MINERVA GOMEZ-CASTILLO G.R. No.

187231
Petitioner,
Present:

-versus -

COMISSION ON ELECTIONS
and STRIKE B. REVILLA,
Respondents.

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DECISION

BERSAMIN, J.:

Petitioner Minerva Gomez-Castillo (Castillo) hereby seeks to nullify the orders dated January 30, 2009 and March 11, 2009[1] issued in EAC No. A-01-2009 by the Commission on Elections (COMELEC).

Antecedents

Castillo and respondent Strike P. Revilla ran for Municipal Mayor of Bacoor, Cavite during the May 14, 2007 local elections. After the Municipal Board of Canvassers proclaimed Revilla as the elected Municipal Mayor of
Bacoor, Cavite, Castillo filed an Election Protest Ad Cautelam[2] in the Regional Trial Court (RTC) in Bacoor, Cavite, which was eventually raffled to Branch 19.

Through his Answer, Revilla sought the dismissal of the election protest, alleging that it was filed in the wrong Branch of the RTC. He pointed out that Supreme Court Administrative Order (SCAO) No. 54-2007 designated
Branch 22 of the RTC in Imus, Cavite and Branch 88 of the RTC in Cavite City to hear, try and decide election contests involving municipal officials in Cavite; and that contrary to SCAO No. 54-2007, Castillo filed his
protest in the RTC in Bacoor, Cavite, which was not the proper court.

On November 21, 2008, Branch 19 dismissed Castillos election protest for being violative of SCAO No. 54-2007.

On December 23, 2008, Castillo presented a notice of appeal.[3] Thereupon, the RTC ordered that the complete records of the protest be forwarded to the Election Contests Adjudication Department (ECAD) of the
COMELEC.[4]

The First Division of the COMELEC dismissed the appeal for being brought beyond the five-day reglementary period, noting that although Castillo had received the November 21, 2008 order of the RTC on
December 15 , 2008, she filed her notice of appeal on December 23, 2008, a day too late to appeal, to wit:

Pursuant to Section 3, Rule 22 of the COMELEC Rules of Procedure which requires the appellant to file her notice of appeal within five (5) days after promulgation of the decision of the court xxx and
considering further that jurisprudence holds that perfection of an appeal in the manner and within the period laid down by law is not only mandatory but JURISDICTIONAL, this Commission, First
Division, RESOLVES to DISMISS the instant appeal for appellant's failure to file her Notice of Appeal within the five (5) day reglementary period.
SO ORDERED.[5]
Castillo moved for the reconsideration of the dismissal of her appeal, but the COMELEC denied the motion because she did not pay the motion fees required under Sec. 7(f), Rule 40 of the COMELEC Rules of
Procedure, as amended by COMELEC Resolution No. 02-0130, viz:

The Motion for Reconsideration filed by protestant-appellant Minerva G. Castillo, thru registered mail on 13 February 2009 and received by this Commission on 4 March 2009, seeking reconsideration
of the Commission's (First Division) Order dated 30 January 2009, is hereby DENIED for failure of the movant to pay the necessary motion fees under Sec. 7(f), Rule 40 of the Comelec Rules of
Procedure[6] as amended by Comelec Resolution no. 02-0130.[7]
Castillo has brought the present recourse, contending that the COMELECs orders dismissing her appeal and denying her motion for reconsideration were issued with grave abuse of discretion amounting to lack or
excess of jurisdiction.

Parties Arguments
Castillo insists that her notice of appeal was seasonably filed; otherwise, the RTC would not have given due course to his appeal; that Section 3, Rule 22 of the COMELEC Rules of Procedure, cited in the assailed order dated
January 30, 2009, did not apply to her case, because Section 2 of Rule I of the COMELEC Rules of Procedure provides that:

Sec. 2. Applicability.- These rules, except Part VI, shall apply to all actions and proceedings brought before the Commission. Part VI shall apply to election contests and Quo Warranto cases cognizable
by courts of general jurisdiction.

that the COMELEC Rules of Procedure applied only to actions and proceedings brought before the COMELEC, not to actions or proceedings originating in courts of general jurisdiction; that even assuming that the appeal
was belatedly filed, the rules on election contests should be liberally construed to the end that mere technical objections would not defeat the will of the people in the choice of public officers; that the Court relaxed
on numerous occasions the application of the rules in order to give due course to belated appeals upon strong and compelling reasons; that an electoral contest like hers was imbued with public interest, because it involved the
paramount need to clarify the real choice of the electorate; that Section 4 of Rule I of the COMELEC Rules of Procedure even allows the COMELEC to suspend its own rules of procedure in order to obtain a speedy
disposition of all matters pending before the COMELEC; and that the COMELEC should not have dismissed her motion for reconsideration for her mere failure to pay the corresponding filing fee, but should have
considered the soundness of her argument to the effect that SCAO No. 54-2007 continued to vest jurisdiction to try and decide election contest involving elective municipal officials in the RTC as a whole, rendering the
designation of the RTC branches to handle election protests akin to a designation of venue.
Castillo further insists that Section 12 of Rule 2 of the COMELEC Rules of Procedure provides that assignment of cases to the specially designated courts should be done exclusively by raffle conducted by the executive
judge or by the judges designated by the Supreme Court; and that her protest was thus duly raffled to the RTC in Bacoor, Cavite, considering that SCAO 54-2007 should be construed as a permissive rule that cannot supersede
the general rule that jurisdiction over election contests is vested in the RTC.

In his comment,[8] Revilla submits that the COMELEC correctly dismissed Castillos appeal for being filed beyond the five-day reglementary period prescribed in Section 3 of Rule 22 of the COMELEC Rules of Procedure,
thus:

Section 3. Notice of Appeal. - Within five (5) days after promulgation of the decision of the court, the aggrieved party may filed with said court a notice of appeal, and serve a copy thereof upon the
attorney of record of the adverse party.
that A.M. No. 07-4-15-SC, otherwise known as The Rules of Procedure in Election Contests Involving Elective Municipal and Barangay Officials, clearly and categorically directed:

Section 8. Appeal. - An aggrieved party may appeal the decision to the commission on Elections, within five days after promulgation, by filing a notice of appeal with the court that rendered the
decision, with copy served on the adverse counsel or party if not represented by counsel.

that the period for filing an appeal is not a mere technicality of law or procedure and the right to appeal is merely a statutory privilege that may be exercised only in the manner prescribed by the law; that the notice of appeal,
even on the assumption that it was filed on time, still remained futile due to the petitioners failure to pay the corresponding fee for the motion for reconsideration; that the failure to pay the filing fee rendered the motion for
reconsideration a mere scrap of paper, because it prevented the COMELEC from acquiring jurisdiction over the protest; and that the COMELEC could not be faulted for applying its procedural rules to achieve a just and
expeditious determination of every proceeding brought before it.

Issues

Does Section 13 of Rule 2 of A.M. No. 07-4-15-SC designate the RTC Branch that has jurisdiction over an election contest, or does it merely designate the proper venue for filing?

In case the RTC was incorrect, is the error enough to warrant the reversal of its order of dismissal despite its having attained finality?

Ruling

The petition has no merit.

A
Error of Petitioner in filing the protest in
RTC in Bacoor, not jurisdictional

It is well-settled that jurisdiction is conferred by law. As such, jurisdiction cannot be fixed by the will of the parties; nor be acquired through waiver nor enlarged by the omission of the parties; nor conferred by any
acquiescence of the court. The allocation of jurisdiction is vested in Congress, and cannot be delegated to another office or agency of the Government.

The Rules of Court does not define jurisdictional boundaries of the courts. In promulgating the Rules of Court, the Supreme Court is circumscribed by the zone properly denominated as the promulgation of rules
concerning pleading, practice, and procedure in all courts; [9] consequently, the Rules of Court can only determine the means, ways or manner in which said jurisdiction, as fixed by the Constitution and acts of Congress, shall
be exercised. The Rules of Court yields to the substantive law in determining jurisdiction.[10]

The jurisdiction over election contests involving elective municipal officials has been vested in the RTC by Section 251, Batas Pambansa Blg. 881 (Omnibus Election Code).[11] On the other hand, A.M. No. 07-4-15-SC, by
specifying the proper venue where such cases may be filed and heard, only spelled out the manner by which an RTC with jurisdiction exercises such jurisdiction. Like other rules on venue, A.M. No. 07-4-15-SC was designed
to ensure a just and orderly administration of justice, [12] and is permissive, because it was enacted to ensure the exclusive and speedy disposition of election protests and petitions for quo warranto involving elective municipal
officials.[13]

Castillos filing her protest in the RTC in Bacoor, Cavite amounted only to a wrong choice of venue. Hence, the dismissal of the protest by Branch 19 constituted plain error, considering that her wrong choice did not affect the
jurisdiction of the RTC. What Branch 19 should have done under the circumstances was to transfer the protest to Branch 22 of the RTC in Imus, Cavite, which was the proper venue. Such transfer was proper, whether she as
the protestant sought it or not, given that the determination of the will of the electorate of Bacoor, Cavite according to the process set forth by law was of the highest concern of our institutions, particularly of the courts.

B
Castillos tardy appeal should be dismissed

Section 8 of A.M. No. 07-4-15-SC provides that:

Section 8. Appeal. - An aggrieved party may appeal the decision to the Commission on Elections within five days after promulgation by filing a notice of appeal with the court that rendered the
decision with copy served on the adverse counsel or party if not represented by counsel.

Although Castillo had received the November 21, 2008 order of the RTC on December 15, 2008, she filed her notice of appeal only on December 23, 2008, or eight days after her receipt of the decision. Her appeal was
properly dismissed for being too late under the aforequoted rule of the COMELEC.

Castillo now insists that her appeal should not be dismissed, because she claims that the five-day reglementary period was a mere technicality, implying that such period was but a trivial guideline to be ignored or
brushed aside at will.

Castillos insistence is unacceptable. The period of appeal and the perfection of appeal are not mere technicalities to be so lightly regarded, for they are essential to the finality of judgments, a notion underlying the
stability of our judicial system.[14] A greater reason to adhere to this notion exists herein, for the short period of five days as the period to appeal recognizes the essentiality of time in election protests, in order that the will of
the electorate is ascertained as soon as possible so that the winning candidate is not deprived of the right to assume office, and so that any doubt that can cloud the incumbency of the truly deserving winning candidate is
quickly removed.

Contrary to Castillos posture, we cannot also presume the timeliness of her appeal from the fact that the RTC gave due course to her appeal by its elevating the protest to the COMELEC. The presumption of
timeliness would not arise if her appeal was actually tardy.

It is not trite to observe, finally, that Castillos tardy appeal resulted in the finality of the RTCs dismissal even before January 30, 2002. This result provides an additional reason to warrant the assailed actions of the
COMELEC in dismissing her appeal. Accordingly, the Court finds that the COMELECs assailed actions were appropriate and lawful, not tainted by either arbitrariness or whimsicality,

WHEREFORE, the petition is dismissed for lack of merit.

SO ORDERED.

THE COMMISSION ON ELECTIONS, G.R. No. 171208

Petitioner,
Present:
 PUNO, C.J.,
QUISUMBING,
-versus- YNARES-SANTIAGO,
SANDOVAL- GUTIERREZ,
CARPIO,
AUSTRIA-MARTINEZ,
CORONA,
HON. THELMA CANLAS TRINIDAD-PE AGUIRRE, CARPIO MORALES,
Presiding Judge, Regional Trial Court, Br. 129, Caloocan City, AZCUNA,
and MA. LEONISA GENOVIA, TINGA,
Respondents. CHICO-NAZARIO,
GARCIA,
VELASCO, JR.,
NACHURA, and
REYES, JJ.

Promulgated:

September 7, 2007

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DECISION

CARPIO MORALES, J.:

The present petition for Certiorari under Rule 64 of the Rules of Court involves jurisdiction over an election offense punishable under the Omnibus Election Code by imprisonment of not less than one year but not more than
six years.
On the directive of the Commission on Elections (COMELEC) En Banc,[1] its Law Department filed an Information against respondent Ma. Leonisa Genovia, for violation of Section 261 (z) (3) of the Omnibus Election Code
which penalizes

Any person who votes in substitution for another whether with or without the latters knowledge and/or consent. (Underscoring supplied)

The accusatory portion of the Information, dated July 26, 2005, which was filed before the Regional Trial Court (RTC) of Caloocan City where it was docketed as Criminal Case No. C-73774, reads:

That on or about July 15, 2002 Synchronized Barangay and Sangguniang Kabataan (SK) Elections, in the City of Caloocan, Metro Manila, Philippines, and within the jurisdiction of this Honorable Court, the above-named
accused, did, then and there, willfully and unlawfully, cast her vote in substitution of another person by misrepresenting herself to be Emely Genovia and voted in substitution of said Emely Genovia, a registered voter in
Precinct No. 779-A, Barangay 60, Caloocan City.[2]

Under Section 264 of the Omnibus Election Code, violation of any election offense is punishable as follows:

SECTION 264. Penalties. Any person found guilty of any election offense under this Code shall be punished with imprisonment of not less than one year but not more than six years and shall not be subject to probation. In
addition, the guilty party shall be sentenced to suffer disqualification to hold public office and deprivation of the right of suffrage. If he is a foreigner, he shall be sentenced to deportation which shall be enforced after the
prison term has been served. Any political party found guilty shall be sentenced to pay a fine of not less than ten thousand pesos, which shall be imposed upon such party after criminal action has been instituted in which their
corresponding officials have been found guilty. x x x (Italics in the original; emphasis and underscoring supplied)

By Order of September 21, 2005,[3] Branch 129 of the Caloocan RTC dismissed the case for lack of jurisdiction, it citing Section 32(2) of Batas Pambansa (B.P.) Blg. 129 (The Judiciary Reorganization Act of 1980) reading:

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 jurisdiction of Regional Trial Courts and of the
Sandiganbayan, the Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts shall exercise:
xxxx

(2) Exclusive original jurisdiction over all offenses punishable with imprisonment not exceeding six (6) years irrespective of the amount of fine regardless of other imposable accessory penalties, including the civil liability
arising from such offenses or predicated thereon, irrespective of kind, nature, or value amount thereof: Provided, however, That in offenses involving damage to property through criminal negligence, they shall have exclusive
original jurisdiction thereof. (Italics in the original; emphasis and underscoring supplied)

The COMELEC moved to reconsider the trial courts dismissal order,[4] inviting attention to Section 268 of the Omnibus Election Code which reads:

SECTION 268. Jurisdiction of courts. The regional trial court shall have the exclusive original jurisdiction to try and decide any criminal action or proceedings for violation of this Code, except those relating to the offense of
failure to register or failure to vote which shall be under the jurisdiction of the metropolitan or municipal trial courts. From the decision of the courts, appeal will lie as in other criminal cases. (Underscoring supplied)

By a one sentence Order of November 15, 2005,[5] the trial court denied the COMELECs motion for lack of merit.

Hence, the present petition for certiorari under Rule 64,[6] the COMELEC contending that the dismissal order is contrary to Section 268 of the Omnibus Election Code.

The COMELEC argues that under the above-quoted provision of Section 268 of the Omnibus Election Code, all criminal cases for violation of the Code, except those relating to failure to register or failure to vote which
shall be under the exclusive jurisdiction of inferior courts, fall under the exclusive jurisdiction of regional trial courts.[7]

The petition is meritorious.

From the above-quoted provision of Section 32 of BP Blg. 129, jurisdiction of first-level courts the metropolitan trial courts, municipal trial courts and municipal circuit trial courts does not cover criminal cases which, by
specific provision of law, fall within the exclusive jurisdiction of regional trial courts (and of the Sandiganbayan). [8]

As correctly argued by the COMELEC, Section 268 of the Omnibus Election Code specifically provides, regional trial courts have exclusive jurisdiction to try and decide any criminal action or proceedings for violation of
the Code except those relating to the offense of failure to register or failure to vote.

It bears emphasis that Congress has the plenary power to define, prescribe and apportion the jurisdictions of various courts. Hence, it may, by law, provide that a certain class of cases should be exclusively heard and
determined by a specific court. Section 268 of Omnibus Election Code is one such and must thus be construed as an exception to BP Blg. 129, the general law on jurisdiction of courts. [9]

In fine, while BP Blg. 129 lodges in municipal trial courts, metropolitan trial courts and municipal circuit trial courts jurisdiction over criminal cases carrying a penalty of imprisonment of less than one year but not exceeding
six years, following Section 268 of the Omnibus Election Code, any criminal action or proceeding which bears the same penalty, with the exception of the therein mentioned two cases, falls within the exclusive original
jurisdiction of regional trial courts.

WHEREFORE, the petition is GRANTED. The challenged orders of respondent Judge Thelma Canlas Trinided-Pe Aguirre, in Criminal Case No. C-73774 are SET ASIDE. Respondent judge is DIRECTED to reinstate the
case to the court docket and to conduct appropriate proceedings thereon with reasonable dispatch.

SO ORDERED.

COMELEC vs. AGUIRRE

ESCRA

Election Law; Jurisdictions; Section 268 of the Omnibus Election Code specifically provides that regional trial courts have exclusive jurisdiction to try and decide any criminal action or proceedings for violation of the Code
except those relating to the offense of failure to register or failure to votefirst-level courts, therefore, do not have jurisdiction over the same.From the above-quoted provision of Section 32 of BP Blg. 129, jurisdiction
of first-level courtsthe metropolitan trial courts, municipal trial courts and municipal circuit trial courtsdoes not cover criminal cases which, by specific provision of law, fall within the exclusive jurisdiction of regional
trial courts (and of the Sandiganbayan). As correctly argued by the COMELEC, Section 268 of the Omnibus Election Code specifically provides, regional trial courts have exclusive jurisdiction to try and decide any criminal
action or proceedings for violation of the Code except those relating to the offense of failure to register or failure to vote.

Same; Same; Congress has the plenary power to define, prescribe and apportion the jurisdictions of various courtsit may, by law, provide that a certain class of cases should be exclusively heard and determined by a specific
court.It bears emphasis that Congress has the plenary power to define, prescribe and apportion the jurisdictions of various courts. Hence, it may, by law, provide that a certain class of cases should be exclusively heard and
determined by a specific court. Section 268 of Omnibus Election Code is one such and must thus be construed as an exception to BP Blg. 129, the general law on jurisdiction of courts. In fine, while BP Blg. 129 lodges in
municipal trial courts, metropolitan trial courts and municipal circuit trial courts jurisdiction over criminal cases carrying a penalty of imprisonment of less than one year but not exceeding six years, following Section 268 of
the Omnibus Election Code any criminal action or proceeding which bears the same penalty, with the exception of the therein mentioned two cases, falls within the exclusive original jurisdiction of regional trial courts.
DBM vs. KOLONWELL

DECISION

Before the Court are these consolidated three (3) petitions for review under Rule 45 of the Rules of Court, with a prayer for a temporary restraining order, to nullify and set aside the Order[1] dated December 4, 2006 of the
Manila Regional Trial Court (RTC), Branch 18, in SP Civil Case No. 06-116010, a special civil action for certiorari and prohibition thereat commenced by herein respondent Kolonwel Trading (Kolonwel for short) against
the Department of Budget and Management Procurement Service (DBM-PS), et al.

At the core of the controversy are the bidding and the eventual contract awards for the supply and delivery of some 17.5 million copies of Makabayan (social studies) textbooks and teachers manuals, a project of the
Department of Education (DepEd).

The factual antecedents:

In the middle of 2005, the DepEd requested the services of the DBM-PS to undertake the aforementioned procurement project which is to be jointly funded by the World Bank (WB), through the Second Social Expenditure
Management Program (SEMP2) of the Philippines (RP) International Bank for Reconstruction and Development (IBRD) Loan Agreement No. 7118-PH [2] (Loan No. 7118-PH, hereinafter) dated September 12, 2002; and the
Asian Development Bank (ADB), through SEDIP Loan No. 1654-PHI. Earlier, the Executive Director of the Government Procurement Policy Board (GPPB), in reply to a DepEd query, stated that procurement[s] for
MAKABAYAN textbooks where funds therefore (sic) are sourced from World Bank Loan shall be governed by the applicable procurement guidelines of the foreign lending institution. The 2005 Call for Submission of
Textbooks and Teachers Manuals shall be viewed vis--vis relevant World Bank guidelines.[3]

On October 27, 2005, the DBM-PS Inter-Agency Bids and Awards Committee (IABAC) called for a bidding for the supply of the Makabayan textbooks and manuals, divided into three (3) lots, to wit: Lot 1 for Sibika Grades
1-3; Lot 2 for HeKaSi Grades 4-6 and Lot 3 for Araling Panlipunan Years I-IV. Of the entities, foreign and local, which responded and procured the Bidding Documents,[4] only eleven (11) bidders submitted, either as
principal or in joint venture arrangement, proposals for the different lots. Among them were Watana Phanit Printing & Publishing Co., Ltd., of Thailand (Watana, for short), petitioner Vibal Publishing House, Inc., (Vibal,
hereinafter), Daewoo International Corporation of South Korea (Daewoo, for brevity) and respondent Kolonwel. Kolonwels tender appeared to cover all three (3) lots. [5]

Following the bid and the book content/body evaluation process, the IABAC, via Resolution (Res.) No. 001-2006[6] dated March 9, 2006, resolved to recommend to the [WB] and the [ADB] failure of bids for all lots in view
of the abovementioned disqualifications, non-compliance and reservations of [DepEd]. Issues of Conflict of interest with respect to Watana and Vibal, failure in cover stock testing for Kolonwel and DepEds reservation were
among the disqualifying reasons stated in the resolution.

On March 15, 2006, the IABAC submitted to WB for its review and information Res. No. 001-2006. Appended to the covering letter was a document entitled Bid Evaluation Report and Recommendation for Award of
Contract.[7]

The following events, as recited in the assailed Manila RTC order and as borne out by the records, then transpired:

1. In a letter[8] dated April 24, 2006 to the DepEd and the DBM-PS IABAC Chairman, the WB, through its Regional Senior Economist, Ms. Rekha Menon, disagreed, for stated reasons, with the IABACs finding of conflict of
interest on the part of Vibal and Watana and the rejection of their bids. Ms. Menon, however, upheld the disqualification of all the other bidders. She thus asked the IABAC to review its evaluation and to provide the WB with
the revised Bid Evaluation Report (BER), taking into account the December 31, 2006 RP-IBRD Loan closing date.

2. On May 11, 2006, the IABAC informed Kolonwel of its or its bids failure to post qualify and of the grounds for the failure. [9]

In its reply-letter of May 18, 2006,[10] Kolonwel raised several issues and requested that its disqualification be reconsidered and set aside. In reaction, IABAC apprised WB of Kolonwels concerns stated in its letter-reply.

3) Subsequently, the IABAC, agreeing with WBs position articulated in Ms. Menon, issued Res. No. 001-2006-A effectively recommending to WB the contract award to Vibal of Sibika 1 & 3 and HekaSi 5;
to Watana of Sibika 2 and HeKaSi 4 & 5 and to Daewoo of Sibika 3. Upon review, WB offered no objection to the recommended award.[11]

4) The issuance of notices of award and the execution on September 12, 2006 of the corresponding Purchaser-Supplier contracts followed.[12]

5. On June 23, 2006, the DBM-PS IABAC chairman informed Kolonwel of the denial of its request for reconsideration and of the WBs concurrence with the denial.[13] The IABAC denied, on September 8, 2006, a second
request for reconsideration of Kolonwel[14] after WB found the reasons therefor, as detailed in PS IABAC Res. No. 001-2006-B [15] dated July 18, 2006, unmeritorious, particularly on the aspect of cover stock testing.

Such was the state of things when on, October 12, 2006, Kolonwel filed with the RTC of Manila a special civil action for certiorariand prohibition with a prayer for a temporary restraining order (TRO) and/or writ of
preliminary injunction. Docketed as SP Civil Case No. 06-116010, and raffled to Branch 18 of the court, [16] the petition sought to nullify IABAC Res. Nos. 001-2006 and 001-2006-A and to set aside the contract awards in
favor of Vibal and Watana. In support of its TRO application, Kolonwel alleged, among other things, that the supply-awardees were rushing with the implementation of the void supply contracts to beat the loan closing-date
deadline.

A week after, the Manila RTC scheduled - and eventually conducted - a summary hearing on the TRO application. In an order[17] of October 31, 2006, as amended in another order [18] dated November 20, 2006, the court
granted a 20-day TRO enjoining the IABAC, et al, starting November 6, 2006, from proceeding with the subject September 12, 2006 purchase- supply contracts. In the original order, the court set the preliminary conference
and hearing for the applied preliminary injunction on November 7, and 8, 2006, respectively.

In the meantime, Vibal filed an urgent motion to dismiss [19] Kolonwels petition on several grounds, among them want of jurisdiction and lack of cause of action, inter alia alleging that the latter had pursued judicial relief
without first complying with the protest procedure prescribed by Republic Act (R.A.) No. 9184, otherwise known as the Government Procurement Reform Act. The DepEd later followed with its own motion to dismiss, partly
based on the same protest provision. As records show, the trial court did not conduct a hearing on either dismissal motions, albeit it heard the parties on their opposing claims respecting the propriety of issuing a writ of
preliminary injunction.

On December 4, 2006, the Manila RTC issued its assailed Order [20] finding for Kolonwel, as petitioner a quo, disposing as follows:

WHEREFORE, the court grants the petition for certiorari and prohibition. The IABAC Resolution No. 001-2006-A dated May 30, 2006 is annulled and set aside. IABAC Resolution No. 001-2006 is declared validly and
regularly issued in the absence of a showing of grave abuse of discretion or excess of jurisdiction. All subsequent actions of the respondents resulting from the issuance of IABAC Resolution No. 001-2006-A are consequently
nullified and set aside. This court grants a final injunction pursuant to Sec. 9 of Rule 58 of the Rules of Court as amended, restraining respondents Department of Education and Culture (sic), [DBM-PS], [IABAC], Vibal
Publishing House, Inc., LG & M Corporation and SD Publications from the commission or continuance of acts, contracts or transactions proceeding from the issuance of IABAC Resolution No. 001-2006-A.

SO ORDERED. (Emphasis and words in brackets supplied

Hence, these three (3) petitions which the Court, per its Resolution [21] of January 16, 2007, ordered consolidated. Earlier, the Court issued, in G. R. No. 175616, a TRO[22] enjoining the presiding judge[23] of the RTC of Manila,
Branch 18, from proceeding with SP Civil Case No. 06-116010 or implementing its assailed order

Petitioners urge the annulment of the assailed RTC Order dated December 4, 2006, on jurisdictional ground, among others. It is their parallel posture that the Manila RTC erred in assuming jurisdiction over the case despite
respondent Kolonwels failure to observe the protest mechanism provided under Sec. 55 in relation to Secs. 57 and 58 of R.A. No. 9184, respectively reading as follows:

Sec. 55. Protest on Decision of the BAC.- Decisions of the BAC [Bids and Awards Committee] in all stages of procurement may be protested to the head of the procuring entity. Decisions of the BAC may be protested by
filing a verified position paper and paying a non-refundable protest fee. The amount of the protest fee and the periods during which the protest may be filed and resolved shall be specific in the IRR.

Sec. 57. Non-interruption of the Bidding Process. In no case shall any process taken from any decision treated in this Article stay or delay the bidding process. Protests must first be resolved before any award is made.

Sec. 58. Report to Regular Courts; Certiorari.- Court action may be resorted to only after the protests contemplated in this Article shall have been completed. Cases that are filed in violation of the process specified in this
article shall be dismissed for lack of jurisdiction. The [RTC] shall have jurisdiction over final decisions of the head of the procuring entity. (Emphasis and words in bracket added.)

As a counterpoint, the respondent draws attention to its having twice asked, and having been twice spurned by, the IABAC to reconsider its disqualification, obviously agreeing with the Manila RTC that the judicial window
was already opened under the exhaustion of available administrative remedies principle. In the same breath, however, the respondent would argue, again following the RTCs line, that it was prevented from filing a protest
inasmuch as the government had not issued the Implementing Rules and Regulations (IRR) of R.A. No. 9184 to render the protest mechanism of the law operative for foreign-funded projects.

The Court is unable to lend concurrence to the trial courts and respondents positions on the interplay of the protest and jurisdictional issues. As may be noted, the aforequoted Section 55 of R.A. No. 9184 sets three (3)
requirements that must be met by the party desiring to protest the decision of the Bids and Awards Committee (BAC). These are: 1) the protest must be in writing, in the form of a verified position paper; 2) the protest must be
submitted to the head of the procuring entity; and 3) the payment of a non-refundable protest fee. The jurisdictional caveat that authorizes courts to assume or, inversely, precludes courts from assuming, jurisdiction over suits
assailing the BACs decisions is in turn found in the succeeding Section 58 which provides that the courts would have jurisdiction over such suits only if the protest procedure has already been completed.

Respondents letters of May 18, 2006[24] and June 28, 2006[25] in which it requested reconsideration of its disqualification cannot plausibly be given the status of a protest in the context of the aforequoted provisions of R.A.
No. 9184. For one, neither of the letter-request was addressed to the head of the procuring entity, in this case the DepEd Secretary or the head of the DBM Procurement Service, as required by law. For another, the same letters
were unverified. And not to be overlooked of course is the fact that the third protest-completing requirement, i.e., payment of protest fee, was not complied with.

Given the above perspective, it cannot really be said that the respondent availed itself of the protest procedure prescribed under Section 55 of R.A. No. 9184 before going to the RTC of Manila via a petition
for certiorari. Stated a bit differently, respondent sought judicial intervention even before duly completing the protest process. Hence, its filing of SP Civil Case No. 06-116010 was precipitate. Or, as the law itself would put
it, cases that are filed in violation of the protest process shall be dismissed for lack of jurisdiction.

Considering that the respondents petition in RTC Manila was actually filed in violation of the protest process set forth in Section 55 of R.A. No. 9184, that court could not have lawfully acquired jurisdiction over the subject
matter of this case. In fact, Section 58, supra, of R.A. No. 9184 emphatically states that cases filed in violation of the protest process therein provided shall be dismissed for lack of jurisdiction.
It is to be stressed that the protest mechanism adverted to is a built-in administrative remedy embodied in the law itself. It was not prescribed by an administrative agency tasked with implementing a statute through the
medium of interpretative circulars or bulletins. Ignoring thus this administrative remedy would be to defy the law itself.

It will not avail the respondent any to argue that the absence of an IRR to make the protest mechanism under R.A. No. 9184 become operative for foreign-funded projects was what prevented it from complying with the
protest procedure. As the last sentence of the afore-quoted Section 55 of R.A. No. 9184 is couched, the specific office of an IRR for foreign-funded project, vis--vis the matter of protest, is limited to fixing the amount of the
protest fee and the periods during which the protest may be filed and resolved. Surely, the absence of provisions on protest fee and reglementary period does not signify the deferment of the implementation of the protest
mechanism as a condition sine qua non to resort to judicial relief. As applied to the present case, the respondent had to file a protest and pursue it until its completion before going to court. There was hardly any need to wait
for the specific filing period to be prescribed by the IRR because the protest, as a matter of necessity, has to be lodged before court action.

Neither is it necessary that the amount of protest fee be prescribed first. Respondent could very well have proceeded with its protest without paying the required protest fee, remitting the proper amount once the appropriate
IRR fixed the protest fee.

There may perhaps be room for relaxing the prescription on protest if a bona fide attempt to comply with legal requirements had been made. But the fact alone that the respondent did not even submit a verified position paper
by way of protest argues against such plausibility. Significantly, none of the reconsideration-seeking letters of the respondent advert to the protest procedure under Section 55 of R.A. No. 9184, even by way of noting that it
was at a loss as to the inoperativeness of such provision in the light of the absence of an IRR.

In its petition before the Manila RTC, the respondent veritably admitted to not complying with the protest requirement, albeit with the lame excuse that it was effectively barred from complying with the required
administrative remedies of protest. Neither did the respondent then argue that it was not able to comply due to the absence of an IRR for foreign- funded projects.

At any rate, there is, in fact a set of implementing rules and regulations, denominated as IRR-A, issued on July 11, 2003 by the GPPB and the Joint Congressional Oversight Committee, Section 55.1 [26] of which provides that
prior to a resort to protest, the aggrieved party must first file a motion for reconsideration of the decision of the BAC. It is only after the BAC itself denies reconsideration that the protest, accompanied by a fixed protest fee,
shall be filed within the period defined in the IRR.

It may be that IRR-A specifically defines its coverage to all fully domestically-funded procurement activities, it being also provided that foreign-funded procurement activities shall be the subject of a subsequent
issuance. [27] However, a similarly drawn argument involving IRR-A was set aside in Abaya v. Ebdane,[28] a case involving Loan Agreement No. PH-P204 entered into by and between the RP and the Japan Bank for
International Cooperation (JBIC) for the implementation DPWH Contract Package No. I (CP I).Wrote the Court in Abaya:

Admittedly, IRR-A covers only fully domestically-funded procurement activities from procurement planning up to contract implementation and that it is expressly stated that IRR-B for foreign-funded procurement activities
shall be subject of a subsequent issuance. Nonetheless, there is no reason why the policy behind Section 77 of IRR-A cannot be applied to foreign-funded procurement projects like the CP I project. Stated differently, the
policy on the prospective or non-retroactive application of RA 9184 with respect to domestically-funded procurement projects cannot be any different with respect to foreign-funded procurement projects . It would be
incongruous, even absurd, to provide for the prospective application of RA 9184 with respect to domestically-funded procurement projects and, on the other hand, as urged by the petitioners, apply RA 9184 retroactively with
respect to foreign-funded procurement projects. To be sure, the lawmakers could not have intended such an absurdity.

As in Abaya, there really should be no reason why the policy behind Section 55.l of IRR-A on the procedure for protest cannot be applied, even analogously, to foreign-funded procurement projects, such as those in this case.
Indeed, there is no discernable justification why a different procedure should obtain with respect to foreign-funded procurement undertakings as opposed to a locally funded project, and certainly there is no concrete
foundation in R.A. 9184 to indicate that Congress intended such a variance in the protest procedure.

The Manila RTC, in granting the petition for certiorari and prohibition, stated the observation that there was substantial compliance of the requirement of protest. [29] Yet, it is not even clear that respondent Kolonwel, in its
dealings with the IABAC, particularly in seeking reconsideration of its decision, was even aware of the protest requirements. What is beyond dispute, however, is that courts are precluded by express legislative command
from entertaining protests from decisions of the BAC. What Congress contextually intended under the premises was that not only would there be a distinct administrative grievance mechanism to be observed in assailing
decisions of the BAC, but that courts would be without jurisdiction over actions impugning decisions of the BACs, unless, in the meantime, the protest procedure mandated under Section 55 of R.A. No. 9184 is brought to its
logical completion.

It is Congress by law, not the courts by discretion, which defines the courts jurisdiction not otherwise conferred by the Constitution. Through the same medium, Congress also draws the parameters in the exercise of the
functions of administrative agencies. Section 55 of R.A. No. 9184 could not be any clearer when it mandates the manner of protesting the decision of bids and awards committees. Similarly, there can be no quibbling that,
under Section 58 of the same law, courts do not have jurisdiction over decisions of the BACs unless the appropriate protest has been made and completed. The absence of the IRR does not detract from the reality that R.A.
No. 9184 requires a protest to be filed under the form therein prescribed.

Given the above perspective, the Manila RTC had no jurisdiction over respondent Kolonwels petition for certiorari and prohibition. Accordingly, it ought to have granted herein petitioners motion to dismiss, but it did not.
Worse, the court even added another layer to its grievous error when it granted the respondents basic petition for certiorari and prohibition itself.

Compounding the Manila RTCs error is its having proceeded with SP Civil Case No. 06-116010 even without acquiring jurisdiction over Watana. As may be recalled, the respondent, in its petition before the RTC, impleaded
Watana as one of the defendants, the latter having been awarded by the IABAC Sibika 2 and HeKaSi 4 &5. The records, however, show that Watana was not served with summons. The Sheriffs Return dated October 18, 2006,
noted that summons was not served on Watana and another defendant at No. 1281 G. Araneta Avenue cor. Ma. Clara Street, Quezon City, on the ground that said companies were not holding office thereat according to Mr.
Marvin V. Catacutan.
There can be no dispute that Watana is an indispensable party to the respondents petition in SP Civil Case No. 06-116010, Kolonwel having therein assailed and sought to nullify the contract-award made in its and Vibals
favor. Indispensable parties are those with such interest in the controversy that a final decree would necessarily affect their rights so that courts cannot proceed without their presence. [30] All of them must be included in a suit
for an action to prosper or for a final determination to be had. [31]Watana, to repeat, was never served with summons; neither did it participate in the proceedings below. Plainly, then, the Manila RTC did not acquire jurisdiction
over one of the indispensable parties, the joinder of whom is compulsory.[32]

With the foregoing disquisitions, the Court finds it unnecessary to even dwell on the other points raised in this consolidated cases. In the light, however, of the Manila RTCs holding that the WB Guidelines on Procurement
under IBRD Loans do not in any way provided superiority over local laws on the matter,[33] the Court wishes to state the following observation:

As may be recalled, all interested bidders were put on notice that the DepEds procurement project was to be funded from the proceeds of the RP-IBRD Loan No. 7118-PH, [34] Section 1, Schedule 4 of which stipulates that
Goods shall be procured in accordance with the provisions of Section 1 [35] of the Guidelines for Procurement under IBRD Loans. Accordingly, the IABAC conducted the bidding for the supply of textbooks and manuals based
on the WB Guidelines, particularly the provisions on International Competitive Bidding (ICB). Section 4 of R.A. No. 9184 expressly recognized this particular process, thus:

Sec. 4. Scope and application. - This Act shall apply to the Procurement of Goods and Consulting Services, regardless of source of funds, whether local or foreign by all branches and instrumentalities of government . Any
treaty or international or executive agreement affecting the subject matter of this Act to which the Philippine government is a signatory shall be observed. (Emphasis added.)

The question as to whether or not foreign loan agreements with international financial institutions, such as Loan No. 7118-PH, partake of an executive or international agreement within the purview of the Section 4 of R.A.
No. 9184, has been answered by the Court in the affirmative in Abaya, supra. Significantly, Abaya declared that the RP-JBIC loan agreement was to be of governing application over the CP I project and that the JBIC
Procurement Guidelines, as stipulated in the loan agreement, shall primarily govern the procurement of goods necessary to implement the main project.

Under the fundamental international law principle of pacta sunt servanda,[36] which is in fact embodied in the afore-quoted Section 4 of R.A. No. 9184, the RP, as borrower, bound itself to perform in good faith its duties and
obligation under Loan No. 7118- PH. Applying this postulate in the concrete to this case, the IABAC was legally obliged to comply with, or accord primacy to, the WB Guidelines on the conduct and implementation of the
bidding/procurement process in question.

WHEREFORE, the instant consolidated petitions are GRANTED and the assailed Order dated December 4, 2006 of the Regional Trial Court of Manila in its SP Case No. 06-116010 is NULLIFIED and SET ASIDE.

CASE DIGEST:

Department Of Budget And Management Procurement Service Vs Kolonwel Trading, G.R. No. 175608, July 8, 2007

Facts:

Before the Court are these consolidated three (3) petitions for review under Rule 45 of the Rules of Court, with a prayer for a temporary restraining order, to nullify and set aside the Order dated December 4, 2006 of the
Manila Regional Trial Court (RTC), Branch 18, in SP Civil Case No. 06-116010, a special civil action for certiorari and prohibition thereat commenced by herein respondent Kolonwel Trading (Kolonwel for short) against the
Department of Budget and Management Procurement Service (DBM-PS), et al. At the core of the controversy are the bidding and the eventual contract awards for the supply and delivery of some 17.5 million copies of
Makabayan (social studies) textbooks and teachers manuals, a project of the Department of Education (DepEd). The contract was awarded to several publishers for the different textbooks and Kolonwel was disqualified for
which it appealed to the Inter-Agency Bids and Awards Committee but was denied. Kolonwel filed with the RTC of Manila a special civil action for certiorari and prohibition with a prayer for a temporary restraining order
(TRO) and/or writ of preliminary injunction. Docketed as SP Civil Case No. 06-116010, and raffled to Branch 18 of the court, the petition sought to nullify IABAC Res. Nos. 001-2006 and 001-2006-A and to set aside the
contract awards in favor of other publishers. Other publishers filed a motion to dismiss Kolonwels petition on several grounds, among them want of jurisdiction and lack of cause of action, inter alia alleging that the latter had
pursued judicial relief without first complying with the protest procedure prescribed by Republic Act (R.A.) No. 9184, otherwise known as the Government Procurement Reform Act..

Issue:

Whether or not the RTC erred in assuming jurisdiction over the case despite Kolonwels failure to observe the protest mechanism provided under Sec. 55, Sec. 57 and 58 of the Government Procurement Reform Act because it
is a foreign funded project.

Ruling:

The Court is unable to lend concurrence to the trial courts and respondents positions on the interplay of the protest and jurisdictional issues. As may be noted, that Section 55 of R.A. No. 9184 sets three (3) requirements that
must be met by the party desiring to protest the decision of the Bids and Awards Committee (BAC). These are: 1) the protest must be in writing, in the form of a verified position paper; 2) the protest must be submitted to the
head of the procuring entity; and 3) the payment of a non-refundable protest fee. The jurisdictional caveat that authorizes courts to assume or, inversely, precludes courts from assuming, jurisdiction over suits assailing the
BACs decisions is in turn found in the succeeding Section 58 which provides that the courts would have jurisdiction over such suits only if the protest procedure has already been completed. Considering that the respondents
petition in RTC Manila was actually filed in violation of the protest process set forth in Section 55 of R.A. No. 9184, that court could not have lawfully acquired jurisdiction over the subject matter of this case. In fact, Section
58, supra, of R.A. No. 9184 emphatically states that cases filed in violation of the protest process therein provided shall be dismissed for lack of jurisdiction. The question as to whether or not foreign loan agreements with
international financial institutions, such as Loan No. 7118-PH, partake of an executive or international agreement within the purview of the Section 4 of R.A. No. 9184, has been answered by the Court in the affirmative in
Abaya, supra. Significantly, Abaya declared that the RP-JBIC loan agreement was to be of governing application over the CP I project and that the JBIC Procurement Guidelines, as stipulated in the loan agreement, shall
primarily govern the procurement of goods necessary to implement the main project. WHEREFORE, the instant consolidated petitions are GRANTED and the assailed Order dated December 4, 2006 of the Regional Trial
Court of Manila in its SP Case No. 06-116010 is NULLIFIED and SET ASIDE.

FIRST DIVISION

[G.R. NO. 146454 : September 14, 2007]

PAMELA S. SEVILLENO and PURITA S. SEVILLENO, Petitioners, v. PACITA CARILO and CAMELO CARILO, Respondents.

DECISION

SANDOVAL-GUTIERREZ, J.:

For our resolution is a Petition for Review on Certiorari assailing the Resolution1 of the Court of Appeals (Third Division) dated December 20, 2000 in CA-G.R. CV No. 63608.

On October 28, 1998, Pamela and Purita, both surnamed Sevilleno, petitioners, filed with the Regional Trial Court (RTC), Branch 82, Quezon City, a complaint for damages against spouses Camelo and Pacita Carilo,
respondents, docketed as Civil Case No. Q-35895. Petitioners prayed for an award of P5,000.00 as actual damages, P400,000.00 as moral damages, P10,000.00 as exemplary damages, and P50,000.00 for attorney's fees.

Respondents seasonably filed their answer with compulsory counterclaim. They prayed that the trial court dismiss the complaint for lack of cause of action.

On March 23, 1999, the RTC motu prioprio issued an Order dismissing the case for lack of jurisdiction over the subject matter of the case.

Petitioners filed a motion for reconsideration but it was denied by the RTC in an Order dated May 18, 1999.

Petitioners interposed an appeal to the Court of Appeals but it was dismissed for being the wrong mode of appeal. The appellate court held that since the issue being raised is whether the RTC has jurisdiction over the subject
matter of the case, which is a question of law, the appeal should have been elevated to the Supreme Court under Rule 45 of the 1997 Rules of Civil Procedure, as amended.

Section 2, Rule 41 of the same Rules which governs appeals from judgments and final orders of the RTC to the Court of Appeals, provides:

SEC. 2. Modes of appeal. '

(a) Ordinary appeal. - The appeal to the Court of Appeals in cases decided by the Regional Trial Court in the exercise of its original jurisdiction shall be taken by filing a notice of appeal with the court which rendered the
judgment or final order appealed from and serving a copy thereof upon the adverse party. No record on appeal shall be required except in special proceedings and other cases of multiple or separate appeals where the law or
these Rules so require. In such cases, the record on appeal shall be filed and served in like manner.

(b) Petition for review. - The appeal to the Court of Appeals in cases decided by the Regional Trial Court in the exercise of its appellate jurisdiction shall be by Petition for Review in accordance with Rule 42.

(c) Appeal by certiorari . - In all cases where only questions of law are raised or involved, the appeal shall be to the Supreme Court by Petition for Review on Certiorari in accordance with Rule 45.

In Macawiwili Gold Mining and Development Co., Inc. v. Court of Appeals,2 we summarized the rule on appeals as follows:

(1) In all cases decided by the RTC in the exercise of its original jurisdiction, appeal may be made to the Court of Appeals by mere notice of appeal where the appellant raises questions of fact or mixed questions of fact and
law;

(2) In all cases decided by the RTC in the exercise of its original jurisdiction where the appellant raises only questions of law, the appeal must be taken to the Supreme Court on a Petition for Review on Certiorari under Rule
45.

(3) All appeals from judgments rendered by the RTC in the exercise of its appellate jurisdiction, regardless of whether the appellant raises questions of fact, questions of law, or mixed questions of fact and law, shall be
brought to the Court of Appeals by filing a Petition for Review under Rule 42.

It is not disputed that the issue brought by petitioners to the Court of Appeals involves the jurisdiction of the RTC over the subject matter of the case. We have a long standing rule that a court's jurisdiction over the subject
matter of an action is conferred only by the Constitution or by statute. 3 Otherwise put, jurisdiction of a court over the subject matter of the action is a matter of law.4 Consequently, issues which deal with the jurisdiction of a
court over the subject matter of a case are pure questions of law. As petitioners' appeal solely involves a question of law, they should have directly taken their appeal to this Court by filing a Petition for Review
on Certiorari under Rule 45, not an ordinary appeal with the Court of Appeals under Rule 41. Clearly, the appellate court did not err in holding that petitioners pursued the wrong mode of appeal.

Indeed, the Court of Appeals did not err in dismissing petitioners' appeal. Section 2, Rule 50 of the same Rules provides that an appeal from the RTC to the Court of Appeals raising only questions of law shall be dismissed;
and that an appeal erroneously taken to the Court of Appeals shall be dismissed outright, thus:

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 of pure 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.

WHEREFORE, we DENY the petition. The questioned Resolution of the Court of Appeals (Third Division) in CA-G.R. CV No. 63608 is AFFIRMED. Costs against petitioners.

SO ORDERED.

Sevilleno vs. COMELEC

PAMELA S. SEVILLENO and PURITA S. SEVILLENO, petitioners, vs. PACITA CARILO and CAMELO CARILO, respondents.

Remedial Law; Civil Procedure; Appeals; Rule on appeal summarized in Macawiwili Gold Mining and Development Co., Inc. vs. Court of Appeals, 297 SCRA 602 (1998).In Macawiwili Gold Mining and Development
Co., Inc. v. Court of Appeals, 297 SCRA 602 (1998), we summarized the rule on appeals as follows: (1) In all cases decided by the RTC in the exercise of its original jurisdiction, appeal may be made to the Court of Appeals
by mere notice of appeal where the appellant raises questions of fact or mixed questions of fact and law; (2) In all cases decided by the RTC in the exercise of its original jurisdiction where the appellant raises only questions
of law, the appeal must be taken to the Supreme Court on a petition for review on certiorari under Rule 45. (3) All appeals from judgments rendered by the RTC in the exercise of its appellate jurisdiction, regardless of
whether the appellant raises questions of fact, questions of law, or mixed questions of fact and law, shall be brought to the Court of Appeals by filing a petition for review under Rule 42.

Same; Same; Same; Actions; Jurisdictions; A courts jurisdiction over the subject matter of an action is conferred only by the Constitution or by statute.It is not disputed that the issue brought by petitioners to the Court of
Appeals involves the jurisdiction of the RTC over the subject matter of the case. We have a long standing rule that a courts jurisdiction over the subject matter of an action is conferred only by the Constitution or by statute.
Otherwise put, jurisdiction of a court over the subject matter of the action is a matter of law. Consequently, issues which deal with the jurisdiction of a court over the subject matter of a case are pure questions of law. As
petitioners appeal solely involves a question of law, they should have directly taken their appeal to this Court by filing a petition for review on certiorari under Rule 45, not an ordinary appeal with the Court of Appeals under
Rule 41. Clearly, the appellate court did not err in holding that petitioners pursued the wrong mode of appeal.

Same; Same; Same; An appeal from the RTC to the Court of Appeals raising only questions of law shall be dismissed; An appeal erroneously taken to the Court of Appeals shall be dismissed outright.The Court of Appeals
did not err in dismissing petitioners appeal. Section 2, Rule 50 of the same Rules provides that an appeal from the RTC to the Court of Appeals raising only questions of law shall be dismissed; and that an appeal erroneously
taken to the Court of Appeals shall be dismissed outright.

COSCO PHILIPPINES SHIPPING, INC., G.R. No. 179488

Petitioner,

Present:

VELASCO, JR., J., Chairperson,

- versus - PERALTA,

ABAD,
 MENDOZA, and

PERLAS-BERNABE, JJ.

KEMPER INSURANCE COMPANY,

Respondent. Promulgated:

April 23, 2012

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

DECISION

This is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to reverse and set aside the Decision [1] and Resolution[2] of the Court of Appeals (CA), in CA-G.R. CV No. 75895, entitled Kemper
Insurance Company v. Cosco Philippines Shipping, Inc. The CA Decision reversed and set aside the Order dated March 22, 2002 of the Regional Trial Court (RTC), Branch 8, Manila, which granted the Motion to Dismiss
filed by petitioner Cosco Philippines Shipping, Inc., and ordered that the case be remanded to the trial court for further proceedings.

The antecedents are as follows:

Respondent Kemper Insurance Company is a foreign insurance company based in Illinois, United States of America (USA) with no license to engage in business in the Philippines, as it is not doing business in the Philippines,
except in isolated transactions; while petitioner is a domestic shipping company organized in accordance with Philippine laws.

In 1998, respondent insured the shipment of imported frozen boneless beef (owned by Genosi, Inc.), which was loaded at a port in Brisbane, Australia, for shipment to Genosi, Inc. (the importer-consignee) in the
Philippines. However, upon arrival at the Manila port, a portion of the shipment was rejected by Genosi, Inc. by reason of spoilage arising from the alleged temperature fluctuations of petitioner's reefer containers.

Thus, Genosi, Inc. filed a claim against both petitioner shipping company and respondent Kemper Insurance Company. The claim was referred to McLarens Chartered for investigation, evaluation, and adjustment of the
claim. After processing the claim documents, McLarens Chartered recommended a settlement of the claim in the amount of $64,492.58, which Genosi, Inc. (the consignee-insured) accepted.

Thereafter, respondent paid the claim of Genosi, Inc. (the insured) in the amount of $64,492.58. Consequently, Genosi, Inc., through its General Manager, Avelino S. Mangahas, Jr., executed a Loss and Subrogation
Receipt[3] dated September 22, 1999, stating that Genosi, Inc. received from respondent the amount of $64,492.58 as the full and final satisfaction compromise, and discharges respondent of all claims for losses and expenses
sustained by the property insured, under various policy numbers, due to spoilage brought about by machinery breakdown which occurred on October 25, November 7 and 10, and December 5, 14, and 18, 1998; and, in
consideration thereof, subrogates respondent to the claims of Genosi, Inc. to the extent of the said amount. Respondent then made demands upon petitioner, but the latter failed and refused to pay the said amount.

Hence, on October 28, 1999, respondent filed a Complaint for Insurance Loss and Damages [4] against petitioner before the trial court, docketed as Civil Case No. 99-95561, entitled Kemper Insurance Company v. Cosco
Philippines Shipping, Inc. Respondent alleged that despite repeated demands to pay and settle the total amount of US$64,492.58, representing the value of the loss, petitioner failed and refused to pay the same, thereby
causing damage and prejudice to respondent in the amount of US$64,492.58; that the loss and damage it sustained was due to the fault and negligence of petitioner, specifically, the fluctuations in the temperature of the reefer
container beyond the required setting which was caused by the breakdown in the electronics controller assembly; that due to the unjustified failure and refusal to pay its just and valid claims, petitioner should be held liable to
pay interest thereon at the legal rate from the date of demand; and that due to the unjustified refusal of the petitioner to pay the said amount, it was compelled to engage the services of a counsel whom it agreed to pay 25% of
the whole amount due as attorney's fees. Respondent prayed that after due hearing, judgment be rendered in its favor and that petitioner be ordered to pay the amount of US$64,492.58, or its equivalent in Philippine currency
at the prevailing foreign exchange rate, or a total of P2,594,513.00, with interest thereon at the legal rate from date of demand, 25% of the whole amount due as attorney's fees, and costs.

In its Answer[5] dated November 29, 1999, petitioner insisted, among others, that respondent had no capacity to sue since it was doing business in the Philippines without the required license; that the complaint has prescribed
and/or is barred by laches; that no timely claim was filed; that the loss or damage sustained by the shipments, if any, was due to causes beyond the carrier's control and was due to the inherent nature or insufficient packing of
the shipments and/or fault of the consignee or the hired stevedores or arrastre operator or the fault of persons whose acts or omissions cannot be the basis of liability of the carrier; and that the subject shipment was discharged
under required temperature and was complete, sealed, and in good order condition.
During the pre-trial proceedings, respondent's counsel proffered and marked its exhibits, while petitioner's counsel manifested that he would mark his client's exhibits on the next scheduled pre-trial. However, on November 8,
2001, petitioner filed a Motion to Dismiss,[6] contending that the same was filed by one Atty. Rodolfo A. Lat, who failed to show his authority to sue and sign the corresponding certification against forum shopping. It argued
that Atty. Lat's act of signing the certification against forum shopping was a clear violation of Section 5, Rule 7 of the 1997 Rules of Court.

In its Order[7] dated March 22, 2002, the trial court granted petitioner's Motion to Dismiss and dismissed the case without prejudice, ruling that it is mandatory that the certification must be executed by the petitioner himself,
and not by counsel. Since respondent's counsel did not have a Special Power of Attorney (SPA) to act on its behalf, hence, the certification against forum shopping executed by said counsel was fatally defective and
constituted a valid cause for dismissal of the complaint.

Respondent's Motion for Reconsideration[8] was denied by the trial court in an Order[9] dated July 9, 2002.

On appeal by respondent, the CA, in its Decision[10] dated March 23, 2007, reversed and set aside the trial court's order. The CA ruled that the required certificate of non-forum shopping is mandatory and that the same must be
signed by the plaintiff or principal party concerned and not by counsel; and in case of corporations, the physical act of signing may be performed in behalf of the corporate entity by specifically authorized individuals.
However, the CA pointed out that the factual circumstances of the case warranted the liberal application of the rules and, as such, ordered the remand of the case to the trial court for further proceedings.

Petitioner's Motion for Reconsideration[11] was later denied by the CA in the Resolution[12] dated September 3, 2007.

Hence, petitioner elevated the case to this Court via Petition for Review on Certiorari under Rule 45 of the Rules of Court, with the following issues:

THE COURT OF APPEALS SERIOUSLY ERRED IN RULING THAT ATTY. RODOLFO LAT WAS PROPERLY AUTHORIZED BY THE RESPONDENT TO SIGN THE CERTIFICATE AGAINST FORUM SHOPPING
DESPITE THE UNDISPUTED FACTS THAT:

A) THE PERSON WHO EXECUTED THE SPECIAL POWER OF ATTORNEY (SPA) APPOINTING ATTY. LAT AS RESPONDENT'S ATTORNEY-IN-FACT WAS MERELY AN UNDERWRITER OF THE
RESPONDENT WHO HAS NOT SHOWN PROOF THAT HE WAS AUTHORIZED BY THE BOARD OF DIRECTORS OF RESPONDENT TO DO SO.

B) THE POWERS GRANTED TO ATTY. LAT REFER TO [THE AUTHORITY TO REPRESENT DURING THE] PRE-TRIAL [STAGE] AND DO NOT COVER THE SPECIFIC POWER TO SIGN THE CERTIFICATE.
[13]

Petitioner alleged that respondent failed to submit any board resolution or secretary's certificate authorizing Atty. Lat to institute the complaint and sign the certificate of non-forum shopping on its behalf. Petitioner submits
that since respondent is a juridical entity, the signatory in the complaint must show proof of his or her authority to sign on behalf of the corporation. Further, the SPA[14]dated May 11, 2000, submitted by Atty. Lat, which was
notarized before the Consulate General of Chicago, Illinois, USA, allegedly authorizing him to represent respondent in the pre-trial and other stages of the proceedings was signed by one Brent Healy (respondent's
underwriter), who lacks authorization from its board of directors.

In its Comment, respondent admitted that it failed to attach in the complaint a concrete proof of Atty. Lat's authority to execute the certificate of non-forum shopping on its behalf. However, there was subsequent compliance
as respondent submitted an authenticated SPA empowering Atty. Lat to represent it in the pre-trial and all stages of the proceedings. Further, it averred that petitioner is barred by laches from questioning the purported defect
in respondent's certificate of non-forum shopping.

The main issue in this case is whether Atty. Lat was properly authorized by respondent to sign the certification against forum shopping on its behalf.

The petition is meritorious.

We have consistently held that the certification against forum shopping must be signed by the principal parties. [15] If, for any reason, the principal party cannot sign the petition, the one signing on his behalf must have been
duly authorized.[16] With respect to a corporation, the certification against forum shopping may be signed for and on its behalf, by a specifically authorized lawyer who haspersonal knowledge of the facts required to be
disclosed in such document.[17] A corporation has no power, except those expressly conferred on it by the Corporation Code and those that are implied or incidental to its existence. In turn, a corporation exercises said powers
through its board of directors and/or its duly authorized officers and agents. Thus, it has been observed that the power of a corporation to sue and be sued in any court is lodged with the board of directors that exercises its
corporate powers. In turn, physical acts of the corporation, like the signing of documents, can be performed only by natural persons duly authorized for the purpose by corporate by-laws or by a specific act of the board of
directors.[18]

In Philippine Airlines, Inc. v. Flight Attendants and Stewards Association of the Philippines (FASAP) ,[19] we ruled that only individuals vested with authority by a valid board resolution may sign the certificate of non-
forum shopping on behalf of a corporation. We also required proof of such authority to be presented. The petition is subject to dismissal if a certification was submitted unaccompanied by proof of the signatory's authority.

In the present case, since respondent is a corporation, the certification must be executed by an officer or member of the board of directors or by one who is duly authorized by a resolution of the board of directors; otherwise,
the complaint will have to be dismissed. [20] The lack of certification against forum shopping is generally not curable by mere amendment of the complaint, but shall be a cause for the dismissal of the case without prejudice.
[21]
The same rule applies to certifications against forum shopping signed by a person on behalf of a corporation which are unaccompanied by proof that said signatory is authorized to file the complaint on behalf of the
corporation.[22]
There is no proof that respondent, a private corporation, authorized Atty. Lat, through a board resolution, to sign the verification and certification against forum shopping on its behalf. Accordingly, the certification against
forum shopping appended to the complaint is fatally defective, and warrants the dismissal of respondent's complaint for Insurance Loss and Damages (Civil Case No. 99-95561) against petitioner.

In Republic v. Coalbrine International Philippines, Inc.,[23] the Court cited instances wherein the lack of authority of the person making the certification of non-forum shopping was remedied through subsequent compliance by
the parties therein. Thus,

[w]hile there were instances where we have allowed the filing of a certification against non-forum shopping by someone on behalf of a corporation without the accompanying proof of authority at the time of its filing, we did
so on the basis of a special circumstance or compelling reason. Moreover, there was a subsequent compliance by the submission of the proof of authority attesting to the fact that the person who signed thecertification was
duly authorized.

In China Banking Corporation v. Mondragon International Philippines, Inc., the CA dismissed the petition filed by China Bank, since the latter failed to show that its bank manager who signed the certification against non-
forum shopping was authorized to do so. We reversed the CA and said that the case be decided on the merits despite the failure to attach the required proof of authority, since the boardresolution which was subsequently
attached recognized the pre-existing status of the bank manager as an authorized signatory.

In Abaya Investments Corporation v. Merit Philippines, where the complaint before the Metropolitan Trial Court of Manila was instituted by petitioner's Chairman and President, Ofelia Abaya, who signed the verification
and certification against non-forum shopping without proof of authority to sign for the corporation, we also relaxed the rule. We did so taking into consideration the merits of the case and to avoid a re-litigation of the issues
and further delay the administration of justice, since the case had already been decided by the lower courts on the merits. Moreover, Abaya's authority to sign the certification was ratified by the Board.[24]

Contrary to the CA's finding, the Court finds that the circumstances of this case do not necessitate the relaxation of the rules. There was no proof of authority submitted, even belatedly, to show subsequent compliance with
the requirement of the law. Neither was there a copy of the board resolution or secretary's certificate subsequently submitted to the trial court that would attest to the fact that Atty. Lat was indeed authorized to file said
complaint and sign the verification and certification against forum shopping, nor did respondent satisfactorily explain why it failed to comply with the rules. Thus, there exists no cogent reason for the relaxation of the rule on
this matter. Obedience to the requirements of procedural rules is needed if we are to expect fair results therefrom, and utter disregard of the rules cannot justly be rationalized by harking on the policy of liberal construction.[25]

Moreover, the SPA dated May 11, 2000, submitted by respondent allegedly authorizing Atty. Lat to appear on behalf of the corporation, in the pre-trial and all stages of the proceedings, signed by Brent Healy, was fatally
defective and had no evidentiary value. It failed to establish Healy's authority to act in behalf of respondent, in view of the absence of a resolution from respondent's board of directors or secretary's certificate proving the
same. Like any other corporate act, the power of Healy to name, constitute, and appoint Atty. Lat as respondent's attorney-in-fact, with full powers to represent respondent in the proceedings, should have been evidenced by a
board resolution or secretary's certificate.

Respondent's allegation that petitioner is estopped by laches from raising the defect in respondent's certificate of non-forum shopping does not hold water.

In Tamondong v. Court of Appeals,[26] we held that if a complaint is filed for and in behalf of the plaintiff who is not authorized to do so, the complaint is not deemed filed. An unauthorized complaint does not produce any
legal effect. Hence, the court shoulddismiss the complaint on the ground that it has no jurisdiction over the complaint and the plaintiff. [27] Accordingly, since Atty. Lat was not duly authorized by respondent to file the
complaint and sign the verification and certification against forum shopping, the complaint is considered not filed and ineffectual, and, as a necessary consequence, is dismissable due to lack of jurisdiction.

Jurisdiction is the power with which courts are invested for administering justice; that is, for hearing and deciding cases. In order for the court to have authority to dispose of the case on the merits, it must acquire jurisdiction
over the subject matter and the parties.Courts acquire jurisdiction over the plaintiffs upon the filing of the complaint, and to be bound by a decision, a party should first be subjected to the court's jurisdiction.[28] Clearly, since
no valid complaint was ever filed with the RTC, Branch 8, Manila, the same did not acquire jurisdiction over the person of respondent.

Since the court has no jurisdiction over the complaint and respondent, petitioner is not estopped from challenging the trial court's jurisdiction, even at the pre-trial stage of the proceedings. This is so because 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.[29]

In Regalado v. Go,[30] the Court held that laches should be clearly present for the Sibonghanoy[31] doctrine to apply, 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 only when the adverse
decision was rendered by the Court of Appeals that it finally woke up to raise the question of jurisdiction. [32]
The factual setting attendant in Sibonghanoy is not similar to that of the present case so as to make it fall under the doctrine of estoppel by laches. Here, the trial court's jurisdiction was questioned by the petitioner during the
pre-trial stage of the proceedings, and it cannot be said that considerable length of time had elapsed for laches to attach.

WHEREFORE, the petition is GRANTED. The Decision and the Resolution of the Court of Appeals, dated March 23, 2007 and September 3, 2007, respectively, in CA-G.R. CV No. 75895 are REVERSED and SET ASIDE.
The Orders of the Regional Trial Court, dated March 22, 2002 and July 9, 2002, respectively, in Civil Case No. 99-95561, are REINSTATED.

CASE DIGEST:

The Case:

Kemper Insurance, a foreign insurance company operating out of the U.S.A. With no license to engage I business in the Philippines, insured the shipment of imported frozen boneless beef owned by Genosi. However, upon
arrival in the Philippines, Genosi rejected the shipment by reason of spoilage. Genosi thus filed a claim against both Cosco Philippines Inc. (The petitioner), and Kemper Insurance (the respondent). Kemper insurance paid
the claim (US$64,492.58) and was thus issued a Loss and Subrogation Receipt, which it used in filing a complaint for Insurance Loss and Damages against the petitioner before the RTC. During the pre-trial, and before it
could mark its exhibits, petitioner filed a Motion to Dismiss, contending that the same was filed by one Atty. Rodolfo A. Lat, who failed to show his authority to sue and sign the corresponding certification against forum
shopping. It argued that Atty. Lats act of signing the certification against forum shopping was a clear violation of Section 5, Rule 7 of the 1997 Rules of Court. The trial court granted the motion to dismiss and dismissed the
case. It ruled that it is mandatory that the certification must be executed by the plaintiff itself, and not by counsel. Since respondents counsel did not have a Special Power of Attorney (SPA) to act on its behalf, hence, the
certification against forum shopping executed by said counsel was fatally defective and constituted a valid cause for dismissal of the complaint.On appeal to the CA, however, the appellate court reversed the RTC. It held that
factual circumstances of the case warrant the liberal application of the rules. Petitioner thus filed the instant petition for review with the Supreme Court. It argues that respondent failed to submit any board resolution or
secretarys certificate authorising Atty. Lat file the complaint and to sign the certificate of non-forum shopping on its behalf. The special power of attorney signed by one Brent Healy, an underwriter of the company (who
lacked the necessary authorisation from the board of directors), only authorised him to represent respondent during the pre-trial and other stages of the proceedings.

The Issue:

Whether or not the case should be dismissed for lack of authority of respondents counsel to file the complaint and to sign the certificate of non-forum shopping.

The Ruling:

The petition is meritorious.

We have consistently held that the certification against forum shopping must be signed by the principal parties. 1 If, for any reason, the principal party cannot sign the petition, the one signing on his behalf must have been
duly authorized2. With respect to a corporation, the certification against forum shopping may be signed for and on its behalf, by a specifically authorized lawyer who has personal knowledge of the facts required to be
disclosed in such document.3 A corporation has no power, except those expressly conferred on it by the Corporation Code and those that are implied or incidental to its existence. In turn, a corporation exercises said powers
through its board of directors and/or its duly authorized officers and agents. Thus, it has been observed that the power of a corporation to sue and be sued in any court is lodged with the board of directors that exercises its
corporate powers. In turn, physical acts of the corporation, like the signing of documents, can be performed only by natural persons duly authorized for the purpose by corporate by-laws or by a specific act of the board of
directors.4

In Philippine Airlines, Inc. v. Flight Attendants and Stewards Association of the Philippines (FASAP),5we ruled that only individuals vested with authority by a valid board resolution may sign the certificate of non-forum
shopping on behalf of a corporation. We also required proof of such authority to be presented. The petition is subject to dismissal if a certification was submitted unaccompanied by proof of the signatorys authority.

In the present case, since respondent is a corporation, the certification must be executed by an officer or member of the board of directors or by one who is duly authorized by a resolution of the board of directors; otherwise,
the complaint will have to be dismissed6. The lack of certification against forum shopping is generally not curable by mere amendment of the complaint, but shall be a cause for the dismissal of the case without prejudice. 7
The same rule applies to certifications against forum shopping signed by a person on behalf of a corporation which are unaccompanied by proof that said signatory is authorized to file the complaint on behalf of the
corporation.8

There is no proof that respondent, a private corporation, authorized Atty. Lat, through a board resolution, to sign the verification and certification against forum shopping on its behalf. Accordingly, the certification against
forum shopping appended to the complaint is fatally defective, and warrants the dismissal of respondents complaint for Insurance Loss and Damages (Civil Case No. 99-95561) against petitioner.

In Republic v. Coalbrine International Philippines, Inc.,9 the Court cited instances wherein the lack of authority of the person making the certification of non-forum shopping was remedied through subsequent compliance by
the parties therein. Thus,[w]hile there were instances where we have allowed the filing of a certification against non-forum shopping by someone on behalf of a corporation without the accompanying proof of authority at the
time of its filing, we did so on the basis of a special circumstance or compelling reason. Moreover, there was a subsequent compliance by the submission of the proof of authority attesting to the fact that the person who
signed the certification was duly authorized.

In China Banking Corporation v. Mondragon International Philippines, Inc., the CA dismissed the petition filed by China Bank, since the latter failed to show that its bank manager who signed the certification against non-
forum shopping was authorized to do so. We reversed the CA and said that the case be decided on the merits despite the failure to attach the required proof of authority, since the board resolution which was subsequently
attached recognized the pre-existing status of the bank manager as an authorized signatory.
In Abaya Investments Corporation v. Merit Philippines, where the complaint before the Metropolitan Trial Court of Manila was instituted by petitioners Chairman and President, Ofelia Abaya, who signed the verification and
certification against non-forum shopping without proof of authority to sign for the corporation, we also relaxed the rule. We did so taking into consideration the merits of the case and to avoid a re-litigation of the issues and
further delay the administration of justice, since the case had already been decided by the lower courts on the merits. Moreover, Abayas authority to sign the certification was ratified by the Board. 10

Contrary to the CAs finding, the Court finds that the circumstances of this case do not necessitate the relaxation of the rules. There was no proof of authority submitted, even belatedly, to show subsequent compliance with
the requirement of the law. Neither was there a copy of the board resolution or secretarys certificate subsequently submitted to the trial court that would attest to the fact that Atty. Lat was indeed authorized to file said
complaint and sign the verification and certification against forum shopping, nor did respondent satisfactorily explain why it failed to comply with the rules. Thus, there exists no cogent reason for the relaxation of the rule on
this matter. Obedience to the requirements of procedural rules is needed if we are to expect fair results therefrom, and utter disregard of the rules cannot justly be rationalized by harking on the policy of liberal construction. 11

Moreover, the SPA dated May 11, 2000, submitted by respondent allegedly authorizing Atty. Lat to appear on behalf of the corporation, in the pre-trial and all stages of the proceedings, signed by Brent Healy, was fatally
defective and had no evidentiary value. It failed to establish Healys authority to act in behalf of respondent, in view of the absence of a resolution from respondents board of directors or secretarys certificate proving the
same. Like any other corporate act, the power of Healy to name, constitute, and appoint Atty. Lat as respondents attorney-in-fact, with full powers to represent respondent in the proceedings, should have been evidenced by a
board resolution or secretarys certificate.

Respondents allegation that petitioner is estopped by laches from raising the defect in respondents certificate of non-forum shopping does not hold water.

In Tamondong v. Court of Appeals,12 we held that if a complaint is filed for and in behalf of the plaintiff who is not authorized to do so, the complaint is not deemed filed. An unauthorized complaint does not produce any legal
effect. Hence, the court should dismiss the complaint on the ground that it has no jurisdiction over the complaint and the plaintiff. 13 Accordingly, since Atty. Lat was not duly authorized by respondent to file the complaint
and sign the verification and certification against forum shopping, the complaint is considered not filed and ineffectual, and, as a necessary consequence, is dismissable due to lack of jurisdiction.

Jurisdiction is the power with which courts are invested for administering justice; that is, for hearing and deciding cases. In order for the court to have authority to dispose of the case on the merits, it must acquire jurisdiction
over the subject matter and the parties. Courts acquire jurisdiction over the plaintiffs upon the filing of the complaint, and to be bound by a decision, a party should first be subjected to the courts jurisdiction. 14 Clearly, since
no valid complaint was ever filed with the RTC, Branch 8, Manila, the same did not acquire jurisdiction over the person of respondent.

Since the court has no jurisdiction over the complaint and respondent, petitioner is not estopped from challenging the trial courts jurisdiction, even at the pre-trial stage of the proceedings. This is so because 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.15

In Regalado v. Go,16 the Court held that laches should be clearly present for the Sibonghanoy17doctrine to apply, 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 only when the adverse
decision was rendered by the Court of Appeals that it finally woke up to raise the question of jurisdiction. 18

The factual setting attendant in Sibonghanoy is not similar to that of the present case so as to make it fall under the doctrine of estoppel by laches. Here, the trial courts jurisdiction was questioned by the petitioner during the
pre-trial stage of the proceedings, and it cannot be said that considerable length of time had elapsed for laches to attach.

WHEREFORE, the petition is GRANTED. The Decision and the Resolution of the Court of Appeals, dated March 23, 2007 and September 3, 2007, respectively, in CA-G.R. CV No. 75895 are REVERSED and SET ASIDE.
The Orders of the Regional Trial Court, dated March 22, 2002 and July 9, 2002, respectively, in Civil Case No. 99-95561, are REINSTATED.

SO ORDERED.

HILIP L. GO, PACIFICO Q. LIM and ANDREW Q. LIM G.R. No. 194024

Petitioners,

Present:
 VELASCO, JR., J.,Chairperson,

- versus - PERALTA,

ABAD,

MENDOZA, and

PERLAS-BERNABE, JJ.

DISTINCTION PROPERTIES DEVELOPMENT AND

CONSTRUCTION, INC.

Respondent.
Promulgated:

April 25, 2012

X -------------------------------------------------------------------------------------- X

DECISION

Before the Court is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure assailing the March 17, 2010 Decision [1] and October 7, 2010 Resolution[2] of the Court of Appeals (CA) in CA-G.R.
SP No. 110013 entitled Distinction Properties Development & Construction, Inc. v. Housing Land Use Regulatory Board (NCR), Philip L. Go, Pacifico Q. Lim and Andrew Q. Lim.

Factual and Procedural Antecedents:

Philip L. Go, Pacifico Q. Lim and Andrew Q. Lim (petitioners) are registered individual owners of condominium units in Phoenix Heights Condominium located at H. Javier/Canley Road, Bo. Bagong Ilog, Pasig City,
Metro Manila.

Respondent Distinction Properties Development and Construction, Inc. (DPDCI) is a corporation existing under the laws of the Philippines with principal office at No. 1020 Soler Street, Binondo, Manila. It was incorporated
as a real estate developer, engaged in the development of condominium projects, among which was the Phoenix Heights Condominium.

In February 1996, petitioner Pacifico Lim, one of the incorporators and the then president of DPDCI, executed a Master Deed and Declaration of Restrictions (MDDR)[3] of Phoenix Heights Condominium, which was filed
with the Registry of Deeds. As the developer, DPDCI undertook, among others, the marketing aspect of the project, the sale of the units and the release of flyers and brochures.

Thereafter, Phoenix Heights Condominium Corporation (PHCC) was formally organized and incorporated. Sometime in 2000, DPDCI turned over to PHCC the ownership and possession of the condominium units, except for
the two saleable commercial units/spaces:

1. G/F Level BAS covered by Condominium Certificate of Title (CCT) No. 21030 utilized as the PHCCsadministration office, and

2. G/F Level 4-A covered by CCT No. PT-27396/C-136-II used as living quarters by the building administrator.

Although used by PHCC, DPDCI was assessed association dues for these two units.
Meanwhile, in March 1999, petitioner Pacifico Lim, as president of DPDCI, filed an Application for Alteration of Plan[4]pertaining to the construction of 22 storage units in the spaces adjunct to the parking area of the
building. The application, however, was disapproved as the proposed alteration would obstruct light and ventilation.

In August 2004, through its Board, [5] PHCC approved a settlement offer from DPDCI for the set-off of the latters association dues arrears with the assignment of title over CCT Nos. 21030 and PT-27396/C-136-II and their
conversion into common areas.Thus, CCT Nos. PT-43400 and PT-43399 were issued by the Registrar of Deeds of Pasig City in favor of PHCC in lieu of the old titles. The said settlement between the two corporations
likewise included the reversion of the 22 storage spaces into common areas.With the conformity of PHCC, DPDCIs application for alteration (conversion of unconstructed 22 storage units and units GF4-A and BAS from
saleable to common areas) was granted by the Housing and Land Use Regulatory Board (HLURB).[6]

In August 2008, petitioners, as condominium unit-owners, filed a complaint [7] before the HLURB against DPDCI for unsound business practices and violation of the MDDR. The case was docketed as REM- 080508-13906.
They alleged that DPDCI committed misrepresentation in their circulated flyers and brochures as to the facilities or amenities that would be available in the condominium and failed to perform its obligation to comply with
the MDDR.

In defense, DPDCI denied that it had breached its promises and representations to the public concerning the facilities in the condominium. It alleged that the brochure attached to the complaint was a mere preparatory draft
and not the official one actually distributed to the public, and that the said brochure contained a disclaimer as to the binding effect of the supposed offers therein.Also, DPDCI questioned the petitioners personality to sue as
the action was a derivative suit.

After due hearing, the HLURB rendered its decision [8] in favor of petitioners. It held as invalid the agreement entered into between DPDCI and PHCC, as to the alteration or conversion of the subject units into common areas,
which it previously approved, for the reason that it was not approved by the majority of the members of PHCC as required under Section 13 of the MDDR. It stated that DPDCIs defense, that the brochure was a mere draft,
was against human experience and a convenient excuse to avoid its obligation to provide the facility of the project. The HLURB further stated that the case was not a derivative suit but one which involved contracts of sale of
the respective units between the complainants and DPDCI, hence, within its jurisdiction pursuant to Section 1, Presidential Decree (P.D.) No. 957 (The Subdivision and Condominium Buyers Protective Decree), as
amended. The decretal portion of the HLURB decision reads:

WHEREFORE, in view of the foregoing, judgment is hereby rendered:

1. Ordering respondent to restore/provide proper gym facilities, to restore the hallway at the mezzanine floor.

2. Declaring the conversion/alteration of 22 storage units and Units GF4-A and BAS as illegal, and consequently, and ordering respondent to continue paying the condominium dues for these units, with interest and
surcharge.

3. Ordering the Respondent to pay the sum of Php998,190.70, plus interests and surcharges, as condominium dues in arrears and turnover the administration office to PHCC without any charges pursuant to the
representation of the respondent in the brochures it circulated to the public with a corresponding credit to complainants individual shares as members of PHCC entitled to such refund or reimbursements.

4. Ordering the Respondent to refund to the PHCC the amount of Php1,277,500.00, representing the cost of the deep well, with interests and surcharges with a corresponding credit to complainants individual shares as
members of PHCC entitled to such refund or reimbursements.

5. Ordering the Respondent to pay the complainants moral and exemplary damages in the amount of 10,000.00 and attorneys fees in the amount of 10,000.00.

All other claims and counterclaims are hereby dismissed accordingly.

IT IS SO ORDERED.[9]

Aggrieved, DPDCI filed with the CA its Petition for Certiorari and Prohibition [10] dated August 11, 2009, on the ground that the HLURB decision was a patent nullity constituting an act without or beyond its jurisdiction and
that it had no other plain, speedy and adequate remedy in the course of law.

On March 17, 2010, the CA rendered the assailed decision which disposed of the case in favor of DPDCI as follows:

WHEREFORE, in view of the foregoing, the petition is GRANTED. Accordingly, the assailed Decision of the HLURB in Case No. REM-0800508-13906 is ANNULLED and SET ASIDE and a new one is entered
DISMISSING the Complaint a quo.

IT IS SO ORDERED.[11]

The CA ruled that the HLURB had no jurisdiction over the complaint filed by petitioners as the controversy did not fall within the scope of the administrative agencys authority under P.D. No. 957. The HLURB not only
relied heavily on the brochures which, according to the CA, did not set out an enforceable obligation on the part of DPDCI, but also erroneously cited Section 13 of the MDDR to support its finding of contractual violation.

The CA held that jurisdiction over PHCC, an indispensable party, was neither acquired nor waived by estoppel. Citing Carandang v. Heirs of De Guzman,[12] it held that, in any event, the action should be dismissed because
the absence of PHCC, an indispensable party, rendered all subsequent actuations of the court void, for want of authority to act, not only as to the absent parties but even as to those present.
Finally, the CA held that the rule on exhaustion of administrative remedies could be relaxed. Appeal was not a speedy and adequate remedy as jurisdictional questions were continuously raised but ignored by the HLURB. In
the present case, however, [t]he bottom line is that the challenged decision is one that had been rendered in excess of jurisdiction, if not with grave abuse of discretion amounting to lack or excess of jurisdiction. [13]

Petitioners filed a motion for reconsideration[14] of the said decision. The motion, however, was denied by the CA in its Resolution dated October 7, 2010.

Hence, petitioners interpose the present petition before this Court anchored on the following

GROUNDS

(1)

THE COURT OF APPEALS ERRED IN HOLDING THAT THE HLURB HAS NO JURISDICTION OVER THE INSTANT CASE;

(2)

THE COURT OF APPEALS ALSO ERRED IN FINDING THAT PHCC IS AN INDISPENSABLE PARTY WHICH WARRANTED THE DISMISSAL OF THE CASE BY REASON OF IT NOT HAVING BEEN
IMPLEADED IN THE CASE;

(3)

THE COURT OF APPEALS HAS LIKEWISE ERRED IN RELAXING THE RULE ON NON-EXHAUSTION OF ADMINISTRATIVE REMEDIES BY DECLARING THAT THE APPEAL MAY NOT BE A SPEEDY
AND ADEQUATE REMEDY WHEN JURISDICTIONAL QUESTIONS WERE CONTINUOUSLY RAISED BUT IGNORED BY THE HLURB; and

(4)

THAT FINALLY, THE COURT A QUO ALSO ERRED IN NOT GIVING DUE RESPECT OR EVEN FINALITY TO THE FINDINGS OF THE HLURB. [15]

Petitioners contend that the HLURB has jurisdiction over the subject matter of this case. Their complaint with the HLURB clearly alleged and demanded specific performance upon DPDCI of the latters contractual obligation
under their individual contracts to provide a back-up water system as part of the amenities provided for in the brochure, together with an administration office, proper gym facilities, restoration of a hallway, among others.
They point out that the violation by DPDCI of its obligations enumerated in the said complaint squarely put their case within the ambit of Section 1, P.D. No. 957, as amended, enumerating the cases that are within the
exclusive jurisdiction of the HLURB. Likewise, petitioners argue that the case was not a derivative suit as they were not suing for and in behalf of PHCC. They were suing, in their individual capacities as condominium unit
buyers, their developer for breach of contract. In support of their view that PHCC was not an indispensable party, petitioners even quoted the dispositive portion of the HLURB decision to show that complete relief between or
among the existing parties may be obtained without the presence of PHCC as a party to this case. Petitioners further argue that DPDCIs petition before the CA should have been dismissed outright for failure to comply with
Section 1, Rule XVI of the 2004 Rules of Procedure of the HLURB providing for an appeal to the Board of Commissioners by a party aggrieved by a decision of a regional officer.

DPDCI, in its Comment,[16] strongly objects to the arguments of petitioners and insists that the CA did not err in granting its petition. It posits that the HLURB has no jurisdiction over the complaint filed by petitioners because
the controversies raised therein are in the nature of intra-corporate disputes. Thus, the case does not fall within the jurisdiction of the HLURB under Section 1, P.D. No. 957 and P.D. No. 1344. According to DPDCI,
petitioners sought to address the invalidation of the corporate acts duly entered and executed by PHCC as a corporation of which petitioners are admittedly members of, and not the acts pertaining to their ownership of the
units. Such being the case, PHCC should have been impleaded as a party to the complaint. Its non-inclusion as an indispensable party warrants the dismissal of the case. DPDCI further avers that the doctrine of exhaustion is
inapplicable inasmuch as the issues raised in the petition with the CA are purely legal; that the challenged administrative act is patently illegal; and that the procedure of the HLURB does not provide a plain, speedy and
adequate remedy and its application may cause great and irreparable damage. Finally, it claims that the decision of the HLURB Arbiter has not attained finality, the same having been issued without jurisdiction.

Essentially, the issues to be resolved are: (1) whether the HLURB has jurisdiction over the complaint filed by the petitioners; (2) whether PHCC is an indispensable party; and (3) whether the rule on exhaustion of
administrative remedies applies in this case.

The petition fails.

Basic as a hornbook principle is that jurisdiction over the subject matter of a case is conferred by law and determined by the allegations in the complaint which comprise a concise statement of the ultimate facts constituting
the plaintiff's cause of action. The nature of an action, as well as which court or body has jurisdiction over it, is determined based on the allegations contained in the complaint of the plaintiff, irrespective of whether or not the
plaintiff is entitled to recover upon all or some of the claims asserted therein. The averments in the complaint and the character of the relief sought are the ones to be consulted. Once vested by the allegations in the complaint,
jurisdiction also remains vested irrespective of whether or not the plaintiff is entitled to recover upon all or some of the claims asserted therein. [17] Thus, it was ruled that the jurisdiction of the HLURB to hear and decide cases
is determined by the nature of the cause of action, the subject matter or property involved and the parties. [18]
Generally, the extent to which an administrative agency may exercise its powers depends largely, if not wholly, on the provisions of the statute creating or empowering such agency. [19] With respect to the HLURB, to
determine if said agency has jurisdiction over petitioners cause of action, an examination of the laws defining the HLURBs jurisdiction and authority becomes imperative. P.D. No. 957,[20] specifically Section 3, granted the
National Housing Authority (NHA) the "exclusive jurisdiction to regulate the real estate trade and business." Then came P.D. No. 1344 [21] expanding the jurisdiction of the NHA (now HLURB), as follows:

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 shall have exclusive
jurisdiction to hear and decide cases of the following nature:

(a) Unsound real estate business practices;

(b) Claims involving refund and any other claims filed by subdivision lot or condominium unit buyer against the project owner, developer, dealer, broker or salesman; and

(c) Cases involving specific performance of contractual and statutory obligations filed by buyers of subdivision lot or condominium unit against the owner, developer, dealer, broker or salesman.

This provision must be read in light of the laws preamble, which explains the reasons for enactment of the law or the contextual basis for its interpretation. [22] A statute derives its vitality from the purpose for which it is
enacted, and to construe it in a manner that disregards or defeats such purpose is to nullify or destroy the law. [23] P.D. No. 957, as amended, aims to protect innocent subdivision lot and condominium unit buyers against
fraudulent real estate practices.[24]

The HLURB is given a wide latitude in characterizing or categorizing acts which may constitute unsound business practice or breach of contractual obligations in the real estate trade. This grant of expansive jurisdiction to the
HLURB does not mean, however, that all cases involving subdivision lots or condominium units automatically fall under its jurisdiction. The CA aptly quoted the case of Christian General Assembly, Inc. v. Ignacio,
[25]
wherein the Court held that:

The mere relationship between the parties, i.e., that of being subdivision owner/developer and subdivision lot buyer, does not automatically vest jurisdiction in the HLURB. For an action to fall within the exclusive
jurisdiction of the HLURB, the decisive element is the nature of the action as enumerated in Section 1 of P.D. 1344. On this matter, we have consistently held that the concerned administrative agency, the National Housing
Authority (NHA) before and now the HLURB, has jurisdiction over complaints aimed at compelling the subdivision developer to comply with its contractual and statutory obligations. [26][Emphases supplied]

In this case, the complaint filed by petitioners alleged causes of action that apparently are not cognizable by the HLURB considering the nature of the action and the reliefs sought. A perusal of the complaint discloses that
petitioners are actually seeking to nullify and invalidate the duly constituted acts of PHCC - the April 29, 2005 Agreement [27] entered into by PHCC with DPDCI and its Board Resolution [28] which authorized the acceptance of
the proposed offsetting/settlement of DPDCIs indebtedness and approval of the conversion of certain units from saleable to common areas. All these were approved by the HLURB. Specifically, the reliefs sought or prayers
are the following:

1. Ordering the respondent to restore the gym to its original location;

2. Ordering the respondent to restore the hallway at the second floor;

3. Declaring the conversion/alteration of 22 storage units and Units GF4-A and BAS as illegal, and consequently, ordering respondent to continue paying the condominium dues for these units, with interest and surcharge;

4. Ordering the respondent to pay the sum of PHP998,190.70, plus interest and surcharges, as condominium dues in arrears and turnover the administration office to PHCC without any charges pursuant to the
representation of the respondent in the brochures it circulated to the public;

5. Ordering the respondent to refund to the PHCC the amount of PHP1,277,500.00, representing the cost of the deep well, with interests and surcharges;

6. Ordering the respondent to pay the complainants moral/exemplary damages in the amount of PHP100,000.00; and

7. Ordering the respondent to pay the complainant attorneys fees in the amount of PHP100,000.00, and PHP3,000.00 for every hearing scheduled by the Honorable Office. [29]

As it is clear that the acts being assailed are those of PHHC, this case cannot prosper for failure to implead the proper party, PHCC.

[30]
An indispensable party is defined as one who has such an interest in the controversy or subject matter that a final adjudication cannot be made, in his absence, without injuring or affecting that interest. In the recent case
of Nagkakaisang Lakas ng Manggagawa sa Keihin (NLMK-OLALIA-KMU) v. Keihin Philippines Corporation,[31] the Court had the occasion to state that:

Under Section 7, Rule 3 of the Rules of Court, "parties in interest without whom no final determination can be had of an action shall be joined as plaintiffs or defendants." If there is a failure to implead an indispensable party,
any judgment rendered would have no effectiveness. It is "precisely when an indispensable party is not before the court (that) an action should be dismissed. The absence of an indispensable party renders all subsequent
actions of the court null and void for want of authority to act, not only as to the absent parties but even to those present." The purpose of the rules on joinder of indispensable parties is a complete determination of all issues
not only between the parties themselves, but also as regards other persons who may be affected by the judgment. A decision valid on its face cannot attain real finality where there is want of indispensable parties. [32]
(Underscoring supplied)
Similarly, in the case of Plasabas v. Court of Appeals,[33] the Court held that a final decree would necessarily affect the rights of indispensable parties so that the Court could not proceed without their presence. In support
thereof, the Court in Plasabas cited the following authorities, thus:

"The general rule with reference to the making of parties in a civil action requires the joinder of all indispensable parties under any and all conditions, their presence being a sine qua non of the exercise of judicial power.
(Borlasa v. Polistico, 47 Phil. 345, 348) For this reason, our Supreme Court has held that when it appears of record that there are other persons interested in the subject matter of the litigation, who are not made parties to the
action, it is the duty of the court to suspend the trial until such parties are made either plaintiffs or defendants. (Pobre, et al. v. Blanco, 17 Phil. 156). x x x Where the petition failed to join as party defendant the person
interested in sustaining the proceeding in the court, the same should be dismissed. x x x When an indispensable party is not before the court, the action should be dismissed. (People, et al. v. Rodriguez, et al., G.R. Nos. L-
14059-62, September 30, 1959) (sic)

"Parties in interest without whom no final determination can be had of an action shall be joined either as plaintiffs or defendants. (Sec. 7, Rule 3, Rules of Court). The burden of procuring the presence of all indispensable
parties is on the plaintiff. (39 Amjur [sic] 885). The evident purpose of the rule is to prevent the multiplicity of suits by requiring the person arresting a right against the defendant to include with him, either as co-plaintiffs or
as co-defendants, all persons standing in the same position, so that the whole matter in dispute may be determined once and for all in one litigation. (Palarca v. Baginsi, 38 Phil. 177, 178).

From all indications, PHCC is an indispensable party and should have been impleaded, either as a plaintiff or as a defendant, [34] in the complaint filed before the HLURB as it would be directly and adversely affected by any
determination therein. To belabor the point, the causes of action, or the acts complained of, were the acts of PHCC as a corporate body. Note that in the judgment rendered by the HLURB, the dispositive portion in particular,
DPDCI was ordered (1) to pay 998,190.70, plus interests and surcharges, as condominium dues in arrears and turnover the administration office to PHCC; and (2) to refund to PHCC1,277,500.00, representing the cost of
the deep well, with interests and surcharges. Also, the HLURB declared as illegal the agreement regarding the conversion of the 22 storage units and Units GF4-A and BAS, to which agreement PHCC was a party.

Evidently, the cause of action rightfully pertains to PHCC. Petitioners cannot exercise the same except through a derivative suit. In the complaint, however, there was no allegation that the action was a derivative suit. In fact,
in the petition, petitioners claim that their complaint is not a derivative suit. [35] In the cited case of Chua v. Court of Appeals,[36] the Court ruled:

For a derivative suit to prosper, it is required that the minority stockholder suing for and on behalf of the corporation must allege in his complaint that he is suing on a derivative cause of action on behalf of the corporation and
all other stockholders similarly situated who may wish to join him in the suit. It is a condition sine qua non that the corporation be impleaded as a party because not only is the corporation an indispensable party, but it is also
the present rule that it must be served with process. The judgment must be made binding upon the corporation in order that the corporation may get the benefit of the suit and may not bring subsequent suit against the same
defendants for the same cause of action. In other words, the corporation must be joined as party because it is its cause of action that is being litigated and because judgment must be a res adjudicata against it. (Underscoring
supplied)

Without PHCC as a party, there can be no final adjudication of the HLURBs judgment. The CA was, thus, correct in ordering the dismissal of the case for failure to implead an indispensable party.

To justify its finding of contractual violation, the HLURB cited a provision in the MDDR, to wit:

Section 13. Amendment. After the corporation shall have been created, organized and operating, this MDDR may be amended, in whole or in part, by the affirmative vote of Unit owners constituting at least fifty one (51%)
percent of the Unit shares in the Project at a meeting duly called pursuant to the Corporation By Laws and subject to the provisions of the Condominium Act.

This citation, however, is misplaced as the above-quoted provision pertains to the amendment of the MDDR. It should be stressed that petitioners are not asking for any change or modification in the terms of the MDDR.
What they are really praying for is a declaration that the agreement regarding the alteration/conversion is illegal. Thus, the Court sustains the CAs finding that:

There was nothing in the records to suggest that DPDCI sought the amendment of a part or the whole of such MDDR. The cited section is somewhat consistent only with the principle that an amendment of a
corporations Articles of Incorporation must be assented to by the stockholders holding more than 50% of the shares. The MDDR does not contemplate, by such provision, that all corporate acts ought to be with the
concurrence of a majority of the unit owners.[37]

Moreover, considering that petitioners, who are members of PHCC, are ultimately challenging the agreement entered into by PHCC with DPDCI, they are assailing, in effect, PHCCs acts as a body corporate. This action,
therefore, partakes the nature of an intra-corporate controversy, the jurisdiction over which used to belong to the Securities and Exchange Commission (SEC), but transferred to the courts of general jurisdiction or the
appropriate Regional Trial Court (RTC), pursuant to Section 5b of P.D. No.902-A,[38] as amended by Section 5.2 of Republic Act (R.A.) No. 8799.[39]

An intra-corporate controversy is one which "pertains to any of the following relationships: (1) between the corporation, partnership or association and the public; (2) between the corporation, partnership or association and
the State in so far as its franchise, permit or license to operate is concerned; (3) between the corporation, partnership or association and its stockholders, partners, members or officers; and (4) among the stockholders, partners
or associates themselves."[40]

Based on the foregoing definition, there is no doubt that the controversy in this case is essentially intra-corporate in character, for being between a condominium corporation and its members-unit owners. In the recent case
of Chateau De Baie Condominium Corporation v. Sps. Moreno,[41] an action involving the legality of assessment dues against the condominium owner/developer, the Court held that, the matter being an intra-corporate
dispute, the RTC had jurisdiction to hear the same pursuant to R.A. No. 8799.

As to the alleged failure to comply with the rule on exhaustion of administrative remedies, the Court again agrees with the position of the CA that the circumstances prevailing in this case warranted a relaxation of the rule.

The doctrine of exhaustion of administrative remedies is a cornerstone of our judicial system. The thrust of the rule is that courts must allow administrative agencies to carry out their functions and discharge their
responsibilities within the specialized areas of their respective competence. [42] It has been held, however, that the doctrine of exhaustion of administrative remedies and the doctrine of primary jurisdiction are not ironclad
rules. In the case of Republic of the Philippines v. Lacap,[43] the Court enumerated the numerous exceptions to these rules, namely: (a) where there is estoppel on the part of the party invoking the doctrine; (b) where the
challenged administrative act is patently illegal, amounting to lack of jurisdiction; (c) where there is unreasonable delay or official inaction that will irretrievably prejudice the complainant; (d) where the amount involved is
relatively so small as to make the rule impractical and oppressive; (e) where the question involved is purely legal and will ultimately have to be decided by the courts of justice; (f) where judicial intervention is urgent; (g)
where the application of the doctrine may cause great and irreparable damage; (h) where the controverted acts violate due process; (i) where the issue of non-exhaustion of administrative remedies has been rendered moot; (j)
where there is no other plain, speedy and adequate remedy; (k) where strong public interest is involved; and (l) in quo warranto proceedings. [44] [Underscoring supplied]

The situations (b) and (e) in the foregoing enumeration obtain in this case.

The challenged decision of the HLURB is patently illegal having been rendered in excess of jurisdiction, if not with grave abuse of discretion amounting to lack or excess of jurisdiction. Also, the issue on jurisdiction is
purely legal which will have to be decided ultimately by a regular court of law. As the Court wrote in Vigilar v. Aquino:[45]

It does not involve an examination of the probative value of the evidence presented by the parties. There is a question of law when the doubt or difference arises as to what the law is on a certain state of facts, and not as to
the truth or the falsehood of alleged facts. Said question at best could be resolved only tentatively by the administrative authorities. The final decision on the matter rests not with them but with the courts of justice. Exhaustion
of administrative remedies does not apply, because nothing of an administrative nature is to be or can be done. The issue does not require technical knowledge and experience but one that would involve the interpretation and
application of law.

Finally, petitioners faulted the CA in not giving respect and even finality to the findings of fact of the HLURB. Their reliance on the case of Dangan v. NLRC,[46] reiterating the well-settled principles involving decisions of
administrative agencies, deserves scant consideration as the decision of the HLURB in this case is manifestly not supported by law and jurisprudence.

Petitioners, therefore, cannot validly invoke DPDCIs failure to fulfill its obligation on the basis of a plain draft leaflet which petitioners were able to obtain, specifically Pacifico Lim, having been a president of DPDCI. To
accord petitioners the right to demand compliance with the commitment under the said brochure is to allow them to profit by their own act. This, the Court cannot tolerate.

In sum, inasmuch as the HLURB has no jurisdiction over petitioners complaint, the Court sustains the subject decision of the CA that the HLURB decision is null and void ab initio. This disposition, however, is without
prejudice to any action that the parties may rightfully file in the proper forum.

WHEREFORE, the petition is DENIED.

CASE DIGEST:

Go v. Distinction Properties Development and Construction, Inc.

G.R. No. 194024

FACTS

Philip L. Go, Pacifico Q. Lim and Andrew Q. Lim (petitioners) are registered individual owners of condominium units in Phoenix Heights Condominium developed by the respondent.

In August 2008, petitioners, as condominium unit-owners, filed a complaintbefore the HLURB against DPDCI for unsound business practices and violation of the MDDR, alleging that DPDCI committed misrepresentation in
their circulated flyers and brochures as to the facilities or amenities that would be available in the condominium and failed to perform its obligation to comply with the MDDR.

In defense, DPDCI alleged that the brochure attached to the complaint was a mere preparatory draft. HLURB rendered its decision in favor of petitioners. DPDCI filed with the CA its Petition for Certiorari and Prohibition
on the ground that HLURB acted without or beyond its jurisdiction.

The CA ruled that the HLURB had no jurisdiction over the complaint filed by petitioners as the controversy did not fall within the scope of the administrative agencys authority.

ISSUES:

1.Whether the HLURB has jurisdiction over the complaint filed by the petitioners

2. Whether PHCC is an indispensable party

HELD:
1. Jurisdiction over the subject matter of a case is conferred by law and determined by the allegations in the complaint which comprise a concise statement of the ultimate facts constituting the plaintiff's cause of action. The
nature of an action, as well as which court or body has jurisdiction over it, is determined based on the allegations contained in the complaint of the plaintiff, irrespective of whether or not the plaintiff is entitled to recover
upon all or some of the claims asserted therein. The averments in the complaint and the character of the relief sought are the ones to be consulted. Once vested by the allegations in the complaint, jurisdiction also remains
vested irrespective of whether or not the plaintiff is entitled to recover upon all or some of the claims asserted therein. Thus, it was ruled that the jurisdiction of the HLURB to hear and decide cases is determined by the nature
of the cause of action, the subject matter or property involved and the parties.

In this case, the complaint filed by petitioners alleged causes of action that apparently are not cognizable by the HLURB considering the nature of the action and the reliefs sought.

2.An indispensable party is defined as one who has such an interest in the controversy or subject matter that a final adjudication cannot be made, in his absence, without injuring or affecting that interest. It is "precisely when
an indispensable party is not before the court (that) an action should be dismissed. The absence of an indispensable party renders all subsequent actions of the court null and void for want of authority to act, not only as to the
absent parties but even to those present. The purpose of the rules on joinder of indispensable parties is a complete determination of all issues not only between the parties themselves, but also as regards other persons who may
be affected by the judgment.

PHCC is an indispensable party and should have been impleaded, as it would be directly and adversely affected by any determination therein. Evidently, the cause of action rightfully pertains to PHCC.

A.M. No. 11-10-1-SC Re: Letters of Atty. Estelito P. Mendoza Regarding G.R. No. 178083 - Flight Attendants and Stewards Association of the Philippines (FASAP) v. Philippine Airlines, Inc. (PAL), Patria Chiong and Court
of Appeals.

Promulgated:

March 13, 2012

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

DISSENTING OPINION

SERENO, J.:

The majority Resolution has opened a Pandoras box full of future troubles for Philippine judicial decision-making. First, it opened for review a Decision[1] on the merits that had been unanimously agreed upon and affirmed by
at least ten (10) justices sitting in three differently constituted Divisions of this Court for a staggering third time. Second, it has made a possible, and we emphasize, only a possible error in the raffling of the case to a
wrong ponente a jurisdictional defect as to render invalid that ponentes decision and the concurrence thereto by four colleagues. Third, this extreme flipping was prompted not even by a formal motion for reconsideration by
the losing party, but by four (4) letters from its counsel addressed not to the Court, but only to the Clerk of Court. Fourth, the circumstances under which this flipping was made are so curiously strange where the five (5)
justices who voted to deny the second motion for reconsideration (2 nd MR),[2] according to the ponente who penned the Resolution of denial, [3]themselves initiated moves to prevent their promulgated decision from ever
becoming final. Fifth, for the first time in Philippine law, a ponente is being called only a nominal one,[4] i.e., a ponente with authority to admit a 2nd MR but who upon successfully recommending the same to his Division,
immediately loses authority over that case by virtue of such favorable recommendation, to a ruling ponente,[5] who will then have the authority to write the decision on the merits.

Immediate Antecedents of the

04 October 2011 En Banc Session

On 04 October 2011, the Court En Banc, in its 10 a.m. session, considered item no. 147 entitled Re: Letters of Atty. Estelito P. Mendoza re: G.R. No. 178083 Flight Attendants and Stewards Association of the Philippines
(FASAP) v. Philippine Airlines, Inc. (PAL), Patria Chiong, et al. The agenda item consisted of two sub-items: (a) the 1st Indorsement dated 03 October 2011 of Atty. Enriqueta E. Vidal, Clerk of Court En Banc, referring to the
En Banc four letters of Atty. Estelito P. Mendoza (the Mendoza letters) dated September 13, 16, 20 and 22, 2011 all addressed to her regarding G. R. No. 178083 (the Mendoza letters) for the inclusion thereof in the Court En
Bancs Agenda; and as items (b) to (e) of the Agenda the aforesaid Mendoza letters, which were briefly described in chronological order.
The Mendoza letters are all in connection with G. R. No. 178083 (the main FASAP case), [6] a case now lodged with the Second Division of this Court. On 07 September 2011, the Second Division issued an unsigned extended
Resolution (07 September 2011 Resolution) on the said case denying the Second Motion for Reconsideration (2 nd MR) of Philippine Airlines, Inc. (PAL), the respondent therein.

The first two letters of Atty. Mendoza, counsel of PAL, inquired about any Court action on the 2 nd MR; which Division of the Court (whether regular or special) had been acting on the case; who was the Justice in charge; and
the reason for such Division and ponencia assignments; also requested were copies of the documents regarding those assignments. The first letter of Atty. Mendoza recalled for the Clerk of Court the participants in the
original Decision on the case, as well as in the denial of the First Motion for Reconsideration (1 st MR) of PAL. The letter further proferred the observation that the last communication received from the Court was the Third
Divisions admission of its 2nd MR.

The third letter of Atty. Mendoza acknowledged receipt by PAL of the Second Divisions 07 September 2011 Resolution, [7]which reads as follows:

We resolve the second motion for reconsideration (2nd MR) filed by respondent Philippine Airlines (PAL) of the Courts July 22, 2008 Decision.

PAL submits in its 2nd MR that the October 2, 2009 Resolution of the Court did not rule on the issues it raised in its first motion for reconsideration, in the oral arguments and in the memorandum. According to PAL, the
resolution left unresolved the issues raised in PALs xxx Motion for Reconsideration of the Decision dated July 22, 2008. Since the Court did not rule on all the issues, according to PAL, the present motion must be considered
as the FIRST motion for reconsideration of the Resolution of October 2, 2009.

PALs arguments fail to convince us of their merits.

We remind PAL that the Court is only bound to discuss those issues that are relevant and are necessary to the full disposition of the case, it is not incumbent upon the court to discuss each and every issue in the pleadings and
memoranda of the parties.

PAL likewise incorrectly asserts that the resolution did not rule on the issues raised and argued by the respondents, and that Mme. Justice Consuelo Ynares-Santiago modified the Courts July 22, 2008 Decision.

First, the issues raised by PAL in its 2 nd MR have already been discussed and settled by the Court in its July 22, 2008 Decision . The Flight Attendants and Stewards Association of the Phils. (FASAP) is correct in its position
that the resolution sustained the challenged decision dated 22 July 2008. To reiterate, the Court is not required to re-state its factual and legal findings in its Resolution. The Courts supposed silence cannot be construed as a
repudiation of the original decision; it only implies that the Court sustained the decision in its entirety.

Second, although the subsequent Resolution did not discuss all the issues raised by the petitioner, it does not mean that the Court did not take these issues into consideration.

Finally, the Resolution did not modify the July 22, 2008 Decision of the Court. The Resolution clearly upheld its original ruling and unequivocally stated so when we said:

Therefore, this Court finds no reason to disturb its finding that the retrenchment of the flight attendants was illegally executed. As held in the Decision sought to be reconsidered, PAL failed to observe the procedure and
requirements for a valid retrenchment. Assuming that PAL was indeed suffering financial losses, the requisite proof therefor was not presented before the NLRC which was the proper forum. More importantly, the manner of
the retrenchment was not in accordance with the procedure required by law. Hence, the retrenchment of the flight attendants amounted to illegal dismissal.

Significantly, PAL appeared to have deliberately omitted the above highlighted portions of the Courts Resolution in its 2 nd MR. The omission appears to us to be deliberate as we not only referred to our original finding that
PAL failed to observe the proper procedures and requirements of a valid retrenchment; we also reaffirmed these findings. Thus, PAL appears to be less than honest in its claim.

To conclude, the rights and privileges that PAL unlawfully withheld from its employees have been in dispute for a decade and a half. Many of these employees have since then moved on, but the arbitrariness and illegality of
PALs actions have yet to be rectified. This case has dragged on for so long and we are now more than duty-bound to finally put an end to the illegality that took place; otherwise, the illegally retrenched employees can
rightfully claim that the Court has denied them justice.

WHEREFORE, the Court resolves to deny with finality respondent PALs second motion for reconsideration. No further pleadings shall be entertained. Costs against the respondents. Let entry of judgment be made in due
course.

SO ORDERED. (Emphasis supplied; footnotes omitted).

The En Banc Resolution of 04 October 2011

The Mendoza letters, as earlier mentioned, were taken up in the En Banc session on 04 October 2011. As a result, the following Resolution (the 04 October 2011 Resolution) was issued by the Court En Banc, which recalled
the 07 September 2011 Resolution of the Second Division:

RESOLUTION
Pursuant to Section 3(m) and (n), Rule II of the Internal Rules of the Supreme Court, the Court En Banc resolves to accept G.R. No. 178083 (Flight Attendants and Stewards Association of the Philippines [FASAP] v.
Philippine Airlines, Inc. (PAL), Patricia Chiong, Et Al.)

The Court En Banc further resolves to recall the Resolution dated September 7, 2011 issued by the Second Division in this case.

The Court furthermore resolves to re-raffle this case to a new Member-in-Charge. (Carpio, Velasco, Jr., Leonardo-de Castro and Del Castillo, JJ., no part. Brion, J., no part insofar as the re-raffle is concerned.) [Footnotes
omitted; emphasis supplied].

By virtue of this 04 October 2011 Resolution, the main FASAP case was re-raffled and initially assigned to Justice Maria Lourdes P.A. Sereno on 10 October 2011. That assignment intended to have the new Member-in-
Charge recommend a course of action for the Court En Banc on the main FASAP case, particularly on PALs 2 nd MR. Such recommendation would have necessitated this Member-in-Charge to evaluate all the records of the
main FASAP case in G. R. No. 178083. The evaluation of the record would have been the fourth evaluation of the case by the Court and effectively an action on a third motion for reconsideration of the original Decision
dated 22 July 2008 (the 22 July 2008 Decision). Instead, what was discovered by the assigned Member-in-Charge from a review of the records is that the 07 September 2011 Resolution of the Second Division should not even
have been recalled; thus, a fourth evaluation of the record, or a resolution of what is effectively a third motion for reconsideration, is completely unwarranted. I thus circulated a draft resolution to the Court for the recall of the
04 October 2011 Resolution, which has now become this Dissenting Opinion. Sadly, the majority of this Court chose to ignore judicial precedents and compel another review of the main FASAP case, specifically by the two
remaining members of the Division, who themselves twice earlier denied PALs motions for reconsideration

Assignment of Cases to the Court En Banc or in Division

As designed by the Constitution,[8] the Court acts either En Banc or through three (3) Divisions of five (5) Members each. The first arrangement involves all fifteen (15) Members of the Court, and the cases which the En
Banc may take cognizance of are defined by the Constitution [9] and by the Internal Rules of the Supreme Court. [10] All other cases are assigned to one of the three Divisions. [11]A Rule 45 petition for review on certiorari of a
Court of Appeals Decision involving a labor dispute, such as the main FASAP case, is cognizable by a Division.

The first step in the assignment of a case filed with the Supreme Court is the determination or classification of whether it is properly an En Banc or a Division case.[12] The case is then listed with the others filed in the same
period, in the order in which they were filed for random assignment. This process is supervised by two Raffle Committees, one for En Banc cases and another for Division cases. [13] These committees have three (3) members
each, chaired by the two (2) most senior associate justices, with the four other slots occupied by the next four (4) associate justices in the order of their seniority.

Membership in the three Divisions of the Court is also determined by seniority.[14] When a Member departs from the Court, the memberships in the Divisions also change as a result of the change in seniority of the remaining
justices. Thus, a Member who stays in the Court for a significant period of time will periodically be re-assigned to different Divisions. The rules also provide that a case follows its ponente when he or she transfers to another
Division.[15]

II

Conclusions from the Records on the main FASAP case in G.R. No. 178083 from 18 July 2007 to 04 October 2011.

On 18 July 2007, the above Petition was filed by the Flight Attendants and Stewards Association of the Philippines (FASAP).[16] It was raffled on 20 June 2007 to now retired Justice Consuelo Ynares-Santiago.

On 22 July 2008, Justice Ynares-Santiago penned the Decision of the Third Division on the case. The Division ruled in favor of petitioner FASAP and found PAL guilty of illegal dismissal. [17] The ponencia was unanimously
concurred in by Justices Ma. Alicia Austria-Martinez, Minita Chico-Nazario, Antonio Eduardo Nachura and Teresita Leonardo-de Castro. [18] The counsel of record to whom the Notice of Judgment was sent was the SyCip
Salazar Hernandez and Gatmaitan law firm (SyCip law firm).[19]

On 20 August 2008, PAL, through the SyCip law firm, filed the 1st MR of even date and prayed for the reversal of the 22 July 2008 Decision of the Third Division. [20]

On 10 February 2009, PAL, through the SyCip law firm and now in collaboration with Atty. Estelito P. Mendoza, also filed a Motion to Set the Case for Oral Argument. [21] This Motion was granted and notices were sent to the
counsel of the parties, including Atty. Mendoza.[22] In the oral argument on the case held on 18 March 2009,[23] Atty. Lozano Tan of the SyCip law firm and Atty. Mendoza appeared as counsel for PAL. [24]
On 02 October 2009, the Special Third Division of the Court denied with finality PALs 1st MR through a signed Resolution (the 02 October 2009 Resolution) penned by Justice Ynares-Santiago and concurred in by Justices
Chico-Nazario, Nachura, Diosdado M. Peralta (vice Justice Austria-Martinez who had retired) and Lucas P. Bersamin (vice Justice Leonardo-de Castro, who had earlier inhibited for personal reasons). [25] It was a unanimous
Decision. Justice Ynares-Santiago retired three days later, on 05 October 2009. Notice of Judgment was sent to PAL through the SyCip law firm; as well as to Attys. Estelito P. Mendoza and Claudette A. de la Cerna, who
were denominated in the Notice of Judgment also as counsel for PAL. [26] The claim publicly made by FASAP that Atty. Mendoza was not a counsel of record was therefore refuted by the Division Clerk of Courts action of
describing him in a Notice as counsel for respondent.

The dispositive portion of the 02 October 2009 Resolution reads:

WHEREFORE, for lack of merit, the Motion for Reconsideration is hereby DENIED with FINALITY. The assailed Decision dated July 22, 2008 is AFFIRMED with MODIFICATION in that the award of attorneys fees and
expenses of litigation is reduced to 2,000,000.00. The case is hereby REMANDED to the Labor Arbiter solely for the purpose of computing the exact amount of the award pursuant to the guidelines herein stated.

No further pleadings will be entertained.

SO ORDERED.[27]

On 03 November 2009, respondent PAL, through both the SyCip law firm and law office of Atty. Mendoza (Estelito P. Mendoza & Associates), asked for leave [28] to file a motion for reconsideration of the 02 October 2009
Resolution and a second motion for reconsideration of the 22 July 2008 Decision and attached thereto were the twin motions (the 2 nd MR).[29] At the time this 2 nd MR was filed, Justice Ynares-Santiago, who penned both the
22 July 2008 Decision and 02 October 2009 Resolution, had already retired.

On 11 November 2009, per Special Order No. 792, the Raffle Committee composed of then Associate Justices Renato C. Corona, Chico-Nazario and Presbitero J. Velasco, Jr. had to respond to the queries of the Raffle
Committee Secretariat on who the new ponente of the case would be in view of the retirement of Justice Ynares-Santiago. [30] Ordinarily, a second motion for reconsideration, considering that it is prohibited, [31] is not
entertained by the Court.[32] Thus, ordinarily, had Justice Ynares-Santiago not yet retired, the 2nd MR would just have been ordered expunged from the record for being an unauthorized pleading.[33]

It must be emphasized that even in Tirazona v. Philippine EDS Techno-Service, Inc., (PET, Inc.),[34] a case cited by the majority Resolution, the Court found that unless there is an extraordinarily persuasive reason to entertain
a second motion for reconsideration, it must be denied outright for lack of merit:

Section 2, Rule 52 of the Rules of Court explicitly decrees that no second motion for reconsideration of a judgment or final resolution by the same party shall be entertained. Accordingly, a second motion for reconsideration
is a prohibited pleading, which shall not be allowed, except for extraordinarily persuasive reasons and only after an express leave shall have first been obtained. In this case, we fail to find any such extraordinarily persuasive
reason to allow Tirazonas Second Motion for Reconsideration.

WHEREFORE, the Motion for Leave to File [a] Second Motion for Reconsideration is hereby DENIED for lack of merit and the Second Motion for Reconsideration incorporated therein is NOTED WITHOUT ACTION in
view of the denial of the former. (Emphasis supplied)

The Minutes of the Raffle Committee meeting of 11 November 2009, which included the queries of its Secretariat reflected the Committees response as follows:

The case was decided by the Third Division on July 22, 2008. The motion for reconsideration was denied with finality on October 2, 2009. Both the decision and resolution on the MR were penned by retired Justice Ynares-
Santiago.

In cases where the regular Division which rendered the [Decision] is no longer complete as when one of them has retired, a special division is created under A.M. No. 99-8-09-SC. However, A.M. No. 99-8-09-SC specifically
states that it does not apply where the motion has been denied with finality.
QUERY: May this case be acted upon by the regular Third Division and raffled among its Members? Note: Justice Corona already inhibited from this case; thus, an additional Member must be designated from the other two
Divisions to replace Justice Corona.

(Answer in handwritten note): Yes, PV

additional member AC

OR

Should this case be inherited by Justice Villarama who succeeded Justice Ynares-Santiago? NOTE: The case will be transferred to the First Division.

(Answer in handwritten note): No

In line with the above answers to the queries, the Raffle Committee raffled the case among the regular members of the Third Division, then composed of then Associate Justices Corona, Chico-Nazario, Velasco, Nachura and
Peralta. The case was raffled to Justice Velasco. Since Justice Corona, a regular member of the Third Division, had inhibited himself from the main FASAP case, Justice Carpio was designated to replace him as an additional
member during the same days raffle. [35] According to the Report dated 14 July 2008 of the Division Raffle Committee, Justice Corona inhibited due to his previous efforts in settling the controversy when he was still in
Malacaang.[36]

A.M. No. 99-8-09-SC, which was the justification for the decision of the Raffle Committee, provided for the rules on who among the Members of this Court shall be assigned to resolve motions for reconsiderations in cases
assigned to the Divisions. It took effect by its express provision on 01 April 2000[37] and was the prevailing rule at the time of the raffle on 11 November 2009. Its relevant provision reads:

RULES ON WHO SHALL RESOLVE MOTIONS FOR RECONSIDERATION IN CASES ASSIGNED TO THE DIVISIONS OF THE COURT

2. If the ponente is no longer a Member of the Court or is disqualified or has inhibited himself from acting on the motion, he shall be replaced by another Justice who shall be chosen by raffle from among the remaining
members of the Division who participated in the rendition of the decision or resolution and who concurred therein. If only one member of the Court who participated and concurred in the rendition of the decision or resolution
remains, he shall be designated as the ponente.

These rules shall not apply to motions for reconsideration of decisions or resolutions already denied with finality. (Emphasis supplied.)

This interpretation by the Raffle Committee makes perfect sense, since a contrary interpretation would prevent a decision from ever being considered as having been denied with finality by the mere filing of a motion to admit
a second motion for reconsideration. The Raffle Committee has the right to presume that a final decision is indeed final, since a second motion for reconsideration is expressly prohibited by the Rules of Court [38] and the
Internal Rules of the Supreme Court.[39] The admission of a second motion for reconsideration is highly contingent on the demonstration of an exceptional circumstance that would warrant the allowance of a second motion
for reconsideration.

It is important to note that a contrary opinion that the case should have been raffled to a Member of the Division who participated in the deliberation on the Decision or the Resolution denying the first Motion for
Reconsideration did not seem to be held by Justice Chico-Nazario, a member of the Raffle Committee. Having concurred in both the original 22 July 2008 Decision as well as in the 02 October 2009 Resolution that denied
the 1st MR, Justice Chico-Nazario, as concurring Member of the Third Division in both Decisions, could have opined that the case was not really denied with finality as that is understood in A.M. No. 99-8-09-SC. Thus, she
could have asserted that the case be raffled among Justices Nachura, Peralta, Bersamin, and herself, but she did not. Instead, she appeared to have held the view that the raffling of the case falls under the exception that [these]
rules shall not apply to motions for reconsideration of decisions or resolutions already denied with finality.

The only conclusion from Justice Chico-Nazarios action as a Member of the Raffle Committee is that she interpreted the denial with finality as a genuine denial with finality, which would not require the case to be raffled
among the remaining Members of the Division that decided and resolved the case. Rather, the alternative rule requiring that the case be raffled among the regular Members of the Third Division whether or not they took part
in the Decision would apply.

The Clerk of Court, Atty. Enriqueta E. Vidal, through Atty. Felipa B. Anama, the Deputy Clerk of Court, explained in a Memorandum dated 26 September 2011 (the Vidal-Anama Memorandum) the actions of the Raffle
Committee for Division Cases with respect to the main FASAP case in this way:

The case was referred to the Raffle Committee in November 2009 in view of the filing of the Motion for Leave to File and Admit Motion for Reconsideration of the Resolution dated October 2, 2009 and Second Motion for
Reconsideration of the Decision dated July 22, 2008 mentioned on page 3 of the Letter dated September 13, 2011 of Atty. Mendoza. At that time, Justice Ynares-Santiago had already retired. Moreover, the standing rules with
respect to motions for reconsideration in cases assigned to the Divisions of the Court were provided in A. M. No. 99-8-09-SC.

A. M. No. 99-8-09-SC mandated the creation of a special division to act on motions for reconsideration of decisions or signed resolutions of the Divisions of the Court. However, it specifically stated that it did not apply to
cases where the motion for reconsideration was already denied with finality.

Thus, on November 11, 2009, the Raffle Committee resolved that a special division need not be created to act on the aforecited pending second motion for reconsideration and proceeded to raffle the case among the regular
Members of the Third Division. As the raffle agenda would show, the case was raffled to Justice Presbitero J. Velasco, Jr.

On 20 January 2010, with Justice Velasco as the new ponente, the regular Third Division,[40] acting on PALs motion for leave to file the twin motions and the attached 2 nd MR itself, resolved: (1) to grant the two motions and
(2) to require the parties to comment on PALs twin Motions for Reconsideration and FASAPs Urgent Appeal to the Supreme Court Justices dated 23 November 2009 (the 20 January 2010 Resolution). [41] Then Associate
Justice Corona, according to the Resolution, took no part therein. The names of Justices Carpio, Velasco (chairperson), Nachura, Peralta, and Bersamin appeared in the Resolution.

Notably, in taking part in the 20 January 2010 Resolution, Justices Nachura, Peralta, and Bersamin all of whom took part in the denial of the 1 st MR in the 02 October 2009 Resolution could have objected to either: (a) the
assignment of the case to Justice Velasco, a member of the regular Third Division who did not participate in either action; or (b) the non-constitution of a Special Third Division. However, none of them did. Justice Nachura, it
must be additionally noted, had concurred in both the original 22 July 2008 Decision and the 02 October 2009 Resolution.

On 17 May 2010, Chief Justice Renato Corona, who had then been appointed Chief Justice, issued Special Order No. 838 reorganizing the three Divisions of the Court in view of his vacating his former position as Associate
Justice.[42] As a result, Justice Velasco, Jr. was transferred to the First Division. Under the applicable rule on the effect of reorganization, the main FASAP case, which was assigned to Justice Velasco, was correspondingly
transferred to the First Division. Parenthetically, Justice Arturo D. Brion was assigned to the Third Division under the same Special Order.

On 17 January 2011, Justice Velasco inhibited himself due to a close relationship to a party. The First Division, to which he was transferred, thus referred the matter to the Raffle Committee for designation of additional
members, the intention being to seek a replacement ponente for Justice Velasco.

On 26 January 2011, the Raffle Committee for Division Cases (composed of Justices Conchita Carpio Morales, Nachura and Arturo D. Brion) resolved, in its Minutes, as follows:

The case is presently assigned to Justice Velasco, Jr. who inhibited from the case due to close relation to one of the parties.

Following the pertinent provision of Administrative Circular No. 84-2007, the case must be raffled among the Members of the Second and Third Division.

*Justice De Castro also recused from the case.[43]

(NB: The handwritten note in the minutes designated the new ponente as a result of the raffle by his acronym - AB - referring to Justice Brion).

As a result of the 26 January 2011 raffle, the case fell on the lap of Justice Brion, who was then a member of the Third Division.

Administrative Circular No. 84-2007, cited in the Report of the Raffle Committee, provided the various rules on the inhibition, leaves and vacancies of the ponente or other members of the Division in pending cases and their
proper substitution. The old rule was that when the ponente inhibits from the case, the case shall be returned to the Raffle Committee for re-raffling among the other Members of the same Division with one additional Member
from the other two Divisions:

2. Whenever the ponente, in the exercise of sound discretion, inhibits herself or himself from the case for just and valid reasons other than those mentioned in paragraph 1, a to f above, the case shall be returned to the Raffle
Committee for re-raffling among the other Members of the same Division with one additional Member from the other two Divisions. (Emphasis supplied)

These Rules have been twice amended; first, on 04 May 2010; second, on 03 August 2010. At the time that the case was assigned to Justice Brion as the new ponente by the 26 January 2011 raffle, the pertinent rule was that
provided in the 03 August 2010 amendment. The Resolution dated 03 August 2010 in A.M. No. 10-4-20-SC amended Rule 8, Sections 2 and 3(a) of the Internal Rules of the Supreme Court. The amended rule reads as
follows:

Motion to inhibit a Division or a Member of the Court. A motion for inhibition must be in writing and under oath and shall state the grounds therefor.

No motion for inhibition of a Division or a Member of the Court shall be granted after a decision on the merits or substance of the case has been rendered or issued by any Division, except for a valid or just reason such as an
allegation of a graft and corrupt practice or a ground not earlier apparent. (Rule 8, Sec. 2, Internal Rules of the Supreme Court)

Effects of Inhibition. The consequences of an inhibition of a Member of the Court shall be governed by these rules:

(a) Whenever a Member-in-Charge of a case in a Division inhibits himself for a just and valid reason, the case shall be returned to the Raffle Committee for re-raffling among the Members of the other two Divisions of the
Court. (Rule 8, Sec. 3 [a] of the Internal Rules of the Supreme Court; emphasis supplied.)

Unlike in the old rule where the case remains with the Division of the inhibiting Justice, the amended rule now uniformly provides for the effect of inhibition of the ponente on the assignment of a case the case will be taken
out of the Division to which the inhibiting Member of this Court belongs and raffled among the members of the two other Divisions.

Following the new rule, the inhibition from the main FASAP case by Justice Velasco a member of the First Division resulted in the need to re-raffle the case to members of the Second and the Third Divisions. When the case
was re-raffled, Justice Brion to whom the case was assigned, was then a member of the Third Division. The case was thus properly assigned to him as a regular member of that Division.

On 21 June 2011, the Chief Justice issued Special Order No. 1025 reorganizing the Divisions of the Court, in view of the retirement of Justices Carpio-Morales and Nachura. Justice Brion was then transferred from the Third
Division to the Second Division.[44]

On 27 June 2011, as required by the new reorganization, the new Third Division had to order the transfer of all of Justice Brions cases in the former Third Division to the new Second Division. The new Third Division,
composed of its regular members Justices Velasco, Peralta, Bersamin and Jose C. Mendoza, together with Justice Sereno as additional member issued an internal Resolution to transfer the case to the Second Division, the
same being assigned to a member thereof.[45]

This procedure follows the aforecited Rule 2, Section 9 of the Internal Rules of the Supreme Court stating that if a case is a regular Division case, it follows the ponente to his or her new Division under the reorganization. It is
also consistent with Rule 2, Section 7, paragraph 6 of the Internal Rules of the Supreme Court stating that (i)f there are pleadings, motions or incidents subsequent to the denial of the motion for reconsideration or
clarification, the case shall be acted upon by the ponente on record with the participation of the other Members of the Division to which he or she belongs at the time said pleading, motion or incident is to be taken up by the
Court. The main FASAP case was thus appropriately transferred from the Third Division to the Second Division when Justice Brion was reassigned to the latter.
On 24 August 2011, the Court issued a Resolution that would give notice to the parties that the main FASAP case had been transferred to the Second Division. [46] In the said Resolution, the Second Division NOTED the
pleadings filed by FASAP and PAL, parties to the case. [47] The parties received the notice under the document heading of the Second Division and under the name of the Clerk of Court of the same Division. The notice of the
Resolution was sent to PAL through its principal counsel, the SyCip law firm.

Hence, it is wrong for any of the co-counsel for PAL to assert that their receipt of the 07 September 2011 Resolution of the Second Division was the first time that the parties were apprised of the transfer of the case to another
Division.[48] Under the Rules of Court, service upon the principal counsel of PAL is service to all the co-counsel:

Filing and service, defined. Filing is the act of presenting the pleading or other paper to the clerk of court.

Service is the act of providing a party with a copy of the pleading or paper concerned. If any party has appeared by counsel, service upon him shall be made upon his counsel or one of them, unless service upon the party
himself is ordered by the court. Where one counsel appears for several parties, he shall only be entitled to one copy of any paper served upon him by the opposite side. (Rule 13, Sec. 2, of the Rules of Court; emphasis
supplied)

It is also important to emphasize that parties cannot complain about lack of receipt of formal notices that their cases are being transferred from one Division to another, since that is a matter of reorganization entirely internal
to the Court.

On 07 September 2011, a Second Division session was held. The Agenda, Supplemental Agenda and Minutes of the Second Division session for that day reveal the dispositions of the agenda items as discussed by the
Members of the Division. One hundred forty-eight (148) agenda items were calendared that day, broken down as follows: 96 judicial matters, 21 administrative matters and 31 administrative cases. This is not an unusual
volume for a Division case load for a day. The main FASAP case in G. R. No. 178083 was one of the judicial matters tackled during the said Session of the Second Division.

Two non-regular Members of the Division had earlier been designated by raffle as replacements for the two regular Members who were on leave: (1) Justice Bersamin ( vice Justice Sereno), and (2) Justice Mendoza
(vice Justice Bienvenido L. Reyes). Most of the cases for the day were acted upon by unsigned Resolutions, but five signed Decisions/dispositive Resolutions were also promulgated. Among the unsigned Resolutions that
were promulgated was the denial of PALs 2nd MR in the main FASAP case in G. R. No. 178083.

Justice Carpio (who had earlier inhibited, the reason given being per advice of the office of the Member-in-Charge) was replaced by Justice Peralta. [49] Note that Justices Peralta and Bersamin became Members of the Second
Division for the purpose of resolving the main FASAP case not because they took part in the denial of the 1 st MR, but because they were replacements for a regular Member of the Second Division who had inhibited from the
case and for another who was on leave.

Justice Brion, as the next most senior Justice in the Second Division, was acting chairperson and, at the same time, the Member-in-Charge. Thus, the Members of the Second Division during the 07 September 2011 Session
for the main FASAP case were composed of Justices (1) Brion (Chairperson), (2) Peralta, (3) Bersamin, (4) Jose P. Perez, and (5) Mendoza. This Second Division promulgated the unsigned 07 September 2011
Resolution penned by Justice Brion, denying with finality respondent PALs 2nd MR.[50] Of these five, two Justices Peralta and Bersamin had earlier concurred in the 02 October 2009 Resolution that denied PALs 1 st MR. The
Notice of this 07 September 2011 Resolution was sent not only to the SyCip law firm, but also to Atty. Mendoza. [51]

On 13 September 2011, Atty. Estelito P. Mendoza, counsel for PAL in the main FASAP case, addressed his first letter to the Clerk of Court of the Supreme Court, which contained the following matters:

1. Noting that (a) of the members of the Court who acted on the Motion for Reconsideration dated 20 August 2008 (the 1 st MR), Justices Ynares-Santiago (ponente), Chico-Nazario and Nachura had retired from the
Court; and (b) the Third Division had issued a Resolution on the case dated 20 January 2010, acted upon by Justices Carpio, Velasco, Nachura, Peralta, and Bersamin;

2. Seeking advice on (a) whether the Court had acted on the 2 nd MR and, if so, which Division whether regular or special and the identities of the chairperson and the members thereof; and (b) the identity of the
current ponente or Justice-in-charge of the case, and when and for what reason he or she was designated as ponente; and
3. Requesting a copy of the Resolution rendered on the 2nd MR, if an action had already been taken thereon.

On 16 September 2011, Atty. Mendoza sent a second letter addressed to the Clerk of Court requesting copies of any Special Orders or similar issuances transferring the case to another division, and/or designating members of
the division which resolved its 2nd MR, in case a resolution had already been rendered by the Court and in the event that such resolution was issued by a different division.

A third letter from Atty. Mendoza addressed to the Clerk of Court was received by the Court on 20 September 2011. [52]Atty. Mendoza stated that he received a copy of the 07 September 2011 Resolution issued by the Second
Division, notwithstanding that all prior Court Resolutions he received regarding the case had been issued by the Third Division. He reiterated his request in two earlier letters to the Court, asking for the date and time when the
said Resolution was deliberated upon and a vote taken thereon, as well as the names of the Members of the Court who had participated in the deliberation and voted on the 07 September 2011 Resolution.

Atty. Mendoza sent a fourth letter dated 22 September 2011 addressed to the Clerk of Court, suggesting that if some facts subject of my inquiries are not evident from the records of the case or are not within your knowledge,
that you refer the inquiries to the members of the Court who appear to have participated in the issuance of the Resolution of September 7, 2011, namely: Hon. Arturo D. Brion, Hon. Jose P. Perez, Hon. Diosdado M. Peralta,
Hon. Lucas P. Bersamin, and Hon. Jose C. Mendoza.

On 26 September 2011, upon request by Justice Brion, the Clerk of Court issued the Vidal-Anama Memorandum for the members of the Second Division regarding the inquiries contained in Atty. Mendozas first and second
letters dated 13 and 20 September 2011, respectively. According to Justice Brion, as the acting Chairperson of the Second Division that rendered the 07 September 2011 Resolution, he decided to send a copy of the Vidal-
Anama Memorandum only to those who had participated in the issuance of the Resolution. [53] Neither Senior Associate Justice Carpio, the regular Chairperson of the Second Division, nor Justices Sereno and Reyes, its other
regular Members, received a copy of this Memorandum at that time.

In the said Memorandum, which was signed by Atty. Felipa Anama on behalf of Atty. Enriqueta Vidal, the legal and documentary bases for all the actions of the various Raffle Committees were attached and discussed.
[54]
These included the decisions of the two raffle committees that oversaw the transfer of the ponencia, as a regular Second Division case, from Justice Ynares-Santiago to Justice Velasco and finally to Justice Brion. A reading
of the Vidal-Anama Memorandum would lead to the conclusion that the two transfers of ponencia were compliant with the applicable rules.

One parenthetical note. In the above Vidal-Anama Memorandum, the Raffle Committee is quoted as having relied on Administrative Order No. 84-2007 as basis for raffling out the case from the Third Division to the First
and the Second Divisions.[55]Apparently, the Vidal-Anama Memorandum refers to Administrative Order No. 84-2007, as amended, i.e., by the Resolution dated 03 August 2010 in A.M. No. 10-4-20-SC. The implication of the
latter Resolution on the assignment of the case to Justice Brion has been discussed here earlier.

On 28 September 2011, the regular Second Division NOTED the Letters dated 13 and 20 September 2011 of Atty. Mendoza to Atty. Vidal, asking that his inquiry be referred to the relevant Division members who took part in
the 07 September 2011 Resolution. In response to an earlier suggestion to just simply direct the Division Clerk of Court to answer the letters of Atty. Mendoza, Justice Brion the ponente informed those present that he needed
to consult Chief Justice Corona on this matter. There was no suggestion from anyone, much less any agreement among the Justices present, to refer the matter to the En Banc . Indeed, Justices Sereno and Reyes, who were
then present, were not fully informed of the contents of those letters.

As related by Justice Brion to the En Banc, a meeting was held on 28 September 2011 among the Justices who participated in the deliberations of the 07 September 2011 Resolution namely, Justices Brion, Peralta, Bersamin,
Perez and Mendoza to inform them of the four letters of Atty. Mendoza and to ask for their inputs. According to him, a couple more meetings were held to this effect, but there was no unanimity on how to specifically respond
to these letters.

According also to Justice Brion, on 30 September 2011, a meeting held between Chief Justice Corona and Justices Brion, Peralta, Bersamin, Perez and Mendoza yielded the recommendation to refer the matter to the En Banc
and to vacate the 07 September 2011 Resolution in the meantime. Chief Justice Corona, who presided over the meeting, was also furnished a copy of the Vidal-Anama Memorandum.
On 04 October 2011, the following happened in the En Banc session:

1. In the Agenda distributed, the Clerk of Court endorsed item no. 147 for inclusion therein, referring the letters of Atty. Mendoza with respect to the main FASAP case to the Court En Banc. Instead of being given its regular
judicial docket number, G.R. No. 178083, it was given a separate administrative matter number, A.M. No. 11-10-1-SC.

2. This separate administrative matter in the En Bancs agenda, apparently raffled to Justice Mariano del Castillo on 03 October 2011, [56] merited his recommendation to refer to ponente, meaning, to Justice Brion, to whom the
main FASAP case in G.R. No. 178083 was assigned.

3. Without waiting for Justice Brion to respond to the recommendation of referral, the Chief Justice, who was presiding, informed the Court that the 07 September 2011 Resolution of the Second Division must be recalled,
because it had a lot of serious problems. Justice Brion, the ponente of the said Resolution, kept quiet.

4. Despite the fact that the matter was characterized by the Chief Justice as a very sensitive matter and that the Resolution had a lot of serious problems, copies of the four letters of Atty. Mendoza were not furnished the rest of
the Court.

5. Neither did the Chief Justice inform the rest of the Court that the Clerk of Court, through her Deputy Felipa B. Anama, had issued her narration of facts via the Vidal-Anama Memorandum, which detailed the raffle process
undertaken with respect to the main FASAP case, and which tended to prove the regularity of the assignment of the case from Justice Velasco to Justice Brion, with its citation of the legal bases for the actions of the various
Raffle Committees.

6. The rest of the Court assented, through their silence, to the recall of the 07 September 2011 Resolution of the Second Division.

7. There was no formal referral of the case by way of written resolution from the Second Division to the En Banc, but only an assumption and cognizance of the Mendoza letters by the En Banc.

The Court En Banc thus issued the above-quoted 04 October 2011 Resolution in the separate administrative matter docketed as A.M. No. 11-10-1-SC (Re: Letters of Atty. Estelito P. Mendoza re: G.R. No. 178083 Flight
Attendants and Stewards Association of the Philippines v. Philippine Airlines, Inc., Patria Chiong, et al.) accepting and taking cognizance of the above-cited case; recalling the 07 September 2011 Resolution of the Second
Division on the main FASAP case; and ordering the re-raffle of the same case to a new Member-in-Charge. At this point, four Members inhibited themselves from the main FASAP case: [57] Justices Carpio, Velasco, Leonardo-
De Castro, and Del Castillo.[58] As earlier stated, the main FASAP case was re-raffled to Justice Sereno, as new Member-in-Charge. [59]

Under the Internal Rules of the Supreme Court, as amended, the Court En Banc cannot just take cognizance of a case assigned to a Division. The initiative of transferring the case from a Division to the En Banc must always
come from the Division itself. Rules 2 and 15 of the Internal Rules of the Supreme Court provide:

Division cases. All cases and matters under the jurisdiction of the Court not otherwise provided for by law, by the Rules of Court or by these Internal Rules to be cognizable by the Court en banc shall be cognizable by the
Divisions. (Rule 2, Section 4, Internal Rules of the Supreme Court)

Actions on Cases Referred to the Court En Banc. The referral of a Division case to the Court en banc shall be subject to the following rules:

(a) the resolution of a Division denying a motion for referral to the Court en banc shall be final and shall not be appealable to the Court en banc;

(b) the Court en banc may, in the absence of sufficiently important reasons, decline to take cognizance of a case referred to it and return the case to the Division; and

(c) No motion for reconsideration of a resolution of the Court en banc declining cognizance of a referral by a Division shall be entertained. (Rule 2, Section 11, Internal Rules of the Supreme Court)
Second Motion for Reconsideration. The Court shall not entertain a second motion for reconsideration, and any exception to this rule can only be granted in the higher interest of justice by the Court en banc upon a vote of at
least two-thirds of its actual membership. In the Division, a vote of three Members shall be required to elevate a second motion for reconsideration to the Court en banc. (Rule 15, Section 3, Internal Rules of the Supreme
Court)

While it is true that none of the Second Division Members whether regular or their substitutes objected to the discussion, several important observations must be made here:

1. When the matter of the Mendoza letters was calendared for agenda in the En Banc, not all Members of the Court including certain regular members of the Second Division, such as Justices Carpio, Sereno and Reyes were
sufficiently alerted to the significance of their contents.

2. Except for Chief Justice Corona and those who took part in the 07 September 2011 Resolution, neither the Members of the Second Division, nor any of the remaining Members of the Court were furnished a copy of the
Vidal-Anama Memorandum before or during the En Banc Session, which would have clearly shown the regularity of the assignment of the case to Justice Brion as a regular Second Division matter.

3. The impression given to the majority of the Court was that something deeply irregular had transpired, something akin to not vesting Justice Brion with authority to act on the main FASAP case such that, to protect the
Court, the 07 September 2011 Resolution must be recalled and the case taken cognizance of as an En Banc matter.

Given that the factual bases for the impressions of the majority of the Court do not exist, and that the resulting conclusion that allowed them to accede to the 04 October 2011 Resolution on the instant administrative matter
can no longer be sustained, I submit that no such irregularity in the application of the rules occurred. Therefore, the main FASAP case in G.R. No. 178083 should be returned to the Second Division as a regular case, and the
recalled 07 September 2011 Resolution be reinstated and duly executed under the existing laws and rules.

While it is true that the Supreme Court has the power to suspend its rules (i)n the interest of sound and efficient administration of justice, under Rule 1, Section 4 of its Internal Rules, the interest of justice in this case requires
that the rules be appropriately followed. The 04 October 2011 Resolution to transfer the case from the Second Division to the En Banc was apparently pursuant to the desire to observe the rules, not suspend them. The transfer
of the case to the Second Division having been proven to be regularly made, there was no need for the suspension of any rule.

The following are therefore very clear:

First, the assignment of the case to Justice Brion as ponente and its transfer to the regular Second Division to which he belongs complies with all the applicable rules.

Second, there was no proper referral of the main FASAP case from the Second Division to the Court En Banc; hence, the latter did not act properly in taking cognizance of the case under the 04 October 2011 Resolution.

No Division of the Court is a body inferior to the Court En Banc; and each Division sits veritably as the Court En Banc itself. [60] The Court En Banc is not an appellate Court to which decisions or resolutions of a Division
may be appealed.[61] Before a judgment or resolution on a case becomes final and executory, the Court En Banc may accept a referral by the Division for sufficiently important reasons.[62] Otherwise, the case would be returned
to the Division for decision or resolution. [63] The proposal to refer the case to the Court En Banc must first be agreed upon and made by the Division and formal notice thereof should then be sent to the Clerk of Court. The
Clerk of Court would then calendar the referral in the Agenda for consideration of the Court En Banc. In this case, no such formal notice of a referral was made by the regular Second Division or sent to the Clerk of Court En
Banc to elevate the main FASAP case for the consideration of the Court En Banc.

In fact, the Internal Rules of the Supreme Court are explicit on referring cases to the Court En Banc in instances in which the matter to be considered is a case that has already been decided by the Division and is already the
subject of a second motion for reconsideration, similar to the circumstance in the case of PAL. In a Division, a vote of three Members shall be required to elevate a second motion for reconsideration to the Court En Banc. [64]

Applying this rule to PALs 2nd MR in the main FASAP case, no decision or vote by at least three Members of the regular Second Division was ever made to refer the case to the Court En Banc. Those who informally met with
the Chief Justice and decided to raise the main FASAP case to the Court En Banc without any formal written notice thereof committed a serious lapse. The determination of sufficiently important reasons to refer the case,
which was already the subject of a 2 nd motion for reconsideration, was within the purview of the regular Members of the Second Division, and not by those who merely substituted for them in the 07 September 2011
Resolution. Regardless of the validity of that Resolution, the referral to the Court En Banc was a separate and distinct matter that should have been decided by the regular Members of the Second Division. Hence, Justices
Sereno and Reyes, as regular members of the Second Division who during their absence in the 07 September 2011 Session of the Second Division were substituted by Justices Bersamin and Mendoza, respectively should
have been included in the discussion on the referral of the matter to the Court En Banc.

For the Court to take cognizance of the Mendoza letters as a separate administrative matter independent from the judicial case in G.R. No. 178083 in order to justify the recall of the Second Divisions 07 September 2011
Resolution is unacceptable because it is plainly a circumvention of the above-discussed rules on the proper referral of a case from a Division to the En Banc. Rather than formally filing a motion for the referral of their case to
the En Banc, any party-litigant may now, under the majoritys ruling, subscribe to Atty. Mendozas course of action and simply write a separate letter to the Clerk of Court or any of the justices, which can now be treated as an
independent administrative matter so that the Court En Banc may unilaterally appropriate or take away a case from the Division. This new rule being egregiously created in this case by the majority will open the floodgates
for all disgruntled litigants or their counsel to appeal unfavorable final judgments of the Courts three Divisions to the En Banc.

Absent a formal referral by the regular Members of the Second Division and an articulation of sufficiently important reasons, the Court En Banc cannot properly take cognizance of the main FASAP case; nor can it oust, on its
own, the authority of the Second Division over that case.

Thus, I maintain that the Court En Banc should recall its 04 October 2011 Resolution and return this case to the Second Division for reinstatement and finality of the 07 September 2011 Resolution.

It must be further noted that the decisions of the two raffle committees headed by Chief Justice Corona and by retired Justice Carpio-Morales, which led to the assignment of this case from Justice Ynares-Santiago to Justice
Velasco and eventually to Justice Brion, were concurred in by retired Justices Chico-Nazario and Nachura and by incumbent Justices Velasco and Brion.

Significantly also, all three main dispositions of this case in favor of FASAP the 22 July 2008 Decision, the 02 October 2009 Resolution denying PALs 1st MR, and the 07 September 2011 Resolution denying PALs 2 nd MR
were uniformly unanimous, and concurred in by a total of ten (10) justices, retired and incumbent:

22 July 2008 02 October 2009 07 September 2011

Decision Resolution Resolution

1. Ynares-Santiago (ponente) 1. Ynares-Santiago (ponente) 1. Brion (ponente)

2. Austria-Martinez 2. Chico-Nazario 2. Peralta

3. Chico-Nazario 3. Nachura 3. Bersamin

4. Nachura 4. Peralta 4. Perez

5. Leonardo-de Castro 5. Bersamin 5. Mendoza

III

Pleadings Submitted After Atty. Mendozas

Letters to the Clerk of Court

After the four Mendoza letters were received by the Court, the parties to the main FASAP case filed three significant pleadings: (a) PALs Motion to Vacate dated 03 October 2011; (b) FASAPs Motion for Reconsideration
dated 17 October 2011; and (c) PALs Comment on the said Motion for Reconsideration.

A. PALs Motion to Vacate dated 03 October 2011

It appears that a day before the issuance of the Court En Bancs 04 October 2011 Resolution recalling the Second Divisions 07 September 2011 Resolution, or at 11:31 a.m. of 03 October 2011, the Court received a copy of
PALs Motion to Vacate (Resolution dated September 7, 2011) [the Motion to Vacate]. However, the Motion to Vacate was received only on 04 October 2011 at 3:00 p.m., by the Courts Judicial Records Office, Judgment
Division.

In the Motion to Vacate, PAL argued that the 07 September 2011 Resolution of the Second Division denying its 2 nd MR should be vacated on the following grounds:

A.1. The 07 September 2011 Resolution was issued in violation of Sections 4 and 13, Article VIII of the Constitution.

A.2. It was issued in violation of the Internal Rules of the Supreme Court.

A.1. PALs First Ground in the Motion to Vacate

Quoting portions of the Records of the Constitutional Commission dated 14 July 1986, PAL argued that the intention of the Constitution is for cases or matters heard by the division to be decided/resolved with the
concurrence of a majority of the Members who actually took part in the deliberations on the issues in the case and voted thereon and that the conclusion shall be reached in consultation before the case is assigned to a Member
for the writing of the opinion of the Court, with the phrase in consultation having a settled meaning as after due deliberation.

PAL concluded that the constitutional requirement may not have been met because those who participated in the issuance of the 07 September 2011 Resolution Justices Brion, Mendoza, and Perez had never taken part in the
resolution of any matter in connection with the instant case, while Justice Bersamin was designated on 06 September 2011, or only one day before the 07 September 2011 Resolution was voted upon.

Effectively, although PAL was not articulating this thought explicitly, it was arguing that, under the Constitution, only Justices Peralta and Bersamin could have taken part in any deliberation on its 2 nd MR. It was also
effectively claiming that a one-day notice to Justice Bersamin of his designation as a replacement Member of the Second Division was not enough notice for him to take part in the deliberation on the 2 nd MR, even though he
had earlier voted to deny the 1st MR in the 02 October 2009 Resolution.

A.2. PALs Second Ground in the Motion to Vacate.

PAL insisted that its motion should have been resolved by a Special Third Division, based on A. M. No. 99-8-09-SC dated 17 November 2009 (Amended Rules on who shall resolve motions for reconsideration of decisions or
signed resolutions in cases assigned to the division of the court). It argued that although another Court issuance, A.M. No. 99-8-09-SC, as amended (Rules on who shall Resolve Motions for Reconsideration in Cases Assigned
to the Divisions of the Court, 15 February 2000), provides that a special division need not be constituted to resolve motions for reconsideration of decisions or resolutions that have already been denied with finality, this latter
rule would not apply to its case. PAL contended that when its 2nd MR was allowed by the Third Division in the 20 January 2010 Resolution, the Courts 02 October 2009 Resolution denying the 1 st MR with finality was thereby
suspended.

Although PAL was not explicitly saying so, it was in effect arguing that when it filed a 2 nd MR on 03 November 2009 after the denial of its 1 st MR by the 02 October 2009 Resolution, the rules required that (1) a Special Third
Division consisting of Justices Chico-Nazario, Nachura, Peralta and Bersamin, with an additional fifth Member, should have been constituted to take cognizance of the case; and (2) the ponencia should have been raffled only
to these first four Members who had actually taken part in the deliberation on the 1st MR. Thus, its Motion for Reconsideration should not have been raffled off to Justice Velasco.

PAL was anchoring its argument on the eventual admission of its 2 nd MR, an action initiated by Justice Velasco after the case was raffled to him on 11 November 2009. It was saying that, by admitting the 2 nd MR, the Court
did not consider the said motion for reconsideration is to have been denied with finality, hence, the assignment of the case to Justice Velasco was erroneous, because he was not among the remaining four Justices who had
concurred in the Decision or Resolution of the main FASAP case. But how could PAL argue that the assignment of the case to Justice Velasco was wrong and at the same time claim benefit from his action as Member-in-
Charge?

At the time when the Raffle Committee met on 11 November 2009 for the purpose, among others, of making a decision on how to dispose of PALs 2 nd MR, the legal status of the main FASAP case was unambiguous its
1st MR had been denied with finality. There was no room to read into the case any other legal status. The Raffle Committee could have taken cognizance of only that status; it was bereft of any authority to dwell on any other
future possibility, including the admission of PALs 2nd MR admitted a year later when Justice Velasco was designated as Member-in-Charge.

A.3. PALs Prayer in Its Motion to Vacate

PAL additionally contended that parties should be made aware of who among the Members of this Court were deliberating on its case, so that they may be allowed to move for their inhibition. We note at this point that this
argument was being raised, bereft of any basis to claim a right of prior information on who would ultimately constitute the membership in a Division. [65]
PAL prays that the Court: (1) direct the Clerk of Court to respond to all its inquiries as contained in its letters; (2) vacate the 07 September 2011 Resolution and thereafter refer its 2 nd MR to a Special Third Division
constituted in accordance with A. M. No. 99-8-09-SC dated 17 November 2009 and Section 7, Rule 2 of the Internal Rules of the Supreme Court; and, (3) considering the issues involved, refer its Motion to Vacate to the
Court En Banc for resolution.

B. FASAPs Motion for Reconsideration dated 17 October 2011

In its Motion for Reconsideration dated 17 October 2011, FASAP argued that the 04 October 2011 Resolution of the Court En Banc taking cognizance of the main FASAP case, recalling the Second Divisions 07 September
2011 Resolution denying PALs 2nd MR, and re-raffling the case to a new Member-in-Charge was wrong, since the 07 September 2011 Resolution of the Second Division was already final, executory and immutable. FASAP
also claimed that the recall by the Court En Banc was violative of due process because the latter did not provide the reason therefor, and the recall arose from an ex parte consideration of mere letters from PALs counsel, Atty.
Mendoza. Finally, the recall was already not a valid exercise of the functions of the Court En Banc, whether administrative or judicial.

C. PALs Comment on FASAPs Motion for Reconsideration dated 17 October 2011

In its Comment on FASAPs Motion for Reconsideration, PAL argued that the recall made by the Court En Banc was proper and in keeping with due process, because the 07 September 2011 Resolution of the Second Division
violated the Constitution and the Internal Rules of the Supreme Court.

PAL also contended that the Court had the power to recall its own orders and resolutions and to take cognizance, motu proprio, of cases being heard by any of its Divisions, as it had done in the past. It cited several instances
in which the Court En Banc had re-submitted and re-deliberated on cases and pointed to Rule 135, Section 5 of the Rules of Court on the inherent powers of the court, including (g) [t]o amend and control its process and
orders so as to make them more conformable to law and justice.

Finally, PAL claimed that the four Mendoza letters were not ex parte third motions for reconsiderations, because neither the merits of the main FASAP case in G.R. No. 178083 nor any prayer for reconsideration of the 07
September 2011 Resolution was discussed therein.

PAL prayed that: (1) FASAPs Motion for Reconsideration dated 17 October 2011 be denied; and (2) that the Court En Banc proceed with the disposition of the main FASAP case in G.R. No. 178083.

IV

Main Disposition of the Case

A. The Sufficiency of the Factual Findings in the Case

Considering that the assignment of the main FASAP case in G. R. No. 178083 was perfectly regular, the 04 October 2011 Resolution of the Court En Banc recalling the 07 September 2011 Resolution of the Second Division
has been found to be without of any legal basis. Hence, this should have been sufficient for the Court to vacate the 04 October 2011 Resolution and to return the main FASAP case to the Second Division for proper action.

I vote to simply NOTE the four Mendoza letters that have become the subject of the instant administrative matter (A.M. No. 11-10-1-SC). Atty. Mendoza, counsel for PAL, should be guided by the findings in this Opinion in
order to find some of the answers to the questions raised in his letters to the Clerk of Court. His various requests to the Clerk of Court for (a) copies of Special Orders regarding the reorganization of the various Divisions
relative to the main FASAP case; (b) information on and copies of the official assignments of the ponentes as well as additional Members to the various Divisions to which the said case was assigned; and (c) information on
dates and times when deliberations took place, should be denied. Although Atty. Mendoza, as counsel for PAL is entitled to the results of the raffle of the main FASAP case under the rules,[66] this is not a carte
blanche authority to demand the smallest minutiae of the Courts processes in relation thereto, especially since this case has already been decided with finality. If as the majority in the Decision seek to imply that such detailed
requests should be entertained in all cases by this Court, an unduly oppressive burden will be imposed that would prevent this Court from discharging its constitutional duty to resolve with reasonable dispatch the many other
cases pending before it.

It is important to note that any of the five Members of the Second Division who voted for the 07 September 2011 Resolution namely, Justices Brion, Peralta, Bersamin, Perez and Mendoza could have easily dissented
therefrom, in keeping with the practice observed in this Court, but none of them dissented. [67] Deliberations took place not only on the main FASAP case in G.R. No. 178083, but also on many other cases calendared for the
day. Justices Brion, Peralta, Bersamin, Perez and Mendoza, as regular or additional Members of the Second Division, in fact signed several other Decisions and Resolutions of the Second Division of this Court promulgated
on 07 September 2011, as listed below.[68] If any of them felt that they could not participate in the deliberations in the main FASAP case in the manner that the Constitution required them to, they could have easily done so by
either requesting deferment of the discussion to give them time to reflect on the draft resolution, or by writing their own Dissent from the unsigned 07 September 2011 Resolution. None of them did and, thus, the said
Resolution remains on record as a unanimous Decision of the Second Division.
In assailing the composition of the Second Division during its 07 September 2011 Session, which acted on the main FASAP case, Atty. Mendoza was effectively placing serious doubts on the effectivity of all actions of the
Second Division on the 147 other items on that days Agenda, including the signed Decisions and Resolution above-cited. Giving in to his assertions would wreak havoc on the Courts procedures and allow litigants to
incessantly question the validity of orders based on mere suspicions about the propriety of the composition of a Division of the Court.

The 07 September 2011 Resolution was far from transgressing the constitutional requirements for the valid adoption of a decision. Indeed, while the Constitution requires a Division action to have the concurrence of at least
three Justices thereof, the Decision to uphold FASAPs position has been consistently and unanimously concurred in by all the justices who acted on the case. The 22 July 2008 Decision of the Third Division in favor of
FASAP, penned by Justice Ynares-Santiago, was unanimously concurred in by Justices Austria-Martinez, Chico-Nazario, Nachura and Leonardo-De Castro. PALs 1 st MR of the Decision was denied with finality in the signed
02 October 2009 Resolution by the Special Third Division, penned once again by Justice Ynares-Santiago and unanimously concurred in by Justices Chico-Nazario, Nachura, Peralta and Bersamin. Thereafter, the 07
September 2011 Resolution of the Second Division denying PALs 2 nd MR, penned by Justice Brion, was concurred in by Justices Peralta, Perez, Bersamin and Mendoza. In sum, the position expressed in the 07 September
2011 Resolution of the Court has been shared by ten (10) Justices of this Court throughout the years.

B. The Validity of the Raffle of the main FASAP Case

In the Decision, the majority, led by Justice Brion as ponente, explained the consequences of the 20 January 2010 Resolution, which accepted the review prayed for by PAL in its 2 nd MR. To my respected colleagues, the said
Resolution, which opened the main FASAP case entirely anew for review on the merits, should have been raffled off to the remaining Members of the Division, who participated in the deliberations and previous rulings,
specifically Justices Peralta or Bersamin. However, I must register my dissent to this position since it glosses over factual circumstances attendant in this case and makes hairline distinctions in the rules to come up with a
strained conclusion to justify the recall of the 07 September 2011 Resolution, penned by no less than Justice Brion, himself. The raffle of the case to Justice Velasco, then to Justice Brion and his subsequent ruling in 07
September 2011 Resolution are reasonable and consistent with our rules.

First, the Court was tasked to resolve the 2 nd MR filed by PAL, which was undoubtedly a prohibited pleading and was already in contravention of the Courts express ruling against entertaining any further pleadings in the
main FASAP case.[69] Hence, when the 2nd MR was filed on 03 November 2009, the status of the case was one where a 1 st MR had already been filed and subsequently denied with finality. Since Justice Ynares Santiago had
already retired and the then prevailing rules on resolving motions for reconsideration had no application for motions for reconsiderations of decisions or resolutions which were already denied with finality, [70] the Raffle
Committee correctly treated the 2nd MR as an ordinary matter to be raffled to the now regular members of the Third Division, which was the Division that issued the 22 July 2008 Decision and 02 October 2009 Resolution.
The Raffle Committee found no need to forward the matter to Justice Martin S. Villarama, Jr., who succeeded Justice Ynares Santiago and inherited her caseload, [71] since the main FASAP case was already denied with
finality.[72]

There can be no arguing with the majority, when it found no fault in the position taken by the Clerk of Court, as explained in the Vidal-Anama Memorandum. [73] It would indeed be unreasonable for the Court to require the
Clerk to divine or speculate on a future and favorable resolution of PALs 2 nd MR and consequently, proceed to raffle the case to the original Members of the Division who participated and concurred in the Decision or denial
of the 1st MR. Hence, as the majority found, there was nothing erroneous with respect to the raffle of the case after the 2 nd MR was filed and that the assignment to Justice Velasco was still proper.

I must however make a marked divergence with the majority with respect to the actions of the Clerk of Court and the Raffle Committee after the issuance of the 20 January 2010 Resolution, penned by Justice Velasco, to grant
the motion for leave to file the 2 nd MR and thus, give new life to the main FASAP case. As the majority explained, throwing the case wide open for another review warrants its removal from Justice Velascos caseload and the
conduct of another raffle to either Justices Peralta or Bersamin, who are the remaining members of the Court that decided the 02 October 2009 Resolution denying PALs 1 st MR. However, the majoritys proposition is not only
riddled with operational inefficiency, but likewise opens all final decisions of any Division to second-guessing by Members of the two other Divisions.

It is incongruent, if not burdensome, for a Member of this Court, acting in a Division, to revive a case that has been denied with finality on a 2 nd MR and then, to throw that same motion back to the other Justices for them to
review anew the substantial merits of the case, which they have already decided. As the new Member-in-Charge of the 2 nd MR of the main FASAP case, Justice Velasco together with the Members of the then reorganized
Third Division found some cause for review of the main FASAP case, when it issued the 20 January 2010 Resolution. Presumably, they reviewed the two unanimously supported ponencias of Justice Ynares-Santiago and
found issues in the case worth looking anew. Having resolved to re-open the case for a third review, the burden should have been on Justice Velasco, as Member-in-Charge, and the other Members of the reorganized Third
Division to hear the parties on the 2nd MR and resolve the matter on a final decision.

For the Court to recognize the action of the Third Division to re-open a final decision and suddenly throw back the responsibility of deciding the 2 nd MR to the original Members who decided the main FASAP case is to
second-guess decisions of the various Divisions of this Court and to allow a peculiar circumvention of our rule on immutability of judgments. The unacceptable contradiction lies in the fact that based on the ponencia of
Justice Brion, a Member of this Court who does not intimately know the facts and merits of the case, can be given authority to re-open a final decision on 2 nd MR and yet be precluded from holding on to the case to decide its
substantial merits. Worse, those Members, who had in fact participated in the deliberations of the Decision and Resolution of the 1 st MR, will now be compelled to review their own findings based on the recommendation of
Member, who instigated the reopening, but will not participate in the same review.

The original Members of Third Division, which issued the 22 July 2008 Decision and 02 October 2009 Resolution, including Justices Peralta and Bersamin, and the five other Justices, [74] have already made known their
unanimous stand on the main FASAP case by their votes thereon. PAL cannot be allowed, by merely the retirement of Justice Ynares Santiago, to question the unfavorable rulings of a Courts Division on a 2 nd MR. The
principle of immutability of final judgment is better protected and upheld by disallowing review of a final decision by a Division on a prohibited second motion for reconsideration based solely on the retirement of
the ponente or a change in the composition of the Division.

Furthermore, the introduction by the majority of the concept of a nominal ponente, to decide whether to open a third review of a decided case on a 2 nd MR, finds no support in any existing rule or jurisprudence. Justice
Velasco, to whom the case was properly raffled, and the members of the reorganized Third Division, at the time the 2 nd MR was filed, had full authority to decide the motion in two respects: (1) whether to accept the 2 nd MR
despite the finality of the decision; and (2) if accepted, subsequently rule on the substantial merits of the main FASAP case based on the arguments in the 2 nd MR. Justice Velasco was in no sense a nominal ponente, who will
make a first determination of the propriety of accepting the 2 nd MR and thereafter forward the second determination of the merits of the case to the ruling ponente the existing Members who were part of the Division which
originally deliberated and decided the main FASAP case. Contrary to the majoritys conclusions, Justice Velasco is the proper ponente to whom the case was raffled to, with the dual responsibilities (1) to decide on accepting
the 2nd MR and (2) if accepted, to resolve the substantial merits thereof.

Second, the subsequent inhibition of Justice Velasco was not cause to resort to the rule on resolving motions for reconsideration. What was called for was the regular application of the ordinary rules on inhibition and
substitution of Members of the Court.

Under the Internal Rules of the Supreme Court, the general rule on resolving motions for reconsideration, as relied on by the majority itself, is expressed in its entirety as follows:

Resolutions of Motions for Reconsideration or Clarification of Decisions or Signed Resolutions and All Other Motions and Incidents Subsequently Filed; Creation of a Special Division . Motions for reconsideration or
clarification of a decision or of a signed resolution and all other motions and incidents subsequently filed in the case shall be acted upon by the ponente and the other Members of the Division who participated in the rendition
of the decision or signed resolution.

If the ponente has retired, is no longer a Member of the Court, is disqualified, or has inhibited himself or herself from acting on the motion for reconsideration or clarification, he or she shall be replaced through raffle by a
new ponente who shall be chosen among the new Members of the Division who participated in the rendition of the decision or signed resolution and who concurred therein . If only one Member of the Court who participated
and concurred in the rendition of the decision or signed resolution remains, he or she shall be designated as the new ponente.

If a Member (not the ponente) of the Division which rendered the decision or signed resolution has retired, is no longer a Member of the Court, is disqualified, or has inhibited himself or herself from acting on the motion for
reconsideration or clarification, he or she shall be replaced through raffle by a replacement Member who shall be chosen from the other Divisions until a new Justice is appointed as replacement for the retired Justice. Upon
the appointment of a new Justice, he or she shall replace the designated Justice as replacement Member of the Special Division.

Any vacancy or vacancies in the Special Division shall be filled by raffle from among the other Members of the Court to constitute a Special Division of five (5) Members.

If the ponente and all the Members of the Division that rendered the Decision or signed Resolution are no longer Members of the Court, the case shall be raffled to any Member of the Court and the motion shall be acted upon
by him or her with the participation of the other Members of the Division to which he or she belongs.

If there are pleadings, motions or incidents subsequent to the denial of the motion for reconsideration or clarification, the case shall be acted upon by the ponente on record with the participation of the other Members of the
Division to which he or she belongs at the time said pleading, motion or incident is to be taken up by the Court.[75] (Emphasis supplied.)

Briefly stated, the general rule is that the ponente of the case and the other Members of the Division who participated in the rendition of the decision or signed resolution shall act upon motions for reconsideration or
clarification. If the ponente had already retired, is no longer a member, is disqualified or has inhibited himself or herself, he or she will be replaced by the Members of the Division who participated in the rendition of the
decision or signed resolution and who concurred therein. This rule is specific only to a first motion for reconsideration, which is permitted under the Rules of Court.

However, a different rule obtains for pleadings, motions or incidents subsequent to the denial of the motion for reconsideration or clarification, including in this case, a 2 nd MR, which is already a prohibited pleading.
The ponente on record shall still continue to act on these motions, pleadings or incidents after the denial of the motion for reconsideration, but with the participation of the Division to which he or she belongs at the time the
said pleading, motion or incident is taken up by the Court, and not by the members of the original Division who participated and concurred in the rendition of the decision or signed resolution. The principle therefore is that
after the resolution of the 1st MR, all incidents subsequent thereto shall stay with the ponente, and if he or she retires, with the Division that decided the case and resolved the 1st MR.

Hence, the general rule relied by the majority cannot be applied in the instant case because what is being resolved is not a 1 stMR (which was in fact already denied with finality) but a 2 nd MR. Being a 2nd MR subsequent to the
denial of the 1st motion for reconsideration, the case was correctly raffled to Justice Velasco, as a regular Member of the Third Division, at the time the 2 nd MR was filed and taken up.

Neither can the inhibition of Justice Velasco result in the return of the resolution of the 2 nd MR to those Members of the Court who participated and concurred in the rendition of the decision or signed resolution in the main
FASAP case. After Justice Velasco resolved to accept the 2 nd MR and then inhibited himself due to close personal relationship, the Raffle Committee applied the regular rules on inhibition and substitutions of members of a
Division.[76] Hence, there was nothing irregular or out of the ordinary when the case was subsequently raffled from Justice Velasco, who had by then moved to the First Division, to Justice Brion, as a member of the other two
Divisions (namely the Third Division, and subsequently the Second Division, after the re-organization):

The case is presently assigned to Justice Velasco, Jr. who inhibited from the case due to close relation to one of the parties.

Following the pertinent provisions of Administrative Circular No. 84-2007, the case must be re-raffled among the Members of the Second and Third Divisions. [77]

The distinctions in applying the rules on resolving 1 st motions for reconsideration and the rules on inhibition between a nominal ponente and a Member-in-Charge are illusory in this case. After Justice Velasco, as Member-in-
Charge, recommended that PALs 2ndMR be given due course, nothing changed the fact that the 2 nd MR continues to be a motion subsequent to the denial of the 1 stMR. Under our Internal Rules, all motions, pleadings or
incidents subsequent to the denial of the first motion for reconsideration or clarification shall be acted upon by the ponente on record.[78] However, since Justice Ynares Santiago had already retired, these subsequent motions,
pleadings or incidents in the main FASAP case will remain with the Third Division which resolved the 1 st MR, but will now be raffled off as an ordinary case among that Divisions present Members, in this instance to Justice
Velasco. When Justice Velasco recused himself afterwards on 17 January 2011, the 2 nd MR nevertheless continues to be treated as a motion subsequent to the denial of a 1 st MR. Much like any ordinary case, the Courts regular
rules arising from a valid inhibition of a Justice now govern, and the special rules for resolution of a 1 st MR in case of the retirement of the ponente still do not apply.[79]Hence, following the regular rules for inhibition and
substitution,[80] the 2nd MR was properly re-raffled out of the hands of Justice Velasco to the Members of the two other Divisions, in this case to Justice Brion of the Third Division, and eventually to the Second Division, after
the re-organization. This is not a simplistic view of the rules of this Court to the main FASAP case but a direct, proper and appropriate application thereof.

Finally, the supposed exigencies, which compelled the recall of the 07 September 2011 Resolution, penned by Justice Brion himself, are infinitesimally and overwhelmingly insufficient to retract a substantial ruling by the
Second Division on PALs 2nd MR.

That the 07 September 2011 Resolution would lapse into finality after the 15 th day, or on 04 October 2011, was not a compelling reason to recall it. At that point, the main FASAP case had already been decided with finality by
the 02 October 2009 Resolution which denied the 1 st MR and PAL did not have any realistic expectation that its 2 nd MR would be given any more judicial consideration. In fact, the recalled 07 September 2011 reiterated the
substantial findings of Third Division, as penned by Justice Ynares Santiago, and ultimately denied the 2 nd MR. In hindsight, the much underscored time constraint was not as shocking to the judicial sense as to warrant
a motu proprio recall by the En Banc of the 07 September 2011 Resolution of the Second Division, because the case had already been decided with finality since 02 October 2009 and was on its third review.

In any case, the concerns raised by the majority regarding the proper raffling of the main FASAP case (albeit properly executed by the Raffle Committee) could have been raised by the party concerned and was in fact
questioned in the third and fourth letters of Atty. Mendoza as well as in the Motion to Vacate filed by PAL. There was no need for the Court En Banc to act with haste prior to the lapse of the 15-day period to move for
reconsideration because the case was already denied with finality twice over (by 02 October 2009 and 07 September 2011 Resolutions). The recall of the 07 September 2011 Resolution by the Second Division was unduly
precipitous and done without proper disclosure to all Members of the Court of the factual circumstances surrounding the issues.

The majoritys emphasis on the fear that the Court would be accused of flip-flopping if the 07 September 2011 Resolution be recalled on the ground of lack of jurisdiction of the Second Division after the lapse of the period is
baseless. This concern erroneously assumes that a ruling made by one of the Divisions can be questioned based on the ground that another Division of this Court has purportedly better jurisdiction over deciding the case. Each
Division sits veritably as the Court En Banc itself. [81] The Divisions of the Court are not inferior bodies to the Court En Banc; neither are they independent tribunals, whose decisions can be appealed on a 2 nd MR to the other
two divisions.

It is axiomatic that jurisdiction once acquired is not lost but continues until the case is finally terminated. [82] The jurisdiction of a court depends upon the state of facts existing at the time it is invoked, and if the jurisdiction
once attaches to the person and subject matter of the litigation, the subsequent happening of events, although they are of such a character as would have prevented jurisdiction from attaching in the first instance, will not
operate to oust jurisdiction already attached.[83] In Mercado v. CA,[84] the Court even went so far as to say that errors committed by the court in the exercise of its jurisdiction will not deprive it of the same:

Now, jurisdiction, once acquired, is not lost by any error in the exercise thereof that might subsequently be committed by the court. Where there is jurisdiction over the person and the subject matter, the decision of all other
questions arising in the case is but an exercise of that jurisdiction. And when a court exercises its jurisdiction, an error committed while engaged in that exercise does not deprive it of the jurisdiction being exercised when the
error is committed. If it did, every error committed by a court would deprive it of jurisdiction and every erroneous judgment would be a void judgment. This, of course, can not be allowed. The administration of justice would
not survive such a rule. (Emphasis supplied.)

Applying the foregoing principles to the factual circumstances of the instant case, this Court through its Second Division was not ousted of its jurisdiction when the case was assigned to Justice Brion and he, together with the
other members of the Second Division, voted to deny PALs 2 nd MR in the recalled 07 September 2011 Resolution. Even assuming arguendo that some errors attended the assignment of the case from Justice Velasco to Justice
Brion by the Raffle Committee (albeit, no such mistake occurred in this instance, as it was done in accordance with our existing rules), this Court through its Second Division cannot be considered by the majority as having
lost jurisdiction by that purported lapse and thus, enable a fourth review by either Justices Peralta or Bersamin.

Neither can a claim of violation of substantive or procedural due process rights of PAL by this alleged mistake in the internal operations of the Court be sustained because it cannot be denied that PAL was afforded all the
opportunity to ventilate its legal claims before the Court. In fact, when the Second Division, speaking through Justice Brion, voted to deny the 2 nd MR, the main FASAP case had already been decided with finality in favor of
FASAP and was on its third review by this Court. Thus, the parties, especially PAL, had been given more than adequate opportunities to argue the cause before this Court. In sum, the purported mistake in the raffle of the case
pointed to by the majority is not so grave and deplorable to our sense of justice as to warrant the retraction of the substantive decision of the members of this Courts Second Division that voted without any dissent to deny the
2nd MR and finally lay to rest this case. The aim here is not just to give definitive resolution to the controversy between the parties in this case but to ensure that final decisions of this Court are indeed final.

Indeed, the recall of the 07 September 2011 Resolution produced the very effect or perception that Justice Brion, speaking for the majority, wanted to avoid flip-flopping on cases decided with finality on account of a
prohibited 2nd MR and personal correspondences by a partys counsel. There can be no surer indication of flip-flopping than the subsequent and sudden denial of the petition in the main FASAP case on a 2 nd MR, despite the
grant of the petition in three rulings by at least ten justices (22 July 2008 Decision, 02 October 2009 Resolution and the recalled 07 September 2011 Resolution).

The view of the majority that the recall of the 07 September 2011 Resolution did not constitute a reversal of the substantial issues is a false view of the effects of such an action. This argument ignores the fact that the
substantial merits of the case is yet again opened for review and the case reverts back to its status after the 20 January 2010 Resolution penned by Justice Velasco, which is the grant of the motion for leave to file the 2 nd MR.
Yet, even Justice Brion in the recalled 07 September 2011 Resolution asserted that the issues raised by PAL in the 2 nd MR have already been discussed and settled by the Court in the July 22, 2008 Decision. [85]It is so odd that
this Court would open the main FASAP case for a fourth review by either Justices Peralta or Bersamin, when no new or earth-shattering argument has been offered that has not been taken up in the past that would warrant a
reversal of the undisputed and repeatedly reiterated finding of this Court that PAL was guilty of illegal dismissal.

Finally, the unfounded allegations by PAL of the mishandling of the raffle of the case (albeit erroneous) which supported a review of the substantial merits of the main FASAP case clearly compelled discussion of the
administrative matters and operations of this Court. Contrary to the insinuation that this possibly violates the 14 February 2011 Resolution of this Court on its internal deliberations, these matters are decidedly outside the
province of judicial privilege, since it treats of issues not with respect to internal deliberations of the merits of the case, but on the procedural and administrative proceedings in raffling and designating the Members of the
Court to handle cases.

Rather than write finis to the controversy hounding PAL and its employees, the Court has opened the flood gates anew for a fourth review of the main FASAP case, which had already achieved finality but has been resurrected
by the mere expedience of supposed confusion in the raffling of the case. If this Court is to adhere to its character as a court of last resort, it must stop giving never-ending refuge to parties who obstinately seek to resist
execution of our final decisions on the sole ground of their counsels creativity in re-labelling a prohibited second motion for reconsideration, or the changing composition of the three Divisions of this Court. Otherwise, the
Court might as well lay to rest in the sepulcher the founding judicial principles of immutability of judgments and res judicata. I am duty-bound to register my dissent from the position taken by the majority in this case.
Nothing has been established in the letters or pleadings to merit the Courts extraordinary or special treatment in reopening for a third time, a unanimously-agreed upon Decision and to assign as new ponente, either of the two
Justices who had twice agreed with that Decision. Nothing can be more unconstitutionally deprivatory of the winning partys right to enforcement of a final judgment.

IN VIEW OF THE FOREGOING, I vote to (a) RECALL the Courts En Banc 04 October 2011 Resolution in A.M. No. 11-10-1-SC; and (b) RETURN the main case in G.R. No. 178083 to the regular Second Division for
implementation of the reinstated 07 September 2011 Resolution. I also vote to GRANT the Motion for Reconsideration dated 17 October 2011 of the Flight Attendants and Stewards Association of the Philippines (FASAP) in
A.M. No. 11-10-1-SC.

I also find that the claim of violation by the Court of the Constitution and the Internal Rules of the Supreme Court argued by Philippine Airlines, Inc., in its Motion to Vacate dated 03 October 2011 and in its Comment dated
03 November 2011 to be WITHOUT ANY MERIT. Hence, the said Motion to Vacate filed by Philippine Airlines, Inc., (PAL) in G. R. No. 178083 should be DENIED.

The letters of Atty. Estelito P. Mendoza, counsel for PAL, to the Clerk of Court dated 13, 16, 20 and 22, all of September 2011 should simply be NOTED. Hence, I submit that the Court should DENY the requests of Atty.
Mendoza in the aforesaid letters for further information, as stated therein, from the Clerk of Court.

PEOPLE vs. SANDIGANBAYAN FOURTH DIVISION

DECISION

BRION, J.:

Before us is a petition for certiorari filed by the People of the Philippines (petitioner) assailing the decision dated March 22, 2002 of the Sandiganbayan [1] in Criminal Case Nos. 20345 and 20346 which granted the demurrers
to evidence filed by Imelda R. Marcos, Jose Conrado Benitez (respondents) and Rafael Zagala.

The Facts

The petition stemmed from two criminal informations filed before the Sandiganbayan, charging the respondents with the crime of malversation of public funds, defined and penalized under Article 217, paragraph 4 of the
Revised Penal Code, as amended. The charges arose from the transactions that the respondents participated in, in their official capacities as Minister and Deputy Minister of the Ministry of Human Settlements ( MHS) under
the MHS Kabisig Program.

In Criminal Case No. 20345, respondents, together with Gilbert C. Dulay, were charged with malversation of public funds, committed as follows:
That on or about April 6, 1984 or sometime and/or [subsequent] thereto, in Pasig, Metro Manila, Philippines, and within the jurisdiction of this Honorable Court, the above-named accused, all public officers charged with the
administration of public funds and as such, accountable officers, Imelda R. Marcos being then the Minister of Human Settlements, Jose Conrado Benitez being then the Deputy Minister of Human Settlements and Gilbert C.
Dulay being then [the] Assistant Manager for Finance, Ministry of Human Settlements, while in the performance of their official functions, taking advantage of their positions, acting in concert and mutually helping one
another thru manifest partiality and evident bad faith did then and there, willfully, unlawfully and criminally, in a series of anomalous transactions, abstract the total amount of P57.954 Million Pesos (sic), Philippine Currency
from the funds of the Ministry of Human Settlements in the following manner: accused Conrado Benitez approved the series of cash advances made and received by Gilbert C. Dulay, and made it appear that the funds were
transferred to the University of Life, a private foundation represented likewise by Gilbert C. Dulay when in truth and in fact no such funds were transferred while Imelda R. Marcos concurred in the series of such cash
advances approved by Jose Conrado Benitez and received by Gilbert C. Dulay and in furtherance of the conspiracy, in order to camouflage the aforesaid anomalous and irregular cash advances and withdrawals, Imelda R.
Marcos requested that the funds of the KSS Program be treated as Confidential Funds; and as such be considered as Classified Information; and that the above-named accused, once in possession of the said aggregate amount
of P57.954 Million Pesos (sic), misappropriated and converted the same to their own use and benefit to the damage and prejudice of the government in the said amount.

CONTRARY TO LAW. [Emphasis ours][2]

In Criminal Case No. 20346, respondents together with Zagala were charged with malversation of public funds under these allegations:

That on or about April 6 to April 16, 1984 [3] and/or sometime or subsequent thereto, in Pasig, Metro Manila, Philippines, and within the jurisdiction of this Honorable Court, the above-named accused, all public officers
charged with the administration of public funds and as such, accountable officers, Imelda R. Marcos being then the Minister of Human Settlements, Jose Conrado Benitez being then the Deputy Minister of Human
Settlements[,] and Rafael Zagala being then [the] Assistant Manager for Regional Operations and at the same time Presidential Action Officer, while in the performance of their official functions, taking advantage of their
positions, acting in concert and mutually helping one another thru manifest partiality and evident bad faith[,] did then and there, willfully, unlawfully and criminally, in a series of anomalous transactions, abstract from the
funds of the Ministry of Human Settlements the total amount of P40 Million Pesos (sic), Philippine Currency, in the following manner: Jose Conrado Benitez approved the cash advances made by Rafael Zagala and Imelda R.
Marcos concurred in the series of cash advances approved by Jose Conrado Benitez in favor of Rafael G. Zagala; and in furtherance of the conspiracy, Imelda R. Marcos in order to camouflage the aforesaid anomalous and
irregular cash advances, requested that funds of the KSS Program be treated as Confidential Funds; and as such be considered as Classified Information; and the above-named accused, once in possession of the total amount
of P40 Million Pesos (sic), misappropriated and converted the same to their own use and benefit to the damage and prejudice of the government in the said amount.

CONTRARY TO LAW. [Emphasis ours][4]

Only the respondents and Zagala were arraigned for the above charges to which they pleaded not guilty; Dulay was not arraigned and remains at large. On March 15, 2000, Zagala died, leaving the respondents to answer the
charges in the criminal cases.

After the pre-trial conference, a joint trial of the criminal cases ensued. The prosecutions chief evidence was based on the lone testimony of Commission of Audit ( COA) Auditor Iluminada Cortez and the documentary
evidence used in the audit examination of the subject funds.[5]

The gist of COA Auditor Cortez direct testimony was summarized by the Sandiganbaya, as follows:

In Criminal Case No. 20345

[s]he was appointed on March 31, 1986 by then COA Chairman Teofisto Guingona, Jr. to head a team of COA auditors. Upon examination of the documents, she declared that an amount of P100 Million Pesos (sic) from the
Office of Budget and Management was released for the KSS Project of the Ministry of Human Settlements (MHS) by virtue of an Advice of Allotment for Calendar Year 1984. Also, an amount of P42.4 Million Pesos (sic)
was separately disbursed for the Kabisig Program of the Ministry of Human Settlements. With regard to the amount of P100 Million Pesos (sic) received by the MHS, P60 Million Pesos (sic) [was] disbursed through cash
advances. Of the P60 Million Pesos (sic) in cash advances, accused Zagala received P40 Million Pesos (sic) in four (4) disbursements while accused Dulay received the remaining P20 Million Pesos (sic) in two
disbursements.

With respect to accused Rafael Zagala, the cash advances consist of four (4) disbursement vouchers in the amount of P5 Million Pesos (sic), P10 Million Pesos (sic), P10 Million Pesos (sic) and P15 Million Pesos (sic). All of
these vouchers are in the name of accused Zagala as claimant and accused Benitez as approving officer and are accompanied by their corresponding Treasury Warrants that were countersigned by accused Benitez and
approved by accused Dulay.

In contrast, x x x a disbursement voucher in the amount of P10 Million Pesos (sic) was drawn in favor of accused Gilbert Dulay and approved by accused Benitez. Pursuant to this, a Treasury Warrant was issued to the order
of accused Dulay, countersigned by accused Benitez and approved by accused Zagala. Another voucher was drawn in favor of accused Dulay in the amount of P10 Million Pesos (sic) and approved by accused Benitez. Again,
a Treasury Warrant was issued to the order of accused Dulay in the amount of P10 Million Pesos (sic), which was countersigned by accused Benitez and approved by accused Zagala.

x x x [A]ccused Marcos sent a letter to then President Ferdinand E. Marcos requesting that the fund intended for the KSS Project in the amount of P100 Million Pesos (sic) be deemed as Confidential Fund.

x x x [T]he liquidation of accused Zagalas account, which was contained in a Journal Voucher dated November 27, 1984, was without any supporting documents. Upon this discovery, witness requested and secured a
certification from the Manager of the National Government Audit Office to the effect that the COA did not receive any document coming from the MHS. However, this liquidation voucher which contained figures in the total
amount of P50 Million Pesos (sic), comprised the entire cash advances of accused Zagala in the amount of P40 Million Pesos (sic) and the P10 Million Pesos (sic) cash advance made by accused Dulay. Since the amount
of P10 Million Pesos (sic) was already contained in Zagalas Journal Voucher, the witness and her team of auditors tried to locate the remaining P10 Million Pesos (sic) and found out that accused Dulay had liquidated the
same amount.[6] (footnotes omitted)

According to COA Auditor Cortez, Zagalas cash advances were supported by a liquidation report and supporting documents submitted to the resident auditor even before the P100 Million Kilusang Sariling Sikap (KSS) fund
was made confidential.[7] The witness also testified that the COA resident auditor found no irregularity in this liquidation report. [8]

COA Auditor Cortez stated that since the P100 Million KSS fund was classified as confidential, the liquidation report should have been submitted to the COA Chairman who should have then issued a credit memo. No credit
memo was ever found during the audit examination of the MHS accounts. [9] COA Auditor Cortez admitted that she did not verify whether the supporting documents of Zagalas cash advances were sent to the COA Chairman.
[10]

Respondent Marcos was prosecuted because of her participation as Minister of the MHS, in requesting that the P100 Million KSS fund be declared confidential. Respondent Benitez was prosecuted because he was the
approving officer in these disputed transactions.

In Criminal Case No. 20346

Regarding the Kabisig Program of the MHS, the COA team of auditors examined the vouchers of the MHS, which upon inspection revealed that there were at least three (3) memoranda of agreements entered into between the
MHS and University of Life (UL). With reference to the first Memorandum of Agreement dated July 2, 1985, an amount of P21.6 Million Pesos (sic) was transferred by the MHS to the UL to pay for the operations of the
Community Mobilization Program and the Kabisig Program of the MHS. Accused Benitez as the Deputy Minister of the MHS and accused Dulay as Vice President of the UL were the signatories of this agreement. Although
there is no disbursement voucher in the records, it is admitted that a Treasury Warrant was drawn in the sum of P21.6 Million Pesos (sic). The second Memorandum of Agreement dated July 10, 1985 provided for a fund
transfer in the amount of P3.8 Million Pesos (sic) for the Human Resources Development Plan of the MHS. Accordingly, a Disbursement Voucher certified by accused Dulay and approved by accused Benitez was drawn in
the sum of P3.8 Million Pesos (sic). The third Memorandum of Agreement in the sum of P17 Million Pesos (sic) was granted for the acquisition of motor vehicles and other equipment to support the Kabisig Program of the
MHS. For that reason, a Disbursement Voucher pertaining thereto accompanied by a Treasury Warrant was drafted.

Similarly, the witness declared that although they did not examine any of the records of the UL, the abovementioned sums were not received by the UL based on the affidavit of the UL Comptroller named Pablo Cueto. In the
same way, an affidavit was executed by the UL Chief Accountant named Ernesto Jiao attesting that there is no financial transaction on record covering the purchase of motor vehicles. Again, witness Cortez admitted that they
did not examine the books of the UL on this matter but only inquired about it from Mr. Jiao. The affidavit of Mr. Jiao with respect to the nonexistence of the purchases of motor vehicles was further corroborated by the
affidavit of one Romeo Sison, who was the Administrative Assistant of the Property Section of the UL.
The respective treasury warrants representing the various sums of P21.6 Million Pesos (sic), P17 Million Pesos (sic) and P3.8 Million Pesos (sic) were subsequently deposited with the United Coconut Planters Bank (UCPB),
Shaw Blvd. Branch, Mandaluyong, under various accounts. Soon after, several checks were drawn out of these funds as evidenced by the Photostat copies recovered by the COA auditors. In the course of the testimony of the
witness, she revealed that her team of auditors classified said several checks into different groups in accordance with the account numbers of the said deposits.

x x x [T]he amount of P3.8 Million Pesos (sic), the same was intended for the Human Resource Development Plan of the UL. x x x [T]he aforesaid amount is not a cash advance but rather paid as an expense account, which is
charged directly as if services have already been rendered. Hence, UL is not mandated to render liquidation for the disbursement of P3.8 Million Pesos (sic).

The sums of P21.6 Million Pesos (sic) and P17 Million Pesos (sic) were deposited under x x x the name of the UL Special Account. Out of these deposits, the following first sequence of withdrawals of checks [11] payable
either to its order or to cash x x x reached a total sum of P5,690,750.93 Million Pesos (sic).

The second list of checks[12] [which] consists of numerous [Managers] Checks x x x reached the amount of P18,416,062.15.

A third set of checks allegedly consists of nine (9) ordinary checks and two (2) managers checks in the sum of P1,971,568.00 and P4,566,712.18[,] respectively. x x x

Moreover, [a] witness confirmed that as regards the amount of P17 Million Pesos (sic) intended for the acquisition of motor vehicles, P10.4 Million Pesos (sic) was spent for the purchase of some five hundred (500) units of
motorcycles while P2.1 Million Pesos (sic) was used to procure eight (8) brand new cars. The balance of P4.5 Million Pesos (sic) was later refunded to the MHS. As regards the five hundred (500) units of motorcycle, the
Presidential Task Force furnished the witness documents attesting to the transfers of some two hundred seventy-one (271) units of motorcycles from the UL to the MHS by virtue of Deed of Assignments allegedly executed on
February 17, 1986. However, of the two hundred seventy-one (271) units of motorcycle, only one hundred ninety (190) units were covered with complete documents. With respect to the eight (8) brand new cars, the team of
auditors did not see any registration papers. (footnotes omitted; underscorings ours) [13]

COA Auditor Cortez admitted that the audit team did not conduct a physical inventory of these motor vehicles; it based its report on the information given by the Presidential Task Force. [14] She emphasized that the audit team
found it highly irregular that the motor vehicles were registered in the name of University of Life (UL) and not in the name of MHS; and for this reason, she believed that no proper liquidation was made of these vehicles by
MHS.[15]

After COA Auditor Cortez testimony, the prosecution submitted its formal offer of evidence and rested its case.

Subsequently, separate motions to dismiss the criminal cases, by way of demurrers to evidence, were filed by Zagala and the respondents on November 15, 1997, January 5, 1998 and January 28, 1998; on January 27,
1998, the prosecution filed a Manifestation stating that it was not opposing the demurrers to evidence. [16]

The Sandiganbayans Ruling

The Sandiganbayan granted the demurrers to evidence and acquitted the respondents in its assailed decision dated March 22, 2002. The dispositive portion of this decision reads:
Wherefore, the Demurrers to Evidence are hereby granted. Accused Imelda R. Marcos, Jose Conrado Benitez and Gilbert C. Dulay are hereby acquitted of the crime of Malversation in Criminal Case No. 20435 for
insufficiency of evidence to prove their guilt beyond reasonable doubt. Accused Imelda R. Marcos, Jose Conrado Benitez and Rafael G. Zagala are likewise acquitted of the offense of Malversation in Criminal Case No.
20346 for insufficiency of evidence in proving their guilt beyond reasonable doubt.[17]

In dismissing these criminal cases, the Sandiganbayan found no evidence of misappropriation of the subject funds in the two criminal cases considering the unreliability and incompleteness of the audit report. [18]

The Issues

The issues for our consideration are:

1. Whether the prosecutors actions and/or omissions in these cases effectively deprived the State of its right to due process; and

2. Whether the Sandiganbayan gravely abused its discretion in granting the demurrers to evidence of the respondents.

The petitioner claims that the State was denied due process because of the nonfeasance committed by the special prosecutor in failing to present sufficient evidence to prove its case. It claims that the prosecutor failed to
protect the States interest in the proceedings before the Sandiganbayan. To support its position, petitioner cites the case of Merciales v. Court of Appeals [19] where the Court nullified the dismissal of the criminal cases due to
the serious nonfeasance committed by the public prosecutor.

The petitioner argues that the Sandiganbayan committed grave abuse of discretion amounting to lack or excess of jurisdiction that resulted in a miscarriage of justice prejudicial to the States interest when it took the demurrers
to evidence at face value instead of requiring the presentation of additional evidence, taking into consideration the huge amounts of public funds involved and the special prosecutors failure to oppose the demurrers to
evidence.

The Courts Ruling

We do not find the petition meritorious.

We are called to overturn a judgment of acquittal in favor of the respondents brought about by the dismissal, for insufficiency of evidence, of the malversation charged in the two criminal cases. As a rule, once the court grants
the demurrer, the grant amounts to an acquittal; any further prosecution of the accused would violate the constitutional proscription on double jeopardy.[20] Notably, the proscription against double jeopardy only envisages
appeals based on errors of judgment, but not errors of jurisdiction.Jurisprudence recognizes two grounds where double jeopardy will not attach, these are: (i) on the ground of grave abuse of discretion amounting to lack or
excess of jurisdiction;[21] and/or (ii) where there is a denial of a partys due process rights. [22]
A judgment of acquittal sought to be reviewed on the basis of grave abuse of discretion amounting to lack or excess of jurisdiction or on the ground of denial of due process implies an invalid or otherwise void judgment. If
either or both grounds are established, the judgment of acquittal is considered void; as a void judgment, it is legally inexistent and does not have the effect of an acquittal. [23] Thus, the defense of double jeopardy will not lie in
such a case.[24]

Accordingly, a review of a dismissal order of the Sandiganbayan granting an accuseds demurrer to evidence may be done via the special civil action of certiorari under Rule 65, based on the narrow ground of grave abuse of
discretion amounting to lack or excess of jurisdiction. [25] Mere allegations of grave abuse of discretion, however, are not enough to establish this ground; so also, mere abuse of discretion is not sufficient. [26] On the petitioner
lies the burden of demonstrating, plainly and distinctly, all facts essential to establish its right to a writ of certiorari.[27]

In the present case, the petitioner particularly imputes grave abuse of discretion on the Sandiganbayan for its grant of the demurrer to evidence, without requiring the presentation of additional evidence and despite the lack of
basis for the grant traceable to the special prosecutors conduct. The special prosecutors conduct allegedly also violated the States due process rights.

There is grave abuse of discretion when the public respondent acts in a capricious, whimsical, arbitrary or despotic manner, amounting to lack of jurisdiction, in the exercise of its judgment. [28] An act is done without
jurisdiction if the public respondent does not have the legal power to act or where the respondent, being clothed with the power to act, oversteps its authority as determined by law, [29] or acts outside the contemplation of law.
For the grant of the present petition, the petitioner must prove, based on the existing records, action in the above manner by the Sandiganbayan.

I. States right to due process

In People v. Leviste,[30] we stressed that the State, like any other litigant, is entitled to its day in court; in criminal proceedings, the public prosecutor acts for and represents the State, and carries the burden of diligently
pursuing the criminal prosecution in a manner consistent with public interest. [31] The States right to be heard in court rests to a large extent on whether the public prosecutor properly undertook his duties in pursuing the
criminal action for the punishment of the guilty.[32]

The prosecutors role in the administration of justice is to lay before the court, fairly and fully, every fact and circumstance known to him or her to exist, without regard to whether such fact tends to establish the guilt or
innocence of the accused and without regard to any personal conviction or presumption on what the judge may or is disposed to do. [33] The prosecutor owes the State, the court and the accused the duty to lay before the court
the pertinent facts at his disposal with methodical and meticulous attention, clarifying contradictions and filling up gaps and loopholes in his evidence to the end that the courts mind may not be tortured by doubts; that the
innocent may not suffer; and that the guilty may not escape unpunished. [34] In the conduct of the criminal proceedings, the prosecutor has ample discretionary power to control the conduct of the presentation of the prosecution
evidence, part of which is the option to choose what evidence to present or who to call as witness. [35]

The petitioner claims that the special prosecutor failed in her duty to give effective legal representation to enable the State to fully present its case against the respondents, citing Merciales v. Court of Appeals[36] where we
considered the following factual circumstances - (1) the public prosecutor rested the case knowing fully well that the evidence adduced was insufficient; (2) the refusal of the public prosecutor to present other witnesses
available to take the stand; (3) the knowledge of the trial court of the insufficiency of the prosecutions evidence when the demurrer to evidence was filed before it; and (4) the trial courts failure to require the presentation of
additional evidence before it acted on the demurrer to evidence. All these circumstances effectively resulted in the denial of the States right to due process, attributable to the inaction of the public prosecutor and/or the trial
court.

Merciales was followed by Valencia v. Sandiganbayan,[37] where we recognized the violation of the States right to due process in criminal proceedings because of sufficient showing that the special
prosecutor haphazardly handled the prosecution. In upholding the prosecutions right to present additional evidence under the circumstances, Valencia took into account the fact that the former special prosecutor rested his
case solely on the basis of a Joint Stipulation of Facts that was not even signed by the accused.
These two cases, to our mind, not only show the existing factual considerations [38] that led to the conclusion that the public prosecutor willfully and deliberately failed to perform his mandated duty to represent the States
interest, but stress as well that there must be sufficient facts on record supporting this conclusion. In the absence of these supporting facts, no conclusion similar to the Merciales and Valencia outcomes can be reached.

The requirement for supporting factual premises finds complement in the general rule founded on public policy [39] that the negligence or mistake of a counsel binds the client. While this rule admits of exceptions [40] (as when
the gross negligence of a counsel resulted in depriving the client of due process), the application of the exception likewise depends on a showing of facts on record demonstrating a clear violation of the clients due process
rights.

II. The factual premises cited in the petition and the issue of due process

In the present case, we find that the State was not denied due process in the proceedings before the Sandiganbayan. There was no indication that the special prosecutor deliberately and willfully failed to present available
evidence or that other evidence could be secured. For purposes of clarity, we shall address the instances cited in the petition as alleged proof of the denial of the States due process rights, and our reasons in finding them
inadequate.

First. The petitioner bewails the alleged lack of efforts by the special prosecutor to ascertain the last known addresses and whereabouts, and to compel the attendance of Pablo C. Cueto, Ernesto M. Jiao and Romeo F. Sison,
UL officers who executed affidavits in connection with the alleged anomalous fund transfers from MHS to UL.

The special prosecutor likewise allegedly did not present the records of the UL to show that the sums under the Memoranda of Agreement were not received by UL (based on the affidavit of UL Comptroller Cueto) and that
no financial transactions really took place for the purchase of the motor vehicles (based on the affidavit of UL Chief Accountant Jiao, as corroborated by the affidavit of UL Administrative Assistant Sison).

We note that, other than making a claim that these instances demonstrate the serious nonfeasance by the special prosecutor, the petitioner failed to offer any explanation showing how these instances deprived the State of due
process. An examination of the records shows that the affidavits of Cueto, [41] Jiao and Sison surfaced early on to prove the alleged anomalous fund transfers from MHS to UL. The records further show that during the hearing
of December 5, 1995 - when the special prosecutor was asked by the presiding judge what she intended to do with these affidavits the special prosecutor replied that she planned to present Jiao and Cueto who were the chief
accountant and the designated comptroller, respectively, of UL. [42] The same records, however, show that, indeed, an attempt had been made to bring these prospective witnesses to court; as early as April 20, 1994, subpoenas
had been issued to these three individuals and these were all returned unserved because the subjects had RESIGNED from the service sometime in 1992, and their present whereabouts were unknown. [43]

We consider at this point that these individuals executed their respective affidavits on the alleged anomalous transactions between MHS and UL sometime in 1986; from that period on, and until the actual criminal prosecution
started in 1994, a considerable time had elapsed bringing undesirable changes one of which was the disappearance of these prospective witnesses.

Significantly, no evidence exists or has been submitted showing that the special prosecutor willfully and deliberately opted not to present these individuals. The petitioner also failed to show that the whereabouts of these
individuals could have been located by the exercise of reasonable diligence in order to prove that the special prosecutor had been remiss in performing her duties. We can in fact deduce from the allegations in the petition that
even at present, the petitioner has not and cannot ascertain the whereabouts of these prospective witnesses.

Further, the records show that the affidavits of these individuals (who denied the transfer of the funds in the amounts of P21.6 Million, P3.8 Million and P17 Million from MHS to UL) were refuted by contrary evidence of the
prosecution itself. The records indicate that the special prosecutor presented treasury warrants and disbursement vouchers issued in the name of UL, bearing the respective amounts for transactions between MHS and UL. [44]
The special prosecutor admitted that the audit team failed to examine the records of UL to support the prosecutions allegation of an anomalous fund transfer. COA Auditor Cortez admitted, too, that the amounts (P21.6 Million
and P3.8 Million) were transferred[45] to UL[46] and that a portion of the amount of P17 Million, i.e., P12.5 Million, was used to purchase 500 motorcycles and eight cars, while the remaining amount of P4.5 Million was
refunded by UL to MHS.[47]

Under these facts, and in the absence of indicators too that other persons could have testified, we cannot give weight to the petitioners allegation that no efforts were exerted by the special prosecutor. On the contrary, we find
under the circumstances that the special prosecutor exerted reasonable efforts to present these individuals in court, but failed to do so for reasons beyond her control. One of these reasons appears to be the simple lack of
concrete evidence of irregularities in the respondents handling of the MHS funds.

Second. The petitioner alleged that the special prosecutor failed to present the resident auditor to testify on the physical inventory of the vehicles, or to produce documents showing that an inspection was conducted on the
vehicles.

The prosecutions theory, as the records would show, was to prove that there had been misappropriation of funds since the motor vehicles were registered in ULs name instead of the MHS. [48] In this regard, the special
prosecutor presented COA Auditor Cortez who testified that the audit team did not assail the existence of the motor vehicles and she also did not dispute that the amount of P12.5 Million (out of P17 Million) was used to
purchase 500 motorcycles and eight cars. The witness stated that the audit team was more concerned with the documentation of the disbursements made rather than the physical liquidation (inventory) of the funds. [49] The
witness further explained that it was the Presidential Task Force which had the duty to keep track of the existence of the motor vehicles. [50] She reiterated that the audit team was only questioning the registration of the
vehicles; it never doubted that the vehicles were purchased.[51]

More importantly, COA Auditor Cortez stated that at the time the team made the audit examination in April 1986, 500 registration papers supported the purchase of these motorcycles; [52] none of the audit team at that time
found this documentation inadequate or anomalous. [53] The witness also stated that the Presidential Task Force gave the audit team a folder showing that P10.4 Million was used to purchase the motorcycles and P2.1 Million
was used to purchase the cars.[54] Checks were presented indicating the dates when the purchase of some of the motor vehicles was made. [55] COA Auditor Cortez also testified that 270 of these motorcycles had already been
transferred by UL in the name of MHS.[56] She stated that all the documents are in order except for the registration of the motor vehicles in the name of UL. [57]

Given these admissions regarding the existence of the motor vehicles, the presentation of the resident auditor who would simply testify on the physical inventory of the motor vehicles, or that an inspection had been conducted
thereon, was unnecessary.Her presentation in court would not materially reinforce the prosecutions case; thus, the omission to present her did not deprive the State of due process. To repeat, the prosecutions theory of
misappropriation was not based on the fact that the funds were not used to purchase motor vehicles, in which case, the testimony of the resident auditor would have had material implications. Rather, the prosecutions theory,
as established by the records, shows that the imputed misappropriation stemmed from the registration of the motor vehicles in ULs name an administrative lapse in light of the relationship of UL to MHS simply as an
implementing agency.[58]

Third. Despite the Sandiganbayans warning on June 7, 1996 that the various checks covering the cash advances for P40 Million were photostatic copies, the special prosecutor still failed to present the certified copies from the
legal custodian of these commercial documents.

The petitioner faults the special prosecutor for failing to present the original copies of the checks drawn out of the P21.6 Million and P17 Million combination account from the United Coconut Planters Bank (UCPB), as well
as the P3.8 Million expense account with the same bank. The presentation would have allegedly proven the misappropriation of these amounts. [59]

Records show that instead of presenting the original copies of these checks, the special prosecutor tried to establish, through the testimony of COA Auditor Cortez, that these checks were photocopied from the original checks
in the possession of UCPB, which were obtained through the assistance of the UL management. [60] Thus, while the originals of these checks were not presented, COA Auditor Cortez testified that the photostatic copies were
furnished by the UCPB which had custody of the original checks. [61]Further, the witness also testified that at the time she made the examination of these documents, the entries thereon were legible. [62]She also presented a
summary schedule of the various micro film prints of the UCPB checks that she examined.[63]
At any rate, we observe that the defense never objected[64] to the submission of the photostatic copies of the UCPB checks as evidence, thus making the production of the originals dispensable. This was our view in Estrada v.
Hon. Desierto[65] where we ruled that the production of the original may be dispensed with if the opponent does not dispute the contents of the document and no other useful purpose would be served by requiring its
production. In such case, we ruled that secondary evidence of the content of the writing would be received in evidence if no objection was made to its reception.[66] We note, too, that in addition to the defenses failure to object
to the presentation of photostatic copies of the checks, the petitioner failed to show that the presentation of the originals would serve a useful purpose, pursuant to our ruling in Estrada.

We reiterate in this regard our earlier observation that other than enumerating instances in the petition where the State was allegedly deprived of due process in the principal case, no explanation was ever offered by the
petitioner on how each instance resulted in the deprivation of the States right to due process warranting the annulment of the presently assailed Sandiganbayan ruling.

Fourth. The petitioner faults the special prosecutor for making no effort to produce the final audit report dated June 6, 1986, referred to in the last paragraph of the Affidavit [67] dated June 10, 1987 of COA Auditor Cortez.

The records show that although this final audit report dated June 6, 1986 was not presented in court, the prosecution questioned her on the contents of this audit report since she had a hand in its preparation. COA Auditor
Cortez directly testified on the audit teams findings and examination, which took three hearings to complete; the cross-examination of COA Auditor Cortez took two hearings to complete; and subsequently, the Sandiganbayan
ordered that a clarificatory hearing be held with respect to COA Auditor Cortez testimony. In addition to her testimony, the special prosecutor did present, too, other pieces of documentary evidence (from which the final audit
report was based) before the Sandiganbayan.

Under these circumstances, we are reluctant to consider the special prosecutors omission as significant in the petitioners allegation of serious nonfeasance or misfeasance.

Fifth. The petitioner presents the special prosecutors failure to oppose the demurrer to evidence as its last point and as basis for the applicability of the Merciales ruling.

The failure to oppose per se cannot be a ground for grave abuse of discretion. The real issue, to our mind, is whether the special prosecutor had basis to act as she did. As the point-by-point presentation above shows, the
dismissal of the criminal cases cannot be attributed to any grossly negligent handling by the special prosecutor. To begin with, the prosecutions case suffered from lack of witnesses because, among others, of the time that
elapsed between the act charged and the start of the actual prosecution in 1994; and from lack of sufficient preparatory investigation conducted, resulting in insufficiency of its evidence as a whole. In sum, in the absence of
circumstances approximating the facts of Merciales and Valencia, which circumstances the petitioner failed to show, no basis exists to conclude that the special prosecutor grossly erred in failing to oppose the demurrer to
evidence.

Neither are we persuaded by the petitioners position that the special prosecutors Manifestation of non-opposition to the demurrer needed to be submitted to, and approved by, her superiors. [68] The petitioners argument assumes
that the special prosecutor lacked the necessary authority from her superiors when she filed her non-opposition to the demurrers to evidence. This starting assumption, in our view, is incorrect. The correct premise and
presumption, since the special prosecutor is a State delegate, is that she had all incidental and necessary powers to prosecute the case in the States behalf so that her actions as a State delegate bound the State. We do not
believe that the State can have an unbridled discretion to disown the acts of its delegates at will unless it can clearly establish that its agent had been grossly negligent [69] or was guilty of collusion with the accused or other
interested party,[70] resulting in the States deprivation of its due process rights as client-principal.

Gross negligence exists where there is want, or absence of or failure to exercise slight care or diligence, or the entire absence of care. It involves a thoughtless disregard of consequences without exerting any effort to avoid
them.[71] As the above discussions show, the State failed to clearly establish the gross negligence on the part of the special prosecutor (or to show or even allege that there was collusion in the principal case between the special
prosecutor and the respondents) that resulted in depriving the petitioner of its due process rights; and, consequently prevent the application of the rule on double jeopardy. If at all, what the records emphasized, as previously
discussed, is the weakness of the prosecutions evidence as a whole rather than the gross negligence of the special prosecutor. In these lights, we must reject the petitioners position.

III. Grave abuse of discretion

Under the Rules on Criminal Procedure, the Sandiganbayan is under no obligation to require the parties to present additional evidence when a demurrer to evidence is filed. In a criminal proceeding, the burden lies with the
prosecution to prove that the accused committed the crime charged beyond reasonable doubt, as the constitutional presumption of innocence ordinarily stands in favor of the accused. Whether the Sandiganbayan will
intervene in the course of the prosecution of the case is within its exclusive jurisdiction, competence and discretion, provided that its actions do not result in the impairment of the substantial rights of the accused, or of the
right of the State and of the offended party to due process of law.[72]

A discussion of the violation of the States right to due process in the present case, however, is intimately linked with the gross negligence or the fraudulent action of the States agent. The absence of this circumstance in the
present case cannot but have a negative impact on how the petitioner would want the Court to view the Sandiganbayans actuation and exercise of discretion.

The court, in the exercise of its sound discretion, may require or allow the prosecution to present additional evidence (at its own initiative or upon a motion) after a demurrer to evidence is filed. This exercise, however, must
be for good reasons and in the paramount interest of justice. [73] As mentioned, the court may require the presentation of further evidence if its action on the demurrer to evidence would patently result in the denial of due
process; it may also allow the presentation of additional evidence if it is newly discovered, if it was omitted through inadvertence or mistake, or if it is intended to correct the evidence previously offered. [74]

In this case, we cannot attribute grave abuse of discretion to the Sandiganbayan when it exercised restraint and did not require the presentation of additional evidence, given the clear weakness of the case at that point. We note
that under the obtaining circumstances, the petitioner failed to show what and how additional available evidence could have helped and the paramount interest of justice sought to be achieved. It does not appear that pieces of
evidence had been omitted through inadvertence or mistake, or that these pieces of evidence are intended to correct evidence previously offered. More importantly, it does not appear that these contemplated additional pieces
of evidence (which the special prosecutor allegedly should have presented) were ever present and available. For instance, at no point in the records did the petitioner unequivocally state that it could present the three UL
officers, Cueto, Jiao and Sison. The petitioner also failed to demonstrate its possession of or access to these documents (such as the final audit report) to support the prosecutions charges the proof that the State had been
deprived of due process due to the special prosecutors alleged inaction.

IIIa. Grave abuse of discretion and the demurrers to evidence

In Criminal Case No. 20345 that charged conspiracy for abstracting P57.59 Million out of the P100 Million KSS fund, the prosecutions evidence showed that P60 Million of this fund was disbursed by respondent Benitez, as
approving officer, in the nature of cash advances to Zagala (who received a total amount of P40 Million) and Dulay (who received P20 Million).

To prove the misappropriation, the prosecution tried to establish that there was an irregularity in the procedure of liquidating these amounts on the basis of COA Auditor Cortez testimony that the liquidation should have been
made before the COA Chairman (not to the resident auditor of the MHS) because these funds were confidential. [75]

Quite evident from the prosecutions position is that it did not dispute whether a liquidation had been made of the whole amount of P60 Million; rather, what it disputed was the identity of the person before whom the
liquidation should have been made. Before the directive of former President Marcos was made which declared the KSS funds (of which the P60 Million formed part) to be confidential, the liquidation of this amount must be
made before the resident auditor of the MHS. With the issuance of the directive, liquidation should have been made to the COA Chairman who should have then issued a credit memo to prove proper liquidation. [76]

To justify conviction for malversation of public funds, the prosecution has to prove that the accused received public funds or property that they could not account for, or was not in their possession and which they could not
give a reasonable excuse for the disappearance of such public funds or property. [77] The prosecution failed in this task as the subject funds were liquidated and were not shown to have been converted for personal use by the
respondents.

The records reveal that the amounts of P50 Million and P10 Million were liquidated by Zagala and Dulay, respectively. [78] On Zagalas part, the liquidation of P50 Million (P10 Million of which was the cash advance given to
Dulay) was made to resident auditor Flerida V. Creencia on September 25, 1984 or before the directive of former President Marcos (declaring the said funds confidential) was issued on November 7, 1984. [79] Hence, at the
time the liquidation of the amount was made, the liquidation report submitted to the resident auditor was the proper procedure of liquidation. Respondent Benitez, for his part, submitted Journal Voucher No. 4350208 dated
November 27, 1984 stating, among others, that as early as June 22, 1984, the supporting papers for the liquidation of the P50 Million had already been submitted to the COA.[80]
Moreover, even if the liquidation should have been made in compliance with the former Presidents directive, the prosecutions evidence did not sufficiently establish the non-existence of a credit memo. As admitted by COA
Auditor Cortez, certain documents they were looking for during the audit examination (including the credit memo) could no longer be located after the (EDSA) revolution. [81] She further declared that she did not know if COA
Chairman Alfredo Tantingco complied with the required audit examination of the liquidated P60 Million.[82]

In Criminal Case No. 20346, respondents are sought to be held liable under the criminal information for converting P40 Million (subdivided to P21.6 Million, P3.8 Million and P17 Million or a total of P42.4 Million) to their
own use given that these funds were never allegedly transferred to UL, the intended beneficiary.

Records show that the disputed amount allegedly malversed was actually P37,757,364.57 Million because of evidence that an amount of P4.5 Million was returned by respondent Benitez. [83] As previously mentioned, the
documentary evidence adduced reveals the existence of treasury warrants and disbursement vouchers issued in the name of UL bearing the amounts of P21.6 Million, P3.8 Million and P17 Million.[84] Documentary evidence
also exists showing that these amounts were deposited in the UCPB and drawn afterwards by means of checks issued for purchases intended for the Kabisig Program of the MHS.

Except for the appropriated P17 Million, the petitioners evidence does not sufficiently show how the amounts of P21.6 Million and P3.8 Million were converted to the personal use by the respondents. The testimony of COA
Auditor Cortez revealed that documents showing the disbursements of the subject funds were in possession of one Flordeliz Gomez as the Records Custodian and Secretary of UL. For undisclosed reasons, however, COA
Auditor Cortez failed to communicate with Gomez but merely relied on the documents and checks, which the audit team already had in its possession. [85]

This omission, in our view, raises doubts on the completeness and accuracy of the audit examination pertaining to the P21.6 Million and P3.8 Million funds. Such doubt was further strengthened by COA Auditor Cortez
testimony showing that P3.8 Million was listed in the books of the MHS as a direct expense account to which UL is not required to render an accounting or liquidation. [86] Also, she admitted that the amount of P21.6 Million
was contained in a liquidation voucher submitted by Dulay, which was included in the transmittal letter signed by the respondents to the COA and accompanied by a performance report on the KabisigProgram. This
performance report showed that the total amount of P21.6 Million was exhausted in the Kabisig Program.[87]

With respect to the P17 Million, evidence adduced showed that 270 units of the motorcycles have already been transferred in the name of MHS by UL. [88] There is also evidence that the audit team initially found nothing
irregular in the documentation of the 500 motorcycles during the audit examination conducted in April 1986; the same goes for the eight cars purchased.

Under the circumstances, we agree with the Sandiganbayan that registration of these vehicles in ULs name alone did not constitute malversation in the absence of proof, based on the available evidence, to establish that the
respondents benefited from the registration of these motor vehicles in ULs name, or that these motor vehicles were converted by the respondents to their own personal use. [89] In the end, the prosecutions evidence tended to
prove that the subject funds were actually used for their intended purpose.

IV. Conclusion

In dismissing this petition, we observe that the criminal cases might have been prompted by reasons other than injury to government interest as the primary concern.[90] These other reasons might have triggered the hastiness
that attended the conduct of audit examinations which resulted in evidentiary gaps in the prosecutions case to hold the respondents liable for the crime of malversation. [91] As matters now stand, no sufficient evidence exists to
support the charges of malversation against the respondents.Hence, the Sandiganbayan did not commit any grave abuse of discretion amounting to lack or excess of jurisdiction when it granted the demurrers to evidence and,
consequently, dismissed the criminal cases against the respondents.

We take this opportunity to remind the prosecution that this Court is as much a judge in behalf of an accused-defendant whose liberty is in jeopardy, as it is the judge in behalf of the State, for the purpose of safeguarding the
interests of society.[92] Therefore, unless the petitioner demonstrates, through evidence and records, that its case falls within the narrow exceptions from the criminal protection of double jeopardy, the Court has no recourse but
to apply the finality-of-acquittal rule.

WHEREFORE, premises considered, we hereby DENY the petition.

CASE DIGEST

PEOPLE v. SANDIGANBAYAN
G.R. No. 153304-05; 7 February 2012

Brion, J.

FACTS:

The petition stemmed from two criminal informations filed before the Sandiganbayan, charging the respondents with the crime of malversation of public funds, defined and penalized under Art. 217(4) of the RPC.

In the first information, Imelda R. Marcos being then the Minister of Human Settlements (MHS), Jose Conrado Benitez being then the Deputy Minister of Human Settlements and Gilbert Dulay being then the Assistant
Manager for Finance, MHS, while in the performance of their official functions and taking advantage of their positions, were said to have abstracted the total amount of P57.954M. It was alleged that Benitez approved the
series of cash advances made and received by Dulay, and made it appear that the funds were transferred to the University of Life (UL). And in order to camouflage the aforesaid anomalous and irregular cash advances and
withdrawals, Imelda requested that the funds of the Kilusang Sariling Sikap (KSS) Program be treated as Confidential Funds; and as such be considered as Classified Information.

And in the second information, Imelda, Benitez and Rafael Zagala being the Assistant Manager for Regional Operations and at the same time Presidential Action Officer, were also said to have abstracted from the funds of the
Ministry of Human Settlements the total amount of P40M. Similarly, Benitez approved the cash advances made by Zagala and Imelda as well concurred in the series of cash advances. And in furtherance of the conspiracy, the
same way as in the first information, Imelda in order to camouflage the aforesaid anomalous and irregular cash advances, requested that funds of the KSS Program be treated too as Confidential Funds; and be considered as
Classified Information.

According to COA Auditor Iluminada Cortez, who is the lone witness for the prosecution, Zagalas cash advances were supported by a liquidation report and supporting documents submitted to the resident auditor even
before the P100M KSS fund was made confidential. The witness also testified that the COA resident auditor found no irregularity in this liquidation report. It is also of the opinion that since the P100M KSS fund was
classified as confidential, the liquidation report should have been submitted to the COA Chairman who should have then issued a credit memo. No credit memo was ever found during the audit examination of the MHS
accounts. Meanwhile, COA Auditor Cortez admitted that she did not verify whether the supporting documents of Zagalas cash advances were sent to the COA Chairman.

Also, Cortez admitted that the audit team did not conduct a physical inventory of these motor vehicles as it based its report on the information given by the Presidential Task Force. She emphasized that the audit team found it
highly irregular that the motor vehicles were registered in the name of UL and not in the name of MHS; and for this reason, she believed that no proper liquidation was made of these vehicles by MHS.

After COA Auditor Cortez testimony, the prosecution submitted its formal offer of evidence and rested its case.Subsequently, separate motions to dismiss the criminal cases, by way of demurrers to evidence, were filed by
Zagala and the respondents and the prosecution filed a Manifestation stating that it was not opposing the demurrers to evidence. The Sandiganbayan granted the demurrers to evidence and acquitted the respondents

It is the Peoples contention that the Sandiganbayan committed grave abuse of discretion amounting to lack or excess of jurisdiction that resulted in a miscarriage of justice prejudicial to the States interest when it took the
demurrers to evidence at face value instead of requiring the presentation of additional evidence, taking into consideration the huge amounts of public funds involved and the special prosecutors failure to oppose the demurrers
to evidence.

Also, petitioner particularly imputes grave abuse of discretion on the Sandiganbayan for its grant of the demurrer to evidence, without requiring the presentation of additional evidence and despite the lack of basis for the grant
traceable to the special prosecutors conduct. The special prosecutors conduct allegedly also violated the State's due process rights for she failed to oppose the demurrer to evidence. Furthermore, People invoked that that the
non-opposition must be approved by her superiors thus, she lacked the necessary authority when she allowed the demurrers to evidence to proceed.

ISSUE:

Did the Sandiganbayan gravely abused its discretion in granting the demurrers to evidence of the respondents?

HELD:

No. As a rule, once the court grants the demurrer, the grant amounts to an acquittal; any further prosecution of the accused would violate the constitutional proscription on double jeopardy. Notably, the proscription against
double jeopardy only envisages appeals based on errors of judgment, but not errors of jurisdiction. Jurisprudence recognizes two grounds where double jeopardy will not attach, these are: (i) on the ground of grave abuse of
discretion amounting to lack or excess of jurisdiction; and/or (ii) where there is a denial of a party's due process rights. Thus, the Court is called to overturn a judgment of acquittal in favor of the respondents brought about by
the dismissal, for insufficiency of evidence, of the malversation charged in the two criminal cases.

A judgment of acquittal sought to be reviewed on the basis of grave abuse of discretion amounting to lack or excess of jurisdiction or on the ground of denial of due process implies an invalid or otherwise void judgment. If
either or both grounds are established, the judgment of acquittal is considered void; as a void judgment, it is legally inexistent and does not have the effect of an acquittal. Thus, the defense of double jeopardy will not lie in
such a case.

The Court, in the exercise of its sound discretion, may require or allow the prosecution to present additional evidence (at its own initiative or upon a motion) after a demurrer to evidence is filed. This exercise, however, must
be for good reasons and in the paramount interest of justice. In this case, grave abuse of discretion cannot be attributed to the Sandiganbayan when it exercised restraint and did not require the presentation of additional
evidence, given the clear weakness of the case at that point. It must be noted that under the obtaining circumstances, the petitioner failed to show what and how additional available evidence could have helped and the
paramount interest of justice sought to be achieved. For instance, at no point in the records did the petitioner unequivocally state that it could present the three UL officers, Cueto, Jiao and Sison. The petitioner also failed to
demonstrate its possession of or access to these documents (such as the final audit report) to support the prosecution's charges the proof that the State had been deprived of due process due to the special prosecutors alleged
inaction.

The failure to oppose per se cannot also be a ground for grave abuse of discretion. The real issue, to the Courts mind, is whether the special prosecutor had basis to act as she did. As the point-by-point presentation above
shows, the dismissal of the criminal cases cannot be attributed to any grossly negligent handling by the special prosecutor. To begin with, the prosecution's case suffered from lack of witnesses because, among others, of the
time that elapsed between the act charged and the start of the actual prosecution in 1994; and from lack of sufficient preparatory investigation conducted, resulting in insufficiency of its evidence as a whole.

Further, it must be stressed that the State was not denied due process in the proceedings before the Sandiganbayan. There was no indication that the special prosecutor deliberately and willfully failed to present available
evidence or that other evidence could be secured. The correct premise and presumption, since the special prosecutor is a State delegate, is that she had all incidental and necessary powers to prosecute the case in the State's
behalf so that her actions as a State delegate bound the State. The Court does not believe that the State can have an unbridled discretion to disown the acts of its delegates at will unless it can clearly establish that its agent had
been grossly negligent or was guilty of collusion with the accused or other interested party, resulting in the State's deprivation of its due process rights as client-principal.