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JURISDICTION
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Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 167702 March 20, 2009
LOURDES L. ERISTINGCOL, Petitioner,
vs.
COURT OF APPEALS and RANDOLPH C. LIMJOCO, Respondents.
D E C I S I O N
NACHURA, J .:
This is a petition for review on certiorari under Rule 45 of the Rules of Court which assails the Court of
Appeals (CA) Decision
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in CA-G.R. SP. No. 64642 dismissing Civil Case No. 99-297 before the Regional
Trial Court (RTC) for lack of jurisdiction.
The facts, as narrated by the CA, are simple.
[Petitioner Lourdes] Eristingcol is an owner of a residential lot in Urdaneta Village (or "village"), Makati
City and covered by Transfer Certificate of Title No. 208586. On the other hand, [respondent Randolph]
Limjoco, [Lorenzo] Tan and [June] Vilvestre were the former president and chairman of the board of
governors (or "board"), construction committee chairman and village manager of [Urdaneta Village
Association Inc.] UVAI, respectively. UVAI is an association of homeowners at Urdaneta Village.
[Eristingcols] action [against UVAI, Limjoco, Tan and Vilvestre] is founded on the allegations that in
compliance with the National Building Code and after UVAIs approval of her building plans and
acceptance of the construction bond and architects fee, Eristingcol started constructing a house on her
lot with "concrete canopy directly above the main door and highway"; that for alleged violation of its
Construction Rules and Regulations (or "CRR") on "Set Back Line" vis-a-vis the canopy easement, UVAI
imposed on her a penalty of P400,000.00 and barred her workers and contractors from entering the
village and working on her property; that the CRR, particularly on "Set Back Line," is contrary to law; and
that the penalty is unwarranted and excessive.
On February 9, 1999, or a day after the filing of the complaint, the parties reached a temporary settlement
whereby UVAI, Limjoco, Tan and Vilvestre executed an undertaking which allowed Eristingcols workers,
contractors and suppliers to leave and enter the village, subject only to normal security regulations of
UVAI.
On February 26, 1999, UVAI, Limjoco, Tan and Vilvestre filed a motion to dismiss on ground of lack of
jurisdiction over the subject matter of the action. They argued that it is the Home Insurance Guaranty
Corporation (or "HIGC")
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which has jurisdiction over intra-corporate disputes involving homeowners
associations, pursuant to Exec. Order No. 535, Series of 1979, as amended by Exec. Order No. 90,
Series of 1986.
Opposing the motion, Eristingcol alleged, among others, that UVAI, Limjoco, Tan and Vilvestre did not
comply with the mandatory provisions of Secs. 4 and 6, Rule 15 of the 1997 Rules of Civil Procedure and
are estopped from questioning the jurisdiction of the [RTC] after they voluntarily appeared therein "and
embraced its authority by agreeing to sign an Undertaking."
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On May 20, 1999, Eristingcol filed an amended complaint by (i) impleading Manuel Carmona (or
"Carmona") and Rene Cristobal (or "Cristobal"), UVAIs newly-elected president and chairman of the
board and newly-designated construction committee chairman, respectively, as additional defendants and
(ii) increasing her claim for moral damages against each petitioner from P500,000.00 to P1,000,000.00.
On May 25, 1999, Eristingcol filed a motion for production and inspection of documents, which UVAI,
Limjoco, Tan, Vilvestre, Carmona and Cristobal opposed. The motion sought to compel [UVAI and its
officers] to produce the documents used by UVAI as basis for the imposition of the P400,000.00 penalty
on Eristingcol as well as letters and documents showing that UVAI had informed the other homeowners of
their violations of the CRR.
On May 26, 1999, the [RTC] issued an order which pertinently reads:
IN VIEW OF THE FOREGOING, for lack of merit, the defendants Motion to Dismiss is Denied, and
plaintiffs motion to declare defendants in default and for contempt are also Denied."
The [RTC] ratiocinated that [UVAI, Limjoco, Tan and Vilvestre] may not assail its jurisdiction "after they
voluntarily entered their appearance, sought reliefs therein, and embraced its authority by agreeing to
sign an undertaking to desist from prohibiting (Eristingcols) workers from entering the village." In so
ruling, it applied the doctrine enunciated in Tijam v. Sibonghanoy.
On June 7, 1999, Eristingcol filed a motion reiterating her earlier motion for production and inspection of
documents.
On June 8, 1999, [UVAI, Limjoco, Tan and Vilvestre] moved for partial reconsideration of the order dated
May 26, 1999. Eristingcol opposed the motion.
On March 24, 2001, the [RTC] issued an order granting Eristingcols motion for production and inspection
of documents, while on March 26, 2001, it issued an order denying [UVAIs, Limjocos, Tans and
Vilvestres] motion for partial reconsideration.
On May 10, 2001, [UVAI, Limjoco, Tan and Vilvestre] elevated the dispute before [the CA] via [a] petition
for certiorari alleging that the [RTC] acted without jurisdiction in issuing the orders of May 26, 1999 and
March 24 and 26, 2001.
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The CA issued the herein assailed Decision reversing the RTC Order
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and dismissing Eristingcols
complaint for lack of jurisdiction.
Hence, this appeal positing a sole issue for our resolution:
Whether it is the RTC or the Housing and Land Use Regulatory Board (HLURB) which has jurisdiction
over the subject matter of Eristingcols complaint.
Before anything else, we note that the instant petition impleads only Limjoco as private respondent. The
rest of the defendants sued by Eristingcol before the RTC, who then collectively filed the petition for
certiorari before the CA assailing the RTCs Order, were, curiously, not included as private respondents in
this particular petition.
Eristingcol explains that only respondent Limjoco was retained in the instant petition as her discussions
with UVAI and the other defendants revealed their lack of participation in the work-stoppage order which
was supposedly single-handedly thought of and implemented by Limjoco.
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The foregoing clarification notwithstanding, the rest of the defendants should have been impleaded as
respondents in this petition considering that the complaint before the RTC, where the petition before the
CA and the instant petition originated, has yet to be amended. Furthermore, the present petition
maintains that it was serious error for the CA to have ruled that the RTC did not have jurisdiction over a
complaint for declaration of nullity of UVAIs Construction Rules. Clearly, UVAI and the rest of the
defendants should have been impleaded herein as respondents.
Section 4(a), Rule 45 of the Rules of Court, requires that the petition shall "state the full name of the
appealing party as petitioner and the adverse party as respondent, without impleading the lower courts or
judges thereof either as petitioners or respondents." As the losing party in defendants petition for
certiorari before the CA, Eristingcol should have impleaded all petitioners, the winning and adverse
parties therein.
On this score alone, the present petition could have been dismissed outright.
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However, to settle the
issue of jurisdiction, we have opted to dispose of this case on the merits.
Despite her having dropped UVAI, Lorenzo Tan (Tan) and June Vilvestre (Vilvestre) from this suit,
Eristingcol insists that her complaint against UVAI and the defendants was properly filed before the RTC
as it prays for the declaration of nullity of UVAIs Construction Rules and asks that damages be paid by
Limjoco and the other UVAI officers who had inflicted injury upon her. Eristingcol asseverates that since
the case before the RTC is one for declaration of nullity, the nature of the question that is the subject of
controversy, not just the status or relationship of the parties, should determine which body has
jurisdiction. In any event, Eristingcol submits that the RTCs jurisdiction over the case was foreclosed by
the prayer of UVAI and its officers, including Limjoco, for affirmative relief from that court.
Well-settled in jurisprudence is the rule that in determining which body has jurisdiction over a case, we
should consider not only the status or relationship of the parties, but also the nature of the question that is
the subject of their controversy.
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To determine the nature of an action and which court has jurisdiction,
courts must look at the averments of the complaint or petition and the essence of the relief prayed for.
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Thus, we examine the pertinent allegations in Eristingcols complaint, specifically her amended complaint,
to wit:
Allegations Common to All Causes of Action
3. In 1958 and upon its incorporation, [UVAI] adopted a set of By-laws and Rules and Regulations, x x x.
Item 5 of [UVAIs] Construction Rules pertinently provides:
"Set back line: All Buildings, including garage servants quarters, or parts thereof (covered terraces,
portes cocheres) must be constructed at a distance of not less than three (3) meters from the boundary
fronting a street and not less than four (4) meters fronting the drainage creek or underground culvert and
two (2) meters from other boundaries of a lot. Distance will be measured from the vertical projection of the
roof nearest the property line. Completely open and unroofed terraces are not included in these
restrictions."
Suffice it to state that there is nothing in the same By-laws which deals explicitly with canopies or
marquees which extend outward from the main building.
4. [Eristingcol] has been a resident of Urdaneta Village for eleven (11) years. In February 1997, she
purchased a parcel of land in the Village, located at the corner of Urdaneta Avenue and Cerrada Street. x
x x.
5. In considering the design for the house (the "Cerrada property") which she intended to construct on
Cerrada Street, [Eristingcol] referred to the National Building Code of the Philippines. After assuring
herself that the said law does not expressly provide any restrictions in respect thereof, and after noting
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that other houses owned by prominent families had similar structures without being cited by the Villages
Construction Committee, [Eristingcol] decided that the Cerrada property would have a concrete canopy
directly above the main door and driveway.
6. In compliance with [UVAIs] rules, [Eristingcol] submitted to [UVAI] copies of her building plans in
respect of the Cerrada property and the building plans were duly approved by [UVAI]. x x x.
7. [Eristingcol] submitted and/or paid the "cash bond/construction bond deposit and architects inspection
fee" of P200,000.00 and the architects inspection fee of P500.00 as required under Construction Rules x
x x.
8. In the latter part of 1997, and while the construction of the Cerrada property was ongoing, [Eristingcol]
received a notice from [UVAI], charging her with alleged violations of the Construction Rules, i.e., those
on the height restriction of eleven (11.0) meters, and the canopy extension into the easement. On 22nd
January 1998, [Eristingcol] (through her representatives) met with, among others, defendant Limjoco. In
said meeting, and after deliberation on the definition of the phrase "original ground elevation" as a
reference point, [Eristingcols] representatives agreed to revise the building plan by removing what was
intended to be a parapet or roof railing, and thereby reduce the height of the structure by 40 centimeters,
which proposal was accepted by the Board through defendant Limjoco, Gov. Catalino Macaraig Jr.
([UVAIs] Construction Committee chairman), and the Villages Architect. However, the issue of the
alleged violation in respect of the canopy/extension remained unresolved.
x x x x
9. In compliance with the agreement reached at the 22nd January 1998 meeting, [Eristingcol] caused the
revision of her building plans such that, as it now stands, the Cerrada property has a vertical height of
10.96 meters and, thus, was within the Villages allowed maximum height of 11 meters.
10. Sometime in June 1998, [Eristingcol] was surprised to receive another letter from [UVAI], this time
from the Construction Committee chairman (defendant Tan), again calling her attention to alleged
violations of the Construction Rules. On 15th June 1998, [UVAI] barred [Eristingcols] construction
workers from entering the Village. Thus, [Eristingcols] Construction Manager (Mr. Jaime M. Hidalgo)
wrote defendant Tan to explain her position, and attached photographs of similar "violations" by other
property owners which have not merited the same scrutiny and sanction from [UVAI].
x x x x
11. On 26th October 1998, and for reasons known only to him, defendant Vilvestre sent a letter to Mr.
Geronimo delos Reyes, demanding for an "idea of how [Mr. delos Reyes] can demonstrate in concrete
terms [his] good faith as a quid pro quo for compromise to" [UVAIs] continued insistence that [Eristingcol]
had violated [UVAIs] Construction Rules. x x x.
x x x x
12. [Eristingcol] through Mr. Hidalgo sent a letter dated 24th November 1998 to defendant Tan, copies of
which were furnished defendants Limjoco, Vilvestre and the Board, reiterating that, among others: (i) the
alleged height restriction violation is untrue, since the Cerrada property now has a height within the limits
imposed by [UVAI]; and (ii) the demand to reduce the canopy by ninety (90) centimeters is without basis,
in light of the existence of thirty-five (35) similar "violations" of the same nature by other homeowners.
[Eristingcol] through Mr. Hidalgo further mentioned that she had done nothing to deserve the crude and
coercive Village letters and the Boards threats of work stoppage, and she cited instances when she dealt
with [UVAI] and her fellow homeowners in good faith and goodwill such as in 1997, when she very
discreetly spent substantial amounts to landscape the entire Village Park, concrete the Park track oval
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which was being used as a jogging path, and donate to the Association molave benches used as Park
benches.
x x x x
13. On the same date (24th November 1998), defendant Vilvestre sent another letter addressed to
[Eristingcols] construction manager Hidalgo, again threatening to enjoin all construction activity on the
Cerrada property as well as ban entry of all workers and construction deliveries effective 1st December
1998 unless Mr. delos Reyes met with defendants. x x x.
x x x x
14. On 2nd December 1998, [Eristingcols] representatives met with defendants Limjoco, Tan, and
Vilvestre. During that meeting, defendants were shown copies of the architectural plans for the Cerrada
property. [Eristingcols] representatives agreed to allow [UVAIs] Construction Committees architect to
validate the measurements given. However, on the issue of the canopy extension, the defendants
informed [Eristingcols] representatives that the Board would impose a penalty of Four Hundred Thousand
Pesos (P400,000.00) for violation of [UVAIs] "set back" or easement rule. Defendants cited the Boards
imposition of similar fines to previous homeowners who had violated the same rule, and they undertook to
furnish [Eristingcol] with a list of past penalties imposed and paid by homeowners found by the Board to
have violated the Villages "set back" provision.
15. On 22nd December 1998, defendant Vilvestre sent [Eristingcol] a letter dated 18th December 1998
formally imposing a penalty of P400,000.00 for the "canopy easement violation." x x x.
16. On 29th December 1998, x x x, Vilvestre sent a letter to [Eristingcol], stating that "as far as [his]
administration is concerned, there has been no past penalties executed by [UVAI], similar to the one we
are presently demanding on your on going construction. x x x
17. On 4th January 1999, [Eristingcols] representative sent a letter to the Board, asking for a
reconsideration of the imposition of the P400,000.00 penalty on the ground that the same is unwarranted
and excessive. On 6th January 1999, [Eristingcol] herself sent a letter to the Board, expounding on the
reasons for opposing the Boards action. On 18th January 1999, [Eristingcol] sent another letter in
compliance with defendants request for a breakdown of her expenditures in respect of her donations
relative to the Village park.
18. On 3
rd
February 1999, [Eristingcol] through her lawyers sent defendants a letter, requesting that her
letters of 4th and 6th January 1999 be acted upon.
19. On 4th February 1999, x x x, defendant Limjoco gave a verbal order to [UVAIs] guards to bar the
entry of workers working on the Cerrada property.
20. In the morning of 5th February 1999, defendants physically barred [Eristingcols] workers and
contractors from entering the Village and working at the Cerrada property.
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Eristingcol then lists the following causes of action:
1. Item 5 of UVAIs Construction Rules constitutes an illegal and unwarranted intrusion upon
Eristingcols proprietary rights as it imposes a set-back or horizontal easement of 3.0 meters from
the property line greater than the specification in Section 1005(b) of the Building Code that "the
horizontal clearance between the outermost edge of the marquee and the curb line shall be not
less than 300 millimeters." As such, Eristingcol prays for the declaration of nullity of this provision
in UVAIs Construction Rules insofar as she is concerned.
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2. UVAIs imposition of a P400,000.00 penalty on Eristingcol has no factual basis, is arbitrary,
whimsical and capricious as rampant violations of the set-back rule by other homeowners in the
Village were not penalized by UVAI. Eristingcol prays to put a stop to defendants arbitrary
exercise of power pursuant to UVAIs by-laws.
3. Absent any factual or legal bases for the imposition of a P400,000.00 penalty, defendants and
all persons working under their control should be permanently barred or restrained from imposing
and/or enforcing any penalty upon Eristingcol for an alleged violation of UVAIs Construction
Rules, specifically the provision on set-back.
4. Defendants Limjoco, Tan, and Vilvestre, in violation of Article 19 of the Civil Code,
demonstrated bias against Eristingcol by zeroing in on her alone and her supposed violation,
while other homeowners, who had likewise violated UVAIs Construction Rules, were not cited or
penalized therefor. Defendants actuations were in clear violation of their duty to give all
homeowners, including Eristingcol, their due.
5. Defendants actuations have seriously affected Eristingcols mental disposition and have
caused her to suffer sleepless nights, mental anguish and serious anxiety. Eristingcols reputation
has likewise been besmirched by UVAIs and defendants arbitrary charge that she had violated
UVAIs Construction Rules. In this regard, individual defendants should each pay Eristingcol
moral damages in the amount of P1,000,000.00.
6. Lastly, defendants should pay Eristingcol P1,000.000.00 for litigation expenses she incurred in
instituting this suit and for attorneys fees.
At the outset, we note that the relationship between the parties is not in dispute and is, in fact, admitted
by Eristingcol in her complaint. Nonetheless, Eristingcol is adamant that the subject matter of her
complaint is properly cognizable by the regular courts and need not be filed before a specialized body or
commission.
Eristingcols contention is wrong.
Ostensibly, Eristingcols complaint, designated as one for declaration of nullity, falls within the regular
courts jurisdiction. However, we have, on more than one occasion, held that the caption of the complaint
is not determinative of the nature of the action.
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A scrutiny of the allegations contained in Eristingcols complaint reveals that the nature of the question
subject of this controversy only superficially delves into the validity of UVAIs Construction Rules. The
complaint actually goes into the proper interpretation and application of UVAIs by-laws, specifically its
construction rules. Essentially, the conflict between the parties arose as Eristingcol, admittedly a member
of UVAI, now wishes to be exempt from the application of the canopy requirement set forth in UVAIs
Construction Rules. Significantly, Eristingcol does not assail the height restriction of UVAIs Construction
Rules, as she has readily complied therewith.
Distinctly in point is China Banking Corp. v. Court of Appeals,
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which upheld the jurisdiction of the
Securities and Exchange Commission (SEC) over the suit and recognized its special competence to
interpret and apply Valley Golf and Country Club, Inc.s (VGCCIs) by-laws. We ruled, thus:
Applying the foregoing principles in the case at bar, to ascertain which tribunal has jurisdiction we have to
determine therefore whether or not petitioner is a stockholder of VGCCI and whether or not the nature of
the controversy between petitioner and private respondent corporation is intra-corporate.
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As to the first query, there is no question that the purchase of the subject share or membership certificate
at public auction by petitioner (and the issuance to it of the corresponding Certificate of Sale) transferred
ownership of the same to the latter and thus entitled petitioner to have the said share registered in its
name as a member of VGCCI. x x x.
By virtue of the aforementioned sale, petitioner became a bona fide stockholder of VGCCI and, therefore,
the conflict that arose between petitioner and VGCCI aptly exemplifies an intra-corporate controversy
between a corporation and its stockholder under Sec. 5(b) of P.D. 902-A.
An important consideration, moreover, is the nature of the controversy between petitioner and private
respondent corporation. VGCCI claims a prior right over the subject share anchored mainly on Sec. 3,
Art. VIII of its by-laws which provides that "after a member shall have been posted as delinquent, the
Board may order his/her/its share sold to satisfy the claims of the Club" It is pursuant to this provision
that VGCCI also sold the subject share at public auction, of which it was the highest bidder. VGCCI caps
its argument by asserting that its corporate by-laws should prevail. The bone of contention, thus, is the
proper interpretation and application of VGCCIs aforequoted by-laws, a subject which irrefutably calls for
the special competence of the SEC.
We reiterate herein the sound policy enunciated by the Court in Abejo v. De la Cruz:
6. In the fifties, the Court taking cognizance of the move to vest jurisdiction in administrative commissions
and boards the power to resolve specialized disputes in the field of labor (as in corporations, public
transportation and public utilities) ruled that Congress in requiring the Industrial Courts intervention in the
resolution of labor-management controversies likely to cause strikes or lockouts meant such jurisdiction to
be exclusive, although it did not so expressly state in the law. The Court held that under the "sense-
making and expeditious doctrine of primary jurisdiction the courts cannot or will not determine a
controversy involving a question which is within the jurisdiction of an administrative tribunal, where the
question demands the exercise of sound administrative discretion requiring the special knowledge,
experience, and services of the administrative tribunal to determine technical and intricate matters of fact,
and a uniformity of ruling is essential to comply with the purposes of the regulatory statute administered.
x x x x
In this case, the need for the SECs technical expertise cannot be over-emphasized involving as it does
the meticulous analysis and correct interpretation of a corporations by-laws as well as the applicable
provisions of the Corporation Code in order to determine the validity of VGCCIs claims. The SEC,
therefore, took proper cognizance of the instant case.
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Likewise in point is our illuminating ruling in Sta. Clara Homeowners Association v. Sps. Gaston,
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although it ultimately held that the question of subject matter jurisdiction over the complaint of
respondent- spouses Gaston for declaration of nullity of a board resolution issued by Sta. Clara
Homeowners Association (SCHA) was vested in the regular courts. In Sta. Clara, the main issue raised
by SCHA reads: "Whether [the CA] erred in upholding the jurisdiction of the [RTC], to declare as null and
void the resolution of the Board of SCHA, decreeing that only members [in] good standing of the said
association were to be issued stickers for use in their vehicles." In holding that the regular courts had
jurisdiction over respondent-spouses Gastons complaint for declaration of nullity, we stressed the
absence of relationship and the consequent lack of privity of contract between the parties, thus:
Are [Respondent-Spouses Gaston] SCHA Members?
In order to determine if the HIGC has jurisdiction over the dispute, it is necessary to resolve
preliminarilyon the basis of the allegations in the Complaintwhether [respondent-spouses Gaston] are
members of the SCHA.
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[SCHA] contend[s] that because the Complaint arose from intra-corporate relations between the SCHA
and its members, the HIGC therefore has jurisdiction over the dispute. To support their contention that
[respondent-spouses Gaston] are members of the association, [SCHA] cite[s] the SCHAs Articles of
Incorporation and By-laws which provide that all landowners of the Sta. Clara Subdivision are
automatically members of the SCHA.
We are not persuaded. The constitutionally guaranteed freedom of association includes the freedom not
to associate. The right to choose with whom one will associate oneself is the very foundation and
essence of that partnership. It should be noted that the provision guarantees the right to form an
association. It does not include the right to compel others to form or join one.
More to the point, [respondent-spouses Gaston] cannot be compelled to become members of the SCHA
by the simple expedient of including them in its Articles of Incorporation and By-laws without their express
or implied consent. x x x. In the present case, however, other than the said Articles of Incorporation and
By-laws, there is no showing that [respondent-spouses Gaston] have agreed to be SCHA members.
x x x x
No privity of Contract
Clearly then, no privity of contract exists between [SCHA] and [respondent-spouses Gaston]. As a
general rule, a contract is a meeting of minds between two persons. The Civil Code upholds the spirit
over the form; thus, it deems an agreement to exist, provided the essential requisites are present. x x x.
From the moment there is a meeting of minds between the parties, it is perfected.
As already adverted to, there are cases in which a party who enters into a contract of sale is also bound
by a lien annotated on the certificate of title. We recognized this in Bel Air Village Association, Inc. v.
Dionisio, in which we ruled:
There is no dispute that Transfer Certificate of Title No. 81136 covering the subject parcel of land issued
in the name of the petitioner contains an annotation to the effect that the lot owner becomes an automatic
member of the respondent Bel-Air Association and must abide by such rules and regulations laid down by
the Association in the interest of the sanitation, security and the general welfare of the community. It is
likewise not disputed that the provision on automatic membership was expressly annotated on the
petitioners Transfer Certificate of Title and on the title of his predecessor-in-interest.
The question, therefore, boils down to whether or not the petitioner is bound by such annotation.
Section 39 of Art. 496 (The Land Registration Act) states:
Sec. 39. Every person receiving a certificate of title in pursuance of a decree of registration, and every
subsequent purchaser of registered land who takes a certificate of title for value in good faith shall hold
the same free of all encumbrances except those noted on said certificate x x x. (Italics supplied)
The above ruling, however, does not apply to the case at bar. When [respondent-spouses Gaston]
purchased their property in 1974 and obtained Transfer Certificates of Title Nos. T-126542 and T-127462
for Lots 11 and 12 of Block 37 along San Jose Avenue in Sta. Clara Subdivision, there was no annotation
showing their automatic membership in the SCHA. Thus, no privity of contract arising from the title
certificate exists between [SCHA] and [respondent-spouses Gaston].
Further, the records are bereft of any evidence that would indicate that private respondents intended to
become members of the SCHA. Prior to the implementation of the aforesaid Resolution, they and the
other homeowners who were not members of the association were issued non-member gate pass
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stickers for their vehicles. This fact has not been disputed by [SCHA]. Thus, the SCHA recognized that
there were subdivision landowners who were not members thereof, notwithstanding the provisions of its
Articles of Incorporation and By-laws.
Jurisdiction Determined by Allegations in the Complaint
It is a settled rule that jurisdiction over the subject matter is determined by the allegations in the
complaint. Jurisdiction is not affected by the pleas or the theories set up by the defendant in an answer or
a motion to dismiss. Otherwise, jurisdiction would become dependent almost entirely upon the whims of
the defendant.
The Complaint does not allege that [respondent-spouses Gaston] are members of the SCHA. In point of
fact, they deny such membership. Thus, the HIGC has no jurisdiction over the dispute.
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In stark contrast, the relationship between the parties in the instant case is well-established. Given this
admitted relationship, the privity of contract between UVAI and Eristingcol is palpable, despite the latters
deft phraseology of its primary cause of action as a declaration of nullity of UVAIs Construction Rules. In
short, the crux of Eristingcols complaint is UVAIs supposed arbitrary implementation of its construction
rules against Eristingcol, a member thereof.
Moreover, as in Sta. Clara (had respondent-spouses Gaston been members of SCHA), the controversy
which arose between the parties in this case partook of the nature of an intra-corporate dispute.
Executive Order (E.O.) No. 535,
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which amended Republic Act No. 580 creating the HIGC, transferred to
the HIGC the regulatory and administrative functions over homeowners associations originally vested
with the SEC. Section 2 of E.O. No. 535 provides in pertinent part:
2. In addition to the powers and functions vested under the Home Financing Act, the Corporation, shall
have among others, the following additional powers:
(a) x x x; and exercise all the powers, authorities and responsibilities that are vested on the
Securities and Exchange Commission with respect to home owners association, the provision of
Act 1459, as amended by P.D. 902-A, to the contrary notwithstanding;
(b) To regulate and supervise the activities and operations of all houseowners association
registered in accordance therewith.
By virtue thereof, the HIGC likewise assumed the SECs original and exclusive jurisdiction to hear and
decide cases involving controversies arising from intra-corporate or partnership relations.
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Thereafter,
with the advent of Republic Act No. 8763, the foregoing powers and responsibilities vested in the HIGC,
with respect to homeowners associations, were transferred to the HLURB.
As regards the defendants supposed embrace of the RTCs jurisdiction by appearing thereat and
undertaking to desist from prohibiting Eristingcols workers from entering the village, suffice it to state that
the invocation of the doctrine in Tijam, et al. v. Sibonghanoy, et al.
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is quite a long stretch.
The factual milieu obtaining in Tijam and in the case at bench are worlds apart. As found by the CA,
defendants appearance before the RTC was pursuant to, and in compliance with, a subpoena issued by
that court in connection with Eristingcols application for a Temporary Restraining Order (TRO). On
defendants supposed agreement to sign the Undertaking allowing Eristingcols workers, contractors, and
suppliers to enter and exit the village, this temporary settlement cannot be equated with full acceptance of
the RTCs authority, as what actually transpired in Tijam.1avvphi1.zw+
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The landmark case of Tijam is, in fact, only an exception to the general rule that an objection to the
courts jurisdiction over a case may be raised at any stage of the proceedings, as the lack of jurisdiction
affects the very authority of the court to take cognizance of a case.
17
In that case, the Surety filed a
Motion to Dismiss before the CA, raising the question of lack of jurisdiction for the first timefifteen years
after the action was commenced in the Court of First Instance (CFI) of Cebu. Indeed, in several stages of
the proceedings in the CFI, as well as in the CA, the Surety invoked the jurisdiction of said courts to
obtain affirmative relief, and even submitted its case for a final adjudication on the merits. Consequently,
it was barred by laches from invoking the CFIs lack of jurisdiction.
To further highlight the distinction in this case, the TRO hearing was held on February 9, 1999, a day after
the filing of the complaint. On even date, the parties reached a temporary settlement reflected in the
Undertaking. Fifteen days thereafter, defendants, including Limjoco, filed a Motion to Dismiss. Certainly,
this successive and continuous chain of events cannot be characterized as laches as would bar
defendants from questioning the RTCs jurisdiction.
In fine, based on the allegations contained in Eristingcols complaint, it is the HLURB, not the RTC, which
has jurisdiction over this case.
WHEREFORE, premises considered, the petition is DENIED. The Decision of the Court of Appeals in CA-
G.R. SP. No. 64642 is hereby AFFIRMED. Costs against petitioner.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 131282 January 4, 2002
GABRIEL L. DUERO, petitioner,
vs.
HON.COURT OF APPEALS, and BERNARDO A. ERADEL, respondents.
QUISUMBING, J .:
This petition for certiorari assails the Decisionl dated September 17, 1997, of the Court of Appeals in CA-
G.R. No. SP No.. 2340- UDK, entitled Bernardo Eradel vs. Non. Ermelino G. Andal, setting aside all
proceedings in Civil Case No.1075, Gabriel L. Duero vs. Bernardo Eradel, before the Branch 27 of the
Regional Trial Court of Tandag, Surigao del Sur .
The pertinent facts are as follow.
Sometime in 1988, according to petitioner, private respondent Bemardo Eradel
2
entered and occupied
petitioner's land covered by Tax Declaration No. A-16-13-302, located in Baras, San Miguel, Surigao del
Sur. As shown in the tax declaration, the land had an assessed value of P5,240. When petitioner politely
informed private respondent that the land was his and requested the latter to vacate the land, private
respondent refused, but instead threatened him with bodily harm. Despite repeated demands, private
respondent remained steadfast in his refusal to leave the land.
On June 16, 1995, petitioner filed before the RTC a complaint for Recovery of Possession and Ownership
with Damages and Attorney's Fees against private respondent and two others, namely, Apolinario and
JURISDICTION jrp
12

Inocencio Ruena. Petitioner appended to the complaint the aforementioned tax declaration. The counsel
of the Ruenas asked for extension to file their Answer and was given until July 18, 1995. Meanwhile,
petitioner and the, Ruenas executed a compromise agreement, which became the trial court's basis for a
partial judgment rendered on January 12, 1996. In this agreement, the Ruenas through their counsel,
Atty. Eusebio Avila, entered into a Compromise Agreement with herein petitioner, Gabriel Duero. Inter
alia, the agreement stated that the Ruenas recognized and bound themselves to respect the ownership
and possession of Duero.
3
Herein private respondent Eradel was not a party to the agreement, and he
was declared in default for failure to file his answer to the complaint.
4

Petitioner presented his evidence ex parte on February 13, 1996. On May 8, 1996, judgment was
rendered in his favor, and private respondent was ordered to peacefully vacate and turn over Lot No.1065
Cad. 537-D to petitioner; pay petitioner P2,000 annual rental from 1988 up the time he vacates the land,
and P5,000 as attorney's fees and the cost of the suit.
5
Private respondent received a copy of the
decision on May 25, 1996.
On June 10, 1996, private respondent filed a Motion for New Trial, alleging that he has been occupying
the land as a tenant of Artemio Laurente, Sr., since 1958. He explained that he turned over the complaint
and summons to Laurente in the honest belief that as landlord, the latter had a better right to the land and
was responsible to defend any adverse claim on it. However, the trial court denied the motion for new
trial.1wphi1.nt
Meanwhile, RED Conflict Case No.1029, an administrative case between petitioner and applicant-
contestants Romeo, Artemio and Jury Laurente, remained pending with the Office of the Regional
Director of the Department of Environment and Natural Resources in Davao City. Eventually, it was
forwarded to the DENR Regional Office in Prosperidad, Agusan del Sur .
On July 24, 1996, private respondent filed before the RTC a Petition for Relief from Judgment, reiterating
the same allegation in his Motion for New Trial. He averred that unless there is a determination on who
owned the land, he could not be made to vacate the land. He also averred that the judgment of the trial
court was void inasmuch as the heirs of Artemio Laurente, Sr., who are indispensable parties, were not
impleaded.
On September 24, 1996, Josephine, Ana Soledad and Virginia, all surnamed Laurente, grandchildren of
Artemio who were claiming ownership of the land, filed a Motion for Intervention. The RTC denied the
motion.
On October 8, 1996, the trial court issued an order denying the Petition for Relief from Judgment. In a
Motion for Reconsideration of said order, private respondent alleged that the RTC had no jurisdiction over
the case, since the value of the land was only P5,240 and therefore it was under the jurisdiction of the
municipal trial court. On November 22, 1996, the RTC denied the motion for reconsideration.
On January 22, 1997, petitioner filed a Motion for Execution, which the RTC granted on January 28. On
February 18, 1997, Entry of Judgment was made of record and a writ of execution was issued by the RTC
on February 27,1997. On March 12,1997, private respondent filed his petition for certiorari before the
Court of Appeals.
The Court of Appeals gave due course to the petition, maintaining that private respondent is not estopped
from assailing the jurisdiction 'of the RTC, Branch 27 in Tandag, Surigao del Sur, when private
respondent filed with said court his Motion for Reconsideration And/Or Annulment of Judgment. The
Court of Appeals decreed as follows:
IN THE LIGHT OF ALL THE FOREGOING, the Petition is GRANTED. All proceedings in "Gabriel
L. Duero vs. Bernardo Eradel, et. al. Civil Case 1075" filed in the Court a quo, including its
Decision, Annex "E" of the petition, and its Orders and Writ of Execution and the turn over of the
JURISDICTION jrp
13

property to the Private Respondent by the Sheriff of the Court a quo, are declared null and void
and hereby SET ASIDE, No pronouncement as to costs.
SO ORDERED.
6

Petitioner now comes before this Court, alleging that the Court of Appeals acted with grave abuse of
discretion amounting to lack or in excess of jurisdiction when it held that:
I.
...THE LOWER COURT HAS NO JURISDICTION OVER THE SUBJECT MA TTER OF THE
CASE.
II
...PRIVATE RESPONDENT WAS NOT THEREBY ESTOPPED FROM QUESTIONING THE
JURISDICTION OF THE LOWER COURT EVEN AFTER IT SUCCESSFULLY SOUGHT
AFFIRMATIVE RELIEF THEREFROM.
III
...THE FAlLURE OF PRIVATE RESPONDENT TO FILE HIS ANSWER IS JUSTIFIED.
7

The main issue before us is whether the Court of Appeals gravely abused its discretion when it held that
the municipal trial court had jurisdiction, and that private respondent was not estopped from assailing the
jurisdiction of the RTC after he had filed several motions before it. The secondary issue is whether the
Court of appeals erred in holding that private respondent's failure to file an answer to the complaint was
justified.
At the outset, however, we note that petitioner through counsel submitted to this Court pleadings that
contain inaccurate statements. Thus, on page 5 of his petition,
8
we find that to bolster the claim that the
appellate court erred in holding that the RTC had no jurisdiction, petitioner pointed to Annex E
9
of his
petition which supposedly is the Certification issued by the Municipal Treasurer of San Miguel, Surigao,
specifically containing the notation, "Note: Subject for General Revision Effective 1994." But it appears
that Annex E of his petition is not a Certification but a xerox copy of a Declaration of Real Property.
Nowhere does the document contain a notation, "Note: Subject for General Revision Effective 1994."
Petitioner also asked this Court to refer to Annex F,
10
where he said the zonal value of the disputed land
was P1.40 per sq.m., thus placing the computed value of the land at the time the complaint was filed
before the RTC at P57,113.98, hence beyond the jurisdiction of the municipal court and within the
jurisdiction of the regional trial court. However, we find that these annexes are both merely xerox copies.
They are obviously without evidentiary weight or value.
Coming now to the principal issue, petitioner contends that respondent appellate court acted with grave
abuse of discretion. By "grave abuse of discretion" is meant such capricious and whimsical exercise of
judgment which is equivalent to an excess or a lack of jurisdiction. The abuse of discretion must be so
patent and gross as to amount to an evasion of a positive duty or a virtual refusal to perform a duty
enjoined by law, or to act at all in contemplation of law as where the power is exercised in an arbitrary
and despotic manner by reason of passion or hostility.
11
But here we find that in its decision holding that
the municipal court has jurisdiction over the case and that private respondent was not estopped from
questioning the jurisdiction of the RTC, respondent Court of Appeals discussed the facts on which its
decision is grounded as well as the law and jurisprudence on the matter.
12
Its action was neither
whimsical nor capricious.
JURISDICTION jrp
14

Was private respondent estopped from questioning the jurisdiction of the RTC? In this case, we are in
agreement with the Court of Appeals that he was not. While participation in all stages of a case before the
trial court, including invocation of its authority in asking for affirmative relief, effectively bars a party by
estoppel from challenging the court's jurisdiction,
13
we note that estoppel has become an equitable
defense that is both substantive and remedial and its successful invocation can bar a right and not merely
its equitable enforcement.
14
Hence, estoppel ought to be applied with caution. For estoppel to apply, the
action giving rise thereto must be unequivocal and intentional because, if misapplied, estoppel may
become a tool of injustice.
15

In the present case, private respondent questions the jurisdiction of RTC in Tandag, Surigao del Sur, on
legal grounds. Recall that it was petitioner who filed the complaint against private respondent and two
other parties before the said court,
16
believing that the RTC had jurisdiction over his complaint. But by
then, Republic Act 7691
17
amending BP 129 had become effective, such that jurisdiction already belongs
not to the RTC but to the MTC pursuant to said amendment. Private respondent, an unschooled farmer,
in the mistaken belief that since he was merely a tenant of the late Artemio Laurente Sr., his landlord,
gave the summons to a Hipolito Laurente, one of the surviving heirs of Artemio Sr., who did not do
anything about the summons. For failure to answer the complaint, private respondent was declared in
default. He then filed a Motion for New Trial in the same court and explained that he defaulted because of
his belief that the suit ought to be answered by his landlord. In that motion he stated that he had by then
the evidence to prove that he had a better right than petitioner over the land because of his long,
continuous and uninterrupted possession as bona-fide tenant-lessee of the land.
18
But his motion was
denied. He tried an alternative recourse. He filed before the RTC a Motion for Relief from Judgment.
Again, the same court denied his motion, hence he moved for reconsideration of the denial. In his Motion
for Reconsideration, he raised for the first time the RTC's lack of jurisdiction. This motion was again
denied. Note that private respondent raised the issue of lack of jurisdiction, not when the case was
already on appeal, but when the case, was still before the RTC that ruled him in default, denied his
motion for new trial as well as for relief from judgment, and denied likewise his two motions for
reconsideration. After the RTC still refused to reconsider the denial of private respondent's motion for
relief from judgment, it went on to issue the order for entry of judgment and a writ of execution.
Under these circumstances, we could not fault the Court of Appeals in overruling the RTC and in holding
that private respondent was not estopped from questioning the jurisdiction of the regional trial court. The
fundamental rule is that, the lack of jurisdiction of the court over an action cannot be waived by the
parties, or even cured by their silence, acquiescence or even by their express consent.
19
Further, a party
may assail the jurisdiction of the court over the action at any stage of the proceedings and even on
appeal.
20
The appellate court did not err in saying that the RTC should have declared itself barren of
jurisdiction over the action. Even if private respondent actively participated in the proceedings before said
court, the doctrine of estoppel cannot still be properly invoked against him because the question of lack of
jurisdiction may be raised at anytime and at any stage of the action.
21
Precedents tell us that as a general
rule, the jurisdiction of a court is not a question of acquiescence as a matter of fact, but an issue of
conferment as a matter of law.
22
Also, neither waiver nor estoppel shall apply to confer jurisdiction upon a
court, barring highly meritorious and exceptional circumstances.
23
The Court of Appeals found support for
its ruling in our decision in Javier vs. Court of Appeals, thus:
x x x The point simply is that when a party commits error in filing his suit or proceeding in a court
that lacks jurisdiction to take cognizance of the same, such act may not at once be deemed
sufficient basis of estoppel. It could have been the result of an honest mistake, or of divergent
interpretations of doubtful legal provisions. If any fault is to be imputed to a party taking such
course of action, part of the blame should be placed on the court which shall entertain the
suit, thereby lulling the parties into believing that they pursued their remedies in the
correct forum. Under the rules, it is the duty of the court to dismiss an action 'whenever it
appears that the court has no jurisdiction over the subject matter.' (Sec. 2, Rule 9, Rules of Court)
Should the Court render a judgment without jurisdiction, such judgment may be impeached or
annulled for lack of jurisdiction (Sec. 30, Rule 132, Ibid), within ten (10) years from the finality of
the same. [Emphasis ours.]
24

JURISDICTION jrp
15

Indeed, "...the trial court was duty-bound to take judicial notice of the parameters of its jurisdiction and its
failure to do so, makes its decision a 'lawless' thing."
25

Since a decision of a court without jurisdiction is null and void, it could logically never become final and
executory, hence appeal therefrom by writ of error would be out of the question. Resort by private
respondent to a petition for certiorari before the Court of Appeals was in order .
In holding that estoppel did not prevent private respondent from questioning the RTC's jurisdiction, the
appellate court reiterated the doctrine that estoppel must be applied only in exceptional cases, as its
misapplication could result in a miscarriage of justice. Here, we find that petitioner, who claims ownership
of a parcel of land, filed his complaint before a court without appropriate jurisdiction. Defendant, a farmer
whose tenancy status is still pending before the proper administrative agency concerned, could have
moved for dismissal of the case on jurisdictional grounds. But the farmer as defendant therein could not
be expected to know the nuances of jurisdiction and related issues. This farmer, who is now the private
respondent, ought not to be penalized when he claims that he made an honest mistake when he initially
submitted his motions before the RTC, before he realized that the controversy was outside the RTC's
cognizance but within the jurisdiction of the municipal trial court. To hold him in estoppel as the RTC did
would amount to foreclosing his avenue to obtain a proper resolution of his case. Furthermore, if the
RTC's order were to be sustained, he would be evicted from the land prematurely, while RED Conflict
Case No.1029 would remain unresolved. Such eviction on a technicality if allowed could result in an
injustice, if it is later found that he has a legal right to till the land he now occupies as tenant-
lessee.1wphi1.nt
Having determined that there was no grave abuse of discretion by the appellate court in ruling that private
respondent was not estopped from questioning the jurisdiction of the RTC, we need not tarry to consider
in detail the second issue. Suffice it to say that, given the circumstances in this case, no error was
committed on this score by respondent appellate court. Since the RTC had no jurisdiction over the case,
private respondent had justifiable reason in law not to file an answer, aside from the fact that he believed
the suit was properly his landlord's concern.
WHEREFORE, the petition is DISMISSED. The assailed decision of the Court of Appeals is AFFIRMED.
The decision of the Regional Trial Court in Civil Case No.1075 entitled Gabriel L. Duero vs. Bernardo
Eradel, its Order that private respondent turn over the disputed land to petitioner, and the Writ of
Execution it issued, are ANNULLED and SET ASIDE. Costs against petitioner .
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 129638 December 8, 2003
ANTONIO T. DONATO, petitioner,
vs.
COURT OF APPEALS, FILOMENO ARCEPE, TIMOTEO BARCELONA, IGNACIO BENDOL, THELMA
P. BULICANO, ROSALINDA CAPARAS, ROSITA DE COSTO, FELIZA DE GUZMAN, LETICIA DE
LOS REYES, ROGELIO GADDI, PAULINO GAJARDO, GERONIMO IMPERIAL, HOMER IMPERIAL,
ELVIRA LESLIE, CEFERINO LUGANA, HECTOR PIMENTEL, NIMFA PIMENTEL, AURELIO G.
ROCERO, ILUMINADA TARA, JUANITO VALLESPIN, and NARCISO YABUT, respondents.
D E C I S I O N
JURISDICTION jrp
16

AUSTRIA-MARTINEZ, J .:
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 assails the Resolutions
1
dated March 21, 1997 and June
23, 1997 issued by the Court of Appeals in CA-G.R. SP No. 41394.
2

The factual background of the case is as follows:
Petitioner Antonio T. Donato is the registered owner of a real property located at Ciriaco Tuason Street,
San Andres, Manila, covered by Transfer Certificate of Title No. 131793 issued by the Register of Deeds
of the City of Manila on November 24, 1978. On June 7, 1994, petitioner filed a complaint before the
Metropolitan Trial Court (Branch 26) of Manila (MeTC) for forcible entry and unlawful detainer against 43
named defendants and "all unknown occupants" of the subject property.
3

Petitioner alleges that: private respondents had oral contracts of lease that 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 paying rent; on April 7, 1994, petitioner sent them a written demand to vacate; the
non-compliance with said demand letter constrained him to file the ejectment case against them.
4

Of the 43 named defendants, only 20 (private respondents,
5
for brevity) filed a consolidated Answer dated
June 29, 1994 wherein they denied non-payment of rentals. They contend that they cannot be evicted
because the Urban Land Reform Law guarantees security of tenure and priority right to 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 passive stage, they decided to continue payment of rentals and tendered
payment to petitioners counsel and thereafter initiated a petition for consignation of the rentals in Civil
Case No. 144049 while they await the outcome of the negotiation to purchase.
Following trial under the Rule on Summary Procedure, the MeTC rendered judgment on September 19,
1994 against the 23 non-answering defendants, ordering them to vacate the premises occupied by each
of them, and to pay jointly and severally P10,000.00 per month from the date they last paid their rent until
the date they actually vacate, plus interest thereon at the legal rate 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
judgment
6
on the same day sustaining their rights under the Land Reform Law, declaring petitioners
cause of action as not duly warranted by the facts and circumstances of the case and dismissing the case
without prejudice.
Not satisfied with the judgment dismissing the complaint as against the private respondents, petitioner
appealed to the Regional Trial Court (Branch 47) of Manila (RTC).
7
In a Decision
8
dated July 5, 1996, the
RTC sustained the decision of the MeTC.
Undaunted, petitioner filed a petition for review with the Court of Appeals (CA for brevity), docketed as
CA-G.R. SP No. 41394. In a Resolution dated March 21, 1997, the CA dismissed the petition on two
grounds: (a) the certification of non-forum shopping was signed by petitioners counsel and not by
petitioner himself, in violation of Revised Circular No. 28-91;
9
and, (b) the only annex to the petition is a
certified copy of the questioned decision but copies of the pleadings and other material portions of the
record 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 Appeals (RIRCA).
10

On April 17, 1997, petitioner filed a Motion for Reconsideration,
11
attaching thereto a photocopy of the
certification of non-forum shopping duly signed by petitioner himself
12
and the relevant records of the
MeTC and the RTC.
13
Five days later, or on April 22, 1997, petitioner filed a Supplement
14
to his motion
for reconsideration submitting the duly authenticated original of the certification of non-forum shopping
signed by petitioner.
15

JURISDICTION jrp
17

In a Resolution
16
dated June 23, 1997 the CA denied petitioners motion for reconsideration and its
supplement, ruling that "petitioners subsequent compliance did not cure the defect in the instant
petition."
17

Hence, the present petition anchored on the following grounds:
I.
RESPONDENT COURT OF APPEALS GRAVELY ERRED IN DISMISSING THE PETITION BASED ON
HYPER-TECHNICAL GROUNDS BECAUSE:
A. PETITIONER HAS SUBSTANTIALLY COMPLIED WITH SUPREME COURT CIRCULAR NO.
28-91. MORE, PETITIONER SUBSEQUENTLY SUBMITTED DURING THE PENDENCY OF
THE PROCEEDINGS A DULY AUTHENTICATED CERTIFICATE OF NON-FORUM SHOPPING
WHICH HE HIMSELF SIGNED AND EXECUTED IN THE UNITED STATES.
B. PETITIONER HAS SUBSTANTIALLY COMPLIED WITH SECTION 3, RULE 6 OF THE
REVISED INTERNAL RULES OF THE COURT OF APPEALS. MORE, PETITIONER
SUBSEQUENTLY SUBMITTED DURING THE PENDENCY OF THE PROCEEDINGS COPIES
OF THE RELEVANT DOCUMENTS IN THE CASES BELOW.
C. PETITIONER HAS A MERITORIOUS APPEAL, AND HE STANDS TO LOSE SUBSTANTIAL
PROPERTY IF THE APPEAL IS NOT GIVEN DUE COURSE. THE RULES OF PROCEDURE
MUST BE LIBERALLY CONSTRUED TO DO SUBSTANTIAL JUSTICE.
II.
RESPONDENT COURT OF APPEALS GRAVELY ERRED IN NOT RULING THAT ALL THE ELEMENTS
OF UNLAWFUL DETAINER ARE PRESENT IN THE CASE AT BAR.
III.
RESPONDENT COURT OF APPEALS ERRED IN NOT RULING THAT THE RTC MANILA, BRANCH 47,
COMMITTED REVERSIBLE ERROR IN AFFIRMING THE FINDING OF MTC MANILA, BRANCH 26,
THAT PRIVATE RESPONDENTS CANNOT BE EJECTED FROM THE SUBJECT PROPERTY
WITHOUT VIOLATING THEIR SECURITY OF TENURE EVEN IF THE TERM OF THE LEASE IS
MONTH-TO-MONTH WHICH EXPIRES AT THE END OF EACH MONTH. IN THIS REGARD,
A. RESPONDENT COURT OF APPEALS SHOULD HAVE RULED THAT THE RTC MANILA
COMMITTED REVERSIBLE ERROR IN NOT RULING THAT TENANTS UNDER P.D. 1517 MAY
BE EVICTED FOR NON-PAYMENT OF RENT, TERMINATION OF LEASE OR OTHER
GROUNDS FOR EJECTMENT.
B. RESPONDENT COURT OF APPEALS SHOULD HAVE RULED THAT THE RTC MANILA
COMMITTED REVERSIBLE ERROR IN NOT RULING THAT THE ALLEGED "PRIORITY RIGHT
TO BUY THE LOT THEY OCCUPY" DOES NOT APPLY WHERE THE LANDOWNER DOES
NOT INTEND TO SELL THE SUBJECT PROPERTY, AS IN THE CASE AT BAR.
C. RESPONDENT COURT OF APPEALS SHOULD HAVE RULED THAT THE RTC MANILA
COMMITTED REVERSIBLE ERROR IN RULING THAT THE SUBJECT PROPERTY IS
LOCATED WITHIN A ZONAL IMPROVEMENT AREA OR APD.
JURISDICTION jrp
18

D. RESPONDENT COURT OF APPEALS SHOULD HAVE RULED THAT THE RTC MANILA
COMMITTED REVERSIBLE ERROR IN NOT RULING THAT PRIVATE RESPONDENTS NON-
COMPLIANCE WITH THE CONDITIONS UNDER THE LAW RESULT IN THE WAIVER OF
PROTECTION AGAINST EVICTION.
E. RESPONDENT COURT OF APPEALS SHOULD HAVE RULED THAT THE RTC MANILA
COMMITTED REVERSIBLE ERROR IN NOT RULING THAT PRIVATE RESPONDENTS
CANNOT BE ENTITLED TO PROTECTION UNDER P.D. 2016 SINCE THE GOVERNMENT
HAS NO INTENTION OF ACQUIRING THE SUBJECT PROPERTY.
F. RESPONDENT COURT OF APPEALS SHOULD HAVE RULED THAT THE RTC MANILA
COMMITTED REVERSIBLE ERROR IN FINDING THAT THERE IS AN ON-GOING
NEGOTIATION FOR THE SALE OF THE SUBJECT PROPERTY AND THAT IT RENDERS THE
EVICTION OF PRIVATE RESPONDENTS PREMATURE.
G. RESPONDENT COURT OF APPEALS SHOULD HAVE RULED 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.
RESPONDENT COURT OF APPEALS GRAVELY ERRED IN NOT FINDING THAT RESPONDENTS
SHOULD PAY PETITIONER A REASONABLE COMPENSATION FOR THEIR USE AND OCCUPANCY
OF THE SUBJECT PROPERTY IN THE AMOUNT OF AT LEAST P10,000.00 PER MONTH FROM THE
DATE THEY LAST PAID RENT UNTIL THE TIME THEY ACTUALLY VACATE THE SAME, WITH LEGAL
INTEREST AT THE MAXIMUM RATE ALLOWED BY LAW UNTIL PAID.
V.
RESPONDENT COURT OF APPEALS GRAVELY ERRED IN NOT FINDING THAT RESPONDENTS
SHOULD PAY PETITIONER ATTORNEYS FEES AND EXPENSES OF LITIGATION OF AT LEAST
P20,000.00, PLUS COSTS.
18

Petitioner submits that a relaxation of the rigid rules of technical procedure is called for in view of the
attendant circumstances showing that the objectives 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 glaringly
violated and, more importantly, the petition is meritorious.
The proper recourse of an aggrieved party from a decision of the CA is a petition for review on certiorari
under Rule 45 of the Rules of Court. However, if the error, subject of the recourse, is one of jurisdiction,
or the act complained of was perpetrated by a court with grave abuse of discretion amounting to lack or
excess of jurisdiction, the proper remedy available to the aggrieved party is a petition for certiorari under
Rule 65 of the said Rules. As enunciated by the Court in Fortich vs. Corona:
19

Anent the first issue, in order to determine whether the recourse of petitioners is proper or not, it is
necessary to draw a line between an error of judgment and an error of jurisdiction. An error of judgment is
one which the court may commit in the exercise of its jurisdiction, and which error is reviewable only by an
appeal. On the other hand, an error of jurisdiction is one where the act complained of was issued by the
court, officer or a quasi-judicial body without or in excess of jurisdiction, or with grave abuse of discretion
which is tantamount to lack or in excess of jurisdiction. This error is correctible only by the extraordinary
writ of certiorari.
20
(Emphasis supplied).
JURISDICTION jrp
19

Inasmuch as the present petition principally assails the dismissal of the petition on ground of procedural
flaws involving the jurisdiction of the court a quo to entertain the petition, it falls within the ambit of a
special civil action for certiorari under Rule 65 of the Rules of Court.
At the time the instant petition for certiorari was filed, i.e., on July 17, 1997, the prevailing rule is the newly
promulgated 1997 Rules of Civil Procedure. However, considering that the CA Resolution being assailed
was rendered on March 21, 1997, the applicable rule is the three-month reglementary period, established
by jurisprudence.
21
Petitioner received notice of the assailed CA Resolution dismissing his petition for
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 the CA Resolution denying his motion on July 3, 1997 and
fourteen days later, or on July 17, 1997, he filed a motion for 30-day extension of time to file a "petition for
review" which was granted by us; and petitioner duly filed his petition on August 15, 1997, which is well-
within the period of extension granted to him.
We now go to the merits of the case.
We find the instant petition partly meritorious.
The requirement regarding the need for a certification of non-forum shopping in cases filed before the CA
and the corresponding sanction for non-compliance thereto are found in the then prevailing Revised
Circular No. 28-91.
22
It provides that the petitioner himself must make the certification against forum
shopping and a violation thereof shall be a cause for the summary dismissal of the multiple petition or
complaint. The rationale for the rule of personal execution of the certification by the petitioner himself is
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 counsel of record may be unaware of such fact.
23
The Court
has ruled that with respect to the contents of the certification, the rule on substantial compliance may be
availed of. This is so because the requirement of strict compliance with the rule regarding the certification
of non-forum shopping simply underscores its mandatory nature in that the certification cannot be
altogether dispensed with or its requirements completely disregarded, but it does not thereby interdict
substantial compliance with its provisions under justifiable circumstances.
24

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 his motion for reconsideration,
25
petitioner has aptly drawn the Courts attention to
the physical impossibility of filing the petition for review within 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 accomplish and sign the certification.
We fully agree with petitioner that it was physically impossible for the petition to have been prepared and
sent to the petitioner in the United States, for him to travel from Virginia, U.S.A. to the nearest Philippine
Consulate in 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 within the 15-day reglementary period. Thus, we find
that petitioner has adequately explained his failure to personally sign the certification which justifies
relaxation of the rule.
We have stressed that the rules on forum shopping, which were precisely designed to promote and
facilitate the orderly administration of justice, should not be interpreted with such absolute literalness as to
subvert its own ultimate and legitimate objective
26
which is simply to prohibit and penalize the evils of
forum-shopping.
27
The subsequent filing of the certification duly signed by the petitioner himself should
thus be deemed substantial compliance, pro hac vice.
In like manner, the failure of the petitioner to comply with Section 3, paragraph b, Rule 6 of the RIRCA,
that is, to append to his petition copies of the pleadings and other material portions of the records as
would support the petition, does not justify the outright dismissal of the petition. It must be emphasized
JURISDICTION jrp
20

that the RIRCA gives the appellate court a certain leeway to require parties to submit additional
documents as may be necessary in the interest of substantial justice. Under Section 3, paragraph d of
Rule 3 of the RIRCA,
28
the CA may require the parties to complete the annexes as the 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 Section 3(d)(5) of Rule 6 of the RIRCA.
29
At any rate, petitioner
attached copies of the pleadings and other material portions of the records below with his motion for
reconsideration.
30
In Jaro vs. Court of Appeals,
31
the Court reiterated the doctrine laid down in Cusi-
Hernandez vs. Diaz
32
and Piglas-Kamao vs. National Labor Relations Commission
33
that subsequent
submission of the missing documents with the motion for reconsideration amounts to substantial
compliance which calls for the relaxation of the rules of procedure. We find no cogent reason to depart
from this doctrine.
Truly, in dismissing the petition for review, the CA had committed grave abuse of discretion amounting to
lack of jurisdiction in putting a premium on technicalities at the expense of a just resolution of the case.
Needless to stress, "a litigation is not a game of technicalities."
34
When 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 of procedure should be used to promote, not frustrate justice. While the swift unclogging of court
dockets is a laudable objective, granting substantial justice is an even more urgent ideal.
36

The Courts pronouncement in Republic vs. Court of Appeals
37
is worth echoing: "cases should be
determined on the merits, after full opportunity to all parties for ventilation of their causes and defenses,
rather than on technicality or some procedural imperfections. In that way, the ends of justice would be
better served."
38
Thus, what should guide judicial action is that a party litigant is given the fullest
opportunity to establish the merits of his action or defense rather than for him to lose life, honor or
property on mere technicalities.
39
This guideline is especially true when the petitioner has satisfactorily
explained the lapse and fulfilled the requirements in his motion for reconsideration,
40
as in this case.
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 of unlawful detainer are present in the case. He further
argues that the alleged "priority right to buy the lot they occupy" does not apply where the landowner does
not intend to sell the subject property, as in the case; that respondents cannot be entitled to protection
under P.D. No. 2016 since the government has no intention of acquiring the subject property, nor is the
subject property located within a zonal improvement area; and, that assuming that there is a negotiation
for the sale of the subject property or a pending case for consignation of rentals, these do not bar the
eviction of respondents.
We are not persuaded. We shall refrain from ruling on the foregoing issues in the present petition for
certiorari.1wphi1 The issues involved are factual issues which inevitably require the weighing of
evidence. These are matters that are beyond the province of this Court in a special civil action for
certiorari. These issues are best addressed to the CA in the petition for review filed before it. As an
appellate court, it is empowered to require parties to submit additional documents, as it may find
necessary, or to receive evidence, to promote the ends of justice, pursuant to the last paragraph of
Section 9, 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."
JURISDICTION jrp
21

SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 144025 December 27, 2002
SPS. RENE GONZAGA and LERIO GONZAGA, petitioners,
vs.
HON. COURT OF APPEALS, Second Division, Manila,
HON. QUIRICO G. DEFENSOR, Judge, RTC, Branch 36, Sixth Judicial Region, Iloilo City,
and LUCKY HOMES, INC., represented by WILSON JESENA, JR., as Manager, respondents.
D E C I S I O N
CORONA, J .:
Before this Court is a petition for review on certiorari seeking the reversal of 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 records disclose that, sometime in 1970, petitioner-spouses purchased a parcel of land from private
respondent Lucky Homes, Inc., situated in Iloilo and containing an area of 240 square meters. Said lot
was specifically denominated as Lot No. 19 under Transfer Certificate of Title (TCT) No. 28254 and was
mortgaged to the Social Security System (SSS) as security for their housing loan. Petitioners then started
the construction of their house, not on Lot No. 19 but on Lot No. 18, as private respondent mistakenly
identified Lot No. 18 as Lot No. 19. Upon realizing its error, private respondent, through its general
manager, informed petitioners of such mistake but the latter offered to buy Lot No. 18 in order to widen
their premises. Thus, petitioners continued with the construction of their house. However, petitioners
defaulted in the payment of their housing loan from SSS. Consequently, Lot No. 19 was foreclosed by
SSS and petitioners certificate of title was cancelled and a new one was issued in the name of SSS. After
Lot No. 19 was foreclosed, petitioners offered to swap Lot Nos. 18 and 19 and demanded from private
respondent that their contract of sale be reformed and another deed of sale be executed with respect to
Lot No. 18, considering that their house was built therein. However, private respondent refused. This
prompted petitioners to file, on June 13, 1996, an action for reformation of contract and damages with the
Regional Trial Court of Iloilo City, Branch 36, which was docketed as Civil Case No. 17115.
On January 15, 1998, the trial court
2
rendered its decision dismissing the complaint for lack of merit and
ordering herein petitioners to pay private respondent the amount of P10,000 as moral damages and
another P10,000 as attorneys fees. The pertinent conclusion of the trial court reads as follows:
"Aware of such fact, the plaintiff nonetheless continued to stay in the premises of Lot 18 on the proposal
that he would also buy the same. Plaintiff however failed to buy Lot 18 and likewise defaulted in the
payment of his loan with the SSS involving Lot 19. Consequently Lot 19 was foreclosed and sold at public
auction. Thereafter TCT No. T-29950 was cancelled and in lieu thereof TCT No. T-86612 (Exh. 9) was
issued in favor of SSS. This being the situation obtaining, the reformation of instruments, even if allowed,
or the swapping of Lot 18 and Lot 19 as earlier proposed by the plaintiff, is no longer feasible considering
that plaintiff is no longer the owner of Lot 19, otherwise, defendant will be losing Lot 18 without any
substitute therefore (sic). Upon the other hand, plaintiff will be unjustly enriching himself having in its favor
both Lot 19 which was earlier mortgaged by him and subsequently foreclosed by SSS, as well as Lot 18
where his house is presently standing.
JURISDICTION jrp
22

"The logic and common sense of the situation lean heavily in favor of the defendant. It is evident that what
plaintiff had bought from the defendant is Lot 19 covered by TCT No. 28254 which parcel of land has
been properly indicated in the instruments and not Lot 18 as claimed by the plaintiff. The contracts being
clear and unmistakable, they reflect the true intention of the parties, besides the plaintiff failed to assail
the contracts on mutual mistake, hence the same need no longer be reformed."
3

On June 22, 1998, a writ of execution was issued by the trial court. Thus, on September 17, 1998,
petitioners filed an urgent motion to recall writ of execution, alleging that the court a quo had no
jurisdiction to try the case as it was vested in the Housing and Land Use Regulatory Board (HLURB)
pursuant to PD 957 (The Subdivision and Condominium Buyers Protective Decree). Conformably,
petitioners filed a new complaint against private respondent with the HLURB. Likewise, on June 30, 1999,
petitioner-spouses filed before the Court of Appeals a petition for annulment of judgment, premised on the
ground that the trial court had no jurisdiction to try and decide Civil Case No. 17115.
In a decision rendered on December 29, 1999, the Court of Appeals denied the petition for annulment of
judgment, relying mainly on the jurisprudential doctrine of estoppel as laid down in the case of Tijam vs.
Sibonghanoy.
4

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

"A party may be estopped or barred from raising a question in different ways and for different reasons.
Thus we speak of estoppel in pais, or estoppel by deed or by record, and of estoppel by laches.
x x x
"It has been held that a party cannot invoke the jurisdiction of a court to secure affirmative relief against
his opponent and, after obtaining or failing to obtain such relief, repudiate, or question that same
jurisdiction x x x x [T]he question whether the court had jurisdiction either of the subject matter of the
action or of the parties was not important in such cases because the party is barred from such conduct
not because the judgment or order of the court is valid and conclusive as an adjudication, but for the
reason that such a practice can not be tolerated obviously for reasons of public policy."
Tijam has been reiterated in many succeeding cases. Thus, in Orosa vs. Court of Appeals;
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.
JURISDICTION jrp
23

In the case at bar, it was petitioners themselves who invoked the jurisdiction of the court a quo by
instituting an action for reformation of contract against private respondents. It appears that, in the
proceedings before the trial court, petitioners vigorously asserted their cause from start to finish. Not even
once did petitioners ever raise the issue of the courts jurisdiction during the entire proceedings which
lasted for two years. It was only after the trial court rendered its decision and issued a writ of execution
against them in 1998 did petitioners first raise the issue of jurisdiction and it was only because said
decision was unfavorable to them. Petitioners thus effectively waived their right to question the courts
jurisdiction over the case they themselves filed.
Petitioners should bear the consequence of their act. They cannot be allowed to profit from their omission
to the damage and prejudice of the private respondent. This Court frowns upon the undesirable practice
of a party submitting his case for decision and then accepting the judgment but only if favorable, and
attacking it for lack of jurisdiction if not.
13

Public policy dictates that this Court must strongly condemn any double-dealing by parties who are
disposed to trifle with the courts by deliberately taking inconsistent positions, in utter disregard of the
elementary principles of justice and good faith.
14
There is no denying that, in this case, petitioners never
raised the issue of jurisdiction throughout the entire proceedings in the trial court. Instead, they voluntarily
and willingly submitted themselves to the jurisdiction of said court. It is now too late in the day for them to
repudiate the jurisdiction they were invoking all along.
WHEREFORE, the petition for review is hereby DENIED.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 124644 February 5, 2004
ARNEL ESCOBAL, petitioner,
vs
HON. FRANCIS GARCHITORENA, Presiding Justice of the Sandiganbayan, Atty. Luisabel Alfonso-
Cortez, Executive Clerk of Court IV of the Sandiganbayan, Hon. David C. Naval, Presiding Judge of
the Regional Trial Court of Naga City, Branch 21, Luz N. Nueca, respondents.
D E C I S I O N
CALLEJO, SR., J .:
This is a petition for certiorari with a prayer for the issuance of a temporary restraining order and
preliminary injunction filed by Arnel Escobal seeking the nullification of the remand by the Presiding
Justice of the Sandiganbayan of the records of Criminal Case No. 90-3184 to the Regional Trial Court
(RTC) of Naga City, Branch 21.
The petition at bench arose from the following milieu:
The petitioner is a graduate of the Philippine Military Academy, a member of the Armed Forces of
the Philippines and the Philippine Constabulary, as well as the Intelligence Group of the
Philippine National Police. On March 16, 1990, the petitioner was conducting surveillance
JURISDICTION jrp
24

operations on drug trafficking at the Sa Harong Caf Bar and Restaurant located along Barlin St.,
Naga City. He somehow got involved in a shooting incident, resulting in the death of one Rodney
Rafael N. Nueca. On February 6, 1991, an amended Information was filed with the RTC of Naga
City, Branch 21, docketed as Criminal Case No. 90-3184 charging the petitioner and a certain
Natividad Bombita, Jr. alias "Jun Bombita" with murder. The accusatory portion of the amended
Information reads:
That on or about March 16, 1990, in the City of Naga, Philippines, and within the jurisdiction of
this Honorable Court by virtue of the Presidential Waiver, dated June 1, 1990, with intent to kill,
conspiring and confederating together and mutually helping each other, did, then and there,
willfully, unlawfully and feloniously attack, assault and maul one Rodney Nueca and accused 2Lt
Arnel Escobal armed with a caliber .45 service pistol shoot said Rodney Nueca thereby inflicting
upon him serious, mortal and fatal wounds which caused his death, and as a consequence
thereof, complainant LUZ N. NUECA, mother of the deceased victim, suffered actual and
compensatory damages in the amount of THREE HUNDRED SIXTY-SEVEN THOUSAND ONE
HUNDRED SEVEN & 95/100 (P367,107.95) PESOS, Philippine Currency, and moral and
exemplary damages in the amount of ONE HUNDRED THIRTY-FIVE THOUSAND (P135,000.00)
PESOS, Philippine Currency.
1

On March 19, 1991, the RTC issued an Order preventively suspending the petitioner from the service
under Presidential Decree No. 971, as amended by P.D. No. 1847. When apprised of the said order, the
General Headquarters of the PNP issued on October 6, 1992 Special Order No. 91, preventively
suspending the petitioner from the service until the case was terminated.
2

The petitioner was arrested by virtue of a warrant issued by the RTC, while accused Bombita remained at
large. The petitioner posted bail and was granted temporary liberty.
When arraigned on April 9, 1991,
3
the petitioner, assisted by counsel, pleaded not guilty to the offense
charged. Thereafter, on December 23, 1991, the petitioner filed a Motion to Quash
4
the Information
alleging that as mandated by Commonwealth Act No. 408,
5
in relation to Section 1, Presidential Decree
No. 1822 and Section 95 of R.A. No. 6975, the court martial, not the RTC, had jurisdiction over criminal
cases involving PNP members and officers.
Pending the resolution of the motion, the petitioner on June 25, 1993 requested the Chief of the PNP for
his reinstatement. He alleged that under R.A. No. 6975, his suspension should last for only 90 days, and,
having served the same, he should now be reinstated. On September 23, 1993,
6
the PNP Region V
Headquarters wrote Judge David C. Naval requesting information on whether he issued an order lifting
the petitioners suspension. The RTC did not reply. Thus, on February 22, 1994, the petitioner filed a
motion in the RTC for the lifting of the order of suspension. He alleged that he had served the 90-day
preventive suspension and pleaded for compassionate justice. The RTC denied the motion on March 9,
1994.
7
Trial thereafter proceeded, and the prosecution rested its case. The petitioner commenced the
presentation of his evidence. On July 20, 1994, he filed a Motion to Dismiss
8
the case. Citing Republic of
the Philippines v. Asuncion, et al.,
9
he argued that since he committed the crime in the performance of his
duties, the Sandiganbayan had exclusive jurisdiction over the case.
On October 28, 1994, the RTC issued an Order
10
denying the motion to dismiss. It, however, ordered the
conduct of a preliminary hearing to determine whether or not the crime charged was committed by the
petitioner in relation to his office as a member of the PNP.
In the preliminary hearing, the prosecution manifested that it was no longer presenting any evidence in
connection with the petitioners motion. It reasoned that it had already rested its case, and that its
evidence showed that the petitioner did not commit the offense charged in connection with the
performance of his duties as a member of the Philippine Constabulary. According to the prosecution, they
were able to show the following facts: (a) the petitioner was not wearing his uniform during the incident;
JURISDICTION jrp
25

(b) the offense was committed just after midnight; (c) the petitioner was drunk when the crime was
committed; (d) the petitioner was in the company of civilians; and, (e) the offense was committed in a
beerhouse called "Sa Harong Caf Bar and Restaurant."
11

For his part, the petitioner testified that at about 10:00 p.m. on March 15, 1990, he was at the Sa Harong
Caf Bar and Restaurant at Barlin St., Naga City, to conduct surveillance on alleged drug trafficking,
pursuant to Mission Order No. 03-04 issued by Police Superintendent Rufo R. Pulido. The petitioner
adduced in evidence the sworn statements of Benjamin Cario and Roberto Fajardo who corroborated
his testimony that he was on a surveillance mission on the aforestated date.
12

On July 31, 1995, the trial court issued an Order declaring that the petitioner committed the crime
charged while not in the performance of his official function. The trial court added that upon the
enactment of R.A. No. 7975,
13
the issue had become moot and academic. The amendatory law
transferred the jurisdiction over the offense charged from the Sandiganbayan to the RTC since the
petitioner did not have a salary grade of "27" as provided for in or by Section 4(a)(1), (3) thereof. The trial
court nevertheless ordered the prosecution to amend the Information pursuant to the ruling in Republic v.
Asuncion
14
and R.A. No. 7975. The amendment consisted in the inclusion therein of an allegation that the
offense charged was not committed by the petitioner in the performance of his duties/functions, nor in
relation to his office.lawphi1.nt
The petitioner filed a motion for the reconsideration
15
of the said order, reiterating that based on his
testimony and those of Benjamin Cario and Roberto Fajardo, the offense charged was committed by him
in relation to his official functions. He asserted that the trial court failed to consider the exceptions to the
prohibition. He asserted that R.A. No. 7975, which was enacted on March 30, 1995, could not be applied
retroactively.
16

The petitioner further alleged that Luz Nacario Nueca, the mother of the victim, through counsel,
categorically and unequivocably admitted in her complaint filed with the Peoples Law Enforcement Board
(PLEB) that he was on an official mission when the crime was committed.
On November 24, 1995, the RTC made a volte face and issued an Order reversing and setting aside its
July 31, 1995 Order. It declared that based on the petitioners evidence, he was on official mission when
the shooting occurred. It concluded that the prosecution failed to adduce controverting evidence thereto.
It likewise considered Luz Nacario Nuecas admission in her complaint before the PLEB that the petitioner
was on official mission when the shooting happened.
The RTC ordered the public prosecutor to file a Re-Amended Information and to allege that the offense
charged was committed by the petitioner in the performance of his duties/functions or in relation to his
office; and, conformably to R.A. No. 7975, to thereafter transmit the same, as well as the complete
records with the stenographic notes, to the Sandiganbayan, to wit:
WHEREFORE, the Order dated July 31, 1995 is hereby SET ASIDE and RECONSIDERED, and
it is hereby declared that after preliminary hearing, this Court has found that the offense charged
in the Information herein was committed by the accused in his relation to his function and duty as
member of the then Philippine Constabulary.
Conformably with R.A. No. 7975 and the ruling of the Supreme Court in Republic v. Asuncion, et
al., G.R. No. 180208, March 11, 1994:
(1) The City Prosecutor is hereby ordered to file a Re-Amended Information alleging that
the offense charged was committed by the Accused in the performance of his
duties/functions or in relation to his office, within fifteen (15) days from receipt hereof;
JURISDICTION jrp
26

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

On January 8, 1996, the Presiding Justice of the Sandiganbayan ordered the Executive Clerk of Court IV,
Atty. Luisabel Alfonso-Cortez, to return the records of Criminal Case No. 90-3184 to the court of origin,
RTC of Naga 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 rested its case and the petitioner had commenced presenting
his evidence in the RTC; following the rule on continuity of jurisdiction, the latter court should continue
with the case and render judgment therein after trial.
Upon the remand of the records, the RTC set the case for trial on May 3, 1996, for the petitioner to
continue presenting his evidence. Instead of adducing his evidence, the petitioner filed a petition for
certiorari, assailing the Order of the Presiding Justice of the Sandiganbayan remanding the records of the
case to the RTC.
The threshold issue for resolution is whether or not the Presiding Justice of the Sandiganbayan
committed a grave abuse of his discretion amounting to excess or lack of jurisdiction in ordering the
remand of the case to the RTC.
The petitioner contends that when the amended information was filed with the RTC on February 6, 1991,
P.D. No. 1606 was still in effect. Under Section 4(a) of the decree, the Sandiganbayan had exclusive
jurisdiction over the case against him as he was charged with homicide with the imposable penalty of
reclusion temporal, and the crime was committed while in the performance of his duties. He further
asserts that although P.D. No. 1606, as amended by P.D. No. 1861 and by R.A. No. 7975 provides that
crimes committed by members and officers of the PNP with a salary grade below "27" committed in
relation to office are within the exclusive jurisdiction of the proper RTC, the amendment thus introduced
by R.A. No. 7975 should not be applied retroactively. This is so, the petitioner asserts, because under
Section 7 of R.A. No. 7975, only those cases where trial has not begun in the Sandiganbayan upon the
effectivity of the law should be referred to the proper trial court.
The private complainant agrees with the contention of the petitioner. In contrast, the Office of the Special
Prosecutor contends that the Presiding Justice of the Sandiganbayan acted in accordance with law when
he ordered the remand of the case to the RTC. It asserts that R.A. No. 7975 should be applied
retroactively. Although the Sandiganbayan had jurisdiction over the crime committed by the petitioner
when the amended information was filed with the RTC, by the time it resolved petitioners motion to
dismiss on July 31, 1995, R.A. No. 7975 had already taken effect. Thus, the law should be given
retroactive effect.
The Ruling of the Court
The respondent Presiding Justice acted in accordance with law and the rulings of this Court when he
ordered the remand of the case to the RTC, the court of origin.
The jurisdiction of the court over criminal cases is determined by the allegations in the Information or the
Complaint and the statute in effect at the time of the commencement of the action, unless such statute
provides for a retroactive application thereof. The jurisdictional requirements must be alleged in the
Information.
19
Such jurisdiction of the court acquired at the inception of the case continues until the case
is terminated.
20

Under Section 4(a) of P.D. No. 1606 as amended by P.D. No. 1861, the Sandiganbayan had exclusive
jurisdiction in all cases involving the following:
JURISDICTION jrp
27

(1) Violations of Republic Act No. 3019, as amended, otherwise known as the Anti-Graft and
Corrupt Practices Act, Republic Act No. 1379, and Chapter II, Section 2, Title VII of the Revised
Penal Code;
(2) Other offenses or felonies committed by public officers and employees in relation to their
office, including those employed in government-owned or controlled corporations, whether simple
or complexed with other crimes, where the penalty prescribed by law is higher than prision
correccional or imprisonment for six (6) years, or a fine of P6,000.00 .
21

However, for the Sandiganbayan to have exclusive jurisdiction under the said law over crimes committed
by public officers in relation to their office, it is essential that the facts showing the intimate relation
between the office of the offender and the discharge of official duties must be alleged in the Information. It
is not enough to merely allege in the Information that the crime charged was committed by the offender in
relation to his office because that would be a conclusion of law.
22
The amended Information filed with the
RTC against the petitioner does not contain any allegation showing the intimate relation between his
office and the discharge of his duties. Hence, the RTC had jurisdiction over the offense charged when on
November 24, 1995, it ordered the re-amendment of the Information to include therein an allegation that
the petitioner committed the crime in relation to office. The trial court erred when it ordered the elevation
of the records to the Sandiganbayan. It bears stressing that R.A. No. 7975 amending P.D. No. 1606 was
already in effect and under Section 2 of the law:
In cases where none of the principal accused are occupying positions corresponding to salary
grade "27" or higher, as prescribed in the said Republic Act No. 6758, or PNP officers occupying
the rank of superintendent or higher, or their equivalent, exclusive jurisdiction thereof shall be
vested in the proper Regional Trial Court, Metropolitan Trial Court, Municipal Trial Court, and
Municipal Circuit Trial Court, as the case may be, pursuant to their respective jurisdiction as
provided in Batas Pambansa Blg. 129.
Under the law, even if the offender committed the crime charged in relation to his office but occupies a
position corresponding to a salary grade below "27," the proper Regional Trial Court or Municipal Trial
Court, as the case may be, shall have exclusive jurisdiction over the case. In this case, the petitioner was
a Police Senior Inspector, with salary grade "23." He was charged with homicide punishable by reclusion
temporal. Hence, the RTC had exclusive jurisdiction over the crime charged conformably to Sections 20
and 32 of Batas Pambansa Blg. 129, as amended by Section 2 of R.A. No. 7691.
The petitioners contention that R.A. No. 7975 should not be applied retroactively has no legal basis. It
bears stressing that R.A. No. 7975 is a substantive procedural law which may be applied retroactively.
23

IN LIGHT OF ALL THE FOREGOING, the petition is DISMISSED. No pronouncement as to costs.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 169914 April 18, 2008
ASIA'S EMERGING DRAGON CORPORATION, petitioner,
vs.
JURISDICTION jrp
28

DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS, SECRETARY LEANDRO R.
MENDOZA and MANILA INTERNATIONAL AIRPORT AUTHORITY, respondents.
x ----------------------------------------- x
G.R. No. 174166 April 18, 2008
REPUBLIC OF THE PHILIPPINES, represented by the DEPARTMENT OF TRANSPORTATION AND
COMMUNICATIONS and MANILA INTERNATIONAL AIRPORT AUTHORITY, petitioner,
vs.
HON. COURT OF APPEALS and SALACNIB BATERINA, respondents.
D E C I S I O N
CHICO-NAZARIO, J .:
This Court is still continuously besieged by Petitions arising from the awarding of the Ninoy Aquino
International Airport International Passenger Terminal III (NAIA IPT III) Project to the Philippine
International Air Terminals Co., Inc. (PIATCO), despite the promulgation by this Court of Decisions and
Resolutions in two cases, Agan, Jr. v. Philippine International Air Terminals Co., Inc.
1
and Republic v.
Gingoyon,
2
which already resolved the more basic and immediate issues arising from the said award. The
sheer magnitude of the project, the substantial cost of its building, the expected high profits from its
operations, and its remarkable impact on the Philippine economy, consequently raised significant interest
in the project from various quarters.
Once more, two new Petitions concerning the NAIA IPT III Project are before this Court. It is only
appropriate, however, that the Court first recounts its factual and legal findings in Agan and Gingoyon to
ascertain that its ruling in the Petitions at bar shall be consistent and in accordance therewith.
Agan, J r. v. Philippine International Air Terminals Co., Inc. (G.R. Nos. 155001, 155547, and 155661)
Already established and incontrovertible are the following facts in Agan:
In August 1989, the [Department of Trade and Communications (DOTC)] engaged the services of
Aeroport de Paris (ADP) to conduct a comprehensive study of the Ninoy Aquino International
Airport (NAIA) and determine whether the present airport can cope with the traffic development
up to the year 2010. The study consisted of two parts: first, traffic forecasts, capacity of existing
facilities, NAIA future requirements, proposed master plans and development plans; and second,
presentation of the preliminary design of the passenger terminal building. The ADP submitted a
Draft Final Report to the DOTC in December 1989.
Some time in 1993, six business leaders consisting of John Gokongwei, Andrew Gotianun, Henry
Sy, Sr., Lucio Tan, George Ty and Alfonso Yuchengco met with then President Fidel V. Ramos to
explore the possibility of investing in the construction and operation of a new international airport
terminal. To signify their commitment to pursue the project, they formed the Asia's Emerging
Dragon Corp. (AEDC) which was registered with the Securities and Exchange Commission (SEC)
on September 15, 1993.
On October 5, 1994, AEDC submitted an unsolicited proposal to the Government through the
DOTC/[Manila International Airport Authority (MIAA)] for the development of NAIA International
Passenger Terminal III (NAIA IPT III) under a build-operate-and-transfer arrangement pursuant to
RA 6957 as amended by RA 7718 (BOT Law).
JURISDICTION jrp
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On December 2, 1994, the DOTC issued Dept. Order No. 94-832 constituting the Prequalification
Bids and Awards Committee (PBAC) for the implementation of the NAIA IPT III project.
On March 27, 1995, then DOTC Secretary Jose Garcia endorsed the proposal of AEDC to the
National Economic and Development Authority (NEDA). A revised proposal, however, was
forwarded by the DOTC to NEDA on December 13, 1995. On January 5, 1996, the NEDA
Investment Coordinating Council (NEDA ICC) - Technical Board favorably endorsed the project to
the ICC - Cabinet Committee which approved the same, subject to certain conditions, on January
19, 1996. On February 13, 1996, the NEDA passed Board Resolution No. 2 which approved the
NAIA IPT III project.
On June 7, 14, and 21, 1996, DOTC/MIAA caused the publication in two daily newspapers of an
invitation for competitive or comparative proposals on AEDC's unsolicited proposal, in
accordance with Sec. 4-A of RA 6957, as amended. The alternative bidders were required to
submit three (3) sealed envelopes on or before 5:00 p.m. of September 20, 1996. The first
envelope should contain the Prequalification Documents, the second envelope the Technical
Proposal, and the third envelope the Financial Proposal of the proponent.
On June 20, 1996, PBAC Bulletin No. 1 was issued, postponing the availment of the Bid
Documents and the submission of the comparative bid proposals. Interested firms were permitted
to obtain the Request for Proposal Documents beginning June 28, 1996, upon submission of a
written application and payment of a non-refundable fee of P50,000.00 (US$2,000).
The Bid Documents issued by the PBAC provided among others that the proponent must have
adequate capability to sustain the financing requirement for the detailed engineering, design,
construction, operation, and maintenance phases of the project. The proponent would be
evaluated based on its ability to provide a minimum amount of equity to the project, and its
capacity to secure external financing for the project.
On July 23, 1996, the PBAC issued PBAC Bulletin No. 2 inviting all bidders to a pre-bid
conference on July 29, 1996.
On August 16, 1996, the PBAC issued PBAC Bulletin No. 3 amending the Bid Documents. The
following amendments were made on the Bid Documents:
a. Aside from the fixed Annual Guaranteed Payment, the proponent shall include in its
financial proposal an additional percentage of gross revenue share of the Government,
as follows:
i. First 5 years 5.0%
ii. Next 10 years 7.5%
iii. Next 10 years 10.0%
b. The amount of the fixed Annual Guaranteed Payment shall be subject of the price
challenge. Proponent may offer an Annual Guaranteed Payment which need not be of
equal amount, but payment of which shall start upon site possession.
c. The project proponent must have adequate capability to sustain the financing
requirement for the detailed engineering, design, construction, and/or operation and
maintenance phases of the project as the case may be. For purposes of pre-qualification,
this capability shall be measured in terms of:
JURISDICTION jrp
30

i. Proof of the availability of the project proponent and/or the consortium to
provide the minimum amount of equity for the project; and
ii. a letter testimonial from reputable banks attesting that the project proponent
and/or the members of the consortium are banking with them, that the project
proponent and/or the members are of good financial standing, and have
adequate resources.
d. The basis for the prequalification shall be the proponent's compliance with the
minimum technical and financial requirements provided in the Bid Documents and the
[Implementing Rules and Regulations (IRR)] of the BOT Law. The minimum amount of
equity shall be 30% of the Project Cost.
e. Amendments to the draft Concession Agreement shall be issued from time to time.
Said amendments shall only cover items that would not materially affect the preparation
of the proponent's proposal.
On August 29, 1996, the Second Pre-Bid Conference was held where certain clarifications were
made. Upon the request of prospective bidder People's Air Cargo & Warehousing Co., Inc
(Paircargo), the PBAC warranted that based on Sec. 11.6, Rule 11 of the Implementing Rules
and Regulations of the BOT Law, only the proposed Annual Guaranteed Payment submitted by
the challengers would be revealed to AEDC, and that the challengers' technical and financial
proposals would remain confidential. The PBAC also clarified that the list of revenue sources
contained in Annex 4.2a of the Bid Documents was merely indicative and that other revenue
sources may be included by the proponent, subject to approval by DOTC/MIAA. Furthermore, the
PBAC clarified that only those fees and charges denominated as Public Utility Fees would be
subject to regulation, and those charges which would be actually deemed Public Utility Fees
could still be revised, depending on the outcome of PBAC's query on the matter with the
Department of Justice.
In September 1996, the PBAC issued Bid Bulletin No. 5, entitled "Answers to the Queries of
PAIRCARGO as Per Letter Dated September 3 and 10, 1996." Paircargo's queries and the
PBAC's responses were as follows:
1. It is difficult for Paircargo and Associates to meet the required minimum equity
requirement as prescribed in Section 8.3.4 of the Bid Documents considering that the
capitalization of each member company is so structured to meet the requirements and
needs of their current respective business undertaking/activities. In order to comply with
this equity requirement, Paircargo is requesting PBAC to just allow each member of (sic)
corporation of the Joint Venture to just execute an agreement that embodies a
commitment to infuse the required capital in case the project is awarded to the Joint
Venture instead of increasing each corporation's current authorized capital stock just for
prequalification purposes.
In prequalification, the agency is interested in one's financial capability at the time of
prequalification, not future or potential capability.
A commitment to put up equity once awarded the project is not enough to establish that
"present" financial capability. However, total financial capability of all member companies
of the Consortium, to be established by submitting the respective companies' audited
financial statements, shall be acceptable.
2. At present, Paircargo is negotiating with banks and other institutions for the extension
of a Performance Security to the joint venture in the event that the Concessions
JURISDICTION jrp
31

Agreement (sic) is awarded to them. However, Paircargo is being required to submit a
copy of the draft concession as one of the documentary requirements. Therefore,
Paircargo is requesting that they'd (sic) be furnished copy of the approved negotiated
agreement between the PBAC and the AEDC at the soonest possible time.
A copy of the draft Concession Agreement is included in the Bid Documents. Any
material changes would be made known to prospective challengers through bid bulletins.
However, a final version will be issued before the award of contract.
The PBAC also stated that it would require AEDC to sign Supplement C of the Bid Documents
(Acceptance of Criteria and Waiver of Rights to Enjoin Project) and to submit the same with the
required Bid Security.
On September 20, 1996, the consortium composed of People's Air Cargo and Warehousing Co.,
Inc. (Paircargo), Phil. Air and Grounds Services, Inc. (PAGS) and Security Bank Corp. (Security
Bank) (collectively, Paircargo Consortium) submitted their competitive proposal to the PBAC. On
September 23, 1996, the PBAC opened the first envelope containing the prequalification
documents of the Paircargo Consortium. On the following day, September 24, 1996, the PBAC
prequalified the Paircargo Consortium.
On September 26, 1996, AEDC informed the PBAC in writing of its reservations as regards the
Paircargo Consortium, which include:
a. The lack of corporate approvals and financial capability of PAIRCARGO;
b. The lack of corporate approvals and financial capability of PAGS;
c. The prohibition imposed by RA 337, as amended (the General Banking Act) on the
amount that Security Bank could legally invest in the project;
d. The inclusion of Siemens as a contractor of the PAIRCARGO Joint Venture, for
prequalification purposes; and
e. The appointment of Lufthansa as the facility operator, in view of the Philippine
requirement in the operation of a public utility.
The PBAC gave its reply on October 2, 1996, informing AEDC that it had considered the issues
raised by the latter, and that based on the documents submitted by Paircargo and the established
prequalification criteria, the PBAC had found that the challenger, Paircargo, had prequalified to
undertake the project. The Secretary of the DOTC approved the finding of the PBAC.
The PBAC then proceeded with the opening of the second envelope of the Paircargo Consortium
which contained its Technical Proposal.
On October 3, 1996, AEDC reiterated its objections, particularly with respect to Paircargo's
financial capability, in view of the restrictions imposed by Section 21-B of the General Banking
Act and Sections 1380 and 1381 of the Manual Regulations for Banks and Other Financial
Intermediaries. On October 7, 1996, AEDC again manifested its objections and requested that it
be furnished with excerpts of the PBAC meeting and the accompanying technical evaluation
report where each of the issues they raised were addressed.
On October 16, 1996, the PBAC opened the third envelope submitted by AEDC and the
Paircargo Consortium containing their respective financial proposals. Both proponents offered to
JURISDICTION jrp
32

build the NAIA Passenger Terminal III for at least $350 million at no cost to the government and
to pay the government: 5% share in gross revenues for the first five years of operation, 7.5%
share in gross revenues for the next ten years of operation, and 10% share in gross revenues for
the last ten years of operation, in accordance with the Bid Documents. However, in addition to the
foregoing, AEDC offered to pay the government a total of P135 million as guaranteed payment for
27 years while Paircargo Consortium offered to pay the government a total of P17.75 billion for
the same period.
Thus, the PBAC formally informed AEDC that it had accepted the price proposal submitted by the
Paircargo Consortium, and gave AEDC 30 working days or until November 28, 1996 within which
to match the said bid, otherwise, the project would be awarded to Paircargo.
As AEDC failed to match the proposal within the 30-day period, then DOTC Secretary Amado
Lagdameo, on December 11, 1996, issued a notice to Paircargo Consortium regarding AEDC's
failure to match the proposal.
On February 27, 1997, Paircargo Consortium incorporated into Philippine International Airport
Terminals Co., Inc. (PIATCO).
AEDC subsequently protested the alleged undue preference given to PIATCO and reiterated its
objections as regards the prequalification of PIATCO.
On April 11, 1997, the DOTC submitted the concession agreement for the second-pass approval
of the NEDA-ICC.
On April 16, 1997, AEDC filed with the Regional Trial Court of Pasig a Petition for Declaration of
Nullity of the Proceedings, Mandamus and Injunction against the Secretary of the DOTC, the
Chairman of the PBAC, the voting members of the PBAC and Pantaleon D. Alvarez, in his
capacity as Chairman of the PBAC Technical Committee.
x x x x
On July 9, 1997, the DOTC issued the notice of award for the project to PIATCO.
On July 12, 1997, the Government, through then DOTC Secretary Arturo T. Enrile, and PIATCO,
through its President, Henry T. Go, signed the "Concession Agreement for the Build-Operate-
and-Transfer Arrangement of the Ninoy Aquino International Airport Passenger Terminal III"
(1997 Concession Agreement). x x x.
On November 26, 1998, the Government and PIATCO signed an Amended and Restated
Concession Agreement (ARCA). x x x.
Subsequently, the Government and PIATCO signed three Supplements to the ARCA. The First
Supplement was signed on August 27, 1999; the Second Supplement on September 4, 2000; and
the Third Supplement on June 22, 2001 (collectively, Supplements).
x x x x
Meanwhile, the MIAA which is charged with the maintenance and operation of the NAIA
Terminals I and II, had existing concession contracts with various service providers to offer
international airline airport services, such as in-flight catering, passenger handling, ramp and
ground support, aircraft maintenance and provisions, cargo handling and warehousing, and other
services, to several international airlines at the NAIA. x x x.
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On September 17, 2002, the workers of the international airline service providers, claiming that
they stand to lose their employment upon the implementation of the questioned agreements, filed
before this Court a petition for prohibition to enjoin the enforcement of said agreements.
On October 15, 2002, the service providers, joining the cause of the petitioning workers, filed a
motion for intervention and a petition-in-intervention.
On October 24, 2002, Congressmen Salacnib Baterina, Clavel Martinez and Constantino Jaraula
filed a similar petition with this Court.
On November 6, 2002, several employees of the MIAA likewise filed a petition assailing the
legality of the various agreements.
On December 11, 2002, another group of Congressmen, Hon. Jacinto V. Paras, Rafael P.
Nantes, Eduardo C. Zialcita, Willie B. Villarama, Prospero C. Nograles, Prospero A. Pichay, Jr.,
Harlin Cast Abayon and Benasing O. Macaranbon, moved to intervene in the case as
Respondents-Intervenors. They filed their Comment-In-Intervention defending the validity of the
assailed agreements and praying for the dismissal of the petitions.
During the pendency of the case before this Court, President Gloria Macapagal Arroyo, on
November 29, 2002, in her speech at the 2002 Golden Shell Export Awards at Malacaang
Palace, stated that she will not "honor (PIATCO) contracts which the Executive Branch's legal
offices have concluded (as) null and void."
3

The Court first dispensed with the procedural issues raised in Agan, ruling that (a) the MIAA service
providers and its employees, petitioners in G.R. Nos. 155001 and 155661, had the requisite standing
since they had a direct and substantial interest to protect by reason of the implementation of the PIATCO
Contracts which would affect their source of livelihood;
4
and (b) the members of the House of
Representatives, petitioners in G.R. No. 155547, were granted standing in view of the serious legal
questions involved and their impact on public interest.
5

As to the merits of the Petitions in Agan, the Court concluded that:
In sum, this Court rules that in view of the absence of the requisite financial capacity of the
Paircargo Consortium, predecessor of respondent PIATCO, the award by the PBAC of the
contract for the construction, operation and maintenance of the NAIA IPT III is null and void.
Further, considering that the 1997 Concession Agreement contains material and substantial
amendments, which amendments had the effect of converting the 1997 Concession Agreement
into an entirely different agreement from the contract bidded upon, the 1997 Concession
Agreement is similarly null and void for being contrary to public policy. The provisions under
Sections 4.04(b) and (c) in relation to Section 1.06 of the 1997 Concession Agreement and
Section 4.04(c) in relation to Section 1.06 of the ARCA, which constitute a direct government
guarantee expressly prohibited by, among others, the BOT Law and its Implementing Rules and
Regulations are also null and void. The Supplements, being accessory contracts to the ARCA,
are likewise null and void.
6

Hence, the fallo of the Court's Decision in Agan reads:
WHEREFORE, the 1997 Concession Agreement, the Amended and Restated Concession
Agreement and the Supplements thereto are set aside for being null and void.
7

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34

In a Resolution
8
dated 21 January 2004, the Court denied with finality the Motions for Reconsideration of
its 5 May 2003 Decision in Agan filed by therein respondents PIATCO and Congressmen Paras, et al.,
and respondents-intervenors.
9
Significantly, the Court declared in the same Resolution that:
This Court, however, is not unmindful of the reality that the structures comprising the NAIA IPT III
facility are almost complete and that funds have been spent by PIATCO in their construction. For
the government to take over the said facility, it has to compensate respondent PIATCO as
builder of the said structures. The compensation must be just and in accordance with law
and equity for the government can not unjustly enrich itself at the expense of PIATCO and its
investors.
10
(Emphasis ours.)
It is these afore-quoted pronouncements that gave rise to the Petition in Gingoyon.
Republic v. Gingoyon (G.R. No. 166429)
According to the statement of facts in Gingoyon:
After the promulgation of the rulings in Agan, the NAIA 3 facilities have remained in the
possession of PIATCO, despite the avowed intent of the Government to put the airport terminal
into immediate operation. The Government and PIATCO conducted several rounds of negotiation
regarding the NAIA 3 facilities. It also appears that arbitral proceedings were commenced before
the International Chamber of Commerce International Court of Arbitration and the International
Centre for the Settlement of Investment Disputes, although the Government has raised
jurisdictional questions before those two bodies.
Then, on 21 December 2004, the Government filed a Complaint for expropriation with the Pasay
City Regional Trial Court (RTC), together with an Application for Special Raffle seeking the
immediate holding of a special raffle. The Government sought upon the filing of the complaint the
issuance of a writ of possession authorizing it to take immediate possession and control over the
NAIA 3 facilities. The Government also declared that it had deposited the amount of
P3,002,125,000.00 (3 Billion) in Cash with the Land Bank of the Philippines, representing the
NAIA 3 terminal's assessed value for taxation purposes.
The case was raffled to Branch 117 of the Pasay City RTC, presided by respondent judge Hon.
Henrick F. Gingoyon (Hon. Gingoyon). On the same day that the Complaint was filed, the RTC
issued an Order directing the issuance of a writ of possession to the Government, authorizing it to
"take or enter upon the possession" of the NAIA 3 facilities. Citing the case of City of Manila v.
Serrano, the RTC noted that it had the ministerial duty to issue the writ of possession upon the
filing of a complaint for expropriation sufficient in form and substance, and upon deposit made by
the government of the amount equivalent to the assessed value of the property subject to
expropriation. The RTC found these requisites present, particularly noting that "[t]he case record
shows that [the Government has] deposited the assessed value of the [NAIA 3 facilities] in the
Land Bank of the Philippines, an authorized depositary, as shown by the certification attached to
their complaint." Also on the same day, the RTC issued a Writ of Possession. According to
PIATCO, the Government was able to take possession over the NAIA 3 facilities immediately
after the Writ of Possession was issued.
However, on 4 January 2005, the RTC issued another Order designed to supplement its 21
December 2004 Order and the Writ of Possession. In the 4 January 2005 Order, now assailed in
the present petition, the RTC noted that its earlier issuance of its writ of possession was pursuant
to Section 2, Rule 67 of the 1997 Rules of Civil Procedure. However, it was observed that
Republic Act No. 8974 (Rep. Act No. 8974), otherwise known as "An Act to Facilitate the
Acquisition of Right-of-Way, Site or Location for National Government Infrastructure Projects and
JURISDICTION jrp
35

For Other Purposes" and its Implementing Rules and Regulations (Implementing Rules) had
amended Rule 67 in many respects.
There are at least two crucial differences between the respective procedures under Rep. Act No.
8974 and Rule 67. Under the statute, the Government is required to make immediate payment to
the property owner upon the filing of the complaint to be entitled to a writ of possession, whereas
in Rule 67, the Government is required only to make an initial deposit with an authorized
government depositary. Moreover, Rule 67 prescribes that the initial deposit be equivalent to the
assessed value of the property for purposes of taxation, unlike Rep. Act No. 8974 which provides,
as the relevant standard for initial compensation, the market value of the property as stated in the
tax declaration or the current relevant zonal valuation of the Bureau of Internal Revenue (BIR),
whichever is higher, and the value of the improvements and/or structures using the replacement
cost method.
Accordingly, on the basis of Sections 4 and 7 of Rep. Act No. 8974 and Section 10 of the
Implementing Rules, the RTC made key qualifications to its earlier issuances. First, it directed the
Land Bank of the Philippines, Baclaran Branch (LBP-Baclaran), to immediately release the
amount of US$62,343,175.77 to PIATCO, an amount which the RTC characterized as that which
the Government "specifically made available for the purpose of this expropriation;" and such
amount to be deducted from the amount of just compensation due PIATCO as eventually
determined by the RTC. Second, the Government was directed to submit to the RTC a Certificate
of Availability of Funds signed by authorized officials to cover the payment of just compensation.
Third, the Government was directed "to maintain, preserve and safeguard" the NAIA 3 facilities or
"perform such as acts or activities in preparation for their direct operation" of the airport terminal,
pending expropriation proceedings and full payment of just compensation. However, the
Government was prohibited "from performing acts of ownership like awarding concessions or
leasing any part of [NAIA 3] to other parties."
The very next day after the issuance of the assailed 4 January 2005 Order, the Government filed
an Urgent Motion for Reconsideration, which was set for hearing on 10 January 2005. On 7
January 2005, the RTC issued another Order, the second now assailed before this Court, which
appointed three (3) Commissioners to ascertain the amount of just compensation for the NAIA 3
Complex. That same day, the Government filed a Motion for Inhibition of Hon. Gingoyon.
The RTC heard the Urgent Motion for Reconsideration and Motion for Inhibition on 10 January
2005. On the same day, it denied these motions in an Omnibus Order dated 10 January 2005.
This is the third Order now assailed before this Court. Nonetheless, while the Omnibus Order
affirmed the earlier dispositions in the 4 January 2005 Order, it excepted from affirmance "the
superfluous part of the Order prohibiting the plaintiffs from awarding concessions or leasing any
part of [NAIA 3] to other parties."
Thus, the present Petition for Certiorari and Prohibition under Rule 65 was filed on 13 January
2005. The petition prayed for the nullification of the RTC orders dated 4 January 2005, 7 January
2005, and 10 January 2005, and for the inhibition of Hon. Gingoyon from taking further action on
the expropriation case. A concurrent prayer for the issuance of a temporary restraining order and
preliminary injunction was granted by this Court in a Resolution dated 14 January 2005.
11

The Court resolved the Petition of the Republic of the Philippines and Manila International Airport
Authority in Gingoyon in this wise:
In conclusion, the Court summarizes its rulings as follows:
(1) The 2004 Resolution in Agan sets the base requirement that has to be observed before the
Government may take over the NAIA 3, that there must be payment to PIATCO of just
JURISDICTION jrp
36

compensation in accordance with law and equity. Any ruling in the present expropriation case
must be conformable to the dictates of the Court as pronounced in the Agan cases.
(2) Rep. Act No. 8974 applies in this case, particularly insofar as it requires the immediate
payment by the Government of at least the proffered value of the NAIA 3 facilities to PIATCO and
provides certain valuation standards or methods for the determination of just compensation.
(3) Applying Rep. Act No. 8974, the implementation of Writ of Possession in favor of the
Government over NAIA 3 is held in abeyance until PIATCO is directly paid the amount of P3
Billion, representing the proffered value of NAIA 3 under Section 4(c) of the law.
(4) Applying Rep. Act No. 8974, the Government is authorized to start the implementation of the
NAIA 3 Airport terminal project by performing the acts that are essential to the operation of the
NAIA 3 as an international airport terminal upon the effectivity of the Writ of Possession, subject
to the conditions above-stated. As prescribed by the Court, such authority encompasses "the
repair, reconditioning and improvement of the complex, maintenance of the existing facilities and
equipment, installation of new facilities and equipment, provision of services and facilities
pertaining to the facilitation of air traffic and transport, and other services that are integral to a
modern-day international airport."
5) The RTC is mandated to complete its determination of the just compensation within sixty (60)
days from finality of this Decision. In doing so, the RTC is obliged to comply with the standards
set under Rep. Act No. 8974 and its Implementing Rules. Considering that the NAIA 3 consists of
structures and improvements, the valuation thereof shall be determined using the replacements
cost method, as prescribed under Section 10 of the Implementing Rules.
(6) There was no grave abuse of discretion attending the RTC Order appointing the
commissioners for the purpose of determining just compensation. The provisions on
commissioners under Rule 67 shall apply insofar as they are not inconsistent with Rep. Act No.
8974, its Implementing Rules, or the rulings of the Court in Agan.
(7) The Government shall pay the just compensation fixed in the decision of the trial court to
PIATCO immediately upon the finality of the said decision.
(8) There is no basis for the Court to direct the inhibition of Hon. Gingoyon.
All told, the Court finds no grave abuse of discretion on the part of the RTC to warrant the
nullification of the questioned orders. Nonetheless, portions of these orders should be modified to
conform with law and the pronouncements made by the Court herein.
12

The decretal portion of the Court's Decision in Gingoyon thus reads:
WHEREFORE, the Petition is GRANTED in PART with respect to the orders dated 4 January
2005 and 10 January 2005 of the lower court. Said orders are AFFIRMED with the following
MODIFICATIONS:
1) The implementation of the Writ of Possession dated 21 December 2004 is HELD IN
ABEYANCE, pending payment by petitioners to PIATCO of the amount of Three Billion Two
Million One Hundred Twenty Five Thousand Pesos (P3,002,125,000.00), representing the
proffered value of the NAIA 3 facilities;
2) Petitioners, upon the effectivity of the Writ of Possession, are authorized [to] start the
implementation of the Ninoy Aquino International Airport Pasenger Terminal III project by
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37

performing the acts that are essential to the operation of the said International Airport Passenger
Terminal project;
3) RTC Branch 117 is hereby directed, within sixty (60) days from finality of this Decision, to
determine the just compensation to be paid to PIATCO by the Government.
The Order dated 7 January 2005 is AFFIRMED in all respects subject to the qualification that the
parties are given ten (10) days from finality of this Decision to file, if they so choose, objections to
the appointment of the commissioners decreed therein.
The Temporary Restraining Order dated 14 January 2005 is hereby LIFTED.
No pronouncement as to costs.
13

Motions for Partial Reconsideration of the foregoing Decision were filed by therein petitioners Republic
and MIAA, as well as the three other parties who sought to intervene, namely, Asakihosan Corporation,
Takenaka Corporation, and Congressman Baterina.
In a Resolution dated 1 February 2006, this Court denied with finality the Motion for Partial
Reconsideration of therein petitioners and remained faithful to its assailed Decision based on the
following ratiocination:
Admittedly, the 2004 Resolution in Agan could be construed as mandating the full payment of the
final amount of just compensation before the Government may be permitted to take over the
NAIA 3. However, the Decision ultimately rejected such a construction, acknowledging the public
good that would result from the immediate operation of the NAIA 3. Instead, the Decision adopted
an interpretation which is in consonance with Rep. Act No. 8974 and with equitable standards as
well, that allowed the Government to take possession of the NAIA 3 after payment of the
proffered value of the facilities to PIATCO. Such a reading is substantially compliant with the
pronouncement in the 2004 Agan Resolution, and is in accord with law and equity. In contrast,
the Government's position, hewing to the strict application of Rule 67, would permit the
Government to acquire possession over the NAIA 3 and implement its operation without having to
pay PIATCO a single centavo, a situation that is obviously unfair. Whatever animosity the
Government may have towards PIATCO does not acquit it from settling its obligations to the
latter, particularly those which had already been previously affirmed by this Court.
14

The Court, in the same Resolution, denied all the three motions for intervention of Asakihosan
Corporation, Takenaka Corporation, and Congressman Baterina, and ruled as follows:
We now turn to the three (3) motions for intervention all of which were filed after the promulgation
of the Court's Decision. All three (3) motions must be denied. Under Section 2, Rule 19 of the
1997 Rules of Civil Procedure the motion to intervene may be filed at any time before rendition of
judgment by the court. Since this case originated from an original action filed before this Court,
the appropriate time to file the motions-in-intervention in this case if ever was before and not after
resolution of this case. To allow intervention at this juncture would be highly irregular. It is
extremely improbable that the movants were unaware of the pendency of the present case before
the Court, and indeed none of them allege such lack of knowledge.
Takenaka and Asahikosan rely on Mago v. Court of Appeals wherein the Court took the
extraordinary step of allowing the motion for intervention even after the challenged order of the
trial court had already become final. Yet it was apparent in Mago that the movants therein were
not impleaded despite being indispensable parties, and had not even known of the existence of
the case before the trial court, and the effect of the final order was to deprive the movants of their
land. In this case, neither Takenaka nor Asahikosan stand to be dispossessed by reason of the
JURISDICTION jrp
38

Court's Decision. There is no palpable due process violation that would militate the suspension of
the procedural rule.
Moreover, the requisite legal interest required of a party-in-intervention has not been established
so as to warrant the extra-ordinary step of allowing intervention at this late stage. As earlier
noted, the claims of Takenaka and Asahikosan have not been judicially proved or conclusively
established as fact by any trier of facts in this jurisdiction. Certainly, they could not be considered
as indispensable parties to the petition for certiorari. In the case of Representative Baterina, he
invokes his prerogative as legislator to curtail the disbursement without appropriation of public
funds to compensate PIATCO, as well as that as a taxpayer, as the basis of his legal standing to
intervene. However, it should be noted that the amount which the Court directed to be paid by the
Government to PIATCO was derived from the money deposited by the Manila International
Airport Authority, an agency which enjoys corporate autonomy and possesses a legal personality
separate and distinct from those of the National Government and agencies thereof whose
budgets have to be approved by Congress.
It is also observed that the interests of the movants-in-intervention may be duly litigated in
proceedings which are extant before lower courts. There is no compelling reason to disregard the
established rules and permit the interventions belatedly filed after the promulgation of the Court's
Decision.
15

Asia's Emerging Dragon Corporation v. Department of Transportation and Communications and
Manila International Airport Authority (G.R. No. 169914)
Banking on this Court's declaration in Agan that the award of the NAIA IPT III Project to PIATCO is null
and void, Asia's Emerging Dragon Corporation (AEDC) filed before this Court the present Petition for
Mandamus and Prohibition (with Application for Temporary Restraining Order), praying of this Court that:
(1) After due hearing, judgment be rendered commanding the Respondents, their officers, agents,
successors, representatives or persons or entities acting on their behalf, to formally award the
NAIA-APT [sic] III PROJECT to Petitioner AEDC and to execute and formalize with Petitioner
AEDC the approved Draft Concession Agreement embodying the agreed terms and conditions for
the operation of the NAIA-IPT III Project and directing Respondents to cease and desist from
awarding the NAIA-IPT Project to third parties or negotiating into any concession contract with
third parties.
(2) Pending resolution on the merits, a Temporary Restraining Order be issued enjoining
Respondents, their officers, agents, successors or representatives or persons or entities acting
on their behalf from negotiating, re-bidding, awarding or otherwise entering into any concession
contract with PIATCO and other third parties for the operation of the NAIA-IPT III Project.
Other relief and remedies, just and equitable under the premises, are likewise prayed for.
16

AEDC bases its Petition on the following grounds:
I. PETITIONER AEDC, BEING THE RECOGNIZED AND UNCHALLENGED ORIGINAL
PROPONENT, HAS THE EXCLUSIVE, CLEAR AND VESTED STATUTORY RIGHT TO THE
AWARD OF THE NAIA-IPT III PROJECT;
II. RESPONDENTS HAVE A STATUTORY DUTY TO PROTECT PETITIONER AEDC AS THE
UNCHALLENGED ORIGINAL PROPONENT AS A RESULT OF THE SUPREME COURT'S
NULLIFICATION OF THE AWARD OF THE NAIA-IPT III PROJECT TO PIATCO[; and]
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III. RESPONDENTS HAVE NO LEGAL BASIS OR AUTHORITY TO TAKE OVER THE NAIA-IPT
III PROJECT, TO THE EXCLUSION OF PETITIONER AEDC, OR TO AWARD THE PROJECT
TO THIRD PARTIES.
17

At the crux of the Petition of AEDC is its claim that, being the recognized and unchallenged original
proponent of the NAIA IPT III Project, it has the exclusive, clear, and vested statutory right to the award
thereof. However, the Petition of AEDC should be dismissed for lack of merit, being as it is, substantially
and procedurally flawed.
SUBSTANTIVE INFIRMITY
A petition for mandamus is governed by Section 3 of Rule 65 of the Rules of Civil Procedure, which reads

SEC. 3. Petition for mandamus. When any tribunal, corporation, board, officer or person
unlawfully neglects the performance of an act which the law specifically enjoins as a duty
resulting from an office, trust, or station, or unlawfully excludes another from the use and
enjoyment of a right or office to which such other is entitled, and there is no other plain, speedy
and adequate remedy in the ordinary course of law, the person aggrieved thereby may file a
verified petition in the proper court, alleging the facts with certainty and praying that judgment be
rendered commanding the respondent, immediately or some other time to be specified by the
court, to do the act required to be done to protect the rights of the petitioner, and to pay the
damages sustained by the petitioner by reason of the wrongful acts of the respondent.
It is well-established in our jurisprudence that only specific legal rights are enforceable by mandamus,
that the right sought to be enforced must be certain and clear, and that the writ will not issue in cases
where the right is doubtful. Just as fundamental is the principle governing the issuance of mandamus that
the duties to be performed must be such as are clearly and peremptorily enjoined by law or by reason of
official station.
18

A rule long familiar is that mandamus never issues in doubtful cases. It requires a showing of a complete
and clear legal right in the petitioner to the performance of ministerial acts. In varying language, the
principle echoed and reechoed is that legal rights may be enforced by mandamus only if those rights are
well-defined, clear and certain. Otherwise, the mandamus petition must be dismissed.
19

The right that AEDC is seeking to enforce is supposedly enjoined by Section 4-A of Republic Act No.
6957,
20
as amended by Republic Act No. 7718, on unsolicited proposals, which provides
SEC. 4-A. Unsolicited proposals. Unsolicited proposals for projects may be accepted by any
government agency or local government unit on a negotiated basis: Provided, That, all the
following conditions are met: (1) such projects involve a new concept or technology and/or are not
part of the list of priority projects, (2) no direct government guarantee, subsidy or equity is
required, and (3) the government agency or local government unit has invited by publication, for
three (3) consecutive weeks, in a newspaper of general circulation, comparative or competitive
proposals and no other proposal is received for a period of sixty (60) working days: Provided,
further, That in the event another proponent submits a lower price proposal, the original
proponent shall have the right to match the price within thirty (30) working days.
In furtherance of the afore-quoted provision, the Implementing Rules and Regulations (IRR) of Republic
Act No. 6957, as amended by Republic Act No. 7718, devoted the entire Rule 10 to Unsolicited
Proposals, pertinent portions of which are reproduced below
Sec. 10.1. Requisites for Unsolicited Proposals. Any Agency/LGU may accept unsolicited
proposals on a negotiated basis provided that all the following conditions are met:
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40

a. the project involves a new concept or technology and/or is not part of the list of priority projects;
b. no direct government guarantee, subsidy or equity is required; and
c. the Agency/LGU concerned has invited by publication, for three (3) consecutive weeks, in a
newspaper of general circulation, comparative or competitive proposals and no other proposal is
received for a period of sixty (60) working days. In the event that another project proponent
submits a price proposal lower than that submitted by the original proponent, the latter shall have
the right to match said price proposal within thirty (30) working days. Should the original
proponent fail to match the lower price proposal submitted within the specified period, the
contract shall be awarded to the tenderer of the lowest price. On the other hand, if the original
project proponent matches the submitted lowest price within the specified period, he shall be
immediately be awarded the project.
x x x x
Sec. 10.6. Evaluation of Unsolicited Proposals. The Agency/LGU is tasked with the initial
evaluation of the proposal. The Agency/LGU shall: 1) appraise the merits of the project; 2)
evaluate the qualification of the proponent; and 3) assess the appropriateness of the contractual
arrangement and reasonableness of the risk allocation. The Agency/LGU is given sixty (60) days
to evaluate the proposal from the date of submission of the complete proposal. Within this 60-day
period, the Agency/LGU, shall advise the proponent in writing whether it accepts or rejects the
proposal. Acceptance means commitment of the Agency/LGU to pursue the project and
recognition of the proponent as the "original proponent." At this point, the Agency/LGU
will no longer entertain other similar proposals until the solicitation of comparative
proposals. The implementation of the project, however, is still contingent primarily on the
approval of the appropriate approving authorities consistent with Section 2.7 of these IRR, the
agreement between the original proponent and the Agency/LGU of the contract terms, and the
approval of the contract by the [Investment Coordination Committee (ICC)] or Local Sanggunian.
x x x x
Sec. 10.9. Negotiation With the Original Proponent. Immediately after ICC/Local
Sanggunian's clearance of the project, the Agency/LGU shall proceed with the in-depth
negotiation of the project scope, implementation arrangements and concession
agreement, all of which will be used in the Terms of Reference for the solicitation of
comparative proposals. The Agency/LGU and the proponent are given ninety (90) days upon
receipt of ICC's approval of the project to conclude negotiations. The Agency/LGU and the
original proponent shall negotiate in good faith. However, should there be unresolvable
differences during the negotiations, the Agency/LGU shall have the option to reject the
proposal and bid out the project. On the other hand, if the negotiation is successfully
concluded, the original proponent shall then be required to reformat and resubmit its
proposal in accordance with the requirements of the Terms of Reference to facilitate
comparison with the comparative proposals. The Agency/LGU shall validate the
reformatted proposal if it meets the requirements of the TOR prior to the issuance of the
invitation for comparative proposals.
x x x x
Sec. 10.11. Invitation for Comparative Proposals. The Agency/LGU shall publish the invitation for
comparative or competitive proposals only after ICC/Local Sanggunian issues a no objection
clearance of the draft contract. The invitation for comparative or competitive proposals should be
published at least once every week for three (3) weeks in at least one (1) newspaper of general
circulation. It shall indicate the time, which should not be earlier than the last date of publication,
JURISDICTION jrp
41

and place where tender/bidding documents could be obtained. It shall likewise explicitly specify a
time of sixty (60) working days reckoned from the date of issuance of the tender/bidding
documents upon which proposals shall be received. Beyond said deadline, no proposals shall be
accepted. A pre-bid conference shall be conducted ten (10) working days after the issuance of
the tender/bidding documents.
Sec. 10.12. Posting of Bid Bond by Original Proponent. The original proponent shall be required
at the date of the first date of the publication of the invitation for comparative proposals to submit
a bid bond equal to the amount and in the form required of the challengers.
Sec. 10.13. Simultaneous Qualification of the Original Proponent. The Agency/LGU shall qualify
the original proponent based on the provisions of Rule 5 hereof, within thirty (30) days from start
of negotiation. For consistency, the evaluation criteria used for qualifying the original proponent
should be the same criteria used for qualifying the original proponent should be the criteria used
in the Terms of Reference for the challengers.
x x x x
Sec. 10.16. Disclosure of the Price Proposal. The disclosure of the price proposal of the original
proponent in the Tender Documents will be left to the discretion of the Agency/LGU. However, if it
was not disclosed in the Tender Documents, the original proponent's price proposal should be
revealed upon the opening of the financial proposals of the challengers. The right of the original
proponent to match the best proposal within thirty (30) working days starts upon official
notification by the Agency/LGU of the most advantageous financial proposal. (Emphasis
ours.)
In her sponsorship speech on Senate Bill No. 1586 (the precursor of Republic Act No. 7718), then
Senator (now President of the Republic of the Philippines) Gloria Macapagal-Arroyo explained the reason
behind the proposed amendment that would later become Section 4-A of Republic Act No. 6957, as
amended by Republic Act No. 7718:
The object of the amendment is to protect proponents which have already incurred costs in the
conceptual design and in the preparation of the proposal, and which may have adopted an
imaginative method of construction or innovative concept for the proposal. The amendment also
aims to harness the ingenuity of the private sector to come up with solutions to the country's
infrastructure problems.
21

It is irrefragable that Section 4-A of Republic Act No. 6957, as amended by Republic Act No. 7718, and
Section 10 of its IRR, accord certain rights or privileges to the original proponent of an unsolicited
proposal for an infrastructure project. They are meant to encourage private sector initiative in
conceptualizing infrastructure projects that would benefit the public. Nevertheless, none of these rights or
privileges would justify the automatic award of the NAIA IPT III Project to AEDC after its previous award
to PIATCO was declared null and void by this Court in Agan.
The rights or privileges of an original proponent of an unsolicited proposal for an infrastructure project are
never meant to be absolute. Otherwise, the original proponent can hold the Government hostage and
secure the award of the infrastructure project based solely on the fact that it was the first to submit a
proposal. The absurdity of such a situation becomes even more apparent when considering that the
proposal is unsolicited by the Government. The rights or privileges of an original proponent depends on
compliance with the procedure and conditions explicitly provided by the statutes and their IRR.
An unsolicited proposal is subject to evaluation, after which, the government agency or local government
unit (LGU) concerned may accept or reject the proposal outright.
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42

Under Section 10.6 of the IRR, the "acceptance" of the unsolicited proposal by the agency/LGU is limited
to the "commitment of the [a]gency/LGU to pursue the project and recognition of the proponent as the
'original proponent.'" Upon acceptance then of the unsolicited proposal, the original proponent is
recognized as such but no award is yet made to it. The commitment of the agency/LGU upon
acceptance of the unsolicited proposal is to the pursuit of the project, regardless of to whom it shall
subsequently award the same. The acceptance of the unsolicited proposal only precludes the
agency/LGU from entertaining other similar proposals until the solicitation of comparative proposals.
Consistent in both the statutes and the IRR is the requirement that invitations be published for
comparative or competitive proposals. Therefore, it is mandatory that a public bidding be held before the
awarding of the project. The negotiations between the agency/LGU and the original proponent, as
provided in Section 10.9 of the IRR, is for the sole purpose of coming up with draft agreements, which
shall be used in the Terms of Reference (TOR) for the solicitation of comparative proposals. Even at this
point, there is no definite commitment made to the original proponent as to the awarding of the project. In
fact, the same IRR provision even gives the concerned agency/LGU, in case of unresolvable differences
during the negotiations, the option to reject the original proponent's proposal and just bid out the project.
Generally, in the course of processing an unsolicited proposal, the original proponent is treated in much
the same way as all other prospective bidders for the proposed infrastructure project. It is required to
reformat and resubmit its proposal in accordance with the requirements of the TOR.
22
It must submit a bid
bond equal to the amount and in the form required of the challengers.
23
Its qualification shall be evaluated
by the concerned agency/LGU, using evaluation criteria in accordance with Rule 5
24
of the IRR, and
which shall be the same criteria to be used in the TOR for the challengers.
25
These requirements ensure
that the public bidding under Rule 10 of IRR on Unsolicited Proposals still remain in accord with the three
principles in public bidding, which are: the offer to the public, an opportunity for competition, and a basis
for exact comparison of bids.
26

The special rights or privileges of an original proponent thus come into play only when there are other
proposals submitted during the public bidding of the infrastructure project. As can be gleaned from the
plain language of the statutes and the IRR, the original proponent has: (1) the right to match the lowest or
most advantageous proposal within 30 working days from notice thereof, and (2) in the event that the
original proponent is able to match the lowest or most advantageous proposal submitted, then it has the
right to be awarded the project. The second right or privilege is contingent upon the actual exercise by the
original proponent of the first right or privilege. Before the project could be awarded to the original
proponent, he must have been able to match the lowest or most advantageous proposal within the
prescribed period. Hence, when the original proponent is able to timely match the lowest or most
advantageous proposal, with all things being equal, it shall enjoy preference in the awarding of the
infrastructure project.
This is the extent of the protection that Legislature intended to afford the original proponent, as supported
by the exchange between Senators Neptali Gonzales and Sergio Osmea during the Second Reading of
Senate Bill No. 1586:
Senator Gonzales:
x x x x
The concept being that in case of an unsolicited proposal and nonetheless public bidding has
been held, then [the original proponent] shall, in effect, be granted what is the equivalent of
the right of first refusal by offering a bid which shall equal or better the bid of the winning
bidder within a period of, let us say, 30 days from the date of bidding.
Senator Osmea:
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x x x x
To capture the tenor of the proposal of the distinguished Gentleman, a subsequent paragraph
has to be added which says, "IF THERE IS A COMPETITIVE PROPOSAL, THE ORIGINAL
PROPONENT SHALL HAVE THE RIGHT TO EQUAL THE TERMS AND CONDITIONS OF THE
COMPETITIVE PROPOSAL."
In other words, if there is nobody who will submit a competitive proposal, then nothing is lost.
Everybody knows it, and it is open and transparent. But if somebody comes in with another
proposal and because it was the idea of the original proponent that proponent now has the
right to equal the terms of the original proposal.
SENATOR GONZALES:
That is the idea, Mr. President. Because it seems to me that it is utterly unfair for one who has
conceived an idea or a concept, spent and invested in feasibility studies, in the drawing of plans
and specifications, and the project is submitted to a public bidding, then somebody will win on the
basis of plans and specifications and concepts conceived by the original proponent. He should at
least be given the right to submit an equalizing bid. x x x.
27
(Emphasis ours.)
As already found by this Court in the narration of facts in Agan, AEDC failed to match the more
advantageous proposal submitted by PIATCO by the time the 30-day working period expired on 28
November 1996;
28
and, without exercising its right to match the most advantageous proposal, it cannot
now lay claim to the award of the project.
The bidding process as to the NAIA IPT III Project was already over after the award thereof to PIATCO,
even if eventually, the said award was nullified and voided. The nullification of the award to PIATCO did
not revive the proposal nor re-open the bidding. AEDC cannot insist that this Court turn back the hands of
time and award the NAIA IPT III Project to it, as if the bid of PIATCO never existed and the award of the
project to PIATCO did not take place. Such is a simplistic approach to a very complex problem that is the
NAIA IPT III Project.
In his separate opinion in Agan, former Chief Justice Artemio V. Panganiban noted that "[T]here was
effectively no public bidding to speak of, the entire bidding process having been flawed and tainted
from the very outset, therefore, the award of the concession to Paircargo's successor Piatco was void,
and the Concession Agreement executed with the latter was likewise void ab initio. x x x.
29
" (Emphasis
ours.) In consideration of such a declaration that the entire bidding process was flawed and tainted from
the very beginning, then, it would be senseless to re-open the same to determine to whom the project
should have been properly awarded to. The process and all proposals and bids submitted in participation
thereof, and not just PIATCO's, were placed in doubt, and it would be foolhardy for the Government to
rely on them again. At the very least, it may be declared that there was a failure of public bidding.
30

In addition, PIATCO is already close to finishing the building of the structures comprising NAIA IPT III,
31
a
fact that this Court cannot simply ignore. The NAIA IPT III Project was proposed, subjected to bidding,
and awarded as a build-operate-transfer (BOT) project. A BOT project is defined as
A contractual arrangement whereby the project proponent undertakes the construction,
including financing, of a given infrastructure facility, and the operation and maintenance
thereof. The project proponent operates the facility over a fixed term during which it is allowed to
charge facility users appropriate tolls, fees, rentals, and charges not exceeding those proposed in
its bid or as negotiated and incorporated in the contract to enable the project proponent to
recover its investment, and operating and maintenance expenses in the project. The project
proponent transfers the facility to the government agency or local government unit concerned at
the end of the fixed term that shall not exceed fifty (50) years. This shall include a supply-and-
JURISDICTION jrp
44

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

The claim of AEDC to the award of the NAIA IPT III Project, after the award thereof to PIATCO was set
aside for being null and void, grounded solely on its being the original proponent of the project, is
specious and an apparent stretch in the interpretation of Section 4-A of Republic Act No. 6957, as
amended by Republic Act No. 7718, and Rule 10 of the IRR.
JURISDICTION jrp
45

In all, just as AEDC has no legal right to the NAIA IPT III Project, corollarily, it has no legal right over the
NAIA IPT III facility. AEDC does not own the NAIA IPT III facility, which this Court already recognized in
Gingoyon as owned by PIATCO; nor does AEDC own the land on which NAIA IPT III stands, which is
undisputedly owned by the Republic through the Bases Conversion Development Authority (BCDA).
AEDC did not fund any portion of the construction of NAIA IPT III, which was entirely funded by PIATCO.
AEDC also does not have any kind of lien over NAIA IPT III or any kind of legal entitlement to occupy the
facility or the land on which it stands. Therefore, nothing that the Government has done or will do in
relation to the project could possibly prejudice or injure AEDC. AEDC then does not possess any legal
personality to interfere with or restrain the activities of the Government as regards NAIA IPT III. Neither
does it have the legal personality to demand that the Government deliver or sell to it the NAIA IPT III
facility despite the express willingness of AEDC to reimburse the Government the proferred amount it had
paid PIATCO and complete NAIA IPT III facility at its own cost.
AEDC invokes the Memorandum of Agreement, purportedly executed between the DOTC and AEDC on
26 February 1996, following the approval of the NAIA IPT III Project by the National Economic
Development Authority Board in a Resolution dated 13 February 1996, which provided for the following
commitments by the parties:
a. commitment of Respondent DOTC to target mid 1996 as the time frame for the formal award of
the project and commencement of site preparation and construction activities with the view of a
partial opening of the Terminal by the first quarter of 1998;
b. commitment of Respondent DOTC to pursue the project envisioned in the unsolicited proposal
and commence and conclude as soon as possible negotiations with Petitioner AEDC on the BOT
contract;
c. commitment of Respondent DOTC to make appropriate arrangements through which the
formal award of the project can be affected[;]
d. commitment of Petitioner AEDC to a fast track approach to project implementation and to
commence negotiations with its financial partners, investors and creditors;
e. commitment of Respondent DOTC and Petitioner AEDC to fast track evaluation of competitive
proposals, screening and eliminating nuisance comparative bids;
34

It is important to note, however, that the document attached as Annex "E" to the Petition of AEDC is a
"certified photocopy of records on file." This Court cannot give much weight to said document considering
that its existence and due execution have not been established. It is not notarized, so it does not enjoy
the presumption of regularity of a public document. It is not even witnessed by anyone. It is not certified
true by its supposed signatories, Secretary Jesus B. Garcia, Jr. for DOTC and Chairman Henry Sy, Sr. for
AEDC, or by any government agency having its custody. It is certified as a photocopy of records on file by
an Atty. Cecilia L. Pesayco, the Corporate Secretary, of an unidentified corporation.
Even assuming for the sake of argument, that the said Memorandum of Agreement, is in existence and
duly executed, it does little to support the claim of AEDC to the award of the NAIA IPT III Project. The
commitments undertaken by the DOTC and AEDC in the Memorandum of Agreement may be simply
summarized as a commitment to comply with the procedure and requirements provided in Rules 10 and
11 of the IRR. It bears no commitment on the part of the DOTC to award the NAIA IPT III Project to
AEDC. On the contrary, the document includes express stipulations that negate any such government
obligation. Thus, in the first clause,
35
the DOTC affirmed its commitment to pursue, implement and
complete the NAIA IPT III Project on or before 1998, noticeably without mentioning that such commitment
was to pursue the project specifically with AEDC. Likewise, in the second clause,
36
it was emphasized
that the DOTC shall pursue the project under Rules 10 and 11 of the IRR of Republic Act No. 6957, as
JURISDICTION jrp
46

amended by Republic Act No. 7718. And most significantly, the tenth clause of the same document
provided:
10. Nothing in this Memorandum of Understanding shall be understood, interpreted or construed
as permitting, allowing or authorizing the circumvention of, or non-compliance with, or as waiving,
the provisions of, and requirements and procedures under, existing laws, rules and regulations.
37

AEDC further decries that:
24. In carrying out its commitments under the DOTC-AEDC MOU, Petitioner AEDC undertook the
following activities, incurring in the process tremendous costs and expenses.
a. pre-qualified 46 design and contractor firms to assist in the NAIA-IPT III Project;
b. appointed a consortium of six (6) local banks as its financial advisor in June 1996;
c. hired the services of GAIA South, Inc. to prepare the Project Description Report and to obtain
the Environmental Clearance Certificate (ECC) for the NAIA-IPT III Project;
d. coordinated with the Airline Operators Association, Bases Conversion Development Authority,
Philippine Air Force, Bureau of Customs, Bureau of Immigration, relative to their particular
requirements regarding the NAIA-IPT III [P]roject; and
e. negotiated and entered into firm commitments with Ital Thai, Marubeni Corporation and Mitsui
Corporation as equity partners.
38

While the Court may concede that AEDC, as the original proponent, already expended resources in its
preparation and negotiation of its unsolicited proposal, the mere fact thereof does not entitle it to the
instant award of the NAIA IPT III Project. AEDC was aware that the said project would have to undergo
public bidding, and there existed the possibility that another proponent may submit a more advantageous
bid which it cannot match; in which case, the project shall be awarded to the other proponent and AEDC
would then have no means to recover the costs and expenses it already incurred on its unsolicited
proposal. It was a given business risk that AEDC knowingly undertook.
Additionally, the very defect upon which this Court nullified the award of the NAIA IPT III Project to
PIATCO similarly taints the unsolicited proposal of AEDC. This Court found Paircargo Consortium
financially disqualified after striking down as incorrect the PBAC's assessment of the consortium's
financial capability. According to the Court's ratio in Agan:
As the minimum project cost was estimated to be US$350,000,000.00 or roughly
P9,183,650,000.00, the Paircargo Consortium had to show to the satisfaction of the PBAC that it
had the ability to provide the minimum equity for the project in the amount of at least
P2,755,095,000.00.
x x x x
Thus, the maximum amount that Security Bank could validly invest in the Paircargo Consortium is
only P528,525,656.55, representing 15% of its entire net worth. The total net worth therefore of
the Paircargo Consortium, after considering the maximum amounts that may be validly invested
by each of its members is P558,384,871.55 or only 6.08% of the project cost, an amount
substantially less than the prescribed minimum equity investment required for the project in the
amount of P2,755,095,000.00 or 30% of the project cost.
JURISDICTION jrp
47

The purpose of pre-qualification in any public bidding is to determine, at the earliest opportunity,
the ability of the bidder to undertake the project. Thus, with respect to the bidder's financial
capacity at the pre-qualification stage, the law requires the government agency to examine and
determine the ability of the bidder to fund the entire cost of the project by considering the
maximum amounts that each bidder may invest in the project at the time of pre-
qualification.
x x x x
Thus, if the maximum amount of equity that a bidder may invest in the project at the time the
bids are submitted falls short of the minimum amounts required to be put up by the bidder, said
bidder should be properly disqualified. Considering that at the pre-qualification stage, the
maximum amounts which the Paircargo Consortium may invest in the project fell short of the
minimum amounts prescribed by the PBAC, we hold that Paircargo Consortium was not a
qualified bidder. Thus the award of the contract by the PBAC to the Paircargo Consortium, a
disqualified bidder, is null and void.
39

Pursuant to the above-quoted ruling, AEDC, like the Paircargo Consortium, would not be financially
qualified to undertake the NAIA IPT III Project. Based on AEDC's own submissions to the Government, it
had then a paid-in capital of only P150,000,000.00,
40
which was less than the P558,384,871.55 that
Paircargo Consortium was capable of investing in the NAIA IPT III Project, and even far less that what
this Court prescribed as the minimum equity investment required for the project in the amount of
P2,755,095,000.00 or 30% of the project cost. AEDC had not sufficiently demonstrated that it would have
been financially qualified to undertake the project at the time of submission of the bids.
Instead, AEDC took pains to present to this Court that allowing it to take over and operate NAIA IPT III at
present would be beneficial to the Government. This Court must point out, however, that AEDC is
precisely making a new proposal befitting the current status of the NAIA IPT III Project, contrary to its own
argument that it is merely invoking its original BOT proposal. And it is not for this Court to evaluate
AEDC's new proposal and assess whether it would truly be most beneficial for the Government, for the
same is an executive function rather than judicial, for which the statutes and regulations have sufficiently
provided standards and procedures for evaluation.
It can even be said that if the award of the NAIA IPT III Project was merely a matter of choosing between
PIATCO and AEDC (which it is not), there could be no doubt that PIATCO is more qualified to operate the
structure that PIATCO itself built and PIATCO's offer of P17.75 Billion in annual guaranteed payments to
the Government is far better that AEDC's offer of P135 Million.
Hence, AEDC is not entitled to a writ of mandamus, there being no specific, certain, and clear legal right
to be enforced, nor duty to be performed that is clearly and peremptorily enjoined by law or by reason of
official station.
PROCEDURAL LAPSES
In addition to the substantive weaknesses of the Petition of AEDC, the said Petition also suffers from
procedural defects.
AEDC revived its hope to acquire the NAIA IPT III Project when this Court promulgated its Decision in
Agan on 5 May 2003. The said Decision became final and executory on 17 February 2004 upon the
denial by this Court of the Motion for Leave to File Second Motion for Reconsideration submitted by
PIATCO. It is this Decision that declared the award of the NAIA IPT III Project to PIATCO as null and
void; without the same, then the award of the NAIA IPT III Project to PIATCO would still subsist and other
persons would remain precluded from acquiring rights thereto, including AEDC. Irrefutably, the present
JURISDICTION jrp
48

claim of AEDC is rooted in the Decision of this Court in Agan. However, AEDC filed the Petition at bar
only 20 months after the promulgation of the Decision in Agan on 5 May 2003.
It must be emphasized that under Sections 2 and 3, Rule 65 of the revised Rules of Civil Procedure,
petitions for prohibition and mandamus, such as in the instant case, can only be resorted to when there is
no other plain, speedy and adequate remedy for the party in the ordinary course of law.
In Cruz v. Court of Appeals,
41
this Court elucidates that
Although Rule 65 does not specify any period for the filing of a petition for certiorari and
mandamus, it must, nevertheless, be filed within a reasonable time. In certiorari cases, the
definitive rule now is that such reasonable time is within three months from the commission of
the complained act. The same rule should apply to mandamus cases.
The unreasonable delay in the filing of the petitioner's mandamus suit unerringly negates any
claim that the application for the said extraordinary remedy was the most expeditious and speedy
available to the petitioner. (Emphasis ours.)
As the revised Rules now stand, a petition for certiorari may be filed within 60 days from notice of the
judgment, order or resolution sought to be assailed.
42
Reasonable time for filing a petition for mandamus
should likewise be for the same period. The filing by the AEDC of its petition for mandamus 20 months
after its supposed right to the project arose is evidently beyond reasonable time and negates any claim
that the said petition for the extraordinary writ was the most expeditious and speedy remedy available to
AEDC.
AEDC contends that the "reasonable time" within which it should have filed its petition should be
reckoned only from 21 September 2005, the date when AEDC received the letter from the Office of the
Solicitor General refusing to recognize the rights of AEDC to provide the available funds for the
completion of the NAIA IPT III Project and to reimburse the costs of the structures already built by
PIATCO. It has been unmistakable that even long before said letter especially when the Government
instituted with the RTC of Pasay City expropriation proceedings for the NAIA IPT III on 21 December
2004 that the Government would not recognize any right that AEDC purportedly had over the NAIA IPT
III Project and that the Government is intent on taking over and operating the NAIA IPT III itself.
Another strong argument against the AEDC's Petition is that it is already barred by res judicata.
In Agan,
43
it was noted that on 16 April 1997, the AEDC instituted before the RTC of Pasig City Civil Case
No. 66213, a Petition for the Declaration of Nullity of the Proceedings, Mandamus and Injunction, against
the DOTC Secretary and the PBAC Chairman and members.
In Civil Case No. 66213, AEDC prayed for:
i) the nullification of the proceedings before the DOTC-PBAC, including its decision to qualify
Paircargo Consortium and to deny Petitioner AEDC's access to Paircargo Consortium's technical
and financial bid documents;
ii) the protection of Petitioner AEDC's right to match considering the void challenge bid of the
Paircargo Consortium and the denial by DOTC-PBAC of access to information vital to the
effective exercise of its right to match;
iii) the declaration of the absence of any other qualified proponent submitting a competitive bid in
an unsolicited proposal.
44

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49

Despite the pendency of Civil Case No. 66213, the DOTC issued the notice of award for the NAIA IPT III
Project to PIATCO on 9 July 1997. The DOTC and PIATCO also executed on 12 July 1997 the 1997
Concession Agreement. AEDC then alleges that:
k) On September 3, 1998, then Pres. Joseph Ejercito Estrada convened a meeting with the
members of the Board of Petitioner AEDC to convey his "desire" for the dismissal of the
mandamus case filed by Petition AEDC and in fact urged AEDC to immediately withdraw said
case.
l) The President's direct intervention in the disposition of this mandamus case was a clear
imposition that Petitioner AEDC had not choice but to accept. To do otherwise was to take a
confrontational stance against the most powerful man in the country then under the risk of
catching his ire, which could have led to untold consequences upon the business interests of the
stakeholders in AEDC. Thus, Petitioner AEDC was constrained to agree to the signing of a Joint
Motion to Dismiss and to the filing of the same in court.
m) Unbeknownst to AEDC at that time was that simultaneous with the signing of the July 12,
1997 Concession Agreement, the DOTC and PIATCO executed a secret side agreement grossly
prejudicial and detrimental to the interest of Government. It stipulated that in the event that the
Civil Case filed by AEDC on April 16, 1997 is not resolved in a manner favorable to the
Government, PIATCO shall be entitled to full reimbursement for all costs and expenses it incurred
in order to obtain the NAIA IPT III BOT project in an amount not less than One Hundred Eighty
Million Pesos (Php 180,000,000.00). This was apparently the reason why the President was
determined to have AEDC's case dismissed immediately.
n) On February 9, 1999, after the Amended and Restated Concession Agreement (hereinafter
referred to as "ARCA") was signed without Petitioner AEDC's knowledge, Petitioner AEDC signed
a Joint Motion to Dismiss upon the representation of the DOTC that it would provide AEDC with a
copy of the 1997 Concession Agreement. x x x.
45

On 30 April 1999, the RTC of Pasig City issued an Order dismissing with prejudice Civil Case No. 66213
upon the execution by the parties of a Joint Motion to Dismiss. According to the Joint Motion to Dismiss
The parties, assisted by their respective counsel, respectfully state:
1. Philippine International Air Terminals Company, Inc. ("PIATCO") and the respondents have
submitted to petitioner, through the Office of the Executive Secretary, Malacaang, a copy of the
Concession Agreement which they executed for the construction and operation of the Ninoy
Aquino International Airport International Passenger Terminal III Project ("NAIA IPT III Project),
which petitioner requested.
2. Consequently, the parties have decided to amicably settle the instant case and jointly move
for the dismissal thereof without any of the parties admitting liability or conceding to the position
taken by the other in the instant case.
3. Petitioner, on the other hand, and the respondents, on the other hand, hereby release and
forever discharge each other from any and all liabilities, direct or indirect, whether criminal or
civil, which arose in connection with the instant case.
4. The parties agree to bear the costs, attorney's fees and other expenses they respectively
incurred in connection with the instant case. (Emphasis ours.)
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50

AEDC, however, invokes the purported pressure exerted upon it by then President Joseph E. Estrada,
the alleged fraud committed by the DOTC, and paragraph 2 in the afore-quoted Joint Motion to Dismiss to
justify the non-application of the doctrine of res judicata to its present Petition.
The elements of res judicata, in its concept as a bar by former judgment, are as follows: (1) the former
judgment or order must be final; (2) it must be a judgment or order on the merits, that is, it was rendered
after a consideration of the evidence or stipulations submitted by the parties at the trial of the case; (3) it
must have been rendered by a court having jurisdiction over the subject matter and the parties; and (4)
there must be, between the first and second actions, identity of parties, of subject matter and of cause of
action.
46
All of the elements are present herein so as to bar the present Petition.
First, the Order of the RTC of Pasig City, dismissing Civil Case No. 66213, was issued on 30 April 1999.
The Joint Motion to Dismiss, deemed a compromise agreement, once approved by the court is
immediately executory and not appealable.
47

Second, the Order of the RTC of Pasig City dismissing Civil Case No. 66213 pursuant to the Joint Motion
to Dismiss filed by the parties constitutes a judgment on the merits.
The Joint Motion to Dismiss stated that the parties were willing to settle the case amicably and,
consequently, moved for the dismissal thereof. It also contained a provision in which the parties the
AEDC, on one hand, and the DOTC Secretary and PBAC, on the other released and forever discharged
each other from any and all liabilities, whether criminal or civil, arising in connection with the case. It is
undisputable that the parties entered into a compromise agreement, defined as "a contract whereby the
parties, by making reciprocal concessions, avoid a litigation or put an end to one already commenced.
48
"
Essentially, it is a contract perfected by mere consent, the latter being manifested by the meeting of the
offer and the acceptance upon the thing and the cause which are to constitute the contract. Once an
agreement is stamped with judicial approval, it becomes more than a mere contract binding upon the
parties; having the sanction of the court and entered as its determination of the controversy, it has the
force and effect of any other judgment.
49
Article 2037 of the Civil Code explicitly provides that a
compromise has upon the parties the effect and authority of res judicata.
Because of the compromise agreement among the parties, there was accordingly a judicial settlement of
the controversy, and the Order, dated 30 April 1999, of the RTC of Pasig City was no less a judgment on
the merits which may be annulled only upon the ground of extrinsic fraud.
50
Thus, the RTC of Pasig City,
in the same Order, correctly granted the dismissal of Civil Case No. 66213 with prejudice.
A scrutiny of the Joint Motion to Dismiss submitted to the RTC of Pasig City would reveal that the parties
agreed to discharge one another from any and all liabilities, whether criminal or civil, arising from the
case, after AEDC was furnished with a copy of the 1997 Concession Agreement between the DOTC and
PIATCO. This complete waiver was the reciprocal concession of the parties that puts to an end the
present litigation, without any residual right in the parties to litigate the same in the future. Logically also,
there was no more need for the parties to admit to any liability considering that they already agreed to
absolutely discharge each other therefrom, without necessarily conceding to the other's position. For
AEDC, it was a declaration that even if it was not conceding to the Government's position, it was
nonetheless waiving any legal entitlement it might have to sue the Government on account of the NAIA
IPT III Project. Conversely, for the Government, it was an avowal that even if it was not accepting AEDC's
stance, it was all the same relinquishing its right to file any suit against AEDC in connection with the same
project. That none of the parties admitted liability or conceded its position is without bearing on the validity
or binding effect of the compromise agreement, considering that these were not essential to the said
compromise.
Third, there is no question as to the jurisdiction of the RTC of Pasig City over the subject matter and
parties in Civil Case No. 66213. The RTC can exercise original jurisdiction over cases involving the
issuance of writs of certiorari, prohibition, mandamus, quo warranto, habeas corpus and injunction.
51
To
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51

recall, the Petition of AEDC before the RTC of Pasig City was for the declaration of nullity of proceedings,
mandamus and injunction. The RTC of Pasig City likewise had jurisdiction over the parties, with the
voluntary submission by AEDC and proper service of summons on the DOTC Secretary and the PBAC
Chairman and members.
Lastly, there is, between Civil Case No. 66213 before the RTC of Pasig City and the Petition now pending
before this Court, an identity of parties, of subject matter, and of causes of action.
There is an identity of parties. In both petitions, the AEDC is the petitioner. The respondents in Civil Case
No. 66213 are the DOTC Secretary and the PBAC Chairman and members. The respondents in the
instant Petition are the DOTC, the DOTC Secretary, and the Manila International Airport Authority (MIAA).
While it may be conceded that MIAA was not a respondent and did not participate in Civil Case No.
66213, it may be considered a successor-in-interest of the PBAC. When Civil Case No. 66213 was
initiated, PBAC was then in charge of the NAIA IPT III Project, and had the authority to evaluate the bids
and award the project to the one offering the lowest or most advantageous bid. Since the bidding is
already over, and the structures comprising NAIA IPT III are now built, then MIAA has taken charge
thereof. Furthermore, it is clear that it has been the intention of the AEDC to name as respondents in their
two Petitions the government agency/ies and official/s who, at the moment each Petition was filed, had
authority over the NAIA IPT III Project.
There is an identity of subject matter because the two Petitions involve none other than the award and
implementation of the NAIA IPT III Project.
There is an identity of cause of action because, in both Petitions, AEDC is asserting the violation of its
right to the award of the NAIA IPT III Project as the original proponent in the absence of any other
qualified bidders. As early as in Civil Case No. 66213, AEDC already sought a declaration by the court of
the absence of any other qualified proponent submitting a competitive bid for the NAIA IPT III Project,
which, ultimately, would result in the award of the said project to it.
AEDC attempts to evade the effects of its compromise agreement by alleging that it was compelled to
enter into such an agreement when former President Joseph E. Estrada asserted his influence and
intervened in Civil Case No. 66213. This allegation deserves scant consideration. Without any proof that
such events did take place, such statements remain mere allegations that cannot be given weight. One
who alleges any defect or the lack of a valid consent to a contract must establish the same by full, clear
and convincing evidence, not merely by preponderance thereof.
52
And, even assuming arguendo, that the
consent of AEDC to the compromise agreement was indeed vitiated, then President Estrada was
removed from office in January 2001. AEDC filed the present Petition only on 20 October 2005. The four-
year prescriptive period, within which an action to annul a voidable contract may be brought, had already
expired.
53

The AEDC further claims that the DOTC committed fraud when, without AEDC's knowledge, the DOTC
entered into an Amended and Restated Concession Agreement (ARCA) with PIATCO. The fraud on the
part of the DOTC purportedly also vitiated AEDC's consent to the compromise agreement. It is true that a
judicial compromise may be set aside if fraud vitiated the consent of a party thereof; and that the extrinsic
fraud, which nullifies a compromise, likewise invalidates the decision approving it.
54
However, once again,
AEDC's allegations of fraud are unsubstantiated. There is no proof that the DOTC and PIATCO willfully
and deliberately suppressed and kept the information on the execution of the ARCA from AEDC. The
burden of proving that there indeed was fraud lies with the party making such allegation. Each party must
prove his own affirmative allegations. The burden of proof lies on the party who would be defeated if no
evidence were given on either side. In this jurisdiction, fraud is never presumed.
55

Moreover, a judicial compromise may be rescinded or set aside on the ground of fraud in accordance with
Rule 38 of the Rules on Civil Procedure on petition for relief from judgment. Section 3 thereof prescribes
the periods within which the petition for relief must be filed:
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52

SEC. 3. Time for filing petition; contents and verification. A petition provided for in either of the
preceding sections of this Rule must be verified, filed within sixty (60) days after the petitioner
learns of the judgment, final order or other proceeding to be set aside, and not more than six (6)
months after such judgment or final order was entered, or such proceeding was taken, and must
be accompanied with affidavits showing the fraud, accident, mistake or excusable negligence
relied upon, and the facts constituting the petitioner's good and substantial cause of action or
defense, as the case may be.
According to this Court's ruling in Argana v. Republic,
56
as applied to a judgment based on compromise,
both the 60-day and six-month reglementary periods within which to file a petition for relief should be
reckoned from the date when the decision approving the compromise agreement was rendered because
such judgment is considered immediately executory and entered on the date that it was approved by the
court. In the present case, the Order of the RTC of Pasig City granting the Joint Motion to Dismiss filed by
the parties in Civil Case No. 66213 was issued on 30 April 1999, yet AEDC only spoke of the alleged
fraud which vitiated its consent thereto in its Petition before this Court filed on 20 October 2005, more
than six years later.
It is obvious that the assertion by AEDC of its vitiated consent to the Joint Motion to Dismiss Civil Case
No. 66213 is nothing more than an after-thought and a desperate attempt to escape the legal implications
thereof, including the barring of its present Petition on the ground of res judicata.
It is also irrelevant to the legal position of AEDC that the Government asserted in Agan that the award of
the NAIA IPT III Project to PIATCO was void. That the Government eventually took such a position, which
this Court subsequently upheld, does not affect AEDC's commitments and obligations under its judicially-
approved compromise agreement in Civil Case No. 66213, which AEDC signed willingly, knowingly, and
ably assisted by legal counsel.
In addition, it cannot be said that there has been a fundamental change in the Government's position
since Civil Case No. 66213, contrary to the allegation of AEDC. The Government then espoused that
AEDC is not entitled to the award of the NAIA IPT III Project. The Government still maintains the exact
same position presently. That the Government eventually reversed its position on the validity of its award
of the project to PIATCO is not inconsistent with its position that neither should AEDC be awarded the
project.
For the foregoing substantive and procedural reasons, the instant Petition of AEDC should be dismissed.
Republic of the Philippines v. Court of Appeals and Baterina (G.R. No. 174166)
As mentioned in Gingoyon, expropriation proceedings for the NAIA IPT III was instituted by the
Government with the RTC of Pasay City, docketed as Case No. 04-0876CFM. Congressman Baterina,
together with other members of the House of Representatives, sought intervention in Case No. 04-
0876CFM by filing a Petition for Prohibition in Intervention (with Application for Temporary Restraining
Order and Writ of Preliminary Injunction). Baterina, et al. believe that the Government need not file
expropriation proceedings to gain possession of NAIA IPT III and that PIATCO is not entitled to payment
of just compensation, arguing thus
A) Respondent PIATCO does not own Terminal III because BOT Contracts do not vest ownership
in PIATCO. As such, neither PIATCO nor FRAPORT are entitled to compensation.
B) Articles 448, ET SEQ., of the New Civil Code, as regards builders in good faith/bad faith, do
not apply to PIATCO's Construction of Terminal III.
C) Article 1412(2) of the New Civil Code allows the Government to demand the return of what it
has given without any obligation to comply with its promise.
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53

D) The payment of compensation to PIATCO is unconstitutional, violative of the Build-Operate-
Transfer Law, and violates the Civil Code and other laws.
57

On 27 October 2005, the RTC of Pasay City issued an Order admitting the Petition in Intervention of
Baterina, et al., as well as the Complaint in Intervention of Manuel L. Fortes, Jr. and the Answer in
Intervention of Gina B. Alnas, et al. The Republic sought reconsideration of the 27 October 2005 Order of
the RTC of Pasay City, which, in an Omnibus Order dated 13 December 2005, was denied by the RTC of
Pasay City as regards the intervention of Baterina, et al. and Fortes, but granted as to the intervention of
Alnas, et al. On 22 March 2006, Baterina, et al. filed with the RTC of Pasay City a Motion to Declare in
Default and/or Motion for Summary Judgment considering that the Republic and PIATCO failed to file an
answer or any responsive pleading to their Petition for Prohibition in Intervention.
In the meantime, on 19 December 2005, the Court's Decision in Gingoyon was promulgated. Baterina
also filed a Motion for Intervention in said case and sought reconsideration of the Decision therein.
However, his Motion for Intervention was denied by this Court in a Resolution dated 1 February 2006.
On 27 March 2006, the RTC of Pasay City issued an Order and Writ of Execution, the dispositive portion
of which reads
WHEREFORE, let a writ of execution be issued in this case directing the Sheriff of this court to
immediately implement the Order dated January 4, 2005 and January 10, 2005, as affirmed by
the Decision of the Supreme Court in G.R. No. 166429 in the above-entitled case dated
December 19, 2005, in the following manner:
1. Ordering the General Manager, the Senior Assistant General Manager and the Vice President
of Finance of the Manila International Airport Authority (MIAA) to immediately withdraw the
amount of P3,002,125,000.00 from the above-mentioned Certificates of US Dollar Time Deposits
with the Land Bank of the Philippines, Baclaran Branch;
2. Ordering the Branch Manager, Land Bank of the Philippines, Baclaran Branch to immediately
release the sum of P3,002,125,000.00 to PIATCO;
Return of Service of the Writs shall be made by the Sheriff of this court immediately thereafter;
58

The RTC of Pasay City, in an Order, dated 15 June 2006, denied the Motions for Reconsideration of its
Order and Writ of Execution filed by the Government and Fortes. Baterina, meanwhile, went before the
Court of Appeals via a Petition for Certiorari and Prohibition (With Urgent Prayer for the Issuance of a
Temporary Restraining Order and Writ of Preliminary Injunction), docketed as CA-G.R. No. 95539,
assailing the issuance, in grave abuse of discretion, by the RTC of Pasay City of its Orders dated 27
March 2006 and 15 June 2006 and Writ of Execution dated 27 March 2006.
During the pendency of CA-G.R. No. 95539 with the Court of Appeals, the RTC of Pasay City issued an
Order, dated 7 August 2006, denying the Urgent Manifestation and Motion filed by the Republic in which it
relayed willingness to comply with the Order and Writ of Execution dated 27 March 2006, provided that
the trial court shall issue an Order expressly authorizing the Republic to award concessions and lease
portions of the NAIA IPT III to potential users. The following day, on 8 August 2006, the RTC of Pasay
City issued an Order denying the intervention of Baterina, et al. and Fortes in Case No. 04-0876CFM. In a
third Order, dated 9 August 2006, the RTC of Pasay City directed PIATCO to receive the amount of
P3,002,125,000.00 from the Land Bank of the Philippines, Baclaran Branch.
By 24 August 2006, the Republic was all set to comply with the 9 August 2006 Order of the RTC of Pasay
City. Hence, the representatives of the Republic and PIATCO met before the RTC of Pasay City for the
supposed payment by the former to the latter of the proferred amount. However, on the same day, the
Court of Appeals, in CA G.R. No. 95539, issued a Temporary Restraining Order (TRO) enjoining, among
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54

other things, the RTC of Pasay City from implementing the questioned Orders, dated 27 March 2006 and
15 June 2006, or "from otherwise causing payment and from further proceeding with the determination of
just compensation in the expropriation case involved herein, until such time that petitioner's motion to
declare in default and motion for partial summary judgment shall have been resolved by the trial court; or
it is clarified that PIATCO categorically disputes the proferred value for NAIA Terminal 3." The TRO was
to be effective for 30 days. Two days later, on 26 August 2006, the Republic filed with the Court of
Appeals an Urgent Motion to Lift Temporary Restraining Order, which the appellate court scheduled for
hearing on 5 September 2006.
While the Urgent Motion to lift the TRO was still pending with the Court of Appeals, the Republic already
filed the present Petition for Certiorari and Prohibition With Urgent Application for a Temporary
Restraining Order and/or Writ of Preliminary Injunction, attributing to the Court of Appeals grave abuse of
discretion in granting the TRO and seeking a writ of prohibition against the Court of Appeals to enjoin it
from giving due course to Baterina's Petition in CA-G.R. No. 95539. The Republic thus raises before this
Court the following arguments:
I
THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO
AN EXCESS OR LACK OF JURISDICTION WHEN IT GRANTED THE TEMPORARY
RESTRAINING ORDER.
A. THIS HONORABLE COURT'S DECISION IN GINGOYON CONSTITUTES THE "LAW
OF THE CASE".
B. THE TRO IS IN DIRECT CONTRAVENTION OF THIS COURT'S DECISION WICH
HAD ATTAINED FINALITY.
II
THE REPUBLIC IS SUFFERING IRREPARABLE DAMAGE.
III
THE COURT OF APPEALS MUST BE PROHIBITED FROM GIVING DUE COURSE TO A
PETITION THAT IS DEFECTIVE IN FORM AND SUBSTANCE.
A. PRIVATE RESPONDENT HAS NO LEGAL STANDING.
1. THIS HONORABLE COURT HAS RULED THAT PRIVATE RESPONDENT
HAS NO LEGAL STANDING.
2. PRIVATE RESPONDENT HAS LOST HIS STANDING AS AN INTERVENOR.
B. PRIVATE RESPONDENT FAILED TO DEMONSTRATE THAT HE IS ENTITLED TO
THE INJUNCTIVE RELIEFS PRAYED FOR.
C. THE BOND POSTED IS INSUFFICIENT.
IV
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55

GRANTING ARGUENDO THAT PRIVATE RESPONDENT'S PETITION IS SUFFICIENT IN
FORM AND SUBSTANCE, THE SAME HAS BECOME MOOT AND ACADEMIC.
A. THE MOTION TO DECLARE IN DEFAULT AND/OR MOTION FOR PARTIAL
SUMMARY JUDGMENT HAS ALREADY BEEN RESOLVED.
B. PIATCO HAS CATEGORICALLY DISPUTED THE PROFFERED VALUE FOR NAIA
TERMINAL III.
59

The Republic prays of this Court that:
(a) Pending the determination of the merits of this petition, a temporary restraining order and/or a
writ of preliminary injunction be ISSUED restraining the Court of Appeals from implementing the
writ of preliminary injunction in CA-G.R. SP No. 95539 and proceeding in said case such as
hearing it on September 5, 2006. After both parties have been heard, the preliminary injunction
be MADE PERMANENT;
(b) The Resolution date 24 August 2006 of the Court of Appeals be SET ASIDE; and
(c) CA-G.R. SP No. 95539 be ORDERED DISMISSED.
Other just and equitable reliefs are likewise prayed for.
60

On 4 September 2006, the Republic filed a Manifestation and Motion to Withdraw Urgent Motion to Lift
Temporary Restraining Order with the Court of Appeals stating, among other things, that it had decided to
withdraw the said Motion as it had opted to avail of other options and remedies. Despite the Motion to
Withdraw filed by the Government, the Court of Appeals issued a Resolution, dated 8 September 2006,
lifting the TRO it issued, on the basis of the following
In view of the pronouncement of the Supreme Court in the Gingoyon case upholding the right of
PIATCO to be paid the proferred value in the amount of P3,002,125,000.00 prior to the
implementation of the writ of possession issued by the trial court on December 21, 2004 over the
NAIA Passenger Terminal III, and directing the determination of just compensation, there is no
practical and logical reason to maintain the effects of the Temporary Restraining Order contained
in our Resolution dated August 24, 2006. Thus, We cannot continue restraining what has been
mandated in a final and executory decision of the Supreme Court.
WHEREFORE, Our Resolution dated 24 August 2006 be SET ASIDE. Consequently, the Motion
to Withdraw the Motion to Lift the Temporary Restraining Order is rendered moot and academic.
61

There being no more legal impediment, the Republic tendered on 11 September 2006 Land Bank check
in the amount of P3,002,125,000.00 representing the proferred value of NAIA IPT III, which was received
by a duly authorized representative of PIATCO.
On 27 December 2006, the Court of Appeals rendered a Decision in CA G.R. No. 95539 dismissing
Baterina's Petition.
The latest developments before the Court of Appeals and the RTC of Pasay City render the present
Petition of the Republic moot.
Nonetheless, Baterina, as the private respondent in the instant Petition, presented his own prayer that a
judgment be rendered as follows:
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56

A. For this Honorable Court, in the exercise of its judicial discretion to relax procedural rules
consistent with Metropolitan Traffic Command v. Gonong and deem that justice would be better
served if all legal issues involved in the expropriation case and in Baterina are resolved in this
case once and for all, to DECLARE that:
i. TERMINAL 3, as a matter of law, is public property and thus not a proper object of
eminent domain proceedings; and
ii. PIATCO, as a matter of law, is merely the builder of TERMINAL 3 and, as such, it may
file a claim for recovery on quantum meruit with the Commission on Audi[t] for
determination of the amount thereof, if any.
B. To DIRECT the Regional Trial Court of Pasay City, Branch 117 to dismiss the expropriation
case;
C. To DISMISS the instant Petition and DENY The Republic's application for TRO and/or writ of
preliminary injunction for lack of merit;
D. To DECLARE that the P3 Billion (representing the proferred value of TERMINAL 3) paid to
PIATCO on 11 September 2006 as funds held in trust by PIATCO for the benefit of the Republic
and subject to the outcome of the proceedings for the determination of recovery on quantum
meruit due to PIATCO, if any.
E. To DIRECT the Solicitor General to disclose the evidence it has gathered on corruption,
bribery, fraud, bad faith, etc., to this Honorable Court and the Commission on Audit, and to
DECLARE such evidence to be admissible in any proceeding for the determination of any
compensation due to PIATCO, if any.
[F]. In the alternative, to:
i. SET ASIDE the trial court's Order dated 08 August 2006 denying Private Respondent's
motion for intervention in the expropriation case, and
ii. Should this Honorable Court lend credence to the argument of the Solicitor General in
its Comment dated 20 April 2006 that "there are issues as to material fact that require
presentation of evidence", to REMAND the resolution of the legal issues raised by Private
Respondent to the trial court consistent with this Honorable Court's holding in the
Gingoyon Resolution that "the interests of the movants-in-intervention [meaning
Takenaka, Asahikosan, and herein Private Respondent] may be duly litigated in
proceedings which are extant before the lower courts."
62

In essence, Baterina is opposing the expropriation proceedings on the ground that NAIA IPT III is already
public property. Hence, PIATCO is not entitled to just compensation for NAIA IPT III. He is asking the
Court to make a definitive ruling on this matter considering that it was not settled in either Agan or
Gingoyon.
We disagree. Contrary to Baterina's stance, PIATCO's entitlement to just and equitable consideration for
its construction of NAIA IPT III and the propriety of the Republic's resort to expropriation proceedings
were already recognized and upheld by this Court in Agan and Gingoyon.
The Court's Decisions in both Agan and Gingoyon had attained finality, the former on 17 February 2004
and the latter on 17 March 2006.
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57

This Court already made an unequivocal pronouncement in its Resolution dated 21 January 2004 in Agan
that for the Government of the Republic to take over the NAIA IPT III facility, it has to compensate
PIATCO as a builder of the structures; and that "[t]he compensation must be just and in accordance with
law and equity for the government cannot unjustly enrich itself at the expense of PIATCO and its
investors."
63
As between the Republic and PIATCO, the judgment on the need to compensate PIATCO
before the Government may take over NAIA IPT III is already conclusive and beyond question.
Hence, in Gingoyon, this Court declared that:
This pronouncement contains the fundamental premises which permeate this decision of the
Court. Indeed, Agan, final and executory as it is, stands as governing law in this case, and any
disposition of the present petition must conform to the conditions laid down by the Court in its
2004 Resolution.
x x x x
The pronouncement in the 2004 Resolution is especially significant to this case in two
aspects, namely: (i) that PIATCO must receive payment of just compensation determined
in accordance with law and equity; and (ii) that the government is barred from taking over
NAIA 3 until such just compensation is paid. The parties cannot be allowed to evade the
directives laid down by this Court through any mode of judicial action, such as the complaint for
eminent domain.
It cannot be denied though that the Court in the 2004 Resolution prescribed mandatory guidelines
which the Government must observe before it could acquire the NAIA 3 facilities. Thus, the
actions of respondent judge under review, as well as the arguments of the parties must, to merit
affirmation, pass the threshold test of whether such propositions are in accord with the 2004
Resolution.
64

The Court then, in Gingoyon, directly addressed the issue on the appropriateness of the Republic's resort
to expropriation proceedings:
The Government has chosen to resort to expropriation, a remedy available under the law,
which has the added benefit of an integrated process for the determination of just
compensation and the payment thereof to PIATCO. We appreciate that the case at bar is a
highly unusual case, whereby the Government seeks to expropriate a building complex
constructed on land which the State already owns. There is an inherent illogic in the resort to
eminent domain on property already owned by the State. At first blush, since the State already
owns the property on which NAIA 3 stands, the proper remedy should be akin to an action for
ejectment.
However, the reason for the resort by the Government to expropriation proceedings is
understandable in this case. The 2004 Resolution, in requiring the payment of just
compensation prior to the takeover by the Government of NAIA 3, effectively precluded it from
acquiring possession or ownership of the NAIA 3 through the unilateral exercise of its rights as
the owner of the ground on which the facilities stood. Thus, as things stood after the 2004
Resolution, the right of the Government to take over the NAIA 3 terminal was preconditioned by
lawful order on the payment of just compensation to PIATCO as builder of the structures.
x x x x
The right of eminent domain extends to personal and real property, and the NAIA 3 structures,
adhered as they are to the soil, are considered as real property. The public purpose for the
expropriation is also beyond dispute. It should also be noted that Section 1 of Rule 67 (on
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58

Expropriation) recognizes the possibility that the property sought to be expropriated may
be titled in the name of the Republic of the Philippines, although occupied by private
individuals, and in such case an averment to that effect should be made in the complaint. The
instant expropriation complaint did aver that the NAIA 3 complex "stands on a parcel of land
owned by the Bases Conversion Development Authority, another agency of [the Republic of the
Philippines]."
Admittedly, eminent domain is not the sole judicial recourse by which the Government may
have acquired the NAIA 3 facilities while satisfying the requisites in the 2004 Resolution. Eminent
domain though may be the most effective, as well as the speediest means by which such
goals may be accomplished. Not only does it enable immediate possession after satisfaction of
the requisites under the law, it also has a built-in procedure through which just compensation may
be ascertained. Thus, there should be no question as to the propriety of eminent domain
proceedings in this case.
Still, in applying the laws and rules on expropriation in the case at bar, we are impelled to apply or
construe these rules in accordance with the Court's prescriptions in the 2004 Resolution to
achieve the end effect that the Government may validly take over the NAIA 3 facilities. Insofar as
this case is concerned, the 2004 Resolution is effective not only as a legal precedent, but as the
source of rights and prescriptions that must be guaranteed, if not enforced, in the resolution of
this petition. Otherwise, the integrity and efficacy of the rulings of this Court will be severely
diminished.
65
(Emphasis ours.)
The Court, also in Gingoyon, categorically recognized PIATCO's ownership over the structures it had built
in NAIA IPT III, to wit:
There can be no doubt that PIATCO has ownership rights over the facilities which it had
financed and constructed. The 2004 Resolution squarely recognized that right when it
mandated the payment of just compensation to PIATCO prior to the takeover by the Government
of NAIA 3. The fact that the Government resorted to eminent domain proceedings in the first
place is a concession on its part of PIATCO's ownership. Indeed, if no such right is recognized,
then there should be no impediment for the Government to seize control of NAIA 3 through
ordinary ejectment proceedings.
x x x x
Thus, the property subject of expropriation, the NAIA 3 facilities, are real property owned
by PIATCO. x x x (Emphasis ours.)
66

It was further settled in Gingoyon that the expropriation proceedings shall be held in accordance with
Republic Act No. 8974,
67
thus:
Unlike in the case of Rule 67, the application of Rep. Act No. 8974 will not contravene the 2004
Resolution, which requires the payment of just compensation before any takeover of the NAIA 3
facilities by the Government. The 2004 Resolution does not particularize the extent such payment
must be effected before the takeover, but it unquestionably requires at least some degree of
payment to the private property owner before a writ of possession may issue. The utilization of
Rep. Act No. 8974 guarantees compliance with this bare minimum requirement, as it assures the
private property owner the payment of, at the very least, the proffered value of the property to be
seized. Such payment of the proffered value to the owner, followed by the issuance of the writ of
possession in favor of the Government, is precisely the schematic under Rep. Act No. 8974, one
which facially complies with the prescription laid down in the 2004 Resolution.
And finally, as to the determination of the amount due PIATCO, this Court ruled in Gingoyon that:
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59

Under Rep. Act No. 8974, the Government is required to "immediately pay" the owner of the
property the amount equivalent to the sum of (1) one hundred percent (100%) of the value of the
property based on the current relevant zonal valuation of the [BIR]; and (2) the value of the
improvements and/or structures as determined under Section 7. As stated above, the BIR zonal
valuation cannot apply in this case, thus the amount subject to immediate payment should be
limited to "the value of the improvements and/or structures as determined under Section 7," with
Section 7 referring to the "implementing rules and regulations for the equitable valuation of the
improvements and/or structures on the land." Under the present implementing rules in place, the
valuation of the improvements/structures are to be based using "the replacement cost
method." However, the replacement cost is only one of the factors to be considered in
determining the just compensation.
In addition to Rep. Act No. 8974, the 2004 Resolution in Agan also mandated that the payment of
just compensation should be in accordance with equity as well. Thus, in ascertaining the
ultimate amount of just compensation, the duty of the trial court is to ensure that such amount
conforms not only to the law, such as Rep. Act No. 8974, but to principles of equity as well.
Admittedly, there is no way, at least for the present, to immediately ascertain the value of the
improvements and structures since such valuation is a matter for factual determination. Yet Rep.
Act No. 8974 permits an expedited means by which the Government can immediately take
possession of the property without having to await precise determination of the valuation. Section
4(c) of Rep. Act No. 8974 states that "in case the completion of a government infrastructure
project is of utmost urgency and importance, and there is no existing valuation of the area
concerned, the implementing agency shall immediately pay the owner of the property its
proferred value, taking into consideration the standards prescribed in Section 5 [of the law]." The
"proffered value" may strike as a highly subjective standard based solely on the intuition of the
government, but Rep. Act No. 8974 does provide relevant standards by which "proffered value"
should be based, as well as the certainty of judicial determination of the propriety of the proffered
value.
In filing the complaint for expropriation, the Government alleged to have deposited the amount of
P3 Billion earmarked for expropriation, representing the assessed value of the property. The
making of the deposit, including the determination of the amount of the deposit, was undertaken
under the erroneous notion that Rule 67, and not Rep. Act No. 8974, is the applicable law. Still,
as regards the amount, the Court sees no impediment to recognize this sum of P3 Billion as the
proffered value under Section 4(b) of Rep. Act No. 8974. After all, in the initial determination of
the proffered value, the Government is not strictly required to adhere to any predetermined
standards, although its proffered value may later be subjected to judicial review using the
standards enumerated under Section 5 of Rep. Act No. 8974.
68

Gingoyon constitutes as the law of the case for the expropriation proceedings, docketed as Case No. 04-
0876CFM, before the RTC of Pasay City. Law of the case has been defined in the following manner
By "law of the case" is meant that "whatever is once irrevocably established as the controlling
legal rule or decision between the same parties in the same case continues to be the law of the
case" so long as the "facts on which such decision was predicated continue to be the facts of the
case before the court" (21 C.J.S. 330). And once the decision becomes final, it is binding on all
inferior courts and hence beyond their power and authority to alter or modify (Kabigting vs. Acting
Director of Prisons, G.R. L-15548, October 30, 1962).
69

A ruling rendered on the first appeal, constitutes the law of the case, and, even if erroneous, it may no
longer be disturbed or modified since it has become final long ago.
70

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60

The extensive excerpts from Gingoyon demonstrate and emphasize that the Court had already adjudged
the issues raised by Baterina, which he either conveniently overlooked or stubbornly refused to accept.
The general rule precluding the relitigation of material facts or questions which were in issue and
adjudicated in former action are commonly applied to all matters essentially connected with the subject
matter of the litigation. Thus, it extends to questions necessarily involved in an issue, and
necessarily adjudicated, or necessarily implied in the final judgment, although no specific finding
may have been made in reference thereto, and although such matters were directly referred to in the
pleadings and were not actually or formally presented. Under this rule, if the record of the former trial
shows that the judgment could not have been rendered without deciding the particular matter, it will be
considered as having settled that matter as to all future actions between the parties and if a judgment
necessarily presupposes certain premises, they are as conclusive as the judgment itself. Reasons for
the rule are that a judgment is an adjudication on all the matters which are essential to support it, and that
every proposition assumed or decided by the court leading up to the final conclusion and upon which
such conclusion is based is as effectually passed upon as the ultimate question which is finally solved.
71

Since the issues Baterina wishes to raise as an intervenor in Case No. 04-0876CFM were already settled
with finality in both Agan and Gingoyon, then there is no point in still allowing his intervention. His
Petition-in-Intervention would only be a relitigation of matters that had been previously adjudicated by no
less than the Highest Court of the land. And, in no manner can the RTC of Pasay City in Case No. 04-
0876CFM grant the reliefs he prayed for without departing from or running afoul of the final and executory
Decisions of this Court in Agan and Gingoyon.
While it is true that when this Court, in a Resolution dated 1 February 2006, dismissed the Motions for
Intervention in Gingoyon, including that of Baterina, it also observed that the interests of the movants-in-
intervention may be duly litigated in proceedings which are extant before the lower courts. This does not
mean, however, that the said movants-in-interest were assured of being allowed as intervenors or that the
reliefs they sought as such shall be granted by the trial courts. The fate of their intervention still rests on
their interest or legal standing in the case and the merits of their arguments.
WHEREFORE, in view of the foregoing:
a. The Petition in G.R. No. 169914 is hereby DISMISSED for lack of merit; and
b. The Petition in G.R. No. 174166 is hereby likewise DISMISSED for being moot and academic.
No costs.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 169914 April 7, 2009
ASIA'S EMERGING DRAGON CORPORATION, petitioner,
vs.
DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS, SECRETARY LEANDRO R.
MENDOZA and MANILA INTERNATIONAL AIRPORT AUTHORITY, Respondents.
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61

x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 174166 April 7, 2009
REPUBLIC OF THE PHILIPPINES, represented by the DEPARTMENT OF TRANSPORTATION AND
COMMUNICATIONS and MANILA INTERNATIONAL AIRPORT AUTHORITY, petitioners,
vs.
HON. COURT OF APPEALS and SALACNIB BATERINA, Respondents.
R E S O L U T I O N
CHICO-NAZARIO, J .:
In the Decision
1
dated 18 April 2008, We dismissed the Petitions in G.R. No. 169914 and G.R. No.
174166 of Asias Emerging Dragon Corporation (AEDC) and Salacnib F. Baterina (Baterina), respectively.
The fallo of the Decision reads:
WHEREFORE, in view of the foregoing:
a. The Petition in G.R. No. 169914 is hereby DISMISSED for lack of merit; and
b. The Petition in G.R. No. 174166 is hereby likewise DISMISSED for being moot and academic.
No costs.
Presently before us are the separate Motions for Reconsideration of the aforementioned Decision filed by
AEDC and Baterina.
The Motion for Reconsideration of AEDC (G.R. No. 169914)
AEDC invokes the following grounds for its Motion for Reconsideration:
I.
AEDC, BEING THE ORIGINAL PROPONENT OF THE [NINOY AQUINO INTERNATIONAL AIRPORT-
INTERNATIONAL PASSENGER TERMINAL III (NAIA IPT III)] PROJECT, THOUGH NOT ENTITLED TO
ANY UNDUE PREFERENCE, HAS VESTED RIGHTS, BOTH LEGAL (UNDER THE BOT LAW) AND
CONTRACTUAL, WHICH MUST BE RESPECTED AND/OR RECOGNIZED.
A) THE DECISION MISTAKENLY CHARACTERIZED THE PROCESS OF UNSOLICITED
PROPOSALS UNDER SECTION 4-A OF THE BOT LAW AS A BIDDING. AEDC, AS THE
ORIGINAL PROPONENT, HAS RIGHTS UNDER THE BOT LAW, WHICH MUST BE
RESPECTED AND RECOGNIZED.
B) THE DECISION MISTAKENLY CONCLUDES THAT EVEN IF THE CHALLENGE WAS
SUBSEQUENTLY DECLARED VOID, THE ORIGINAL PROPONENT IS LEFT WITHOUT ANY
RIGHTS OR REMEDY SIMPLY BECAUSE THE DISQUALIFIED CHALLENGER HAS ALREADY
PROCEEDED TO IMPLEMENT THE PROJECT.
II.
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GIVEN THE DECLARATION OF THIS HONORABLE COURT THAT THE [PHILIPPINE
INTERNATIONAL AIR TERMINALS CO., INC. (PIATCO)] CONTRACTS ARE VOID AB INITIO, AT THE
VERY LEAST, THE [NAIA IPT III] PROJECT SHOULD BE COVERED ANEW BY SECTION 10.11, RULE
10 OF THE [IMPLEMENTING RULES AND REGULATIONS (IRR)] OF THE BOT LAW, WHEREIN
INVITATIONS FOR COMPARATIVE PROPOSALS SHALL AGAIN BE MADE AND THE RIGHT OF
AEDC AS THE ORIGINAL PROPONENT TO MATCH THE BEST OFFER SHOULD BE REINSTATED.
III.
WITH THE NULLIFICATION OF THE PIATCO CONTRACTS, GOVERNMENT SHOULD NOT HAVE
INITIATED EXPROPRIATION PROCEEDINGS AGAINST THE [NAIA IPT III] FACILITIES. BUT HAVING
DONE SO, THE GOVERNMENT MAY PROCEED WITH THE EXPROPRIATION AND THEN USE THE
FAIR AND JUST VALUATION, AS MAY BE DETERMINED IN THE EXPROPRIATION PROCEEDINGS,
AS THE FLOOR PRICE FOR THE NEW INVITATION FOR COMPARATIVE PROPOSALS FOR THE
[NAIA IPT III] PROJECT.
IV.
IN THE EVENT OF A NEW INVITATION FOR COMPARATIVE PROPOSALS, LAW AND EQUITY
DICTATES THAT GOVERNMENT SHOULD RECOGNIZE AND/OR REINSTATE AEDCS RIGHT TO
MATCH THE LOWEST PRICE OFFER/PROPOSAL FOR THE [NAIA IPT III] PROJECT WITHIN THE
PERIOD ALLOWED UNDER THE BOT LAW.
V.
THERE IS NO FACTUAL BASIS TO CONCLUDE THAT AEDC WAS NOT FINANCIALLY QUALIFIED
TO UNDERTAKE THE [NAIA IPT III] PROJECT BECAUSE THIS MATTER WAS NOT PUT IN ISSUE BY
THE PARTIES. A DECLARATION THAT AEDC WAS NOT QUALIFIED WILL JEOPARDIZE THE
REPUBLICS POSITION IN THE INTERNATIONAL ARBITRATION CASES BECAUSE THE
GOVERNMENT WILL BE VIEWED AS HAVING LET PIATCO TO BELIEVE THAT PIATCOS
CONTRACTING PROCESS WAS LEGAL AND THAT PIATCO COMMITTED NO VIOLATION.
CONSEQUENTLY, PIATCO MAY BE ENTITLED NOT ONLY TO COMPENSATION BUT ALSO TO
DAMAGES.
VI.
[NAIA IPT III] WAS BUILT BY PIATCO WITH SIGNIFICANT DEVIATION FROM THE BID DOCUMENTS
AND DRAFT CONCESSION AGREEMENT. AEDCS TAKING OVER OF [NAIA IPT III] WILL NOT
RESULT IN AN AMENDMENT OF ITS PROPOSAL. INSTEAD AEDC WILL IMPLEMENT OR ENFORCE
THE DRAFT CONCESSION AGREEMENT AND THE TECHNICAL SPECIFICATIONS APPROVED BY
THE NEDA, ICC AND OTHER GOVERNMENT AGENCIES, THE MEMORANDUM OF
UNDERSTANDING AND TERMS OF REFERENCE OR BID DOCUMENTS.
VII.
THIS HONORABLE COURT SHOULD NOT HAVE PASSED UPON EITHER THE AUTHENTICITY OR
IMPORT OF THE MEMORANDUM OF UNDERSTANDING (MOU") BECAUSE IT WAS NOT A
LITIGATED ISSUE. GOVERNMENT NEVER DISPUTED THE CAPACITY OF THE MOU TO CREATE
RIGHTS AND OBLIGATIONS. TO CONCLUDE THAT THE MOU WAS VOID IS TO NECESSARILY
ALSO CONCLUDE THAT THERE WAS NO CONTRACT TO OPEN UP TO CHALLENGE, AND THAT
PIATCO WAS WRONGFULLY LED TO MOUNT A CHALLENGE THAT COULD NOT POSSIBLY BE
VALID. BASED ON THIS PREMISE, GOVERNMENT IS ENTIRELY TO BLAME FOR THE [NAIA IPT III]
DISASTER AND WILL ENTITLE PIATCO TO DAMAGES.
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VIII.
AEDC RELIED ON AND ACTED DETRIMENTALLY IN RELYING ON THE MOU. IT IS A DANGEROUS
JUDICIAL POLICY TO PERMIT GOVERNMENT TO UNILATERALLY BREACH CONTRACTUAL
OBLIGATIONS WITHOUT CONSEQUENCE, ESPECIALLY WHEN THE OTHER PARTY IS NOT IN
BREACH.
IX.
THE PETITION IS NOT BARRED BY THE DISMISSAL OF THE PASIG CASE. WHETHER THE
DISMISSAL CONSTITUTES RES JUDICATA OR PRECLUDES AEDCS CLAIM IS NOT AMONG THE
ISSUES RAISED AND LITIGATED BY THE PARTIES IN THIS CASE. HENCE, THE STATEMENT THAT
THE INSTANT PETITION IS NOT BARRED BY RES JUDICATA SHOULD NOT HAVE BEEN MADE. TO
UPHOLD THE DISMISSAL OF THE PASIG CASE AS A VALID JUDGMENT WOULD BE TO PUT
GOVERNMENTS ARBITRATION CASES IN PERIL BECAUSE IT WOULD AFFIRM THAT
GOVERNMENT, INCLUDING THE SOLICITOR GENERAL, AND NOT JUST MIAA OR DOTC, UPHELD
THE VALIDITY OF THE PIATCO CONTRACTS, SUCH WOULD PLACE GOVERNMENT IN ESTOPPEL
TO DENY CLAIMS FOR DAMAGES, IN ADDITION TO COMPENSATION, BY PIATCO.
X.
THE FUNDAMENTAL PREMISE FOR THE COMPROMISE AGREEEMENT (I.E. THE AMICABLE
SETTLEMENT OF AEDCS AND PUBLIC RESPONDENTS CLAIMS) HAS CEASED TO EXIST IN VIEW
OF PUBLIC RESPONDENTS ADOPTION OF AEDCS LEGAL POSITION THAT THE AWARD OF THE
[NAIA IPT III] PROJECT TO PIATCO WAS ILLEGAL. THEREFORE, BOTH AEDC AND PUBLIC
RESPONDENTS SHOULD BE RELEASED FROM THEIR MUTUAL OBLIGATIONS UNDER THE
COMPROMISE AGREEMENT.
XI.
THE PETITION FOR MANDAMUS WAS TIMELY FILED WITHIN THE PERIOD PROVIDED UNDER THE
RULES OF COURT.
2

At the end of its Motion, AEDC prays to this Court to reconsider the latters Decision of 18 April 2008,
insofar as the formers Petition in G.R. No. 169914 is concerned, and render, in its stead, judgment
1. Directing Public Respondents, their officers, agents, successors, representatives or persons or
entities acting on their behalf to recognize AEDCs rights as an Original Proponent of an
unsolicited project as set forth above;
2. Directing Public Respondents to issue the appropriate Notice of Award of the Project to AEDC,
sign the draft concession agreement with AEDC and implement the same;
3. Directing Public Respondents, their officers, agents, successors, representatives or persons or
entities acting on their behalf to recognize AEDCs right to conduct an invasive inspection and
valuation of the structures currently built as [NAIA IPT III] for an effective valuation and
determination of the work to be conducted thereon; and
4. Permanently enjoining Public Respondents, their officers, agents, successors, representatives
or persons or entities acting on their behalf, from negotiating, re-bidding, awarding or otherwise
entering into any concession contract with PIATCO and other third parties, except as otherwise
stated above, within the context of permitting AEDC to complete the construction and operation of
the [NAIA IPT III] Project.
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64

5. In the alternative, directing Public Respondents to effect a new invitation for comparative
proposals for the [NAIA IPT III] Project in accordance with Rule 10 of the IRR of the BOT Law, as
soon as practicable and in the process recognize and/or reinstate the right of AEDC to match the
best offer.
Other reliefs, just and equitable in the premises, are likewise prayed for.
3

AEDC persistently asserts its right to be awarded the NAIA IPT III Project as the original proponent
thereof, following the declaration of nullity of the award of the said project to PIATCO in Agan, Jr. v.
Philippine International Air Terminals Co., Inc.
4
Extensive as its Motion for Reconsideration may seem, it
is mostly a reiteration of the arguments AEDC already raised in its Petition for Mandamus and Prohibition
(with Application for Temporary Restraining Order), considered by this Court when it rendered its Decision
dated 18 April 2008 dismissing said Petition.
We are not persuaded, whether by the previous Petition or the present Motion, to grant AEDC the writs of
mandamus and prohibition it prays for in the absence of a clear right to the same. The declaration of
nullity of the award of the NAIA IPT III Project to PIATCO in Agan does not automatically entitle AEDC to
the award of the said project on the mere basis that it was the original proponent thereof.
The rights of the original proponent of an unsolicited proposal are rooted in Section 4-A of Republic Act
No. 6957,
5
more commonly known as the Build-Operate-Transfer (BOT) Law, as amended by Republic
Act No. 7718, which reads:
SEC. 4-A. Unsolicited proposals. Unsolicited proposals for projects may be accepted by any
government agency or local government unit on a negotiated basis: Provided, That, all the following
conditions are met: (1) such projects involve a new concept or technology and/or are not part of the list of
priority projects, (2) no direct government guarantee, subsidy or equity is required, and (3) the
government agency or local government unit has invited by publication, for three (3) consecutive weeks,
in a newspaper of general circulation, comparative or competitive proposals and no other proposal is
received for a period of sixty (60) working days: Provided, further, That in the event another proponent
submits a lower price proposal, the original proponent shall have the right to match the price within thirty
(30) working days.
In his dissent to this Resolution, Mr. Justice Renato C. Corona submits that the original proponent of an
unsolicited proposal for a BOT project, under Section 4-A of Republic Act No. 6957, as amended, is
entitled to the award of the project in at least three circumstances: (1) no competitive bid was submitted;
(2) there was a lower bid by a qualified bidder but the original proponent matched it; and (3) there was a
lower bid but it was made by a person/entity not qualified to bid, in which case, it is as if no competitive
bid had been made. Both Justice Corona and Mr. Justice Presbiterio J. Velasco, Jr., in their dissenting
opinions, conclude that AEDC is entitled to the award of the NAIA IPT III project as the original proponent
thereof because the third circumstance is extant in this case.
We can only accept in part the afore-mentioned enumeration of the circumstances when an original
proponent is entitled to the award of the project under Section 4-A of Republic Act No. 6957, as
amended. In the 18 April 2008 Decision, we have already exhaustively scrutinized Section 4-A of the BOT
Law, as amended, in relation to its IRR,
6
and in consideration of the intent of the legislators who crafted
the BOT Law. We find no reason to disturb our conclusion therein that:
The special rights or privileges of an original proponent thus come into play only when there are other
proposals submitted during the public bidding of the infrastructure project. As can be gleaned from the
plain language of the statutes and the IRR, the original proponent has: (1) the right to match the lowest or
most advantageous proposal within 30 working days from notice thereof, and (2) in the event that the
original proponent is able to match the lowest or most advantageous proposal submitted, then it has the
right to be awarded the project. The second right or privilege is contingent upon the actual exercise by the
JURISDICTION jrp
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original proponent of the first right or privilege. Before the project could be awarded to the original
proponent, he must have been able to match the lowest or most advantageous proposal within the
prescribed period. Hence, when the original proponent is able to timely match the lowest or most
advantageous proposal, with all things being equal, it shall enjoy preference in the awarding of the
infrastructure project.
7

It is without question that in a situation where there is no other competitive bid submitted for the BOT
project that the project would be awarded to the original proponent thereof. However, when there are
competitive bids submitted, the original proponent must be able to match the most advantageous or
lowest bid; only when it is able to do so, will the original proponent enjoy the preferential right to the
award of the project over the other bidder. These are the general circumstances covered by Section 4-A
of Republic Act No. 6957, as amended.
We cannot accede to include in such enumeration the situation in this case and categorically declare that
the right of AEDC to the NAIA III Project is ensured and protected by Section 4-A of Republic Act No.
6957, as amended. What had happened in the proposal, bidding, and awarding process of the NAIA IPT
III Project is indisputably unique and convoluted. We cannot subscribe to disposing of the controversy as
regards the NAIA IPT III Project with a generalized rule, i.e., there was a lower bid but it was made by a
person/entity not qualified to bid, in which case, it is as if no competitive bid had been made. As we said
in the Decision of 18 April 2008, it would be a simplistic approach to what is a complex problem.
In the instant case, AEDC may be the original proponent of the NAIA IPT III Project; however, the Pre-
Qualification Bids and Awards Committee (PBAC) also found the Peoples Air Cargo & Warehousing Co.,
Inc. Consortium (Paircargo), the predecessor of PIATCO, to be a qualified bidder for the project. Upon
consideration of the bid of Paircargo/PIATCO, PBAC found the same to be far more advantageous than
the original offer of AEDC. It is already an established fact in Agan that AEDC failed to match the more
advantageous proposal submitted by PIATCO by the time the 30-day working period expired on 28
November 1996;
8
and since it did not exercise its right to match the most advantageous proposal within
the prescribed period, it cannot assert its right to be awarded the project.
Also, in Agan, the Court disqualified PIATCO from the NAIA IPT III Project for failure to put up the
required minimum equity of P2.7 million. The feasibility, however, of the financial proposal of
Paircargo/PIATCO was never put in issue. The proposals of AEDC and Paircargo/PIATCO contained the
following terms:
Both proponents offered to build the NAIA Passenger Terminal III for at least $350 million at no cost to
the government and to pay the government: 5% share in gross revenues for the first five years of
operation, 7.5% share in gross revenues for the next ten years of operation, and 10% share in gross
revenues for the last ten years of operation, in accordance with the Bid Documents. However, in addition
to the foregoing, AEDC offered to pay the government a total of P135 million as guaranteed payment for
27 years while Paircargo Consortium offered to pay the government a total of P17.75 billion for the same
period. x x x.
9
(Emphasis ours.)
Clearly, the P17.75 billion guaranteed payment of PIATCO is more advantageous to the government.
There is not a single allegation that such proposal is impossible to implement. It is true that AEDC
instituted before the Regional Trial Court (RTC) of Pasig City Civil Case No. 66213, complaining that it
was not given access to certain documents by which it could have evaluated the financial proposal of
PIATCO and its ability to match the same. Thus, AEDC sought, among other things, the nullification of the
proceedings before the PBAC and the declaration of the absence of any other competitive bid by a
qualified bidder. Nevertheless, AEDC would also later jointly move (with therein public respondents
10
) for
the dismissal of Civil Case No. 66213 pursuant to a Concession Agreement it executed on 12 July 1997
with the Department of Transportation and Communications (DOTC). The Pasig City RTC granted the
joint motion of the parties and accordingly dismissed with prejudice Civil Case No. 66213 in an Order
dated 30 April 1999. Therefore, AEDC not only failed to match the more advantageous proposal of
PIATCO, but it also agreed to no longer pursue its objections thereto.
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In the meantime, PIATCO already began building the NAIA IPT III facilities. By the time this Court
promulgated its Decision in Agan, disqualifying PIATCO as a bidder and annulling the award of the NAIA
IPT III Project to it, the NAIA IPT III facilities were substantially complete. The Court, in its Resolution in
Agan, recognized the right of PIATCO to just compensation for the NAIA IPT III facilities, in accordance
with law and equity. The Government, thereafter, instituted an expropriation case for the determination of
the just compensation to be paid to PIATCO. In Republic v. Gingoyon,
11
the Court affirmed the application
of Republic Act No. 8974
12
to the expropriation case and the right of the Government to take possession
of the NAIA IPT III facilities upon the payment to PIATCO of the proffered value of the same.
On 11 September 2006, the Manila International Airport Authority (MIAA) tendered a Land Bank check in
the amount of P3,002,125,000.00 representing the proffered value of NAIA IPT III, which was received by
a duly authorized representative of PIATCO. As a result, the MIAA and other concerned government
agencies were able to take possession of the NAIA IPT III facilities and prepare them for operation. The
NAIA IPT III opened for domestic air travel on 22 July 2008.
13
The first international flight took off from
NAIA IPT III on 1 August 2008.
14

These developments, as well as the implications and consequences thereof, cannot be conveniently
ignored. The factual backdrop has significantly changed from the time of the bidding of the NAIA IPT III
Project, which prevents us from concluding that, with the disqualification of PIATCO, AEDC shall
automatically acquire NAIA IPT III Project as the original proponent thereof. The bidding and awarding
process for the NAIA IPT III Project had long been closed. The Court could not just conveniently revert to
the stage of bidding and awarding of the said project and ignore all the factual and legal developments
that had already taken place.
There is no point in subjecting the NAIA IPT III Project to another bidding and awarding process when it is
substantially finished and, contrary to the averments of AEDC, already operational. Worth stressing is that
the NAIA IPT III Project is a build-operate-transfer project. When the NAIA IPT III facilities have already
been built, their possession transferred to the government, and are now being operated by the latter,
nothing much remains of the project. The ultimate goal of a BOT project is for the government to
eventually gain possession, ownership, and control of the infrastructure subject thereof from the private
sector that undertook its building and financing, after allowing the latter to recoup its investments and
reap reasonable profit. In this case, the government has already attained possession and control of the
NAIA IPT III facilities. It would also acquire ownership of said facilities once the just and equitable
compensation due PIATCO as builder
15
has been determined and paid in the ongoing expropriation
proceedings, docketed as Case No. 04-0876CFM, before the Pasay City RTC. To return the NAIA IPT III
facilities to the private sector would only be a step backwards.
The lack of technical skill and competence of the Government to operate NAIA IPT III cannot justify
turning over the same to AEDC. There are several other ways for the Government to cope, i.e., recruiting
more qualified people, without it having to relinquish ownership, possession, and control of NAIA IPT III.
The protestation by AEDC of our characterization of the process on unsolicited proposal as public bidding
is specious.
We call attention to the following relevant sections of Rule 10 of the IRR specifically on Unsolicited
Proposals:
Sec. 10.9. Negotiation With the Original Proponent. Immediately after ICC/Local Sanggunians
clearance of the project, the Agency/LGU shall proceed with the in-depth negotiation of the project scope,
implementation arrangements and concession agreement, all of which will be used in the Terms of
Reference for the solicitation of comparative proposals. The Agency/LGU and the proponent are
given ninety (90) days upon receipt of ICCs approval of the project to conclude negotiations. The
Agency/LGU and the original proponent shall negotiate in good faith. However, should there be
unresolvable differences during the negotiations, the Agency/LGU shall have the option to reject the
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proposal and bid out the project. On the other hand, if the negotiation is successfully concluded, the
original proponent shall then be required to reformat and resubmit its proposal in accordance
with the requirements of the Terms of Reference to facilitate comparison with the comparative
proposals. The Agency/LGU shall validate the reformatted proposal if it meets the requirements of the
TOR prior to the issuance of the invitation for comparative proposals.
Sec. 10.10. Tender Documents. The qualification and tender documents shall be prepared along the
lines specified under Rules 4 and 5 hereof. The concession agreement that will be part of the tender
documents will be considered final and non-negotiable by the challengers. Proprietary information shall,
however, be respected, protected and treated with utmost confidentiality. As such, it shall not form part of
the bidding/tender and related documents.
Sec. 10.11. Invitation for Comparative Proposals. The Agency/LGU shall publish the invitation for
comparative or competitive proposals only after ICC/Local Sanggunian issues a no objection clearance of
the draft contract. The invitation for comparative or competitive proposals should be published at least
once every week for three (3) weeks in at least one (1) newspaper of general circulation. It shall indicate
the time, which should not be earlier than the last date of publication, and place where tender/bidding
documents could be obtained. It shall likewise explicitly specify a time of sixty (60) working days reckoned
from the date of issuance of the tender/bidding documents upon which proposals shall be received.
Beyond said deadline, no proposals shall be accepted. A pre-bid conference shall be conducted ten (10)
working days after the issuance of the tender/bidding documents.
Sec. 10.12. Posting of Bid Bond by Original Proponent. The original proponent shall be required at the
date of the first date of the publication of the invitation for comparative proposals to submit a bid bond
equal to the amount and in the form required of the challengers.
Sec. 10.13. Simultaneous Qualification of the Original Proponent. The Agency/LGU shall qualify the
original proponent based on the provisions of Rule 5 hereof, within thirty (30) days from start of
negotiation. For consistency, the evaluation criteria used for qualifying the original proponent should be
the same criteria used in the Terms of Reference for the challengers.
Sec. 10.14. Submission of Proposal. The bidders are required to submit the proposal in three envelopes
at the time and place specified in the Tender Documents. The first envelope shall contain the qualification
documents, the second envelope the technical proposal as required under Sec. 7.1.(b), and the third
envelope as required under Sec. 7.1.(c).
Sec. 10.15. Evaluation of Proposals. In terms of procedure, the evaluation will be in three stages: Stage
1 is the evaluation of qualification documents; Stage 2, the technical proposal; and Stage 3, the financial
proposal. Only those bids which passed the first stage will be considered for the second stage and
similarly, only those which passed the second stage will be considered for the third stage evaluation. The
Agency/LGU will return to the disqualified bidders the remaining envelopes unopened together with a
letter explaining why they were disqualified. The criteria for evaluation will follow Rule 5 for the
qualification of bidders and Rule 8 for the technical and financial proposals. The time frames under Rules
5 and 8 shall likewise be followed.
Sec. 10.16. Disclosure of the Price Proposal. The disclosure of the price proposal of the original
proponent in the Tender Documents will be left to the discretion of the Agency/LGU. However, if it was
not disclosed in the Tender Documents, the original proponents price proposal should be revealed upon
the opening of the financial proposals of the challengers. The right of the original proponent to match
the best proposal within thirty (30) working days starts upon official notification by the
Agency/LGU of the most advantageous financial proposal. (Emphasis ours.)
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After the concerned government agency or local government unit (LGU) has received, evaluated, and
approved the pursuance of the project subject of the unsolicited proposal, the subsequent steps are
fundamentally similar to the bidding process conducted for ordinary government projects.
The three principles of public bidding are: the offer to the public, an opportunity for competition, and a
basis for an exact comparison of bids,
16
all of which are present in Sec. 10.9 to Sec. 10.16 of the IRR.
First, the project is offered to the public through the publication of the invitation for comparative proposals.
Second, the challengers are given the opportunity to compete for the project through the submission of
their tender/bid documents. And third, the exact comparison of the bids is ensured by using the same
requirements/qualifications/criteria for the original proponent and the challengers, to wit: the proposals of
the original proponent
17
and the challengers must all be in accordance with the requirements of the Terms
of Reference (TOR) for the project; the original proponent and the challengers are required to post bid
bonds equal in amount and form;
18
and the qualifications of the original proponent and the challengers
shall be evaluated by the concerned agency/LGU using the same evaluation criteria.
19
1avvphi1.zw+
A perusal of Sec. 10.9 to Sec. 10.16 of the IRR further reveals repeated mention of "comparative
proposals" and "tender/bid documents"; as well as reference to and required compliance with the same
rules followed in ordinary bidding of government projects, such as Rule 4 (Bid/Tender Documents); Rule
5 (Qualification of Bidders); and Sec. 7.1(b) and Sec. 7.1(c) of Rule 7 (Submission, Receipt and Opening
of Bids) of the same IRR.
Hence, the process of unsolicited proposals does involve public bidding where, in the end, the
government is free to choose the bid or proposal most advantageous to it. However, by adoption of the
Swiss Challenge, special consideration is given in said process to the original proponent of the project,
namely, the right to be awarded the project should it be able to match the lowest or most advantageous
proposal within 30 working days from notice.
There is no truth to the averment of AEDC that by our Decision of 18 April 2008, we are allowing PIATCO
to benefit from its own fraud and wrongdoing. Our refusal to award the NAIA IPT III Project to AEDC does
not in any way benefit PIATCO. PIATCO cannot benefit from the NAIA IPT III Project when its
Concession Agreements involving the same were set aside for being null and void, rendering it unable to
derive profit therefrom. It is only entitled to just and equitable compensation for building the NAIA IPT III
facilities, "for the government cannot unjustly enrich itself at the expense of PIATCO and investors."
20

AEDC takes exception to the doubts raised by this Court on the authenticity of the Memorandum of
Understanding (MOU) dated 26 February 1996 it executed with the DOTC.
To recall, our Decision of 18 April 2008 states:
It is important to note, however, that the document attached as Annex "E" to the Petition of AEDC is a
"certified photocopy of records on file." This Court cannot give much weight to said document considering
that its existence and due execution have not been established. It is not notarized, so it does not enjoy
the presumption of regularity of a public document. It is not even witnessed by anyone. It is not certified
true by its supposed signatories, Secretary Jesus B. Garcia, Jr. for DOTC and Chairman Henry Sy, Sr. for
AEDC, or by any government agency having its custody. It is certified as a photocopy of records on file by
an Atty. Cecilia L. Pesayco, the Corporate Secretary, of an unidentified corporation.
21

AEDC itself invoked the provisions of the MOU and attached a copy thereof as one of the Annexes to its
Petition in G.R. No. 169914. By submitting a copy of the MOU, AEDC subjects the said document to the
scrutiny of the Court, which is duty-bound to examine and weigh the same in accordance with the rules.
We are not obligated to receive a copy of the MOU just as AEDC offered it; and accept hook, line, and
sinker, the references made by AEDC to the contents thereof without ascertaining that it was actually the
very same document executed by the parties. Nowhere in our 18 April 2008 Decision did we expressly
declare that there was no MOU between AEDC and the government. What we called attention to therein
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was the fact that the document attached to the Petition of AEDC was highly suspect, not being a clear
copy and not being properly certified as a true copy of the MOU, for which reasons, it could not be given
much weight and credence in establishing the exact contents of the MOU in question.
Furthermore, it would do well for AEDC to remember that we did proceed, for the sake of argument, to
rule on the contents of the MOU as follows:
Even assuming for the sake of argument, that the said Memorandum of [Understanding], is in existence
and duly executed, it does little to support the claim of AEDC to the award of the NAIA IPT III Project. The
commitments undertaken by the DOTC and AEDC in the Memorandum of [Understanding] may be simply
summarized as a commitment to comply with the procedure and requirements provided in Rules 10 and
11 of the IRR. It bears no commitment on the part of the DOTC to award the NAIA IPT III Project to
AEDC. On the contrary, the document includes express stipulations that negate any such government
obligation. Thus, in the first clause, the DOTC affirmed its commitment to pursue, implement and
complete the NAIA IPT III Project on or before 1998, noticeably without mentioning that such commitment
was to pursue the project specifically with AEDC. Likewise, in the second clause, it was emphasized that
the DOTC shall pursue the project under Rules 10 and 11 of the IRR of Republic Act No. 6957, as
amended by Republic Act No. 7718. And most significantly, the tenth clause of the same document
provided:
10. Nothing in this Memorandum of Understanding shall be understood, interpreted or construed as
permitting, allowing or authorizing the circumvention of, or non-compliance with, or as waiving, the
provisions of, and requirements and procedures under, existing laws, rules and regulations.
22

Hence, even after a consideration of the contents of the MOU, we do not find therein an absolute
undertaking on the part of the government, represented by the DOTC, to award the NAIA IPT III Project to
AEDC.
There is likewise no sufficient reason for us to reverse the pronouncements in our Decision dated 18 April
2008 that the Petition of AEDC in G.R. No. 169914 suffered from procedural defects: having been filed
beyond reasonable time and being barred by res judicata.
We have already adequately explained in our 18 April 2008 Decision our finding that the Petition of AEDC
was filed beyond reasonable time, to wit:
AEDC revived its hope to acquire the NAIA IPT III Project when this Court promulgated its Decision in
Agan on 5 May 2003. The said Decision became final and executory on 17 February 2004 upon the
denial by this Court of the Motion for Leave to File Second Motion for Reconsideration submitted by
PIATCO. It is this Decision that declared the award of the NAIA IPT III Project to PIATCO as null and
void; without the same, then the award of the NAIA IPT III Project to PIATCO would still subsist and other
persons would remain precluded from acquiring rights thereto, including AEDC. Irrefutably, the present
claim of AEDC is rooted in the Decision of this Court in Agan. However, AEDC filed the Petition at bar
only 20 months after the promulgation of the Decision in Agan on 5 May 2003.
23

AEDC is merely reiterating in its Motion for Reconsideration the same disputation it previously made in its
Petition that the period for filing of said Petition should only be counted from 21 September 2005, the
date when it received the letter of the Solicitor General denying its offer to take over the NAIA IPT III
Project and which we had already considered and rejected in our Decision dated 18 April 2008 for the
following reasons:
AEDC contends that the "reasonable time" within which it should have filed its petition should be
reckoned only from 21 September 2005, the date when AEDC received the letter from the Office of the
Solicitor General refusing to recognize the rights of AEDC to provide the available funds for the
completion of the NAIA IPT III Project and to reimburse the costs of the structures already built by
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PIATCO. It has been unmistakable that even long before said letter especially when the Government
instituted with the RTC of Pasay City expropriation proceedings for the NAIA IPT III on 21 December
2004 that the Government would not recognize any right that AEDC purportedly had over the NAIA IPT
III Project and that the Government is intent on taking over and operating the NAIA IPT III itself.
24

Without any new argument on this issue, we are not persuaded to change our afore-quoted ruling.
On the issue of res judicata, AEDC argues that we erred in taking cognizance thereof even when the
issue was not raised by the parties. We disagree.
Even if the public respondents in G.R. No. 169914 failed to plead res judicata in their Comment and is
deemed to have waived the said defense, we may still motu proprio dismiss the Petition by reason thereof
if it appears in the pleadings or the evidence on record that the said Petition is barred by prior judgment.
Section 1, Rule 10 of the Revised Rules of Court provides:
SECTION 1. Defenses and objections not pleaded. Defenses and objections not pleaded either in a
motion to dismiss or in the answer are deemed waived. However, when it appears from the pleadings or
the evidence on record that the court has no jurisdiction over the subject matter, that there is another
action pending between the same parties for the same cause, or that the action is barred by a prior
judgment or by statute of limitations, the court shall dismiss the claim. (Emphasis ours.)
Although the foregoing provision appears under the rules on proceedings before the trial court, the power
to dismiss provided therein is among the residual prerogatives which the Court of Appeals
25
and even this
Court may exercise by virtue of Section 2, Rule 1 of the Revised Rules of Court.
26

The Petition
27
of AEDC itself brought to our attention the institution of, the developments in, as well as the
eventual dismissal with prejudice of Civil Case No. 66213 by the Pasig City RTC. We had to take
cognizance thereof, and after careful consideration, found that the dismissal with prejudice of Civil Case
No. 66213 by the Pasig City RTC effectively bars the instant Petition of AEDC.
AEDC had waived its right to challenge the award of the NAIA IPT III Project to PIATCO when it amicably
settled Civil Case No. 66213 before the Pasig City RTC, resulting in the dismissal with prejudice of said
case. We should not allow the revival by AEDC of its right to the NAIA IPT III Project as the original
proponent thereof, after some other party secured the annulment of the award to PIATCO, not only
because it is barred by res judicata, but also because it constitutes palpable opportunism.
Finally, we find baseless the averment of AEDC that our judgment recognizing and respecting the final
and immediately executory Order dated 30 April 1999 of the Pasig City RTC which granted, with
prejudice, the Joint Motion to Dismiss Civil Case No. 66213 filed by the parties therein will imperil the
position of the government in the international arbitration cases involving the NAIA IPT III Project still
pending before the International Chamber of Commerce (ICC). AEDC points out that the position taken
by the government in Civil Case No. 66213 (that PIATCO was qualified to participate in the bidding for the
NAIA IPT III Project) is inconsistent with the position the latter is espousing in the international arbitration
cases (that PIATCO was financially disqualified from bidding for the NAIA IPT III Project).
It should be recalled, however, that in the Joint Motion to Dismiss Civil Case No. 66213, the parties,
without admitting liability or conceding to the position taken by the other, agreed to release and forever
discharge each other from any and all liabilities, whether criminal or civil, arising in connection with the
case. Evidently, the parties consented to release and discharge each other from any liability regardless of
whether the other party maintained or conceded its position. Stated otherwise, the position taken by the
parties on the issues in the case was not material to their agreement to release and discharge each other
from any liability. The Order dated 30 April 1999 of the Pasig City RTC merely granted the Joint Motion to
Dismiss Civil Case No. 66213, the very terms of which rendered it unnecessary for the said court to
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consider or rule upon the positions of the parties. Thus, nothing in the said Order of the Pasig City RTC
precludes the government in the international arbitration proceedings before the ICC from adopting the
position that PIATCO was financially disqualified to bid for the NAIA IPT III Project.
The Motion for Reconsideration of Baterina (G.R. No. 174166)
Baterina presents the following arguments in support of his Motion for Reconsideration:
The principles of res judicata and stare decisis, and the doctrine of the "law of the case," do not apply to
Baterina because he was not a party to the previous cases; and because the issues raised here are not
the same issues litigated in Gingoyon.
28

The issues advocated by Baterina, especially on the ownership of Terminal 3 and the propriety of paying
just compensation to PIATCO, have not become moot and academic because these issues remain to be
viable and justiciable controversies; a resolution on the merits of these issues will serve a useful purpose
that will inure to the benefit of the Filipino people.
29

The issues advocated by Baterina remain to be viable and justiciable controversies because the
pronouncements relating thereto in AGan and in Gingoyon were not a final adjudication on the merits.
30

Baterina was deprived of a fair opportunity to be heard because the Court may have unwittingly failed to
explain the factual and legal reasons that led the Court to reject Baterinas arguments that the
pronouncement in Gingoyon regarding PIATCOs ownership of Terminal 3 was not a final adjudication on
the merits and may have been improvident.
31

A resolution on the merits of the ownership of Terminal 3 will serve a useful and practical purpose, and
will inure to the benefit of the Filipino people, because it will determine the regime of compensation that
must be applied to PIATCO.
32

Baterina then seeks from this Court the following:
PRAYER
WHEREFORE, premises considered, it is respectfully prayed that the Honorable Court RECONSIDER
and SET ASIDE the Decision dated 18 April 2008, at least insofar as G.R. No. 174166 is concerned, and
RENDER a new judgment as follows:
1. DECLARE that: (i) Terminal 3 as a matter of law, is public property and thus not a proper
object of eminent domain proceedings; and (ii) PIATCO, as a matter of law, is merely the builder
of Terminal 3 and, as such, it may file a claim for recovery on quantum meruit with the
Commission on Audit for determination of the amount thereof, if any.
2. DIRECT the Regional Trial Court of Pasay City, Branch 117 to dismiss the expropriation case,
Civil Case No. 04-0876-CFM.
3. DECLARE that the Php3 Billion paid to PIATCO on 11 September 2006 (representing the
proferred value of Terminal 3) as funds held in trust by PIATCO for the benefit of the Republic
and subject to the outcome of the proceedings to determine recovery on quantum meruit due to
PIATCO, if any.
4. DIRECT the Solicitor General to disclose the evidence it has gathered on the corruption,
bribery, fraud, bad faith, etc., to this Honorable Court and the Commission on Audit, and to
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DECLARE such evidence to be admissible in any proceeding for the determination of any
compensation due to PIATCO, if any.
5. In the alternative, to:
i. SET ASIDE the expropriaton courts Order dated 08 August 2006 denying Baterinas
motion for intervention in the expropriation case, and
ii. DIRECT the expropriation court to hear and resolve the issue of ownership of Terminal
3 consistent with the Honorable Courts holding in Gingoyon that "the interests of the
movants-in-intervention may be duly litigated in proceedings which are extant before
lower courts."
6. As another alternative, even should this Honorable Court not reconsider its Decision dated 18
April 2008, to declare that the expropriation court is empowered and is mandated, by both law
and to protect the public interest and to ensure good governance, to consider evidence of
PIATCOs illegal activities and unreasonable expenses and to accordingly adjust the amount of
just compensation due to PIATCO.
Other reliefs, just and equitable in the premises, are likewise prayed for.
33

Baterinas present Motion presents no new arguments for our consideration and only displays his
obstinate refusal to acknowledge and respect our final and executory decisions in Agan and Gingoyon.
We stand firm on our pronouncement in our Decision dated 18 April 2008 that the entitlement of PIATCO
to just and equitable consideration for its construction of NAIA IPT III and the propriety of the Republics
resort to expropriation proceedings were already recognized and upheld by this Court in Agan and
Gingoyon. Undoubtedly, the Republic and PIATCO, the parties in Case No. 04-0876CFM, the
expropriation case instituted by the Republic before the Pasay City RTC, are bound by Agan and
Gingoyon by conclusiveness of judgment and law of the case.
However, as to Baterina, a second hard look at this case convinces us that the issue of whether he is
bound by Agan and Gingoyon is not even material, given the fact that he has repeatedly failed to
establish to the satisfaction of the courts his interest and legal standing to intervene in previous or
pending judicial proceedings involving the NAIA IPT III Project.
Baterinas Motion for Intervention and Motion for Reconsideration-in-Intervention of the Decision in
Gingoyon were denied by the Court, not only for having been belatedly filed, but also pursuant to the
following significant observation:
In the case of Representative Baterina, he invokes his prerogative as legislator to curtail the
disbursement without appropriation of public funds to compensate PIATCO, as well as that as a taxpayer,
as the basis of his legal standing to intervene. However, it should be noted that the amount which the
Court directed to be paid by the Government to PIATCO was derived from the money deposited by the
Manila International Airport Authority, an agency which enjoys corporate autonomy and possesses a legal
personality separate and distinct from those of the National Government and agencies thereof whose
budgets have to be approved by Congress.
34

True, we also noted that the interests of the movants-in-intervention in Gingoyon, which included
Baterina, "may be duly litigated in proceedings which are extant before the lower courts."
35
But such
statement simply recognized Baterinas option to pursue his intervention in Case No. 04-0876CFM before
the Pasay City RTC, and contained no absolute assurance to Baterina or categorical directive to the trial
court that his intervention shall be allowed and given due course. The Pasay City RTC can still exercise
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its discretion in granting or denying Baterinas Motion for Intervention and in admitting or rejecting his
Petition in Intervention.
In fact, in its exercise of said discretion, the Pasay City RTC issued an Order
36
dated 8 August 2006
denying Baterinas Motion for Intervention and refusing to admit his Petition in Intervention in Case No.
04-0876CFM, ratiocinating thus:
As regards Congressman Baterina, et.al., (sic) the Court finds that, as legislators and taxpayers, they
have no legal interest to intervene in this case.
x x x x
There has been no showing up to this point that plaintiffs intend to use tax refunds in the course of their
expropriation of NAIA IPT 3. In fact, the amount that plaintiffs initially deposited with the Land Bank of the
Philippines for the purposes of this case comprised funds (sic) of plaintiff Manila International Authority
(MIAA) (sic) and did not come from the collection of taxes. The reasoning behind the Supreme Courts
denial of their motion to intervene in Republic vs. Gingoyon also applies here:
x x x x
More importantly, this Court itself will decide how much payment will be due from plaintiffs to defendant
PIATCO, in accordance with law, since the determination of just compensation is a judicial function. The
amount of just compensation is not for the plaintiffs or defendant PIATCO to decide. This, Congressman
Baterina, Et (sic) al. could not possibly set up a petition against both plaintiffs and defendant for illegal
disbursement of public funds when it is precisely the Court, not plaintiff or defendant, which will ensure
that the determination and payment of just compensation to defendant PIATCO would be in compliance
with Philippine laws.
There is, therefore, no room in this expropriation case for a taxpayers intervention. Similarly, there is also
no room in this expropriation case for the accommodation of a legislators petition. Plaintiffs exercise of
the right of eminent domain does not infringe howsoever on legislative prerogatives, powers of (sic)
privileges.
x x x x
The motion that private property may be taken without need for payment of just compensation, as
espoused by Congressman Baterina, et al., is so foreign to Philippine Constitutional democracy that it has
no place for consideration in an expropriation case. Congressman Baterina, et.al., (sic) also cannot rely
on criminal charges filed against private individuals, not involving defendant PIATCO, to defeat the
payment of just compensation for the taking of private property, which no less than the Philippine
Constitution mandates. Those criminal cases are irrelevant to this expropriation.
Neither may Congressman Baterina, et al., rely on the Supreme Courts ruling in Again vs. PIATCO (G.R.
No. 155001, May 5, 2003) to establish legal standing here. Agan vs. PIATCO was an entirely different
case, involving very different legal interests. It was not an expropriation case. Congressman Baterina,
Et.al., (sic) cannot use this expropriation case as a venue to belatedly ventilate arguments that they may
forgotten to raise in Agan vs. PIATCO. That is not allowed, especially since Congressman Baterina,
Et.al., (sic) has (sic) every opportunity to seek reconsideration of the Supreme Courts decision in Agan
vs. PIATCO.
Furthermore, there is no basis under the Rules of Court or in jurisprudence for the allowance of a petition
for prohibition being intermingled with a special civil action for expropriation.
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Finally, the Court notes that Congressman Baterina et.al. (sic) never paid filing fees for their petition for
prohibition in intervention. This Court, therefore, never obtained jurisdiction over their petition and never
acquired jurisdiction to permit their intervention. As the Supreme Court clarified in Serrano vs. Delica
(G.R. No. 136325, July 29, 2005). (sic) It is not simply the filing of the complaint or appropriate initiatory
pleading, but the payment of the prescribed docket fees that vests a trial court with jurisdiction over the
subject matter or nature of the action.
37

There is no showing that Baterina filed a Motion for Reconsideration of the foregoing Order dated 8
August 2006 of the Pasay City RTC denying his Motion for Intervention; or that he appealed the said
Order or challenged the same in a Petition for Certiorari before the higher courts.
Baterinas Petition for Certiorari and Prohibition (With Urgent Prayer for the Issuance of a Temporary
Restraining Order and Writ of Preliminary Injunction), docketed as CA-G.R. No. 95539, was filed before
the Court of Appeals on 6 August 2006. It questioned the issuance by the Pasay City RTC, allegedly in
grave abuse of discretion, of the Orders dated 27 March 2006 and 15 June 2006 and Writ of
Execution dated 27 March 2006, which directed the MIAA and Land Bank of the Philippines to already
pay PIATCO the proffered value of the NAIA IPT III facilities, so that the government could take
possession of the said infrastructures. Thus, the 8 August 2006 Order denying Baterinas Motion for
Intervention was clearly not among the orders of the Pasay City RTC assailed in CA-G.R. No. 95539.
Additionally, it was the issuance by the Court of Appeals of a Temporary Restraining Order (TRO) in CA-
G.R. No. 95539 that gave rise to the Petition for Certiorari and Prohibition of the Republic before this
Court, docketed as G.R. No. 174166. The Republic sought to enjoin the appellate court from
implementing the said TRO and from proceeding with CA-G.R. No. 95539. None of the afore-described
proceedings before the Court of Appeals or this Court involve the Pasay City RTC Order dated 8 August
2006.
Since Baterina failed to avail himself of any remedy from the denial of his Motion for Intervention in Case
No. 04-0876CFM, the same has become final and executory as to him. Baterina, therefore, can no longer
participate in the proceedings before the Pasay City RTC in Case No. 04-0876CFM, for he is already a
stranger to said case. Having been barred from participating any further in Case No. 04-0876CFM before
the Pasay City RTC, Baterina is attempting to have us rule on the merits of his Petition in Intervention
(which was not admitted by the Pasay City RTC) by merely reiterating the contents thereof in his
Comment on the Petition of the Republic in G.R. No. 174166. This is a blatant circumvention of the rules
of procedure which we cannot countenance. In light of Baterinas failure to have the denial by the Pasay
City RTC of his Motion for Intervention reversed, no court, not even this Court, can take cognizance of his
Petition in Intervention, even if so cleverly presented as another pleading but with essentially the same
prayer.
WHEREFORE, premises considered, the Motions for Reconsideration of our 18 April 2008 Decision filed
by Asias Emerging Dragon Corporation and Salacnib F. Baterina are hereby DENIED WITH FINALITY.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 155001 May 5, 2003
DEMOSTHENES P. AGAN, JR., JOSEPH B. CATAHAN, JOSE MARI B. REUNILLA, MANUEL
ANTONIO B. BOE, MAMERTO S. CLARA, REUEL E. DIMALANTA, MORY V. DOMALAON,
CONRADO G. DIMAANO, LOLITA R. HIZON, REMEDIOS P. ADOLFO, BIENVENIDO C. HILARIO,
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75

MIASCOR WORKERS UNION - NATIONAL LABOR UNION (MWU-NLU), and PHILIPPINE AIRLINES
EMPLOYEES ASSOCIATION (PALEA), petitioners,
vs.
PHILIPPINE INTERNATIONAL AIR TERMINALS CO., INC., MANILA INTERNATIONAL AIRPORT
AUTHORITY, DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS and SECRETARY
LEANDRO M. MENDOZA, in his capacity as Head of the Department of Transportation and
Communications, respondents,
MIASCOR GROUNDHANDLING CORPORATION, DNATA-WINGS AVIATION SYSTEMS
CORPORATION, MACROASIA-EUREST SERVICES, INC., MACROASIA-MENZIES AIRPORT
SERVICES CORPORATION, MIASCOR CATERING SERVICES CORPORATION, MIASCOR
AIRCRAFT MAINTENANCE CORPORATION, and MIASCOR LOGISTICS CORPORATION,
petitioners-in-intervention,
x---------------------------------------------------------x
G.R. No. 155547 May 5, 2003
SALACNIB F. BATERINA, CLAVEL A. MARTINEZ and CONSTANTINO G. JARAULA, petitioners,
vs.
PHILIPPINE INTERNATIONAL AIR TERMINALS CO., INC., MANILA INTERNATIONAL AIRPORT
AUTHORITY, DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS, DEPARTMENT OF
PUBLIC WORKS AND HIGHWAYS, SECRETARY LEANDRO M. MENDOZA, in his capacity as Head
of the Department of Transportation and Communications, and SECRETARY SIMEON A.
DATUMANONG, in his capacity as Head of the Department of Public Works and Highways,
respondents,
JACINTO V. PARAS, RAFAEL P. NANTES, EDUARDO C. ZIALCITA, WILLY BUYSON VILLARAMA,
PROSPERO C. NOGRALES, PROSPERO A. PICHAY, JR., HARLIN CAST ABAYON, and BENASING
O. MACARANBON, respondents-intervenors,
x---------------------------------------------------------x
G.R. No. 155661 May 5, 2003
CEFERINO C. LOPEZ, RAMON M. SALES, ALFREDO B. VALENCIA, MA. TERESA V. GAERLAN,
LEONARDO DE LA ROSA, DINA C. DE LEON, VIRGIE CATAMIN RONALD SCHLOBOM, ANGELITO
SANTOS, MA. LUISA M. PALCON and SAMAHANG MANGGAGAWA SA PALIPARAN NG PILIPINAS
(SMPP), petitioners,
vs.
PHILIPPINE INTERNATIONAL AIR TERMINALS CO., INC., MANILA INTERNATIONAL AIRPORT
AUTHORITY, DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS, SECRETARY
LEANDRO M. MENDOZA, in his capacity as Head of the Department of Transportation and
Communications, respondents.
PUNO, J .:
Petitioners and petitioners-in-intervention filed the instant petitions for prohibition under Rule 65 of the
Revised Rules of Court seeking to prohibit the Manila International Airport Authority (MIAA) and the
Department of Transportation and Communications (DOTC) and its Secretary from implementing the
following agreements executed by the Philippine Government through the DOTC and the MIAA and the
Philippine International Air Terminals Co., Inc. (PIATCO): (1) the Concession Agreement signed on July
12, 1997, (2) the Amended and Restated Concession Agreement dated November 26, 1999, (3) the First
Supplement to the Amended and Restated Concession Agreement dated August 27, 1999, (4) the
Second Supplement to the Amended and Restated Concession Agreement dated September 4, 2000,
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and (5) the Third Supplement to the Amended and Restated Concession Agreement dated June 22, 2001
(collectively, the PIATCO Contracts).
The facts are as follows:
In August 1989, the DOTC engaged the services of Aeroport de Paris (ADP) to conduct a
comprehensive study of the Ninoy Aquino International Airport (NAIA) and determine whether the
present airport can cope with the traffic development up to the year 2010. The study consisted of
two parts: first, traffic forecasts, capacity of existing facilities, NAIA future requirements, proposed
master plans and development plans; and second, presentation of the preliminary design of the
passenger terminal building. The ADP submitted a Draft Final Report to the DOTC in December
1989.
Some time in 1993, six business leaders consisting of John Gokongwei, Andrew Gotianun, Henry
Sy, Sr., Lucio Tan, George Ty and Alfonso Yuchengco met with then President Fidel V. Ramos to
explore the possibility of investing in the construction and operation of a new international airport
terminal. To signify their commitment to pursue the project, they formed the Asia's Emerging
Dragon Corp. (AEDC) which was registered with the Securities and Exchange Commission (SEC)
on September 15, 1993.
On October 5, 1994, AEDC submitted an unsolicited proposal to the Government through the
DOTC/MIAA for the development of NAIA International Passenger Terminal III (NAIA IPT III)
under a build-operate-and-transfer arrangement pursuant to RA 6957 as amended by RA 7718
(BOT Law).
1

On December 2, 1994, the DOTC issued Dept. Order No. 94-832 constituting the Prequalification Bids
and Awards Committee (PBAC) for the implementation of the NAIA IPT III project.
On March 27, 1995, then DOTC Secretary Jose Garcia endorsed the proposal of AEDC to the National
Economic and Development Authority (NEDA). A revised proposal, however, was forwarded by the DOTC
to NEDA on December 13, 1995. On January 5, 1996, the NEDA Investment Coordinating Council
(NEDA ICC) Technical Board favorably endorsed the project to the ICC Cabinet Committee which
approved the same, subject to certain conditions, on January 19, 1996. On February 13, 1996, the NEDA
passed Board Resolution No. 2 which approved the NAIA IPT III project.
On June 7, 14, and 21, 1996, DOTC/MIAA caused the publication in two daily newspapers of an invitation
for competitive or comparative proposals on AEDC's unsolicited proposal, in accordance with Sec. 4-A of
RA 6957, as amended. The alternative bidders were required to submit three (3) sealed envelopes on or
before 5:00 p.m. of September 20, 1996. The first envelope should contain the Prequalification
Documents, the second envelope the Technical Proposal, and the third envelope the Financial Proposal
of the proponent.
On June 20, 1996, PBAC Bulletin No. 1 was issued, postponing the availment of the Bid Documents and
the submission of the comparative bid proposals. Interested firms were permitted to obtain the Request
for Proposal Documents beginning June 28, 1996, upon submission of a written application and payment
of a non-refundable fee of P50,000.00 (US$2,000).
The Bid Documents issued by the PBAC provided among others that the proponent must have adequate
capability to sustain the financing requirement for the detailed engineering, design, construction,
operation, and maintenance phases of the project. The proponent would be evaluated based on its ability
to provide a minimum amount of equity to the project, and its capacity to secure external financing for the
project.
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On July 23, 1996, the PBAC issued PBAC Bulletin No. 2 inviting all bidders to a pre-bid conference on
July 29, 1996.
On August 16, 1996, the PBAC issued PBAC Bulletin No. 3 amending the Bid Documents. The following
amendments were made on the Bid Documents:
a. Aside from the fixed Annual Guaranteed Payment, the proponent shall include in its financial
proposal an additional percentage of gross revenue share of the Government, as follows:
i. First 5 years 5.0%
ii. Next 10 years 7.5%
iii. Next 10 years 10.0%
b. The amount of the fixed Annual Guaranteed Payment shall be subject of the price challenge.
Proponent may offer an Annual Guaranteed Payment which need not be of equal amount, but
payment of which shall start upon site possession.
c. The project proponent must have adequate capability to sustain the financing requirement for
the detailed engineering, design, construction, and/or operation and maintenance phases of the
project as the case may be. For purposes of pre-qualification, this capability shall be measured in
terms of:
i. Proof of the availability of the project proponent and/or the consortium to provide the
minimum amount of equity for the project; and
ii. a letter testimonial from reputable banks attesting that the project proponent and/or the
members of the consortium are banking with them, that the project proponent and/or the
members are of good financial standing, and have adequate resources.
d. The basis for the prequalification shall be the proponent's compliance with the minimum
technical and financial requirements provided in the Bid Documents and the IRR of the BOT Law.
The minimum amount of equity shall be 30% of the Project Cost.
e. Amendments to the draft Concession Agreement shall be issued from time to time. Said
amendments shall only cover items that would not materially affect the preparation of the
proponent's proposal.
On August 29, 1996, the Second Pre-Bid Conference was held where certain clarifications were made.
Upon the request of prospective bidder People's Air Cargo & Warehousing Co., Inc (Paircargo), the
PBAC warranted that based on Sec. 11.6, Rule 11 of the Implementing Rules and Regulations of the
BOT Law, only the proposed Annual Guaranteed Payment submitted by the challengers would be
revealed to AEDC, and that the challengers' technical and financial proposals would remain confidential.
The PBAC also clarified that the list of revenue sources contained in Annex 4.2a of the Bid Documents
was merely indicative and that other revenue sources may be included by the proponent, subject to
approval by DOTC/MIAA. Furthermore, the PBAC clarified that only those fees and charges denominated
as Public Utility Fees would be subject to regulation, and those charges which would be actually deemed
Public Utility Fees could still be revised, depending on the outcome of PBAC's query on the matter with
the Department of Justice.
In September 1996, the PBAC issued Bid Bulletin No. 5, entitled "Answers to the Queries of PAIRCARGO
as Per Letter Dated September 3 and 10, 1996." Paircargo's queries and the PBAC's responses were as
follows:
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1. It is difficult for Paircargo and Associates to meet the required minimum equity requirement as
prescribed in Section 8.3.4 of the Bid Documents considering that the capitalization of each
member company is so structured to meet the requirements and needs of their current respective
business undertaking/activities. In order to comply with this equity requirement, Paircargo is
requesting PBAC to just allow each member of (sic) corporation of the Joint Venture to just
execute an agreement that embodies a commitment to infuse the required capital in case the
project is awarded to the Joint Venture instead of increasing each corporation's current
authorized capital stock just for prequalification purposes.
In prequalification, the agency is interested in one's financial capability at the time of
prequalification, not future or potential capability.
A commitment to put up equity once awarded the project is not enough to establish that "present"
financial capability. However, total financial capability of all member companies of the
Consortium, to be established by submitting the respective companies' audited financial
statements, shall be acceptable.
2. At present, Paircargo is negotiating with banks and other institutions for the extension of a
Performance Security to the joint venture in the event that the Concessions Agreement (sic) is
awarded to them. However, Paircargo is being required to submit a copy of the draft concession
as one of the documentary requirements. Therefore, Paircargo is requesting that they'd (sic) be
furnished copy of the approved negotiated agreement between the PBAC and the AEDC at the
soonest possible time.
A copy of the draft Concession Agreement is included in the Bid Documents. Any material
changes would be made known to prospective challengers through bid bulletins. However, a final
version will be issued before the award of contract.
The PBAC also stated that it would require AEDC to sign Supplement C of the Bid Documents
(Acceptance of Criteria and Waiver of Rights to Enjoin Project) and to submit the same with the required
Bid Security.
On September 20, 1996, the consortium composed of People's Air Cargo and Warehousing Co., Inc.
(Paircargo), Phil. Air and Grounds Services, Inc. (PAGS) and Security Bank Corp. (Security Bank)
(collectively, Paircargo Consortium) submitted their competitive proposal to the PBAC. On September 23,
1996, the PBAC opened the first envelope containing the prequalification documents of the Paircargo
Consortium. On the following day, September 24, 1996, the PBAC prequalified the Paircargo Consortium.
On September 26, 1996, AEDC informed the PBAC in writing of its reservations as regards the Paircargo
Consortium, which include:
a. The lack of corporate approvals and financial capability of PAIRCARGO;
b. The lack of corporate approvals and financial capability of PAGS;
c. The prohibition imposed by RA 337, as amended (the General Banking Act) on the amount that
Security Bank could legally invest in the project;
d. The inclusion of Siemens as a contractor of the PAIRCARGO Joint Venture, for prequalification
purposes; and
e. The appointment of Lufthansa as the facility operator, in view of the Philippine requirement in
the operation of a public utility.
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The PBAC gave its reply on October 2, 1996, informing AEDC that it had considered the issues raised by
the latter, and that based on the documents submitted by Paircargo and the established prequalification
criteria, the PBAC had found that the challenger, Paircargo, had prequalified to undertake the project. The
Secretary of the DOTC approved the finding of the PBAC.
The PBAC then proceeded with the opening of the second envelope of the Paircargo Consortium which
contained its Technical Proposal.
On October 3, 1996, AEDC reiterated its objections, particularly with respect to Paircargo's financial
capability, in view of the restrictions imposed by Section 21-B of the General Banking Act and Sections
1380 and 1381 of the Manual Regulations for Banks and Other Financial Intermediaries. On October 7,
1996, AEDC again manifested its objections and requested that it be furnished with excerpts of the PBAC
meeting and the accompanying technical evaluation report where each of the issues they raised were
addressed.
On October 16, 1996, the PBAC opened the third envelope submitted by AEDC and the Paircargo
Consortium containing their respective financial proposals. Both proponents offered to build the NAIA
Passenger Terminal III for at least $350 million at no cost to the government and to pay the government:
5% share in gross revenues for the first five years of operation, 7.5% share in gross revenues for the next
ten years of operation, and 10% share in gross revenues for the last ten years of operation, in
accordance with the Bid Documents. However, in addition to the foregoing, AEDC offered to pay the
government a total of P135 million as guaranteed payment for 27 years while Paircargo Consortium
offered to pay the government a total of P17.75 billion for the same period.
Thus, the PBAC formally informed AEDC that it had accepted the price proposal submitted by the
Paircargo Consortium, and gave AEDC 30 working days or until November 28, 1996 within which to
match the said bid, otherwise, the project would be awarded to Paircargo.
As AEDC failed to match the proposal within the 30-day period, then DOTC Secretary Amado Lagdameo,
on December 11, 1996, issued a notice to Paircargo Consortium regarding AEDC's failure to match the
proposal.
On February 27, 1997, Paircargo Consortium incorporated into Philippine International Airport Terminals
Co., Inc. (PIATCO).
AEDC subsequently protested the alleged undue preference given to PIATCO and reiterated its
objections as regards the prequalification of PIATCO.
On April 11, 1997, the DOTC submitted the concession agreement for the second-pass approval of the
NEDA-ICC.
On April 16, 1997, AEDC filed with the Regional Trial Court of Pasig a Petition for Declaration of Nullity of
the Proceedings, Mandamus and Injunction against the Secretary of the DOTC, the Chairman of the
PBAC, the voting members of the PBAC and Pantaleon D. Alvarez, in his capacity as Chairman of the
PBAC Technical Committee.
On April 17, 1997, the NEDA-ICC conducted an ad referendum to facilitate the approval, on a no-
objection basis, of the BOT agreement between the DOTC and PIATCO. As the ad referendum gathered
only four (4) of the required six (6) signatures, the NEDA merely noted the agreement.
On July 9, 1997, the DOTC issued the notice of award for the project to PIATCO.
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On July 12, 1997, the Government, through then DOTC Secretary Arturo T. Enrile, and PIATCO, through
its President, Henry T. Go, signed the "Concession Agreement for the Build-Operate-and-Transfer
Arrangement of the Ninoy Aquino International Airport Passenger Terminal III" (1997 Concession
Agreement). The Government granted PIATCO the franchise to operate and maintain the said terminal
during the concession period and to collect the fees, rentals and other charges in accordance with the
rates or schedules stipulated in the 1997 Concession Agreement. The Agreement provided that the
concession period shall be for twenty-five (25) years commencing from the in-service date, and may be
renewed at the option of the Government for a period not exceeding twenty-five (25) years. At the end of
the concession period, PIATCO shall transfer the development facility to MIAA.
On November 26, 1998, the Government and PIATCO signed an Amended and Restated Concession
Agreement (ARCA). Among the provisions of the 1997 Concession Agreement that were amended by the
ARCA were: Sec. 1.11 pertaining to the definition of "certificate of completion"; Sec. 2.05 pertaining to the
Special Obligations of GRP; Sec. 3.02 (a) dealing with the exclusivity of the franchise given to the
Concessionaire; Sec. 4.04 concerning the assignment by Concessionaire of its interest in the
Development Facility; Sec. 5.08 (c) dealing with the proceeds of Concessionaire's insurance; Sec. 5.10
with respect to the temporary take-over of operations by GRP; Sec. 5.16 pertaining to the taxes, duties
and other imposts that may be levied on the Concessionaire; Sec. 6.03 as regards the periodic
adjustment of public utility fees and charges; the entire Article VIII concerning the provisions on the
termination of the contract; and Sec. 10.02 providing for the venue of the arbitration proceedings in case
a dispute or controversy arises between the parties to the agreement.
Subsequently, the Government and PIATCO signed three Supplements to the ARCA. The First
Supplement was signed on August 27, 1999; the Second Supplement on September 4, 2000; and the
Third Supplement on June 22, 2001 (collectively, Supplements).
The First Supplement to the ARCA amended Sec. 1.36 of the ARCA defining "Revenues" or "Gross
Revenues"; Sec. 2.05 (d) of the ARCA referring to the obligation of MIAA to provide sufficient funds for
the upkeep, maintenance, repair and/or replacement of all airport facilities and equipment which are
owned or operated by MIAA; and further providing additional special obligations on the part of GRP aside
from those already enumerated in Sec. 2.05 of the ARCA. The First Supplement also provided a
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 Runway 13/31; the swapping of obligations between GRP
and PIATCO regarding the improvement of Sales Road; and the changes in the timetable. It also
amended Sec. 6.01 (c) of the ARCA pertaining to the Disposition of Terminal Fees; Sec. 6.02 of the
ARCA by inserting an introductory paragraph; and Sec. 6.02 (a) (iii) of the ARCA referring to the
Payments of Percentage Share in Gross Revenues.
The Second Supplement to the ARCA contained provisions concerning the clearing, removal, demolition
or disposal of subterranean structures uncovered or discovered at the site of the construction of the
terminal by the Concessionaire. It defined the scope of works; it provided for the procedure for the
demolition of the said structures and the consideration for the same which the GRP shall pay PIATCO; it
provided for time extensions, incremental and consequential costs and losses consequent to the
existence of such structures; and it provided for some additional obligations on the part of PIATCO as
regards the said structures.
Finally, the Third Supplement provided for the obligations of the Concessionaire as regards the
construction of the surface road connecting Terminals II and III.
Meanwhile, the MIAA which is charged with the maintenance and operation of the NAIA Terminals I and
II, had existing concession contracts with various service providers to offer international airline airport
services, such as in-flight catering, passenger handling, ramp and ground support, aircraft maintenance
and provisions, cargo handling and warehousing, and other services, to several international airlines at
the NAIA. Some of these service providers are the Miascor Group, DNATA-Wings Aviation Systems
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Corp., and the MacroAsia Group. Miascor, DNATA and MacroAsia, together with Philippine Airlines
(PAL), are the dominant players in the industry with an aggregate market share of 70%.
On September 17, 2002, the workers of the international airline service providers, claiming that they stand
to lose their employment upon the implementation of the questioned agreements, filed before this Court a
petition for prohibition to enjoin the enforcement of said agreements.
2

On October 15, 2002, the service providers, joining the cause of the petitioning workers, filed a motion for
intervention and a petition-in-intervention.
On October 24, 2002, Congressmen Salacnib Baterina, Clavel Martinez and Constantino Jaraula filed a
similar petition with this Court.
3

On November 6, 2002, several employees of the MIAA likewise filed a petition assailing the legality of the
various agreements.
4

On December 11, 2002. another group of Congressmen, Hon. Jacinto V. Paras, Rafael P. Nantes,
Eduardo C. Zialcita, Willie B. Villarama, Prospero C. Nograles, Prospero A. Pichay, Jr., Harlin Cast
Abayon and Benasing O. Macaranbon, moved to intervene in the case as Respondents-Intervenors. They
filed their Comment-In-Intervention defending the validity of the assailed agreements and praying for the
dismissal of the petitions.
During the pendency of the case before this Court, President Gloria Macapagal Arroyo, on November 29,
2002, in her speech at the 2002 Golden Shell Export Awards at Malacaang Palace, stated that she will
not "honor (PIATCO) contracts which the Executive Branch's legal offices have concluded (as) null and
void."
5

Respondent PIATCO filed its Comments to the present petitions on November 7 and 27, 2002. The Office
of the Solicitor General and the Office of the Government Corporate Counsel filed their respective
Comments in behalf of the public respondents.
On December 10, 2002, the Court heard the case on oral argument. After the oral argument, the Court
then resolved in open court to require the parties to file simultaneously their respective Memoranda in
amplification of the issues heard in the oral arguments within 30 days and to explore the possibility of
arbitration or mediation as provided in the challenged contracts.
In their consolidated Memorandum, the Office of the Solicitor General and the Office of the Government
Corporate Counsel prayed that the present petitions be given due course and that judgment be rendered
declaring the 1997 Concession Agreement, the ARCA and the Supplements thereto void for being
contrary to the Constitution, the BOT Law and its Implementing Rules and Regulations.
On March 6, 2003, respondent PIATCO informed the Court that on March 4, 2003 PIATCO commenced
arbitration proceedings before the International Chamber of Commerce, International Court of Arbitration
(ICC) by filing a Request for Arbitration with the Secretariat of the ICC against the Government of the
Republic of the Philippines acting through the DOTC and MIAA.
In the present cases, the Court is again faced with the task of resolving complicated issues made difficult
by their intersecting legal and economic implications. The Court is aware of the far reaching fall out
effects of the ruling which it makes today. For more than a century and whenever the exigencies of the
times demand it, this Court has never shirked from its solemn duty to dispense justice and resolve "actual
controversies involving rights which are legally demandable and enforceable, and to determine whether
or not there has been grave abuse of discretion amounting to lack or excess of jurisdiction."
6
To be sure,
this Court will not begin to do otherwise today.
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We shall first dispose of the procedural issues raised by respondent PIATCO which they allege will bar
the resolution of the instant controversy.
Petitioners' Legal Standing to File
the present Petitions
a. G.R. Nos. 155001 and 155661
In G.R. No. 155001 individual petitioners are employees of various service providers
7
having separate
concession contracts with MIAA and continuing service agreements with various international airlines to
provide in-flight catering, passenger handling, ramp and ground support, aircraft maintenance and
provisions, cargo handling and warehousing and other services. Also included as petitioners are labor
unions MIASCOR Workers Union-National Labor Union and Philippine Airlines Employees Association.
These petitioners filed the instant action for prohibition as taxpayers and as parties whose rights and
interests stand to be violated by the implementation of the PIATCO Contracts.
Petitioners-Intervenors in the same case are all corporations organized and existing under Philippine laws
engaged in the business of providing in-flight catering, passenger handling, ramp and ground support,
aircraft maintenance and provisions, cargo handling and warehousing and other services to several
international airlines at the Ninoy Aquino International Airport. Petitioners-Intervenors allege that as tax-
paying international airline and airport-related service operators, each one of them stands to be
irreparably injured by the implementation of the PIATCO Contracts. Each of the petitioners-intervenors
have separate and subsisting concession agreements with MIAA and with various international airlines
which they allege are being interfered with and violated by respondent PIATCO.
In G.R. No. 155661, petitioners constitute employees of MIAA and Samahang Manggagawa sa Paliparan
ng Pilipinas - a legitimate labor union and accredited as the sole and exclusive bargaining agent of all the
employees in MIAA. Petitioners anchor their petition for prohibition on the nullity of the contracts entered
into by the Government and PIATCO 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 the implementation
of the PIATCO Contracts.
Petitioners in both cases raise the argument that the PIATCO Contracts contain stipulations which directly
contravene numerous provisions of the Constitution, specific provisions of the BOT Law and its
Implementing Rules and Regulations, and public policy. Petitioners contend that the DOTC and the MIAA,
by entering into said contracts, have committed grave abuse of discretion amounting to lack or excess of
jurisdiction which can be remedied only by a writ of prohibition, there being no plain, speedy or adequate
remedy in the ordinary course of law.
In particular, petitioners assail the provisions in the 1997 Concession Agreement and the ARCA which
grant PIATCO the exclusive right to operate a commercial international passenger terminal within the
Island of Luzon, except those international airports already existing at the time of the execution of the
agreement. The contracts further provide that upon the commencement of operations at the NAIA IPT III,
the Government shall cause the closure of Ninoy Aquino International Airport Passenger Terminals I and
II as international passenger terminals. With respect to existing concession agreements between MIAA
and international airport service providers regarding certain services or operations, the 1997 Concession
Agreement and the ARCA uniformly provide that such services or operations will not be carried over to
the NAIA IPT III and PIATCO is under no obligation to permit such carry over except through a separate
agreement duly entered into with PIATCO.
8

With respect to the petitioning service providers and their employees, upon the commencement of
operations of the NAIA IPT III, they allege that they will be effectively barred from providing international
airline airport services at the NAIA Terminals I and II as all international airlines and passengers will be
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diverted to the NAIA IPT III. The petitioning service providers will thus be compelled to contract with
PIATCO alone for such services, with no assurance that subsisting contracts with MIAA and other
international airlines will be respected. Petitioning service providers stress that despite the very
competitive market, the substantial capital investments required and the high rate of fees, they entered
into their respective contracts with the MIAA with the understanding that the said contracts will be in force
for the stipulated period, and thereafter, renewed so as to allow each of the petitioning service providers
to recoup their investments and obtain a reasonable return thereon.
Petitioning employees of various service providers at the NAIA Terminals I 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 PIATCO Contracts, they stand to lose employment.
The question on legal standing is whether such parties have "alleged such a personal stake in the
outcome of the controversy as to assure that concrete adverseness which sharpens the presentation of
issues upon which the court so largely depends for illumination of difficult constitutional questions."
9

Accordingly, it has been held that the interest of a person 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,
but also that he sustained or is in imminent danger of sustaining some direct injury as a result of its
enforcement, and not merely that he suffers thereby in some indefinite way. It must appear that the
person complaining has been or is about to be denied some right or privilege to which he is lawfully
entitled or that he is about to be subjected to some burdens or penalties by reason of the statute or act
complained of.
10

We hold that petitioners have the requisite standing. In the above-mentioned cases, petitioners have a
direct and substantial interest to protect by reason of the implementation of the PIATCO Contracts. They
stand to lose their source of livelihood, a property right which is zealously protected by the 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 operation of the NAIA IPT III under the PIATCO Contracts. The financial prejudice brought about by
the PIATCO Contracts on petitioners and petitioners-intervenors in these cases are legitimate interests
sufficient to confer on them the requisite standing to file the instant petitions.
b. G.R. No. 155547
In G.R. No. 155547, petitioners filed the petition for prohibition as members of the House of
Representatives, citizens and taxpayers. They allege that as members of the House of Representatives,
they are especially interested in the PIATCO Contracts, because the contracts compel the Government
and/or the House of Representatives to appropriate funds necessary to comply with the provisions
therein.
11
They cite provisions of the PIATCO Contracts which require disbursement of unappropriated
amounts in compliance with the contractual obligations of the Government. They allege that the
Government obligations in the PIATCO Contracts which compel government expenditure without
appropriation is a curtailment of their prerogatives as legislators, contrary to the mandate of the
Constitution that "[n]o money shall be paid out of the treasury except in pursuance of an appropriation
made by law."
12

Standing is a peculiar concept in constitutional law because in some cases, suits are not brought by
parties who have been personally injured by the operation of a law or any other government act but by
concerned citizens, taxpayers or voters who actually sue in the public interest. Although we are not
unmindful of the cases of Imus Electric Co. v. Municipality of Imus
13
and Gonzales v. Raquiza
14

wherein this Court held that appropriation must be made only on amounts immediately demandable,
public interest demands that we take a more liberal view in determining whether the petitioners
suing as legislators, taxpayers and citizens have locus standi to file the instant petition. In
Kilosbayan, Inc. v. Guingona,
15
this Court held "[i]n line with the liberal policy of this Court on locus
standi, ordinary taxpayers, members of Congress, and even association of planters, and non-profit civic
organizations were allowed to initiate and prosecute actions before this Court to question the
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constitutionality or validity of laws, acts, decisions, rulings, or orders of various government agencies or
instrumentalities."
16
Further, "insofar as taxpayers' suits are concerned . . . (this Court) is not devoid of
discretion as 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 within the wide discretion of the Court to waive
the requirement and so remove the impediment to its addressing and resolving the serious constitutional
questions raised."
18
In view of the serious legal questions involved and their impact on public interest, we
resolve to grant standing to the petitioners.
Other Procedural Matters
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-equipped to resolve. Moreover, PIATCO alleges that
submission of this controversy to this Court at the first instance is a violation of the rule on hierarchy of
courts. They contend that trial courts have concurrent jurisdiction with this Court with respect to a special
civil action for prohibition and hence, following the rule on hierarchy of courts, resort must first be had
before the trial courts.
After a thorough study and careful evaluation of the issues involved, this Court is of the view that the crux
of the instant controversy involves significant legal questions. The facts necessary to resolve these legal
questions are well established and, hence, need not be determined by a trial court.
The rule on hierarchy of courts will not also prevent this Court from assuming jurisdiction over the cases
at bar. The said rule may be relaxed when the redress desired cannot be obtained in the appropriate
courts or where exceptional and compelling circumstances justify availment of a remedy within and calling
for the exercise of this Court's primary jurisdiction.
19

It is easy to discern that exceptional circumstances exist in the cases at bar that call for the relaxation
of the rule. Both petitioners and respondents agree that these cases are of transcendental importance
as they involve the construction and operation of the country's premier international airport. Moreover, the
crucial issues submitted for resolution are of first impression and they entail the proper legal interpretation
of key provisions of the Constitution, the BOT Law and its Implementing Rules and Regulations. Thus,
considering the nature of the controversy before the Court, procedural bars may be lowered to give way
for the speedy disposition of the instant cases.
Legal Effect of the Commencement
of Arbitration Proceedings by
PIATCO
There is one more procedural obstacle which must be overcome. The Court is 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 the arbitration step taken by PIATCO will not oust this Court of its
jurisdiction over the cases at bar.
In Del Monte Corporation-USA v. Court of Appeals,
20
even after finding that the arbitration clause in the
Distributorship Agreement in question is valid and the dispute between the parties is arbitrable, this Court
affirmed the trial 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 as contracts produce legal effect
between the parties, their assigns and heirs, only the parties to the Distributorship Agreement are bound
by its terms, including the arbitration clause stipulated therein. This Court ruled that arbitration
proceedings could be called for but only with respect to the parties to the contract in question.
Considering that there are parties to the case who are neither parties to the Distributorship Agreement
nor heirs or assigns of the parties thereto, this Court, citing its previous ruling in Salas, Jr. v. Laperal
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Realty Corporation,
21
held that to tolerate the splitting of proceedings by allowing arbitration as to some of
the parties on the one hand and trial for the others on the other hand would, in effect, result in
multiplicity of suits, duplicitous procedure and unnecessary 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
proceeding.
It is established that petitioners in the present cases who have presented legitimate interests in the
resolution of the controversy are not parties to the PIATCO Contracts. Accordingly, they cannot be
bound by the arbitration clause provided for in the ARCA and hence, cannot be compelled to submit to
arbitration proceedings. A speedy and decisive resolution of all the critical issues in the present
controversy, including those raised by petitioners, cannot be made before an arbitral tribunal. The
object of arbitration is precisely to allow an expeditious determination of a dispute. This objective would
not be met if this Court were to allow the parties to settle the cases by arbitration as there are certain
issues involving non-parties to the PIATCO Contracts which the arbitral tribunal will not be equipped to
resolve.
Now, to the merits of the instant controversy.
I
Is PIATCO a qualified bidder?
Public respondents argue that the Paircargo Consortium, PIATCO's predecessor, was not a duly pre-
qualified bidder on the unsolicited proposal submitted by AEDC as the Paircargo Consortium failed to
meet the financial capability required under the BOT Law and the Bid Documents. They allege that in
computing the ability of the Paircargo Consortium to meet the minimum equity requirements for the
project, the entire net worth of Security Bank, a member of the consortium, should not be
considered.
PIATCO relies, on the other hand, on the strength of the Memorandum dated October 14, 1996 issued by
the DOTC Undersecretary Primitivo C. Cal stating that the Paircargo Consortium is found to have a
combined net worth of P3,900,000,000.00, sufficient to meet the equity requirements of the project. The
said Memorandum was in response to a letter from Mr. Antonio Henson of AEDC to President Fidel V.
Ramos questioning the financial capability of the Paircargo Consortium on the ground that it does not
have the financial resources to put up the required minimum equity of P2,700,000,000.00. This contention
is based on the restriction under R.A. No. 337, as amended or the General Banking Act that a commercial
bank cannot invest in any single enterprise in an amount more than 15% of its net worth. In the said
Memorandum, Undersecretary Cal opined:
The Bid Documents, as clarified through Bid Bulletin Nos. 3 and 5, require that financial capability
will be evaluated based on total financial capability of all the member companies of the
[Paircargo] Consortium. In this connection, the Challenger was found to have a combined net
worth of P3,926,421,242.00 that could support a project costing approximately P13 Billion.
It is not a requirement that the net worth must be "unrestricted." To impose that as a requirement
now will be nothing less than unfair.
The financial statement or the net worth is not the sole basis in establishing financial capability.
As stated in Bid Bulletin No. 3, financial capability may also be established by testimonial letters
issued by reputable banks. The Challenger has complied with this requirement.
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 (30%) equity of the challenger but rather
to be used in establishing if there is enough basis to believe that the challenger can comply with
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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-qualification (Section 5.4 of
the same document).
23

Under the BOT Law, in case of a build-operate-and-transfer arrangement, the contract shall be
awarded to the bidder "who, having satisfied the minimum financial, technical, organizational
and legal standards" required by the law, has submitted the lowest bid and most favorable
terms of the project.
24
Further, the 1994 Implementing Rules and Regulations of the BOT Law
provide:
Section 5.4 Pre-qualification Requirements.
xxx xxx xxx
c. Financial Capability: The project proponent must have adequate capability to sustain the
financing requirements for the detailed engineering design, construction and/or operation and
maintenance phases of the project, as the case may be. For purposes of pre-qualification, this
capability shall be measured in terms of (i) proof of the ability of the project proponent and/or
the consortium to provide a minimum amount of equity to the project, and (ii) a letter
testimonial from reputable banks attesting that the project proponent and/or members of
the consortium are banking with them, that they are in good financial standing, and that
they have adequate resources. The government agency/LGU concerned shall determine on a
project-to-project basis and before pre-qualification, the minimum amount of equity needed.
(emphasis supplied)
Pursuant to this provision, the PBAC issued PBAC Bulletin No. 3 dated August 16, 1996 amending the
financial capability requirements for pre-qualification of the project proponent as follows:
6. Basis of Pre-qualification
The basis for the pre-qualification shall be on the compliance of the proponent to the minimum
technical and financial requirements provided in the Bid Documents and in the IRR of the BOT
Law, R.A. No. 6957, as amended by R.A. 7718.
The minimum amount of equity to which the proponent's financial capability will be based shall be
thirty percent (30%) of the project cost instead of the twenty percent (20%) specified in
Section 3.6.4 of the Bid Documents. This is to correlate with the required debt-to-equity ratio of
70:30 in Section 2.01a of the draft concession agreement. The debt portion of the project
financing should not exceed 70% of the actual project cost.
Accordingly, based on the above provisions of law, the Paircargo Consortium or any challenger to the
unsolicited proposal of AEDC has to show that it possesses the requisite financial capability to
undertake the project in the minimum amount of 30% of the project cost through (i) proof of the
ability to provide a minimum amount of equity to the project, and (ii) a letter testimonial from reputable
banks attesting that the project proponent or members of the consortium are banking with them, that they
are in good financial standing, and that they have adequate resources.
As the minimum project cost was estimated to be US$350,000,000.00 or 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 equity for the project in the amount of at least P2,755,095,000.00.
Paircargo's Audited Financial Statements as of 1993 and 1994 indicated that it had a net worth of
P2,783,592.00 and P3,123,515.00 respectively.
26
PAGS' Audited Financial Statements as of 1995
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indicate that it has approximately P26,735,700.00 to invest as its equity for the project.
27
Security Bank's
Audited Financial Statements as of 1995 show that it has a net worth equivalent to its capital funds in the
amount of P3,523,504,377.00.
28

We agree with public respondents that with respect to Security Bank, the entire amount of its net worth
could not be invested in a single undertaking or enterprise, whether allied or non-allied in accordance with
the provisions of R.A. No. 337, as amended or the General Banking Act:
Sec. 21-B. The provisions in this or in any other Act to the contrary notwithstanding, the Monetary
Board, whenever it shall deem appropriate and necessary to further national development
objectives or support national priority projects, may authorize a commercial bank, a bank
authorized to provide commercial banking services, as well as a government-owned and
controlled bank, to operate under an expanded commercial banking authority and by
virtue thereof exercise, in addition to powers authorized for commercial banks, the powers
of an Investment House as provided in Presidential Decree No. 129, invest in the equity of
a non-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 commercial banking services: Provided,
That (a) the total investment in equities shall not exceed fifty percent (50%) of the net worth of the
bank; (b) the equity investment in any one enterprise whether allied or non-allied shall not
exceed fifteen percent (15%) of the net worth of the bank; (c) the equity investment of the
bank, or of its wholly or majority-owned 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-five
percent (35%) of the voting stock in that enterprise; and (d) the equity investment in other banks
shall be deducted from the investing bank's net worth for purposes of computing the prescribed
ratio of net worth to risk assets.
xxx xxx xxx
Further, the 1993 Manual of Regulations for Banks provides:
SECTION X383. Other Limitations and Restrictions. The following limitations and restrictions
shall also apply regarding equity investments of banks.
a. In any single enterprise. The equity investments of banks in any single enterprise shall not
exceed at any time fifteen percent (15%) of the net worth of the investing bank as defined in Sec.
X106 and Subsec. X121.5.
Thus, the maximum amount that Security Bank could validly invest in the Paircargo Consortium is only
P528,525,656.55, representing 15% of its entire net worth. The total net worth therefore of the Paircargo
Consortium, after considering the maximum amounts that may be validly invested by each of its
members is P558,384,871.55 or only 6.08% of the project cost,
29
an amount substantially less than the
prescribed minimum equity investment required for the project in the amount of P2,755,095,000.00 or
30% of the project cost.
The purpose of pre-qualification in any public bidding is to determine, at the earliest opportunity, the
ability of the bidder to undertake the project. Thus, with respect to the bidder's financial capacity at the
pre-qualification stage, the law requires the government agency to examine and determine the ability of
the bidder to fund the entire cost of the project by considering the maximum amounts that each
bidder may invest in the project at the time of pre-qualification.
The PBAC has determined that any prospective bidder for the construction, operation and maintenance of
the NAIA IPT III project should prove that it has the ability to provide equity in the minimum amount of
30% of the project cost, in accordance with the 70:30 debt-to-equity ratio prescribed in the Bid
Documents. Thus, in the case of Paircargo Consortium, the PBAC should determine the maximum
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amounts that each member of the consortium may commit for the construction, operation and
maintenance of the NAIA IPT III project at the time of pre-qualification. With respect to Security Bank,
the maximum amount which may be invested by it would only be 15% of its net worth in view of the
restrictions imposed by the General Banking Act. Disregarding the investment ceilings provided by
applicable law would not result in a proper evaluation of whether or not a bidder is pre-qualified to
undertake the project as for all intents and purposes, such ceiling or legal restriction determines the true
maximum amount which a bidder may invest in the project.
Further, the determination of whether or not a bidder is pre-qualified to 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 documents presented by the bidder. The PBAC should not be allowed to speculate on the future
financial ability of the bidder to undertake the project on the basis of documents submitted. This would
open doors to abuse and defeat the very purpose of a public bidding. This is especially true in the case at
bar which involves the investment of billions of pesos by the project proponent. The relevant government
authority is duty-bound to ensure that the awardee of the contract possesses the minimum required
financial capability to complete the project. To allow the PBAC to estimate the bidder's future financial
capability would not secure the viability and integrity of the project. A restrictive and conservative
application of the rules and procedures of public bidding is necessary not only to protect the impartiality
and regularity of the proceedings but also to ensure the financial and technical reliability of the project. It
has been held that:
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. Otherwise, the foundation of a fair and
competitive public bidding would be defeated. Strict observance of the rules, regulations, and
guidelines of the bidding process is the only safeguard to a fair, honest and competitive
public bidding.
30

Thus, if the maximum amount of equity that a bidder may invest in the project at the time the bids are
submitted falls short of the minimum amounts required to be put up by the bidder, said bidder should be
properly disqualified. Considering that at the pre-qualification stage, the maximum amounts which the
Paircargo Consortium may invest in the project fell short of the minimum amounts prescribed by the
PBAC, we hold that Paircargo Consortium was not a qualified bidder. Thus the award of the contract by
the PBAC to the Paircargo Consortium, a disqualified bidder, is null and void.
While it would be proper at this juncture to end the resolution of the instant controversy, as the legal
effects of the disqualification of respondent 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 project, the Court feels
that it is necessary to discuss in full the pressing issues of the present controversy for a complete
resolution thereof.
II
Is the 1997 Concession Agreement valid?
Petitioners and public respondents contend that the 1997 Concession Agreement is invalid as it contains
provisions that substantially depart from the draft Concession Agreement included in the Bid Documents.
They maintain that a substantial departure from the draft Concession Agreement is a violation of public
policy and renders the 1997 Concession Agreement null and void.
PIATCO maintains, however, that the Concession Agreement attached to the Bid Documents is intended
to be a draft, i.e., subject to change, alteration or modification, and that this intention was clear to all
participants, including AEDC, and DOTC/MIAA. It argued further that said intention is expressed in Part C
(6) of Bid Bulletin No. 3 issued by the PBAC which states:
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6. Amendments to the Draft Concessions Agreement
Amendments to the Draft Concessions Agreement shall be issued from time to time. Said
amendments shall only cover items that would not materially affect the preparation of the
proponent's proposal.
By its very nature, public bidding aims to protect the public interest by giving the public the best possible
advantages through open competition. Thus:
Competition must be legitimate, fair and honest. In the field of government contract law,
competition requires, not only `bidding upon a common standard, a common basis, upon the
same thing, the same subject matter, the same undertaking,' but also that it be legitimate, fair
and honest; and not designed to injure or defraud the government.
31

An essential element of a publicly bidded contract is that all bidders must be on equal footing. Not simply
in terms of application of the procedural rules and regulations imposed by the relevant government
agency, but more importantly, on the contract bidded upon. Each bidder must be able to bid on 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 the contract is altered in any material respect, then the essence of fair
competition in the public bidding is destroyed. A public bidding would indeed be a farce if after the
contract is awarded, the winning bidder may modify the contract and include provisions which are
favorable to it that were not previously made available to the other bidders. Thus:
It is inherent in public biddings that there shall be a fair competition among the bidders. The
specifications in such biddings provide the common ground or basis for the bidders. The
specifications should, accordingly, operate equally or indiscriminately upon all bidders.
32

The same rule was restated by Chief Justice Stuart of the Supreme Court of Minnesota:
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 proposals and specifications therefore must be
so framed as to permit free and full competition. Nor can they enter into a contract with the
best bidder containing substantial provisions beneficial to him, not included or
contemplated in the terms and specifications upon which the bids were invited.
33

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 pertinent portion of which was quoted above, the PBAC also
clarified that "[s]aid amendments shall only cover items that would not materially affect the
preparation of the proponent's proposal."
While we concede that a winning bidder is not precluded from modifying or amending certain provisions
of the contract bidded upon, such changes must not constitute substantial or material amendments
that would alter the basic parameters of the contract and would constitute a denial to the other
bidders of the opportunity to bid on the same terms. Hence, the determination of whether or not a
modification or amendment of a contract bidded out constitutes a substantial amendment rests on
whether the contract, when taken as a whole, would contain substantially different terms and conditions
that would have the effect of altering the technical and/or financial proposals previously submitted by
other bidders. The alterations and modifications in the contract executed between the government and
the winning bidder must be such as to render such executed contract to be an entirely different
contract from the one that was bidded upon.
In the case of Caltex (Philippines), Inc. v. Delgado Brothers, Inc.,
34
this Court quoted with approval the
ruling of the trial court that an amendment to a contract awarded through public bidding, when such
subsequent amendment was made without a new public bidding, is null and void:
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The Court agrees with the contention of counsel for the plaintiffs that the due execution of a
contract after public bidding is a limitation upon the right of the contracting parties to alter or
amend it without another public bidding, for otherwise what would a public bidding be good for
if after the execution 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 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 or offers the best terms is awarded the contract subject of the
bid, and it is 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 or amend it without
another previous public bidding.
35

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 draft Concession Agreement attached to the Bid Documents?
A close comparison of the draft Concession Agreement attached to the Bid Documents and the 1997
Concession Agreement reveals that the documents differ in at least two material respects:
a. Modification on the Public
Utility Revenues and Non-Public
Utility Revenues that may be
collected by PIATCO
The fees that may be imposed and collected by PIATCO under the draft Concession Agreement and the
1997 Concession Agreement may be classified into three distinct categories: (1) fees which are subject to
periodic adjustment of once every two years in accordance with a prescribed parametric formula and
adjustments are made effective only upon written approval by MIAA; (2) fees other than those included in
the first category which maybe adjusted by PIATCO whenever it deems necessary without need for
consent of DOTC/MIAA; and (3) new fees and charges that may be imposed by PIATCO which have not
been previously imposed or collected at the Ninoy Aquino International Airport Passenger Terminal I,
pursuant to Administrative Order No. 1, Series of 1993, as amended. The glaring distinctions between the
draft Concession Agreement and the 1997 Concession Agreement lie in the types of fees included in
each category and the extent of the supervision and regulation which MIAA is allowed to exercise in
relation thereto.
For fees under the first category, i.e., those which are subject to periodic adjustment in accordance with
a prescribed parametric formula and effective only upon written approval by MIAA, the draft Concession
Agreement includes the following:
36

(1) aircraft parking fees;
(2) aircraft tacking fees;
(3) groundhandling fees;
(4) rentals and airline offices;
(5) check-in counter rentals; and
(6) porterage fees.
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Under the 1997 Concession Agreement, fees which are subject to adjustment and effective upon MIAA
approval are classified as "Public Utility Revenues" and include:
37

(1) aircraft parking fees;
(2) aircraft tacking fees;
(3) check-in counter fees; and
(4) Terminal Fees.
The implication of the reduced number of fees that are subject to MIAA approval is best appreciated in
relation to fees included in the second category identified above. Under the 1997 Concession
Agreement, fees which PIATCO may adjust whenever it deems necessary without need for consent of
DOTC/MIAA are "Non-Public Utility Revenues" and is defined as "all other income not classified as Public
Utility Revenues derived from operations of the Terminal and the Terminal Complex."
38
Thus, under the
1997 Concession Agreement, ground handling fees, rentals from airline offices and porterage fees are no
longer subject to MIAA regulation.
Further, under Section 6.03 of the draft Concession Agreement, MIAA reserves the right to regulate (1)
lobby and vehicular parking fees and (2) other new fees and charges that may be imposed by PIATCO.
Such regulation may be made by periodic adjustment and is effective only upon written approval of MIAA.
The full text of said provision is quoted below:
Section 6.03. Periodic Adjustment in Fees and Charges. Adjustments in the aircraft parking fees,
aircraft tacking fees, groundhandling fees, rentals and airline offices, check-in-counter rentals and
porterage fees shall be allowed only once every two years and in accordance with the Parametric
Formula attached hereto as Annex F. Provided that adjustments shall be made effective only
after the written express approval of the MIAA. Provided, further, that such approval of the MIAA,
shall be contingent only on the conformity of the adjustments with the above said parametric
formula. The first adjustment shall be made prior to the In-Service Date of the Terminal.
The MIAA reserves the right to regulate under the foregoing terms and 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 the users of the airport shall be deprived of a
free option for the services they cover.
39

On the other hand, the equivalent provision under the 1997 Concession Agreement reads:
Section 6.03 Periodic Adjustment in Fees and Charges.
xxx xxx xxx
(c) Concessionaire shall at all times be judicious in fixing fees and charges constituting Non-
Public Utility Revenues in order to ensure that End Users are not unreasonably deprived of
services. While the vehicular parking fee, porterage fee and greeter/well wisher fee
constitute Non-Public Utility Revenues of Concessionaire, GRP may intervene and require
Concessionaire to explain and justify the fee it may set from time to time, if in the
reasonable opinion of GRP the said fees have become exorbitant resulting in the unreasonable
deprivation of End Users of such services.
40

Thus, under the 1997 Concession Agreement, with respect to (1) vehicular parking fee, (2) porterage
fee and (3) greeter/well wisher fee, all that MIAA can do is to require PIATCO to explain and justify the
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fees set by PIATCO. In the draft Concession Agreement, vehicular parking fee is subject to MIAA
regulation and approval under the second paragraph of Section 6.03 thereof while porterage fee is
covered by the first paragraph of the same provision. There is an obvious relaxation of the extent of
control and regulation by MIAA with respect to the particular fees that may be charged by PIATCO.
Moreover, with respect to the third category of fees that may be imposed and collected by PIATCO, i.e.,
new fees and charges that may be imposed by PIATCO which have not been previously imposed or
collected at the Ninoy Aquino International Airport Passenger Terminal I, under Section 6.03 of the draft
Concession Agreement MIAA has reserved the right to regulate the same under the same conditions
that MIAA may regulate fees under the first category, i.e., periodic adjustment of once every two years in
accordance with a prescribed parametric formula and effective only upon written approval by MIAA.
However, under the 1997 Concession Agreement, adjustment of fees under the third category is not
subject to MIAA regulation.
With respect to terminal fees that may be charged by PIATCO,
41
as shown earlier, this was included
within the category of "Public Utility Revenues" under the 1997 Concession Agreement. This classification
is significant because under the 1997 Concession Agreement, "Public Utility Revenues" are subject to
an "Interim Adjustment" of fees upon the occurrence of certain extraordinary events specified in the
agreement.
42
However, under the draft Concession Agreement, terminal fees are not included in the
types of fees that may be subject to "Interim Adjustment."
43

Finally, under the 1997 Concession Agreement, "Public Utility Revenues," except terminal fees, are
denominated in US Dollars
44
while payments to the Government are in Philippine Pesos. In the draft
Concession Agreement, no such stipulation was included. By stipulating that "Public Utility Revenues"
will be paid to PIATCO in US Dollars while payments by PIATCO to the Government are in Philippine
currency under the 1997 Concession Agreement, PIATCO is able to enjoy the benefits of depreciations of
the Philippine Peso, while being effectively insulated from the detrimental effects of exchange rate
fluctuations.
When taken as a whole, the changes under the 1997 Concession Agreement with respect to reduction in
the types of fees that are subject to MIAA regulation and the relaxation of such regulation with respect to
other fees are significant amendments that substantially distinguish the draft Concession Agreement from
the 1997 Concession Agreement. The 1997 Concession Agreement, in this respect, clearly gives
PIATCO more favorable terms than what was available to other bidders at the time the contract
was 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 was offered for bidding. It cannot be denied that under the 1997 Concession Agreement only
"Public Utility Revenues" are subject to MIAA regulation. Adjustments of all other fees imposed and
collected by PIATCO are entirely within its control. Moreover, with respect to terminal fees, under the
1997 Concession Agreement, the same is further subject to "Interim Adjustments" not previously
stipulated in the draft Concession Agreement. Finally, the change in the currency stipulated for "Public
Utility Revenues" under the 1997 Concession Agreement, except terminal fees, gives PIATCO an added
benefit which was not available at the time of bidding.
b. Assumption by the
Government of the liabilities of
PIATCO in the event of the latter's
default thereof
Under the draft Concession Agreement, default by PIATCO of any of its obligations to creditors who
have provided, loaned or advanced funds for the NAIA IPT III project does not result in the assumption by
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the Government of these liabilities. In fact, nowhere in the said contract does default of PIATCO's loans
figure in the agreement. Such default does not directly result in any concomitant right or obligation in
favor of the Government.
However, the 1997 Concession Agreement provides:
Section 4.04 Assignment.
xxx xxx xxx
(b) In the event Concessionaire should default in the payment of an Attendant Liability, and the
default has resulted in the acceleration of the payment due date of the Attendant Liability prior to
its stated date of maturity, the Unpaid Creditors and Concessionaire shall immediately inform
GRP in writing of such default. GRP shall, within one hundred eighty (180) Days from receipt of
the joint written notice of the Unpaid Creditors and Concessionaire, either (i) take over the
Development Facility and assume the Attendant Liabilities, or (ii) allow the Unpaid Creditors, if
qualified, to be substituted as concessionaire and operator of the Development Facility in
accordance with the terms and conditions hereof, or designate a qualified operator acceptable to
GRP to operate the Development Facility, likewise under the terms and conditions of this
Agreement; Provided that if at the end of the 180-day period GRP shall not have served the
Unpaid Creditors and Concessionaire written notice of its choice, GRP shall be deemed to have
elected to take over the Development Facility with the concomitant assumption of Attendant
Liabilities.
(c) If GRP should, by written notice, allow the Unpaid Creditors to be substituted as
concessionaire, the latter shall form and organize a concession company qualified to take over
the operation of the Development Facility. If the concession company should elect to designate
an operator for the Development Facility, the concession company shall in good faith identify and
designate a qualified operator acceptable to GRP within one hundred eighty (180) days from
receipt of GRP's written notice. If the concession company, acting in good faith and with due
diligence, is unable to designate a qualified operator within the aforesaid period, then GRP shall
at the end of the 180-day period take over the Development Facility and assume Attendant
Liabilities.
The term "Attendant Liabilities" under the 1997 Concession Agreement is defined as:
Attendant Liabilities refer to all amounts recorded and from time to time outstanding in the books
of the Concessionaire as owing to Unpaid Creditors who have provided, loaned or advanced
funds actually used for the Project, including all interests, penalties, associated fees, charges,
surcharges, indemnities, reimbursements and other related expenses, and further including
amounts owed by Concessionaire to its suppliers, contractors and sub-contractors.
Under the above quoted portions of Section 4.04 in relation to the definition of "Attendant Liabilities,"
default by PIATCO of its loans used to finance the NAIA IPT III project triggers the occurrence of
certain events that leads to the assumption by the Government of the liability for the loans. Only in
one instance may the Government escape the assumption of PIATCO's liabilities, i.e., when the
Government so elects and allows a qualified operator to take over as Concessionaire. However, this
circumstance is dependent on the existence and availability of a qualified operator who is willing
to take over the rights and obligations of PIATCO under the contract, a circumstance that is not
entirely within the control of the Government.
Without going into the validity of this provision at this juncture, suffice it to state that Section 4.04 of the
1997 Concession Agreement may be considered 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. Section
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4.04 is an important amendment to the 1997 Concession Agreement because it grants PIATCO a
financial advantage or benefit which was not previously made available during the bidding
process. This financial advantage is a significant modification that translates to better terms and
conditions for PIATCO.
PIATCO, however, argues that the parties to the bidding procedure acknowledge that the draft
Concession Agreement is subject to amendment because the Bid Documents permit financing or
borrowing. They claim that it was the lenders who proposed the amendments to the draft Concession
Agreement which resulted in the 1997 Concession Agreement.
We agree that it is not inconsistent with the rationale and purpose of the BOT Law to allow the project
proponent or the winning bidder to obtain financing for the project, especially in this case which involves
the construction, operation and maintenance of the NAIA IPT III. Expectedly, compliance by the project
proponent of its undertakings therein would involve a substantial amount of investment. It is therefore
inevitable for the awardee of the contract to seek alternate sources of funds to support the project. Be that
as it may, this Court maintains that amendments to the contract bidded upon should always conform to
the general policy on public bidding if such procedure is to be faithful to its real nature and purpose. By its
very nature and characteristic, competitive public bidding aims to protect the public interest by giving the
public the best possible advantages through open 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 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 the purpose of its adoption.
46
These are the basic
parameters which every awardee of a contract bidded out must conform to, requirements of financing and
borrowing notwithstanding. Thus, upon a concrete showing that, as in this case, the contract signed by
the government and the contract-awardee is an entirely different contract from the contract bidded, courts
should not hesitate to strike down said contract in its entirety for violation of public policy on public
bidding. A strict adherence on the principles, rules and regulations on public bidding must be sustained if
only to preserve the integrity and the faith of the general public on the procedure.
Public bidding is a standard practice for procuring government contracts for public service and for
furnishing supplies and other materials. It aims to secure for the government the lowest possible price
under the most favorable terms and conditions, to curtail favoritism in the award of government contracts
and avoid suspicion of anomalies and it places all bidders in equal footing.
47
Any government action
which permits any substantial variance between the conditions under which the bids are invited
and the contract executed after the award thereof is a grave abuse of discretion amounting to lack
or excess of jurisdiction which warrants proper judicial action.
In view of the above discussion, the fact that the foregoing substantial amendments were made on the
1997 Concession Agreement renders the same null and void for being contrary to public policy.
These amendments convert the 1997 Concession Agreement to an entirely different 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 charges that are subject to MIAA regulation or control and the extent thereof
and (2) the assumption by the Government, under certain conditions, of the liabilities of PIATCO directly
translates concrete financial advantages to PIATCO that were previously not available during the
bidding process. These amendments cannot be taken as merely supplements to or implementing
provisions of those already existing in the draft Concession Agreement. The amendments discussed
above present new terms and conditions which provide financial benefit to PIATCO which may have
altered the technical and financial parameters of other bidders had they known that such terms were
available.
III
Direct Government Guarantee
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Article IV, Section 4.04(b) and (c), in relation to Article 1.06, of the 1997 Concession Agreement provides:
Section 4.04 Assignment
xxx xxx xxx
(b) In the event Concessionaire should default in the payment of an Attendant Liability, and
the default resulted in the acceleration of the payment due date of the Attendant Liability prior to
its stated date of maturity, the Unpaid Creditors and Concessionaire shall immediately inform
GRP in writing of such default. GRP shall within one hundred eighty (180) days from receipt of
the joint written notice of the Unpaid Creditors and Concessionaire, either (i) take over the
Development Facility and assume the Attendant Liabilities, or (ii) allow the Unpaid Creditors, if
qualified to be substituted as concessionaire and operator of the Development facility in
accordance with the terms and conditions hereof, or designate a qualified operator acceptable to
GRP to operate the Development Facility, likewise under the terms and conditions of this
Agreement; Provided, that if at the end of the 180-day period GRP shall not have served the
Unpaid Creditors and Concessionaire written notice of its choice, GRP shall be deemed to have
elected to take over the Development Facility with the concomitant assumption of
Attendant Liabilities.
(c) If GRP, by written notice, allow the Unpaid Creditors to be substituted as concessionaire, the
latter shall form and organize a concession company qualified to takeover the operation of the
Development Facility. If the concession company should elect to designate an operator for the
Development Facility, the concession company shall in good faith identify and designate a
qualified operator acceptable to GRP within one hundred eighty (180) days from receipt of GRP's
written notice. If the concession company, acting in good faith and with due diligence, is unable to
designate a qualified operator within the aforesaid period, then GRP shall at the end of the 180-
day period take over the Development Facility and assume Attendant Liabilities.
.
Section 1.06. Attendant Liabilities
Attendant Liabilities refer to all amounts recorded and from time to time outstanding in the
books of the Concessionaire as owing to Unpaid Creditors who have provided, loaned or
advanced funds actually used for the Project, including all interests, penalties, associated fees,
charges, surcharges, indemnities, reimbursements and other related expenses, and further
including amounts owed by Concessionaire to its suppliers, contractors and sub-contractors.
48

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 amounts recorded and from time to time outstanding from the
books" of PIATCO which the latter owes to its creditors.
49
These amounts include "all interests, penalties,
associated fees, charges, surcharges, indemnities, reimbursements and other related expenses."
50
This
obligation of the Government to pay PIATCO's creditors upon PIATCO's default would arise if the
Government opts to take over NAIA IPT III. It should be noted, 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 to designate
a qualified operator within the prescribed period.
51
In effect, whatever option the Government chooses
to take in the event of PIATCO's failure to fulfill its loan obligations, the Government is still at a
risk of assuming PIATCO's outstanding loans. This is due to the fact that the Government would only
be free from assuming PIATCO's debts if the unpaid creditors would be able to designate a qualified
operator within the period provided for in the contract. Thus, the Government's assumption of liability
is virtually out of its control. The Government under the circumstances provided for in the 1997
Concession Agreement is at the mercy of the existence, availability and willingness of a qualified
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operator. The above contractual provisions constitute a direct government guarantee which is prohibited
by law.
One of the main impetus for the enactment of the BOT Law is the lack of government funds to construct
the infrastructure and development projects necessary for economic growth and development. This is
why private sector resources are being tapped in order to finance these projects. The BOT law allows the
private sector to participate, and is in fact encouraged to do so by 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 prohibited.
53
This is but logical for if the government would in
the end still be at a risk of paying the debts incurred by the private entity in the BOT projects, then
the purpose of the law is subverted.
Section 2(n) of the BOT Law defines direct guarantee as follows:
(n) Direct government guarantee An agreement whereby the government or any of its
agencies or local government units assume responsibility for the repayment of debt directly
incurred by the project proponent in implementing the project in case of a loan default.
Clearly by providing that the Government "assumes" the attendant liabilities, which consists of PIATCO's
unpaid debts, the 1997 Concession Agreement provided for a direct government guarantee for the debts
incurred by PIATCO in the implementation of the NAIA IPT III project. It is of no moment that the relevant
sections are subsumed under the title of "assignment". The provisions providing for direct government
guarantee which is prohibited by law is clear from the terms thereof.
The fact that the ARCA superseded the 1997 Concession Agreement did not cure this fatal defect. Article
IV, Section 4.04(c), in relation to Article I, Section 1.06, of the ARCA provides:
Section 4.04 Security
xxx xxx xxx
(c) GRP agrees with Concessionaire (PIATCO) that it shall negotiate in 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 the approval of the Bangko Sentral ng Pilipinas), in such form as
may be reasonably acceptable to both GRP and Senior Lenders, with regard, inter alia, to the
following parameters:
xxx xxx xxx
(iv) If the Concessionaire [PIATCO] is in default under a payment obligation owed to
the Senior Lenders, and as a result thereof the Senior Lenders have become entitled to
accelerate the Senior Loans, the Senior Lenders shall have the right to notify GRP of the
same, and without prejudice to any other rights of the Senior Lenders or any Senior
Lenders' agent may have (including without limitation under security interests granted in
favor of the Senior Lenders), to either in good faith identify and designate a nominee
which is qualified under sub-clause (viii)(y) below to operate the Development Facility
[NAIA Terminal 3] or transfer the Concessionaire's [PIATCO] rights and obligations under
this Agreement to a transferee which is qualified under sub-clause (viii) below;
xxx xxx xxx
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(vi) if the Senior Lenders, acting in good faith and using reasonable efforts, are unable to
designate a nominee or effect a transfer in terms and conditions satisfactory to the Senior
Lenders within one hundred eighty (180) days after giving GRP notice as referred to
respectively in (iv) or (v) above, then GRP and the Senior Lenders shall endeavor in good
faith to enter into any other arrangement relating to the Development Facility [NAIA
Terminal 3] (other than a turnover of the Development Facility [NAIA Terminal 3] to GRP)
within the following one hundred eighty (180) days. If no agreement relating to the
Development Facility [NAIA Terminal 3] is arrived at by GRP and the Senior Lenders
within the said 180-day period, then at the end thereof the Development Facility [NAIA
Terminal 3] shall be transferred by the Concessionaire [PIATCO] to GRP or its
designee and GRP shall make a termination payment to Concessionaire [PIATCO]
equal to the Appraised Value (as hereinafter defined) of the Development Facility
[NAIA Terminal 3] or the sum of the Attendant Liabilities, if greater. Notwithstanding
Section 8.01(c) hereof, this Agreement shall be deemed terminated upon the transfer of
the Development Facility [NAIA Terminal 3] to GRP pursuant hereto;
xxx xxx xxx
Section 1.06. Attendant Liabilities
Attendant Liabilities refer to all amounts in each case supported by verifiable evidence from
time to time owed or which may become owing by Concessionaire [PIATCO] to Senior
Lenders or any other persons or entities who have provided, loaned, or advanced funds or
provided financial facilities to Concessionaire [PIATCO] for the Project [NAIA Terminal 3],
including, without limitation, all principal, interest, associated fees, charges,
reimbursements, and other related expenses (including the fees, charges and expenses of
any agents or trustees of such persons or entities), whether payable at maturity, by acceleration
or otherwise, and further including amounts owed by Concessionaire [PIATCO] to its professional
consultants and advisers, suppliers, contractors and sub-contractors.
54

It is clear from the foregoing contractual provisions that in the event that PIATCO fails to fulfill its loan
obligations to its Senior Lenders, the Government is obligated to directly negotiate and enter into an
agreement relating to NAIA IPT III with the Senior Lenders, should the latter fail to 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 an agreement after the prescribed period, the Government must then pay PIATCO,
upon transfer of NAIA IPT III to the Government, termination payment equal to the appraised value of the
project or the value of the attendant liabilities whichever is greater. Attendant liabilities as defined in
the ARCA includes all amounts owed or thereafter may be owed by PIATCO not only to the Senior
Lenders with whom PIATCO has defaulted in its loan obligations but to all other persons who may have
loaned, advanced funds or provided any other type of financial facilities to PIATCO for NAIA IPT III. The
amount of PIATCO's debt that the Government would have to pay as a result of PIATCO's default in its
loan obligations -- in case no qualified nominee or transferee is appointed by the Senior Lenders and no
other agreement relating to NAIA IPT III has been reached between the Government and the Senior
Lenders -- includes, but is not limited to, "all principal, interest, associated fees, charges, reimbursements,
and other related expenses . . . whether payable at maturity, by acceleration or otherwise."
55

It is clear from the foregoing that the ARCA provides for a direct guarantee by the government to
pay PIATCO's loans not only to its Senior Lenders but all other entities who provided PIATCO
funds or services upon PIATCO's default in its loan obligation with its Senior Lenders. The fact
that the Government's obligation to pay PIATCO's lenders for the latter's obligation would only arise after
the Senior Lenders fail to appoint a qualified nominee or transferee does not detract from the fact that,
should the conditions as stated in the contract occur, the ARCA still obligates the Government to pay any
and all amounts owed by PIATCO to its lenders in connection with NAIA IPT III. Worse, the conditions
that would make the Government liable for PIATCO's debts is triggered by PIATCO's own default of its
loan obligations to its Senior Lenders to which loan contracts the Government was never a party to. The
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Government was not even given an option as to what course of action it should take in case PIATCO
defaulted in the payment of its senior loans. The Government, upon PIATCO's default, would be merely
notified by the Senior Lenders of the same and it is the Senior Lenders who are authorized to appoint a
qualified nominee or transferee. Should the Senior Lenders fail to make such an appointment, the
Government is then automatically obligated to "directly deal and negotiate" with the Senior Lenders
regarding NAIA IPT III. The only way the Government would not be liable for PIATCO's debt is for a
qualified nominee or transferee to be appointed in place of PIATCO to continue the construction,
operation and maintenance of NAIA IPT III. This "pre-condition", however, will not take the contract out of
the ambit of a direct guarantee by the government as the existence, availability and willingness of a
qualified nominee or transferee is totally out of the government's control. As such the Government is
virtually at the mercy of PIATCO (that it would not default on its loan obligations to its Senior Lenders),
the Senior Lenders (that they would appoint a qualified nominee or transferee or agree to some other
arrangement with the Government) and the existence of a qualified nominee or transferee who is able
and willing to take the place of PIATCO in NAIA IPT III.
The proscription against government guarantee in any form is one of the policy considerations
behind the BOT Law. Clearly, in the present case, the ARCA obligates the Government to pay for all
loans, advances and obligations arising out of financial facilities extended to PIATCO for the
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 qualified nominee or transferee. This in effect would make the
Government liable for PIATCO's loans should the conditions as set forth in the ARCA arise. This is a form
of direct government guarantee.
The BOT Law and its implementing rules provide that in order for an unsolicited proposal for a BOT
project may be accepted, the following conditions must first be met: (1) the project involves a new
concept in technology and/or is not part of the list of priority projects, (2) no direct government
guarantee, subsidy or equity is required, and (3) the government agency or local government unit has
invited by publication other interested parties to a public bidding and conducted the same.
56
The failure to
meet any of the above conditions will result in the denial of the proposal. It is further provided that the
presence of direct government guarantee, subsidy or equity will "necessarily disqualify a proposal from
being treated and accepted as an unsolicited proposal."
57
The BOT Law clearly and strictly prohibits direct
government guarantee, subsidy and equity in unsolicited proposals that the mere inclusion of a provision
to that effect is fatal and is sufficient to deny the proposal. It stands to reason therefore that if a proposal
can be denied by reason of the existence of direct government guarantee, then its inclusion in the
contract executed after the said proposal has been accepted is likewise sufficient to invalidate the
contract itself. A prohibited provision, the inclusion of which would result in the denial of a proposal
cannot, and should not, be allowed to later on be inserted in the contract resulting from the said proposal.
The basic rules of justice and fair play alone militate against such an occurrence and must not, therefore,
be countenanced particularly in this instance where the government is exposed to the risk of shouldering
hundreds of million of dollars in debt.
This Court has long and consistently adhered to the legal maxim that those that cannot be done directly
cannot be done indirectly.
58
To declare the PIATCO contracts valid despite the clear statutory
prohibition against a direct government guarantee would not only make a mockery of what the
BOT Law seeks to prevent -- which is to expose the government to the risk of incurring a
monetary obligation resulting from a contract of loan between the project proponent and its
lenders and to which the 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 private sector in the
"financing, operation and maintenance of infrastructure and development projects"
59
which are
necessary for national growth and development but which the government, unfortunately, could
ill-afford to finance at this point in time.
IV
Temporary takeover of business affected with public interest
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Article XII, Section 17 of the 1987 Constitution provides:
Section 17. In times of national emergency, when the public interest so requires, the State may,
during the emergency and under reasonable terms prescribed by it, temporarily take over or
direct the operation of any privately owned public utility or business affected with public interest.
The above provision pertains to the right of the State in times of national emergency, and in the exercise
of its police power, to temporarily take over the operation of any business affected with public interest. In
the 1986 Constitutional Commission, the term "national emergency" was defined to include threat from
external aggression, calamities or national disasters, but not strikes "unless it is of such proportion that
would paralyze government service."
60
The duration of the emergency itself is the determining factor as to
how long the temporary takeover by the government would last.
61
The temporary takeover by the
government extends only to the operation of the business and not to the ownership thereof. As such the
government is not required to compensate the private entity-owner of the said business as there
is no transfer of ownership, whether permanent or temporary. The private entity-owner affected by the
temporary takeover cannot, likewise, claim just compensation for the use of the said business and its
properties as the temporary takeover by the government is in exercise of its police power and not of its
power of eminent domain.
Article V, Section 5.10 (c) of the 1997 Concession Agreement provides:
Section 5.10 Temporary Take-over of operations by GRP.
.
(c) In the event the development Facility or any part thereof and/or the operations of
Concessionaire or any part thereof, become the subject matter of or be included in any notice,
notification, or declaration concerning or relating to acquisition, seizure or appropriation by GRP
in times of war or national emergency, GRP shall, by written notice to Concessionaire,
immediately take over the operations of the Terminal and/or the Terminal Complex. During such
take over by GRP, the Concession Period shall be suspended; provided, that upon termination of
war, hostilities or national emergency, the operations shall be returned to Concessionaire, at
which time, 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 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 Concessionaire, if the temporary take over should occur at the time
when Concessionaire is still servicing debts owed to project lenders), any loss or damage to the
Development Facility, and other consequential damages. If the parties cannot agree on the
reasonable compensation of Concessionaire, or on the liability of GRP as aforesaid, the matter
shall be resolved in accordance with Section 10.01 [Arbitration]. Any amount determined to be
payable by GRP to Concessionaire shall be offset from the amount next payable by
Concessionaire to GRP.
62

PIATCO cannot, by mere contractual stipulation, contravene the Constitutional provision on
temporary government takeover and obligate the government to pay "reasonable cost for the use
of the Terminal and/or Terminal Complex."
63
Article XII, section 17 of the 1987 Constitution envisions a
situation wherein the exigencies of the times necessitate the government to "temporarily take over or
direct the operation of any privately owned public utility or business affected with public interest." It is the
welfare and interest of the public which is the paramount consideration in determining whether or not to
temporarily take over a particular business. Clearly, the State in effecting the temporary takeover is
exercising its police power. Police power is the "most essential, insistent, and illimitable of powers."
64
Its
exercise therefore must not be unreasonably hampered nor its exercise be a source of obligation by the
government in the absence of damage due to arbitrariness of its exercise.
65
Thus, requiring the
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100

government to pay reasonable compensation for the reasonable use of the property pursuant to the
operation of the business contravenes the Constitution.
V
Regulation of Monopolies
A monopoly is "a privilege or peculiar advantage vested in one or more persons or companies, consisting
in the exclusive right (or power) to carry on a particular business or trade, manufacture a particular article,
or control the sale of a particular commodity."
66
The 1987 Constitution strictly regulates monopolies,
whether private or public, and even provides for their prohibition if public interest so requires. Article XII,
Section 19 of the 1987 Constitution states:
Sec. 19. The state shall regulate or prohibit monopolies when the public interest so requires. No
combinations in restraint of trade or unfair competition shall be allowed.
Clearly, monopolies are not per se prohibited by the Constitution but may be permitted to exist to aid the
government in carrying on an enterprise or to aid in the performance of various services and functions in
the interest of the public.
67
Nonetheless, a determination must first be made as to whether public
interest requires a monopoly. As monopolies are subject to abuses that can inflict severe prejudice to the
public, they are subject to a higher level of State regulation than an ordinary business undertaking.
In the cases at bar, PIATCO, under the 1997 Concession Agreement and the ARCA, is granted the
"exclusive right to operate a commercial international passenger terminal within the Island of Luzon" at
the NAIA IPT III.
68
This is with the exception of already existing international airports in Luzon such as
those located in the Subic Bay Freeport Special Economic Zone ("SBFSEZ"), Clark Special Economic
Zone ("CSEZ") and in Laoag City.
69
As such, upon commencement of PIATCO's operation of NAIA IPT
III, Terminals 1 and 2 of NAIA would cease to function as international passenger terminals. This,
however, does not prevent MIAA to use Terminals 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 III in
the latter's operation as an international passenger terminal.
70
The right granted to PIATCO to
exclusively operate NAIA IPT III would be for a period of twenty-five (25) years from the In-Service
Date
71
and renewable for another twenty-five (25) years at the option of the government.
72
Both the 1997
Concession Agreement and the ARCA further provide that, in view of the exclusive right granted
to PIATCO, the concession contracts of the service providers currently servicing Terminals 1 and
2 would no longer be renewed and those concession contracts whose expiration are subsequent
to the In-Service Date would cease to be effective on the said date.
73

The operation of an international passenger airport terminal is no doubt an undertaking imbued with
public interest. In entering into a BuildOperate-and-Transfer contract for the construction, operation and
maintenance of NAIA IPT III, the government has determined that public interest would be served better if
private sector resources were used in its construction and an exclusive right to operate be granted to the
private entity undertaking the said project, in this case PIATCO. Nonetheless, the privilege given to
PIATCO is subject to reasonable regulation and supervision by the Government through the MIAA, which
is the government agency authorized to operate the NAIA complex, as well as DOTC, the department to
which MIAA is attached.
74

This is in accord with the Constitutional mandate that a monopoly which is not prohibited must be
regulated.
75
While it is the declared policy of the BOT Law to encourage private sector participation by
"providing a climate of minimum government regulations,"
76
the same does not mean that Government
must completely surrender its sovereign power to protect public interest in the operation of a public utility
as a monopoly. The operation of said public utility can not be done in an arbitrary manner to the detriment
of 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 PIATCO may be authorized to exclusively operate NAIA
JURISDICTION jrp
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IPT III as an international passenger terminal, the Government, through the MIAA, has the right and the
duty to ensure that it is done in accord with public interest. PIATCO's right to operate NAIA IPT III cannot
also violate the rights of third parties.
Section 3.01(e) of the 1997 Concession Agreement and the ARCA provide:
3.01 Concession Period
xxx xxx xxx
(e) GRP confirms that certain concession agreements relative to certain services and
operations currently being undertaken at the Ninoy Aquino International Airport passenger
Terminal I have a validity period extending beyond the In-Service Date. GRP through
DOTC/MIAA, confirms that these services and operations shall not be carried over to the
Terminal and the Concessionaire is under no legal obligation to permit such carry-over except
through a separate agreement duly entered into with Concessionaire. In the event
Concessionaire becomes involved in any litigation initiated by any such concessionaire or
operator, GRP undertakes and hereby holds Concessionaire free and harmless on full indemnity
basis from and against any loss and/or any liability resulting from any such litigation, including the
cost of litigation and the reasonable fees paid or payable to Concessionaire's counsel of choice,
all such amounts shall be fully deductible by way of an offset from any amount which the
Concessionaire is bound to pay GRP under this Agreement.
During the oral arguments on December 10, 2002, the counsel for the petitioners-in-intervention
for G.R. No. 155001 stated that there are two service providers whose contracts are still existing
and whose validity extends beyond the In-Service Date. One contract remains valid until 2008
and the other until 2010.
77

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 their respective contracts, those contracts whose duration
extends beyond NAIA IPT III's In-Service-Date should not be unduly prejudiced. These 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 and binding contract nugatory. PIATCO, by the mere expedient of claiming an
exclusive right to operate, cannot require the Government to break its contractual obligations to the
service providers. In contrast to the arrastre and stevedoring service providers in the case of Anglo-Fil
Trading Corporation v. Lazaro
78
whose contracts consist of temporary hold-over permits, the affected
service providers in the cases at bar, have a valid and binding contract with the Government, through
MIAA, whose period of effectivity, as well as the other terms and conditions thereof, cannot be violated.
In fine, the efficient functioning of NAIA IPT III is imbued with public 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 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 third
parties and above all, the interest of the public.
VI
CONCLUSION
In sum, this Court rules that in view of the absence of the requisite financial capacity of the Paircargo
Consortium, predecessor of respondent PIATCO, the award by the PBAC of the contract for the
construction, operation and maintenance of the NAIA IPT III is null and void. Further, considering that the
1997 Concession Agreement contains material and substantial amendments, which amendments had the
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effect of converting the 1997 Concession Agreement into an entirely different agreement from the
contract bidded upon, the 1997 Concession Agreement is similarly null and void for being contrary to
public policy. The provisions under Sections 4.04(b) and (c) in relation to Section 1.06 of the 1997
Concession Agreement and Section 4.04(c) in relation to Section 1.06 of the ARCA, which constitute a
direct government guarantee expressly prohibited by, among others, the BOT Law and its Implementing
Rules and Regulations are also null and void. The Supplements, being accessory contracts to the ARCA,
are likewise null and void.
WHEREFORE, the 1997 Concession Agreement, the Amended and Restated Concession Agreement
and the Supplements thereto are set aside for being null and void.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 154599 January 21, 2004
THE LIGA NG MGA BARANGAY NATIONAL, petitioner,
vs.
THE CITY MAYOR OF MANILA, HON. JOSE ATIENZA, JR., and THE CITY COUNCIL OF MANILA,
respondents.
D E C I S I O N
DAVIDE, JR., C.J .:
This petition for certiorari under Rule 65 of the Rules of Court seeks the nullification of Manila City
Ordinance No. 8039, Series of 2002,
1
and respondent City Mayors Executive Order No. 011, Series of
2002,
2
dated 15 August 2002 , for being patently contrary to law.
The antecedents are as follows:
Petitioner Liga ng mga Barangay National (Liga for brevity) is the national organization of all the
barangays in the Philippines, which pursuant to Section 492 of Republic Act No. 7160, otherwise
known as The Local Government Code of 1991, constitutes the duly elected presidents of highly-
urbanized cities, provincial chapters, the metropolitan Manila Chapter, and metropolitan political
subdivision chapters.
Section 493 of that law provides that "[t]he liga at the municipal, city, provincial, metropolitan
political subdivision, and national levels directly elect a president, a vice-president, and five (5)
members of the board of directors." All other matters not provided for in the law affecting the
internal organization of the leagues of local government units shall be governed by their
respective constitution and by-laws, which must always conform to the provisions of the
Constitution and existing laws.
3

On 16 March 2000, the Liga adopted and ratified its own Constitution and By-laws to govern its internal
organization.
4
Section 1, third paragraph, Article XI of said Constitution and By-Laws states:
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All other election matters not covered in this Article shall be governed by the "Liga Election Code"
or such other rules as may be promulgated by the National Liga Executive Board in conformity
with the provisions of existing laws.
By virtue of the above-cited provision, the Liga adopted and ratified its own Election Code.
5
Section 1.2,
Article I of the Liga Election Code states:
1.2 Liga ng mga Barangay Provincial, Metropolitan, HUC/ICC Chapters. There shall be
nationwide synchronized elections for the provincial, metropolitan, and HUC/ICC chapters to be
held on the third Monday of the month immediately after the month when the synchronized
elections in paragraph 1.1 above was held. The incumbent Liga chapter president concerned duly
assisted by the proper government agency, office or department, e.g.
Provincial/City/NCR/Regional Director, shall convene all the duly elected Component
City/Municipal Chapter Presidents and all the current elected Punong Barangays (for HUC/ICC)
of the respective chapters in any public place within its area of jurisdiction for the purpose of
reorganizing and electing the officers and directors of the provincial, metropolitan or HUC/ICC
Liga chapters. Said president duly assisted by the government officer aforementioned, shall
notify, in writing, all the above concerned at least fifteen (15) days before the scheduled election
meeting on the exact date, time, place and requirements of the said meeting.
The Liga thereafter came out with its Calendar of Activities and Guidelines in the Implementation of the
Liga Election Code of 2002,
6
setting on 21 October 2002 the synchronized elections for highly urbanized
city chapters, such as the Liga Chapter of Manila, together with independent component city, provincial,
and metropolitan chapters.lawphi1.net
On 28 June 2002, respondent City Council of Manila enacted Ordinance No. 8039, Series of 2002,
providing, among other things, for the election of representatives of the District Chapters in the City
Chapter of Manila and setting the elections for both chapters thirty days after the barangay elections.
Section 3 (A) and (B) of the assailed ordinance read:
SEC. 3. Representation Chapters. Every Barangay shall be represented in the said Liga
Chapters by the Punong Barangayor, in his absence or incapacity, by the kagawad duly
elected for the purpose among its members.
A. District Chapter
All elected Barangay Chairman in each District shall elect from among themselves the President,
Vice-President and five (5) members of the Board.
B. City Chapter
The District Chapter representatives shall automatically become members of the Board and they
shall elect from among themselves a President, Vice-President, Secretary, Treasurer, Auditor and
create other positions as it may deem necessary for the management of the chapter.
The assailed ordinance was later transmitted to respondent City Mayor Jose L. Atienza, Jr., for
his signature and approval.
On 16 July 2002, upon being informed that the ordinance had been forwarded to the Office of the
City Mayor, still unnumbered and yet to be officially released, the Liga sent respondent Mayor of
Manila a letter requesting him that said ordinance be vetoed considering that it encroached upon,
or even assumed, the functions of the Liga through legislation, a function which was clearly
beyond the ambit of the powers of the City Council.
7

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

Quasi-judicial function, on the other hand, is "a term which applies to the actions, discretion, etc., of public
administrative officers or bodies required to investigate facts or ascertain the existence of facts, hold
hearings, and draw conclusions from them as a basis for their official action and to exercise discretion of
a judicial nature."
12

Before a tribunal, board, or officer may exercise judicial or quasi-judicial acts, it is necessary that there be
a law that gives rise to some specific rights of persons or property under which adverse claims to such
rights are made, and the controversy ensuing therefrom is brought before a tribunal, board, or officer
clothed with power and authority to determine the law and adjudicate the respective rights of the
contending parties.
13

The respondents do not fall within the ambit of tribunal, board, or officer exercising judicial or quasi-
judicial functions. As correctly pointed out by the respondents, the enactment by the City Council of
Manila of the assailed ordinance and the issuance by respondent Mayor of the questioned executive
order were done in the exercise of legislative and executive functions, respectively, and not of judicial or
quasi-judicial functions. On this score alone, certiorari will not lie.
Second, although the instant petition is styled as a petition for certiorari, in essence, it seeks the
declaration by this Court of the unconstitutionality or illegality of the questioned ordinance and executive
order. It, thus, partakes of the nature of a petition for declaratory relief over which this Court has only
appellate, not original, jurisdiction.
14
Section 5, Article VIII of the Constitution provides:
Sec. 5. The Supreme Court shall have the following powers:
(1) Exercise original jurisdiction over cases affecting ambassadors, other public ministers
and consuls, and over petitions for certiorari, prohibition, mandamus, quo warranto, and
habeas corpus.
(2) Review, revise, reverse, modify, or affirm on appeal or certiorari as the law or the
Rules of Court may provide, final judgments and orders of lower courts in:
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(a) All cases in which the constitutionality or validity of any treaty, international or
executive agreement, law, presidential decree, proclamation, order, instruction,
ordinance, or regulation is in question. (Italics supplied).
As such, this petition must necessary fail, as this Court does not have original jurisdiction over a
petition for declaratory relief even if only questions of law are involved.
15

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

This concurrence of jurisdiction is not, however, to be taken as according to parties seeking any
of the writs an absolute, unrestrained freedom of choice of the court to which application therefor0
will be directed. There is after all a hierarchy of courts. That hierarchy is determinative of the
venue of appeals, and also serves as a general determinant of the appropriate forum for petitions
for the extraordinary writs. A becoming regard of that judicial hierarchy most certainly indicates
that petitions for the issuance of extraordinary writs against first level ("inferior") courts should be
filed with the Regional Trial Court, and those against the latter, with the Court of Appeals. A direct
invocation of the Supreme Courts original jurisdiction to issue these writs should be allowed only
when there are special and important reasons therefor, clearly and specifically set out in the
petition. This is [an] established policy. It is a policy necessary to prevent inordinate demands
upon the Courts time and attention which are better devoted to those matters within its exclusive
jurisdiction, and to prevent further over-crowding of the Courts docket.
As we have said in Santiago v. Vasquez,
17
the propensity of litigants and lawyers to disregard the
hierarchy of courts in our judicial system by seeking relief directly from this Court must be put to a halt for
two reasons: (1) it would be an imposition upon the precious time of this Court; and (2) it would cause an
inevitable and resultant delay, intended or otherwise, in the adjudication of cases, which in some
instances had to be remanded or referred to the lower court as the proper forum under the rules of
procedure, or as better equipped to resolve the issues because this Court is not a trier of facts.
Thus, we shall reaffirm the judicial policy that this Court will not entertain direct resort to it unless the
redress desired cannot be obtained in the appropriate courts, and exceptional and compelling
circumstances justify the availment of the extraordinary remedy of writ of certiorari, calling for the exercise
of its primary jurisdiction.
18

Petitioners reliance on Pimentel v. Aguirre
19
is misplaced because the non-observance of the hierarchy-
of-courts rule was not an issue therein. Besides, what was sought to be nullified in the petition for
certiorari and prohibition therein was an act of the President of the Philippines, which would have greatly
affected all local government units. We reiterated therein that when an act of the legislative department is
seriously alleged to have infringed the Constitution, settling the controversy becomes the duty of this
Court. The same is true when what is seriously alleged to be unconstitutional is an act of the President,
who in our constitutional scheme is coequal with Congress.
We hesitate to rule that the petitioner and the intervenor are guilty of forum-shopping. Forum-shopping
exists where the elements of litis pendentia are present or when a final judgment in one case will amount
to res judicata in the other. For litis pendentia to exist, the following requisites must be present: (1) identity
of parties, or at least such parties as are representing the same interests in both actions; (2) identity of
rights asserted and reliefs prayed for, the reliefs being founded on the same facts; and (3) identity with
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108

respect to the two preceding particulars in the two cases, such that any judgment that may be rendered in
the pending case, regardless of which party is successful, would amount to res judicata in the other
case.
20

In the instant petition, and as admitted by the respondents, the parties in this case and in the alleged
other pending cases are different individuals or entities; thus, forum-shopping cannot be said to exist.
Moreover, even assuming that those five petitions are indeed pending before the RTC of Manila and the
Court of Appeals, we can only guess the causes of action and issues raised before those courts,
considering that the respondents failed to furnish this Court with copies of the said petitions.
WHEREFORE, the petition is DISMISSED.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 162059 January 22, 2008
HANNAH EUNICE D. SERANA, petitioner,
vs.
SANDIGANBAYAN and PEOPLE OF THE PHILIPPINES, respondents.
D E C I S I O N
REYES, R.T., J .:
CAN the Sandiganbayan try a government scholaran
**
accused, along with her brother, of swindling
government funds?
MAAARI bang litisin ng Sandiganbayan ang isang iskolar ng bayan, at ang kanyang kapatid, na
kapwa pinararatangan ng estafa ng pera ng bayan?
The jurisdictional question is posed in this petition for certiorari assailing the Resolutions
1
of the
Sandiganbayan, Fifth Division, denying petitioners motion to quash the information and her motion for
reconsideration.
The Antecedents
Petitioner Hannah Eunice D. Serana was a senior student of the University of the Philippines-Cebu. A
student of a state university is known as a government scholar. She was appointed by then President
Joseph Estrada on December 21, 1999 as a student regent of UP, to serve a one-year term starting
January 1, 2000 and ending on December 31, 2000.
In the early part of 2000, petitioner discussed with President Estrada the renovation of Vinzons Hall
Annex in UP Diliman.
2
On September 4, 2000, petitioner, with her siblings and relatives, registered with
the Securities and Exchange Commission the Office of the Student Regent Foundation, Inc. (OSRFI).
3

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One of the projects of the OSRFI was the renovation of the Vinzons Hall Annex.
4
President Estrada gave
Fifteen Million Pesos (P15,000,000.00) to the OSRFI as financial assistance for the proposed renovation.
The source of the funds, according to the information, was the Office of the President.
The renovation of Vinzons Hall Annex failed to materialize.
5
The succeeding student regent, Kristine
Clare Bugayong, and Christine Jill De Guzman, Secretary General of the KASAMA sa U.P., a system-
wide alliance of student councils within the state university, consequently filed a complaint for
Malversation of Public Funds and Property with the Office of the Ombudsman.
6

On July 3, 2003, the Ombudsman, after due investigation, found probable cause to indict petitioner and
her brother Jade Ian D. Serana for estafa, docketed as Criminal Case No. 27819 of the Sandiganbayan.
7

The Information reads:
The undersigned Special Prosecution Officer III, Office of the Special Prosecutor, hereby accuses
HANNAH EUNICE D. SERANA and JADE IAN D. SERANA of the crime of Estafa, defined and
penalized under Paragraph 2(a), Article 315 of the Revised Penal Code, as amended committed
as follows:
That on October, 24, 2000, or sometime prior or subsequent thereto, in Quezon City, Metro
Manila, Philippines, and within the jurisdiction of this Honorable Court, above-named accused,
HANNAH EUNICE D. SERANA, a high-ranking public officer, being then the Student Regent of
the University of the Philippines, Diliman, Quezon City, while in the performance of her official
functions, committing the offense in relation to her office and taking advantage of her position,
with intent to gain, conspiring with her brother, JADE IAN D. SERANA, a private individual, did
then and there wilfully, unlawfully and feloniously defraud the government by falsely and
fraudulently representing to former President Joseph Ejercito Estrada that the renovation of the
Vinzons Hall of the University of the Philippines will be renovated and renamed as "President
Joseph Ejercito Estrada Student Hall," and for which purpose accused HANNAH EUNICE D.
SERANA requested the amount of FIFTEEN MILLION PESOS (P15,000,000.00), Philippine
Currency, from the Office of the President, and the latter relying and believing on said false
pretenses and misrepresentation gave and delivered to said accused Land Bank Check No.
91353 dated October 24, 2000 in the amount of FIFTEEN MILLION PESOS (P15,000,000.00),
which check was subsequently encashed by accused Jade Ian D. Serana on October 25, 2000
and misappropriated for their personal use and benefit, and despite repeated demands made
upon the accused for them to return aforesaid amount, the said accused failed and refused to do
so to the damage and prejudice of the government in the aforesaid amount.
CONTRARY TO LAW. (Underscoring supplied)
Petitioner moved to quash the information. She claimed that the Sandiganbayan does not have any
jurisdiction over the offense charged or over her person, in her capacity as UP student regent.
Petitioner claimed that Republic Act (R.A.) No. 3019, as amended by R.A. No. 8249, enumerates the
crimes or offenses over which the Sandiganbayan has jurisdiction.
8
It has no jurisdiction over the crime of
estafa.
9
It only has jurisdiction over crimes covered by Title VII, Chapter II, Section 2 (Crimes Committed
by Public Officers), Book II of the Revised Penal Code (RPC). Estafa falling under Title X, Chapter VI
(Crimes Against Property), Book II of the RPC is not within the Sandiganbayans jurisdiction.
She also argued that it was President Estrada, not the government, that was duped. Even assuming that
she received the P15,000,000.00, that amount came from Estrada, not from the coffers of the
government.
10

Petitioner likewise posited that the Sandiganbayan had no jurisdiction over her person. As a student
regent, she was not a public officer since she merely represented her peers, in contrast to the other
JURISDICTION jrp
110

regents who held their positions in an ex officio capacity. She addsed that she was a simple student and
did not receive any salary as a student regent.
She further contended that she had no power or authority to receive monies or funds. Such power was
vested with the Board of Regents (BOR) as a whole. Since it was not alleged in the information that it was
among her functions or duties to receive funds, or that the crime was committed in connection with her
official functions, the same is beyond the jurisdiction of the Sandiganbayan citing the case of Soller v.
Sandiganbayan.
11

The Ombudsman opposed the motion.
12
It disputed petitioners interpretation of the law. Section 4(b) of
Presidential Decree (P.D.) No. 1606 clearly contains the catch -all phrase "in relation to office," thus, the
Sandiganbayan has jurisdiction over the charges against petitioner. In the same breath, the prosecution
countered that the source of the money is a matter of defense. It should be threshed out during a full-
blown trial.
13

According to the Ombudsman, petitioner, despite her protestations, iwas a public officer. As a member of
the BOR, she hads the general powers of administration and exerciseds the corporate powers of UP.
Based on Mechems definition of a public office, petitioners stance that she was not compensated,
hence, not a public officer, is erroneous. Compensation is not an essential part of public office.
Parenthetically, compensation has been interpreted to include allowances. By this definition, petitioner
was compensated.
14

Sandiganbayan Disposition
In a Resolution dated November 14, 2003, the Sandiganbayan denied petitioners motion for lack of
merit.
15
It ratiocinated:
The focal point in controversy is the jurisdiction of the Sandiganbayan over this case.
It is extremely erroneous to hold that only criminal offenses covered by Chapter II, Section 2, Title
VII, Book II of the Revised Penal Code are within the jurisdiction of this Court. As correctly
pointed out by the prosecution, Section 4(b) of R.A. 8249 provides that the Sandiganbayan also
has jurisdiction over other offenses committed by public officials and employees in relation to their
office. From this provision, there is no single doubt that this Court has jurisdiction over the offense
of estafa committed by a public official in relation to his office.
Accused-movants claim that being merely a member in representation of the student body, she
was never a public officer since she never received any compensation nor does she fall under
Salary Grade 27, is of no moment, in view of the express provision of Section 4 of Republic Act
No. 8249 which provides:
Sec. 4. Jurisdiction The Sandiganbayan shall exercise exclusive original jurisdiction in all cases
involving:
(A) x x x
(1) Officials of the executive branch occupying the positions of regional director and higher,
otherwise classified as Grade "27" and higher, of the Compensation and Position Classification
Act of 1989 (Republic Act No. 6758), specifically including:
x x x x
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111

(g) Presidents, directors or trustees, or managers of government-owned or controlled
corporations, state universities or educational institutions or foundations. (Italics supplied)
It is very clear from the aforequoted provision that the Sandiganbayan has original exclusive
jurisdiction over all offenses involving the officials enumerated in subsection (g), irrespective of
their salary grades, because the primordial consideration in the inclusion of these officials is the
nature of their responsibilities and functions.
Is accused-movant included in the contemplated provision of law?
A meticulous review of the existing Charter of the University of the Philippines reveals that the
Board of Regents, to which accused-movant belongs, exclusively exercises the general powers of
administration and corporate powers in the university, such as: 1) To receive and appropriate to
the ends specified by law such sums as may be provided by law for the support of the university;
2) To prescribe rules for its own government and to enact for the government of the university
such general ordinances and regulations, not contrary to law, as are consistent with the purposes
of the university; and 3) To appoint, on recommendation of the President of the University,
professors, instructors, lecturers and other employees of the University; to fix their compensation,
hours of service, and such other duties and conditions as it may deem proper; to grant to them in
its discretion leave of absence under such regulations as it may promulgate, any other provisions
of law to the contrary notwithstanding, and to remove them for cause after an investigation and
hearing shall have been had.
It is well-established in corporation law that the corporation can act only through its board of
directors, or board of trustees in the case of non-stock corporations. The board of directors or
trustees, therefore, is the governing body of the corporation.
It is unmistakably evident that the Board of Regents of the University of the Philippines is
performing functions similar to those of the Board of Trustees of a non-stock corporation. This
draws to fore the conclusion that being a member of such board, accused-movant undoubtedly
falls within the category of public officials upon whom this Court is vested with original exclusive
jurisdiction, regardless of the fact that she does not occupy a position classified as Salary Grade
27 or higher under the Compensation and Position Classification Act of 1989.
Finally, this court finds that accused-movants contention that the same of P15 Million was
received from former President Estrada and not from the coffers of the government, is a matter a
defense that should be properly ventilated during the trial on the merits of this case.
16

On November 19, 2003, petitioner filed a motion for reconsideration.
17
The motion was denied with finality
in a Resolution dated February 4, 2004.
18

Issue
Petitioner is now before this Court, contending that "THE RESPONDENT COURT COMMITTED GRAVE
ABUSE OF DISCRETION AMOUNTING TO LACK AND/OR EXCESS OF JURISDICTION IN NOT
QUASHING THE INFORMATION AND DISMISING THE CASE NOTWITHSTANDING THAT IS HAS NO
JURISDICTION OVER THE OFFENSE CHARGED IN THE INFORMATION."
19

In her discussion, she reiterates her four-fold argument below, namely: (a) the Sandiganbayan has no
jurisdiction over estafa; (b) petitioner is not a public officer with Salary Grade 27 and she paid her tuition
fees; (c) the offense charged was not committed in relation to her office; (d) the funds in question
personally came from President Estrada, not from the government.
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112

Our Ruling
The petition cannot be granted.
Preliminarily, the denial of a motion to
quash is not correctible by certiorari.
We would ordinarily dismiss this petition for certiorari outright on procedural grounds. Well-established is
the rule that when a motion to quash in a criminal case is denied, the remedy is not a petition for
certiorari, but for petitioners to go to trial, without prejudice to reiterating the special defenses invoked in
their motion to quash.
20
Remedial measures as regards interlocutory orders, such as a motion to quash,
are frowned upon and often dismissed.
21
The evident reason for this rule is to avoid multiplicity of appeals
in a single action.
22

In Newsweek, Inc. v. Intermediate Appellate Court,
23
the Court clearly explained and illustrated the rule
and the exceptions, thus:
As a general rule, an order denying a motion to dismiss is merely interlocutory and cannot be
subject of appeal until final judgment or order is rendered. (Sec. 2 of Rule 41). The ordinary
procedure to be followed in such a case is to file an answer, go to trial and if the decision is
adverse, reiterate the issue on appeal from the final judgment. The same rule applies to an order
denying a motion to quash, except that instead of filing an answer a plea is entered and no
appeal lies from a judgment of acquittal.
This general rule is subject to certain exceptions. If the court, in denying the motion to dismiss or
motion to quash, acts without or in excess of jurisdiction or with grave abuse of discretion, then
certiorari or prohibition lies. The reason is that it would be unfair to require the defendant or
accused to undergo the ordeal and expense of a trial if the court has no jurisdiction over the
subject matter or offense, or is not the court of proper venue, or if the denial of the motion to
dismiss or motion to quash is made with grave abuse of discretion or a whimsical and capricious
exercise of judgment. In such cases, the ordinary remedy of appeal cannot be plain and
adequate. The following are a few examples of the exceptions to the general rule.
In De Jesus v. Garcia (19 SCRA 554), upon the denial of a motion to dismiss based on lack of
jurisdiction over the subject matter, this Court granted the petition for certiorari and prohibition
against the City Court of Manila and directed the respondent court to dismiss the case.
In Lopez v. City Judge (18 SCRA 616), upon the denial of a motion to quash based on lack of
jurisdiction over the offense, this Court granted the petition for prohibition and enjoined the
respondent court from further proceeding in the case.
In Enriquez v. Macadaeg (84 Phil. 674), upon the denial of a motion to dismiss based on
improper venue, this Court granted the petition for prohibition and enjoined the respondent judge
from taking cognizance of the case except to dismiss the same.
In Manalo v. Mariano (69 SCRA 80), upon the denial of a motion to dismiss based on bar by prior
judgment, this Court granted the petition for certiorari and directed the respondent judge to
dismiss the case.
In Yuviengco v. Dacuycuy (105 SCRA 668), upon the denial of a motion to dismiss based on the
Statute of Frauds, this Court granted the petition for certiorari and dismissed the amended
complaint.
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113

In Tacas v. Cariaso (72 SCRA 527), this Court granted the petition for certiorari after the motion
to quash based on double jeopardy was denied by respondent judge and ordered him to desist
from further action in the criminal case except to dismiss the same.
In People v. Ramos (83 SCRA 11), the order denying the motion to quash based on prescription
was set aside on certiorari and the criminal case was dismissed by this Court.
24

We do not find the Sandiganbayan to have committed a grave abuse of discretion.
The jurisdiction of the Sandiganbayan is
set by P.D. No. 1606, as amended, not by
R.A. No. 3019, as amended.
We first address petitioners contention that the jurisdiction of the Sandiganbayan is determined by
Section 4 of R.A. No. 3019 (The Anti-Graft and Corrupt Practices Act, as amended). We note that
petitioner refers to Section 4 of the said law yet quotes Section 4 of P.D. No. 1606, as amended, in her
motion to quash before the Sandiganbayan.
25
She repeats the reference in the instant petition for
certiorari
26
and in her memorandum of authorities.
27

We cannot bring ourselves to write this off as a mere clerical or typographical error. It bears stressing that
petitioner repeated this claim twice despite corrections made by the Sandiganbayan.
28

Her claim has no basis in law. It is P.D. No. 1606, as amended, rather than R.A. No. 3019, as amended,
that determines the jurisdiction of the Sandiganbayan. A brief legislative history of the statute creating the
Sandiganbayan is in order. The Sandiganbayan was created by P.D. No. 1486, promulgated by then
President Ferdinand E. Marcos on June 11, 1978. It was promulgated to attain the highest norms of
official conduct required of public officers and employees, based on the concept that public officers and
employees shall serve with the highest degree of responsibility, integrity, loyalty and efficiency and shall
remain at all times accountable to the people.
29

P.D. No. 1486 was, in turn, amended by P.D. No. 1606 which was promulgated on December 10, 1978.
P.D. No. 1606 expanded the jurisdiction of the Sandiganbayan.
30

P.D. No. 1606 was later amended by P.D. No. 1861 on March 23, 1983, further altering the
Sandiganbayan jurisdiction. R.A. No. 7975 approved on March 30, 1995 made succeeding amendments
to P.D. No. 1606, which was again amended on February 5, 1997 by R.A. No. 8249. Section 4 of R.A.
No. 8249 further modified the jurisdiction of the Sandiganbayan. As it now stands, the Sandiganbayan
has jurisdiction over the following:
Sec. 4. Jurisdiction. - The Sandiganbayan shall exercise exclusive original jurisdiction in all cases
involving:
A. Violations of Republic Act No. 3019, as amended, other known as the Anti-Graft and Corrupt
Practices Act, Republic Act No. 1379, and Chapter II, Section 2, Title VII, Book II of the Revised
Penal Code, where one or more of the accused are officials occupying the following positions in
the government, whether in a permanent, acting or interim capacity, at the time of the commission
of the offense:
(1) Officials of the executive branch occupying the positions of regional director and higher,
otherwise classified as Grade "27" and higher, of the Compensation and Position Classification
Act of 989 (Republic Act No. 6758), specifically including:
JURISDICTION jrp
114

" (a) Provincial governors, vice-governors, members of the sangguniang panlalawigan, and
provincial treasurers, assessors, engineers, and other city department heads;
" (b) City mayor, vice-mayors, members of the sangguniang panlungsod, city treasurers,
assessors, engineers, and other city department heads;
"(c ) Officials of the diplomatic service occupying the position of consul and higher;
" (d) Philippine army and air force colonels, naval captains, and all officers of higher rank;
" (e) Officers of the Philippine National Police while occupying the position of provincial director
and those holding the rank of senior superintended or higher;
" (f) City and provincial prosecutors and their assistants, and officials and prosecutors in the
Office of the Ombudsman and special prosecutor;
" (g) Presidents, directors or trustees, or managers of government-owned or controlled
corporations, state universities or educational institutions or foundations.
" (2) Members of Congress and officials thereof classified as Grade "27'" and up under the
Compensation and Position Classification Act of 1989;
" (3) Members of the judiciary without prejudice to the provisions of the Constitution;
" (4) Chairmen and members of Constitutional Commission, without prejudice to the provisions of
the Constitution; and
" (5) All other national and local officials classified as Grade "27'" and higher under the
Compensation and Position Classification Act of 1989.
B. Other offenses of felonies whether simple or complexed with other crimes committed by the
public officials and employees mentioned in subsection a of this section in relation to their office.
C. Civil and criminal cases filed pursuant to and in connection with Executive Order Nos. 1, 2, 14
and 14-A, issued in 1986.
" In cases where none of the accused are occupying positions corresponding to Salary Grade
"27'" or higher, as prescribed in the said Republic Act No. 6758, or military and PNP officer
mentioned above, exclusive original jurisdiction thereof shall be vested in the proper regional
court, metropolitan trial court, municipal trial court, and municipal circuit trial court, as the case
may be, pursuant to their respective jurisdictions as provided in Batas Pambansa Blg. 129, as
amended.
" The Sandiganbayan shall exercise exclusive appellate jurisdiction over final judgments,
resolutions or order of regional trial courts whether in the exercise of their own original jurisdiction
or of their appellate jurisdiction as herein provided.
" The Sandiganbayan shall have exclusive original jurisdiction over petitions for the issuance of
the writs of mandamus, prohibition, certiorari, habeas corpus, injunctions, and other ancillary writs
and processes in aid of its appellate jurisdiction and over petitions of similar nature, including quo
warranto, arising or that may arise in cases filed or which may be filed under Executive Order
Nos. 1, 2, 14 and 14-A, issued in 1986: Provided, That the jurisdiction over these petitions shall
not be exclusive of the Supreme Court.
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115

" The procedure prescribed in Batas Pambansa Blg. 129, as well as the implementing rules that
the Supreme Court has promulgated and may thereafter promulgate, relative to appeals/petitions
for review to the Court of Appeals, shall apply to appeals and petitions for review filed with the
Sandiganbayan. In all cases elevated to the Sandiganbayan and from the Sandiganbayan to the
Supreme Court, the Office of the Ombudsman, through its special prosecutor, shall represent the
People of the Philippines, except in cases filed pursuant to Executive Order Nos. 1, 2, 14 and 14-
A, issued in 1986.
" In case private individuals are charged as co-principals, accomplices or accessories with the
public officers or employees, including those employed in government-owned or controlled
corporations, they shall be tried jointly with said public officers and employees in the proper
courts which shall exercise exclusive jurisdiction over them.
" Any provisions of law or Rules of Court to the contrary notwithstanding, the criminal action and
the corresponding civil action for the recovery of civil liability shall, at all times, be simultaneously
instituted with, and jointly determined in, the same proceeding by the Sandiganbayan or the
appropriate courts, the filing of the criminal action being deemed to necessarily carry with it the
filing of the civil action, and no right to reserve the filing such civil action separately from the
criminal action shall be recognized: Provided, however, That where the civil action had heretofore
been filed separately but judgment therein has not yet been rendered, and the criminal case is
hereafter filed with the Sandiganbayan or the appropriate court, said civil action shall be
transferred to the Sandiganbayan or the appropriate court, as the case may be, for consolidation
and joint determination with the criminal action, otherwise the separate civil action shall be
deemed abandoned."
Upon the other hand, R.A. No. 3019 is a penal statute approved on August 17, 1960. The said law
represses certain acts of public officers and private persons alike which constitute graft or corrupt
practices or which may lead thereto.
31
Pursuant to Section 10 of R.A. No. 3019, all prosecutions for
violation of the said law should be filed with the Sandiganbayan.
32

R.A. No. 3019 does not contain an enumeration of the cases over which the Sandiganbayan has
jurisdiction. In fact, Section 4 of R.A. No. 3019 erroneously cited by petitioner, deals not with the
jurisdiction of the Sandiganbayan but with prohibition on private individuals. We quote:
Section 4. Prohibition on private individuals. (a) It shall be unlawful for any person having family
or close personal relation with any public official to capitalize or exploit or take advantage of such
family or close personal relation by directly or indirectly requesting or receiving any present, gift or
material or pecuniary advantage from any other person having some business, transaction,
application, request or contract with the government, in which such public official has to intervene.
Family relation shall include the spouse or relatives by consanguinity or affinity in the third civil
degree. The word "close personal relation" shall include close personal friendship, social and
fraternal connections, and professional employment all giving rise to intimacy which assures free
access to such public officer.
(b) It shall be unlawful for any person knowingly to induce or cause any public official to commit
any of the offenses defined in Section 3 hereof.
In fine, the two statutes differ in that P.D. No. 1606, as amended, defines the jurisdiction of the
Sandiganbayan while R.A. No. 3019, as amended, defines graft and corrupt practices and provides for
their penalties.
Sandiganbayan has jurisdiction over
the offense of estafa.
JURISDICTION jrp
116

Relying on Section 4 of P.D. No. 1606, petitioner contends that estafa is not among those crimes
cognizable by the Sandiganbayan. We note that in hoisting this argument, petitioner isolated the first
paragraph of Section 4 of P.D. No. 1606, without regard to the succeeding paragraphs of the said
provision.
The rule is well-established in this jurisdiction that statutes should receive a sensible construction so as to
avoid an unjust or an absurd conclusion.
33
Interpretatio talis in ambiguis semper fienda est, ut evitetur
inconveniens et absurdum. Where there is ambiguity, such interpretation as will avoid inconvenience and
absurdity is to be adopted. Kung saan mayroong kalabuan, ang pagpapaliwanag ay hindi dapat
maging mahirap at katawa-tawa.
Every section, provision or clause of the statute must be expounded by reference to each other in order to
arrive at the effect contemplated by the legislature.
34
The intention of the legislator must be ascertained
from the whole text of the law and every part of the act is to be taken into view.
35
In other words,
petitioners interpretation lies in direct opposition to the rule that a statute must be interpreted as a whole
under the principle that the best interpreter of a statute is the statute itself.
36
Optima statuti interpretatrix
est ipsum statutum. Ang isang batas ay marapat na bigyan ng kahulugan sa kanyang kabuuan sa
ilalim ng prinsipyo na ang pinakamainam na interpretasyon ay ang mismong batas.
Section 4(B) of P.D. No. 1606 reads:
B. Other offenses or felonies whether simple or complexed with other crimes committed by the
public officials and employees mentioned in subsection a of this section in relation to their office.
Evidently, the Sandiganbayan has jurisdiction over other felonies committed by public officials in relation
to their office. We see no plausible or sensible reason to exclude estafa as one of the offenses included in
Section 4(bB) of P.D. No. 1606. Plainly, estafa is one of those other felonies. The jurisdiction is simply
subject to the twin requirements that (a) the offense is committed by public officials and employees
mentioned in Section 4(A) of P.D. No. 1606, as amended, and that (b) the offense is committed in relation
to their office.
In Perlas, Jr. v. People,
37
the Court had occasion to explain that the Sandiganbayan has jurisdiction over
an indictment for estafa versus a director of the National Parks Development Committee, a government
instrumentality. The Court held then:
The National Parks Development Committee was created originally as an Executive Committee
on January 14, 1963, for the development of the Quezon Memorial, Luneta and other national
parks (Executive Order No. 30). It was later designated as the National Parks Development
Committee (NPDC) on February 7, 1974 (E.O. No. 69). On January 9, 1966, Mrs. Imelda R.
Marcos and Teodoro F. Valencia were designated Chairman and 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
PD No. 830, dated November 27, 1975), the NPDC has remained under the Office of the
President (E.O. No. 709, dated July 27, 1981).
Since 1977 to 1981, the annual appropriations decrees listed NPDC as a regular government
agency under the Office of the President and allotments for its maintenance and operating
expenses were issued direct to NPDC (Exh. 10-A, Perlas, Item Nos. 2, 3).
The Sandiganbayans jurisdiction over estafa was reiterated with greater firmness in Bondoc v.
Sandiganbayan.
38
Pertinent parts of the Courts ruling in Bondoc read:
Furthermore, it is not legally possible to transfer Bondocs cases to the Regional Trial Court, for
the simple reason that the latter would not have jurisdiction over the offenses. As already above
JURISDICTION jrp
117

intimated, the inability of the Sandiganbayan to hold a joint trial of Bondocs cases and those of
the government employees separately charged for the same crimes, has not altered the nature of
the offenses charged, as estafa thru falsification punishable by penalties higher than prision
correccional or imprisonment of six years, or a fine of P6,000.00, committed by government
employees in conspiracy with private persons, including Bondoc. These crimes are within the
exclusive, original jurisdiction of the Sandiganbayan. They simply cannot be taken cognizance of
by the regular courts, apart from the fact that even if the cases could be so transferred, a joint trial
would nonetheless not be possible.
Petitioner UP student regent
is a public officer.
Petitioner also contends that she is not a public officer. She does not receive any salary or remuneration
as a UP student regent. This is not the first or likely the last time that We will be called upon to define a
public officer. In Khan, Jr. v. Office of the Ombudsman, We ruled that it is difficult to pin down the
definition of a public officer.
39
The 1987 Constitution does not define who are public officers. Rather, the
varied definitions and concepts are found in different statutes and jurisprudence.
In Aparri v. Court of Appeals,
40
the Court held that:
A public office is the right, authority, and duty created and conferred by law, by which for a given
period, either fixed by law or enduring at the pleasure of the creating power, an individual is
invested with some portion of the sovereign functions of the government, to be exercise by him
for the benefit of the public ([Mechem Public Offices and Officers,] Sec. 1). The right to hold a
public office under our political system is therefore not a natural right. It exists, when it exists at all
only because and by virtue of some law expressly or impliedly creating and conferring it (Mechem
Ibid., Sec. 64). There is no such thing as a vested interest or an estate in an office, or even an
absolute right to hold office. Excepting constitutional offices which provide for special immunity as
regards salary and tenure, no one can be said to have any vested right in an office or its salary
(42 Am. Jur. 881).
In Laurel v. Desierto,
41
the Court adopted the definition of Mechem of a public office:
"A public office is the right, authority and duty, created and conferred by law, by which, for a given
period, either fixed by law or enduring at the pleasure of the creating power, an individual is
invested with some portion of the sovereign functions of the government, to be exercised by him
for the benefit of the public. The individual so invested is a public officer."
42

Petitioner claims that she is not a public officer with Salary Grade 27; she is, in fact, a regular tuition fee-
paying student. This is likewise bereft of merit. It is not only the salary grade that determines the
jurisdiction of the Sandiganbayan. The Sandiganbayan also has jurisdiction over other officers
enumerated in P.D. No. 1606. In Geduspan v. People,
43
We held that while the first part of Section 4(A)
covers only officials with Salary Grade 27 and higher, its second part specifically includes other executive
officials whose positions may not be of Salary Grade 27 and higher but who are by express provision of
law placed under the jurisdiction of the said court. Petitioner falls under the jurisdiction of the
Sandiganbayan as she is placed there by express provision of law.
44

Section 4(A)(1)(g) of P.D. No. 1606 explictly vested the Sandiganbayan with jurisdiction over Presidents,
directors or trustees, or managers of government-owned or controlled corporations, state universities or
educational institutions or foundations. Petitioner falls under this category. As the Sandiganbayan pointed
out, the BOR performs functions similar to those of a board of trustees of a non-stock corporation.
45
By
express mandate of law, petitioner is, indeed, a public officer as contemplated by P.D. No. 1606.
JURISDICTION jrp
118

Moreover, it is well established that compensation is not an essential element of public office.
46
At most, it
is merely incidental to the public office.
47

Delegation of sovereign functions is essential in the public office. An investment in an individual of some
portion of the sovereign functions of the government, to be exercised by him for the benefit of the public
makes one a public officer.
48

The administration of the UP is a sovereign function in line with Article XIV of the Constitution. UP
performs a legitimate governmental function by providing advanced instruction in literature, philosophy,
the sciences, and arts, and giving professional and technical training.
49
Moreover, UP is maintained by
the Government and it declares no dividends and is not a corporation created for profit.
50

The offense charged was committed
in relation to public office, according
to the Information.
Petitioner likewise argues that even assuming that she is a public officer, the Sandiganbayan would still
not have jurisdiction over the offense because it was not committed in relation to her office.
According to petitioner, she had no power or authority to act without the approval of the BOR. She adds
there was no Board Resolution issued by the BOR authorizing her to contract with then President
Estrada; and that her acts were not ratified by the governing body of the state university. Resultantly, her
act was done in a private capacity and not in relation to public office.
It is axiomatic that jurisdiction is determined by the averments in the information.
51
More than that,
jurisdiction is not affected by the pleas or the theories set up by defendant or respondent in an answer, a
motion to dismiss, or a motion to quash.
52
Otherwise, jurisdiction would become dependent almost
entirely upon the whims of defendant or respondent.
53

In the case at bench, the information alleged, in no uncertain terms that petitioner, being then a student
regent of U.P., "while in the performance of her official functions, committing the offense in relation to her
office and taking advantage of her position, with intent to gain, conspiring with her brother, JADE IAN D.
SERANA, a private individual, did then and there wilfully, unlawfully and feloniously defraud the
government x x x." (Underscoring supplied)
Clearly, there was no grave abuse of discretion on the part of the Sandiganbayan when it did not quash
the information based on this ground.
Source of funds is a defense that should
be raised during trial on the merits.
It is contended anew that the amount came from President Estradas private funds and not from the
government coffers. Petitioner insists the charge has no leg to stand on.
We cannot agree. The information alleges that the funds came from the Office of the President and not its
then occupant, President Joseph Ejercito Estrada. Under the information, it is averred that "petitioner
requested the amount of Fifteen Million Pesos (P15,000,000.00), Philippine Currency, from the Office of
the President, and the latter relying and believing on said false pretenses and misrepresentation gave
and delivered to said accused Land Bank Check No. 91353 dated October 24, 2000 in the amount of
Fifteen Million Pesos (P15,000,000.00)."
Again, the Court sustains the Sandiganbayan observation that the source of the P15,000,000 is a matter
of defense that should be ventilated during the trial on the merits of the instant case.
54

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119

A lawyer owes candor, fairness
and honesty to the Court.
As a parting note, petitioners counsel, Renato G. dela Cruz, misrepresented his reference to Section 4 of
P.D. No. 1606 as a quotation from Section 4 of R.A. No. 3019. A review of his motion to quash, the
instant petition for certiorari and his memorandum, unveils the misquotation. We urge petitioners counsel
to observe Canon 10 of the Code of Professional Responsibility, specifically Rule 10.02 of the Rules
stating that "a lawyer shall not misquote or misrepresent."
The Court stressed the importance of this rule in Pangan v. Ramos,
55
where Atty Dionisio D. Ramos used
the name Pedro D.D. Ramos in connection with a criminal case. The Court ruled that Atty. Ramos
resorted to deception by using a name different from that with which he was authorized. We severely
reprimanded Atty. Ramos and warned that a repetition may warrant suspension or disbarment.
56

We admonish petitioners counsel to be more careful and accurate in his citation. A lawyers conduct
before the court should be characterized by candor and fairness.
57
The administration of justice would
gravely suffer if lawyers do not act with complete candor and honesty before the courts.
58

WHEREFORE, the petition is DENIED for lack of merit.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 170122 October 12, 2009
CLARITA DEPAKAKIBO GARCIA, Petitioner,
vs.
SANDIGANBAYAN and REPUBLIC OF THE PHILIPPINES, Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 171381
CLARITA DEPAKAKIBO GARCIA, Petitioner,
vs.
SANDIGANBAYAN and REPUBLIC OF THE PHILIPPINES, Respondents.
D E C I S I O N
VELASCO, JR., J .:
The Case
Before us are these two (2) consolidated petitions under Rule 65, each interposed by petitioner Clarita D.
Garcia, with application for injunctive relief. In the first petition for mandamus and/or certiorari, docketed
as G.R. No. 170122, petitioner seeks to nullify and set aside the August 5, 2005 Order,
1
as reiterated in
another Order dated August 26, 2005, both issued by the Sandiganbayan, Fourth Division, which
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effectively denied the petitioners motion to dismiss and/or to quash Civil Case No. 0193, a suit for
forfeiture commenced by the Republic of the Philippines against the petitioner and her immediate family.
The second petition for certiorari, docketed as G.R. No. 171381, seeks to nullify and set aside the
November 9, 2005 Resolution
2
of the Sandiganbayan, Fourth Division, insofar as it likewise denied the
petitioners motion to dismiss and/or quash Civil Case No. 0196, another forfeiture case involving the
same parties but for different properties.
The Facts
To recover unlawfully acquired funds and properties in the aggregate amount of PhP 143,052,015.29 that
retired Maj. Gen. Carlos F. Garcia, his wife, herein petitioner Clarita, children Ian Carl, Juan Paulo and
Timothy Mark (collectively, the Garcias) had allegedly amassed and acquired, the Republic, through the
Office of the Ombudsman (OMB), pursuant to Republic Act No. (RA) 1379,
3
filed with the Sandiganbayan
(SB) on October 29, 2004 a petition for the forfeiture of those properties. This petition, docketed as Civil
Case No. 0193, was eventually raffled to the Fourth Division of the anti-graft court.
Civil Case No. 0193 was followed by the filing on July 5, 2005 of another forfeiture case, docketed as Civil
Case No. 0196, this time to recover funds and properties amounting to PhP 202,005,980.55. Civil Case
No. 0196 would eventually be raffled also to the Fourth Division of the SB. For convenience and clarity,
Civil Case No. 0193 shall hereinafter be also referred to as Forfeiture I and Civil Case No. 0196 as
Forfeiture II.
Prior to the filing of Forfeiture II, but subsequent to the filing of Forfeiture I, the OMB charged the Garcias
and three others with violation of RA 7080 (plunder) under an Information dated April 5, 2005 which
placed the value of the property and funds plundered at PhP 303,272,005.99. Docketed as Crim. Case
No. 28107, the Information was raffled off to the Second Division of the SB. The plunder charge, as the
parties pleadings seem to indicate, covered substantially the same properties identified in both forfeiture
cases.
After the filing of Forfeiture I, the following events transpired in relation to the case:
(1) The corresponding summons were issued and all served on Gen. Garcia at his place of
detention. Per the Sheriffs Return
4
dated November 2, 2005, the summons were duly served on
respondent Garcias. Earlier, or on October 29, 2004, the SB issued a writ of attachment in favor
of the Republic, an issuance which Gen. Garcia challenged before this Court, docketed as G.R.
No. 165835.
Instead of an answer, the Garcias filed a motion to dismiss on the ground of the SBs lack of
jurisdiction over separate civil actions for forfeiture. The OMB countered with a motion to expunge
and to declare the Garcias in default. To the OMBs motion, the Garcias interposed an opposition
in which they manifested that they have meanwhile repaired to the Court on certiorari, docketed
as G.R. No. 165835 to nullify the writ of attachment SB issued in which case the SB should defer
action on the forfeiture case as a matter of judicial courtesy.
(2) By Resolution
5
of January 20, 2005, the SB denied the motion to dismiss; declared the same
motion as pro forma and hence without tolling effect on the period to answer. The same
resolution declared the Garcias in default.
Another resolution
6
denied the Garcias motion for reconsideration and/or to admit answer, and
set a date for the ex-parte presentation of the Republics evidence.
A second motion for reconsideration was also denied on February 23, 2005, pursuant to the
prohibited pleading rule.
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(3) Despite the standing default order, the Garcias moved for the transfer and consolidation of
Forfeiture I with the plunder case which were respectively pending in different divisions of the SB,
contending that such consolidation is mandatory under RA 8249.
7

On May 20, 2005, the SB 4th Division denied the motion for the reason that the forfeiture case is
not the corresponding civil action for the recovery of civil liability arising from the criminal case of
plunder.
(4) On July 26, 2005, the Garcias filed another motion to dismiss and/or to quash Forfeiture I on,
inter alia, the following grounds: (a) the filing of the plunder case ousted the SB 4th Division of
jurisdiction over the forfeiture case; and (b) that the consolidation is imperative in order to avoid
possible double jeopardy entanglements.
By Order
8
of August 5, 2005, the SB merely noted the motion in view of movants having been declared in
default which has yet to be lifted.
It is upon the foregoing factual antecedents that petitioner Clarita has interposed her first special civil
action for mandamus and/or certiorari docketed as G.R. No. 170122, raising the following issues:
I. Whether or not the [SB] 4th Division acted without or in excess of jurisdiction or with grave abuse of
discretion x x x in issuing its challenged order of August 5, 2005 and August 26 2005 that merely "Noted
without action," hence refused to resolve petitioners motion to dismiss and/or to quash by virtue of
petitioners prior default in that:
A. For lack of proper and valid service of summons, the [SB] 4th Division could not have
acquired jurisdiction over petitioners, [and her childrens] x x x persons, much less make them
become the true "parties-litigants, contestants or legal adversaries" in forfeiture I. As the [SB] has
not validly acquired jurisdiction over the petitioners [and her childrens] x x x persons, they could
not possibly be declared in default, nor can a valid judgment by default be rendered against them.
B. Even then, mere declaration in default does not per se bar petitioner from challenging the [SB]
4th Divisions lack of jurisdiction over the subject matter of forfeiture I as the same can be raised
anytime, even after final judgment. In the absence of jurisdiction over the subject matter, any and
all proceedings before the [SB] are null and void.
C. Contrary to its August 26, 2005 rejection of petitioners motion for reconsideration of the first
challenged order that the issue of jurisdiction raised therein had already been passed upon by
[the SB 4th Divisions] resolution of May 20, 2005, the records clearly show that the grounds
relied upon by petitioner in her motion to dismiss and/or to quash dated July 26, 2005 were
entirely different, separate and distinct from the grounds set forth in petitioners manifestation and
motion [to consolidate] dated April 15, 2005 that was denied by it per its resolution of May 20,
2005.
D. In any event, the [SB] 4th Division has been ousted of jurisdiction over the subject matter of
forfeiture I upon the filing of the main plunder case against petitioner that mandates the automatic
forfeiture of the subject properties in forfeiture cases I & II as a function or adjunct of any
conviction for plunder.
E. Being incompatible, the forfeiture law (RA No. 1379 [1955]) was impliedly repealed by the
plunder law (RA No. 7080 [1991]) with automatic forfeiture mechanism.
F. Since the sought forfeiture includes properties purportedly located in the USA, any penal
conviction for forfeiture in this case cannot be enforced outside of the Philippines x x x.
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G. Based on orderly procedure and sound administration of justice, it is imperative that the matter
of forfeiture be exclusively tried in the main plunder case to avoid possible double jeopardy
entanglements, and to avoid possible conflicting decisions by 2 divisions of the [SB] on the matter
of forfeiture as a penal sanction.
9
(Emphasis added.)
With respect to Forfeiture II, the following events and proceedings occurred or were taken after the
petition for Forfeiture II was filed:
(1) On July 12, 2005, the SB sheriff served the corresponding summons. In his return of July 13,
2005, the sheriff stated giving the copies of the summons to the OIC/Custodian of the PNP
Detention Center who in turn handed them to Gen. Garcia. The general signed his receipt of
the summons, but as to those pertaining to the other respondents, Gen. Garcia acknowledged
receiving the same, but with the following qualifying note: "Im receiving the copies of Clarita, Ian
Carl, Juan Paolo & Timothy but these copies will not guarantee it being served to the above-
named (sic)."
(2) On July 26, 2005, Clarita and her children, thru special appearance of counsel, filed a motion
to dismiss and/or to quash Forfeiture II primarily for lack of jurisdiction over their persons and on
the subject matter thereof which is now covered by the plunder case.
To the above motion, the Republic filed its opposition with a motion for alternative service
of summons. The motion for alternative service would be repeated in another motion of
August 25, 2005.
(3) By Joint Resolution of November 9, 2005, the SB denied both the petitioners motion to
dismiss and/or to quash and the Republics motion for alternative service of summons.
On January 24, 2006, the SB denied petitioners motion for partial reconsideration.
10

From the last two issuances adverted to, Clarita has come to this Court via the instant petition for
certiorari, docketed as GR No. 171381. As there submitted, the SB 4th Division acted without or in
excess of jurisdiction or with grave abuse of discretion in issuing its Joint Resolution dated November 9,
2005 and its Resolution of January 24, 2006 denying petitioners motion to dismiss and/or to quash in
that:
A. Based on its own finding that summons was improperly served on petitioner, the [SB] ought
to have dismissed forfeiture II for lack of jurisdiction over petitioners person x x x.
B. By virtue of the plunder case filed with the [SB] Second Division that mandates the automatic
forfeiture of unlawfully acquired properties upon conviction, the [SB] Fourth Division has no
jurisdiction over the subject matter of forfeiture.
C. Being incompatible, the forfeiture law (RA No. 1379 [1955]) was impliedly repealed by the
plunder law (RA No. 7080 [1991]) with automatic forfeiture mechanism.
D. Based on orderly procedure and sound administration of justice, it is imperative that the matter
of forfeiture be exclusively tried in the main plunder case to avoid possible double jeopardy
entanglements and worse conflicting decisions by 2 divisions of the Sandiganbayan on the matter
of forfeiture as a penal sanction.
11
(Emphasis added.)
Per Resolution of the Court dated March 13, 2006, G.R. No. 170122 and G.R. No. 171381 were
consolidated.
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The Courts Ruling
The petitions are partly meritorious.
The core issue tendered in these consolidated cases ultimately boils down to the question of jurisdiction
and may thusly be couched into whether the Fourth Division of the SB has acquired jurisdiction over the
person of petitionerand her three sons for that matterconsidering that, first, vis--vis Civil Case Nos.
0193 (Forfeiture I) and 0196 (Forfeiture II), summons against her have been ineffectively or improperly
served and, second, that the plunder caseCrim. Case No. 28107has already been filed and pending
with another division of the SB, i.e., Second Division of the SB.
Plunder Case in Crim. Case No. 28107 Did Not Absorb the Forfeiture Cases in Civil Case Nos. 0193
and 0196
Petitioner maintains that the SB 4th Division has no jurisdiction over the subject matter of Forfeitures I
and II as both cases are now covered or included in the plunder case against the Garcias. Or as
petitioner puts it a bit differently, the filing of the main plunder case (Crim. Case No. 28107), with its
automatic forfeiture mechanism in the event of conviction, ousted the SB 4th Division of its jurisdiction
over the subject matter of the forfeiture cases. The inclusion of the forfeiture cases with the plunder case
is necessary, so petitioner claims, to obviate possible double jeopardy entanglements and colliding case
dispositions. Prescinding from these premises, petitioner would ascribe grave abuse of discretion on the
SB 4th Division for not granting its separate motions to dismiss the two forfeiture petitions and/or to
consolidate them with the plunder case on the foregoing ground.
Petitioners contention is untenable. And in response to what she suggests in some of her pleadings, let it
be stated at the outset that the SB has jurisdiction over actions for forfeiture under RA 1379, albeit the
proceeding thereunder is civil in nature. We said so in Garcia v. Sandiganbayan
12
involving no less than
petitioners husband questioning certain orders issued in Forfeiture I case.
Petitioners posture respecting Forfeitures I and II being absorbed by the plunder case, thus depriving the
4th Division of the SB of jurisdiction over the civil cases, is flawed by the assumptions holding it together,
the first assumption being that the forfeiture cases are the corresponding civil action for recovery of civil
liability ex delicto. As correctly ruled by the SB 4th Division in its May 20, 2005 Resolution,
13
the civil
liability for forfeiture cases does not arise from the commission of a criminal offense, thus:
Such liability is based on a statute that safeguards the right of the State to recover unlawfully acquired
properties. The action of forfeiture arises when a "public officer or employee [acquires] during his
incumbency an amount of property which is manifestly out of proportion of his salary x x x and to his other
lawful income x x x."
14
Such amount of property is then presumed prima facie to have been unlawfully
acquired.
15
Thus "if the respondent [public official] is unable to show to the satisfaction of the court that he
has lawfully acquired the property in question, then the court shall declare such property forfeited in favor
of the State, and by virtue of such judgment the property aforesaid shall become property of the State.
16
x
x x (Citations in the original.)
Lest it be overlooked, Executive Order No. (EO) 14, Series of 1986, albeit defining only the jurisdiction
over cases involving ill-gotten wealth of former President Marcos, his immediate family and business
associates, authorizes under its Sec. 3
17
the filing of forfeiture suits under RA 1379 which will proceed
independently of any criminal proceedings. The Court, in Republic v. Sandiganbayan,
18
interpreted this
provision as empowering the Presidential Commission on Good Government to file independent civil
actions separate from the criminal actions.
Forfeiture Cases and the Plunder Case Have Separate Causes of Action; the Former Is Civil in
Nature while the Latter Is Criminal
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It bears stressing, as a second point, that a forfeiture case under RA 1379 arises out of a cause of action
separate and different from a plunder case, thus negating the notion that the crime of plunder charged in
Crim. Case No. 28107 absorbs the forfeiture cases. In a prosecution for plunder, what is sought to be
established is the commission of the criminal acts in furtherance of the acquisition of ill-gotten wealth. In
the language of Sec. 4 of RA 7080, for purposes of establishing the crime of plunder, it is "sufficient to
establish beyond reasonable doubt a pattern of overt or criminal acts indicative of the overall unlawful
scheme or conspiracy [to amass, accumulate or acquire ill-gotten wealth]." On the other hand, all that the
court needs to determine, by preponderance of evidence, under RA 1379 is the disproportion of
respondents properties to his legitimate income, it being unnecessary to prove how he acquired said
properties. As correctly formulated by the Solicitor General, the forfeitable nature of the properties under
the provisions of RA 1379 does not proceed from a determination of a specific overt act committed by the
respondent public officer leading to the acquisition of the illegal wealth.
19

Given the foregoing considerations, petitioners thesis on possible double jeopardy entanglements should
a judgment of conviction ensue in Crim. Case 28107 collapses entirely. Double jeopardy, as a criminal
law concept, refers to jeopardy of punishment for the same offense,
20
suggesting that double jeopardy
presupposes two separate criminal prosecutions. Proceedings under RA 1379 are, to repeat, civil in
nature. As a necessary corollary, one who is sued under RA 1379 may be proceeded against for a
criminal offense. Thus, the filing of a case under that law is not barred by the conviction or acquittal of the
defendant in Crim. Case 28107 for plunder.
Moreover, given the variance in the nature and subject matter of the proceedings between the plunder
case and the subject forfeiture cases, petitioners apprehension about the likelihood of conflicting
decisions of two different divisions of the anti-graft court on the matter of forfeiture as a penal sanction is
specious at best. What the SB said in this regard merits approving citation:
On the matter of forfeiture as a penal sanction, respondents argue that the division where the plunder
case is pending may issue a decision that would collide or be in conflict with the decision by this division
on the forfeiture case. They refer to a situation where this Courts Second Division may exonerate the
respondents in the plunder case while the Fourth Division grant the petition for forfeiture for the same
properties in favor of the state or vice versa.
Suffice it to say that the variance in the decisions of both divisions does not give rise to a conflict. After all,
forfeiture in the plunder case requires the attendance of facts and circumstances separate and distinct
from that in the forfeiture case. Between the two (2) cases, there is no causal connection in the facts
sought to be established and the issues sought to be addressed. As a result, the decision of this Court in
one does not have a bearing on the other.
There is also no conflict even if the decisions in both cases result in an order for the forfeiture of the
subject properties. The forfeiture following a conviction in the plunder case will apply only to those ill-
gotten wealth not recovered by the forfeiture case and vise (sic) versa. This is on the assumption that the
information on plunder and the petition for forfeiture cover the same set of properties.
21

RA 7080 Did Not Repeal RA 1379
Petitioner takes a different tack in her bid to prove that SB erred in not dismissing Forfeitures I and II with
her assertion that RA 7080 impliedly repealed RA 1379. We are not convinced.
Nowhere in RA 7080 can we find any provision that would indicate a repeal, expressly or impliedly, of RA
1379. RA 7080 is a penal statute which, at its most basic, aims to penalize the act of any public officer
who by himself or in connivance with members of his family amasses, accumulates or acquires ill-gotten
wealth in the aggregate amount of at least PhP 50 million. On the other hand, RA 1379 is not penal in
nature, in that it does not make a crime the act of a public official acquiring during his incumbency an
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125

amount of property manifestly out of proportion of his salary and other legitimate income. RA 1379 aims
to enforce the right of the State to recover the properties which were not lawfully acquired by the officer.
It has often been said that all doubts must be resolved against any implied repeal and all efforts should be
exerted to harmonize and give effect to all laws and provisions on the same subject. To be sure, both RA
1379 and RA 7080 can very well be harmonized. The Court perceives no irreconcilable conflict between
them. One can be enforced without nullifying the other.
Sandiganbayan Did Not Acquire Jurisdiction over the Persons of Petitioner and Her Children
On the issue of lack of jurisdiction, petitioner argues that the SB did not acquire jurisdiction over her
person and that of her children due to a defective substituted service of summons. There is merit in
petitioners contention.1 a vv p h i 1
Sec. 7, Rule 14 of the 1997 Revised Rules of Civil Procedure clearly provides for the requirements of a
valid substituted service of summons, thus:
SEC. 7. Substituted service.If the defendant cannot be served within a reasonable time as provided in
the preceding section [personal service on defendant], service may be effected (a) by leaving copies of
the summons at the defendants residence with some person of suitable age and discretion then residing
therein, or (b) by leaving the copies at defendants office or regular place of business with some
competent person in charge thereof.
It is basic that a court must acquire jurisdiction over a party for the latter to be bound by its decision or
orders. Valid service of summons, by whatever mode authorized by and proper under the Rules, is the
means by which a court acquires jurisdiction over a person.
22

In the instant case, it is undisputed that summons for Forfeitures I and II were served personally on Maj.
Gen. Carlos Flores Garcia, who is detained at the PNP Detention Center, who acknowledged receipt
thereof by affixing his signature. It is also undisputed that substituted service of summons for both
Forfeitures I and II were made on petitioner and her children through Maj. Gen. Garcia at the PNP
Detention Center. However, such substituted services of summons were invalid for being irregular and
defective.
In Manotoc v. Court of Appeals,
23
we broke down the requirements to be:
(1) Impossibility of prompt personal service, i.e., the party relying on substituted service or the
sheriff must show that defendant cannot be served promptly or there is impossibility of prompt
service within a reasonable time. Reasonable time being "so much time as is necessary under
the circumstances for a reasonably prudent and diligent man to do, conveniently, what the
contract or duty requires that should be done, having a regard for the rights and possibility of loss,
if any[,] to the other party."
24
Moreover, we indicated therein that the sheriff must show several
attempts for personal service of at least three (3) times on at least two (2) different dates.
(2) Specific details in the return, i.e., the sheriff must describe in the Return of Summons the facts
and circumstances surrounding the attempted personal service.
(3) Substituted service effected on a person of suitable age and discretion residing at defendants
house or residence; or on a competent person in charge of defendants office or regular place of
business.
From the foregoing requisites, it is apparent that no valid substituted service of summons was made on
petitioner and her children, as the service made through Maj. Gen. Garcia did not comply with the first two
JURISDICTION jrp
126

(2) requirements mentioned above for a valid substituted service of summons. Moreover, the third
requirement was also not strictly complied with as the substituted service was made not at petitioners
house or residence but in the PNP Detention Center where Maj. Gen. Garcia is detained, even if the latter
is of suitable age and discretion. Hence, no valid substituted service of summons was made.
The stringent rules on valid service of summons for the court to acquire jurisdiction over the person of the
defendants, however, admits of exceptions, as when the party voluntarily submits himself to the
jurisdiction of the court by asking affirmative relief.
25
In the instant case, the Republic asserts that
petitioner is estopped from questioning improper service of summons since the improvident service of
summons in both forfeiture cases had been cured by their (petitioner and her children) voluntary
appearance in the forfeiture cases. The Republic points to the various pleadings filed by petitioner and
her children during the subject forfeiture hearings. We cannot subscribe to the Republics views.
Special Appearance to Question a Courts Jurisdiction Is Not Voluntary Appearance
The second sentence of Sec. 20, Rule 14 of the Revised Rules of Civil Procedure clearly provides:
Sec. 20. Voluntary appearance.The defendants voluntary appearance in the action shall be equivalent
to service of summons. The inclusion in a motion to dismiss of other grounds aside from lack of
jurisdiction over the person of the defendant shall not be deemed a voluntary appearance.
(Emphasis ours.)
Thus, a defendant who files a motion to dismiss, assailing the jurisdiction of the court over his person,
together with other grounds raised therein, is not deemed to have appeared voluntarily before the court.
What the rule on voluntary appearancethe first sentence of the above-quoted rulemeans is that the
voluntary appearance of the defendant in court is without qualification, in which case he is deemed to
have waived his defense of lack of jurisdiction over his person due to improper service of summons.
The pleadings filed by petitioner in the subject forfeiture cases, however, do not show that she voluntarily
appeared without qualification. Petitioner filed the following pleadings in Forfeiture I: (a) motion to dismiss;
(b) motion for reconsideration and/or to admit answer; (c) second motion for reconsideration; (d) motion to
consolidate forfeiture case with plunder case; and (e) motion to dismiss and/or to quash Forfeiture I. And
in Forfeiture II: (a) motion to dismiss and/or to quash Forfeiture II; and (b) motion for partial
reconsideration.
The foregoing pleadings, particularly the motions to dismiss, were filed by petitioner solely for special
appearance with the purpose of challenging the jurisdiction of the SB over her person and that of
her three children. Petitioner asserts therein that SB did not acquire jurisdiction over her person and of
her three children for lack of valid service of summons through improvident substituted service of
summons in both Forfeiture I and Forfeiture II. This stance the petitioner never abandoned when she filed
her motions for reconsideration, even with a prayer to admit their attached Answer Ex Abundante Ad
Cautelam dated January 22, 2005 setting forth affirmative defenses with a claim for damages. And the
other subsequent pleadings, likewise, did not abandon her stance and defense of lack of jurisdiction due
to improper substituted services of summons in the forfeiture cases. Evidently, from the foregoing Sec.
20, Rule 14 of the 1997 Revised Rules on Civil Procedure, petitioner and her sons did not voluntarily
appear before the SB constitutive of or equivalent to service of summons.
Moreover, the leading La Naval Drug Corp. v. Court of Appeals
26
applies to the instant case. Said case
elucidates the current view in our jurisdiction that a special appearance before the courtchallenging its
jurisdiction over the person through a motion to dismiss even if the movant invokes other groundsis not
tantamount to estoppel or a waiver by the movant of his objection to jurisdiction over his person; and such
is not constitutive of a voluntary submission to the jurisdiction of the court.
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127

Thus, it cannot be said that petitioner and her three children voluntarily appeared before the SB to cure
the defective substituted services of summons. They are, therefore, not estopped from questioning the
jurisdiction of the SB over their persons nor are they deemed to have waived such defense of lack of
jurisdiction. Consequently, there being no valid substituted services of summons made, the SB did not
acquire jurisdiction over the persons of petitioner and her children. And perforce, the proceedings in the
subject forfeiture cases, insofar as petitioner and her three children are concerned, are null and void for
lack of jurisdiction. Thus, the order declaring them in default must be set aside and voided insofar as
petitioner and her three children are concerned. For the forfeiture case to proceed against them, it is,
thus, imperative for the SB to serve anew summons or alias summons on the petitioner and her three
children in order to acquire jurisdiction over their persons.
WHEREFORE, the petitions for certiorari and mandamus are PARTIALLY GRANTED. The
Sandiganbayan, Fourth Division has not acquired jurisdiction over petitioner Clarita D. Garcia and her
three children. The proceedings in Civil Case Nos. 0193 and 0196 before the Sandiganbayan, Fourth
Division, insofar as they pertain to petitioner and her three children, are VOID for lack of jurisdiction over
their persons. No costs.
SO ORDERED.
THIRD DIVISION
[G.R. No. 133365. September 16, 2003]
PLATINUM TOURS AND TRAVEL, INCORPORATED, petitioner, vs. JOSE M. PANLILIO, respondent.
D E C I S I O N
CORONA, J.:
Before us is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the January
15, 1998 decision1[1] of the Court of Appeals which ruled that:
x x x
Consequently, the respondent judge committed grave abuse of discretion in allowing the consolidation of
Civil Case No. 96-635 with Civil Case No. 94-1634.
x x x We also leave it to the respondent Judge to decide whether he will return Civil Case No. 96-635 to
Branch 146 or keep it in his docket but should he opt for the latter, he should act on it as a separate case
from Civil Case No. 94-1634.
WHEREFORE, the petition is partially granted and the assailed Orders dated July 23, 1996 and
September 17, 1996, allowing the consolidation of Civil Case No. 96-635 with Civil Case No. 94-1634 and
denying petitioners motion for reconsideration, respectively, are ANNULLED and SET ASIDE, with the
consequent complete severance of the two (2) cases.2[2]




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The facts follow:
On April 27, 1994, petitioner Platinum Tours and Travel Inc. (Platinum) filed a complaint for a sum of
money with damages against Pan Asiatic Travel Corporation (PATC) and its president Nelida G. Galvez.
Platinum sought to collect payment for the airline tickets which PATC bought from it. The case was
docketed as Civil Case No. 94-1634.
On October 24, 1994, the Regional Trial Court of Makati City, Branch 62, rendered a judgment3[3] by
default in favor of Platinum and ordered PATC and Nelida G. Galvez to solidarily pay Platinum actual
damages of P 359,621.03 with legal interest, P 50,000 attorneys fees and cost of suit.
On February 10, 1995, a writ of execution was issued on motion of Platinum. Pursuant to the writ, Manila
Polo Club Proprietary Membership Certificate No. 2133 in the name of Nelida G. Galvez was levied upon
and sold for P479,888.48 to a certain Ma. Rosario Khoo.
On June 2, 1995, private respondent Jose M. Panlilio filed a motion to intervene in Civil Case No. 94-
1634. Panlilio claimed that, in October 1992, Galvez had executed in his favor a chattel mortgage over
her shares of stock in the Manila Polo Club to secure her P1 million loan and that Galvez had already
delivered to him the stock certificates valued at P5 million.
On June 9, 1995, the trial court denied Panlilios motion for intervention:
Submitted for resolution is Jose M. Panlilios Motion for Intervention dated May 31, 1995.
This Court has to deny the motion because (1) a decision had already been rendered in this case and
that the only matters at issue is the propriety of the execution; (2) it will only delay or prejudice the
adjudication of the rights of the original parties; and, (3) the Intervenors rights may be fully protected in a
separate action.4[4]
On January 29, 1996, the trial court declared the execution sale null and void due to irregularities in the
conduct thereof.
On May 3, 1996, Panlilio filed against Galvez a collection case with application for a writ of preliminary
attachment of the disputed Manila Polo Club shares, docketed as Civil Case No. 96-365. The case was
raffled to Branch 146 of the Regional Trial Court of Makati City5[5]. In the meantime, Panlilio again
attempted to intervene in Civil Case No. 94-1634, this time by incorporating in his complaint a motion to
consolidate Civil Case No. 96-365 and Civil Case No. 94-1634.








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On June 13, 1996, Judge Salvador Tensuan of Branch 146 granted the motion for consolidation on
condition that Judge Roberto Diokno of Branch 62, who was trying Civil Case No. 94-1634, would not
object thereto. Judge Diokno later issued an order, dated July 23, 1996, allowing the consolidation of the
two cases and setting for hearing Panlilios application for a writ of preliminary attachment.
Platinum, as plaintiff in Civil Case No. 94-1634, moved to reconsider the July 23, 1996 order of Judge
Diokno but its motion was denied.
On January 31, 1997, Platinum filed a petition for certiorari at the Court of Appeals assailing, among
others, the July 23, 1996 order of Judge Diokno allowing the consolidation of Civil Case No. 96-365 and
Civil Case No. 94-1634.
In a decision dated January 15, 1998, the Court of Appeals annulled the assailed order but left it to Judge
Diokno to decide whether to return Civil Case No. 96-365 to Judge Tensuan in Branch 146, or to keep it
in his docket and decide it as a separate case.
Platinum filed a motion for partial reconsideration of the decision of the Court of Appeals, praying that
Civil Case No. 96-365 be returned to Branch 146 or re-raffled to another RTC Branch of Makati.
However, the motion was denied by the Court of Appeals on April 2, 1998.
In the instant petition, Platinum insists that the Makati RTC, Branch 62, has no jurisdiction to try Civil
Case No. 96-365. It argues that, when Judge Dioknos July 23, 1996 order allowing the consolidation of
the two cases was annulled and set aside, RTC Branch 62s basis for acquiring jurisdiction over Civil
Case No. 96-365 was likewise extinguished.
We disagree.
Jurisdiction is the power and authority of the court to hear, try and decide a case.6[6] In general,
jurisdiction may either be over the nature of the action, over the subject matter, over the person of the
defendants or over the issues framed in the pleadings.
Jurisdiction over the nature of the action and subject matter is conferred by law. It is determined by the
allegations of the complaint, irrespective of whether or not the plaintiff is entitled to recover upon all or
some of the claims asserted therein.7[7] Jurisdiction over the person of the plaintiff is acquired from the
time he files his complaint; while jurisdiction over the person of the defendant is acquired by his voluntary
appearance in court and his submission to its authority, or by the coercive power of legal processes
exerted over his person.
Since jurisdiction is the power to hear and determine a particular case, it does not depend upon the
regularity of the exercise by the court of that power or on the correctness of its decisions.
In the case at bar, there is no doubt that Panlilios collection case docketed as Civil Case No. 96-365 falls
within the jurisdiction of the RTC of Makati, Branch 62. The fact that the Court of Appeals subsequently





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annulled Judge Dioknos order granting the consolidation of Civil Case No. 96-365 and Civil Case No. 94-
1634, did not affect the jurisdiction of the court which issued the said order.
Jurisdiction should be distinguished from the exercise of jurisdiction. Jurisdiction refers to the authority
to decide a case, not the orders or the decision rendered therein. Accordingly, where a court has
jurisdiction over the person and the subject matter, as in the instant case, the decision on all questions
arising from the case is but an exercise of such jurisdiction. Any error that the court may commit in the
exercise of its jurisdiction is merely an error of judgment which does not affect its authority to decide the
case, much less divest the court of the jurisdiction over the case.
We find no reversible error on the part of the Court of Appeals when it left to Judge Diokno of Branch 62
the discretion on whether to return Civil Case No. 96-365 to Branch 146 or to decide the same as a
separate case in his own sala.
Moreover, we find the instant petition premature and speculative. Had Platinum waited until Judge Diokno
decided on what to do with Civil Case No. 96-365, the parties would have been spared the trouble and
the expense of seeking recourse from this Court, which in turn would have had one petition less in its
docket.
The unfounded fear that Civil Case No. 96-365 would unduly delay the final resolution of Civil Case No.
94-1634, if the former were retained by Branch 62, made Platinum act with haste. In so doing, it wasted
the precious time not only of the parties but also of this Court.
All told, nothing legally prevents the RTC of Makati, Branch 62, from proceeding with Civil Case No. 96-
365. Should it decide to retain the case, it is hereby directed to resolve the same with dispatch.
WHEREFORE, petition is hereby DENIED.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 139791 December 12, 2003
MANILA BANKERS LIFE INSURANCE CORPORATION, petitioner,
vs.
EDDY NG KOK WEI, respondent.
D E C I S I O N
SANDOVAL-GUTIERREZ, J .:
Before us is a petition for review on certiorari assailing the Decision
1
dated March 26, 1999 and
Resolution
2
dated August 5, 1999 of the Court of Appeals in CA-G.R. CV No. 40504, entitled "Eddy Ng
Kok Wei vs. Manila Bankers Life Insurance Corporation".
The factual antecedents as borne by the records are:
JURISDICTION jrp
131

Eddy Ng Kok Wei, respondent, is a Singaporean businessman who ventured into investing in the
Philippines. On November 29, 1988, respondent, in a Letter of Intent addressed to Manila Bankers Life
Insurance Corporation, petitioner, expressed his intention to purchase a condominium unit at Valle Verde
Terraces.
Subsequently or on December 5, 1988, respondent paid petitioner a reservation fee of P50,000.00 for the
purchase of a 46-square meter condominium unit (Unit 703) valued at P860,922.00. On January 16,
1989, respondent paid 90% of the purchase price in the sum of P729,830.00.
Consequently, petitioner, through its President, Mr. Antonio G. Puyat, executed a Contract to Sell in favor
of the respondent. The contract expressly states that the subject condominium unit "shall substantially be
completed and delivered" to the respondent "within fifteen (15) months" from February 8, 1989 or on May
8, 1990, and that "(S)hould there be no substantial completion and fail(ure) to deliver the unit on the date
specified, a penalty of 1% of the total amount paid (by respondent) shall be charged against (petitioner)".
Considering that the stipulated 15-month period was at hand, respondent returned to the Philippines
sometime in April, 1990.
In a letter dated April 5, 1990, petitioner, through its Senior Assistant Vice-President, Mr. Mario G.
Zavalla, informed respondent of the substantial completion of his condominium unit, however, due to
various uncontrollable forces (such as coup d etat attempts, typhoon and steel and cement shortage), the
final turnover is reset to May 31, 1990.1wphi1
Meanwhile, on July 5, 1990, upon receipt of petitioners notice of delivery dated May 31, 1990,
respondent again flew back to Manila. He found the unit still uninhabitable for lack of water and electric
facilities.
Once more, petitioner issued another notice to move-in addressed to its building administrator advising
the latter that respondent is scheduled to move in on August 22, 1990.
On October 5, 1990, respondent returned to the Philippines only to find that his condominium unit was still
unlivable. Exasperated, he was constrained to send petitioner a letter dated November 21, 1990
demanding payment for the damages he sustained. But petitioner ignored such demand, prompting
respondent to file with the Regional Trial Court, Branch 150, Makati City, a complaint against the former
for specific performance and damages, docketed as Civil Case No. 90-3440.
Meanwhile, during the pendency of the case, respondent finally accepted the condominium unit and on
April 12, 1991, occupied the same. Thus, respondents cause of action has been limited to his claim for
damages.
On December 18, 1992, the trial court rendered a Decision
3
finding the petitioner liable for payment of
damages due to the delay in the performance of its obligation to the respondent. The dispositive portion
reads:
"WHEREFORE, judgment is hereby rendered in favor of plaintiff and against defendant, ordering Manila
Bankers Life Insurance Corporation to pay plaintiff Eddy Ng Kok Wei the following:
1. One percent (1%) of the total amount plaintiff paid defendant;
2. P100,000.00 as moral damages;
3. P50,000.00 as exemplary damages;
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132

4. P25,000.00 by way of attorneys fees; and
Cost of suit.
"SO ORDERED."
On appeal, the Court of Appeals, in a Decision dated March 26, 1999, affirmed in toto the trial courts
award of damages in favor of the respondent.
Unsatisfied, petitioner filed a motion for reconsideration but was denied by the Appellate Court in a
Resolution dated August 5, 1999.
Hence, this petition for review on certiorari. Petitioner contends that the trial court has no jurisdiction over
the instant case; and that the Court of Appeals erred in affirming the trial courts finding that petitioner
incurred unreasonable delay in the delivery of the condominium unit to respondent.
On petitioners contention that the trial court has no jurisdiction over the instant case, Section 1 (c) of
Presidential Decree No. 1344, as amended, provides:
"SECTION 1. In the exercise of its functions to regulate the real estate trade and business and in
addition to its powers provided for in Presidential Decree No. 957, the National Housing Authority [now
Housing and Land Use Regulatory Board (HLURB)]
4
shall have exclusive jurisdiction to hear and decide
cases of the following nature:
x x x
"C. Cases involving specific performance of contractual and statutory obligations filed by buyers of
subdivision lots or condominium units against the owner, developer, dealer, broker or salesman.
x x x."
Pursuant to the above provisions, it is the HLURB which has jurisdiction over the instant case. We have
consistently held that complaints for specific performance with damages by a lot or condominium unit
buyer against the owner or developer falls under the exclusive jurisdiction of the HLURB.
5

While it may be true that the trial court is without jurisdiction over the case, petitioners active participation
in the proceedings estopped it from assailing such lack of it. We have held that it is an undesirable
practice of a party participating in the proceedings and submitting its case for decision and then accepting
the judgment, only if favorable, and attacking it for lack of jurisdiction, when adverse.
6

Here, petitioner failed to raise the question of jurisdiction before the trial court and the Appellate Court. In
effect, petitioner confirmed and ratified the trial courts jurisdiction over this case. Certainly, it is now in
estoppel and can no longer question the trial courts jurisdiction.
On petitioners claim that it did not incur delay, suffice it to say that this is a factual issue. Time and again,
we have ruled that "the factual findings of the trial court are given weight when supported by substantial
evidence and carries more weight when affirmed by the Court of Appeals."
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.
JURISDICTION jrp
133

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.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 155206 October 28, 2003
GOVERNMENT SERVICE INSURANCE SYSTEM, petitioner,
vs.
EDUARDO M. SANTIAGO, substituted by his widow ROSARIO ENRIQUEZ VDA. DE SANTIAGO,
respondent.
D E C I S I O N
CALLEJO, SR., J .:
Before the Court is the petition for review on certiorari filed by the Government Service Insurance System
(GSIS), seeking to reverse and set aside the Decision
1
dated February 22, 2002 of the Court of Appeals
(CA) in CA-G.R. CV No. 62309 and its Resolution dated September 5, 2002 denying its motion for
reconsideration.
The antecedent facts of the case, as culled from the assailed CA decision and that of the trial court, are
as follows:
Deceased spouses Jose C. Zulueta and Soledad Ramos obtained various loans from defendant GSIS for
(the) period September, 1956 to October, 1957 in the total amount of P3,117,000.00 secured by real
estate mortgages over parcels of land covered by TCT Nos. 26105, 37177 and 50365. The Zuluetas
failed to pay their loans to defendant GSIS and the latter foreclosed the real estate mortgages dated
September 25, 1956, March 6, 1957, April 4, 1957 and October 15, 1957.
On August 14, 1974, the mortgaged properties were sold at public auction by defendant GSIS submitting
a bid price of P5,229,927.84. Not all lots covered by the mortgaged titles, however, were sold. Ninety-one
(91) lots were expressly excluded from the auction since the lots were sufficient to pay for all the
mortgage debts. A Certificate of Sale (Annex "F," Records, Vol. I, pp. 23-28) was issued by then
Provincial Sheriff Nicanor D. Salaysay.
The Certificate of Sale dated August 14, 1974 had been annotated and inscribed in TCT Nos. 26105,
37177 and 50356, with the following notations: "(T)he following lots which form part of this title (TCT No.
26105) are not covered by the mortgage contract due to sale to third parties and donation to the
government: 50-H-5-C-9-J-65-H-8, 50-H-5-C-9J-M-7; 50-H-5-C-9-J-65-H-5; 1 lots Nos. 1 to 13, Block No.
1 -6,138 sq.m. 2. Lots Nos. 1 to 11, Block No. 2 4,660 sq.m. 3. Lot No. 15, Block No. 3 487 sq.m. 4.
Lot No. 17, Block No. 4 263 sq.m. 5. Lot No. 1, Block No. 7 402 sq.m. 6. Road Lots Nos. 1, 2, 3, & 4
2,747 sq.m."
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134

In another "NOTE: The following lots in the Antonio Subdivision were already released by the GSIS and
therefore are not included in this sale, namely: LOT NO. 1, 6, 7, 8, 9, 10, and 13 (Old Plan) Block I; 1, 3,
4, 5, 7, 8 and 10 (Old Plan) Block II; 3, 10, 12 and 13 (New Plan) Block I (Old Plan) Block III; 7, 14 and 20
(New Plan) Block III (Old Plan) Block V; 13 and 20 (New Plan) Block IV (Old Plan) Block VI; 1, 2, 3 and 10
(New Plan) Block V (Old Plan) Block VII; 1, 5, 8, 15, 26 and 27 (New Plan) Block VI (Old Plan) Block VIII;
7, 12 and 20 (New Plan) Block VII (Old Plan) Block II; 1, 4 and 6 (New Plan) Block VIII (Old Plan) Block X;
5 (New Plan) Block X (Old Plan) Block ZXII; 6 (New Plan) Block XI (Old Plan) Block XII; 1, Block 9; 12
Block 1; 11 Block 2; 19 Block 1; 10 Block 6; 23 Block 3."
And the lots on "ADDITIONAL EXCLUSION FROM PUBLIC SALE" are "LOTS NO. 6 Block 4; 2 Block 2;
5 Block 5; 1, 2 and 3 Block 11, 1, 2, 3 and 4 Block 10; 5 Block 11 (New); 1 Block 3; 5 Block 1; 15 Block 7;
11 Block 9; 13 Block 5; 12 Block 5; 3 Block 10; 6."
On November 25, 1975, an Affidavit of Consolidation of Ownership (Annex "G," Records, Vol. I, pp. 29-
31) was executed by defendant GSIS over Zuluetas lots, including the lots, which as earlier stated, were
already excluded from the foreclosure.
On March 6, 1980, defendant GSIS sold the foreclosed properties to Yorkstown Development
Corporation which sale was disapproved by the Office of the President of the Philippines. The sold
properties were returned to defendant GSIS.
The Register of Deeds of Rizal cancelled the land titles issued to Yorkstown Development Corporation.
On July 2, 1980, TCT No. 23552 was issued cancelling TCT No. 21926; TCT No. 23553 cancelled TCT
No. 21925; and TCT No. 23554 cancelling TCT No. 21924, all in the name of defendant
GSIS.1awphi1.nt
After defendant GSIS had re-acquired the properties sold to Yorkstown Development Corporation, it
began disposing the foreclosed lots including the excluded ones.
On April 7, 1990, representative Eduardo Santiago and then plaintiff Antonio Vic Zulueta executed an
agreement whereby Zulueta transferred all his rights and interests over the excluded lots. Plaintiff
Eduardo Santiagos lawyer, Atty. Wenceslao B. Trinidad, wrote a demand letter dated May 11, 1989
(Annex "H," Records, Vol. I, pp. 32-33) to defendant GSIS asking for the return of the eighty-one (81)
excluded lots.
2

On May 7, 1990, Antonio Vic Zulueta, represented by Eduardo M. Santiago, filed with the Regional Trial
Court (RTC) of Pasig City, Branch 71, a complaint for reconveyance of real estate against the GSIS.
Spouses Alfeo and Nenita Escasa, Manuel III and Sylvia G. Urbano, and Marciana P. Gonzales and the
heirs of Mamerto Gonzales moved to be included as intervenors and filed their respective answers in
intervention. Subsequently, the petitioner, as defendant therein, filed its answer alleging inter alia that the
action was barred by the statute of limitations and/or laches and that the complaint stated no cause of
action. Subsequently, Zulueta was substituted by Santiago as the plaintiff in the complaint a quo. Upon
the death of Santiago on March 6, 1996, he was substituted by his widow, Rosario Enriquez Vda. de
Santiago, as the plaintiff.
After due trial, the RTC rendered judgment against the petitioner ordering it to reconvey to the
respondent, Rosario Enriquez Vda. de Santiago, in substitution of her deceased husband Eduardo, the
seventy-eight lots excluded from the foreclosure sale.1awphi1.nt The dispositive portion of the RTC
decision reads:
WHEREFORE, judgment is hereby rendered in favor of plaintiff and against the defendant:
1. Ordering defendant to reconvey to plaintiff the seventy-eight (78) lots released and excluded
from the foreclosure sale including the additional exclusion from the public sale, namely:
JURISDICTION jrp
135

a. Lot Nos. 1, 6, 7, 8, 0, 10, 13, Block I (Old Plan).
b. Lot Nos. 1, 3, 4, 5, 7, 8 and 10, Block II (Old Plan).
c. Lot Nos. 3, 10, 12, and 13, Block I (New Plan), Block III (Old Plan),
d. Lot Nos. 7, 14 and 20, Block III (New Plan), Block V (Old Plan).
e. Lot Nos. 13 and 20, Block IV (New Plan), Block VI (Old Plan).
f. Lot Nos. 1, 2, 3 and 10, Block V (New Plan), Block VII (Old Plan).
g. Lot Nos. 1, 5, 8, 15, 26 and 27, Block VI (New Plan), Block VIII (Old Plan).
h. Lot Nos. 7 and 12, Block VII (New Plan), Block II (Old Plan).
i. Lot Nos. 1, 4 and 6, Block VIII (New Plan), Block X (Old Plan).
j. Lot 5, Block X (New Plan), Block XII (Old Plan).
k. Lot 6, Block XI (New Plan), Block XII (Old Plan).
l. Lots 2, 5, 12 and 15, Block I.
m. Lots 6, 9 and 11, Block 2.
n. Lots 1, 5, 6, 7, 16 and 23, Block 3.
o. Lot 6, Block 4.
p. Lots 5, 12, 13 and 24, Block 5.
q. Lots 10 and 16, Block 6.
r. Lots 6 and 15, Block 7.
s. Lots 13, 24, 28 and 29, Block 8.
t. Lots 1, 11, 17 and 22, Block 9.
u. Lots 1, 2, 3 and 4, Block 10.
v. Lots 1, 2, 3 and 5 (New), Block 11.
2. Ordering defendant to pay plaintiff, if the seventy-eight (78) excluded lots could not be
reconveyed, the fair market value of each of said lots.
3. Ordering the Registry of Deeds of Pasig City to cancel the land titles covering the excluded lots
in the name of defendant or any of its successors-in-interest including all derivative titles
therefrom and to issue new land titles in plaintiffs name.
JURISDICTION jrp
136

4. Ordering the Registry of Deeds of Pasig City to cancel the Notices of Lis Pendens inscribed in
TCT No. PT-80342 under Entry No. PT-12267/T-23554; TCT No. 81812 under Entry No. PT-
12267/T-23554; and TCT No. PT-84913 under Entry No. PT-12267/T-23554.
5. Costs of suit.
3

The petitioner elevated the case to the CA which rendered the assailed decision affirming that of the
RTC. The dispositive portion of the assailed decision reads:
WHEREFORE, premises considered, the herein appeal is DISMISSED for lack of merit. The Decision of
December 17, 1997 of Branch 71 of the Regional Trial Court of Pasig City is hereby AFFIRMED.
4

The petitioner moved for a reconsideration of the aforesaid decision but the same was denied in the
assailed CA Resolution of September 5, 2002.
The petitioner now comes to this Court alleging that:
THE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR IN RULING THAT A) PETITIONER
WAS GUILTY OF BAD FAITH WHEN IN TRUTH AND IN FACT, THERE WAS NO SUFFICIENT
GROUND TO SUPPORT SUCH CONCLUSION; AND B) THERE WAS NO PRESCRIPTION IN THIS
CASE.
5

In its petition, the petitioner maintains that it did not act in bad faith when it erroneously included in its
certificate of sale, and subsequently consolidated the titles in its name over the seventy-eight lots
("subject lots") that were excluded from the foreclosure sale. There was no proof of bad faith nor could
fraud or malice be attributed to the petitioner when it erroneously caused the issuance of certificates of
title over the subject lots despite the fact that these were expressly excluded from the foreclosure sale.
The petitioner asserts that the action for reconveyance instituted by the respondent had already
prescribed after the lapse of ten years from November 25, 1975 when the petitioner consolidated its
ownership over the subject lots. According to the petitioner, an action for reconveyance based on implied
or constructive trust prescribes in ten years from the time of its creation or upon the alleged fraudulent
registration of the property. In this case, when the action was instituted on May 7, 1990, more than
fourteen years had already lapsed. Thus, the petitioner contends that the same was already barred by
prescription as well as laches.
The petitioner likewise takes exception to the holding of the trial court and the CA that it (the petitioner)
failed to apprise or return to the Zuluetas, the respondents predecessors-in-interest, the seventy-eight
lots excluded from the foreclosure sale because the petitioner had no such obligation under the pertinent
loan and mortgage agreement.
The petitioners arguments fail to persuade.1awphi1.nt
At the outset, it bears emphasis that the jurisdiction of this Court in a petition for review on certiorari under
Rule 45 of the Rules of Court, as amended, is limited to reviewing only errors of law. This Court is not a
trier of facts. Case law has it that the findings of the trial court especially when affirmed by the CA are
binding and conclusive upon this Court. Although there are exceptions to the said rule, we find no reason
to deviate therefrom.
6
By assailing the findings of facts of the trial court as affirmed by the CA, that it
acted in bad faith, the petitioner thereby raised questions of facts in its petition.
Nonetheless, even if we indulged the petition and delved into the factual issues, we find the petition
barren of merit.
JURISDICTION jrp
137

That the petitioner acted in bad faith in consolidating ownership and causing the issuance of titles in its
name over the subject lots, notwithstanding that these were expressly excluded from the foreclosure sale
was the uniform ruling of the trial court and appellate court. As declared by the CA:
The acts of defendant-appellant GSIS in concealing from the Zuluetas [the respondents predecessors-in-
interest] the existence of these lots, in failing to notify or apprise the spouses Zulueta about the excluded
lots from the time it consolidated its titles on their foreclosed properties in 1975, in failing to inform them
when it entered into a contract of sale of the foreclosed properties to Yorkstown Development Corporation
in 1980 as well as when the said sale was revoked by then President Ferdinand E. Marcos during the
same year demonstrated a clear effort on its part to defraud the spouses Zulueta and appropriate for itself
the subject properties. Even if titles over the lots had been issued in the name of the defendant-appellant,
still it could not legally claim ownership and absolute dominion over them because indefeasibility of title
under the Torrens system does not attach to titles secured by fraud or misrepresentation. The fraud
committed by defendant-appellant in the form of concealment of the existence of said lots and failure to
return the same to the real owners after their exclusion from the foreclosure sale made defendant-
appellant holders in bad faith. It is well-settled that a holder in bad faith of a certificate of title is not
entitled to the protection of the law for the law cannot be used as a shield for fraud.
7

The Court agrees with the findings and conclusion of the trial court and the CA. The petitioner is not an
ordinary mortgagee. It is a government financial institution and, like banks, is expected to exercise greater
care and prudence in its dealings, including those involving registered lands.
8
The Courts ruling in Rural
Bank of Compostela v. CA
9
is apropos:
Banks, indeed, should exercise more care and prudence in dealing even with registered lands, than
private individuals, for their business is one affected with public interest, keeping in trust money belonging
to their depositors, which they should guard against loss by not committing any act of negligence which
amounts to lack of good faith by which they would be denied the protective mantle of land registration
statute, Act [No.] 496, extended only to purchasers for value and in good faith, as well as to mortgagees
of the same character and description.
10

Due diligence required of banks extend even to persons, or institutions like the petitioner, regularly
engaged in the business of lending money secured by real estate mortgages.
11

In this case, the petitioner executed an affidavit in consolidating its ownership and causing the issuance
of titles in its name over the subject lots despite the fact that these were expressly excluded from the
foreclosure sale. By so doing, the petitioner acted in gross and evident bad faith. It cannot feign ignorance
of the fact that the subject lots were excluded from the sale at public auction. At the least, its act
constituted gross negligence amounting to bad faith. Further, as found by the CA, the petitioners acts of
concealing the existence of these lots, its failure to return them to the Zuluetas and even its attempt to sell
them to a third party is proof of the petitioners intent to defraud the Zuluetas and appropriate for itself the
subject lots.
On the issue of prescription, generally, an action for reconveyance of real property based on fraud
prescribes in four years from the discovery of fraud; such discovery is deemed to have taken place upon
the issuance of the certificate of title over the property. Registration of real property is a constructive
notice to all persons and, thus, the four-year period shall be counted therefrom.
12
On the other hand,
Article 1456 of the Civil Code provides:
Art. 1456. If property is acquired through mistake or fraud, the person obtaining it is, by force of law,
considered a trustee of an implied trust for the benefit of the person from whom the property comes.
An action for reconveyance based on implied or constructive trust prescribes in ten years from the alleged
fraudulent registration or date of issuance of the certificate of title over the property.
13

JURISDICTION jrp
138

The petitioners defense of prescription is untenable. As held by the CA, the general rule that the
discovery of fraud is deemed to have taken place upon the registration of real property because it is
"considered a constructive notice to all persons" does not apply in this case. The CA correctly cited the
cases of Adille v. Court of Appeals
14
and Samonte v. Court of Appeals,
15
where this Court reckoned the
prescriptive period for the filing of the action for reconveyance based on implied trust from the actual
discovery of fraud.
In ruling that the action had not yet prescribed despite the fact that more than ten years had lapsed
between the date of registration and the institution of the action for reconveyance, the Court in Adille
ratiocinated:
It is true that registration under the Torrens system is constructive notice of title, but it has likewise been
our holding that the Torrens title does not furnish a shield for fraud. It is therefore no argument to say that
the act of registration is equivalent to notice of repudiation, assuming there was one, notwithstanding the
long-standing rule that registration operates as a universal notice of title.
For the same reason, we cannot dismiss private respondents claims commenced in 1974 over the estate
registered in 1955. While actions to enforce a constructive trust prescribes in ten years, reckoned from
the date of the registration of the property, we, as we said, are not prepared to count the period from such
a date in this case. We note the petitioners sub rosa efforts to get hold of the property exclusively for
himself beginning with his fraudulent misrepresentation in his unilateral affidavit of extrajudicial settlement
that he is "the only heir and child of his mother Feliza with the consequence that he was able to secure
title in his name [alone]." Accordingly, we hold that the right of the private respondents commenced from
the time they actually discovered the petitioners act of defraudation. According to the respondent Court of
Appeals, they "came to know [of it] apparently only during the progress of the litigation." Hence,
prescription is not a bar.
16

The above ruling was reiterated in the more recent case of Samonte. In this case, as established by the
CA, the respondent actually discovered the fraudulent act of the petitioner only in 1989:
... [T]he prescriptive period of the action is to be reckoned from the time plaintiff-appellee (then Eduardo
M. Santiago) had actually discovered the fraudulent act of defendant-appellant which was, as borne out
by the records, only in 1989. Plaintiff-appellee Eduardo M. Santiago categorically testified (TSN of July
11, 1995, pp. 14-15) that he came to know that there were 91 excluded lots in Antonio Village which were
foreclosed by the GSIS and included in its consolidation of ownership in 1975 when, in 1989, he and
Antonio Vic Zulueta discussed it and he was given by Zulueta a special power of attorney to represent
him to recover the subject properties from GSIS. The complaint for reconveyance was filed barely a year
from the discovery of the fraud.
17

Following the Courts pronouncements in Adille and Samonte, the institution of the action for
reconveyance in the court a quo in 1990 was thus well within the prescriptive period. Having acted in bad
faith in securing titles over the subject lots, the petitioner is a holder in bad faith of certificates of title over
the subject lots. The petitioner is not entitled to the protection of the law for the law cannot be used as a
shield for frauds.
18

Contrary to its claim, the petitioner unarguably had the legal duty to return the subject lots to the Zuluetas.
The petitioners attempts to justify its omission by insisting that it had no such duty under the mortgage
contract is obviously clutching at straw. Article 22 of the Civil Code explicitly provides that "every person
who, through an act of performance by another, or any other means, acquires or comes into possession
of something at the expense of the latter without just or legal ground, shall return the same to him."
WHEREFORE, the petition is DENIED for lack of merit.1a\^/phi1.net The assailed Decision dated
February 22, 2002 and Resolution dated September 5, 2002 of the Court of Appeals in CA-G.R. CV No.
62309 are AFFIRMED IN TOTO. Costs against the petitioner.
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139

SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 151149 September 7, 2004
GEORGE KATON, petitioner,
vs.
MANUEL PALANCA JR., LORENZO AGUSTIN, JESUS GAPILANGO and JUAN FRESNILLO,
respondents.
D E C I S I O N
PANGANIBAN, J .:
Where prescription, lack of jurisdiction or failure to state a cause of action clearly appear from the
complaint filed with the trial court, the action may be dismissed motu proprio by the Court of Appeals,
even if the case has been elevated for review on different grounds. Verily, the dismissal of such cases
appropriately ends useless litigations.
The Case
Before us is a Petition for Review
1
under Rule 45 of the Rules of Court, assailing the December 8, 2000
Decision
2
and the November 20, 2001 Resolution
3
of the Court of Appeals in CA-GR SP No. 57496. The
assailed Decision disposed as follows:
"Assuming that petitioner is correct in saying that he has the exclusive right in applying for the
patent over the land in question, it appears that his action is already barred by laches because he
slept on his alleged right for almost 23 years from the time the original certificate of title has been
issued to respondent Manuel Palanca, Jr., or after 35 years from the time the land was certified
as agricultural land. In addition, the proper party in the annulment of patents or titles acquired
through fraud is the State; thus, the petitioners action is deemed misplaced as he really does not
have any right to assert or protect. What he had during the time he requested for the re-
classification of the land was the privilege of applying for the patent over the same upon the
lands conversion from forest to agricultural.
"WHEREFORE, the petition is hereby DISMISSED. No pronouncement as to cost."
4

The assailed Resolution, on the other hand, denied the Motion for Reconsideration filed by petitioner. It
affirmed the RTCs dismissal of his Complaint in Civil Case No. 3231, not on the grounds relied upon by
the trial court, but because of prescription and lack of jurisdiction.
The Antecedent Facts
The CA narrates the antecedent facts as follows:
"On August 2, 1963, herein [P]etitioner [George Katon] filed a request with the District Office of
the Bureau of Forestry in Puerto Princesa, Palawan, for the re-classification of a piece of real
property known as Sombrero Island, located in Tagpait, Aborlan, Palawan, which consists of
JURISDICTION jrp
140

approximately 18 hectares. Said property is within Timberland Block of LC Project No. 10-C of
Aborlan, Palawan, per BF Map LC No. 1582.
"Thereafter, the Bureau of Forestry District Office, Puerto Princesa, Palawan, ordered the
inspection, investigation and survey of the land subject of the petitioners request for eventual
conversion or re-classification from forest to agricultural land, and thereafter for George Katon to
apply for a homestead patent.
"Gabriel Mandocdoc (now retired Land Classification Investigator) undertook the investigation,
inspection and survey of the area in the presence of the petitioner, his brother Rodolfo Katon
(deceased) and his cousin, [R]espondent Manuel Palanca, Jr. During said survey, there were no
actual occupants on the island but there were some coconut trees claimed to have been planted
by petitioner and [R]espondent Manuel Palanca, Jr. (alleged overseer of petitioner) who went to
the island from time to time to undertake development work, like planting of additional coconut
trees.
"The application for conversion of the whole Sombrero Island was favorably endorsed by the
Forestry District Office of Puerto Princesa to its main office in Manila for appropriate action. The
names of Felicisimo Corpuz, Clemente Magdayao and Jesus Gapilango and Juan Fresnillo were
included in the endorsement as co-applicants of the petitioner.
"In a letter dated September 23, 1965, then Asst. Director of Forestry R.J.L. Utleg informed the
Director of Lands, Manila, that since the subject land was no longer needed for forest purposes,
the same is therefore certified and released as agricultural land for disposition under the Public
Land Act.
"Petitioner contends that the whole area known as Sombrero Island had been classified from
forest land to agricultural land and certified available for disposition upon his request and at his
instance. However, Mr. Lucio Valera, then [l]and investigator of the District Land Office, Puerto
Princesa, Palawan, favorably endorsed the request of [R]espondents Manuel Palanca Jr. and
Lorenzo Agustin, for authority to survey on November 15, 1965. On November 22, a second
endorsement was issued by Palawan District Officer Diomedes De Guzman with specific
instruction to survey vacant portions of Sombrero Island for the respondents consisting of five (5)
hectares each. On December 10, 1965, Survey Authority No. R III-342-65 was issued authorizing
Deputy Public Land Surveyor Eduardo Salvador to survey ten (10) hectares of Sombrero Island
for the respondents. On December 23, 1990, [R]espondent Lorenzo Agustin filed a homestead
patent application for a portion of the subject island consisting of an area of 4.3 hectares.
"Records show that on November 8, 1996, [R]espondent Juan Fresnillo filed a homestead patent
application for a portion of the island comprising 8.5 hectares. Records also reveal that
[R]espondent Jesus Gapilango filed a homestead application on June 8, 1972. Respondent
Manuel Palanca, Jr. was issued Homestead Patent No. 145927 and OCT No. G-7089 on March
3, 1977
5
with an area of 6.84 hectares of Sombrero Island.
"Petitioner assails the validity of the homestead patents and original certificates of title covering
certain portions of Sombrero Island issued in favor of respondents on the ground that the same
were obtained through fraud. Petitioner prays for the reconveyance of the whole island in his
favor.
"On the other hand, [R]espondent Manuel Palanca, Jr. claims that he himself requested for the
reclassification of the island in dispute and that on or about the time of such request,
[R]espondents Fresnillo, Palanca and Gapilango already occupied their respective areas and
introduced numerous improvements. In addition, Palanca said that petitioner never filed any
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141

homestead application for the island. Respondents deny that Gabriel Mandocdoc undertook the
inspection and survey of the island.
"According to Mandocdoc, the island was uninhabited but the respondents insist that they already
had their respective occupancy and improvements on the island. Palanca denies that he is a
mere overseer of the petitioner because he said he was acting for himself in developing his own
area and not as anybodys caretaker.
"Respondents aver that they are all bona fide and lawful possessors of their respective portions
and have declared said portions for taxation purposes and that they have been faithfully paying
taxes thereon for twenty years.
"Respondents contend that the petitioner has no legal capacity to sue insofar as the island is
concerned because an action for reconveyance can only be brought by the owner and not a mere
homestead applicant and that petitioner is guilty of estoppel by laches for his failure to assert his
right over the land for an unreasonable and unexplained period of time.
"In the instant case, petitioner seeks to nullify the homestead patents and original certificates of
title issued in favor of the respondents covering certain portions of the Sombrero Island as well as
the reconveyance of the whole island in his favor. The petitioner claims that he has the exclusive
right to file an application for homestead patent over the whole island since it was he who
requested for its conversion from forest land to agricultural land."
6

Respondents filed their Answer with Special and/or Affirmative Defenses and Counterclaim in due time.
On June 30, 1999, they also filed a Motion to Dismiss on the ground of the alleged defiance by petitioner
of the trial courts Order to amend his Complaint so he could thus effect a substitution by the legal heirs of
the deceased, Respondent Gapilango. The Motion to Dismiss was granted by the RTC in its Order dated
July 29, 1999.
Petitioners Motion for Reconsideration of the July 29, 1999 Order was denied by the trial court in its
Resolution dated December 17, 1999, for being a third and prohibited motion. In his Petition for Certiorari
before the CA, petitioner charged the trial court with grave abuse of discretion on the ground that the
denied Motion was his first and only Motion for Reconsideration of the aforesaid Order.
Ruling of the Court of Appeals
Instead of limiting itself to the allegation of grave abuse of discretion, the CA ruled on the merits. It held
that while petitioner had caused the reclassification of Sombrero Island from forest to agricultural land, he
never applied for a homestead patent under the Public Land Act. Hence, he never acquired title to that
land.
The CA added that the annulment and cancellation of a homestead patent and the reversion of the
property to the State were matters between the latter and the homestead grantee. Unless and until the
government takes steps to annul the grant, the homesteaders right thereto stands.
Finally, granting arguendo that petitioner had the exclusive right to apply for a patent to the land in
question, he was already barred by laches for having slept on his right for almost 23 years from the time
Respondent Palancas title had been issued.
In the Assailed Resolution, the CA acknowledged that it had erred when it ruled on the merits of the case.
It agreed with petitioner that the trial court had acted without jurisdiction in perfunctorily dismissing his
September 10, 1999 Motion for Reconsideration, on the erroneous ground that it was a third and
prohibited motion when it was actually only his first motion.
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142

Nonetheless, the Complaint was dismissed motu proprio by the challenged Resolution of the CA Special
Division of five members with two justices dissenting pursuant to its "residual prerogative" under
Section 1 of Rule 9 of the Rules of Court.
From the allegations of the Complaint, the appellate court opined that petitioner clearly had no standing to
seek reconveyance of the disputed land, because he neither held title to it nor even applied for a
homestead patent. It reiterated that only the State could sue for cancellation of the title issued upon a
homestead patent, and for reversion of the land to the public domain.
Finally, it ruled that prescription had already barred the action for reconveyance. First, petitioners action
was brought 24 years after the issuance of Palancas homestead patent. Under the Public Land Act, such
action should have been taken within ten years from the issuance of the homestead certificate of title.
Second, it appears from the submission (Annex "F" of the Complaint) of petitioner himself that
Respondents Fresnillo and Palanca had been occupying six hectares of the island since 1965, or 33
years before he took legal steps to assert his right to the property. His action was filed beyond the 30-
year prescriptive period under Articles 1141 and 1137 of the Civil Code.
Hence, this Petition.
7

Issues
In his Memorandum, petitioner raises the following issues:
"1. Is the Court of Appeals correct in resolving the Petition for Certiorari based on an issue not
raised (the merits of the case) in the Petition?
"2. Is the Court of Appeals correct in invoking its alleged residual prerogative under Section 1,
Rule 9 of the 1997 Rules of Civil Procedure in resolving the Petition on an issue not raised in the
Petition?"
8

The Courts Ruling
The Petition has no merit.
First Issue:
Propriety of Ruling on the Merits
This is not the first time that petitioner has taken issue with the propriety of the CAs ruling on the merits.
He raised it with the appellate court when he moved for reconsideration of its December 8, 2000
Decision. The CA even corrected itself in its November 20, 2001 Resolution, as follows:
"Upon another review of the case, the Court concedes that it may indeed have lost its way and
been waylaid by the variety, complexity and seeming importance of the interests and issues
involved in the case below, the apparent reluctance of the judges, five in all, to hear the case, and
the volume of the conflicting, often confusing, submissions bearing on incidental matters. We
stand corrected."
9

That explanation should have been enough to settle the issue. The CAs Resolution on this point has
rendered petitioners issue moot. Hence, there is no need to discuss it further. Suffice it to say that the
appellate court indeed acted ultra jurisdictio in ruling on the merits of the case when the only issue that
could have been, and was in fact, raised was the alleged grave abuse of discretion committed by the trial
court in denying petitioners Motion for Reconsideration. Settled is the doctrine that the sole office of a writ
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143

of certiorari is the correction of errors of jurisdiction. Such writ does not include a review of the evidence,
10

more so when no determination of the merits has yet been made by the trial court, as in this case.
Second Issue:
Dismissal for Prescription and Lack of J urisdiction
Petitioner next submits that the CA erroneously invoked its "residual prerogatives" under Section 1 of
Rule 9 of the Rules of Court when it motu proprio dismissed the Petition for lack of jurisdiction and
prescription. According to him, residual prerogative refers to the power that the trial court, in the exercise
of its original jurisdiction, may still validly exercise even after perfection of an appeal. It follows that such
powers are not possessed by an appellate court.
Petitioner has confused what the CA adverted to as its "residual prerogatives" under Section 1 of Rule 9
of the Rules of Court with the "residual jurisdiction" of trial courts over cases appealed to the CA.
Under Section 1 of Rule 9 of the Rules of Court, defenses and objections not pleaded either in a motion
to dismiss or in the answer are deemed waived, except when (1) lack of jurisdiction over the subject
matter, (2) litis pendentia, (3) res judicata and (4) prescription are evident from the pleadings or the
evidence on record. In the four excepted instances, the court shall motu proprio dismiss the claim or
action. In Gumabon v. Larin
11
we explained thus:
"x x x [T]he motu proprio dismissal of a case was traditionally limited to instances when the court
clearly had no jurisdiction over the subject matter and when the plaintiff did not appear during
trial, failed to prosecute his action for an unreasonable length of time or neglected to comply with
the rules or with any order of the court. Outside of these instances, any motu proprio dismissal
would amount to a violation of the right of the plaintiff to be heard. Except for qualifying and
expanding Section 2, Rule 9, and Section 3, Rule 17, of the Revised Rules of Court, the
amendatory 1997 Rules of Civil Procedure brought about no radical change. Under the new rules,
a court may motu proprio dismiss a claim when it appears from the pleadings or evidence on
record that it has no jurisdiction over the subject matter; when there is another cause of action
pending between the same parties for the same cause, or where the action is barred by a prior
judgment or by statute of limitations. x x x."
12
(Italics supplied)
On the other hand, "residual jurisdiction" is embodied in Section 9 of Rule 41 of the Rules of Court, as
follows:
"SEC. 9. Perfection of appeal; effect thereof. A partys appeal by notice of appeal is deemed
perfected as to him upon the filing of the notice of appeal in due time.
"A partys appeal by record on appeal is deemed perfected as to him with respect to the subject
matter thereof upon the approval of the record on appeal filed in due time.
"In appeals by notice of appeal, the court loses jurisdiction over the case upon the perfection of
the appeals filed in due time and the expiration of the time to appeal of the other parties.
"In appeals by record on appeal, the court loses jurisdiction only over the subject matter thereof
upon the approval of the records on appeal filed in due time and the expiration of the time to
appeal of the other parties.
"In either case, prior to the transmittal of the original record or the record on appeal, the court
may issue orders for the protection and preservation of the rights of the parties which do not
involve any matter litigated by the appeal, approve compromises, permit appeals of indigent
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144

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

Jurisdiction over the subject matter is conferred by law and is determined by the allegations in the
complaint and the character of the relief sought.
17
In his Complaint for "Nullification of Applications for
Homestead and Original Certificate of Title No. G-7089 and for Reconveyance of Title,"
18
petitioner
averred:
"2. That on November 10, 1965, without the knowledge of [petitioner, Respondent] Manuel
Palanca Jr., [petitioners] cousin, in connivance with his co-[respondent], Lorenzo Agustin, x x x
fraudulently and in bad faith:
2.1. x x x made the request for authority to survey as a pre-requisite to the filing of an
application for homestead patent in his name and that of his Co-[Respondent] Agustin,
[despite being] fully aware that [Petitioner] KATON had previously applied or requested
for re-classification and certification of the same land from forest land to agricultural land
which request was favorably acted upon and approved as mentioned earlier; a clear case
of intrinsic fraud and misrepresentation;
x x x x x x x x x
2.3. In stating in his application for homestead patent that he was applying for the
VACANT PORTION of Sombrero Island where there was none, the same constituted
another clear case of fraud and misrepresentation;
"3. That the issuance of Homestead Patent No. 145927 and OCT No. G-7089 in the name of
[Respondent] Manuel Palanca Jr. and the filing of Homestead Patent Applications in the names of
[respondents], Lorenzo Agustin, Jesus Gapilango and Juan Fresnillo[,] having been done
fraudulently and in bad faith, are ipso facto null and void and of no effect whatsoever."
19

x x x x x x x x x
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145

"x x x. By a wrongful act or a willful omission and intending the effects with natural necessity arise
knowing from such act or omission, [Respondent Palanca] on account of his blood relation, first
degree cousins, trust, interdependence and intimacy is guilty of intrinsic fraud [sic]. x x x."
20

Thereupon, petitioner prayed, among others, for a judgment (1) nullifying the homestead patent
applications of Respondents Agustin, Fresnillo and Gapilango as well as Homestead Patent No. 145927
and OCT No. G-7089 in the name of Respondent Palanca; and (2) ordering the director of the Land
Management Bureau to reconvey the Sombrero Island to petitioner.
21

The question is, did the Complaint sufficiently allege an action for declaration of nullity of the free patent
and certificate of title or, alternatively, for reconveyance? Or did it plead merely for reversion?
The Complaint did not sufficiently make a case for any of such actions, over which the trial court could
have exercised jurisdiction.
In an action for nullification of title or declaration of its nullity, the complaint must contain the following
allegations: 1) that the contested land was privately owned by the plaintiff prior to the issuance of the
assailed certificate of title to the defendant; and 2) that the defendant perpetuated a fraud or committed a
mistake in obtaining a document of title over the parcel of land claimed by the plaintiff.
22
In these cases,
the nullity arises not from fraud or deceit, but from the fact that the director of the Land Management
Bureau had no jurisdiction to bestow title; hence, the issued patent or certificate of title was void ab
initio.
23

In an alternative action for reconveyance, the certificate of title is also respected as incontrovertible, but
the transfer of the property or title thereto is sought to be nullified on the ground that it was wrongfully or
erroneously registered in the defendants name.
24
As with an annulment of title, a complaint must allege
two facts that, if admitted, would entitle the plaintiff to recover title to the disputed land: (1) that the plaintiff
was the owner of the land, and (2) that the defendant illegally dispossessed the plaintiff of the property.
25

Therefore, the defendant who acquired the property through mistake or fraud is bound to hold and
reconvey to the plaintiff the property or the title thereto.
26

In the present case, nowhere in the Complaint did petitioner allege that he had previously held title to the
land in question. On the contrary, he acknowledged that the disputed island was public land,
27
that it had
never been privately titled in his name, and that he had not applied for a homestead under the provisions
of the Public Land Act.
28
This Court has held that a complaint by a private party who alleges that a
homestead patent was obtained by fraudulent means, and who consequently prays for its annulment,
does not state a cause of action; hence, such complaint must be dismissed.
29

Neither can petitioners case be one for reversion. Section 101 of the Public Land Act categorically
declares that only the solicitor general or the officer in his stead may institute such an action.
30
A private
person may not bring an action for reversion or any other action that would have the effect of canceling a
free patent and its derivative title, with the result that the land thereby covered would again form part of
the public domain.
31

Thus, when the plaintiff admits in the complaint that the disputed land will revert to the public domain
even if the title is canceled or amended, the action is for reversion; and the proper party who may bring
action is the government, to which the property will revert.
32
A mere homestead applicant, not being the
real party in interest, has no cause of action in a suit for reconveyance.
33
As it is, vested rights over the
land applied for under a homestead may be validly claimed only by the applicant, after approval by the
director of the Land Management Bureau of the formers final proof of homestead patent.
34

Consequently, the dismissal of the Complaint is proper not only because of lack of jurisdiction, but also
because of the utter absence of a cause of action,
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 or defended in
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146

the name of the real party in interest, who stands to be benefited or injured by the judgment in the suit.
Indeed, one who has no right or interest to protect has no cause of action by which to invoke, as a party-
plaintiff, the jurisdiction of the court.
38

Finally, assuming that petitioner is the proper party to bring the action for annulment of title or its
reconveyance, the case should still be dismissed for being time-barred.
39
It is not disputed that a
homestead patent and an Original Certificate of Title was issued to Palanca on February 21, 1977,
40
while
the Complaint was filed only on October 6, 1998. Clearly, the suit was brought way past ten years from
the date of the issuance of the Certificate, the prescriptive period for reconveyance of fraudulently
registered real property.
41

It must likewise be stressed that Palancas title -- which attained the status of indefeasibility one year from
the issuance of the patent and the Certificate of Title in February 1977 -- is no longer open to review on
the ground of actual fraud. Ybanez v. Intermediate Appellate 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 is essential only, to repeat, is that the facts demonstrating the lapse of the prescriptive
period be otherwise sufficiently and satisfactorily apparent on the record; either in the averments
of the plaintiff's complaint, or otherwise established by the evidence."
45
(Italics supplied)
Clearly then, the CA did not err in dismissing the present case. After all, if and when they are able to do
so, courts must endeavor to settle entire controversies before them to prevent future litigations.
46

WHEREFORE, the Petition is hereby DENIED, and the assailed Resolution AFFIRMED. The dismissal of
the Complaint in Civil Case No. 3231 is SUSTAINED on the grounds of lack of jurisdiction, failure to state
a cause of action and prescription. Costs against petitioner.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 182865 December 24, 2008
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147

ROMULO F. PECSON, petitioner,
vs.
COMMISSION ON ELECTIONS, DEPARTMENT OF INTERIOR AND LOCAL GOVERNMENT and
LYNDON A. CUNANAN, respondents.
D E C I S I O N
BRION, J .:
This petition for certiorari - filed by Romulo F. Pecson (Pecson) under Rule 64, in relation with Rule 65 of
the Revised Rules of Court - seeks to set aside and annul the Resolution dated May 21, 2008 of the
Commission on Elections en banc (COMELEC) in SPR 60-2007.
1
The assailed Resolution nullified the
grant (via a Special Order) by the Regional Trial Court (RTC), Branch 56, Angeles City, of the execution
pending appeal of its Decision in the election contest between Pecson and the private respondent Lyndon
A. Cunanan (Cunanan), the proclaimed winner in the 2007 mayoralty election in Magalang, Pampanga.
THE ANTECEDENTS
Pecson and Cunanan were candidates for the mayoralty position in the Municipality of Magalang,
Province of Pampanga in the May 2007 elections. On May 17, 2007, Cunanan was proclaimed the
winning candidate, garnering a total of 12,592 votes as against Pecson's 12,531, or a margin of 61 votes.
Cunanan took his oath and assumed the position of Mayor of Magalang. Soon thereafter, Pecson filed an
election protest, docketed as EPE No. 07-51, with the RTC.
On November 23, 2007, the RTC rendered a Decision in Pecson's favor. The RTC ruled that Pecson
received a total of 14,897 votes as against Cunanan's 13,758 - a vote margin of 1,139.
Cunanan received a copy of the Decision on November 26, 2007 and filed a Notice of Appeal the day
after. The RTC issued on November 27, 2008 an Order noting the filing of the notice of appeal and the
payment of appeal fee and directing the transmittal of the records of the case to the Electoral Contests
Adjudication Department (ECAD) of the COMELEC. Pecson, on the other hand, filed on November 28,
2007 an Urgent Motion for Immediate Execution Pending Appeal, claiming that Section 11, Rule 14 of the
Rules of Procedure in Election Contests before the Courts Involving Elective Municipal and Barangay
Officials
2
(Rules) allows this remedy.
The RTC granted Pecson's motion for execution pending appeal via a Special Order dated December 3,
2007 (Special Order) but suspended, pursuant to the Rules, the actual issuance of the writ of execution
for twenty (20) days. The Special Order states the following reasons:
1. The result of the judicial revision show[s] that the protestant garnered 14,897 votes as against
protestee's 13,758 votes or a plurality of 1,139 votes. The victory of the protestant is clearly and
manifestly established by the rulings and tabulation of results made by the Court x x x;
2. It is settled jurisprudence that execution pending appeal in election cases should be granted
"to give as much recognition to the worth of a trial judge's decision as that which is initially
ascribed by the law to the proclamation by the board of canvassers." The Court holds that this
wisp of judicial wisdom of the Supreme Court enunciated in the Gahol case and subsequent
cases citing it is borne by the recognition that the decision of the trial court in an election case is
nothing but the court upholding the mandate of the voter, which has as its source no other than
the exercise of the constitutional right to vote. While it is true that the protestee can avail of the
remedy of appeal before the COMELEC, the Court is more convinced that between upholding the
mandate of the electorate of Magalang, Pampanga which is the fruit of the exercise of the
constitutional right to vote and a procedural remedy, the Court is more inclined to uphold and give
effect to and actualize the mandate of the electorate of Magalang. To the mind of the Court, in
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granting execution pending appeal the Court is being true to its bounden duty to uphold the
exercise of constitutional rights and gives flesh to the mandate of the people. The foregoing is, as
far as the Court is concerned, considered far superior circumstance that convinces the Court to
grant protestant's motion;
3. Public interest and the will of the electorate must be respected and given meaning;
4. In the case of Navarosa v. Comelec, the Supreme Court held that "In the Gahol case, the
Court gave an additional justification for allowing execution pending appeal of decisions of trial
courts, thus: Public policy underlies it, x x x [S]omething had to be done to strike the death blow
at the pernicious grab-the-proclamation-prolong-the-protest technique often, if not invariably,
resorted to by unscrupulous politicians who would render nugatory the people's verdict against
them and persist in continuing in an office they very well know they have no legitimate right to
hold. x x x." A primordial public interest is served by the grant of the protestant's motion, i.e., to
obviate a hollow victory for the duly elected candidate. In the words of Chief Justice Cesar
Bengzon, "The well known delay in the adjudication of election protests often gave the successful
contestant a mere pyrrhic victory, i.e., a vindication when the term of office is about to expire or
has expired."
Expectedly, Cunanan moved to reconsider the Order, arguing that the RTC gravely abused its discretion:
(1) in ruling that there were good reasons to issue a writ of execution pending appeal; and (2) in
entertaining and subsequently granting the motion for execution pending appeal despite the issuance of
an order transmitting the records of the case.
Thereupon, Cunanan filed with the COMELEC a Petition for Application of Preliminary Injunction with
Prayer for Status Quo Ante Order/Temporary Restraining Order (TRO) with Prayer for Immediate Raffle.
He argued in his petition that: (1) the RTC Decision did not clearly establish Pecson's victory or his
(Cunanan's) defeat - a requirement of Section 11, Rule 14 of the Rules; among other reasons, the
number of votes the RTC tallied and tabulated exceeded the number of those who actually voted and the
votes cast for the position of Mayor, and (2) the RTC had constructively relinquished its jurisdiction by the
issuance of the Order dated November 27, 2007 directing the transmittal of the records of the case.
The Second Division of the COMELEC issued on January 4, 2008 a 60-day TRO directing: (1) the RTC to
cease and desist from issuing or causing the issuance of a writ of execution or implementing the Special
Order; and (2) Cunanan to continue performing the functions of Mayor of Magalang.
In his Answer and/or Opposition, with Prayer for Immediate Lifting of TRO, Pecson argued that: (1)
preliminary injunction cannot exist except as part or incident of an independent action, being a mere
ancillary remedy that exists only as an incident of the main proceeding; (2) the "petition for application of
preliminary injunction," as an original action, should be dismissed outright; and (3) Cunanan is guilty of
forum shopping, as he filed a motion for reconsideration of the Special Order simultaneously with the
petition filed with the COMELEC.
The COMELEC's Second Division denied Cunanan's petition in a Resolution dated March 6, 2008. It
ruled that: (1) the resolution of the motion for execution pending appeal is part of the residual jurisdiction
of the RTC to settle pending incidents; the motion was filed prior to the expiration of the period to appeal
and while the RTC was still in possession of the original record; and (2) there is good reason to justify the
execution of the Decision pending appeal, as Pecson's victory was clearly and manifestly established.
Ruling on the alleged defect in the RTC count, the Second Division ruled:
[A]fter a careful scrutiny of the Decision, We found that the error lies in the trial court's
computation of the results. In its Decision, the trial court, to the votes obtained by the party (as
per proclamation of the MBOC), deducted the votes per physical count after revision and
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deducted further the invalid/nullified ballots per the trial court's appreciation and thereafter added
the valid claimed ballots per the trial court's appreciation, thus:
Votes obtained per proclamation of the MBOC (-) Votes per physical count (-) Invalid or nullified
ballots (+) Valid claimed ballots = Total Votes Obtained
The formula used by the trial court is erroneous as it used as its reference the votes obtained by
the parties as per the proclamation of the MBOC. It complicated an otherwise simple and
straightforward computation, thus leading to the error. The correct formula should have been as
follows:
Total Number of Uncontested Ballots (
+
) Valid Contested Ballots (
+
) Valid Claimed Ballots = Total
Votes Obtained
Using this formula and applying the figures in pages 744 and 745 of the trial court's Decision, the
results will be as follows:
For the Petitioner Cunanan
Total Number of Uncontested Ballots 9,656
Add: Valid Contested Ballots 2,058
Add: Valid Claimed Ballots 36
Total Votes of Petitioner 11,750
For the Private Respondent (Pecson)
Total Number of Uncontested Ballots 9,271
Add: Valid Contested Ballots 2,827
Add: Valid Claimed Ballots 39
Total Votes of Petitioner 12,134
Using the correct formula, private respondent still obtained a plurality of the votes cast and enjoys
a margin of 384 votes over the petitioner. Although not as wide as the margin found by the trial
court, We are nevertheless convinced that the victory of private respondent has been clearly
established in the trial court's decision for the following reasons:
First, the error lies merely in the computation and does not put in issue the appreciation
and tabulation of votes. The error is purely mathematical which will not involve the
opening of ballot boxes or an examination and appreciation of ballots. It is a matter of
arithmetic which calls for the mere clerical act of reflecting the true and correct votes of
the candidates.
Second, the error did not affect the final outcome of the election protest as to which
candidate obtained the plurality of the votes cast.
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We are likewise convinced that the assailed order states good or special reasons justifying the
execution pending appeal, to wit:
(1) The victory of the protestant was clearly and manifestly established;
(2) Execution pending appeal in election cases should be granted to give as much
recognition to the worth of a trial judge's decision as that which is initially ascribed by the
law to the proclamation by the board of canvassers;
(3) Public interest and the will of the electorate must be respected and given meaning;
and
(4) Public policy underlies it, as something had to be done to strike the death blow at the
pernicious grab-the-proclamation-prolong-the-protest technique often, if not invariably
resorted to by unscrupulous politicians.
Such reasons to Our mind constitute superior circumstances as to warrant the execution of the
trial court's decision pending appeal.
Pecson thus asked for the issuance of a writ of execution via an Ex-Parte Motion. Despite Cunanan's
opposition, the RTC granted Pecson's motion and issued the writ of execution on March 11, 2008.
Pecson thereafter assumed the duties and functions of Mayor of Magalang.
The Assailed Resolution
On Cunanan's motion, the COMELEC en banc issued its Resolution dated May 21, 2008 reversing the
ruling of the Second Division insofar as it affirmed the RTC's findings of good reasons to execute the
decision pending appeal. It affirmed the authority of the RTC to order execution pending appeal; it
however nullified the March 11, 2008 writ of execution on the ground that the RTC could no longer issue
the writ because it had lost jurisdiction over the case after transmittal of the records and the perfection of
the appeals of both Cunanan and Pecson (to be accurate, the lapse of Pecson's period to appeal).
On the propriety of executing the RTC Decision pending appeal, the COMELEC en banc ruled that it was
not convinced of the good reasons stated by the RTC in its Special Order. It ruled that recognition of the
worth of a trial judge's decision, on the one hand, and the right to appeal, including the Commission's
authority to review the decision of the trial court, on the other, requires a balancing act; and not every
invocation of public interest will suffice to justify an execution pending appeal. It added that at a stage
when the decision of the trial court has yet to attain finality, both the protestee and the protestant are to
be considered "presumptive winners." It noted too that the Second Division already cast a doubt on the
correctness of the number of votes obtained by the parties after the trial court's revision; thus, the
resolution of the pending appeal becomes all the more important. Between two presumptive winners,
considering the pending appeal of the election protest to the Commission and public service being the
prime consideration, the balance should tilt in favor of non-disruption of government service. The
execution of the RTC Decision pending appeal would necessarily entail the unseating of the protestee,
resulting not only in the disruption of public service, but also in confusion in running the affairs of the
government; a subsequent reversal too of the RTC Decision also results in the unseating of the
protestant. This situation (i.e., the series of turn-over of the seat of power from one presumptive winner to
another) cannot but cause irreparable damage to the people of Magalang, and overweighs the reasons
asserted by the RTC in its Special Order. In the end, according to the COMELEC, public interest is best
served when he who was really voted for the position is proclaimed and adjudged as winner with finality.
The Petition and the Prayer for the issuance of a Status Quo Order
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In imputing grave abuse of discretion to the COMELEC en banc, Pecson argues that: (1) the RTC
Decision clearly showed Pecson's victory; (2) the reasons for the reversal of the RTC Decision practically
render impossible a grant of an execution pending appeal; and (3) the RTC correctly found the presence
of the requisites for execution pending appeal.
Threatened to be unseated, Pecson asked, as interim relief, for the issuance of a Status Quo Order. He
claimed that: (1) the Department of Interior and Local Government already recognized (based on the
issuance of the assailed Resolution) Cunanan's assumption of office even if the assailed Resolution had
not attained finality; and (2) in order to prevent grave and irreparable injury to Pecson and the
perpetuation of a travesty of justice, a Status Quo Order must immediately issue.
THE COURT'S RULING
We find the petition meritorious.
The remedy of executing court decisions pending appeal in election contests is provided under the Rules
as follows:
SEC. 11. Execution pending appeal. - On motion of the prevailing party with notice to the adverse
party, the court, while still in possession of the original records, may, at its discretion, order the
execution of the decision in an election contest before the expiration of the period to appeal,
subject to the following rules:
(a) There must be a motion by the prevailing party with three-day notice to the adverse party.
Execution pending appeal shall not issue without prior notice and hearing. There must be good
reasons for the execution pending appeal. The court, in a special order, must state the good or
special reasons justifying the execution pending appeal. Such reasons must:
(1) constitute superior circumstances demanding urgency that will outweigh the injury or
damage should the losing party secure a reversal of the judgment on appeal; and
(2) be manifest, in the decision sought to be executed, that the defeat of the protestee or
the victory of the protestant has been clearly established.
(b) If the court grants execution pending appeal, an aggrieved party shall have twenty working
days from notice of the special order within which to secure a restraining order or status quo
order from the Supreme Court of the Commission on Elections. The corresponding writ of
execution shall issue after twenty days, if no restraining order or status quo order is issued.
During such period, the writ of execution pending appeal shall be stayed.
3

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

Because this case is essentially about the implementation of an RTC decision pending appeal, we must
first dwell on the writ the RTC issued. The COMELEC ruled in this regard that the writ of execution the
RTC issued on March 11, 2008 was void; the RTC could no longer issue the writ because of the lapse of
the period for appeal, and because the RTC no longer held the records of the election contest which had
then been transmitted to the ECAD-COMELEC.
Cunanan argues in his Comment that this ruling has become final and executory because Pecson did not
question it in the present petition. In Cunanan's view, the finality of this aspect of the COMELEC ruling
renders the issue of the nullification of the Special Order moot and academic, as any ruling we shall
render would serve no practical purpose; it can no longer be implemented since the means (obviously
referring to the writ the RTC issued on March 11, 2008) of executing the RTC decision (i.e., seating
Pecson as Mayor of Magalang) has, to all intents and purposes, been nullified and rendered ineffective.
We see no merit in Cunanan's argument. The writ of execution issued by the RTC is a mere
administrative enforcement medium of the Special Order - the main order supporting Pecson's motion for
the issuance of a writ of execution. The writ itself cannot and does not assume a life of its own
independent from the Special Order on which it is based. Certainly, its nullification does not carry with it
the nullification of the Special Order. This consequence does not of course hold true in the reverse
situation - the nullification of the Special Order effectively carries with it the nullification of its implementing
writ and removes the basis for the issuance of another implementing writ. In the present case, the reality
is that if and when we ultimately affirm the validity of the Special Order, nothing will thereafter prevent the
RTC from issuing another writ.
Another legal reality is that the COMELEC is wrong in its ruling that the RTC could no longer actually
issue the writ on March 11, 2008 because it no longer had jurisdiction to do so after the appeal period
lapsed and after the records were transmitted to the ECAD-COMELEC. That the RTC is still in
possession of the records and that the period to appeal (of both contending parties) must have not lapsed
are important for jurisdictional purposes if the issue is the authority of the RTC to grant a Special Order
allowing execution pending appeal; they are requisite elements for the exercise by the RTC of its residual
jurisdiction to validly order an execution pending appeal, not for the issuance of the writ itself. This is
clearly evident from the cited provision of the Rules which does not require the issuance of the
implementing writ within the above limited jurisdictional period. The RTC cannot legally issue the
implementing writ within this limited period for two reasons: (1) the cited twenty-day waiting period under
Section 11(b); and (2) the mandatory immediate transmittal of the records to the ECAD of the COMELEC
under Section 10 of the Rules.
7

On the substantive issue of whether a writ of execution pending appeal should issue, we do not agree
with the COMELEC's view that there are "two presumptive winners" prior to its ruling on the protest case.
We likewise cannot support its "balancing act" view that essentially posits that given the pendency of the
appeal and the lack of finality of a decision in the election protest, the unseating of the protestee, and the
need for continuity of public service, the balance should tilt in favor of continuity or non-disruption of
public service; hence, the execution pending appeal should be denied.
As Pecson correctly argued, this reasoning effectively prevents a winner (at the level of the courts) of an
election protest from ever availing of an execution pending appeal; it gives too much emphasis to the
COMELEC's authority to decide the election contest and the losing party's right to appeal. What is there
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to execute pending appeal if, as the COMELEC suggested, a party should await a COMELEC final ruling
on the protest case? Effectively, the "two presumptive winners" and the "balancing act" views negate the
execution pending appeal that we have categorically and unequivocally recognized in our rulings and in
the Rules we issued. To be sure, the COMELEC cannot, on its own, render ineffective a rule of procedure
we established by formulating its own ruling requiring a final determination at its level before an RTC
decision in a protest case can be implemented.
We additionally note that "disruption of public service" necessarily results from any order allowing
execution pending appeal and is a concern that this Court was aware of when it expressly provided the
remedy under the Rules. Such disruption is therefore an element that has been weighed and factored in
and cannot be per se a basis to deny execution pending appeal.
What comes out clearly from this examination of the COMELEC ruling is that it looked at the wrong
material considerations when it nullified the RTC's Special Order. They are the wrong considerations
because they are not the standards outlined under Section 11, Rule 14 of the Rules against which the
validity of a Special Order must be tested. Significantly, the use of wrong considerations in arriving at a
decision constitutes grave abuse of discretion.
8

The proper consideration that the COMELEC made relates to the correctness of the RTC's Decision in
light of the Rules' requirement that the victory of the protestant and the defeat of the protestee be clearly
established for execution pending appeal to issue. According to the COMELEC, no less than the Second
Division cast a doubt on the correctness of the number of votes obtained by the parties after the revision
of ballots when the Second Division proposed a mathematical formula to correct the RTC count. At the
same time, the COMELEC noted that the Second Division could not have corrected the RTC count, as
the petition before it was one for certiorari while the correction of errors in computation properly pertained
to the resolution of Cunanan's pending appeal. To the COMELEC, all these showed that the correctness
of the RTC Decision in favor of Pecson was far from clear and cannot support an execution pending
appeal.
We disagree once more with the COMELEC en banc in this conclusion, as it failed to accurately and
completely appreciate the Second Division's findings. The RTC Decision, on its face, shows that Pecson
garnered more valid votes than Cunanan after the revision of ballots. The Second Division properly
recognized, however, that the RTC computation suffered from a facial defect that did not affect the final
results; as Cunanan pointed out, the votes for Pecson and Cunanan, if totally summed up, exceeded the
total number of valid votes for mayor.
Duly alerted, the Second Division looked into the purported error, analyzed it, and found the error to be
merely mathematical; the RTC formula would necessarily exceed the total number of votes cast for mayor
because it counted some votes twice. In making this finding, the Second Division was guided by the rule
that one of the requisites for an execution pending appeal is a clear showing in the decision of the
protestant's victory and the protestee's defeat. Its examination of the RTC Decision was only for this
limited purpose and this was what it did, no more no less. Specifically, it did not review the RTC's
appreciation of the ballots on revision; it did not review the intrinsic merits of the RTC Decision - issues
that properly belong to the appeal that is currently pending. It merely found that the defect Cunanan noted
was actually inconsequential with respect to the results, thus showing Pecson's clear victory under the
RTC Decision. In other words, the Second Division's corrected view of the RTC count confirmed, rather
than contradicted or placed in doubt, the conclusion that Pecson won.
Other than the clarity of Pecson's victory under the RTC Decision, the Special Order cited good and
special reasons that justified an execution pending appeal, specifically: (1) the need to give as much
recognition to the worth of a trial judge's decision as that which is initially given by the law to the
proclamation by the board of canvassers; (2) public interest and/or respect for and giving meaning to the
will of the electorate; and (3) public policy - something had to be done to deal a death blow to the
pernicious grab-the-proclamation-prolong-the-protest technique often, if not invariably, resorted to by
unscrupulous politicians who would render nugatory the people's verdict against them.
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Unfortunately, the COMELEC en banc simply glossed over the RTC's cited reasons and did not fully
discuss why these reasons were not sufficient to justify execution pending appeal. A combination,
however, of the reasons the RTC cited, to our mind, justifies execution of the RTC Decision pending
appeal.
A striking feature of the present case is the time element involved. We have time and again noted the well
known delay in the adjudication of election contests that, more often than not, gives the protestant an
empty or hollow victory in a long drawn-out legal battle.
9
Some petitions before us involving election
contests have been in fact dismissed for being moot, the term for the contested position having long
expired before the final ruling on the merits came.
10
In the present case, the term for mayor consists of
only three (3) years. One year and six months has lapsed since the May 2007 election; thus, less than
two years are left of the elected mayor's term. The election protest, while already decided at the RTC
level, is still at the execution-pending-appeal stage and is still far from the finality of any decision on the
merits, given the available appellate remedies and the recourses available through special civil actions.
To be sure, there is nothing definite in the horizon on who will finally be declared the lawfully elected
mayor.
Also, we reiterate here our consistent ruling that decisions of the courts in election protest cases, resulting
as they do from a judicial evaluation of the ballots and after full-blown adversarial proceedings, should at
least be given similar worth and recognition as decisions of the board of canvassers.
11
This is especially
true when attended by other equally weighty circumstances of the case, such as the shortness of the term
of the contested elective office, of the case.
In light of all these considerations, we conclude that the COMELEC erred in nullifying the RTC's Special
Order in a manner sufficiently gross to affect its exercise of jurisdiction. Specifically, it committed grave
abuse of discretion when it looked at wrong considerations and when it acted outside of the
contemplation of the law in nullifying the Special Order.
WHEREFORE, premises considered, we GRANT the petition and accordingly ANNUL the assailed
COMELEC Resolution.
SO ORDERED.

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