[REMEDIAL LAW I : CEAC : ATTY.

DELA PENA]
**

SECOND DIVISION
[G.R. No. 131282. January 4, 2002]

GABRIEL L. DUERO, petitioner, vs. HON. COURT OF APPEALS, and BERNARDO A.

ERADEL, respondents.
DECISION
QUISUMBING, J.:
This petition for certiorari assails the Decision [1] dated September 17, 1997, of the Court of Appeals
in CA-G.R. No. SP No. 2340- UDK, entitled Bernardo Eradel vs. Hon. 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 follows:
Sometime in 1988, according to petitioner, private respondent Bernardo Eradel [2] entered and
occupied petitioners 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 Attorneys Fees against private respondent and two others, namely,
Apolinario and Inocencio Ruena. Petitioner appended to the complaint the aforementioned tax
declaration. The counsel of the Ruenas asked for extension to file their Answer and was given until July 18,
1995. Meanwhile, petitioner and the Ruenas executed a compromise agreement, which became the trial
courts 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 attorneys fees and the cost of the suit. [5] Private respondent received a copy of the decision
on May 25, 1996.
On June 10, 1996, private respondent filed a Motion for New Trial, alleging that he has been
occupying the land as a tenant of Artemio Laurente, Sr., since 1958. He explained that he turned over the
complaint and summons to Laurente in the honest belief that as landlord, the latter had a better right to the
land and was responsible to defend any adverse claim on it. However, the trial court denied the motion for
new trial.

Meanwhile, RED Conflict Case No. 1029, an administrative case between petitioner and applicantcontestants Romeo, Artemio and Jury Laurente, remained pending with the Office of the Regional Director
of the Department of Environment and Natural Resources in Davao City. Eventually, it was forwarded to
the DENR Regional Office in Prosperidad, Agusan del Sur.
On July 24, 1996, private respondent filed before the RTC a Petition for Relief from Judgment,
reiterating the same allegation in his Motion for New Trial. He averred that unless there is a determination
on who owned the land, he could not be made to vacate the land. He also averred that the judgment of the
trial court was void inasmuch as the heirs of Artemio Laurente, Sr., who are indispensable parties, were not
impleaded.
On September 24, 1996, Josephine, Ana Soledad and Virginia, all surnamed Laurente, grandchildren
of Artemio who were claiming ownership of the land, filed a Motion for Intervention. The RTC denied the
motion.
On October 8, 1996, the trial court issued an order denying the Petition for Relief from Judgment. In
a Motion for Reconsideration of said order, private respondent alleged that the RTC had no jurisdiction
over the case, since the value of the land was only P5,240 and therefore it was under the jurisdiction of the
municipal trial court. On November 22, 1996, the RTC denied the motion for reconsideration.
On January 22, 1997, petitioner filed a Motion for Execution, which the RTC granted on January
28. On February 18, 1997, Entry of Judgment was made of record and a writ of execution was issued by the
RTC on February 27, 1997. On March 12, 1997, private respondent filed his petition for certiorari before
the Court of Appeals.
The Court of Appeals gave due course to the petition, maintaining that private respondent is not
estopped from assailing the jurisdiction of the RTC, Branch 27 in Tandag, Surigao del Sur, when private
respondent filed with said court his Motion for Reconsideration And/Or Annulment of Judgment. The Court
of Appeals decreed as follows:
IN THE LIGHT OF ALL THE FOREGOING, the Petition is GRANTED. All proceedings in Gabriel L.
Duero vs. Bernardo Eradel, et. al. Civil Case 1075 filed in the Court a quo, including its Decision, Annex
E of the petition, and its Orders and Writ of Execution and the turn over of the property to the Private
Respondent by the Sheriff of the Court a quo, are declared null and void and hereby SET ASIDE, No
pronouncement as to costs.
SO ORDERED.[6]
Petitioner now comes before this Court, alleging that the Court of Appeals acted with grave abuse of
discretion amounting to lack or in excess of jurisdiction when it held that:
I.
THE LOWER COURT HAS NO JURISDICTION OVER THE SUBJECT MATTER OF THE CASE.
II

[REMEDIAL LAW I : CEAC : ATTY. DELA PENA]

PRIVATE RESPONDENT WAS NOT THEREBY ESTOPPED FROM QUESTIONING THE
JURISDICTION OF THE LOWER COURT EVEN AFTER IT SUCCESSFULLY SOUGHT
AFFIRMATIVE RELIEF THEREFROM.
III
THE FAILURE 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 respondents 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
thatAnnex E of his petition is not a Certification but a xerox copy of a Declaration of Real
Property. Nowhere does the document contain a notation, Note: Subject for General Revision Effective
1994. Petitioner also asked this Court to refer to Annex F,[10] where he said the zonal value of the disputed
land was P1.40 per sq.m., thus placing the computed value of the land at the time the complaint was filed
before the RTC at P57,113.98, hence beyond the jurisdiction of the municipal court and within the
jurisdiction of the regional trial court.However, we find that these annexes are both merely xerox
copies. They are obviously without evidentiary weight or value.
Coming now to the principal issue, petitioner contends that respondent appellate court acted with
grave abuse of discretion. By grave abuse of discretion is meant such capricious and whimsical exercise of
judgment which is equivalent to an excess or a lack of jurisdiction. The abuse of discretion must be so
patent and gross as to amount to an evasion of a positive duty or a virtual refusal to perform a duty enjoined
by law, or to act at all in contemplation of law as where the power is exercised in an arbitrary and despotic
manner by reason of passion or hostility.[11] But here we find that in its decision holding that the municipal
court has jurisdiction over the case and that private respondent was not estopped from questioning the
jurisdiction of the RTC, respondent Court of Appeals discussed the facts on which its decision is grounded
as well as the law and jurisprudence on the matter.[12] Its action was neither whimsical nor capricious.
Was private respondent estopped from questioning the jurisdiction of the RTC? In this case, we are in
agreement with the Court of Appeals that he was not. While participation in all stages of a case before the
trial court, including invocation of its authority in asking for affirmative relief, effectively bars a party by
estoppel from challenging the courts 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 RTCs 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 respondents motion for relief from judgment, it went on to issue the order
for entry of judgment and a writ of execution.
Under these circumstances, we could not fault the Court of Appeals in overruling the RTC and in
holding that private respondent was not estopped from questioning the jurisdiction of the regional trial
court. The fundamental rule is that, the lack of jurisdiction of the court over an action cannot be waived by
the parties, or even cured by their silence, acquiescence or even by their express consent. [19] Further, a party
may assail the jurisdiction of the court over the action at any stage of the proceedings and even on appeal.
[20]
The appellate court did not err in saying that the RTC should have declared itself barren of jurisdiction
over the action. Even if private respondent actively participated in the proceedings before said court, the
doctrine of estoppel cannot still be properly invoked against him because the question of lack of
jurisdiction may be raised at anytime and at any stage of the action. [21] Precedents tell us that as a general
rule, the jurisdiction of a court is not a question of acquiescence as a matter of fact, but an issue of
conferment as a matter of law.[22] Also, neither waiver nor estoppel shall apply to confer jurisdiction upon a
court, barring highly meritorious and exceptional circumstances. [23] The Court of Appeals found support for
its ruling in our decision in Javier vs. Court of Appeals, thus:
x x x The point simply is that when a party commits error in filing his suit or proceeding in a court that
lacks jurisdiction to take cognizance of the same, such act may not at once be deemed sufficient basis of
estoppel. It could have been the result of an honest mistake, or of divergent interpretations of doubtful legal
provisions. If any fault is to be imputed to a party taking such course of action, part of the blame
should be placed on the court which shall entertain the suit, thereby lulling the parties into believing
that they pursued their remedies in the correct forum. Under the rules, it is the duty of the court to
dismiss an action whenever it appears that the court has no jurisdiction over the subject matter. (Sec. 2,
Rule 9, Rules of Court) Should the Court render a judgment without jurisdiction, such judgment may be
impeached or annulled for lack of jurisdiction (Sec. 30, Rule 132, Ibid), within ten (10) years from the
finality of the same. [Emphasis ours.][24]
Indeed, the trial court was duty-bound to take judicial notice of the parameters of its jurisdiction and its
failure to do so, makes its decision a lawless thing.[25]

[REMEDIAL LAW I : CEAC : ATTY. DELA PENA]

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 RTCs 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 RTCs
cognizance but within the jurisdiction of the municipal trial court. To hold him in estoppel as the RTC did
would amount to foreclosing his avenue to obtain a proper resolution of his case. Furthermore, if the RTCs
order were to be sustained, he would be evicted from the land prematurely, while RED Conflict Case No.
1029 would remain unresolved. Such eviction on a technicality if allowed could result in an injustice, if it is
later found that he has a legal right to till the land he now occupies as tenant-lessee.
Having determined that there was no grave abuse of discretion by the appellate court in ruling that
private respondent was not estopped from questioning the jurisdiction of the RTC, we need not tarry to
consider in detail the second issue. Suffice it to say that, given the circumstances in this case, no error was
committed on this score by respondent appellate court. Since the RTC had no jurisdiction over the case,
private respondent had justifiable reason in law not to file an answer, aside from the fact that he believed
the suit was properly his landlords concern.
WHEREFORE, the petition is DISMISSED. The assailed decision of the Court of Appeals is
AFFIRMED. The decision of the Regional Trial Court in Civil Case No. 1075 entitled Gabriel L. Duero vs.
Bernardo Eradel, its Order that private respondent turn over the disputed land to petitioner, and the Writ of
Execution it issued, are ANNULLED and SET ASIDE. Costs against petitioner.
SO ORDERED.

[REMEDIAL LAW I : CEAC : ATTY. DELA PENA]

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.
DECISION
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

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
judgment6 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 Decision8 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.13Five 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
In a Resolution16 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:

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 noncompliance 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

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

[REMEDIAL LAW I : CEAC : ATTY. DELA PENA]

NON-FORUM SHOPPING WHICH HE HIMSELF SIGNED AND EXECUTED IN THE
UNITED STATES.

RESPONDENTS NON-COMPLIANCE WITH THE CONDITIONS UNDER THE LAW

RESULT IN THE WAIVER OF PROTECTION AGAINST EVICTION.

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.

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.

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.

F. RESPONDENT COURT OF APPEALS SHOULD HAVE RULED THAT THE RTC

MANILA COMMITTED REVERSIBLE ERROR IN FINDING THAT THERE IS AN ONGOING NEGOTIATION FOR THE SALE OF THE SUBJECT PROPERTY AND THAT IT
RENDERS THE EVICTION OF PRIVATE RESPONDENTS PREMATURE.

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.
D. RESPONDENT COURT OF APPEALS SHOULD HAVE RULED THAT THE RTC
MANILA COMMITTED REVERSIBLE ERROR IN NOT RULING THAT PRIVATE

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
LEASTP20,000.00, 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

[REMEDIAL LAW I : CEAC : ATTY. DELA PENA]

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).
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 objective26 which is simply to prohibit and penalize the evils of forumshopping.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 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 inCusi-Hernandez vs. Diaz32 and Piglas-Kamao vs.
National Labor Relations Commission33 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 Appeals37 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

[REMEDIAL LAW I : CEAC : ATTY. DELA PENA]

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."
SO ORDERED.

[REMEDIAL LAW I : CEAC : ATTY. DELA PENA]

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.
DECISION
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 court2 rendered its decision dismissing the complaint for lack of merit and
ordering herein petitioners to pay private respondent the amount of P10,000 as moral damages and
another P10,000 as attorneys fees. The pertinent conclusion of the trial court reads as follows:
"Aware of such fact, the plaintiff nonetheless continued to stay in the premises of Lot 18 on the proposal
that he would also buy the same. Plaintiff however failed to buy Lot 18 and likewise defaulted in the
payment of his loan with the SSS involving Lot 19. Consequently Lot 19 was foreclosed and sold at public

auction. Thereafter TCT No. T-29950 was cancelled and in lieu thereof TCT No. T-86612 (Exh. 9) was
issued in favor of SSS. This being the situation obtaining, the reformation of instruments, even if allowed,
or the swapping of Lot 18 and Lot 19 as earlier proposed by the plaintiff, is no longer feasible considering
that plaintiff is no longer the owner of Lot 19, otherwise, defendant will be losing Lot 18 without any
substitute therefore (sic). Upon the other hand, plaintiff will be unjustly enriching himself having in its
favor both Lot 19 which was earlier mortgaged by him and subsequently foreclosed by SSS, as well as Lot
18 where his house is presently standing.
"The logic and common sense of the situation lean heavily in favor of the defendant. It is evident that what
plaintiff had bought from the defendant is Lot 19 covered by TCT No. 28254 which parcel of land has been
properly indicated in the instruments and not Lot 18 as claimed by the plaintiff. The contracts being clear
and unmistakable, they reflect the true intention of the parties, besides the plaintiff failed to assail the
contracts on mutual mistake, hence the same need no longer be reformed." 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.

[REMEDIAL LAW I : CEAC : ATTY. DELA PENA]

xxx
"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.
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.

[REMEDIAL LAW I : CEAC : ATTY. DELA PENA]

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

and moral and exemplary damages in the amount of ONE HUNDRED THIRTY-FIVE
THOUSAND (P135,000.00) PESOS, Philippine Currency.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 Dismiss8the 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 Order10 denying the motion to dismiss. It, however, ordered the
conduct of a preliminary hearing to determine whether or not the crime charged was committed by the
petitioner in relation to his office as a member of the PNP.
In the preliminary hearing, the prosecution manifested that it was no longer presenting any evidence in
connection with the petitioners motion. It reasoned that it had already rested its case, and that its evidence
showed that the petitioner did not commit the offense charged in connection with the performance of his
duties as a member of the Philippine Constabulary. According to the prosecution, they were able to show
the following facts: (a) the petitioner was not wearing his uniform during the incident; (b) the offense was
committed just after midnight; (c) the petitioner was drunk when the crime was committed; (d) the
petitioner was in the company of civilians; and, (e) the offense was committed in a beerhouse called "Sa
Harong Caf Bar and Restaurant."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

10

[REMEDIAL LAW I : CEAC : ATTY. DELA PENA]

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

duties/functions or in relation to his office, within fifteen (15) days from receipt
hereof;

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

(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

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

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

11

[REMEDIAL LAW I : CEAC : ATTY. DELA PENA]

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.

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 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

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

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:

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

SO ORDERED.

(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

12

[REMEDIAL LAW I : CEAC : ATTY. DELA PENA]

Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION

** G.R. No. 191894

Prior to his arraignment, petitioner filed a Motion to Dismiss With Prayer to Defer the Issuance of Warrant
of Arrest7before respondent Sandiganbayan Second Division. As the OSP alleged, he admitted that he is a
Regional Director with Salary Grade 26. Citing Inding v. Sandiganbayan 8 and Serana v. Sandiganbayan, et
al.,9 he asserted that under Presidential Decree (P.D.) No. 1606, as amended by Section 4 (A) (1) of R.A No.
8249,10 the Sandiganbayan has no jurisdiction to try and hear the case because he is an official of the
executive branch occupying the position of a Regional Director but with a compensation that is classified
as below Salary Grade 27.

July 15, 2015

DANILO A. DUNCANO, Petitioner,

vs.
HON. SANDIGANBAYAN (2nd DIVISION), and HON. OFFICE OF THE SPECIAL
PROSECUTOR, Respondents.
DECISION
PERALTA, J.:
This petition for certiorari under Rule 65 of the Rules of Court (Rules) with prayer for issuance of
preliminary injunction and/or temporary restraining order seeks to reverse and set aside the August 18,
2009 Resolution1 and February 8, 2010 Order2 of respondent Sandiganbayan Second Division in Criminal
Case No. SB-09-CRM-0080, which denied petitioner's Motion to Dismiss on the ground of la9k of
jurisdiction.
The facts are plain and undisputed.
Petitioner Danilo A. Duncano is, at the time material to the case, the Regional Director of the Bureau of
Internal Revenue (BIR) with Salary Grade 26 as classified under Republic Act (R.A.) No. 6758. 3 On March
24, 2009,4 the Office of the Special Prosecutor (OSP), Office of the Ombudsman, filed a criminal case
against him for violation of Section 8, in relation to Section 11 of R.A. No. 6713, 5 allegedly committed as
follows:
That on or about April 15, 2003, or sometime prior or subsequent thereto, in Quezon City, Philippines, and
within the jurisdiction of this Honorable Court, accused DANILODUNCANO y ACIDO, a high ranking
public officer, being the Regional Director of Revenue Region No. 7, of the Bureau of Internal Revenue,
Quezon City, and as such is under an obligation to accomplish and submit declarations under oath of his
assets, liabilities and net worth and financial and business interests, did then and there, wilfully, unlawfully
and criminally fail to disclose in his Sworn Statement of Assets and Liabilities and Networth (SALN) for
the year 2002, his financial and business interests/connection in Documail Provides Corporation and Don
Plus Trading of which he and his family are the registered owners thereof, and the 1993 Nissan Patrol
motor vehicle registered in the name of his son VINCENT LOUIS P. DUNCANO which are part of his
assets, to the damage and prejudice of public interest.

In its Opposition,11 the OSP argued that a reading of Section 4 (A) (1) (a) to (g) of the subject law would
clearly show that the qualification as to Salary Grade 27 and higher applies only to officials of the
executive branch other than the Regional Director and those specifically enumerated. This is so since the
term "Regional Director" and "higher" are separated by the conjunction "and," which signifies that these
two positions are different, apart and distinct, words but are conjoined together "relating one to the other" to
give effect to the purpose of the law. The fact that the position of Regional Director was specifically
mentioned without indication as to its salary grade signifies the lawmakers intention that officials
occupying such position, regardless of salary grade, fall within the original and exclusive jurisdiction of the
Sandiganbayan. This issue, it is claimed, was already resolved in Inding. Finally, the OSP contended that
the filing of the motion to dismiss is premature considering that the Sandiganbayan has yet to acquire
jurisdiction over the person of the accused.
Still not to be outdone, petitioner invoked the applicability of Cuyco v. Sandiganbayan 12 and Organo v.
Sandiganbayan13 in his rejoinder.
On August 18, 2009, the Sandiganbayan Second Division promulgated its Resolution, disposing:
WHEREFORE, in the light of the foregoing, the Court hereby DENIES the instant Motion to Dismiss for
being devoid of merit. Let a Warrant of Arrest be therefore issued against the accused.
SO ORDERED.14
The respondent court ruled that the position of Regional Director is one of those exceptions where the
Sandiganbayan has jurisdiction even if such position is not Salary Grade 27. It was opined that Section 4
(A) (1) of R.A No. 8249 unequivocally provides that respondent court has jurisdiction over officials of the
executive branch of the government occupying the position of regional director and higher, otherwise
classified as Salary Grade 27 and higher, of R.A. No. 6758, including those officials who are expressly
enumerated in subparagraphs (a) to (g). In support of the ruling, this Courts pronouncements in Indingand
Binay v. Sandiganbayan15 were cited.
Petitioner filed a Motion for Reconsideration, but it was denied; 16 Hence, this petition.
Instead of issuing a temporary restraining order or writ of preliminary injunction, the Court required
respondents to file a comment on the petition without necessarily giving due course thereto. 17 Upon
compliance of the OSP, a Rejoinder (supposedly a Reply) was filed by petitioner.

CONTRARY TO LAW.6

13

[REMEDIAL LAW I : CEAC : ATTY. DELA PENA]

At the heart of the controversy is the determination of whether, according to P.D. No. 1606, as amended by
Section 4 (A) (1) of R.A No. 8249, only Regional Directors with Salary Grade of 27 and higher, as
classified under R.A. No. 6758, fall within the exclusive jurisdiction of the Sandiganbayan. Arguing that he
is not included among the public officials specifically enumerated in Section 4 (A) (1) (a) to (g) of the law
and heavily relying as well on Cuyco, petitioner insists that respondent court lacks jurisdiction over him,
who is merely a Regional Director with Salary Grade 26. On the contrary, the OSP maintains that a
Regional Director, irrespective of salary grade, falls within the exclusive original jurisdiction of the
Sandiganbayan. We find merit in the petition.

"(d) Philippine army and air force colonels, naval captains, and all officers of higher rank;

The creation of the Sandiganbayan was mandated by Section 5, Article XIII of the 1973 Constitution. 18 By
virtue of the powers vested in him by the Constitution and pursuant to Proclamation No. 1081, dated
September 21, 1972, former President Ferdinand E. Marcos issued P.D. No. 1486. 19 The decree was later
amended by P.D. No. 1606,20Section 20 of Batas Pambansa Blg. 129,21 P.D. No. 1860,22 and P.D. No.
1861.23

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

corporations, state universities or educational institutions or foundations.

With the advent of the 1987 Constitution, the special court was retained as provided for in Section 4,
Article XI thereof.24 Aside from Executive Order Nos. 1425 and 14-a,26 and R.A. 7080,27 which expanded
the jurisdiction of the Sandiganbayan, P.D. No. 1606 was further modified by R.A. No. 7975, 28 R.A. No.
8249,29 and just this year, R.A. No. 10660.30

"(3) Members of the judiciary without prejudice to the provisions of the Constitution;

For the purpose of this case, the relevant provision is Section 4 of R.A. No. 8249, which states: SEC. 4.
Section 4 of the same decree is hereby further amended to read as follows:
"SEC. 4. Jurisdiction. The Sandiganbayan shall exercise exclusive original jurisdiction in all cases
involving:
"A. Violations of Republic Act No. 3019, as amended, otherwise known as the 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:

"(e) Officers of the Philippine National Police while occupying the position of provincial director
and those holding the rank of senior superintendent or higher;
"(f) City and provincial prosecutors and their assistants, and officials and prosecutors in the
Office of the Ombudsman and special prosecutor;

"(2) Members of Congress and officials thereof classified as Grade 27 and up under the
Compensation and Position Classification Act of 1989;

"(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 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.
"C. Civil and criminal cases filed pursuant to and in connection with Executive Order Nos. 1, 2, 14 and 14A, issued in 1986.
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:
"(a) Provincial governors, vice-governors, members of the sangguniang panlalawigan, and
provincial treasurers, assessors, engineers, and other provincial 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;

Based on the afore-quoted, those that fall within the original jurisdiction of the Sandiganbayan are: (1)
officials of the executive branch with Salary Grade 27 or higher, and (2) officials specifically enumerated in
Section 4 (A) (1) (a) to (g), regardless of their salary grades. 31 While the first part of Section 4 (A) covers
only officials of the executive branch 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 Sandiganbayan. 32
That the phrase "otherwise classified as Grade 27 and higher" qualifies "regional director and higher" is
apparent from the Sponsorship Speech of Senator Raul S. Roco on Senate Bill Nos. 1353and 844, which
eventually became R.A. Nos. 7975 and 8249, respectively:

14

[REMEDIAL LAW I : CEAC : ATTY. DELA PENA]

As proposed by the Committee, the Sandiganbayan shall exercise original jurisdiction over the cases
assigned to it only in instances where one or more of the principal accused are officials occupying the
positions of regional director and higher or are otherwise classified as Grade 27 and higher by the
Compensation and Position Classification Act of 1989, whether in a permanent, acting or interim capacity
at the time of the commission of the offense. The jurisdiction, therefore, refers to a certain grade upwards,
which shall remain with the Sandiganbayan.33 (Emphasis supplied)
To speed up trial in the Sandiganbayan, Republic Act No. 7975 was enacted for that Court to concentrate on
the "larger fish" and leave the "small fry" to the lower courts. This law became effective on May 6, 1995
and it provided a two-pronged solution to the clogging of the dockets of that court, to wit:
It divested the Sandiganbayan of jurisdiction over public officials whose salary grades were at Grade "26"
or lower, devolving thereby these cases to the lower courts, and retaining the jurisdiction of the
Sandiganbayan only over public officials whose salary grades were at Grade "27" or higher and over other
specific public officials holding important positions in government regardless of salary grade; x x
x34 (Emphasis supplied)
The legislative intent is to allow the Sandiganbayan to devote its time and expertise to big-time cases
involving the so-called "big fishes" in the government rather than those accused who are of limited means
who stand trial for "petty crimes," the so-called "small fry," which, in turn, helps the court decongest its
dockets.35
Yet, those that are classified as Salary Grade 26 and below may still fall within the jurisdiction of the
Sandiganbayan, provided that they hold the positions enumerated by the law.36 In this category, it is the
position held, not the salary grade, which determines the jurisdiction of the Sandiganbayan. 37 The specific
inclusion constitutes an exception to the general qualification relating to "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." 38 As ruled in Inding:
Following this disquisition, the paragraph of Section 4 which provides that if the accused is occupying a
position lower than SG 27, the proper trial court has jurisdiction, can only be properly interpreted as
applying to those cases where the principal accused is occupying a position lower than SG 27 and not
among those specifically included in the enumeration in Section 4 a. (1) (a) to (g). Stated otherwise, except
for those officials specifically included in Section 4 a. (1) (a) to (g), regardless of their salary grades, over
whom the Sandiganbayan has jurisdiction, all other public officials below SG 27 shall be under the
jurisdiction of the proper trial courts "where none of the principal accused are occupying positions
corresponding to SG 27 or higher." By this construction, the entire Section 4 is given effect. The cardinal
rule, after all, in statutory construction is that the particular words, clauses and phrases should not be
studied as detached and isolated expressions, but the whole and every part of the statute must be considered
in fixing the meaning of any of its parts and in order to produce a harmonious whole. And courts should
adopt a construction that will give effect to every part of a statute, if at all possible. Ut magis valeat quam
pereat or that construction is to be sought which gives effect to the whole of the statute its every word. 39

Philippines,42 and a Head of the Legal Department and Chief of the Documentation with corresponding
ranks of Vice-Presidents and Assistant Vice-President of the Armed Forces of the Philippines Retirement
and Separation Benefits System (AFP-RSBS)43 fall within the jurisdiction of the Sandiganbayan.
Petitioner is not an executive official with Salary Grade 27 or higher. Neither does he hold any position
particularly enumerated in Section 4 (A) (1) (a) to (g). As he correctly argues, his case is, in fact, on all
fours with Cuyco.1avvphi1Therein, the accused was the Regional Director of the Land Transportation
Office, Region IX, Zamboanga City, but at the time of the commission of the crime in 1992, his position
was classified as Director II with Salary Grade 26.44It was opined: Petitioner contends that at the time of the
commission of the offense in 1992, he was occupying the position of Director II, Salary Grade 26, hence,
jurisdiction over the cases falls with the Regional Trial Court.
We sustain petitioner's contention.
The Sandiganbayan has no jurisdiction over violations of Section 3(a) and (e), Republic Act No. 3019, as
amended, unless committed by public officials and employees occupying positions of regional director and
higher with Salary Grade "27" or higher, under the Compensation and Position Classification Act of 1989
(Republic Act No. 6758) in relation to their office.
In ruling in favor of its jurisdiction, even though petitioner admittedly occupied the position of Director II
with Salary Grade "26" under the Compensation and Position Classification Act of 1989 (Republic Act No.
6758), the Sandiganbayan incurred in serious error of jurisdiction, and acted with grave abuse of discretion
amounting to lack of jurisdiction in suspending petitioner from office, entitling petitioner to the reliefs
prayed for.45
In the same way, a certification issued by the OIC Assistant Chief, Personnel Division of the BIR shows
that, although petitioner is a Regional Director of the BIR, his position is classified as Director II with
Salary Grade 26.46
There is no merit in the OSPs allegation that the petition was prematurely filed on the ground that
respondent court has not yet acquired jurisdiction over the person of petitioner. Records disclose that when
a warrant of arrest was issued by respondent court, petitioner voluntarily surrendered and posted a cash
bond on September 17, 2009.Also, he was arraigned on April 14, 2010,prior to the filing of the petition on
April 30, 2010.
WHEREFORE, the foregoing considered, the instant petition for certiorari is GRANTED. The August 18,
2009 Resolution and February 8, 2010 Order of the Sandiganbayan Second Division, which denied
petitioner's Motion to Dismiss on the ground of lack of jurisdiction, are REVERSED AND SET ASIDE.
SO ORDERED.

Thus, to cite a few, We have held that a member of the Sangguniang Panlungsod, 40 a department manager
of the Philippine Health Insurance Corporation (Philhealth), 41 a student regent of the University of the

15

[REMEDIAL LAW I : CEAC : ATTY. DELA PENA]

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, 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,

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, 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:

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

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

16

[REMEDIAL LAW I : CEAC : ATTY. DELA PENA]

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).

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.

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.

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.

On July 23, 1996, the PBAC issued PBAC Bulletin No. 2 inviting all bidders to a pre-bid conference on
July 29, 1996.

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 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%

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:

17

[REMEDIAL LAW I : CEAC : ATTY. DELA PENA]

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.

c. The prohibition imposed by RA 337, as amended (the General Banking Act) on the amount
that Security Bank could legally invest in the project;
d. The inclusion of Siemens as a contractor of the PAIRCARGO Joint Venture, for
prequalification purposes; and
e. The appointment of Lufthansa as the facility operator, in view of the Philippine requirement in
the operation of a public utility.
The PBAC gave its reply on October 2, 1996, informing AEDC that it had considered the issues raised by
the latter, and that based on the documents submitted by Paircargo and the established prequalification
criteria, the PBAC had found that the challenger, Paircargo, had prequalified to undertake the project. The
Secretary of the DOTC approved the finding of the PBAC.
The PBAC then proceeded with the opening of the second envelope of the Paircargo Consortium which
contained its Technical Proposal.
On October 3, 1996, AEDC reiterated its objections, particularly with respect to Paircargo's financial
capability, in view of the restrictions imposed by Section 21-B of the General Banking Act and Sections
1380 and 1381 of the Manual Regulations for Banks and Other Financial Intermediaries. On October 7,
1996, AEDC again manifested its objections and requested that it be furnished with excerpts of the PBAC
meeting and the accompanying technical evaluation report where each of the issues they raised were
addressed.
On October 16, 1996, the PBAC opened the third envelope submitted by AEDC and the Paircargo
Consortium containing their respective financial proposals. Both proponents offered to build the NAIA
Passenger Terminal III for at least $350 million at no cost to the government and to pay the government:
5% share in gross revenues for the first five years of operation, 7.5% share in gross revenues for the next
ten years of operation, and 10% share in gross revenues for the last ten years of operation, in accordance
with the Bid Documents. However, in addition to the foregoing, AEDC offered to pay the government a
total of P135 million as guaranteed payment for 27 years while Paircargo Consortium offered to pay the
government a total of P17.75 billion for the same period.

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.

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.

On September 26, 1996, AEDC informed the PBAC in writing of its reservations as regards the Paircargo
Consortium, which include:

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.

a. The lack of corporate approvals and financial capability of PAIRCARGO;

On February 27, 1997, Paircargo Consortium incorporated into Philippine International Airport Terminals
Co., Inc. (PIATCO).

b. The lack of corporate approvals and financial capability of PAGS;

18

[REMEDIAL LAW I : CEAC : ATTY. DELA PENA]

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.
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 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

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[REMEDIAL LAW I : CEAC : ATTY. DELA PENA]

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.
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

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 taxpaying 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

the present Petitions

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[REMEDIAL LAW I : CEAC : ATTY. DELA PENA]

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
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.

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 Imus13 and Gonzales v. Raquiza14 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 onlocus 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 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

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

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

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[REMEDIAL LAW I : CEAC : ATTY. DELA PENA]

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 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 prequalified 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
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

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[REMEDIAL LAW I : CEAC : ATTY. DELA PENA]

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 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 governmentowned 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 nonallied 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
isP558,384,871.55 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 prequalification 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 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

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[REMEDIAL LAW I : CEAC : ATTY. DELA PENA]

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.

PIATCO maintains, however, that the Concession Agreement attached to the Bid Documents is intended to
be adraft, 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:
6. Amendments to the Draft Concessions Agreement

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
submittedfalls 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.

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."

24

[REMEDIAL LAW I : CEAC : ATTY. DELA PENA]

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:
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:

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
Agreementincludes 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.
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;

a. Modification on the Public

(2) aircraft tacking fees;

Utility Revenues and Non-Public

(3) check-in counter fees; and

Utility Revenues that may be

(4) Terminal Fees.

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

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.

25

[REMEDIAL LAW I : CEAC : ATTY. DELA PENA]

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

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 Dollars44 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.

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 NonPublic 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 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

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

26

[REMEDIAL LAW I : CEAC : ATTY. DELA PENA]

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
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 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

27

[REMEDIAL LAW I : CEAC : ATTY. DELA PENA]

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
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 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:

28

[REMEDIAL LAW I : CEAC : ATTY. DELA PENA]

(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.

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;

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:

xxx

xxx

xxx

Section 1.06. Attendant Liabilities

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

Attendant Liabilities refer to all amounts in each case supported by verifiable evidence from
time to timeowed 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

xxx

(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

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

29

[REMEDIAL LAW I : CEAC : ATTY. DELA PENA]

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
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 suchthe 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" 59which 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
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

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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 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 rightto 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 toexclusively 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
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

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[REMEDIAL LAW I : CEAC : ATTY. DELA PENA]

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.

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.

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. Lazaro78 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
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

Republic of the Philippines

SUPREME COURT
Manila

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[REMEDIAL LAW I : CEAC : ATTY. DELA PENA]

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.
DECISION
DAVIDE, JR., C.J.:
This petition for certiorari under Rule 65 of the Rules of Court seeks the nullification of Manila City
Ordinance No. 8039, Series of 2002,1 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

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

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:
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:

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

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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
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.
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

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[REMEDIAL LAW I : CEAC : ATTY. DELA PENA]

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.

hearings, and draw conclusions from them as a basis for their official action and to exercise discretion of a
judicial nature."12

Besides, according to the respondents, the petitioner has transgressed the proscription against forumshopping 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.

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

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.
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

The respondents do not fall within the ambit of tribunal, board, or officer exercising judicial or quasijudicial functions. As correctly pointed out by the respondents, the enactment by the City Council of
Manila of the assailed ordinance and the issuance by respondent Mayor of the questioned executive order
were done in the exercise of legislative and executive functions, respectively, and not of judicial or quasijudicial 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:
(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.

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

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[REMEDIAL LAW I : CEAC : ATTY. DELA PENA]

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.

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.

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. Aguirre19 is misplaced because the non-observance of the hierarchy-ofcourts 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 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

Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION

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[REMEDIAL LAW I : CEAC : ATTY. DELA PENA]

G.R. No. 139791

December 12, 2003

MANILA BANKERS LIFE INSURANCE CORPORATION, petitioner,

vs.
EDDY NG KOK WEI, respondent.
DECISION
SANDOVAL-GUTIERREZ, J.:
Before us is a petition for review on certiorari assailing the Decision 1 dated March 26, 1999 and
Resolution2 dated August 5, 1999 of the Court of Appeals in CA-G.R. CV No. 40504, entitled "Eddy Ng
Kok Wei vs. Manila Bankers Life Insurance Corporation".
The factual antecedents as borne by the records are:
Eddy Ng Kok Wei, respondent, is a Singaporean businessman who ventured into investing in the
Philippines. On November 29, 1988, respondent, in a Letter of Intent addressed to Manila Bankers Life
Insurance Corporation, petitioner, expressed his intention to purchase a condominium unit at Valle Verde
Terraces.
Subsequently or on December 5, 1988, respondent paid petitioner a reservation fee of P50,000.00 for the
purchase of a 46-square meter condominium unit (Unit 703) valued at P860,922.00. On January 16, 1989,
respondent paid 90% of the purchase price in the sum of P729,830.00.

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;

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.

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.

37

[REMEDIAL LAW I : CEAC : ATTY. DELA PENA]

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:
xxx
"C. Cases involving specific performance of contractual and statutory obligations filed by buyers of
subdivision lots or condominium units against the owner, developer, dealer, broker or salesman.
x x x."
Pursuant to the above provisions, it is the HLURB which has jurisdiction over the instant case. We have
consistently held that complaints for specific performance with damages by a lot or condominium unit
buyer against the owner or developer falls under the exclusive jurisdiction of the HLURB. 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.
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.

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
A.M. No. MTJ-01-1370
April 25, 2003
(Formerly A.M. No. 00-11-238-MTC)

38

[REMEDIAL LAW I : CEAC : ATTY. DELA PENA]

OFFICE OF THE COURT ADMINISTRATOR, complainant,
vs.
JUDGE AGUSTIN T. SARDIDO, Municipal Trial Court of Koronadal, South Cotabato, respondent.

The Provincial Prosecutor opposed Judge Hurtados motion, arguing that the case against Judge Hurtado is
not within the scope of Circular No. 3-89 since it is not an IBP-initiated case. Moreover, the offense
charged was committed in 1993 when Judge Hurtado was still a clerk of court and ex-officio notary public.

CARPIO, J.:

On 20 October 1998, Judge Sardido issued an Order, the pertinent portions of which read:
The Case

This is an administrative case against respondent Judge Agustin T. Sardido ("Judge Sardido") formerly
presiding judge of the Municipal Trial Court of Koronadal, South Cotabato, for gross ignorance of the law.
Judge Sardido issued an Order dated 20 October 1998 excluding Judge Braulio Hurtado, Jr. ("Judge
Hurtado") of the Regional Trial Court of Kabacan, North Cotabato as one of the accused in an Amended
Information.1 Judge Sardido ruled that Supreme Court Circular No. 3-89 requires that Judge Hurtado be
dropped from the Amended Information and his case be forwarded to the Court.
The Facts
Private complainant Teresita Aguirre Magbanua accused Oscar Pagunsan and Danilo Ong of the crime of
"Falsification by Private Individual and Use of Falsified Document." 2 The Amended Information included
Judge Hurtado. The case, docketed as Criminal Case No. 14071, was raffled to Judge Sardido, then
presiding judge of the Municipal Trial Court of Koronadal, South Cotabato ("MTC-Koronadal").
In a Deed of Absolute Sale dated 8 August 1993, private complainant Magbanua and six other vendors
allegedly sold two parcels of land, covered by TCT Nos. 47873 and 33633 and located at the commercial
district of Koronadal, to Davao Realty Development Corporation, represented by accused Ong, with coaccused Pagunsan, as broker. Judge Hurtado, who at that time was the Clerk of Court of RTC-Koronadal
and ex-officio notary public, notarized the Deed of Absolute Sale.
However, private complainant Magbanua denies signing the Deed of Absolute Sale dated 8 August 1993
which states that the consideration for the sale was only P600,000.00. Private complainant asserts that what
she and the other vendors signed was a Deed of Absolute Sale dated 6 August 1996 for a consideration
of P16,000,000.00. Under the terms of the sale, the vendee agreed to pay for the capital gains tax. The
consideration in the 8 August 1993 Deed of Absolute Sale was apparently undervalued. Subsequently, the
Bureau of Internal Revenue assessed the vendors a deficiency capital gains tax of P1,023,375.00.
Judge Hurtado filed a motion praying that the criminal complaint against him be forwarded to the Supreme
Court. Judge Hurtado claimed that Circular No. 3-89 dated 6 February 1989 requires "all cases involving
justices and judges of the lower courts, whether or not such complaints deal with acts apparently unrelated
to the discharge of their official functions, such as acts of immorality, estafa, crimes against persons and
property, etc." to be forwarded to the Supreme Court. Judge Hurtado asserted that since the case against
him is one involving a judge of a lower court, the same should be forwarded to the Supreme Court pursuant
to Circular No. 3-89.

The issue to be resolved in the instant case is, whether the case of Judge Hurtado, who is charged
for acts committed prior to his appointment as an RTC Judge, falls within the purview of the
afore-said Circular No. 3-89.
It is the humble submission of the Court that the case of Judge Hurtado, an RTC Judge of the
Regional Trial Court of Kabacan, North Cotabato, falls within the meaning and intent of the said
circular.
For reasons being, firstly, the said circular provides that all cases involving justices and judges of
lower courts shall be forwarded to the Supreme Court for appropriate action, whether or not such
complaints deal with acts apparently unrelated to the discharge of their official functions, and
regardless of the nature of the crime, without any qualification whether the crime was committed
before or during his tenure of office. Under the law on Legal Hermeneutics, if the law does not
qualify we must not qualify. Secondly, it would sound, to the mind of the Court, awkward for a
first level court to be trying an incumbent judge of a second level court.
For reasons afore-stated, this Court can not and shall not try this case as against Judge Hurtado,
unless the Honorable Supreme Court would order otherwise.
Wherefore, the foregoing premises duly considered, the name of Judge Braulio L. Hurtado, Jr. is
ordered excluded from the amended information and the case against him is ordered forwarded
to the Honorable Supreme Court, pursuant to the afore-said Circular No. 3-89 of the Supreme
Court, dated February 9, 1989.
Accordingly, Maxima S. Borja ("Borja"), Stenographer I and Acting Clerk of Court II of the MTCKoronadal, South Cotabato, wrote a letter dated 21 July 1999 forwarding the criminal case against Judge
Hurtado to the Court Administrator for appropriate action.
Then Court Administrator Alfredo L. Benipayo issued a Memorandum dated 25 October 2000 pointing out
that Circular No. 3-89 refers only to administrative complaints filed with the IBP against justices and
judges of lower courts. The Circular does not apply to criminal cases filed before trial courts against such
justices and judges.
Thus, in the Resolution of 6 December 2000, the Court directed that the letter of Acting Clerk of Court
Borja be returned to the MTC-Koronadal together with the records of the criminal case. The Court directed
Judge Sardido to explain in writing why he should not be held liable for gross ignorance of the law for
excluding Judge Hurtado from the Amended Information and for transmitting the records of Judge
Hurtados case to the Court.

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[REMEDIAL LAW I : CEAC : ATTY. DELA PENA]

In his Explanation dated 26 January 2001, Judge Sardido reasoned out that he excluded Judge Hurtado
because Circular No. 3-89 directs the IBP to "forward to the Supreme Court for appropriate action all cases
involving justices and judges of lower courts x x x." Judge Sardido claims that the Circular likewise
"applies to courts in cases involving justices or judges of the lower courts," especially so in this case where
"Judge Hurtado was charged with falsification of public document as a notary public while he was still the
Clerk of Court of the Regional Trial Court of the 11th Judicial Region in Koronadal, South Cotabato."
In the Resolution of 28 March 2001, the Court referred this case to the Office of the Court Administrator
("OCA") for evaluation, report and recommendation. On 10 July 2001, the OCA submitted a Memorandum
recommending that this case be re-docketed as a regular administrative matter.
Judge Sardido filed his Manifestation dated 20 September 2001 stating that he is submitting the case for
decision based on the pleadings and records already filed. Judge Sardido insisted that he did "what he had
done in all honesty and good faith."

whether or not such complaints deal with acts apparently unrelated to the discharge of their
official functions, such as acts of immorality, estafa, crimes against persons and property, etc. x x
x. (Emphasis supplied)
Circular No. 3-89 clarified the second paragraph, Section 1 of Rule 139-B of the Rules of Court which
states that:
The IBP Board of Governors may, motu proprio or upon referral by the Supreme Court or by a
Chapter Board of Officers, or at the instance of any person, initiate and prosecute proper charges
against erring attorneys including those in the government service. (Emphasis supplied).
As clarified, the phrase "attorneys x x x in the government service" in Section 1 of Rule 139-B does not
include justices of appellate courts and judges of lower courts who are not subject to the disciplining
authority of the IBP. All administrative cases against justices of appellate courts and judges of lower courts
fall exclusively within the jurisdiction of the Supreme Court.

OCAs Findings and Conclusions

The OCA found that Judge Sardido erred in excluding Judge Hurtado as one of the accused in the Amended
Information in Criminal Case No. 14071. The OCA held that Circular No. 3-89, which is Judge Sardidos
basis in issuing the Order of 20 October 1998, refers to administrative complaints filed with the IBP against
justices and judges of lower courts. The Circular does not apply to criminal cases filed against justices and
judges of lower courts. The OCA recommended that a fine of P5,000.00 be imposed on Judge Sardido for
gross ignorance of the law.

However, Rule 139-B refers to Disbarment and Discipline of Attorneys which is administrative and not
criminal in nature. The cases referred to in Circular No. 3-89 are administrative cases for disbarment,
suspension or discipline of attorneys, including justices of appellate courts and judges of the lower courts.
The Court has vested the IBP with the power to initiate and prosecute administrative cases against erring
lawyers.8 However, under Circular No. 3-89, the Court has directed the IBP to refer to the Supreme Court
for appropriate action all administrative cases filed with IBP against justices of appellate courts and judges
of the lower courts. As mandated by the Constitution, the Court exercises the exclusive power to discipline
administratively justices of appellate courts and judges of lower courts.

The Courts Ruling

The Court issued Circular No. 3-89 in response to a letter dated 19 December 1988 by then IBP President
Leon M. Garcia, seeking clarification of the Courts En Banc Resolution of 29 November 1998 in RE:
Letter of then Acting Presiding Justice Rodolfo A. Nocon 3 and Associate Justices Reynato Puno4 and
Alfredo Marigomen5 of the Court of Appeals.
A certain Atty. Eduardo R. Balaoing had filed a complaint against Court of Appeals Justices Nocon, Puno
and Marigomen relating to a petition filed before their division. In its En Banc Resolution of 29 November
1988, the Court required the IBP to refer to the Supreme Court for appropriate action the complaint 6 filed
by Atty. Balaoing with the IBP Commission on Bar Discipline. The Court stated that the power to discipline
justices and judges of the lower courts is within the Courts exclusive power and authority as provided in
Section 11, Article VII of the 1987 Constitution.7 The Court Administrator publicized the En Banc
Resolution of 29 November 1988 by issuing Circular No. 17 dated 20 December 1988.
The Court issued Circular No. 3-89 on 6 February 1989 clarifying the En Banc Resolution of 29 November
1988. Circular No. 3-89 provides in part as follows:
(1) The IBP (Board of Governors and Commission on Bar Discipline) shall forward to the
Supreme Court for appropriate action all cases involving justices and judges of lower courts,

Circular No. 3-89 does not refer to criminal cases against erring justices of appellate courts or judges of
lower courts. Trial courts retain jurisdiction over the criminal aspect of offenses committed by justices of
appellate courts9and judges of lower courts. This is clear from the Circular directing the IBP, and not the
trial courts, to refer all administrative cases filed against justices of appellate courts and judges of lower
courts to the Supreme Court. The case filed against Judge Hurtado is not an administrative case filed with
the IBP. It is a criminal case filed with the trial court under its jurisdiction as prescribed by law.
The acts or omissions of a judge may well constitute at the same time both a criminal act and an
administrative offense. Whether the criminal case against Judge Hurtado relates to an act committed before
or after he became a judge is of no moment. Neither is it material that an MTC judge will be trying an RTC
judge in the criminal case. A criminal case against an attorney or judge is distinct and separate from an
administrative case against him. The dismissal of the criminal case does not warrant the dismissal of an
administrative case arising from the same set of facts. The quantum of evidence that is required in the latter
is only preponderance of evidence, and not proof beyond reasonable doubt which is required in criminal
cases.10 As held in Gatchalian Promotions Talents Pool, Inc. v. Naldoza:11
Administrative cases against lawyers belong to a class of their own. They are distinct from and
they may proceed independently of civil and criminal cases.

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[REMEDIAL LAW I : CEAC : ATTY. DELA PENA]

The burden of proof for these types of cases differ. In a criminal case, proof beyond reasonable
doubt is necessary; in an administrative case for disbarment or suspension, clearly preponderant
evidence is all that is required. Thus, a criminal prosecution will not constitute a prejudicial
question even if the same facts and circumstances are attendant in the administrative
proceedings.
It should be emphasized that a finding of guilt in the criminal case will not necessarily result in a
finding of liability in the administrative case. Conversely, respondents acquittal does not
necessarily exculpate him administratively. In the same vein, the trial courts finding of civil
liability against the respondent will not inexorably lead to a similar finding in the administrative
action before this Court. Neither will a favorable disposition in the civil action absolve the
administrative liability of the lawyer. The basic premise is that criminal and civil cases are
altogether different from administrative matters, such that the disposition in the first two will not
inevitably govern the third and vice versa. For this reason, it would be well to remember the
Courts ruling in In re Almacen, which we quote:
"x x x Disciplinary proceedings against lawyers are sui generis. Neither purely civil
nor purely criminal, they do not involve a trial of an action or a suit, but are rather
investigations by the Court into the conduct of one of its officers. Not being intended
to inflict punishment, [they are] in no sense a criminal prosecution. Accordingly, there
is neither a plaintiff nor a prosecutor therein. [They] may be initiated by the
Court motu proprio. Public interest is [their] primary objective, and the real question
for determination is whether or not the attorney is still a fit person to be allowed the
privileges as such. Hence, in the exercise of its disciplinary powers, the Court merely
calls upon a member of the Bar to account for his actuations as an officer of the Court
with the end in view of preserving the purity of the legal profession and the proper and
honest administration of justice by purging the profession of members who by their
misconduct have prove[n] themselves no longer worthy to be entrusted with the duties
and responsibilities pertaining to the office of an attorney. x x x"

would be dealt with more severely. InAlmeron v. Judge Sardido,16 the Court imposed on Judge Sardido a
stiffer fine of P10,000.00 for gross ignorance of the law. He was again sternly warned that the commission
of the same or similar act in the future would be dealt with more severely including, if warranted, his
dismissal from the service.
In a more recent administrative case, Torcende v. Judge Sardido,17 the Court found Judge Sardido again
guilty of gross ignorance of the law and of gross misconduct. This time the Court dismissed Judge Sardido
from the service with forfeiture of his retirement benefits, except accrued leave credits. The dismissal was
with prejudice to reemployment in any branch of the government or any of its agencies or instrumentalities,
including government-owned and controlled corporations.
The records of the OCA further disclose that Judge Sardido has other similar administrative
complaints18 still pending against him. Such an unflattering service record erodes the peoples faith and
confidence in the judiciary. It is the duty of every member of the bench to avoid any impression of
impropriety to protect the image and integrity of the judiciary.19 The Court may still impose a fine on Judge
Sardido in the instant case despite his dismissal from the service.
WHEREFORE, respondent Judge Agustin T. Sardido is FINED Ten Thousand Pesos (P10,000.00) for gross
ignorance of the law. The fine may be deducted from his accrued leave credits.
SO ORDERED.

A judge is called upon to exhibit more than just a cursory acquaintance with statutes and procedural rules.
He must be conversant with basic legal principles and well-settled doctrines. He should strive for
excellence and seek the truth with passion.12 Judge Sardido failed in this regard. He erred in excluding
Judge Hurtado as one of the accused in the Amended Information and in forwarding the criminal case
against Judge Hurtado to the Court.
One last point. This administrative case against Judge Sardido started before the amendment 13 of Rule 140
classifying gross ignorance of the law a serious offense punishable by a fine of more than P20,000.00 but
not exceeding P40,000.00. The amendment cannot apply retroactively to Judge Sardidos case. However,
the fine ofP5,000.00 recommended by the OCA is too light a penalty considering that this is not the first
offense of Judge Sardido.
In RE: Hold Departure Order Issued by Judge Agustin T. Sardido,14 the Court reprimanded Judge Sardido
for issuing a hold-departure order contrary to Circular No. 39-97. In Cabilao v. Judge Sardido,15 the Court
fined Judge Sardido P5,000.00 for gross ignorance of the law, grave abuse of discretion and gross
misconduct. The Court gave a stern warning to Judge Sardido that a commission of the same or similar act

Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 151149

September 7, 2004

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[REMEDIAL LAW I : CEAC : ATTY. DELA PENA]

GEORGE KATON, petitioner,
vs.
MANUEL PALANCA JR., LORENZO AGUSTIN, JESUS GAPILANGO and JUAN
FRESNILLO, respondents.
DECISION

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.

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 Review1 under Rule 45 of the Rules of Court, assailing the December 8, 2000
Decision2and the November 20, 2001 Resolution3 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 reclassification 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

"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,
19775 with an area of 6.84 hectares of Sombrero Island.

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[REMEDIAL LAW I : CEAC : ATTY. DELA PENA]

"Petitioner assails the validity of the homestead patents and original certificates of title covering
certain portions of Sombrero Island issued in favor of respondents on the ground that the same
were obtained through fraud. Petitioner prays for the reconveyance of the whole island in his
favor.
"On the other hand, [R]espondent Manuel Palanca, Jr. claims that he himself requested for the
reclassification of the island in dispute and that on or about the time of such request,
[R]espondents Fresnillo, Palanca and Gapilango already occupied their respective areas and
introduced numerous improvements. In addition, Palanca said that petitioner never filed any
homestead application for the island. Respondents deny that Gabriel Mandocdoc undertook the
inspection and survey of the island.

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.

"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.

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.

"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.

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.

"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.

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.

"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.

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?

Ruling of the Court of Appeals

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[REMEDIAL LAW I : CEAC : ATTY. DELA PENA]

"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
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 Jurisdiction
Petitioner next submits that the CA erroneously invoked its "residual prerogatives" under Section 1 of Rule
9 of the Rules of Court when it motu proprio dismissed the Petition for lack of jurisdiction and prescription.
According to him, residual prerogative refers to the power that the trial court, in the exercise of its original
jurisdiction, may still validly exercise even after perfection of an appeal. It follows that such powers are not
possessed by an appellate court.
Petitioner has confused what the CA adverted to as its "residual prerogatives" under Section 1 of Rule 9 of
the Rules of Court with the "residual jurisdiction" of trial courts over cases appealed to the CA.

Under Section 1 of Rule 9 of the Rules of Court, defenses and objections not pleaded either in a motion to
dismiss or in the answer are deemed waived, except when (1) lack of jurisdiction over the subject matter,
(2) litis pendentia, (3) res judicata and (4) prescription are evident from the pleadings or the evidence on
record. In the four excepted instances, the court shall motu proprio dismiss the claim or action. In Gumabon
v. Larin11 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
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

44

[REMEDIAL LAW I : CEAC : ATTY. DELA PENA]

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 114 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;
xxx

xxx

xxx

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

xxx

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

xxx

45

[REMEDIAL LAW I : CEAC : ATTY. DELA PENA]

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

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

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 Court37 ordains that every action must be prosecuted or
defended in the name of the real party in interest, who stands to be benefited or injured by the judgment in
the suit. Indeed, one who has no right or interest to protect has no cause of action by which to invoke, as a
party-plaintiff, the jurisdiction of the court.38

SO ORDERED.

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.

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)

Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 147406

July 14, 2008

VENANCIO FIGUEROA y CERVANTES,1 Petitioner,

vs.
PEOPLE OF THE PHILIPPINES, Respondent.

46

[REMEDIAL LAW I : CEAC : ATTY. DELA PENA]

DECISION

d. Is the Honorable Court of Appeals justified in convicting the petitioner for homicide through
reckless imprudence (the legally correct designation is "reckless imprudence resulting to
homicide") with violation of the Land Transportation and Traffic Code when the prosecution did
not prove this during the trial and, more importantly, the information filed against the petitioner
does not contain an allegation to that effect?

NACHURA, J.:
When is a litigant estopped by laches from assailing the jurisdiction of a tribunal? This is the paramount
issue raised in this petition for review of the February 28, 2001 Decision 2 of the Court of Appeals (CA) in
CA-G.R. CR No. 22697.

e. Does the uncontroverted testimony of the defense witness Leonardo Hernal that the victim
unexpectedly crossed the road resulting in him getting hit by the bus driven by the petitioner not
enough evidence to acquit him of the crime charged? 9

Pertinent are the following antecedent facts and proceedings:

On July 8, 1994, an information3 for reckless imprudence resulting in homicide was filed against the
petitioner before the Regional Trial Court (RTC) of Bulacan, Branch 18. 4 The case was docketed as
Criminal Case No. 2235-M-94.5 Trial on the merits ensued and on August 19, 1998, the trial court
convicted the petitioner as charged.6 In his appeal before the CA, the petitioner questioned, among others,
for the first time, the trial courts jurisdiction.7

Applied uniformly is the familiar rule that the jurisdiction of the court to hear and decide a case is conferred
by the law in force at the time of the institution of the action, unless such statute provides for a retroactive
application thereof.10 In this case, at the time the criminal information for reckless imprudence resulting in
homicide with violation of the Automobile Law (now Land Transportation and Traffic Code) was filed,
Section 32(2) of Batas Pambansa (B.P.) Blg. 12911 had already been amended by Republic Act No.
7691.12 The said provision thus reads:

The appellate court, however, in the challenged decision, considered the petitioner to have actively
participated in the trial and to have belatedly attacked the jurisdiction of the RTC; thus, he was already
estopped by laches from asserting the trial courts lack of jurisdiction. Finding no other ground to reverse
the trial courts decision, the CA affirmed the petitioners conviction but modified the penalty imposed and
the damages awarded.8

Sec. 32. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial
Courts in Criminal Cases.Except in cases falling within the exclusive original jurisdiction of Regional
Trial Courts and the Sandiganbayan, the Metropolitan Trial Courts, Municipal Trial Courts, and Municipal
Circuit Trial Courts shall exercise:

Dissatisfied, the petitioner filed the instant petition for review on certiorari raising the following issues for
our resolution:
a. Does the fact that the petitioner failed to raise the issue of jurisdiction during the trial of this
case, which was initiated and filed by the public prosecutor before the wrong court, constitute
laches in relation to the doctrine laid down in Tijam v. Sibonghanoy, notwithstanding the fact
that said issue was immediately raised in petitioners appeal to the Honorable Court of Appeals?
Conversely, does the active participation of the petitioner in the trial of his case, which is
initiated and filed not by him but by the public prosecutor, amount to estoppel?
b. Does the admission of the petitioner that it is difficult to immediately stop a bus while it is
running at 40 kilometers per hour for the purpose of avoiding a person who unexpectedly crossed
the road, constitute enough incriminating evidence to warrant his conviction for the crime
charged?
c. Is the Honorable Court of Appeals justified in considering the place of accident as falling
within Item 4 of Section 35 (b) of the Land Transportation and Traffic Code, and subsequently
ruling that the speed limit thereto is only 20 kilometers per hour, when no evidence whatsoever
to that effect was ever presented by the prosecution during the trial of this case?

xxxx
(2) Exclusive original jurisdiction over all offenses punishable with imprisonment not exceeding six (6)
years irrespective of the amount of fine, and regardless of other imposable accessory or other penalties,
including the civil liability arising from such offenses or predicated thereon, irrespective of kind, nature,
value or amount thereof: Provided, however, That in offenses involving damage to property through
criminal negligence, they shall have exclusive original jurisdiction thereof.
As the imposable penalty for the crime charged herein is prision correccional in its medium and maximum
periods or imprisonment for 2 years, 4 months and 1 day to 6 years, 13 jurisdiction to hear and try the same
is conferred on the Municipal Trial Courts (MTCs). Clearly, therefore, the RTC of Bulacan does not have
jurisdiction over Criminal Case No. 2235-M-94.
While both the appellate court and the Solicitor General acknowledge this fact, they nevertheless are of the
position that the principle of estoppel by laches has already precluded the petitioner from questioning the
jurisdiction of the RTCthe trial went on for 4 years with the petitioner actively participating therein and
without him ever raising the jurisdictional infirmity. The petitioner, for his part, counters that the lack of
jurisdiction of a court over the subject matter may be raised at any time even for the first time on appeal. As
undue delay is further absent herein, the principle of laches will not be applicable.
To settle once and for all this problem of jurisdiction vis--vis estoppel by laches, which continuously
confounds the bench and the bar, we shall analyze the various Court decisions on the matter.

47

[REMEDIAL LAW I : CEAC : ATTY. DELA PENA]

As early as 1901, this Court has declared that unless jurisdiction has been conferred by some legislative act,
no court or tribunal can act on a matter submitted to it.14 We went on to state in U.S. v. De La Santa15 that:
It has been frequently held that a lack of jurisdiction over the subject-matter is fatal, and subject to
objection at any stage of the proceedings, either in the court below or on appeal (Ency. of Pl. & Pr., vol. 12,
p. 189, and large array of cases there cited), and indeed, where the subject-matter is not within the
jurisdiction, the court may dismiss the proceeding ex mero motu. (4 Ill., 133; 190 Ind., 79; Chipman vs.
Waterbury, 59 Conn., 496.)
Jurisdiction over the subject-matter in a judicial proceeding is conferred by the sovereign authority which
organizes the court; it is given only by law and in the manner prescribed by law and an objection based on
the lack of such jurisdiction can not be waived by the parties. x x x 16
Later, in People v. Casiano,17 the Court explained:
4. The operation of the principle of estoppel on the question of jurisdiction seemingly depends upon
whether the lower court actually had jurisdiction or not. If it had no jurisdiction, but the case was tried and
decided upon the theory that it had jurisdiction, the parties are not barred, on appeal, from assailing such
jurisdiction, for the same "must exist as a matter of law, and may not be conferred by consent of the parties
or by estoppel" (5 C.J.S., 861-863). However, if the lower court had jurisdiction, and the case was heard
and decided upon a given theory, such, for instance, as that the court had no jurisdiction, the party who
induced it to adopt such theory will not be permitted, on appeal, to assume an inconsistent positionthat
the lower court had jurisdiction. Here, the principle of estoppel applies. The rule that jurisdiction is
conferred by law, and does not depend upon the will of the parties, has no bearing thereon. Thus, Corpus
Juris Secundum says:
Where accused has secured a decision that the indictment is void, or has been granted an instruction based
on its defective character directing the jury to acquit, he is estopped, when subsequently indicted, to assert
that the former indictment was valid. In such case, there may be a new prosecution whether the indictment
in the former prosecution was good or bad. Similarly, where, after the jury was impaneled and sworn, the
court on accused's motion quashed the information on the erroneous assumption that the court had no
jurisdiction, accused cannot successfully plead former jeopardy to a new information. x x x (22 C.J.S., sec.
252, pp. 388-389; italics ours.)
Where accused procured a prior conviction to be set aside on the ground that the court was without
jurisdiction, he is estopped subsequently to assert, in support of a defense of previous jeopardy, that such
court had jurisdiction." (22 C.J.S. p. 378.)18
But in Pindagan Agricultural Co., Inc. v. Dans,19 the Court, in not sustaining the plea of lack of jurisdiction
by the plaintiff-appellee therein, made the following observations:
It is surprising why it is only now, after the decision has been rendered, that the plaintiff-appellee presents
the question of this Courts jurisdiction over the case. Republic Act No. 2613 was enacted on August 1,
1959. This case was argued on January 29, 1960. Notwithstanding this fact, the jurisdiction of this Court

was never impugned until the adverse decision of this Court was handed down. The conduct of counsel
leads us to believe that they must have always been of the belief that notwithstanding said enactment of
Republic Act 2613 this Court has jurisdiction of the case, such conduct being born out of a conviction that
the actual real value of the properties in question actually exceeds the jurisdictional amount of this Court
(over P200,000). Our minute resolution in G.R. No. L-10096, Hyson Tan, et al. vs. Filipinas Compaa de
Seguros, et al., of March 23, 1956, a parallel case, is applicable to the conduct of plaintiff-appellee in this
case, thus:
x x x that an appellant who files his brief and submits his case to the Court of Appeals for decision, without
questioning the latters jurisdiction until decision is rendered therein, should be considered as having
voluntarily waived so much of his claim as would exceed the jurisdiction of said Appellate Court; for the
reason that a contrary rule would encourage the undesirable practice of appellants submitting their cases for
decision to the Court of Appeals in expectation of favorable judgment, but with intent of attacking its
jurisdiction should the decision be unfavorable: x x x20
Then came our ruling in Tijam v. Sibonghanoy21 that a party may be barred by laches from invoking lack of
jurisdiction at a late hour for the purpose of annulling everything done in the case with the active
participation of said party invoking the plea. We expounded, thus:
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, of estoppel by deed or by record, and of estoppel by laches.
Laches, in a general sense, is failure or neglect, for an unreasonable and unexplained length of time, to do
that which, by exercising due diligence, could or should have been done earlier; it is negligence or omission
to assert a right within a reasonable time, warranting a presumption that the party entitled to assert it either
has abandoned it or declined to assert it.
The doctrine of laches or of "stale demands" is based upon grounds of public policy which requires, for the
peace of society, the discouragement of stale claims and, unlike the statute of limitations, is not a mere
question of time but is principally a question of the inequity or unfairness of permitting a right or claim to
be enforced or asserted.
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
(Dean vs. Dean, 136 Or. 694, 86 A.L.R. 79). In the case just cited, by way of explaining the rule, it was
further said that the question whether the court had jurisdiction either of the subject matter of the action or
of the parties was not 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 cannot be toleratedobviously for reasons of public policy.
Furthermore, it has also been held that after voluntarily submitting a cause and encountering an adverse
decision on the merits, it is too late for the loser to question the jurisdiction or power of the court (Pease vs.
Rathbun-Jones etc., 243 U.S. 273, 61 L. Ed. 715, 37 S.Ct. 283; St. Louis etc. vs. McBride, 141 U.S. 127, 35
L. Ed. 659). And in Littleton vs. Burgess, 16 Wyo. 58, the Court said that it is not right for a party who has

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[REMEDIAL LAW I : CEAC : ATTY. DELA PENA]

affirmed and invoked the jurisdiction of a court in a particular matter to secure an affirmative relief, to
afterwards deny that same jurisdiction to escape a penalty.

could or should have been done earlier; it is negligence or omission to assert a right within a reasonable
time, warranting a presumption that the party entitled to assert has abandoned it or declined to assert it. 24

Upon this same principle is what We said in the three cases mentioned in the resolution of the Court of
Appeals of May 20, 1963 (supra)to the effect that we frown upon the "undesirable practice" of a party
submitting his case for decision and then accepting the judgment, only if favorable, and attacking it for lack
of jurisdiction, when adverseas well as in Pindagan etc. vs. Dans et al., G.R. L-14591, September 26,
1962; Montelibano et al. vs. Bacolod-Murcia Milling Co., Inc., G.R. L-15092; Young Men Labor Union
etc. vs. The Court of Industrial Relations et al., G.R. L-20307, Feb. 26, 1965, and Mejia vs. Lucas, 100
Phil. p. 277.

In Calimlim, despite the fact that the one who benefited from the plea of lack of jurisdiction was the one
who invoked the courts jurisdiction, and who later obtained an adverse judgment therein, we refused to
apply the ruling in Sibonghanoy. The Court accorded supremacy to the time-honored principle that the
issue of jurisdiction is not lost by waiver or by estoppel.

The facts of this case show that from the time the Surety became a quasi-party on July 31, 1948, it could
have raised the question of the lack of jurisdiction of the Court of First Instance of Cebu to take cognizance
of the present action by reason of the sum of money involved which, according to the law then in force,
was within the original exclusive jurisdiction of inferior courts. It failed to do so. Instead, at several stages
of the proceedings in the court a quo, as well as in the Court of Appeals, it invoked the jurisdiction of said
courts to obtain affirmative relief and submitted its case for a final adjudication on the merits. It was only
after an adverse decision was rendered by the Court of Appeals that it finally woke up to raise the question
of jurisdiction. Were we to sanction such conduct on its part, We would in effect be declaring as useless all
the proceedings had in the present case since it was commenced on July 19, 1948 and compel the judgment
creditors to go up their Calvary once more. The inequity and unfairness of this is not only patent but
revolting.22
For quite a time since we made this pronouncement in Sibonghanoy, courts and tribunals, in resolving
issues that involve the belated invocation of lack of jurisdiction, have applied the principle of estoppel by
laches. Thus, in Calimlim v. Ramirez,23 we pointed out that Sibonghanoy was developing into a general rule
rather than the exception:
A rule that had been settled by unquestioned acceptance and upheld in decisions so numerous to cite is that
the jurisdiction of a court over the subject-matter of the action is a matter of law and may not be conferred
by consent or agreement of the parties. The lack of jurisdiction of a court may be raised at any stage of the
proceedings, even on appeal. This doctrine has been qualified by recent pronouncements which stemmed
principally from the ruling in the cited case of Sibonghanoy. It is to be regretted, however, that the holding
in said case had been applied to situations which were obviously not contemplated therein. The exceptional
circumstance involved in Sibonghanoy which justified the departure from the accepted concept of nonwaivability of objection to jurisdiction has been ignored and, instead a blanket doctrine had been repeatedly
upheld that rendered the supposed ruling in Sibonghanoy not as the exception, but rather the general rule,
virtually overthrowing altogether the time-honored principle that the issue of jurisdiction is not lost by
waiver or by estoppel.
In Sibonghanoy, the defense of lack of jurisdiction of the court that rendered the questioned ruling was held
to be barred by estoppel by laches. It was ruled that the lack of jurisdiction having been raised for the first
time in a motion to dismiss filed almost fifteen (15) years after the questioned ruling had been rendered,
such a plea may no longer be raised for being barred by laches. As defined in said case, laches is "failure or
neglect, for an unreasonable and unexplained length of time, to do that which, by exercising due diligence,

Yet, in subsequent cases decided after Calimlim, which by sheer volume are too plentiful to mention, the
Sibonghanoy doctrine, as foretold in Calimlim, became the rule rather than the exception. As such, in
Soliven v. Fastforms Philippines, Inc.,25 the Court ruled:
While it is true that jurisdiction may be raised at any time, "this rule presupposes that estoppel has not
supervened." In the instant case, respondent actively participated in all stages of the proceedings before the
trial court and invoked its authority by asking for an affirmative relief. Clearly, respondent is estopped from
challenging the trial courts jurisdiction, especially when an adverse judgment has been rendered. In
PNOC Shipping and Transport Corporation vs. Court of Appeals, we held:
Moreover, we note that petitioner did not question at all the jurisdiction of the lower court x x x in its
answers to both the amended complaint and the second amended complaint. It did so only in its motion for
reconsideration of the decision of the lower court after it had received an adverse decision. As this Court
held in Pantranco North Express, Inc. vs. Court of Appeals (G.R. No. 105180, July 5, 1993, 224 SCRA 477,
491), participation in all stages of the case before the trial court, that included invoking its authority in
asking for affirmative relief, effectively barred petitioner by estoppel from challenging the courts
jurisdiction. Notably, from the time it filed its answer to the second amended complaint on April 16, 1985,
petitioner did not question the lower courts jurisdiction. It was only on December 29, 1989 when it filed its
motion for reconsideration of the lower courts decision that petitioner raised the question of the lower
courts lack of jurisdiction. Petitioner thus foreclosed its right to raise the issue of jurisdiction by its own
inaction. (italics ours)
Similarly, in the subsequent case of Sta. Lucia Realty and Development, Inc. vs. Cabrigas, we ruled:
In the case at bar, it was found by the trial court in its 30 September 1996 decision in LCR Case No. Q60161(93) that private respondents (who filed the petition for reconstitution of titles) failed to comply with
both sections 12 and 13 of RA 26 and therefore, it had no jurisdiction over the subject matter of the case.
However, private respondents never questioned the trial courts jurisdiction over its petition for
reconstitution throughout the duration of LCR Case No. Q-60161(93). On the contrary, private respondents
actively participated in the reconstitution proceedings by filing pleadings and presenting its evidence. They
invoked the trial courts jurisdiction in order to obtain affirmative relief the reconstitution of their titles.
Private respondents have thus foreclosed their right to raise the issue of jurisdiction by their own actions.
The Court has constantly upheld the doctrine that while jurisdiction may be assailed at any stage, a
litigants participation in all stages of the case before the trial court, including the invocation of its authority
in asking for affirmative relief, bars such party from challenging the courts jurisdiction (PNOC Shipping
and Transport Corporation vs. Court of Appeals, 297 SCRA 402 [1998]). A party cannot invoke the

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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 (Asset Privatization Trust vs. Court of
Appeals, 300 SCRA 579 [1998]; Province of Bulacan vs. Court of Appeals, 299 SCRA 442 [1998]). The
Court frowns upon the undesirable practice of a party participating in the proceedings and submitting his
case for decision and then accepting judgment, only if favorable, and attacking it for lack of jurisdiction,
when adverse (Producers Bank of the Philippines vs. NLRC, 298 SCRA 517 [1998], citing Ilocos Sur
Electric Cooperative, Inc. vs. NLRC, 241 SCRA 36 [1995]). (italics ours) 26
Noteworthy, however, is that, in the 2005 case of Metromedia Times Corporation v. Pastorin, 27 where the
issue of lack of jurisdiction was raised only in the National Labor Relations Commission (NLRC) on
appeal, we stated, after examining the doctrines of jurisdiction vis--vis estoppel, that the ruling in
Sibonghanoy stands as an exception, rather than the general rule. Metromedia, thus, was not estopped from
assailing the jurisdiction of the labor arbiter before the NLRC on appeal. 281avvphi1

circumstance involved in Sibonghanoy which justified the departure from the accepted concept of nonwaivability of objection to jurisdiction has been ignored and, instead a blanket doctrine had been repeatedly
upheld that rendered the supposed ruling in Sibonghanoy not as the exception, but rather the general rule,
virtually overthrowing altogether the time-honored principle that the issue of jurisdiction is not lost by
waiver or by estoppel.
Indeed, the general rule remains: a courts lack of jurisdiction may be raised at any stage of the
proceedings, even on appeal. The reason is that jurisdiction is conferred by law, and lack of it affects the
very authority of the court to take cognizance of and to render judgment on the action. Moreover,
jurisdiction is determined by the averments of the complaint, not by the defenses contained in the answer. 30
Also, in Mangaliag v. Catubig-Pastoral,31 even if the pleader of lack of jurisdiction actively took part in the
trial proceedings by presenting a witness to seek exoneration, the Court, reiterating the doctrine in
Calimlim, said:

Later, in Francel Realty Corporation v. Sycip,29 the Court clarified that:

Petitioner argues that the CAs affirmation of the trial courts dismissal of its case was erroneous,
considering that a full-blown trial had already been conducted. In effect, it contends that lack of jurisdiction
could no longer be used as a ground for dismissal after trial had ensued and ended.
The above argument is anchored on estoppel by laches, which has been used quite successfully in a number
of cases to thwart dismissals based on lack of jurisdiction. Tijam v. Sibonghanoy, in which this doctrine was
espoused, held that a party may be barred from questioning a courts jurisdiction after being invoked to
secure affirmative relief against its opponent. In fine, laches prevents the issue of lack of jurisdiction from
being raised for the first time on appeal by a litigant whose purpose is to annul everything done in a trial in
which it has actively participated.
Laches is defined as the "failure or neglect for an unreasonable and unexplained length of time, to do that
which, by exercising due diligence, could or should have been done earlier; it is negligence or omission to
assert a right within a reasonable time, warranting a presumption that the party entitled to assert it either has
abandoned it or declined to assert it."
The ruling in Sibonghanoy on the matter of jurisdiction is, however, the exception rather than the
rule.1avvphi1 Estoppel by laches may be invoked to bar the issue of lack of jurisdiction only in cases in
which the factual milieu is analogous to that in the cited case. In such controversies, laches should be
clearly present; that is, lack of jurisdiction must have been raised so belatedly as to warrant the presumption
that the party entitled to assert it had abandoned or declined to assert it. That Sibonghanoy applies only to
exceptional circumstances is clarified in Calimlim v. Ramirez, which we quote:
A rule that had been settled by unquestioned acceptance and upheld in decisions so numerous to cite is that
the jurisdiction of a court over the subject-matter of the action is a matter of law and may not be conferred
by consent or agreement of the parties. The lack of jurisdiction of a court may be raised at any stage of the
proceedings, even on appeal. This doctrine has been qualified by recent pronouncements which stemmed
principally from the ruling in the cited case of Sibonghanoy. It is to be regretted, however, that the holding
in said case had been applied to situations which were obviously not contemplated therein. The exceptional

Private respondent argues that the defense of lack of jurisdiction may be waived by estoppel through active
participation in the trial. Such, however, is not the general rule but an exception, best characterized by the
peculiar circumstances in Tijam vs. Sibonghanoy. In Sibonghanoy, the party invoking lack of jurisdiction
did so only after fifteen years and at a stage when the proceedings had already been elevated to the
CA. Sibonghanoy is an exceptional case because of the presence of laches, which was defined therein as
failure or neglect for an unreasonable and unexplained length of time to do that which, by exercising due
diligence, could or should have been done earlier; it is the negligence or omission to assert a right within a
reasonable time, warranting a presumption that the party entitled to assert has abandoned it or declined to
assert it.32
And in the more recent Regalado v. Go,33 the Court again emphasized that laches should be clearly present
for the Sibonghanoy doctrine to be applicable, thus:
Laches is defined as the "failure or neglect for an unreasonable and unexplained length of time, to do that
which, by exercising due diligence, could or should have been done earlier, it is negligence or omission to
assert a right within a reasonable length of time, warranting a presumption that the party entitled to assert it
either has abandoned it or declined to assert it."
The ruling in People v. Regalario that was based on the landmark doctrine enunciated in Tijam v.
Sibonghanoy on the matter of jurisdiction by estoppel is the exception rather than the rule. Estoppel by
laches may be invoked to bar the issue of lack of jurisdiction only in cases in which the factual milieu is
analogous to that in the cited case. In such controversies, laches should have been clearly present; that is,
lack of jurisdiction must have been raised so belatedly as to warrant the presumption that the party entitled
to assert it had abandoned or declined to assert it.
In Sibonghanoy, the defense of lack of jurisdiction was raised for the first time in a motion to dismiss filed
by the Surety almost 15 years after the questioned ruling had been rendered. At several stages of the
proceedings, in the court a quo as well as in the Court of Appeals, the Surety invoked the jurisdiction of the
said courts to obtain affirmative relief and submitted its case for final adjudication on the merits. It was

50

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only when the adverse decision was rendered by the Court of Appeals that it finally woke up to raise the
question of jurisdiction.
Clearly, the factual settings attendant in Sibonghanoy are not present in the case at bar. Petitioner Atty.
Regalado, after the receipt of the Court of Appeals resolution finding her guilty of contempt, promptly filed
a Motion for Reconsideration assailing the said courts jurisdiction based on procedural infirmity in
initiating the action. Her compliance with the appellate courts directive to show cause why she should not
be cited for contempt and filing a single piece of pleading to that effect could not be considered as an active
participation in the judicial proceedings so as to take the case within the milieu of Sibonghanoy. Rather, it is
the natural fear to disobey the mandate of the court that could lead to dire consequences that impelled her to
comply.34
The Court, thus, wavered on when to apply the exceptional circumstance in Sibonghanoy and on when to
apply the general rule enunciated as early as in De La Santa and expounded at length in Calimlim. The
general rule should, however, be, as it has always been, that the issue of jurisdiction may be raised at any
stage of the proceedings, even on appeal, and is not lost by waiver or by estoppel. Estoppel by laches, to
bar a litigant from asserting the courts absence or lack of jurisdiction, only supervenes in exceptional cases
similar to the factual milieu of Tijam v. Sibonghanoy. Indeed, the fact that a person attempts to invoke
unauthorized jurisdiction of a court does not estop him from thereafter challenging its jurisdiction over the
subject matter, since such jurisdiction must arise by law and not by mere consent of the parties. This is
especially true where the person seeking to invoke unauthorized jurisdiction of the court does not thereby
secure any advantage or the adverse party does not suffer any harm. 35

entitled to any or all such reliefs. Jurisdiction over the nature and subject matter of an action is conferred by
the Constitution and the law, and not by the consent or waiver of the parties where the court otherwise
would have no jurisdiction over the nature or subject matter of the action. Nor can it be acquired through,
or waived by, any act or omission of the parties. Moreover, estoppel does not apply to confer jurisdiction to
a tribunal that has none over the cause of action. x x x
Indeed, the jurisdiction of the court or tribunal is not affected by the defenses or theories set up by the
defendant or respondent in his answer or motion to dismiss. Jurisdiction should be determined by
considering not only the status or the relationship of the parties but also the nature of the issues or questions
that is the subject of the controversy. x x x x The proceedings before a court or tribunal without jurisdiction,
including its decision, are null and void, hence, susceptible to direct and collateral attacks. 43
With the above considerations, we find it unnecessary to resolve the other issues raised in the petition.
WHEREFORE, premises considered, the petition for review on certiorari is GRANTED. Criminal Case
No. 2235-M-94 is hereby DISMISSED without prejudice.
SO ORDERED.

Applying the said doctrine to the instant case, the petitioner is in no way estopped by laches in assailing the
jurisdiction of the RTC, considering that he raised the lack thereof in his appeal before the appellate court.
At that time, no considerable period had yet elapsed for laches to attach. True, delay alone, though
unreasonable, will not sustain the defense of "estoppel by laches" unless it further appears that the party,
knowing his rights, has not sought to enforce them until the condition of the party pleading laches has in
good faith become so changed that he cannot be restored to his former state, if the rights be then enforced,
due to loss of evidence, change of title, intervention of equities, and other causes. 36 In applying the
principle of estoppel by laches in the exceptional case of Sibonghanoy, the Court therein considered the
patent and revolting inequity and unfairness of having the judgment creditors go up their Calvary once
more after more or less 15 years.37 The same, however, does not obtain in the instant case.
We note at this point that estoppel, being in the nature of a forfeiture, is not favored by law. It is to be
applied rarelyonly from necessity, and only in extraordinary circumstances. The doctrine must be applied
with great care and the equity must be strong in its favor.38 When misapplied, the doctrine of estoppel may
be a most effective weapon for the accomplishment of injustice. 39 Moreover, a judgment rendered without
jurisdiction over the subject matter is void.40 Hence, the Revised Rules of Court provides for remedies in
attacking judgments rendered by courts or tribunals that have no jurisdiction over the concerned cases. No
laches will even attach when the judgment is null and void for want of jurisdiction. 41 As we have stated in
Heirs of Julian Dela Cruz and Leonora Talaro v. Heirs of Alberto Cruz, 42
It is axiomatic that the jurisdiction of a tribunal, including a quasi-judicial officer or government agency,
over the nature and subject matter of a petition or complaint is determined by the material allegations
therein and the character of the relief prayed for, irrespective of whether the petitioner or complainant is

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.

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[REMEDIAL LAW I : CEAC : ATTY. DELA PENA]

DECISION
REYES, R.T., J.:
CAN the Sandiganbayan try a government scholaran ** accused, along with her brother, of swindling
government funds?
MAAARI bang litisin ng Sandiganbayan ang isang iskolar ng bayan, at ang kanyang kapatid, na
kapwa pinararatangan ng estafa ng pera ng bayan?
The jurisdictional question is posed in this petition for certiorari assailing the Resolutions 1 of the
Sandiganbayan, Fifth Division, denying petitioners motion to quash the information and her motion for
reconsideration.
The Antecedents
Petitioner Hannah Eunice D. Serana was a senior student of the University of the Philippines-Cebu. A
student of a state university is known as a government scholar. She was appointed by then President Joseph
Estrada on December 21, 1999 as a student regent of UP, to serve a one-year term starting January 1, 2000
and ending on December 31, 2000.
In the early part of 2000, petitioner discussed with President Estrada the renovation of Vinzons Hall Annex
in UP Diliman.2 On September 4, 2000, petitioner, with her siblings and relatives, registered with the
Securities and Exchange Commission the Office of the Student Regent Foundation, Inc. (OSRFI). 3
One of the projects of the OSRFI was the renovation of the Vinzons Hall Annex. 4 President Estrada gave
Fifteen Million Pesos (P15,000,000.00) to the OSRFI as financial assistance for the proposed renovation.
The source of the funds, according to the information, was the Office of the President.
The renovation of Vinzons Hall Annex failed to materialize.5 The succeeding student regent, Kristine Clare
Bugayong, and Christine Jill De Guzman, Secretary General of the KASAMA sa U.P., a 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 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

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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:

(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

(A) x x x
(1) Officials of the executive branch occupying the positions of regional director and higher,
otherwise classified as Grade "27" and higher, of the Compensation and Position Classification
Act of 1989 (Republic Act No. 6758), specifically including:
xxxx

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

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[REMEDIAL LAW I : CEAC : ATTY. DELA PENA]

Petitioner is now before this Court, contending that "THE RESPONDENT COURT COMMITTED
GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK AND/OR EXCESS OF JURISDICTION
IN NOT QUASHING THE INFORMATION AND DISMISING THE CASE NOTWITHSTANDING
THAT IS HAS NO JURISDICTION OVER THE OFFENSE CHARGED IN THE INFORMATION."19
In her discussion, she reiterates her four-fold argument below, namely: (a) the Sandiganbayan has no
jurisdiction over estafa; (b) petitioner is not a public officer with Salary Grade 27 and she paid her tuition
fees; (c) the offense charged was not committed in relation to her office; (d) the funds in question
personally came from President Estrada, not from the government.
Our Ruling
The petition cannot be granted.
Preliminarily, the denial of a motion to
quash is not correctible by certiorari.
We would ordinarily dismiss this petition for certiorari outright on procedural grounds. 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.
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.25She repeats the reference in the instant petition for certiorari26 and in her
memorandum of authorities.27
We cannot bring ourselves to write this off as a mere clerical or typographical error. It bears stressing that
petitioner repeated this claim twice despite corrections made by the Sandiganbayan. 28

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Her claim has no basis in law. It is P.D. No. 1606, as amended, rather than R.A. No. 3019, as amended, that
determines the jurisdiction of the Sandiganbayan. A brief legislative history of the statute creating the
Sandiganbayan is in order. The Sandiganbayan was created by P.D. No. 1486, promulgated by then
President Ferdinand E. Marcos on June 11, 1978. It was promulgated to attain the highest norms of official
conduct required of public officers and employees, based on the concept that public officers and employees
shall serve with the highest degree of responsibility, integrity, loyalty and efficiency and shall remain at all
times accountable to the people.29
P.D. No. 1486 was, in turn, amended by P.D. No. 1606 which was promulgated on December 10, 1978. P.D.
No. 1606 expanded the jurisdiction of the Sandiganbayan.30
P.D. No. 1606 was later amended by P.D. No. 1861 on March 23, 1983, further altering the Sandiganbayan
jurisdiction. R.A. No. 7975 approved on March 30, 1995 made succeeding amendments to P.D. No. 1606,
which was again amended on February 5, 1997 by R.A. No. 8249. Section 4 of R.A. No. 8249 further
modified the jurisdiction of the Sandiganbayan. As it now stands, the Sandiganbayan has jurisdiction over
the following:
Sec. 4. Jurisdiction. - The Sandiganbayan shall exercise exclusive original jurisdiction in all
cases involving:
A. Violations of Republic Act No. 3019, as amended, other known as the Anti-Graft and Corrupt
Practices Act, Republic Act No. 1379, and Chapter II, Section 2, Title VII, Book II of the
Revised Penal Code, where one or more of the accused are officials occupying the following
positions in the government, whether in a permanent, acting or interim capacity, at the time of
the commission of the offense:
(1) Officials of the executive branch occupying the positions of regional director and higher,
otherwise classified as Grade "27" and higher, of the Compensation and Position Classification
Act of 989 (Republic Act No. 6758), specifically including:
" (a) Provincial governors, vice-governors, members of the sangguniang panlalawigan, and
provincial treasurers, assessors, engineers, and other city department heads;
" (b) City mayor, vice-mayors, members of the sangguniang panlungsod, city treasurers,
assessors, engineers, and other city department heads;
"(c ) Officials of the diplomatic service occupying the position of consul and higher;
" (d) Philippine army and air force colonels, naval captains, and all officers of higher rank;
" (e) Officers of the Philippine National Police while occupying the position of provincial
director and those holding the rank of senior superintended or higher;

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

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[REMEDIAL LAW I : CEAC : ATTY. DELA PENA]

" 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 14A, 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

(b) It shall be unlawful for any person knowingly to induce or cause any public official to
commit any of the offenses defined in Section 3 hereof.
In fine, the two statutes differ in that P.D. No. 1606, as amended, defines the jurisdiction of the
Sandiganbayan while R.A. No. 3019, as amended, defines graft and corrupt practices and provides for their
penalties.
Sandiganbayan has jurisdiction over
the offense of estafa.
Relying on Section 4 of P.D. No. 1606, petitioner contends that estafa is not among those crimes cognizable
by the Sandiganbayan. We note that in hoisting this argument, petitioner isolated the first paragraph of
Section 4 of P.D. No. 1606, without regard to the succeeding paragraphs of the said provision.
The rule is well-established in this jurisdiction that statutes should receive a sensible construction so as to
avoid an unjust or an absurd conclusion.33 Interpretatio talis in ambiguis semper fienda est, ut evitetur
inconveniens et absurdum. Where there is ambiguity, such interpretation as will avoid inconvenience and
absurdity is to be adopted.Kung saan mayroong kalabuan, ang pagpapaliwanag ay hindi dapat maging
mahirap at katawa-tawa.
Every section, provision or clause of the statute must be expounded by reference to each other in order to
arrive at the effect contemplated by the legislature.34 The intention of the legislator must be ascertained
from the whole text of the law and every part of the act is to be taken into view.35 In other words,
petitioners interpretation lies in direct opposition to the rule that a statute must be interpreted as a whole
under the principle that the best interpreter of a statute is the statute itself. 36 Optima statuti interpretatrix est
ipsum statutum. Ang isang batas ay marapat na bigyan ng kahulugan sa kanyang kabuuan sa ilalim
ng prinsipyo na ang pinakamainam na interpretasyon ay ang mismong batas.
Section 4(B) of P.D. No. 1606 reads:

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. 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:

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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.38Pertinent parts of the Courts ruling in Bondoc read:
Furthermore, it is not legally possible to transfer Bondocs cases to the Regional Trial Court, for
the simple reason that the latter would not have jurisdiction over the offenses. As already above
intimated, the inability of the Sandiganbayan to hold a joint trial of Bondocs cases and those of
the government employees separately charged for the same crimes, has not altered the nature of
the offenses charged, as estafa thru falsification punishable by penalties higher than prision
correccional or imprisonment of six years, or a fine of P6,000.00, committed by government
employees in conspiracy with private persons, including Bondoc. These crimes are within the
exclusive, original jurisdiction of the Sandiganbayan. They simply cannot be taken cognizance
of by the regular courts, apart from the fact that even if the cases could be so transferred, a joint
trial would nonetheless not be possible.
Petitioner UP student regent
is a public officer.
Petitioner also contends that she is not a public officer. She does not receive any salary or remuneration as a
UP student regent. This is not the first or likely the last time that We will be called upon to define a public
officer. InKhan, 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 feepaying 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. InGeduspan v. People,43 We held that while the first part of Section 4(A) covers only
officials with Salary Grade 27 and higher, its second part specifically includes other executive officials
whose positions may not be of Salary Grade 27 and higher but who are by express provision of law placed
under the jurisdiction of the said court. Petitioner falls under the jurisdiction of the Sandiganbayan as she is
placed there by express provision of law.44
Section 4(A)(1)(g) of P.D. No. 1606 explictly vested the Sandiganbayan with jurisdiction over Presidents,
directors or trustees, or managers of government-owned or controlled corporations, state universities or
educational institutions or foundations. Petitioner falls under this category. As the Sandiganbayan pointed
out, the BOR performs functions similar to those of a board of trustees of a non-stock corporation. 45 By
express mandate of law, petitioner is, indeed, a public officer as contemplated by P.D. No. 1606.
Moreover, it is well established that compensation is not an essential element of public office. 46 At most, it
is merely incidental to the public office. 47
Delegation of sovereign functions is essential in the public office. An investment in an individual of some
portion of the sovereign functions of the government, to be exercised by him for the benefit of the public
makes one a public officer.48
The administration of the UP is a sovereign function in line with Article XIV of the Constitution. UP
performs a legitimate governmental function by providing advanced instruction in literature, philosophy,
the sciences, and arts, and giving professional and technical training. 49 Moreover, UP is maintained by the
Government and it declares no dividends and is not a corporation created for profit. 50
The offense charged was committed
in relation to public office, according
to the Information.

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[REMEDIAL LAW I : CEAC : ATTY. DELA PENA]

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)

petition forcertiorari 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.

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

Republic of the Philippines

SUPREME COURT
Manila

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

THIRD DIVISION

** G.R. No. 198755

June 5, 2013

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ALBERTO PAT-OG, SR., Petitioner,
vs.
CIVIL SERVICE COMMISSION, Respondent.
DECISION
MENDOZA, J.:
Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, which seeks to
set aside the April 6, 2011 Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 101700, affirming
the April 11, 2007 Decision2 of the Civil Service Commission (CSC), which ordered the dismissal of
petitioner Alberto Pat-og, Sr. (Pat-og) from the service for grave misconduct.
The Facts
On September 13, 2003, Robert Bang-on (Bang-on), then a 14-year old second year high school student of
the Antadao National High School in Sagada, Mountain Province, tiled an affidavit-complaint against Patog, a third year high school teacher of the same school, before the Civil Service Commission-Cordillera
Administrative Region (CSC-CAR).
Bang-on alleged that on the morning of August 26, 2003, he attended his class at the basketball court of the
school, where Pat-og and his third year students were also holding a separate class; that he and some of his
classmates joined Pat-ogs third year students who were practicing basketball shots; that Pat-og later
instructed them to form two lines; that thinking that three lines were to be formed, he stayed in between the
two lines; that Pat-og then held his right arm and punched his stomach without warning for failing to follow
instructions; and that as a result, he suffered stomach pain for several days and was confined in a hospital
from September 10-12, 2003, as evidenced by a medico-legal certificate, which stated that he sustained a
contusion hematoma in the hypogastric area.
Regarding the same incident, Bang-on filed a criminal case against Pat-og for the crime of Less Serious
Physical Injury with the Regional Trial Court (RTC) of Bontoc, Mountain Province.
Taking cognizance of the administrative case, the CSC-CAR directed Pat-og to file his counter-affidavit.
He denied the charges hurled against him and claimed that when he was conducting his Music, Arts,
Physical Education and Health (MAPEH) class, composed of third year students, he instructed the girls to
play volleyball and the boys to play basketball; that he later directed the boys to form two lines; that after
the boys failed to follow his repeated instructions, he scolded them in a loud voice and wrested the ball
from them; that while approaching them, he noticed that there were male students who were not members
of his class who had joined the shooting practice; that one of those male students was Bang-on, who was
supposed to be having his own MAPEH class under another teacher; that he then glared at them, continued
scolding them and dismissed the class for their failure to follow instructions; and that he offered the sworn
statement of other students to prove that he did not box Bang-on.

On June 1, 2004, the CSC-CAR found the existence of a prima faciecase for misconduct and formally
charged Pat-og.
While the proceedings of the administrative case were ongoing, the RTC rendered its judgment in the
criminal case and found Pat-og guilty of the offense of slight physical injury. He was meted the penalty of
imprisonment from eleven (11) to twenty (20) days. Following his application for probation, the decision
became final and executory and judgment was entered.
Meanwhile, in the administrative case, a pre-hearing conference was conducted after repeated
postponement by Pat-og. With the approval of the CSC-CAR, the prosecution submitted its position paper
in lieu of a formal presentation of evidence and formally offered its evidence, which included the decision
in the criminal case. It offered the affidavits of Raymund Atuban, a classmate of Bang-on; and James
Domanog, a third year high school student, who both witnessed Pat-og hit Bang-on in the stomach.
For his defense, Pat-og offered the testimonies of his witnesses - Emiliano Dontongan (Dontongan), a
teacher in another school, who alleged that he was a member of the Municipal Council for the Protection of
Children, and that, in such capacity, he investigated the incident and came to the conclusion that it did not
happen at all; and Ernest Kimmot, who testified that he was in the basketball court at the time but did not
see such incident. Pat-og also presented the affidavits of thirteen other witnesses to prove that he did not
punch Bang-on.
Ruling of the CSC-CAR
In its Decision,3 dated September 19, 2006, the CSC-CAR found Pat-og guilty and disposed as follows:
WHEREFORE, all premises told, respondent Alberto Pat-og, Sr., Teacher Antadao National High School, is
hereby found guilty of Simple Misconduct.
Under the Uniform Rules on Administrative Cases in the Civil Service, the imposable penalty on the first
offense of Simple Misconduct is suspension of one (1) month and one (1) day to six (6) months.
Due to seriousness of the resulting injury to the fragile body of the minor victim, the CSC-CAR hereby
imposed upon respondent the maximum penalty attached to the offense which is six months suspension
without pay.
The CSC-CAR gave greater weight to the version posited by the prosecution, finding that a blow was
indeed inflicted by Pat-og on Bang-on. It found that Pat-og had a motive for doing so - his students failure
to follow his repeated instructions which angered him. Nevertheless, the CSCCAR ruled that a motive was
not necessary to establish guilt if the perpetrator of the offense was positively identified. The positive
identification of Pat-og was duly proven by the corroborative testimonies of the prosecution witnesses, who
were found to be credible and disinterested. The testimony of defense witness, Dontongan, was not given
credence considering that the students he interviewed for his investigation claimed that Pat-og was not even
angry at the time of the incident, contrary to the latters own admission.

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The CSC-CAR held that the actions of Pat-og clearly transgressed the proper norms of conduct required of
a public official, and the gravity of the offense was further magnified by the seriousness of the injury of
Bang-on which required a healing period of more than ten (10) days. It pointed out that, being his teacher,
Pat-ogs substitute parental authority did not give him license to physically chastise a misbehaving student.
The CSC-CAR added that the fact that Pat-og applied for probation in the criminal case, instead of filing an
appeal, further convinced it of his guilt.

the CSC upgraded Pat-ogs offense from Simple Misconduct to Grave Misconduct and ordered his
dismissal from the service.

The CSC-CAR believed that the act committed by Pat-og was sufficient to find him guilty of Grave
Misconduct. It, however, found the corresponding penalty of dismissal from the service too harsh under the
circumstances. Thus, it adjudged petitioner guilty of Simple Misconduct and imposed the maximum
penalty of suspension for six (6) months.

On November 5, 2007, the CSC denied his motion for reconsideration.7 It ruled that Pat-og was estopped
from challenging its jurisdiction considering that he actively participated in the administrative proceedings
against him, raising the issue of jurisdiction only after his appeal was dismissed by the CSC.

On December 11, 2006, the motion for reconsideration filed by Pat-og was denied for lack of merit. 4
The Ruling of the CSC
In its Resolution,5 dated April 11, 2007, the CSC dismissed Pat-ogs appeal and affirmed with modification
the decision of the CSC-CAR as follows:
WHEREFORE, foregoing premises considered, the instant appeal is hereby DISMISSED. The decision of
the CSC-CAR is affirmed with the modification that Alberto Pat-og, Sr., is adjudged guilty of grave
misconduct, for which he is meted out the penalty of dismissal from the service with all its accessory
penalties of cancellation of eligibilities, perpetual disqualification from reemployment in the government
service, and forfeiture of retirement benefits.6
After evaluating the records, the CSC sustained the CSC-CARs conclusion that there existed substantial
evidence to sustain the finding that Pat-og did punch Bang-on in the stomach. It gave greater weight to the
positive statements of Bang-on and his witnesses over the bare denial of Patog. It also highlighted the fact
that Pat-og failed to adduce evidence of any ill motive on the part of Bang-on in filing the administrative
case against him. It likewise gave credence to the medico-legal certificate showing that Bang-on suffered a
hematoma contusion in his hypogastric area.

Pat-og filed a motion for reconsideration, questioning for the first time the jurisdiction of CSC over the
case. He contended that administrative charges against a public school teacher should have been initially
heard by a committee to be constituted pursuant to the Magna Carta for Public School Teachers.

Ruling of the Court of Appeals

In its assailed April 6, 2011 Decision,8 the CA affirmed the resolutions of the CSC. It agreed that Pat-og
was estopped from questioning the jurisdiction of the CSC as the records clearly showed that he actively
participated in the proceedings. It was of the view that Pat-og was not denied due process when he failed to
cross-examine Bang-on and his witnesses because he was given the opportunity to be heard and present his
evidence before the CSC-CAR and the CSC.
The CA also held that the CSC committed no error in taking into account the conviction of Pat-og in the
criminal case. It stated that his conviction was not the sole basis of the CSC for his dismissal from the
service because there was substantial evidence proving that Pat-og had indeed hit Bang-on.
In its assailed Resolution,9 dated September 13, 2011, the CA denied the motion for reconsideration filed by
Pat-og.
Hence, the present petition with the following
Assignment of Errors

The CSC ruled that the affidavits of Bang-ons witnesses were not bereft of evidentiary value even if Pat-og
was not afforded a chance to cross-examine the witnesses of Bang-on. It is of no moment because the
cross- examination of witnesses is not an indispensable requirement of administrative due process.

WHETHER OR NOT RESPONDENT COURT OF APPEALS COMMITTED GRAVE ABUSE OF

DISCRETION WHEN IT AFFIRMED THE SUPREME PENALTY OF DISMISSAL FROM SERVICE
WITH FORFEITURE OF RETIREMENT BENEFITS AGAINST THE PETITIONER WITHOUT
CONSIDERING PETITIONERS LONG YEARS OF GOVERNMENT SERVICE?

The CSC noted that Pat-og did not question but, instead, fully acquiesced in his conviction in the criminal
case for slight physical injury, which was based on the same set of facts and circumstances, and involved
the same parties and issues. It, thus, considered his prior criminal conviction as evidence against him in the
administrative case.

WHETHER OR NOT RESPONDENT COURT OF APPEALS COMMITTED GRAVE ABUSE OF

DISCRETION WHEN IT RULED THAT PETITIONER IS ESTOPPED FROM QUESTIONING THE
JURISDICTION OF THE CIVIL SERVICE COMMISSION TO HEAR AND DECIDE THE
ADMINISTRATIVE CASE AGAINST HIM?

Finding that his act of punching his student displayed a flagrant and wanton disregard of the dignity of a
person, reminiscent of corporal punishment that had since been outlawed for being harsh, unjust, and cruel,

WHETHER OR NOT RESPONDENT COURT OF APPEALS SERIOUSLY ERRED AND COMMITTED

GRAVE ABUSE OF DISCRETION IN DISMISSING THE APPEAL DESPITE LACK OF
SUBSTANTIAL EVIDENCE?

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On Jurisdiction
Pat-og contends that Section 9 of Republic Act (R.A.) No. 4670, otherwise known as the Magna Carta for
Public School Teachers, provides that administrative charges against a public school teacher shall be heard
initially by a committee constituted under said section. As no committee was ever formed, the petitioner
posits that he was denied due process and that the CSC did not have the jurisdiction to hear and decide his
administrative case. He further argues that notwithstanding the fact that the issue of jurisdiction was raised
for the first time on appeal, the rule remains that estoppel does not confer jurisdiction on a tribunal that has
no jurisdiction over the cause of action or subject matter of the case.
The Court cannot sustain his position.
The petitioners argument that the administrative case against him can only proceed under R.A. No. 4670 is
misplaced.
In Puse v. Santos-Puse,10 it was held that the CSC, the Department of Education (DepEd) and the Board of
Professional Teachers-Professional Regulatory Commission (PRC) have concurrent jurisdiction over
administrative cases against public school teachers.
Under Article IX-B of the 1987 Constitution, the CSC is the body charged with the establishment and
administration of a career civil service which embraces all branches and agencies of the
government.11 Executive Order (E.O.) No. 292 (the Administrative Code of 1987) 12 and Presidential Decree
(P.D.) No. 807 (the Civil Service Decree of the Philippines) 13 expressly provide that the CSC has the power
to hear and decide administrative disciplinary cases instituted with it or brought to it on appeal. Thus, the
CSC, as the central personnel agency of the government, has the inherent power to supervise and discipline
all members of the civil service, including public school teachers.
Indeed, under Section 9 of R.A. No. 4670, the jurisdiction over administrative cases of public school
teachers is lodged with the investigating committee constituted therein. 14 Also, under Section 23 of R.A.
No. 7836 (the Philippine Teachers Professionalization Act of 1994), the Board of Professional Teachers is
given the power, after due notice and hearing, to suspend or revoke the certificate of registration of a
professional teacher for causes enumerated therein.15

In CSC v. Alfonso,18 it was held that special laws, such as R.A. No. 4670, do not divest the CSC of its
inherent power to supervise and discipline all members of the civil service, including public school
teachers. Pat-og, as a public school teacher, is first and foremost, a civil servant accountable to the people
and answerable to the CSC for complaints lodged against him as a public servant. To hold that R.A. No.
4670 divests the CSC of its power to discipline public school teachers would negate the very purpose for
which the CSC was established and would impliedly amend the Constitution itself.
To further drive home the point, it was ruled in CSC v. Macud 19 that R.A. No. 4670, in imposing a separate
set of procedural requirements in connection with administrative proceedings against public school
teachers, should be construed to refer only to the specific procedure to be followed in administrative
investigations conducted by the DepEd. By no means, then, did R.A. No. 4670 confer an exclusive
disciplinary authority over public school teachers on the DepEd.
At any rate, granting that the CSC was without jurisdiction, the petitioner is indeed estopped from raising
the issue. Although the rule states that a jurisdictional question may be raised at any time, such rule admits
of the exception where, as in this case, estoppel has supervened. 20 Here, instead of opposing the CSCs
exercise of jurisdiction, the petitioner invoked the same by actively participating in the proceedings before
the CSC-CAR and by even filing his appeal before the CSC itself; only raising the issue of jurisdiction later
in his motion for reconsideration after the CSC denied his appeal. This Court has time and again frowned
upon the undesirable practice of a party submitting his case for decision and then accepting the judgment
only if favorable, but attacking it for lack of jurisdiction when adverse. 21
On Administrative Due Process
On due process, Pat-og asserts that the affidavits of the complainant and his witnesses are of questionable
veracity having been subscribed in Bontoc, which is nearly 30 kilometers from the residences of the parties.
Furthermore, he claimed that considering that the said affiants never testified, he was never afforded the
opportunity to cross-examine them. Therefore, their affidavits were mere hearsay and insufficient to prove
his guilt.
The petitioner does not persuade.

Concurrent jurisdiction is that which is possessed over the same parties or subject matter at the same time
by two or more separate tribunals. When the law bestows upon a government body the jurisdiction to hear
and decide cases involving specific matters, it is to be presumed that such jurisdiction is exclusive unless it
be proved that another body is likewise vested with the same jurisdiction, in which case, both bodies have
concurrent jurisdiction over the matter.16

The essence of due process is simply to be heard, or as applied to administrative proceedings, a fair and
reasonable opportunity to explain ones side, or an opportunity to seek a reconsideration of the action or
ruling complained of.22 Administrative due process cannot be fully equated with due process in its strict
judicial sense. In administrative proceedings, a formal or trial-type hearing is not always necessary 23 and
technical rules of procedure are not strictly applied. Hence, the right to cross-examine is not an
indispensable aspect of administrative due process.24 The petitioner cannot, therefore, argue that the
affidavit of Bang-on and his witnesses are hearsay and insufficient to prove his guilt.

Where concurrent jurisdiction exists in several tribunals, the body that first takes cognizance of the
complaint shall exercise jurisdiction to the exclusion of the others. In this case, it was CSC which first
acquired jurisdiction over the case because the complaint was filed before it. Thus, it had the authority to
proceed and decide the case to the exclusion of the DepEd and the Board of Professional Teachers. 17

At any rate, having actively participated in the proceedings before the CSC-CAR, the CSC, and the CA, the
petitioner was apparently afforded every opportunity to explain his side and seek reconsideration of the
ruling against him.1wphi1

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As to the issue of the veracity of the affidavits, such is a question of fact which cannot now be raised before
the Court under Rule 45 of the Rules of Court. The CSC-CAR, the CSC and the CA did not, therefore, err
in giving credence to the affidavits of the complainants and his witnesses, and in consequently ruling that
there was substantial evidence to support the finding of misconduct on the part of the petitioner.

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

On the Penalty

SO ORDERED.

Assuming that he did box Bang-on, Pat-og argues that there is no substantial evidence to prove that he did
so with a clear intent to violate the law or in flagrant disregard of the established rule, as required for a
finding of grave misconduct. He insists that he was not motivated by bad faith or ill will because he acted
in the belief that, as a teacher, he was exercising authority over Bang-on in loco parentis, and was,
accordingly, within his rights to discipline his student. Citing his 33 years in the government service
without any adverse record against him and the fact that he is at the edge of retirement, being already 62
years old, the petitioner prays that, in the name of substantial and compassionate justice, the CSC-CARs
finding of simple misconduct and the concomitant penalty of suspension should be upheld, instead of
dismissal.
The Court agrees in part.
Misconduct means intentional wrongdoing or deliberate violation of a rule of law or standard of behavior.
To constitute an administrative offense, misconduct should relate to or be connected with the performance
of the official functions and duties of a public officer. In grave misconduct, as distinguished from simple
misconduct, the elements of corruption, clear intent to violate the law or t1agrant disregard of an
established rule must be manifest.25
Teachers are duly licensed professionals who must not only be competent in the practice of their noble
profession, but must also possess dignity and a reputation with high moral values. They must strictly adhere
to, observe, and practice the set of ethical and moral principles, standards, and values laid down in the Code
of Ethics of Professional Teachers, which apply to all teachers in schools in the Philippines, whether public
or private, as provided in the preamble of the said Code.26 Section 8 of Article VIII of the same Code
expressly provides that "a teacher shall not inflict corporal punishment on offending learners."
Clearly then, petitioner cannot argue that in punching Bang-on, he was exercising his right as a teacher in
loco parentis to discipline his student. It is beyond cavil that the petitioner, as a public school teacher,
deliberately violated his Code of Ethics. Such violation is a flagrant disregard for the established rule
contained in the said Code tantamount to grave misconduct.
Under Section 52(A)(2) of Rule IV of the Uniform Rules on Administrative Cases in the Civil Service, the
penalty for grave misconduct is dismissal from the service, which carries with it the cancellation of
eligibility, forfeiture of retirement benefits and perpetual disqualification from reemployment in the
government service.27 This penalty must, however, be tempered with compassion as there was sut1icient
provocation on the part of Bang-on. Considering further the mitigating circumstances that the petitioner has
been in the government service for 33 years, that this is his first offense and that he is at the cusp of
retirement, the Court finds the penalty of suspension for six months as appropriate under the circumstances.

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION

** G.R. No. 173946

June 19, 2013

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BOSTON EQUITY RESOURCES, INC., Petitioner,
vs.
COURT OF APPEALS AND LOLITA G. TOLEDO, Respondents.
DECISION
PEREZ, J.:
Before the Court is a Petition for Review on Certiorari seeking to reverse and set aside: (1) the
Decision,1 dated 28 February 2006 and (2) the Resolution,2 dated 1 August 2006 of the Court of Appeals in
CA-G.R. SP No. 88586. The challenged decision granted herein respondent's petition for certiorari upon a
finding that the trial court committed grave abuse of discretion in denying respondent's motion to dismiss
the complaint against her.3 Based on this finding, the Court of Appeals reversed and set aside the Orders,
dated 8 November 20044 and 22 December 2004,5respectively, of the Regional Trial Court (RTC) of
Manila, Branch 24.
The Facts
On 24 December 1997, petitioner filed a complaint for sum of money with a prayer for the issuance of a
writ of preliminary attachment against the spouses Manuel and Lolita Toledo. 6 Herein respondent filed an
Answer dated 19 March 1998 but on 7 May 1998, she filed a Motion for Leave to Admit Amended
Answer7 in which she alleged, among others, that her husband and co-defendant, Manuel Toledo (Manuel),
is already dead.8 The death certificate9 of Manuel states "13 July 1995" as the date of death. As a result,
petitioner filed a motion, dated 5 August 1999, to require respondent to disclose the heirs of Manuel. 10 In
compliance with the verbal order of the court during the 11 October 1999 hearing of the case, respondent
submitted the required names and addresses of the heirs. 11 Petitioner then filed a Motion for
Substitution,12 dated 18 January 2000, praying that Manuel be substituted by his children as partydefendants. It appears that this motion was granted by the trial court in an Order dated 9 October 2000. 13
Pre-trial thereafter ensued and on 18 July 2001, the trial court issued its pre-trial order containing, among
others, the dates of hearing of the case.14
The trial of the case then proceeded. Herein petitioner, as plaintiff, presented its evidence and its exhibits
were thereafter admitted.
On 26 May 2004, the reception of evidence for herein respondent was cancelled upon agreement of the
parties. On 24 September 2004, counsel for herein respondent was given a period of fifteen days within
which to file a demurrer to evidence. 15 However, on 7 October 2004, respondent instead filed a motion to
dismiss the complaint, citing the following as grounds: (1) that the complaint failed to implead an
indispensable party or a real party in interest; hence, the case must be dismissed for failure to state a cause
of action; (2) that the trial court did not acquire jurisdiction over the person of Manuel pursuant to Section
5, Rule 86 of the Revised Rules of Court; (3) that the trial court erred in ordering the substitution of the
deceased Manuel by his heirs; and (4) that the court must also dismiss the case against Lolita Toledo in
accordance with Section 6, Rule 86 of the Rules of Court.16

The trial court, in an Order dated 8 November 2004, denied the motion to dismiss for having been filed out
of time, citing Section 1, Rule 16 of the 1997 Rules of Court which states that: "Within the time for but
before filing the answer to the complaint or pleading asserting a claim, a motion to dismiss may be made x
x x."17 Respondents motion for reconsideration of the order of denial was likewise denied on the ground
that "defendants attack on the jurisdiction of this Court is now barred by estoppel by laches" since
respondent failed to raise the issue despite several chances to do so. 18
Aggrieved, respondent filed a petition for certiorari with the Court of Appeals alleging that the trial court
seriously erred and gravely abused its discretion in denying her motion to dismiss despite discovery, during
the trial of the case, of evidence that would constitute a ground for dismissal of the case. 19
The Court of Appeals granted the petition based on the following grounds:
It is elementary that courts acquire jurisdiction over the person of the defendant x x x only when the latter
voluntarily appeared or submitted to the court or by coercive process issued by the court to him, x x x. In
this case, it is undisputed that when petitioner Boston filed the complaint on December 24, 1997, defendant
Manuel S. Toledo was already dead, x x x. Such being the case, the court a quo could not have acquired
jurisdiction over the person of defendant Manuel S. Toledo.
x x x the court a quos denial of respondents motion to dismiss was based on its finding that respondents
attack on the jurisdiction of the court was already barred by laches as respondent failed to raise the said
ground in its [sic] amended answer and during the pre-trial, despite her active participation in the
proceedings.
However, x x x it is well-settled that issue on jurisdiction may be raised at any stage of the proceeding,
even for the first time on appeal. By timely raising the issue on jurisdiction in her motion to dismiss x x x
respondent is not estopped from raising the question on jurisdiction.
Moreover, when issue on jurisdiction was raised by respondent, the court a quo had not yet decided the
case, hence, there is no basis for the court a quo to invoke estoppel to justify its denial of the motion for
reconsideration;
It should be stressed that when the complaint was filed, defendant Manuel S. Toledo was already dead. The
complaint should have impleaded the estate of Manuel S. Toledo as defendant, not only the wife,
considering that the estate of Manuel S. Toledo is an indispensable party, which stands to be benefited or be
injured in the outcome of the case. x x x
xxxx
Respondents motion to dismiss the complaint should have been granted by public respondent judge as the
same was in order. Considering that the obligation of Manuel S. Toledo is solidary with another debtor, x x
x, the claim x x x should be filed against the estate of Manuel S. Toledo, in conformity with the provision
of Section 6, Rule 86 of the Rules of Court, x x x. 20

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The Court of Appeals denied petitioners motion for reconsideration. Hence, this petition.
The Issues
Petitioner claims that the Court of Appeals erred in not holding that:

Even assuming that certiorari is the proper remedy, the trial court did not commit grave abuse of discretion
in denying respondents motion to dismiss. It, in fact, acted correctly when it issued the questioned orders
as respondents motion to dismiss was filed SIX YEARS AND FIVE MONTHS AFTER SHE FILED HER
AMENDED ANSWER. This circumstance alone already warranted the outright dismissal of the motion for
having been filed in clear contravention of the express mandate of Section 1, Rule 16, of the Revised Rules
of Court. Under this provision, a motion to dismiss shall be filed within the time for but before the filing of
an answer to the complaint or pleading asserting a claim.24

1. Respondent is already estopped from questioning the trial courts jurisdiction;

2. Petitioner never failed to implead an indispensable party as the estate of Manuel is not an
indispensable party;
3. The inclusion of Manuel as party-defendant is a mere misjoinder of party not warranting the
dismissal of the case before the lower court; and
4. Since the estate of Manuel is not an indispensable party, it is not necessary that petitioner file
its claim against the estate of Manuel.
In essence, what is at issue here is the correctness of the trial courts orders denying respondents motion to
dismiss.

More importantly, respondents motion to dismiss was filed after petitioner has completed the presentation
of its evidence in the trial court, giving credence to petitioners and the trial courts conclusion that the
filing of the motion to dismiss was a mere ploy on the part of respondent to delay the prompt resolution of
the case against her.
Also worth mentioning is the fact that respondents motion to dismiss under consideration herein is not the
first motion to dismiss she filed in the trial court. It appears that she had filed an earlier motion to
dismiss26 on the sole ground of the unenforceability of petitioners claim under the Statute of Frauds, which
motion was denied by the trial court. More telling is the following narration of the trial court in its Order
denying respondents motion for reconsideration of the denial of her motion to dismiss:
As can be gleaned from the records, with the admission of plaintiffs exhibits, reception of defendants
evidence was set on March 31, and April 23, 2004 x x x . On motion of the defendants, the hearing on
March 31, 2004 was cancelled.

The Ruling of the Court

We find merit in the petition.
Motion to dismiss filed out of time
To begin with, the Court of Appeals erred in granting the writ of certiorari in favor of respondent. Well
settled is the rule that the special civil action for certiorari is not the proper remedy to assail the denial by
the trial court of a motion to dismiss. The order of the trial court denying a motion to dismiss is merely
interlocutory, as it neither terminates nor finally disposes of a case and still leaves something to be done by
the court before a case is finally decided on the merits. 21 Therefore, "the proper remedy in such a case is to
appeal after a decision has been rendered."22
As the Supreme Court held in Indiana Aerospace University v. Comm. on Higher Education: 23
A writ of certiorari is not intended to correct every controversial interlocutory ruling; it is resorted only to
correct a grave abuse of discretion or a whimsical exercise of judgment equivalent to lack of jurisdiction.
Its function is limited to keeping an inferior court within its jurisdiction and to relieve persons from
arbitrary acts acts which courts or judges have no power or authority in law to perform. It is not designed
to correct erroneous findings and conclusions made by the courts. (Emphasis supplied)

On April 14, 2004, defendants sought the issuance of subpoena ad testificandum and duces tecum to one
Gina M. Madulid, to appear and testify for the defendants on April 23, 2004. Reception of defendants
evidence was again deferred to May 26, June 2 and June 30, 2004, x x x.
On May 13, 2004, defendants sought again the issuance of a subpoena duces tecum and ad testificandum to
the said Gina Madulid. On May 26, 2004, reception of defendants [sic] evidence was cancelled upon the
agreement of the parties. On July 28, 2004, in the absence of defendants witness, hearing was reset to
September 24 and October 8, 2004 x x x.
On September 24, 2004, counsel for defendants was given a period of fifteen (15) days to file a demurrer to
evidence. On October 7, 2004, defendants filed instead a Motion to Dismiss x x x. 27
Respondents act of filing multiple motions, such as the first and earlier motion to dismiss and then the
motion to dismiss at issue here, as well as several motions for postponement, lends credibility to the
position taken by petitioner, which is shared by the trial court, that respondent is
deliberately impeding the early disposition of this case. The filing of the second motion to dismiss was,
therefore, "not only improper but also dilatory." 28 Thus, the trial court, "far from deviating or straying off
course from established jurisprudence on the matter, x x x had in fact faithfully observed the law and legal
precedents in this case."29 The Court of Appeals, therefore, erred not only in entertaining respondents

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petition for certiorari, it likewise erred in ruling that the trial court committed grave abuse of discretion
when it denied respondents motion to dismiss.

null and void for want of jurisdiction as her appeal should have been filed with the Court of Appeals or the
Supreme Court.

On whether or not respondent is estopped from

questioning the jurisdiction of the trial court

In all of these cases, the Supreme Court barred the attack on the jurisdiction of the respective courts
concerned over the subject matter of the case based on estoppel by laches, declaring that parties cannot be
allowed to belatedly adopt an inconsistent posture by attacking the jurisdiction of a court to which they
submitted their cause voluntarily.35

At the outset, it must be here stated that, as the succeeding discussions will demonstrate, jurisdiction over
the person of Manuel should not be an issue in this case. A protracted discourse on jurisdiction is,
nevertheless, demanded by the fact that jurisdiction has been raised as an issue from the lower court, to the
Court of Appeals and, finally, before this Court. For the sake of clarity, and in order to finally settle the
controversy and fully dispose of all the issues in this case, it was deemed imperative to resolve the issue of
jurisdiction.
1. Aspects of Jurisdiction
Petitioner calls attention to the fact that respondents motion to dismiss questioning the trial courts
jurisdiction was filed more than six years after her amended answer was filed. According to petitioner,
respondent had several opportunities, at various stages of the proceedings, to assail the trial courts
jurisdiction but never did so for six straight years. Citing the doctrine laid down in the case of Tijam, et al.
v. Sibonghanoy, et al.30 petitioner claimed that respondents failure to raise the question of jurisdiction at an
earlier stage bars her from later questioning it, especially since she actively participated in the proceedings
conducted by the trial court.
Petitioners argument is misplaced, in that, it failed to consider that the concept of jurisdiction has several
aspects, namely: (1) jurisdiction over the subject matter; (2) jurisdiction over the parties; (3) jurisdiction
over the issues of the case; and (4) in cases involving property, jurisdiction over the res or the thing which
is the subject of the litigation.31
The aspect of jurisdiction which may be barred from being assailed as a result of estoppel by laches is
jurisdiction over the subject matter. Thus, in Tijam, the case relied upon by petitioner, the issue involved
was the authority of the then Court of First Instance to hear a case for the collection of a sum of money in
the amount of P1,908.00 which amount was, at that time, within the exclusive original jurisdiction of the
municipal courts.
In subsequent cases citing the ruling of the Court in Tijam, what was likewise at issue was the jurisdiction
of the trial court over the subject matter of the case. Accordingly, in Spouses Gonzaga v. Court of
Appeals,32 the issue for consideration was the authority of the regional trial court to hear and decide an
action for reformation of contract and damages involving a subdivision lot, it being argued therein that
jurisdiction is vested in the Housing and Land Use Regulatory Board pursuant to PD 957 (The Subdivision
and Condominium Buyers Protective Decree). In Lee v. Presiding Judge, MTC, Legaspi City,33 petitioners
argued that the respondent municipal trial court had no jurisdiction over the complaint for ejectment
because the issue of ownership was raised in the pleadings. Finally, in People v. Casuga, 34 accusedappellant claimed that the crime of grave slander, of which she was charged, falls within the concurrent
jurisdiction of municipal courts or city courts and the then courts of first instance, and that the judgment of
the court of first instance, to which she had appealed the municipal court's conviction, should be deemed

Here, what respondent was questioning in her motion to dismiss before the trial court was that courts
jurisdiction over the person of defendant Manuel. Thus, the principle of estoppel by laches finds no
application in this case. Instead, the principles relating to jurisdiction over the person of the parties are
pertinent herein.
The Rules of Court provide:
RULE 9
EFFECT OF FAILURE TO PLEAD
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.
RULE 15
MOTIONS
Sec. 8. Omnibus motion. Subject to the provisions of Section 1 of Rule 9, a motion attacking a pleading,
order, judgment, or proceeding shall include all objections then available, and all objections not so included
shall be deemed waived.
Based on the foregoing provisions, the "objection on jurisdictional grounds which is not waived even if not
alleged in a motion to dismiss or the answer is lack of jurisdiction over the subject matter. x x x Lack of
jurisdiction over the subject matter can always be raised anytime, even for the first time on appeal, since
jurisdictional issues cannot be waived x x x subject, however, to the principle of estoppel by laches." 36
Since the defense of lack of jurisdiction over the person of a party to a case is not one of those defenses
which are not deemed waived under Section 1 of Rule 9, such defense must be invoked when an answer or
a motion to dismiss is filed in order to prevent a waiver of the defense. 37 If the objection is not raised either
in a motion to dismiss or in the answer, the objection to the jurisdiction over the person of the plaintiff or
the defendant is deemed waived by virtue of the first sentence of the above-quoted Section 1 of Rule 9 of
the Rules of Court.38

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The Court of Appeals, therefore, erred when it made a sweeping pronouncement in its questioned decision,
stating that "issue on jurisdiction may be raised at any stage of the proceeding, even for the first time on
appeal" and that, therefore, respondent timely raised the issue in her motion to dismiss and is, consequently,
not estopped from raising the question of jurisdiction. As the question of jurisdiction involved here is that
over the person of the defendant Manuel, the same is deemed waived if not raised in the answer or a motion
to dismiss. In any case, respondent cannot claim the defense since "lack of jurisdiction over the person,
being subject to waiver, is a personal defense which can only be asserted by the party who can thereby
waive it by silence."39
2. Jurisdiction over the person of a defendant is acquired through a valid service of summons; trial court did
not acquire jurisdiction over the person of Manuel Toledo
In the first place, jurisdiction over the person of Manuel was never acquired by the trial court. A defendant
is informed of a case against him when he receives summons. "Summons is a writ by which the defendant
is notified of the action brought against him. Service of such writ is the means by which the court acquires
jurisdiction over his person."40
In the case at bar, the trial court did not acquire jurisdiction over the person of Manuel since there was no
valid service of summons upon him, precisely because he was already dead even before the complaint
against him and his wife was filed in the trial court. The issues presented in this case are similar to those in
the case of Sarsaba v. Vda. de Te.41
In Sarsaba, the NLRC rendered a decision declaring that Patricio Sereno was illegally dismissed from
employment and ordering the payment of his monetary claims. To satisfy the claim, a truck in the
possession of Serenos employer was levied upon by a sheriff of the NLRC, accompanied by Sereno and
his lawyer, Rogelio Sarsaba, the petitioner in that case. A complaint for recovery of motor vehicle and
damages, with prayer for the delivery of the truck pendente lite was eventually filed against Sarsaba,
Sereno, the NLRC sheriff and the NLRC by the registered owner of the truck. After his motion to dismiss
was denied by the trial court, petitioner Sarsaba filed his answer. Later on, however, he filed an omnibus
motion to dismiss citing, as one of the grounds, lack of jurisdiction over one of the principal defendants, in
view of the fact that Sereno was already dead when the complaint for recovery of possession was filed.
Although the factual milieu of the present case is not exactly similar to that of Sarsaba, one of the issues
submitted for resolution in both cases is similar: whether or not a case, where one of the named defendants
was already dead at the time of its filing, should be dismissed so that the claim may be pursued instead in
the proceedings for the settlement of the estate of the deceased defendant. The petitioner in the Sarsaba
Case claimed, as did respondent herein, that since one of the defendants died before summons was served
on him, the trial court should have dismissed the complaint against all the defendants and the claim should
be filed against the estate of the deceased defendant. The petitioner in Sarsaba, therefore, prayed that the
complaint be dismissed, not only against Sereno, but as to all the defendants, considering that the RTC did
not acquire jurisdiction over the person of Sereno.42 This is exactly the same prayer made by respondent
herein in her motion to dismiss.

x x x We cannot countenance petitioners argument that the complaint against the other defendants should
have been dismissed, considering that the RTC never acquired jurisdiction over the person of Sereno. The
courts failure to acquire jurisdiction over ones person is a defense which is personal to the person
claiming it. Obviously, it is now impossible for Sereno to invoke the same in view of his death. Neither can
petitioner invoke such ground, on behalf of Sereno, so as to reap the benefit of having the case dismissed
against all of the defendants. Failure to serve summons on Serenos person will not be a cause for the
dismissal of the complaint against the other defendants, considering that they have been served with copies
of the summons and complaints and have long submitted their respective responsive pleadings. In fact, the
other defendants in the complaint were given the chance to raise all possible defenses and objections
personal to them in their respective motions to dismiss and their subsequent answers. 43 (Emphasis
supplied.)
Hence, the Supreme Court affirmed the dismissal by the trial court of the complaint against Sereno only.
Based on the foregoing pronouncements, there is no basis for dismissing the complaint against respondent
herein. Thus, as already emphasized above, the trial court correctly denied her motion to dismiss.
On whether or not the estate of Manuel
Toledo is an indispensable party
Rule 3, Section 7 of the 1997 Rules of Court states:
SEC. 7. Compulsory joinder of indispensable parties. Parties-in-interest without whom no final
determination can be had of an action shall be joined either as plaintiffs or defendants.
An indispensable party is one who has such an interest in the controversy or subject matter of a case that a
final adjudication cannot be made in his or her absence, without injuring or affecting that interest. He or she
is a party who has not only an interest in the subject matter of the controversy, but "an interest of such
nature that a final decree cannot be made without affecting that interest or leaving the controversy in such a
condition that its final determination may be wholly inconsistent with equity and good conscience. It has
also been considered that an indispensable party is a person in whose absence there cannot be a
determination between the parties already before the court which is effective, complete or equitable."
Further, an indispensable party is one who must be included in an action before it may properly proceed. 44
On the other hand, a "person is not an indispensable party if his interest in the controversy or subject matter
is separable from the interest of the other parties, so that it will not necessarily be directly or injuriously
affected by a decree which does complete justice between them. Also, a person is not an indispensable
party if his presence would merely permit complete relief between him or her and those already parties to
the action, or if he or she has no interest in the subject matter of the action." It is not a sufficient reason to
declare a person to be an indispensable party simply because his or her presence will avoid multiple
litigations.45

The Court, in the Sarsaba Case, resolved the issue in this wise:

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Applying the foregoing pronouncements to the case at bar, it is clear that the estate of Manuel is not an
indispensable party to the collection case, for the simple reason that the obligation of Manuel and his wife,
respondent herein, is solidary.
The contract between petitioner, on the one hand and respondent and respondents husband, on the other,
states:
FOR VALUE RECEIVED, I/We jointly and severally46 (in solemn) promise to pay BOSTON EQUITY
RESOURCES, INC. x x x the sum of PESOS: [ONE MILLION FOUR HUNDRED (P1,400,000.00)] x x
x.47
The provisions and stipulations of the contract were then followed by the respective signatures of
respondent as "MAKER" and her husband as "CO-MAKER."48 Thus, pursuant to Article 1216 of the Civil
Code, petitioner may collect the entire amount of the obligation from respondent only. The aforementioned
provision states: "The creditor may proceed against any one of the solidary debtors or some or all of them
simultaneously. The demand made against one of them shall not be an obstacle to those which may
subsequently be directed against the others, so long as the debt has not been fully collected."
In other words, the collection case can proceed and the demands of petitioner can be satisfied by
respondent only, even without impleading the estate of Manuel. Consequently, the estate of Manuel is not
an indispensable party to petitioners complaint for sum of money.
However, the Court of Appeals, agreeing with the contention of respondent, held that the claim of petitioner
should have been filed against the estate of Manuel in accordance with Sections 5 and 6 of Rule 86 of the
Rules of Court. The aforementioned provisions provide:
SEC. 5. Claims which must be filed under the notice. If not filed, barred; exceptions. All claims for money
against the decedent, arising from contract, express or implied, whether the same be due, not due, or
contingent, all claims for funeral expenses and judgment for money against the decedent, must be filed
within the time limited in the notice; otherwise, they are barred forever, except that they may be set forth as
counterclaims in any action that the executor or administrator may bring against the claimants. x x x.
SEC. 6. Solidary obligation of decedent. Where the obligation of the decedent is solidary with another
debtor, the claim shall be filed against the decedent as if he were the only debtor, without prejudice to the
right of the estate to recover contribution from the other debtor. x x x.
The Court of Appeals erred in its interpretation of the above-quoted provisions.
In construing Section 6, Rule 87 of the old Rules of Court, the precursor of Section 6, Rule 86 of the
Revised Rules of Court, which latter provision has been retained in the present Rules of Court without any
revisions, the Supreme Court, in the case of Manila Surety & Fidelity Co., Inc. v. Villarama, et. al., 49 held:50

Construing Section 698 of the Code of Civil Procedure from whence [Section 6, Rule 87] was taken, this
Court held that where two persons are bound in solidum for the same debt and one of them dies, the whole
indebtedness can be proved against the estate of the latter, the decedents liability being absolute and
primary; x x x. It is evident from the foregoing that Section 6 of Rule 87 provides the procedure should the
creditor desire to go against the deceased debtor, but there is certainly nothing in the said provision making
compliance with such procedure a condition precedent before an ordinary action against the surviving
solidary debtors, should the creditor choose to demand payment from the latter, could be entertained to the
extent that failure to observe the same would deprive the court jurisdiction to take cognizance of the action
against the surviving debtors. Upon the other hand, the Civil Code expressly allows the creditor to proceed
against any one of the solidary debtors or some or all of them simultaneously. There is, therefore, nothing
improper in the creditors filing of an action against the surviving solidary debtors alone, instead of
instituting a proceeding for the settlement of the estate of the deceased debtor wherein his claim could be
filed.
The foregoing ruling was reiterated and expounded in the later case of Philippine National Bank v.
Asuncion51where the Supreme Court pronounced:
A cursory perusal of Section 6, Rule 86 of the Revised Rules of Court reveals that nothing therein prevents
a creditor from proceeding against the surviving solidary debtors. Said provision merely sets up the
procedure in enforcing collection in case a creditor chooses to pursue his claim against the estate of the
deceased solidary debtor. The rule has been set forth that a creditor (in a solidary obligation) has the option
whether to file or not to file a claim against the estate of the solidary debtor. x x x
xxxx
It is crystal clear that Article 1216 of the New Civil Code is the applicable provision in this matter. Said
provision gives the creditor the right to "proceed against anyone of the solidary debtors or some or all of
them simultaneously." The choice is undoubtedly left to the solidary creditor to determine against whom he
will enforce collection. In case of the death of one of the solidary debtors, he (the creditor) may, if he so
chooses, proceed against the surviving solidary debtors without necessity of filing a claim in the estate of
the deceased debtors. It is not mandatory for him to have the case dismissed as against the surviving
debtors and file its claim against the estate of the deceased solidary debtor, x x x. For to require the creditor
to proceed against the estate, making it a condition precedent for any collection action against the surviving
debtors to prosper, would deprive him of his substantive rightsprovided by Article 1216 of the New Civil
Code. (Emphasis supplied.)
As correctly argued by petitioner, if Section 6, Rule 86 of the Revised Rules of Court were applied literally,
Article 1216 of the New Civil Code would, in effect, be repealed since under the Rules of Court, petitioner
has no choice but to proceed against the estate of [the deceased debtor] only. Obviously, this provision
diminishes the [creditors] right under the New Civil Code to proceed against any one, some or all of the
solidary debtors. Such a construction is not sanctioned by principle, which is too well settled to require
citation, that a substantive law cannot be amended by a procedural rule. Otherwise stated, Section 6, Rule
86 of the Revised Rules of Court cannot be made to prevail over Article 1216 of the New Civil Code, the
former being merely procedural, while the latter, substantive.

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Based on the foregoing, the estate of Manuel is not an indispensable party and the case can proceed as
against respondent only. That petitioner opted to collect from respondent and not from the estate of Manuel
is evidenced by its opposition to respondents motion to dismiss asserting that the case, as against her,
should be dismissed so that petitioner can proceed against the estate of Manuel.

Parties may be either plaintiffs or defendants. x x x. In order to maintain an action in a court of justice, the
plaintiff must have an actual legal existence, that is, he, she or it must be a person in law and possessed of a
legal entity as either a natural or an artificial person, and no suit can be lawfully prosecuted save in the
name of such a person.

On whether or not the inclusion of Manuel as

party defendant is a misjoinder of party

The rule is no different as regards party defendants. It is incumbent upon a plaintiff, when he institutes a
judicial proceeding, to name the proper party defendant to his cause of action. In a suit or proceeding in
personam of an adversary character, the court can acquire no jurisdiction for the purpose of trial or
judgment until a party defendant who actually or legally exists and is legally capable of being sued, is
brought before it. It has even been held that the question of the legal personality of a party defendant is a
question of substance going to the jurisdiction of the court and not one of procedure.

Section 11 of Rule 3 of the Rules of Court states that "neither misjoinder nor non-joinder of parties is
ground for dismissal of an action. Parties may be dropped or added by order of the court on motion of any
party or on its own initiative at any stage of the action and on such terms as are just. Any claim against a
misjoined party may be severed and proceeded with separately."
Based on the last sentence of the afore-quoted provision of law, a misjoined party must have the capacity to
sue or be sued in the event that the claim by or against the misjoined party is pursued in a separate case. In
this case, therefore, the inclusion of Manuel in the complaint cannot be considered a misjoinder, as in fact,
the action would have proceeded against him had he been alive at the time the collection case was filed by
petitioner. This being the case, the remedy provided by Section 11 of Rule 3 does not obtain here. The name
of Manuel as party-defendant cannot simply be dropped from the case. Instead, the procedure taken by the
Court in Sarsaba v. Vda. de Te,52whose facts, as mentioned earlier, resemble those of this case, should be
followed herein. There, the Supreme Court agreed with the trial court when it resolved the issue of
jurisdiction over the person of the deceased Sereno in this wise:
As correctly pointed by defendants, the Honorable Court has not acquired jurisdiction over the person of
Patricio Sereno since there was indeed no valid service of summons insofar as Patricio Sereno is concerned.
Patricio Sereno died before the summons, together with a copy of the complaint and its annexes, could be
served upon him.
However, the failure to effect service of summons unto Patricio Sereno, one of the defendants herein, does
not render the action DISMISSIBLE, considering that the three (3) other defendants, x x x, were validly
served with summons and the case with respect to the answering defendants may still proceed
independently. Be it recalled that the three (3) answering defendants have previously filed a Motion to
Dismiss the Complaint which was denied by the Court.

The original complaint of petitioner named the "estate of Carlos Ngo as represented by surviving spouse
Ms. Sulpicia Ventura" as the defendant.1wphi1 Petitioner moved to dismiss the same on the ground that
the defendant as named in the complaint had no legal personality. We agree.
x x x. Considering that capacity to be sued is a correlative of the capacity to sue, to the same extent, a
decedent does not have the capacity to be sued and may not be named a party defendant in a court action.
(Emphases supplied.)
Indeed, where the defendant is neither a natural nor a juridical person or an entity authorized by law, the
complaint may be dismissed on the ground that the pleading asserting the claim states no cause of action or
for failure to state a cause of action pursuant to Section 1(g) of Rule 16 of the Rules of Court, because a
complaint cannot possibly state a cause of action against one who cannot be a party to a civil action. 55
Since the proper course of action against the wrongful inclusion of Manuel as party-defendant is the
dismissal of the case as against him, thus did the trial court err when it ordered the substitution of Manuel
by his heirs. Substitution is proper only where the party to be substituted died during the pendency of the
case, as expressly provided for by Section 16, Rule 3 of the Rules of Court, which states:
Death of party;duty of counsel. Whenever a party to a pending action dies, and the claim is not thereby
extinguished, it shall be the duty of his counsel to inform the court within thirty (30) days after such death
of the fact thereof, and to give the name and address of his legal representative or representatives. x x x

Hence, only the case against Patricio Sereno will be DISMISSED and the same may be filed as a claim
against the estate of Patricio Sereno, but the case with respect to the three (3) other accused [sic] will
proceed. (Emphasis supplied.)53

The heirs of the deceased may be allowed to be substituted for the deceased, without requiring the
appointment of an executor or administrator x x x.

As a result, the case, as against Manuel, must be dismissed.

The court shall forthwith order said legal representative or representatives to appear and be substituted
within a period of thirty (30) days from notice. (Emphasis supplied.)

In addition, the dismissal of the case against Manuel is further warranted by Section 1 of Rule 3 of the
Rules of Court, which states that: only natural or juridical persons, or entities authorized by law may be
parties in a civil action." Applying this provision of law, the Court, in the case of Ventura v.
Militante,54 held:

Here, since Manuel was already dead at the time of the filing of the complaint, the court never acquired
jurisdiction over his person and, in effect, there was no party to be substituted.

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WHEREFORE, the petition is GRANTED. The Decision dated 28 February 2006 and the Resolution dated
1 August 2006 of the Court of Appeals in CA-G.R. SP No. 88586 are REVERSED and SET ASIDE. The
Orders of the Regional Trial Court dated 8 November 2004 and 22 December 2004, respectively, in Civil
Case No. 97-86672, are REINSTATED. The Regional Trial Court, Branch 24, Manila is hereby
DIRECTED to proceed with the trial of Civil Case No. 97-86672 against respondent Lolita G. Toledo only,
in accordance with the above pronouncements of the Court, and to decide the case with dispatch.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC

** G.R. No. 168539

March 25, 2014

PEOPLE OF THE PHILIPPINES, Petitioner,

vs.
HENRY T. GO, Respondent.

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DECISION
PERALTA, J.:
Before the Court is a petition for review on certiorari assailing the Resolution 1 of the Third Division2 of the
Sandiganbayan (SB) dated June 2, 2005 which quashed the Information filed against herein respondent for
alleged violation of Section 3 (g) of Republic Act No. 3019 (R.A. 3019), otherwise known as the Anti-Graft
and Corrupt Practices Act.
The Information filed against respondent is an offshoot of this Court's Decision 3 in Agan, Jr. v. Philippine
International Air Terminals Co., Inc. which nullified the various contracts awarded by the Government,
through the Department of Transportation and Communications (DOTC), to Philippine Air Terminals, Co.,
Inc. (PIATCO) for the construction, operation and maintenance of the Ninoy Aquino International Airport
International Passenger Terminal III (NAIA IPT III). Subsequent to the above Decision, a certain Ma.
Cecilia L. Pesayco filed a complaint with the Office of the Ombudsman against several individuals for
alleged violation of R.A. 3019. Among those charged was herein respondent, who was then the Chairman
and President of PIATCO, for having supposedly conspired with then DOTC Secretary Arturo Enrile
(Secretary Enrile) in entering into a contract which is grossly and manifestly disadvantageous to the
government.
On September 16, 2004, the Office of the Deputy Ombudsman for Luzon found probable cause to indict,
among others, herein respondent for violation of Section 3(g) of R.A. 3019. While there was likewise a
finding of probable cause against Secretary Enrile, he was no longer indicted because he died prior to the
issuance of the resolution finding probable cause.
Thus, in an Information dated January 13, 2005, respondent was charged before the SB as follows:
On or about July 12, 1997, or sometime prior or subsequent thereto, in Pasay City, Metro Manila,
Philippines and within the jurisdiction of this Honorable Court, the late ARTURO ENRILE, then Secretary
of the Department of Transportation and Communications (DOTC), committing the offense in relation to
his office and taking advantage of the same, in conspiracy with accused, HENRY T. GO, Chairman and
President of the Philippine International Air Terminals, Co., Inc. (PIATCO), did then and there, willfully,
unlawfully and criminally enter into a Concession Agreement, after the project for the construction of the
Ninoy Aquino International Airport International Passenger Terminal III (NAIA IPT III) was awarded to
Paircargo Consortium/PIATCO, which Concession Agreement substantially amended the draft Concession
Agreement covering the construction of the NAIA IPT III under Republic Act 6957, as amended by
Republic Act 7718 (BOT law), specifically the provision on Public Utility Revenues, as well as the
assumption by the government of the liabilities of PIATCO in the event of the latter's default under Article
IV, Section 4.04 (b) and (c) in relation to Article 1.06 of the Concession Agreement, which terms are more
beneficial to PIATCO while manifestly and grossly disadvantageous to the government of the Republic of
the Philippines.4
The case was docketed as Criminal Case No. 28090.

On March 10, 2005, the SB issued an Order, to wit:

The prosecution is given a period of ten (10) days from today within which to show cause why this case
should not be dismissed for lack of jurisdiction over the person of the accused considering that the accused
is a private person and the public official Arturo Enrile, his alleged co-conspirator, is already deceased, and
not an accused in this case.5
The prosecution complied with the above Order contending that the SB has already acquired jurisdiction
over the person of respondent by reason of his voluntary appearance, when he filed a motion for
consolidation and when he posted bail. The prosecution also argued that the SB has exclusive jurisdiction
over respondent's case, even if he is a private person, because he was alleged to have conspired with a
public officer.6
On April 28, 2005, respondent filed a Motion to Quash 7 the Information filed against him on the ground
that the operative facts adduced therein do not constitute an offense under Section 3(g) of R.A. 3019.
Respondent, citing the show cause order of the SB, also contended that, independently of the deceased
Secretary Enrile, the public officer with whom he was alleged to have conspired, respondent, who is not a
public officer nor was capacitated by any official authority as a government agent, may not be prosecuted
for violation of Section 3(g) of R.A. 3019.
The prosecution filed its Opposition.8
On June 2, 2005, the SB issued its assailed Resolution, pertinent portions of which read thus:
Acting on the Motion to Quash filed by accused Henry T. Go dated April 22, 2005, and it appearing that
Henry T. Go, the lone accused in this case is a private person and his alleged co-conspirator-public official
was already deceased long before this case was filed in court, for lack of jurisdiction over the person of the
accused, the Court grants the Motion to Quash and the Information filed in this case is hereby ordered
quashed and dismissed.9
Hence, the instant petition raising the following issues, to wit:
I
WHETHER OR NOT THE COURT A QUO GRAVELY ERRED AND DECIDED A QUESTION OF
SUBSTANCE IN A MANNER NOT IN ACCORD WITH LAW OR APPLICABLE JURISPRUDENCE IN
GRANTING THE DEMURRER TO EVIDENCE AND IN DISMISSING CRIMINAL CASE NO. 28090
ON THE GROUND THAT IT HAS NO JURISDICTION OVER THE PERSON OF RESPONDENT GO.
II
WHETHER OR NOT THE COURT A QUO GRAVELY ERRED AND DECIDED A QUESTION OF
SUBSTANCE IN A MANNER NOT IN ACCORD WITH LAW OR APPLICABLE JURISPRUDENCE,

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IN RULING THAT IT HAS NO JURISDICTION OVER THE PERSON OF RESPONDENT GO
DESPITE THE IRREFUTABLE FACT THAT HE HAS ALREADY POSTED BAIL FOR HIS
PROVISIONAL LIBERTY

Respondent contends that by reason of the death of Secretary Enrile, there is no public officer who was
charged in the Information and, as such, prosecution against respondent may not prosper.
The Court is not persuaded.

III
WHETHER OR NOT THE COURT A QUO GRAVELY ERRED WHEN, IN COMPLETE DISREGARD
OF THE EQUAL PROTECTION CLAUSE OF THE CONSTITUTION, IT QUASHED THE
INFORMATION AND DISMISSED CRIMINAL CASE NO. 2809010
The Court finds the petition meritorious.
Section 3 (g) of R.A. 3019 provides:
Sec. 3. Corrupt practices of public officers. In addition to acts or omissions of public officers already
penalized by existing law, the following shall constitute corrupt practices of any public officer and are
hereby declared to be unlawful:
xxxx
(g) Entering, on behalf of the Government, into any contract or transaction manifestly and grossly
disadvantageous to the same, whether or not the public officer profited or will profit thereby.
The elements of the above provision are:
(1) that the accused is a public officer;
(2) that he entered into a contract or transaction on behalf of the government; and
(3) that such contract or transaction is grossly and manifestly disadvantageous to the
government.11
At the outset, it bears to reiterate the settled rule that private persons, when acting in conspiracy with public
officers, may be indicted and, if found guilty, held liable for the pertinent offenses under Section 3 of R.A.
3019, in consonance with the avowed policy of the anti-graft law to repress certain acts of public officers
and private persons alike constituting graft or corrupt practices act or which may lead thereto. 12 This is the
controlling doctrine as enunciated by this Court in previous cases, among which is a case involving herein
private respondent.13
The only question that needs to be settled in the present petition is whether herein respondent, a private
person, may be indicted for conspiracy in violating Section 3(g) of R.A. 3019 even if the public officer,
with whom he was alleged to have conspired, has died prior to the filing of the Information.

It is true that by reason of Secretary Enrile's death, there is no longer any public officer with whom
respondent can be charged for violation of R.A. 3019. It does not mean, however, that the allegation of
conspiracy between them can no longer be proved or that their alleged conspiracy is already expunged. The
only thing extinguished by the death of Secretary Enrile is his criminal liability. His death did not
extinguish the crime nor did it remove the basis of the charge of conspiracy between him and private
respondent. Stated differently, the death of Secretary Enrile does not mean that there was no public officer
who allegedly violated Section 3 (g) of R.A. 3019. In fact, the Office of the Deputy Ombudsman for Luzon
found probable cause to indict Secretary Enrile for infringement of Sections 3 (e) and (g) of R.A.
3019.14 Were it not for his death, he should have been charged.
The requirement before a private person may be indicted for violation of Section 3(g) of R.A. 3019, among
others, is that such private person must be alleged to have acted in conspiracy with a public officer. The
law, however, does not require that such person must, in all instances, be indicted together with the public
officer. If circumstances exist where the public officer may no longer be charged in court, as in the present
case where the public officer has already died, the private person may be indicted alone.
Indeed, it is not necessary to join all alleged co-conspirators in an indictment for conspiracy.15 If two or
more persons enter into a conspiracy, any act done by any of them pursuant to the agreement is, in
contemplation of law, the act of each of them and they are jointly responsible therefor.16 This means that
everything said, written or done by any of the conspirators in execution or furtherance of the common
purpose is deemed to have been said, done, or written by each of them and it makes no difference whether
the actual actor is alive or dead, sane or insane at the time of trial. 17 The death of one of two or more
conspirators does not prevent the conviction of the survivor or survivors. 18 Thus, this Court held that:
x x x [a] conspiracy is in its nature a joint offense. One person cannot conspire alone. The crime depends
upon the joint act or intent of two or more persons. Yet, it does not follow that one person cannot be
convicted of conspiracy. So long as the acquittal or death of a co-conspirator does not remove the bases of a
charge for conspiracy, one defendant may be found guilty of the offense. 19
The Court agrees with petitioner's contention that, as alleged in the Information filed against respondent,
which is deemed hypothetically admitted in the latter's Motion to Quash, he (respondent) conspired with
Secretary Enrile in violating Section 3 (g) of R.A. 3019 and that in conspiracy, the act of one is the act of
all. Hence, the criminal liability incurred by a co-conspirator is also incurred by the other co-conspirators.
Moreover, the Court agrees with petitioner that the avowed policy of the State and the legislative intent to
repress "acts of public officers and private persons alike, which constitute graft or corrupt
practices,"20 would be frustrated if the death of a public officer would bar the prosecution of a private
person who conspired with such public officer in violating the Anti-Graft Law.

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In this regard, this Court's disquisition in the early case of People v. Peralta 21 as to the nature of and the
principles governing conspiracy, as construed under Philippine jurisdiction, is instructive, to wit:
x x x A conspiracy exists when two or more persons come to an agreement concerning the commission of a
felony and decide to commit it. Generally, conspiracy is not a crime except when the law specifically
provides a penalty therefor as in treason, rebellion and sedition. The crime of conspiracy known to the
common law is not an indictable offense in the Philippines. An agreement to commit a crime is a
reprehensible act from the view-point of morality, but as long as the conspirators do not perform overt acts
in furtherance of their malevolent design, the sovereignty of the State is not outraged and the tranquility of
the public remains undisturbed.
However, when in resolute execution of a common scheme, a felony is committed by two or more
malefactors, the existence of a conspiracy assumes pivotal importance in the determination of the liability
of the perpetrators. In stressing the significance of conspiracy in criminal law, this Court in U.S. vs. Infante
and Barreto opined that
While it is true that the penalties cannot be imposed for the mere act of conspiring to commit a crime unless
the statute specifically prescribes a penalty therefor, nevertheless the existence of a conspiracy to commit a
crime is in many cases a fact of vital importance, when considered together with the other evidence of
record, in establishing the existence, of the consummated crime and its commission by the conspirators.
Once an express or implied conspiracy is proved, all of the conspirators are liable as co-principals
regardless of the extent and character of their respective active participation in the commission of the crime
or crimes perpetrated in furtherance of the conspiracy because in contemplation of law the act of one is the
act of all. The foregoing rule is anchored on the sound principle that "when two or more persons unite to
accomplish a criminal object, whether through the physical volition of one, or all, proceeding severally or
collectively, each individual whose evil will actively contributes to the wrong-doing is in law responsible
for the whole, the same as though performed by himself alone." Although it is axiomatic that no one is
liable for acts other than his own, "when two or more persons agree or conspire to commit a crime, each is
responsible for all the acts of the others, done in furtherance of the agreement or conspiracy." The
imposition of collective liability upon the conspirators is clearly explained in one case where this Court
held that x x x it is impossible to graduate the separate liability of each (conspirator) without taking into
consideration the close and inseparable relation of each of them with the criminal act, for the commission
of which they all acted by common agreement x x x. The crime must therefore in view of the solidarity of
the act and intent which existed between the x x x accused, be regarded as the act of the band or party
created by them, and they are all equally responsible x x x
Verily, the moment it is established that the malefactors conspired and confederated in the commission of
the felony proved, collective liability of the accused conspirators attaches by reason of the conspiracy, and
the court shall not speculate nor even investigate as to the actual degree of participation of each of the
perpetrators present at the scene of the crime. Of course, as to any conspirator who was remote from the
situs of aggression, he could be drawn within the enveloping ambit of the conspiracy if it be proved that
through his moral ascendancy over the rest of the conspirators the latter were moved or impelled to carry
out the conspiracy.

In fine, the convergence of the wills of the conspirators in the scheming and execution of the crime amply
justifies the imputation to all of them the act of any one of them. It is in this light that conspiracy is
generally viewed not as a separate indictable offense, but a rule for collectivizing criminal liability.
xxxx
x x x A time-honored rule in the corpus of our jurisprudence is that once conspiracy is proved, all of the
conspirators who acted in furtherance of the common design are liable as co-principals. This rule of
collective criminal liability emanates from the ensnaring nature of conspiracy. The concerted action of the
conspirators in consummating their common purpose is a patent display of their evil partnership, and for
the consequences of such criminal enterprise they must be held solidarily liable. 22
This is not to say, however, that private respondent should be found guilty of conspiring with Secretary
Enrile. It is settled that the absence or presence of conspiracy is factual in nature and involves evidentiary
matters.23 Hence, the allegation of conspiracy against respondent is better left ventilated before the trial
court during trial, where respondent can adduce evidence to prove or disprove its presence.
Respondent claims in his Manifestation and Motion 24 as well as in his Urgent Motion to Resolve25 that in a
different case, he was likewise indicted before the SB for conspiracy with the late Secretary Enrile in
violating the same Section 3 (g) of R.A. 3019 by allegedly entering into another agreement (Side
Agreement) which is separate from the Concession Agreement subject of the present case. The case was
docketed as Criminal Case No. 28091. Here, the SB, through a Resolution, granted respondent's motion to
quash the Information on the ground that the SB has no jurisdiction over the person of respondent. The
prosecution questioned the said SB Resolution before this Court via a petition for review on certiorari. The
petition was docketed as G.R. No. 168919. In a minute resolution dated August 31, 2005, this Court denied
the petition finding no reversible error on the part of the SB. This Resolution became final and executory
on January 11, 2006. Respondent now argues that this Court's resolution in G.R. No. 168919 should be
applied in the instant case.
The Court does not agree. Respondent should be reminded that prior to this Court's ruling in G.R. No.
168919, he already posted bail for his provisional liberty. In fact, he even filed a Motion for
Consolidation26 in Criminal Case No. 28091. The Court agrees with petitioner's contention that private
respondent's act of posting bail and filing his Motion for Consolidation vests the SB with jurisdiction over
his person. The rule is well settled that the act of an accused in posting bail or in filing motions seeking
affirmative relief is tantamount to submission of his person to the jurisdiction of the court. 27
Thus, it has been held that:
When a defendant in a criminal case is brought before a competent court by virtue of a warrant of arrest or
otherwise, in order to avoid the submission of his body to the jurisdiction of the court he must raise the
question of the courts jurisdiction over his person at the very earliest opportunity. If he gives bail, demurs
to the complaint or files any dilatory plea or pleads to the merits, he thereby gives the court jurisdiction
over his person. (State ex rel. John Brown vs. Fitzgerald, 51 Minn., 534)

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[REMEDIAL LAW I : CEAC : ATTY. DELA PENA]

xxxx
As ruled in La Naval Drug vs. CA [236 SCRA 78, 86]:
"[L]ack of jurisdiction over the person of the defendant may be waived either expressly or impliedly. When
a defendant voluntarily appears, he is deemed to have submitted himself to the jurisdiction of the court. If
he so wishes not to waive this defense, he must do so seasonably by motion for the purpose of objecting to
the jurisdiction of the court; otherwise, he shall be deemed to have submitted himself to that jurisdiction."

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

Moreover, "[w]here the appearance is by motion for the purpose of objecting to the jurisdiction of the court
over the person, it must be for the sole and separate purpose of objecting to said jurisdiction. If the
appearance is for any other purpose, the defendant is deemed to have submitted himself to the jurisdiction
of the court. Such an appearance gives the court jurisdiction over the person."
Verily, petitioners participation in the proceedings before the Sandiganbayan was not confined to his
opposition to the issuance of a warrant of arrest but also covered other matters which called for respondent
courts exercise of its jurisdiction. Petitioner may not be heard now to deny said courts jurisdiction over
him. x x x.28
In the instant case, respondent did not make any special appearance to question the jurisdiction of the SB
over his person prior to his posting of bail and filing his Motion for Consolidation. In fact, his Motion to
Quash the Information in Criminal Case No. 28090 only came after the SB issued an Order requiring the
prosecution to show cause why the case should not be dismissed for lack of jurisdiction over his person.
As a recapitulation, it would not be amiss to point out that the instant case involves a contract entered into
by public officers representing the government. More importantly, the SB is a special criminal court which
has exclusive original jurisdiction in all cases involving violations of R.A. 3019 committed by certain
public officers, as enumerated in P.D. 1606 as amended by R.A. 8249. This includes private individuals
who are charged as co-principals, accomplices or accessories with the said public officers. In the instant
case, respondent is being charged for violation of Section 3(g) of R.A. 3019, in conspiracy with then
Secretary Enrile. Ideally, under the law, both respondent and Secretary Enrile should have been charged
before and tried jointly by the Sandiganbayan. However, by reason of the death of the latter, this can no
longer be done. Nonetheless, for reasons already discussed, it does not follow that the SB is already
divested of its jurisdiction over the person of and the case involving herein respondent. To rule otherwise
would mean that the power of a court to decide a case would no longer be based on the law defining its
jurisdiction but on other factors, such as the death of one of the alleged offenders.
Lastly, the issues raised in the present petition involve matters which are mere incidents in the main case
and the main case has already been pending for over nine (9) years. Thus, a referral of the case to the
Regional Trial Court would further delay the resolution of the main case and it would, by no means,
promote respondent's right to a speedy trial and a speedy disposition of his case.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC

** G.R. No. 175723

February 4, 2014

THE CITY OF MANILA, represented by MAYOR JOSE L. ATIENZA, JR., and MS. LIBERTY M.
TOLEDO, in her capacity as the City Treasurer of Manila, Petitioners,
vs.
HON. CARIDAD H. GRECIA-CUERDO, in her capacity as Presiding Judge of the Regional Trial

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[REMEDIAL LAW I : CEAC : ATTY. DELA PENA]

Court, Branch 112, Pasay City; SM MART, INC.; SM PRIME HOLDINGS, INC.; STAR
APPLIANCES CENTER; SUPERVALUE, INC.; ACE HARDWARE PHILIPPINES, INC.;
WATSON PERSONAL CARE STORES, PHILS., INC.; JOLLIMART PHILS., CORP.; SURPLUS
MARKETING CORPORATION and SIGNATURE LINES, Respondents.
DECISION

In its Resolution promulgated on April 6, 2006, the CA dismissed petitioners' petition for certiorari holding
that it has no jurisdiction over the said petition. The CA ruled that since appellate jurisdiction over private
respondents' complaint for tax refund, which was filed with the RTC, is vested in the Court of Tax Appeals
(CTA), pursuant to its expanded jurisdiction under Republic Act No. 9282 (RA 9282), it follows that a
petition for certiorari seeking nullification of an interlocutory order issued in the said case should, likewise,
be filed with the CTA.

PERALTA, J.:

Petitioners filed a Motion for Reconsideration,7 but the CA denied it in its Resolution dated November 29,
2006.

Before the Court is a special civil action for certiorari under Rule 65 of the Rules of Court seeking to
reverse and set aside the Resolutions1 dated April 6, 2006 and November 29, 2006 of the Court of Appeals
(CA) in CA-G.R. SP No. 87948.

Hence, the present petition raising the following issues:

The antecedents of the case, as summarized by the CA, are as follows:

The record shows that petitioner City of Manila, through its treasurer, petitioner Liberty Toledo, assessed
taxes for the taxable period from January to December 2002 against private respondents SM Mart, Inc., SM
Prime Holdings, Inc., Star Appliances Center, Supervalue, Inc., Ace Hardware Philippines, Inc., Watsons
Personal Care Stores Phils., Inc., Jollimart Philippines Corp., Surplus Marketing Corp. and Signature Lines.
In addition to the taxes purportedly due from private respondents pursuant to Section 14, 15, 16, 17 of the
Revised Revenue Code of Manila (RRCM), said assessment covered the local business taxes petitioners
were authorized to collect under Section 21 of the same Code. Because payment of the taxes assessed was a
precondition for the issuance of their business permits, private respondents were constrained to pay
the P19,316,458.77 assessment under protest.
On January 24, 2004, private respondents filed [with the Regional Trial Court of Pasay City] the complaint
denominated as one for "Refund or Recovery of Illegally and/or Erroneously-Collected Local Business Tax,
Prohibition with Prayer to Issue TRO and Writ of Preliminary Injunction"
which was docketed as Civil Case No. 04-0019-CFM before public respondent's sala [at Branch 112]. In
the amended complaint they filed on February 16, 2004, private respondents alleged that, in relation to
Section 21 thereof, Sections 14, 15, 16, 17, 18, 19 and 20 of the RRCM were violative of the limitations
and guidelines under Section 143 (h) of Republic Act. No. 7160 [Local Government Code] on double
taxation. They further averred that petitioner city's Ordinance No. 8011 which amended pertinent portions
of the RRCM had already been declared to be illegal and unconstitutional by the Department of Justice. 2
In its Order3 dated July 9, 2004, the RTC granted private respondents' application for a writ of preliminary
injunction.
Petitioners filed a Motion for Reconsideration4 but the RTC denied it in its Order5 dated October 15, 2004.
Petitioners then filed a special civil action for certiorari with the CA assailing the July 9, 2004 and October
15, 2004 Orders of the RTC.6

I- Whether or not the Honorable Court of Appeals gravely erred in dismissing the case for lack of
jurisdiction.
II- Whether or not the Honorable Regional Trial Court gravely abuse[d] its discretion amounting
to lack or excess of jurisdiction in enjoining by issuing a Writ of Injunction the petitioners, their
agents and/or authorized representatives from implementing Section 21 of the Revised Revenue
Code of Manila, as amended, against private respondents.
III- Whether or not the Honorable Regional Trial Court gravely abuse[d] its discretion amounting
to lack or excess of jurisdiction in issuing the Writ of Injunction despite failure of private
respondents to make a written claim for tax credit or refund with the City Treasurer of Manila.
IV- Whether or not the Honorable Regional Trial Court gravely abuse[d] its discretion amounting
to lack or excess of jurisdiction considering that under Section 21 of the Manila Revenue Code,
as amended, they are mere collecting agents of the City Government.
V- Whether or not the Honorable Regional Trial Court gravely abuse[d] its discretion amounting
to lack or excess of jurisdiction in issuing the Writ of Injunction because petitioner City of
Manila and its constituents would result to greater damage and prejudice thereof. (sic) 8
Without first resolving the above issues, this Court finds that the instant petition should be denied for being
moot and academic.
Upon perusal of the original records of the instant case, this Court discovered that a Decision 9 in the main
case had already been rendered by the RTC on August 13, 2007, the dispositive portion of which reads as
follows:
WHEREFORE, in view of the foregoing, this Court hereby renders JUDGMENT in favor of the plaintiff
and against the defendant to grant a tax refund or credit for taxes paid pursuant to Section 21 of the
Revenue Code of the City of Manila as amended for the year 2002 in the following amounts:

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[REMEDIAL LAW I : CEAC : ATTY. DELA PENA]

To plaintiff SM Mart, Inc.

P 11,462,525.02

To plaintiff SM Prime Holdings, Inc.

3,118,104.63

To plaintiff Star Appliances Center

2,152,316.54

To plaintiff Supervalue, Inc.

1,362,750.34

To plaintiff Ace Hardware Phils., Inc.

419,689.04

To plaintiff Watsons Personal Care Health

231,453.62

To plaintiff Jollimart Phils., Corp.

140,908.54

To plaintiff Surplus Marketing Corp.

220,204.70

To plaintiff Signature Mktg. Corp.

94,906.34

P 19,316,458.77

Petitioners availed of the wrong remedy when they filed the instant special civil action for certiorari under
Rule 65 of the Rules of Court in assailing the Resolutions of the CA which dismissed their petition filed
with the said court and their motion for reconsideration of such dismissal. There is no dispute that the
assailed Resolutions of the CA are in the nature of a final order as they disposed of the petition completely.
It is settled that in cases where an assailed judgment or order is considered final, the remedy of the
aggrieved party is appeal. Hence, in the instant case, petitioner should have filed a petition for review on
certiorari under Rule 45, which is a continuation of the appellate process over the original case. 15
Petitioners should be reminded of the equally-settled rule that a special civil action for certiorari under Rule
65 is an original or independent action based on grave abuse of discretion amounting to lack or excess of
jurisdiction and it will lie only if there is no appeal or any other plain, speedy, and adequate remedy in the
ordinary course of law.16 As such, it cannot be a substitute for a lost appeal. 17

Stores Phils., Inc.

TOTAL:

Defendants are further enjoined from collecting taxes under Section 21, Revenue Code of Manila from
herein plaintiff.
SO ORDERED.

10

The parties did not inform the Court but based on the records, the above Decision had already become final
and executory per the Certificate of Finality11 issued by the same trial court on October 20, 2008. In fact, a
Writ of Execution12 was issued by the RTC on November 25, 2009. In view of the foregoing, it clearly
appears that the issues raised in the present petition, which merely involve the incident on the preliminary
injunction issued by the RTC, have already become moot and academic considering that the trial court, in
its decision on the merits in the main case, has already ruled in favor of respondents and that the same
decision is now final and executory. Well entrenched is the rule that where the issues have become moot
and academic, there is no justiciable controversy, thereby rendering the resolution of the same of no
practical use or value.13
In any case, the Court finds it necessary to resolve the issue on jurisdiction raised by petitioners owing to
its significance and for future guidance of both bench and bar. It is a settled principle that courts will decide
a question otherwise moot and academic if it is capable of repetition, yet evading review.14
However, before proceeding, to resolve the question on jurisdiction, the Court deems it proper to likewise
address a procedural error which petitioners committed.

Nonetheless, in accordance with the liberal spirit pervading the Rules of Court and in the interest of
substantial justice, this Court has, before, treated a petition for certiorari as a petition for review on
certiorari, particularly (1) if the petition for certiorari was filed within the reglementary period within which
to file a petition for review on certiorari; (2) when errors of judgment are averred; and (3) when there is
sufficient reason to justify the relaxation of the rules. 18 Considering that the present petition was filed
within the 15-day reglementary period for filing a petition for review on certiorari under Rule 45, that an
error of judgment is averred, and because of the significance of the issue on jurisdiction, the Court deems it
proper and justified to relax the rules and, thus, treat the instant petition for certiorari as a petition for
review on certiorari.
Having disposed of the procedural aspect, we now turn to the central issue in this case. The basic question
posed before this Court is whether or not the CTA has jurisdiction over a special civil action for certiorari
assailing an interlocutory order issued by the RTC in a local tax case.
This Court rules in the affirmative.
On June 16, 1954, Congress enacted Republic Act No. 1125 (RA 1125) creating the CTA and giving to the
said court jurisdiction over the following:
(1) Decisions of the Collector of Internal Revenue in cases involving disputed assessments,
refunds of internal revenue taxes, fees or other charges, penalties imposed in relation thereto, or
other matters arising under the National Internal Revenue Code or other law or part of law
administered by the Bureau of Internal Revenue;
(2) Decisions of the Commissioner of Customs in cases involving liability for customs duties,
fees or other money charges; seizure, detention or release of property affected fines, forfeitures
or other penalties imposed in relation thereto; or other matters arising under the Customs Law or
other law or part of law administered by the Bureau of Customs; and

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[REMEDIAL LAW I : CEAC : ATTY. DELA PENA]

(3) Decisions of provincial or City Boards of Assessment Appeals in cases involving the
assessment and taxation of real property or other matters arising under the Assessment Law,
including rules and regulations relative thereto.

respectively, of the Tariff and Customs Code, and safeguard measures under Republic Act No.
8800, where either party may appeal the decision to impose or not to impose said duties.
b. Jurisdiction over cases involving criminal offenses as herein provided:

On March 30, 2004, the Legislature passed into law Republic Act No. 9282 (RA 9282) amending RA 1125
by expanding the jurisdiction of the CTA, enlarging its membership and elevating its rank to the level of a
collegiate court with special jurisdiction. Pertinent portions of the amendatory act provides thus:
Sec. 7. Jurisdiction. - The CTA shall exercise:
a. Exclusive appellate jurisdiction to review by appeal, as herein provided:
1. Decisions of the Commissioner of Internal Revenue in cases involving disputed assessments,
refunds of internal revenue taxes, fees or other charges, penalties in relation thereto, or other
matters arising under the National Internal Revenue or other laws administered by the Bureau of
Internal Revenue;
2. Inaction by the Commissioner of Internal Revenue in cases involving disputed assessments,
refunds of internal revenue taxes, fees or other charges, penalties in relations thereto, or other
matters arising under the National Internal Revenue Code or other laws administered by the
Bureau of Internal Revenue, where the National Internal Revenue Code provides a specific
period of action, in which case the inaction shall be deemed a denial;
3. Decisions, orders or resolutions of the Regional Trial Courts in local tax cases originally
decided or resolved by them in the exercise of their original or appellate jurisdiction;
4. Decisions of the Commissioner of Customs in cases involving liability for customs duties, fees
or other money charges, seizure, detention or release of property affected, fines, forfeitures or
other penalties in relation thereto, or other matters arising under the Customs Law or other laws
administered by the Bureau of Customs;
5. Decisions of the Central Board of Assessment Appeals in the exercise of its appellate
jurisdiction over cases involving the assessment and taxation of real property originally decided
by the provincial or city board of assessment appeals;
6. Decisions of the Secretary of Finance on customs cases elevated to him automatically for
review from decisions of the Commissioner of Customs which are adverse to the Government
under Section 2315 of the Tariff and Customs Code;
7. Decisions of the Secretary of Trade and Industry, in the case of nonagricultural product,
commodity or article, and the Secretary of Agriculture in the case of agricultural product,
commodity or article, involving dumping and countervailing duties under Section 301 and 302,

1. Exclusive original jurisdiction over all criminal offenses arising from violations of the
National Internal Revenue Code or Tariff and Customs Code and other laws administered by the
Bureau of Internal Revenue or the Bureau of Customs: Provided, however, That offenses or
felonies mentioned in this paragraph where the principal amount of taxes and fees, exclusive of
charges and penalties, claimed is less than One million pesos (P1,000,000.00) or where there is
no specified amount claimed shall be tried by the regular Courts and the jurisdiction of the CTA
shall be appellate. Any provision of law or the Rules of Court to the contrary notwithstanding,
the criminal action and the corresponding civil action for the recovery of civil liability for taxes
and penalties shall at all times be simultaneously instituted with, and jointly determined in the
same proceeding by the CTA, the filing of the criminal action being deemed to necessarily carry
with it the filing of the civil action, and no right to reserve the filing of such civil action
separately from the criminal action will be recognized.
2. Exclusive appellate jurisdiction in criminal offenses:
a. Over appeals from the judgments, resolutions or orders of the Regional Trial Courts in tax cases
originally decided by them, in their respected territorial jurisdiction.
b. Over petitions for review of the judgments, resolutions or orders of the Regional Trial Courts in the
exercise of their appellate jurisdiction over tax cases originally decided by the Metropolitan Trial Courts,
Municipal Trial Courts and Municipal Circuit Trial Courts in their respective jurisdiction.
c. Jurisdiction over tax collection cases as herein provided:
1. Exclusive original jurisdiction in tax collection cases involving final and executory
assessments for taxes, fees, charges and penalties: Provides, however, that collection cases where
the principal amount of taxes and fees, exclusive of charges and penalties, claimed is less than
One million pesos (P1,000,000.00) shall be tried by the proper Municipal Trial Court,
Metropolitan Trial Court and Regional Trial Court.
2. Exclusive appellate jurisdiction in tax collection cases:
a. Over appeals from the judgments, resolutions or orders of the Regional Trial Courts in tax collection
cases originally decided by them, in their respective territorial jurisdiction.
b. Over petitions for review of the judgments, resolutions or orders of the Regional Trial Courts in the
Exercise of their appellate jurisdiction over tax collection cases originally decided by the Metropolitan Trial
Courts, Municipal Trial Courts and Municipal Circuit Trial Courts, in their respective jurisdiction. 19

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[REMEDIAL LAW I : CEAC : ATTY. DELA PENA]

A perusal of the above provisions would show that, while it is clearly stated that the CTA has exclusive
appellate jurisdiction over decisions, orders or resolutions of the RTCs in local tax cases originally decided
or resolved by them in the exercise of their original or appellate jurisdiction, there is no categorical
statement under RA 1125 as well as the amendatory RA 9282, which provides that th e CTA has jurisdiction
over petitions for certiorari assailing interlocutory orders issued by the RTC in local tax cases filed before
it.
The prevailing doctrine is that the authority to issue writs of certiorari involves the exercise of original
jurisdiction which must be expressly conferred by the Constitution or by law and cannot be implied from
the mere existence of appellate jurisdiction. 20 Thus, in the cases of Pimentel v. COMELEC,21 Garcia v. De
Jesus,22 Veloria v. COMELEC,23Department of Agrarian Reform Adjudication Board v. Lubrica, 24 and
Garcia v. Sandiganbayan,25 this Court has ruled against the jurisdiction of courts or tribunals over petitions
for certiorari on the ground that there is no law which expressly gives these tribunals such power.26 It must
be observed, however, that with the exception of Garcia v. Sandiganbayan, 27 these rulings pertain not to
regular courts but to tribunals exercising quasi-judicial powers. With respect to the Sandiganbayan,
Republic Act No. 824928 now provides that the special criminal court has 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.
In the same manner, Section 5 (1), Article VIII of the 1987 Constitution grants power to the Supreme Court,
in the exercise of its original jurisdiction, to issue writs of certiorari, prohibition and mandamus. With
respect to the Court of Appeals, Section 9 (1) of Batas Pambansa Blg. 129 (BP 129) gives the appellate
court, also in the exercise of its original jurisdiction, the power to issue, among others, a writ of
certiorari,whether or not in aid of its appellate jurisdiction. As to Regional Trial Courts, the power to issue a
writ of certiorari, in the exercise of their original jurisdiction, is provided under Section 21 of BP 129.
The foregoing notwithstanding, while there is no express grant of such power, with respect to the CTA,
Section 1, Article VIII of the 1987 Constitution provides, nonetheless, that judicial power shall be vested in
one Supreme Court and in such lower courts as may be established by law and that judicial power includes
the duty of the courts of justice to settle actual controversies involving rights which are legally demandable
and enforceable, and to determine whether or not there has been a grave abuse of discretion amounting to
lack or excess of jurisdiction on the part of any branch or instrumentality of the Government.
On the strength of the above constitutional provisions, it can be fairly interpreted that the power of the CTA
includes that of determining whether or not there has been grave abuse of discretion amounting to lack or
excess of jurisdiction on the part of the RTC in issuing an interlocutory order in cases falling within the
exclusive appellate jurisdiction of the tax court. It, thus, follows that the CTA, by constitutional mandate, is
vested with jurisdiction to issue writs of certiorari in these cases.
Indeed, in order for any appellate court to effectively exercise its appellate jurisdiction, it must have the
authority to issue, among others, a writ of certiorari. In transferring exclusive jurisdiction over appealed tax
cases to the CTA, it can reasonably be assumed that the law intended to transfer also such power as is
deemed necessary, if not indispensable, in aid of such appellate jurisdiction. There is no perceivable reason
why the transfer should only be considered as partial, not total.

Consistent with the above pronouncement, this Court has held as early as the case of J.M. Tuason & Co.,
Inc. v. Jaramillo, et al.29 that "if a case may be appealed to a particular court or judicial tribunal or body,
then said court or judicial tribunal or body has jurisdiction to issue the extraordinary writ of certiorari, in
aid of its appellate jurisdiction."30 This principle was affirmed in De Jesus v. Court of Appeals,31 where the
Court stated that "a court may issue a writ of certiorari in aid of its appellate jurisdiction if said court has
jurisdiction to review, by appeal or writ of error, the final orders or decisions of the lower court." 32 The
rulings in J.M. Tuason and De Jesus were reiterated in the more recent cases of Galang, Jr. v.
Geronimo33 and Bulilis v. Nuez.34
Furthermore, Section 6, Rule 135 of the present Rules of Court provides that when by law, jurisdiction is
conferred on a court or judicial officer, all auxiliary writs, processes and other means necessary to carry it
into effect may be employed by such court or officer.
If this Court were to sustain petitioners' contention that jurisdiction over their certiorari petition lies with
the CA, this Court would be confirming the exercise by two judicial bodies, the CA and the CTA, of
jurisdiction over basically the same subject matter precisely the split-jurisdiction situation which is
anathema to the orderly administration of justice.35 The Court cannot accept that such was the legislative
motive, especially considering that the law expressly confers on the CTA, the tribunal with the specialized
competence over tax and tariff matters, the role of judicial review over local tax cases without mention of
any other court that may exercise such power. Thus, the Court agrees with the ruling of the CA that since
appellate jurisdiction over private respondents' complaint for tax refund is vested in the CTA, it follows that
a petition for certiorari seeking nullification of an interlocutory order issued in the said case should,
likewise, be filed with the same court. To rule otherwise would lead to an absurd situation where one court
decides an appeal in the main case while another court rules on an incident in the very same case.
Stated differently, it would be somewhat incongruent with the pronounced judicial abhorrence to split
jurisdiction to conclude that the intention of the law is to divide the authority over a local tax case filed
with the RTC by giving to the CA or this Court jurisdiction to issue a writ of certiorari against interlocutory
orders of the RTC but giving to the CTA the jurisdiction over the appeal from the decision of the trial court
in the same case. It is more in consonance with logic and legal soundness to conclude that the grant of
appellate jurisdiction to the CTA over tax cases filed in and decided by the RTC carries with it the power to
issue a writ of certiorari when necessary in aid of such appellate jurisdiction. The supervisory power or
jurisdiction of the CTA to issue a writ of certiorari in aid of its appellate jurisdiction should co-exist with,
and be a complement to, its appellate jurisdiction to review, by appeal, the final orders and decisions of the
RTC, in order to have complete supervision over the acts of the latter.36
A grant of appellate jurisdiction implies that there is included in it the power necessary to exercise it
effectively, to make all orders that will preserve the subject of the action, and to give effect to the final
determination of the appeal. It carries with it the power to protect that jurisdiction and to make the
decisions of the court thereunder effective. The court, in aid of its appellate jurisdiction, has authority to
control all auxiliary and incidental matters necessary to the efficient and proper exercise of that
jurisdiction.1wphi1 For this purpose, it may, when necessary, prohibit or restrain the performance of any
act which might interfere with the proper exercise of its rightful jurisdiction in cases pending before it. 37
Lastly, it would not be amiss to point out that a court which is endowed with a particular jurisdiction should
have powers which are necessary to enable it to act effectively within such jurisdiction. These should be

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[REMEDIAL LAW I : CEAC : ATTY. DELA PENA]

regarded as powers which are inherent in its jurisdiction and the court must possess them in order to
enforce its rules of practice and to suppress any abuses of its process and to defeat any attempted thwarting
of such process.
In this regard, Section 1 of RA 9282 states that the CTA shall be of the same level as the CA and shall
possess all the inherent powers of a court of justice.
Indeed, courts possess certain inherent powers which may be said to be implied from a general grant of
jurisdiction, in addition to those expressly conferred on them. These inherent powers are such powers as are
necessary for the ordinary and efficient exercise of jurisdiction; or are essential to the existence, dignity and
functions of the courts, as well as to the due administration of justice; or are directly appropriate,
convenient and suitable to the execution of their granted powers; and include the power to maintain the
court's jurisdiction and render it effective in behalf of the litigants. 38
Thus, this Court has held that "while a court may be expressly granted the incidental powers necessary to
effectuate its jurisdiction, a grant of jurisdiction, in the absence of prohibitive legislation, implies the
necessary and usual incidental powers essential to effectuate it, and, subject to existing laws and
constitutional provisions, every regularly constituted court has power to do all things that are reasonably
necessary for the administration of justice within the scope of its jurisdiction and for the enforcement of its
judgments and mandates."39 Hence, demands, matters or questions ancillary or incidental to, or growing out
of, the main action, and coming within the above principles, may be taken cognizance of by the court and
determined, since such jurisdiction is in aid of its authority over the principal matter, even though the court
may thus be called on to consider and decide matters which, as original causes of action, would not be
within its cognizance.40
Based on the foregoing disquisitions, it can be reasonably concluded that the authority of the CTA to take
cognizance of petitions for certiorari questioning interlocutory orders issued by the RTC in a local tax case
is included in the powers granted by the Constitution as well as inherent in the exercise of its appellate
jurisdiction.
Finally, it would bear to point out that this Court is not abandoning the rule that, insofar as quasi-judicial
tribunals are concerned, the authority to issue writs of certiorari must still be expressly conferred by the
Constitution or by law and cannot be implied from the mere existence of their appellate jurisdiction. This
doctrine remains as it applies only to quasi-judicial bodies.
WHEREFORE, the petition is DENIED.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 184203

November 26, 2014

CITY OF LAPU-LAPU, Petitioner,

vs.
PHILIPPINE ECONOMIC ZONE AUTHORITY, Respondent.
x-----------------------x
G.R. No. 187583

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[REMEDIAL LAW I : CEAC : ATTY. DELA PENA]

PROVINCE OF BATAAN, represented by GOVERNOR ENRIQUE T. GARCIA, JR., and
EMERLINDA S. TALENTO, in her capacity as Provincial Treasurer of Bataan, Petitioners,
vs.
PHILIPPINE ECONOMIC ZONE AUTHORITY, Respondent.
DECISION

Section 21. Non-profit Character of the Authority; Exemption from Taxes. The Authority shall be nonprofit and shall devote and use all its returns from its capital investment, as well as excess revenues from its
operations, for the development, improvement and maintenance and other related expenditures of the
Authority to pay its indebtedness and obligations and in furtherance and effective implementation of the
policy enunciated in Section 1 of this Decree. In consonance therewith, the Authority is hereby declared
exempt:
....

LEONEN, J.:
The Philippine Economic Zone Authority is exempt from payment of real property taxes.
These are consolidated1 petitions for review on certiorari the City of Lapu-Lapu and the Province of Bataan
separately filed against the Philippine Economic Zone Authority (PEZA).
In G.R. No. 184203, the City of Lapu-Lapu (the City) assails the Court of Appeals decision 2 dated January
11, 2008 and resolution3 dated August 6, 2008, dismissing the Citys appeal for being the wrong mode of
appeal. The City appealed the Regional Trial Court,Branch 111, Pasay Citys decision finding the PEZA
exempt from payment of real property taxes.
In G.R. No. 187583, the Province of Bataan (the Province) assails the Court of Appeals decision 4 dated
August 27, 2008 and resolution5 dated April 16, 2009, granting the PEZAs petition for certiorari. The Court
of Appeals ruled that the Regional Trial Court, Branch 115, Pasay City gravely abused its discretion in
finding the PEZA liable for real property taxes to the Province of Bataan.
Facts common to the consolidated petitions
In the exercise of his legislative powers,6 President Ferdinand E. Marcos issued Presidential Decree No. 66
in 1972, declaring as government policy the establishment of export processing zones in strategic locations
in the Philippines. Presidential Decree No. 66 aimed "to encourage and promote foreign commerce as a
means of making the Philippines a center of international trade, of strengthening our export trade and
foreign exchange position, of hastening industrialization,of reducing domestic unemployment, and of
accelerating the development of the country."7
To carry out this policy, the Export Processing Zone Authority (EPZA) was created to operate, administer,
and manage the export processing zones established in the Port of Mariveles, Bataan 8 and such other export
processing zones that may be created by virtue of the decree. 9
The decree declared the EPZA non-profit in character10 with all its revenues devoted to its development,
improvement, and maintenance.11 To maintain this non-profit character, the EPZA was declared exempt
from all taxes that may be due to the Republic of the Philippines, its provinces, cities, municipalities, and
other government agencies and instrumentalities.12 Specifically, Section 21 of Presidential Decree No. 66
declared the EPZA exempt from payment of real property taxes:

(b) From all income taxes, franchise taxes, realty taxes and all other kinds of taxes and licenses to be paid
to the National Government, its provinces, cities, municipalities and other government agenciesand
instrumentalities[.]
In 1979, President Marcos issued Proclamation No. 1811, establishing the Mactan Export Processing Zone.
Certain parcels of land of the public domain located in the City of Lapu-Lapuin Mactan, Cebu were
reserved to serve as site of the Mactan Export Processing Zone.
In 1995, the PEZA was created by virtue of Republic Act No. 7916 or "the Special Economic Zone Act of
1995"13 to operate, administer, manage, and develop economic zones in the country.14 The PEZA was
granted the power to register, regulate, and supervise the enterprises located in the economic zones. 15 By
virtue of the law, the export processing zone in Mariveles, Bataan became the Bataan Economic Zone 16 and
the Mactan Export Processing Zone the Mactan Economic Zone.17
As for the EPZA, the law required it to "evolve into the PEZA in accordance with the guidelines and
regulations set forth in an executive order issued for [the] purpose." 18
On October 30, 1995, President Fidel V. Ramos issued Executive Order No. 282, directing the PEZA to
assume and exercise all of the EPZAs powers, functions, and responsibilities "as provided in Presidential
Decree No. 66, as amended, insofar as they are not inconsistent with the powers, functions, and
responsibilities of the PEZA, as mandated under [the Special Economic Zone Act of 1995]." 19 All of
EPZAs properties, equipment, and assets, among others, were ordered transferred to the PEZA. 20
Facts of G.R. No. 184203
In the letter21 dated March 25, 1998, the City of Lapu-Lapu, through the Office of the Treasurer, demanded
from the PEZA 32,912,350.08 in real property taxes for the period from 1992 to 1998 on the PEZAs
properties located in the Mactan Economic Zone.
The City reiterated its demand in the letter22 dated May 21, 1998. It cited Sections 193 and 234 of the Local
Government Code of 1991 that withdrew the real property tax exemptions previously granted to or
presently enjoyed by all persons. The City pointed out that no provision in the Special Economic Zone Act
of 1995 specifically exempted the PEZA from payment of real property taxes, unlike Section 21 of
Presidential Decree No. 66 that explicitly provided for EPZAs exemption. Since no legal provision

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explicitly exempted the PEZA from payment of real property taxes, the City argued that it can tax the
PEZA.
The City made subsequent demands23 on the PEZA. In its last reminder24 dated May 13, 2002, the City
assessed the PEZA 86,843,503.48 as real property taxes for the period from 1992 to 2002.
On September 11, 2002, the PEZAfiled a petition for declaratory Relief 25 with the Regional Trial Court of
Pasay City, praying that the trial court declare it exempt from payment ofreal property taxes. The case was
raffled to Branch 111.
The City answered26 the petition, maintaining that the PEZA is liable for real property taxes. To support its
argument, the City cited a legal opinion dated September 6, 1999 issued by the Department of
Justice,27 which stated that the PEZA is not exempt from payment of real property taxes. The Department of
Justice based its opinion on Sections 193 and 234 of the Local Government Code that withdrew the tax
exemptions, including real property tax exemptions, previously granted to all persons.
A reply28 was filed by the PEZA to which the City filed a rejoinder.29
Pursuant to Rule 63, Section 3 of Rules of Court, 30 the Office of the Solicitor General filed a comment 31 on
the PEZAs petition for declaratory relief. It agreed that the PEZA is exempt from payment of real property
taxes, citing Sections 24 and 51 of the Special Economic Zone Act of 1995.

Based on Section 51, the trial court held that all privileges, benefits, advantages, or exemptions granted
tospecial economic zones created under the Bases Conversion and Development Act of 1992 apply to
special economic zones created under the Special Economic ZoneAct of 1995.
Since these benefits include exemption from payment of national or local taxes, these benefits apply to
special economic zones owned by the PEZA.
According to the trial court, the PEZA remained tax-exempt regardless of Section 24 of the Special
Economic Zone Act of 1995. It ruled that Section 24, which taxes real property owned by developers of
economic zones, only applies to private developers of economic zones, not to public developers like the
PEZA. The PEZA, therefore, is not liable for real property taxes on the land it owns.
Characterizing the PEZA as an agency of the National Government, the trial court ruled that the City had
no authority to tax the PEZA under Sections 133(o) and 234(a) of the Local Government Code of 1991.
In the resolution32 dated June 14, 2006, the trial court granted the PEZAs petition for declaratory relief and
declared it exempt from payment of real property taxes.
The City filed a motion for reconsideration, 33 which the trial court denied in its resolution 34 dated
September 26, 2006.
The City then appealed35 to the Court of Appeals.

The trial court agreed with the Solicitor General. Section 24 of the Special Economic Zone Act of 1995
provides:
SEC. 24. Exemption from National and Local Taxes. Except for real property taxes on land owned by
developers, no taxes, local and national, shall be imposed on business establishments operating within the
ECOZONE. In lieu thereof, five percent (5%) of the gross income earned by all business enterprises within
the ECOZONE shall be paid and remitted as follows:
a. Three percent (3%) to the National Government;
b. Two percent (2%) which shall be directly remitted by the business establishments to the
treasurers office of the municipality or city where the enterprise is located.

The Court of Appeals noted the following issues the City raised in its appellants brief: (1) whether the trial
court had jurisdiction over the PEZAs petition for declaratory relief; (2) whether the PEZA is a government
agency performing governmental functions; and (3) whether the PEZA is exempt from payment of real
property taxes.
The issues presented by the City, according to the Court of Appeals, are pure questions of law which should
have been raised in a petition for review on certiorari directly filed before this court. Since the City availed
itself of the wrong mode of appeal, the Court of Appeals dismissed the Citys appeal in the decision 36 dated
January 11, 2008.
The City filed a motion for extension of time to file a motion for reconsideration, 37 which the Court of
Appeals denied in the resolution38 dated April 11, 2008.

Section 51 of the law, on the other hand, provides:

SEC. 51. Ipso-Facto Clause. All privileges, benefits, advantages or exemptions granted to special
economic zones under Republic Act No. 7227, shall ipso-facto be accorded to special economic zones
already created or to be created under this Act. The free port status shall not be vested upon new special
economic zones.

Despite the denial of its motion for extension, the City filed a motion for reconsideration. 39 In the
resolution40 dated August 6, 2008, the Court of Appeals denied that motion.
In its petition for review on certiorari with this court, 41 the City argues that the Court of Appeals "hid under
the skirts of technical rules"42 in resolving its appeal. The City maintains that its appeal involved mixed
questions of fact and law. According to the City, whether the PEZA performed governmental functions

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"cannot completely be addressed by law but [by] the factual and actual activities [the PEZA is] carrying
out."43

Facts of G.R. No. 187583

Even assuming that the petition involves pure questions of law, the City contends that the subject matter of
the case "is of extreme importance with [far-reaching] consequence that [its magnitude] would surely shape
and determine the course ofour nations future." 44 The Court of Appeals, the City argues, should have
resolved the case on the merits.

After the City of Lapu-Lapu had demanded payment of real property taxes from the PEZA, the Province of
Bataan followed suit. In its letter55 dated May 29, 2003, the Province, through the Office of the Provincial
Treasurer, informed the PEZA that it would be sending a real property tax billing to the PEZA. Arguing that
the PEZA is a developer of economic zones, the Province claimed that the PEZA is liable for real property
taxes under Section 24 of the Special Economic Zone Act of 1995.

The City insists that the trial court had no jurisdiction to hear the PEZAs petition for declaratory relief.
According to the City, the case involves real property located in the City of Lapu-Lapu. The petition for
declaratory relief should have been filed before the Regional Trial Court of the City of Lapu-Lapu. 45

In its reply letter56 dated June 18, 2003, the PEZA requested the Province to suspend the service of the real
property tax billing. It cited its petition for declaratory relief against the City of Lapu-Lapu pending before
the Regional Trial Court, Branch 111, Pasay City as basis.

Moreover, the Province of Bataan, the City of Baguio, and the Province of Cavite allegedly demanded real
property taxes from the PEZA. The City argues that the PEZA should have likewise impleaded these local
government units as respondents in its petition for declaratory relief. For its failure to do so, the PEZA
violated Rule 63, Section 2 of the Rules of Court, and the trial court should have dismissed the petition. 46

The Province argued that serving a real property tax billing on the PEZA "would not in any way affect [its]
petition for declaratory relief before [the Regional Trial Court] of Pasay City." 57 Thus, in its letter58 dated
June 27, 2003, the Province notified the PEZAof its real property tax liabilities for June 1, 1995 to
December 31, 2002 totallingP110,549,032.55.

This court ordered the PEZA to comment on the Citys petition for review on certiorari. 47

After having been served a tax billing, the PEZA again requested the Province to suspend collecting its
alleged real property tax liabilities until the Regional Trial Court of Pasay Cityresolves its petition for
declaratory relief.59

At the outset of its comment, the PEZA argues that the Court of Appeals decision dated January 11, 2008
had become final and executory. After the Court of Appeals had denied the Citys appeal, the City filed a
motion for extension of time to file a motion for reconsideration. Arguing that the time to file a motion for
reconsideration is not extendible, the PEZA filed its motion for reconsideration out of time. The Cityhas no
more right to appeal to this court.48
The PEZA maintains that the City availed itself of the wrong mode of appeal before the Court of Appeals.
Since the City raised pure questions of law in its appeal, the PEZA argues that the proper remedy is a
petition for review on certiorari with this court, not an ordinary appeal before the appellate court. The Court
of Appeals, therefore, correctly dismissed outright the Citys appeal under Rule 50, Section 2 of the Rules
of Court.49
On the merits, the PEZA argues that it is an agency and instrumentality of the National Government. It is
therefore exempt from payment of real property taxes under Sections 133(o) and 234(a) of the Local
Government Code.50 It adds that the tax privileges under Sections 24 and 51 of the Special Economic Zone
Act of 1995 applied to it.51
Considering that the site of the Mactan Economic Zoneis a reserved land under Proclamation No. 1811, the
PEZA claims that the properties sought to be taxed are lands of public dominion exempt from real property
taxes.52

The Province ignored the PEZAs request. On January 20, 2004, the Province served on the PEZA a
statement of unpaid real property tax for the period from June 1995 to December 2004. 60
The PEZA again requested the Province to suspend collecting its alleged real property taxes. 61 The Province
denied the request in its letter62 dated January 29, 2004, then servedon the PEZA a warrant of
levy63 covering the PEZAs real properties located in Mariveles, Bataan.
The PEZAs subsequent requests64 for suspension of collection were all denied by the Province.65 The
Province then served on the PEZA a notice of delinquency in the payment of real property taxes 66 and a
notice of sale of real property for unpaid real property tax. 67 The Province finally sent the PEZA a notice of
public auction of the latters properties in Mariveles, Bataan. 68
On June 14, 2004, the PEZA filed a petition for injunction 69 with prayer for issuance of a temporary
restraining order and/or writ of preliminary injunction before the Regional Trial Court of Pasay City,
arguing that it is exempt from payment ofreal property taxes. It added that the notice of sale issued by the
Province was void because it was not published in a newspaper ofgeneral circulation asrequired by Section
260 of the Local Government Code.70
The case was raffled to Branch 115.

As to the jurisdiction issue, the PEZA counters that the Regional Trial Court of Pasay had jurisdiction to
hear its petition for declaratory relief under Rule 63, Section 1 of the Rules of Court.[53]] It also argued
that it need not implead the Province of Bataan, the City of Baguio, and the Province of Cavite as
respondents considering that their demands came after the PEZA had already filed the petition in court. 54

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In its order71 dated June 18, 2004, the trial court issued a temporary restraining order against the Province.
After the PEZA had filed a P100,000.00 bond,72 the trial court issued a writ of preliminary
injunction,73 enjoining the Province from selling the PEZAs real properties at public auction.

The Province then filed a motion86 for leave to admit attached rejoinder with motion to dismiss. In the
rejoinder with motion to dismiss,87 the Province argued for the first time that the Court of Appeals had no
jurisdiction over the subject matter of the action.

On March 3, 2006, the PEZA and Province both manifested that each would file a memorandum after
which the case would be deemed submitted for decision. The parties then filed their respective
memoranda.74

According to the Province, the PEZA erred in filing a petition for certiorari. Arguing that the PEZA sought
to reverse a Regional Trial Court decision in a local tax case, the Province claimed that the court with
appellate jurisdiction over the action is the Court of Tax Appeals. The PEZA then prayed that the Court of
Appeals dismiss the petition for certiorari for lack of jurisdiction over the subject matter of the action.

In the order75 dated January 31, 2007, the trial court denied the PEZAs petition for injunction. The trial
court ruled that the PEZA is not exempt from payment of real property taxes. According to the trial court,
Sections 193 and 234 of the Local Government Code had withdrawn the real property tax exemptions
previously granted to all persons, whether natural or juridical. 76 As to the tax exemptions under Section 51
of the Special Economic Zone Act of 1995, the trial court ruled that the provision only applies to businesses
operating within the economic zones, not to the PEZA. 77
The PEZA filed before the Court of Appeals a petition for certiorari 78 with prayer for issuance of a
temporary restraining order.
The Court of Appeals issued a temporary restraining order, enjoining the Province and its Provincial
Treasurer from selling PEZA's properties at public auction scheduled on October 17, 2007. 79 It also ordered
the Province to comment on the PEZAs petition.
In its comment,80 the Province alleged that it received a copy of the temporary restraining order only on
October 18, 2007 when it had already sold the PEZAs properties at public auction. Arguing that the act
sought to be enjoined was already fait accompli, the Province prayed for the dismissal of the petition for
certiorari.
The PEZA then filed a supplemental petition for certiorari, prohibition, and mandamus 81 against the
Province, arguing that the Provincial Treasurer of Bataan acted with grave abuse of discretion in issuing the
notice of delinquency and notice of sale. It maintained that it is exempt from payment of real property taxes
because it is a government instrumentality. It added that its lands are property of public dominion which
cannot be sold at public auction.
The PEZA also filed a motion82 for issuance of an order affirming the temporary restraining order and a
writ of preliminary injunction to enjoin the Province from consolidating title over the PEZAs properties.
In its resolution83 dated January 16, 2008,the Court of Appeals admitted the supplemental petition for
certiorari, prohibition, and mandamus. It required the Province to comment on the supplemental petition
and to file a memorandum on the PEZAs prayer for issuance of temporary restraining order.
The Province commented84 on the PEZAs supplemental petition, to which the PEZA replied.85

The Court of Appeals held that the issue before it was whether the trial court judge gravely abused his
discretion in dismissing the PEZAs petition for prohibition. This issue, according to the Court of Appeals,
is properly addressed in a petition for certiorari over which it has jurisdiction to resolve. It, therefore,
maintained jurisdiction to resolve the PEZAs petition for certiorari. 88
Although it admitted that appeal, not certiorari, was the PEZAs proper remedy to reverse the trial courts
decision,89the Court of Appeals proceeded to decide the petition for certiorari in "the broader interest of
justice."90
The Court of Appeals ruled that the trial court judge gravely abused his discretion in dismissing the PEZAs
petition for prohibition. It held that Section 21 of Presidential Decree No. 66 and Section 51 of the Special
Economic Zone Act of 1995 granted the PEZA exemption from payment of real property taxes. 91 Based on
the criteria set in Manila International Airport Authority v. Court of Appeals, 92 the Court of Appeals found
that the PEZA is an instrumentality of the national government. No taxes, therefore, could be levied on it by
local government units.93
In the decision94 dated August 27, 2008, the Court of Appeals granted the PEZAs petition for certiorari. It
set aside the trial courts decision and nullified all the Provinces proceedings with respect to the collection
of real property taxes from the PEZA.
The Province filed a motion for reconsideration,95 which the Court of Appeals denied in the
resolution96 dated April 16, 2009 for lack of merit.
In its petition for review on certiorari with this court, 97 the Province of Bataan insists that the Court of
Appeals had no jurisdiction to take cognizance of the PEZAs petition for certiorari. The Province maintains
that the Court of Tax Appeals had jurisdiction to hear the PEZAs petition since it involved a local tax case
decided by a Regional Trial Court.98
The Province reiterates that the PEZA is not exempt from payment of real property taxes. The Province
points out that the EPZA, the PEZAs predecessor, had to be categorically exempted from payment of real
property taxes. The EPZA, therefore, was not inherently exempt from payment of real property taxes and so
is the PEZA. Since Congress omitted from the Special Economic Zone Act of 1995 a provision specifically
exempting the PEZA from payment of real property taxes, the Province argues that the PEZA is a taxable
entity. It cited the rule in statutory construction that provisions omitted in revised statutes are deemed
repealed.99

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With respect to Sections 24 and 51 of the Special Economic Zone Act of 1995 granting tax exemptions and
benefits, the Province argues that these provisions only apply to business establishments operating within
special economic zones,100 not to the PEZA.
This court ordered the PEZA tocomment on the Provinces petition for review on certiorari. 101 In its
comment,102 the PEZA argues that the Court of Appeals had jurisdiction to hear its petition for certiorari
since the issue was whether the trial court committed grave abuse of discretion in denying its petition for
injunction. The PEZA maintains thatit is exempt from payment of real property taxes under Section 21 of
Presidential Decree No. 66 and Section 51 of the Special Economic Zone Act of 1995.
The Province filed its reply,103 reiterating its arguments in its petition for review on certiorari. On the
PEZAs motion,104 this court consolidated the petitions filed by the City of Lapu-Lapu and the Province of
Bataan.105
The issues for our resolution are the following:
I. Whether the Court of Appeals erred in dismissing the City of Lapu-Lapus appeal for raising
pure questions of law;
II. Whether the Regional Trial Court, Branch 111, Pasay City had jurisdiction to hear, try, and
decide the City of Lapu-Lapus petition for declaratory relief;
III. Whether the petition for injunction filed before the Regional Trial Court, Branch 115, Pasay
City, is a local tax case appealable to the Court of Tax Appeals; and
IV. Whether the PEZA is exempt from payment of real property taxes.

of Court governs petitions for review before the Court of Appeals. In petitions for review under Rule 42,
questions of fact, of law, or mixed questions of fact and law may be raised. 107
The third mode is through an appealby certiorari before this court under Rule 45 where only questions of
law shall be raised.108
A question of fact exists when there is doubt as to the truth or falsity of the alleged facts. 109 On the other
hand, there is a question of law if the appeal raises doubt as to the applicable law on a certain set of facts. 110
Under Rule 50, Section 2, an improper appeal before the Court of Appeals is dismissed outright and shall
not be referred to the proper court:
SEC. 2. Dismissal of improper appeal to the Court of Appeals. An appeal under Rule 41 taken from the
Regional Trial Court to the Court of Appeals raising only questions of law shall be dismissed, issues purely
of law not being reviewable by said court. Similarly, an appeal by notice of appeal instead of by petition for
review from the appellate judgment of a Regional Trial Court shall be dismissed.
An appeal erroneously taken to the Court of Appeals shall not be transferred to the appropriate court but
shall be dismissed outright.
Rule 50, Section 2 repealed Rule 50, Section 3 of the 1964 Rules of Court, which provided that improper
appeals to the Court of Appeals shall not be dismissed but shall be certified to the proper court for
resolution:
Sec. 3. Where appealed case erroneously, brought. Where the appealed case has been erroneously
brought to the Court of Appeals, it shall not dismiss the appeal, but shall certify the case to the proper court,
with a specific and clear statement of the grounds therefor.

We deny the consolidated petitions.

I.
The Court of Appeals did not err in
dismissing the City of Lapu-Lapus
appeal for raising pure questions of law
Under the Rules of Court, there are three modes of appeal from Regional Trial Court decisions. The first
mode is through an ordinary appeal before the Court of Appeals where the decision assailed was rendered
in the exercise of the Regional Trial Courts original jurisdiction. Ordinary appeals are governed by Rule
41, Sections 3 to 13 of the Rules of Court. In ordinary appeals, questions of fact or mixed questions of fact
and law may be raised.106

With respect to appeals by certiorari directly filed before this court but which raise questions of fact,
paragraph 4(b) of Circular No. 2-90 dated March 9, 1990 states that this court "retains the option, in the
exercise of its sound discretion and considering the attendant circumstances, either itself to take cognizance
of and decide such issues or to refer them to the Court of Appeals for determination." In Indoyon, Jr. v.
Court of Appeals,111 we said that this court "cannot tolerate ignorance of the law on appeals." 112 It is not this
courts task to determine for litigants their proper remedies under the Rules. 113
We agree that the City availed itself of the wrong mode of appeal before the Court of Appeals. The City
raised pure questions of law in its appeal. The issue of whether the Regional Trial Court of Pasay had
jurisdiction over the PEZAs petition for declaratory relief is a question of law, jurisdiction being a matter
of law.114 The issue of whether the PEZA is a government instrumentality exempt from payment of real
property taxes is likewise a question of law since this question is resolved by examining the provisions of
the PEZAs charter as well as other laws relating to the PEZA. 115

The second mode is through a petition for review before the Court of Appeals where the decision assailed
was rendered by the Regional Trial Court in the exercise of its appellate jurisdiction. Rule 42 of the Rules

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The Court of Appeals, therefore, did not err in dismissing the Citys appeal pursuant to Rule 50, Section 2
of the Rules of Court.

Regional Trial Court to determine any question of construction or validity arising, and for a declaration of
his rights or duties, thereunder.

Nevertheless, considering the important questions involved in this case, we take cognizance of the Citys
petition for review on certiorari in the interest of justice.

An action for reformation of an instrument, to quiet title to real property or remove clouds therefrom, or to
consolidate ownership under Article 1607 of the Civil Code, may be brought under this Rule.

In Municipality of Pateros v. The Honorable Court of Appeals,116 the Municipality of Pateros filed an appeal
under Rule 42 before the Court of Appeals, which the Court of Appeals denied outright for raising pure
questions of law. This court agreed that the Municipality of Pateros "committed a procedural
infraction"117 and should have directly filed a petition for review on certiorari before this court.
Nevertheless, "in the interest of justice and in order to write finisto [the] controversy," 118 this court "opt[ed]
to relax the rules"119 and proceeded to decide the case. This court said:

The court with jurisdiction over petitions for declaratory relief is the Regional Trial Court, the subject
matter of litigation in an action for declaratory relief being incapable of pecuniary estimation. 121 Section 19
of the Judiciary Reorganization Act of 1980 provides:

While it is true that rules of procedure are intended to promote rather than frustrate the ends of justice, and
while the swift unclogging of the dockets of the courts is a laudable objective, it nevertheless must not be
met at the expense of substantial justice.
The Court has allowed some meritorious cases to proceed despite inherent procedural defects and lapses.
Thisis in keeping with the principle that rules of procedure are mere tools designed to facilitate the
attainment of justice, and that strict and rigid application ofrules which should result in technicalities that
tend to frustrate rather than promote substantial justice must always be avoided. It is a far better and more
prudent cause of action for the court to excuse a technical lapse and afford the parties a review of the case
to attain the ends of justice, rather than dispose of the case on technicality and cause grave injustice to the
parties, giving a false impression of speedy disposal of cases while actually resulting in more delay, if not a
miscarriage of justice.120
Similar to Municipality of Pateros, we opt to relax the rules in this case. The PEZA operates or otherwise
administers special economic zones all over the country. Resolving the substantive issue of whether the
PEZA is taxable for real property taxes will clarify the taxing powers of all local government units where
special economic zones are operated. This case, therefore, should be decided on the merits.
II.
The Regional Trial Court of Pasay had no
jurisdiction to hear, try, and decide the
PEZAs petition for declaratory relief
against the City of Lapu-Lapu
Rule 63 of the Rules of Court governs actions for declaratory relief. Section 1 of Rule 63 provides:
SECTION 1. Who may file petition. Any person interested under a deed, will, contract or other written
instrument, or whose rights are affected by a statute, executive order or regulation, ordinance, or any other
governmental regulation may, before breach or violation, thereof, bring an action in the appropriate

SEC. 19. Jurisdiction in Civil Cases. Regional Trial Courts shall exercise exclusive original jurisdiction:
(1) In all civil actions in which the subject of litigation is incapable of pecuniary estimation[.]
Consistent with the law, the Rules state that a petition for declaratory relief is filed "in the appropriate
Regional Trial Court."122
A special civil action for declaratory relief is filed for a judicial determination of any question of
construction or validity arising from, and for a declaration of rights and duties, under any of the following
subject matters: a deed, will, contract or other written instrument, statute, executive order or regulation,
ordinance, orany other governmental regulation. 123 However, a declaratory judgment may issue only if there
has been "no breach of the documents in question." 124 If the contract or statute subject matter of the action
has already been breached, the appropriate ordinary civil action must be filed. 125 If adequate relief is
available through another form of action or proceeding, the other action must be preferred over an action
for declaratory relief.126
In Ollada v. Central Bank of the Philippines,127 the Central Bank issued CB-IED Form No. 5 requiring
certified public accountants to submit an accreditation under oath before they were allowed to certify
financial statements submitted to the bank. Among those financial statements the Central Bank disallowed
were those certified by accountant Felipe B. Ollada.128 Claiming that the requirement "restrained the
legitimate pursuit of ones trade,"129
Ollada filed a petition for declaratory relief against the Central Bank.
This court ordered the dismissal of Olladas petition "without prejudice to [his] seeking relief in another
appropriate action."130 According to this court, Olladas right had already been violated when the Central
Bank refused to accept the financial statements he prepared. Since there was already a breach, a petition for
declaratory relief was not proper. Ollada must pursue the "appropriate ordinary civil action or
proceeding."131 This court explained:
Petitioner commenced this action as, and clearly intended it to be one for Declaratory Relief under the
provisions of Rule 66 of the Rules of Court. On the question of when a special civil action of this nature
would prosper, we have already held that the complaint for declaratory relief will not prosper if filed after a

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contract, statute or right has been breached or violated. In the present case such is precisely the situation
arising from the facts alleged in the petition for declaratory relief. As vigorously claimed by petitioner
himself, respondent had already invaded or violated his right and caused him injury all these giving him
a complete cause of action enforceable in an appropriate ordinary civil action or proceeding. The dismissal
of the action was, therefore, proper in the lightof our ruling in De Borja vs. Villadolid, 47 O.G. (5) p. 2315,
and Samson vs. Andal, G.R. No. L-3439, July 31, 1951, where we held that an action for declaratory relief
should be filed before there has been a breach of a contract, statutes or right, and that it is sufficient tobar
such action, that there had been a breach which would constitute actionable violation. The rule is that an
action for Declaratory Relief is proper only if adequate relief is not available through the means of other
existing forms of action or proceeding (1 C.J.S. 1027-1028).132
It is also required that the parties to the action for declaratory relief be those whose rights or interests are
affected by the contract or statute in question.133 "There must be an actual justiciable controversy or the
ripening seeds of one"134 between the parties. The issue between the parties "must be ripe for judicial
determination."135 An action for declaratory relief based on theoreticalor hypothetical questions cannot be
filed for our courts are not advisory courts.136
In Republic v. Roque,137 this court dismissed respondents petition for declaratory relief for lack of
justiciable controversy. According to this court, "[the respondents] fear of prospective prosecution [under
the Human Security Act] was solely based on remarks of certain government officials which were
addressed to the general public."138
In Velarde v. Social Justice Society,139 this court refused to resolve the issue of "whether or not [a religious
leaders endorsement] of a candidate for elective office or in urging or requiring the members of his flock
to vote for a specific candidate is violative [of the separation clause]." 140 According to the court, there was
no justiciable controversy and ordered the dismissal of the Social Justice Societys petition for declaratory
relief. This court explained: Indeed, SJS merely speculated or anticipated without factual moorings that, as
religious leaders, the petitioner and his co-respondents below had endorsed or threatened to endorse a
candidate or candidates for elective offices; and that such actual or threatened endorsement "will enable
[them] to elect men to public office who [would] in turn be forever beholden to their leaders, enabling them
to control the government"[;] and "pos[ing] a clear and present danger ofserious erosion of the peoples
faith in the electoral process[;] and reinforc[ing] their belief that religious leaders determine the ultimate
result of elections," which would then be violative of the separation clause.
Such premise is highly speculative and merely theoretical, to say the least. Clearly, it does not suffice to
constitute a justiciable controversy. The Petition does not even allege any indication or manifest intent on
the part of any of the respondents below to champion an electoral candidate, or to urge their so-called flock
to vote for, or not to vote for, a particular candidate. It is a time-honored rule that sheer speculation does not
give rise to an actionable right.
Obviously, there is no factual allegation that SJS rights are being subjected to any threatened, imminent
and inevitable violation that should be prevented by the declaratory relief sought. The judicial power and
duty of the courts to settle actual controversies involving rights that are legally demandable and enforceable
cannot be exercised when there is no actual or threatened violation of a legal right.

All that the 5-page SJS Petition prayed for was "that the question raised in paragraph 9 hereof be resolved."
In other words, it merely sought an opinion of the trial court on whether the speculated acts of religious
leaders endorsing elective candidates for political offices violated the constitutional principle on the
separation of church and state. SJS did not ask for a declaration of its rights and duties; neither did it pray
for the stoppage of any threatened violation of its declared rights. Courts, however, are proscribed from
rendering an advisory opinion.141 In sum, a petition for declaratory relief must satisfy six requisites:
[F]irst, the subject matter of the controversy must be a deed, will, contract or other written instrument,
statute, executive order or regulation, or ordinance; second, the terms of said documents and the validity
thereof are doubtful and require judicial construction; third, there must have been no breach of the
documents in question; fourth, there must be an actual justiciable controversy or the "ripening seeds" of one
between persons whose interests are adverse; fifth, the issue must be ripe for judicial determination; and
sixth, adequate relief is not available through other means or other forms of action or
proceeding.142 (Emphases omitted)
We rule that the PEZA erred in availing itself of a petition for declaratory relief against the City. The City
had already issued demand letters and real property tax assessment against the PEZA, in violation of the
PEZAs alleged tax-exempt status under its charter. The Special Economic Zone Act of 1995, the subject
matter of PEZAs petition for declaratory relief, had already been breached. The trial court, therefore, had
no jurisdiction over the petition for declaratory relief. There are several aspects of
jurisdiction.143 Jurisdiction over the subject matter is "the power to hear and determine cases of the general
class to which the proceedings in question belong." 144 It is conferred by law, which may either be the
Constitution or a statute.145 Jurisdiction over the subject matter means "the nature of the cause of action and
the relief sought."146 Thus, the cause of action and character of the relief sought as alleged in the complaint
are examinedto determine whether a court had jurisdiction over the subject matter.147 Any decision rendered
by a court without jurisdiction over the subjectmatter of the action is void. 148
Another aspect of jurisdiction is jurisdiction over the person. It is "the power of [a] court to render a
personal judgment or to subject the parties in a particular action to the judgment and other rulings rendered
in the action."149A court automatically acquires jurisdiction over the person of the plaintiff upon the filing of
the initiatory pleading.150With respect to the defendant, voluntary appearance in court or a valid service of
summons vests the court with jurisdiction over the defendants person. 151 Jurisdiction over the person of the
defendant is indispensable in actions in personamor those actions based on a partys personal
liability.152 The proceedings in an action in personamare void if the court had no jurisdiction over the person
of the defendant.153
Jurisdiction over the resor the thing under litigation is acquired either "by the seizure of the property under
legal process, whereby it is brought into actual custody of the law; or asa result of the institution of legal
proceedings, in which the power of the court is recognized and made effective." 154 Jurisdiction over the res
is necessary in actions in remor those actions "directed against the thing or property or status of a person
and seek judgments with respect thereto as against the whole world." 155 The proceedings in an action in rem
are void if the court had no jurisdiction over the thing under litigation. 156
In the present case, the Regional Trial Court had no jurisdiction over the subject matter of the action,
specifically, over the remedy sought. As this court explained in Malana v. Tappa: 157

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. . . an action for declaratory relief presupposes that there has been no actual breach of the instruments
involved or of rights arising thereunder. Since the purpose of an action for declaratory relief is to secure an
authoritative statement of the rights and obligations of the parties under a statute, deed, or contract for their
guidance in the enforcement thereof, or compliance therewith, and not to settle issues arising from an
alleged breach thereof, it may be entertained only before the breach or violation of the statute, deed, or
contract to which it refers. A petition for declaratory relief gives a practical remedy for ending controversies
that have not reached the state where another relief is immediately available; and supplies the need for a
form of action that will set controversies at rest before they lead to a repudiation of obligations, an invasion
of rights, and a commission of wrongs.
Where the law or contract has already been contravened prior to the filing of an action for declaratory
relief, the courts can no longer assume jurisdiction over the action. In other words, a court has no more
jurisdiction over an action for declaratory relief if its subject has already been infringed or transgressed
before the institution of the action.158 (Emphasis supplied)
The trial court should have dismissed the PEZAs petition for declaratory relief for lack of jurisdiction.
Once an assessment has already been issued by the assessor, the proper remedy of a taxpayer depends on
whether the assessment was erroneous or illegal.
An erroneous assessment "presupposes that the taxpayer is subject to the tax but is disputing the correctness
of the amount assessed."159 With an erroneous assessment, the taxpayer claims that the local assessor erred
in determining any of the items for computing the real property tax, i.e., the value of the real property or the
portion thereof subject to tax and the proper assessment levels. In case of an erroneous assessment, the
taxpayer must exhaust the administrative remedies provided under the Local Government Code before
resorting to judicial action.
The taxpayer must first pay the realproperty tax under protest. Section 252 of the Local Government Code
provides:
SECTION 252. Payment Under Protest. -(a) No protest shall be entertained unless the taxpayer first
paysthe tax. There shall be annotated on the tax receipts the words "paid under protest". The protest in
writing must be filed within thirty (30) days from payment of the tax to the provincial, city treasurer or
municipal treasurer, in the case of a municipality within Metropolitan Manila Area, who shall decide the
protest within sixty (60) days from receipt.
(b) The tax or a portion thereof paidunder protest, shall be held in trust by the treasurer
concerned.
(c) In the event that the protest is finally decided in favor of the taxpayer, the amount or portion
of the tax protested shall be refunded to the protestant, or applied as tax credit against his
existing or future tax liability.

(d) In the event that the protest is denied or upon the lapse of the sixty day period prescribed in
subparagraph (a), the taxpayer may avail of the remedies as provided for in Chapter 3, Title II,
Book II of this Code.
Should the taxpayer find the action on the protest unsatisfactory, the taxpayer may appeal with the Local
Board of Assessment Appeals within 60 days from receipt of the decision on the protest:
SECTION 226. Local Board of Assessment Appeals. - Any owner or person having legal interest in the
property who is not satisfied with the action of the provincial, city or municipal assessor in the assessment
of his property may, within sixty (60) days from the date of receipt of the written notice of assessment,
appeal to the Board of Assessment Appeals of the provincial or city by filing a petition under oath in the
form prescribed for the purpose, together with copies of the tax declarations and such affidavits or
documents submitted in support of the appeal.
Payment under protest and appeal to the Local Board of Assessment Appeals are "successive administrative
remedies to a taxpayer who questions the correctness of an assessment." 160 The Local Board Assessment
Appeals shall not entertain an appeal "without the action of the local assessor" 161 on the protest.
If the taxpayer is still unsatisfied after appealing with the Local Board of Assessment Appeals, the taxpayer
may appeal with the Central Board of Assessment Appeals within 30 days from receipt of the Local Boards
decision:
SECTION 229. Action by the Local Board of Assessment Appeals. - (a) The Board shall decide the appeal
within one hundred twenty (120) days from the date of receipt of such appeal. The Board, after hearing,
shall render its decision based on substantial evidence or such relevant evidence on record as a reasonable
mind might accept as adequate to support the conclusion. (b) In the exercise ofits appellate jurisdiction, the
Board shall have the power to summon witnesses, administer oaths, conduct ocular inspection, take
depositions, and issue subpoena and subpoena duces tecum. The proceedings of the Board shall be
conducted solely for the purpose of ascertaining the facts without necessarily adhering to technical rules
applicable in judicial proceedings.
(c) The secretary of the Board shall furnish the owner of the property or the person having legal interest
therein and the provincial or city assessor with a copy of the decision of the Board. In case the provincial or
city assessor concurs in the revision or the assessment, it shall be his duty to notify the owner of the
property or the person having legal interest therein of such factusing the form prescribed for the purpose.
The owner of the property or the person having legal interest therein or the assessor who is not satisfied
with the decision of the Board, may, within thirty (30) days after receipt of the decision of said Board,
appeal to the Central Board of Assessment Appeals, as herein provided. The decision of the Central Board
shall be final and executory. (Emphasis supplied)
On the other hand, an assessment is illegal if it was made without authority under the law.162 In case of an
illegal assessment, the taxpayer may directly resort to judicial action without paying under protest the
assessed tax and filing an appeal with the Local and Central Board of Assessment Appeals.

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In Ty v. Trampe,163 the Municipal Assessor of Pasig sent Alejandro B. Ty a notice of assessment with
respect to Tys real properties in Pasig. Without resorting to the administrative remedies under the Local
Government Code, Ty filed before the Regional Trial Court a petition, praying that the trial court nullify the
notice of assessment. In assessing the real property taxes due, the Municipal Assessor used a schedule of
market values solely prepared by him. This, Ty argued, was void for being contrary to the Local
Government Code requiring that the schedule of market values be jointly prepared by the provincial, city,
and municipal assessors of the municipalities within the Metropolitan Manila Area.
This court ruled that the assessmentwas illegal for having been issued without authority of the Municipal
Assessor. Reconciling provisions of the Real Property Tax Code and the Local Government Code, this
court held that the schedule of market valuesmust be jointly prepared by the provincial, city, and municipal
assessors of the municipalities within the Metropolitan Manila Area.
As to the issue of exhaustion of administrative remedies, this court held that Ty did not err in directly
resorting to judicial action. According to this court, payment under protest is required only "where there is a
question as to the reasonableness of the amount assessed." 164 As to appeals before the Local and Central
Board of Assessment Appeals, they are "fruitful only where questions of fact are involved." 165
Ty raised the issue of the legality of the notice of assessment, an issue that did not go into the
reasonableness of the amount assessed. Neither did the issue involve a question of fact. Ty raised a question
of law and, therefore, need not resort to the administrative remedies provided under the Local Government
Code.
In the present case, the PEZA did not avail itself of any of the remedies against a notice of assessment. A
petition for declaratory relief is not the proper remedy once a notice of assessment was already issued.
Instead of a petition for declaratory relief, the PEZA should have directly resorted to a judicial action. The
PEZA should have filed a complaint for injunction, the "appropriate ordinary civil action" 166 to enjoin the
City from enforcing its demand and collecting the assessed taxes from the PEZA. After all, a declaratory
judgment as to the PEZAs tax-exempt status is useless unless the City isenjoined from enforcing its
demand.

filed only with the court or tribunal where the Constitution or a statute says it can be brought. 172 Objections
to jurisdiction cannot be waived and may be brought at any stage of the proceedings, even on
appeal.173 When a case is filed with a court which has no jurisdiction over the action, the court shall motu
propriodismiss the case.174
On the other hand, venue is "the place of trial or geographical location in which an action or proceeding
should be brought." 175 In civil cases, venue is a matter of procedural law.176 A partys objections to venue
must be brought at the earliest opportunity either in a motion to dismiss or in the answer; otherwise the
objection shall be deemed waived.177 When the venue of a civil action is improperly laid, the court cannot
motu propriodismiss the case.178
The venue of an action depends on whether the action is a real or personal action. Should the action affect
title to or possession of real property, or interest therein, it is a real action. The action should be filed in the
proper court which has jurisdiction over the area wherein the real property involved, or a portion thereof, is
situated.179 If the action is a personal action, the action shall be filed with the proper court where the
plaintiff or any of the principal plaintiffs resides, or where the defendant or any of the principal defendants
resides, or in the case of a non-resident defendant where he may be found, at the election of the plaintiff. 180
The City was objecting to the venue of the action, not to the jurisdiction of the Regional Trial Court of
Pasay. In essence, the City was contending that the PEZAs petition is a real action as it affects title to or
possession of real property, and, therefore, the PEZA should have filed the petition with the Regional Trial
Court of Lapu-Lapu City where the real properties are located. However, whatever objections the City has
against the venue of the PEZAs action for declaratory relief are already deemed waived. Objections to
venue must be raised at the earliest possible opportunity.181 The City did not file a motion to dismiss the
petition on the ground that the venue was improperly laid. Neither did the City raise this objection in its
answer.
In any event, the law sought to be judicially interpreted in this case had already been breached. The
Regional Trial Court of Pasay, therefore, had no jurisdiction over the PEZAs petition for declaratory relief
against the City.
III.

Injunction "is a judicial writ, process or proceeding whereby a party is ordered to do or refrain from doing a
certain act."167 "It may be the main action or merely a provisional remedy for and as incident in the main
action."168 The essential requisites of a writ of injunction are: "(1) there must be a right in esseor the
existence of a right to be protected; and (2) the act against which the injunction is directed to constitute a
violation of such right."169
We note, however, that the City confused the concepts of jurisdiction and venue in contending that the
Regional Trial Court of Pasay had no jurisdiction because the real properties involved in this case are
located in the City of Lapu-Lapu.

The Court of Appeals had no jurisdiction

over the PEZAs petition for certiorari
against the Province of Bataan
Appeal is the remedy "to obtain a reversal or modification of a judgment on the merits." 182 A judgment on
the merits is one which "determines the rights and liabilities of the parties based on the disclosed facts,
irrespective of the formal, technical or dilatory objections." 183 It is not even necessary that the case
proceeded to trial.184 So long as the "judgment is general"185 and "the parties had a full legal opportunity to
be heard on their respective claims and contentions," 186 the judgment is on the merits.

On the one hand, jurisdiction is "the power to hear and determine cases of the general class to which the
proceedings in question belong."170 Jurisdiction is a matter of substantive law.171 Thus, an action may be

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On the other hand, certiorari is a special civil action filed to annul or modify a proceeding of a tribunal,
board, or officer exercising judicial or quasi-judicial functions. 187 Certiorari, which in Latin means "to be
more fully informed,"188was originally a remedy in the common law. This court discussed the history of the
remedy of certiorari in Spouses Delos Santos v. Metropolitan Bank and Trust Company: 189
In the common law, from which the remedy of certiorari evolved, the writ of certiorari was issued out of
Chancery, or the Kings Bench, commanding agents or officers of the inferior courts to return the record of
a cause pending before them, so as to give the party more sure and speedy justice, for the writ would enable
the superior court to determine froman inspection of the record whether the inferior courts judgment was
rendered without authority. The errors were of such a nature that, if allowed to stand, they would result in a
substantial injury to the petitioner to whom no other remedy was available. If the inferior court acted
without authority, the record was then revised and corrected in matters of law. The writ of certiorari was
limited to cases in which the inferior court was said to be exceeding its jurisdiction or was not proceeding
according to essential requirements of law and would lie only to review judicial or quasi-judicial acts. 190
In our jurisdiction, the term "certiorari" is used in two ways. An appeal before this court raising pure
questions of law is commenced by filing a petition for reviewon certiorari under Rule 45 of the Rules of
Court. An appeal by certiorari, which continues the proceedings commenced before the lower courts, 191 is
filed to reverse or modify judgments or final orders. 192 Under the Rules, an appeal by certiorarimust be filed
within 15 days from notice of the judgment or final order, or of the denial of the appellants motion for new
trial or reconsideration.193
A petition for certiorari under Rule 65, on the other hand, is an independent and original action filed to set
aside proceedings conducted without or in excess of jurisdiction or with grave abuse of discretion
amounting to lack or excess of jurisdiction.194 Under the Rules, a petition for certiorari may only be filed if
there is no appeal or any plain, speedy, or adequate remedy in the ordinary course of law.195 The petition
must be filed within 60 days from notice of the judgment, order, or resolution. 196
Because of the longer period to file a petition for certiorari, some litigants attempt to file petitions for
certiorari as substitutes for lost appeals by certiorari. However, Rule 65 is clear that a petition for certiorari
will not prosper if appeal is available. Appealis the proper remedy even if the error, or one of the errors,
raised is grave abuse of discretion on the part of the court rendering judgment. 197 If appeal is available, a
petition for certiorari cannot be filed.
In this case, the trial courts decision dated January 31, 2007 is a judgment on the merits. Based on the facts
disclosed by the parties, the trial court declared the PEZA liable to the Province of Bataan for real property
taxes. The PEZAs proper remedy against the trial courts decision, therefore, is appeal.
Since the PEZA filed a petition for certiorari against the trial courts decision, it availed itself of the wrong
remedy. As the Province of Bataan contended, the trial courts decision dated January 31, 2007 "is only an
error of judgment appealable to the higher level court and may not be corrected by filing a petition for
certiorari."198 That the trial court judge allegedly committed grave abuse of discretion does not make the
petition for certiorari the correct remedy. The PEZA should haveraised this ground in an appeal filed within
15 days from notice of the assailed resolution.

This court, "in the liberal spirit pervading the Rules of Court and in the interest of substantial justice," 199 has
treated petitions for certiorari as an appeal: "(1) if the petition for certiorari was filed within the
reglementary period within which to file a petition for review on certiorari; (2) when errors of judgment are
averred; and (3) when there is sufficient reason to justify the relaxation of the rules." 200 Considering that
"the nature of an action is determined by the allegationsof the complaint or the petition and the character of
the relief sought,"201 a petition which "actually avers errors of judgment rather than errors than that of
jurisdiction"202 may be considered a petition for review.
However, suspending the application of the Rules has its disadvantages. Relaxing procedural rules may
reduce the "effective enforcement of substantive rights," 203 leading to "arbitrariness, caprice, despotism, or
whimsicality in the settlement of disputes." 204 Therefore, for this court to suspend the application of the
Rules, the accomplishment of substantial justice must outweigh the importance of predictability of court
procedures.
The PEZAs petition for certiorari may be treated as an appeal. First, the petition for certiorari was filed
withinthe 15-day reglementary period for filing an appeal. The PEZA filed its petition for certiorari before
the Court of Appeals on October 15, 2007,205 which was 12 days from October 3, 2007206 when the PEZA
had notice of the trial courts order denying the motion for reconsideration.
Second, the petition for certiorari raised errors of judgment. The PEZA argued that the trial court erred in
ruling that it is not exempt from payment of real property taxes given Section 21 of Presidential Decree No.
66 and Sections 11 and 51 of the Special Economic Zone Act of 1995. 207
Third, there is sufficient reason to relax the rules given the importance of the substantive issue presented in
this case.
However, the PEZAs petition for certiorari was filed before the wrong court. The PEZA should have filed
its petition before the Court of Tax Appeals.
The Court of Tax Appeals has the exclusive appellate jurisdiction over local tax cases decided by Regional
Trial Courts. Section 7, paragraph (a)(3) of Republic Act No. 1125, as amended by Republic Act No. 9282,
provides:
Sec. 7. Jurisdiction. The [Court of Tax Appeals] shall exercise:
a. Exclusive appellate jurisdiction to review by appeal, as herein provided:
....
3. Decisions, orders or resolutions of the Regional Trial Courts in local tax cases originally
decided or resolved by them in the exercise of their original or appellate jurisdiction[.]

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The local tax cases referred to in Section 7, paragraph (a)(3) of Republic Act No. 1125, as amended,
include cases involving real property taxes. Real property taxation is governed by Book II of the Local
Government Code on "Local Taxation and Fiscal Matters." Real property taxes are collected by the Local
Treasurer,208 not by the Bureau of Internal Revenue in charge of collecting national internal revenue taxes,
fees, and charges.209
Section 7, paragraph (a)(5) of Republic Act No. 1125, as amended by Republic Act No. 9282, separately
provides for the exclusive appellate jurisdiction of the Court of Tax Appeals over decisions of the Central
Board of Assessment Appeals involving the assessment or collection of real property taxes:
Sec. 7. Jurisdiction. The [Court of Tax Appeals] shall exercise:
a. Exclusive appellate jurisdiction to review by appeal, as herein provided:
....
5. Decisions of the Central Board of Assessment Appeals in the exercise of its appellate jurisdiction over
cases involving the assessment and taxation of real property originally decided by the provincial or city
board of assessment appeals[.]
This separate provision, nevertheless, does not bar the Court of Tax Appeals from taking cognizance of trial
court decisions involving the collection of real property tax cases. Sections 256 210 and 266211 of the Local
Government Code expressly allow localgovernment units to file "in any court of competent jurisdiction"
civil actions to collect basic real property taxes. Should the trial court rule against them, local government
units cannot be barred from appealing before the Court of Tax Appeals the "highly specialized body
specifically created for the purpose of reviewing tax cases." 212
We have also ruled that the Court of Tax Appeals, not the Court of Appeals, has the exclusive original
jurisdiction over petitions for certiorari assailing interlocutory orders issued by Regional Trial Courts in a
local tax case. We explained in The City of Manila v. Hon. Grecia-Cuerdo 213 that while the Court of Tax
Appeals has no express grant of power to issue writs of certiorari under Republic Act No. 1125, 214 as
amended, the tax courts judicial power as defined in the Constitution 215 includes the power to determine
"whether or not there has been grave abuse of discretion amounting to lack or excess of jurisdiction on the
part of the [Regional Trial Court] in issuing an interlocutory order of jurisdiction in cases falling within the
exclusive appellate jurisdiction of the tax court." 216 We further elaborated:
Indeed, in order for any appellate court to effectively exercise its appellate jurisdiction, it must have the
authority to issue, among others, a writ of certiorari. In transferring exclusive jurisdiction over appealed tax
cases to the CTA, it can reasonably be assumed that the law intended to transfer also such power as is
deemed necessary, if not indispensable, in aid of such appellate jurisdiction. There is no perceivable reason
why the transfer should only be considered as partial, not total.
....

If this Court were to sustain petitioners' contention that jurisdiction over their certiorari petition lies with
the CA, this Court would be confirming the exercise by two judicial bodies, the CA and the CTA, of
jurisdiction over basically the same subject matter precisely the split-jurisdiction situation which is
anathema to the orderly administration of justice.The Court cannot accept that such was the legislative
motive, especially considering that the law expressly confers on the CTA, the tribunal with the specialized
competence over tax and tariff matters, the role of judicial review over local tax cases without mention of
any other court that may exercise such power. Thus, the Court agrees with the ruling of the CA that since
appellate jurisdiction over private respondents' complaint for tax refund is vested in the CTA, it follows that
a petition for certiorari seeking nullification of an interlocutory order issued in the said case should,
likewise, be filed with the same court. To rule otherwise would lead to an absurd situation where one court
decides an appeal in the main case while another court rules on an incident in the very same case.
Stated differently, it would be somewhat incongruent with the pronounced judicial abhorrence to split
jurisdiction to conclude that the intention of the law is to divide the authority over a local tax case filed
with the RTC by giving to the CA or this Court jurisdiction to issue a writ of certiorari against interlocutory
orders of the RTC but giving to the CTA the jurisdiction over the appeal from the decision of the trial court
in the same case. It is more in consonance with logic and legal soundness to conclude that the grant of
appellate jurisdiction to the CTA over tax cases filed in and decided by the RTC carries withit the power to
issue a writ of certiorari when necessary in aid of such appellate jurisdiction. The supervisory power or
jurisdiction of the CTA to issue a writ of certiorari in aid of its appellate jurisdiction should co-exist with,
and be a complement to, its appellate jurisdiction to review, by appeal, the final orders and decisionsof the
RTC, in order to have complete supervision over the acts of the latter.217 (Citations omitted)
In this case, the petition for injunction filed before the Regional Trial Court of Pasay was a local tax case
originally decided by the trial court in its original jurisdiction. Since the PEZA assailed a judgment, not an
interlocutory order, of the Regional Trial Court, the PEZAs proper remedy was an appeal to the Court of
Tax Appeals.
Considering that the appellate jurisdiction of the Court of Tax Appeals is to the exclusion of all other
courts, the Court of Appeals had no jurisdiction to take cognizance of the PEZAs petition. The Court of
Appeals acted without jurisdiction in rendering the decision in CA-G.R. SP No. 100984. Its decision in CAG.R. SP No. 100984 is void.218
The filing of appeal in the wrong court does not toll the period to appeal. Consequently, the decision of the
Regional Trial Court, Branch 115, Pasay City, became final and executory after the lapse of the 15th day
from the PEZAs receipt of the trial courts decision.219 The denial of the petition for injunction became
final and executory.
IV.
The remedy of a taxpayer depends on the
stage in which the local government unit
is enforcing its authority to impose real
property taxes

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The proper remedy of a taxpayer depends on the stage in which the local government unit is enforcing its
authority to collect real property taxes. For the guidance of the members of the bench and the bar, we
reiterate the taxpayers remedies against the erroneous or illegal assessment of real property taxes.
Exhaustion of administrative remedies under the Local Government Code is necessary in cases of
erroneous assessments where the correctness of the amount assessed is assailed. The taxpayer must first pay
the tax then file a protest with the Local Treasurer within 30 days from date of payment of tax. 220 If protest
is denied or upon the lapse of the 60-day period to decide the protest, the taxpayer may appeal to the Local
Board of Assessment Appeals within 60 days from the denial of the protest or the lapse of the 60-day period
to decide the protest.221 The Local Board of Assessment Appeals has 120 days to decide the appeal. 222
If the taxpayer is unsatisfied withthe Local Boards decision, the taxpayer may appeal before the Central
Board of Assessment Appeals within 30 days from receipt of the Local Boards decision. 223
The decision of the Central Board of Assessment Appeals is appealable before the Court of Tax Appeals En
Banc.224 The appeal before the Court of Tax Appeals shall be filed following the procedure under Rule 43 of
the Rules of Court.225
The Court of Tax Appeals decision may then be appealed before this court through a petition for review on
certiorari under Rule 45 of the Rules of Court raising pure questions of law.226
In case of an illegal assessment where the assessment was issued without authority, exhaustion of
administrative remedies is not necessary and the taxpayer may directly resort to judicial action. 227 The
taxpayer shall file a complaint for injunction before the Regional Trial Court 228 to enjoin the local
government unit from collecting real property taxes.
The party unsatisfied with the decision of the Regional Trial Court shall file an appeal, not a petition for
certiorari, before the Court of Tax Appeals, the complaint being a local tax case decided by the Regional
Trial Court.229 The appeal shall be filed within fifteen (15) days from notice of the trial courts decision.
The Court of Tax Appeals decision may then be appealed before this court through a petition for review on
certiorari under Rule 45 of the Rules of Court raising pure questions of law.230
In case the local government unit has issued a notice of delinquency, the taxpayer may file a complaint for
injunction to enjoin the impending sale of the real property at public auction. In case the local government
unit has already sold the property at public auction, the taxpayer must first deposit with the court the
amount for which the real property was sold, together with interest of 2% per month from the date ofsale to
the time of the institution of action. The taxpayer may then file a complaint to assail the validity of the
public auction.231 The decisions of the Regional Trial Court in these cases shall be appealable before the
Court of Tax Appeals,232 and the latters decisions appealable before this court through a petition for review
on certiorari under Rule 45 of the Rules of Court.233
V.

The PEZA is exempt from payment of

real property taxes
The jurisdictional errors in this case render these consolidated petitions moot. We do not review void
decisions rendered without jurisdiction.
However, the PEZA alleged that several local government units, including the City of Baguio and the
Province of Cavite, have issued their respective real property tax assessments against the PEZA. Other
local government units will likely follow suit, and either the PEZA or the local government units taxing the
PEZA may file their respective actions against each other.
In the interest of judicial economy234 and avoidance of conflicting decisions involving the same
issues,235 we resolve the substantive issue of whether the PEZA is exempt from payment of real property
taxes.
Real property taxes are annual taxes levied on real property such as lands, buildings, machinery, and other
improvements not otherwise specifically exempted under the Local Government Code. 236 Real property
taxes are ad valorem, with the amount charged based on a fixed proportion of the value of the
property.237 Under the law, provinces, cities, and municipalities within the Metropolitan Manila Area have
the power to levy real property taxes within their respective territories. 238
The general rule is that real properties are subject to real property taxes. This is true especially since the
Local Government Code has withdrawn exemptions from real property taxes of all persons, whether natural
or juridical:
SEC. 234. Exemptions from Real Property Tax. The following are exempted from payment of real
property tax:
(a) Real property owned by the Republic of the Philippines or any of its political subdivisions
except when the beneficial use thereof has been granted, for consideration or otherwise, to a
taxable person;
(b) Charitable institutions, churches, parsonages or convents appurtenant thereto, mosques,
nonprofit or religious cemeteries and all lands, buildings, and improvements actually, directly,
and exclusively used for religious, charitable or educational purposes;
(c) All machineries and equipment that are actually, directly and exclusively used by local water
districts and government-owned or controlled corporations engaged in the supply and
distribution of water and/or generation and transmission of electric power;
(d) All real property owned by duly registered cooperatives as provided under R.A. No. 6938;
and

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(e) Machinery and equipment usedfor pollution control and environmental protection.

(e) Machinery and equipment used for pollution control and environmental protection.

Except as provided herein, any exemption from payment of real property taxes previously granted to, or
presently enjoyed by, all persons, whether natural or juridical, including government-owned or -controlled
corporations are hereby withdrawn upon the effectivity of this Code. (Emphasis supplied)

Except as provided herein, any exemption from payment of real property tax previously granted to, or
presently enjoyed by, all persons, whether natural or juridical, including all government-owned or
-controlled corporations are hereby withdrawn upon the effectivity of this Code. (Emphasis supplied)

The person liable for real property taxes is the "taxable person who had actual or beneficial use and
possession [of the real property for the taxable period,] whether or not [the person owned the property for
the period he or she is being taxed]."239

For persons granted tax exemptions or incentives before the effectivity of the Local Government Code,
Section 193 withdrew these tax exemption privileges. These persons consist of both natural and juridical
persons, including government-owned or controlled corporations:

The exceptions to the rule are provided in the Local Government Code. Under Section 133(o), local
government units have no power to levy taxes of any kind on the national government, its agencies and
instrumentalities and local government units:

SEC. 193. Withdrawal of Tax Exemption Privileges. Unless otherwise provided in this code, tax
exemptions or incentives granted to or presently enjoyed by all persons, whether natural or juridical,
including government-owned or controlled corporations, except local water districts, cooperatives duly
registered under R.A. 6938, non stock and non profit hospitals and educational institutions, are hereby
withdrawn upon effectivity of this Code.

SEC. 133. Common Limitations on the Taxing Powers of Local Government Units. Unless otherwise
provided herein, the exercise of taxing powers of provinces, cities, municipalities, and barangays shall not
extend to the levy of the following:
....
(o) Taxes, fees or charges of any kind on the National Government, its agencies and instrumentalities and
local government units.
Specifically on real property taxes, Section 234 enumerates the persons and real property exempt from real
property taxes:
SEC. 234. Exemptions from Real Property Tax. The following are exempted from payment of real
property tax:
(a) Real property owned by the Republic of the Philippines or any of its political subdivisions
except when the beneficial use thereof has been granted, for consideration or otherwise, to a
taxable person;
(b) Charitable institutions, churches, parsonages or convents appurtenant thereto, mosques,
nonprofitor religious cemeteries and all lands, buildings, and improvements actually, directly,
and exclusively used for religious, charitable or educational purposes;
(c) All machineries and equipment that are actually, directly and exclusively used by local water
districts and government-owned or controlled corporations engaged in the supply and
distribution of water and/or generation and transmission of electric power;
(d) All real property owned by duly registered cooperatives as provided under R.A. No. 6938;
and

As discussed, Section 234 withdrew all tax privileges with respect to real property taxes. Nevertheless,
local government units may grant tax exemptions under such terms and conditions asthey may deem
necessary:
SEC. 192. Authority to Grant Tax Exemption Privileges. Local government units may, through ordinances
duly approved, grant tax exemptions, incentives or reliefs under such terms and conditions as they may
deem necessary.
In Mactan Cebu International Airport Authority v. Hon. Marcos, 240 this court classified the exemptions from
real property taxes into ownership, character, and usage exemptions. Ownership exemptions are exemptions
based on the ownership of the real property. The exemptions of real property owned by the Republic of the
Philippines, provinces, cities, municipalities, barangays, and registered cooperatives fall under this
classification.241 Character exemptions are exemptions based on the character of the real property. Thus, no
real property taxes may be levied on charitable institutions, houses and temples of prayer like churches,
parsonages, or convents appurtenant thereto, mosques, and non profitor religious cemeteries. 242
Usage exemptions are exemptions based on the use of the real property. Thus, no real property taxes may
be levied on real property such as: (1) lands and buildings actually, directly, and exclusively used for
religious, charitable or educational purpose; (2) machineries and equipment actually, directly and
exclusively used by local water districts or by government-owned or controlled corporations engaged in the
supply and distribution of water and/or generation and transmission of electric power; and (3) machinery
and equipment used for pollution control and environmental protection. 243
Persons may likewise be exempt from payment of real properties if their charters, which were enacted or
reenacted after the effectivity of the Local Government Code, exempt them payment of real property
taxes.244
V.

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(A) The PEZA is an instrumentality of the national government
An instrumentality is "any agency of the National Government, not integrated within the department
framework, vested with special functions or jurisdiction by law, endowed with some if not all corporate
powers, administering special funds, and enjoying operational autonomy, usually through a charter." 245
Examples of instrumentalities of the national government are the Manila International Airport
Authority,246 the Philippine Fisheries Development Authority,247 the Government Service Insurance
System,248 and the Philippine Reclamation Authority.249 These entities are not integrated within the
department framework but are nevertheless vested with special functions to carry out a declared policy of
the national government.
Similarly, the PEZA is an instrumentality of the national government. It is not integrated within the
department framework but is an agency attached to the Department of Trade and Industry.250 Book IV,
Chapter 7, Section 38(3)(a) of the Administrative Code of 1987 defines "attachment": SEC. 38. Definition
of Administrative Relationship. Unless otherwise expressly stated in the Code or in other laws defining
the special relationships of particular agencies, administrative relationships shall be categorized and defined
as follows:
....
(3) Attachment. (a) This refers to the lateral relationship between the department or its equivalent and the
attached agency or corporation for purposes of policy and program coordination. The coordination may be
accomplished by having the department represented in the governing board of the attached agency or
corporation, either as chairman or as a member, with or without voting rights, if this is permitted by the
charter; having the attached corporation or agency comply with a system of periodic reporting which shall
reflect the progress of the programs and projects; and having the department or its equivalent provide
general policies through its representative in the board, which shall serve as the framework for the internal
policies of the attached corporation or agency[.]
Attachment, which enjoys "a larger measure of independence" 251 compared with other administrative
relationships such as supervision and control, is further explained in Beja, Sr. v. Court of Appeals: 252
An attached agency has a larger measure of independence from the Department to which it is attached than
one which is under departmental supervision and control or administrative supervision. This is borne out by
the "lateral relationship" between the Department and the attached agency. The attachment is merely for
"policy and program coordination." With respect to administrative matters, the independence of an attached
agency from Departmental control and supervision is further reinforced by the fact that even an agency
under a Departments administrative supervision is free from Departmental interference with respect to
appointments and other personnel actions "in accordance with the decentralization of personnel functions"
under the Administrative Code of 1987. Moreover, the Administrative Code explicitly provides that Chapter
8 of Book IV on supervision and control shall not apply to chartered institutions attached to a
Department.253

With the PEZA as an attached agency to the Department of Trade and Industry, the 13-person PEZA Board
is chaired by the Department Secretary.254 Among the powers and functions of the PEZA is its ability to
coordinate with the Department of Trade and Industry for policy and program formulation and
implementation.255 In strategizing and prioritizing the development of special economic zones, the PEZA
coordinates with the Department of Trade and Industry.256
The PEZA also administers its own funds and operates autonomously, with the PEZA Board formulating
and approving the PEZAs annual budget.257 Appointments and other personnel actions in the PEZA are also
free from departmental interference, with the PEZA Board having the exclusive and final authority to
promote, transfer, assign and reassign officers of the PEZA.258
As an instrumentality of the national government, the PEZA is vested with special functions or jurisdiction
by law. Congress created the PEZA to operate, administer, manage and develop special economic zones in
the Philippines.259 Special economic zones are areas with highly developed or which have the potential to
be developed into agro-industrial, industrial tourist/recreational, commercial, banking, investment and
financial centers.260 By operating, administering, managing, and developing special economic zones which
attract investments and promote use of domestic labor, the PEZA carries out the following policy of the
Government: SECTION 2. Declaration of Policy. It is the declared policy of the government to translate
into practical realities the following State policies and mandates in the 1987 Constitution, namely:
(a) "The State recognizes the indispensable role of the private sector, encourages private
enterprise, and provides incentives to needed investments." (Sec. 20, Art. II)
(b) "The State shall promote the preferential use of Filipino labor, domestic materials and locally
produced goods, and adopt measures that help make them competitive." (Sec. 12, Art. XII) In
pursuance of these policies, the government shall actively encourage, promote, induce and
accelerate a sound and balanced industrial, economic and social development of the country in
order to provide jobs to the people especially those in the rural areas, increase their productivity
and their individual and family income, and thereby improve the level and quality of their living
condition through the establishment, among others, of special economic zones in suitable and
strategic locations in the country and through measures that shall effectively attract legitimate
and productive foreign investments. 261
Being an instrumentality of the national government, the PEZA cannot be taxed by local government units.
Although a body corporate vested with some corporate powers,262 the PEZA is not a government-owned or
controlled corporation taxable for real property taxes.
Section 2(13) of the Introductory Provisions of the Administrative Code of 1987 defines the term
"government-owned or controlled corporation":
SEC. 2. General Terms Defined. Unless the specific words of the text, or the context as a whole, or a
particular statute, shall require a different meaning:

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....
(13) Government-owned or controlled corporation refers to any agency organized as a stock or non-stock
corporation, vested with functions relating to public needs whether governmental or proprietary in nature,
and owned by the Government directly or through its instrumentalities either wholly, or, where applicable
as in the case of stock corporations, to the extent of at least fifty-one (51) per cent of its capital stock:
Provided, That government owned or controlled corporations may be further categorized by the Department
of the Budget, the Civil Service Commission, and the Commission on Audit for purposes of the exercise
and discharge of their respective powers, functions and responsibilities with respect to such corporations.
Government entities are created by law, specifically, by the Constitution or by statute. In the case of
government-owned or controlled corporations, they are incorporated by virtue of special charters 263 to
participate in the market for special reasons which may be related to dysfunctions or inefficiencies of the
market structure. This is to adjust reality as against the concept of full competition where all market players
are price takers. Thus, under the Constitution, government-owned or controlled corporations are created in
the interest of the common good and should satisfy the test of economic viability.264 Article XII, Section 16
of the Constitution provides:
Section 16. The Congress shall not, except by general law, provide for the formation, organization, or
regulation of private corporations. Government-owned or controlled corporations may be created or
established by special charters in the interest of the common good and subject to the test of economic
viability.
Economic viability is "the capacity to function efficiently in business." 265 To be economically viable, the
entity "should not go into activities which the private sector can do better." 266
To be considered a government-owned or controlled corporation, the entity must have been organized as a
stock or non-stock corporation.267

creates through special charters corporations that perform economic or commercial activities, such entities
known as "government-owned or controlled corporations" must meetthe test of economic viability
because they compete in the market place.
....
Commissioner Blas F. Ople, proponent of the test of economic viability, explained to the Constitutional
Commission the purpose of this test, as follows:
MR. OPLE: Madam President, the reason for this concern is really that when the government creates a
corporation, there is a sense in which this corporation becomes exempt from the test of economic
performance. We know what happened in the past. If a government corporation loses, then it makes its
claim upon the taxpayers' money through new equity infusions from the government and what is always
invoked is the common good. That is the reason why this year, out of a budget of P115 billion for the entire
government, about P28 billion of this will go into equity infusions to support a few government financial
institutions. And this is all taxpayers' money which could have been relocated to agrarian reform, to social
services like health and education, to augment the salaries of grossly underpaid public employees. And yet
this is all going down the drain.
Therefore, when we insert the phrase "ECONOMIC VIABILITY" together with the "common good," this
becomes a restraint on future enthusiasts for state capitalism to excuse themselves from the responsibility
of meeting the market test so that they become viable. And so, Madam President, I reiterate, for the
committee's consideration and I am glad that I am joined in this proposal by Commissioner Foz, the
insertion of the standard of "ECONOMIC VIABILITY OR THE ECONOMIC TEST," together with the
common good.
....

Government instrumentalities, on the other hand, are also created by law but partake of sovereign
functions. When a government entity performs sovereign functions, it need not meet the test of economic
viability. In Manila International Airport Authority v. Court of Appeals, 268 this court explained:

Clearly, the test of economic viability does not apply to government entities vested with corporate powers
and performing essential public services. The State is obligated to render essential public services
regardless of the economic viability of providing such service. The noneconomic viability of rendering
such essential public service does not excuse the State from withholding such essential services from the
public.269 (Emphases and citations omitted)

In contrast, government instrumentalities vested with corporate powers and performing governmental
orpublic functions need not meet the test of economic viability. These instrumentalities perform essential
public services for the common good, services that every modern State must provide its citizens. These
instrumentalities need not be economically viable since the government may even subsidize their entire
operations. These instrumentalities are not the "government-owned or controlled corporations" referred to
in Section 16, Article XII of the 1987 Constitution.

The law created the PEZAs charter. Under the Special Economic Zone Act of 1995, the PEZA was
established primarily to perform the governmental function of operating,administering, managing, and
developing special economic zones to attract investments and provide opportunities for preferential use of
Filipino labor.

Thus, the Constitution imposes no limitation when the legislature creates government instrumentalities
vested with corporate powers but performing essential governmental or public functions. Congress has
plenary authority to create government instrumentalities vested with corporate powers provided these
instrumentalities perform essential government functions or public services. However, when the legislature

Under its charter, the PEZA was created a body corporate endowed with some corporate powers. However,
it was not organized as a stock270 or non-stock271 corporation. Nothing in the PEZAs charter provides that
the PEZAs capital is divided into shares.272 The PEZA also has no members who shall share in the PEZAs
profits.

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The PEZA does not compete with other economic zone authorities in the country. The government may
even subsidize the PEZAs operations. Under Section 47 of the Special Economic Zone Act of 1995, "any
sum necessary to augment [the PEZAs] capital outlay shall be included in the General Appropriations Act
to be treated as an equity of the national government." 273
The PEZA, therefore, need not be economically viable. It is not a government-owned or controlled
corporation liable for real property taxes.

SECTION 1. Assumption of EPZAs Powers and Functions by PEZA. All the powers, functions and
responsibilities of EPZA as provided under its Charter, Presidential Decree No. 66, as amended, insofar as
they are not inconsistent with the powers,functions and responsibilities of the PEZA, as mandated under
Republic Act No. 7916, shall hereafter be assumed and exercised by the PEZA. Henceforth, the EPZA shall
be referred to as the PEZA.
The following sections of the Special Economic Zone Act of 1995 provide for the PEZAs
powers,functions, and responsibilities:

V. (B)
The PEZA assumed the non-profit character, including the tax exempt status, of the EPZA
The PEZAs predecessor, the EPZA, was declared non-profit in character with all its revenues devoted for
its development, improvement, and maintenance. Consistent with this non-profit character, the EPZA was
explicitly declared exempt from real property taxes under its charter. Section 21 of Presidential Decree No.
66 provides:
Section 21. Non-profit Character of the Authority; Exemption from Taxes. The Authority shall be nonprofit and shall devote and use all its returns from its capital investment, as well as excess revenues from its
operations, for the development, improvement and maintenance and other related expenditures of the
Authority to pay its indebtedness and obligations and in furtherance and effective implementation of the
policy enunciated in Section 1 of this Decree. In consonance therewith, the Authority is hereby declared
exempt:
....
(b) From all income taxes, franchise taxes, realty taxes and all other kinds of taxes and licenses to be paid
to the National Government, its provinces, cities, municipalities and other government agencies and
instrumentalities[.]
The Special Economic Zone Act of 1995, on the other hand, does not specifically exempt the PEZA from
payment of real property taxes.
Nevertheless, we rule that the PEZA is exempt from real property taxes by virtue of its charter. A provision
in the Special Economic Zone Act of 1995 explicitly exempting the PEZA is unnecessary. The PEZA
assumed the real property exemption of the EPZA under Presidential Decree No. 66.
Section 11 of the Special Economic Zone Act of 1995 mandated the EPZA "to evolve into the PEZA in
accordance with the guidelines and regulations set forth in an executive order issued for this purpose."
President Ramos then issued Executive Order No. 282 in 1995, ordering the PEZA to assume the EPZAs
powers, functions, and responsibilities under Presidential Decree No. 66 not inconsistent with the Special
Economic Zone Act of 1995:

SEC. 5. Establishment of ECOZONES. To ensure the viability and geographical dispersal of

ECOZONES through a system of prioritization, the following areas are initially identified as ECOZONES,
subject to the criteria specified in Section 6:
....
The metes and bounds of each ECOZONE are to be delineated and more particularly described in a
proclamation to be issued by the President of the Philippines, upon the recommendation of the Philippine
Economic Zone Authority (PEZA), which shall be established under this Act, in coordination with the
municipal and / or city council, National Land Use Coordinating Committee and / or the Regional Land
Use Committee.
SEC. 6. Criteria for the Establishment of Other ECOZONES. In addition to the ECOZONES identified in
Section 5 of this Act, other areas may be established as ECOZONES in a proclamation to be issued by the
President of the Philippines subject to the evaluation and recommendation of the PEZA, based on a detailed
feasibility and engineering study which must conform to the following criteria:
(a) The proposed area must be identified as a regional growth center in the Medium-Term
Philippine Development Plan or by the Regional Development Council;
(b) The existence of required infrastructure in the proposed ECOZONE, such as roads, railways,
telephones, ports, airports, etc., and the suitability and capacity of the proposed site to absorb
such improvements;
(c) The availability of water source and electric power supply for use of the ECOZONE;
(d) The extent of vacant lands available for industrial and commercial development and future
expansion of the ECOZONE as well as of lands adjacent to the ECOZONE available for
development of residential areas for the ECOZONE workers;
(e) The availability of skilled, semi-skilled and non-skilled trainable labor force in and around
the ECOZONE;

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(f) The area must have a significant incremental advantage over the existing economic zones and
its potential profitability can be established;
(g) The area must be strategically located; and
(h) The area must be situated where controls can easily be established to curtail smuggling
activities.
Other areas which do not meet the foregoing criteria may be established as ECOZONES: Provided, That
the said area shall be developed only through local government and/or private sector initiative under any of
the schemes allowed in Republic Act No. 6957 (the build-operate-transfer law), and without any financial
exposure on the part of the national government: Provided, further, That the area can be easily secured to
curtail smuggling activities: Provided, finally, That after five (5) years the area must have attained a
substantial degree of development, the indicators of which shall be formulated by the PEZA.
SEC. 7. ECOZONE to be a Decentralized Agro-Industrial, Industrial, Commercial / Trading, Tourist,
Investment and Financial Community. - Within the framework of the Constitution, the interest of national
sovereignty and territorial integrity of the Republic, ECOZONE shall be developed, as much as possible,
into a decentralized, self-reliant and self-sustaining industrial, commercial/trading, agro-industrial, tourist,
banking, financial and investment center with minimum government intervention. Each ECOZONE shall
be provided with transportation, telecommunications, and other facilities needed to generate linkage with
industries and employment opportunitiesfor its own inhabitants and those of nearby towns and cities.
The ECOZONE shall administer itself on economic, financial, industrial, tourism development and such
other matters within the exclusive competence of the national government.
The ECOZONE may establish mutually beneficial economic relations with other entities within the
country, or, subject to the administrative guidance of the Department of Foreign Affairs and/or the
Department of Trade and Industry, with foreign entities or enterprises.
Foreign citizens and companies owned by non-Filipinos in whatever proportion may set up enterprises in
the ECOZONE, either by themselves or in joint venture with Filipinos in any sector of industry,
international trade and commerce within the ECOZONE. Their assets, profits and other legitimate interests
shall be protected: Provided, That the ECOZONE through the PEZA may require a minimum investment
for any ECOZONE enterprises in freely convertible currencies: Provided, further, That the new investment
shall fall under the priorities, thrusts and limits provided for in the Act.
SEC. 8. ECOZONE to be Operated and Managed as Separate Customs Territory. The ECOZONE shall be
managed and operated by the PEZA as separate customs territory.
The PEZA is hereby vested with the authority to issue certificate of origin for products manufactured or
processed in each ECOZONE in accordance with the prevailing rules or origin, and the pertinent
regulations of the Department of Trade and Industry and/or the Department of Finance.

SEC. 9. Defense and Security. The defense of the ECOZONE and the security of its perimeter fence shall
be the responsibility of the national government in coordination with the PEZA. Military forces sent by the
national government for the purpose of defense shall not interfere in the internal affairs of any of the
ECOZONE and expenditure for these military forces shall be borne by the national government. The PEZA
may provide and establish the ECOZONES internal security and firefighting forces.
SEC. 10. Immigration. Any investor within the ECOZONE whose initial investment shall not be less than
One Hundred Fifty Thousand Dollars ($150,000.00), his/her spouse and dependent children under twentyone (21) years of age shall be granted permanent resident status within the ECOZONE. They shall have
freedom of ingress and egress to and from the ECOZONE without any need of special authorization from
the Bureau of Immigration.
The PEZA shall issue working visas renewable every two (2) years to foreign executives and other aliens,
processing highly-technical skills which no Filipino within the ECOZONE possesses, as certified by the
Department of Labor and Employment. The names of aliens granted permanent resident status and working
visas by the PEZA shall be reported to the Bureau of Immigration within thirty (30) days after issuance
thereof.
SEC. 13. General Powers and Functions of the Authority. The PEZA shall have the following powers and
functions:
(a) To operate, administer, manage and develop the ECOZONE according to the principles and
provisions set forth in this Act;
(b) To register, regulate and supervise the enterprises in the ECOZONE in an efficient and
decentralized manner;
(c) To coordinate with local government units and exercise general supervision over the
development, plans, activities and operations of the ECOZONES, industrial estates, export
processing zones, free trade zones, and the like;
(d) In coordination with local government units concerned and appropriate agencies, to
construct,acquire, own, lease, operate and maintain on its own or through contract, franchise,
license, bulk purchase from the private sector and build-operate-transfer scheme or joint venture,
adequate facilities and infrastructure, such as light and power systems, water supply and
distribution systems, telecommunication and transportation, buildings, structures, warehouses,
roads, bridges, ports and other facilities for the operation and development of the ECOZONE;
(e) To create, operate and/or contractto operate such agencies and functional units or offices of
the authority as it may deem necessary;
(f) To adopt, alter and use a corporate seal; make contracts, lease, own or otherwise dispose of
personal or real property; sue and be sued; and otherwise carry out its duties and functions as
provided for in this Act;

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(g) To coordinate the formulation and preparation of the development plans of the different
entities mentioned above;
(h) To coordinate with the National Economic Development Authority (NEDA), the Department
of Trade and Industry (DTI), the Department of Science and Technology (DOST), and the local
government units and appropriate government agencies for policy and program formulation and
implementation; and
(i) To monitor and evaluate the development and requirements of entities in subsection (a) and
recommend to the local government units or other appropriate authorities the location,
incentives, basic services, utilities and infrastructure required or to be made available for said
entities.
SEC. 17. Investigation and Inquiries. Upon a written formal complaint made under oath, which on its face
provides reasonable basis to believe that some anomaly or irregularity might have been committed, the
PEZA or the administrator of the ECOZONE concerned, shall have the power to inquire into the conduct of
firms or employees of the ECOZONE and to conduct investigations, and for that purpose may subpoena
witnesses, administer oaths, and compel the production of books, papers, and other evidences: Provided,
That to arrive at the truth, the investigator(s) may grant immunity from prosecution to any person whose
testimony or whose possessions of documents or other evidence is necessary or convenient to determine the
truth in any investigation conducted by him or under the authority of the PEZA or the administrator of the
ECOZONE concerned.
SEC. 21. Development Strategy of the ECOZONE. - The strategy and priority of development of each
ECOZONE established pursuant to this Act shall be formulated by the PEZA, in coordination with the
Department of Trade and Industry and the National Economic and Development Authority; Provided, That
such development strategy is consistent with the priorities of the national government as outlined in the
medium-term Philippine development plan. It shall be the policy of the government and the PEZA to
encourage and provide Incentives and facilitate private sector participation in the construction and
operation of public utilities and infrastructure in the ECOZONE, using any of the schemes allowed in
Republic Act No. 6957 (the build-operate-transfer law).
SEC. 22. Survey of Resources. The PEZA shall, in coordination with appropriate authorities and
neighboring cities and municipalities, immediately conduct a survey of the physical, natural assets and
potentialities of the ECOZONE areas under its jurisdiction.
SEC. 26. Domestic Sales. Goods manufactured by an ECOZONE enterprise shall be made available for
immediate retail sales in the domestic market, subject to payment of corresponding taxes on the raw
materials and other regulations that may be adopted by the Board of the PEZA. However, in order to
protect the domestic industry, there shall be a negative list of Industries that willbe drawn up by the PEZA.
Enterprises engaged in the industries included in the negative list shall not be allowed to sell their products
locally. Said negative list shall be regularly updated by the PEZA.

The PEZA, in coordination with the Department of Trade and Industry and the Bureau of Customs, shall
jointly issue the necessary implementing rules and guidelines for the effective Implementation of this
section.
SEC. 29. Eminent Domain. The areas comprising an ECOZONE may be expanded or reduced when
necessary. For this purpose, the government shall have the power to acquire, either by purchase, negotiation
or condemnation proceedings, any private lands within or adjacent to the ECOZONE for:
a. Consolidation of lands for zone development purposes;
b. Acquisition of right of way to the ECOZONE; and
c. The protection of watershed areas and natural assets valuable to the prosperity of the
ECOZONE.
If in the establishment of a publicly-owned ECOZONE, any person or group of persons who has been
occupying a parcel of land within the Zone has to be evicted, the PEZA shall provide the person or group of
persons concerned with proper disturbance compensation: Provided, however, That in the case of displaced
agrarian reform beneficiaries, they shall be entitled to the benefits under the Comprehensive Agrarian
Reform Law, including but not limited to Section 36 of Republic Act No. 3844, in addition to a homelot in
the relocation site and preferential employment in the project being undertaken.
SEC. 32. Shipping and Shipping Register. Private shipping and related business including private
container terminals may operate freely in the ECOZONE, subject only to such minimum reasonable
regulations of local application which the PEZA may prescribe.
The PEZA shall, in coordination with the Department of Transportation and Communications, maintain a
shipping register for each ECOZONE as a business register of convenience for ocean-going vessels and
issue related certification.
Ships of all sizes, descriptions and nationalities shall enjoy access to the ports of the ECOZONE, subject
only to such reasonable requirement as may be prescribed by the PEZA In coordination with the
appropriate agencies of the national government.
SEC. 33. Protection of Environment. - The PEZA, in coordination with the appropriate agencies, shall take
concrete and appropriate steps and enact the proper measure for the protection of the local environment.
SEC. 34. Termination of Business. - Investors In the ECOZONE who desire to terminate business or
operations shall comply with such requirements and procedures which the PEZA shall set, particularly
those relating to the clearing of debts. The assets of the closed enterprise can be transferred and the funds
con be remitted out of the ECOZONE subject to the rules, guidelines and procedures prescribed jointly by
the Bangko Sentral ng Pilipinas, the Department of Finance and the PEZA.

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SEC. 35. Registration of Business Enterprises. - Business enterprises within a designated ECOZONE shall
register with the PEZA to avail of all incentives and benefits provided for in this Act.
SEC. 36. One Stop Shop Center. - The PEZA shall establish a one stop shop center for the purpose of
facilitating the registration of new enterprises in the ECOZONE. Thus, all appropriate government agencies
that are Involved In registering, licensing or issuing permits to investors shall assign their representatives to
the ECOZONE to attend to Investors requirements.
SEC. 39. Master Employment Contracts. - The PEZA, in coordination with the Department of Tabor and
Employment, shall prescribe a master employment contract for all ECOZONE enterprise staff members and
workers, the terms of which provide salaries and benefits not less than those provided under this Act, the
Philippine Labor Code, as amended, and other relevant issuances of the national government.
SEC. 41. Migrant Worker. - The PEZA, in coordination with the Department of Labor and Employment,
shall promulgate appropriate measures and programs leading to the expansion of the services of the
ECOZONE to help the local governments of nearby areas meet the needs of the migrant workers.
SEC. 42. Incentive Scheme. - An additional deduction equivalent to one- half (1/2) of the value of training
expenses incurred in developing skilled or unskilled labor or for managerial or other management
development programs incurred by enterprises in the ECOZONE can be deducted from the national
government's share of three percent (3%) as provided In Section 24.
The PEZA, the Department of Labor and Employment, and the Department of Finance shall jointly make a
review of the incentive scheme provided In this section every two (2) years or when circumstances so
warrant.
SEC. 43. Relationship with the Regional Development Council. - The PEZA shall determine the
development goals for the ECOZONE within the framework of national development plans, policies and
goals, and the administrator shall, upon approval by the PEZA Board, submit the ECOZONE plans,
programs and projects to the regional development council for inclusion in and as inputs to the overall
regional development plan.
SEC. 44. Relationship with the Local Government Units. - Except as herein provided, the local government
units comprising the ECOZONE shall retain their basic autonomy and identity. The cities shall be governed
by their respective charters and the municipalities shall operate and function In accordance with Republic
Act No. 7160, otherwise known as the Local Government Code of 1991.
SEC. 45. Relationship of PEZA to Privately-Owned Industrial Estates. Privately-owned industrial estates
shall retain their autonomy and independence and shall be monitored by the PEZA for the implementation
of incentives.
SEC. 46. Transfer of Resources. - The relevant functions of the Board of Investments over industrial estates
and agri-export processing estates shall be transferred to the PEZA. The resources of government owned
Industrial estates and similar bodies except the Bases Conversion Development Authority and those areas

identified under Republic Act No. 7227, are hereby transferred to the PEZA as the holding agency. They are
hereby detached from their mother agencies and attached to the PEZA for policy, program and operational
supervision.
The Boards of the affected government-owned industrial estates shall be phased out and only the
management level and an appropriate number of personnel shall be retained.
Government personnel whose services are not retained by the PEZA or any government office within the
ECOZONE shall be entitled to separation pay and such retirement and other benefits theyare entitled to
under the laws then in force at the time of their separation: Provided, That in no case shall the separation
pay be less than one and one-fourth (1 1/4) month of every year of service.
The non-profit character of the EPZA under Presidential Decree No. 66 is not inconsistent with any of the
powers, functions, and responsibilities of the PEZA. The EPZAs non-profit character, including the
EPZAs exemption from real property taxes, must be deemed assumed by the PEZA.
In addition, the Local Government Code exempting instrumentalities of the national government from real
property taxes was already in force274 when the PEZAs charter was enacted in 1995. It would have been
redundant to provide for the PEZAs exemption in its charter considering that the PEZA is already exempt
by virtue of Section 133(o) of the Local Government Code.
As for the EPZA, Commonwealth Act No. 470 or the Assessment Law was in force when the EPZAs
charter was enacted. Unlike the Local Government Code, Commonwealth Act No. 470 does not contain a
provision specifically exempting instrumentalities of the national government from payment of real
property taxes.275 It was necessary to put an exempting provision in the EPZAs charter.
Contrary to the PEZAs claim, however, Section 24 of the Special Economic Zone Act of 1995 is not a basis
for the PEZAs exemption. Section 24 of the Special Economic Zone Act of 1995 provides:
Sec. 24. Exemption from National and Local Taxes. Except for real property taxes on land owned by
developers, no taxes, local and national, shall be imposed on business establishments operating within the
ECOZONE. In lieu thereof, five percent (5%) of the gross income earned by all business enterprises within
the ECOZONEshall be paid and remitted as follows:
(a) Three percent (3%) to the National Government;
(b) Two percent (2%) which shall be directly remitted by the business establishments to the
treasurer's office of the municipality or city where the enterprise is located. (Emphasis supplied)
Tax exemptions provided under Section 24 apply only to business establishments operating within
economic zones. Considering that the PEZA is not a business establishment but an instrumentality
performing governmental functions, Section 24 is inapplicable to the PEZA. Also, contrary to the PEZAs
claim, developers ofeconomic zones, whether public or private developers, are liable for real property taxes

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on lands they own. Section 24 does not distinguish between a public and private developer. Thus, courts
cannot distinguish.276 Unless the public developer is exempt under the Local Government Code or under its
charter enacted after the Local Government Codes effectivity, the public developer must pay real property
taxes on their land.
At any rate, the PEZA cannot be taxed for real property taxes even if it acts as a developer or operator of
special economic zones. The PEZA is an instrumentality of the national government exempt from payment
of real property taxes under Section 133(o) of the Local Government Code. As this court said in Manila
International Airport Authority, "there must be express language in the law empowering local governments
to tax national government instrumentalities. Any doubt whether such power exists is resolved against local
governments."277
V. (C)
Real properties under the PEZAs title are owned by the Republic of the Philippines
Under Section 234(a) of the LocalGovernment Code, real properties owned by the Republic of the
Philippines are exempt from real property taxes:
SEC. 234. Exemptions from Real Property Tax. The following are exempted from payment of real
property tax:
(a) Real property owned by the Republic of the Philippines or any of its political subdivisions except when
the beneficial use thereof has been granted, for consideration or otherwise, to a taxable person[.]
Properties owned by the state are either property of public dominion or patrimonial property. Article 420 of
the Civil Code of the Philippines enumerates property of public dominion:
Art. 420. The following things are property of public dominion:

public dominion is void for being contrary to public policy. Essential public services will stop if properties
of public dominion are subject to encumbrances, foreclosures and auction sale[.] 279
On the other hand, all other properties of the state that are not intended for public use or are not intended
for some public service or for the development of the national wealth are patrimonial properties. Article
421 of the Civil Code of the Philippines provides:
Art. 421. All other property of the State, which is not of the character stated in the preceding article, is
patrimonial property.
Patrimonial properties are also properties of the state, but the state may dispose of its patrimonial property
similar to private persons disposing of their property. Patrimonial properties are within the commerce of
man and are susceptible to prescription, unless otherwise provided. 280
In this case, the properties sought to be taxed are located in publicly owned economic zones. These
economic zones are property of public dominion. The City seeks to tax properties located within the
Mactan Economic Zone,281 the site of which was reserved by President Marcos under Proclamation No.
1811, Series of 1979. Reserved lands are lands of the public domain set aside for settlement or public use,
and for specific public purposes by virtue of a presidential proclamation. 282 Reserved lands are inalienable
and outside the commerce of man,283 and remain property of the Republic until withdrawn from publicuse
either by law or presidential proclamation.284 Since no law or presidential proclamation has been issued
withdrawing the site of the Mactan Economic Zone from public use, the property remains reserved land.
As for the Bataan Economic Zone, the law consistently characterized the property as a port. Under
Republic Act No. 5490, Congress declared Mariveles, Bataan "a principal port of entry" 285 to serve as site
of a foreign trade zone where foreign and domestic merchandise may be brought in without being subject to
customs and internal revenue laws and regulations of the Philippines. 286
Section 4 of Republic Act No. 5490 provided that the foreign trade zone in Mariveles, Bataan "shall at all
times remain to be owned by the Government":

(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges
constructed by the State, banks, shores, roadsteads, and others of similar character;

SEC. 4. Powers and Duties. The Foreign Trade Zone Authority shall have the following powers and
duties:

(2) Those which belong to the State, without belonging for public use, and are intended for some
public service or for the development of the national wealth.

a. To fix and delimit the site of the Zone which at all times remain to be owned by the Government, and
which shall have a contiguous and adequate area with well defined and policed boundaries, with adequate
enclosures to segregate the Zone from the customs territory for protection of revenues, together with
suitable provisions for ingress and egress of persons, conveyance, vessels and merchandise sufficient for
the purpose of this Act[.] (Emphasis supplied)

Properties of public dominion are outside the commerce of man. These properties are exempt from "levy,
encumbrance or disposition through public or private sale." 278 As this court explained in Manila
International Airport Authority:
Properties of public dominion, being for public use, are not subject to levy, encumbrance or disposition
through public or private sale. Any encumbrance, levy on execution or auction sale of any property of

The port in Mariveles, Bataan then became the Bataan Economic Zone under the Special Economic Zone
Act of 1995.287 Republic Act No. 9728 then converted the Bataan Economic Zone into the Freeport Area of
Bataan.288

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A port of entry, where imported goods are unloaded then introduced in the market for public consumption,
is considered property for public use. Thus, Article 420 of the Civil Code classifies a port as property of
public dominion. The Freeport Area of Bataan, where the government allows tax and duty-free importation
of goods,289 is considered property of public dominion. The Freeport Area of Bataan is owned by the state
and cannot be taxed under Section 234(a) of the Local Government Code.

operating within the economic zones: SEC. 24. Exemption from National and Local Taxes. Except for
real property on land owned by developers, no taxes, local and national, shall be imposed on business
establishments operating within the ECOZONE. In lieu thereof, five percent (5%) of the gross income
earned by all business enterprises within the ECOZONE shall be paid and remitted as follows:
a. Three percent (3%) to the National Government;

Properties of public dominion, even if titled in the name of an instrumentality as in this case, remain owned
by the Republic of the Philippines. If property registered in the name of an instrumentality is conveyed to
another person,the property is considered conveyed on behalf of the Republic of the Philippines. Book I,
Chapter 12, Section 48 of the Administrative Code of 1987 provides:
SEC. 48. Official Authorized to Convey Real Property. Whenever real property of the government is
authorized by law to be conveyed, the deed of conveyance shall be executed in behalf of the government by
the following:
....

b. Two percent (2%) which shall be directly remitted by the business establishments to the treasurers office
of the municipality or city where the enterprise is located. 292 (Emphasis supplied)
In lieu of revenues from real property taxes, the City of Lapu-Lapu collects two-fifths of 5% final tax on
gross income paid by all business establishments operating withinthe Mactan Economic Zone:
SEC. 24. Exemption from National and Local Taxes. Except for real property on land owned by
developers, no taxes, local and national, shall be imposed on business establishments operating within the
ECOZONE. In lieu thereof, five percent (5%) of the gross income earned by all business enterprises within
the ECOZONE shall be paid and remitted as follows:

(2) For property belonging to the Republic of the Philippines, but titled in the name of any political
subdivision orof any corporate agency or instrumentality, by the executive head of the agency or
instrumentality. (Emphasis supplied)

a. Three percent (3%) to the National Government;

In Manila International Airport Authority, this court explained:

b. Two percent (2%) which shall be directly remitted by the business establishments to the
treasurers office of the municipality or city where the enterprise is located. 293 (Emphasis
supplied)

[The exemption under Section 234(a) of the Local Government Code] should be read in relation with
Section 133(o) of the same Code, which prohibits local governments from imposing "[t]axes, fess or
charges of any kind on the National Government, its agencies and instrumentalitiesx x x." The real
properties owned by the Republic are titled either in the name of the Republic itself or in the name of
agencies or instrumentalities of the National Government.The Administrative Code allows real property
owned by the Republic to be titled in the name of agencies or instrumentalities of the national government.
Such real properties remained owned by the Republic of the Philippines and continue to be exempt from
real estate tax.
The Republic may grant the beneficialuse of its real property to an agency or instrumentality of the national
government. This happens when title of the real property is transferred to an agency or instrumentality even
as the Republic remains the owner of the real property. Such arrangement does not result in the loss of the
tax exemption/ Section 234(a) of the Local Government Code states that real property owned by the
Republic loses its tax exemption only if the "beneficial use thereof has been granted, for consideration or
otherwise, to a taxable person." . . .290 (Emphasis in the original; italics supplied)
Even the PEZAs lands and buildings whose beneficial use have been granted to other persons may not be
taxed with real property taxes. The PEZA may only lease its lands and buildings to PEZA-registered
economic zone enterprises and entities.291 These PEZA-registered enterprises and entities, which operate
within economic zones, are not subject to real property taxes. Under Section 24 of the Special Economic
Zone Act of 1995, no taxes, whether local or national, shall be imposed on all business establishments

For its part, the Province of Bataan collects a fifth of the 5% final tax on gross income paid by all business
establishments operating within the Freeport Area of Bataan:
Section 6. Imposition of a Tax Rate of Five Percent (5%) on Gross Income Earned. - No taxes, local and
national, shall be imposed on business establishments operating withinthe FAB. In lieu thereof, said
business establishments shall pay a five percent (5%) final tax on their gross income earned in the
following percentages:
(a) One per centum (1%) to the National Government;
(b) One per centum (1%) to the Province of Bataan;
(c) One per centum (1%) to the treasurer's office of the Municipality of Mariveles; and
(d) Two per centum (2%) to the Authority of the Freeport of Area of Bataan. 294 (Emphasis
supplied)

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Petitioners, therefore, are not deprived of revenues from the operations of economic zones within their
respective territorial jurisdictions.
The national government ensured that loeal government units comprising economic zones shall retain their
basic autonomy and identity.295
All told, the PEZA is an instrumentality of the national government.1wphi1 Furthermore, the lands owned
by the PEZA are real properties owned by the Republic of the Philippines. The City of Lapu-Lapu and the
Province of Bataan cannot collect real property taxes from the PEZA.
WHEREFORE, the consolidated petitions are DENIED.
SO ORDERED.

SECOND DIVISION
July 29, 2015
G.R. No. 210646

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[REMEDIAL LAW I : CEAC : ATTY. DELA PENA]

COMMISSIONER OF INTERNAL REVENUE, Petitioner,
vs.
AIR LIQUIDE PHILIPPINES, INC., Respondent.

ALPI moved for reconsideration, but the motion was denied by the CTA Division in its September 24, 2012
Resolution. Aggrieved, ALPI filed a petition for review with the CTA En Banc.
CTA En Banc Ruling

DECISION

This is a petition for review on certiorari seeking to reverse and set aside the July 29, 2013 Decision 1 and
the December 17, 2013 Resolution2 of the Court of Tax Appeals En Banc (CTA En Banc), in CTA EB Case
No. 943, which reversed and set aside the July 3, 2012 Decision 3 and the September 24, 2012 Resolution of
the Court of Tax Appeals Second Division (CTA Division), in a case involving an application for issuance
of a tax credit certificate for unutilized input VAT.

On July 29, 2013, the CTA En Banc rendered the assailed decision and reversed the ruling of the CTA
Division, citing the consolidated cases of tax credit certificate for unutilized input VAT. CIR v. San Roque,
CIR v. Taganito andCIR v. Philex4 (San Roque). In these cases, the Court recognized the legal effects of
BIR Ruling No. DA-489-03, which stated that the "taxpayer-claimant need not wait for the lapse of the
120-day period before it could seek judicial relief with the CTA by way of Petition for Review." Thus, all
taxpayers could rely on BIR Ruling No. DA-489-03 from the time of its issuance on December 10, 2003 up
to its reversal by this Court in CIR v. Aichi5 (Aichi) on October 6, 2010, where it ruled that the 120+30-day
period was mandatory and jurisdictional.

Respondent Air Liquide Philippines, Inc. (ALPI) is a domestic corporation registered with the Bureau of
Internal Revenue (BIR) as a Value- Added Tax (VAT) entity. It sells chemical products and renders certain
related services to the Philippine Economic Zone Authority (PEZA) enterprises. On January 22, 2008, ALPI
filed with the BIR its Quarterly VAT Return for the 4th quarter of 2007.

Consequently, as ALPI filed its judicial claim for VAT credit on December 29, 2009, then it was covered by
BIR Ruling No. DA-489-03. ALPI need not wait for the lapse of the 120-day period before it could seek
judicial relief. The CTA En Banc remanded the case to the CTA Division for the determination of the
propriety of the VAT refund or credit claim. The dispositive portion of the assailed decision stated:

Subsequently, on December 23, 2009, ALPI filed with petitioner Commissioner of Internal
Revenue (CIR), through BIR Revenue District Office (RDO) No. 121, an application for issuance of a tax
credit certificate for its unutilized input VAT in the amount of P23,254,465.64 attributable to its transactions
with PEZA-registered enterprises for the 4th quarter of 2007.

WHEREFORE, premises considered, the instant Petition for Review filed on October 25, 2012 is hereby
GRANTED. The assailed Decision dated July 3, 2012 and the assailed Resolution dated September 24,
2012 promulgated by CTA-Second Division, which dismissed the Petition for Review docketed as CTA
Case No. 8017, are hereby REVERSED and SET ASIDE.

On December 29, 2009, or only six (6) days later, ALPI filed its petition for review with the CTA Division,
without awaiting the resolution of its application for tax credit certificate or the expiration of the 120-day
period under Section 112(C) of the National Internal Revenue Code (NIRC).

Accordingly, CTA Case No. 8017 is hereby REMANDED to the CTA-Second Division for the proper and
immediate determination of the propriety of the claim for refund or tax credit certificate. Thereafter, the
CTA-Second Division shall make a declaration of the specific amount of refund or tax credit certificate to
which petitioner is entitled to, if any.

MENDOZA, J.:

CTA Division Ruling

In its July 3, 2012 decision, the CTA Division, instead of ruling on the merits, dismissed the judicial claim
for VAT refund for lack of jurisdiction. The CTA Division noted that the CIR was given a period of one
hundred twenty (120) days within which to either grant or deny the claim for VAT refund or credit. ALPI,
however, filed its judicial claim before the CTA only 6 days after the filing of the administrative claim for
tax credit with the CIR. The failure of ALPI to observe the compulsory 120-day period warranted the
dismissal of its petition. The decretal portion of the decision declared:

SO ORDERED.
The CIR filed its motion for reconsideration, but it was denied by the CTA En Banc in its December 17,
2013 Resolution.
Hence, this present petition.
ISSUE

WHEREFORE, premises considered, the present Petition for Review is hereby DISMISSED for lack of
jurisdiction.

WHETHER OR NOT THE CTA DIVISION ACQUIRED JURISDICTION OVER ALPIS

PETITION FOR REVIEW.

SO ORDERED.
The CIR contends that the CTA Division did not acquire jurisdiction over ALPIs petition because of its
failure to observe the 120+30 day rule in filing a judicial claim for refund or tax credit certificate.

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Moreover, ALPI could not benefit from the consolidated cases of San Roque. In those cases, the taxpayers
relied in good faith on BIR Ruling No. DA-489-03 which allowed the seeking of judicial relief without
waiting for the lapse of the 120-day period. In the present case, ALPI did not assert and invoke BIR Ruling
No. DA-489-03 in its petitions before the CTA Division and the CTA En Banc. Hence, it cannot be said that
ALPI was misled in relying on BIR Ruling No. DA-489-03 in its premature filing before the CTA Division.
In its Comment,6 filed on July 28, 2014, ALPI made a survey of recent Court decisions that applied the San
Roquecase. It argued that in Republic v. GST Philippines,7 CIR v. Visayas Geothermal,8 Team Energy Corp.
v. CIR,9Proctor & Gamble v. CIR,10 and Visayas Geothermal v. CIR,11 the Court applied BIR Ruling No.
DA-489-03 because the judicial claims for VAT refund in these cases were filed within the interim period
from December 10, 2003 to October 6, 2010; and yet, the taxpayer claimants did not expressly state that
they relied or claimed to be misled by the said BIR Ruling. Thus, ALPI concluded there was no need to
specifically invoke BIR Ruling No. DA-489-03 before a taxpayer could benefit from it.
In its Reply,12 filed on December 3, 2014, the CIR asserted that from the start, a taxpayer must expressly
allege and prove that it was indeed misled by the provision of BIR Ruling No. DA-489-03; and that it could
not be invoked as a mere afterthought. This was in keeping with the well-settled rule that tax credit or
refund is strictly construed against the taxpayer.
The Courts Ruling
The petition is bereft of merit.
BIR Ruling No. DA-489-03, issued on December 10, 2003, stated that the taxpayer-claimant need not wait
for the lapse of the 120-day period before it could seek judicial relief with the CTA by way of a petition for
review. This rule, however, was nullified in Aichi, promulgated on October 6, 2010. Aichi emphasized that
the failure to await the decision of the Commissioner or the lapse of 120-day period prescribed in Section
112(C) amounted to a premature filing.
To elucidate on the seemingly conflicting doctrines, San Roque clarified, once and for all, that BIR Ruling
No. DA-489-03 was a general interpretative rule. Thus, all taxpayers can rely on the said BIR ruling from
the time of its issuance on December 10, 2003 up to its reversal by this Court in Aichi on October 6, 2010,
where it was held that the 120+30-day periods are mandatory and jurisdictional. In other words,
the Aichi ruling was prospective in application.
In the present case, ALPI can benefit from BIR Ruling No. DA-489-03. It filed its judicial claim for VAT
credit certificate on December 29, 2009, well within the interim period from December 10, 2003 to October
6, 2010, so there was no need to wait for the lapse of 120 days prescribed in Section 112 (c) of the NIRC.
The CIR asserted, however, that ALPI cannot invoke the exception from the San Roque Ruling as it did not
particularly allege BIR Ruling No. D-489-03 in its petition before the CTA. Thus, it poses a valid question:
Is there a need for a taxpayer to specifically invoke BIR Ruling No. DA-489-03 to benefit from the same?

The Court answers in the negative. To reiterate, San Roque, held that BIR Ruling No. DA-489-03 was a
general interpretative rule because it was a response to a query made, not by a particular taxpayer, but by a
government agency tasked with processing tax refunds and credits. Thus, it applies to all taxpayers alike,
and not only to one particular taxpayer.
The Court agrees with ALPI in its survey of cases which shows that BIR Ruling No. DA-489-03 was
applied even though the taxpayer did not specifically invoke the same. As long as the judicial claim was
filed between December 10, 2003 and October 6, 2010, then the taxpayer would not be required to wait for
the lapse of 120-day period. This doctrine has been consistently upheld in the recent decisions of the
Court.13 On the other hand, in Nippon Express v. CIR,14 Applied Food Ingredients v. CIR15 and Silicon
Philippines v. CIR, 16 the taxpayer did not benefit from BIR Ruling No. DA-489-03 because they filed their
precipitate judicial claim before December 10, 2003.
Indeed, BIR Ruling No. DA-489-03 is a general interpretative law and it applies to each and every
taxpayer.1wphi1 To subscribe to the contention of the CIR would alter the Court's ruling in San Roque. It
will lead to an unreasonable classification of the beneficiaries of BIR Ruling No. DA-489-03 and further
complicate the doctrine. ALPI cannot be faulted for not specifically invoking BIR Ruling No. DA-489-03
as the rules for its application were not definite until the San Roque case was promulgated.
In the furtherance of the doctrinal pronouncements in San Roque, the better approach would be to apply
BIR Ruling No. DA-489-03 to all taxpayers who filed their judicial claim for VAT refund within the period
of exception from December 10, 2003 to October 6, 2010. Consequently, this case must be remanded to the
CT A Division for the proper determination of the refundable or creditable amount due to ALPI, if any.
WHEREFORE, the petition is DENIED. The July 29, 2013 Decision and the December 17, 2013
Resolution of the Court of Tax Appeals En Banc in CTA EB Case No. 943
are AFFIRMED in toto. Accordingly, the case isREMANDED to the CT A Second Division for the proper
determination of the refundable or creditable amount due to the respondent, if any.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION

** G.R. No. 207843

July 15, 2015

COMMISSION OF INTERNAL REVENUE, Petitioner,

vs.
COURT OF TAX APPEALS (SECOND DIVISION) and PETRON CORPORATION,* Respondents.

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DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for certiorari1 are the Resolutions dated February 13, 20132 and May 8, 20133 of the
Court of Tax Appeals, Second Division (CTA) in CTA Case No. 8544 reversing and setting aside the earlier
dismissal of the petition for review filed by private respondent Petron Corporation (Petron) in the said case
on the bases of prematurity and lack of jurisdiction.
The Facts
Petron, which is engaged in the manufacture and marketing of petroleum products, imports alkylate as a
raw material or blending component for the manufacture of ethanol-blended motor gasoline. 4 For the period
January 2009 to August 2011, as well as for the month of April 2012, Petron transacted an aggregate of 22
separate importations for which petitioner the Commissioner of Internal Revenue (CIR) issued Authorities
to Release Imported Goods (ATRIGs), categorically stating that Petron's importation of alkylate is exempt
from the payment of the excise tax because it was not among those articles enumerated as subject to excise
tax under Title VI of Republic Act No. (RA) 8424,5 as amended, or the 1997 National Internal Revenue
Code (NIRC). With respect, however, to Petron's alkylate importations covering the period September 2011
to June 2012 (excluding April 2012), the CIR inserted, without prior notice, a reservation for all ATRIGs
issued,6 stating that:
This is without prejudice to the collection of the corresponding excise taxes, penalties and interest
depending on the final resolution of the Office of the Commissioner on the issue of whether this item is
subject to the excise taxes under the National Internal Revenue Code of 1997, as amended. 7
In June 2012, Petron imported 12,802,660 liters of alkylate and paid value-added tax (VAT) in the total
amount of ?41,657,533.00 as evidenced by Import Entry and Internal Revenue Declaration (IEIRD) No. SN
122406532. Based on the Final Computation, said importation was subjected by the Collector of Customs
of Port Limay, Bataan, upon instructions of the Commissioner of Customs (COC), to excise taxes of P4.35
per liter, or in the aggregate amount ofP55,691,571.00, and consequently, to an additional VAT of 12% on
the imposed excise tax in the amount ofP6,682,989.00.8 The imposition of the excise tax was supposedly
premised on Customs Memorandum Circular (CMC) No. 164-2012 dated July 18, 2012, implementing the
Letter dated June 29, 2012 issued by the CIR, which states that:
[A]lkylate which is a product of distillation similar to that of naphta, is subject to excise tax under Section
148( e) of the National Internal Revenue Code (NIRC) of 1997. 9
In view of the CIR's assessment, Petron filed before the CTA a petition for review,10 docketed as CTA Case
No. 8544, raising the issue of whether its importation of alkylate as a blending component is subject to
excise tax as contemplated under Section 148 (e) of the NIRC.

Initially, in a Resolution12 dated November 15, 2012, the CTA granted the CIR's motion and dismissed the
case. However, on Petron's motion for reconsideration,13 it reversed its earlier disposition in a
Resolution14 dated February 13, 2013, and eventually denied the CIR's motion for
reconsideration15 therefrom in a Resolution16 dated May 8, 2013. In effect, the CTA gave due course to
Petron's petition, finding that: (a) the controversy was not essentially for the determination of the
constitutionality, legality or validity of a law, rule or regulation but a question on the propriety or soundness
of the CIR's interpretation of Section 148 (e) of the NIRC which falls within the exclusive jurisdiction of
the CTA under Section 4 thereof, particularly under the phrase "other matters arising under [the
NIRC]";17 and (b) there are attending circumstances that exempt the case from the rule on non-exhaustion
of administrative remedies, such as the great irreparable damage that may be suffered by Petron from the
CIR's final assessment of excise tax on its importation. 18
Aggrieved, the CIR sought immediate recourse to the Court, through the instant petition, alleging that the
CTA committed grave abuse of discretion when it assumed authority to take cognizance of the case despite
its lack of jurisdiction to do so.19
The Issue Before the Court
The core issue to be resolved is whether or not the CTA properly assumed jurisdiction over the petition
assailing the imposition of excise tax on Petron's importation of alkylate based on Section 148 (e) of the
NIRC.
The Court's Ruling
The petition is meritorious.
The CIR asserts that the interpretation of the subject tax provision, i.e., Section 148 (e) of the NIRC,
embodied in CMC No. 164-2012, is an exercise of her quasi-legislative function which is reviewable by the
Secretary of Finance, whose decision, in turn, is appealable to the Office of
the President and, ultimately, to the regular courts, and that only her quasi-judicial functions or the
authority to decide disputed assessments, refunds, penalties and the like are subject to the exclusive
appellate jurisdiction of the CTA.20 She likewise contends that the petition suffers from prematurity due to
Petron 's failure to exhaust all available remedies within the administrative level in accordance with the
Tariff and Customs Code (TCC).21
The CIR's position is well-grounded.
Section 4 of the NIRC confers upon the CIR both: (a) the power to interpret tax laws in the exercise of her
quasi-legislative function; and (b) the power to decide tax cases in the exercise of her quasi-judicial
function. It also delineates the jurisdictional authority to review the validity of the CIR's exercise of the said
powers, thus:

On October 5, 2012, the CIR filed a motion to dismiss on the grounds of lack of jurisdiction and
prematurity.11

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SEC. 4. Power of the Commissioner to Interpret Tax Laws and to Decide Tax Cases. - The power to
interpret the provisions of this Code and other tax laws shall be under the exclusive and original jurisdiction
of the Commissioner, subject to review by the Secretary of Finance.

6. Decisions of the Secretary of Finance on customs cases elevated to him

automatically for review from decisions of the Commissioner of Customs which are
adverse to the Government under Section 2315 of the Tariff and Customs Code;

The power to decide disputed assessments, refunds of internal revenue taxes, fees or other charges,
penalties imposed in relation thereto, or other matters arising under this Code or other laws or portions
thereof administered by the Bureau of Internal Revenue is vested in the Commissioner, subject to the
exclusive appellate jurisdiction of the Court of Tax Appeals. (Emphases and underscoring supplied)

7. Decisions of the Secretary of Trade and Industry, in the case of nonagricultural

product, commodity or article, and the Secretary of Agriculture in the case of
agricultural product, commodity or article, involving dumping and countervailing
duties under Section 301 and 302, respectively, of the Tariff and Customs Code, and
safeguard measures under Republic Act No. 8800, where either party may appeal the
decision to impose or not to impose said duties.

The CTA is a court of special jurisdiction, with power to review by appeal decisions involving tax disputes
rendered by either the CIR or the COC.1wphi1 Conversely, it has no jurisdiction to determine the validity
of a ruling issued by the CIR or the COC in the exercise of their quasi-legislative powers to interpret tax
laws. These observations may be deduced from a reading of Section 7 of RA 1125, 22 as amended by RA
9282,23 entitled "An Act Creating the Court of Tax Appeals," enumerating the cases over which the CT A
may exercise its jurisdiction:
Sec. 7. Jurisdiction. -The CTA shall exercise:
a. Exclusive appellate jurisdiction to review by appeal, as herein provided:
1. Decisions of the Commissioner of Internal Revenue in cases involving disputed
assessments, refunds of internal revenue taxes, fees or other charges, penalties in
relation thereto, or other matters arising under the National Internal Revenue or other
laws administered by the Bureau of Internal Revenue;
2. Inaction by the Commissioner of Internal Revenue in cases involving disputed
assessments, refunds of internal revenue taxes, fees or other charges, penalties in
relations thereto, or other matters arising under the National Internal Revenue Code or
other laws administered by the Bureau of Internal Revenue, where the National
Internal Revenue Code provides a specific period of action, in which case the inaction
shall be deemed a denial;
3. Decisions, orders or resolutions of the Regional Trial Comis in local tax cases
originally decided or resolved by them in the exercise of their original or appellate
jurisdiction;
4. Decisions of the Commissioner of Customs in cases involving liability for customs
duties, fees or other money charges, seizure, detention or release of property affected,
fines, forfeitures or other penalties in relation thereto, or other matters arising under
the Customs Law or other laws administered by the Bureau of Customs;
5. Decisions of the Central Board of Assessment Appeals in the exercise of its
appellate jurisdiction over cases involving the assessment and taxation of real property
originally decided by the provincial or city board of assessment appeals;

b. Jurisdiction over cases involving criminal offenses as herein provided:

1. Exclusive original jurisdiction over all criminal offenses arising from violations of
the National Internal Revenue Code or Tariff and Customs Code and other laws
administered by the Bureau of Internal Revenue or the Bureau of Customs: Provided,
however, That offenses or felonies mentioned in this paragraph where the principal
amount of taxes and fees, exclusive of charges and penalties, claimed is less than One
million pesos (P1,000,000.00) or where there is no specified amount claimed shall be
tried by the regular Courts and the jurisdiction of the CTA shall be appellate. Any
provision of law or the Rules of Court to the contrary notwithstanding, the criminal
action and the corresponding civil action for the recovery of civil liability for taxes
and penalties shall at all times be simultaneously instituted with, and jointly
determined in the same proceeding by the CT A, 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 filling of such civil action separately from the criminal action will be recognized.
2. Exclusive appellate jurisdiction in criminal offenses:
a. Over appeals from the judgments, resolutions or orders of the Regional
Trial Courts in tax cases originally decided by them, in their respective
territorial jurisdiction.
b. Over petitions for review of the judgments, resolutions or orders of the
Regional Trial Courts in the exercise of their appellate jurisdiction over tax
cases originally decided by the Metropolitan Trial Courts, Municipal Trial
Courts and Municipal Circuit Trial Courts in their respective jurisdiction.
c. Jurisdiction over tax collection cases as herein provided:
1. Exclusive original jurisdiction in tax collection cases involving final and executory
assessments for taxes, fees, charges and penalties: Provided, however, That collection cases
where the principal amount of taxes and fees, exclusive of charges and penalties, claimed is less

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[REMEDIAL LAW I : CEAC : ATTY. DELA PENA]

than One million pesos (P1,000,000.00) shall be tried by the proper Municipal Trial Court,
Metropolitan Trial Court and Regional Trial Court.

thereof administered by the Bureau of Internal Revenue is vested in the commissioner, subject to the
exclusive appellate jurisdiction of the Court of Tax Appeals. (Emphases and underscoring supplied)

2. Exclusive appellate jurisdiction in tax collection cases:

The Court disagrees.

a. Over appeals from the judgments, resolutions or orders of the Regional Trial Courts
in tax collection cases originally decided by them, in their respective territorial
jurisdiction.
b. Over petitions for review of the judgments, resolutions or orders of the Regional
Trial Courts in the exercise of their appellate jurisdiction over tax collection cases
originally decided by the Metropolitan Trial Courts, Municipal Trial Courts and
Municipal Circuit Trial Courts, in their respective jurisdiction. (Emphasis supplied)
In this case, Petron's tax liability was premised on the COC's issuance of CMC No. 164-2012, which gave
effect to the CIR's June 29, 2012 Letter interpreting Section 148 (e) of the NIRC as to include alkyl ate
among the articles subject to customs duties, hence, Petron's petition before the CTA ultimately challenging
the legality and constitutionality of the CIR's aforesaid interpretation of a tax provision. In line with the
foregoing discussion, however, the CIR correctly argues that the CT A had no jurisdiction to take
cognizance of the petition as its resolution would necessarily involve a declaration of the validity or
constitutionality of the CIR's interpretation of Section 148 (e) of the NIRC, which is subject to the
exclusive review by the Secretary of Finance and ultimately by the regular courts. In British American
Tobacco v. Camacho,24 the Court ruled that the CTA's jurisdiction to resolve tax disputes excludes the
power to rule on the constitutionality or validity of a law, rule or regulation, to wit:
While the above statute confers on the CTA jurisdiction to resolve tax disputes in general, this does not
include cases where the constitutionality of a law or rule is challenged. Where what is assailed is the
validity or constitutionality of a law, or a rule or regulation issued by the administrative agency in the
performance of its quasi-legislative function, the regular courts have jurisdiction to pass upon the same. x x
x.25
In asserting its jurisdiction over the present case, the CTA explained that Petron's petition filed before it
"simply puts in question" the propriety or soundness of the CIR's interpretation and application of Section
148 (e) of the NIRC (as embodied in CMC No. 164-2012) "in relation to" the imposition of excise tax on
Petron's importation of alkylate; thus, the CTA posits that the case should be regarded as "other matters
arising under [the NIRC]" under the second paragraph of Section 4 of the NIRC, therefore falling within
the CTA's jurisdiction:26
SEC. 4. Power of the Commissioner to Interpret Tax Laws and to Decide Tax Cases. - The power to
interpret the provisions of this Code and other tax laws shall be under the exclusive and original jurisdiction
of the Commissioner, subject to review by the Secretary of Finance.

As the CIR aptly pointed out, the phrase "other matters arising under this Code," as stated in the second
paragraph of Section 4 of the NIRC, should be understood as pertaining to those matters directly related to
the preceding phrase "disputed assessments, refunds of internal revenue taxes, fees or other charges,
penalties imposed in relation thereto" and must therefore not be taken in isolation to invoke the jurisdiction
of the CTA.27 In other words, the subject phrase should be used only in reference to cases that are, to begin
with, subject to the exclusive appellate jurisdiction of the CTA, i.e., those controversies over which the CIR
had exercised her quasi-judicial functions or her power to decide disputed assessments, refunds or internal
revenue taxes, fees or other charges, penalties imposed in relation thereto, not to those that involved the
CIR's exercise of quasi-legislative powers.
In Enrile v. Court of Appeals,28 the Court, applying the statutory construction principle of ejusdem
generis,29explained the import of using the general clause "other matters arising under the Customs Law or
other law or part of law administered by the Bureau of Customs" in the enumeration of cases subject to the
exclusive appellate jurisdiction of the CTA, saying that: [T]he 'other matters' that may come under the
general clause should be of the same nature as those that have preceded them applying the rule of
construction known as ejusdem generis.30(Emphasis and underscoring supplied)
Hence, as the CIR's interpretation of a tax provision involves an exercise of her quasi-legislative functions,
the proper recourse against the subject tax ruling expressed in CMC No. 164-2012 is a review by the
Secretary of Finance and ultimately the regular courts. In Commissioner of Customs v. Hypermix Feeds
Corporation,31 the Court has held that:
The determination of whether a specific rule or set of rules issued by an administrative agency contravenes
the law or the constitution is within the jurisdiction of the regular courts. Indeed, the Constitution vests the
power of judicial review or the power to declare a law, treaty, international or executive agreement,
presidential decree, order, instruction, ordinance, or regulation in the courts, including the regional trial
courts. This is within the scope of judicial power, which includes the authority of the courts to determine in
an appropriate action the validity of the acts of the political departments. x x x. 32
Besides, Petron prematurely invoked the jurisdiction of the CT A. Under Section 7 of RA 1125, as amended
by RA 9282, what is appealable to the CT A is the decision of the COC over a customs collector's adverse
ruling on a taxpayer's protest:
SEC. 7. Jurisdiction. -The CTA shall exercise:
a. Exclusive appellate jurisdiction to review by appeal, as herein provided:

The power to decide disputed assessments, refunds of internal revenue taxes, fees or other charges,
penalties imposed in relation thereto, or other matters arising under this Code or other laws or portions

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[REMEDIAL LAW I : CEAC : ATTY. DELA PENA]

1. Decisions of the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of
internal revenue taxes, fees or other charges, penalties in relation thereto, or other matters arising under the
National Internal Revenue or other laws administered by the Bureau of Internal Revenue;
xxxx
4. Decisions of the Commissioner of Customs in cases involving liability for customs duties, fees or other
money charges, seizure, detention or release of property affected, fines, forfeitures or other penalties in
relation thereto, or other matters arising under the Customs Law or other laws administered by the Bureau
of Customs;
xxxx
Section 11 of the same law is no less categorical in stating that what may be the subject of an appeal to the
CT A is a decision, ruling or inaction of the CIR or the COC, among others:
SEC. 11. Who May Appeal; Mode of Appeal; Effect of Appeal. Any party adversely affected by a
decision, ruling or inaction of the Commissioner of Internal Revenue, the Commissioner of Customs, the
Secretary of Finance, the Secretary of Trade and Industry or the Secretary of Agriculture or the Central
Board of Assessment Appeals or the Regional Trial Courts may file an appeal with the CTA within thirty
(30) days after the receipt of such decision or ruling or after the expiration of the period fixed by law for
action as referred to in Section 7(a)(2) herein.

customs collector that was appealed to the COC, the filing of the petition before the CTA was premature as
there was nothing yet to review.39
Verily, the fact that there is no decision by the COC to appeal from highlights Petron's failure to exhaust
administrative remedies prescribed by law. Before a party is allowed to seek the intervention of the courts,
it is a pre-condition that he avail of all administrative processes afforded him, such that if a remedy within
the administrative machinery can be resorted to by giving the administrative officer every opportunity to
decide on a matter that comes within his jurisdiction, then such remedy must be exhausted first before the
court's power of judicial review can be sought, otherwise, the premature resort to the court is fatal to one's
cause of action.40 While there are exceptions to the principle of exhaustion of administrative remedies, it
has not been sufficiently shown that the present case falls under any of the exceptions.
WHEREFORE, the petition is GRANTED. The Resolutions dated February 13, 2013 and May 8, 2013 of
the Court of Tax Appeals (CTA), Second Division in CTA Case No. 8544 are hereby REVERSED and SET
ASIDE. The petition for review filed by private respondent Petron Corporation before the CTA is
DISMISSED for lack of jurisdiction and prematurity.
SO ORDERED.

xxxx
In this case, there was even no tax assessment to speak of. While customs collector Federico Bulanhagui
himself admitted during the CTA's November 8, 2012 hearing that the computation he had written at the
back page of the IEIRD served as the final assessment imposing excise tax on Petron's importation of
alkylate,33 the Court concurs with the CIR's stance that the subject IEIRD was not yet the customs
collector's final assessment that could be the proper subject of review. And even if it were, the same should
have been brought first for review before the COC and not directly to the CTA. It should be stressed that
the CTA has no jurisdiction to review by appeal, decisions of the customs collector.34 The TCC prescribes
that a party adversely affected by a ruling or decision of the customs collector may protest such ruling or
decision upon payment of the amount due35 and, if aggrieved by the action of the customs collector on the
matter under protest, may have the same reviewed by the COC.36 It is only after the COC shall have made
an adverse ruling on the matter may the aggrieved party file an
appeal to the CT A.37
Notably, Petron admitted to not having filed a protest of the assessment before the customs collector and
elevating a possible adverse ruling therein to the COC, reasoning that such a procedure would be costly and
impractical, and would unjustly delay the resolution of the issues which, being purely legal in nature
anyway, were also beyond the authority of the customs collector to resolve with finality.38 This admission is
at once decisive of the issue of the CTA's jurisdiction over the petition. There being no protest ruling by the

Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION

** G.R. No. 192463

July 13, 2015

OMAIRA LOMONDOT and SARIPA LOMONDOT, Petitioners,

vs.
HON. RASAD G BALINDONG, Presiding Judge, Shari'a District Court, 4th Shari'a Judicial
District, Marawi City, Lanao del Sur and AMBOG PANGANDAMUAN and SIMBANATAO
DIACA, Respondents.
DECISION

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[REMEDIAL LAW I : CEAC : ATTY. DELA PENA]

PERALTA, J.:
Before us is a petition for certiorari with prayer for the issuance of a writ of demolition seeking to annul the
Order1dated November 9, 2009 of the Shari'a District Court (SDC), Fourth Shari'a Judicial District, Marawi
City, issued in Civil Case No. 055-91, denying petitioners' motion for the issuance of a writ of demolition,
and the Orders2 dated January 5, 2010 and February 10, 2010 denying petitioners' first and second motions
for reconsideration, respectively.

On February 7, 2008, the SDC granted the motion10 for a writ of execution and the writ was issued with the
following fallo:
NOW THEREFORE, you are hereby commanded to cause the execution of the aforesaid judgment. If
defendants do not vacate the premises and remove the improvements, you must secure a special order of
the court to destroy, demolish or remove the improvements on the property. The total amount awarded to
and demanded by the prevailing party is P150,000.00 (damages, attorney's fees and the cost) which
defendants must satisfy, pursuant to Section 8 (d) and (e), Rule 39, Rules of Court. 11

The antecedent facts are as follows:

The Sheriff then sent a demand letter12 to respondents for their compliance.
On August 16, 1991, petitioners Omaira and Saripa Lomondot filed with the SDC, Marawi City, a
complaint for recovery of possession and damages with prayer for mandatory injunction and temporary
restraining order against respondents Ambog Pangandamun (Pangandamun) and Simbanatao Diaca (Diaca).
Petitioners claimed that they are the owners by succession of a parcel of land located at Bangon, Marawi
City, consisting an area of about 800 sq. meters; that respondent Pangandamun illegally entered and
encroached 100 sq. meter of their land, while respondent Diaca occupied 200 sq. meters, as indicated in
Exhibits "A" and "K" submitted as evidence. Respondents filed their Answer arguing that they are the
owners of the land alleged to be illegally occupied. Trial thereafter ensued.
On January 31, 2005, the SDC rendered a Decision,3 the dispositive portion of which reads:
WHEREFORE, judgment is rendered as follows:
1. DECLARING plaintiffs owners of the 800 square meter land borrowed and turned over by
BPI and described in the complaint and Exhibits "A" and "K";
2. ORDERING defendants to VACATE the portions or areas they illegally encroached as
indicated in Exhibits "A" and "K" and to REMOVE whatever improvements thereat introduced;
3. ORDERING defendants to jointly and severally pay plaintiffs (a) P50,000.00 as moral
damages; (b)P30,000.00 as exemplary damages; (C) P50,000.00 as attorney's fees and the costs
of the suit.
SO ORDERED4
Respondents filed an appeal5 with us and petitioners were required to file their Comment thereto. In a
Resolution6dated March 28, 2007, we dismissed the petition for failure of respondents to sufficiently show
that a grave abuse of discretion was committed by the SDC as the decision was in accord with the facts and
the applicable law and jurisprudence. Respondents' motion for reconsideration was denied with finality on
September 17, 2007.7 The SDC Decision dated January 31, 2005 became final and executory on October
31, 2007 and an entry of judgment8 was subsequently made.
Petitioners filed a motion9 for issuance of a writ of execution with prayer for a writ of demolition.

On February 3, 2009, petitioners filed a Motion13 for the Issuance of a Writ of Demolition to implement the
SDC Decision dated January 31, 2005. The motion was set for hearing.
On March 4, 2009, the SDC issued an Order14 reading as follows:
The plaintiffs, the prevailing party, filed a Motion for Writ of Demolition and the motion was set for
hearing on February 16, 2009. On this date, the plaintiffs, without counsel, appeared. The defendants failed
to appear. Thus, the court issued an order submitting the motion for resolution. Resolution of the motion for
issuance of a Writ of Demolition should be held in abeyance. First, defendant Ambog Pangandamun has
filed on February 6, 2009 an Urgent Manifestation praying deferment of the hearing on the motion for writ
of execution. Second, Atty. Dimnatang T. Saro filed on February 13, 2009 a Notice of Appearance with
Motion to Postpone the hearing set on February 16, 2009 to study the records of the case as the records are
not yet in his possession. Third, the recent periodic report dated January 26, 2009 of the Sheriff shows
Sultan Alioden of Kabasaran is negotiating the parties whereby the defendant Ambog Pangandamun will be
made to pay the five (5)-meter land of the plaintiffs encroached by him and that what remains to be ironed
out is the fixing of the amount.
WHEREFORE, the resolution on the Motion for Writ of Demolition is HELD IN ABEYANCE. The Sheriff
is DIRECTED to exert efforts to bring the parties back to the negotiating table seeing to it that Sultan
Alioden of Kabasaran is involved in the negotiation. Atty. Saro is REQUIRED to file his comment on the
motion for writ of execution within fifteen (15) days from notice to guide the court in resolving the incident
in the event the negotiation fails.
SO ORDERED.15
On May 5, 2009, the SDC issued another Order16 which held in abeyance the resolution of the motion for
issuance of a writ of demolition and granted an ocular inspection or actual measurement of petitioners' 800sq.-meter land.
The SDC issued another Order17 dated May 14, 2009, which stated, among others, that: While the decision
has become final and executory and a Writ of Execution has been issued, there are instances when a Writ of
Execution cannot be enforced as when there is a supervening event that prevents the Sheriff to execute a
Writ of Execution.

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[REMEDIAL LAW I : CEAC : ATTY. DELA PENA]

The defendants claimed they have not encroached as they have already complied with the Writ of
Execution and their buildings are not within the area claimed by the plaintiffs. This to the Court is the
supervening event, thus the order granting the request of Atty. Jimmy Saro, counsel for the defendants, to
conduct a survey to determine whether there is encroachment or not. Thus, the Order dated May 5, 2009.

Undaunted, petitioners filed with the CA-Cagayan de Oro City a petition for certiorari assailing the Orders
issued by the SDC on November 9, 2009, January 5, 2010 and February 10, 2010. In a Resolution 23 dated
April 27, 2010, the CA dismissed the petition for lack of jurisdiction, saying, among others, that:
xxxx

WHEREFORE, Engr. Hakim Laut Balt is hereby commissioned to conduct a survey of the 800 square
meters claimed by the plaintiffs. Said Eng. Balt is given a period of one (1) month from notice within
which to conduct the survey in the presence of the parties. 18
On November 9, 2009, the SDC issued the assailed Order19 denying petitioners' motion for demolition. The
Order reads in full:
It was on February 3, 2009 that the plaintiffs filed a Motion for Issuance of a Writ of Demolition. The
defendants filed their comment thereto on March 24, 2009. They prayed that an ocular inspection and/or
actual measurement of the 800 square meter land of the plaintiffs be made which the court granted, in the
greater interest of justice, considering that defendants claimed to have complied with the writ of execution,
hence there is no more encroachment of plaintiffs land.
The intercession of concerned leaders to effect amicable settlement and the order to conduct a survey
justified the holding in abeyance of the resolution of the pending incident, motion for writ of demolition.
After attempts for settlement failed and after the commissioned Geodetic Engineer to conduct the needed
survey asked for relief, plaintiffs asked anew for a writ of demolition. Defendants opposed the grant of the
motion, alleging compliance with the writ of execution, and prayed for appointment of another Geodetic
Engineer to conduct a survey and actual measurement of plaintiffs' 800 square meter land.
At this point in time, the court cannot issue a special order to destroy, demolish or remove defendants'
houses, considering their claim that they no longer encroach any portion of plaintiffs land.
Gleaned from Engineer Hakim Laut Balt's Narrative Report, he could have conducted the required survey
had not the plaintiffs dictated him where to start the survey.
WHERFORE, the motion for issuance of a writ of demolition is DENIED. A survey is still the best way to
find out if indeed defendants' houses are within plaintiffs' 800 square meter land. Parties are, therefore,
directed to choose and submit to the court their preferred Geodetic Engineer to conduct the survey within
ten (10) days from notice.20
Petitioners filed their motion for reconsideration which the SDC denied in an Order 21 dated January 5, 2010
saying that the motion failed to state the timeliness of the filing of said motion and failed to comply with
the requirements of notice of hearing. Petitioners' second motion for reconsideration was also denied in an
Order22 dated February10, 2010. The SDC directed the parties to choose and submit their preferred
Geodetic Engineer to conduct the survey within 15 days from notice.

In pursuing the creation of Shari'a Appellate Court, the Supreme Court En Banc even approved A.M. No.
99-4-06, otherwise known as Resolution Authorizing the Organization of the Shari'a Appellate Court.
However, the Shari'a Appellate Court has not yet been organized until the present. We, on our part,
therefore, cannot take cognizance of the instant case because it emanates from the Shari'a Courts, which is
not among those courts, bodies or tribunals enumerated under Chapter 1, Section 9 of [Batas] Pambansa
Bilang 129, as amended over which We can exercise appellate jurisdiction. Thus, the instant Petition should
be filed directly with the Supreme Court.24 Petitioners filed the instant petition for certiorari assailing the
SDC Orders, invoking the following grounds:
RESPONDENT JUDGE, HONORABLE RASAD G. BALINDONG, COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OF JURISDICTION OR IN EXCESS OF JURISDICTION IN
DENYING THE MOTION FOR ISSUANCE OF THE WRIT OF DEMOLITION AFTERTHE WRIT OF
EXECUTION ISSUED BY THE COURT COULD NOT BE IMPLEMENTED AND INSTEAD DIRECT
THE CONDUCT OF THE SURVEY.
RESPONDENT JUDGE HAD COMMITTED GRAVE ABUSE OF DISCRETION IN MAKING IT
APPEAR THAT HE WAS IN COURT AT HIS SALA IN MARAWI CITY LAST JANUARY 28, 2010
WHEN THE PARTIES WERE PRESENT AND HE WAS NOT THERE.25
Preliminarily, we would deal with a procedural matter. Petitioners, after receipt of the SDC Order denying
their second motion for reconsideration of the Order denying their motion for the issuance of a writ of
demolition, filed a petition for certiorari with the CA. The CA dismissed the petition for lack of jurisdiction
in a Resolution dated April 27, 2010 saying that, under RA 9054, it is the Sharia Appellate Court (SAC)
which shall exercise jurisdiction over petition for certiorari; that, however, since SAC has not yet been
organized, it cannot take cognizance of the case as it emanates from the Sharia Courts, which is not among
those courts, bodies or tribunals enumerated under Chapter 1, Section 9 of Batas Pambansa Bilang 129, as
amended, over which it can exercise appellate jurisdiction.
Under Republic Act No. 9054, An Act to Strengthen and Expand the Organic Act for the Autonomous
Region in Muslim Mindanao, amending for the purpose Republic Act No. 6734, entitled, "An Act
Providing for the Autonomous Region in Muslim Mindanao, as amended", the Shari'a Appellate Court shall
exercise appellate jurisdiction over petitions for certiorari of decisions of the Shari'a District Courts. In
Villagracia v. Fifth (5th) Sharia District Court,26 we said:
x x x We call for the organization of the court system created under Republic Act No. 9054 to effectively
enforce the Muslim legal system in our country. After all, the Muslim legal system a legal system

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[REMEDIAL LAW I : CEAC : ATTY. DELA PENA]

complete with its own civil, criminal, commercial, political, international, and religious laws is part of the
law of the land, and Sharia courts are part of the Philippine judicial system.
The Sharia Appellate Court created under Republic Act No. 9054 shall exercise appellate jurisdiction over
all cases tried in the Sharia District Courts.1avvphi1 It shall also exercise original jurisdiction over
petitions for certiorari, prohibition, mandamus, habeas corpus, and other auxiliary writs and processes in
aid of its appellate jurisdiction. The decisions of the Sharia Appellate Court shall be final and executory,
without prejudice to the original and appellate jurisdiction of this court. 27
and
In Tomawis v. Hon. Balindong,28 we stated that:
x x x [t]he Sharia Appellate Court has yet to be organized with the appointment of a Presiding Justice and
two Associate Justices. Until such time that the Sharia Appellate Court shall have been organized,
however, appeals or petitions from final orders or decisions of the SDC filed with the CA shall be referred
to a Special Division to be organized in any of the CA stations preferably composed of Muslim CA
Justices.29
Notably, Tomawis case was decided on March 5, 2010, while the CA decision was rendered on April 27,
2010. The CA's reason for dismissing the petition, i.e., the decision came from SDC which the CA has no
appellate jurisdiction is erroneous for failure to follow the Tomawis ruling. However, we need not remand
the case, as we have, on several occasions, 30 passed upon and resolved petitions and cases emanating from
Sharia courts.
Petitioners contend that their land was specific and shown by the areas drawn in Exhibits "A" and "K" and
by oral and documentary evidence on record showing that respondents have occupied portions of their land,
i.e., respondent Pangandamun's house encroached a 100 sq. meter portion, while respondent Diaca
occupied 200 sq. meters; and that the SDC had rendered a decision ordering respondents to vacate the
portions or areas they had illegally encroached as indicated in Exhibits "A" and "K" and to remove
whatever improvements thereat introduced. Such decision had already attained finality and a corresponding
entry of judgment had been made and a writ of execution was issued. Petitioners' claim that the SDC's
order for a conduct of a survey to determine whether respondents' land are within petitioners' 800-sq.-meter
land would, in effect, be amending a final and executory decision.
Only respondent Pangandamun filed his Comment, arguing that petitioners' motion for the issuance of a
writ of demolition has no factual and legal basis because his houses are clearly outside the 800-sq.-meter
land of petitioners; that his house had been constructed in 1964 within full view of the petitioners but none
of them ever questioned the same.
We find for the petitioners.
The SDC Decision dated January31, 2005 ordered respondents to vacate the portions or areas they had
illegally encroached as indicated in Exhibits "A" and "K" and to remove whatever improvements thereat

introduced. Thus, petitioners had established that they are recovering possession of 100 sq. meters of their
land which was occupied by respondent Pangandamun's house as indicated in Exhibit "K-1", and 200 sq.
meter portion being occupied by Diaca as indicated in Exhibit "K-2". Such decision had become final and
executory after we affirmed the same and an entry of judgment was made. Such decision can no longer be
modified or amended. In Dacanay v. Yrastorza, Sr.,31 we explained the concept of a final and executory
judgment, thus:
Once a judgment attains finality, it becomes immutable and unalterable. A final and executory judgment
may no longer be modified in any respect, even if the modification is meant to correct what is perceived to
be an erroneous conclusion of factor law and regardless of whether the modification is attempted to be
made by the court rendering it or by the highest court of the land. This is the doctrine of finality of
judgment. It is grounded on fundamental considerations of public policy and sound practice that, at the risk
of occasional errors, the judgments or orders of courts must become final at some definite time fixed by
law. Otherwise, there will be no end to litigations, thus negating the main role of courts of justice to assist
in the enforcement of the rule of law and the maintenance of peace and order by settling justiciable
controversies with finality.32
However, the SDC later found that while the decision has become final and executory and a writ of
execution has been issued, there are instances when a writ of execution cannot be enforced as when there is
a supervening event that prevents the sheriff to execute the writ of execution. It found that respondents'
claim that their buildings are not within the area claimed by petitioners is a supervening event and ordered
a survey of the land, hence, denied the motion for a writ of demolition.
We do not agree.
It is settled that there are recognized exceptions to the execution as a matter of right of a final and
immutable judgment, and one of which is a supervening event.
In Abrigo v. Flores,33 we said:
We deem it highly relevant to point out that a supervening event is an exception to the execution as a matter
of right of a final and immutable judgment rule, only if it directly affects the matter already litigated and
settled, or substantially changes the rights or relations of the parties therein as to render the execution
unjust, impossible or inequitable. A supervening event consists of facts that transpire after the judgment
became final and executory, or of new circumstances that develop after the judgment attained finality,
including matters that the parties were not aware of prior to or during the trial because such matters were
not yet in existence at that time. In that event, the interested party may properly seek the stay of execution
or the quashal of the writ of execution, or he may move the court to modify or alter the judgment in order to
harmonize it with justice and the supervening event. The party who alleges a supervening event to stay the
execution should necessarily establish the facts by competent evidence; otherwise, it would become all too
easy to frustrate the conclusive effects of a final and immutable judgment. 34 In this case, the matter of
whether respondents' houses intruded petitioners' land is the issue in the recovery of possession complaint
filed by petitioners in the SDC which was already ruled upon, thus cannot be considered a supervening
event that would stay the execution of a final and immutable judgment. To allow a survey as ordered by the

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SDC to determine whether respondents' houses are within petitioners' land is tantamount to modifying a
decision which had already attained finality.
We find that the SDC committed grave abuse of discretion when it denied petitioners' motion for the
issuance a writ of demolition. The issuance of a special order of demolition would certainly be the
necessary and logical consequence of the execution of the final and immutable decision. 35 Section 10(d) of
Rule 39, Rules of Court provides:
Section 10. Execution of judgments for specific act.
xxxx

WHEREFORE, the petition is GRANTED. The Orders dated November 9, 2009, January 5, 2010 and
February 10, 2010, of the Shari'a District Court, Fourth Shari'a Judicial District, Marawi City are hereby
CANCELLED and SET ASIDE. The Shari'a District Court is hereby ORDERED to ISSUE a writ of
demolition to enforce its Decision dated January 31, 2005 in Civil Case No. 055-91.
Let a copy of this Decision be furnished the Presiding Justice of the Court of Appeals for whatever action
he may undertake in light of our pronouncement in the Tomawis v. Hon. Balindong case quoted earlier on
the creation of a Special Division to handle appeals or petitions from trial orders or decisions of the Shari' a
District Court.
SO ORDERED.

(d) Removal of improvements on property subject of execution. - when the property subject of the
execution contains improvements constructed or planted by the judgment obligor or his agent, the officer
shall not destroy, demolish or remove said improvements except upon special order of the court, issued
upon motion of the judgment obligee after due hearing and after the former has failed to remove the same
within a reasonable time fixed by the court.
Notably, this case was decided in 2005 and its execution has already been delayed for years now. It is
almost trite to say that execution is the fruit and end of the suit and is the life of law.36 A judgment, if left
unexecuted, would be nothing but an empty victory for the prevailing party.37

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