla, informed respondent of the substantial affirmed in toto the trial courts award of damages in favor of the respondent.
completion of his condominium unit, however, due to various uncontrollable
forces (such as coup d etat attempts, typhoon and steel and cement shortage), Unsatisfied, petitioner filed a motion for reconsideration but was denied by
the final turnover is reset to May 31, 1990. the Appellate Court in a Resolution dated August 5, 1999.

Meanwhile, on July 5, 1990, upon receipt of petitioners notice of delivery Hence, this petition for review on certiorari. Petitioner contends that the trial
dated May 31, 1990, respondent again flew back to Manila. He found the court has no jurisdiction over the instant case; and that the Court of Appeals
unit still uninhabitable for lack of water and electric facilities. erred in affirming the trial courts finding that petitioner incurred
unreasonable delay in the delivery of the condominium unit to respondent.
Once more, petitioner issued another notice to move-in addressed to its
building administrator advising the latter that respondent is scheduled to On petitioners contention that the trial court has no jurisdiction over the
move in on August 22, 1990. instant case, Section 1 (c) of Presidential Decree No. 1344, as amended,
provides:
On October 5, 1990, respondent returned to the Philippines only to find that
his condominium unit was still unlivable. Exasperated, he was constrained to SECTION 1. In the exercise of its functions to regulate the real estate trade
send petitioner a letter dated November 21, 1990 demanding payment for the and business and in addition to its powers provided for in Presidential Decree
damages he sustained. But petitioner ignored such demand, prompting No. 957, the National Housing Authority [now Housing and Land Use
respondent to file with the Regional Trial Court, Branch 150, MakatiCity, a Regulatory Board (HLURB)][4] shall have exclusive jurisdiction to hear and
complaint against the former for specific performance and damages, decide cases of the following nature:
docketed as Civil Case No. 90-3440.
xxx
Meanwhile, during the pendency of the case, respondent finally accepted the
condominium unit and on April 12, 1991, occupied the same. Thus, C. Cases involving specific performance of contractual and statutory
respondents cause of action has been limited to his claim for damages. obligations filed by buyers of subdivision lots or condominium units against
the owner, developer, dealer, broker or salesman.
On December 18, 1992, the trial court rendered a Decision[3] finding the
petitioner liable for payment of damages due to the delay in the performance x x x.
of its obligation to the respondent.The dispositive portion reads: Pursuant to the above provisions, it is the HLURB which has jurisdiction
WHEREFORE, judgment is hereby rendered in favor of plaintiff and against over the instant case. We have consistently held that complaints for specific
defendant, ordering Manila Bankers Life Insurance Corporation to pay performance with damages by a lot or condominium unit buyer against the
plaintiff Eddy Ng Kok Wei the following: owner or developer falls under the exclusive jurisdiction of the HLURB.[5]

1. One percent (1%) of the total amount plaintiff paid defendant; While it may be true that the trial court is without jurisdiction over the case,
petitioners active participation in the proceedings estopped it from assailing
2. P100,000.00 as moral damages; such lack of it. We have held that it is an undesirable practice of a party
participating in the proceedings and submitting its case for decision and then
3. P50,000.00 as exemplary damages; accepting the judgment, only if favorable, and attacking it for lack of
jurisdiction, when adverse.[6]
4. P25,000.00 by way of attorneys fees; and
Here, petitioner failed to raise the question of jurisdiction before the trial
Cost of suit. court and the Appellate Court. In effect, petitioner confirmed and ratified the
SO ORDERED.
trial courts jurisdiction over this case. Certainly, it is now in estoppel and can
no longer question the trial courts jurisdiction.

On petitioners claim that it did not incur delay, suffice it to say that this is a
factual issue. Time and again, we have ruled that the factual findings of the
trial court are given weight when supported by substantial evidence and
carries more weight when affirmed by the Court of Appeals.[7] Whether or
not petitioner incurred delay and thus, liable to pay damages as a result
thereof, are indeed factual questions.

The jurisdiction of this Court in a petition for review on certiorari under


Rule 45 of the 1997 Rules of Civil Procedure, as amended, is limited to
reviewing only errors of law, not of fact, unless the factual findings being
assailed are not supported by evidence on record or the impugned judgment
is based on a misapprehension of facts.[8] These exceptions are not present
here.

WHEREFORE, the petition is DENIED. The assailed Decision dated March


26, 1999 and Resolution dated August 5, 1999 of the Court of Appeals are
hereby AFFIRMED IN TOTO.

Costs against the petitioner.

SO ORDERED.
FIRST DIVISION consideration of P16,000,000.00. Under the terms of the sale, the vendee
agreed to pay for the capital gains tax. The consideration in the 8 August
[A.M. No. MTJ-01-1370. April 25, 2003] 1993 Deed of Absolute Sale was apparently undervalued. Subsequently, the
Bureau of Internal Revenue assessed the vendors a deficiency capital gains
OFFICE OF THE COURT ADMINISTRATOR, complainant, vs. tax of P1,023,375.00.
JUDGE AGUSTIN T. SARDIDO, Municipal Trial Court of Koronadal,
South Cotabato, respondent. Judge Hurtado filed a motion praying that the criminal complaint against him
be forwarded to the Supreme Court. Judge Hurtado claimed that Circular No.
DECISION 3-89 dated 6 February 1989 requires all cases involving justices and judges
CARPIO, J.: of the lower courts, whether or not such complaints deal with acts apparently
unrelated to the discharge of their official functions, such as acts of
The Case immorality, estafa, crimes against persons and property, etc. to be forwarded
to the Supreme Court. Judge Hurtado asserted that since the case against him
This is an administrative case against respondent Judge Agustin T. Sardido is one involving a judge of a lower court, the same should be forwarded to
(Judge Sardido) formerly presiding judge of the Municipal Trial Court of the Supreme Court pursuant to Circular No. 3-89.
Koronadal, South Cotabato, for gross ignorance of the law. Judge Sardido
issued an Order dated 20 October 1998 excluding Judge Braulio Hurtado, Jr. The Provincial Prosecutor opposed Judge Hurtados motion, arguing that the
(Judge Hurtado) of the Regional Trial Court of Kabacan, North Cotabato as case against Judge Hurtado is not within the scope of Circular No. 3-89 since
one of the accused in an Amended Information.[1] Judge Sardido ruled that it is not an IBP-initiated case. Moreover, the offense charged was committed
Supreme Court Circular No. 3-89 requires that Judge Hurtado be dropped in 1993 when Judge Hurtado was still a clerk of court and ex-officio notary
from the Amended Information and his case be forwarded to the Court. public.

The Facts On 20 October 1998, Judge Sardido issued an Order, the pertinent portions of
which read:
Private complainant Teresita Aguirre Magbanua accused Oscar Pagunsan
and Danilo Ong of the crime of Falsification by Private Individual and Use of The issue to be resolved in the instant case is, whether the case of Judge
Falsified Document.[2] The Amended Information included Judge Hurtado, who is charged for acts committed prior to his appointment as an
Hurtado. The case, docketed as Criminal Case No. 14071, was raffled to RTC Judge, falls within the purview of the afore-said Circular No. 3-89.
Judge Sardido, then presiding judge of the Municipal Trial Court of
Koronadal, South Cotabato (MTC-Koronadal). It is the humble submission of the Court that the case of Judge Hurtado, an
RTC Judge of the Regional Trial Court of Kabacan, North Cotabato, falls
In a Deed of Absolute Sale dated 8 August 1993, private complainant within the meaning and intent of the said circular.
Magbanua and six other vendors allegedly sold two parcels of land, covered
by TCT Nos. 47873 and 33633 and located at the commercial district of For reasons being, firstly, the said circular provides that all cases involving
Koronadal, to Davao Realty Development Corporation, represented by justices and judges of lower courts shall be forwarded to the Supreme Court
accused Ong, with co-accused Pagunsan, as broker. Judge Hurtado, who at for appropriate action, whether or not such complaints deal with acts
that time was the Clerk of Court of RTC-Koronadal and ex-officio notary apparently unrelated to the discharge of their official functions, and
public, notarized the Deed of Absolute Sale. regardless of the nature of the crime, without any qualification whether the
crime was committed before or during his tenure of office. Under the law on
However, private complainant Magbanua denies signing the Deed of Legal Hermeneutics, if the law does not qualify we must not qualify.
Absolute Sale dated 8 August 1993 which states that the consideration for the Secondly, it would sound, to the mind of the Court, awkward for a first level
sale was only P600,000.00. Private complainant asserts that what she and the court to be trying an incumbent judge of a second level court.
other vendors signed was a Deed of Absolute Sale dated 6 August 1996 for a
For reasons afore-stated, this Court can not and shall not try this case as Judge Sardido filed his Manifestation dated 20 September 2001 stating that
against Judge Hurtado, unless the Honorable Supreme Court would order he is submitting the case for decision based on the pleadings and records
otherwise. already filed. Judge Sardido insisted that he did what he had done in all
honesty and good faith.
Wherefore, the foregoing premises duly considered, the name of Judge
Braulio L. Hurtado, Jr. is ordered excluded from the amended information OCAs Findings and Conclusions
and the case against him is ordered forwarded to the Honorable Supreme
Court, pursuant to the afore-said Circular No. 3-89 of the Supreme Court, The OCA found that Judge Sardido erred in excluding Judge Hurtado as one
dated February 9, 1989. of the accused in the Amended Information in Criminal Case No. 14071. The
OCA held that Circular No. 3-89, which is Judge Sardidos basis in issuing
Accordingly, Maxima S. Borja (Borja), Stenographer I and Acting Clerk of the Order of 20 October 1998, refers to administrative complaints filed with
Court II of the MTC-Koronadal, South Cotabato, wrote a letter dated 21 July the IBP against justices and judges of lower courts. The Circular does not
1999 forwarding the criminal case against Judge Hurtado to the Court apply to criminal cases filed against justices and judges of lower courts. The
Administrator for appropriate action. OCA recommended that a fine of P5,000.00 be imposed on Judge Sardido
for gross ignorance of the law.
Then Court Administrator Alfredo L. Benipayo issued a Memorandum dated
25 October 2000 pointing out that Circular No. 3-89 refers only to The Courts Ruling
administrative complaints filed with the IBP against justices and judges of
lower courts. The Circular does not apply to criminal cases filed before trial The Court issued Circular No. 3-89 in response to a letter dated 19 December
courts against such justices and judges. 1988 by then IBP President Leon M. Garcia, seeking clarification of the
Courts En Banc Resolution of 29 November 1998 in RE: Letter of then
Thus, in the Resolution of 6 December 2000, the Court directed that the letter Acting Presiding Justice Rodolfo A. Nocon[3] and Associate Justices
of Acting Clerk of Court Borja be returned to the MTC-Koronadal together Reynato Puno[4] and Alfredo Marigomen[5] of the Court of Appeals.
with the records of the criminal case. The Court directed Judge Sardido to
explain in writing why he should not be held liable for gross ignorance of the A certain Atty. Eduardo R. Balaoing had filed a complaint against Court of
law for excluding Judge Hurtado from the Amended Information and for Appeals Justices Nocon, Puno and Marigomen relating to a petition filed
transmitting the records of Judge Hurtados case to the Court. before their division. In its En Banc Resolution of 29 November 1988, the
Court required the IBP to refer to the Supreme Court for appropriate action
In his Explanation dated 26 January 2001, Judge Sardido reasoned out that he the complaint[6] filed by Atty. Balaoing with the IBP Commission on Bar
excluded Judge Hurtado because Circular No. 3-89 directs the IBP to Discipline. The Court stated that the power to discipline justices and judges
forward to the Supreme Court for appropriate action all cases involving of the lower courts is within the Courts exclusive power and authority as
justices and judges of lower courts x x x. Judge Sardido claims that the provided in Section 11, Article VII of the 1987 Constitution.[7] The Court
Circular likewise applies to courts in cases involving justices or judges of the Administrator publicized the En Banc Resolution of 29 November 1988 by
lower courts, especially so in this case where Judge Hurtado was charged issuing Circular No. 17 dated 20 December 1988.
with falsification of public document as a notary public while he was still the
Clerk of Court of the Regional Trial Court of the 11th Judicial Region in The Court issued Circular No. 3-89 on 6 February 1989 clarifying the En
Koronadal, South Cotabato. Banc Resolution of 29 November 1988. Circular No. 3-89 provides in part as
follows:
In the Resolution of 28 March 2001, the Court referred this case to the Office
of the Court Administrator (OCA) for evaluation, report and (1) The IBP (Board of Governors and Commission on Bar Discipline)
recommendation. On 10 July 2001, the OCA submitted a Memorandum shall forward to the Supreme Court for appropriate action all cases
recommending that this case be re-docketed as a regular administrative involving justices and judges of lower courts, whether or not such complaints
matter. deal with acts apparently unrelated to the discharge of their official functions,
such as acts of immorality, estafa, crimes against persons and property, etc. x RTC judge in the criminal case. A criminal case against an attorney or judge
x x. (Emphasis supplied) is distinct and separate from an administrative case against him. The
dismissal of the criminal case does not warrant the dismissal of an
Circular No. 3-89 clarified the second paragraph, Section 1 of Rule 139-B of administrative case arising from the same set of facts. The quantum of
the Rules of Court which states that: evidence that is required in the latter is only preponderance of evidence, and
not proof beyond reasonable doubt which is required in criminal cases.[10] As
The IBP Board of Governors may, motu proprio or upon referral by the held in Gatchalian Promotions Talents Pool, Inc. v. Naldoza:[11]
Supreme Court or by a Chapter Board of Officers, or at the instance of any
person, initiate and prosecute proper charges against erring attorneys Administrative cases against lawyers belong to a class of their own. They are
including those in the government service. (Emphasis supplied). distinct from and they may proceed independently of civil and criminal
cases.
As clarified, the phrase attorneys x x x in the government service in Section 1
of Rule 139-B does not include justices of appellate courts and judges of The burden of proof for these types of cases differ. In a criminal case, proof
lower courts who are not subject to the disciplining authority of the IBP. All beyond reasonable doubt is necessary; in an administrative case for
administrative cases against justices of appellate courts and judges of lower disbarment or suspension, clearly preponderant evidence is all that is
courts fall exclusively within the jurisdiction of the Supreme Court. required. Thus, a criminal prosecution will not constitute a prejudicial
question even if the same facts and circumstances are attendant in the
However, Rule 139-B refers to Disbarment and Discipline of Attorneys administrative proceedings.
which is administrative and not criminal in nature. The cases referred to in
Circular No. 3-89 are administrative cases for disbarment, suspension or It should be emphasized that a finding of guilt in the criminal case will not
discipline of attorneys, including justices of appellate courts and judges of necessarily result in a finding of liability in the administrative case.
the lower courts. The Court has vested the IBP with the power to initiate and Conversely, respondents acquittal does not necessarily exculpate him
prosecute administrative cases against erring lawyers.[8] However, under administratively. In the same vein, the trial courts finding of civil liability
Circular No. 3-89, the Court has directed the IBP to refer to the Supreme against the respondent will not inexorably lead to a similar finding in the
Court for appropriate action all administrative cases filed with IBP against administrative action before this Court. Neither will a favorable disposition
justices of appellate courts and judges of the lower courts. As mandated by in the civil action absolve the administrative liability of the lawyer. The basic
the Constitution, the Court exercises the exclusive power to discipline premise is that criminal and civil cases are altogether different from
administratively justices of appellate courts and judges of lower courts. administrative matters, such that the disposition in the first two will not
inevitably govern the third and vice versa. For this reason, it would be well to
Circular No. 3-89 does not refer to criminal cases against erring justices of remember the Courts ruling in In re Almacen, which we quote:
appellate courts or judges of lower courts. Trial courts retain jurisdiction over
the criminal aspect of offenses committed by justices of appellate x x x Disciplinary proceedings against lawyers are sui generis. Neither
courts[9] and judges of lower courts. This is clear from the Circular directing purely civil nor purely criminal, they do not involve a trial of an action or a
the IBP, and not the trial courts, to refer all administrative cases filed against suit, but are rather investigations by the Court into the conduct of one of its
justices of appellate courts and judges of lower courts to the Supreme officers. Not being intended to inflict punishment, [they are] in no sense a
Court. The case filed against Judge Hurtado is not an administrative case criminal prosecution. Accordingly, there is neither a plaintiff nor a
filed with the IBP. It is a criminal case filed with the trial court under its prosecutor therein. [They] may be initiated by the Court motu proprio. Public
jurisdiction as prescribed by law. interest is [their] primary objective, and the real question for determination is
whether or not the attorney is still a fit person to be allowed the privileges as
The acts or omissions of a judge may well constitute at the same time both a such. Hence, in the exercise of its disciplinary powers, the Court merely calls
criminal act and an administrative offense. Whether the criminal case against upon a member of the Bar to account for his actuations as an officer of the
Judge Hurtado relates to an act committed before or after he became a judge Court with the end in view of preserving the purity of the legal profession
is of no moment. Neither is it material that an MTC judge will be trying an and the proper and honest administration of justice by purging the profession
of members who by their misconduct have prove[n] themselves no longer impropriety to protect the image and integrity of the judiciary.[19] The Court
worthy to be entrusted with the duties and responsibilities pertaining to the may still impose a fine on Judge Sardido in the instant case despite his
office of an attorney. x x x dismissal from the service.

A judge is called upon to exhibit more than just a cursory acquaintance with WHEREFORE, respondent Judge Agustin T. Sardido is FINED Ten
statutes and procedural rules. He must be conversant with basic legal Thousand Pesos (P10,000.00) for gross ignorance of the law. The fine may
principles and well-settled doctrines.He should strive for excellence and seek be deducted from his accrued leave credits.
the truth with passion.[12] Judge Sardido failed in this regard. He erred in
excluding Judge Hurtado as one of the accused in the Amended Information SO ORDERED.
and in forwarding the criminal case against Judge Hurtado to the Court.

One last point. This administrative case against Judge Sardido started before
the amendment[13] of Rule 140 classifying gross ignorance of the law a
serious offense punishable by a fine of more than P20,000.00 but not
exceeding P40,000.00. The amendment cannot apply retroactively to Judge
Sardidos case. However, the fine of P5,000.00 recommended by the OCA is
too light a penalty considering that this is not the first offense of Judge
Sardido.

In RE: Hold Departure Order Issued by Judge Agustin T. Sardido,[14] the


Court reprimanded Judge Sardido for issuing a hold-departure order contrary
to Circular No. 39-97. In Cabilao v. Judge Sardido,[15] the Court fined Judge
Sardido P5,000.00 for gross ignorance of the law, grave abuse of discretion
and gross misconduct. The Court gave a stern warning to Judge Sardido that
a commission of the same or similar act would be dealt with more
severely. In Almeron v. Judge Sardido,[16] the Court imposed on Judge
Sardido a stiffer fine of P10,000.00 for gross ignorance of the law. He was
again sternly warned that the commission of the same or similar act in the
future would be dealt with more severely including, if warranted, his
dismissal from the service.

In a more recent administrative case, Torcende v. Judge Sardido,[17] the


Court found Judge Sardido again guilty of gross ignorance of the law and of
gross misconduct. This time the Court dismissed Judge Sardido from the
service with forfeiture of his retirement benefits, except accrued leave
credits. The dismissal was with prejudice to reemployment in any branch of
the government or any of its agencies or instrumentalities, including
government-owned and controlled corporations.

The records of the OCA further disclose that Judge Sardido has other similar
administrative complaints[18] still pending against him. Such an unflattering
service record erodes the peoples faith and confidence in the judiciary. It is
the duty of every member of the bench to avoid any impression of
THIRD DIVISION The Antecedent Facts

[G.R. No. 151149. September 7, 2004] The CA narrates the antecedent facts as follows:

GEORGE KATON, petitioner, vs. MANUEL PALANCA JR., On August 2, 1963, herein [P]etitioner [George Katon] filed a request with
LORENZO AGUSTIN, JESUS GAPILANGO and JUAN the District Office of the Bureau of Forestry in Puerto Princesa, Palawan, for
FRESNILLO, respondents. the re-classification of a piece of real property known as Sombrero Island,
located in Tagpait, Aborlan, Palawan, which consists of approximately 18
DECISION hectares. Said property is within Timberland Block of LC Project No. 10-C
of Aborlan, Palawan, per BF Map LC No. 1582.
PANGANIBAN, J.:
Thereafter, the Bureau of Forestry District Office, Puerto Princesa, Palawan,
Where prescription, lack of jurisdiction or failure to state a cause of action ordered the inspection, investigation and survey of the land subject of the
clearly appear from the complaint filed with the trial court, the action may be petitioners request for eventual conversion or re-classification from forest to
dismissed motu proprio by the Court of Appeals, even if the case has been agricultural land, and thereafter for George Katon to apply for a homestead
elevated for review on different grounds. Verily, the dismissal of such cases patent.
appropriately ends useless litigations.
Gabriel Mandocdoc (now retired Land Classification Investigator) undertook
The Case the investigation, inspection and survey of the area in the presence of the
Before us is a Petition for Review[1] under Rule 45 of the Rules of Court, petitioner, his brother Rodolfo Katon (deceased) and his cousin,
assailing the December 8, 2000 Decision[2] and the November 20, 2001 [R]espondent Manuel Palanca, Jr. During said survey, there were no actual
Resolution[3] of the Court of Appeals in CA-GR SP No. 57496. The assailed occupants on the island but there were some coconut trees claimed to have
Decision disposed as follows: been planted by petitioner and [R]espondent Manuel Palanca, Jr. (alleged
overseer of petitioner) who went to the island from time to time to undertake
Assuming that petitioner is correct in saying that he has the exclusive right in development work, like planting of additional coconut trees.
applying for the patent over the land in question, it appears that his action is
already barred by laches because he slept on his alleged right for almost 23 The application for conversion of the whole Sombrero Island was favorably
years from the time the original certificate of title has been issued to endorsed by the Forestry District Office of Puerto Princesa to its main office
respondent Manuel Palanca, Jr., or after 35 years from the time the land was in Manila for appropriate action. The names of Felicisimo Corpuz, Clemente
certified as agricultural land. In addition, the proper party in the annulment of Magdayao and Jesus Gapilango and Juan Fresnillo were included in the
patents or titles acquired through fraud is the State; thus, the petitioners endorsement as co-applicants of the petitioner.
action is deemed misplaced as he really does not have any right to assert or In a letter dated September 23, 1965, then Asst. Director of Forestry R.J.L.
protect. What he had during the time he requested for the re-classification of Utleg informed the Director of Lands, Manila, that since the subject land was
the land was the privilege of applying for the patent over the same upon the no longer needed for forest purposes, the same is therefore certified and
lands conversion from forest to agricultural. released as agricultural land for disposition under the Public Land Act.
WHEREFORE, the petition is hereby DISMISSED. No pronouncement as to Petitioner contends that the whole area known as Sombrero Island had been
cost.[4] classified from forest land to agricultural land and certified available for
The assailed Resolution, on the other hand, denied the Motion for disposition upon his request and at his instance. However, Mr. Lucio Valera,
Reconsideration filed by petitioner. It affirmed the RTCs dismissal of his then [l]and investigator of the District Land Office, Puerto
Complaint in Civil Case No. 3231, not on the grounds relied upon by the trial Princesa, Palawan, favorably endorsed the request of [R]espondents Manuel
court, but because of prescription and lack of jurisdiction. Palanca Jr. and Lorenzo Agustin, for authority to survey on November 15,
1965. On November 22, a second endorsement was issued by Palawan
District Officer Diomedes De Guzman with specific instruction to survey is guilty of estoppel by laches for his failure to assert his right over the land
vacant portions of Sombrero Islandfor the respondents consisting of five (5) for an unreasonable and unexplained period of time.
hectares each. On December 10, 1965, Survey Authority No. R III-342-65
was issued authorizing Deputy Public Land Surveyor Eduardo Salvador to In the instant case, petitioner seeks to nullify the homestead patents and
survey ten (10) hectares of Sombrero Island for the respondents. On original certificates of title issued in favor of the respondents covering certain
December 23, 1990, [R]espondent Lorenzo Agustin filed a homestead patent portions of the Sombrero Island as well as the reconveyance of the whole
application for a portion of the subject island consisting of an area of 4.3 island in his favor. The petitioner claims that he has the exclusive right to file
hectares. an application for homestead patent over the whole island since it was he
who requested for its conversion from forest land to agricultural land.[6]
Records show that on November 8, 1996, [R]espondent Juan Fresnillo filed a
homestead patent application for a portion of the island comprising 8.5 Respondents filed their Answer with Special and/or Affirmative Defenses
hectares. Records also reveal that [R]espondent Jesus Gapilango filed a and Counterclaim in due time. On June 30, 1999, they also filed a Motion to
homestead application on June 8, 1972. Respondent Manuel Palanca, Jr. was Dismiss on the ground of the alleged defiance by petitioner of the trial courts
issued Homestead Patent No. 145927 and OCT No. G-7089 on March 3, Order to amend his Complaint so he could thus effect a substitution by the
1977[5] with an area of 6.84 hectares of Sombrero Island. legal heirs of the deceased, Respondent Gapilango. The Motion to Dismiss
was granted by the RTC in its Order dated July 29, 1999.
Petitioner assails the validity of the homestead patents and original
certificates of title covering certain portions of Sombrero Island issued in Petitioners Motion for Reconsideration of the July 29, 1999 Order was
favor of respondents on the ground that the same were obtained through denied by the trial court in its Resolution dated December 17, 1999, for being
fraud. Petitioner prays for the reconveyance of the whole island in his favor. a third and prohibited motion. In his Petition for Certiorari before the CA,
petitioner charged the trial court with grave abuse of discretion on the ground
On the other hand, [R]espondent Manuel Palanca, Jr. claims that he himself that the denied Motion was his first and only Motion for Reconsideration of
requested for the reclassification of the island in dispute and that on or about the aforesaid Order.
the time of such request, [R]espondents Fresnillo, Palanca and Gapilango
already occupied their respective areas and introduced numerous Ruling of the Court of Appeals
improvements. In addition, Palanca said that petitioner never filed any
homestead application for the island.Respondents deny that Gabriel Instead of limiting itself to the allegation of grave abuse of discretion, the CA
Mandocdoc undertook the inspection and survey of the island. ruled on the merits. It held that while petitioner had caused the
reclassification of Sombrero Island from forest to agricultural land, he never
According to Mandocdoc, the island was uninhabited but the respondents applied for a homestead patent under the Public Land Act. Hence, he never
insist that they already had their respective occupancy and improvements on acquired title to that land.
the island. Palanca denies that he is a mere overseer of the petitioner because
he said he was acting for himself in developing his own area and not as The CA added that the annulment and cancellation of a homestead patent and
anybodys caretaker. the reversion of the property to the State were matters between the latter and
the homestead grantee.Unless and until the government takes steps to annul
Respondents aver that they are all bona fide and lawful possessors of their the grant, the homesteaders right thereto stands.
respective portions and have declared said portions for taxation purposes and
that they have been faithfully paying taxes thereon for twenty years. Finally, granting arguendo that petitioner had the exclusive right to apply for
a patent to the land in question, he was already barred by laches for having
Respondents contend that the petitioner has no legal capacity to sue insofar slept on his right for almost 23 years from the time Respondent Palancas title
as the island is concerned because an action for reconveyance can only be had been issued.
brought by the owner and not a mere homestead applicant and that petitioner
In the Assailed Resolution, the CA acknowledged that it had erred when it
ruled on the merits of the case. It agreed with petitioner that the trial court
had acted without jurisdiction in perfunctorily dismissing his September 10, Propriety of Ruling on the Merits
1999 Motion for Reconsideration, on the erroneous ground that it was a third
and prohibited motion when it was actually only his first motion. This is not the first time that petitioner has taken issue with the propriety of
the CAs ruling on the merits. He raised it with the appellate court when he
Nonetheless, the Complaint was dismissed motu proprio by the challenged moved for reconsideration of its December 8, 2000 Decision. The CA even
Resolution of the CA Special Division of five members with two justices corrected itself in its November 20, 2001 Resolution, as follows:
dissenting pursuant to its residual prerogative under Section 1 of Rule 9 of
the Rules of Court. Upon another review of the case, the Court concedes that it may indeed have
lost its way and been waylaid by the variety, complexity and seeming
From the allegations of the Complaint, the appellate court opined that importance of the interests and issues involved in the case below, the
petitioner clearly had no standing to seek reconveyance of the disputed land, apparent reluctance of the judges, five in all, to hear the case, and the volume
because he neither held title to it nor even applied for a homestead patent. It of the conflicting, often confusing, submissions bearing on incidental
reiterated that only the State could sue for cancellation of the title issued matters. We stand corrected.[9]
upon a homestead patent, and for reversion of the land to the public domain.
That explanation should have been enough to settle the issue. The CAs
Finally, it ruled that prescription had already barred the action for Resolution on this point has rendered petitioners issue moot. Hence, there is
reconveyance. First, petitioners action was brought 24 years after the no need to discuss it further.Suffice it to say that the appellate court indeed
issuance of Palancas homestead patent. Under the Public Land Act, such acted ultra jurisdictio in ruling on the merits of the case when the only issue
action should have been taken within ten years from the issuance of the that could have been, and was in fact, raised was the alleged grave abuse of
homestead certificate of title. Second, it appears from the submission (Annex discretion committed by the trial court in denying petitioners Motion for
F of the Complaint) of petitioner himself that Respondents Fresnillo and Reconsideration. Settled is the doctrine that the sole office of a writ of
Palanca had been occupying six hectares of the island since 1965, or 33 years certiorari is the correction of errors of jurisdiction. Such writ does not include
before he took legal steps to assert his right to the property. His action was a review of the evidence,[10] more so when no determination of the merits has
filed beyond the 30-year prescriptive period under Articles 1141 and 1137 of yet been made by the trial court, as in this case.
the Civil Code.
Second Issue:
[7]
Hence, this Petition.
Dismissal for Prescription
Issues
and Lack of Jurisdiction
In his Memorandum, petitioner raises the following issues:
Petitioner next submits that the CA erroneously invoked its residual
1. Is the Court of Appeals correct in resolving the Petition for Certiorari prerogatives under Section 1 of Rule 9 of the Rules of Court when it motu
based on an issue not raised (the merits of the case) in the Petition? proprio dismissed the Petition for lack of jurisdiction and
prescription. According to him, residual prerogative refers to the power that
2. Is the Court of Appeals correct in invoking its alleged residual prerogative the trial court, in the exercise of its original jurisdiction, may still validly
under Section 1, Rule 9 of the 1997 Rules of Civil Procedure in resolving the exercise even after perfection of an appeal. It follows that such powers are
Petition on an issue not raised in the Petition?[8] not possessed by an appellate court.
The Courts Ruling Petitioner has confused what the CA adverted to as its residual prerogatives
under Section 1 of Rule 9 of the Rules of Court with the residual jurisdiction
The Petition has no merit. of trial courts over cases appealed to the CA.
First Issue:
Under Section 1 of Rule 9 of the Rules of Court, defenses and objections not rights of the parties which do not involve any matter litigated by the appeal,
pleaded either in a motion to dismiss or in the answer are deemed waived, approve compromises, permit appeals of indigent litigants, order execution
except when (1) lack of jurisdiction over the subject matter, (2) litis pending appeal in accordance with Section 2 of Rule 39, and allow
pendentia, (3) res judicata and (4) prescription are evident from the withdrawal of the appeal. (Italics supplied)
pleadings or the evidence on record. In the four excepted instances, the court
shall motu proprio dismiss the claim or action. In Gumabon v. Larin[11] we The residual jurisdiction of trial courts is available at a stage in which the
explained thus: court is normally deemed to have lost jurisdiction over the case or the subject
matter involved in the appeal.This stage is reached upon the perfection of the
x x x [T]he motu proprio dismissal of a case was traditionally limited to appeals by the parties or upon the approval of the records on appeal, but prior
instances when the court clearly had no jurisdiction over the subject matter to the transmittal of the original records or the records on appeal.[13] In either
and when the plaintiff did not appear during trial, failed to prosecute his instance, the trial court still retains its so-called residual jurisdiction to issue
action for an unreasonable length of time or neglected to comply with the protective orders, approve compromises, permit appeals of indigent litigants,
rules or with any order of the court. Outside of these instances, any motu order execution pending appeal, and allow the withdrawal of the appeal.
proprio dismissal would amount to a violation of the right of the plaintiff to
be heard. Except for qualifying and expanding Section 2, Rule 9, and Section The CAs motu proprio dismissal of petitioners Complaint could not have
3, Rule 17, of the Revised Rules of Court, the amendatory 1997 Rules of been based, therefore, on residual jurisdiction under Rule 41. Undeniably,
Civil Procedure brought about no radical change. Under the new rules, a such order of dismissal was not one for the protection and preservation of the
court may motu proprio dismiss a claim when it appears from the pleadings rights of the parties, pending the disposition of the case on appeal. What the
or evidence on record that it has no jurisdiction over the subject CA referred to as residual prerogatives were the general residual powers of
matter; when there is another cause of action pending between the same the courts to dismiss an action motu proprio upon the grounds mentioned in
parties for the same cause, or where the action is barred by a prior judgment Section 1 of Rule 9 of the Rules of Court and under authority of Section 2 of
or by statute of limitations. x x x.[12] (Italics supplied) Rule 1[14] of the same rules.

On the other hand, residual jurisdiction is embodied in Section 9 of Rule 41 To be sure, the CA had the excepted instances in mind when it dismissed the
of the Rules of Court, as follows: Complaint motu proprio on more fundamental grounds directly bearing on
the lower courts lack of jurisdiction[15] and for prescription of the
SEC. 9. Perfection of appeal; effect thereof. A partys appeal by notice of action. Indeed, when a court has no jurisdiction over the subject matter, the
appeal is deemed perfected as to him upon the filing of the notice of appeal only power it has is to dismiss the action.[16]
in due time.
Jurisdiction over the subject matter is conferred by law and is determined by
A partys appeal by record on appeal is deemed perfected as to him with the allegations in the complaint and the character of the relief sought.[17] In
respect to the subject matter thereof upon the approval of the record on his Complaint for Nullification of Applications for Homestead and Original
appeal filed in due time. Certificate of Title No. G-7089 and for Reconveyance of Title,[18] petitioner
averred:
In appeals by notice of appeal, the court loses jurisdiction over the case upon
the perfection of the appeals filed in due time and the expiration of the time 2. That on November 10, 1965, without the knowledge of [petitioner,
to appeal of the other parties. Respondent] Manuel Palanca Jr., [petitioners] cousin, in connivance with his
co-[respondent], Lorenzo Agustin, x x x fraudulently and in bad faith:
In appeals by record on appeal, the court loses jurisdiction only over the
subject matter thereof upon the approval of the records on appeal filed in due 2.1. x x x made the request for authority to survey as a pre-requisite to the
time and the expiration of the time to appeal of the other parties. filing of an application for homestead patent in his name and that of his Co-
[Respondent] Agustin, [despite being] fully aware that [Petitioner] KATON
In either case, prior to the transmittal of the original record or the record on had previously applied or requested for re-classification and certification of
appeal, the court may issue orders for the protection and preservation of the
the same land from forest land to agricultural land which request was Bureau had no jurisdiction to bestow title; hence, the issued patent or
favorably acted upon and approved as mentioned earlier; a clear case of certificate of title was void ab initio.[23]
intrinsic fraud and misrepresentation;
In an alternative action for reconveyance, the certificate of title is also
xxxxxxxxx respected as incontrovertible, but the transfer of the property or title thereto is
sought to be nullified on the ground that it was wrongfully or erroneously
2.3. In stating in his application for homestead patent that he was applying registered in the defendants name.[24] As with an annulment of title, a
for the VACANT PORTION of Sombrero Island where there was none, the complaint must allege two facts that, if admitted, would entitle the plaintiff to
same constituted another clear case of fraud and misrepresentation; recover title to the disputed land: (1) that the plaintiff was the owner of the
land, and (2) that the defendant illegally dispossessed the plaintiff of the
3. That the issuance of Homestead Patent No. 145927 and OCT No. G-7089 property.[25] Therefore, the defendant who acquired the property through
in the name of [Respondent] Manuel Palanca Jr. and the filing of Homestead mistake or fraud is bound to hold and reconvey to the plaintiff the property or
Patent Applications in the names of [respondents], Lorenzo Agustin, Jesus the title thereto.[26]
Gapilango and Juan Fresnillo[,] having been done fraudulently and in bad
faith, are ipso facto null and void and of no effect whatsoever.[19] In the present case, nowhere in the Complaint did petitioner allege that he
had previously held title to the land in question. On the contrary, he
xxxxxxxxx acknowledged that the disputed island was public land,[27] that it had never
x x x. By a wrongful act or a willful omission and intending the effects with been privately titled in his name, and that he had not applied for a homestead
natural necessity arise knowing from such act or omission, [Respondent under the provisions of the Public Land Act.[28] This Court has held that a
Palanca] on account of his blood relation, first degree cousins, trust, complaint by a private party who alleges that a homestead patent was
interdependence and intimacy is guilty of intrinsic fraud [sic]. x x x.[20] obtained by fraudulent means, and who consequently prays for its annulment,
does not state a cause of action; hence, such complaint must be dismissed. [29]
Thereupon, petitioner prayed, among others, for a judgment (1) nullifying the
homestead patent applications of Respondents Agustin, Fresnillo and Neither can petitioners case be one for reversion. Section 101 of the Public
Gapilango as well as HomesteadPatent No. 145927 and OCT No. G-7089 in Land Act categorically declares that only the solicitor general or the officer
the name of Respondent Palanca; and (2) ordering the director of the Land in his stead may institute such an action.[30] A private person may not bring
Management Bureau to reconvey the Sombrero Island to petitioner.[21] an action for reversion or any other action that would have the effect of
canceling a free patent and its derivative title, with the result that the land
The question is, did the Complaint sufficiently allege an action for thereby covered would again form part of the public domain.[31]
declaration of nullity of the free patent and certificate of title or,
alternatively, for reconveyance? Or did it plead merely for reversion? Thus, when the plaintiff admits in the complaint that the disputed land will
revert to the public domain even if the title is canceled or amended, the
The Complaint did not sufficiently make a case for any of such actions, over action is for reversion; and the proper party who may bring action is the
which the trial court could have exercised jurisdiction. government, to which the property will revert.[32] A mere homestead
applicant, not being the real party in interest, has no cause of action in a suit
In an action for nullification of title or declaration of its nullity, the complaint for reconveyance.[33] As it is, vested rights over the land applied for under a
must contain the following allegations: 1) that the contested land homestead may be validly claimed only by the applicant, after approval by
was privately owned by the plaintiffprior to the issuance of the assailed the director of the Land Management Bureau of the formers final proof of
certificate of title to the defendant; and 2) that the defendant perpetuated a homestead patent. [34]
fraud or committed a mistake in obtaining a document of title over the parcel
of land claimed by the plaintiff.[22] In these cases, the nullity arises not from Consequently, the dismissal of the Complaint is proper not only because of
fraud or deceit, but from the fact that the director of the Land Management lack of jurisdiction, but also because of the utter absence of a cause of
action,[35] a defense raised by respondents in their Answer.[36] Section 2 of
Rule 3 of the Rules of Court[37] ordains that every action must be prosecuted is essential only, to repeat, is that the facts demonstrating the lapse of the
or defended in the name of the real party in interest, who stands to be prescriptive period be otherwise sufficiently and satisfactorily apparent on
benefited or injured by the judgment in the suit. Indeed, one who has no right the record; either in the averments of the plaintiff's complaint, or otherwise
or interest to protect has no cause of action by which to invoke, as a party- established by the evidence."[45] (Italics supplied)
plaintiff, the jurisdiction of the court.[38]
Clearly then, the CA did not err in dismissing the present case. After all, if
Finally, assuming that petitioner is the proper party to bring the action for and when they are able to do so, courts must endeavor to settle entire
annulment of title or its reconveyance, the case should still be dismissed for controversies before them to prevent future litigations.[46]
being time-barred.[39] It is not disputed that a homestead patent and an
Original Certificate of Title was issued to Palanca on February 21, WHEREFORE, the Petition is hereby DENIED, and the assailed
1977,[40] while the Complaint was filed only on October 6, 1998. Clearly, the Resolution AFFIRMED. The dismissal of the Complaint in Civil Case No.
suit was brought way past ten years from the date of the issuance of the 3231 is SUSTAINED on the grounds of lack of jurisdiction, failure to state a
Certificate, the prescriptive period for reconveyance of fraudulently cause of action and prescription. Costs against petitioner.
registered real property.[41]
SO ORDERED.
It must likewise be stressed that Palancas title -- which attained the status of
indefeasibility one year from the issuance of the patent and the Certificate of
Title in February 1977 -- is no longer open to review on the ground of actual
fraud. Ybanez v. Intermediate Appellate Court[42] ruled that a certificate of
title, issued under an administrative proceeding pursuant to a homestead
patent, is as indefeasible as one issued under a judicial registration
proceeding one year from its issuance; provided, however, that the land
covered by it is disposable public land, as in this case.

In Aldovino v. Alunan,[43] the Court has held that when the plaintiffs own
complaint shows clearly that the action has prescribed, such action may be
dismissed even if the defense of prescription has not been invoked by the
defendant. In Gicano v. Gegato,[44] we also explained thus:

"x x x [T]rial courts have authority and discretion to dismiss an action on the
ground of prescription when the parties' pleadings or other facts on record
show it to be indeed time-barred; (Francisco v. Robles, Feb. 15, 1954; Sison
v. McQuaid, 50 O.G. 97; Bambao v. Lednicky, Jan. 28, 1961; Cordova v.
Cordova, Jan. 14, 1958; Convets, Inc. v. NDC, Feb. 28, 1958; 32 SCRA 529;
Sinaon v. Sorongan, 136 SCRA 408); and it may do so on the basis of a
motion to dismiss (Sec. 1,f, Rule 16, Rules of Court), or an answer which
sets up such ground as an affirmative defense (Sec. 5, Rule 16), or even if the
ground is alleged after judgment on the merits, as in a motion for
reconsideration (Ferrer v. Ericta, 84 SCRA 705); or even if the defense has
not been asserted at all, as where no statement thereof is found in the
pleadings (Garcia v. Mathis, 100 SCRA 250; PNB v. Pacific Commission
House, 27 SCRA 766; Chua Lamco v. Dioso, et al., 97 Phil. 821); or where a
defendant has been declared in default (PNB v. Perez, 16 SCRA 270). What
THIRD DIVISION DECISION

NACHURA, J.:

VENANCIO FIGUEROA y CERVANTES,[1] G.R. No. 147406

Petitioner, When is a litigant estopped by laches from assailing the jurisdiction of a


tribunal? This is the paramount issue raised in this petition for review of
the February 28, 2001Decision[2] of the Court of Appeals (CA) in CA-G.R.
CR No. 22697.
Present:

Pertinent are the following antecedent facts and proceedings:


QUISUMBING, J.,*

YNARES-SANTIAGO,
On July 8, 1994, an information[3] for reckless imprudence resulting in
- versus - Chairperson, homicide was filed against the petitioner before the Regional Trial Court
AUSTRIA-MARTINEZ, (RTC) of Bulacan, Branch 18.[4]The case was docketed as Criminal Case No.
2235-M-94.[5] Trial on the merits ensued and on August 19, 1998, the trial
NACHURA, and court convicted the petitioner as charged.[6] In his appeal before the CA, the
petitioner questioned, among others, for the first time, the trial courts
REYES, JJ. jurisdiction.[7]

The appellate court, however, in the challenged decision, considered the


petitioner to have actively participated in the trial and to have belatedly
PEOPLE OF THE PHILIPPINES, Promulgated: attacked the jurisdiction of the RTC; thus, he was already estopped by laches
from asserting the trial courts lack of jurisdiction. Finding no other ground to
Respondent.
reverse the trial courts decision, the CA affirmed the petitioners conviction
July 14, 2008 but modified the penalty imposed and the damages awarded.[8]

x------------------------------------------------------------------------------------x Dissatisfied, the petitioner filed the instant petition for review
on certiorari raising the following issues for our resolution:

a. Does the fact that the petitioner failed to raise the issue of jurisdiction
during the trial of this case, which was initiated and filed by the public
prosecutor before the wrong court, constitute laches in relation to the
doctrine laid down in Tijam v. Sibonghanoy, notwithstanding the fact that
said issue was immediately raised in petitioners appeal to the Honorable imprudence resulting in homicide with violation of the Automobile Law
Court of Appeals? Conversely, does the active participation of the petitioner (now Land Transportation and Traffic Code) was filed, Section 32(2)
in the trial of his case, which is initiated and filed not by him but by the of Batas Pambansa (B.P.) Blg. 129[11] had already been amended by
public prosecutor, amount to estoppel? Republic Act No. 7691.[12] The said provision thus reads:

b. Does the admission of the petitioner that it is difficult to immediately stop Sec. 32. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts
a bus while it is running at 40 kilometers per hour for the purpose of and Municipal Circuit Trial Courts in Criminal Cases.Except in cases falling
avoiding a person who unexpectedly crossed the road, constitute enough within the exclusive original jurisdiction of Regional Trial Courts and the
incriminating evidence to warrant his conviction for the crime charged? Sandiganbayan, the Metropolitan Trial Courts, Municipal Trial Courts, and
Municipal Circuit Trial Courts shall exercise:

c. Is the Honorable Court of Appeals justified in considering the place of


accident as falling within Item 4 of Section 35 (b) of the Land Transportation xxxx
and Traffic Code, and subsequently ruling that the speed limit thereto is only
20 kilometers per hour, when no evidence whatsoever to that effect was ever
presented by the prosecution during the trial of this case?
(2) Exclusive original jurisdiction over all offenses punishable with
imprisonment not exceeding six (6) years irrespective of the amount of fine,
and regardless of other imposable accessory or other penalties, including the
d. Is the Honorable Court of Appeals justified in convicting the petitioner for civil liability arising from such offenses or predicated thereon, irrespective of
homicide through reckless imprudence (the legally correct designation is kind, nature, value or amount thereof: Provided, however, That in offenses
reckless imprudence resulting to homicide) with violation of the Land involving damage to property through criminal negligence, they shall have
Transportation and Traffic Code when the prosecution did not prove this exclusive original jurisdiction thereof.
during the trial and, more importantly, the information filed against the
petitioner does not contain an allegation to that effect?

e. Does the uncontroverted testimony of the defense witness Leonardo As the imposable penalty for the crime charged herein is prision
Hernal that the victim unexpectedly crossed the road resulting in him getting correccional in its medium and maximum periods or imprisonment for 2
hit by the bus driven by the petitioner not enough evidence to acquit him of years, 4 months and 1 day to 6 years,[13] jurisdiction to hear and try the same
the crime charged?[9] is conferred on the Municipal Trial Courts (MTCs). Clearly, therefore, the
RTC of Bulacan does not have jurisdiction over Criminal Case No. 2235-M-
94.

Applied uniformly is the familiar rule that the jurisdiction of the court to hear While both the appellate court and the Solicitor General acknowledge this
and decide a case is conferred by the law in force at the time of the institution fact, they nevertheless are of the position that the principle of estoppel by
of the action, unless such statute provides for a retroactive application laches has already precluded the petitioner from questioning the jurisdiction
thereof.[10] In this case, at the time the criminal information for reckless of the RTCthe trial went on for 4 years with the petitioner actively
participating therein and without him ever raising the jurisdictional the theory that it had jurisdiction, the parties are not barred, on appeal,
infirmity. The petitioner, for his part, counters that the lack of jurisdiction of from assailing such jurisdiction, for the same must exist as a matter of
a court over the subject matter may be raised at any time even for the first law, and may not be conferred by consent of the parties or by estoppel (5
time on appeal. As undue delay is further absent herein, the principle of C.J.S., 861-863). However, if the lower court had jurisdiction, and the case
laches will not be applicable. was heard and decided upon a given theory, such, for instance, as that the
court had no jurisdiction, the party who induced it to adopt such theory will
not be permitted, on appeal, to assume an inconsistent positionthat the lower
court had jurisdiction. Here, the principle of estoppel applies. The rule that
To settle once and for all this problem of jurisdiction vis--vis estoppel by jurisdiction is conferred by law, and does not depend upon the will of the
laches, which continuously confounds the bench and the bar, we shall parties, has nobearing thereon. Thus, Corpus Juris Secundum says:
analyze the various Court decisions on the matter.

Where accused has secured a decision that the indictment is void, or has been
As early as 1901, this Court has declared that unless jurisdiction has been granted an instruction based on its defective character directing the jury to
conferred by some legislative act, no court or tribunal can act on a matter acquit, he is estopped, when subsequently indicted, to assert that the former
submitted to it.[14] We went on to state in U.S. v. De La Santa[15] that: indictment was valid. In such case, there may be a new prosecution whether
the indictment in the former prosecution was good or bad. Similarly, where,
after the jury was impaneled and sworn, the court on accused's motion
It has been frequently held that a lack of jurisdiction over the subject-matter quashed the information on the erroneous assumption that the court had no
is fatal, and subject to objection at any stage of the proceedings, either in the jurisdiction, accused cannot successfully plead former jeopardy to a new
court below or on appeal (Ency. of Pl. & Pr., vol. 12, p. 189, and large array information. x x x (22 C.J.S., sec. 252, pp. 388-389; italics ours.)
of cases there cited), and indeed, where the subject-matter is not within
the jurisdiction, the court may dismiss the proceeding ex mero motu.
(4 Ill., 133; 190 Ind., 79; Chipman vs. Waterbury, 59 Conn., 496.) Where accused procured a prior conviction to be set aside on the ground that
the court was without jurisdiction, he is estopped subsequently to assert, in
support of a defense of previous jeopardy, that such court had jurisdiction.
Jurisdiction over the subject-matter in a judicial proceeding is conferred by (22 C.J.S. p. 378.)[18]
the sovereign authority which organizes the court; it is given only by law and
in the manner prescribed by law and an objection based on the lack of such
jurisdiction can not be waived by the parties. x x x[16]

But in Pindagan Agricultural Co., Inc. v. Dans,[19] the Court, in not


sustaining the plea of lack of jurisdiction by the plaintiff-appellee therein,
made the following observations:
Later, in People v. Casiano,[17] the Court explained:

It is surprising why it is only now, after the decision has been rendered, that
4. The operation of the principle of estoppel on the question of jurisdiction the plaintiff-appellee presents the question of this Courts jurisdiction over the
seemingly depends upon whether the lower court actually had jurisdiction case. Republic Act No. 2613 was enacted on August 1, 1959. This case was
or not. If it had nojurisdiction, but the case was tried and decided upon argued on January 29, 1960. Notwithstanding this fact, the jurisdiction of this
Court was never impugned until the adverse decision of this Court was claims and, unlike the statute of limitations, is not a mere question of time
handed down. The conduct of counsel leads us to believe that they must have but is principally a question of the inequity or unfairness of permitting a right
always been of the belief that notwithstanding said enactment of Republic or claim to be enforced or asserted.
Act 2613 this Court has jurisdiction of the case, such conduct being born out
of a conviction that the actual real value of the properties in question actually
exceeds the jurisdictional amount of this Court (over P200,000). Our minute
resolution in G.R. No. L-10096, Hyson Tan, et al. vs. Filipinas Compaa de It has been held that a party cannot invoke the jurisdiction of a court to
Seguros, et al., of March 23, 1956, a parallel case, is applicable to the secure affirmative relief against his opponent and, after obtaining or failing
conduct of plaintiff-appellee in this case, thus: to obtain such relief, repudiate or question that same jurisdiction (Dean vs.
Dean, 136 Or. 694, 86 A.L.R. 79). In the case just cited, by way of
explaining the rule, it was further said that the question whether the court had
jurisdiction either of the subject matter of the action or of the parties was not
x x x that an appellant who files his brief and submits his case to the Court of important in such cases because the party is barred from such conduct not
Appeals for decision, without questioning the latters jurisdiction until because the judgment or order of the court is valid and conclusive as an
decision is rendered therein, should be considered as having voluntarily adjudication, but for the reason that such a practice cannot be
waived so much of his claim as would exceed the jurisdiction of said toleratedobviously for reasons of public policy.
Appellate Court; for the reason that a contrary rule would encourage the
undesirable practice of appellants submitting their cases for decision to the
Court of Appeals in expectation of favorable judgment, but with intent of
attacking its jurisdiction should the decision be unfavorable: x x x[20] Furthermore, it has also been held that after voluntarily submitting a cause
and encountering an adverse decision on the merits, it is too late for the loser
to question the jurisdiction or power of the court (Pease vs. Rathbun-Jones
etc., 243 U.S. 273, 61 L. Ed. 715, 37 S.Ct. 283; St. Louis etc. vs. McBride,
141 U.S. 127, 35 L. Ed. 659). And in Littleton vs. Burgess, 16 Wyo. 58, the
Court said that it is not right for a party who has affirmed and invoked the
Then came our ruling in Tijam v. Sibonghanoy[21] that a party may be barred jurisdiction of a court in a particular matter to secure an affirmative relief, to
by laches from invoking lack of jurisdiction at a late hour for the purpose of afterwards deny that same jurisdiction to escape a penalty.
annulling everything done in the case with the active participation of said
party invoking the plea. We expounded, thus:

Upon this same principle is what We said in the three cases mentioned in the
resolution of the Court of Appeals of May 20, 1963 (supra)to the effect that
A party may be estopped or barred from raising a question in different ways we frown upon the undesirable practice of a party submitting his case for
and for different reasons. Thus, we speak of estoppel in pais, of estoppel by decision and then accepting the judgment, only if favorable, and attacking it
deed or by record, and of estoppel by laches. for lack of jurisdiction, when adverseas well as in Pindagan etc. vs. Dans et
al., G.R. L-14591, September 26, 1962; Montelibano et al. vs. Bacolod-
Laches, in a general sense, is failure or neglect, for an unreasonable and Murcia Milling Co., Inc., G.R. L-15092; Young Men Labor Union etc. vs.
unexplained length of time, to do that which, by exercising due diligence, The Court of Industrial Relations et al., G.R. L-20307, Feb. 26, 1965, and
could or should have been done earlier; it is negligence or omission to assert Mejia vs. Lucas, 100 Phil. p. 277.
a right within a reasonable time, warranting a presumption that the party
entitled to assert it either has abandoned it or declined to assert it.

The doctrine of laches or of stale demands is based upon grounds of public The facts of this case show that from the time the Surety became a quasi-
policy which requires, for the peace of society, the discouragement of stale party on July 31, 1948, it could have raised the question of the lack of
jurisdiction of the Court of First Instance of Cebu to take cognizance of the In Sibonghanoy, the defense of lack of jurisdiction of the court that rendered
present action by reason of the sum of money involved which, according to the questioned ruling was held to be barred by estoppel by laches. It was
the law then in force, was within the original exclusive jurisdiction of inferior ruled that the lack of jurisdiction having been raised for the first time in a
courts. It failed to do so. Instead, at several stages of the proceedings in the motion to dismiss filed almost fifteen (15) years after the questioned ruling
court a quo, as well as in the Court of Appeals, it invoked the jurisdiction of had been rendered, such a plea may no longer be raised for being barred by
said courts to obtain affirmative relief and submitted its case for a final laches. As defined in said case, laches is failure or neglect, for an
adjudication on the merits. It was only after an adverse decision was rendered unreasonable and unexplained length of time, to do that which, by exercising
by the Court of Appeals that it finally woke up to raise the question of due diligence, could or should have been done earlier; it is negligence or
jurisdiction. Were we to sanction such conduct on its part, We would in omission to assert a right within a reasonable time, warranting a presumption
effect be declaring as useless all the proceedings had in the present case since that the party entitled to assert has abandoned it or declined to assert it.[24]
it was commenced on July 19, 1948 and compel the judgment creditors to go
up their Calvary once more. The inequity and unfairness of this is not only
patent but revolting.[22]
In Calimlim, despite the fact that the one who benefited from the plea of lack
of jurisdiction was the one who invoked the courts jurisdiction, and who later
obtained an adverse judgment therein, we refused to apply the ruling
For quite a time since we made this pronouncement in Sibonghanoy, courts in Sibonghanoy. The Court accorded supremacy to the time-honored
and tribunals, in resolving issues that involve the belated invocation of lack principle that the issue of jurisdiction is not lost by waiver or by
of jurisdiction, have applied the principle of estoppel by laches. Thus, estoppel.
in Calimlim v. Ramirez,[23] we pointed out that Sibonghanoy was developing
into a general rule rather than the exception:
Yet, in subsequent cases decided after Calimlim, which by sheer volume are
too plentiful to mention, the Sibonghanoy doctrine, as foretold in Calimlim,
A rule that had been settled by unquestioned acceptance and upheld in became the rule rather than the exception. As such, in Soliven v. Fastforms
decisions so numerous to cite is that the jurisdiction of a court over the Philippines, Inc.,[25] the Court ruled:
subject-matter of the action is a matter of law and may not be conferred by
consent or agreement of the parties. The lack of jurisdiction of a court may
be raised at any stage of the proceedings, even on appeal. This doctrine has
been qualified by recent pronouncements which stemmed principally from While it is true that jurisdiction may be raised at any time, this rule
the ruling in the cited case of Sibonghanoy. It is to be regretted, however, that presupposes that estoppel has not supervened. In the instant case, respondent
the holding in said case had been applied to situations which were obviously actively participated in all stages of the proceedings before the trial court and
not contemplated therein. The exceptional circumstance involved invoked its authority by asking for an affirmative relief. Clearly, respondent
in Sibonghanoy which justified the departure from the accepted concept of is estopped from challenging the trial courts jurisdiction, especially when an
non-waivability of objection to jurisdiction has been ignored and, instead a adverse judgment has been rendered. In PNOC Shipping and Transport
blanket doctrine had been repeatedly upheld that rendered the supposed Corporation vs. Court of Appeals, we held:
ruling in Sibonghanoy not as the exception, but rather the general rule,
virtually overthrowing altogether the time-honored principle that the issue of
jurisdiction is not lost by waiver or by estoppel. Moreover, we note that petitioner did not question at all the jurisdiction of
the lower court x x x in its answers to both the amended complaint and the
second amended complaint.It did so only in its motion for reconsideration of
the decision of the lower court after it had received an adverse decision. As
this Court held in Pantranco North Express, Inc. vs. Court of Appeals (G.R.
No. 105180, July 5, 1993, 224 SCRA 477, 491), participation in all stages of [1998]). The Court frowns upon the undesirable practice of a party
the case before the trial court, that included invoking its authority in asking participating in the proceedings and submitting his case for decision and
for affirmative relief, effectively barred petitioner by estoppel from then accepting judgment, only if favorable, and attacking it for lack of
challenging the courts jurisdiction. Notably, from the time it filed its answer jurisdiction, when adverse (Producers Bank of the Philippines vs. NLRC,
to the second amended complaint on April 16, 1985, petitioner did not 298 SCRA 517 [1998], citing Ilocos Sur Electric Cooperative, Inc. vs.
question the lower courts jurisdiction. It was only on December 29, NLRC, 241 SCRA 36 [1995]). (italics ours)[26]
1989 when it filed its motion for reconsideration of the lower courts decision
that petitioner raised the question of the lower courts lack of
jurisdiction. Petitioner thus foreclosed its right to raise the issue of
jurisdiction by its own inaction. (italics ours)

Similarly, in the subsequent case of Sta. Lucia Realty and Development, Inc. Noteworthy, however, is that, in the 2005 case of Metromedia Times
vs. Cabrigas, we ruled: Corporation v. Pastorin,[27] where the issue of lack of jurisdiction was raised
only in the National Labor Relations Commission (NLRC) on appeal, we
stated, after examining the doctrines of jurisdiction vis--vis estoppel, that the
ruling in Sibonghanoy stands as an exception, rather than the general
In the case at bar, it was found by the trial court in its 30 September rule. Metromedia, thus, was not estopped from assailing the jurisdiction of
1996 decision in LCR Case No. Q-60161(93) that private respondents (who the labor arbiter before the NLRC on appeal.[28]
filed the petition for reconstitution of titles) failed to comply with both
sections 12 and 13 of RA 26 and therefore, it had no jurisdiction over the
subject matter of the case. However, private respondents never questioned
the trial courts jurisdiction over its petition for reconstitution throughout the Later, in Francel Realty Corporation v. Sycip,[29] the Court clarified that:
duration of LCR Case No. Q-60161(93). On the contrary, private respondents
actively participated in the reconstitution proceedings by filing pleadings and
presenting its evidence. They invoked the trial courts jurisdiction in order to Petitioner argues that the CAs affirmation of the trial courts dismissal of its
obtain affirmative relief the reconstitution of their titles. Private respondents case was erroneous, considering that a full-blown trial had already been
have thus foreclosed their right to raise the issue of jurisdiction by their own conducted. In effect, it contends that lack of jurisdiction could no longer be
actions. used as a ground for dismissal after trial had ensued and ended.

The above argument is anchored on estoppel by laches, which has been used
quite successfully in a number of cases to thwart dismissals based on lack of
The Court has constantly upheld the doctrine that while jurisdiction may be jurisdiction. Tijam v. Sibonghanoy, in which this doctrine was espoused, held
assailed at any stage, a litigants participation in all stages of the case before that a party may be barred from questioning a courts jurisdiction after being
the trial court, including the invocation of its authority in asking for invoked to secure affirmative relief against its opponent. In fine, laches
affirmative relief, bars such party from challenging the courts prevents the issue of lack of jurisdiction from being raised for the first time
jurisdiction (PNOC Shipping and Transport Corporation vs. Court of on appeal by a litigant whose purpose is to annul everything done in a trial in
Appeals, 297 SCRA 402 [1998]). A party cannot invoke the jurisdiction of a which it has actively participated.
court to secure affirmative relief against his opponent and after obtaining or
failing to obtain such relief, repudiate or question that same
jurisdiction (Asset Privatization Trust vs. Court of Appeals, 300 SCRA 579
[1998]; Province of Bulacan vs. Court of Appeals, 299 SCRA 442
Laches is defined as the failure or neglect for an unreasonable and jurisdiction is determined by the averments of the complaint, not by the
unexplained length of time, to do that which, by exercising due diligence, defenses contained in the answer.[30]
could or should have been done earlier; it is negligence or omission to assert
a right within a reasonable time, warranting a presumption that the party
entitled to assert it either has abandoned it or declined to assert it.

Also, in Mangaliag v. Catubig-Pastoral,[31] even if the pleader of lack of


The ruling in Sibonghanoy on the matter of jurisdiction is, however, the jurisdiction actively took part in the trial proceedings by presenting a witness
exception rather than the rule. Estoppel by laches may be invoked to bar the to seek exoneration, the Court, reiterating the doctrine in Calimlim, said:
issue of lack of jurisdiction only in cases in which the factual milieu is
analogous to that in the cited case. In such controversies, laches should be
clearly present; that is, lack of jurisdiction must have been raised so belatedly Private respondent argues that the defense of lack of jurisdiction may be
as to warrant the presumption that the party entitled to assert it had waived by estoppel through active participation in the trial. Such, however,
abandoned or declined to assert it. That Sibonghanoy applies only to is not the general rule but an exception, best characterized by the peculiar
exceptional circumstances is clarified in Calimlim v. Ramirez, which we circumstances in Tijam vs. Sibonghanoy. In Sibonghanoy, the party invoking
quote: lack of jurisdiction did so only after fifteen years and at a stage when the
proceedings had already been elevated to the CA. Sibonghanoy is an
exceptional case because of the presence of laches, which was defined
A rule that had been settled by unquestioned acceptance and upheld in therein as failure or neglect for an unreasonable and unexplained length of
decisions so numerous to cite is that the jurisdiction of a court over the time to do that which, by exercising due diligence, could or should have been
subject-matter of the action is a matter of law and may not be conferred by done earlier; it is the negligence or omission to assert a right within a
consent or agreement of the parties. The lack of jurisdiction of a court may reasonable time, warranting a presumption that the party entitled to assert has
be raised at any stage of the proceedings, even on appeal. This doctrine has abandoned it or declined to assert it.[32]
been qualified by recent pronouncements which stemmed principally from
the ruling in the cited case of Sibonghanoy. It is to be regretted, however,
that the holding in said case had been applied to situations which were And in the more recent Regalado v. Go,[33] the Court again emphasized
obviously not contemplated therein. The exceptional circumstance involved that laches should be clearly present for the Sibonghanoy doctrine to be
in Sibonghanoy which justified the departure from the accepted concept of applicable, thus:
non-waivability of objection to jurisdiction has been ignored and, instead a
blanket doctrine had been repeatedly upheld that rendered the supposed
ruling in Sibonghanoy not as the exception, but rather the general rule,
virtually overthrowing altogether the time-honored principle that the issue of Laches is defined as the failure or neglect for an unreasonable and
jurisdiction is not lost by waiver or by estoppel. unexplained length of time, to do that which, by exercising due diligence,
could or should have been done earlier, it is negligence or omission to assert
a right within a reasonable length of time, warranting a presumption that the
party entitled to assert it either has abandoned it or declined to assert it.
Indeed, the general rule remains: a courts lack of jurisdiction may be raised
at any stage of the proceedings, even on appeal. The reason is that The ruling in People v. Regalario that was based on the landmark doctrine
jurisdiction is conferred by law, and lack of it affects the very authority of the enunciated in Tijam v. Sibonghanoy on the matter of jurisdiction
court to take cognizance of and to render judgment on the action. Moreover, by estoppel is the exception rather than the rule. Estoppel by laches may be
invoked to bar the issue of lack of jurisdiction only in cases in which the
factual milieu is analogous to that in the cited case. In such parties. This is especially true where the person seeking to invoke
controversies, lachesshould have been clearly present; that is, lack of unauthorized jurisdiction of the court does not thereby secure any advantage
jurisdiction must have been raised so belatedly as to warrant the presumption or the adverse party does not suffer any harm.[35]
that the party entitled to assert it had abandoned or declined to assert it.

Applying the said doctrine to the instant case, the petitioner is in no way
In Sibonghanoy, the defense of lack of jurisdiction was raised for the first estopped by laches in assailing the jurisdiction of the RTC, considering that
time in a motion to dismiss filed by the Surety almost 15 years after the he raised the lack thereof in his appeal before the appellate court. At that
questioned ruling had been rendered. At several stages of the proceedings, in time, no considerable period had yet elapsed for laches to attach. True, delay
the court a quo as well as in the Court of Appeals, the Surety invoked the alone, though unreasonable, will not sustain the defense of estoppel by
jurisdiction of the said courts to obtain affirmative relief and submitted its laches unless it further appears that the party, knowing his rights, has not
case for final adjudication on the merits. It was only when the adverse sought to enforce them until the condition of the party pleading laches has in
decision was rendered by the Court of Appeals that it finally woke up to raise good faith become so changed that he cannot be restored to his former state,
the question of jurisdiction. if the rights be then enforced, due to loss of evidence, change of title,
intervention of equities, and other causes.[36] In applying the principle of
estoppel by laches in the exceptional case of Sibonghanoy, the Court therein
considered the patent and revolting inequity and unfairness of having the
Clearly, the factual settings attendant in Sibonghanoy are not present in the judgment creditors go up their Calvary once more after more or less 15
case at bar. Petitioner Atty. Regalado, after the receipt of the Court of years.[37] The same, however, does not obtain in the instant case.
Appeals resolution finding her guilty of contempt, promptly filed a Motion
for Reconsideration assailing the said courts jurisdiction based on procedural
infirmity in initiating the action. Her compliance with the appellate courts
directive to show cause why she should not be cited for contempt and filing a We note at this point that estoppel, being in the nature of a forfeiture, is not
single piece of pleading to that effect could not be considered as an active favored by law. It is to be applied rarelyonly from necessity, and only in
participation in the judicial proceedings so as to take the case within the extraordinary circumstances. The doctrine must be applied with great care
milieu of Sibonghanoy. Rather, it is the natural fear to disobey the mandate and the equity must be strong in its favor.[38] When misapplied, the doctrine
of the court that could lead to dire consequences that impelled her to of estoppel may be a most effective weapon for the accomplishment of
comply.[34] injustice.[39] Moreover, a judgment rendered without jurisdiction over the
subject matter is void.[40] Hence, the Revised Rules of Court provides for
remedies in attacking judgments rendered by courts or tribunals that have no
jurisdiction over the concerned cases. No laches will even attach when the
The Court, thus, wavered on when to apply the exceptional circumstance judgment is null and void for want of jurisdiction.[41] As we have stated
in Sibonghanoy and on when to apply the general rule enunciated as early as in Heirs of Julian Dela Cruz and Leonora Talaro v. Heirs of Alberto Cruz,[42]
in De La Santa and expounded at length in Calimlim. The general rule
should, however, be, as it has always been, that the issue of jurisdiction may
be raised at any stage of the proceedings, even on appeal, and is not lost by
waiver or by estoppel. Estoppel by laches, to bar a litigant from asserting the It is axiomatic that the jurisdiction of a tribunal, including a quasi-judicial
courts absence or lack of jurisdiction, only supervenes in exceptional cases officer or government agency, over the nature and subject matter of a petition
similar to the factual milieu of Tijam v. Sibonghanoy. Indeed, the fact that a or complaint is determined by the material allegations therein and the
person attempts to invoke unauthorized jurisdiction of a court does not estop character of the relief prayed for, irrespective of whether the petitioner or
him from thereafter challenging its jurisdiction over the subject matter, since complainant is entitled to any or all such reliefs. Jurisdiction over the nature
such jurisdiction must arise by law and not by mere consent of the and subject matter of an action is conferred by the Constitution and the law,
and not by the consent or waiver of the parties where the court otherwise
would have no jurisdiction over the nature or subject matter of the
action. Nor can it be acquired through, or waived by, any act or omission of
the parties. Moreover, estoppel does not apply to confer jurisdiction to a
tribunal that has none over the cause of action. x x x

Indeed, the jurisdiction of the court or tribunal is not affected by the defenses
or theories set up by the defendant or respondent in his answer or motion to
dismiss. Jurisdiction should be determined by considering not only the status
or the relationship of the parties but also the nature of the issues or questions
that is the subject of the controversy. x x x
x The proceedings before a court or tribunal without jurisdiction, including
its decision, are null and void, hence, susceptible to direct and collateral
attacks.[43]

With the above considerations, we find it unnecessary to resolve the other


issues raised in the petition.
REYES, R.T., J.:

THIRD DIVISION

CAN the Sandiganbayan try a government scholar** accused, along with her
brother, of swindling government funds?

HANNAH EUNICE D. SERANA, G.R. No. 162059


MAAARI bang litisin ng Sandiganbayan ang isang iskolar ng bayan, at
Petitioner, ang kanyang kapatid, na kapwa pinararatangan ng estafa ng pera ng
Present: bayan?

YNARES-SANTIAGO, J., The jurisdictional question is posed in this petition for certiorari assailing the
Resolutions[1] of the Sandiganbayan, Fifth Division, denying petitioners
Chairperson, motion to quash the information and her motion for reconsideration.

- versus - AUSTRIA-MARTINEZ,

CORONA,* The Antecedents

NACHURA, and

REYES, JJ. Petitioner Hannah Eunice D. Serana was a senior student of the University of
the Philippines-Cebu. A student of a state university is known as a
government scholar. She was appointed by then President Joseph Estrada
on December 21, 1999 as a student regent of UP, to serve a one-year term
SANDIGANBAYAN and Promulgated:
starting January 1, 2000 and ending on December 31, 2000.
PEOPLE OF THE PHILIPPINES,

Respondents. January 22, 2008


In the early part of 2000, petitioner discussed with President Estrada the
x--------------------------------------------------x renovation of Vinzons Hall Annex in UP Diliman.[2] On September 4, 2000,
petitioner, with her siblings and relatives, registered with the Securities and
DECISION Exchange Commission the Office of the Student Regent Foundation, Inc.
(OSRFI).[3]
One of the projects of the OSRFI was the renovation of the Vinzons Hall individual, did then and there wilfully, unlawfully and feloniously defraud
Annex.[4] President Estrada gave Fifteen Million Pesos (P15,000,000.00) to the government by falsely and fraudulently representing to former President
the OSRFI as financial assistance for the proposed renovation. The source of Joseph Ejercito Estrada that the renovation of the Vinzons Hall of the
the funds, according to the information, was the Office of the President. University of the Philippines will be renovated and renamed as President
Joseph Ejercito Estrada Student Hall, and for which purpose accused
HANNAH EUNICE D. SERANA requested the amount of
The renovation of Vinzons Hall Annex failed to materialize.[5] The FIFTEEN MILLION PESOS (P15,000,000.00), Philippine Currency, from
succeeding student regent, Kristine Clare Bugayong, and Christine Jill De the Office of the President, and the latter relying and believing on said false
Guzman, Secretary General of the KASAMA sa U.P., a system-wide alliance pretenses and misrepresentation gave and delivered to said accused Land
of student councils within the state university, consequently filed a complaint Bank Check No. 91353 dated October 24, 2000 in the amount of FIFTEEN
MILLION PESOS (P15,000,000.00), which check was subsequently
for Malversation of Public Funds and Property with the Office of the
Ombudsman.[6] encashed by accused Jade Ian D. Serana on October 25, 2000 and
misappropriated for their personal use and benefit, and despite repeated
demands made upon the accused for them to return aforesaid amount, the
said accused failed and refused to do so to the damage and prejudice of the
On July 3, 2003, the Ombudsman, after due investigation, found probable government in the aforesaid amount.
cause to indict petitioner and her brother Jade Ian D. Serana for estafa,
docketed as Criminal Case No. 27819 of the Sandiganbayan.[7] The
Information reads:
CONTRARY TO LAW. (Underscoring supplied)

The undersigned Special Prosecution Officer III, Office of the Special


Prosecutor, hereby accuses HANNAH EUNICE D. SERANA Petitioner moved to quash the information. She claimed that the
and JADE IAN D. SERANA of the crime of Estafa, defined and penalized Sandiganbayan does not have any jurisdiction over the offense charged or
under Paragraph 2(a), Article 315 of the Revised Penal Code, as amended over her person, in her capacity as UP student regent.
committed as follows:

Petitioner claimed that Republic Act (R.A.) No. 3019, as amended by R.A.
That on October, 24, 2000, or sometime prior or subsequent thereto, in No. 8249, enumerates the crimes or offenses over which the Sandiganbayan
Quezon City, Metro Manila, Philippines, and within the jurisdiction of this has jurisdiction.[8]It has no jurisdiction over the crime of estafa.[9] It only has
Honorable Court, above-named accused, HANNAH EUNICE D. jurisdiction over crimes covered by Title VII, Chapter II, Section 2 (Crimes
SERANA, a high-ranking public officer, being then the Student Regent of Committed by Public Officers), Book II of the Revised Penal Code
the University of the Philippines, Diliman, Quezon City, while in the (RPC). Estafa falling under Title X, Chapter VI (Crimes Against Property),
performance of her official functions, committing the offense in relation to Book II of the RPC is not within the Sandiganbayans jurisdiction.
her office and taking advantage of her position, with intent to
gain, conspiring with her brother, JADE IAN D. SERANA, a private
She also argued that it was President Estrada, not the government, that was
duped. Even assuming that she received the P15,000,000.00, that amount
came from Estrada, not from the coffers of the government.[10] Sandiganbayan Disposition

Petitioner likewise posited that the Sandiganbayan had no jurisdiction over In a Resolution dated November 14, 2003, the Sandiganbayan denied
her person. As a student regent, she was not a public officer since she merely petitioners motion for lack of merit.[15] It ratiocinated:
represented her peers, in contrast to the other regents who held their positions
in an ex officio capacity. She added that she was a simple student and did not
receive any salary as a student regent. The focal point in controversy is the jurisdiction of the Sandiganbayan over
this case.

It is extremely erroneous to hold that only criminal offenses covered by


She further contended that she had no power or authority to receive monies Chapter II, Section 2, Title VII, Book II of the Revised Penal Code are within
or funds. Such power was vested with the Board of Regents (BOR) as a the jurisdiction of this Court. As correctly pointed out by the prosecution,
whole. Since it was not alleged in the information that it was among her Section 4(b) of R.A. 8249 provides that the Sandiganbayan also has
functions or duties to receive funds, or that the crime was committed in jurisdiction over other offenses committed by public officials and employees
connection with her official functions, the same is beyond the jurisdiction of in relation to their office. From this provision, there is no single doubt that
the Sandiganbayan citing the case of Soller v. Sandiganbayan.[11] this Court has jurisdiction over the offense of estafa committed by a public
official in relation to his office.

The Ombudsman opposed the motion.[12] It disputed petitioners interpretation Accused-movants claim that being merely a member in representation of the
of the law. Section 4(b) of Presidential Decree (P.D.) No. 1606 clearly student body, she was never a public officer since she never received any
contains the catch-all phrase in relation to office, thus, the Sandiganbayan compensation nor does she fall under Salary Grade 27, is of no moment, in
has jurisdiction over the charges against petitioner. In the same breath, the view of the express provision of Section 4 of Republic Act No. 8249 which
prosecution countered that the source of the money is a matter of defense. It provides:
should be threshed out during a full-blown trial.[13]

Sec. 4. Jurisdiction The Sandiganbayan shall exercise exclusive original


According to the Ombudsman, petitioner, despite her protestations, was a jurisdiction in all cases involving:
public officer. As a member of the BOR, she had the general powers of
administration and exercised the corporate powers of UP. Based on Mechems
definition of a public office, petitioners stance that she was not compensated, (A) x x x
hence, not a public officer, is erroneous. Compensation is not an essential
part of public office. Parenthetically, compensation has been interpreted to
include allowances. By this definition, petitioner was compensated.[14]
(1) Officials of the executive branch occupying the positions of regional and conditions as it may deem proper; to grant to them in its discretion leave
director and higher, otherwise classified as Grade 27 and higher, of the of absence under such regulations as it may promulgate, any other provisions
Compensation and Position Classification Act of 1989 (Republic Act No. of law to the contrary notwithstanding, and to remove them for cause after an
6758), specifically including: investigation and hearing shall have been had.

xxxx It is well-established in corporation law that the corporation can act only
through its board of directors, or board of trustees in the case of non-stock
corporations. The board of directors or trustees, therefore, is the governing
(g) Presidents, directors or trustees, or managers of government-owned or body of the corporation.
controlled corporations, state universities or educational institutions or
foundations. (Italics supplied)
It is unmistakably evident that the Board of Regents of the University of
the Philippines is performing functions similar to those of the Board of
It is very clear from the aforequoted provision that the Sandiganbayan has Trustees of a non-stock corporation. This draws to fore the conclusion that
original exclusive jurisdiction over all offenses involving the officials being a member of such board, accused-movant undoubtedly falls within the
enumerated in subsection (g), irrespective of their salary grades, because the category of public officials upon whom this Court is vested with original
primordial consideration in the inclusion of these officials is the nature of exclusive jurisdiction, regardless of the fact that she does not occupy a
their responsibilities and functions. position classified as Salary Grade 27 or higher under the Compensation and
Position Classification Act of 1989.

Is accused-movant included in the contemplated provision of law?


Finally, this court finds that accused-movants contention that the same
of P15 Million was received from former President Estrada and not from the
coffers of the government, is a matter a defense that should be properly
A meticulous review of the existing Charter of the University of the ventilated during the trial on the merits of this case.[16]
Philippines reveals that the Board of Regents, to which accused-movant
belongs, exclusively exercises the general powers of administration and
corporate powers in the university, such as: 1) To receive and appropriate to
the ends specified by law such sums as may be provided by law for the On November 19, 2003, petitioner filed a motion for reconsideration.[17] The
motion was denied with finality in a Resolution dated February 4, 2004.[18]
support of the university; 2) To prescribe rules for its own government and to
enact for the government of the university such general ordinances and
regulations, not contrary to law, as are consistent with the purposes of the
university; and 3) To appoint, on recommendation of the President of the Issue
University, professors, instructors, lecturers and other employees of the
University; to fix their compensation, hours of service, and such other duties
Petitioner is now before this Court, contending that THE
RESPONDENT COURT COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACKAND/OR EXCESS OF In Newsweek, Inc. v. Intermediate Appellate Court,[23] the Court clearly
JURISDICTION IN NOT QUASHING THE explained and illustrated the rule and the exceptions, thus:
INFORMATION AND DISMISING THE CASE NOTWITHSTANDING
THAT IS HAS NO JURISDICTION OVER THE OFFENSE CHARGED IN
THE INFORMATION.[19] As a general rule, an order denying a motion to dismiss is merely
interlocutory and cannot be subject of appeal until final judgment or order is
rendered. (Sec. 2 of Rule 41). The ordinary procedure to be followed in such
In her discussion, she reiterates her four-fold argument below, namely: (a) a case is to file an answer, go to trial and if the decision is adverse, reiterate
the Sandiganbayan has no jurisdiction over estafa; (b) petitioner is not a the issue on appeal from the final judgment. The same rule applies to an
public officer with Salary Grade 27 and she paid her tuition fees; (c) the order denying a motion to quash, except that instead of filing an answer a
offense charged was not committed in relation to her office; (d) the funds in plea is entered and no appeal lies from a judgment of acquittal.
question personally came from President Estrada, not from the government.

This general rule is subject to certain exceptions. If the court, in denying the
Our Ruling motion to dismiss or motion to quash, acts without or in excess of
jurisdiction or with grave abuse of discretion, then certiorari or prohibition
lies. The reason is that it would be unfair to require the defendant or accused
to undergo the ordeal and expense of a trial if the court has no jurisdiction
The petition cannot be granted. over the subject matter or offense, or is not the court of proper venue, or if
the denial of the motion to dismiss or motion to quash is made with grave
abuse of discretion or a whimsical and capricious exercise of judgment. In
Preliminarily, the denial of a motion to such cases, the ordinary remedy of appeal cannot be plain and adequate. The
following are a few examples of the exceptions to the general rule.
quash is not correctible by certiorari.

In De Jesus v. Garcia (19 SCRA 554), upon the denial of a motion to dismiss
We would ordinarily dismiss this petition for certiorari outright on based on lack of jurisdiction over the subject matter, this Court granted the
procedural grounds. Well-established is the rule that when a motion to quash petition for certiorari and prohibition against the City Court of Manila and
in a criminal case is denied, the remedy is not a petition for certiorari, but for directed the respondent court to dismiss the case.
petitioners to go to trial, without prejudice to reiterating the special defenses
invoked in their motion to quash.[20]Remedial measures as regards
interlocutory orders, such as a motion to quash, are frowned upon and often
dismissed.[21] The evident reason for this rule is to avoid multiplicity of In Lopez v. City Judge (18 SCRA 616), upon the denial of a motion to quash
appeals in a single action.[22] based on lack of jurisdiction over the offense, this Court granted the petition
for prohibition and enjoined the respondent court from further proceeding in
the case.
The jurisdiction of the Sandiganbayan is

set by P.D. No. 1606, as amended, not by

R.A. No. 3019, as amended.

In Enriquez v. Macadaeg (84 Phil. 674), upon the denial of a motion to


dismiss based on improper venue, this Court granted the petition for We first address petitioners contention that the jurisdiction of the
prohibition and enjoined the respondent judge from taking cognizance of the Sandiganbayan is determined by Section 4 of R.A. No. 3019 (The Anti-Graft
case except to dismiss the same. and Corrupt Practices Act, as amended). We note that petitioner refers to
Section 4 of the said law yet quotes Section 4 of P.D. No. 1606, as amended,
in her motion to quash before the Sandiganbayan.[25]She repeats the reference
in the instant petition for certiorari[26] and in her memorandum of
In Manalo v. Mariano (69 SCRA 80), upon the denial of a motion to dismiss authorities.[27]
based on bar by prior judgment, this Court granted the petition
for certiorari and directed the respondent judge to dismiss the case.

In Yuviengco v. Dacuycuy (105 SCRA 668), upon the denial of a motion to


dismiss based on the Statute of Frauds, this Court granted the petition
for certiorari and dismissed the amended complaint.
We cannot bring ourselves to write this off as a mere clerical or
typographical error. It bears stressing that petitioner repeated this claim twice
In Tacas v. Cariaso (72 SCRA 527), this Court granted the petition despite corrections made by the Sandiganbayan.[28]
for certiorari after the motion to quash based on double jeopardy was denied
by respondent judge and ordered him to desist from further action in the
criminal case except to dismiss the same. Her claim has no basis in law. It is P.D. No. 1606, as amended, rather than
R.A. No. 3019, as amended, that determines the jurisdiction of the
Sandiganbayan. A brief legislative history of the statute creating the
In People v. Ramos (83 SCRA 11), the order denying the motion to quash Sandiganbayan is in order. The Sandiganbayan was created by P.D. No.
based on prescription was set aside on certiorari and the criminal case was 1486, promulgated by then President Ferdinand E. Marcos on June 11,
dismissed by this Court.[24] 1978. It was promulgated to attain the highest norms of official conduct
required of public officers and employees, based on the concept that public
We do not find the Sandiganbayan to have committed a grave abuse of officers and employees shall serve with the highest degree of responsibility,
discretion.
integrity, loyalty and efficiency and shall remain at all times accountable to (a) Provincial governors, vice-governors, members of the sangguniang
the people.[29] panlalawigan, and provincial treasurers, assessors, engineers, and other city
department heads;

P.D. No. 1486 was, in turn, amended by P.D. No. 1606 which was
promulgated on December 10, 1978. P.D. No. 1606 expanded the jurisdiction (b) City mayor, vice-mayors, members of the sangguniang panlungsod, city
of the Sandiganbayan.[30] treasurers, assessors, engineers, and other city department heads;

P.D. No. 1606 was later amended by P.D. No. 1861 on March 23, 1983, (c) Officials of the diplomatic service occupying the position of consul and
further altering the Sandiganbayan jurisdiction. R.A. No. 7975 approved on higher;
March 30, 1995 made succeeding amendments to P.D. No. 1606, which was
again amended on February 5, 1997 by R.A. No. 8249. Section 4 of R.A. No.
8249 further modified the jurisdiction of the Sandiganbayan. As it now (d) Philippine army and air force colonels, naval captains, and all officers of
stands, the Sandiganbayan has jurisdiction over the following: higher rank;

Sec. 4. Jurisdiction. - The Sandiganbayan shall exercise exclusive original


(e) Officers of the Philippine National Police while occupying the position of
jurisdiction in all cases involving:
provincial director and those holding the rank of senior superintended or
higher;

A. Violations of Republic Act No. 3019, as amended, other known as the


Anti-Graft and Corrupt Practices Act, Republic Act No. 1379, and Chapter
II, Section 2, Title VII, Book II of the Revised Penal Code, where one or
more of the accused are officials occupying the following positions in the (f) City and provincial prosecutors and their assistants, and officials and
government, whether in a permanent, acting or interim capacity, at the time prosecutors in the Office of the Ombudsman and special prosecutor;
of the commission of the offense:

(g) Presidents, directors or trustees, or managers of government-owned or


(1) Officials of the executive branch occupying the positions of regional controlled corporations, state universities or educational institutions or
director and higher, otherwise classified as Grade 27 and higher, of the foundations.
Compensation and Position Classification Act of 989 (Republic Act No.
6758), specifically including:
(2) Members of Congress and officials thereof classified as Grade 27 and up The Sandiganbayan shall exercise exclusive appellate jurisdiction over final
under the Compensation and Position Classification Act of 1989; judgments, resolutions or order of regional trial courts whether in the
exercise of their own original jurisdiction or of their appellate jurisdiction as
herein provided.
(3) Members of the judiciary without prejudice to the provisions of the
Constitution;
The Sandiganbayan shall have exclusive original jurisdiction over petitions
for the issuance of the writs of mandamus, prohibition, certiorari, habeas
(4) Chairmen and members of Constitutional Commission, without prejudice corpus, injunctions, and other ancillary writs and processes in aid of its
to the provisions of the Constitution; and appellate jurisdiction and over petitions of similar nature, including quo
warranto, arising or that may arise in cases filed or which may be filed under
Executive Order Nos. 1, 2, 14 and 14-A, issued in 1986: Provided, That the
jurisdiction over these petitions shall not be exclusive of the Supreme Court.
(5) All other national and local officials classified as Grade 27 and higher
under the Compensation and Position Classification Act of 1989.

The procedure prescribed in Batas Pambansa Blg. 129, as well as the


implementing rules that the Supreme Court has promulgated and may
B. Other offenses of felonies whether simple or complexed with other crimes thereafter promulgate, relative to appeals/petitions for review to the Court of
committed by the public officials and employees mentioned in subsection a Appeals, shall apply to appeals and petitions for review filed with the
of this section in relation to their office. Sandiganbayan. In all cases elevated to the Sandiganbayan and from the
Sandiganbayan to the Supreme Court, the Office of the Ombudsman, through
its special prosecutor, shall represent the People of the Philippines, except in
C. Civil and criminal cases filed pursuant to and in connection with cases filed pursuant to Executive Order Nos. 1, 2, 14 and 14-A, issued in
Executive Order Nos. 1, 2, 14 and 14-A, issued in 1986. 1986.

In cases where none of the accused are occupying positions corresponding to In case private individuals are charged as co-principals, accomplices or
Salary Grade 27 or higher, as prescribed in the said Republic Act No. 6758, accessories with the public officers or employees, including those employed
or military and PNP officer mentioned above, exclusive original jurisdiction in government-owned or controlled corporations, they shall be tried jointly
thereof shall be vested in the proper regional court, metropolitan trial court, with said public officers and employees in the proper courts which shall
municipal trial court, and municipal circuit trial court, as the case may be, exercise exclusive jurisdiction over them.
pursuant to their respective jurisdictions as provided in Batas Pambansa Blg.
129, as amended.
Any provisions of law or Rules of Court to the contrary notwithstanding, the
criminal action and the corresponding civil action for the recovery of civil
liability shall, at all times, be simultaneously instituted with, and jointly and fraternal connections, and professional employment all giving rise to
determined in, the same proceeding by the Sandiganbayan or the appropriate intimacy which assures free access to such public officer.
courts, the filing of the criminal action being deemed to necessarily carry
with it the filing of the civil action, and no right to reserve the filing such
civil action separately from the criminal action shall be recognized: Provided, (b) It shall be unlawful for any person knowingly to induce or cause any
however, That where the civil action had heretofore been filed separately but
public official to commit any of the offenses defined in Section 3 hereof.
judgment therein has not yet been rendered, and the criminal case is hereafter
filed with the Sandiganbayan or the appropriate court, said civil action shall
be transferred to the Sandiganbayan or the appropriate court, as the case may
be, for consolidation and joint determination with the criminal action, In fine, the two statutes differ in that P.D. No. 1606, as amended, defines the
otherwise the separate civil action shall be deemed abandoned. jurisdiction of the Sandiganbayan while R.A. No. 3019, as amended, defines
graft and corrupt practices and provides for their penalties.

Upon the other hand, R.A. No. 3019 is a penal statute approved on August
17, 1960. The said law represses certain acts of public officers and private Sandiganbayan has jurisdiction over
persons alike which constitute graft or corrupt practices or which may lead
the offense of estafa.
thereto.[31] Pursuant to Section 10 of R.A. No. 3019, all prosecutions for
violation of the said law should be filed with the Sandiganbayan.[32]

Relying on Section 4 of P.D. No. 1606, petitioner contends that estafa is not
among those crimes cognizable by the Sandiganbayan. We note that in
R.A. No. 3019 does not contain an enumeration of the cases over which the
hoisting this argument, petitioner isolated the first paragraph of Section 4 of
Sandiganbayan has jurisdiction. In fact, Section 4 of R.A. No. 3019
P.D. No. 1606, without regard to the succeeding paragraphs of the said
erroneously cited by petitioner, deals not with the jurisdiction of the
provision.
Sandiganbayan but with prohibition on private individuals. We quote:

The rule is well-established in this jurisdiction that statutes should receive a


Section 4. Prohibition on private individuals. (a) It shall be unlawful for any
sensible construction so as to avoid an unjust or an absurd
person having family or close personal relation with any public official to
conclusion.[33] Interpretatio talis in ambiguis semper fienda est, ut evitetur
capitalize or exploit or take advantage of such family or close personal
inconveniens et absurdum. Where there is ambiguity, such interpretation as
relation by directly or indirectly requesting or receiving any present, gift or
will avoid inconvenience and absurdity is to be adopted. Kung saan
material or pecuniary advantage from any other person having some
mayroong kalabuan, ang pagpapaliwanag ay hindi dapat maging
business, transaction, application, request or contract with the government, in
mahirap at katawa-tawa.
which such public official has to intervene. Family relation shall include the
spouse or relatives by consanguinity or affinity in the third civil degree. The
word close personal relation shall include close personal friendship, social
Every section, provision or clause of the statute must be expounded by
reference to each other in order to arrive at the effect contemplated by the
legislature.[34] The intention of the legislator must be ascertained from the
whole text of the law and every part of the act is to be taken into view.[35] In The National Parks Development Committee was created originally as an
other words, petitioners interpretation lies in direct opposition to the rule that Executive Committee on January 14, 1963, for the development of the
a statute must be interpreted as a whole under the principle that the best
Quezon Memorial, Luneta and other national parks (Executive Order No.
interpreter of a statute is the statute itself.[36] Optima statuti interpretatrix est 30). It was later designated as the National Parks Development Committee
ipsum statutum. Ang isang batas ay marapat na bigyan ng kahulugan sa (NPDC) on February 7, 1974 (E.O. No. 69). On January 9, 1966, Mrs.
kanyang kabuuan sa ilalim ng prinsipyo na ang pinakamainam na Imelda R. Marcos and Teodoro F. Valencia were designated Chairman and
interpretasyon ay ang mismong batas. Vice-Chairman respectively (E.O. No. 3). Despite an attempt to transfer it to
the Bureau of Forest Development, Department of Natural Resources,
on December 1, 1975 (Letter of Implementation No. 39, issued pursuant to
Section 4(B) of P.D. No. 1606 reads: PD No. 830, dated November 27, 1975), the NPDC has remained under the
Office of the President (E.O. No. 709, dated July 27, 1981).

B. Other offenses or felonies whether simple or complexed with other crimes


committed by the public officials and employees mentioned in subsection a Since 1977 to 1981, the annual appropriations decrees listed NPDC as a
of this section in relation to their office. regular government agency under the Office of the President and allotments
for its maintenance and operating expenses were issued direct to NPDC
(Exh. 10-A, Perlas, Item Nos. 2, 3).
Evidently, the Sandiganbayan has jurisdiction over other felonies committed
by public officials in relation to their office. We see no plausible or sensible
reason to exclude estafaas one of the offenses included in Section 4(B) of The Sandiganbayans jurisdiction over estafa was reiterated with greater
P.D. No. 1606. Plainly, estafa is one of those other felonies. The jurisdiction firmness in Bondoc v. Sandiganbayan.[38] Pertinent parts of the Courts ruling
is simply subject to the twin requirements that (a) the offense is committed in Bondoc read:
by public officials and employees mentioned in Section 4(A) of P.D. No.
1606, as amended, and that (b) the offense is committed in relation to their
office. Furthermore, it is not legally possible to transfer Bondocs cases to the
Regional Trial Court, for the simple reason that the latter would not have
jurisdiction over the offenses. As already above intimated, the inability of the
In Perlas, Jr. v. People,[37] the Court had occasion to explain that the Sandiganbayan to hold a joint trial of Bondocs cases and those of the
Sandiganbayan has jurisdiction over an indictment for estafa versus a government employees separately charged for the same crimes, has not
director of the National Parks Development Committee, a government altered the nature of the offenses charged, as estafa thru falsification
instrumentality. The Court held then: punishable by penalties higher than prision correccional or imprisonment of
six years, or a fine of P6,000.00, committed by government employees in
conspiracy with private persons, including Bondoc. These crimes are within
the exclusive, original jurisdiction of the Sandiganbayan. They simply cannot
be taken cognizance of by the regular courts, apart from the fact that even if In Laurel v. Desierto,[41] the Court adopted the definition of Mechem of a
the cases could be so transferred, a joint trial would nonetheless not be public office:
possible.

A public office is the right, authority and duty, created and conferred by law,
Petitioner UP student regent by which, for a given period, either fixed by law or enduring at the pleasure
of the creating power, an individual is invested with some portion of the
is a public officer. sovereign functions of the government, to be exercised by him for the benefit
of the public. The individual so invested is a public officer.[42]

Petitioner also contends that she is not a public officer. She does not receive
any salary or remuneration as a UP student regent. This is not the first or Petitioner claims that she is not a public officer with Salary Grade 27; she is,
likely the last time that We will be called upon to define a public in fact, a regular tuition fee-paying student. This is likewise bereft of merit. It
officer. In Khan, Jr. v. Office of the Ombudsman, We ruled that it is difficult is not only the salary grade that determines the jurisdiction of the
to pin down the definition of a public officer.[39] The 1987 Constitution does Sandiganbayan. The Sandiganbayan also has jurisdiction over other
not define who are public officers. Rather, the varied definitions and officers enumerated in P.D. No. 1606. In Geduspan v.
concepts are found in different statutes and jurisprudence. People,[43] We held that while the first part of Section 4(A) covers only
officials with
Salary Grade 27 and higher, its second part specifically includes other
In Aparri v. Court of Appeals,[40] the Court held that: executive officials whose positions may not be of Salary Grade 27 and higher
but who are by express provision of law placed under the jurisdiction of the
said court. Petitioner falls under the jurisdiction of the Sandiganbayan as she
A public office is the right, authority, and duty created and conferred by law, is placed there by express provision of law.[44]
by which for a given period, either fixed by law or enduring at the pleasure
of the creating power, an individual is invested with some portion of the
sovereign functions of the government, to be exercise by him for the benefit Section 4(A)(1)(g) of P.D. No. 1606 explictly vested the Sandiganbayan with
of the public ([Mechem Public Offices and Officers,] Sec. 1). The right to jurisdiction over Presidents, directors or trustees, or managers of
hold a public office under our political system is therefore not a natural government-owned or controlled corporations, state universities or
right. It exists, when it exists at all only because and by virtue of some law educational institutions or foundations. Petitioner falls under this
expressly or impliedly creating and conferring it (Mechem Ibid., Sec. category. As the Sandiganbayan pointed out, the BOR performs functions
64). There is no such thing as a vested interest or an estate in an office, or similar to those of a board of trustees of a non-stock corporation.[45] By
even an absolute right to hold office. Excepting constitutional offices which express mandate of law, petitioner is, indeed, a public officer as
provide for special immunity as regards salary and tenure, no one can be said contemplated by P.D. No. 1606.
to have any vested right in an office or its salary (42 Am. Jur. 881).
university. Resultantly, her act was done in a private capacity and not in
relation to public office.
Moreover, it is well established that compensation is not an essential element
of public office.[46] At most, it is merely incidental to the public office.[47]

It is axiomatic that jurisdiction is determined by the averments in the


information.[51] More than that, jurisdiction is not affected by the pleas or the
Delegation of sovereign functions is essential in the public office. An theories set up by defendant or respondent in an answer, a motion to dismiss,
investment in an individual of some portion of the sovereign functions of the or a motion to quash.[52] Otherwise, jurisdiction would become dependent
government, to be exercised by him for the benefit of the public makes one a almost entirely upon the whims of defendant or respondent.[53]
public officer.[48]

In the case at bench, the information alleged, in no uncertain terms that


The administration of the UP is a sovereign function in line with Article XIV petitioner, being then a student regent of U.P., while in the performance of
of the Constitution. UP performs a legitimate governmental function by her official functions, committing the offense in relation to her office and
providing advanced instruction in literature, philosophy, the sciences, and taking advantage of her position, with intent to gain, conspiring with her
arts, and giving professional and technical training.[49] Moreover, UP is brother, JADE IAN D. SERANA, a private individual, did then and there
maintained by the Government and it declares no dividends and is not a wilfully, unlawfully and feloniously defraud the government x x
corporation created for profit.[50] x. (Underscoring supplied)

The offense charged was committed Clearly, there was no grave abuse of discretion on the part of the
Sandiganbayan when it did not quash the information based on this ground.
in relation to public office, according

to the Information.
Source of funds is a defense that should

Petitioner likewise argues that even assuming that she is a public officer, the be raised during trial on the merits.
Sandiganbayan would still not have jurisdiction over the offense because it
was not committed in relation to her office.
It is contended anew that the amount came from President Estradas private
funds and not from the government coffers. Petitioner insists the charge has
According to petitioner, she had no power or authority to act without the no leg to stand on.
approval of the BOR. She adds there was no Board Resolution issued by the
BOR authorizing her to contract with then President Estrada; and that her
acts were not ratified by the governing body of the state
We cannot agree. The information alleges that the funds came from the
Office of the President and not its then occupant, President Joseph Ejercito
Estrada. Under the information, it is averred that petitioner requested the We admonish petitioners counsel to be more careful and accurate in his
amount of Fifteen Million Pesos (P15,000,000.00), Philippine citation. A lawyers conduct before the court should be characterized by
Currency, from the Office of the President, and the latter relying and candor and fairness.[57]The administration of justice would gravely suffer if
believing on said false pretenses and misrepresentation gave and delivered to lawyers do not act with complete candor and honesty before the courts.[58]
said accused Land Bank Check No. 91353 dated October 24, 2000 in the
amount of Fifteen Million Pesos (P15,000,000.00).
WHEREFORE, the petition is DENIED for lack of merit.

Again, the Court sustains the Sandiganbayan observation that the source of
the P15,000,000 is a matter of defense that should be ventilated during the SO ORDERED.
trial on the merits of the instant case.[54]

A lawyer owes candor, fairness

and honesty to the Court.

As a parting note, petitioners counsel, Renato G. dela Cruz, misrepresented


his reference to Section 4 of P.D. No. 1606 as a quotation from Section 4 of
R.A. No. 3019. A review of his motion to quash, the instant petition
for certiorari and his memorandum, unveils the misquotation. We urge
petitioners counsel to observe Canon 10 of the Code of Professional
Responsibility, specifically Rule 10.02 of the Rules stating that a lawyer shall
not misquote or misrepresent.

The Court stressed the importance of this rule in Pangan v. Ramos,[55] where
Atty Dionisio D. Ramos used the name Pedro D.D. Ramos in connection
with a criminal case. The Court ruled that Atty. Ramos resorted to deception
by using a name different from that with which he was authorized. We
severely reprimanded Atty. Ramos and warned that a repetition may warrant
suspension or disbarment.[56]
Republic of the Philippines evidenced by a medico-legal certificate, which stated that he sustained a
SUPREME COURT contusion hematoma in the hypogastric area.
Manila
Regarding the same incident, Bang-on filed a criminal case against Pat-og for
THIRD DIVISION the crime of Less Serious Physical Injury with the Regional Trial Court
(RTC) of Bontoc, Mountain Province.
G.R. No. 198755 June 5, 2013
Taking cognizance of the administrative case, the CSC-CAR directed Pat-og
ALBERTO PAT-OG, SR., Petitioner, to file his counter-affidavit. He denied the charges hurled against him and
vs. claimed that when he was conducting his Music, Arts, Physical Education
CIVIL SERVICE COMMISSION, Respondent. and Health (MAPEH) class, composed of third year students, he instructed
DECISION the girls to play volleyball and the boys to play basketball; that he later
directed the boys to form two lines; that after the boys failed to follow his
MENDOZA, J.: repeated instructions, he scolded them in a loud voice and wrested the ball
from them; that while approaching them, he noticed that there were male
Before this Court is a Petition for Review on Certiorari under Rule 45 of the students who were not members of his class who had joined the shooting
Rules of Court, which seeks to set aside the April 6, 2011 Decision1 of the practice; that one of those male students was Bang-on, who was supposed to
Court of Appeals (CA) in CA-G.R. SP No. 101700, affirming the April 11, be having his own MAPEH class under another teacher; that he then glared at
2007 Decision2 of the Civil Service Commission (CSC), which ordered the them, continued scolding them and dismissed the class for their failure to
dismissal of petitioner Alberto Pat-og, Sr. (Pat-og) from the service for grave follow instructions; and that he offered the sworn statement of other students
misconduct. to prove that he did not box Bang-on.
The Facts On June 1, 2004, the CSC-CAR found the existence of a prima faciecase for
misconduct and formally charged Pat-og.
On September 13, 2003, Robert Bang-on (Bang-on), then a 14-year old
second year high school student of the Antadao National High School in While the proceedings of the administrative case were ongoing, the RTC
Sagada, Mountain Province, tiled an affidavit-complaint against Pat-og, a rendered its judgment in the criminal case and found Pat-og guilty of the
third year high school teacher of the same school, before the Civil Service offense of slight physical injury. He was meted the penalty of imprisonment
Commission-Cordillera Administrative Region (CSC-CAR). from eleven (11) to twenty (20) days. Following his application for
probation, the decision became final and executory and judgment was
Bang-on alleged that on the morning of August 26, 2003, he attended his
entered.
class at the basketball court of the school, where Pat-og and his third year
students were also holding a separate class; that he and some of his Meanwhile, in the administrative case, a pre-hearing conference was
classmates joined Pat-og’s third year students who were practicing basketball conducted after repeated postponement by Pat-og. With the approval of the
shots; that Pat-og later instructed them to form two lines; that thinking that CSC-CAR, the prosecution submitted its position paper in lieu of a formal
three lines were to be formed, he stayed in between the two lines; that Pat-og presentation of evidence and formally offered its evidence, which included
then held his right arm and punched his stomach without warning for failing the decision in the criminal case. It offered the affidavits of Raymund
to follow instructions; and that as a result, he suffered stomach pain for
several days and was confined in a hospital from September 10-12, 2003, as
Atuban, a classmate of Bang-on; and James Domanog, a third year high The CSC-CAR held that the actions of Pat-og clearly transgressed the proper
school student, who both witnessed Pat-og hit Bang-on in the stomach. norms of conduct required of a public official, and the gravity of the offense
was further magnified by the seriousness of the injury of Bang-on which
For his defense, Pat-og offered the testimonies of his witnesses - Emiliano required a healing period of more than ten (10) days. It pointed out that,
Dontongan (Dontongan), a teacher in another school, who alleged that he being his teacher, Pat-og’s substitute parental authority did not give him
was a member of the Municipal Council for the Protection of Children, and license to physically chastise a misbehaving student. The CSC-CAR added
that, in such capacity, he investigated the incident and came to the conclusion that the fact that Pat-og applied for probation in the criminal case, instead of
that it did not happen at all; and Ernest Kimmot, who testified that he was in filing an appeal, further convinced it of his guilt.
the basketball court at the time but did not see such incident. Pat-og also
presented the affidavits of thirteen other witnesses to prove that he did not The CSC-CAR believed that the act committed by Pat-og was sufficient to
punch Bang-on. find him guilty of Grave Misconduct. It, however, found the corresponding
penalty of dismissal from the service too harsh under the circumstances.
Ruling of the CSC-CAR Thus, it adjudged petitioner guilty of Simple Misconduct and imposed the
In its Decision,3 dated September 19, 2006, the CSC-CAR found Pat-og maximum penalty of suspension for six (6) months.
guilty and disposed as follows: On December 11, 2006, the motion for reconsideration filed by Pat-og was
WHEREFORE, all premises told, respondent Alberto Pat-og, Sr., Teacher denied for lack of merit.4
Antadao National High School, is hereby found guilty of Simple Misconduct. The Ruling of the CSC
Under the Uniform Rules on Administrative Cases in the Civil Service, the In its Resolution,5 dated April 11, 2007, the CSC dismissed Pat-og’s appeal
imposable penalty on the first offense of Simple Misconduct is suspension of and affirmed with modification the decision of the CSC-CAR as follows:
one (1) month and one (1) day to six (6) months.
WHEREFORE, foregoing premises considered, the instant appeal is hereby
Due to seriousness of the resulting injury to the fragile body of the minor DISMISSED. The decision of the CSC-CAR is affirmed with the
victim, the CSC-CAR hereby imposed upon respondent the maximum modification that Alberto Pat-og, Sr., is adjudged guilty of grave misconduct,
penalty attached to the offense which is six months suspension without pay. for which he is meted out the penalty of dismissal from the service with all
The CSC-CAR gave greater weight to the version posited by the prosecution, its accessory penalties of cancellation of eligibilities, perpetual
finding that a blow was indeed inflicted by Pat-og on Bang-on. It found that disqualification from reemployment in the government service, and forfeiture
Pat-og had a motive for doing so - his students’ failure to follow his repeated of retirement benefits.6
instructions which angered him. Nevertheless, the CSCCAR ruled that a After evaluating the records, the CSC sustained the CSC-CAR’s conclusion
motive was not necessary to establish guilt if the perpetrator of the offense that there existed substantial evidence to sustain the finding that Pat-og did
was positively identified. The positive identification of Pat-og was duly punch Bang-on in the stomach. It gave greater weight to the positive
proven by the corroborative testimonies of the prosecution witnesses, who statements of Bang-on and his witnesses over the bare denial of Patog. It also
were found to be credible and disinterested. The testimony of defense highlighted the fact that Pat-og failed to adduce evidence of any ill motive on
witness, Dontongan, was not given credence considering that the students he the part of Bang-on in filing the administrative case against him. It likewise
interviewed for his investigation claimed that Pat-og was not even angry at gave credence to the medico-legal certificate showing that Bang-on suffered
the time of the incident, contrary to the latter’s own admission. a hematoma contusion in his hypogastric area.
The CSC ruled that the affidavits of Bang-on’s witnesses were not bereft of The CA also held that the CSC committed no error in taking into account the
evidentiary value even if Pat-og was not afforded a chance to cross-examine conviction of Pat-og in the criminal case. It stated that his conviction was not
the witnesses of Bang-on. It is of no moment because the cross- examination the sole basis of the CSC for his dismissal from the service because there was
of witnesses is not an indispensable requirement of administrative due substantial evidence proving that Pat-og had indeed hit Bang-on.
process.
In its assailed Resolution,9 dated September 13, 2011, the CA denied the
The CSC noted that Pat-og did not question but, instead, fully acquiesced in motion for reconsideration filed by Pat-og.
his conviction in the criminal case for slight physical injury, which was based
on the same set of facts and circumstances, and involved the same parties and Hence, the present petition with the following
issues. It, thus, considered his prior criminal conviction as evidence against Assignment of Errors
him in the administrative case.
WHETHER OR NOT RESPONDENT COURT OF APPEALS
Finding that his act of punching his student displayed a flagrant and wanton COMMITTED GRAVE ABUSE OF DISCRETION WHEN IT AFFIRMED
disregard of the dignity of a person, reminiscent of corporal punishment that THE SUPREME PENALTY OF DISMISSAL FROM SERVICE WITH
had since been outlawed for being harsh, unjust, and cruel, the CSC upgraded FORFEITURE OF RETIREMENT BENEFITS AGAINST THE
Pat-og’s offense from Simple Misconduct to Grave Misconduct and ordered PETITIONER WITHOUT CONSIDERING PETITIONER’S LONG
his dismissal from the service. YEARS OF GOVERNMENT SERVICE?
Pat-og filed a motion for reconsideration, questioning for the first time the WHETHER OR NOT RESPONDENT COURT OF APPEALS
jurisdiction of CSC over the case. He contended that administrative charges COMMITTED GRAVE ABUSE OF DISCRETION WHEN IT RULED
against a public school teacher should have been initially heard by a THAT PETITIONER IS ESTOPPED FROM QUESTIONING THE
committee to be constituted pursuant to the Magna Carta for Public School JURISDICTION OF THE CIVIL SERVICE COMMISSION TO HEAR
Teachers. AND DECIDE THE ADMINISTRATIVE CASE AGAINST HIM?
On November 5, 2007, the CSC denied his motion for reconsideration.7 It WHETHER OR NOT RESPONDENT COURT OF APPEALS SERIOUSLY
ruled that Pat-og was estopped from challenging its jurisdiction considering ERRED AND COMMITTED GRAVE ABUSE OF DISCRETION IN
that he actively participated in the administrative proceedings against him, DISMISSING THE APPEAL DESPITE LACK OF SUBSTANTIAL
raising the issue of jurisdiction only after his appeal was dismissed by the
EVIDENCE?
CSC.
On Jurisdiction
Ruling of the Court of Appeals
Pat-og contends that Section 9 of Republic Act (R.A.) No. 4670, otherwise
In its assailed April 6, 2011 Decision,8 the CA affirmed the resolutions of the known as the Magna Carta for Public School Teachers, provides that
CSC. It agreed that Pat-og was estopped from questioning the jurisdiction of administrative charges against a public school teacher shall be heard initially
the CSC as the records clearly showed that he actively participated in the by a committee constituted under said section. As no committee was ever
proceedings. It was of the view that Pat-og was not denied due process when formed, the petitioner posits that he was denied due process and that the CSC
he failed to cross-examine Bang-on and his witnesses because he was given did not have the jurisdiction to hear and decide his administrative case. He
the opportunity to be heard and present his evidence before the CSC-CAR further argues that notwithstanding the fact that the issue of jurisdiction was
and the CSC.
raised for the first time on appeal, the rule remains that estoppel does not same jurisdiction, in which case, both bodies have concurrent jurisdiction
confer jurisdiction on a tribunal that has no jurisdiction over the cause of over the matter.16
action or subject matter of the case.
Where concurrent jurisdiction exists in several tribunals, the body that first
The Court cannot sustain his position. takes cognizance of the complaint shall exercise jurisdiction to the exclusion
of the others. In this case, it was CSC which first acquired jurisdiction over
The petitioner’s argument that the administrative case against him can only the case because the complaint was filed before it. Thus, it had the authority
proceed under R.A. No. 4670 is misplaced. to proceed and decide the case to the exclusion of the DepEd and the Board
In Puse v. Santos-Puse,10 it was held that the CSC, the Department of of Professional Teachers.17
Education (DepEd) and the Board of Professional Teachers-Professional In CSC v. Alfonso,18 it was held that special laws, such as R.A. No. 4670, do
Regulatory Commission (PRC) have concurrent jurisdiction over not divest the CSC of its inherent power to supervise and discipline all
administrative cases against public school teachers. members of the civil service, including public school teachers. Pat-og, as a
Under Article IX-B of the 1987 Constitution, the CSC is the body charged public school teacher, is first and foremost, a civil servant accountable to the
with the establishment and administration of a career civil service which people and answerable to the CSC for complaints lodged against him as a
embraces all branches and agencies of the government.11 Executive Order public servant. To hold that R.A. No. 4670 divests the CSC of its power to
(E.O.) No. 292 (the Administrative Code of 1987)12 and Presidential Decree discipline public school teachers would negate the very purpose for which
(P.D.) No. 807 (the Civil Service Decree of the Philippines)13 expressly the CSC was established and would impliedly amend the Constitution itself.
provide that the CSC has the power to hear and decide administrative To further drive home the point, it was ruled in CSC v. Macud19 that R.A.
disciplinary cases instituted with it or brought to it on appeal. Thus, the CSC, No. 4670, in imposing a separate set of procedural requirements in
as the central personnel agency of the government, has the inherent power to connection with administrative proceedings against public school teachers,
supervise and discipline all members of the civil service, including public should be construed to refer only to the specific procedure to be followed in
school teachers. administrative investigations conducted by the DepEd. By no means, then,
Indeed, under Section 9 of R.A. No. 4670, the jurisdiction over did R.A. No. 4670 confer an exclusive disciplinary authority over public
administrative cases of public school teachers is lodged with the school teachers on the DepEd.
investigating committee constituted therein.14 Also, under Section 23 of R.A. At any rate, granting that the CSC was without jurisdiction, the petitioner is
No. 7836 (the Philippine Teachers Professionalization Act of 1994), the indeed estopped from raising the issue. Although the rule states that a
Board of Professional Teachers is given the power, after due notice and jurisdictional question may be raised at any time, such rule admits of the
hearing, to suspend or revoke the certificate of registration of a professional exception where, as in this case, estoppel has supervened.20 Here, instead of
teacher for causes enumerated therein.15 opposing the CSC’s exercise of jurisdiction, the petitioner invoked the same
Concurrent jurisdiction is that which is possessed over the same parties or by actively participating in the proceedings before the CSC-CAR and by
subject matter at the same time by two or more separate tribunals. When the even filing his appeal before the CSC itself; only raising the issue of
law bestows upon a government body the jurisdiction to hear and decide jurisdiction later in his motion for reconsideration after the CSC denied his
cases involving specific matters, it is to be presumed that such jurisdiction is appeal. This Court has time and again frowned upon the undesirable practice
exclusive unless it be proved that another body is likewise vested with the of a party submitting his case for decision and then accepting the judgment
only if favorable, but attacking it for lack of jurisdiction when adverse.21
On Administrative Due Process misconduct. He insists that he was not motivated by bad faith or ill will
because he acted in the belief that, as a teacher, he was exercising authority
On due process, Pat-og asserts that the affidavits of the complainant and his over Bang-on in loco parentis, and was, accordingly, within his rights to
witnesses are of questionable veracity having been subscribed in Bontoc, discipline his student. Citing his 33 years in the government service without
which is nearly 30 kilometers from the residences of the parties. any adverse record against him and the fact that he is at the edge of
Furthermore, he claimed that considering that the said affiants never testified, retirement, being already 62 years old, the petitioner prays that, in the name
he was never afforded the opportunity to cross-examine them. Therefore, of substantial and compassionate justice, the CSC-CAR’s finding of simple
their affidavits were mere hearsay and insufficient to prove his guilt. misconduct and the concomitant penalty of suspension should be upheld,
The petitioner does not persuade. instead of dismissal.

The Court agrees in part.


The essence of due process is simply to be heard, or as applied to
administrative proceedings, a fair and reasonable opportunity to explain Misconduct means intentional wrongdoing or deliberate violation of a rule of
one’s side, or an opportunity to seek a reconsideration of the action or ruling law or standard of behavior. To constitute an administrative offense,
complained of.22 Administrative due process cannot be fully equated with misconduct should relate to or be connected with the performance of the
due process in its strict judicial sense. In administrative proceedings, a formal official functions and duties of a public officer. In grave misconduct, as
or trial-type hearing is not always necessary23 and technical rules of distinguished from simple misconduct, the elements of corruption, clear
procedure are not strictly applied. Hence, the right to cross-examine is not an intent to violate the law or t1agrant disregard of an established rule must be
indispensable aspect of administrative due process.24 The petitioner cannot, manifest.25
therefore, argue that the affidavit of Bang-on and his witnesses are hearsay
and insufficient to prove his guilt. Teachers are duly licensed professionals who must not only be competent in
the practice of their noble profession, but must also possess dignity and a
At any rate, having actively participated in the proceedings before the CSC- reputation with high moral values. They must strictly adhere to, observe, and
CAR, the CSC, and the CA, the petitioner was apparently afforded every practice the set of ethical and moral principles, standards, and values laid
opportunity to explain his side and seek reconsideration of the ruling against down in the Code of Ethics of Professional Teachers, which apply to all
him.1âwphi1 teachers in schools in the Philippines, whether public or private, as provided
As to the issue of the veracity of the affidavits, such is a question of fact in the preamble of the said Code.26 Section 8 of Article VIII of the same
which cannot now be raised before the Court under Rule 45 of the Rules of Code expressly provides that "a teacher shall not inflict corporal punishment
Court. The CSC-CAR, the CSC and the CA did not, therefore, err in giving on offending learners."
credence to the affidavits of the complainants and his witnesses, and in Clearly then, petitioner cannot argue that in punching Bang-on, he was
consequently ruling that there was substantial evidence to support the finding exercising his right as a teacher in loco parentis to discipline his student. It is
of misconduct on the part of the petitioner. beyond cavil that the petitioner, as a public school teacher, deliberately
On the Penalty violated his Code of Ethics. Such violation is a flagrant disregard for the
established rule contained in the said Code tantamount to grave misconduct.
Assuming that he did box Bang-on, Pat-og argues that there is no substantial
evidence to prove that he did so with a clear intent to violate the law or in Under Section 52(A)(2) of Rule IV of the Uniform Rules on Administrative
flagrant disregard of the established rule, as required for a finding of grave Cases in the Civil Service, the penalty for grave misconduct is dismissal from
the service, which carries with it the cancellation of eligibility, forfeiture of
retirement benefits and perpetual disqualification from reemployment in the
government service.27 This penalty must, however, be tempered with
compassion as there was sut1icient provocation on the part of Bang-on.
Considering further the mitigating circumstances that the petitioner has been
in the government service for 33 years, that this is his first offense and that
he is at the cusp of retirement, the Court finds the penalty of suspension for
six months as appropriate under the circumstances.

WHEREFORE, the Court PARTIALLY GRANTS the petition and


MODIFIES the April 6, 2011 Decision of the Court of Appeals in CA-G.R.
SP No. 101700. Accordingly, Alberto Pat-og, Sr. is found GUlLTY of Grave
Misconduct, but the penalty is reduced from dismissal from the service to
SUSPENSION for SIX MONTHS.

SO ORDERED.
Republic of the Philippines Motion for Substitution,12 dated 18 January 2000, praying that Manuel be
SUPREME COURT substituted by his children as party-defendants. It appears that this motion
Manila was granted by the trial court in an Order dated 9 October 2000.13

SECOND DIVISION Pre-trial thereafter ensued and on 18 July 2001, the trial court issued its pre-
trial order containing, among others, the dates of hearing of the case.14
G.R. No. 173946 June 19, 2013
The trial of the case then proceeded. Herein petitioner, as plaintiff, presented
BOSTON EQUITY RESOURCES, INC., Petitioner, its evidence and its exhibits were thereafter admitted.
vs.
COURT OF APPEALS AND LOLITA G. TOLEDO, Respondents. On 26 May 2004, the reception of evidence for herein respondent was
cancelled upon agreement of the parties. On 24 September 2004, counsel for
DECISION herein respondent was given a period of fifteen days within which to file a
demurrer to evidence.15 However, on 7 October 2004, respondent instead
PEREZ, J.:
filed a motion to dismiss the complaint, citing the following as grounds: (1)
Before the Court is a Petition for Review on Certiorari seeking to reverse and that the complaint failed to implead an indispensable party or a real party in
set aside: (1) the Decision,1 dated 28 February 2006 and (2) the interest; hence, the case must be dismissed for failure to state a cause of
Resolution,2 dated 1 August 2006 of the Court of Appeals in CA-G.R. SP action; (2) that the trial court did not acquire jurisdiction over the person of
No. 88586. The challenged decision granted herein respondent's petition for Manuel pursuant to Section 5, Rule 86 of the Revised Rules of Court; (3) that
certiorari upon a finding that the trial court committed grave abuse of the trial court erred in ordering the substitution of the deceased Manuel by
discretion in denying respondent's motion to dismiss the complaint against his heirs; and (4) that the court must also dismiss the case against Lolita
her.3 Based on this finding, the Court of Appeals reversed and set aside the Toledo in accordance with Section 6, Rule 86 of the Rules of Court.16
Orders, dated 8 November 20044 and 22 December 2004,5respectively, of the
Regional Trial Court (RTC) of Manila, Branch 24. The trial court, in an Order dated 8 November 2004, denied the motion to
dismiss for having been filed out of time, citing Section 1, Rule 16 of the
The Facts 1997 Rules of Court which states that: "Within the time for but before filing
the answer to the complaint or pleading asserting a claim, a motion to
On 24 December 1997, petitioner filed a complaint for sum of money with a dismiss may be made x x x."17 Respondent’s motion for reconsideration of
prayer for the issuance of a writ of preliminary attachment against the the order of denial was likewise denied on the ground that "defendants’
spouses Manuel and Lolita Toledo.6 Herein respondent filed an Answer dated attack on the jurisdiction of this Court is now barred by estoppel by laches"
19 March 1998 but on 7 May 1998, she filed a Motion for Leave to Admit since respondent failed to raise the issue despite several chances to do so.18
Amended Answer7 in which she alleged, among others, that her husband and
co-defendant, Manuel Toledo (Manuel), is already dead.8 The death Aggrieved, respondent filed a petition for certiorari with the Court of
certificate9 of Manuel states "13 July 1995" as the date of death. As a result, Appeals alleging that the trial court seriously erred and gravely abused its
petitioner filed a motion, dated 5 August 1999, to require respondent to discretion in denying her motion to dismiss despite discovery, during the trial
disclose the heirs of Manuel.10 In compliance with the verbal order of the of the case, of evidence that would constitute a ground for dismissal of the
court during the 11 October 1999 hearing of the case, respondent submitted case.19
the required names and addresses of the heirs.11 Petitioner then filed a
The Court of Appeals granted the petition based on the following grounds:
It is elementary that courts acquire jurisdiction over the person of the The Court of Appeals denied petitioner’s motion for reconsideration. Hence,
defendant x x x only when the latter voluntarily appeared or submitted to the this petition.
court or by coercive process issued by the court to him, x x x. In this case, it
is undisputed that when petitioner Boston filed the complaint on December The Issues
24, 1997, defendant Manuel S. Toledo was already dead, x x x. Such being Petitioner claims that the Court of Appeals erred in not holding that:
the case, the court a quo could not have acquired jurisdiction over the person
of defendant Manuel S. Toledo. 1. Respondent is already estopped from questioning the trial court’s
jurisdiction;
x x x the court a quo’s denial of respondent’s motion to dismiss was based on
its finding that respondent’s attack on the jurisdiction of the court was 2. Petitioner never failed to implead an indispensable party as the estate of
already barred by laches as respondent failed to raise the said ground in its Manuel is not an indispensable party;
[sic] amended answer and during the pre-trial, despite her active participation
in the proceedings. 3. The inclusion of Manuel as party-defendant is a mere misjoinder of party
not warranting the dismissal of the case before the lower court; and
However, x x x it is well-settled that issue on jurisdiction may be raised at
any stage of the proceeding, even for the first time on appeal. By timely 4. Since the estate of Manuel is not an indispensable party, it is not necessary
raising the issue on jurisdiction in her motion to dismiss x x x respondent is that petitioner file its claim against the estate of Manuel.
not estopped from raising the question on jurisdiction.
In essence, what is at issue here is the correctness of the trial court’s orders
Moreover, when issue on jurisdiction was raised by respondent, the court a denying respondent’s motion to dismiss.
quo had not yet decided the case, hence, there is no basis for the court a quo
The Ruling of the Court
to invoke estoppel to justify its denial of the motion for reconsideration;
We find merit in the petition.
It should be stressed that when the complaint was filed, defendant Manuel S.
Toledo was already dead. The complaint should have impleaded the estate of Motion to dismiss filed out of time
Manuel S. Toledo as defendant, not only the wife, considering that the estate
of Manuel S. Toledo is an indispensable party, which stands to be benefited To begin with, the Court of Appeals erred in granting the writ of certiorari in
or be injured in the outcome of the case. x x x favor of respondent. Well settled is the rule that the special civil action for
certiorari is not the proper remedy to assail the denial by the trial court of a
xxxx motion to dismiss. The order of the trial court denying a motion to dismiss is
merely interlocutory, as it neither terminates nor finally disposes of a case
Respondent’s motion to dismiss the complaint should have been granted by
and still leaves something to be done by the court before a case is finally
public respondent judge as the same was in order. Considering that the
decided on the merits.21 Therefore, "the proper remedy in such a case is to
obligation of Manuel S. Toledo is solidary with another debtor, x x x, the
appeal after a decision has been rendered."22
claim x x x should be filed against the estate of Manuel S. Toledo, in
conformity with the provision of Section 6, Rule 86 of the Rules of Court, x As the Supreme Court held in Indiana Aerospace University v. Comm. on
x x.20 Higher Education:23
A writ of certiorari is not intended to correct every controversial On April 14, 2004, defendants sought the issuance of subpoena ad
interlocutory ruling; it is resorted only to correct a grave abuse of discretion testificandum and duces tecum to one Gina M. Madulid, to appear and testify
or a whimsical exercise of judgment equivalent to lack of jurisdiction. Its for the defendants on April 23, 2004. Reception of defendants’ evidence was
function is limited to keeping an inferior court within its jurisdiction and to again deferred to May 26, June 2 and June 30, 2004, x x x.
relieve persons from arbitrary acts – acts which courts or judges have no
power or authority in law to perform. It is not designed to correct erroneous On May 13, 2004, defendants sought again the issuance of a subpoena duces
findings and conclusions made by the courts. (Emphasis supplied) tecum and ad testificandum to the said Gina Madulid. On May 26, 2004,
reception of defendants [sic] evidence was cancelled upon the agreement of
Even assuming that certiorari is the proper remedy, the trial court did not the parties. On July 28, 2004, in the absence of defendants’ witness, hearing
commit grave abuse of discretion in denying respondent’s motion to dismiss. was reset to September 24 and October 8, 2004 x x x.
It, in fact, acted correctly when it issued the questioned orders as
respondent’s motion to dismiss was filed SIX YEARS AND FIVE On September 24, 2004, counsel for defendants was given a period of fifteen
MONTHS AFTER SHE FILED HER AMENDED ANSWER. This (15) days to file a demurrer to evidence. On October 7, 2004, defendants
circumstance alone already warranted the outright dismissal of the motion for filed instead a Motion to Dismiss x x x.27
having been filed in clear contravention of the express mandate of Section 1, Respondent’s act of filing multiple motions, such as the first and earlier
Rule 16, of the Revised Rules of Court. Under this provision, a motion to motion to dismiss and then the motion to dismiss at issue here, as well as
dismiss shall be filed within the time for but before the filing of an answer to several motions for postponement, lends credibility to the position taken by
the complaint or pleading asserting a claim.24 petitioner, which is shared by the trial court, that respondent is
More importantly, respondent’s motion to dismiss was filed after petitioner
deliberately impeding the early disposition of this case. The filing of the
has completed the presentation of its evidence in the trial court, giving second motion to dismiss was, therefore, "not only improper but also
credence to petitioner’s and the trial court’s conclusion that the filing of the dilatory."28 Thus, the trial court, "far from deviating or straying off course
motion to dismiss was a mere ploy on the part of respondent to delay the
from established jurisprudence on the matter, x x x had in fact faithfully
prompt resolution of the case against her. observed the law and legal precedents in this case."29 The Court of Appeals,
Also worth mentioning is the fact that respondent’s motion to dismiss under therefore, erred not only in entertaining respondent’s petition for certiorari, it
consideration herein is not the first motion to dismiss she filed in the trial likewise erred in ruling that the trial court committed grave abuse of
court. It appears that she had filed an earlier motion to dismiss26 on the sole discretion when it denied respondent’s motion to dismiss.
ground of the unenforceability of petitioner’s claim under the Statute of On whether or not respondent is estopped from
Frauds, which motion was denied by the trial court. More telling is the questioning the jurisdiction of the trial court
following narration of the trial court in its Order denying respondent’s
motion for reconsideration of the denial of her motion to dismiss: At the outset, it must be here stated that, as the succeeding discussions will
demonstrate, jurisdiction over the person of Manuel should not be an issue in
As can be gleaned from the records, with the admission of plaintiff’s this case. A protracted discourse on jurisdiction is, nevertheless, demanded
exhibits, reception of defendants’ evidence was set on March 31, and April by the fact that jurisdiction has been raised as an issue from the lower court,
23, 2004 x x x . On motion of the defendants, the hearing on March 31, 2004 to the Court of Appeals and, finally, before this Court. For the sake of clarity,
was cancelled. and in order to finally settle the controversy and fully dispose of all the issues
in this case, it was deemed imperative to resolve the issue of jurisdiction.
1. Aspects of Jurisdiction courts or city courts and the then courts of first instance, and that the
judgment of the court of first instance, to which she had appealed the
Petitioner calls attention to the fact that respondent’s motion to dismiss municipal court's conviction, should be deemed null and void for want of
questioning the trial court’s jurisdiction was filed more than six years after jurisdiction as her appeal should have been filed with the Court of Appeals or
her amended answer was filed. According to petitioner, respondent had the Supreme Court.
several opportunities, at various stages of the proceedings, to assail the trial
court’s jurisdiction but never did so for six straight years. Citing the doctrine In all of these cases, the Supreme Court barred the attack on the jurisdiction
laid down in the case of Tijam, et al. v. Sibonghanoy, et al.30 petitioner of the respective courts concerned over the subject matter of the case based
claimed that respondent’s failure to raise the question of jurisdiction at an on estoppel by laches, declaring that parties cannot be allowed to belatedly
earlier stage bars her from later questioning it, especially since she actively adopt an inconsistent posture by attacking the jurisdiction of a court to which
participated in the proceedings conducted by the trial court. they submitted their cause voluntarily.35

Petitioner’s argument is misplaced, in that, it failed to consider that the Here, what respondent was questioning in her motion to dismiss before the
concept of jurisdiction has several aspects, namely: (1) jurisdiction over the trial court was that court’s jurisdiction over the person of defendant Manuel.
subject matter; (2) jurisdiction over the parties; (3) jurisdiction over the Thus, the principle of estoppel by laches finds no application in this case.
issues of the case; and (4) in cases involving property, jurisdiction over the Instead, the principles relating to jurisdiction over the person of the parties
res or the thing which is the subject of the litigation.31 are pertinent herein.

The aspect of jurisdiction which may be barred from being assailed as a The Rules of Court provide:
result of estoppel by laches is jurisdiction over the subject matter. Thus, in
Tijam, the case relied upon by petitioner, the issue involved was the authority RULE 9
of the then Court of First Instance to hear a case for the collection of a sum of EFFECT OF FAILURE TO PLEAD
money in the amount of ₱1,908.00 which amount was, at that time, within Section 1. Defenses and objections not pleaded. – Defenses and objections
the exclusive original jurisdiction of the municipal courts.
not pleaded either in a motion to dismiss or in the answer are deemed
In subsequent cases citing the ruling of the Court in Tijam, what was waived. However, when it appears from the pleadings or the evidence on
likewise at issue was the jurisdiction of the trial court over the subject matter record that the court has no jurisdiction over the subject matter, that there is
of the case. Accordingly, in Spouses Gonzaga v. Court of Appeals,32 the another action pending between the same parties for the same cause, or that
issue for consideration was the authority of the regional trial court to hear the action is barred by a prior judgment or by statute of limitations, the court
and decide an action for reformation of contract and damages involving a shall dismiss the claim.
subdivision lot, it being argued therein that jurisdiction is vested in the RULE 15
Housing and Land Use Regulatory Board pursuant to PD 957 (The
MOTIONS
Subdivision and Condominium Buyers Protective Decree). In Lee v.
Presiding Judge, MTC, Legaspi City,33 petitioners argued that the respondent Sec. 8. Omnibus motion. – Subject to the provisions of Section 1 of Rule 9, a
municipal trial court had no jurisdiction over the complaint for ejectment motion attacking a pleading, order, judgment, or proceeding shall include all
because the issue of ownership was raised in the pleadings. Finally, in People objections then available, and all objections not so included shall be deemed
v. Casuga,34 accused-appellant claimed that the crime of grave slander, of waived.
which she was charged, falls within the concurrent jurisdiction of municipal
Based on the foregoing provisions, the "objection on jurisdictional grounds In the case at bar, the trial court did not acquire jurisdiction over the person
which is not waived even if not alleged in a motion to dismiss or the answer of Manuel since there was no valid service of summons upon him, precisely
is lack of jurisdiction over the subject matter. x x x Lack of jurisdiction over because he was already dead even before the complaint against him and his
the subject matter can always be raised anytime, even for the first time on wife was filed in the trial court. The issues presented in this case are similar
appeal, since jurisdictional issues cannot be waived x x x subject, however, to those in the case of Sarsaba v. Vda. de Te.41
to the principle of estoppel by laches."36
In Sarsaba, the NLRC rendered a decision declaring that Patricio Sereno was
Since the defense of lack of jurisdiction over the person of a party to a case is illegally dismissed from employment and ordering the payment of his
not one of those defenses which are not deemed waived under Section 1 of monetary claims. To satisfy the claim, a truck in the possession of Sereno’s
Rule 9, such defense must be invoked when an answer or a motion to dismiss employer was levied upon by a sheriff of the NLRC, accompanied by Sereno
is filed in order to prevent a waiver of the defense.37 If the objection is not and his lawyer, Rogelio Sarsaba, the petitioner in that case. A complaint for
raised either in a motion to dismiss or in the answer, the objection to the recovery of motor vehicle and damages, with prayer for the delivery of the
jurisdiction over the person of the plaintiff or the defendant is deemed truck pendente lite was eventually filed against Sarsaba, Sereno, the NLRC
waived by virtue of the first sentence of the above-quoted Section 1 of Rule 9 sheriff and the NLRC by the registered owner of the truck. After his motion
of the Rules of Court.38 to dismiss was denied by the trial court, petitioner Sarsaba filed his answer.
Later on, however, he filed an omnibus motion to dismiss citing, as one of
The Court of Appeals, therefore, erred when it made a sweeping the grounds, lack of jurisdiction over one of the principal defendants, in view
pronouncement in its questioned decision, stating that "issue on jurisdiction of the fact that Sereno was already dead when the complaint for recovery of
may be raised at any stage of the proceeding, even for the first time on possession was filed.
appeal" and that, therefore, respondent timely raised the issue in her motion
to dismiss and is, consequently, not estopped from raising the question of Although the factual milieu of the present case is not exactly similar to that
jurisdiction. As the question of jurisdiction involved here is that over the of Sarsaba, one of the issues submitted for resolution in both cases is similar:
person of the defendant Manuel, the same is deemed waived if not raised in whether or not a case, where one of the named defendants was already dead
the answer or a motion to dismiss. In any case, respondent cannot claim the at the time of its filing, should be dismissed so that the claim may be pursued
defense since "lack of jurisdiction over the person, being subject to waiver, is instead in the proceedings for the settlement of the estate of the deceased
a personal defense which can only be asserted by the party who can thereby defendant. The petitioner in the Sarsaba Case claimed, as did respondent
waive it by silence."39 herein, that since one of the defendants died before summons was served on
him, the trial court should have dismissed the complaint against all the
2. Jurisdiction over the person of a defendant is acquired through a valid defendants and the claim should be filed against the estate of the deceased
service of summons; trial court did not acquire jurisdiction over the person of defendant. The petitioner in Sarsaba, therefore, prayed that the complaint be
Manuel Toledo dismissed, not only against Sereno, but as to all the defendants, considering
In the first place, jurisdiction over the person of Manuel was never acquired that the RTC did not acquire jurisdiction over the person of Sereno.42 This is
by the trial court. A defendant is informed of a case against him when he exactly the same prayer made by respondent herein in her motion to dismiss.
receives summons. "Summons is a writ by which the defendant is notified of The Court, in the Sarsaba Case, resolved the issue in this wise:
the action brought against him. Service of such writ is the means by which
the court acquires jurisdiction over his person."40 x x x We cannot countenance petitioner’s argument that the complaint
against the other defendants should have been dismissed, considering that the
RTC never acquired jurisdiction over the person of Sereno. The court’s absence there cannot be a determination between the parties already before
failure to acquire jurisdiction over one’s person is a defense which is the court which is effective, complete or equitable." Further, an indispensable
personal to the person claiming it. Obviously, it is now impossible for Sereno party is one who must be included in an action before it may properly
to invoke the same in view of his death. Neither can petitioner invoke such proceed.44
ground, on behalf of Sereno, so as to reap the benefit of having the case
dismissed against all of the defendants. Failure to serve summons on On the other hand, a "person is not an indispensable party if his interest in the
Sereno’s person will not be a cause for the dismissal of the complaint against controversy or subject matter is separable from the interest of the other
the other defendants, considering that they have been served with copies of parties, so that it will not necessarily be directly or injuriously affected by a
the summons and complaints and have long submitted their respective decree which does complete justice between them. Also, a person is not an
responsive pleadings. In fact, the other defendants in the complaint were indispensable party if his presence would merely permit complete relief
given the chance to raise all possible defenses and objections personal to between him or her and those already parties to the action, or if he or she has
them in their respective motions to dismiss and their subsequent no interest in the subject matter of the action." It is not a sufficient reason to
answers.43 (Emphasis supplied.) declare a person to be an indispensable party simply because his or her
presence will avoid multiple litigations.45
Hence, the Supreme Court affirmed the dismissal by the trial court of the
complaint against Sereno only. Applying the foregoing pronouncements to the case at bar, it is clear that the
estate of Manuel is not an indispensable party to the collection case, for the
Based on the foregoing pronouncements, there is no basis for dismissing the simple reason that the obligation of Manuel and his wife, respondent herein,
complaint against respondent herein. Thus, as already emphasized above, the is solidary.
trial court correctly denied her motion to dismiss.
The contract between petitioner, on the one hand and respondent and
On whether or not the estate of Manuel respondent’s husband, on the other, states:

Toledo is an indispensable party FOR VALUE RECEIVED, I/We jointly and severally46 (in solemn) promise
to pay BOSTON EQUITY RESOURCES, INC. x x x the sum of PESOS:
Rule 3, Section 7 of the 1997 Rules of Court states: [ONE MILLION FOUR HUNDRED (₱1,400,000.00)] x x x.47
SEC. 7. Compulsory joinder of indispensable parties. – Parties-in-interest The provisions and stipulations of the contract were then followed by the
without whom no final determination can be had of an action shall be joined respective signatures of respondent as "MAKER" and her husband as "CO-
either as plaintiffs or defendants. MAKER."48 Thus, pursuant to Article 1216 of the Civil Code, petitioner may
collect the entire amount of the obligation from respondent only. The
An indispensable party is one who has such an interest in the controversy or
subject matter of a case that a final adjudication cannot be made in his or her aforementioned provision states: "The creditor may proceed against any one
absence, without injuring or affecting that interest. He or she is a party who of the solidary debtors or some or all of them simultaneously. The demand
has not only an interest in the subject matter of the controversy, but "an made against one of them shall not be an obstacle to those which may
interest of such nature that a final decree cannot be made without affecting subsequently be directed against the others, so long as the debt has not been
fully collected."
that interest or leaving the controversy in such a condition that its final
determination may be wholly inconsistent with equity and good conscience. In other words, the collection case can proceed and the demands of petitioner
It has also been considered that an indispensable party is a person in whose can be satisfied by respondent only, even without impleading the estate of
Manuel. Consequently, the estate of Manuel is not an indispensable party to demand payment from the latter, could be entertained to the extent that
petitioner’s complaint for sum of money. failure to observe the same would deprive the court jurisdiction to take
cognizance of the action against the surviving debtors. Upon the other hand,
However, the Court of Appeals, agreeing with the contention of respondent, the Civil Code expressly allows the creditor to proceed against any one of the
held that the claim of petitioner should have been filed against the estate of solidary debtors or some or all of them simultaneously. There is, therefore,
Manuel in accordance with Sections 5 and 6 of Rule 86 of the Rules of nothing improper in the creditor’s filing of an action against the surviving
Court. The aforementioned provisions provide: solidary debtors alone, instead of instituting a proceeding for the settlement
SEC. 5. Claims which must be filed under the notice. If not filed, barred; of the estate of the deceased debtor wherein his claim could be filed.
exceptions. All claims for money against the decedent, arising from contract, The foregoing ruling was reiterated and expounded in the later case of
express or implied, whether the same be due, not due, or contingent, all Philippine National Bank v. Asuncion51where the Supreme Court
claims for funeral expenses and judgment for money against the decedent, pronounced:
must be filed within the time limited in the notice; otherwise, they are barred
forever, except that they may be set forth as counterclaims in any action that A cursory perusal of Section 6, Rule 86 of the Revised Rules of Court reveals
the executor or administrator may bring against the claimants. x x x. that nothing therein prevents a creditor from proceeding against the surviving
solidary debtors. Said provision merely sets up the procedure in enforcing
SEC. 6. Solidary obligation of decedent. Where the obligation of the collection in case a creditor chooses to pursue his claim against the estate of
decedent is solidary with another debtor, the claim shall be filed against the the deceased solidary debtor. The rule has been set forth that a creditor (in a
decedent as if he were the only debtor, without prejudice to the right of the solidary obligation) has the option whether to file or not to file a claim
estate to recover contribution from the other debtor. x x x. against the estate of the solidary debtor. x x x
The Court of Appeals erred in its interpretation of the above-quoted xxxx
provisions.
It is crystal clear that Article 1216 of the New Civil Code is the applicable
In construing Section 6, Rule 87 of the old Rules of Court, the precursor of provision in this matter. Said provision gives the creditor the right to
Section 6, Rule 86 of the Revised Rules of Court, which latter provision has "proceed against anyone of the solidary debtors or some or all of them
been retained in the present Rules of Court without any revisions, the simultaneously." The choice is undoubtedly left to the solidary creditor to
Supreme Court, in the case of Manila Surety & Fidelity Co., Inc. v. determine against whom he will enforce collection. In case of the death of
Villarama, et. al.,49 held:50 one of the solidary debtors, he (the creditor) may, if he so chooses, proceed
Construing Section 698 of the Code of Civil Procedure from whence [Section against the surviving solidary debtors without necessity of filing a claim in
6, Rule 87] was taken, this Court held that where two persons are bound in the estate of the deceased debtors. It is not mandatory for him to have the
case dismissed as against the surviving debtors and file its claim against the
solidum for the same debt and one of them dies, the whole indebtedness can
be proved against the estate of the latter, the decedent’s liability being estate of the deceased solidary debtor, x x x. For to require the creditor to
absolute and primary; x x x. It is evident from the foregoing that Section 6 of proceed against the estate, making it a condition precedent for any collection
Rule 87 provides the procedure should the creditor desire to go against the action against the surviving debtors to prosper, would deprive him of his
deceased debtor, but there is certainly nothing in the said provision making substantive rightsprovided by Article 1216 of the New Civil Code.
compliance with such procedure a condition precedent before an ordinary (Emphasis supplied.)
action against the surviving solidary debtors, should the creditor choose to
As correctly argued by petitioner, if Section 6, Rule 86 of the Revised Rules followed herein. There, the Supreme Court agreed with the trial court when it
of Court were applied literally, Article 1216 of the New Civil Code would, in resolved the issue of jurisdiction over the person of the deceased Sereno in
effect, be repealed since under the Rules of Court, petitioner has no choice this wise:
but to proceed against the estate of [the deceased debtor] only. Obviously,
this provision diminishes the [creditor’s] right under the New Civil Code to As correctly pointed by defendants, the Honorable Court has not acquired
proceed against any one, some or all of the solidary debtors. Such a jurisdiction over the person of Patricio Sereno since there was indeed no
construction is not sanctioned by principle, which is too well settled to valid service of summons insofar as Patricio Sereno is concerned. Patricio
require citation, that a substantive law cannot be amended by a procedural Sereno died before the summons, together with a copy of the complaint and
rule. Otherwise stated, Section 6, Rule 86 of the Revised Rules of Court its annexes, could be served upon him.
cannot be made to prevail over Article 1216 of the New Civil Code, the However, the failure to effect service of summons unto Patricio Sereno, one
former being merely procedural, while the latter, substantive.
of the defendants herein, does not render the action DISMISSIBLE,
Based on the foregoing, the estate of Manuel is not an indispensable party considering that the three (3) other defendants, x x x, were validly served
and the case can proceed as against respondent only. That petitioner opted to with summons and the case with respect to the answering defendants may
collect from respondent and not from the estate of Manuel is evidenced by its still proceed independently. Be it recalled that the three (3) answering
opposition to respondent’s motion to dismiss asserting that the case, as defendants have previously filed a Motion to Dismiss the Complaint which
against her, should be dismissed so that petitioner can proceed against the was denied by the Court.
estate of Manuel. Hence, only the case against Patricio Sereno will be DISMISSED and the
On whether or not the inclusion of Manuel as same may be filed as a claim against the estate of Patricio Sereno, but the
party defendant is a misjoinder of party case with respect to the three (3) other accused [sic] will proceed. (Emphasis
supplied.)53
Section 11 of Rule 3 of the Rules of Court states that "neither misjoinder nor
non-joinder of parties is ground for dismissal of an action. Parties may be As a result, the case, as against Manuel, must be dismissed.
dropped or added by order of the court on motion of any party or on its own In addition, the dismissal of the case against Manuel is further warranted by
initiative at any stage of the action and on such terms as are just. Any claim Section 1 of Rule 3 of the Rules of Court, which states that: only natural or
against a misjoined party may be severed and proceeded with separately." juridical persons, or entities authorized by law may be parties in a civil
Based on the last sentence of the afore-quoted provision of law, a misjoined action." Applying this provision of law, the Court, in the case of Ventura v.
party must have the capacity to sue or be sued in the event that the claim by Militante,54 held:
or against the misjoined party is pursued in a separate case. In this case, Parties may be either plaintiffs or defendants. x x x. In order to maintain an
therefore, the inclusion of Manuel in the complaint cannot be considered a
action in a court of justice, the plaintiff must have an actual legal existence,
misjoinder, as in fact, the action would have proceeded against him had he that is, he, she or it must be a person in law and possessed of a legal entity as
been alive at the time the collection case was filed by petitioner. This being either a natural or an artificial person, and no suit can be lawfully prosecuted
the case, the remedy provided by Section 11 of Rule 3 does not obtain here. save in the name of such a person.
The name of Manuel as party-defendant cannot simply be dropped from the
case. Instead, the procedure taken by the Court in Sarsaba v. Vda. de The rule is no different as regards party defendants. It is incumbent upon a
Te,52whose facts, as mentioned earlier, resemble those of this case, should be plaintiff, when he institutes a judicial proceeding, to name the proper party
defendant to his cause of action. In a suit or proceeding in personam of an The court shall forthwith order said legal representative or representatives to
adversary character, the court can acquire no jurisdiction for the purpose of appear and be substituted within a period of thirty (30) days from notice.
trial or judgment until a party defendant who actually or legally exists and is (Emphasis supplied.)
legally capable of being sued, is brought before it. It has even been held that
the question of the legal personality of a party defendant is a question of Here, since Manuel was already dead at the time of the filing of the
substance going to the jurisdiction of the court and not one of procedure. complaint, the court never acquired jurisdiction over his person and, in
effect, there was no party to be substituted.
The original complaint of petitioner named the "estate of Carlos Ngo as
represented by surviving spouse Ms. Sulpicia Ventura" as the WHEREFORE, the petition is GRANTED. The Decision dated 28 February
defendant.1âwphi1 Petitioner moved to dismiss the same on the ground that 2006 and the Resolution dated 1 August 2006 of the Court of Appeals in CA-
the defendant as named in the complaint had no legal personality. We agree. G.R. SP No. 88586 are REVERSED and SET ASIDE. The Orders of the
Regional Trial Court dated 8 November 2004 and 22 December 2004,
x x x. Considering that capacity to be sued is a correlative of the capacity to respectively, in Civil Case No. 97-86672, are REINSTATED. The Regional
sue, to the same extent, a decedent does not have the capacity to be sued and Trial Court, Branch 24, Manila is hereby DIRECTED to proceed with the
may not be named a party defendant in a court action. (Emphases supplied.) trial of Civil Case No. 97-86672 against respondent Lolita G. Toledo only, in
accordance with the above pronouncements of the Court, and to decide the
Indeed, where the defendant is neither a natural nor a juridical person or an case with dispatch.
entity authorized by law, the complaint may be dismissed on the ground that
the pleading asserting the claim states no cause of action or for failure to SO ORDERED.
state a cause of action pursuant to Section 1(g) of Rule 16 of the Rules of
Court, because a complaint cannot possibly state a cause of action against
one who cannot be a party to a civil action.55

Since the proper course of action against the wrongful inclusion of Manuel as
party-defendant is the dismissal of the case as against him, thus did the trial
court err when it ordered the substitution of Manuel by his heirs. Substitution
is proper only where the party to be substituted died during the pendency of
the case, as expressly provided for by Section 16, Rule 3 of the Rules of
Court, which states:

Death of party;duty of counsel. – Whenever a party to a pending action dies,


and the claim is not thereby extinguished, it shall be the duty of his counsel
to inform the court within thirty (30) days after such death of the fact thereof,
and to give the name and address of his legal representative or
representatives. x x x

The heirs of the deceased may be allowed to be substituted for the deceased,
without requiring the appointment of an executor or administrator x x x.
Republic of the Philippines cause against Secretary Enrile, he was no longer indicted because he died
SUPREME COURT prior to the issuance of the resolution finding probable cause.
Manila
Thus, in an Information dated January 13, 2005, respondent was charged
EN BANC before the SB as follows:

G.R. No. 168539 March 25, 2014 On or about July 12, 1997, or sometime prior or subsequent thereto, in Pasay
City, Metro Manila, Philippines and within the jurisdiction of this Honorable
PEOPLE OF THE PHILIPPINES, Petitioner, Court, the late ARTURO ENRILE, then Secretary of the Department of
vs. Transportation and Communications (DOTC), committing the offense in
HENRY T. GO, Respondent. relation to his office and taking advantage of the same, in conspiracy with
DECISION accused, HENRY T. GO, Chairman and President of the Philippine
International Air Terminals, Co., Inc. (PIATCO), did then and there,
PERALTA, J.: willfully, unlawfully and criminally enter into a Concession Agreement, after
the project for the construction of the Ninoy Aquino International Airport
Before the Court is a petition for review on certiorari assailing the International Passenger Terminal III (NAIA IPT III) was awarded to
Resolution1 of the Third Division2 of the Sandiganbayan (SB) dated June 2, Paircargo Consortium/PIATCO, which Concession Agreement substantially
2005 which quashed the Information filed against herein respondent for amended the draft Concession Agreement covering the construction of the
alleged violation of Section 3 (g) of Republic Act No. 3019 (R.A. 3019), NAIA IPT III under Republic Act 6957, as amended by Republic Act 7718
otherwise known as the Anti-Graft and Corrupt Practices Act. (BOT law), specifically the provision on Public Utility Revenues, as well as
the assumption by the government of the liabilities of PIATCO in the event
The Information filed against respondent is an offshoot of this Court's
of the latter's default under Article IV, Section 4.04 (b) and (c) in relation to
Decision3 in Agan, Jr. v. Philippine International Air Terminals Co., Inc.
Article 1.06 of the Concession Agreement, which terms are more beneficial
which nullified the various contracts awarded by the Government, through
to PIATCO while manifestly and grossly disadvantageous to the government
the Department of Transportation and Communications (DOTC), to
of the Republic of the Philippines.4
Philippine Air Terminals, Co., Inc. (PIATCO) for the construction, operation
and maintenance of the Ninoy Aquino International Airport International The case was docketed as Criminal Case No. 28090.
Passenger Terminal III (NAIA IPT III). Subsequent to the above Decision, a
certain Ma. Cecilia L. Pesayco filed a complaint with the Office of the On March 10, 2005, the SB issued an Order, to wit:
Ombudsman against several individuals for alleged violation of R.A. 3019.
The prosecution is given a period of ten (10) days from today within which
Among those charged was herein respondent, who was then the Chairman
and President of PIATCO, for having supposedly conspired with then DOTC to show cause why this case should not be dismissed for lack of jurisdiction
Secretary Arturo Enrile (Secretary Enrile) in entering into a contract which is over the person of the accused considering that the accused is a private
grossly and manifestly disadvantageous to the government. person and the public official Arturo Enrile, his alleged co-conspirator, is
already deceased, and not an accused in this case.5
On September 16, 2004, the Office of the Deputy Ombudsman for Luzon
found probable cause to indict, among others, herein respondent for violation The prosecution complied with the above Order contending that the SB has
of Section 3(g) of R.A. 3019. While there was likewise a finding of probable already acquired jurisdiction over the person of respondent by reason of his
voluntary appearance, when he filed a motion for consolidation and when he
posted bail. The prosecution also argued that the SB has exclusive ACCORD WITH LAW OR APPLICABLE JURISPRUDENCE, IN
jurisdiction over respondent's case, even if he is a private person, because he RULING THAT IT HAS NO JURISDICTION OVER THE PERSON OF
was alleged to have conspired with a public officer.6 RESPONDENT GO DESPITE THE IRREFUTABLE FACT THAT HE
HAS ALREADY POSTED BAIL FOR HIS PROVISIONAL LIBERTY
On April 28, 2005, respondent filed a Motion to Quash7 the Information filed
against him on the ground that the operative facts adduced therein do not III
constitute an offense under Section 3(g) of R.A. 3019. Respondent, citing the
show cause order of the SB, also contended that, independently of the WHETHER OR NOT THE COURT A QUO GRAVELY ERRED WHEN,
deceased Secretary Enrile, the public officer with whom he was alleged to IN COMPLETE DISREGARD OF THE EQUAL PROTECTION CLAUSE
have conspired, respondent, who is not a public officer nor was capacitated OF THE CONSTITUTION, IT QUASHED THE INFORMATION AND
by any official authority as a government agent, may not be prosecuted for DISMISSED CRIMINAL CASE NO. 2809010
violation of Section 3(g) of R.A. 3019. The Court finds the petition meritorious.
The prosecution filed its Opposition.8 Section 3 (g) of R.A. 3019 provides:
On June 2, 2005, the SB issued its assailed Resolution, pertinent portions of Sec. 3. Corrupt practices of public officers. – In addition to acts or omissions
which read thus: of public officers already penalized by existing law, the following shall
Acting on the Motion to Quash filed by accused Henry T. Go dated April 22, constitute corrupt practices of any public officer and are hereby declared to
2005, and it appearing that Henry T. Go, the lone accused in this case is a be unlawful:
private person and his alleged co-conspirator-public official was already xxxx
deceased long before this case was filed in court, for lack of jurisdiction over
the person of the accused, the Court grants the Motion to Quash and the (g) Entering, on behalf of the Government, into any contract or transaction
Information filed in this case is hereby ordered quashed and dismissed.9 manifestly and grossly disadvantageous to the same, whether or not the
public officer profited or will profit thereby.
Hence, the instant petition raising the following issues, to wit:
The elements of the above provision are:
I
(1) that the accused is a public officer;
WHETHER OR NOT THE COURT A QUO GRAVELY ERRED AND
DECIDED A QUESTION OF SUBSTANCE IN A MANNER NOT IN (2) that he entered into a contract or transaction on behalf of the government;
ACCORD WITH LAW OR APPLICABLE JURISPRUDENCE IN and
GRANTING THE DEMURRER TO EVIDENCE AND IN DISMISSING
CRIMINAL CASE NO. 28090 ON THE GROUND THAT IT HAS NO (3) that such contract or transaction is grossly and manifestly
JURISDICTION OVER THE PERSON OF RESPONDENT GO. disadvantageous to the government.11

II At the outset, it bears to reiterate the settled rule that private persons, when
acting in conspiracy with public officers, may be indicted and, if found
WHETHER OR NOT THE COURT A QUO GRAVELY ERRED AND guilty, held liable for the pertinent offenses under Section 3 of R.A. 3019, in
DECIDED A QUESTION OF SUBSTANCE IN A MANNER NOT IN consonance with the avowed policy of the anti-graft law to repress certain
acts of public officers and private persons alike constituting graft or corrupt by any of them pursuant to the agreement is, in contemplation of law, the act
practices act or which may lead thereto.12 This is the controlling doctrine as of each of them and they are jointly responsible therefor.16 This means that
enunciated by this Court in previous cases, among which is a case involving everything said, written or done by any of the conspirators in execution or
herein private respondent.13 furtherance of the common purpose is deemed to have been said, done, or
written by each of them and it makes no difference whether the actual actor
The only question that needs to be settled in the present petition is whether is alive or dead, sane or insane at the time of trial.17 The death of one of two
herein respondent, a private person, may be indicted for conspiracy in or more conspirators does not prevent the conviction of the survivor or
violating Section 3(g) of R.A. 3019 even if the public officer, with whom he survivors.18 Thus, this Court held that:
was alleged to have conspired, has died prior to the filing of the Information.
x x x [a] conspiracy is in its nature a joint offense. One person cannot
Respondent contends that by reason of the death of Secretary Enrile, there is conspire alone. The crime depends upon the joint act or intent of two or more
no public officer who was charged in the Information and, as such, persons. Yet, it does not follow that one person cannot be convicted of
prosecution against respondent may not prosper. conspiracy. So long as the acquittal or death of a co-conspirator does not
The Court is not persuaded. remove the bases of a charge for conspiracy, one defendant may be found
guilty of the offense.19
It is true that by reason of Secretary Enrile's death, there is no longer any
public officer with whom respondent can be charged for violation of R.A. The Court agrees with petitioner's contention that, as alleged in the
3019. It does not mean, however, that the allegation of conspiracy between Information filed against respondent, which is deemed hypothetically
them can no longer be proved or that their alleged conspiracy is already admitted in the latter's Motion to Quash, he (respondent) conspired with
Secretary Enrile in violating Section 3 (g) of R.A. 3019 and that in
expunged. The only thing extinguished by the death of Secretary Enrile is his
criminal liability. His death did not extinguish the crime nor did it remove conspiracy, the act of one is the act of all. Hence, the criminal liability
the basis of the charge of conspiracy between him and private respondent. incurred by a co-conspirator is also incurred by the other co-conspirators.
Stated differently, the death of Secretary Enrile does not mean that there was Moreover, the Court agrees with petitioner that the avowed policy of the
no public officer who allegedly violated Section 3 (g) of R.A. 3019. In fact, State and the legislative intent to repress "acts of public officers and private
the Office of the Deputy Ombudsman for Luzon found probable cause to persons alike, which constitute graft or corrupt practices,"20 would be
indict Secretary Enrile for infringement of Sections 3 (e) and (g) of R.A. frustrated if the death of a public officer would bar the prosecution of a
3019.14 Were it not for his death, he should have been charged. private person who conspired with such public officer in violating the Anti-
The requirement before a private person may be indicted for violation of Graft Law.
Section 3(g) of R.A. 3019, among others, is that such private person must be In this regard, this Court's disquisition in the early case of People v.
alleged to have acted in conspiracy with a public officer. The law, however, Peralta21 as to the nature of and the principles governing conspiracy, as
does not require that such person must, in all instances, be indicted together construed under Philippine jurisdiction, is instructive, to wit:
with the public officer. If circumstances exist where the public officer may
no longer be charged in court, as in the present case where the public officer x x x A conspiracy exists when two or more persons come to an agreement
has already died, the private person may be indicted alone. concerning the commission of a felony and decide to commit it. Generally,
conspiracy is not a crime except when the law specifically provides a penalty
Indeed, it is not necessary to join all alleged co-conspirators in an indictment therefor as in treason, rebellion and sedition. The crime of conspiracy known
for conspiracy.15 If two or more persons enter into a conspiracy, any act done
to the common law is not an indictable offense in the Philippines. An accused, be regarded as the act of the band or party created by them, and they
agreement to commit a crime is a reprehensible act from the view-point of are all equally responsible x x x
morality, but as long as the conspirators do not perform overt acts in
furtherance of their malevolent design, the sovereignty of the State is not Verily, the moment it is established that the malefactors conspired and
outraged and the tranquility of the public remains undisturbed. confederated in the commission of the felony proved, collective liability of
the accused conspirators attaches by reason of the conspiracy, and the court
However, when in resolute execution of a common scheme, a felony is shall not speculate nor even investigate as to the actual degree of
committed by two or more malefactors, the existence of a conspiracy participation of each of the perpetrators present at the scene of the crime. Of
assumes pivotal importance in the determination of the liability of the course, as to any conspirator who was remote from the situs of aggression, he
perpetrators. In stressing the significance of conspiracy in criminal law, this could be drawn within the enveloping ambit of the conspiracy if it be proved
Court in U.S. vs. Infante and Barreto opined that that through his moral ascendancy over the rest of the conspirators the latter
were moved or impelled to carry out the conspiracy.
While it is true that the penalties cannot be imposed for the mere act of
conspiring to commit a crime unless the statute specifically prescribes a In fine, the convergence of the wills of the conspirators in the scheming and
penalty therefor, nevertheless the existence of a conspiracy to commit a execution of the crime amply justifies the imputation to all of them the act of
crime is in many cases a fact of vital importance, when considered together any one of them. It is in this light that conspiracy is generally viewed not as a
with the other evidence of record, in establishing the existence, of the separate indictable offense, but a rule for collectivizing criminal liability.
consummated crime and its commission by the conspirators.
xxxx
Once an express or implied conspiracy is proved, all of the conspirators are
liable as co-principals regardless of the extent and character of their x x x A time-honored rule in the corpus of our jurisprudence is that once
respective active participation in the commission of the crime or crimes conspiracy is proved, all of the conspirators who acted in furtherance of the
perpetrated in furtherance of the conspiracy because in contemplation of law common design are liable as co-principals. This rule of collective criminal
the act of one is the act of all. The foregoing rule is anchored on the sound liability emanates from the ensnaring nature of conspiracy. The concerted
principle that "when two or more persons unite to accomplish a criminal action of the conspirators in consummating their common purpose is a patent
object, whether through the physical volition of one, or all, proceeding display of their evil partnership, and for the consequences of such criminal
severally or collectively, each individual whose evil will actively contributes enterprise they must be held solidarily liable.22
to the wrong-doing is in law responsible for the whole, the same as though This is not to say, however, that private respondent should be found guilty of
performed by himself alone." Although it is axiomatic that no one is liable conspiring with Secretary Enrile. It is settled that the absence or presence of
for acts other than his own, "when two or more persons agree or conspire to conspiracy is factual in nature and involves evidentiary matters.23 Hence, the
commit a crime, each is responsible for all the acts of the others, done in allegation of conspiracy against respondent is better left ventilated before the
furtherance of the agreement or conspiracy." The imposition of collective trial court during trial, where respondent can adduce evidence to prove or
liability upon the conspirators is clearly explained in one case where this disprove its presence.
Court held that x x x it is impossible to graduate the separate liability of each
(conspirator) without taking into consideration the close and inseparable Respondent claims in his Manifestation and Motion24 as well as in his Urgent
relation of each of them with the criminal act, for the commission of which Motion to Resolve25 that in a different case, he was likewise indicted before
they all acted by common agreement x x x. The crime must therefore in view the SB for conspiracy with the late Secretary Enrile in violating the same
of the solidarity of the act and intent which existed between the x x x Section 3 (g) of R.A. 3019 by allegedly entering into another agreement
(Side Agreement) which is separate from the Concession Agreement subject objecting to the jurisdiction of the court; otherwise, he shall be deemed to
of the present case. The case was docketed as Criminal Case No. 28091. have submitted himself to that jurisdiction."
Here, the SB, through a Resolution, granted respondent's motion to quash the
Information on the ground that the SB has no jurisdiction over the person of Moreover, "[w]here the appearance is by motion for the purpose of objecting
respondent. The prosecution questioned the said SB Resolution before this to the jurisdiction of the court over the person, it must be for the sole and
Court via a petition for review on certiorari. The petition was docketed as separate purpose of objecting to said jurisdiction. If the appearance is for any
G.R. No. 168919. In a minute resolution dated August 31, 2005, this Court other purpose, the defendant is deemed to have submitted himself to the
denied the petition finding no reversible error on the part of the SB. This jurisdiction of the court. Such an appearance gives the court jurisdiction over
Resolution became final and executory on January 11, 2006. Respondent the person."
now argues that this Court's resolution in G.R. No. 168919 should be applied Verily, petitioner’s participation in the proceedings before the
in the instant case.
Sandiganbayan was not confined to his opposition to the issuance of a
The Court does not agree. Respondent should be reminded that prior to this warrant of arrest but also covered other matters which called for respondent
Court's ruling in G.R. No. 168919, he already posted bail for his provisional court’s exercise of its jurisdiction. Petitioner may not be heard now to deny
liberty. In fact, he even filed a Motion for Consolidation26 in Criminal Case said court’s jurisdiction over him. x x x.28
No. 28091. The Court agrees with petitioner's contention that private In the instant case, respondent did not make any special appearance to
respondent's act of posting bail and filing his Motion for Consolidation vests question the jurisdiction of the SB over his person prior to his posting of bail
the SB with jurisdiction over his person. The rule is well settled that the act and filing his Motion for Consolidation. In fact, his Motion to Quash the
of an accused in posting bail or in filing motions seeking affirmative relief is Information in Criminal Case No. 28090 only came after the SB issued an
tantamount to submission of his person to the jurisdiction of the court.27
Order requiring the prosecution to show cause why the case should not be
Thus, it has been held that: dismissed for lack of jurisdiction over his person.

When a defendant in a criminal case is brought before a competent court by As a recapitulation, it would not be amiss to point out that the instant case
virtue of a warrant of arrest or otherwise, in order to avoid the submission of involves a contract entered into by public officers representing the
his body to the jurisdiction of the court he must raise the question of the government. More importantly, the SB is a special criminal court which has
court’s jurisdiction over his person at the very earliest opportunity. If he exclusive original jurisdiction in all cases involving violations of R.A. 3019
gives bail, demurs to the complaint or files any dilatory plea or pleads to the committed by certain public officers, as enumerated in P.D. 1606 as amended
merits, he thereby gives the court jurisdiction over his person. (State ex rel. by R.A. 8249. This includes private individuals who are charged as co-
John Brown vs. Fitzgerald, 51 Minn., 534) principals, accomplices or accessories with the said public officers. In the
instant case, respondent is being charged for violation of Section 3(g) of R.A.
xxxx 3019, in conspiracy with then Secretary Enrile. Ideally, under the law, both
respondent and Secretary Enrile should have been charged before and tried
As ruled in La Naval Drug vs. CA [236 SCRA 78, 86]: jointly by the Sandiganbayan. However, by reason of the death of the latter,
"[L]ack of jurisdiction over the person of the defendant may be waived either this can no longer be done. Nonetheless, for reasons already discussed, it
expressly or impliedly. When a defendant voluntarily appears, he is deemed does not follow that the SB is already divested of its jurisdiction over the
to have submitted himself to the jurisdiction of the court. If he so wishes not person of and the case involving herein respondent. To rule otherwise would
to waive this defense, he must do so seasonably by motion for the purpose of mean that the power of a court to decide a case would no longer be based on
the law defining its jurisdiction but on other factors, such as the death of one
of the alleged offenders.

Lastly, the issues raised in the present petition involve matters which are
mere incidents in the main case and the main case has already been pending
for over nine (9) years. Thus, a referral of the case to the Regional Trial
Court would further delay the resolution of the main case and it would, by no
means, promote respondent's right to a speedy trial and a speedy disposition
of his case.

WHEREFORE, the petition is GRANTED. The Resolution of the


Sandiganbayan dated June 2, 2005, granting respondent's Motion to Quash,
is hereby REVERSED and SET ASIDE. The Sandiganbayan is forthwith
DIRECTED to proceed with deliberate dispatch in the disposition of
Criminal Case No. 28090.

SO ORDERED.
Republic of the Philippines covered the local business taxes petitioners were authorized to collect under
SUPREME COURT Section 21 of the same Code. Because payment of the taxes assessed was a
Manila precondition for the issuance of their business permits, private respondents
were constrained to pay the ₱19,316,458.77 assessment under protest.
EN BANC
On January 24, 2004, private respondents filed [with the Regional Trial
G.R. No. 175723 February 4, 2014 Court of Pasay City] the complaint denominated as one for "Refund or
Recovery of Illegally and/or Erroneously-Collected Local Business Tax,
THE CITY OF MANILA, represented by MAYOR JOSE L. ATIENZA,
Prohibition with Prayer to Issue TRO and Writ of Preliminary Injunction"
JR., and MS. LIBERTY M. TOLEDO, in her capacity as the City
Treasurer of Manila, Petitioners, which was docketed as Civil Case No. 04-0019-CFM before public
vs. respondent's sala [at Branch 112]. In the amended complaint they filed on
HON. CARIDAD H. GRECIA-CUERDO, in her capacity as Presiding February 16, 2004, private respondents alleged that, in relation to Section 21
Judge of the Regional Trial Court, Branch 112, Pasay City; SM MART, thereof, Sections 14, 15, 16, 17, 18, 19 and 20 of the RRCM were violative
INC.; SM PRIME HOLDINGS, INC.; STAR APPLIANCES CENTER; of the limitations and guidelines under Section 143 (h) of Republic Act. No.
SUPERVALUE, INC.; ACE HARDWARE PHILIPPINES, INC.; 7160 [Local Government Code] on double taxation. They further averred that
WATSON PERSONAL CARE STORES, PHILS., INC.; JOLLIMART petitioner city's Ordinance No. 8011 which amended pertinent portions of the
PHILS., CORP.; SURPLUS MARKETING CORPORATION and RRCM had already been declared to be illegal and unconstitutional by the
SIGNATURE LINES, Respondents. Department of Justice.2
DECISION In its Order3 dated July 9, 2004, the RTC granted private respondents'
application for a writ of preliminary injunction.
PERALTA, J.:

Before the Court is a special civil action for certiorari under Rule 65 of the Petitioners filed a Motion for Reconsideration4 but the RTC denied it in its
Rules of Court seeking to reverse and set aside the Resolutions1 dated April Order5 dated October 15, 2004.
6, 2006 and November 29, 2006 of the Court of Appeals (CA) in CA-G.R. Petitioners then filed a special civil action for certiorari with the CA assailing
SP No. 87948. the July 9, 2004 and October 15, 2004 Orders of the RTC.6
The antecedents of the case, as summarized by the CA, are as follows: In its Resolution promulgated on April 6, 2006, the CA dismissed petitioners'
The record shows that petitioner City of Manila, through its treasurer, petition for certiorari holding that it has no jurisdiction over the said petition.
petitioner Liberty Toledo, assessed taxes for the taxable period from January The CA ruled that since appellate jurisdiction over private respondents'
to December 2002 against private respondents SM Mart, Inc., SM Prime complaint for tax refund, which was filed with the RTC, is vested in the
Holdings, Inc., Star Appliances Center, Supervalue, Inc., Ace Hardware Court of Tax Appeals (CTA), pursuant to its expanded jurisdiction under
Philippines, Inc., Watsons Personal Care Stores Phils., Inc., Jollimart Republic Act No. 9282 (RA 9282), it follows that a petition for certiorari
Philippines Corp., Surplus Marketing Corp. and Signature Lines. In addition seeking nullification of an interlocutory order issued in the said case should,
to the taxes purportedly due from private respondents pursuant to Section 14, likewise, be filed with the CTA.
15, 16, 17 of the Revised Revenue Code of Manila (RRCM), said assessment
Petitioners filed a Motion for Reconsideration,7 but the CA denied it in its To plaintiff SM Mart, Inc. - P 11,462,525.02
Resolution dated November 29, 2006.

Hence, the present petition raising the following issues: To plaintiff SM Prime Holdings, Inc. - 3,118,104.63

I- Whether or not the Honorable Court of Appeals gravely erred in


To plaintiff Star Appliances Center - 2,152,316.54
dismissing the case for lack of jurisdiction.

II- Whether or not the Honorable Regional Trial Court gravely abuse[d] its To plaintiff Supervalue, Inc. - 1,362,750.34
discretion amounting to lack or excess of jurisdiction in enjoining by issuing
a Writ of Injunction the petitioners, their agents and/or authorized
To plaintiff Ace Hardware Phils., Inc. - 419,689.04
representatives from implementing Section 21 of the Revised Revenue Code
of Manila, as amended, against private respondents.
To plaintiff Watsons Personal Care Health - 231,453.62
III- Whether or not the Honorable Regional Trial Court gravely abuse[d] its
discretion amounting to lack or excess of jurisdiction in issuing the Writ of
Stores Phils., Inc.
Injunction despite failure of private respondents to make a written claim for
tax credit or refund with the City Treasurer of Manila.
To plaintiff Jollimart Phils., Corp. - 140,908.54
IV- Whether or not the Honorable Regional Trial Court gravely abuse[d] its
discretion amounting to lack or excess of jurisdiction considering that under To plaintiff Surplus Marketing Corp. - 220,204.70
Section 21 of the Manila Revenue Code, as amended, they are mere
collecting agents of the City Government.
To plaintiff Signature Mktg. Corp. - 94,906.34
V- Whether or not the Honorable Regional Trial Court gravely abuse[d] its
discretion amounting to lack or excess of jurisdiction in issuing the Writ of TOTAL: - P 19,316,458.77
Injunction because petitioner City of Manila and its constituents would result
to greater damage and prejudice thereof. (sic)8 Defendants are further enjoined from collecting taxes under Section 21,
Without first resolving the above issues, this Court finds that the instant Revenue Code of Manila from herein plaintiff.
petition should be denied for being moot and academic. SO ORDERED.10
Upon perusal of the original records of the instant case, this Court discovered The parties did not inform the Court but based on the records, the above
that a Decision9 in the main case had already been rendered by the RTC on Decision had already become final and executory per the Certificate of
August 13, 2007, the dispositive portion of which reads as follows: Finality11 issued by the same trial court on October 20, 2008. In fact, a Writ
WHEREFORE, in view of the foregoing, this Court hereby renders of Execution12 was issued by the RTC on November 25, 2009. In view of the
JUDGMENT in favor of the plaintiff and against the defendant to grant a tax foregoing, it clearly appears that the issues raised in the present petition,
refund or credit for taxes paid pursuant to Section 21 of the Revenue Code of which merely involve the incident on the preliminary injunction issued by the
the City of Manila as amended for the year 2002 in the following amounts: RTC, have already become moot and academic considering that the trial
court, in its decision on the merits in the main case, has already ruled in favor which to file a petition for review on certiorari; (2) when errors of judgment
of respondents and that the same decision is now final and executory. Well are averred; and (3) when there is sufficient reason to justify the relaxation of
entrenched is the rule that where the issues have become moot and academic, the rules.18 Considering that the present petition was filed within the 15-day
there is no justiciable controversy, thereby rendering the resolution of the reglementary period for filing a petition for review on certiorari under Rule
same of no practical use or value.13 45, that an error of judgment is averred, and because of the significance of
the issue on jurisdiction, the Court deems it proper and justified to relax the
In any case, the Court finds it necessary to resolve the issue on jurisdiction rules and, thus, treat the instant petition for certiorari as a petition for review
raised by petitioners owing to its significance and for future guidance of both on certiorari.
bench and bar. It is a settled principle that courts will decide a question
otherwise moot and academic if it is capable of repetition, yet evading Having disposed of the procedural aspect, we now turn to the central issue in
review.14 this case. The basic question posed before this Court is whether or not the
CTA has jurisdiction over a special civil action for certiorari assailing an
However, before proceeding, to resolve the question on jurisdiction, the interlocutory order issued by the RTC in a local tax case.
Court deems it proper to likewise address a procedural error which
petitioners committed. This Court rules in the affirmative.

Petitioners availed of the wrong remedy when they filed the instant special On June 16, 1954, Congress enacted Republic Act No. 1125 (RA 1125)
civil action for certiorari under Rule 65 of the Rules of Court in assailing the creating the CTA and giving to the said court jurisdiction over the following:
Resolutions of the CA which dismissed their petition filed with the said court
and their motion for reconsideration of such dismissal. There is no dispute (1) Decisions of the Collector of Internal Revenue in cases involving
that the assailed Resolutions of the CA are in the nature of a final order as disputed assessments, refunds of internal revenue taxes, fees or other
they disposed of the petition completely. It is settled that in cases where an charges, penalties imposed in relation thereto, or other matters arising under
assailed judgment or order is considered final, the remedy of the aggrieved the National Internal Revenue Code or other law or part of law administered
party is appeal. Hence, in the instant case, petitioner should have filed a by the Bureau of Internal Revenue;
petition for review on certiorari under Rule 45, which is a continuation of the (2) Decisions of the Commissioner of Customs in cases involving liability for
appellate process over the original case.15 customs duties, fees or other money charges; seizure, detention or release of
Petitioners should be reminded of the equally-settled rule that a special civil property affected fines, forfeitures or other penalties imposed in relation
action for certiorari under Rule 65 is an original or independent action based thereto; or other matters arising under the Customs Law or other law or part
on grave abuse of discretion amounting to lack or excess of jurisdiction and it of law administered by the Bureau of Customs; and
will lie only if there is no appeal or any other plain, speedy, and adequate (3) Decisions of provincial or City Boards of Assessment Appeals in cases
remedy in the ordinary course of law.16 As such, it cannot be a substitute for
involving the assessment and taxation of real property or other matters
a lost appeal.17 arising under the Assessment Law, including rules and regulations relative
Nonetheless, in accordance with the liberal spirit pervading the Rules of thereto.
Court and in the interest of substantial justice, this Court has, before, treated
On March 30, 2004, the Legislature passed into law Republic Act No. 9282
a petition for certiorari as a petition for review on certiorari, particularly (1) (RA 9282) amending RA 1125 by expanding the jurisdiction of the CTA,
if the petition for certiorari was filed within the reglementary period within enlarging its membership and elevating its rank to the level of a collegiate
court with special jurisdiction. Pertinent portions of the amendatory act 7. Decisions of the Secretary of Trade and Industry, in the case of
provides thus: nonagricultural product, commodity or article, and the Secretary of
Agriculture in the case of agricultural product, commodity or article,
Sec. 7. Jurisdiction. - The CTA shall exercise: involving dumping and countervailing duties under Section 301 and 302,
a. Exclusive appellate jurisdiction to review by appeal, as herein provided: respectively, of the Tariff and Customs Code, and safeguard measures under
Republic Act No. 8800, where either party may appeal the decision to
1. Decisions of the Commissioner of Internal Revenue in cases involving impose or not to impose said duties.
disputed assessments, refunds of internal revenue taxes, fees or other
charges, penalties in relation thereto, or other matters arising under the b. Jurisdiction over cases involving criminal offenses as herein provided:
National Internal Revenue or other laws administered by the Bureau of 1. Exclusive original jurisdiction over all criminal offenses arising from
Internal Revenue; violations of the National Internal Revenue Code or Tariff and Customs
2. Inaction by the Commissioner of Internal Revenue in cases involving Code and other laws administered by the Bureau of Internal Revenue or the
disputed assessments, refunds of internal revenue taxes, fees or other Bureau of Customs: Provided, however, That offenses or felonies mentioned
charges, penalties in relations thereto, or other matters arising under the in this paragraph where the principal amount of taxes and fees, exclusive of
National Internal Revenue Code or other laws administered by the Bureau of charges and penalties, claimed is less than One million pesos
Internal Revenue, where the National Internal Revenue Code provides a (₱1,000,000.00) or where there is no specified amount claimed shall be tried
specific period of action, in which case the inaction shall be deemed a denial; by the regular Courts and the jurisdiction of the CTA shall be appellate. Any
provision of law or the Rules of Court to the contrary notwithstanding, the
3. Decisions, orders or resolutions of the Regional Trial Courts in local tax criminal action and the corresponding civil action for the recovery of civil
cases originally decided or resolved by them in the exercise of their original liability for taxes and penalties shall at all times be simultaneously instituted
or appellate jurisdiction; with, and jointly determined in the same proceeding by the CTA, the filing of
the criminal action being deemed to necessarily carry with it the filing of the
4. Decisions of the Commissioner of Customs in cases involving liability for civil action, and no right to reserve the filing of such civil action separately
customs duties, fees or other money charges, seizure, detention or release of from the criminal action will be recognized.
property affected, fines, forfeitures or other penalties in relation thereto, or
other matters arising under the Customs Law or other laws administered by 2. Exclusive appellate jurisdiction in criminal offenses:
the Bureau of Customs;
a. Over appeals from the judgments, resolutions or orders of the Regional
5. Decisions of the Central Board of Assessment Appeals in the exercise of Trial Courts in tax cases originally decided by them, in their respected
its appellate jurisdiction over cases involving the assessment and taxation of territorial jurisdiction.
real property originally decided by the provincial or city board of assessment
appeals; b. Over petitions for review of the judgments, resolutions or orders of the
Regional Trial Courts in the exercise of their appellate jurisdiction over tax
6. Decisions of the Secretary of Finance on customs cases elevated to him cases originally decided by the Metropolitan Trial Courts, Municipal Trial
automatically for review from decisions of the Commissioner of Customs Courts and Municipal Circuit Trial Courts in their respective jurisdiction.
which are adverse to the Government under Section 2315 of the Tariff and
Customs Code; c. Jurisdiction over tax collection cases as herein provided:
1. Exclusive original jurisdiction in tax collection cases involving final and not to regular courts but to tribunals exercising quasi-judicial powers. With
executory assessments for taxes, fees, charges and penalties: Provides, respect to the Sandiganbayan, Republic Act No. 824928 now provides that the
however, that collection cases where the principal amount of taxes and fees, special criminal court has exclusive original jurisdiction over petitions for the
exclusive of charges and penalties, claimed is less than One million pesos issuance of the writs of mandamus, prohibition, certiorari, habeas corpus,
(₱1,000,000.00) shall be tried by the proper Municipal Trial Court, injunctions, and other ancillary writs and processes in aid of its appellate
Metropolitan Trial Court and Regional Trial Court. jurisdiction.

2. Exclusive appellate jurisdiction in tax collection cases: In the same manner, Section 5 (1), Article VIII of the 1987 Constitution
grants power to the Supreme Court, in the exercise of its original jurisdiction,
a. Over appeals from the judgments, resolutions or orders of the Regional to issue writs of certiorari, prohibition and mandamus. With respect to the
Trial Courts in tax collection cases originally decided by them, in their Court of Appeals, Section 9 (1) of Batas Pambansa Blg. 129 (BP 129) gives
respective territorial jurisdiction. the appellate court, also in the exercise of its original jurisdiction, the power
b. Over petitions for review of the judgments, resolutions or orders of the to issue, among others, a writ of certiorari,whether or not in aid of its
Regional Trial Courts in the Exercise of their appellate jurisdiction over tax appellate jurisdiction. As to Regional Trial Courts, the power to issue a writ
collection cases originally decided by the Metropolitan Trial Courts, of certiorari, in the exercise of their original jurisdiction, is provided under
Municipal Trial Courts and Municipal Circuit Trial Courts, in their respective Section 21 of BP 129.
jurisdiction.19 The foregoing notwithstanding, while there is no express grant of such
A perusal of the above provisions would show that, while it is clearly stated power, with respect to the CTA, Section 1, Article VIII of the 1987
Constitution provides, nonetheless, that judicial power shall be vested in one
that the CTA has exclusive appellate jurisdiction over decisions, orders or
resolutions of the RTCs in local tax cases originally decided or resolved by Supreme Court and in such lower courts as may be established by law and
them in the exercise of their original or appellate jurisdiction, there is no that judicial power includes the duty of the courts of justice to settle actual
controversies involving rights which are legally demandable and enforceable,
categorical statement under RA 1125 as well as the amendatory RA 9282,
which provides that th e CTA has jurisdiction over petitions for certiorari and to determine whether or not there has been a grave abuse of discretion
assailing interlocutory orders issued by the RTC in local tax cases filed amounting to lack or excess of jurisdiction on the part of any branch or
before it. instrumentality of the Government.

The prevailing doctrine is that the authority to issue writs of certiorari On the strength of the above constitutional provisions, it can be fairly
involves the exercise of original jurisdiction which must be expressly interpreted that the power of the CTA includes that of determining whether
conferred by the Constitution or by law and cannot be implied from the mere or not there has been grave abuse of discretion amounting to lack or excess
existence of appellate jurisdiction.20 Thus, in the cases of Pimentel v. of jurisdiction on the part of the RTC in issuing an interlocutory order in
COMELEC,21 Garcia v. De Jesus,22 Veloria v. COMELEC,23Department of cases falling within the exclusive appellate jurisdiction of the tax court. It,
Agrarian Reform Adjudication Board v. Lubrica,24 and Garcia v. thus, follows that the CTA, by constitutional mandate, is vested with
Sandiganbayan,25 this Court has ruled against the jurisdiction of courts or jurisdiction to issue writs of certiorari in these cases.
tribunals over petitions for certiorari on the ground that there is no law which Indeed, in order for any appellate court to effectively exercise its appellate
expressly gives these tribunals such power.26 It must be observed, however, jurisdiction, it must have the authority to issue, among others, a writ of
that with the exception of Garcia v. Sandiganbayan,27 these rulings pertain certiorari. In transferring exclusive jurisdiction over appealed tax cases to the
CTA, it can reasonably be assumed that the law intended to transfer also such Stated differently, it would be somewhat incongruent with the pronounced
power as is deemed necessary, if not indispensable, in aid of such appellate judicial abhorrence to split jurisdiction to conclude that the intention of the
jurisdiction. There is no perceivable reason why the transfer should only be law is to divide the authority over a local tax case filed with the RTC by
considered as partial, not total. giving to the CA or this Court jurisdiction to issue a writ of certiorari against
interlocutory orders of the RTC but giving to the CTA the jurisdiction over
Consistent with the above pronouncement, this Court has held as early as the the appeal from the decision of the trial court in the same case. It is more in
case of J.M. Tuason & Co., Inc. v. Jaramillo, et al.29 that "if a case may be consonance with logic and legal soundness to conclude that the grant of
appealed to a particular court or judicial tribunal or body, then said court or appellate jurisdiction to the CTA over tax cases filed in and decided by the
judicial tribunal or body has jurisdiction to issue the extraordinary writ of RTC carries with it the power to issue a writ of certiorari when necessary in
certiorari, in aid of its appellate jurisdiction."30 This principle was affirmed in aid of such appellate jurisdiction. The supervisory power or jurisdiction of
De Jesus v. Court of Appeals,31 where the Court stated that "a court may the CTA to issue a writ of certiorari in aid of its appellate jurisdiction should
issue a writ of certiorari in aid of its appellate jurisdiction if said court has co-exist with, and be a complement to, its appellate jurisdiction to review, by
jurisdiction to review, by appeal or writ of error, the final orders or decisions appeal, the final orders and decisions of the RTC, in order to have complete
of the lower court."32 The rulings in J.M. Tuason and De Jesus were supervision over the acts of the latter.36
reiterated in the more recent cases of Galang, Jr. v. Geronimo33 and Bulilis v.
Nuez.34 A grant of appellate jurisdiction implies that there is included in it the power
necessary to exercise it effectively, to make all orders that will preserve the
Furthermore, Section 6, Rule 135 of the present Rules of Court provides that subject of the action, and to give effect to the final determination of the
when by law, jurisdiction is conferred on a court or judicial officer, all appeal. It carries with it the power to protect that jurisdiction and to make the
auxiliary writs, processes and other means necessary to carry it into effect decisions of the court thereunder effective. The court, in aid of its appellate
may be employed by such court or officer. jurisdiction, has authority to control all auxiliary and incidental matters
If this Court were to sustain petitioners' contention that jurisdiction over their necessary to the efficient and proper exercise of that jurisdiction.1âwphi1 For
certiorari petition lies with the CA, this Court would be confirming the this purpose, it may, when necessary, prohibit or restrain the performance of
exercise by two judicial bodies, the CA and the CTA, of jurisdiction over any act which might interfere with the proper exercise of its rightful
jurisdiction in cases pending before it.37
basically the same subject matter – precisely the split-jurisdiction situation
which is anathema to the orderly administration of justice.35 The Court Lastly, it would not be amiss to point out that a court which is endowed with
cannot accept that such was the legislative motive, especially considering a particular jurisdiction should have powers which are necessary to enable it
that the law expressly confers on the CTA, the tribunal with the specialized to act effectively within such jurisdiction. These should be regarded as
competence over tax and tariff matters, the role of judicial review over local powers which are inherent in its jurisdiction and the court must possess them
tax cases without mention of any other court that may exercise such power. in order to enforce its rules of practice and to suppress any abuses of its
Thus, the Court agrees with the ruling of the CA that since appellate process and to defeat any attempted thwarting of such process.
jurisdiction over private respondents' complaint for tax refund is vested in the
CTA, it follows that a petition for certiorari seeking nullification of an In this regard, Section 1 of RA 9282 states that the CTA shall be of the same
interlocutory order issued in the said case should, likewise, be filed with the level as the CA and shall possess all the inherent powers of a court of justice.
same court. To rule otherwise would lead to an absurd situation where one
court decides an appeal in the main case while another court rules on an Indeed, courts possess certain inherent powers which may be said to be
incident in the very same case. implied from a general grant of jurisdiction, in addition to those expressly
conferred on them. These inherent powers are such powers as are necessary
for the ordinary and efficient exercise of jurisdiction; or are essential to the
existence, dignity and functions of the courts, as well as to the due
administration of justice; or are directly appropriate, convenient and suitable
to the execution of their granted powers; and include the power to maintain
the court's jurisdiction and render it effective in behalf of the litigants.38

Thus, this Court has held that "while a court may be expressly granted the
incidental powers necessary to effectuate its jurisdiction, a grant of
jurisdiction, in the absence of prohibitive legislation, implies the necessary
and usual incidental powers essential to effectuate it, and, subject to existing
laws and constitutional provisions, every regularly constituted court has
power to do all things that are reasonably necessary for the administration of
justice within the scope of its jurisdiction and for the enforcement of its
judgments and mandates."39 Hence, demands, matters or questions ancillary
or incidental to, or growing out of, the main action, and coming within the
above principles, may be taken cognizance of by the court and determined,
since such jurisdiction is in aid of its authority over the principal matter, even
though the court may thus be called on to consider and decide matters which,
as original causes of action, would not be within its cognizance.40

Based on the foregoing disquisitions, it can be reasonably concluded that the


authority of the CTA to take cognizance of petitions for certiorari
questioning interlocutory orders issued by the RTC in a local tax case is
included in the powers granted by the Constitution as well as inherent in the
exercise of its appellate jurisdiction.

Finally, it would bear to point out that this Court is not abandoning the rule
that, insofar as quasi-judicial tribunals are concerned, the authority to issue
writs of certiorari must still be expressly conferred by the Constitution or by
law and cannot be implied from the mere existence of their appellate
jurisdiction. This doctrine remains as it applies only to quasi-judicial bodies.

WHEREFORE, the petition is DENIED.

SO ORDERED.
FIRST DIVISION hearing, he dismissed the petition for reconstitution through the first assailed
order of September 12, 2006,2 to wit:chanroblesvirtuallawlibrary
G.R. No. 176508, January 12, 2015
With the receipt of Report dated July 14, 2006 from Land Registration
SAINT MARY CRUSADE TO ALLEVIATE POVERTY OF Authority (LRA) recommending that the petition be dismissed, and
BRETHREN FOUNDATION, INC., Petitioner, v.HON. TEODORO T. considering the Opposition filed by the Republic of the Philippines and
RIEL, ACTING PRESIDING JUDGE, REGIONAL TRIAL COURT, University of the Philippines, the above-entitled petition is hereby ordered
NATIONAL CAPITAL JUDICIAL REGION, BRANCH 85, QUEZON DISMISSED.
CITY, Respondent.
UNIVERSITY OF THE PHILIPPINES, Intervenor.
On October 11, 2006, the petitioner moved for reconsideration of the
DECISION dismissal,3 attaching the following documents to support its petition for
reconstitution, namely: (1) the copy of the original application for
BERSAMIN, J.:
registration dated January 27, 1955; (2) the notice of initial hearing dated
A petition for the judicial reconstitution of a Torrens title must strictly June 23, 1955; (3) the letter of transmittal to the Court of First Instance in
comply with the requirements prescribed in Republic Act No. 26;1 otherwise, Quezon City; (4) the copy of the Spanish Testimonial Title No. 3261054
the petition should be dismissed. dated March 25, 1977 in the name of Eladio Tiburcio; (5) the copy of Tax
Assessment No. 14238; and (6) the approved Plan SWD-37457.
This case is a direct resort to the Court by petition
for certiorari and mandamus. The petitioner applied for the judicial On February 5, 2007, the RTC denied the motion for reconsideration for lack
reconstitution of Original Certificate of Title (OCT) No. 1609 of the Register of any cogent or justifiable ground to
of Deeds of Quezon City, and for the issuance of a new OCT in place reconsider.4chanRoblesvirtualLawlibrary
thereof, docketed as L.R.C. Case No. Q-18987 (04), but respondent Acting
Presiding Judge of Branch 85 of the Regional Trial Court (RTC) in Quezon Hence, on February 22, 2007, the petitioner came directly to the Court
City dismissed the petition for reconstitution through the assailed order dated alleging that respondent Judge had “unfairly abused his discretion and
September 12, 2006. The petitioner alleges that the respondent Judge thereby unlawfully neglected the performance of an act which is specifically enjoined
committed grave abuse of discretion and unlawful neglect of performance of upon him as a duly [sic] under Rule 7, Section 8, of the Revised Rules of
an act specifically enjoined upon him. Equally assailed is the ensuing denial Court;”5that “in finally dismissing the herein subject Petition for
of its motion for reconsideration through the order dated February 5, 2007. Reconsideration, respondent Honorable Acting Presiding Judge has acted
without and in excess of his authority and with grave abuse of discretion to
The antecedents follow. the further damage and prejudice of the herein petitioner;”6 and that it had no
other remedy in the course of law except through the present petition
On October 28, 2004, the petitioner claimed in its petition for reconstitution for certiorari and mandamus.cralawred
that the original copy of OCT No. 1609 had been burnt and lost in the fire
that gutted the Quezon City Register of Deeds in the late 80’s. Initially, Issues
respondent Judge gave due course to the petition, but after the preliminary
The Court directed respondent Judge and the Office of the Solicitor General
(OSG) to comment on the petition for certiorari and mandamus. Respondent which vested title in the UP, and in Cañero v. University of the
Judge submitted his comment on May 23, 2007,7 and the OSG its comment Philippines (437 SCRA 630); and that the Deed of Transfer and Conveyance
on July 19, 2007.8 On November 13, 2007, the University of the Philippines dated November 26, 1925 executed by Tiburcio in favor of St. Mary Village
(UP) sought leave to intervene, attaching to its motion the intended Association, Inc. was not a basis for the judicial reconstitution of title
comment/opposition-in-intervention.9 The motion for the UP’s intervention accepted under Section 2 of Republic Act No. 26.
was granted on November 28, 2007.10 In turn, the petitioner presented its
consolidated reply on February 8, 2008.11 The parties, except respondent In its memorandum, the petitioner indicates that the RTC gravely abused its
Judge, then filed their memoranda in compliance with the Court’s directive. discretion amounting to lack or excess of its jurisdiction in dismissing its
petition for reconstitution on the basis of the recommendation of the LRA
Respondent Judge justified the dismissal of the petition for reconstitution by and the opposition of the Republic and the UP despite having initially given
citing the opposition by the OSG and the UP, as well as the recommendation due course to the petition for reconstitution. It urges that the dismissal should
of the Land Registration Authority (LRA). He pointed out that the petitioner be overturned because it was not given a chance to comment on the
did not present its purported Torrens title to be reconstituted; that the recommendation of the LRA, or to controvert the oppositions filed.17 It
petitioner’s claim was doubtful given the magnitude of 4,304,623 square contends that the LRA report did not substantiate the allegation of dismissal
meters as the land area involved;12 and that the UP’s ownership of the portion of the application for registration of Marcelino Tiburcio on October 17, 1955,
of land covered by petitioner’s claim had long been settled by the Court in a in addition to the veracity of the report being questionable by virtue of its not
long line of cases.13chanRoblesvirtualLawlibrary having been under oath.18chanRoblesvirtualLawlibrary

The OSG and the UP argued that by directly coming to the Court by petition Ruling
for certiorari and mandamus, the petitioner had availed itself of the wrong
remedies to substitute for its lost appeal; that the correct recourse for the The petition for certiorari and mandamus, being devoid of procedural and
petitioner was an appeal considering that the two assailed orders already substantive merit, is dismissed.
finally disposed of the case; that the petitioner intended its petition
for certiorari and mandamus to reverse the final orders;14 that the petitioner Firstly, certiorari, being an extraordinary remedy, is granted only under the
further failed to observe the doctrine of hierarchy of courts, despite the Court conditions defined by the Rules of Court. The conditions are that: (1) the
of Appeals (CA) having concurrent jurisdiction with the Court over special respondent tribunal, board or officer exercising judicial or quasi-judicial
civil actions under Rule 65;15that the RTC would have gravely erred had it functions has acted without or in excess of its or his jurisdiction, or with
proceeded on the petition for reconstitution despite the petitioner not having grave abuse of discretion amounting to lack or excess of jurisdiction; and (2)
notified the adjoining owners of the land or other parties with interest over there is no appeal, or any plain, speedy, and adequate remedy in the ordinary
the land;16 that the petitioner had no factual and legal bases for reconstitution course of law.19Without jurisdiction means that the court acted with absolute
due to its failure to prove the existence and validity of the certificate of title lack of authority; there is excess of jurisdiction when the court transcends its
sought to be reconstituted, in addition to the ownership of the land covered power or acts without any statutory authority; grave abuse of discretion
by the petition for reconstitution being already settled in a long line of cases; implies such capricious and whimsical exercise of judgment as to be
that the petitioner’s claim over the land was derived from the Deed of equivalent to lack or excess of jurisdiction; in other words, power is
Assignment executed by one Marcelino Tiburcio – the same person whose exercised in an arbitrary or despotic manner by reason of passion, prejudice,
claim had long been settled and disposed of in Tiburcio v. People’s Homesite or personal hostility; and such exercise is so patent or so gross as to amount
and Housing Corporation and University of the Philippines (106 Phil. 477),
to an evasion of a positive duty or to a virtual refusal either to perform the may be, pursuant to which the original certificate of title was issued;
duty enjoined or to act at all in contemplation of
law.20chanRoblesvirtualLawlibrary (e) A document, on file in the registry of deeds, by which the property, the
description of which is given in said document, is mortgaged, leased or
The petition for certiorari and mandamus did not show how respondent encumbered, or an authenticated copy of said document showing that its
Judge could have been guilty of lacking or exceeding his jurisdiction, or original had been registered; and
could have gravely abused his discretion amounting to lack or excess of
jurisdiction. Under Section 1221 of Republic Act No. 26, the law on the (f) Any other document which, in the judgment of the court, is sufficient and
judicial reconstitution of a Torrens title, the Regional Trial Court (as the proper basis for reconstituting the lost or destroyed certificate of title.
successor of the Court of First Instance) had the original and exclusive
jurisdiction to act on the petition for judicial reconstitution of title. Hence, Sec. 3. Transfer certificates of title shall be reconstituted from such of the
the RTC neither lacked nor exceeded its authority in acting on and sources hereunder enumerated as may be available, in the following order:
dismissing the petition. Nor did respondent Judge gravely abuse his
discretion amounting to lack or excess of jurisdiction considering that the (a) The owner's duplicate of the certificate of title;
petition for reconstitution involved land already registered in the name of the
UP, as confirmed by the LRA. Instead, it would have been contrary to law (b) The co-owner's, mortgagee's, or lessee's duplicate of the certificate of
had respondent Judge dealt with and granted the petition for judicial title;
reconstitution of title of the petitioner.
(c) A certified copy of the certificate of title, previously issued by the register
Secondly, the petitioner did not present the duplicate or certified copy of of deeds or by a legal custodian thereof;
OCT No. 1609. Thereby, it disobeyed Section 2 and Section 3 of Republic
Act No. 26, the provisions that expressly listed the acceptable bases for (d) The deed of transfer or other document, on file in the registry of deeds,
judicial reconstitution of an existing Torrens title, to containing the description of the property, or an authenticated copy thereof,
wit:chanroblesvirtuallawlibrary showing that its original had been registered, and pursuant to which the lost
or destroyed transfer certificate of title was issued;
Sec. 2. Original certificates of title shall be reconstituted from such of the
sources hereunder enumerated as may be available, in the following order: (e) A document, on file in the registry of deeds, by which the property, the
description of which is given in said document, is mortgaged, leased or
(a) The owner's duplicate of the certificate of title; encumbered, or an authenticated copy of said document showing that its
original had been registered; and
(b) The co-owner's, mortgagee's, or lessee's duplicate of the certificate of
title; (f) Any other document which, in the judgment of the court, is sufficient and
proper basis for reconstituting the lost or destroyed certificate of title.
(c) A certified copy of the certificate of title, previously issued by the register
of deeds or by a legal custodian thereof;
Thirdly, with the questioned orders of the RTC having finally disposed of the
(d) An authenticated copy of the decree of registration or patent, as the case application for judicial reconstitution, nothing more was left for the RTC to
do in the case. As of then, therefore, the correct recourse for the petitioner open the dissolute avenues of graft to unscrupulous land-grabbers who prey
was to appeal to the Court of Appeals by notice of appeal within 15 days like vultures upon the campus of respondent UP. By such actions, they
from notice of the denial of its motion for reconsideration. By allowing the wittingly or unwittingly aid the hucksters who want to earn a quick buck by
period of appeal to elapse without taking action, it squandered its right to misleading the gullible to buy the Philippine counterpart of the proverbial
appeal. Its present resort to certiorari is impermissible, for an extraordinary London Bridge. It is well past time for courts and lawyers to cease wasting
remedy like certiorari cannot be a substitute for a lost appeal. That the their time and resources on these worthless causes and take judicial notice of
extraordinary remedy of certiorari is not an alternative to an available the fact that respondent UP’s title had already been validated countless times
remedy in the ordinary course of law is clear from Section 1 of Rule 65, by this Court. Any ruling deviating from such doctrine is to be viewed as a
which requires that there must be no appeal, or any plain, speedy, and deliberate intent to sabotage the rule of law and will no longer be
adequate remedy in the ordinary course of law. Indeed, no error of judgment countenanced.25
by a court will be corrected by certiorari, which corrects only jurisdictional
errors.22chanRoblesvirtualLawlibrary
WHEREFORE, the Court DISMISSES the petition
Fourthly, the filing of the instant special civil action directly in this Court is for certiorari and mandamus for lack of merit; and ORDERS the petitioner
in disregard of the doctrine of hierarchy of courts. Although the Court has to pay the costs of suit.
concurrent jurisdiction with the Court of Appeals in issuing the writ
of certiorari, direct resort is allowed only when there are special, extra- SO ORDERED.cralawlawlibrary
ordinary or compelling reasons that justify the same. The Court enforces the
observance of the hierarchy of courts in order to free itself from unnecessary,
frivolous and impertinent cases and thus afford time for it to deal with the
more fundamental and more essential tasks that the Constitution has assigned
to it.23 There being no special, important or compelling reason, the petitioner
thereby violated the observance of the hierarchy of courts, warranting the
dismissal of the petition for certiorari.

Finally, the land covered by the petition for judicial reconstitution related to
the same area that formed the UP campus. The UP’s registered ownership of
the land comprising its campus has long been settled under the law.
Accordingly, the dismissal of the petition for judicial reconstitution by
respondent Judge only safeguarded the UP’s registered ownership. In so
doing, respondent Judge actually heeded the clear warnings to the lower
courts and the Law Profession in general against mounting or abetting any
attack against such ownership. One such warning was that in Cañero v.
University of the Philippines,24 as follows:chanroblesvirtuallawlibrary

We strongly admonish courts and unscrupulous lawyers to stop entertaining


spurious cases seeking further to assail respondent UP’s title. These cases
Republic of the Philippines unlawfully and criminally fail to disclose in his Sworn Statement of Assets
SUPREME COURT and Liabilities and Networth (SALN) for the year 2002, his financial and
Manila business interests/connection in Documail Provides Corporation and Don
Plus Trading of which he and his family are the registered owners thereof,
THIRD DIVISION and the 1993 Nissan Patrol motor vehicle registered in the name of his son
VINCENT LOUIS P. DUNCANO which are part of his assets, to the damage
G.R. No. 191894 July 15, 2015
and prejudice of public interest.
DANILO A. DUNCANO, Petitioner,
vs. CONTRARY TO LAW.6
HON. SANDIGANBAYAN (2nd DIVISION), and HON. OFFICE OF Prior to his arraignment, petitioner filed a Motion to Dismiss With Prayer to
THE SPECIAL PROSECUTOR, Respondents. Defer the Issuance of Warrant of Arrest7before respondent Sandiganbayan
DECISION Second Division. As the OSP alleged, he admitted that he is a Regional
Director with Salary Grade 26. Citing Inding v. Sandiganbayan8 and Serana
PERALTA, J.: v. Sandiganbayan, et al.,9 he asserted that under Presidential Decree (P.D.)
No. 1606, as amended by Section 4 (A) (1) of R.A No. 8249,10 the
This petition for certiorari under Rule 65 of the Rules of Court (Rules) with Sandiganbayan has no jurisdiction to try and hear the case because he is an
prayer for issuance of preliminary injunction and/or temporary restraining official of the executive branch occupying the position of a Regional Director
order seeks to reverse and set aside the August 18, 2009 Resolution1 and but with a compensation that is classified as below Salary Grade 27.
February 8, 2010 Order2 of respondent Sandiganbayan Second Division in
Criminal Case No. SB-09-CRM-0080, which denied petitioner's Motion to In its Opposition,11 the OSP argued that a reading of Section 4 (A) (1) (a) to
Dismiss on the ground of la9k of jurisdiction. (g) of the subject law would clearly show that the qualification as to Salary
Grade 27 and higher applies only to officials of the executive branch other
The facts are plain and undisputed. than the Regional Director and those specifically enumerated. This is so
since the term "Regional Director" and "higher" are separated by the
Petitioner Danilo A. Duncano is, at the time material to the case, the
conjunction "and," which signifies that these two positions are different,
Regional Director of the Bureau of Internal Revenue (BIR) with Salary
apart and distinct, words but are conjoined together "relating one to the
Grade 26 as classified under Republic Act (R.A.) No. 6758.3 On March 24,
other" to give effect to the purpose of the law. The fact that the position of
2009,4 the Office of the Special Prosecutor (OSP), Office of the Ombudsman,
Regional Director was specifically mentioned without indication as to its
filed a criminal case against him for violation of Section 8, in relation to
salary grade signifies the lawmakers’ intention that officials occupying such
Section 11 of R.A. No. 6713,5 allegedly committed as follows:
position, regardless of salary grade, fall within the original and exclusive
That on or about April 15, 2003, or sometime prior or subsequent thereto, in jurisdiction of the Sandiganbayan. This issue, it is claimed, was already
Quezon City, Philippines, and within the jurisdiction of this Honorable resolved in Inding. Finally, the OSP contended that the filing of the motion to
Court, accused DANILODUNCANO y ACIDO, a high ranking public dismiss is premature considering that the Sandiganbayan has yet to acquire
officer, being the Regional Director of Revenue Region No. 7, of the Bureau jurisdiction over the person of the accused.
of Internal Revenue, Quezon City, and as such is under an obligation to
Still not to be outdone, petitioner invoked the applicability of Cuyco v.
accomplish and submit declarations under oath of his assets, liabilities and
Sandiganbayan12 and Organo v. Sandiganbayan13 in his rejoinder.
net worth and financial and business interests, did then and there, wilfully,
On August 18, 2009, the Sandiganbayan Second Division promulgated its Constitution and pursuant to Proclamation No. 1081, dated September 21,
Resolution, disposing: WHEREFORE, in the light of the foregoing, the Court 1972, former President Ferdinand E. Marcos issued P.D. No. 1486.19 The
hereby DENIES the instant Motion to Dismiss for being devoid of merit. Let decree was later amended by P.D. No. 1606,20Section 20 of Batas Pambansa
a Warrant of Arrest be therefore issued against the accused. Blg. 129,21 P.D. No. 1860,22 and P.D. No. 1861.23

SO ORDERED.14 With the advent of the 1987 Constitution, the special court was retained as
provided for in Section 4, Article XI thereof.24 Aside from Executive Order
The respondent court ruled that the position of Regional Director is one of Nos. 1425 and 14-a,26 and R.A. 7080,27 which expanded the jurisdiction of the
those exceptions where the Sandiganbayan has jurisdiction even if such Sandiganbayan, P.D. No. 1606 was further modified by R.A. No.
position is not Salary Grade 27. It was opined that Section 4 (A) (1) of R.A 7975,28 R.A. No. 8249,29 and just this year, R.A. No. 10660.30
No. 8249 unequivocally provides that respondent court has jurisdiction over
officials of the executive branch of the government occupying the position of For the purpose of this case, the relevant provision is Section 4 of R.A. No.
regional director and higher, otherwise classified as Salary Grade 27 and 8249, which states: SEC. 4. Section 4 of the same decree is hereby further
higher, of R.A. No. 6758, including those officials who are expressly amended to read as follows:
enumerated in subparagraphs (a) to (g). In support of the ruling, this Court’s
pronouncements in Indingand Binay v. Sandiganbayan15 were cited. "SEC. 4. Jurisdiction.– The Sandiganbayan shall exercise exclusive original
jurisdiction in all cases involving:
Petitioner filed a Motion for Reconsideration, but it was denied;16 Hence, this
petition. "A. Violations of Republic Act No. 3019, as amended, otherwise known as
the Anti-Graft and Corrupt Practices Act, Republic Act No. 1379, and
Instead of issuing a temporary restraining order or writ of preliminary Chapter II, Section 2, Title VII, Book II of the Revised Penal Code, where
injunction, the Court required respondents to file a comment on the petition one or more of the accused are officials occupying the following positions in
without necessarily giving due course thereto.17 Upon compliance of the the government, whether in a permanent, acting or interim capacity, at the
OSP, a Rejoinder (supposedly a Reply) was filed by petitioner. time of the commission of the offense:

At the heart of the controversy is the determination of whether, according to "(1) Officials of the executive branch occupying the positions of regional
P.D. No. 1606, as amended by Section 4 (A) (1) of R.A No. 8249, only director and higher, otherwise classified as Grade ‘27’ and higher, of the
Regional Directors with Salary Grade of 27 and higher, as classified under Compensation and Position Classification Act of 1989 (Republic Act No.
R.A. No. 6758, fall within the exclusive jurisdiction of the Sandiganbayan. 6758), specifically including:
Arguing that he is not included among the public officials specifically
enumerated in Section 4 (A) (1) (a) to (g) of the law and heavily relying as "(a) Provincial governors, vice-governors, members of the sangguniang
well on Cuyco, petitioner insists that respondent court lacks jurisdiction over panlalawigan, and provincial treasurers, assessors, engineers, and other
him, who is merely a Regional Director with Salary Grade 26. On the provincial department heads;
contrary, the OSP maintains that a Regional Director, irrespective of salary "(b) City mayor, vice-mayors, members of the sangguniang panlungsod, city
grade, falls within the exclusive original jurisdiction of the Sandiganbayan. treasurers, assessors, engineers, and other city department heads;
We find merit in the petition.
"(c) Officials of the diplomatic service occupying the position of consul and
The creation of the Sandiganbayan was mandated by Section 5, Article XIII higher;
of the 1973 Constitution.18 By virtue of the powers vested in him by the
"(d) Philippine army and air force colonels, naval captains, and all officers of 27 and higher, its second part specifically includes other executive officials
higher rank; whose positions may not be of Salary Grade 27 and higher but who are by
express provision of law placed under the jurisdiction of the
"(e) Officers of the Philippine National Police while occupying the position Sandiganbayan.32
of provincial director and those holding the rank of senior superintendent or
higher; That the phrase "otherwise classified as Grade ‘27’ and higher" qualifies
"regional director and higher" is apparent from the Sponsorship Speech of
"(f) City and provincial prosecutors and their assistants, and officials and Senator Raul S. Roco on Senate Bill Nos. 1353and 844, which eventually
prosecutors in the Office of the Ombudsman and special prosecutor; became R.A. Nos. 7975 and 8249, respectively:
"(g) Presidents, directors or trustees, or managers of government-owned or As proposed by the Committee, the Sandiganbayan shall exercise original
controlled corporations, state universities or educational institutions or jurisdiction over the cases assigned to it only in instances where one or more
foundations. of the principal accused are officials occupying the positions of regional
"(2) Members of Congress and officials thereof classified as Grade ‘27’ and director and higher or are otherwise classified as Grade 27 and higher by the
up under the Compensation and Position Classification Act of 1989; Compensation and Position Classification Act of 1989, whether in a
permanent, acting or interim capacity at the time of the commission of the
"(3) Members of the judiciary without prejudice to the provisions of the offense. The jurisdiction, therefore, refers to a certain grade upwards, which
Constitution; shall remain with the Sandiganbayan.33 (Emphasis supplied)

"(4) Chairmen and members of Constitutional Commission, without To speed up trial in the Sandiganbayan, Republic Act No. 7975 was enacted
prejudice to the provisions of the Constitution; and for that Court to concentrate on the "larger fish" and leave the "small fry" to
the lower courts. This law became effective on May 6, 1995 and it provided a
"(5) All other national and local officials classified as Grade ‘27’ and higher two-pronged solution to the clogging of the dockets of that court, to wit:
under the Compensation and Position Classification Act of 1989.
It divested the Sandiganbayan of jurisdiction over public officials whose
"B. Other offenses or felonies whether simple or complexed with other salary grades were at Grade "26" or lower, devolving thereby these cases to
crimes committed by the public officials and employees mentioned in the lower courts, and retaining the jurisdiction of the Sandiganbayan only
subsection a of this section in relation to their office. over public officials whose salary grades were at Grade "27" or higher and
over other specific public officials holding important positions in government
"C. Civil and criminal cases filed pursuant to and in connection with
regardless of salary grade; x x x34 (Emphasis supplied)
Executive Order Nos. 1, 2, 14 and 14-A, issued in 1986.
The legislative intent is to allow the Sandiganbayan to devote its time and
x x x"
expertise to big-time cases involving the so-called "big fishes" in the
Based on the afore-quoted, those that fall within the original jurisdiction of government rather than those accused who are of limited means who stand
the Sandiganbayan are: (1) officials of the executive branch with Salary trial for "petty crimes," the so-called "small fry," which, in turn, helps the
Grade 27 or higher, and (2) officials specifically enumerated in Section 4 (A) court decongest its dockets.35
(1) (a) to (g), regardless of their salary grades.31 While the first part of
Yet, those that are classified as Salary Grade 26 and below may still fall
Section 4 (A) covers only officials of the executive branch with Salary Grade
within the jurisdiction of the Sandiganbayan, provided that they hold the
positions enumerated by the law.36 In this category, it is the position held, not (g). As he correctly argues, his case is, in fact, on all fours with
the salary grade, which determines the jurisdiction of the Cuyco.1avvphi1Therein, the accused was the Regional Director of the Land
Sandiganbayan.37 The specific inclusion constitutes an exception to the Transportation Office, Region IX, Zamboanga City, but at the time of the
general qualification relating to "officials of the executive branch occupying commission of the crime in 1992, his position was classified as Director II
the positions of regional director and higher, otherwise classified as Grade with Salary Grade 26.44It was opined: Petitioner contends that at the time of
‘27’ and higher, of the Compensation and Position Classification Act of the commission of the offense in 1992, he was occupying the position of
1989."38 As ruled in Inding: Director II, Salary Grade 26, hence, jurisdiction over the cases falls with the
Regional Trial Court.
Following this disquisition, the paragraph of Section 4 which provides that if
the accused is occupying a position lower than SG 27, the proper trial court We sustain petitioner's contention.
has jurisdiction, can only be properly interpreted as applying to those cases
where the principal accused is occupying a position lower than SG 27 and The Sandiganbayan has no jurisdiction over violations of Section 3(a) and
not among those specifically included in the enumeration in Section 4 a. (1) (e), Republic Act No. 3019, as amended, unless committed by public
(a) to (g). Stated otherwise, except for those officials specifically included in officials and employees occupying positions of regional director and higher
Section 4 a. (1) (a) to (g), regardless of their salary grades, over whom the with Salary Grade "27" or higher, under the Compensation and Position
Sandiganbayan has jurisdiction, all other public officials below SG 27 shall Classification Act of 1989 (Republic Act No. 6758) in relation to their office.
be under the jurisdiction of the proper trial courts "where none of the In ruling in favor of its jurisdiction, even though petitioner admittedly
principal accused are occupying positions corresponding to SG 27 or higher." occupied the position of Director II with Salary Grade "26" under the
By this construction, the entire Section 4 is given effect. The cardinal rule, Compensation and Position Classification Act of 1989 (Republic Act No.
after all, in statutory construction is that the particular words, clauses and
6758), the Sandiganbayan incurred in serious error of jurisdiction, and acted
phrases should not be studied as detached and isolated expressions, but the with grave abuse of discretion amounting to lack of jurisdiction in
whole and every part of the statute must be considered in fixing the meaning suspending petitioner from office, entitling petitioner to the reliefs prayed
of any of its parts and in order to produce a harmonious whole. And courts for.45
should adopt a construction that will give effect to every part of a statute, if
at all possible. Ut magis valeat quam pereat or that construction is to be In the same way, a certification issued by the OIC – Assistant Chief,
sought which gives effect to the whole of the statute – its every word.39 Personnel Division of the BIR shows that, although petitioner is a Regional
Director of the BIR, his position is classified as Director II with Salary Grade
Thus, to cite a few, We have held that a member of the Sangguniang
26.46
Panlungsod,40 a department manager of the Philippine Health Insurance
Corporation (Philhealth),41 a student regent of the University of the There is no merit in the OSP’s allegation that the petition was prematurely
Philippines,42 and a Head of the Legal Department and Chief of the filed on the ground that respondent court has not yet acquired jurisdiction
Documentation with corresponding ranks of Vice-Presidents and Assistant over the person of petitioner. Records disclose that when a warrant of arrest
Vice-President of the Armed Forces of the Philippines Retirement and was issued by respondent court, petitioner voluntarily surrendered and posted
Separation Benefits System (AFP-RSBS)43 fall within the jurisdiction of the a cash bond on September 17, 2009.Also, he was arraigned on April 14,
Sandiganbayan. 2010,prior to the filing of the petition on April 30, 2010.

Petitioner is not an executive official with Salary Grade 27 or higher. Neither WHEREFORE, the foregoing considered, the instant petition for certiorari is
does he hold any position particularly enumerated in Section 4 (A) (1) (a) to GRANTED. The August 18, 2009 Resolution and February 8, 2010 Order of
the Sandiganbayan Second Division, which denied petitioner's Motion to
Dismiss on the ground of lack of jurisdiction, are REVERSED AND SET
ASIDE.

SO ORDERED.
SECOND DIVISION Irrigation and Power Project (Casecnan Project) in Pantabangan, Nueva Ecija
and Alfonso Castaneda, Nueva Vizcaya. The Casecnan Project is a combined
G.R. No. 196278, June 17, 2015 irrigation and hydroelectric power generation facility using the Pantabangan
Dam in Nueva Ecija.
CE CASECNAN WATER AND ENERGY COMPANY,
INC., Petitioner, v. THE PROVINCE OF NUEVA ECIJA, THE OFFICE
On September 29, 2003, petitioner and NIA executed a Supplemental
OF THE PROVINCIAL ASSESSOR OF NUEVA ECIJA, AND THE
Agreement6 amending Article II of the Casecnan Contract which pertains to
OFFICE OF THE PROVINCIAL TREASURER OF NUEVA ECIJA,
payment of taxes. Article 2.2 thereof states that NIA must reimburse
AS REPRESENTED BY HON. AURELIO UMALI, HON. FLORANTE
petitioner for real property taxes (RPT) provided the same was paid upon
FAJARDO AND HON. EDILBERTO PANCHO, RESPECTIVELY, OR
NIA's directive and with the concurrence of the Department of Finance.
THEIR LAWFUL SUCCESSORS, RESPONDENTS, NATIONAL
IRRIGATION ADMINISTRATION AND DEPARTMENT OF
On September 6, 2005, petitioner received from the Office of the Provincial
FINANCE, AS NECESSARY PARTIES.
Assessor a Notice of Assessment of Real Property dated August 2, 2005,
DECISION which indicates that for the years 2002 to 2005, its RPT due was
P248,676,349.60. Petitioner assailed the assessment with the Nueva Ecija
DEL CASTILLO, J.: Local Board of Assessment Appeals (Nueva Ecija LBAA) which dismissed it
on January 26, 2006. Undeterred, petitioner filed a Notice of Appeal with the
The Court of Tax Appeals (CTA) has exclusive jurisdiction over a special
Nueva Ecija Central Board of Assessment Appeals (Nueva Ecija CBAA).
civil action for certiorari assailing an interlocutory order issued by the
During the pendency thereof, respondents collected from petitioner the RPT
Regional Trial Court (RTC) in a local tax case.
due under the said assessment as well as those pertaining to the years 2006
up to the second quarter of 2008, totalling P363,703,606.88. Petitioner paid
This Petition for Review on Certiorari1 assails the November 2, 2010
the assessed RPT under protest; it also initiated proceedings questioning the
Decision2 of the Court of Appeals (CA) in CA-G.R. SP No. 108441 which
validity of the collection with respect to the years 2006 up to the second
dismissed for lack of jurisdiction the Petition for Certiorari of petitioner CE
quarter of 2008. Thereafter, petitioner received a letter7 dated July 9, 2008
Casecnan Water and Energy Company, Inc. (petitioner) against the Province
from the Office of the Provincial Treasurer stating that it has RPT in arrears
of Nueva Ecija, the Office of the Provincial Assessor of Nueva Ecija (Office
for the years 2002 up to the second quarter of 2008 amounting to
of the Provincial Assessor) and the Office of the Provincial Treasurer of
P1,277,474,342.10. Petitioner received another letter8 dated August 29, 2008
Nueva Ecija (Office of the Provincial Treasurer) (respondents). Also assailed
from the same office clarifying that its arrearages in RPT actually amounted
is the March 24, 2011 Resolution3 of the CA denying petitioner's Motion for
to P1,279,997,722.70 (2008 RPT Reassessment). Again, petitioner
Reconsideration.4
questioned this assessment through an appeal before the Nueva Ecija LBAA.
While the same was pending, petitioner received from respondents a letter
Factual Antecedents
dated September 10, 2008 demanding payment for its alleged RPT
arrearages.
On June 26, 1995, petitioner and the National Irrigation Administration
(NIA) entered into a build-operate-transfer (BOT) contract known as the
Hence, on September 23, 2008, petitioner filed with the RTC of San Jose
"Amended and Restated Casecnan Project Agreement"5(Casecnan Contract)
City, Nueva Ecija a Complaint9for injunction and damages with application
relative to the construction and development of the Casecnan Multi-Purpose
for temporary restraining order (TRO) and preliminary injunction10 praying
to restrain the collection of the 2008 RPT Reassessment. Petitioner writ of preliminary injunction, the issue of the validity of the assessment and
emphasized, among others, that it was not the one which should pay the taxes the collection of the RPT against petitioner must also be resolved, thus
but NIA. jurisdiction over the case lies within the Court of Tax Appeals (CTA).
Hence, the CA ruled:chanroblesvirtuallawlibrary
Ruling of the Regional Trial Court
WHEREFORE, premises considered, the Petition for Certiorari is hereby
On September 24, 2008, the RTC denied petitioner's application for a 72- DENIED DUE COURSE and accordingly, DISMISSED for lack of
hour TRO.11 jurisdiction.

Meanwhile, petitioner received from the Office of the Provincial Treasurer a SO ORDERED.18cralawlawlibrary
letter dated September 22, 2008 further demanding payment for RPT
Petitioner sought reconsideration; however, it was denied in a
covering the third quarter of 2008 (2008-3Q Assessment). Thus, petitioner Resolution19 dated March 24, 2011.
filed on September 29, 2008 an Amended Complaint12 asking the RTC to
likewise enjoin respondents from collecting RPT based on the 2008-3 Q Undaunted, petitioner filed this Petition imputing upon the CA grave error
Assessment in the amount of P53,346,755.18.
in:chanroblesvirtuallawlibrary

On October 2, 2008, the RTC issued a 20-day TRO13 enjoining respondents xxx ruling that it is the Court of Tax Appeals (and not the Court of Appeals)
from collecting from petitioner the RPT covered by the 2008 RPT which has jurisdiction over the CA Injunction Case.20cralawlawlibrary
Reassessment amounting to P1,279,997,722.70, including surcharges and
penalties. Petitioner's Arguments

Subsequently, however, the RTC denied petitioner's application for writ of In its Petition21 and Reply22, petitioner argues that it is the CA, not the CTA,
preliminary injunction in its Order14 of October 24, 2008. It also denied which has jurisdiction over the subject matter of its Petition for Certiorari.
petitioner's Motion for Reconsideration thereof in an Order15dated January Petitioner maintains that its petition relates to an ordinary civil action for
30, 2009. injunction and not to a local tax case. It insists that in both the RTC
injunction case and the Petition for Certiorari before the CA, petitioner was
On April 24, 2009, petitioner filed with the CA a Petition not protesting respondents' assessment of RPT against it; what it was seeking
for Certiorari16 under Rule 65 of the Rules of Court seeking to annul and set was respondents' enjoinment from committing or continuing to commit acts
aside the aforementioned October 24, 2008 and January 30,2009 RTC that would probably violate its right. In particular, petitioner points out that
Orders. the RTC injunction case was intended to enjoin respondents from collecting
payment during the pendency of the case with the LBAA challenging the
Riding of the Court of Appeals validity of the 2008 RPT Reassessment. Petitioner explains that the said
injunction case was filed with the RTC because the LBAA has no injunctive
In its November 2, 2010 Decision,17 the CA observed that the Petition power.
for Certiorari before it was actually an offshoot of the 2008 RPT
Reassessment. And since in resolving the issue of whether the RTC Respondents' Arguments
committed grave abuse of discretion in denying petitioner's application for a
In their Comment,23 respondents argue that in resolving the issue on the Constitution provides, nonetheless, that judicial power shall be vested in one
propriety of issuing a writ of injunction, the CA will have to inevitably pass Supreme Court and in such lower courts as may be established by law and
upon the propriety of the assessment of RPT on the Casecnan Project, a local that judicial power includes the duty of the courts of justice to settle actual
tax matter which is within the jurisdiction of the CTA. Respondents also controversies involving rights which are legally demandable and enforceable,
echo the CA pronouncement that petitioner failed to exhaust administrative and to determine whether or not there has been a grave abuse of discretion
remedies with respect to the assessment and collection of amounting to lack or excess of jurisdiction on the part of any branch or
RPT.chanRoblesvirtualLawlibrary instrumentality of the Government.

Our Ruling On the strength of the above constitutional provisions, it can be fairly
interpreted that the power of the CTA includes that of determining
There is no merit in the Petition. whether or not there has been grave abuse of discretion amounting to
lack or excess of jurisdiction on the part of the RTC in issuing an
It is the CTA which has the power to rule on a Petition interlocutory order in cases falling within the exclusive appellate
for Certiorari assailing an interlocutory order of the RTC relating to a local jurisdiction of the tax court. It, thus, follows that the CTA, by
constitutional mandate, is vested with jurisdiction to issue writs
tax case.
of certiorari in these cases.28 (Citations omitted and emphasis supplied)
Jurisdiction over the subject matter is required for a court to act on any Further, the Court in City of Manila, citing J. M. Tuason & Co., Inc. v.
controversy. It is conferred by law and not by the consent or waiver upon a Jaramillo,29De Jesus v. Court of Appeals,30 as well as the more recent cases
court. As such, if a court lacks jurisdiction over an action, it cannot decide of Galang, Jr. v. Hon. Judge Geronimo31 and Bulilis v. Nuez32 held
the case on the merits and must dismiss it.24 that:chanroblesvirtuallawlibrary

With respect to the CTA, its jurisdiction was expanded and its rank elevated Consistent with the above pronouncement, this Court has held as early as the
to that of a collegiate court with special jurisdiction by virtue of Republic Act case of J.M. Tuason & Co., Inc. v. Jaramillo, et al. that 'if a case may be
No. 9282.25 This expanded jurisdiction of the CTA includes its exclusive appealed to a particular court or judicial tribunal or body, then said court or
appellate jurisdiction to review by appeal the decisions, orders or resolutions judicial tribunal or body has jurisdiction to issue the extraordinary writ
of the RTC in local tax cases originally decided or resolved by the RTC in of certiorari, in aid of its appellate jurisdiction.' This principle was affirmed
the exercise of its original or appellate jurisdiction.26 in De Jesus v. Court of Appeals, where the Court stated that 'a court may
issue a writ of certiorari in aid of its appellate jurisdiction if said court has
In the recent case of City of Manila v. Grecia-Cuerdo,27 the Court ruled that jurisdiction to review, by appeal or writ of error, the final orders or decisions
the CTA likewise has the jurisdiction to issue writs of certiorari or to of the lower court.' The rulings in J.M. Tuason and De Jesus were reiterated
determine whether there has been grave abuse of discretion amounting to in the more recent cases of Galang, Jr. v. Geronimo and Bulilis v. Nuez.
lack or excess of jurisdiction on the part of the RTC in issuing an
interlocutory order in cases falling within the CTA's exclusive appellate Furthermore, Section 6, Rule 135 of the present Rules of Court provides that
jurisdiction, thus:chanroblesvirtuallawlibrary when by law, jurisdiction is conferred on a court or judicial officer, all
auxiliary writs, processes and other means necessary to carry it into effect
The foregoing notwithstanding, while there is no express grant of such may be employed by such court or officer.33(Citations omitted)
power, with respect to the CTA, Section 1, Article VIII of the 1987
Anent petitioner's contention that it is the CA which has jurisdiction over
a certiorari petition assailing an interlocutory order issued by the RTC in a The RTC injunction case is a local tax case.
local tax case, the Court had this to say:chanroblesvirtuallawlibrary
In maintaining that it is the CA that has jurisdiction over
If this Court were to sustain petitioners' contention that jurisdiction over petitioner's certiorari petition, the latter argues that the injunction case it
their certioraripetition lies with the CA, this Court would be confirming the filed with the RTC is not a local tax case but an ordinary civil action. It
exercise by two judicial bodies, the CA and the CTA, of jurisdiction over insists that it is not protesting the assessment of RPT against it but only prays
basically the same subject matter - precisely the split-jurisdiction situation that respondents be enjoined from collecting the same.
which is anathema to the orderly administration of justice. The Court
cannot accept that such was the legislative motive, especially considering The Court finds, however, that in praying to restrain the collection of RPT,
that the law expressly confers on the CTA, the tribunal with the petitioner also implicitly questions the propriety of the assessment of such
specialized competence over tax and tariff matters, the role of judicial RPT. This is because in ruling as to whether to restrain the collection, the
review over local tax cases without mention of any other court that may RTC must first necessarily rule on the propriety of the assessment. In other
exercise such power. Thus, the Court agrees with the ruling of the CA that words, in filing an action for injunction to restrain collection, petitioner was
since appellate jurisdiction over private respondents' complaint for tax refund in effect also challenging the validity of the RPT assessment. As aptly
is vested in the CTA, it follows that a petition for certiorari seeking discussed by the CA:chanroblesvirtuallawlibrary
nullification of an interlocutory order issued in the said case should, likewise,
be filed with the same court. To rule otherwise would lead to an absurd xxx [T]he original action filed with the RTC is one for Injunction, with an
situation where one court decides an appeal in the main case while another application for Temporary Restraining Order and a Writ of Preliminary
court rules on an incident in the very same case. Injunction to enjoin the province of Nueva Ecija from further collecting the
alleged real property tax liability assessed against it. Simply because the
xxxx action is an application for irvjunctive relief does not necessarily mean that it
may no longer be considered as a local tax case. The subject matter and the
A grant of appellate jurisdiction implies that there is included in it the power issues, not the name or designation of the remedy, should control. While an
ancillary action for injunction may not be a main case, the court [still has] to
necessary to exercise it effectively, to make all orders that will preserve the
subject of the action, and to give effect to the final determination of the determine, even in a preliminary matter, the applicable tax laws, rules and
appeal. It carries with it the power to protect that jurisdiction and to make the jurisprudence, x x x35cralawlawlibrary
decisions of the court thereunder effective. The court, in aid of its appellate Moreover, in National Power Corporation v. Municipal Government of
jurisdiction, has authority to control all auxiliary and incidental matters Navotas,36 as well as in City of Lapu-Lapu v. Philippine Economic Zone
necessary to the efficient and proper exercise of that jurisdiction. For this Authority,37 this Court already held that local tax cases include RPT.
purpose, it may, when necessary, prohibit or restrain the performance of any
act which might interfere with the proper exercise of its rightful jurisdiction No doubt, the injunction case before the RTC is a local tax case. And as
in cases pending before it.34 (Citations omitted and emphasis supplied) earlier discussed, a certioraripetition questioning an interlocutory order
Given these, it is settled that it is the CTA which has exclusive jurisdiction issued in a local tax case falls under the jurisdiction of the CTA. Thus, the
over a special civil action for certiorari assailing an interlocutory order CA correctly dismissed the Petition for Certiorari before it for lack of
issued by the RTC in a local tax case. jurisdiction.cralawred
WHEREFORE, the Petition is DENIED. The November 2, 2010 Decision
and March 24, 2011 Resolution of the Court of Appeals in CA-G.R. SP No.
108441 are AFFIRMED.

SO ORDERED.chanroblesvirtuallawlibrary
EN BANC financing of public-private partnership agreement of the Quezon City
Government and National Housing Authority (NHA) with the private
G.R. No. 210551, June 30, 2015 sector.3 Under certain conditions, a tax credit shall be enjoyed by taxpayers
JOSE J. FERRER, JR., Petitioner, v. CITY MAYOR HERBERT regularly paying the special assessment:
chanRoblesvirtualLawlibrary
BAUTISTA, CITY COUNCIL OF QUEZON CITY, CITY
TREASURER OF QUEZON CITY, AND CITY ASSESSOR OF SECTION 7. TAX CREDIT. Taxpayers dutifully paying the special
QUEZON CITY, Respondents. assessment tax as imposed by this ordinance shall enjoy a tax credit. The tax
credit may be availed of only after five (5) years of continue[d] payment.
DECISION
Further, the taxpayer availing this tax credit must be a taxpayer in good
PERALTA, J.: standing as certified by the City Treasurer and City Assessor.

Before this Court is a petition for certiorari under Rule 65 of the Rules of The tax credit to be granted shall be equivalent to the total amount of the
Court with prayer for the issuance of a temporary restraining order (TRO) special assessment paid by the property owner, which shall be given as
seeking to declare unconstitutional and illegal Ordinance Nos. SP-2095, S- follows:
2011 and SP-2235, S-2013 on the Socialized Housing Tax and Garbage Fee, chanRoblesvirtualLawlibrary
respectively, which are being imposed by the respondents.
1. 6th year - 20%
The Case
2. 7th year - 20%
On October 17, 2011,1 respondent Quezon City Council enacted Ordinance
3. 8th year - 20%
No. SP-2095, S-2011,2 or the Socialized Housing Tax of Quezon City,
Section 3 of which provides:
4. 9th year - 20%
chanRoblesvirtualLawlibrary

SECTION 3. IMPOSITION. A special assessment equivalent to one-half 5. 10th year - 20%


percent (0.5%) on the assessed value of land in excess of One Hundred chanroblesvirtuallawlibrary
Thousand Pesos (Php100,000.00) shall be collected by the City Treasurer
Furthermore, only the registered owners may avail of the tax credit and may
which shall accrue to the Socialized Housing Programs of the Quezon City
not be continued by the subsequent property owners even if they are buyers
Government. The special assessment shall accrue to the General Fund under
in good faith, heirs or possessor of a right in whatever legal capacity over the
a special account to be established for the purpose.
subject property.4
chanroblesvirtuallawlibrary
chanroblesvirtuallawlibrary
Effective for five (5) years, the Socialized Housing Tax (SHT) shall be
On the other hand, Ordinance No. SP-2235, S-20135 was enacted on
utilized by the Quezon City Government for the following projects: (a) land
December 16, 2013 and took effect ten days after when it was approved by
purchase/land banking; (b) improvement of current/existing socialized
respondent City Mayor.6 The proceeds collected from the garbage fees on
housing facilities; (c) land development; (d) construction of core houses,
residential properties shall be deposited solely and exclusively in an
sanitary cores, medium-rise buildings and other similar structures; and (e)
earmarked special account under the general fund to be utilized for garbage On high-rise Condominium Units
collections.7 Section 1 of the Ordinance set forth the schedule and manner for
the collection of garbage fees: a) High-rise Condominium – The Homeowners Association of high- rise
chanRoblesvirtualLawlibrary condominiums shall pay the annual garbage fee on the total size of the
entire condominium and socialized Housing Unit and an additional
SECTION 1. The City Government of Quezon City in conformity with and garbage fee shall be collected based on area occupied for every unit
in relation to Republic Act No. 7160, otherwise known as the Local already sold or being amortized.
Government Code of 1991 HEREBY IMPOSES THE FOLLOWING
SCHEDULE AND MANNER FOR THE ANNUAL COLLECTION OF b) High-rise apartment units – Owners of high-rise apartment units shall pay
GARBAGE FEES, AS FOLLOWS: the annual garbage fee on the total lot size of the entire apartment and an
additional garbage fee based on the schedule prescribed herein for every
On all domestic households in Quezon City; unit occupied.

The collection of the garbage fee shall accrue on the first day of January and
LAND AREA IMPOSABLE FEE
shall be paid simultaneously with the payment of the real property tax, but
Less than 200 sq. m. PHP 100.00 not later than the first quarter installment.8 In case a household owner refuses
to pay, a penalty of 25% of the garbage fee due, plus an interest of 2% per
201 sq. m. – 500 sq. m. PHP 200.00 month or a fraction thereof, shall be charged.9ChanRoblesVirtualawlibrary

501 sq. m. – 1,000 sq. m. PHP 300.00 Petitioner alleges that he is a registered co-owner of a 371-square-meter
residential property in Quezon City which is covered by Transfer Certificate
1,001 sq. m. – 1,500 sq. m. PHP 400.00
of Title (TCT) No. 216288, and that, on January 7, 2014, he paid his realty
1,501 sq. m. – 2,000 sq. m. or more PHP 500.00 tax which already included the garbage fee in the sum of
Php100.00.10ChanRoblesVirtualawlibrary
On all condominium unit and socialized housing projects/units in Quezon
City; The instant petition was filed on January 17, 2014. We issued a TRO on
February 5, 2014, which enjoined the enforcement of Ordinance Nos. SP-
FLOOR AREA IMPOSABLE FEE 2095 and SP-2235 and required respondents to comment on the petition
without necessarily giving due course thereto.11ChanRoblesVirtualawlibrary
Less than 40 sq. m. PHP25.00
Respondents filed their Comment12 with urgent motion to dissolve the TRO
41 sq. m. – 60 sq. m. PHP50.00
on February 17, 2014. Thereafter, petitioner filed a Reply and a
61 sq. m. – 100 sq. m. PHP75.00 Memorandum on March 3, 2014 and September 8, 2014, respectively.

Procedural Matters
101 sq. m. – 150 sq. m. PHP100.00

151 sq. m. – 200 sq. [m.] or more PHP200.00


A. Propriety of a Petition for Certiorari
quasi-judicial functions; (2) the tribunal, board, or officer must have acted
Respondents are of the view that this petition for certiorari is improper since without or in excess of jurisdiction or with grave abuse of discretion
they are not tribunals, boards or officers exercising judicial or quasi-judicial amounting to lack or excess of jurisdiction; and (3) there is no appeal or any
functions. Petitioner, however, counters that in enacting Ordinance Nos. SP- plain, speedy, and adequate remedy in the ordinary course of law. The
2095 and SP-2235, the Quezon City Council exercised quasi-judicial enactment by the Quezon City Council of the assailed ordinances was done
function because the ordinances ruled against the property owners who must in the exercise of its legislative, not judicial or quasi-judicial, function. Under
pay the SHT and the garbage fee, exacting from them funds for basic Republic Act (R.A.) No. 7160, or the Local Government Code of
essential public services that they should not be held liable. Even if a Rule 65 1991 (LGC), local legislative power shall be exercised by the Sangguniang
petition is improper, petitioner still asserts that this Court, in a number of Panlungsod for the city.15 Said law likewise is specific in providing that the
cases like in Rosario v. Court of Appeals,13 has taken cognizance of an power to impose a tax, fee, or charge, or to generate revenue shall be
improper remedy in the interest of justice. exercised by the sanggunian of the local government unit concerned through
an appropriate ordinance.16ChanRoblesVirtualawlibrary
We agree that respondents neither acted in any judicial or quasi-judicial
capacity nor arrogated unto themselves any judicial or quasi-judicial Also, although the instant petition is styled as a petition for certiorari, it
prerogatives. essentially seeks to declare the unconstitutionality and illegality of the
questioned ordinances. It, thus, partakes of the nature of a petition for
A respondent is said to be exercising judicial function where he has the declaratory relief over which this Court has only appellate, not original,
power to determine what the law is and what the legal rights of the parties jurisdiction.17ChanRoblesVirtualawlibrary
are, and then undertakes to determine these questions and adjudicate upon
the rights of the parties. Despite these, a petition for declaratory relief may be treated as one for
prohibition or mandamus, over which We exercise original jurisdiction, in
Quasi-judicial function, on the other hand, is “a term which applies to the cases with far-reaching implications or one which raises transcendental
actions, discretion, etc., of public administrative officers or bodies … issues or questions that need to be resolved for the public good.18 The judicial
required to investigate facts or ascertain the existence of facts, hold hearings, policy is that this Court will entertain direct resort to it when the redress
and draw conclusions from them as a basis for their official action and to sought cannot be obtained in the proper courts or when exceptional and
exercise discretion of a judicial nature.” compelling circumstances warrant availment of a remedy within and calling
for the exercise of Our primary jurisdiction.19ChanRoblesVirtualawlibrary
Before a tribunal, board, or officer may exercise judicial or quasi-judicial
acts, it is necessary that there be a law that gives rise to some specific rights Section 2, Rule 65 of the Rules of Court lay down under what circumstances
of persons or property under which adverse claims to such rights are made, a petition for prohibition may be filed:
and the controversy ensuing therefrom is brought before a tribunal, board, or chanRoblesvirtualLawlibrary
officer clothed with power and authority to determine the law and adjudicate
the respective rights of the contending parties.14 SEC. 2. Petition for prohibition. - When the proceedings of any tribunal,
chanroblesvirtuallawlibrary corporation, board, officer or person, whether exercising judicial, quasi-
judicial or ministerial functions, are without or in excess of its or his
For a writ of certiorari to issue, the following requisites must concur: (1) it jurisdiction, or with grave abuse of discretion amounting to lack or excess of
must be directed against a tribunal, board, or officer exercising judicial or jurisdiction, and there is no appeal or any other plain, speedy, and adequate
remedy in the ordinary course of law, a person aggrieved thereby may file a a. immediately undertake an inventory of lands within its jurisdiction
verified petition in the proper court, alleging the facts with certainty and which shall be subject to the levy of the Social Housing Tax (SHT)
praying that judgment be rendered commanding the respondent to desist by the local sanggunian concerned;
from further proceeding in the action or matter specified therein, or otherwise
granting such incidental reliefs as law and justice may require. b. inform the affected registered owners of the effectivity of the SHT; a
chanroblesvirtuallawlibrary list of the lands and registered owners shall also be posted in 3
conspicuous places in the city/municipality;
In a petition for prohibition against any tribunal, corporation, board, or
person – whether exercising judicial, quasi-judicial, or ministerial functions – c. furnish the Treasurer’s office and the local sanggunian concerned of
who has acted without or in excess of jurisdiction or with grave abuse of the list of lands affected;
discretion, the petitioner prays that judgment be rendered, commanding the
6.4 The Treasurer’s office shall:
respondents to desist from further proceeding in the action or matter
specified in the petition. In this case, petitioner's primary intention is to a. collect the Social Housing Tax on top of the Real Property Tax, SEF
prevent respondents from implementing Ordinance Nos. SP-2095 and SP- Tax and other special assessments;
2235. Obviously, the writ being sought is in the nature of a prohibition,
commanding desistance. b. report to the DOF, thru the Bureau of Local Government Finance,
and the Mayor’s office the monthly collections on Social Housing
We consider that respondents City Mayor, City Treasurer, and City Assessor Tax (SHT). An annual report should likewise be submitted to the
are performing ministerialfunctions. A ministerial function is one that an HUDCC on the total revenues raised during the year pursuant to Sec.
officer or tribunal performs in the context of a given set of facts, in a 43, R.A. 7279 and the manner in which the same was disbursed.
prescribed manner and without regard for the exercise of his or its own
Petitioner has adduced special and important reasons as to why direct
judgment, upon the propriety or impropriety of the act done.20 Respondent
recourse to Us should be allowed. Aside from presenting a novel question of
Mayor, as chief executive of the city government, exercises such powers and
law, this case calls for immediate resolution since the challenged ordinances
performs such duties and functions as provided for by the LGC and other
adversely affect the property interests of all paying constituents of Quezon
laws.21 Particularly, he has the duty to ensure that all taxes and other
City. As well, this petition serves as a test case for the guidance of other local
revenues of the city are collected, and that city funds are applied to the
government units (LGUs). Indeed, the petition at bar is of transcendental
payment of expenses and settlement of obligations of the city, in accordance
importance warranting a relaxation of the doctrine of hierarchy of courts.
with law or ordinance.22 On the other hand, under the LGC, all local taxes,
In Social Justice Society (SJS) Officers, et al. v. Lim,24 the Court cited the
fees, and charges shall be collected by the provincial, city, municipal, or
case of Senator Jaworski v. Phil. Amusement & Gaming Corp.,25 where We
barangay treasurer, or their duly-authorized deputies, while the assessor shall
ratiocinated:
take charge, among others, of ensuring that all laws and policies governing
chanRoblesvirtualLawlibrary
the appraisal and assessment of real properties for taxation purposes are
properly executed.23Anent the SHT, the Department of Finance (DOF) Local Granting arguendo that the present action cannot be properly treated as a
Finance Circular No. 1-97, dated April 16, 1997, is more specific: petition for prohibition, the transcendental importance of the issues
chanRoblesvirtualLawlibrary involved in this case warrants that we set aside the technical defects and
take primary jurisdiction over the petition at bar. x x x This is in
6.3 The Assessor’s office of the Id.ntified LGU shall:
accordance with the well-entrenched principle that rules of procedure
are not inflexible tools designed to hinder or delay, but to facilitate and illumination of difficult constitutional
promote the administration of justice. Their strict and rigid application, questions.30ChanRoblesVirtualawlibrary
which would result in technicalities that tend to frustrate, rather than
promote substantial justice, must always be eschewed.26 A party challenging the constitutionality of a law, act, or statute must show
chanroblesvirtuallawlibrary “not only that the law is invalid, but also that he has sustained or is in
immediate, or imminent danger of sustaining some direct injury as a result of
B. Locus Standi of Petitioner its enforcement, and not merely that he suffers thereby in some indefinite
way.” It must be shown that he has been, or is about to be, denied some right
Respondents challenge petitioner’s legal standing to file this case on the or privilege to which he is lawfully entitled, or that he is about to be
ground that, in relation to Section 3 of Ordinance No. SP-2095, petitioner subjected to some burdens or penalties by reason of the statute complained
failed to allege his ownership of a property that has an assessed value of of.31ChanRoblesVirtualawlibrary
more than Php100,000.00 and, with respect to Ordinance No. SP-2335, by
what standing or personality he filed the case to nullify the same. According Tested by the foregoing, petitioner in this case clearly has legal standing to
to respondents, the petition is not a class suit, and that, for not having file the petition. He is a real party-in-interest to assail the constitutionality
specifically alleged that petitioner filed the case as a taxpayer, it could only and legality of Ordinance Nos. SP-2095 and SP-2235 because respondents
be surmised whether he is a party-in-interest who stands to be directly did not dispute that he is a registered co-owner of a residential property in
benefited or injured by the judgment in this case. Quezon City and that he paid property tax which already included the SHT
It is a general rule that every action must be prosecuted or defended in the and the garbage fee. He has substantial right to seek a refund of the payments
name of the real party-in-interest, who stands to be benefited or injured by he made and to stop future imposition. While he is a lone petitioner, his
cause of action to declare the validity of the subject ordinances is substantial
the judgment in the suit, or the party entitled to the avails of the suit.
and of paramount interest to similarly situated property owners in Quezon
Jurisprudence defines interest as "material interest, an interest in issue and to City.
be affected by the decree, as distinguished from mere interest in the question
involved, or a mere incidental interest. By real interest is meant a present C. Litis Pendentia
substantial interest, as distinguished from a mere expectancy or a future,
contingent, subordinate, or consequential interest." "To qualify a person to be Respondents move for the dismissal of this petition on the ground of litis
a real party-in-interest in whose name an action must be prosecuted, he must pendentia. They claim that, as early as February 22, 2012, a case
appear to be the present real owner of the right sought to be enforced."27 entitled Alliance of Quezon City Homeowners, Inc., et al., v. Hon. Herbert
chanroblesvirtuallawlibrary Bautista, et al., docketed as Civil Case No. Q-12-7-820, has been pending in
the Quezon City Regional Trial Court, Branch 104, which assails the legality
“Legal standing” or locus standi calls for more than just a generalized of Ordinance No. SP-2095. Relying on City of Makati, et al. v. Municipality
grievance.28 The concept has been defined as a personal and substantial (now City) of Taguig, et al.,32 respondents assert that there is substantial
interest in the case such that the party has sustained or will sustain direct identity of parties between the two cases because petitioner herein and
injury as a result of the governmental act that is being challenged.29 The gist plaintiffs in the civil case filed their respective cases as taxpayers of Quezon
of the question of standing is whether a party alleges such personal stake in City.
the outcome of the controversy as to assure that concrete adverseness which
sharpens the presentation of issues upon which the court depends for For petitioner, however, respondents’ contention is untenable since he is not
a party in Alliance and does not even have the remotest identity or for the sake of the stability of the rights and status of persons, and also to
association with the plaintiffs in said civil case. Moreover, respondents’ avoid the costs and expenses incident to numerous suits.
arguments would deprive this Court of its jurisdiction to determine the
constitutionality of laws under Section 5, Article VIII of the 1987 Among the several tests resorted to in ascertaining whether two suits relate to
Constitution.33ChanRoblesVirtualawlibrary a single or common cause of action are: (1) whether the same evidence
would support and sustain both the first and second causes of action; and (2)
Litis pendentia is a Latin term which literally means “a pending suit” and is whether the defenses in one case may be used to substantiate the complaint in
variously referred to in some decisions as lis pendens and auter action the other.
pendant.34 While it is normally connected with the control which the court
has on a property involved in a suit during the continuance proceedings, it is The determination of whether there is an identity of causes of action for
more interposed as a ground for the dismissal of a civil action pending in purposes of litis pendentia is inextricably linked with that of res judicata,
court.35 In Film Development Council of the Philippines v. SM Prime each constituting an element of the other. In either case, both relate to the
Holdings, Inc.,36 We elucidated: sound practice of including, in a single litigation, the disposition of all issues
chanRoblesvirtualLawlibrary relating to a cause of action that is before a court.37
chanroblesvirtuallawlibrary
Litis pendentia, as a ground for the dismissal of a civil action, refers to a
situation where two actions are pending between the same parties for the There is substantial identity of the parties when there is a community of
same cause of action, so that one of them becomes unnecessary and interest between a party in the first case and a party in the second case albeit
vexatious. It is based on the policy against multiplicity of suit and authorizes the latter was not impleaded in the first case.38 Moreover, the fact that the
a court to dismiss a case motu proprio. positions of the parties are reversed, i.e., the plaintiffs in the first case are the
defendants in the second case or vice-versa, does not negate the identity of
xxxx parties for purposes of determining whether the case is dismissible on the
ground of litis pendentia.39ChanRoblesVirtualawlibrary
The requisites in order that an action may be dismissed on the ground of litis
pendentiaare: (a) the identity of parties, or at least such as representing the In this case, it is notable that respondents failed to attach any pleading
same interest in both actions; (b) the identity of rights asserted and relief connected with the alleged civil case pending before the Quezon City trial
prayed for, the relief being founded on the same facts, and (c) the identity of court. Granting that there is substantial identity of parties between said case
the two cases such that judgment in one, regardless of which party is and this petition, dismissal on the ground of litis pendentia still cannot be had
successful, would amount to res judicata in the other. in view of the absence of the second and third requisites. There is no way for
Us to determine whether both cases are based on the same set of facts that
xxxx require the presentation of the same evidence. Even if founded on the same
set of facts, the rights asserted and reliefs prayed for could be different.
The underlying principle of litis pendentia is the theory that a party is not Moreover, there is no basis to rule that the two cases are intimately related
allowed to vex another more than once regarding the same subject matter and and/or intertwined with one another such that the judgment that may be
for the same cause of action. This theory is founded on the public policy that rendered in one, regardless of which party would be successful, would
the same subject matter should not be the subject of controversy in courts amount to res judicata in the other.
more than once, in order that possible conflicting judgments may be avoided
D. Failure to Exhaust Administrative Remedies x x x [T]he timeframe fixed by law for parties to avail of their legal remedies
before competent courts is not a “mere technicality” that can be easily
Respondents contend that petitioner failed to exhaust administrative remedies brushed aside. The periods stated in Section 187 of the Local Government
for his non-compliance with Section 187 of the LGC, which mandates: Code are mandatory. x x x Being its lifeblood, collection of revenues by the
chanRoblesvirtualLawlibrary government is of paramount importance. The funds for the operation of its
agencies and provision of basic services to its inhabitants are largely derived
Section 187. Procedure for Approval and Effectivity of Tax Ordinances and from its revenues and collections. Thus, it is essential that the validity of
Revenue Measures; Mandatory Public Hearings. – The procedure for revenue measures is not left uncertain for a considerable length of time.
approval of local tax ordinances and revenue measures shall be in accordance Hence, the law provided a time limit for an aggrieved party to assail the
with the provisions of this Code: Provided, That public hearings shall be legality of revenue measures and tax ordinances.”44
conducted for the purpose prior to the enactment thereof: Provided, further, chanroblesvirtuallawlibrary
That any question on the constitutionality or legality of tax ordinances or
revenue measures may be raised on appeal within thirty (30) days from the Despite these cases, the Court, in Ongsuco, et al. v. Hon. Malones,45 held that
effectivity thereof to the Secretary of Justice who shall render a decision there was no need for petitioners therein to exhaust administrative remedies
within sixty (60) days from the date of receipt of the appeal: Provided, before resorting to the courts, considering that there was only a pure question
however, That such appeal shall not have the effect of suspending the of law, the parties did not dispute any factual matter on which they had to
effectivity of the ordinance and the accrual and payment of the tax, fee, or present evidence. Likewise, in Cagayan Electric Power and Light Co., Inc. v.
charge levied therein: Provided, finally, That within thirty (30) days after City of Cagayan de Oro,46We relaxed the application of the rules in view of
receipt of the decision or the lapse of the sixty-day period without the the more substantive matters. For the same reasons, this petition is an
Secretary of Justice acting upon the appeal, the aggrieved party may file exception to the general rule.
appropriate proceedings with a court of competent jurisdiction.
chanroblesvirtuallawlibrary Substantive Issues

The provision, the constitutionality of which was sustained in Drilon v.


Lim,40 has been construed as mandatory41 considering that – Petitioner asserts that the protection of real properties from informal settlers
and the collection of garbage are basic and essential duties and functions of
A municipal tax ordinance empowers a local government unit to impose the Quezon City Government. By imposing the SHT and the garbage fee, the
taxes. The power to tax is the most effective instrument to raise needed latter has shown a penchant and pattern to collect taxes to pay for public
revenues to finance and support the myriad activities of local government services that could be covered by its revenues from taxes imposed on
units for the delivery of basic services essential to the promotion of the property, idle land, business, transfer, amusement, etc., as well as the Internal
general welfare and enhancement of peace, progress, and prosperity of the Revenue Allotment (IRA) from the National Government. For petitioner, it is
people. Consequently, any delay in implementing tax measures would be to noteworthy that respondents did not raise the issue that the Quezon City
the detriment of the public. It is for this reason that protests over tax Government is in dire financial state and desperately needs money to fund
ordinances are required to be done within certain time frames. x x x.42 housing for informal settlers and to pay for garbage collection. In fact, it has
chanroblesvirtuallawlibrary not denied that its revenue collection in 2012 is in the sum of P13.69 billion.

The obligatory nature of Section 187 was underscored in Hagonoy Market Moreover, the imposition of the SHT and the garbage fee cannot be justified
Vendor Asso. v. Municipality of Hagonoy:43cralawlawlibrary by the Quezon City Government as an exercise of its power to create sources
of income under Section 5, Article X of the 1987 Constitution.47 According principle found in Sections 1 and 2, Article XIII57 of the 1987 Constitution
to petitioner, the constitutional provision is not a carte blanche for the LGU and Sections 2 (a)58 and 4359 of R.A. No. 7279, or the “Urban Development
to tax everything under its territorial and political jurisdiction as the and Housing Act of 1992 (UDHA).
provision itself admits of guidelines and limitations.
Relying on Manila Race Horse Trainers Assn., Inc. v. De La
Petitioner further claims that the annual property tax is an ad valorem tax, a Fuente,60 and Victorias Milling Co., Inc. v. Municipality of Victorias,
percentage of the assessed value of the property, which is subject to revision etc.,61 respondents assert that Ordinance No. SP-2095 applies equally to all
every three (3) years in order to reflect an increase in the market value of the real property owners without discrimination. There is no way that the
property. The SHT and the garbage fee are actually increases in the property ordinance could violate the equal protection clause because real property
tax which are not based on the assessed value of the property or its owners and informal settlers do not belong to the same class.
reassessment every three years; hence, in violation of Sections 232 and 233
of the LGC.48ChanRoblesVirtualawlibrary Ordinance No. SP-2095 is also not oppressive since the tax rate being
imposed is consistent with the UDHA. While the law authorizes LGUs to
For their part, respondents relied on the presumption in favor of the collect SHT on properties with an assessed value of more than P50,000.00,
constitutionality of Ordinance Nos. SP-2095 and SP-2235, the questioned ordinance only covers properties with an assessed value
invoking Victorias Milling Co., Inc. v. Municipality of Victorias, exceeding P100,000.00. As well, the ordinance provides for a tax credit
etc.,49People v. Siton, et al.,50 and Hon. Ermita v. Hon. Aldecoa- equivalent to the total amount of the special assessment paid by the property
Delorino.51 They argue that the burden of establishing the invalidity of an owner beginning in the sixth (6th) year of the effectivity of the ordinance.
ordinance rests heavily upon the party challenging its constitutionality. They
insist that the questioned ordinances are proper exercises of police power On the contrary, petitioner claims that the collection of the SHT is
similar to Telecom. & Broadcast Attys. of the Phils., Inc. v. tantamount to a penalty imposed on real property owners due to the failure of
COMELEC52 and Social Justice Society (SJS), et al. v. Hon. Atienza, respondent Quezon City Mayor and Council to perform their duty to secure
Jr.53 and that their enactment finds basis in the social justice principle and protect real property owners from informal settlers, thereby burdening
enshrined in Section 9,54 Article II of the 1987 Constitution. them with the expenses to provide funds for housing. For petitioner, the SHT
cannot be viewed as a “charity” from real property owners since it is forced,
As to the issue of publication, respondents argue that where the law provides not voluntary.
for its own effectivity, publication in the Official Gazette is not necessary so
long as it is not punitive in character, citing Balbuna, et al. v. Hon. Secretary Also, petitioner argues that the collection of the SHT is a kind of class
of Education, et al.55 and Askay v. Cosalan.56 Thus, Ordinance No. SP-2095 legislation that violates the right of property owners to equal protection of the
took effect after its publication, while Ordinance No. SP-2235 became laws since it favors informal settlers who occupy property not their own and
effective after its approval on December 26, 2013. pay no taxes over law-abiding real property owners who pay income and
realty taxes.
Additionally, the parties articulate the following positions:
Petitioner further contends that respondents’ characterization of the SHT as
On the Socialized Housing Tax “nothing more than an advance payment on the real property tax” has no
statutory basis. Allegedly, property tax cannot be collected before it is due
Respondents emphasize that the SHT is pursuant to the social justice because, under the LGC, chartered cities are authorized to impose property
tax based on the assessed value and the general revision of assessment that is ownership based on its assessed value, while the garbage fee is required on
made every three (3) years. the domestic household. The only reference to the property is the
determination of the applicable rate and the facility of collection.
As to the rationale of SHT stated in Ordinance No. SP-2095, which, in turn,
was based on Section 43 of the UDHA, petitioner asserts that there is no Petitioner argues, however, that Ordinance No. S-2235 cannot be justified as
specific provision in the 1987 Constitution stating that the ownership and an exercise of police power. The cases of Calalang v. Williams,65Patalinghug
enjoyment of property bear a social function. And even if there is, it is v. Court of Appeals,66 and Social Justice Society (SJS), et al. v. Hon. Atienza,
seriously doubtful and far-fetched that the principle means that property Jr.,67 which were cited by respondents, are inapplicable since the assailed
owners should provide funds for the housing of informal settlers and for ordinance is a revenue measure and does not regulate the disposal or other
home site development. Social justice and police power, petitioner believes, aspect of garbage.
does not mean imposing a tax on one, or that one has to give up something,
for the benefit of another. At best, the principle that property ownership and The subject ordinance, for petitioner, is discriminatory as it collects garbage
enjoyment bear a social function is but a reiteration of the Civil Law fee only from domestic households and not from restaurants, food courts, fast
principle that property should not be enjoyed and abused to the injury of food chains, and other commercial dining places that spew garbage much
other properties and the community, and that the use of the property may be more than residential property owners.
restricted by police power, the exercise of which is not involved in this case.
Petitioner likewise contends that the imposition of garbage fee is tantamount
Finally, petitioner alleges that 6 Bistekvilles will be constructed out of the to double taxation because garbage collection is a basic and essential public
SHT collected. Bistek is the monicker of respondent City Mayor. service that should be paid out from property tax, business tax, transfer tax,
The Bistekvilles makes it clear, therefore, that politicians will take the credit amusement tax, community tax certificate, other taxes, and the IRA of the
for the tax imposed on real property owners. Quezon City Government. To bolster the claim, he states that the revenue
collection of the Quezon City Government reached Php13.69 billion in 2012.
On the Garbage Fee A small portion of said amount could be spent for garbage collection and
other essential services.
Respondents claim that Ordinance No. S-2235, which is an exercise of police
power, collects on the average from every household a garbage fee in the It is further noted that the Quezon City Government already collects garbage
meager amount of thirty-three (33) centavos per day compared with the sum fee under Section 4768 of R.A. No. 9003, or the Ecological Solid Waste
of P1,659.83 that the Quezon City Government annually spends for every Management Act of 2000, which authorizes LGUs to impose fees in amounts
household for garbage collection and waste sufficient to pay the costs of preparing, adopting, and implementing a solid
management.62ChanRoblesVirtualawlibrary waste management plan, and that LGUs have access to the Solid Waste
Management (SWM) Fund created under Section 4669 of the same law. Also,
In addition, there is no double taxation because the ordinance involves a fee. according to petitioner, it is evident that Ordinance No. S-2235 is
Even assuming that the garbage fee is a tax, the same cannot be a direct inconsistent with R.A. No. 9003 for while the law encourages segregation,
duplicate tax as it is imposed on a different subject matter and is of a composting, and recycling of waste, the ordinance only emphasizes the
different kind or character. Based on Villanueva, et al. v. City of collection and payment of garbage fee; while the law calls for an active
Iloilo63 and Victorias Milling Co., Inc. v. Municipality of Victorias, involvement of the barangay in the collection, segregation, and recycling of
etc.,64 there is no “taxing twice” because the real property tax is imposed on garbage, the ordinance skips such mandate.
should uphold the principle of the supremacy of the Constitution.75 As to
Lastly, in challenging the ordinance, petitioner avers that the garbage fee was conformity with existing statutes, Batangas CATV, Inc. v. Court of
collected even if the required publication of its approval had not yet elapsed. Appeals76 has this to say:
He notes that on January 7, 2014, he paid his realty tax which already chanRoblesvirtualLawlibrary
included the garbage fee.
It is a fundamental principle that municipal ordinances are inferior in status
The Court’s Ruling and subordinate to the laws of the state. An ordinance in conflict with a state
law of general character and statewide application is universally held to be
invalid. The principle is frequently expressed in the declaration that
Respondents correctly argued that an ordinance, as in every law, is presumed municipal authorities, under a general grant of power, cannot adopt
valid. ordinances which infringe the spirit of a state law or repugnant to the general
An ordinance carries with it the presumption of validity. The question of policy of the state. In every power to pass ordinances given to a municipality,
reasonableness though is open to judicial inquiry. Much should be left thus to there is an implied restriction that the ordinances shall be consistent with the
the discretion of municipal authorities. Courts will go slow in writing off an general law. In the language of Justice Isagani Cruz (ret.), this Court,
ordinance as unreasonable unless the amount is so excessive as to be in Magtajas vs. Pryce Properties Corp., Inc., ruled that:
prohibitive, arbitrary, unreasonable, oppressive, or confiscatory. A rule chanRoblesvirtualLawlibrary
which has gained acceptance is that factors relevant to such an inquiry are the The rationale of the requirement that the ordinances should not contravene a
municipal conditions as a whole and the nature of the business made subject statute is obvious. Municipal governments are only agents of the national
to imposition.70 government. Local councils exercise only delegated legislative powers
chanroblesvirtuallawlibrary conferred on them by Congress as the national lawmaking body. The
For an ordinance to be valid though, it must not only be within the corporate delegate cannot be superior to the principal or exercise powers higher than
those of the latter. It is a heresy to suggest that the local government units
powers of the LGU to enact and must be passed according to the procedure
prescribed by law, it should also conform to the following requirements: (1) can undo the acts of Congress, from which they have derived their power in
not contrary to the Constitution or any statute; (2) not unfair or oppressive; the first place, and negate by mere ordinance the mandate of the statute.
(3) not partial or discriminatory; (4) not prohibit but may regulate trade; (5) chanroblesvirtuallawlibrary
general and consistent with public policy; and (6) not unreasonable.71 As Municipal corporations owe their origin to, and derive their powers and
jurisprudence indicates, the tests are divided into the formal (i.e., whether the rights wholly from the legislature. It breathes into them the breath of life,
ordinance was enacted within the corporate powers of the LGU and whether without which they cannot exist. As it creates, so it may destroy. As it may
it was passed in accordance with the procedure prescribed by law), and the destroy, it may abridge and control. Unless there is some constitutional
substantive (i.e., involving inherent merit, like the conformity of the limitation on the right, the legislature might, by a single act, and if we can
ordinance with the limitations under the Constitution and the statutes, as well suppose it capable of so great a folly and so great a wrong, sweep from
as with the requirements of fairness and reason, and its consistency with existence all of the municipal corporations in the State, and the corporation
public policy).72ChanRoblesVirtualawlibrary could not prevent it. We know of no limitation on the right so far as to the
corporation themselves are concerned. They are, so to phrase it, the mere
An ordinance must pass muster under the test of constitutionality and the test tenants at will of the legislature.
of consistency with the prevailing laws.73 If not, it is void.74 Ordinance
This basic relationship between the national legislature and the local Specifically, with regard to the power of taxation, it is indubitably the most
government units has not been enfeebled by the new provisions in the effective instrument to raise needed revenues in financing and supporting
Constitution strengthening the policy of local autonomy. Without meaning to myriad activities of the LGUs for the delivery of basic services essential to
detract from that policy, we here confirm that Congress retains control of the the promotion of the general welfare and the enhancement of peace, progress,
local government units although in significantly reduced degree now than and prosperity of the people.82 As this Court opined in National Power Corp.
under our previous Constitutions. The power to create still includes the v. City of Cabanatuan:83cralawlawlibrary
power to destroy. The power to grant still includes the power to withhold or
recall. True, there are certain notable innovations in the Constitution, like the In recent years, the increasing social challenges of the times expanded the
direct conferment on the local government units of the power to tax, which scope of state activity, and taxation has become a tool to realize social justice
cannot now be withdrawn by mere statute. By and large, however, the and the equitable distribution of wealth, economic progress and the
national legislature is still the principal of the local government units, which protection of local industries as well as public welfare and similar objectives.
cannot defy its will or modify or violate it.77 Taxation assumes even greater significance with the ratification of the 1987
chanroblesvirtuallawlibrary Constitution. Thenceforth, the power to tax is no longer vested exclusively
on Congress; local legislative bodies are now given direct authority to levy
LGUs must be reminded that they merely form part of the whole; that the taxes, fees and other charges pursuant to Article X, Section 5 of the 1987
policy of ensuring the autonomy of local governments was never intended by Constitution, viz:
the drafters of the 1987 Constitution to create an imperium in imperio and chanRoblesvirtualLawlibrary
install an intra-sovereign political subdivision independent of a single
sovereign state.78 “[M]unicipal corporations are bodies politic and corporate, “Section 5. Each Local Government unit shall have the power to create its
created not only as local units of local self-government, but as governmental own sources of revenue, to levy taxes, fees and charges subject to such
agencies of the state. The legislature, by establishing a municipal guidelines and limitations as the Congress may provide, consistent with the
corporation, does not divest the State of any of its sovereignty; absolve itself basic policy of local autonomy. Such taxes, fees and charges shall accrue
from its right and duty to administer the public affairs of the entire state; or exclusively to the local governments.”
divest itself of any power over the inhabitants of the district which it chanroblesvirtuallawlibrary
possesses before the charter was granted.”79ChanRoblesVirtualawlibrary
This paradigm shift results from the realization that genuine development can
be achieved only by strengthening local autonomy and promoting
LGUs are able to legislate only by virtue of a valid delegation of legislative decentralization of governance. For a long time, the country’s highly
power from the national legislature; they are mere agents vested with what is centralized government structure has bred a culture of dependence among
called the power of subordinate legislation.80“Congress enacted the LGC as
local government leaders upon the national leadership. It has also “dampened
the implementing law for the delegation to the various LGUs of the State’s the spirit of initiative, innovation and imaginative resilience in matters of
great powers, namely: the police power, the power of eminent domain, and local development on the part of local government leaders.” The only way to
the power of taxation. The LGC was fashioned to delineate the specific shatter this culture of dependence is to give the LGUs a wider role in the
parameters and limitations to be complied with by each LGU in the exercise delivery of basic services, and confer them sufficient powers to generate their
of these delegated powers with the view of making each LGU a fully own sources for the purpose. To achieve this goal, Section 3 of Article X of
functioning subdivision of the State subject to the constitutional and statutory the 1987 Constitution mandates Congress to enact a local government code
limitations.”81ChanRoblesVirtualawlibrary that will, consistent with the basic policy of local autonomy, set the
guidelines and limitations to this grant of taxing powers x x x84 grant nor a prohibition by statute, the tax power must be deemed to exist
chanroblesvirtuallawlibrary although Congress may provide statutory limitations and guidelines. The
basic rationale for the current rule is to safeguard the viability and self-
Fairly recently, We also stated in Pelizloy Realty Corporation v. Province of sufficiency of local government units by directly granting them general and
Benguet85 that: broad tax powers. Nevertheless, the fundamental law did not intend the
chanRoblesvirtualLawlibrary delegation to be absolute and unconditional; the constitutional objective
The rule governing the taxing power of provinces, cities, municipalities and obviously is to ensure that, while the local government units are being
barangays is summarized in Icard v. City Council of Baguio: strengthened and made more autonomous, the legislature must still see to it
chanRoblesvirtualLawlibrary that (a) the taxpayer will not be over-burdened or saddled with multiple and
unreasonable impositions; (b) each local government unit will have its fair
It is settled that a municipal corporation unlike a sovereign state is clothed share of available resources; (c) the resources of the national government will
with no inherent power of taxation. The charter or statute must plainly show not be unduly disturbed; and (d) local taxation will be fair, uniform, and
an intent to confer that power or the municipality, cannot assume it. And the just.”88ChanRoblesVirtualawlibrary
power when granted is to be construed in strictissimi juris. Any doubt or
ambiguity arising out of the term used in granting that power must be Subject to the provisions of the LGC and consistent with the basic policy of
resolved against the municipality. Inferences, implications, deductions – all local autonomy, every LGU is now empowered and authorized to create its
these – have no place in the interpretation of the taxing power of a municipal own sources of revenue and to levy taxes, fees, and charges which shall
corporation. [Underscoring supplied] accrue exclusively to the local government unit as well as to apply its
resources and assets for productive, developmental, or welfare purposes, in
xxxx the exercise or furtherance of their governmental or proprietary powers and
functions.89 The relevant provisions of the LGC which establish the
Per Section 5, Article X of the 1987 Constitution, “the power to tax is no parameters of the taxing power of the LGUs are as follows:
longer vested exclusively on Congress; local legislative bodies are now given chanRoblesvirtualLawlibrary
direct authority to levy taxes, fees and other charges.” Nevertheless, such
SECTION 130. Fundamental Principles. – The following fundamental
authority is “subject to such guidelines and limitations as the Congress may
provide.” principles shall govern the exercise of the taxing and other revenue-raising
chanroblesvirtuallawlibrary powers of local government units:

In conformity with Section 3, Article X of the 1987 Constitution, Congress (a) Taxation shall be uniform in each local government unit;
enacted Republic Act No. 7160, otherwise known as the Local Government
Code of 1991. Book II of the LGC governs local taxation and fiscal (b) Taxes, fees, charges and other impositions shall:
matters.86 chanRoblesvirtualLawlibrary
chanroblesvirtuallawlibrary
(1) be equitable and based as far as practicable on the taxpayer’s ability to
Indeed, LGUs have no inherent power to tax except to the extent that such pay;
power might be delegated to them either by the basic law or by the
statute.87 “Under the now prevailing Constitution, where there is neither a (2) be levied and collected only for public purposes;
out of, or passing through, the territorial jurisdictions of local government
(3) not be unjust, excessive, oppressive, or confiscatory; units in the guise of charges for wharfage, tolls for bridges or otherwise, or
other taxes, fees, or charges in any form whatsoever upon such goods or
(4) not be contrary to law, public policy, national economic policy, or in merchandise;
restraint of trade;
(f) Taxes, fees or charges on agricultural and aquatic products when sold by
(c) The collection of local taxes, fees, charges and other impositions shall in marginal farmers or fishermen;
no case be let to any private person;
(g) Taxes on business enterprises certified to by the Board of Investments as
(d) The revenue collected pursuant to the provisions of this Code shall inure pioneer or non-pioneer for a period of six (6) and four (4) years, respectively
solely to the benefit of, and be subject to the disposition by, the local from the date of registration;
government unit levying the tax, fee, charge or other imposition unless
otherwise specifically provided herein; and, (h) Excise taxes on articles enumerated under the National Internal Revenue
Code, as amended, and taxes, fees or charges on petroleum products;
(e) Each local government unit shall, as far as practicable, evolve a
progressive system of taxation. (i) Percentage or value-added tax (VAT) on sales, barters or exchanges or
chanroblesvirtuallawlibrary similar transactions on goods or services except as otherwise provided
herein;
SECTION 133. Common Limitations on the Taxing Powers of Local
Government Units. – Unless otherwise provided herein, the exercise of the (j) Taxes on the gross receipts of transportation contractors and persons
taxing powers of provinces, cities, municipalities, and barangays shall not engaged in the transportation of passengers or freight by hire and common
extend to the levy of the following: carriers by air, land or water, except as provided in this Code;
chanRoblesvirtualLawlibrary

(a) Income tax, except when levied on banks and other financial institutions; (k) Taxes on premiums paid by way of reinsurance or retrocession;

(b) Documentary stamp tax; (l) Taxes, fees or charges for the registration of motor vehicles and for the
issuance of all kinds of licenses or permits for the driving thereof, except
(c) Taxes on estates, inheritance, gifts, legacies and other acquisitions mortis tricycles;
causa, except as otherwise provided herein;
(m) Taxes, fees, or other charges on Philippine products actually exported,
(d) Customs duties, registration fees of vessel and wharfage on wharves, except as otherwise provided herein;
tonnage dues, and all other kinds of customs fees, charges and dues except
wharfage on wharves constructed and maintained by the local government (n) Taxes, fees, or charges, on Countryside and Barangay Business
unit concerned; Enterprises and cooperatives duly registered under R.A. No. 6810 and
Republic Act Numbered Sixty-nine hundred thirty-eight (R.A. No. 6938)
(e) Taxes, fees, and charges and other impositions upon goods carried into or otherwise known as the “Cooperative Code of the Philippines” respectively;
and
for the needs of the other members of society. The principle is this:
(o) Taxes, fees or charges of any kind on the National Government, its chanRoblesvirtualLawlibrary
agencies and instrumentalities, and local government units.
chanroblesvirtuallawlibrary Police power proceeds from the principle that every holder of property,
however absolute and unqualified may be his title, holds it under the implied
SECTION 151. Scope of Taxing Powers. – Except as otherwise provided in liability that his use of it shall not be injurious to the equal enjoyment of
this Code, the city, may levy the taxes, fees, and charges which the province others having an equal right to the enjoyment of their property, nor injurious
or municipality may impose: Provided, however, That the taxes, fees and to the right of the community. Rights of property, like all other social and
charges levied and collected by highly urbanized and independent component conventional rights, are subject to reasonable limitations in their enjoyment
cities shall accrue to them and distributed in accordance with the provisions as shall prevent them from being injurious, and to such reasonable restraints
of this Code. and regulations established by law as the legislature, under the governing and
controlling power vested in them by the constitution, may think necessary
The rates of taxes that the city may levy may exceed the maximum rates and expedient.92
allowed for the province or municipality by not more than fifty percent chanroblesvirtuallawlibrary
(50%) except the rates of professional and amusement taxes.
Police power, which flows from the recognition that salus populi est suprema
SECTION 186. Power To Levy Other Taxes, Fees or Charges. – Local lex (the welfare of the people is the supreme law), is the plenary power
government units may exercise the power to levy taxes, fees or charges on vested in the legislature to make statutes and ordinances to promote the
any base or subject not otherwise specifically enumerated herein or taxed health, morals, peace, education, good order or safety and general welfare of
under the provisions of the National Internal Revenue Code, as amended, or the people.93 Property rights of individuals may be subjected to restraints and
other applicable laws: Provided, That the taxes, fees, or charges shall not be burdens in order to fulfill the objectives of the government in the exercise of
unjust, excessive, oppressive, confiscatory or contrary to declared national police power. 94 In this jurisdiction, it is well-entrenched that taxation may be
policy: Provided, further, That the ordinance levying such taxes, fees or made the implement of the state’s police
charges shall not be enacted without any prior public hearing conducted for power.95ChanRoblesVirtualawlibrary
the purpose.
chanroblesvirtuallawlibrary Ordinance No. SP-2095 imposes a Socialized Housing Tax equivalent to
0.5% on the assessed value of land in excess of Php100,000.00. This special
On the Socialized Housing Tax assessment is the same tax referred to in R.A. No. 7279 or the UDHA.96 The
SHT is one of the sources of funds for urban development and housing
Contrary to petitioner’s submission, the 1987 Constitution explicitly program.97Section 43 of the law provides:
espouses the view that the use of property bears a social function and that all chanRoblesvirtualLawlibrary
economic agents shall contribute to the common good.90 The Court already
recognized this in Social Justice Society (SJS), et al. v. Hon. Atienza, Sec. 43. Socialized Housing Tax. – Consistent with the constitutional
Jr.:91cralawlawlibrary principle that the ownership and enjoyment of property bear a social function
and to raise funds for the Program, all local government units are hereby
Property has not only an individual function, insofar as it has to provide for authorized to impose an additional one-half percent (0.5%) tax on the
the needs of the owner, but also a social function insofar as it has to provide assessed value of all lands in urban areas in excess of Fifty thousand pesos
(P50,000.00). NHA, in cooperation with the private developers and concerned agencies,
chanroblesvirtuallawlibrary shall provide socialized housing or resettlement areas with basic services and
facilities such as potable water, power and electricity, and an adequate power
The rationale of the SHT is found in the preambular clauses of the subject distribution system, sewerage facilities, and an efficient and adequate solid
ordinance, to wit: waste disposal system; and access to primary roads and transportation
chanRoblesvirtualLawlibrary facilities.104 The provisions for health, education, communications, security,
WHEREAS, the imposition of additional tax is intended to provide the City recreation, relief and welfare shall also be planned and be given priority for
Government with sufficient funds to initiate, implement and undertake implementation by the LGU and concerned agencies in cooperation with the
Socialized Housing Projects and other related preliminary activities; private sector and the beneficiaries
themselves.105ChanRoblesVirtualawlibrary
WHEREAS, the imposition of 0.5% tax will benefit the Socialized Housing
Programs and Projects of the City Government, specifically the marginalized Moreover, within two years from the effectivity of the UDHA, the LGUs, in
sector through the acquisition of properties for human settlements; coordination with the NHA, are directed to implement the relocation and
resettlement of persons living in danger areas such as esteros, railroad tracks,
garbage dumps, riverbanks, shorelines, waterways, and other public places
WHEREAS, the removal of the urban blight will definitely increase fair
market value of properties in the city[.] like sidewalks, roads, parks, and playgrounds.106 In coordination with the
chanroblesvirtuallawlibrary NHA, the LGUs shall provide relocation or resettlement sites with basic
services and facilities and access to employment and livelihood opportunities
The above-quoted are consistent with the UDHA, which the LGUs are sufficient to meet the basic needs of the affected
charged to implement in their respective localities in coordination with the families.107ChanRoblesVirtualawlibrary
Housing and Urban Development Coordinating Council, the national housing
agencies, the Presidential Commission for the Urban Poor, the private sector, Clearly, the SHT charged by the Quezon City Government is a tax which is
and other non-government organizations.98 It is the declared policy of the within its power to impose. Aside from the specific authority vested by
State to undertake a comprehensive and continuing urban development and Section 43 of the UDHA, cities are allowed to exercise such other powers
housing program that shall, among others, uplift the conditions of the and discharge such other functions and responsibilities as are necessary,
underprivileged and homeless citizens in urban areas and in resettlement appropriate, or incidental to efficient and effective provision of the basic
areas, and provide for the rational use and development of urban land in services and facilities which include, among others, programs and projects
order to bring about, among others, reduction in urban dysfunctions, for low-cost housing and other mass dwellings.108 The collections made
particularly those that adversely affect public health, safety and ecology, and accrue to its socialized housing programs and projects. The tax is not a pure
access to land and housing by the underprivileged and homeless exercise of taxing power or merely to raise revenue; it is levied with a
citizens.99 Urban renewal and resettlement shall include the rehabilitation and regulatory purpose. The levy is primarily in the exercise of the police power
development of blighted and slum areas100 and the resettlement of program for the general welfare of the entire city. It is greatly imbued with public
beneficiaries in accordance with the provisions of the interest. Removing slum areas in Quezon City is not only beneficial to the
UDHA.101ChanRoblesVirtualawlibrary underprivileged and homeless constituents but advantageous to the real
property owners as well. The situation will improve the value of the their
Under the UDHA, socialized housing102 shall be the primary strategy in property investments, fully enjoying the same in view of an orderly, secure,
providing shelter for the underprivileged and homeless.103 The LGU or the and safe community, and will enhance the quality of life of the poor, making
them law-abiding constituents and better consumers of business products. due process clause.111
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Though broad and far-reaching, police power is subordinate to constitutional
limitations and is subject to the requirement that its exercise must be As with the State, LGUs may be considered as having properly exercised
reasonable and for the public good.109 In the words of City of Manila v. Hon. their police power only if there is a lawful subject and a lawful method or, to
Laguio, Jr.:110cralawlawlibrary be precise, if the following requisites are met: (1) the interests of the public
generally, as distinguished from those of a particular class, require its
The police power granted to local government units must always be exercise and (2) the means employed are reasonably necessary for the
exercised with utmost observance of the rights of the people to due process accomplishment of the purpose and not unduly oppressive upon
and equal protection of the law. Such power cannot be exercised individuals.112ChanRoblesVirtualawlibrary
whimsically, arbitrarily or despotically as its exercise is subject to a
qualification, limitation or restriction demanded by the respect and regard In this case, petitioner argues that the SHT is a penalty imposed on real
due to the prescription of the fundamental law, particularly those forming property owners because it burdens them with expenses to provide funds for
part of the Bill of Rights. Individual rights, it bears emphasis, may be the housing of informal settlers, and that it is a class legislation since it favors
adversely affected only to the extent that may fairly be required by the the latter who occupy properties which is not their own and pay no taxes.
legitimate demands of public interest or public welfare. Due process requires
the intrinsic validity of the law in interfering with the rights of the person to We disagree.
his life, liberty and property.
Equal protection requires that all persons or things similarly situated should
xxxx be treated alike, both as to rights conferred and responsibilities
imposed.113 The guarantee means that no person or class of persons shall be
To successfully invoke the exercise of police power as the rationale for the denied the same protection of laws which is enjoyed by other persons or
enactment of the Ordinance, and to free it from the imputation of other classes in like circumstances.114 Similar subjects should not be treated
constitutional infirmity, not only must it appear that the interests of the public differently so as to give undue favor to some and unjustly discriminate
generally, as distinguished from those of a particular class, require an against others.115 The law may, therefore, treat and regulate one class
interference with private rights, but the means adopted must be reasonably differently from another class provided there are real and substantial
necessary for the accomplishment of the purpose and not unduly oppressive differences to distinguish one class from
upon individuals. It must be evident that no other alternative for the another.116ChanRoblesVirtualawlibrary
accomplishment of the purpose less intrusive of private rights can work. A
reasonable relation must exist between the purposes of the police measure An ordinance based on reasonable classification does not violate the
and the means employed for its accomplishment, for even under the guise of constitutional guaranty of the equal protection of the law. The requirements
protecting the public interest, personal rights and those pertaining to private for a valid and reasonable classification are: (1) it must rest on substantial
property will not be permitted to be arbitrarily invaded. distinctions; (2) it must be germane to the purpose of the law; (3) it must not
be limited to existing conditions only; and (4) it must apply equally to all
Lacking a concurrence of these two requisites, the police measure shall be members of the same class.117ChanRoblesVirtualawlibrary
struck down as an arbitrary intrusion into private rights – a violation of the
For the purpose of undertaking a comprehensive and continuing urban
development and housing program, the disparities between a real property have upheld the ordinances against constitutional and statutory
owner and an informal settler as two distinct classes are too obvious and need challenges.124ChanRoblesVirtualawlibrary
not be discussed at length. The differentiation conforms to the practical
dictates of justice and equity and is not discriminatory within the meaning of A municipality has an affirmative duty to supervise and control the collection
the Constitution. Notably, the public purpose of a tax may legally exist even of garbage within its corporate limits.125 The LGC specifically assigns the
if the motive which impelled the legislature to impose the tax was to favor responsibility of regulation and oversight of solid waste to local governing
one over another.118 It is inherent in the power to tax that a State is free to bodies because the Legislature determined that such bodies were in the best
select the subjects of taxation.119 Inequities which result from a singling out position to develop efficient waste management programs.126 To impose on
of one particular class for taxation or exemption infringe no constitutional local governments the responsibility to regulate solid waste but not grant
limitation.120ChanRoblesVirtualawlibrary them the authority necessary to fulfill the same would lead to an absurd
result.”127 As held in one U.S. case:
Further, the reasonableness of Ordinance No. SP-2095 cannot be disputed. It chanRoblesvirtualLawlibrary
is not confiscatory or oppressive since the tax being imposed therein is below
what the UDHA actually allows. As pointed out by respondents, while the x x x When a municipality has general authority to regulate a particular
law authorizes LGUs to collect SHT on lands with an assessed value of more subject matter, the manner and means of exercising those powers, where not
than P50,000.00, the questioned ordinance only covers lands with an specifically prescribed by the legislature, are left to the discretion of the
assessed value exceeding P100,000.00. Even better, on certain conditions, municipal authorities. x x x Leaving the manner of exercising municipal
the ordinance grants a tax credit equivalent to the total amount of the special powers to the discretion of municipal authorities "implies a range of
assessment paid beginning in the sixth (6th) year of its effectivity. Far from reasonableness within which a municipality's exercise of discretion will not
being obnoxious, the provisions of the subject ordinance are fair and just. be interfered with or upset by the judiciary."128
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On the Garbage Fee In this jurisdiction, pursuant to Section 16 of the LGC and in the proper
exercise of its corporate powers under Section 22 of the same,
In the United States of America, it has been held that the authority of a the Sangguniang Panlungsod of Quezon City, like other local legislative
municipality to regulate garbage falls within its police power to protect bodies, is empowered to enact ordinances, approve resolutions, and
public health, safety, and welfare.121 As opined, the purposes and policy appropriate funds for the general welfare of the city and its
underpinnings of the police power to regulate the collection and disposal of inhabitants.129 Section 16 of the LGC provides:
solid waste are: (1) to preserve and protect the public health and welfare as chanRoblesvirtualLawlibrary
well as the environment by minimizing or eliminating a source of disease and
preventing and abating nuisances; and (2) to defray costs and ensure financial SECTION 16. General Welfare. – Every local government unit shall exercise
stability of the system for the benefit of the entire community, with the sum the powers expressly granted, those necessarily implied therefrom, as well as
of all charges marshalled and designed to pay for the expense of a systemic powers necessary, appropriate, or incidental for its efficient and effective
refuse disposal scheme.122ChanRoblesVirtualawlibrary governance, and those which are essential to the promotion of the general
welfare. Within their respective territorial jurisdictions, local government
Ordinances regulating waste removal carry a strong presumption of units shall ensure and support, among other things, the preservation and
validity.123 Not surprisingly, the overwhelming majority of U.S. cases enrichment of culture, promote health and safety, enhance the right of the
addressing a city's authority to impose mandatory garbage service and fees people to a balanced ecology, encourage and support the development of
appropriate and self-reliant scientific and technological capabilities, improve a business or activity.138ChanRoblesVirtualawlibrary
public morals, enhance economic prosperity and social justice, promote full
employment among their residents, maintain peace and order, and preserve The fee imposed for garbage collections under Ordinance No. SP-2235 is a
the comfort and convenience of their inhabitants. charge fixed for the regulation of an activity. The basis for this could be
chanroblesvirtuallawlibrary discerned from the foreword of said Ordinance, to wit:
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The general welfare clause is the delegation in statutory form of the police
power of the State to LGUs.130The provisions related thereto are liberally WHEREAS, Quezon City being the largest and premiere city in the
interpreted to give more powers to LGUs in accelerating economic Philippines in terms of population and urban geographical areas, apart from
development and upgrading the quality of life for the people in the being competent and efficient in the delivery of public service, apparently
community.131 Wide discretion is vested on the legislative authority to requires a big budgetary allocation in order to address the problems relative
determine not only what the interests of the public require but also what and connected to the prompt and efficient delivery of basic services such as
measures are necessary for the protection of such interests since the effective system of waste management, public information programs on
the Sanggunian is in the best position to determine the needs of its proper garbage and proper waste disposal, including the imposition of waste
constituents.132ChanRoblesVirtualawlibrary regulatory measures;

One of the operative principles of decentralization is that, subject to the WHEREAS, to help augment the funds to be spent for the city’s waste
provisions of the LGC and national policies, the LGUs shall share with the management system, the City Government through the Sangguniang
national government the responsibility in the management and maintenance Panlungsod deems it necessary to impose a schedule of reasonable fees or
of ecological balance within their territorial jurisdiction.133 In this regard, charges for the garbage collection services for residential (domestic
cities are allowed to exercise such other powers and discharge such other household) that it renders to the public.
functions and responsibilities as are necessary, appropriate, or incidental to chanroblesvirtuallawlibrary
efficient and effective provision of the basic services and facilities which
include, among others, solid waste disposal system or environmental Certainly, as opposed to petitioner’s opinion, the garbage fee is not a tax.
management system and services or facilities related to general hygiene and In Smart Communications, Inc. v. Municipality of Malvar, Batangas,139 the
sanitation.134 R.A. No. 9003, or the Ecological Solid Waste Management Act Court had the occasion to distinguish these two concepts:
of 2000,135 affirms this authority as it expresses that the LGUs shall be chanRoblesvirtualLawlibrary
primarily responsible for the implementation and enforcement of its In Progressive Development Corporation v. Quezon City, the Court declared
provisions within their respective jurisdictions while establishing a
that “if the generating of revenue is the primary purpose and regulation is
cooperative effort among the national government, other local government merely incidental, the imposition is a tax; but if regulation is the primary
units, non-government organizations, and the private purpose, the fact that incidentally revenue is also obtained does not make the
sector.136ChanRoblesVirtualawlibrary imposition a tax.”

Necessarily, LGUs are statutorily sanctioned to impose and collect such In Victorias Milling Co., Inc. v. Municipality of Victorias, the Court
reasonable fees and charges for services rendered.137 “Charges” refer to reiterated that the purpose and effect of the imposition determine whether it
pecuniary liability, as rents or fees against persons or property, while “Fee” is a tax or a fee, and that the lack of any standards for such imposition gives
means a charge fixed by law or ordinance for the regulation or inspection of the presumption that the same is a tax.
We accordingly say that the designation given by the municipal authorities composting and recycling of wastes. It also skips the mandate of the law
does not decide whether the imposition is properly a license tax or a license calling for the active involvement of the barangay in the collection,
fee. The determining factors are the purpose and effect of the imposition as segregation, and recycling of garbage.
may be apparent from the provisions of the ordinance. Thus, “[w]hen no
police inspection, supervision, or regulation is provided, nor any standard set We now turn to the pertinent provisions of R.A. No. 9003.
for the applicant to establish, or that he agrees to attain or maintain, but any
and all persons engaged in the business designated, without qualification or Under R.A. No. 9003, it is the declared policy of the State to adopt a
hindrance, may come, and a license on payment of the stipulated sum will systematic, comprehensive and ecological solid waste management program
issue, to do business, subject to no prescribed rule of conduct and under no which shall, among others, ensure the proper segregation, collection,
guardian eye, but according to the unrestrained judgment or fancy of the transport, storage, treatment and disposal of solid waste through the
applicant and licensee, the presumption is strong that the power of taxation, formulation and adoption of the best environmental practices in ecological
and not the police power, is being exercised.” waste management.145 The law provides that segregation and collection of
chanroblesvirtuallawlibrary solid waste shall be conducted at the barangay level, specifically for
biodegradable, compostable and reusable wastes, while the collection of non-
In Georgia, U.S.A., assessments for garbage collection services have been recyclable materials and special wastes shall be the responsibility of the
consistently treated as a fee and not a tax.140 In another U.S. case,141 the municipality or city.146 Mandatory segregation of solid wastes shall primarily
garbage fee was considered as a "service charge" rather than a tax as it was be conducted at the source, to include household, institutional, industrial,
actually a fee for a service given by the city which had previously been commercial and agricultural sources.147Segregation at source refers to a solid
provided at no cost to its citizens. waste management practice of separating, at the point of origin, different
materials found in solid waste in order to promote recycling and re-use of
Hence, not being a tax, the contention that the garbage fee under Ordinance resources and to reduce the volume of waste for collection and
No. SP-2235 violates the rule on double taxation142 must necessarily fail. disposal.148 Based on Rule XVII of the Department of Environment and
Natural Resources (DENR) Administrative Order No. 2001-34, Series of
Nonetheless, although a special charge, tax, or assessment may be imposed 2001,149 which is the Implementing Rules and Regulations (IRR) of R.A. No.
by a municipal corporation, it must be reasonably commensurate to the cost 9003, barangays shall be responsible for the collection, segregation, and
of providing the garbage service.143 To pass judicial scrutiny, a regulatory fee recycling of biodegradable, recyclable, compostable and reusable
must not produce revenue in excess of the cost of the regulation because such wastes.150 For the purpose, a Materials Recovery Facility (MRF), which shall
fee will be construed as an illegal tax when the revenue generated by the receive biodegradable wastes for composting and mixed non-biodegradable
regulation exceeds the cost of the regulation.144ChanRoblesVirtualawlibrary wastes for final segregation, re-use and recycling, is to be established in
every barangay or cluster of barangays.151ChanRoblesVirtualawlibrary
Petitioner argues that the Quezon City Government already collects garbage
fee under Section 47 of R.A. No. 9003, which authorizes LGUs to impose According to R.A. 9003, an LGU, through its local solid waste management
fees in amounts sufficient to pay the costs of preparing, adopting, and board, is mandated by law to prepare a 10-year solid waste management plan
implementing a solid waste management plan, and that it has access to the consistent with the National Solid Waste Management Framework.152 The
SWM Fund under Section 46 of the same law. Moreover, Ordinance No. S- plan shall be for the re-use, recycling and composting of wastes generated in
2235 is inconsistent with R.A. No. 9003, because the ordinance emphasizes its jurisdiction; ensure the efficient management of solid waste generated
the collection and payment of garbage fee with no concern for segregation, within its jurisdiction; and place primary emphasis on implementation of all
feasible re-use, recycling, and composting programs while identifying the of this Act to reduce the use of non-recyclable materials, replace disposable
amount of landfill and transformation capacity that will be needed for solid materials and products with reusable materials and products, reduce
waste which cannot be re-used, recycled, or composted.153 One of the packaging, and increase the efficiency of the use of paper, cardboard, glass,
components of the solid waste management plan is source reduction: metal, and other materials. The waste reduction activities of the community
chanRoblesvirtualLawlibrary shall also take into account, among others, local capability, economic
viability, technical requirements, social concerns, disposition of residual
(e) Source reduction – The source reduction component shall include a waste and environmental impact: Provided, That, projection of future
program and implementation schedule which shows the methods by which facilities needed and estimated cost shall be incorporated in the plan. x x x154
the LGU will, in combination with the recycling and composting chanroblesvirtuallawlibrary
components, reduce a sufficient amount of solid waste disposed of in
accordance with the diversion requirements of Section 20. The solid waste management plan shall also include an implementation
schedule for solid waste diversion:
The source reduction component shall describe the following: chanRoblesvirtualLawlibrary
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SEC. 20. Establishing Mandatory Solid Waste Diversion. – Each LGU plan
(1) strategies in reducing the volume of solid waste generated at source; shall include an implementation schedule which shows that within five (5)
years after the effectivity of this Act, the LGU shall divert at least 25% of all
(2) measures for implementing such strategies and the resources necessary to solid waste from waste disposal facilities through re-use, recycling, and
carry out such activities; composting activities and other resource recovery activities: Provided, That
the waste diversion goals shall be increased every three (3) years
(3) other appropriate waste reduction technologies that may also be thereafter: Provided, further, That nothing in this Section prohibits a local
considered, provided that such technologies conform with the standards set government unit from implementing re-use, recycling, and composting
pursuant to this Act; activities designed to exceed the goal.
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(4) the types of wastes to be reduced pursuant to Section 15 of this Act;
The baseline for the twenty-five percent (25%) shall be derived from the
(5) the methods that the LGU will use to determine the categories of solid waste characterization result155that each LGU is mandated to
wastes to be diverted from disposal at a disposal facility through re-use, undertake.156ChanRoblesVirtualawlibrary
recycling and composting; and
In accordance with Section 46 of R.A. No. 9003, the LGUs are entitled to
(6) new facilities and of expansion of existing facilities which will be needed avail of the SWM Fund on the basis of their approved solid waste
to implement re-use, recycling and composting. management plan. Aside from this, they may also impose SWM Fees under
chanroblesvirtuallawlibrary Section 47 of the law, which states:
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The LGU source reduction component shall include the evaluation and
identification of rate structures and fees for the purpose of reducing the SEC. 47. Authority to Collect Solid Waste Management Fees – The local
amount of waste generated, and other source reduction strategies, including government unit shall impose fees in amounts sufficient to pay the costs of
but not limited to, programs and economic incentives provided under Sec. 45 preparing, adopting, and implementing a solid waste management plan
prepared pursuant to this Act. The fees shall be based on the following
minimum factors: Reasonable SWM service fees shall be computed based on but not limited to
chanRoblesvirtualLawlibrary the following minimum factors:
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(a) types of solid waste;
a) Types of solid waste to include special waste
(b) amount/volume of waste; and
b) amount/volume of waste
(c) distance of the transfer station to the waste management facility.
chanroblesvirtuallawlibrary c) distance of the transfer station to the waste management facility

The fees shall be used to pay the actual costs incurred by the LGU in d) capacity or type of LGU constituency
collecting the local fees. In determining the amounts of the fees, an LGU
shall include only those costs directly related to the adoption and e) cost of construction
implementation of the plan and the setting and collection of the local fees.
chanroblesvirtuallawlibrary f) cost of management
Rule XVII of the IRR of R.A. No. 9003 sets forth the details:
chanRoblesvirtualLawlibrary g) type of technology
chanroblesvirtuallawlibrary
Section 1. Power to Collect Solid Waste Management Fees. – The Local
SWM Board/Local SWM Cluster Board shall impose fees on the SWM Section 3. Collection of Fees. – Fees may be collected corresponding to the
services provided for by the LGU and/or any authorized organization or unit. following levels:
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In determining the amounts of the fees, a Local SWM Board/Local SWM
Cluster Board shall include only those costs directly related to the adoption a) Barangay – The Barangay may impose fees for collection and segregation
and implementation of the SWM Plan and the setting and collection of the of biodegradable, compostable and reusable wastes from households,
local fees. This power to impose fees may be ceded to the private sector and commerce, other sources of domestic wastes, and for the use of Barangay
civil society groups which have been duly accredited by the Local SWM MRFs. The computation of the fees shall be established by the respective
Board/Local SWM Cluster Board; provided, the SWM fees shall be covered SWM boards. The manner of collection of the fees shall be dependent on the
by a Contract or Memorandum of Agreement between the respective board style of administration of respective Barangay Councils. However, all
and the private sector or civil society group. transactions shall follow the Commission on Audit rules on collection of
fees.
The fees shall pay for the costs of preparing, adopting and implementing a
SWM Plan prepared pursuant to the Act. Further, the fees shall also be used b) Municipality – The municipal and city councils may impose fees on the
to pay the actual costs incurred in collecting the local fees and for project barangay MRFs for the collection and transport of non-recyclable and special
sustainability. wastes and for the disposal of these into the sanitary landfill. The level and
procedure for exacting fees shall be defined by the Local SWM Board/Local
Section 2. Basis of SWM Service Fees SWM Cluster Board and supported by LGU ordinances, however, payments
shall be consistent with the accounting system of government. of the Constitution and the provisions of the LGC that an ordinance must be
equitable and based as far as practicable on the taxpayer’s ability to pay, and
c) Private Sector/Civil Society Group – On the basis of the stipulations of not unjust, excessive, oppressive,
contract or Memorandum of Agreement, the private sector or civil society confiscatory.158ChanRoblesVirtualawlibrary
group shall impose fees for collection, transport and tipping in their SLFs.
Receipts and invoices shall be issued to the paying public or to the In the subject ordinance, the rates of the imposable fee depend on land or
government. floor area and whether the payee is an occupant of a lot, condominium, social
chanroblesvirtuallawlibrary housing project or apartment. For easy reference, the relevant provision is
again quoted below:
From the afore-quoted provisions, it is clear that the authority of a chanRoblesvirtualLawlibrary
municipality or city to impose fees is limited to the collection and transport
of non-recyclable and special wastes and for the disposal of these into the On all domestic households in Quezon City;
sanitary landfill. Barangays, on the other hand, have the authority to impose
fees for the collection and segregation of biodegradable, compostable and LAND AREA IMPOSABLE FEE
reusable wastes from households, commerce, other sources of domestic
Less than 200 sq. m. PHP 100.00
wastes, and for the use of barangay MRFs. This is but consistent with Section
10 of R.A. No. 9003 directing that segregation and collection of 201 sq. m. – 500 sq. m. PHP 200.00
biodegradable, compostable and reusable wastes shall be conducted at the
barangay level, while the collection of non-recyclable materials and special 501 sq. m. – 1,000 sq. m. PHP 300.00
wastes shall be the responsibility of the municipality or city.
1,001 sq. m. – 1,500 sq. m. PHP 400.00
In this case, the alleged bases of Ordinance No. S-2235 in imposing the
garbage fee is the volume of waste currently generated by each person in 1,501 sq. m. – 2,000 sq. m. or
PHP 500.00
Quezon City, which purportedly stands at 0.66 kilogram per day, and the more
increasing trend of waste generation for the past three years.157 Respondents
On all condominium unit and socialized housing projects/units in Quezon
did not elaborate any further. The figure presented does not reflect the
City;
specific types of wastes generated – whether residential, market, commercial,
industrial, construction/demolition, street waste, agricultural, agro-industrial, FLOOR AREA IMPOSABLE FEE
institutional, etc. It is reasonable, therefore, for the Court to presume that
such amount pertains to the totality of wastes, without any distinction, Less than 40 sq. m. PHP25.00
generated by Quezon City constituents. To reiterate, however, the authority
of a municipality or city to impose fees extends only to those related to the 41 sq. m. – 60 sq. m. PHP50.00
collection and transport of non-recyclable and special wastes.
61 sq. m. – 100 sq. m. PHP75.00
Granting, for the sake of argument, that the 0.66 kilogram of solid waste per
101 sq. m. – 150 sq. m. PHP100.00
day refers only to non-recyclable and special wastes, still, We cannot sustain
the validity of Ordinance No. S-2235. It violates the equal protection clause
151 sq. m. – 200 sq. [m.] or generated and the appropriate fee for its collection. Factors include, among
PHP200.00
more others, household age and size, accessibility to waste collection, population
density of the barangay or district, capacity to pay, and actual occupancy of
On high-rise Condominium Units the property. R.A. No. 9003 may also be looked into for guidance. Under
said law, SWM service fees may be computed based on minimum factors
a) High-rise Condominium – The Homeowners Association of high rise
such as types of solid waste to include special waste, amount/volume of
condominiums shall pay the annual garbage fee on the total size of the
waste, distance of the transfer station to the waste management facility,
entire condominium and socialized Housing Unit and an additional
capacity or type of LGU constituency, cost of construction, cost of
garbage fee shall be collected based on area occupied for every unit
management, and type of technology. With respect to utility rates set by
already sold or being amortized.
municipalities, a municipality has the right to classify consumers under
b) High-rise apartment units – Owners of high-rise apartment units shall pay reasonable classifications based upon factors such as the cost of service, the
the annual garbage fee on the total lot size of the entire apartment and an purpose for which the service or the product is rec