Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No.

167702 March 20, 2009 LOURDES L. ERISTINGCOL, Petitioner, vs. COURT OF APPEALS and RANDOLPH C. LIMJOCO, Respondents. DECISION NACHURA, J.: This is a petition for review on certiorari under Rule 45 of the Rules of Court which assails the Court of Appeals (CA) Decision1 in CA-G.R. SP. No. 64642 dismissing Civil Case No. 99-297 before the Regional Trial Court (RTC) for lack of jurisdiction. The facts, as narrated by the CA, are simple. [Petitioner Lourdes] Eristingcol is an owner of a residential lot in Urdaneta Village (or "village"), Makati City and covered by Transfer Certificate of Title No. 208586. On the other hand, [respondent Randolph] Limjoco, [Lorenzo] Tan and [June] Vilvestre were the former president and chairman of the board of governors (or "board"), construction committee chairman and village manager of [Urdaneta Village Association Inc.] UVAI, respectively. UVAI is an association of homeowners at Urdaneta Village. [Eristingcols] action [against UVAI, Limjoco, Tan and Vilvestre] is founded on the allegations that in compliance with the National Building Code and after UVAIs approval of her building plans and acceptance of the construction bond and architects fee, Eristingcol started constructing a house on her lot with "concrete canopy directly above the main door and highway"; that for alleged violation of its Construction Rules and Regulations (or "CRR") on "Set Back Line" vis-a-vis the canopy easement, UVAI imposed on her a penalty of P400,000.00 and barred her workers and contractors from entering the village and working on her property; that the CRR, particularly on "Set Back Line," is contrary to law; and that the penalty is unwarranted and excessive. On February 9, 1999, or a day after the filing of the complaint, the parties reached a temporary settlement whereby UVAI, Limjoco, Tan and Vilvestre executed an undertaking which allowed Eristingcols workers, contractors and suppliers to leave and enter the village, subject only to normal security regulations of UVAI. On February 26, 1999, UVAI, Limjoco, Tan and Vilvestre filed a motion to dismiss on ground of lack of jurisdiction over the subject matter of the action. They argued that it is the Home Insurance Guaranty Corporation (or "HIGC")2 which has jurisdiction over intra-corporate disputes involving homeowners associations, pursuant to Exec. Order No. 535, Series of 1979, as amended by Exec. Order No. 90, Series of 1986. Opposing the motion, Eristingcol alleged, among others, that UVAI, Limjoco, Tan and Vilvestre did not comply with the mandatory provisions of Secs. 4 and 6, Rule 15 of the 1997 Rules of Civil Procedure and are estopped from questioning the jurisdiction of the [RTC] after they voluntarily appeared therein "and embraced its authority by agreeing to sign an Undertaking." On May 20, 1999, Eristingcol filed an amended complaint by (i) impleading Manuel Carmona (or "Carmona") and Rene Cristobal (or "Cristobal"), UVAIs newly-elected president and chairman of the

board and newly-designated construction committee chairman, respectively, as additional defendants and (ii) increasing her claim for moral damages against each petitioner from P500,000.00 to P1,000,000.00. On May 25, 1999, Eristingcol filed a motion for production and inspection of documents, which UVAI, Limjoco, Tan, Vilvestre, Carmona and Cristobal opposed. The motion sought to compel [UVAI and its officers] to produce the documents used by UVAI as basis for the imposition of the P400,000.00 penalty on Eristingcol as well as letters and documents showing that UVAI had informed the other homeowners of their violations of the CRR. On May 26, 1999, the [RTC] issued an order which pertinently reads: IN VIEW OF THE FOREGOING, for lack of merit, the defendants Motion to Dismiss is Denied, and plaintiffs motion to declare defendants in default and for contempt are also Denied." The [RTC] ratiocinated that [UVAI, Limjoco, Tan and Vilvestre] may not assail its jurisdiction "after they voluntarily entered their appearance, sought reliefs therein, and embraced its authority by agreeing to sign an undertaking to desist from prohibiting (Eristingcols) workers from entering the village." In so ruling, it applied the doctrine enunciated in Tijam v. Sibonghanoy. On June 7, 1999, Eristingcol filed a motion reiterating her earlier motion for production and inspection of documents. On June 8, 1999, [UVAI, Limjoco, Tan and Vilvestre] moved for partial reconsideration of the order dated May 26, 1999. Eristingcol opposed the motion. On March 24, 2001, the [RTC] issued an order granting Eristingcols motion for production and inspection of documents, while on March 26, 2001, it issued an order denying [UVAIs, Limjocos, Tans and Vilvestres] motion for partial reconsideration. On May 10, 2001, [UVAI, Limjoco, Tan and Vilvestre] elevated the dispute before [the CA] via [a] petition for certiorari alleging that the [RTC] acted without jurisdiction in issuing the orders of May 26, 1999 and March 24 and 26, 2001.3 The CA issued the herein assailed Decision reversing the RTC Order4 and dismissing Eristingcols complaint for lack of jurisdiction. Hence, this appeal positing a sole issue for our resolution: Whether it is the RTC or the Housing and Land Use Regulatory Board (HLURB) which has jurisdiction over the subject matter of Eristingcols complaint. Before anything else, we note that the instant petition impleads only Limjoco as private respondent. The rest of the defendants sued by Eristingcol before the RTC, who then collectively filed the petition for certiorari before the CA assailing the RTCs Order, were, curiously, not included as private respondents in this particular petition. Eristingcol explains that only respondent Limjoco was retained in the instant petition as her discussions with UVAI and the other defendants revealed their lack of participation in the work-stoppage order which was supposedly single-handedly thought of and implemented by Limjoco. The foregoing clarification notwithstanding, the rest of the defendants should have been impleaded as respondents in this petition considering that the complaint before the RTC, where the petition before the CA and the instant petition originated, has yet to be amended. Furthermore, the present petition maintains that it was serious error for the CA to have ruled that the RTC did not have jurisdiction over a complaint for declaration of nullity of UVAIs Construction Rules. Clearly, UVAI and the rest of the defendants should have been impleaded herein as respondents.

Section 4(a), Rule 45 of the Rules of Court, requires that the petition shall "state the full name of the appealing party as petitioner and the adverse party as respondent, without impleading the lower courts or judges thereof either as petitioners or respondents." As the losing party in defendants petition for certiorari before the CA, Eristingcol should have impleaded all petitioners, the winning and adverse parties therein. On this score alone, the present petition could have been dismissed outright.5 However, to settle the issue of jurisdiction, we have opted to dispose of this case on the merits. Despite her having dropped UVAI, Lorenzo Tan (Tan) and June Vilvestre (Vilvestre) from this suit, Eristingcol insists that her complaint against UVAI and the defendants was properly filed before the RTC as it prays for the declaration of nullity of UVAIs Construction Rules and asks that damages be paid by Limjoco and the other UVAI officers who had inflicted injury upon her. Eristingcol asseverates that since the case before the RTC is one for declaration of nullity, the nature of the question that is the subject of controversy, not just the status or relationship of the parties, should determine which body has jurisdiction. In any event, Eristingcol submits that the RTCs jurisdiction over the case was foreclosed by the prayer of UVAI and its officers, including Limjoco, for affirmative relief from that court. Well-settled in jurisprudence is the rule that in determining which body has jurisdiction over a case, we should consider not only the status or relationship of the parties, but also the nature of the question that is the subject of their controversy.6 To determine the nature of an action and which court has jurisdiction, courts must look at the averments of the complaint or petition and the essence of the relief prayed for.7 Thus, we examine the pertinent allegations in Eristingcols complaint, specifically her amended complaint, to wit: Allegations Common to All Causes of Action 3. In 1958 and upon its incorporation, [UVAI] adopted a set of By-laws and Rules and Regulations, x x x. Item 5 of [UVAIs] Construction Rules pertinently provides: "Set back line: All Buildings, including garage servants quarters, or parts thereof (covered terraces, portes cocheres) must be constructed at a distance of not less than three (3) meters from the boundary fronting a street and not less than four (4) meters fronting the drainage creek or underground culvert and two (2) meters from other boundaries of a lot. Distance will be measured from the vertical projection of the roof nearest the property line. Completely open and unroofed terraces are not included in these restrictions." Suffice it to state that there is nothing in the same By-laws which deals explicitly with canopies or marquees which extend outward from the main building. 4. [Eristingcol] has been a resident of Urdaneta Village for eleven (11) years. In February 1997, she purchased a parcel of land in the Village, located at the corner of Urdaneta Avenue and Cerrada Street. x x x. 5. In considering the design for the house (the "Cerrada property") which she intended to construct on Cerrada Street, [Eristingcol] referred to the National Building Code of the Philippines. After assuring herself that the said law does not expressly provide any restrictions in respect thereof, and after noting that other houses owned by prominent families had similar structures without being cited by the Villages Construction Committee, [Eristingcol] decided that the Cerrada property would have a concrete canopy

directly above the main door and driveway. 6. In compliance with [UVAIs] rules, [Eristingcol] submitted to [UVAI] copies of her building plans in respect of the Cerrada property and the building plans were duly approved by [UVAI]. x x x. 7. [Eristingcol] submitted and/or paid the "cash bond/construction bond deposit and architects inspection fee" of P200,000.00 and the architects inspection fee of P500.00 as required under Construction Rules x x x. 8. In the latter part of 1997, and while the construction of the Cerrada property was ongoing, [Eristingcol] received a notice from [UVAI], charging her with alleged violations of the Construction Rules, i.e., those on the height restriction of eleven (11.0) meters, and the canopy extension into the easement. On 22nd January 1998, [Eristingcol] (through her representatives) met with, among others, defendant Limjoco. In said meeting, and after deliberation on the definition of the phrase "original ground elevation" as a reference point, [Eristingcols] representatives agreed to revise the building plan by removing what was intended to be a parapet or roof railing, and thereby reduce the height of the structure by 40 centimeters, which proposal was accepted by the Board through defendant Limjoco, Gov. Catalino Macaraig Jr. ([UVAIs] Construction Committee chairman), and the Villages Architect. However, the issue of the alleged violation in respect of the canopy/extension remained unresolved. xxxx 9. In compliance with the agreement reached at the 22nd January 1998 meeting, [Eristingcol] caused the revision of her building plans such that, as it now stands, the Cerrada property has a vertical height of 10.96 meters and, thus, was within the Villages allowed maximum height of 11 meters. 10. Sometime in June 1998, [Eristingcol] was surprised to receive another letter from [UVAI], this time from the Construction Committee chairman (defendant Tan), again calling her attention to alleged violations of the Construction Rules. On 15th June 1998, [UVAI] barred [Eristingcols] construction workers from entering the Village. Thus, [Eristingcols] Construction Manager (Mr. Jaime M. Hidalgo) wrote defendant Tan to explain her position, and attached photographs of similar "violations" by other property owners which have not merited the same scrutiny and sanction from [UVAI]. xxxx 11. On 26th October 1998, and for reasons known only to him, defendant Vilvestre sent a letter to Mr. Geronimo delos Reyes, demanding for an "idea of how [Mr. delos Reyes] can demonstrate in concrete terms [his] good faith as a quid pro quo for compromise to" [UVAIs] continued insistence that [Eristingcol] had violated [UVAIs] Construction Rules. x x x. xxxx

12. [Eristingcol] through Mr. Hidalgo sent a letter dated 24th November 1998 to defendant Tan, copies of which were furnished defendants Limjoco, Vilvestre and the Board, reiterating that, among others: (i) the alleged height restriction violation is untrue, since the Cerrada property now has a height within the limits imposed by [UVAI]; and (ii) the demand to reduce the canopy by ninety (90) centimeters is without basis, in light of the existence of thirty-five (35) similar "violations" of the same nature by other homeowners. [Eristingcol] through Mr. Hidalgo further mentioned that she had done nothing to deserve the crude and coercive Village letters and the Boards threats of work stoppage, and she cited instances when she dealt with [UVAI] and her fellow homeowners in good faith and goodwill such as in 1997, when she very discreetly spent substantial amounts to landscape the entire Village Park, concrete the Park track oval which was being used as a jogging path, and donate to the Association molave benches used as Park benches. xxxx 13. On the same date (24th November 1998), defendant Vilvestre sent another letter addressed to [Eristingcols] construction manager Hidalgo, again threatening to enjoin all construction activity on the Cerrada property as well as ban entry of all workers and construction deliveries effective 1st December 1998 unless Mr. delos Reyes met with defendants. x x x. xxxx 14. On 2nd December 1998, [Eristingcols] representatives met with defendants Limjoco, Tan, and Vilvestre. During that meeting, defendants were shown copies of the architectural plans for the Cerrada property. [Eristingcols] representatives agreed to allow [UVAIs] Construction Committees architect to validate the measurements given. However, on the issue of the canopy extension, the defendants informed [Eristingcols] representatives that the Board would impose a penalty of Four Hundred Thousand Pesos (P400,000.00) for violation of [UVAIs] "set back" or easement rule. Defendants cited the Boards imposition of similar fines to previous homeowners who had violated the same rule, and they undertook to furnish [Eristingcol] with a list of past penalties imposed and paid by homeowners found by the Board to have violated the Villages "set back" provision. 15. On 22nd December 1998, defendant Vilvestre sent [Eristingcol] a letter dated 18th December 1998 formally imposing a penalty of P400,000.00 for the "canopy easement violation." x x x. 16. On 29th December 1998, x x x, Vilvestre sent a letter to [Eristingcol], stating that "as far as [his] administration is concerned, there has been no past penalties executed by [UVAI], similar to the one we are presently demanding on your on going construction. x x x 17. On 4th January 1999, [Eristingcols] representative sent a letter to the Board, asking for a reconsideration of the imposition of the P400,000.00 penalty on the ground that the same is unwarranted and excessive. On 6th January 1999, [Eristingcol] herself sent a letter to the Board, expounding on the reasons for opposing the Boards action. On 18th January 1999, [Eristingcol] sent another letter in compliance with defendants request for a breakdown of her expenditures in respect of her donations relative to the Village park.

18. On 3rd February 1999, [Eristingcol] through her lawyers sent defendants a letter, requesting that her letters of 4th and 6th January 1999 be acted upon. 19. On 4th February 1999, x x x, defendant Limjoco gave a verbal order to [UVAIs] guards to bar the entry of workers working on the Cerrada property. 20. In the morning of 5th February 1999, defendants physically barred [Eristingcols] workers and contractors from entering the Village and working at the Cerrada property.8 Eristingcol then lists the following causes of action: 1. Item 5 of UVAIs Construction Rules constitutes an illegal and unwarranted intrusion upon Eristingcols proprietary rights as it imposes a set-back or horizontal easement of 3.0 meters from the property line greater than the specification in Section 1005(b) of the Building Code that "the horizontal clearance between the outermost edge of the marquee and the curb line shall be not less than 300 millimeters." As such, Eristingcol prays for the declaration of nullity of this provision in UVAIs Construction Rules insofar as she is concerned. 2. UVAIs imposition of a P400,000.00 penalty on Eristingcol has no factual basis, is arbitrary, whimsical and capricious as rampant violations of the set-back rule by other homeowners in the Village were not penalized by UVAI. Eristingcol prays to put a stop to defendants arbitrary exercise of power pursuant to UVAIs by-laws. 3. Absent any factual or legal bases for the imposition of a P400,000.00 penalty, defendants and all persons working under their control should be permanently barred or restrained from imposing and/or enforcing any penalty upon Eristingcol for an alleged violation of UVAIs Construction Rules, specifically the provision on set-back. 4. Defendants Limjoco, Tan, and Vilvestre, in violation of Article 19 of the Civil Code, demonstrated bias against Eristingcol by zeroing in on her alone and her supposed violation, while other homeowners, who had likewise violated UVAIs Construction Rules, were not cited or penalized therefor. Defendants actuations were in clear violation of their duty to give all homeowners, including Eristingcol, their due. 5. Defendants actuations have seriously affected Eristingcols mental disposition and have caused her to suffer sleepless nights, mental anguish and serious anxiety. Eristingcols reputation has likewise been besmirched by UVAIs and defendants arbitrary charge that she had violated UVAIs Construction Rules. In this regard, individual defendants should each pay Eristingcol moral damages in the amount of P1,000,000.00. 6. Lastly, defendants should pay Eristingcol P1,000.000.00 for litigation expenses she incurred in instituting this suit and for attorneys fees. At the outset, we note that the relationship between the parties is not in dispute and is, in fact, admitted by Eristingcol in her complaint. Nonetheless, Eristingcol is adamant that the subject matter of her complaint is properly cognizable by the regular courts and need not be filed before a specialized body or commission. Eristingcols contention is wrong. Ostensibly, Eristingcols complaint, designated as one for declaration of nullity, falls within the regular courts jurisdiction. However, we have, on more than one occasion, held that the caption of the complaint is not determinative of the nature of the action.9

A scrutiny of the allegations contained in Eristingcols complaint reveals that the nature of the question subject of this controversy only superficially delves into the validity of UVAIs Construction Rules. The complaint actually goes into the proper interpretation and application of UVAIs by-laws, specifically its construction rules. Essentially, the conflict between the parties arose as Eristingcol, admittedly a member of UVAI, now wishes to be exempt from the application of the canopy requirement set forth in UVAIs Construction Rules. Significantly, Eristingcol does not assail the height restriction of UVAIs Construction Rules, as she has readily complied therewith. Distinctly in point is China Banking Corp. v. Court of Appeals,10 which upheld the jurisdiction of the Securities and Exchange Commission (SEC) over the suit and recognized its special competence to interpret and apply Valley Golf and Country Club, Inc.s (VGCCIs) by-laws. We ruled, thus: Applying the foregoing principles in the case at bar, to ascertain which tribunal has jurisdiction we have to determine therefore whether or not petitioner is a stockholder of VGCCI and whether or not the nature of the controversy between petitioner and private respondent corporation is intra-corporate. As to the first query, there is no question that the purchase of the subject share or membership certificate at public auction by petitioner (and the issuance to it of the corresponding Certificate of Sale) transferred ownership of the same to the latter and thus entitled petitioner to have the said share registered in its name as a member of VGCCI. x x x. By virtue of the aforementioned sale, petitioner became a bona fide stockholder of VGCCI and, therefore, the conflict that arose between petitioner and VGCCI aptly exemplifies an intra-corporate controversy between a corporation and its stockholder under Sec. 5(b) of P.D. 902-A. An important consideration, moreover, is the nature of the controversy between petitioner and private respondent corporation. VGCCI claims a prior right over the subject share anchored mainly on Sec. 3, Art. VIII of its by-laws which provides that "after a member shall have been posted as delinquent, the Board may order his/her/its share sold to satisfy the claims of the Club" It is pursuant to this provision that VGCCI also sold the subject share at public auction, of which it was the highest bidder. VGCCI caps its argument by asserting that its corporate by-laws should prevail. The bone of contention, thus, is the proper interpretation and application of VGCCIs aforequoted by-laws, a subject which irrefutably calls for the special competence of the SEC. We reiterate herein the sound policy enunciated by the Court in Abejo v. De la Cruz: 6. In the fifties, the Court taking cognizance of the move to vest jurisdiction in administrative commissions and boards the power to resolve specialized disputes in the field of labor (as in corporations, public transportation and public utilities) ruled that Congress in requiring the Industrial Courts intervention in the resolution of labor-management controversies likely to cause strikes or lockouts meant such jurisdiction to be exclusive, although it did not so expressly state in the law. The Court held that under the "sense-making and expeditious doctrine of primary jurisdiction the courts cannot or will not determine a controversy involving a question which is within the jurisdiction of an administrative tribunal, where the question demands the exercise of sound administrative discretion requiring the special knowledge, experience, and services of the administrative tribunal to determine technical and intricate matters of fact, and a uniformity of ruling is essential to comply with the purposes of the regulatory statute administered. xxxx In this case, the need for the SECs technical expertise cannot be over-emphasized involving as it does the meticulous analysis and correct interpretation of a corporations by-laws as well as the applicable provisions of the Corporation Code in order to determine the validity of VGCCIs claims. The SEC, therefore, took proper cognizance of the instant case.11

Likewise in point is our illuminating ruling in Sta. Clara Homeowners Association v. Sps. Gaston,12 although it ultimately held that the question of subject matter jurisdiction over the complaint of respondent- spouses Gaston for declaration of nullity of a board resolution issued by Sta. Clara Homeowners Association (SCHA) was vested in the regular courts. In Sta. Clara, the main issue raised by SCHA reads: "Whether [the CA] erred in upholding the jurisdiction of the [RTC], to declare as null and void the resolution of the Board of SCHA, decreeing that only members [in] good standing of the said association were to be issued stickers for use in their vehicles." In holding that the regular courts had jurisdiction over respondent-spouses Gastons complaint for declaration of nullity, we stressed the absence of relationship and the consequent lack of privity of contract between the parties, thus: Are [Respondent-Spouses Gaston] SCHA Members? In order to determine if the HIGC has jurisdiction over the dispute, it is necessary to resolve preliminarilyon the basis of the allegations in the Complaintwhether [respondent-spouses Gaston] are members of the SCHA. [SCHA] contend[s] that because the Complaint arose from intra-corporate relations between the SCHA and its members, the HIGC therefore has jurisdiction over the dispute. To support their contention that [respondent-spouses Gaston] are members of the association, [SCHA] cite[s] the SCHAs Articles of Incorporation and By-laws which provide that all landowners of the Sta. Clara Subdivision are automatically members of the SCHA. We are not persuaded. The constitutionally guaranteed freedom of association includes the freedom not to associate. The right to choose with whom one will associate oneself is the very foundation and essence of that partnership. It should be noted that the provision guarantees the right to form an association. It does not include the right to compel others to form or join one. More to the point, [respondent-spouses Gaston] cannot be compelled to become members of the SCHA by the simple expedient of including them in its Articles of Incorporation and By-laws without their express or implied consent. x x x. In the present case, however, other than the said Articles of Incorporation and By-laws, there is no showing that [respondent-spouses Gaston] have agreed to be SCHA members. xxxx No privity of Contract Clearly then, no privity of contract exists between [SCHA] and [respondent-spouses Gaston]. As a general rule, a contract is a meeting of minds between two persons. The Civil Code upholds the spirit over the form; thus, it deems an agreement to exist, provided the essential requisites are present. x x x. From the moment there is a meeting of minds between the parties, it is perfected. As already adverted to, there are cases in which a party who enters into a contract of sale is also bound by a lien annotated on the certificate of title. We recognized this in Bel Air Village Association, Inc. v. Dionisio, in which we ruled: There is no dispute that Transfer Certificate of Title No. 81136 covering the subject parcel of land issued in the name of the petitioner contains an annotation to the effect that the lot owner becomes an automatic member of the respondent Bel-Air Association and must abide by such rules and regulations laid down by the Association in the interest of the sanitation, security and the general welfare of the community. It is likewise not disputed that the provision on automatic membership was expressly annotated on the petitioners Transfer Certificate of Title and on the title of his predecessor-in-interest. The question, therefore, boils down to whether or not the petitioner is bound by such annotation.

Section 39 of Art. 496 (The Land Registration Act) states: Sec. 39. Every person receiving a certificate of title in pursuance of a decree of registration, and every subsequent purchaser of registered land who takes a certificate of title for value in good faith shall hold the same free of all encumbrances except those noted on said certificate x x x. (Italics supplied) The above ruling, however, does not apply to the case at bar. When [respondent-spouses Gaston] purchased their property in 1974 and obtained Transfer Certificates of Title Nos. T-126542 and T127462 for Lots 11 and 12 of Block 37 along San Jose Avenue in Sta. Clara Subdivision, there was no annotation showing their automatic membership in the SCHA. Thus, no privity of contract arising from the title certificate exists between [SCHA] and [respondent-spouses Gaston]. Further, the records are bereft of any evidence that would indicate that private respondents intended to become members of the SCHA. Prior to the implementation of the aforesaid Resolution, they and the other homeowners who were not members of the association were issued non-member gate pass stickers for their vehicles. This fact has not been disputed by [SCHA]. Thus, the SCHA recognized that there were subdivision landowners who were not members thereof, notwithstanding the provisions of its Articles of Incorporation and By-laws. Jurisdiction Determined by Allegations in the Complaint It is a settled rule that jurisdiction over the subject matter is determined by the allegations in the complaint. Jurisdiction is not affected by the pleas or the theories set up by the defendant in an answer or a motion to dismiss. Otherwise, jurisdiction would become dependent almost entirely upon the whims of the defendant. The Complaint does not allege that [respondent-spouses Gaston] are members of the SCHA. In point of fact, they deny such membership. Thus, the HIGC has no jurisdiction over the dispute.13 In stark contrast, the relationship between the parties in the instant case is well-established. Given this admitted relationship, the privity of contract between UVAI and Eristingcol is palpable, despite the latters deft phraseology of its primary cause of action as a declaration of nullity of UVAIs Construction Rules. In short, the crux of Eristingcols complaint is UVAIs supposed arbitrary implementation of its construction rules against Eristingcol, a member thereof. Moreover, as in Sta. Clara (had respondent-spouses Gaston been members of SCHA), the controversy which arose between the parties in this case partook of the nature of an intra-corporate dispute. Executive Order (E.O.) No. 535,14 which amended Republic Act No. 580 creating the HIGC, transferred to the HIGC the regulatory and administrative functions over homeowners associations originally vested with the SEC. Section 2 of E.O. No. 535 provides in pertinent part: 2. In addition to the powers and functions vested under the Home Financing Act, the Corporation, shall have among others, the following additional powers: (a) x x x; and exercise all the powers, authorities and responsibilities that are vested on the Securities and Exchange Commission with respect to home owners association, the provision of Act 1459, as amended by P.D. 902-A, to the contrary notwithstanding; (b) To regulate and supervise the activities and operations of all houseowners association registered in accordance therewith. By virtue thereof, the HIGC likewise assumed the SECs original and exclusive jurisdiction to hear and decide cases involving controversies arising from intra-corporate or partnership relations.15 Thereafter, with the advent of Republic Act No. 8763, the foregoing powers and responsibilities vested in the HIGC, with respect to homeowners associations, were transferred to the HLURB.

As regards the defendants supposed embrace of the RTCs jurisdiction by appearing thereat and undertaking to desist from prohibiting Eristingcols workers from entering the village, suffice it to state that the invocation of the doctrine in Tijam, et al. v. Sibonghanoy, et al.16 is quite a long stretch. The factual milieu obtaining in Tijam and in the case at bench are worlds apart. As found by the CA, defendants appearance before the RTC was pursuant to, and in compliance with, a subpoena issued by that court in connection with Eristingcols application for a Temporary Restraining Order (TRO). On defendants supposed agreement to sign the Undertaking allowing Eristingcols workers, contractors, and suppliers to enter and exit the village, this temporary settlement cannot be equated with full acceptance of the RTCs authority, as what actually transpired in Tijam.1avvphi1.zw+ The landmark case of Tijam is, in fact, only an exception to the general rule that an objection to the courts jurisdiction over a case may be raised at any stage of the proceedings, as the lack of jurisdiction affects the very authority of the court to take cognizance of a case.17 In that case, the Surety filed a Motion to Dismiss before the CA, raising the question of lack of jurisdiction for the first timefifteen years after the action was commenced in the Court of First Instance (CFI) of Cebu. Indeed, in several stages of the proceedings in the CFI, as well as in the CA, the Surety invoked the jurisdiction of said courts to obtain affirmative relief, and even submitted its case for a final adjudication on the merits. Consequently, it was barred by laches from invoking the CFIs lack of jurisdiction. To further highlight the distinction in this case, the TRO hearing was held on February 9, 1999, a day after the filing of the complaint. On even date, the parties reached a temporary settlement reflected in the Undertaking. Fifteen days thereafter, defendants, including Limjoco, filed a Motion to Dismiss. Certainly, this successive and continuous chain of events cannot be characterized as laches as would bar defendants from questioning the RTCs jurisdiction. In fine, based on the allegations contained in Eristingcols complaint, it is the HLURB, not the RTC, which has jurisdiction over this case. WHEREFORE, premises considered, the petition is DENIED. The Decision of the Court of Appeals in CA-G.R. SP. No. 64642 is hereby AFFIRMED. Costs against petitioner. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 131282 January 4, 2002 GABRIEL L. DUERO, petitioner, vs. HON.COURT OF APPEALS, and BERNARDO A. ERADEL, respondents. QUISUMBING, J.: This petition for certiorari assails the Decisionl dated September 17, 1997, of the Court of Appeals in CA-G.R. No. SP No.. 2340- UDK, entitled Bernardo Eradel vs. Non. Ermelino G. Andal , setting aside all proceedings in Civil Case No.1075, Gabriel L. Duero vs. Bernardo Eradel, before the Branch 27 of the Regional Trial Court of Tandag, Surigao del Sur . The pertinent facts are as follow. Sometime in 1988, according to petitioner, private respondent Bemardo Eradel2 entered and occupied petitioner's land covered by Tax Declaration No. A-16-13-302, located in Baras, San Miguel, Surigao del Sur. As shown in the tax declaration, the land had an assessed value of P5,240. When petitioner politely informed private respondent that the land was his and requested the latter to vacate the land, private respondent refused, but instead threatened him with bodily harm. Despite repeated demands, private respondent remained steadfast in his refusal to leave the land. On June 16, 1995, petitioner filed before the RTC a complaint for Recovery of Possession and Ownership with Damages and Attorney's Fees against private respondent and two others, namely, Apolinario and Inocencio Ruena. Petitioner appended to the complaint the aforementioned tax declaration. The counsel of the Ruenas asked for extension to file their Answer and was given until July 18, 1995. Meanwhile, petitioner and the, Ruenas executed a compromise agreement, which became the trial court's basis for a partial judgment rendered on January 12, 1996. In this agreement, the Ruenas through their counsel, Atty. Eusebio Avila, entered into a Compromise Agreement with herein petitioner, Gabriel Duero. Inter alia, the agreement stated that the Ruenas recognized and bound themselves to respect the ownership and possession of Duero.3 Herein private respondent Eradel was not a party to the agreement, and he was declared in default for failure to file his answer to the complaint.4 Petitioner presented his evidence ex parte on February 13, 1996. On May 8, 1996, judgment was rendered in his favor, and private respondent was ordered to peacefully vacate and turn over Lot No.1065 Cad. 537-D to petitioner; pay petitioner P2,000 annual rental from 1988 up the time he vacates the land, and P5,000 as attorney's fees and the cost of the suit.5 Private respondent received a copy of the decision on May 25, 1996. On June 10, 1996, private respondent filed a Motion for New Trial, alleging that he has been occupying the land as a tenant of Artemio Laurente, Sr., since 1958. He explained that he turned over the complaint and summons to Laurente in the honest belief that as landlord, the latter had a better right to the land and was responsible to defend any adverse claim on it. However, the trial court denied the motion for new trial.1wphi1.nt Meanwhile, RED Conflict Case No.1029, an administrative case between petitioner and applicantcontestants Romeo, Artemio and Jury Laurente, remained pending with the Office of the Regional Director of the Department of Environment and Natural Resources in Davao City. Eventually, it was

forwarded to the DENR Regional Office in Prosperidad, Agusan del Sur . On July 24, 1996, private respondent filed before the RTC a Petition for Relief from Judgment, reiterating the same allegation in his Motion for New Trial. He averred that unless there is a determination on who owned the land, he could not be made to vacate the land. He also averred that the judgment of the trial court was void inasmuch as the heirs of Artemio Laurente, Sr., who are indispensable parties, were not impleaded. On September 24, 1996, Josephine, Ana Soledad and Virginia, all surnamed Laurente, grandchildren of Artemio who were claiming ownership of the land, filed a Motion for Intervention. The RTC denied the motion. On October 8, 1996, the trial court issued an order denying the Petition for Relief from Judgment. In a Motion for Reconsideration of said order, private respondent alleged that the RTC had no jurisdiction over the case, since the value of the land was only P5,240 and therefore it was under the jurisdiction of the municipal trial court. On November 22, 1996, the RTC denied the motion for reconsideration. On January 22, 1997, petitioner filed a Motion for Execution, which the RTC granted on January 28. On February 18, 1997, Entry of Judgment was made of record and a writ of execution was issued by the RTC on February 27,1997. On March 12,1997, private respondent filed his petition for certiorari before the Court of Appeals. The Court of Appeals gave due course to the petition, maintaining that private respondent is not estopped from assailing the jurisdiction 'of the RTC, Branch 27 in Tandag, Surigao del Sur, when private respondent filed with said court his Motion for Reconsideration And/Or Annulment of Judgment. The Court of Appeals decreed as follows: IN THE LIGHT OF ALL THE FOREGOING, the Petition is GRANTED. All proceedings in "Gabriel L. Duero vs. Bernardo Eradel, et. al. Civil Case 1075" filed in the Court a quo, including its Decision, Annex "E" of the petition, and its Orders and Writ of Execution and the turn over of the property to the Private Respondent by the Sheriff of the Court a quo, are declared null and void and hereby SET ASIDE, No pronouncement as to costs. SO ORDERED.6 Petitioner now comes before this Court, alleging that the Court of Appeals acted with grave abuse of discretion amounting to lack or in excess of jurisdiction when it held that: I. ...THE LOWER COURT HAS NO JURISDICTION OVER THE SUBJECT MA TTER OF THE CASE. II ...PRIVATE RESPONDENT WAS NOT THEREBY ESTOPPED FROM QUESTIONING THE JURISDICTION OF THE LOWER COURT EVEN AFTER IT SUCCESSFULLY SOUGHT AFFIRMATIVE RELIEF THEREFROM. III ...THE FAlLURE OF PRIVATE RESPONDENT TO FILE HIS ANSWER IS JUSTIFIED. 7 The main issue before us is whether the Court of Appeals gravely abused its discretion when it held that the municipal trial court had jurisdiction, and that private respondent was not estopped from assailing the jurisdiction of the RTC after he had filed several motions before it. The secondary issue is whether the Court of appeals erred in holding that private respondent's failure to file an answer to the complaint

was justified. At the outset, however, we note that petitioner through counsel submitted to this Court pleadings that contain inaccurate statements. Thus, on page 5 of his petition,8 we find that to bolster the claim that the appellate court erred in holding that the RTC had no jurisdiction, petitioner pointed to Annex E9 of his petition which supposedly is the Certification issued by the Municipal Treasurer of San Miguel, Surigao, specifically containing the notation, "Note: Subject for General Revision Effective 1994." But it appears that Annex E of his petition is not a Certification but a xerox copy of a Declaration of Real Property. Nowhere does the document contain a notation, "Note: Subject for General Revision Effective 1994." Petitioner also asked this Court to refer to Annex F,10 where he said the zonal value of the disputed land was P1.40 per sq.m., thus placing the computed value of the land at the time the complaint was filed before the RTC at P57,113.98, hence beyond the jurisdiction of the municipal court and within the jurisdiction of the regional trial court. However, we find that these annexes are both merely xerox copies. They are obviously without evidentiary weight or value. Coming now to the principal issue, petitioner contends that respondent appellate court acted with grave abuse of discretion. By "grave abuse of discretion" is meant such capricious and whimsical exercise of judgment which is equivalent to an excess or a lack of jurisdiction. The abuse of discretion must be so patent and gross as to amount to an evasion of a positive duty or a virtual refusal to perform a duty enjoined by law, or to act at all in contemplation of law as where the power is exercised in an arbitrary and despotic manner by reason of passion or hostility.11 But here we find that in its decision holding that the municipal court has jurisdiction over the case and that private respondent was not estopped from questioning the jurisdiction of the RTC, respondent Court of Appeals discussed the facts on which its decision is grounded as well as the law and jurisprudence on the matter.12 Its action was neither whimsical nor capricious. Was private respondent estopped from questioning the jurisdiction of the RTC? In this case, we are in agreement with the Court of Appeals that he was not. While participation in all stages of a case before the trial court, including invocation of its authority in asking for affirmative relief, effectively bars a party by estoppel from challenging the court's jurisdiction,13 we note that estoppel has become an equitable defense that is both substantive and remedial and its successful invocation can bar a right and not merely its equitable enforcement.14 Hence, estoppel ought to be applied with caution. For estoppel to apply, the action giving rise thereto must be unequivocal and intentional because, if misapplied, estoppel may become a tool of injustice.15 In the present case, private respondent questions the jurisdiction of RTC in Tandag, Surigao del Sur, on legal grounds. Recall that it was petitioner who filed the complaint against private respondent and two other parties before the said court,16 believing that the RTC had jurisdiction over his complaint. But by then, Republic Act 769117 amending BP 129 had become effective, such that jurisdiction already belongs not to the RTC but to the MTC pursuant to said amendment. Private respondent, an unschooled farmer, in the mistaken belief that since he was merely a tenant of the late Artemio Laurente Sr., his landlord, gave the summons to a Hipolito Laurente, one of the surviving heirs of Artemio Sr., who did not do anything about the summons. For failure to answer the complaint, private respondent was declared in default. He then filed a Motion for New Trial in the same court and explained that he defaulted because of his belief that the suit ought to be answered by his landlord. In that motion he stated that he had by then the evidence to prove that he had a better right than petitioner over the land because of his long, continuous and uninterrupted possession as bona-fide tenant-lessee of the land.18But his motion was denied. He tried an alternative recourse. He filed before the RTC a Motion for Relief from Judgment. Again, the same court denied his motion, hence he moved for reconsideration of the denial. In his Motion for Reconsideration, he raised for the first time the RTC's lack of jurisdiction. This motion was again denied. Note that private respondent raised the issue of lack

of jurisdiction, not when the case was already on appeal, but when the case, was still before the RTC that ruled him in default, denied his motion for new trial as well as for relief from judgment, and denied likewise his two motions for reconsideration. After the RTC still refused to reconsider the denial of private respondent's motion for relief from judgment, it went on to issue the order for entry of judgment and a writ of execution. Under these circumstances, we could not fault the Court of Appeals in overruling the RTC and in holding that private respondent was not estopped from questioning the jurisdiction of the regional trial court. The fundamental rule is that, the lack of jurisdiction of the court over an action cannot be waived by the parties, or even cured by their silence, acquiescence or even by their express consent.19 Further, a party may assail the jurisdiction of the court over the action at any stage of the proceedings and even on appeal.20 The appellate court did not err in saying that the RTC should have declared itself barren of jurisdiction over the action. Even if private respondent actively participated in the proceedings before said court, the doctrine of estoppel cannot still be properly invoked against him because the question of lack of jurisdiction may be raised at anytime and at any stage of the action.21 Precedents tell us that as a general rule, the jurisdiction of a court is not a question of acquiescence as a matter of fact, but an issue of conferment as a matter of law.22 Also, neither waiver nor estoppel shall apply to confer jurisdiction upon a court, barring highly meritorious and exceptional circumstances.23 The Court of Appeals found support for its ruling in our decision in Javier vs. Court of Appeals, thus: x x x The point simply is that when a party commits error in filing his suit or proceeding in a court that lacks jurisdiction to take cognizance of the same, such act may not at once be deemed sufficient basis of estoppel. It could have been the result of an honest mistake, or of divergent interpretations of doubtful legal provisions. If any fault is to be imputed to a party taking such course of action, part of the blame should be placed on the court which shall entertain the suit, thereby lulling the parties into believing that they pursued their remedies in the correct forum. Under the rules, it is the duty of the court to dismiss an action 'whenever it appears that the court has no jurisdiction over the subject matter.' (Sec. 2, Rule 9, Rules of Court) Should the Court render a judgment without jurisdiction, such judgment may be impeached or annulled for lack of jurisdiction (Sec. 30, Rule 132, Ibid), within ten (10) years from the finality of the same. [Emphasis ours.]24 Indeed, "...the trial court was duty-bound to take judicial notice of the parameters of its jurisdiction and its failure to do so, makes its decision a 'lawless' thing."25 Since a decision of a court without jurisdiction is null and void, it could logically never become final and executory, hence appeal therefrom by writ of error would be out of the question. Resort by private respondent to a petition for certiorari before the Court of Appeals was in order . In holding that estoppel did not prevent private respondent from questioning the RTC's jurisdiction, the appellate court reiterated the doctrine that estoppel must be applied only in exceptional cases, as its misapplication could result in a miscarriage of justice. Here, we find that petitioner, who claims ownership of a parcel of land, filed his complaint before a court without appropriate jurisdiction. Defendant, a farmer whose tenancy status is still pending before the proper administrative agency concerned, could have moved for dismissal of the case on jurisdictional grounds. But the farmer as defendant therein could not be expected to know the nuances of jurisdiction and related issues. This farmer, who is now the private respondent, ought not to be penalized when he claims that he made an honest mistake when he initially submitted his motions before the RTC, before he realized that the controversy was outside the RTC's cognizance but within the jurisdiction of the municipal trial court. To hold him in estoppel as the RTC did would amount to foreclosing his avenue to obtain a proper resolution of his case. Furthermore, if the RTC's order were to be sustained, he would be evicted from the land prematurely, while RED Conflict Case No.1029 would remain unresolved. Such eviction on a

technicality if allowed could result in an injustice, if it is later found that he has a legal right to till the land he now occupies as tenant-lessee.1wphi1.nt Having determined that there was no grave abuse of discretion by the appellate court in ruling that private respondent was not estopped from questioning the jurisdiction of the RTC, we need not tarry to consider in detail the second issue. Suffice it to say that, given the circumstances in this case, no error was committed on this score by respondent appellate court. Since the RTC had no jurisdiction over the case, private respondent had justifiable reason in law not to file an answer, aside from the fact that he believed the suit was properly his landlord's concern. WHEREFORE, the petition is DISMISSED. The assailed decision of the Court of Appeals is AFFIRMED. The decision of the Regional Trial Court in Civil Case No.1075 entitled Gabriel L. Duero vs. Bernardo Eradel, its Order that private respondent turn over the disputed land to petitioner, and the Writ of Execution it issued, are ANNULLED and SET ASIDE. Costs against petitioner . SO ORDERED.

SECOND DIVISION [G.R. No. 129638. December 8, 2003] Antonio T. Donato, petitioner, vs. Court of Appeals, Filomeno ARCEPE, Timoteo Barcelona, Ignacio Bendol, Thelma P. Bulicano, Rosalinda Caparas, Rosita De Costo, Feliza De Guzman, Leticia De Los Reyes, Rogelio Gaddi, Paulino Gajardo, Geronimo Imperial, Homer Imperial, Elvira Leslie, Ceferino Lugana, Hector Pimentel, Nimfa Pimentel, AureliO G. Rocero, Iluminada Tara, Juanito Vallespin, and Narciso Yabut, respondents. DECISION AUSTRIA-MARTINEZ, J.: Before us is a petition for review on certiorari filed on July 17, 1997 which should be a petition for certiorari under Rule 65 of the Rules of Court. It assails the Resolutions[1] dated March 21, 1997 and June 23, 1997 issued by the Court of Appeals in CA-G.R. SP No. 41394.[2] The factual background of the case is as follows: Petitioner Antonio T. Donato is the registered owner of a real property located at Ciriaco Tuason Street, San Andres, Manila, covered by Transfer Certificate of Title No. 131793 issued by the Register of Deeds of the City of Manila on November 24, 1978. On June 7, 1994, petitioner filed a complaint before the Metropolitan Trial Court (Branch 26) of Manila (MeTC) for forcible entry and unlawful detainer against 43 named defendants and all unknown occupants of the subject property.[3] Petitioner alleges that: private respondents had oral contracts of lease that expired at the end of each month but were impliedly renewed under the same terms by mere acquiescence or tolerance; sometime in 1992, they stopped paying rent; on April 7, 1994, petitioner sent them a written demand to vacate; the non-compliance with said demand letter constrained him to file the ejectment case against them.[4] Of the 43 named defendants, only 20 (private respondents,[5] for brevity) filed a consolidated Answer dated June 29, 1994 wherein they denied non-payment of rentals. They contend that they cannot be evicted because the Urban Land Reform Law guarantees security of tenure and priority right to purchase the subject property; and that there was a negotiation for the purchase of the lots occupied by them but when the negotiation reached a passive stage, they decided to continue payment of rentals and tendered payment to petitioners counsel and thereafter initiated a petition for consignation of the rentals in Civil Case No. 144049 while they await the outcome of the negotiation to purchase. Following trial under the Rule on Summary Procedure, the MeTC rendered judgment on September 19, 1994 against the 23 non-answering defendants, ordering them to vacate the premises occupied by each of them, and to pay jointly and severally P10,000.00 per month from the date they last paid their rent until the date they actually vacate, plus interest thereon at the legal rate allowed by law, as well as P10,000.00 as attorneys fees and the costs of the suit. As to the 20 private respondents, the MeTC issued a separate judgment[6] on the same day sustaining their rights under the Land Reform Law, declaring petitioners cause of action as not duly warranted by the facts and circumstances of the case and dismissing the case without prejudice. Not satisfied with the judgment dismissing the complaint as against the private respondents, petitioner appealed to the Regional Trial Court (Branch 47) of Manila (RTC).[7] In a Decision[8] dated July 5, 1996, the RTC sustained the decision of the MeTC. Undaunted, petitioner filed a petition for review with the Court of Appeals (CA for brevity), docketed as CA-G.R. SP No. 41394. In a Resolution dated March 21, 1997, the CA dismissed the petition on two grounds: (a) the certification of non-forum shopping was signed by petitioners counsel and not by

petitioner himself, in violation of Revised Circular No. 28-91;[9] and, (b) the only annex to the petition is a certified copy of the questioned decision but copies of the pleadings and other material portions of the record as would support the allegations of the petition are not annexed, contrary to Section 3, paragraph b, Rule 6 of the Revised Internal Rules of the Court of Appeals (RIRCA).[10] On April 17, 1997, petitioner filed a Motion for Reconsideration,[11] attaching thereto a photocopy of the certification of non-forum shopping duly signed by petitioner himself[12] and the relevant records of the MeTC and the RTC.[13] Five days later, or on April 22, 1997, petitioner filed a Supplement[14] to his motion for reconsideration submitting the duly authenticated original of the certification of nonforum shopping signed by petitioner.[15] In a Resolution[16] dated June 23, 1997 the CA denied petitioners motion for reconsideration and its supplement, ruling that petitioners subsequent compliance did not cure the defect in the instant petition.[17] Hence, the present petition anchored on the following grounds: I. RESPONDENT COURT OF APPEALS GRAVELY ERRED IN DISMISSING THE PETITION BASED ON HYPER-TECHNICAL GROUNDS BECAUSE: A. PETITIONER HAS SUBSTANTIALLY COMPLIED WITH SUPREME COURT CIRCULAR NO. 28-91. MORE, PETITIONER SUBSEQUENTLY SUBMITTED DURING THE PENDENCY OF THE PROCEEDINGS A DULY AUTHENTICATED CERTIFICATE OF NON-FORUM SHOPPING WHICH HE HIMSELF SIGNED AND EXECUTED IN THE UNITED STATES. B. PETITIONER HAS SUBSTANTIALLY COMPLIED WITH SECTION 3, RULE 6 OF THE REVISED INTERNAL RULES OF THE COURT OF APPEALS. MORE, PETITIONER SUBSEQUENTLY SUBMITTED DURING THE PENDENCY OF THE PROCEEDINGS COPIES OF THE RELEVANT DOCUMENTS IN THE CASES BELOW. C. PETITIONER HAS A MERITORIOUS APPEAL, AND HE STANDS TO LOSE SUBSTANTIAL PROPERTY IF THE APPEAL IS NOT GIVEN DUE COURSE. THE RULES OF PROCEDURE MUST BE LIBERALLY CONSTRUED TO DO SUBSTANTIAL JUSTICE. II. RESPONDENT COURT OF APPEALS GRAVELY ERRED IN NOT RULING THAT ALL THE ELEMENTS OF UNLAWFUL DETAINER ARE PRESENT IN THE CASE AT BAR. III. RESPONDENT COURT OF APPEALS ERRED IN NOT RULING THAT THE RTC MANILA, BRANCH 47, COMMITTED REVERSIBLE ERROR IN AFFIRMING THE FINDING OF MTC MANILA, BRANCH 26, THAT PRIVATE RESPONDENTS CANNOT BE EJECTED FROM THE SUBJECT PROPERTY WITHOUT VIOLATING THEIR SECURITY OF TENURE EVEN IF THE TERM OF THE LEASE IS MONTH-TO-MONTH WHICH EXPIRES AT THE END OF EACH MONTH. IN THIS REGARD, A. RESPONDENT COURT OF APPEALS SHOULD HAVE RULED THAT THE RTC MANILA COMMITTED REVERSIBLE ERROR IN NOT RULING THAT TENANTS UNDER P.D. 1517 MAY BE EVICTED FOR NON-PAYMENT OF

RENT, TERMINATION OF LEASE OR OTHER GROUNDS FOR EJECTMENT. B. RESPONDENT COURT OF APPEALS SHOULD HAVE RULED THAT THE RTC MANILA COMMITTED REVERSIBLE ERROR IN NOT RULING THAT THE ALLEGED PRIORITY RIGHT TO BUY THE LOT THEY OCCUPY DOES NOT APPLY WHERE THE LANDOWNER DOES NOT INTEND TO SELL THE SUBJECT PROPERTY, AS IN THE CASE AT BAR. RESPONDENT COURT OF APPEALS SHOULD HAVE RULED THAT THE RTC MANILA COMMITTED REVERSIBLE ERROR IN RULING THAT THE SUBJECT PROPERTY IS LOCATED WITHIN A ZONAL IMPROVEMENT AREA OR APD. RESPONDENT COURT OF APPEALS SHOULD HAVE RULED THAT THE RTC MANILA COMMITTED REVERSIBLE ERROR IN NOT RULING THAT PRIVATE RESPONDENTS NON-COMPLIANCE WITH THE CONDITIONS UNDER THE LAW RESULT IN THE WAIVER OF PROTECTION AGAINST EVICTION. RESPONDENT COURT OF APPEALS SHOULD HAVE RULED THAT THE RTC MANILA COMMITTED REVERSIBLE ERROR IN NOT RULING THAT PRIVATE RESPONDENTS CANNOT BE ENTITLED TO PROTECTION UNDER P.D. 2016 SINCE THE GOVERNMENT HAS NO INTENTION OF ACQUIRING THE SUBJECT PROPERTY. RESPONDENT COURT OF APPEALS SHOULD HAVE RULED THAT THE RTC MANILA COMMITTED REVERSIBLE ERROR IN FINDING THAT THERE IS AN ON-GOING NEGOTIATION FOR THE SALE OF THE SUBJECT PROPERTY AND THAT IT RENDERS THE EVICTION OF PRIVATE RESPONDENTS PREMATURE. RESPONDENT COURT OF APPEALS SHOULD HAVE RULED THAT THE RTC MANILA COMMITTED REVERSIBLE ERROR IN NOT RULING THAT THE ALLEGED CASE FOR CONSIGNATION DOES NOT BAR THE EVICTION OF PRIVATE RESPONDENTS.

C.

D.

E.

F.

G.

IV. RESPONDENT COURT OF APPEALS GRAVELY ERRED IN NOT FINDING THAT RESPONDENTS SHOULD PAY PETITIONER A REASONABLE COMPENSATION FOR THEIR USE AND OCCUPANCY OF THE SUBJECT PROPERTY IN THE AMOUNT OF AT LEAST P10,000.00 PER MONTH FROM THE DATE THEY LAST PAID RENT UNTIL THE TIME THEY ACTUALLY VACATE THE SAME, WITH LEGAL INTEREST AT THE MAXIMUM RATE ALLOWED BY LAW UNTIL PAID. V. RESPONDENT COURT OF APPEALS GRAVELY ERRED IN NOT FINDING THAT RESPONDENTS SHOULD PAY PETITIONER ATTORNEYS FEES AND EXPENSES OF LITIGATION OF AT LEAST P20,000.00, PLUS COSTS.[18] Petitioner submits that a relaxation of the rigid rules of technical procedure is called for in view of the attendant circumstances showing that the objectives of the rule on certification of non-forum shopping and the rule requiring material portions of the record be attached to the petition have not been glaringly violated and, more importantly, the petition is meritorious.

The proper recourse of an aggrieved party from a decision of the CA is a petition for review on certiorari under Rule 45 of the Rules of Court. However, if the error, subject of the recourse, is one of jurisdiction, or the act complained of was perpetrated by a court with grave abuse of discretion amounting to lack or excess of jurisdiction, the proper remedy available to the aggrieved party is a petition for certiorari under Rule 65 of the said Rules. As enunciated by the Court in Fortich vs. Corona:[19] Anent the first issue, in order to determine whether the recourse of petitioners is proper or not, it is necessary to draw a line between an error of judgment and an error of jurisdiction. An error of judgment is one which the court may commit in the exercise of its jurisdiction, and which error is reviewable only by an appeal. On the other hand, an error of jurisdiction is one where the act complained of was issued by the court, officer or a quasi-judicial body without or in excess of jurisdiction, or with grave abuse of discretion which is tantamount to lack or in excess of jurisdiction. This error is correctible only by the extraordinary writ of certiorari.[20] (Emphasis supplied). Inasmuch as the present petition principally assails the dismissal of the petition on ground of procedural flaws involving the jurisdiction of the court a quo to entertain the petition, it falls within the ambit of a special civil action for certiorari under Rule 65 of the Rules of Court. At the time the instant petition for certiorari was filed, i.e., on July 17, 1997, the prevailing rule is the newly promulgated 1997 Rules of Civil Procedure. However, considering that the CA Resolution being assailed was rendered on March 21, 1997, the applicable rule is the three-month reglementary period, established by jurisprudence.[21] Petitioner received notice of the assailed CA Resolution dismissing his petition for review on April 4, 1997. He filed his motion reconsideration on April 17, 1997, using up only thirteen days of the 90-day period. Petitioner received the CA Resolution denying his motion on July 3, 1997 and fourteen days later, or on July 17, 1997, he filed a motion for 30-day extension of time to file a petition for review which was granted by us; and petitioner duly filed his petition on August 15, 1997, which is well-within the period of extension granted to him. We now go to the merits of the case. We find the instant petition partly meritorious. The requirement regarding the need for a certification of non-forum shopping in cases filed before the CA and the corresponding sanction for non-compliance thereto are found in the then prevailing Revised Circular No. 28-91.[22] It provides that the petitioner himself must make the certification against forum shopping and a violation thereof shall be a cause for the summary dismissal of the multiple petition or complaint. The rationale for the rule of personal execution of the certification by the petitioner himself is that it is only the petitioner who has actual knowledge of whether or not he has initiated similar actions or proceedings in other courts or tribunals; even counsel of record may be unaware of such fact. [23] The Court has ruled that with respect to the contents of the certification, the rule on substantial compliance may be availed of. This is so because the requirement of strict compliance with the rule regarding the certification of non-forum shopping simply underscores its mandatory nature in that the certification cannot be altogether dispensed with or its requirements completely disregarded, but it does not thereby interdict substantial compliance with its provisions under justifiable circumstances.[24] The petition for review filed before the CA contains a certification against forum shopping but said certification was signed by petitioners counsel. In submitting the certification of non-forum shopping duly signed by himself in his motion for reconsideration,[25] petitioner has aptly drawn the Courts attention to the physical impossibility of filing the petition for review within the 15-day reglementary period to appeal considering that he is a resident of 1125 South Jefferson Street, Roanoke, Virginia, U.S.A. were he to personally accomplish and sign the certification.

We fully agree with petitioner that it was physically impossible for the petition to have been prepared and sent to the petitioner in the United States, for him to travel from Virginia, U.S.A. to the nearest Philippine Consulate in Washington, D.C., U.S.A., in order to sign the certification before the Philippine Consul, and for him to send back the petition to the Philippines within the 15-day reglementary period. Thus, we find that petitioner has adequately explained his failure to personally sign the certification which justifies relaxation of the rule. We have stressed that the rules on forum shopping, which were precisely designed to promote and facilitate the orderly administration of justice, should not be interpreted with such absolute literalness as to subvert its own ultimate and legitimate objective[26] which is simply to prohibit and penalize the evils of forum-shopping.[27] The subsequent filing of the certification duly signed by the petitioner himself should thus be deemed substantial compliance, pro hac vice. In like manner, the failure of the petitioner to comply with Section 3, paragraph b, Rule 6 of the RIRCA, that is, to append to his petition copies of the pleadings and other material portions of the records as would support the petition, does not justify the outright dismissal of the petition. It must be emphasized that the RIRCA gives the appellate court a certain leeway to require parties to submit additional documents as may be necessary in the interest of substantial justice. Under Section 3, paragraph d of Rule 3 of the RIRCA,[28] the CA may require the parties to complete the annexes as the court deems necessary, and if the petition is given due course, the CA may require the elevation of a complete record of the case as provided for under Section 3(d)(5) of Rule 6 of the RIRCA.[29] At any rate, petitioner attached copies of the pleadings and other material portions of the records below with his motion for reconsideration.[30] In Jaro vs. Court of Appeals,[31] the Court reiterated the doctrine laid down in Cusi-Hernandez vs. Diaz[32] and Piglas-Kamao vs. National Labor Relations Commission[33] that subsequent submission of the missing documents with the motion for reconsideration amounts to substantial compliance which calls for the relaxation of the rules of procedure. We find no cogent reason to depart from this doctrine. Truly, in dismissing the petition for review, the CA had committed grave abuse of discretion amounting to lack of jurisdiction in putting a premium on technicalities at the expense of a just resolution of the case. Needless to stress, "a litigation is not a game of technicalities."[34] When technicality deserts its function of being an aid to justice, the Court is justified in exempting from its operations a particular case.[35] Technical rules of procedure should be used to promote, not frustrate justice. While the swift unclogging of court dockets is a laudable objective, granting substantial justice is an even more urgent ideal.[36] The Courts pronouncement in Republic vs. Court of Appeals[37] is worth echoing: cases should be determined on the merits, after full opportunity to all parties for ventilation of their causes and defenses, rather than on technicality or some procedural imperfections. In that way, the ends of justice would be better served.[38] Thus, what should guide judicial action is that a party litigant is given the fullest opportunity to establish the merits of his action or defense rather than for him to lose life, honor or property on mere technicalities.[39] This guideline is especially true when the petitioner has satisfactorily explained the lapse and fulfilled the requirements in his motion for reconsideration, [40] as in this case. In addition, petitioner prays that we decide the present petition on the merits without need of remanding the case to the CA. He insists that all the elements of unlawful detainer are present in the case. He further argues that the alleged priority right to buy the lot they occupy does not apply where the landowner does not intend to sell the subject property, as in the case; that respondents cannot be entitled to protection under P.D. No. 2016 since the government has no intention of acquiring the

subject property, nor is the subject property located within a zonal improvement area; and, that assuming that there is a negotiation for the sale of the subject property or a pending case for consignation of rentals, these do not bar the eviction of respondents. We are not persuaded. We shall refrain from ruling on the foregoing issues in the present petition for certiorari. The issues involved are factual issues which inevitably require the weighing of evidence. These are matters that are beyond the province of this Court in a special civil action for certiorari. These issues are best addressed to the CA in the petition for review filed before it. As an appellate court, it is empowered to require parties to submit additional documents, as it may find necessary, or to receive evidence, to promote the ends of justice, pursuant to the last paragraph of Section 9, B.P. Blg. 129, otherwise known as The Judiciary Reorganization Act of 1980, to wit: The Intermediate Appellate Court shall have the power to try cases and conduct hearings, receive evidence and perform any and all acts necessary to resolve factual issues raised in cases falling within its original and appellate jurisdiction, including the power to grant and conduct new trials or further proceedings. WHEREFORE, the petition is PARTLY GRANTED. The Resolutions dated March 21, 1997 and June 23, 1997 of the Court of Appeals in CA-G.R. SP No. 41394 are REVERSED and SET ASIDE. The case is REMANDED to the Court of Appeals for further proceedings in CA-G.R. No. 41394, entitled, Antonio T. Donato vs. Hon. Judge of the Regional Trial Court of Manila, Branch 47, Filomeno Arcepe, et al. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 144025 December 27, 2002 SPS. RENE GONZAGA and LERIO GONZAGA, petitioners, vs. HON. COURT OF APPEALS, Second Division, Manila, HON. QUIRICO G. DEFENSOR, Judge, RTC, Branch 36, Sixth Judicial Region, Iloilo City, and LUCKY HOMES, INC., represented by WILSON JESENA, JR., as Manager, respondents. DECISION CORONA, J.: Before this Court is a petition for review on certiorari seeking the reversal of the decision 1 of the Court of Appeals dated December 29, 1999 and its resolution dated June 1, 2000 in CA-G.R. SP No. 54587. The records disclose that, sometime in 1970, petitioner-spouses purchased a parcel of land from private respondent Lucky Homes, Inc., situated in Iloilo and containing an area of 240 square meters. Said lot was specifically denominated as Lot No. 19 under Transfer Certificate of Title (TCT) No. 28254 and was mortgaged to the Social Security System (SSS) as security for their housing loan. Petitioners then started the construction of their house, not on Lot No. 19 but on Lot No. 18, as private respondent mistakenly identified Lot No. 18 as Lot No. 19. Upon realizing its error, private respondent, through its general manager, informed petitioners of such mistake but the latter offered to buy Lot No. 18 in order to widen their premises. Thus, petitioners continued with the construction of their house. However, petitioners defaulted in the payment of their housing loan from SSS. Consequently, Lot No. 19 was foreclosed by SSS and petitioners certificate of title was cancelled and a new one was issued in the name of SSS. After Lot No. 19 was foreclosed, petitioners offered to swap Lot Nos. 18 and 19 and demanded from private respondent that their contract of sale be reformed and another deed of sale be executed with respect to Lot No. 18, considering that their house was built therein. However, private respondent refused. This prompted petitioners to file, on June 13, 1996, an action for reformation of contract and damages with the Regional Trial Court of Iloilo City, Branch 36, which was docketed as Civil Case No. 17115. On January 15, 1998, the trial court 2 rendered its decision dismissing the complaint for lack of merit and ordering herein petitioners to pay private respondent the amount of P10,000 as moral damages and another P10,000 as attorneys fees. The pertinent conclusion of the trial court reads as follows: "Aware of such fact, the plaintiff nonetheless continued to stay in the premises of Lot 18 on the proposal that he would also buy the same. Plaintiff however failed to buy Lot 18 and likewise defaulted in the payment of his loan with the SSS involving Lot 19. Consequently Lot 19 was foreclosed and sold at public auction. Thereafter TCT No. T-29950 was cancelled and in lieu thereof TCT No. T-86612 (Exh. 9) was issued in favor of SSS. This being the situation obtaining, the reformation of instruments, even if allowed, or the swapping of Lot 18 and Lot 19 as earlier proposed by the plaintiff, is no longer feasible considering that plaintiff is no longer the owner of Lot 19, otherwise, defendant will be losing Lot 18 without any substitute therefore (sic). Upon the other hand, plaintiff will be unjustly enriching himself having in its favor both Lot 19 which was earlier mortgaged by him and subsequently foreclosed by SSS, as well as Lot 18 where his house is presently standing. "The logic and common sense of the situation lean heavily in favor of the defendant. It is evident that

what plaintiff had bought from the defendant is Lot 19 covered by TCT No. 28254 which parcel of land has been properly indicated in the instruments and not Lot 18 as claimed by the plaintiff. The contracts being clear and unmistakable, they reflect the true intention of the parties, besides the plaintiff failed to assail the contracts on mutual mistake, hence the same need no longer be reformed."3 On June 22, 1998, a writ of execution was issued by the trial court. Thus, on September 17, 1998, petitioners filed an urgent motion to recall writ of execution, alleging that the court a quo had no jurisdiction to try the case as it was vested in the Housing and Land Use Regulatory Board (HLURB) pursuant to PD 957 (The Subdivision and Condominium Buyers Protective Decree). Conformably, petitioners filed a new complaint against private respondent with the HLURB. Likewise, on June 30, 1999, petitioner-spouses filed before the Court of Appeals a petition for annulment of judgment, premised on the ground that the trial court had no jurisdiction to try and decide Civil Case No. 17115. In a decision rendered on December 29, 1999, the Court of Appeals denied the petition for annulment of judgment, relying mainly on the jurisprudential doctrine of estoppel as laid down in the case of Tijam vs. Sibonghanoy.4 Their subsequent motion for reconsideration having been denied, petitioners filed this instant petition, contending that the Court of Appeals erred in dismissing the petition by applying the principle of estoppel, even if the Regional Trial Court, Branch 36 of Iloilo City had no jurisdiction to decide Civil Case No. 17115. At the outset, it should be stressed that petitioners are seeking from us the annulment of a trial court judgment based on lack of jurisdiction. Because it is not an appeal, the correctness of the judgment is not in issue here. Accordingly, there is no need to delve into the propriety of the decision rendered by the trial court. Petitioners claim that the recent decisions of this Court have already abandoned the doctrine laid down in Tijam vs. Sibonghanoy.5 We do not agree. In countless decisions, this Court has consistently held that, while an order or decision rendered without jurisdiction is a total nullity and may be assailed at any stage, active participation in the proceedings in the court which rendered the order or decision will bar such party from attacking its jurisdiction. As we held in the leading case of Tijam vs. Sibonghanoy:6 "A party may be estopped or barred from raising a question in different ways and for different reasons. Thus we speak of estoppel in pais, or estoppel by deed or by record, and of estoppel by laches. xxx "It has been held that a party cannot invoke the jurisdiction of a court to secure affirmative relief against his opponent and, after obtaining or failing to obtain such relief, repudiate, or question that same jurisdiction x x x x [T]he question whether the court had jurisdiction either of the subject matter of the action or of the parties was not important in such cases because the party is barred from such conduct not because the judgment or order of the court is valid and conclusive as an adjudication, but for the reason that such a practice can not be tolerated obviously for reasons of public policy." Tijam has been reiterated in many succeeding cases. Thus, in Orosa vs. Court of Appeals;7 Ang Ping vs. Court of Appeals;8 Salva vs. Court of Appeals;9 National Steel Corporation vs. Court of Appeals;10 Province of Bulacan vs. Court of Appeals;11 PNOC Shipping and Transport Corporation vs. Court of Appeals,12 this Court affirmed the rule that a partys active participation in all stages of the case before the trial court, which includes invoking the courts authority to grant affirmative relief, effectively estops such party from later challenging that same courts jurisdiction. In the case at bar, it was petitioners themselves who invoked the jurisdiction of the court a quo by

instituting an action for reformation of contract against private respondents. It appears that, in the proceedings before the trial court, petitioners vigorously asserted their cause from start to finish. Not even once did petitioners ever raise the issue of the courts jurisdiction during the entire proceedings which lasted for two years. It was only after the trial court rendered its decision and issued a writ of execution against them in 1998 did petitioners first raise the issue of jurisdiction and it was only because said decision was unfavorable to them. Petitioners thus effectively waived their right to question the courts jurisdiction over the case they themselves filed. Petitioners should bear the consequence of their act. They cannot be allowed to profit from their omission to the damage and prejudice of the private respondent. This Court frowns upon the undesirable practice of a party submitting his case for decision and then accepting the judgment but only if favorable, and attacking it for lack of jurisdiction if not.13 Public policy dictates that this Court must strongly condemn any double-dealing by parties who are disposed to trifle with the courts by deliberately taking inconsistent positions, in utter disregard of the elementary principles of justice and good faith. 14 There is no denying that, in this case, petitioners never raised the issue of jurisdiction throughout the entire proceedings in the trial court. Instead, they voluntarily and willingly submitted themselves to the jurisdiction of said court. It is now too late in the day for them to repudiate the jurisdiction they were invoking all along. WHEREFORE, the petition for review is hereby DENIED. SO ORDERED.

SECOND DIVISION [G.R. No. 124644. February 5, 2004] ARNEL ESCOBAL, petitioner, vs. HON. FRANCIS GARCHITORENA, Presiding Justice of the Sandiganbayan, Atty. Luisabel Alfonso-Cortez, Executive Clerk of Court IV of the Sandiganbayan, Hon. David C. Naval, Presiding Judge of the Regional Trial Court of Naga City, Branch 21, Luz N. Nueca, respondents. DECISION CALLEJO, SR., J.: This is a petition for certiorari with a prayer for the issuance of a temporary restraining order and preliminary injunction filed by Arnel Escobal seeking the nullification of the remand by the Presiding Justice of the Sandiganbayan of the records of Criminal Case No. 90-3184 to the Regional Trial Court (RTC) of Naga City, Branch 21. The petition at bench arose from the following milieu: The petitioner is a graduate of the Philippine Military Academy, a member of the Armed Forces of the Philippines and the Philippine Constabulary, as well as the Intelligence Group of the Philippine National Police. On March 16, 1990, the petitioner was conducting surveillance operations on drug trafficking at the Sa Harong Caf Bar and Restaurant located along Barlin St., Naga City. He somehow got involved in a shooting incident, resulting in the death of one Rodney Rafael N. Nueca. On February 6, 1991, an amended Information was filed with the RTC of Naga City, Branch 21, docketed as Criminal Case No. 90-3184 charging the petitioner and a certain Natividad Bombita, Jr. alias Jun Bombita with murder. The accusatory portion of the amended Information reads: That on or about March 16, 1990, in the City of Naga, Philippines, and within the jurisdiction of this Honorable Court by virtue of the Presidential Waiver, dated June 1, 1990, with intent to kill, conspiring and confederating together and mutually helping each other, did, then and there, willfully, unlawfully and feloniously attack, assault and maul one Rodney Nueca and accused 2Lt Arnel Escobal armed with a caliber .45 service pistol shoot said Rodney Nueca thereby inflicting upon him serious, mortal and fatal wounds which caused his death, and as a consequence thereof, complainant LUZ N. NUECA, mother of the deceased victim, suffered actual and compensatory damages in the amount of THREE HUNDRED SIXTY-SEVEN THOUSAND ONE HUNDRED SEVEN & 95/100 (P367,107.95) PESOS, Philippine Currency, and moral and exemplary damages in the amount of ONE HUNDRED THIRTY-FIVE THOUSAND (P135,000.00) PESOS, Philippine Currency.[1] On March 19, 1991, the RTC issued an Order preventively suspending the petitioner from the service under Presidential Decree No. 971, as amended by P.D. No. 1847. When apprised of the said order, the General Headquarters of the PNP issued on October 6, 1992 Special Order No. 91, preventively suspending the petitioner from the service until the case was terminated.[2] The petitioner was arrested by virtue of a warrant issued by the RTC, while accused Bombita remained at large. The petitioner posted bail and was granted temporary liberty. When arraigned on April 9, 1991,[3] the petitioner, assisted by counsel, pleaded not guilty to the offense charged. Thereafter, on December 23, 1991, the petitioner filed a Motion to Quash[4] the Information alleging that as mandated by Commonwealth Act No. 408,[5] in relation to Section 1, Presidential Decree No. 1822 and Section 95 of R.A. No. 6975, the court martial, not the RTC, had jurisdiction over criminal cases involving PNP members and officers. Pending the resolution of the motion, the petitioner on June 25, 1993 requested the Chief of the PNP

for his reinstatement. He alleged that under R.A. No. 6975, his suspension should last for only 90 days, and, having served the same, he should now be reinstated. On September 23, 1993,[6] the PNP Region V Headquarters wrote Judge David C. Naval requesting information on whether he issued an order lifting the petitioners suspension. The RTC did not reply. Thus, on February 22, 1994, the petitioner filed a motion in the RTC for the lifting of the order of suspension. He alleged that he had served the 90-day preventive suspension and pleaded for compassionate justice. The RTC denied the motion on March 9, 1994.[7] Trial thereafter proceeded, and the prosecution rested its case. The petitioner commenced the presentation of his evidence. On July 20, 1994, he filed a Motion to Dismiss[8] the case. Citing Republic of the Philippines v. Asuncion, et al.,[9] he argued that since he committed the crime in the performance of his duties, the Sandiganbayan had exclusive jurisdiction over the case. On October 28, 1994, the RTC issued an Order[10] denying the motion to dismiss. It, however, ordered the conduct of a preliminary hearing to determine whether or not the crime charged was committed by the petitioner in relation to his office as a member of the PNP. In the preliminary hearing, the prosecution manifested that it was no longer presenting any evidence in connection with the petitioners motion. It reasoned that it had already rested its case, and that its evidence showed that the petitioner did not commit the offense charged in connection with the performance of his duties as a member of the Philippine Constabulary. According to the prosecution, they were able to show the following facts: (a) the petitioner was not wearing his uniform during the incident; (b) the offense was committed just after midnight; (c) the petitioner was drunk when the crime was committed; (d) the petitioner was in the company of civilians; and, (e) the offense was committed in a beerhouse called Sa Harong Caf Bar and Restaurant.[11] For his part, the petitioner testified that at about 10:00 p.m. on March 15, 1990, he was at the Sa Harong Caf Bar and Restaurant at Barlin St., Naga City, to conduct surveillance on alleged drug trafficking, pursuant to Mission Order No. 03-04 issued by Police Superintendent Rufo R. Pulido. The petitioner adduced in evidence the sworn statements of Benjamin Cario and Roberto Fajardo who corroborated his testimony that he was on a surveillance mission on the aforestated date.[12] On July 31, 1995, the trial court issued an Order declaring that the petitioner committed the crime charged while not in the performance of his official function. The trial court added that upon the enactment of R.A. No. 7975,[13] the issue had become moot and academic. The amendatory law transferred the jurisdiction over the offense charged from the Sandiganbayan to the RTC since the petitioner did not have a salary grade of 27 as provided for in or by Section 4(a)(1), (3) thereof. The trial court nevertheless ordered the prosecution to amend the Information pursuant to the ruling in Republic v. Asuncion[14] and R.A. No. 7975. The amendment consisted in the inclusion therein of an allegation that the offense charged was not committed by the petitioner in the performance of his duties/functions, nor in relation to his office. The petitioner filed a motion for the reconsideration[15] of the said order, reiterating that based on his testimony and those of Benjamin Cario and Roberto Fajardo, the offense charged was committed by him in relation to his official functions. He asserted that the trial court failed to consider the exceptions to the prohibition. He asserted that R.A. No. 7975, which was enacted on March 30, 1995, could not be applied retroactively.[16] The petitioner further alleged that Luz Nacario Nueca, the mother of the victim, through counsel, categorically and unequivocably admitted in her complaint filed with the Peoples Law Enforcement Board (PLEB) that he was on an official mission when the crime was committed. On November 24, 1995, the RTC made a volte face and issued an Order reversing and setting aside its July 31, 1995 Order. It declared that based on the petitioners evidence, he was on official mission when the shooting occurred. It concluded that the prosecution failed to adduce controverting evidence

thereto. It likewise considered Luz Nacario Nuecas admission in her complaint before the PLEB that the petitioner was on official mission when the shooting happened. The RTC ordered the public prosecutor to file a Re-Amended Information and to allege that the offense charged was committed by the petitioner in the performance of his duties/functions or in relation to his office; and, conformably to R.A. No. 7975, to thereafter transmit the same, as well as the complete records with the stenographic notes, to the Sandiganbayan, to wit: WHEREFORE, the Order dated July 31, 1995 is hereby SET ASIDE and RECONSIDERED, and it is hereby declared that after preliminary hearing, this Court has found that the offense charged in the Information herein was committed by the accused in his relation to his function and duty as member of the then Philippine Constabulary. Conformably with R.A. No. 7975 and the ruling of the Supreme Court in Republic v. Asuncion, et al., G.R. No. 180208, March 11, 1994: (1) The City Prosecutor is hereby ordered to file a Re-Amended Information alleging that the offense charged was committed by the Accused in the performance of his duties/functions or in relation to his office, within fifteen (15) days from receipt hereof; (2) After the filing of the Re-Amended Information, the complete records of this case, together with the transcripts of the stenographic notes taken during the entire proceedings herein, are hereby ordered transmitted immediately to the Honorable Sandiganbayan, through its Clerk of Court, Manila, for appropriate proceedings.[17] On January 8, 1996, the Presiding Justice of the Sandiganbayan ordered the Executive Clerk of Court IV, Atty. Luisabel Alfonso-Cortez, to return the records of Criminal Case No. 90-3184 to the court of origin, RTC of Naga City, Branch 21. It reasoned that under P.D. No. 1606, as amended by R.A. No. 7975,[18] the RTC retained jurisdiction over the case, considering that the petitioner had a salary grade of 23. Furthermore, the prosecution had already rested its case and the petitioner had commenced presenting his evidence in the RTC; following the rule on continuity of jurisdiction, the latter court should continue with the case and render judgment therein after trial. Upon the remand of the records, the RTC set the case for trial on May 3, 1996, for the petitioner to continue presenting his evidence. Instead of adducing his evidence, the petitioner filed a petition for certiorari, assailing the Order of the Presiding Justice of the Sandiganbayan remanding the records of the case to the RTC. The threshold issue for resolution is whether or not the Presiding Justice of the Sandiganbayan committed a grave abuse of his discretion amounting to excess or lack of jurisdiction in ordering the remand of the case to the RTC. The petitioner contends that when the amended information was filed with the RTC on February 6, 1991, P.D. No. 1606 was still in effect. Under Section 4(a) of the decree, the Sandiganbayan had exclusive jurisdiction over the case against him as he was charged with homicide with the imposable penalty of reclusion temporal, and the crime was committed while in the performance of his duties. He further asserts that although P.D. No. 1606, as amended by P.D. No. 1861 and by R.A. No. 7975 provides that crimes committed by members and officers of the PNP with a salary grade below 27 committed in relation to office are within the exclusive jurisdiction of the proper RTC, the amendment thus introduced by R.A. No. 7975 should not be applied retroactively. This is so, the petitioner asserts, because under Section 7 of R.A. No. 7975, only those cases where trial has not begun in the Sandiganbayan upon the effectivity of the law should be referred to the proper trial court.

The private complainant agrees with the contention of the petitioner. In contrast, the Office of the Special Prosecutor contends that the Presiding Justice of the Sandiganbayan acted in accordance with law when he ordered the remand of the case to the RTC. It asserts that R.A. No. 7975 should be applied retroactively. Although the Sandiganbayan had jurisdiction over the crime committed by the petitioner when the amended information was filed with the RTC, by the time it resolved petitioners motion to dismiss on July 31, 1995, R.A. No. 7975 had already taken effect. Thus, the law should be given retroactive effect. The Ruling of the Court The respondent Presiding Justice acted in accordance with law and the rulings of this Court when he ordered the remand of the case to the RTC, the court of origin. The jurisdiction of the court over criminal cases is determined by the allegations in the Information or the Complaint and the statute in effect at the time of the commencement of the action, unless such statute provides for a retroactive application thereof. The jurisdictional requirements must be alleged in the Information.[19] Such jurisdiction of the court acquired at the inception of the case continues until the case is terminated.[20] Under Section 4(a) of P.D. No. 1606 as amended by P.D. No. 1861, the Sandiganbayan had exclusive jurisdiction in all cases involving the following: (1) Violations of Republic Act No. 3019, as amended, otherwise known as the Anti-Graft and Corrupt Practices Act, Republic Act No. 1379, and Chapter II, Section 2, Title VII of the Revised Penal Code; (2) Other offenses or felonies committed by public officers and employees in relation to their office, including those employed in government-owned or controlled corporations, whether simple or complexed with other crimes, where the penalty prescribed by law is higher than prision correccional or imprisonment for six (6) years, or a fine of P6,000.00 .[21] However, for the Sandiganbayan to have exclusive jurisdiction under the said law over crimes committed by public officers in relation to their office, it is essential that the facts showing the intimate relation between the office of the offender and the discharge of official duties must be alleged in the Information. It is not enough to merely allege in the Information that the crime charged was committed by the offender in relation to his office because that would be a conclusion of law.[22] The amended Information filed with the RTC against the petitioner does not contain any allegation showing the intimate relation between his office and the discharge of his duties. Hence, the RTC had jurisdiction over the offense charged when on November 24, 1995, it ordered the re-amendment of the Information to include therein an allegation that the petitioner committed the crime in relation to office. The trial court erred when it ordered the elevation of the records to the Sandiganbayan. It bears stressing that R.A. No. 7975 amending P.D. No. 1606 was already in effect and under Section 2 of the law: In cases where none of the principal accused are occupying positions corresponding to salary grade 27 or higher, as prescribed in the said Republic Act No. 6758, or PNP officers occupying the rank of superintendent or higher, or their equivalent, exclusive jurisdiction thereof shall be vested in the proper Regional Trial Court, Metropolitan Trial Court, Municipal Trial Court, and Municipal Circuit Trial Court, as the case may be, pursuant to their respective jurisdiction as provided in Batas Pambansa Blg. 129. Under the law, even if the offender committed the crime charged in relation to his office but occupies a position corresponding to a salary grade below 27, the proper Regional Trial Court or Municipal Trial Court, as the case may be, shall have exclusive jurisdiction over the case. In this case, the petitioner was a Police Senior Inspector, with salary grade 23. He was charged with homicide punishable by

reclusion temporal. Hence, the RTC had exclusive jurisdiction over the crime charged conformably to Sections 20 and 32 of Batas Pambansa Blg. 129, as amended by Section 2 of R.A. No. 7691. The petitioners contention that R.A. No. 7975 should not be applied retroactively has no legal basis. It bears stressing that R.A. No. 7975 is a substantive procedural law which may be applied retroactively. [23] IN LIGHT OF ALL THE FOREGOING, the petition is DISMISSED. No pronouncement as to costs. SO ORDERED.

EN BANC [G.R. No. 169914, April 18, 2008] ASIA'S EMERGING DRAGON CORPORATION, PETITIONER, VS. DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS, SECRETARY LEANDRO R. MENDOZA AND MANILA INTERNATIONAL AIRPORT AUTHORITY, RESPONDENTS. [G.R. NO. 174166] REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS AND MANILA INTERNATIONAL AIRPORT AUTHORITY PETITIONERS, VS. HON. COURT OF APPEALS AND SALACNIB BATERINA, RESPONDENTS. DECISION CHICO-NAZARIO, J.: This Court is still continuously besieged by Petitions arising from the awarding of the Ninoy Aquino International Airport International Passenger Terminal III (NAIA IPT III) Project to the Philippine International Air Terminals Co., Inc. (PIATCO), despite the promulgation by this Court of Decisions and Resolutions in two cases, Agan, Jr. v. Philippine International Air Terminals Co., Inc. [1] and Republic v. Gingoyon,[2] which already resolved the more basic and immediate issues arising from the said award. The sheer magnitude of the project, the substantial cost of its building, the expected high profits from its operations, and its remarkable impact on the Philippine economy, consequently raised significant interest in the project from various quarters. Once more, two new Petitions concerning the NAIA IPT III Project are before this Court. It is only appropriate, however, that the Court first recounts its factual and legal findings in Agan and Gingoyon to ascertain that its ruling in the Petitions at bar shall be consistent and in accordance therewith. Agan, Air 155001, Jr. Terminals v. Co., 155547, Inc. Philippine (G.R. and International Nos. 155661)

Already established and incontrovertible are the following facts in Agan: In August 1989, the [Department of Trade and Communications (DOTC)] engaged the services of Aeroport de Paris (ADP) to conduct a comprehensive study of the Ninoy Aquino International Airport (NAIA) and determine whether the present airport can cope with the traffic development up to the year 2010. The study consisted of two parts: first, traffic forecasts, capacity of existing facilities, NAIA future requirements, proposed master plans and development plans; and second, presentation of the preliminary design of the passenger terminal building. The ADP submitted a Draft Final Report to the DOTC in December 1989. Some time in 1993, six business leaders consisting of John Gokongwei, Andrew Gotianun, Henry Sy, Sr., Lucio Tan, George Ty and Alfonso Yuchengco met with then President Fidel

V. Ramos to explore the possibility of investing in the construction and operation of a new international airport terminal. To signify their commitment to pursue the project, they formed the Asia's Emerging Dragon Corp. (AEDC) which was registered with the Securities and Exchange Commission (SEC) on September 15, 1993. On October 5, 1994, AEDC submitted an unsolicited proposal to the Government through the DOTC/[Manila International Airport Authority (MIAA)] for the development of NAIA International Passenger Terminal III (NAIA IPT III) under a build-operate-and-transfer arrangement pursuant to RA 6957 as amended by RA 7718 (BOT Law). On December 2, 1994, the DOTC issued Dept. Order No. 94-832 constituting the Prequalification Bids and Awards Committee (PBAC) for the implementation of the NAIA IPT III project. On March 27, 1995, then DOTC Secretary Jose Garcia endorsed the proposal of AEDC to the National Economic and Development Authority (NEDA). A revised proposal, however, was forwarded by the DOTC to NEDA on December 13, 1995. On January 5, 1996, the NEDA Investment Coordinating Council (NEDA ICC) - Technical Board favorably endorsed the project to the ICC - Cabinet Committee which approved the same, subject to certain conditions, on January 19, 1996. On February 13, 1996, the NEDA passed Board Resolution No. 2 which approved the NAIA IPT III project. On June 7, 14, and 21, 1996, DOTC/MIAA caused the publication in two daily newspapers of an invitation for competitive or comparative proposals on AEDC's unsolicited proposal, in accordance with Sec. 4-A of RA 6957, as amended. The alternative bidders were required to submit three (3) sealed envelopes on or before 5:00 p.m. of September 20, 1996. The first envelope should contain the Prequalification Documents, the second envelope the Technical Proposal, and the third envelope the Financial Proposal of the proponent. On June 20, 1996, PBAC Bulletin No. 1 was issued, postponing the availment of the Bid Documents and the submission of the comparative bid proposals. Interested firms were permitted to obtain the Request for Proposal Documents beginning June 28, 1996, upon submission of a written application and payment of a non-refundable fee of P50,000.00 (US$2,000). The Bid Documents issued by the PBAC provided among others that the proponent must have adequate capability to sustain the financing requirement for the detailed engineering, design, construction, operation, and maintenance phases of the project. The proponent would be evaluated based on its ability to provide a minimum amount of equity to the project, and its capacity to secure external financing for the project. On July 23, 1996, the PBAC issued PBAC Bulletin No. 2 inviting all bidders to a pre-bid conference on July 29, 1996. On August 16, 1996, the PBAC issued PBAC Bulletin No. 3 amending the Bid Documents. The following amendments were made on the Bid Documents: a. Aside from the fixed Annual Guaranteed Payment, the proponent shall include in its financial proposal an additional percentage of gross revenue share of the

Government, as follows: i. First 5 years 5.0% ii. Next 10 years 7.5% iii. Next 10 years 10.0% b. The amount of the fixed Annual Guaranteed Payment shall be subject of the price challenge. Proponent may offer an Annual Guaranteed Payment which need not be of equal amount, but payment of which shall start upon site possession. c. The project proponent must have adequate capability to sustain the financing requirement for the detailed engineering, design, construction, and/or operation and maintenance phases of the project as the case may be. For purposes of prequalification, this capability shall be measured in terms of: i. Proof of the availability of the project proponent and/or the consortium to provide the minimum amount of equity for the project; and ii. a letter testimonial from reputable banks attesting that the project proponent and/or the members of the consortium are banking with them, that the project proponent and/or the members are of good financial standing, and have adequate resources. d. The basis for the prequalification shall be the proponent's compliance with the minimum technical and financial requirements provided in the Bid Documents and the [Implementing Rules and Regulations (IRR)] of the BOT Law. The minimum amount of equity shall be 30% of the Project Cost. e. Amendments to the draft Concession Agreement shall be issued from time to time. Said amendments shall only cover items that would not materially affect the preparation of the proponent's proposal. On August 29, 1996, the Second Pre-Bid Conference was held where certain clarifications were made. Upon the request of prospective bidder People's Air Cargo & Warehousing Co., Inc (Paircargo), the PBAC warranted that based on Sec. 11.6, Rule 11 of the Implementing Rules and Regulations of the BOT Law, only the proposed Annual Guaranteed Payment submitted by the challengers would be revealed to AEDC, and that the challengers' technical and financial proposals would remain confidential. The PBAC also clarified that the list of revenue sources contained in Annex 4.2a of the Bid Documents was merely indicative and that other revenue sources may be included by the proponent, subject to approval by DOTC/MIAA. Furthermore, the PBAC clarified that only those fees and charges denominated as Public Utility Fees would be subject to regulation, and those charges which would be actually deemed Public Utility Fees could still be revised, depending on the outcome of PBAC's query on the matter with the Department of Justice. In September 1996, the PBAC issued Bid Bulletin No. 5, entitled "Answers to the Queries

of PAIRCARGO as Per Letter Dated September 3 and 10, 1996." Paircargo's queries and the PBAC's responses were as follows: 1. It is difficult for Paircargo and Associates to meet the required minimum equity requirement as prescribed in Section 8.3.4 of the Bid Documents considering that the capitalization of each member company is so structured to meet the requirements and needs of their current respective business undertaking/activities. In order to comply with this equity requirement, Paircargo is requesting PBAC to just allow each member of (sic) corporation of the Joint Venture to just execute an agreement that embodies a commitment to infuse the required capital in case the project is awarded to the Joint Venture instead of increasing each corporation's current authorized capital stock just for prequalification purposes. In prequalification, the agency is interested in one's financial capability at the time of prequalification, not future or potential capability. A commitment to put up equity once awarded the project is not enough to establish that "present" financial capability. However, total financial capability of all member companies of the Consortium, to be established by submitting the respective companies' audited financial statements, shall be acceptable. 2. At present, Paircargo is negotiating with banks and other institutions for the extension of a Performance Security to the joint venture in the event that the Concessions Agreement (sic) is awarded to them. However, Paircargo is being required to submit a copy of the draft concession as one of the documentary requirements. Therefore, Paircargo is requesting that they'd (sic) be furnished copy of the approved negotiated agreement between the PBAC and the AEDC at the soonest possible time. A copy of the draft Concession Agreement is included in the Bid Documents. Any material changes would be made known to prospective challengers through bid bulletins. However, a final version will be issued before the award of contract. The PBAC also stated that it would require AEDC to sign Supplement C of the Bid Documents (Acceptance of Criteria and Waiver of Rights to Enjoin Project) and to submit the same with the required Bid Security. On September 20, 1996, the consortium composed of People's Air Cargo and Warehousing Co., Inc. (Paircargo), Phil. Air and Grounds Services, Inc. (PAGS) and Security Bank Corp. (Security Bank) (collectively, Paircargo Consortium) submitted their competitive proposal to the PBAC. On September 23, 1996, the PBAC opened the first envelope containing the prequalification documents of the Paircargo Consortium. On the following day, September 24, 1996, the PBAC prequalified the Paircargo Consortium. On September 26, 1996, AEDC informed the PBAC in writing of its reservations as regards the Paircargo Consortium, which include: a. The lack of corporate approvals and financial capability of PAIRCARGO;

b. The lack of corporate approvals and financial capability of PAGS; c. The prohibition imposed by RA 337, as amended (the General Banking Act) on the amount that Security Bank could legally invest in the project; d. The inclusion of Siemens as a contractor of the PAIRCARGO Joint Venture, for prequalification purposes; and e. The appointment of Lufthansa as the facility operator, in view of the Philippine requirement in the operation of a public utility. The PBAC gave its reply on October 2, 1996, informing AEDC that it had considered the issues raised by the latter, and that based on the documents submitted by Paircargo and the established prequalification criteria, the PBAC had found that the challenger, Paircargo, had prequalified to undertake the project. The Secretary of the DOTC approved the finding of the PBAC. The PBAC then proceeded with the opening of the second envelope of the Paircargo Consortium which contained its Technical Proposal. On October 3, 1996, AEDC reiterated its objections, particularly with respect to Paircargo's financial capability, in view of the restrictions imposed by Section 21-B of the General Banking Act and Sections 1380 and 1381 of the Manual Regulations for Banks and Other Financial Intermediaries. On October 7, 1996, AEDC again manifested its objections and requested that it be furnished with excerpts of the PBAC meeting and the accompanying technical evaluation report where each of the issues they raised were addressed. On October 16, 1996, the PBAC opened the third envelope submitted by AEDC and the Paircargo Consortium containing their respective financial proposals. Both proponents offered to build the NAIA Passenger Terminal III for at least $350 million at no cost to the government and to pay the government: 5% share in gross revenues for the first five years of operation, 7.5% share in gross revenues for the next ten years of operation, and 10% share in gross revenues for the last ten years of operation, in accordance with the Bid Documents. However, in addition to the foregoing, AEDC offered to pay the government a total of P135 million as guaranteed payment for 27 years while Paircargo Consortium offered to pay the government a total of P17.75 billion for the same period. Thus, the PBAC formally informed AEDC that it had accepted the price proposal submitted by the Paircargo Consortium, and gave AEDC 30 working days or until November 28, 1996 within which to match the said bid, otherwise, the project would be awarded to Paircargo. As AEDC failed to match the proposal within the 30-day period, then DOTC Secretary Amado Lagdameo, on December 11, 1996, issued a notice to Paircargo Consortium regarding AEDC's failure to match the proposal. On February 27, 1997, Paircargo Consortium incorporated into Philippine International Airport Terminals Co., Inc. (PIATCO). AEDC subsequently protested the alleged undue preference given to PIATCO and

reiterated

its

objections

as

regards

the

prequalification

of

PIATCO.

On April 11, 1997, the DOTC submitted the concession agreement for the second-pass approval of the NEDA-ICC. On April 16, 1997, AEDC filed with the Regional Trial Court of Pasig a Petition for Declaration of Nullity of the Proceedings, Mandamus and Injunction against the Secretary of the DOTC, the Chairman of the PBAC, the voting members of the PBAC and Pantaleon D. Alvarez, in his capacity as Chairman of the PBAC Technical Committee. x x x x

On July 9, 1997, the DOTC issued the notice of award for the project to PIATCO. On July 12, 1997, the Government, through then DOTC Secretary Arturo T. Enrile, and PIATCO, through its President, Henry T. Go, signed the "Concession Agreement for the Build-Operate-and-Transfer Arrangement of the Ninoy Aquino International Airport Passenger Terminal III" (1997 Concession Agreement). x x x. On November 26, 1998, the Government and PIATCO signed an Amended and Restated Concession Agreement (ARCA). x x x. Subsequently, the Government and PIATCO signed three Supplements to the ARCA. The First Supplement was signed on August 27, 1999; the Second Supplement on September 4, 2000; and the Third Supplement on June 22, 2001 (collectively, Supplements). x x x x

Meanwhile, the MIAA which is charged with the maintenance and operation of the NAIA Terminals I and II, had existing concession contracts with various service providers to offer international airline airport services, such as in-flight catering, passenger handling, ramp and ground support, aircraft maintenance and provisions, cargo handling and warehousing, and other services, to several international airlines at the NAIA. x x x. On September 17, 2002, the workers of the international airline service providers, claiming that they stand to lose their employment upon the implementation of the questioned agreements, filed before this Court a petition for prohibition to enjoin the enforcement of said agreements. On October 15, 2002, the service providers, joining the cause of the petitioning workers, filed a motion for intervention and a petition-in-intervention. On October 24, 2002, Congressmen Salacnib Baterina, Clavel Martinez and Constantino Jaraula filed a similar petition with this Court. On November 6, 2002, several employees of the MIAA likewise filed a petition assailing the legality of the various agreements. On December 11, 2002, another group of Congressmen, Hon. Jacinto V. Paras, Rafael P.

Nantes, Eduardo C. Zialcita, Willie B. Villarama, Prospero C. Nograles, Prospero A. Pichay, Jr., Harlin Cast Abayon and Benasing O. Macaranbon, moved to intervene in the case as Respondents-Intervenors. They filed their Comment-In-Intervention defending the validity of the assailed agreements and praying for the dismissal of the petitions. During the pendency of the case before this Court, President Gloria Macapagal Arroyo, on November 29, 2002, in her speech at the 2002 Golden Shell Export Awards at Malacaang Palace, stated that she will not "honor (PIATCO) contracts which the Executive Branch's legal offices have concluded (as) null and void."[3] The Court first dispensed with the procedural issues raised in Agan, ruling that (a) the MIAA service providers and its employees, petitioners in G.R. Nos. 155001 and 155661, had the requisite standing since they had a direct and substantial interest to protect by reason of the implementation of the PIATCO Contracts which would affect their source of livelihood;[4] and (b) the members of the House of Representatives, petitioners in G.R. No. 155547, were granted standing in view of the serious legal questions involved and their impact on public interest.[5] As to the merits of the Petitions in Agan, the Court concluded that: In sum, this Court rules that in view of the absence of the requisite financial capacity of the Paircargo Consortium, predecessor of respondent PIATCO, the award by the PBAC of the contract for the construction, operation and maintenance of the NAIA IPT III is null and void. Further, considering that the 1997 Concession Agreement contains material and substantial amendments, which amendments had the effect of converting the 1997 Concession Agreement into an entirely different agreement from the contract bidded upon, the 1997 Concession Agreement is similarly null and void for being contrary to public policy. The provisions under Sections 4.04(b) and (c) in relation to Section 1.06 of the 1997 Concession Agreement and Section 4.04(c) in relation to Section 1.06 of the ARCA, which constitute a direct government guarantee expressly prohibited by, among others, the BOT Law and its Implementing Rules and Regulations are also null and void. The Supplements, being accessory contracts to the ARCA, are likewise null and void.[6] Hence, the fallo of the Court's Decision in Agan reads: WHEREFORE, the 1997 Concession Agreement, the Amended and Restated Concession Agreement and the Supplements thereto are set aside for being null and void.[7] In a Resolution[8] dated 21 January 2004, the Court denied with finality the Motions for Reconsideration of its 5 May 2003 Decision in Agan filed by therein respondents PIATCO and Congressmen Paras, et al., and respondents-intervenors.[9] Significantly, the Court declared in the same Resolution that: This Court, however, is not unmindful of the reality that the structures comprising the NAIA IPT III facility are almost complete and that funds have been spent by PIATCO in their construction. For the government to take over the said facility, it has to compensate respondent PIATCO as builder of the said structures . The compensation must be just and in accordance with law and equity for the government can not unjustly enrich itself at the expense of PIATCO and its investors.[10] (Emphasis ours.) It is these afore-quoted pronouncements that gave rise to the Petition in Gingoyon.

Republic

v.

Gingoyon

(G.R.

No.

166429)

According to the statement of facts in Gingoyon: After the promulgation of the rulingsin Agan, the NAIA 3 facilities have remained in the possession of PIATCO, despite the avowed intent of the Government to put the airport terminal into immediate operation. The Government and PIATCO conducted several rounds of negotiation regarding the NAIA 3 facilities. It also appears that arbitral proceedings were commenced before the International Chamber of Commerce International Court of Arbitration and the International Centre for the Settlement of Investment Disputes, although the Government has raised jurisdictional questions before those two bodies. Then, on 21 December 2004, the Government filed a Complaint for expropriation with the Pasay City Regional Trial Court (RTC), together with an Application for Special Raffle seeking the immediate holding of a special raffle. The Government sought upon the filing of the complaint the issuance of a writ of possession authorizing it to take immediatepossession and control over the NAIA 3 facilities. The Government also declared that it had deposited the amount of P3,002,125,000.00 (3 Billion) in Cash with the Land Bank of the Philippines, representing the NAIA 3 terminal's assessed value for taxation purposes. The case was raffled to Branch 117 of the Pasay City RTC, presided by respondent judge Hon. Henrick F. Gingoyon (Hon. Gingoyon). On the same day that the Complaint was filed, the RTC issued an Order directing the issuance of a writ of possession to the Government, authorizing it to "take or enter upon the possession" of the NAIA 3 facilities. Citing the case of City of Manila v. Serrano, the RTC noted that it had the ministerial duty to issue the writ of possession upon the filing of a complaint for expropriation sufficient in form and substance, and upon deposit made by the government of the amount equivalent to the assessed value of the property subject to expropriation. The RTC found these requisites present, particularly noting that "[t]he case record shows that [the Government has] deposited the assessed value of the [NAIA 3 facilities] in the Land Bank of the Philippines, an authorized depositary, as shown by the certification attached to their complaint." Also on the same day, the RTC issued a Writ of Possession. According to PIATCO, the Government was able to take possession over the NAIA 3 facilities immediately after the Writ of Possession was issued. However, on 4 January 2005, the RTC issued another Order designed to supplement its 21 December 2004 Order and the Writ of Possession. In the 4 January 2005 Order, now assailed in the present petition, the RTC noted that its earlier issuance of its writ of possession was pursuant to Section 2, Rule 67 of the 1997 Rules of Civil Procedure. However, it was observed that Republic Act No. 8974 (Rep. Act No. 8974), otherwise known as "An Act to Facilitate the Acquisition of Right-of-Way, Site or Location for National Government Infrastructure Projects and For Other Purposes" and its Implementing Rules and Regulations (Implementing Rules) had amended Rule 67 in many respects. There are at least two crucial differences between the respective procedures under Rep. Act No. 8974 and Rule 67. Under the statute, the Government is required to make immediate payment to the property owner upon the filing of the complaint to be entitled to a writ of

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

(1) The 2004 Resolution in Agan sets the base requirement that has to be observed before the Government may take over the NAIA 3, that there must be payment to PIATCO of just compensation in accordance with law and equity. Any ruling in the present expropriation case must be conformable to the dictates of the Court as pronounced in the Agan cases. (2) Rep. Act No. 8974 applies in this case, particularly insofar as it requires the immediate payment by the Government ofat least the proffered value of the NAIA 3 facilities to PIATCO and provides certain valuation standards or methods for the determination of just compensation. (3) Applying Rep. Act No. 8974, the implementation of Writ of Possession in favor of the Government over NAIA 3is held in abeyance until PIATCO is directlypaid the amount of P3 Billion, representing the proffered value of NAIA 3 under Section 4(c) of the law. (4) Applying Rep. Act No. 8974, the Government is authorized to start the implementation of the NAIA 3 Airport terminal project by performing the acts that are essential to the operation of the NAIA 3 as an international airport terminal upon the effectivity of the Writ of Possession, subject to the conditions above-stated. As prescribed by the Court, such authority encompasses "the repair, reconditioning and improvement of the complex, maintenance of the existing facilities and equipment, installation of new facilities and equipment, provision of services and facilities pertaining to the facilitation of air traffic and transport, and other services that are integral to a modern-day international airport." 5) The RTC is mandated to complete its determination of the just compensation within sixty (60) days from finality of this Decision. In doing so, the RTC is obliged to comply with the standards set under Rep. Act No. 8974 and its Implementing Rules. Considering that the NAIA 3 consists of structures and improvements, the valuation thereof shall be determined using the replacements cost method, as prescribed under Section 10 of the Implementing Rules. (6) There was no grave abuse of discretion attendingthe RTC Order appointing the commissioners for the purpose of determining just compensation. The provisions on commissioners under Rule 67 shall apply insofar as they are not inconsistent with Rep. Act No. 8974, its Implementing Rules, or the rulings of the Court in Agan. (7) The Government shall pay the just compensation fixed in the decision of the trial court to PIATCO immediately upon the finality of the said decision. (8) There is no basis for the Court to direct the inhibition of Hon. Gingoyon. All told, the Court finds no grave abuse of discretion on the part of the RTC to warrant the nullification of the questioned orders. Nonetheless, portions of these orders should be modified to conform with law and the pronouncements made by the Court herein.[12] The decretal portion of the Court's Decision in Gingoyon thus reads: WHEREFORE, the Petition is GRANTED in PART with respect to the orders dated 4 January 2005 and 10 January 2005 of the lower court. Said orders are AFFIRMED with the following MODIFICATIONS:

1) The implementation of the Writ of Possession dated 21 December 2004 is HELD IN ABEYANCE,pending payment by petitioners to PIATCO of the amount of Three Billion Two Million One Hundred Twenty Five Thousand Pesos (P3,002,125,000.00), representing the proffered value of the NAIA 3 facilities; 2) Petitioners, upon the effectivity of the Writ of Possession, are authorized [to] start the implementation of the Ninoy Aquino International Airport Pasenger Terminal III project by performing the acts that are essential to the operation of the said International Airport Passenger Terminal project; 3) RTC Branch 117 is hereby directed, within sixty (60) days from finality of this Decision, to determine thejust compensation to be paid to PIATCO by the Government. The Order dated 7 January 2005 is AFFIRMED in all respects subject to the qualification that the parties are given ten (10) days from finality of this Decision to file, if they so choose, objections to the appointment of the commissioners decreed therein. The Temporary Restraining Order dated 14 January 2005 is hereby LIFTED. No pronouncement as to costs.[13] Motions for Partial Reconsideration of the foregoing Decision were filed by therein petitioners Republic and MIAA, as well as the three other parties who sought to intervene, namely, Asakihosan Corporation, Takenaka Corporation, and Congressman Baterina. In a Resolution dated 1 February 2006, this Court denied with finality the Motion for Partial Reconsideration of therein petitioners and remained faithful to its assailed Decision based on the following ratiocination: Admittedly, the 2004 Resolution in Agan could be construed as mandating the full payment of the final amount of just compensation before the Government may be permitted to take over the NAIA 3. However, the Decision ultimately rejected such a construction, acknowledging the public good that would result from the immediate operation of the NAIA 3. Instead, the Decision adopted an interpretation which is in consonance with Rep. Act No. 8974 and with equitable standards as well, that allowed the Government to take possession of the NAIA 3 after payment of the proffered value of the facilities to PIATCO. Such a reading is substantially compliant with the pronouncement in the 2004 Agan Resolution, and is in accord with law and equity. In contrast, the Government's position, hewing to the strict application of Rule 67, would permit the Government to acquire possession over the NAIA 3 and implement its operation without having to pay PIATCO a single centavo, a situation that is obviously unfair. Whatever animosity the Government may have towards PIATCO does not acquit it from settling its obligations to the latter, particularly those which had already been previously affirmed by this Court.[14] The Court, in the same Resolution, denied all the three motions for intervention of Asakihosan Corporation, Takenaka Corporation, and Congressman Baterina, and ruled as follows: We now turn to the three (3) motions for intervention all of which were filed after the promulgation of the Court's Decision. All three (3) motions must be denied. Under Section

2, Rule 19 of the 1997 Rules of Civil Procedure the motion to intervene may be filed at any time before rendition of judgment by the court. Since this case originated from an original action filed before this Court, the appropriate time to file the motions-in-intervention in this case if ever was before and not afterresolution of this case. To allow intervention at this juncture would be highly irregular. It is extremely improbablethat the movants were unaware of the pendency of the present case before the Court, and indeed none of them allege such lack of knowledge. Takenaka and Asahikosan rely on Mago v. Court of Appeals wherein the Court took the extraordinary step of allowing the motion for intervention even after the challenged order of the trial court had already become final. Yet it was apparent in Mago that the movants therein were not impleaded despite being indispensable parties, and had not even known of the existence of the case before the trial court, and the effect of the final order was to deprive the movants of their land. In this case, neither Takenaka nor Asahikosan stand to be dispossessed by reason of the Court's Decision. There is no palpable due process violation that would militate the suspension of the procedural rule. Moreover, the requisite legal interest required of a party-in-intervention has not been established so as to warrant the extra-ordinary step of allowing intervention at this late stage. As earlier noted, the claims of Takenaka and Asahikosan have not been judicially proved or conclusively established as fact by any trier of facts in this jurisdiction. Certainly, they could not be considered as indispensable parties to the petition for certiorari. In the case of Representative Baterina, he invokes his prerogative as legislator to curtail the disbursement without appropriation of public funds to compensate PIATCO, as well as that as a taxpayer, as the basis of his legal standing to intervene. However, it should be noted that the amount which the Court directed to be paid by the Government to PIATCO was derived from the money deposited by the Manila International Airport Authority, an agency which enjoys corporate autonomy and possesses a legal personalityseparate and distinct from those of the National Government and agencies thereof whose budgets have to be approved by Congress. It is also observed that the interests of the movants-in-intervention may be duly litigated in proceedings which are extant before lower courts. There is no compelling reason to disregard the established rules and permit the interventions belatedly filed after the promulgation of the Court's Decision.[15] Asia's Emerging Dragon Corporation v. Department of Transportation and Communications and Manila International Airport Authority (G.R. No. 169914) Banking on this Court's declaration in Agan that the award of the NAIA IPT III Project to PIATCO is null and void, Asia's Emerging Dragon Corporation (AEDC) filed before this Court the present Petition for Mandamus and Prohibition (with Application for Temporary Restraining Order), praying of this Court that: (1) After due hearing, judgment be rendered commanding the Respondents, their officers, agents, successors, representatives or persons or entities acting on their behalf, to formally award the NAIA-APT [sic] III PROJECT to Petitioner AEDC and to execute and formalize with Petitioner AEDC the approved Draft Concession Agreement embodying the agreed terms and conditions for the operation of the NAIA-IPT III Project and directing

Respondents to cease and desist from awarding the NAIA-IPT Project to third parties or negotiating into any concession contract with third parties. (2) Pending resolution on the merits, a Temporary Restraining Order be issued enjoining Respondents, their officers, agents, successors or representatives or persons or entities acting on their behalf from negotiating, re-bidding, awarding or otherwise entering into any concession contract with PIATCO and other third parties for the operation of the NAIA-IPT III Project. Other relief and remedies, just and equitable under the premises, are likewise prayed for. [16] AEDC bases its Petition on the following grounds: I. PETITIONER AEDC, BEING THE RECOGNIZED AND UNCHALLENGED ORIGINAL PROPONENT, HAS THE EXCLUSIVE, CLEAR AND VESTED STATUTORY RIGHT TO THE AWARD OF THE NAIA-IPT III PROJECT; II. RESPONDENTS HAVE A STATUTORY DUTY TO PROTECT PETITIONER AEDC AS THE UNCHALLENGED ORIGINAL PROPONENT AS A RESULT OF THE SUPREME COURT'S NULLIFICATION OF THE AWARD OF THE NAIAIPT III PROJECT TO PIATCO[; and] III. RESPONDENTS HAVE NO LEGAL BASIS OR AUTHORITY TO TAKE OVER THE NAIA-IPT III PROJECT, TO THE EXCLUSION OF PETITIONER AEDC, OR TO AWARD THE PROJECT TO THIRD PARTIES.[17] At the crux of the Petition of AEDC is its claim that, being the recognized and unchallenged original proponent of the NAIA IPT III Project, it has the exclusive, clear, and vested statutory right to the award thereof. However, the Petition of AEDC should be dismissed for lack of merit, being as it is, substantially and procedurally flawed. SUBSTANTIVE INFIRMITY

A petition for mandamus is governed by Section 3 of Rule 65 of the Rules of Civil Procedure, which reads SEC. 3. Petition for mandamus. - When any tribunal, corporation, board, officer or person unlawfully neglects the performance of an act which the law specifically enjoins as a duty resulting from an office, trust, or station, or unlawfully excludes another from the use and enjoyment of a right or office to which such other is entitled, and there is no other plain, speedy and adequate remedy in the ordinary course of law, the person aggrieved thereby may file a verified petition in the proper court, alleging the facts with certainty and praying that judgment be rendered commanding the respondent, immediately or some other time to be specified by the court, to do the act required to be done to protect the rights of the petitioner, and to pay the damages sustained by the petitioner by reason of the wrongful acts of the respondent. It is well-established in our jurisprudence that only specific legal rights are enforceable by mandamus, that the right sought to be enforced must be certain and clear, and that the writ will not issue in cases

where the right is doubtful. Just as fundamental is the principle governing the issuance of mandamus that the duties to be performed must be such as are clearly and peremptorily enjoined by law or by reason of official station.[18] A rule long familiar is that mandamus never issues in doubtful cases. It requires a showing of a complete and clear legal right in the petitioner to the performance of ministerial acts. In varying language, the principle echoed and reechoed is that legal rights may be enforced by mandamus only if those rights are well-defined, clear and certain. Otherwise, the mandamus petition must be dismissed. [19] The right that AEDC is seeking to enforce is supposedly enjoined by Section 4-A of Republic Act No. 6957,[20] as amended by Republic Act No. 7718, on unsolicited proposals, which provides SEC. 4-A. Unsolicited proposals. - Unsolicited proposals for projects may be accepted by any government agency or local government unit on a negotiated basis: Provided, That, all the following conditions are met: (1) such projects involve a new concept or technology and/or are not part of the list of priority projects, (2) no direct government guarantee, subsidy or equity is required, and (3) the government agency or local government unit has invited by publication, for three (3) consecutive weeks, in a newspaper of general circulation, comparative or competitive proposals and no other proposal is received for a period of sixty (60) working days: Provided, further, That in the event another proponent submits a lower price proposal, the original proponent shall have the right to match the price within thirty (30) working days. In furtherance of the afore-quoted provision, the Implementing Rules and Regulations (IRR) of Republic Act No. 6957, as amended by Republic Act No. 7718, devoted the entire Rule 10 to Unsolicited Proposals, pertinent portions of which are reproduced below Sec. 10.1. Requisites for Unsolicited Proposals. - Any Agency/LGU may accept unsolicited proposals on a negotiated basis provided that all the following conditions are met: a. the project involves a new concept or technology and/or is not part of the list of priority projects; b. no direct government guarantee, subsidy or equity is required; and c. the Agency/LGU concerned has invited by publication, for three (3) consecutive weeks, in a newspaper of general circulation, comparative or competitive proposals and no other proposal is received for a period of sixty (60) working days. In the event that another project proponent submits a price proposal lower than that submitted by the original proponent, the latter shall have the right to match said price proposal within thirty (30) working days. Should the original proponent fail to match the lower price proposal submitted within the specified period, the contract shall be awarded to the tenderer of the lowest price. On the other hand, if the original project proponent matches the submitted lowest price within the specified period, he shall be immediately be awarded the project. xxxx Sec. 10.6. Evaluation of Unsolicited Proposals. - The Agency/LGU is tasked with the initial

evaluation of the proposal. The Agency/LGU shall: 1) appraise the merits of the project; 2) evaluate the qualification of the proponent; and 3) assess the appropriateness of the contractual arrangement and reasonableness of the risk allocation. The Agency/LGU is given sixty (60) days to evaluate the proposal from the date of submission of the complete proposal. Within this 60-day period, the Agency/LGU, shall advise the proponent in writing whether it accepts or rejects the proposal. Acceptance means commitment of the Agency/LGU to pursue the project and recognition of the proponent as the "original proponent." At this point, the Agency/LGU will no longer entertain other similar proposals until the solicitation of comparative proposals. The implementation of the project, however, is still contingent primarily on the approval of the appropriate approving authorities consistent with Section 2.7 of these IRR, the agreement between the original proponent and the Agency/LGU of the contract terms, and the approval of the contract by the [Investment Coordination Committee (ICC)] or Local Sanggunian. x x x x

Sec. 10.9. Negotiation With the Original Proponent. - Immediately after ICC/Local Sanggunian's clearance of the project, the Agency/LGU shall proceed with the indepth negotiation of the project scope, implementation arrangements and concession agreement, all of which will be used in the Terms of Reference for the solicitation of comparative proposals. The Agency/LGU and the proponent are given ninety (90) days upon receipt of ICC's approval of the project to conclude negotiations. The Agency/LGU and the original proponent shall negotiate in good faith. However, should there be unresolvable differences during the negotiations, the Agency/LGU shall have the option to reject the proposal and bid out the project. On the other hand, if the negotiation is successfully concluded, the original proponent shall then be required to reformat and resubmit its proposal in accordance with the requirements of the Terms of Reference to facilitate comparison with the comparative proposals. The Agency/LGU shall validate the reformatted proposal if it meets the requirements of the TOR prior to the issuance of the invitation for comparative proposals. x x x x

Sec. 10.11. Invitation for Comparative Proposals. The Agency/LGU shall publish the invitation for comparative or competitive proposals only after ICC/Local Sanggunian issues a no objection clearance of the draft contract. The invitation for comparative or competitive proposals should be published at least once every week for three (3) weeks in at least one (1) newspaper of general circulation. It shall indicate the time, which should not be earlier than the last date of publication, and place where tender/bidding documents could be obtained. It shall likewise explicitly specify a time of sixty (60) working days reckoned from the date of issuance of the tender/bidding documents upon which proposals shall be received. Beyond said deadline, no proposals shall be accepted. A pre-bid conference shall be conducted ten (10) working days after the issuance of the tender/bidding documents. Sec. 10.12. Posting of Bid Bond by Original Proponent. - The original proponent shall be required at the date of the first date of the publication of the invitation for comparative proposals to submit a bid bond equal to the amount and in the form required of the challengers.

Sec. 10.13. Simultaneous Qualification of the Original Proponent. - The Agency/LGU shall qualify the original proponent based on the provisions of Rule 5 hereof, within thirty (30) days from start of negotiation. For consistency, the evaluation criteria used for qualifying the original proponent should be the same criteria used for qualifying the original proponent should be the criteria used in the Terms of Reference for the challengers. x x x x

Sec. 10.16. Disclosure of the Price Proposal. - The disclosure of the price proposal of the original proponent in the Tender Documents will be left to the discretion of the Agency/LGU. However, if it was not disclosed in the Tender Documents, the original proponent's price proposal should be revealed upon the opening of the financial proposals of the challengers. The right of the original proponent to match the best proposal within thirty (30) working days starts upon official notification by the Agency/LGU of the most advantageous financial proposal. (Emphasis ours.) In her sponsorship speech on Senate Bill No. 1586 (the precursor of Republic Act No. 7718), then Senator (now President of the Republic of the Philippines) Gloria Macapagal-Arroyo explained the reason behind the proposed amendment that would later become Section 4-A of Republic Act No. 6957, as amended by Republic Act No. 7718: The object of the amendment is to protect proponents which have already incurred costs in the conceptual design and in the preparation of the proposal, and which may have adopted an imaginative method of construction or innovative concept for the proposal. The amendment also aims to harness the ingenuity of the private sector to come up with solutions to the country's infrastructure problems.[21] It is irrefragable that Section 4-A of Republic Act No. 6957, as amended by Republic Act No. 7718, and Section 10 of its IRR, accord certain rights or privileges to the original proponent of an unsolicited proposal for an infrastructure project. They are meant to encourage private sector initiative in conceptualizing infrastructure projects that would benefit the public. Nevertheless, none of these rights or privileges would justify the automatic award of the NAIA IPT III Project to AEDC after its previous award to PIATCO was declared null and void by this Court in Agan. The rights or privileges of an original proponent of an unsolicited proposal for an infrastructure project are never meant to be absolute. Otherwise, the original proponent can hold the Government hostage and secure the award of the infrastructure project based solely on the fact that it was the first to submit a proposal. The absurdity of such a situation becomes even more apparent when considering that the proposal is unsolicited by the Government. The rights or privileges of an original proponent depends on compliance with the procedure and conditions explicitly provided by the statutes and their IRR. An unsolicited proposal is subject to evaluation, after which, the government agency or local government unit (LGU) concerned may accept or reject the proposal outright. Under Section 10.6 of the IRR, the "acceptance" of the unsolicited proposal by the agency/LGU is limited to the "commitment of the [a]gency/LGU to pursue the project and recognition of the proponent as the `original proponent.'" Upon acceptance then of the unsolicited proposal, the original proponent is recognized as such but no award is yet made to it. The commitment of the agency/LGU upon acceptance of the unsolicited proposal is to the pursuit of the project, regardless of to whom it shall

subsequently award the same. The acceptance of the unsolicited proposal only precludes the agency/LGU from entertaining other similar proposals until the solicitation of comparative proposals. Consistent in both the statutes and the IRR is the requirement that invitations be published for comparative or competitive proposals. Therefore, it is mandatory that a public bidding be held before the awarding of the project. The negotiations between the agency/LGU and the original proponent, as provided in Section 10.9 of the IRR, is for the sole purpose of coming up with draft agreements, which shall be used in the Terms of Reference (TOR) for the solicitation of comparative proposals. Even at this point, there is no definite commitment made to the original proponent as to the awarding of the project. In fact, the same IRR provision even gives the concerned agency/LGU, in case of unresolvable differences during the negotiations, the option to reject the original proponent's proposal and just bid out the project. Generally, in the course of processing an unsolicited proposal, the original proponent is treated in much the same way as all other prospective bidders for the proposed infrastructure project. It is required to reformat and resubmit its proposal in accordance with the requirements of the TOR.[22] It must submit a bid bond equal to the amount and in the form required of the challengers.[23] Its qualification shall be evaluated by the concerned agency/LGU, using evaluation criteria in accordance with Rule 5[24] of the IRR, and which shall be the same criteria to be used in the TOR for the challengers.[25] These requirements ensure that the public bidding under Rule 10 of IRR on Unsolicited Proposals still remain in accord with the three principles in public bidding, which are: the offer to the public, an opportunity for competition, and a basis for exact comparison of bids.[26] The special rights or privileges of an original proponent thus come into play only when there are other proposals submitted during the public bidding of the infrastructure project. As can be gleaned from the plain language of the statutes and the IRR, the original proponent has: (1) the right to match the lowest or most advantageous proposal within 30 working days from notice thereof, and (2) in the event that the original proponent is able to match the lowest or most advantageous proposal submitted, then it has the right to be awarded the project. The second right or privilege is contingent upon the actual exercise by the original proponent of the first right or privilege. Before the project could be awarded to the original proponent, he must have been able to match the lowest or most advantageous proposal within the prescribed period. Hence, when the original proponent is able to timely match the lowest or most advantageous proposal, with all things being equal, it shall enjoy preference in the awarding of the infrastructure project. This is the extent of the protection that Legislature intended to afford the original proponent, as supported by the exchange between Senators Neptali Gonzales and Sergio Osmea during the Second Reading of Senate Bill No. 1586: Senator x x x Gonzales: x

The concept being that in case of an unsolicited proposal and nonetheless public bidding has been held, then [the original proponent] shall, in effect, be granted what is the equivalent of the right of first refusal by offering a bid which shall equal or better the bid of the winning bidder within a period of, let us say, 30 days from the date of bidding. Senator Osmea:

To capture the tenor of the proposal of the distinguished Gentleman, a subsequent paragraph has to be added which says, "IF THERE IS A COMPETITIVE PROPOSAL, THE ORIGINAL PROPONENT SHALL HAVE THE RIGHT TO EQUAL THE TERMS AND CONDITIONS OF THE COMPETITIVE PROPOSAL." In other words, if there is nobody who will submit a competitive proposal, then nothing is lost. Everybody knows it, and it is open and transparent. But if somebody comes in with another proposal - and because it was the idea of the original proponent - that proponent now has the right to equal the terms of the original proposal. SENATOR GONZALES:

That is the idea, Mr. President. Because it seems to me that it is utterly unfair for one who has conceived an idea or a concept, spent and invested in feasibility studies, in the drawing of plans and specifications, and the project is submitted to a public bidding, then somebody will win on the basis of plans and specifications and concepts conceived by the original proponent. He should at least be given the right to submit an equalizing bid . x x x.[27] (Emphasis ours.) As already found by this Court in the narration of facts in Agan, AEDC failed to match the more advantageous proposal submitted by PIATCO by the time the 30-day working period expired on 28 November 1996;[28] and, without exercising its right to match the most advantageous proposal, it cannot now lay claim to the award of the project. The bidding process as to the NAIA IPT III Project was already over after the award thereof to PIATCO, even if eventually, the said award was nullified and voided. The nullification of the award to PIATCO did not revive the proposal nor re-open the bidding. AEDC cannot insist that this Court turn back the hands of time and award the NAIA IPT III Project to it, as if the bid of PIATCO never existed and the award of the project to PIATCO did not take place. Such is a simplistic approach to a very complex problem that is the NAIA IPT III Project. In his separate opinion in Agan, former Chief Justice Artemio V. Panganiban noted that "[T]here was effectively no public bidding to speak of, the entire bidding process having been flawed and tainted from the very outset, therefore, the award of the concession to Paircargo's successor Piatco was void, and the Concession Agreement executed with the latter was likewise void ab initio. x x x.[29] " (Emphasis ours.) In consideration of such a declaration that the entire bidding process was flawed and tainted from the very beginning, then, it would be senseless to re-open the same to determine to whom the project should have been properly awarded to. The process and all proposals and bids submitted in participation thereof, and not just PIATCO's, were placed in doubt, and it would be foolhardy for the Government to rely on them again. At the very least, it may be declared that there was a failure of public bidding.[30] In addition, PIATCO is already close to finishing the building of the structures comprising NAIA IPT III,[31] a fact that this Court cannot simply ignore. The NAIA IPT III Project was proposed, subjected to bidding, and awarded as a build-operate-transfer (BOT) project. A BOT project is defined as -

A contractual arrangement whereby the project proponent undertakes the construction, including financing, of a given infrastructure facility, and the operation and maintenance thereof. The project proponent operates the facility over a fixed term during which it is allowed to charge facility users appropriate tolls, fees, rentals, and charges not exceeding those proposed in its bid or as negotiated and incorporated in the contract to enable the project proponent to recover its investment, and operating and maintenance expenses in the project. The project proponent transfers the facility to the government agency or local government unit concerned at the end of the fixed term that shall not exceed fifty (50) years. This shall include a supply-and-operate situation which is a contractual arrangement whereby the supplier of equipment and machinery for a given infrastructure facility, if the interest of the Government so requires, operates the facility providing in the process technology transfer and training to Filipino nationals.[32] (Emphasis ours.) The original proposal of AEDC is for a BOT project, in which it undertook to build, operate, and transfer to the Government the NAIA IPT III facilities. This is clearly no longer applicable or practicable under the existing circumstances. It is undeniable that the physical structures comprising the NAIA IPT III Project are already substantially built, and there is almost nothing left for AEDC to construct. Hence, the project could no longer be awarded to AEDC based on the theory of legal impossibility of performance. Neither can this Court revert to the original proposal of AEDC and award to it only the unexecuted components of the NAIA IPT III Project. Whoever shall assume the obligation to operate and maintain NAIA IPT III and to subsequently transfer the same to the Government (in case the operation is not assumed by the Government itself) shall have to do so on terms and conditions that would necessarily be different from the original proposal of AEDC. It will no longer include any undertaking to build or construct the structures. An amendment of the proposal of AEDC to address the present circumstances is out of the question since such an amendment would be substantive and tantamount to an entirely new proposal, which must again be subjected to competitive bidding. AEDC's offer to reimburse the Government the amount it shall pay to PIATCO for the NAIA IPT III Project facilities, as shall be determined in the ongoing expropriation proceedings before the RTC of Pasay City, cannot restore AEDC to its status and rights as the project proponent. It must be stressed that the law requires the project proponent to undertake the construction of the project, including financing; financing, thus, is but a component of the construction of the structures and not the entirety thereof. Moreover, this "reimbursement arrangement" may even result in the unjust enrichment of AEDC. In its original proposal, AEDC offered to construct the NAIA IPT III facilities for $350 million or P9 billion at that time. In exchange, AEDC would share a certain percentage of the gross revenues with, and pay a guaranteed annual income to the Government upon operation of the NAIA IPT III. In Gingoyon, the proferred value of the NAIA IPT III facilities was already determined to be P3 billion. It seems improbable at this point that the balance of the value of said facilities for which the Government is still obligated to pay PIATCO shall reach or exceed P6 billion. There is thus the possibility that the Government shall be required to pay PIATCO an amount less than P9 billion. If AEDC is to reimburse the Government only for the said amount, then it shall acquire the NAIA IPT III facilities for a price less than its original proposal of P9 billion. Yet, per the other terms of its original proposal, it may still recoup a capital investment of P9 billion plus a reasonable rate of return of investment. A change in the agreed value of the NAIA IPT III facilities already built cannot be done without a corresponding amendment in the other terms of the original proposal as regards profit sharing and length of operation;

otherwise,

AEDC

will

be

unjustly

enriched

at

the

expense

of

the

Government.

Again, as aptly stated by former Chief Justice Panganiban, in his separate opinion in Agan: If the PIATCO contracts are junked altogether as I think they should be, should not AEDC automatically be considered the winning bidder and therefore allowed to operate the facility? My answer is a stone-cold `No.' AEDC never won the bidding, never signed any contract, and never built any facility. Why should it be allowed to automatically step in and benefit from the greed of another?[33] The claim of AEDC to the award of the NAIA IPT III Project, after the award thereof to PIATCO was set aside for being null and void, grounded solely on its being the original proponent of the project, is specious and an apparent stretch in the interpretation of Section 4-A of Republic Act No. 6957, as amended by Republic Act No. 7718, and Rule 10 of the IRR. In all, just as AEDC has no legal right to the NAIA IPT III Project, corollarily, it has no legal right over the NAIA IPT III facility. AEDC does not own the NAIA IPT III facility, which this Court already recognized in Gingoyon as owned by PIATCO; nor does AEDC own the land on which NAIA IPT III stands, which is undisputedly owned by the Republic through the Bases Conversion Development Authority (BCDA). AEDC did not fund any portion of the construction of NAIA IPT III, which was entirely funded by PIATCO. AEDC also does not have any kind of lien over NAIA IPT III or any kind of legal entitlement to occupy the facility or the land on which it stands. Therefore, nothing that the Government has done or will do in relation to the project could possibly prejudice or injure AEDC. AEDC then does not possess any legal personality to interfere with or restrain the activities of the Government as regards NAIA IPT III. Neither does it have the legal personality to demand that the Government deliver or sell to it the NAIA IPT III facility despite the express willingness of AEDC to reimburse the Government the proferred amount it had paid PIATCO and complete NAIA IPT III facility at its own cost. AEDC invokes the Memorandum of Agreement, purportedly executed between the DOTC and AEDC on 26 February 1996, following the approval of the NAIA IPT III Project by the National Economic Development Authority Board in a Resolution dated 13 February 1996, which provided for the following commitments by the parties: a. commitment of Respondent DOTC to target mid 1996 as the time frame for the formal award of the project and commencement of site preparation and construction activities with the view of a partial opening of the Terminal by the first quarter of 1998; b. commitment of Respondent DOTC to pursue the project envisioned in the unsolicited proposal and commence and conclude as soon as possible negotiations with Petitioner AEDC on the BOT contract; c. commitment of Respondent DOTC to make appropriate arrangements through which the formal award of the project can be affected[;] d. commitment of Petitioner AEDC to a fast track approach to project implementation and to commence negotiations with its financial partners, investors and creditors; e. commitment of Respondent DOTC and Petitioner AEDC to fast track evaluation of

competitive proposals, screening and eliminating nuisance comparative bids;[34] It is important to note, however, that the document attached as Annex "E" to the Petition of AEDC is a "certified photocopy of records on file." This Court cannot give much weight to said document considering that its existence and due execution have not been established. It is not notarized, so it does not enjoy the presumption of regularity of a public document. It is not even witnessed by anyone. It is not certified true by its supposed signatories, Secretary Jesus B. Garcia, Jr. for DOTC and Chairman Henry Sy, Sr. for AEDC, or by any government agency having its custody. It is certified as a photocopy of records on file by an Atty. Cecilia L. Pesayco, the Corporate Secretary, of an unidentified corporation. Even assuming for the sake of argument, that the said Memorandum of Agreement, is in existence and duly executed, it does little to support the claim of AEDC to the award of the NAIA IPT III Project. The commitments undertaken by the DOTC and AEDC in the Memorandum of Agreement may be simply summarized as a commitment to comply with the procedure and requirements provided in Rules 10 and 11 of the IRR. It bears no commitment on the part of the DOTC to award the NAIA IPT III Project to AEDC. On the contrary, the document includes express stipulations that negate any such government obligation. Thus, in the first clause,[35] the DOTC affirmed its commitment to pursue, implement and complete the NAIA IPT III Project on or before 1998, noticeably without mentioning that such commitment was to pursue the project specifically with AEDC. Likewise, in the second clause,[36] it was emphasized that the DOTC shall pursue the project under Rules 10 and 11 of the IRR of Republic Act No. 6957, as amended by Republic Act No. 7718. And most significantly, the tenth clause of the same document provided: 10. Nothing in this Memorandum of Understanding shall be understood, interpreted or construed as permitting, allowing or authorizing the circumvention of, or noncompliance with, or as waiving, the provisions of, and requirements and procedures under, existing laws, rules and regulations.[37] AEDC further decries that: 24. In carrying out its commitments under the DOTC-AEDC MOU, Petitioner AEDC undertook the following activities, incurring in the process tremendous costs and expenses. a. pre-qualified 46 design and contractor firms to assist in the NAIA-IPT III Project; b. appointed a consortium of six (6) local banks as its financial advisor in June 1996; c. hired the services of GAIA South, Inc. to prepare the Project Description Report and to obtain the Environmental Clearance Certificate (ECC) for the NAIA-IPT III Project; d. coordinated with the Airline Operators Association, Bases Conversion Development Authority, Philippine Air Force, Bureau of Customs, Bureau of Immigration, relative to their particular requirements regarding the NAIAIPT III [P]roject; and

e. negotiated and entered into firm commitments with Ital Thai, Marubeni Corporation and Mitsui Corporation as equity partners.[38] While the Court may concede that AEDC, as the original proponent, already expended resources in its preparation and negotiation of its unsolicited proposal, the mere fact thereof does not entitle it to the instant award of the NAIA IPT III Project. AEDC was aware that the said project would have to undergo public bidding, and there existed the possibility that another proponent may submit a more advantageous bid which it cannot match; in which case, the project shall be awarded to the other proponent and AEDC would then have no means to recover the costs and expenses it already incurred on its unsolicited proposal. It was a given business risk that AEDC knowingly undertook. Additionally, the very defect upon which this Court nullified the award of the NAIA IPT III Project to PIATCO similarly taints the unsolicited proposal of AEDC. This Court found Paircargo Consortium financially disqualified after striking down as incorrect the PBAC's assessment of the consortium's financial capability. According to the Court's ratio in Agan: As the minimum project cost was estimated to be US$350,000,000.00 or roughly P9,183,650,000.00, the Paircargo Consortium had to show to the satisfaction of the PBAC that it had the ability to provide the minimum equity for the project in the amount of at least P2,755,095,000.00. x x x x

Thus, the maximum amount that Security Bank could validly invest in the Paircargo Consortium is only P528,525,656.55, representing 15% of its entire net worth. The total net worth therefore of the Paircargo Consortium, after considering the maximum amounts that may be validly invested by each of its members is P558,384,871.55 or only 6.08% of the project cost, an amount substantially less than the prescribed minimum equity investment required for the project in the amount of P2,755,095,000.00 or 30% of the project cost. The purpose of pre-qualification in any public bidding is to determine, at the earliest opportunity, the ability of the bidder to undertake the project. Thus, with respect to the bidder's financial capacity at the pre-qualification stage, the law requires the government agency to examine and determine the ability of the bidder to fund the entire cost of the project by considering the maximum amounts that each bidder may invest in the project at the time of pre-qualification. x x x x

Thus, if the maximum amount of equity that a bidder may invest in the project at the time the bids are submitted falls short of the minimum amounts required to be put up by the bidder, said bidder should be properly disqualified. Considering that at the prequalification stage, the maximum amounts which the Paircargo Consortium may invest in the project fell short of the minimum amounts prescribed by the PBAC, we hold that Paircargo Consortium was not a qualified bidder. Thus the award of the contract by the PBAC to the Paircargo Consortium, a disqualified bidder, is null and void.[39] Pursuant to the above-quoted ruling, AEDC, like the Paircargo Consortium, would not be financially qualified to undertake the NAIA IPT III Project. Based on AEDC's own submissions to the

Government, it had then a paid-in capital of only P150,000,000.00,[40] which was less than the P558,384,871.55 that Paircargo Consortium was capable of investing in the NAIA IPT III Project, and even far less that what this Court prescribed as the minimum equity investment required for the project in the amount of P2,755,095,000.00 or 30% of the project cost. AEDC had not sufficiently demonstrated that it would have been financially qualified to undertake the project at the time of submission of the bids. Instead, AEDC took pains to present to this Court that allowing it to take over and operate NAIA IPT III at present would be beneficial to the Government. This Court must point out, however, that AEDC is precisely making a new proposal befitting the current status of the NAIA IPT III Project, contrary to its own argument that it is merely invoking its original BOT proposal. And it is not for this Court to evaluate AEDC's new proposal and assess whether it would truly be most beneficial for the Government, for the same is an executive function rather than judicial, for which the statutes and regulations have sufficiently provided standards and procedures for evaluation. It can even be said that if the award of the NAIA IPT III Project was merely a matter of choosing between PIATCO and AEDC (which it is not), there could be no doubt that PIATCO is more qualified to operate the structure that PIATCO itself built and PIATCO's offer of P17.75 Billion in annual guaranteed payments to the Government is far better that AEDC's offer of P135 Million. Hence, AEDC is not entitled to a writ of mandamus, there being no specific, certain, and clear legal right to be enforced, nor duty to be performed that is clearly and peremptorily enjoined by law or by reason of official station. PROCEDURAL LAPSES

In addition to the substantive weaknesses of the Petition of AEDC, the said Petition also suffers from procedural defects. AEDC revived its hope to acquire the NAIA IPT III Project when this Court promulgated its Decision in Agan on 5 May 2003. The said Decision became final and executory on 17 February 2004 upon the denial by this Court of the Motion for Leave to File Second Motion for Reconsideration submitted by PIATCO. It is this Decision that declared the award of the NAIA IPT III Project to PIATCO as null and void; without the same, then the award of the NAIA IPT III Project to PIATCO would still subsist and other persons would remain precluded from acquiring rights thereto, including AEDC. Irrefutably, the present claim of AEDC is rooted in the Decision of this Court in Agan. However, AEDC filed the Petition at bar only 20 months after the promulgation of the Decision in Agan on 5 May 2003. It must be emphasized that under Sections 2 and 3, Rule 65 of the revised Rules of Civil Procedure, petitions for prohibition and mandamus, such as in the instant case, can only be resorted to when there is no other plain, speedy and adequate remedy for the party in the ordinary course of law. In Cruz v. Court of Appeals,[41] this Court elucidates that Although Rule 65 does not specify any period for the filing of a petition for certiorari and mandamus, it must, nevertheless, be filed within a reasonable time. In certiorari cases, the definitive rule now is that such reasonable time is within three months from the commission of the complained act. The same rule should apply to mandamus cases.

The unreasonable delay in the filing of the petitioner's mandamus suit unerringly negates any claim that the application for the said extraordinary remedy was the most expeditious and speedy available to the petitioner. (Emphasis ours.) As the revised Rules now stand, a petition for certiorari may be filed within 60 days from notice of the judgment, order or resolution sought to be assailed.[42] Reasonable time for filing a petition for mandamus should likewise be for the same period. The filing by the AEDC of its petition for mandamus 20 months after its supposed right to the project arose is evidently beyond reasonable time and negates any claim that the said petition for the extraordinary writ was the most expeditious and speedy remedy available to AEDC. AEDC contends that the "reasonable time" within which it should have filed its petition should be reckoned only from 21 September 2005, the date when AEDC received the letter from the Office of the Solicitor General refusing to recognize the rights of AEDC to provide the available funds for the completion of the NAIA IPT III Project and to reimburse the costs of the structures already built by PIATCO. It has been unmistakable that even long before said letter - especially when the Government instituted with the RTC of Pasay City expropriation proceedings for the NAIA IPT III on 21 December 2004 - that the Government would not recognize any right that AEDC purportedly had over the NAIA IPT III Project and that the Government is intent on taking over and operating the NAIA IPT III itself. Another strong argument against the AEDC's Petition is that it is already barred by res judicata. In Agan,[43] it was noted that on 16 April 1997, the AEDC instituted before the RTC of Pasig City Civil Case No. 66213, a Petition for the Declaration of Nullity of the Proceedings, Mandamus and Injunction, against the DOTC Secretary and the PBAC Chairman and members. In Civil Case No. 66213, AEDC prayed for: i) the nullification of the proceedings before the DOTC-PBAC, including its decision to qualify Paircargo Consortium and to deny Petitioner AEDC's access to Paircargo Consortium's technical and financial bid documents; the protection of Petitioner AEDC's right to match considering the void challenge bid of the Paircargo Consortium and the denial by DOTC-PBAC of access to information vital to the effective exercise of its right to match; the declaration of the absence of any other qualified proponent submitting a competitive bid in an unsolicited proposal. SUP STYLE= COLOR: RGB(255, 0, 0); [44] /SUP

i)

iii)

Despite the pendency of Civil Case No. 66213, the DOTC issued the notice of award for the NAIA IPT III Project to PIATCO on 9 July 1997. The DOTC and PIATCO also executed on 12 July 1997 the 1997 Concession Agreement. AEDC then alleges that: k) On September 3, 1998, then Pres. Joseph Ejercito Estrada convened a meeting with the members of the Board of Petitioner AEDC to convey his "desire" for the dismissal of the mandamus case filed by Petition AEDC and in fact urged AEDC to immediately withdraw said case. l) The President's direct intervention in the disposition of this mandamus case was a clear

imposition that Petitioner AEDC had not choice but to accept. To do otherwise was to take a confrontational stance against the most powerful man in the country then under the risk of catching his ire, which could have led to untold consequences upon the business interests of the stakeholders in AEDC. Thus, Petitioner AEDC was constrained to agree to the signing of a Joint Motion to Dismiss and to the filing of the same in court. m) Unbeknownst to AEDC at that time was that simultaneous with the signing of the July 12, 1997 Concession Agreement, the DOTC and PIATCO executed a secret side agreement grossly prejudicial and detrimental to the interest of Government. It stipulated that in the event that the Civil Case filed by AEDC on April 16, 1997 is not resolved in a manner favorable to the Government, PIATCO shall be entitled to full reimbursement for all costs and expenses it incurred in order to obtain the NAIA IPT III BOT project in an amount not less than One Hundred Eighty Million Pesos (Php 180,000,000.00). This was apparently the reason why the President was determined to have AEDC's case dismissed immediately. n) On February 9, 1999, after the Amended and Restated Concession Agreement (hereinafter referred to as "ARCA") was signed without Petitioner AEDC's knowledge, Petitioner AEDC signed a Joint Motion to Dismiss upon the representation of the DOTC that it would provide AEDC with a copy of the 1997 Concession Agreement. x x x.[45] On 30 April 1999, the RTC of Pasig City issued an Order dismissing with prejudice Civil Case No. 66213 upon the execution by the parties of a Joint Motion to Dismiss. According to the Joint Motion to Dismiss The parties, assisted by their respective counsel, respectfully state: 1. Philippine International Air Terminals Company, Inc. ("PIATCO") and the respondents have submitted to petitioner, through the Office of the Executive Secretary, Malacaang, a copy of the Concession Agreement which they executed for the construction and operation of the Ninoy Aquino International Airport International Passenger Terminal III Project ("NAIA IPT III Project), which petitioner requested. 2. Consequently, the parties have decided to amicably settle the instant case and jointly move for the dismissal thereof without any of the parties admitting liability or conceding to the position taken by the other in the instant case. 3. Petitioner, on the other hand, and the respondents, on the other hand, hereby release and forever discharge each other from any and all liabilities , direct or indirect, whether criminal or civil, which arose in connection with the instant case. 4. The parties agree to bear the costs, attorney's fees and other expenses they respectively incurred in connection with the instant case. (Emphasis ours.) AEDC, however, invokes the purported pressure exerted upon it by then President Joseph E. Estrada, the alleged fraud committed by the DOTC, and paragraph 2 in the afore-quoted Joint Motion to Dismiss to justify the non-application of the doctrine of res judicata to its present Petition. The elements of res judicata, in its concept as a bar by former judgment, are as follows: (1) the former

judgment or order must be final; (2) it must be a judgment or order on the merits, that is, it was rendered after a consideration of the evidence or stipulations submitted by the parties at the trial of the case; (3) it must have been rendered by a court having jurisdiction over the subject matter and the parties; and (4) there must be, between the first and second actions, identity of parties, of subject matter and of cause of action.[46] All of the elements are present herein so as to bar the present Petition. First, the Order of the RTC of Pasig City, dismissing Civil Case No. 66213, was issued on 30 April 1999. The Joint Motion to Dismiss, deemed a compromise agreement, once approved by the court is immediately executory and not appealable.[47] Second, the Order of the RTC of Pasig City dismissing Civil Case No. 66213 pursuant to the Joint Motion to Dismiss filed by the parties constitutes a judgment on the merits. The Joint Motion to Dismiss stated that the parties were willing to settle the case amicably and, consequently, moved for the dismissal thereof. It also contained a provision in which the parties - the AEDC, on one hand, and the DOTC Secretary and PBAC, on the other - released and forever discharged each other from any and all liabilities, whether criminal or civil, arising in connection with the case. It is undisputable that the parties entered into a compromise agreement, defined as "a contract whereby the parties, by making reciprocal concessions, avoid a litigation or put an end to one already commenced.[48] " Essentially, it is a contract perfected by mere consent, the latter being manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract. Once an agreement is stamped with judicial approval, it becomes more than a mere contract binding upon the parties; having the sanction of the court and entered as its determination of the controversy, it has the force and effect of any other judgment.[49] Article 2037 of the Civil Code explicitly provides that a compromise has upon the parties the effect and authority of res judicata. Because of the compromise agreement among the parties, there was accordingly a judicial settlement of the controversy, and the Order, dated 30 April 1999, of the RTC of Pasig City was no less a judgment on the merits which may be annulled only upon the ground of extrinsic fraud.[50] Thus, the RTC of Pasig City, in the same Order, correctly granted the dismissal of Civil Case No. 66213 with prejudice. A scrutiny of the Joint Motion to Dismiss submitted to the RTC of Pasig City would reveal that the parties agreed to discharge one another from any and all liabilities, whether criminal or civil, arising from the case, after AEDC was furnished with a copy of the 1997 Concession Agreement between the DOTC and PIATCO. This complete waiver was the reciprocal concession of the parties that puts to an end the present litigation, without any residual right in the parties to litigate the same in the future. Logically also, there was no more need for the parties to admit to any liability considering that they already agreed to absolutely discharge each other therefrom, without necessarily conceding to the other's position. For AEDC, it was a declaration that even if it was not conceding to the Government's position, it was nonetheless waiving any legal entitlement it might have to sue the Government on account of the NAIA IPT III Project. Conversely, for the Government, it was an avowal that even if it was not accepting AEDC's stance, it was all the same relinquishing its right to file any suit against AEDC in connection with the same project. That none of the parties admitted liability or conceded its position is without bearing on the validity or binding effect of the compromise agreement, considering that these were not essential to the said compromise. Third, there is no question as to the jurisdiction of the RTC of Pasig City over the subject matter and parties in Civil Case No. 66213. The RTC can exercise original jurisdiction over cases involving the issuance of writs of certiorari, prohibition, mandamus, quo warranto, habeas corpus and injunction.

[51] To recall, the Petition of AEDC before the RTC of Pasig City was for the declaration of nullity of proceedings, mandamus and injunction. The RTC of Pasig City likewise had jurisdiction over the parties, with the voluntary submission by AEDC and proper service of summons on the DOTC Secretary and the PBAC Chairman and members. Lastly, there is, between Civil Case No. 66213 before the RTC of Pasig City and the Petition now pending before this Court, an identity of parties, of subject matter, and of causes of action. There is an identity of parties. In both petitions, the AEDC is the petitioner. The respondents in Civil Case No. 66213 are the DOTC Secretary and the PBAC Chairman and members. The respondents in the instant Petition are the DOTC, the DOTC Secretary, and the Manila International Airport Authority (MIAA). While it may be conceded that MIAA was not a respondent and did not participate in Civil Case No. 66213, it may be considered a successor-in-interest of the PBAC. When Civil Case No. 66213 was initiated, PBAC was then in charge of the NAIA IPT III Project, and had the authority to evaluate the bids and award the project to the one offering the lowest or most advantageous bid. Since the bidding is already over, and the structures comprising NAIA IPT III are now built, then MIAA has taken charge thereof. Furthermore, it is clear that it has been the intention of the AEDC to name as respondents in their two Petitions the government agency/ies and official/s who, at the moment each Petition was filed, had authority over the NAIA IPT III Project. There is an identity of subject matter because the two Petitions involve none other than the award and implementation of the NAIA IPT III Project. There is an identity of cause of action because, in both Petitions, AEDC is asserting the violation of its right to the award of the NAIA IPT III Project as the original proponent in the absence of any other qualified bidders. As early as in Civil Case No. 66213, AEDC already sought a declaration by the court of the absence of any other qualified proponent submitting a competitive bid for the NAIA IPT III Project, which, ultimately, would result in the award of the said project to it. AEDC attempts to evade the effects of its compromise agreement by alleging that it was compelled to enter into such an agreement when former President Joseph E. Estrada asserted his influence and intervened in Civil Case No. 66213. This allegation deserves scant consideration. Without any proof that such events did take place, such statements remain mere allegations that cannot be given weight. One who alleges any defect or the lack of a valid consent to a contract must establish the same by full, clear and convincing evidence, not merely by preponderance thereof.[52] And, even assuming arguendo, that the consent of AEDC to the compromise agreement was indeed vitiated, then President Estrada was removed from office in January 2001. AEDC filed the present Petition only on 20 October 2005. The four-year prescriptive period, within which an action to annul a voidable contract may be brought, had already expired.[53] The AEDC further claims that the DOTC committed fraud when, without AEDC's knowledge, the DOTC entered into an Amended and Restated Concession Agreement (ARCA) with PIATCO. The fraud on the part of the DOTC purportedly also vitiated AEDC's consent to the compromise agreement. It is true that a judicial compromise may be set aside if fraud vitiated the consent of a party thereof; and that the extrinsic fraud, which nullifies a compromise, likewise invalidates the decision approving it. [54] However, once again, AEDC's allegations of fraud are unsubstantiated. There is no proof that the DOTC and PIATCO willfully and deliberately suppressed and kept the information on the execution of the ARCA from AEDC. The burden of proving that there indeed was fraud lies with the party making such allegation. Each party must prove his own affirmative allegations. The burden of proof lies on the

party who would be defeated if no evidence were given on either side. In this jurisdiction, fraud is never presumed.[55] Moreover, a judicial compromise may be rescinded or set aside on the ground of fraud in accordance with Rule 38 of the Rules on Civil Procedure on petition for relief from judgment. Section 3 thereof prescribes the periods within which the petition for relief must be filed: SEC. 3. Time for filing petition; contents and verification.- A petition provided for in either of the preceding sections of this Rule must be verified, filed within sixty (60) days after the petitioner learns of the judgment, final order or other proceeding to be set aside, and not more than six (6) months after such judgment or final order was entered, or such proceeding was taken, and must be accompanied with affidavits showing the fraud, accident, mistake or excusable negligence relied upon, and the facts constituting the petitioner's good and substantial cause of action or defense, as the case may be. According to this Court's ruling in Argana v. Republic,[56] as applied to a judgment based on compromise, both the 60-day and six-month reglementary periods within which to file a petition for relief should be reckoned from the date when the decision approving the compromise agreement was rendered because such judgment is considered immediately executory and entered on the date that it was approved by the court. In the present case, the Order of the RTC of Pasig City granting the Joint Motion to Dismiss filed by the parties in Civil Case No. 66213 was issued on 30 April 1999, yet AEDC only spoke of the alleged fraud which vitiated its consent thereto in its Petition before this Court filed on 20 October 2005, more than six years later. It is obvious that the assertion by AEDC of its vitiated consent to the Joint Motion to Dismiss Civil Case No. 66213 is nothing more than an after-thought and a desperate attempt to escape the legal implications thereof, including the barring of its present Petition on the ground of res judicata. It is also irrelevant to the legal position of AEDC that the Government asserted in Agan that the award of the NAIA IPT III Project to PIATCO was void. That the Government eventually took such a position, which this Court subsequently upheld, does not affect AEDC's commitments and obligations under its judicially-approved compromise agreement in Civil Case No. 66213, which AEDC signed willingly, knowingly, and ably assisted by legal counsel. In addition, it cannot be said that there has been a fundamental change in the Government's position since Civil Case No. 66213, contrary to the allegation of AEDC. The Government then espoused that AEDC is not entitled to the award of the NAIA IPT III Project. The Government still maintains the exact same position presently. That the Government eventually reversed its position on the validity of its award of the project to PIATCO is not inconsistent with its position that neither should AEDC be awarded the project. For the foregoing substantive and procedural reasons, the instant Petition of AEDC should be dismissed. Republic of 174166) of Appeals the and Philippines Baterina v. (G.R. Court No.

As mentioned in Gingoyon, expropriation proceedings for the NAIA IPT III was instituted by the

Government with the RTC of Pasay City, docketed as Case No. 04-0876CFM. Congressman Baterina, together with other members of the House of Representatives, sought intervention in Case No. 040876CFM by filing a Petition for Prohibition in Intervention (with Application for Temporary Restraining Order and Writ of Preliminary Injunction). Baterina, et al. believe that the Government need not file expropriation proceedings to gain possession of NAIA IPT III and that PIATCO is not entitled to payment of just compensation, arguing thus A) Respondent PIATCO does not own Terminal III because BOT Contracts do not vest ownership in PIATCO. As such, neither PIATCO nor FRAPORT are entitled to compensation. B) Articles 448, ET SEQ., of the New Civil Code, as regards builders in good faith/bad faith, do not apply to PIATCO's Construction of Terminal III. C) Article 1412(2) of the New Civil Code allows the Government to demand the return of what it has given without any obligation to comply with its promise. D) The payment of compensation to PIATCO is unconstitutional, violative of the BuildOperate-Transfer Law, and violates the Civil Code and other laws. [57] On 27 October 2005, the RTC of Pasay City issued an Order admitting the Petition in Intervention of Baterina, et al., as well as the Complaint in Intervention of Manuel L. Fortes, Jr. and the Answer in Intervention of Gina B. Alnas, et al. The Republic sought reconsideration of the 27 October 2005 Order of the RTC of Pasay City, which, in an Omnibus Order dated 13 December 2005, was denied by the RTC of Pasay City as regards the intervention of Baterina, et al. and Fortes, but granted as to the intervention of Alnas, et al. On 22 March 2006, Baterina, et al. filed with the RTC of Pasay City a Motion to Declare in Default and/or Motion for Summary Judgment considering that the Republic and PIATCO failed to file an answer or any responsive pleading to their Petition for Prohibition in Intervention. In the meantime, on 19 December 2005, the Court's Decision in Gingoyon was promulgated. Baterina also filed a Motion for Intervention in said case and sought reconsideration of the Decision therein. However, his Motion for Intervention was denied by this Court in a Resolution dated 1 February 2006. On 27 March 2006, the RTC of Pasay City issued an Order and Writ of Execution, the dispositive portion of which reads WHEREFORE, let a writ of execution be issued in this case directing the Sheriff of this court to immediately implement the Order dated January 4, 2005 and January 10, 2005, as affirmed by the Decision of the Supreme Court in G.R. No. 166429 in the above-entitled case dated December 19, 2005, in the following manner: 1. Ordering the General Manager, the Senior Assistant General Manager and the Vice President of Finance of the Manila International Airport Authority (MIAA) to immediately withdraw the amount of P3,002,125,000.00 from the above-mentioned Certificates of US Dollar Time Deposits with the Land Bank of the Philippines, Baclaran Branch; 2. Ordering the Branch Manager, Land Bank of the Philippines, Baclaran Branch to immediately release the sum of P3,002,125,000.00 to PIATCO;

Return of Service of the Writs shall be made by the Sheriff of this court immediately thereafter;[58] The RTC of Pasay City, in an Order, dated 15 June 2006, denied the Motions for Reconsideration of its Order and Writ of Execution filed by the Government and Fortes. Baterina, meanwhile, went before the Court of Appeals via a Petition for Certiorari and Prohibition (With Urgent Prayer for the Issuance of a Temporary Restraining Order and Writ of Preliminary Injunction), docketed as CA-G.R. No. 95539, assailing the issuance, in grave abuse of discretion, by the RTC of Pasay City of its Orders dated 27 March 2006 and 15 June 2006 and Writ of Execution dated 27 March 2006. During the pendency of CA-G.R. No. 95539 with the Court of Appeals, the RTC of Pasay City issued an Order, dated 7 August 2006, denying the Urgent Manifestation and Motion filed by the Republic in which it relayed willingness to comply with the Order and Writ of Execution dated 27 March 2006, provided that the trial court shall issue an Order expressly authorizing the Republic to award concessions and lease portions of the NAIA IPT III to potential users. The following day, on 8 August 2006, the RTC of Pasay City issued an Order denying the intervention of Baterina, et al. and Fortes in Case No. 04-0876CFM. In a third Order, dated 9 August 2006, the RTC of Pasay City directed PIATCO to receive the amount of P3,002,125,000.00 from the Land Bank of the Philippines, Baclaran Branch. By 24 August 2006, the Republic was all set to comply with the 9 August 2006 Order of the RTC of Pasay City. Hence, the representatives of the Republic and PIATCO met before the RTC of Pasay City for the supposed payment by the former to the latter of the proferred amount. However, on the same day, the Court of Appeals, in CA G.R. No. 95539, issued a Temporary Restraining Order (TRO) enjoining, among other things, the RTC of Pasay City from implementing the questioned Orders, dated 27 March 2006 and 15 June 2006, or "from otherwise causing payment and from further proceeding with the determination of just compensation in the expropriation case involved herein, until such time that petitioner's motion to declare in default and motion for partial summary judgment shall have been resolved by the trial court; or it is clarified that PIATCO categorically disputes the proferred value for NAIA Terminal 3." The TRO was to be effective for 30 days. Two days later, on 26 August 2006, the Republic filed with the Court of Appeals an Urgent Motion to Lift Temporary Restraining Order, which the appellate court scheduled for hearing on 5 September 2006. While the Urgent Motion to lift the TRO was still pending with the Court of Appeals, the Republic already filed the present Petition for Certiorari and Prohibition With Urgent Application for a Temporary Restraining Order and/or Writ of Preliminary Injunction, attributing to the Court of Appeals grave abuse of discretion in granting the TRO and seeking a writ of prohibition against the Court of Appeals to enjoin it from giving due course to Baterina's Petition in CA-G.R. No. 95539. The Republic thus raises before this Court the following arguments: I THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO AN EXCESS OR LACK OF JURISDICTION WHEN IT GRANTED THE TEMPORARY RESTRAINING ORDER. A. THIS HONORABLE COURT'S DECISION IN GINGOYON CONSTITUTES THE "LAW OF THE CASE". B. THE TRO IS IN DIRECT CONTRAVENTION OF THIS COURT'S DECISION

WICH HAD ATTAINED FINALITY. II THE REPUBLIC IS SUFFERING IRREPARABLE DAMAGE. III THE COURT OF APPEALS MUST BE PROHIBITED FROM GIVING DUE COURSE TO A PETITION THAT IS DEFECTIVE IN FORM AND SUBSTANCE. A. PRIVATE RESPONDENT HAS NO LEGAL STANDING. A. THIS HONORABLE COURT HAS RULED RESPONDENT HAS NO LEGAL STANDING. THAT PRIVATE

B. PRIVATE RESPONDENT HAS LOST HIS STANDING AS AN INTERVENOR. B. PRIVATE RESPONDENT FAILED TO DEMONSTRATE THAT HE IS ENTITLED TO THE INJUNCTIVE RELIEFS PRAYED FOR. C. THE BOND POSTED IS INSUFFICIENT. IV GRANTING ARGUENDO THAT PRIVATE RESPONDENT'S PETITION IS SUFFICIENT IN FORM AND SUBSTANCE, THE SAME HAS BECOME MOOT AND ACADEMIC. A. THE MOTION TO DECLARE IN DEFAULT AND/OR MOTION FOR PARTIAL SUMMARY JUDGMENT HAS ALREADY BEEN RESOLVED. B. PIATCO HAS CATEGORICALLY DISPUTED THE PROFFERED VALUE FOR NAIA TERMINAL III.[59] The Republic prays of this Court that: (a) Pending the determination of the merits of this petition, a temporary restraining order and/or a writ of preliminary injunction be ISSUED restraining the Court of Appeals from implementing the writ of preliminary injunction in CA-G.R. SP No. 95539 and proceeding in said case such as hearing it on September 5, 2006. After both parties have been heard, the preliminary injunction be MADE PERMANENT; (b) The Resolution date 24 August 2006 of the Court of Appeals be SET ASIDE; and (c) CA-G.R. SP No. 95539 be ORDERED DISMISSED.

Other just and equitable reliefs are likewise prayed for.[60]

On 4 September 2006, the Republic filed a Manifestation and Motion to Withdraw Urgent Motion to Lift Temporary Restraining Order with the Court of Appeals stating, among other things, that it had decided to withdraw the said Motion as it had opted to avail of other options and remedies. Despite the Motion to Withdraw filed by the Government, the Court of Appeals issued a Resolution, dated 8 September 2006, lifting the TRO it issued, on the basis of the following In view of the pronouncement of the Supreme Court in the Gingoyon case upholding the right of PIATCO to be paid the proferred value in the amount of P3,002,125,000.00 prior to the implementation of the writ of possession issued by the trial court on December 21, 2004 over the NAIA Passenger Terminal III, and directing the determination of just compensation, there is no practical and logical reason to maintain the effects of the Temporary Restraining Order contained in our Resolution dated August 24, 2006. Thus, We cannot continue restraining what has been mandated in a final and executory decision of the Supreme Court. WHEREFORE, Our Resolution dated 24 August 2006 be SET ASIDE. Consequently, the Motion to Withdraw the Motion to Lift the Temporary Restraining Order is rendered moot and academic.[61] There being no more legal impediment, the Republic tendered on 11 September 2006 Land Bank check in the amount of P3,002,125,000.00 representing the proferred value of NAIA IPT III, which was received by a duly authorized representative of PIATCO. On 27 December 2006, the Court of Appeals rendered a Decision in CA G.R. No. 95539 dismissing Baterina's Petition. The latest developments before the Court of Appeals and the RTC of Pasay City render the present Petition of the Republic moot. Nonetheless, Baterina, as the private respondent in the instant Petition, presented his own prayer that a judgment be rendered as follows: A. For this Honorable Court, in the exercise of its judicial discretion to relax procedural rules consistent with Metropolitan Traffic Command v. Gonong and deem that justice would be better served if all legal issues involved in the expropriation case and in Baterina are resolved in this case once and for all, to DECLARE that: i. TERMINAL 3, as a matter of law, is public property and thus not a proper object of eminent domain proceedings; and ii. PIATCO, as a matter of law, is merely the builder of TERMINAL 3 and, as such, it may file a claim for recovery on quantum meruit with the Commission on Audi[t] for determination of the amount thereof, if any. B. To DIRECT the Regional Trial Court of Pasay City, Branch 117 to dismiss the expropriation case; C. To DISMISS the instant Petition and DENY The Republic's application for TRO and/or writ of preliminary injunction for lack of merit;

D. To DECLARE that the P3 Billion (representing the proferred value of TERMINAL 3) paid to PIATCO on 11 September 2006 as funds held in trust by PIATCO for the benefit of the Republic and subject to the outcome of the proceedings for the determination of recovery on quantum meruit due to PIATCO, if any. E. To DIRECT the Solicitor General to disclose the evidence it has gathered on corruption, bribery, fraud, bad faith, etc., to this Honorable Court and the Commission on Audit, and to DECLARE such evidence to be admissible in any proceeding for the determination of any compensation due to PIATCO, if any. [F]. In the alternative, to:

i. SET ASIDE the trial court's I Order /I dated 08 August 2006 denying Private Respondent's motio for intervention in the expropriation case, and

ii. Should this Honorable Court lend credence to the argument of the Solicitor General in its Commen dated 20 April 2006 that there are issues as to material fact that require presentation of evidence , t REMAND the resolution of the legal issues raised by Private Respondent to the trial cour consistent with this Honorable Court's holding in the Gingoyon Resolution that the interests of th movants-in-intervention [meaning Takenaka, Asahikosan, and herein Private Respondent] may be duly litigated in proceedings which are extant before the lower courts."[62] In essence, Baterina is opposing the expropriation proceedings on the ground that NAIA IPT III is already public property. Hence, PIATCO is not entitled to just compensation for NAIA IPT III. He is asking the Court to make a definitive ruling on this matter considering that it was not settled in either Agan or Gingoyon. We disagree. Contrary to Baterina's stance, PIATCO's entitlement to just and equitable consideration for its construction of NAIA IPT III and the propriety of the Republic's resort to expropriation proceedings were already recognized and upheld by this Court in Agan and Gingoyon. The Court's Decisions in both Agan and Gingoyon had attained finality, the former on 17 February 2004 and the latter on 17 March 2006. This Court already made an unequivocal pronouncement in its Resolution dated 21 January 2004 in Agan that for the Government of the Republic to take over the NAIA IPT III facility, it has to compensate PIATCO as a builder of the structures; and that "[t]he compensation must be just and in accordance with law and equity for the government cannot unjustly enrich itself at the expense of PIATCO and its investors."[63] As between the Republic and PIATCO, the judgment on the need to compensate PIATCO before the Government may take over NAIA IPT III is already conclusive and beyond question. Hence, in Gingoyon, this Court declared that: This pronouncement contains the fundamental premises which permeate this decision of the Court. Indeed, Agan, final and executory as it is, stands as governing law in this case, and any disposition of the present petition must conform to the conditions laid down by the Court in its 2004 Resolution.

x x x x The pronouncement in the 2004 Resolution is especially significant to this case in two aspects, namely: (i) that PIATCO must receive payment of just compensation determined in accordance with law and equity; and (ii) that the government is barred from taking over NAIA 3 until such just compensation is paid . The parties cannot be allowed to evade the directives laid down by this Court through any mode of judicial action, such as the complaint for eminent domain. It cannot be denied though that the Court in the 2004 Resolution prescribed mandatory guidelines which the Government must observe before it could acquire the NAIA 3 facilities. Thus, the actions of respondent judge under review, as well as the arguments of the parties must, to merit affirmation, pass the threshold test of whether such propositions are in accord with the 2004 Resolution.[64] The Court then, in Gingoyon, directly addressed the issue on the appropriateness of the Republic's resort to expropriation proceedings: The Government has chosen to resort to expropriation, a remedy available under the law,which has the added benefit of an integrated process for the determination of just compensation and the payment thereof to PIATCO. We appreciate that the case at bar is a highly unusual case, whereby the Government seeks to expropriate a building complex constructed on land which the State already owns. There is an inherent illogic in the resort to eminent domain on property already owned by the State. At first blush, since the State already owns the property on which NAIA 3 stands, the proper remedy should be akin to an action for ejectment. However, the reason for the resort by the Government to expropriation proceedings is understandable in this case. The 2004 Resolution, in requiring the payment of just compensation prior to the takeoverbythe Government of NAIA 3, effectively precluded it from acquiring possession or ownership of the NAIA 3 through the unilateral exercise of its rights as the owner of the ground on which the facilities stood. Thus, as things stood after the 2004 Resolution, the right of the Government to take over the NAIA 3 terminal was preconditioned by lawful order on the payment of just compensation to PIATCO as builder of the structures. x x x x

The right of eminent domain extends to personal and real property, and the NAIA 3 structures, adhered as they are to the soil, are considered as real property. The public purpose for the expropriation is also beyond dispute. It should also be noted that Section 1 of Rule 67 (on Expropriation) recognizes the possibility that the property sought to be expropriated may be titled in the name of the Republic of the Philippines, although occupied by private individuals, and in such case an averment to that effect should be made in the complaint. The instant expropriation complaint did aver that the NAIA 3 complex "stands on a parcel of land owned by the Bases Conversion Development Authority, another agency of [the Republic of the Philippines]." Admittedly, eminent domain is not the sole judicial recourse by which the Government may have acquired the NAIA 3 facilities while satisfying the requisites in the 2004

Resolution. Eminent domain though may be the most effective, as well as the speediest means by which such goals may be accomplished . Not only does it enable immediate possession after satisfaction of the requisites under the law, it also has a built-in procedure through which just compensation may be ascertained. Thus, there should be no question as to the propriety of eminent domain proceedings in this case. Still, in applying the laws and rules on expropriation in the case at bar, we are impelled to apply or construe these rules in accordance with the Court's prescriptions in the 2004 Resolution to achieve the end effect that the Government may validly take over the NAIA 3 facilities. Insofar as this case is concerned, the 2004 Resolution is effective not only as a legal precedent, but as the source of rights and prescriptions that must be guaranteed, if not enforced, in the resolution of this petition. Otherwise, the integrity and efficacy of the rulings of this Court will be severely diminished.[65] (Emphasis ours.) The Court, also in Gingoyon, categorically recognized PIATCO's ownership over the structures it had built in NAIA IPT III, to wit: There can be no doubt that PIATCO has ownership rights over the facilities which it had financed and constructed. The 2004 Resolution squarely recognized that right when it mandated the payment of just compensation to PIATCO prior to the takeover by the Government of NAIA 3. The fact that the Government resorted to eminent domain proceedings in the first place is a concession on its part of PIATCO's ownership. Indeed, if no such right is recognized, then there should be no impediment for the Government to seize control of NAIA 3 through ordinary ejectment proceedings. x x x x

Thus, the property subject of expropriation, the NAIA 3 facilities, are real property owned by PIATCO. x x x (Emphasis ours.)[66] It was further settled in Gingoyon that the expropriation proceedings shall be held in accordance with Republic Act No. 8974,[67] thus: Unlike in the case of Rule 67, the application of Rep. Act No. 8974 will not contravene the 2004 Resolution, which requires the payment of just compensation before any takeover of the NAIA 3 facilities by the Government. The 2004 Resolution does not particularize the extent such payment must be effected before the takeover, but it unquestionably requires at least some degree of payment to the private property owner before a writ of possession may issue. The utilization of Rep. Act No. 8974 guarantees compliance with this bare minimum requirement, as it assures the private property owner the payment of, at the very least, the proffered value of the property to be seized. Such payment of the proffered value to the owner, followed by the issuance of the writ of possession in favor of the Government, is precisely the schematic under Rep. Act No. 8974, one which facially complies with the prescription laid down in the 2004 Resolution. And finally, as to the determination of the amount due PIATCO, this Court ruled in Gingoyon that: Under Rep. Act No. 8974, the Government is required to "immediately pay" the owner of the property the amount equivalent to the sum of (1) one hundred percent (100%) of the value of the property based on the current relevant zonal valuation of the [BIR]; and (2) the

value of the improvements and/or structures as determined under Section 7. As stated above, the BIR zonal valuation cannot apply in this case, thus the amount subject to immediate payment should be limited to "the value of the improvements and/or structures as determined under Section 7," with Section 7 referring to the "implementing rules and regulations for the equitable valuation of the improvements and/or structures on the land." Under the present implementing rules in place,the valuation of the improvements/structures are to be based using "the replacement cost method." However, the replacement cost is only one of the factors to be consideredin determining the just compensation. In addition to Rep. Act No. 8974, the 2004 Resolution in Agan also mandated that the payment of just compensationshould be in accordance with equity as well. Thus, in ascertaining the ultimate amount of just compensation, the duty of the trial court is to ensure that such amount conforms not only to the law, such as Rep. Act No. 8974, but to principles of equity as well. Admittedly, there is no way, at least for the present, to immediately ascertain the value of the improvements and structures since such valuation is a matter for factual determination. Yet Rep. Act No. 8974 permits an expedited means by which the Government can immediately take possession of the property without having to await precise determination of the valuation. Section 4(c) of Rep. Act No. 8974 states that "in case the completion of a government infrastructure project is of utmost urgency and importance, and there is no existing valuation of the area concerned, the implementing agency shall immediately pay the owner of the property its proferred value, taking into consideration the standards prescribed in Section 5 [of the law]." The "proffered value" may strike as a highly subjective standard based solely on the intuition of the government, but Rep. Act No. 8974 does provide relevant standards by which "proffered value"shouldbe based, as well as the certainty of judicial determination of the propriety of the proffered value. In filing the complaint for expropriation, the Government alleged to have deposited the amount of P3 Billion earmarked for expropriation, representing the assessed value of the property. Themaking of the deposit, including the determination of the amount of the deposit, was undertaken under the erroneous notion that Rule 67, and not Rep. Act No. 8974, is the applicable law. Still, as regards the amount, the Court sees no impediment to recognize this sum of P3 Billion as the proffered value under Section 4(b) of Rep. Act No. 8974. After all, in the initial determination of the proffered value, the Government is not strictly required to adhere to any predetermined standards, although its proffered value may later be subjected to judicial review using the standards enumerated under Section 5 of Rep. Act No. 8974.[68] Gingoyon constitutes as the law of the case for the expropriation proceedings, docketed as Case No. 040876CFM, before the RTC of Pasay City. Law of the case has been defined in the following manner By law of the case is meant that whatever is once irrevocably established as the controlling legal rule or decision between the same parties in the same case continues to be the law of the case so long as the facts on which such decision was predicated continue to be the facts of the case before the court (21 C.J.S. 330). And once the decision becomes final, it is binding on all inferior courts and hence beyond their power and authority to alter or modify (Kabigting vs. Acting Director of Prisons, G.R. L-15548, October 30, 1962).[69]

A ruling rendered on the first appeal, constitutes the law of the case, and, even if erroneous, it may no longer be disturbed or modified since it has become final long ago.[70] The extensive excerpts from Gingoyon demonstrate and emphasize that the Court had already adjudged the issues raised by Baterina, which he either conveniently overlooked or stubbornly refused to accept. The general rule precluding the relitigation of material facts or questions which were in issue and adjudicated in former action are commonly applied to all matters essentially connected with the subject matter of the litigation. Thus, it extends to questions necessarily involved in an issue, and necessarily adjudicated, or necessarily implied in the final judgment , although no specific finding may have been made in reference thereto, and although such matters were directly referred to in the pleadings and were not actually or formally presented. Under this rule, if the record of the former trial shows that the judgment could not have been rendered without deciding the particular matter, it will be considered as having settled that matter as to all future actions between the parties and if a judgment necessarily presupposes certain premises, they are as conclusive as the judgment itself. Reasons for the rule are that a judgment is an adjudication on all the matters which are essential to support it, and that every proposition assumed or decided by the court leading up to the final conclusion and upon which such conclusion is based is as effectually passed upon as the ultimate question which is finally solved.[71] Since the issues Baterina wishes to raise as an intervenor in Case No. 04-0876CFM were already settled with finality in both Agan and Gingoyon, then there is no point in still allowing his intervention. His Petition-in-Intervention would only be a relitigation of matters that had been previously adjudicated by no less than the Highest Court of the land. And, in no manner can the RTC of Pasay City in Case No. 04-0876CFM grant the reliefs he prayed for without departing from or running afoul of the final and executory Decisions of this Court in Agan and Gingoyon. While it is true that when this Court, in a Resolution dated 1 February 2006, dismissed the Motions for Intervention in Gingoyon, including that of Baterina, it also observed that the interests of the movantsin-intervention may be duly litigated in proceedings which are extant before the lower courts. This does not mean, however, that the said movants-in-interest were assured of being allowed as intervenors or that the reliefs they sought as such shall be granted by the trial courts. The fate of their intervention still rests on their interest or legal standing in the case and the merits of their arguments. WHEREFORE, in view of the foregoing: a. The Petition in G.R. No. 169914 is hereby DISMISSED for lack of merit; and b. The Petition in G.R. No. 174166 is hereby likewise DISMISSED for being moot and academic. No costs. SO ORDERED.

EN BANC [G.R. No. 155001. May 5, 2003] DEMOSTHENES P. AGAN, JR., JOSEPH B. CATAHAN, JOSE MARI B. REUNILLA, MANUEL ANTONIO B. BOE, MAMERTO S. CLARA, REUEL E. DIMALANTA, MORY V. DOMALAON, CONRADO G. DIMAANO, LOLITA R. HIZON, REMEDIOS P. ADOLFO, BIENVENIDO C. HILARIO, MIASCOR WORKERS UNION - NATIONAL LABOR UNION (MWU-NLU), and PHILIPPINE AIRLINES EMPLOYEES ASSOCIATION (PALEA), petitioners, vs. PHILIPPINE INTERNATIONAL AIR TERMINALS CO., INC., MANILA INTERNATIONAL AIRPORT AUTHORITY, DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS and SECRETARY LEANDRO M. MENDOZA, in his capacity as Head of the Department of Transportation and Communications, respondents, MIASCOR GROUNDHANDLING CORPORATION, DNATA-WINGS AVIATION SYSTEMS CORPORATION, MACROASIA-EUREST SERVICES, INC., MACROASIA-MENZIES AIRPORT SERVICES CORPORATION, MIASCOR CATERING SERVICES CORPORATION, MIASCOR AIRCRAFT MAINTENANCE CORPORATION, and MIASCOR LOGISTICS CORPORATION, petitioners-in-intervention, [G.R. No. 155547. May 5, 2003] SALACNIB F. BATERINA, CLAVEL A. MARTINEZ and CONSTANTINO G. JARAULA, petitioners, vs. PHILIPPINE INTERNATIONAL AIR TERMINALS CO., INC., MANILA INTERNATIONAL AIRPORT AUTHORITY, DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS, DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS, SECRETARY LEANDRO M. MENDOZA, in his capacity as Head of the Department of Transportation and Communications, and SECRETARY SIMEON A. DATUMANONG, in his capacity as Head of the Department of Public Works and Highways, respondents, JACINTO V. PARAS, RAFAEL P. NANTES, EDUARDO C. ZIALCITA, WILLY BUYSON VILLARAMA, PROSPERO C. NOGRALES, PROSPERO A. PICHAY, JR., HARLIN CAST ABAYON, and BENASING O. MACARANBON, respondents-intervenors, [G.R. No. 155661. May 5, 2003] CEFERINO C. LOPEZ, RAMON M. SALES, ALFREDO B. VALENCIA, MA. TERESA V. GAERLAN, LEONARDO DE LA ROSA, DINA C. DE LEON, VIRGIE CATAMIN RONALD SCHLOBOM, ANGELITO SANTOS, MA. LUISA M. PALCON and SAMAHANG MANGGAGAWA SA PALIPARAN NG PILIPINAS (SMPP), petitioners, vs. PHILIPPINE INTERNATIONAL AIR TERMINALS CO., INC., MANILA INTERNATIONAL AIRPORT AUTHORITY, DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS, SECRETARY LEANDRO M. MENDOZA, in his capacity as Head of the Department of Transportation and Communications, respondents. DECISION PUNO, J.: Petitioners and petitioners-in-intervention filed the instant petitions for prohibition under Rule 65 of the Revised Rules of Court seeking to prohibit the Manila International Airport Authority (MIAA) and the Department of Transportation and Communications (DOTC) and its Secretary from implementing the following agreements executed by the Philippine Government through the DOTC and the MIAA and the Philippine International Air Terminals Co., Inc. (PIATCO): (1) the Concession Agreement signed on July 12, 1997, (2) the Amended and Restated Concession Agreement dated November 26, 1999, (3) the First Supplement to the Amended and Restated Concession Agreement dated August 27, 1999, (4)

the Second Supplement to the Amended and Restated Concession Agreement dated September 4, 2000, and (5) the Third Supplement to the Amended and Restated Concession Agreement dated June 22, 2001 (collectively, the PIATCO Contracts). The facts are as follows: In August 1989, the DOTC engaged the services of Aeroport de Paris (ADP) to conduct a comprehensive study of the Ninoy Aquino International Airport (NAIA) and determine whether the present airport can cope with the traffic development up to the year 2010. The study consisted of two parts: first, traffic forecasts, capacity of existing facilities, NAIA future requirements, proposed master plans and development plans; and second, presentation of the preliminary design of the passenger terminal building. The ADP submitted a Draft Final Report to the DOTC in December 1989. Some time in 1993, six business leaders consisting of John Gokongwei, Andrew Gotianun, Henry Sy, Sr., Lucio Tan, George Ty and Alfonso Yuchengco met with then President Fidel V. Ramos to explore the possibility of investing in the construction and operation of a new international airport terminal. To signify their commitment to pursue the project, they formed the Asias Emerging Dragon Corp. (AEDC) which was registered with the Securities and Exchange Commission (SEC) on September 15, 1993. On October 5, 1994, AEDC submitted an unsolicited proposal to the Government through the DOTC/MIAA for the development of NAIA International Passenger Terminal III (NAIA IPT III) under a build-operate-and-transfer arrangement pursuant to RA 6957 as amended by RA 7718 (BOT Law).[1] On December 2, 1994, the DOTC issued Dept. Order No. 94-832 constituting the Prequalification Bids and Awards Committee (PBAC) for the implementation of the NAIA IPT III project. On March 27, 1995, then DOTC Secretary Jose Garcia endorsed the proposal of AEDC to the National Economic and Development Authority (NEDA). A revised proposal, however, was forwarded by the DOTC to NEDA on December 13, 1995. On January 5, 1996, the NEDA Investment Coordinating Council (NEDA ICC) Technical Board favorably endorsed the project to the ICC Cabinet Committee which approved the same, subject to certain conditions, on January 19, 1996. On February 13, 1996, the NEDA passed Board Resolution No. 2 which approved the NAIA IPT III project. On June 7, 14, and 21, 1996, DOTC/MIAA caused the publication in two daily newspapers of an invitation for competitive or comparative proposals on AEDCs unsolicited proposal, in accordance with Sec. 4-A of RA 6957, as amended. The alternative bidders were required to submit three (3) sealed envelopes on or before 5:00 p.m. of September 20, 1996. The first envelope should contain the Prequalification Documents, the second envelope the Technical Proposal, and the third envelope the Financial Proposal of the proponent. On June 20, 1996, PBAC Bulletin No. 1 was issued, postponing the availment of the Bid Documents and the submission of the comparative bid proposals. Interested firms were permitted to obtain the Request for Proposal Documents beginning June 28, 1996, upon submission of a written application and payment of a non-refundable fee of P50,000.00 (US$2,000). The Bid Documents issued by the PBAC provided among others that the proponent must have adequate capability to sustain the financing requirement for the detailed engineering, design, construction, operation, and maintenance phases of the project. The proponent would be evaluated based on its ability to provide a minimum amount of equity to the project, and its capacity to secure external financing for the project. On July 23, 1996, the PBAC issued PBAC Bulletin No. 2 inviting all bidders to a pre-bid conference on July 29, 1996.

On August 16, 1996, the PBAC issued PBAC Bulletin No. 3 amending the Bid Documents. The following amendments were made on the Bid Documents: a. Aside from the fixed Annual Guaranteed Payment, the proponent shall include in its financial proposal an additional percentage of gross revenue share of the Government, as follows: i. ii. iii. First 5 years Next 10 years Next 10 years 5.0% 7.5% 10.0%

b. The amount of the fixed Annual Guaranteed Payment shall be subject of the price challenge. Proponent may offer an Annual Guaranteed Payment which need not be of equal amount, but payment of which shall start upon site possession. c. The project proponent must have adequate capability to sustain the financing requirement for the detailed engineering, design, construction, and/or operation and maintenance phases of the project as the case may be. For purposes of pre-qualification, this capability shall be measured in terms of: i. Proof of the availability of the project proponent and/or the consortium to provide the minimum amount of equity for the project; and ii. a letter testimonial from reputable banks attesting that the project proponent and/or the members of the consortium are banking with them, that the project proponent and/or the members are of good financial standing, and have adequate resources. d. The basis for the prequalification shall be the proponents compliance with the minimum technical and financial requirements provided in the Bid Documents and the IRR of the BOT Law. The minimum amount of equity shall be 30% of the Project Cost. e. Amendments to the draft Concession Agreement shall be issued from time to time. Said amendments shall only cover items that would not materially affect the preparation of the proponents proposal. On August 29, 1996, the Second Pre-Bid Conference was held where certain clarifications were made. Upon the request of prospective bidder Peoples Air Cargo & Warehousing Co., Inc (Paircargo), the PBAC warranted that based on Sec. 11.6, Rule 11 of the Implementing Rules and Regulations of the BOT Law, only the proposed Annual Guaranteed Payment submitted by the challengers would be revealed to AEDC, and that the challengers technical and financial proposals would remain confidential. The PBAC also clarified that the list of revenue sources contained in Annex 4.2a of the Bid Documents was merely indicative and that other revenue sources may be included by the proponent, subject to approval by DOTC/MIAA. Furthermore, the PBAC clarified that only those fees and charges denominated as Public Utility Fees would be subject to regulation, and those charges which would be actually deemed Public Utility Fees could still be revised, depending on the outcome of PBACs query on the matter with the Department of Justice. In September 1996, the PBAC issued Bid Bulletin No. 5, entitled Answers to the Queries of PAIRCARGO as Per Letter Dated September 3 and 10, 1996. Paircargos queries and the PBACs responses were as follows: 1. It is difficult for Paircargo and Associates to meet the required minimum equity requirement as prescribed in Section 8.3.4 of the Bid Documents considering that the capitalization of each member company is so structured to meet the requirements and needs of their current respective business undertaking/activities. In order to comply with this equity requirement, Paircargo is requesting PBAC to just allow each member of (sic) corporation of the Joint Venture to just execute an agreement that embodies a commitment to infuse the required capital in case the project is awarded to the Joint

Venture instead of increasing each corporations current authorized capital stock just for prequalification purposes. In prequalification, the agency is interested in ones financial capability at the time of prequalification, not future or potential capability. A commitment to put up equity once awarded the project is not enough to establish that present financial capability. However, total financial capability of all member companies of the Consortium, to be established by submitting the respective companies audited financial statements, shall be acceptable. 2. At present, Paircargo is negotiating with banks and other institutions for the extension of a Performance Security to the joint venture in the event that the Concessions Agreement (sic) is awarded to them. However, Paircargo is being required to submit a copy of the draft concession as one of the documentary requirements. Therefore, Paircargo is requesting that theyd (sic) be furnished copy of the approved negotiated agreement between the PBAC and the AEDC at the soonest possible time. A copy of the draft Concession Agreement is included in the Bid Documents. Any material changes would be made known to prospective challengers through bid bulletins. However, a final version will be issued before the award of contract. The PBAC also stated that it would require AEDC to sign Supplement C of the Bid Documents (Acceptance of Criteria and Waiver of Rights to Enjoin Project) and to submit the same with the required Bid Security. On September 20, 1996, the consortium composed of Peoples Air Cargo and Warehousing Co., Inc. (Paircargo), Phil. Air and Grounds Services, Inc. (PAGS) and Security Bank Corp. (Security Bank) (collectively, Paircargo Consortium) submitted their competitive proposal to the PBAC. On September 23, 1996, the PBAC opened the first envelope containing the prequalification documents of the Paircargo Consortium. On the following day, September 24, 1996, the PBAC prequalified the Paircargo Consortium. On September 26, 1996, AEDC informed the PBAC in writing of its reservations as regards the Paircargo Consortium, which include: a. The lack of corporate approvals and financial capability of PAIRCARGO; b. The lack of corporate approvals and financial capability of PAGS; c. The prohibition imposed by RA 337, as amended (the General Banking Act) on the amount that Security Bank could legally invest in the project; d. The inclusion of Siemens as a contractor of the PAIRCARGO Joint Venture, for prequalification purposes; and e. The appointment of Lufthansa as the facility operator, in view of the Philippine requirement in the operation of a public utility. The PBAC gave its reply on October 2, 1996, informing AEDC that it had considered the issues raised by the latter, and that based on the documents submitted by Paircargo and the established prequalification criteria, the PBAC had found that the challenger, Paircargo, had prequalified to undertake the project. The Secretary of the DOTC approved the finding of the PBAC. The PBAC then proceeded with the opening of the second envelope of the Paircargo Consortium which contained its Technical Proposal. On October 3, 1996, AEDC reiterated its objections, particularly with respect to Paircargos financial

capability, in view of the restrictions imposed by Section 21-B of the General Banking Act and Sections 1380 and 1381 of the Manual Regulations for Banks and Other Financial Intermediaries. On October 7, 1996, AEDC again manifested its objections and requested that it be furnished with excerpts of the PBAC meeting and the accompanying technical evaluation report where each of the issues they raised were addressed. On October 16, 1996, the PBAC opened the third envelope submitted by AEDC and the Paircargo Consortium containing their respective financial proposals. Both proponents offered to build the NAIA Passenger Terminal III for at least $350 million at no cost to the government and to pay the government: 5% share in gross revenues for the first five years of operation, 7.5% share in gross revenues for the next ten years of operation, and 10% share in gross revenues for the last ten years of operation, in accordance with the Bid Documents. However, in addition to the foregoing, AEDC offered to pay the government a total of P135 million as guaranteed payment for 27 years while Paircargo Consortium offered to pay the government a total of P17.75 billion for the same period. Thus, the PBAC formally informed AEDC that it had accepted the price proposal submitted by the Paircargo Consortium, and gave AEDC 30 working days or until November 28, 1996 within which to match the said bid, otherwise, the project would be awarded to Paircargo. As AEDC failed to match the proposal within the 30-day period, then DOTC Secretary Amado Lagdameo, on December 11, 1996, issued a notice to Paircargo Consortium regarding AEDCs failure to match the proposal. On February 27, 1997, Paircargo Consortium incorporated into Philippine International Airport Terminals Co., Inc. (PIATCO). AEDC subsequently protested the alleged undue preference given to PIATCO and reiterated its objections as regards the prequalification of PIATCO. On April 11, 1997, the DOTC submitted the concession agreement for the second-pass approval of the NEDA-ICC. On April 16, 1997, AEDC filed with the Regional Trial Court of Pasig a Petition for Declaration of Nullity of the Proceedings, Mandamus and Injunction against the Secretary of the DOTC, the Chairman of the PBAC, the voting members of the PBAC and Pantaleon D. Alvarez, in his capacity as Chairman of the PBAC Technical Committee. On April 17, 1997, the NEDA-ICC conducted an ad referendum to facilitate the approval, on a noobjection basis, of the BOT agreement between the DOTC and PIATCO. As the ad referendum gathered only four (4) of the required six (6) signatures, the NEDA merely noted the agreement. On July 9, 1997, the DOTC issued the notice of award for the project to PIATCO. On July 12, 1997, the Government, through then DOTC Secretary Arturo T. Enrile, and PIATCO, through its President, Henry T. Go, signed the Concession Agreement for the Build-Operate-andTransfer Arrangement of the Ninoy Aquino International Airport Passenger Terminal III (1997 Concession Agreement). The Government granted PIATCO the franchise to operate and maintain the said terminal during the concession period and to collect the fees, rentals and other charges in accordance with the rates or schedules stipulated in the 1997 Concession Agreement. The Agreement provided that the concession period shall be for twenty-five (25) years commencing from the in-service date, and may be renewed at the option of the Government for a period not exceeding twenty-five (25) years. At the end of the concession period, PIATCO shall transfer the development facility to MIAA. On November 26, 1998, the Government and PIATCO signed an Amended and Restated Concession Agreement (ARCA). Among the provisions of the 1997 Concession Agreement that were amended by

the ARCA were: Sec. 1.11 pertaining to the definition of certificate of completion; Sec. 2.05 pertaining to the Special Obligations of GRP; Sec. 3.02 (a) dealing with the exclusivity of the franchise given to the Concessionaire; Sec. 4.04 concerning the assignment by Concessionaire of its interest in the Development Facility; Sec. 5.08 (c) dealing with the proceeds of Concessionaires insurance; Sec. 5.10 with respect to the temporary take-over of operations by GRP; Sec. 5.16 pertaining to the taxes, duties and other imposts that may be levied on the Concessionaire; Sec. 6.03 as regards the periodic adjustment of public utility fees and charges; the entire Article VIII concerning the provisions on the termination of the contract; and Sec. 10.02 providing for the venue of the arbitration proceedings in case a dispute or controversy arises between the parties to the agreement. Subsequently, the Government and PIATCO signed three Supplements to the ARCA. The First Supplement was signed on August 27, 1999; the Second Supplement on September 4, 2000; and the Third Supplement on June 22, 2001 (collectively, Supplements). The First Supplement to the ARCA amended Sec. 1.36 of the ARCA defining Revenues or Gross Revenues; Sec. 2.05 (d) of the ARCA referring to the obligation of MIAA to provide sufficient funds for the upkeep, maintenance, repair and/or replacement of all airport facilities and equipment which are owned or operated by MIAA; and further providing additional special obligations on the part of GRP aside from those already enumerated in Sec. 2.05 of the ARCA. The First Supplement also provided a stipulation as regards the construction of a surface road to connect NAIA Terminal II and Terminal III in lieu of the proposed access tunnel crossing Runway 13/31; the swapping of obligations between GRP and PIATCO regarding the improvement of Sales Road; and the changes in the timetable. It also amended Sec. 6.01 (c) of the ARCA pertaining to the Disposition of Terminal Fees; Sec. 6.02 of the ARCA by inserting an introductory paragraph; and Sec. 6.02 (a) (iii) of the ARCA referring to the Payments of Percentage Share in Gross Revenues. The Second Supplement to the ARCA contained provisions concerning the clearing, removal, demolition or disposal of subterranean structures uncovered or discovered at the site of the construction of the terminal by the Concessionaire. It defined the scope of works; it provided for the procedure for the demolition of the said structures and the consideration for the same which the GRP shall pay PIATCO; it provided for time extensions, incremental and consequential costs and losses consequent to the existence of such structures; and it provided for some additional obligations on the part of PIATCO as regards the said structures. Finally, the Third Supplement provided for the obligations of the Concessionaire as regards the construction of the surface road connecting Terminals II and III. Meanwhile, the MIAA which is charged with the maintenance and operation of the NAIA Terminals I and II, had existing concession contracts with various service providers to offer international airline airport services, such as in-flight catering, passenger handling, ramp and ground support, aircraft maintenance and provisions, cargo handling and warehousing, and other services, to several international airlines at the NAIA. Some of these service providers are the Miascor Group, DNATAWings Aviation Systems Corp., and the MacroAsia Group. Miascor, DNATA and MacroAsia, together with Philippine Airlines (PAL), are the dominant players in the industry with an aggregate market share of 70%. On September 17, 2002, the workers of the international airline service providers, claiming that they stand to lose their employment upon the implementation of the questioned agreements, filed before this Court a petition for prohibition to enjoin the enforcement of said agreements.[2] On October 15, 2002, the service providers, joining the cause of the petitioning workers, filed a motion for intervention and a petition-in-intervention.

On October 24, 2002, Congressmen Salacnib Baterina, Clavel Martinez and Constantino Jaraula filed a similar petition with this Court.[3] On November 6, 2002, several employees of the MIAA likewise filed a petition assailing the legality of the various agreements.[4] On December 11, 2002. another group of Congressmen, Hon. Jacinto V. Paras, Rafael P. Nantes, Eduardo C. Zialcita, Willie B. Villarama, Prospero C. Nograles, Prospero A. Pichay, Jr., Harlin Cast Abayon and Benasing O. Macaranbon, moved to intervene in the case as Respondents-Intervenors. They filed their Comment-In-Intervention defending the validity of the assailed agreements and praying for the dismissal of the petitions. During the pendency of the case before this Court, President Gloria Macapagal Arroyo, on November 29, 2002, in her speech at the 2002 Golden Shell Export Awards at Malacaang Palace, stated that she will not honor (PIATCO) contracts which the Executive Branchs legal offices have concluded (as) null and void.[5] Respondent PIATCO filed its Comments to the present petitions on November 7 and 27, 2002. The Office of the Solicitor General and the Office of the Government Corporate Counsel filed their respective Comments in behalf of the public respondents. On December 10, 2002, the Court heard the case on oral argument. After the oral argument, the Court then resolved in open court to require the parties to file simultaneously their respective Memoranda in amplification of the issues heard in the oral arguments within 30 days and to explore the possibility of arbitration or mediation as provided in the challenged contracts. In their consolidated Memorandum, the Office of the Solicitor General and the Office of the Government Corporate Counsel prayed that the present petitions be given due course and that judgment be rendered declaring the 1997 Concession Agreement, the ARCA and the Supplements thereto void for being contrary to the Constitution, the BOT Law and its Implementing Rules and Regulations. On March 6, 2003, respondent PIATCO informed the Court that on March 4, 2003 PIATCO commenced arbitration proceedings before the International Chamber of Commerce, International Court of Arbitration (ICC) by filing a Request for Arbitration with the Secretariat of the ICC against the Government of the Republic of the Philippines acting through the DOTC and MIAA. In the present cases, the Court is again faced with the task of resolving complicated issues made difficult by their intersecting legal and economic implications. The Court is aware of the far reaching fall out effects of the ruling which it makes today. For more than a century and whenever the exigencies of the times demand it, this Court has never shirked from its solemn duty to dispense justice and resolve actual controversies involving rights which are legally demandable and enforceable, and to determine whether or not there has been grave abuse of discretion amounting to lack or excess of jurisdiction.[6] To be sure, this Court will not begin to do otherwise today. We shall first dispose of the procedural issues raised by respondent PIATCO which they allege will bar the resolution of the instant controversy. Petitioners Legal Standing to File the present Petitions a. G.R. Nos. 155001 and 155661 In G.R. No. 155001 individual petitioners are employees of various service providers[7] having separate concession contracts with MIAA and continuing service agreements with various international airlines to provide in-flight catering, passenger handling, ramp and ground support, aircraft

maintenance and provisions, cargo handling and warehousing and other services. Also included as petitioners are labor unions MIASCOR Workers Union-National Labor Union and Philippine Airlines Employees Association. These petitioners filed the instant action for prohibition as taxpayers and as parties whose rights and interests stand to be violated by the implementation of the PIATCO Contracts. Petitioners-Intervenors in the same case are all corporations organized and existing under Philippine laws engaged in the business of providing in-flight catering, passenger handling, ramp and ground support, aircraft maintenance and provisions, cargo handling and warehousing and other services to several international airlines at the Ninoy Aquino International Airport. Petitioners-Intervenors allege that as tax-paying international airline and airport-related service operators, each one of them stands to be irreparably injured by the implementation of the PIATCO Contracts. Each of the petitionersintervenors have separate and subsisting concession agreements with MIAA and with various international airlines which they allege are being interfered with and violated by respondent PIATCO. In G.R. No. 155661, petitioners constitute employees of MIAA and Samahang Manggagawa sa Paliparan ng Pilipinas - a legitimate labor union and accredited as the sole and exclusive bargaining agent of all the employees in MIAA. Petitioners anchor their petition for prohibition on the nullity of the contracts entered into by the Government and PIATCO regarding the build-operate-and-transfer of the NAIA IPT III. They filed the petition as taxpayers and persons who have a legitimate interest to protect in the implementation of the PIATCO Contracts. Petitioners in both cases raise the argument that the PIATCO Contracts contain stipulations which directly contravene numerous provisions of the Constitution, specific provisions of the BOT Law and its Implementing Rules and Regulations, and public policy. Petitioners contend that the DOTC and the MIAA, by entering into said contracts, have committed grave abuse of discretion amounting to lack or excess of jurisdiction which can be remedied only by a writ of prohibition, there being no plain, speedy or adequate remedy in the ordinary course of law. In particular, petitioners assail the provisions in the 1997 Concession Agreement and the ARCA which grant PIATCO the exclusive right to operate a commercial international passenger terminal within the Island of Luzon, except those international airports already existing at the time of the execution of the agreement. The contracts further provide that upon the commencement of operations at the NAIA IPT III, the Government shall cause the closure of Ninoy Aquino International Airport Passenger Terminals I and II as international passenger terminals. With respect to existing concession agreements between MIAA and international airport service providers regarding certain services or operations, the 1997 Concession Agreement and the ARCA uniformly provide that such services or operations will not be carried over to the NAIA IPT III and PIATCO is under no obligation to permit such carry over except through a separate agreement duly entered into with PIATCO.[8] With respect to the petitioning service providers and their employees, upon the commencement of operations of the NAIA IPT III, they allege that they will be effectively barred from providing international airline airport services at the NAIA Terminals I and II as all international airlines and passengers will be diverted to the NAIA IPT III. The petitioning service providers will thus be compelled to contract with PIATCO alone for such services, with no assurance that subsisting contracts with MIAA and other international airlines will be respected. Petitioning service providers stress that despite the very competitive market, the substantial capital investments required and the high rate of fees, they entered into their respective contracts with the MIAA with the understanding that the said contracts will be in force for the stipulated period, and thereafter, renewed so as to allow each of the petitioning service providers to recoup their investments and obtain a reasonable return thereon. Petitioning employees of various service providers at the NAIA Terminals I and II and of MIAA on the other hand allege that with the closure of the NAIA Terminals I and II as international passenger

terminals under the PIATCO Contracts, they stand to lose employment. The question on legal standing is whether such parties have alleged such a personal stake in the outcome of the controversy as to assure that concrete adverseness which sharpens the presentation of issues upon which the court so largely depends for illumination of difficult constitutional questions.[9] Accordingly, it has been held that the interest of a person assailing the constitutionality of a statute must be direct and personal. He must be able to show, not only that the law or any government act is invalid, but also that he sustained or is in imminent danger of sustaining some direct injury as a result of its enforcement, and not merely that he suffers thereby in some indefinite way. It must appear that the person complaining has been or is about to be denied some right or privilege to which he is lawfully entitled or that he is about to be subjected to some burdens or penalties by reason of the statute or act complained of.[10] We hold that petitioners have the requisite standing. In the above-mentioned cases, petitioners have a direct and substantial interest to protect by reason of the implementation of the PIATCO Contracts. They stand to lose their source of livelihood, a property right which is zealously protected by the Constitution. Moreover, subsisting concession agreements between MIAA and petitioners-intervenors and service contracts between international airlines and petitioners-intervenors stand to be nullified or terminated by the operation of the NAIA IPT III under the PIATCO Contracts. The financial prejudice brought about by the PIATCO Contracts on petitioners and petitioners-intervenors in these cases are legitimate interests sufficient to confer on them the requisite standing to file the instant petitions. b. G.R. No. 155547 In G.R. No. 155547, petitioners filed the petition for prohibition as members of the House of Representatives, citizens and taxpayers. They allege that as members of the House of Representatives, they are especially interested in the PIATCO Contracts, because the contracts compel the Government and/or the House of Representatives to appropriate funds necessary to comply with the provisions therein.[11] They cite provisions of the PIATCO Contracts which require disbursement of unappropriated amounts in compliance with the contractual obligations of the Government. They allege that the Government obligations in the PIATCO Contracts which compel government expenditure without appropriation is a curtailment of their prerogatives as legislators, contrary to the mandate of the Constitution that [n]o money shall be paid out of the treasury except in pursuance of an appropriation made by law.[12] Standing is a peculiar concept in constitutional law because in some cases, suits are not brought by parties who have been personally injured by the operation of a law or any other government act but by concerned citizens, taxpayers or voters who actually sue in the public interest. Although we are not unmindful of the cases of Imus Electric Co. v. Municipality of Imus[13] and Gonzales v. Raquiza[14] wherein this Court held that appropriation must be made only on amounts immediately demandable, public interest demands that we take a more liberal view in determining whether the petitioners suing as legislators, taxpayers and citizens have locus standi to file the instant petition. In Kilosbayan, Inc. v. Guingona,[15] this Court held [i]n line with the liberal policy of this Court on locus standi, ordinary taxpayers, members of Congress, and even association of planters, and non-profit civic organizations were allowed to initiate and prosecute actions before this Court to question the constitutionality or validity of laws, acts, decisions, rulings, or orders of various government agencies or instrumentalities.[16] Further, insofar as taxpayers' suits are concerned . . . (this Court) is not devoid of discretion as to whether or not it should be entertained.[17] As such . . . even if, strictly speaking, they [the petitioners] are not covered by the definition, it is still within the wide discretion of the Court to waive the requirement and so remove the impediment to its addressing and resolving the serious constitutional questions raised.[18] In view of the serious legal questions involved and their impact on public interest, we resolve to grant standing to the petitioners.

Other Procedural Matters Respondent PIATCO further alleges that this Court is without jurisdiction to review the instant cases as factual issues are involved which this Court is ill-equipped to resolve. Moreover, PIATCO alleges that submission of this controversy to this Court at the first instance is a violation of the rule on hierarchy of courts. They contend that trial courts have concurrent jurisdiction with this Court with respect to a special civil action for prohibition and hence, following the rule on hierarchy of courts, resort must first be had before the trial courts. After a thorough study and careful evaluation of the issues involved, this Court is of the view that the crux of the instant controversy involves significant legal questions. The facts necessary to resolve these legal questions are well established and, hence, need not be determined by a trial court. The rule on hierarchy of courts will not also prevent this Court from assuming jurisdiction over the cases at bar. The said rule may be relaxed when the redress desired cannot be obtained in the appropriate courts or where exceptional and compelling circumstances justify availment of a remedy within and calling for the exercise of this Courts primary jurisdiction.[19] It is easy to discern that exceptional circumstances exist in the cases at bar that call for the relaxation of the rule. Both petitioners and respondents agree that these cases are of transcendental importance as they involve the construction and operation of the countrys premier international airport. Moreover, the crucial issues submitted for resolution are of first impression and they entail the proper legal interpretation of key provisions of the Constitution, the BOT Law and its Implementing Rules and Regulations. Thus, considering the nature of the controversy before the Court, procedural bars may be lowered to give way for the speedy disposition of the instant cases. Legal Effect of the Commencement of Arbitration Proceedings by PIATCO There is one more procedural obstacle which must be overcome. The Court is aware that arbitration proceedings pursuant to Section 10.02 of the ARCA have been filed at the instance of respondent PIATCO. Again, we hold that the arbitration step taken by PIATCO will not oust this Court of its jurisdiction over the cases at bar. In Del Monte Corporation-USA v. Court of Appeals,[20] even after finding that the arbitration clause in the Distributorship Agreement in question is valid and the dispute between the parties is arbitrable, this Court affirmed the trial courts decision denying petitioners Motion to Suspend Proceedings pursuant to the arbitration clause under the contract. In so ruling, this Court held that as contracts produce legal effect between the parties, their assigns and heirs, only the parties to the Distributorship Agreement are bound by its terms, including the arbitration clause stipulated therein. This Court ruled that arbitration proceedings could be called for but only with respect to the parties to the contract in question. Considering that there are parties to the case who are neither parties to the Distributorship Agreement nor heirs or assigns of the parties thereto, this Court, citing its previous ruling in Salas, Jr. v. Laperal Realty Corporation,[21] held that to tolerate the splitting of proceedings by allowing arbitration as to some of the parties on the one hand and trial for the others on the other hand would, in effect, result in multiplicity of suits, duplicitous procedure and unnecessary delay .[22] Thus, we ruled that the interest of justice would best be served if the trial court hears and adjudicates the case in a single and complete proceeding. It is established that petitioners in the present cases who have presented legitimate interests in the resolution of the controversy are not parties to the PIATCO Contracts. Accordingly, they cannot be bound by the arbitration clause provided for in the ARCA and hence, cannot be compelled to submit to

arbitration proceedings. A speedy and decisive resolution of all the critical issues in the present controversy, including those raised by petitioners, cannot be made before an arbitral tribunal. The object of arbitration is precisely to allow an expeditious determination of a dispute. This objective would not be met if this Court were to allow the parties to settle the cases by arbitration as there are certain issues involving non-parties to the PIATCO Contracts which the arbitral tribunal will not be equipped to resolve. Now, to the merits of the instant controversy. I Is PIATCO a qualified bidder? Public respondents argue that the Paircargo Consortium, PIATCOs predecessor, was not a duly prequalified bidder on the unsolicited proposal submitted by AEDC as the Paircargo Consortium failed to meet the financial capability required under the BOT Law and the Bid Documents. They allege that in computing the ability of the Paircargo Consortium to meet the minimum equity requirements for the project, the entire net worth of Security Bank, a member of the consortium, should not be considered. PIATCO relies, on the other hand, on the strength of the Memorandum dated October 14, 1996 issued by the DOTC Undersecretary Primitivo C. Cal stating that the Paircargo Consortium is found to have a combined net worth of P3,900,000,000.00, sufficient to meet the equity requirements of the project. The said Memorandum was in response to a letter from Mr. Antonio Henson of AEDC to President Fidel V. Ramos questioning the financial capability of the Paircargo Consortium on the ground that it does not have the financial resources to put up the required minimum equity of P2,700,000,000.00. This contention is based on the restriction under R.A. No. 337, as amended or the General Banking Act that a commercial bank cannot invest in any single enterprise in an amount more than 15% of its net worth. In the said Memorandum, Undersecretary Cal opined: The Bid Documents, as clarified through Bid Bulletin Nos. 3 and 5, require that financial capability will be evaluated based on total financial capability of all the member companies of the [Paircargo] Consortium. In this connection, the Challenger was found to have a combined net worth of P3,926,421,242.00 that could support a project costing approximately P13 Billion. It is not a requirement that the net worth must be unrestricted. To impose that as a requirement now will be nothing less than unfair. The financial statement or the net worth is not the sole basis in establishing financial capability. As stated in Bid Bulletin No. 3, financial capability may also be established by testimonial letters issued by reputable banks. The Challenger has complied with this requirement. To recap, net worth reflected in the Financial Statement should not be taken as the amount of the money to be used to answer the required thirty percent (30%) equity of the challenger but rather to be used in establishing if there is enough basis to believe that the challenger can comply with the required 30% equity. In fact, proof of sufficient equity is required as one of the conditions for award of contract (Section 12.1 IRR of the BOT Law) but not for pre-qualification (Section 5.4 of the same document). [23] Under the BOT Law, in case of a build-operate-and-transfer arrangement, the contract shall be awarded to the bidder who, having satisfied the minimum financial, technical, organizational and legal standards required by the law, has submitted the lowest bid and most favorable terms of the project. [24] Further, the 1994 Implementing Rules and Regulations of the BOT Law provide: Section 5.4 Pre-qualification Requirements.

. c. Financial Capability: The project proponent must have adequate capability to sustain the financing requirements for the detailed engineering design, construction and/or operation and maintenance phases of the project, as the case may be. For purposes of pre-qualification, this capability shall be measured in terms of (i) proof of the ability of the project proponent and/or the consortium to provide a minimum amount of equity to the project, and (ii) a letter testimonial from reputable banks attesting that the project proponent and/or members of the consortium are banking with them, that they are in good financial standing, and that they have adequate resources. The government agency/LGU concerned shall determine on a project-to-project basis and before prequalification, the minimum amount of equity needed. (emphasis supplied) Pursuant to this provision, the PBAC issued PBAC Bulletin No. 3 dated August 16, 1996 amending the financial capability requirements for pre-qualification of the project proponent as follows: 6. Basis of Pre-qualification The basis for the pre-qualification shall be on the compliance of the proponent to the minimum technical and financial requirements provided in the Bid Documents and in the IRR of the BOT Law, R.A. No. 6957, as amended by R.A. 7718. The minimum amount of equity to which the proponents financial capability will be based shall be thirty percent (30%) of the project cost instead of the twenty percent (20%) specified in Section 3.6.4 of the Bid Documents. This is to correlate with the required debt-to-equity ratio of 70:30 in Section 2.01a of the draft concession agreement. The debt portion of the project financing should not exceed 70% of the actual project cost. Accordingly, based on the above provisions of law, the Paircargo Consortium or any challenger to the unsolicited proposal of AEDC has to show that it possesses the requisite financial capability to undertake the project in the minimum amount of 30% of the project cost through (i) proof of the ability to provide a minimum amount of equity to the project, and (ii) a letter testimonial from reputable banks attesting that the project proponent or members of the consortium are banking with them, that they are in good financial standing, and that they have adequate resources. As the minimum project cost was estimated to be US$350,000,000.00 or roughly P9,183,650,000.00, [25] the Paircargo Consortium had to show to the satisfaction of the PBAC that it had the ability to provide the minimum equity for the project in the amount of at least P2,755,095,000.00. Paircargos Audited Financial Statements as of 1993 and 1994 indicated that it had a net worth of P2,783,592.00 and P3,123,515.00 respectively.[26] PAGS Audited Financial Statements as of 1995 indicate that it has approximately P26,735,700.00 to invest as its equity for the project.[27] Security Banks Audited Financial Statements as of 1995 show that it has a net worth equivalent to its capital funds in the amount of P3,523,504,377.00.[28] We agree with public respondents that with respect to Security Bank, the entire amount of its net worth could not be invested in a single undertaking or enterprise, whether allied or non-allied in accordance with the provisions of R.A. No. 337, as amended or the General Banking Act: Sec. 21-B. The provisions in this or in any other Act to the contrary notwithstanding, the Monetary Board, whenever it shall deem appropriate and necessary to further national development objectives or support national priority projects, may authorize a commercial bank, a bank authorized to provide commercial banking services, as well as a government-owned and controlled bank, to operate under an expanded commercial banking authority and by virtue thereof exercise, in addition to powers authorized for commercial banks, the powers of an

Investment House as provided in Presidential Decree No. 129, invest in the equity of a non-allied undertaking, or own a majority or all of the equity in a financial intermediary other than a commercial bank or a bank authorized to provide commercial banking services: Provided, That (a) the total investment in equities shall not exceed fifty percent (50%) of the net worth of the bank; (b) the equity investment in any one enterprise whether allied or non-allied shall not exceed fifteen percent (15%) of the net worth of the bank; (c) the equity investment of the bank, or of its wholly or majority-owned subsidiary, in a single non-allied undertaking shall not exceed thirty-five percent (35%) of the total equity in the enterprise nor shall it exceed thirty-five percent (35%) of the voting stock in that enterprise; and (d) the equity investment in other banks shall be deducted from the investing bank's net worth for purposes of computing the prescribed ratio of net worth to risk assets. . Further, the 1993 Manual of Regulations for Banks provides: SECTION X383. Other Limitations and Restrictions. The following limitations and restrictions shall also apply regarding equity investments of banks. a. In any single enterprise. The equity investments of banks in any single enterprise shall not exceed at any time fifteen percent (15%) of the net worth of the investing bank as defined in Sec. X106 and Subsec. X121.5. Thus, the maximum amount that Security Bank could validly invest in the Paircargo Consortium is only P528,525,656.55, representing 15% of its entire net worth. The total net worth therefore of the Paircargo Consortium, after considering the maximum amounts that may be validly invested by each of its members is P558,384,871.55 or only 6.08% of the project cost,[29] an amount substantially less than the prescribed minimum equity investment required for the project in the amount of P2,755,095,000.00 or 30% of the project cost. The purpose of pre-qualification in any public bidding is to determine, at the earliest opportunity, the ability of the bidder to undertake the project. Thus, with respect to the bidders financial capacity at the pre-qualification stage, the law requires the government agency to examine and determine the ability of the bidder to fund the entire cost of the project by considering the maximum amounts that each bidder may invest in the project at the time of pre-qualification. The PBAC has determined that any prospective bidder for the construction, operation and maintenance of the NAIA IPT III project should prove that it has the ability to provide equity in the minimum amount of 30% of the project cost, in accordance with the 70:30 debt-to-equity ratio prescribed in the Bid Documents. Thus, in the case of Paircargo Consortium, the PBAC should determine the maximum amounts that each member of the consortium may commit for the construction, operation and maintenance of the NAIA IPT III project at the time of pre-qualification. With respect to Security Bank, the maximum amount which may be invested by it would only be 15% of its net worth in view of the restrictions imposed by the General Banking Act. Disregarding the investment ceilings provided by applicable law would not result in a proper evaluation of whether or not a bidder is pre-qualified to undertake the project as for all intents and purposes, such ceiling or legal restriction determines the true maximum amount which a bidder may invest in the project. Further, the determination of whether or not a bidder is pre-qualified to undertake the project requires an evaluation of the financial capacity of the said bidder at the time the bid is submitted based on the required documents presented by the bidder. The PBAC should not be allowed to speculate on the future financial ability of the bidder to undertake the project on the basis of documents submitted. This would open doors to abuse and defeat the very purpose of a public bidding. This is especially true in the case at bar which involves the investment of billions of pesos by the project proponent. The

relevant government authority is duty-bound to ensure that the awardee of the contract possesses the minimum required financial capability to complete the project. To allow the PBAC to estimate the bidders future financial capability would not secure the viability and integrity of the project. A restrictive and conservative application of the rules and procedures of public bidding is necessary not only to protect the impartiality and regularity of the proceedings but also to ensure the financial and technical reliability of the project. It has been held that: The basic rule in public bidding is that bids should be evaluated based on the required documents submitted before and not after the opening of bids. Otherwise, the foundation of a fair and competitive public bidding would be defeated. Strict observance of the rules, regulations, and guidelines of the bidding process is the only safeguard to a fair, honest and competitive public bidding. [30] Thus, if the maximum amount of equity that a bidder may invest in the project at the time the bids are submitted falls short of the minimum amounts required to be put up by the bidder, said bidder should be properly disqualified. Considering that at the pre-qualification stage, the maximum amounts which the Paircargo Consortium may invest in the project fell short of the minimum amounts prescribed by the PBAC, we hold that Paircargo Consortium was not a qualified bidder. Thus the award of the contract by the PBAC to the Paircargo Consortium, a disqualified bidder, is null and void. While it would be proper at this juncture to end the resolution of the instant controversy, as the legal effects of the disqualification of respondent PIATCOs predecessor would come into play and necessarily result in the nullity of all the subsequent contracts entered by it in pursuance of the project, the Court feels that it is necessary to discuss in full the pressing issues of the present controversy for a complete resolution thereof. II Is the 1997 Concession Agreement valid? Petitioners and public respondents contend that the 1997 Concession Agreement is invalid as it contains provisions that substantially depart from the draft Concession Agreement included in the Bid Documents. They maintain that a substantial departure from the draft Concession Agreement is a violation of public policy and renders the 1997 Concession Agreement null and void. PIATCO maintains, however, that the Concession Agreement attached to the Bid Documents is intended to be a draft, i.e., subject to change, alteration or modification, and that this intention was clear to all participants, including AEDC, and DOTC/MIAA. It argued further that said intention is expressed in Part C (6) of Bid Bulletin No. 3 issued by the PBAC which states: 6. Amendments to the Draft Concessions Agreement Amendments to the Draft Concessions Agreement shall be issued from time to time. Said amendments shall only cover items that would not materially affect the preparation of the proponents proposal. By its very nature, public bidding aims to protect the public interest by giving the public the best possible advantages through open competition. Thus: Competition must be legitimate, fair and honest. In the field of government contract law, competition requires, not only `bidding upon a common standard, a common basis, upon the same thing, the same subject matter, the same undertaking,' but also that it be legitimate, fair and honest; and not designed to injure or defraud the government.[31] An essential element of a publicly bidded contract is that all bidders must be on equal footing. Not simply in terms of application of the procedural rules and regulations imposed by the relevant government agency, but more importantly, on the contract bidded upon. Each bidder must be able

to bid on the same thing. The rationale is obvious. If the winning bidder is allowed to later include or modify certain provisions in the contract awarded such that the contract is altered in any material respect, then the essence of fair competition in the public bidding is destroyed. A public bidding would indeed be a farce if after the contract is awarded, the winning bidder may modify the contract and include provisions which are favorable to it that were not previously made available to the other bidders. Thus: It is inherent in public biddings that there shall be a fair competition among the bidders. The specifications in such biddings provide the common ground or basis for the bidders. The specifications should, accordingly, operate equally or indiscriminately upon all bidders.[32] The same rule was restated by Chief Justice Stuart of the Supreme Court of Minnesota: The law is well settled that where, as in this case, municipal authorities can only let a contract for public work to the lowest responsible bidder, the proposals and specifications therefore must be so framed as to permit free and full competition. Nor can they enter into a contract with the best bidder containing substantial provisions beneficial to him, not included or contemplated in the terms and specifications upon which the bids were invited.[33] In fact, in the PBAC Bid Bulletin No. 3 cited by PIATCO to support its argument that the draft concession agreement is subject to amendment, the pertinent portion of which was quoted above, the PBAC also clarified that [s]aid amendments shall only cover items that would not materially affect the preparation of the proponents proposal. While we concede that a winning bidder is not precluded from modifying or amending certain provisions of the contract bidded upon, such changes must not constitute substantial or material amendments that would alter the basic parameters of the contract and would constitute a denial to the other bidders of the opportunity to bid on the same terms. Hence, the determination of whether or not a modification or amendment of a contract bidded out constitutes a substantial amendment rests on whether the contract, when taken as a whole, would contain substantially different terms and conditions that would have the effect of altering the technical and/or financial proposals previously submitted by other bidders. The alterations and modifications in the contract executed between the government and the winning bidder must be such as to render such executed contract to be an entirely different contract from the one that was bidded upon. In the case of Caltex (Philippines), Inc. v. Delgado Brothers, Inc.,[34] this Court quoted with approval the ruling of the trial court that an amendment to a contract awarded through public bidding, when such subsequent amendment was made without a new public bidding, is null and void: The Court agrees with the contention of counsel for the plaintiffs that the due execution of a contract after public bidding is a limitation upon the right of the contracting parties to alter or amend it without another public bidding, for otherwise what would a public bidding be good for if after the execution of a contract after public bidding, the contracting parties may alter or amend the contract, or even cancel it, at their will? Public biddings are held for the protection of the public, and to give the public the best possible advantages by means of open competition between the bidders. He who bids or offers the best terms is awarded the contract subject of the bid, and it is obvious that such protection and best possible advantages to the public will disappear if the parties to a contract executed after public bidding may alter or amend it without another previous public bidding. [35] Hence, the question that comes to fore is this: is the 1997 Concession Agreement the same agreement that was offered for public bidding, i.e., the draft Concession Agreement attached to the Bid Documents? A close comparison of the draft Concession Agreement attached to the Bid Documents and the 1997 Concession Agreement reveals that the documents differ in at least two material respects:

a. Modification on the Public Utility Revenues and Non-Public Utility Revenues that may be collected by PIATCO The fees that may be imposed and collected by PIATCO under the draft Concession Agreement and the 1997 Concession Agreement may be classified into three distinct categories: (1) fees which are subject to periodic adjustment of once every two years in accordance with a prescribed parametric formula and adjustments are made effective only upon written approval by MIAA; (2) fees other than those included in the first category which maybe adjusted by PIATCO whenever it deems necessary without need for consent of DOTC/MIAA; and (3) new fees and charges that may be imposed by PIATCO which have not been previously imposed or collected at the Ninoy Aquino International Airport Passenger Terminal I, pursuant to Administrative Order No. 1, Series of 1993, as amended. The glaring distinctions between the draft Concession Agreement and the 1997 Concession Agreement lie in the types of fees included in each category and the extent of the supervision and regulation which MIAA is allowed to exercise in relation thereto. For fees under the first category, i.e., those which are subject to periodic adjustment in accordance with a prescribed parametric formula and effective only upon written approval by MIAA, the draft Concession Agreement includes the following:[36] (1) aircraft parking fees; (2) aircraft tacking fees; (3) groundhandling fees; (4) rentals and airline offices; (5) check-in counter rentals; and (6) porterage fees. Under the 1997 Concession Agreement, fees which are subject to adjustment and effective upon MIAA approval are classified as Public Utility Revenues and include:[37] (1) aircraft parking fees; (2) aircraft tacking fees; (3) check-in counter fees; and (4) Terminal Fees. The implication of the reduced number of fees that are subject to MIAA approval is best appreciated in relation to fees included in the second category identified above. Under the 1997 Concession Agreement, fees which PIATCO may adjust whenever it deems necessary without need for consent of DOTC/MIAA are Non-Public Utility Revenues and is defined as all other income not classified as Public Utility Revenues derived from operations of the Terminal and the Terminal Complex.[38] Thus, under the 1997 Concession Agreement, groundhandling fees, rentals from airline offices and porterage fees are no longer subject to MIAA regulation. Further, under Section 6.03 of the draft Concession Agreement, MIAA reserves the right to regulate (1) lobby and vehicular parking fees and (2) other new fees and charges that may be imposed by PIATCO. Such regulation may be made by periodic adjustment and is effective only upon written approval of MIAA. The full text of said provision is quoted below: Section 6.03. Periodic Adjustment in Fees and Charges. Adjustments in the aircraft parking fees,

aircraft tacking fees, groundhandling fees, rentals and airline offices, check-in-counter rentals and porterage fees shall be allowed only once every two years and in accordance with the Parametric Formula attached hereto as Annex F. Provided that adjustments shall be made effective only after the written express approval of the MIAA. Provided, further, that such approval of the MIAA, shall be contingent only on the conformity of the adjustments with the above said parametric formula. The first adjustment shall be made prior to the In-Service Date of the Terminal. The MIAA reserves the right to regulate under the foregoing terms and conditions the lobby and vehicular parking fees and other new fees and charges as contemplated in paragraph 2 of Section 6.01 if in its judgment the users of the airport shall be deprived of a free option for the services they cover.[39] On the other hand, the equivalent provision under the 1997 Concession Agreement reads: Section 6.03 Periodic Adjustment in Fees and Charges. . (c) Concessionaire shall at all times be judicious in fixing fees and charges constituting Non-Public Utility Revenues in order to ensure that End Users are not unreasonably deprived of services. While the vehicular parking fee, porterage fee and greeter/well wisher fee constitute Non-Public Utility Revenues of Concessionaire, GRP may intervene and require Concessionaire to explain and justify the fee it may set from time to time, if in the reasonable opinion of GRP the said fees have become exorbitant resulting in the unreasonable deprivation of End Users of such services.[40] Thus, under the 1997 Concession Agreement, with respect to (1) vehicular parking fee, (2) porterage fee and (3) greeter/well wisher fee, all that MIAA can do is to require PIATCO to explain and justify the fees set by PIATCO. In the draft Concession Agreement, vehicular parking fee is subject to MIAA regulation and approval under the second paragraph of Section 6.03 thereof while porterage fee is covered by the first paragraph of the same provision. There is an obvious relaxation of the extent of control and regulation by MIAA with respect to the particular fees that may be charged by PIATCO. Moreover, with respect to the third category of fees that may be imposed and collected by PIATCO, i.e., new fees and charges that may be imposed by PIATCO which have not been previously imposed or collected at the Ninoy Aquino International Airport Passenger Terminal I, under Section 6.03 of the draft Concession Agreement MIAA has reserved the right to regulate the same under the same conditions that MIAA may regulate fees under the first category, i.e., periodic adjustment of once every two years in accordance with a prescribed parametric formula and effective only upon written approval by MIAA. However, under the 1997 Concession Agreement, adjustment of fees under the third category is not subject to MIAA regulation. With respect to terminal fees that may be charged by PIATCO,[41] as shown earlier, this was included within the category of Public Utility Revenues under the 1997 Concession Agreement. This classification is significant because under the 1997 Concession Agreement, Public Utility Revenues are subject to an Interim Adjustment of fees upon the occurrence of certain extraordinary events specified in the agreement.[42] However, under the draft Concession Agreement, terminal fees are not included in the types of fees that may be subject to Interim Adjustment.[43] Finally, under the 1997 Concession Agreement, Public Utility Revenues, except terminal fees, are denominated in US Dollars[44] while payments to the Government are in Philippine Pesos. In the draft Concession Agreement, no such stipulation was included. By stipulating that Public Utility Revenues will be paid to PIATCO in US Dollars while payments by PIATCO to the Government are in Philippine currency under the 1997 Concession Agreement, PIATCO is able to enjoy the benefits of depreciations of the Philippine Peso, while being effectively insulated from the detrimental effects of

exchange rate fluctuations. When taken as a whole, the changes under the 1997 Concession Agreement with respect to reduction in the types of fees that are subject to MIAA regulation and the relaxation of such regulation with respect to other fees are significant amendments that substantially distinguish the draft Concession Agreement from the 1997 Concession Agreement. The 1997 Concession Agreement, in this respect, clearly gives PIATCO more favorable terms than what was available to other bidders at the time the contract was bidded out. It is not very difficult to see that the changes in the 1997 Concession Agreement translate to direct and concrete financial advantages for PIATCO which were not available at the time the contract was offered for bidding. It cannot be denied that under the 1997 Concession Agreement only Public Utility Revenues are subject to MIAA regulation. Adjustments of all other fees imposed and collected by PIATCO are entirely within its control. Moreover, with respect to terminal fees, under the 1997 Concession Agreement, the same is further subject to Interim Adjustments not previously stipulated in the draft Concession Agreement. Finally, the change in the currency stipulated for Public Utility Revenues under the 1997 Concession Agreement, except terminal fees, gives PIATCO an added benefit which was not available at the time of bidding. b. Assumption by the Government of the liabilities of PIATCO in the event of the latters default thereof Under the draft Concession Agreement, default by PIATCO of any of its obligations to creditors who have provided, loaned or advanced funds for the NAIA IPT III project does not result in the assumption by the Government of these liabilities. In fact, nowhere in the said contract does default of PIATCOs loans figure in the agreement. Such default does not directly result in any concomitant right or obligation in favor of the Government. However, the 1997 Concession Agreement provides: Section 4.04 . (b) In the event Concessionaire should default in the payment of an Attendant Liability, and the default has resulted in the acceleration of the payment due date of the Attendant Liability prior to its stated date of maturity, the Unpaid Creditors and Concessionaire shall immediately inform GRP in writing of such default. GRP shall, within one hundred eighty (180) Days from receipt of the joint written notice of the Unpaid Creditors and Concessionaire, either (i) take over the Development Facility and assume the Attendant Liabilities, or (ii) allow the Unpaid Creditors, if qualified, to be substituted as concessionaire and operator of the Development Facility in accordance with the terms and conditions hereof, or designate a qualified operator acceptable to GRP to operate the Development Facility, likewise under the terms and conditions of this Agreement; Provided that if at the end of the 180-day period GRP shall not have served the Unpaid Creditors and Concessionaire written notice of its choice, GRP shall be deemed to have elected to take over the Development Facility with the concomitant assumption of Attendant Liabilities. (c) If GRP should, by written notice, allow the Unpaid Creditors to be substituted as concessionaire, the latter shall form and organize a concession company qualified to take over the operation of the Development Facility. If the concession company should elect to designate an operator for the Development Facility, the concession company shall in good faith identify and designate a qualified operator acceptable to GRP within one hundred eighty (180) days from receipt of GRPs written notice. Assignment.

If the concession company, acting in good faith and with due diligence, is unable to designate a qualified operator within the aforesaid period, then GRP shall at the end of the 180-day period take over the Development Facility and assume Attendant Liabilities. The term Attendant Liabilities under the 1997 Concession Agreement is defined as: Attendant Liabilities refer to all amounts recorded and from time to time outstanding in the books of the Concessionaire as owing to Unpaid Creditors who have provided, loaned or advanced funds actually used for the Project, including all interests, penalties, associated fees, charges, surcharges, indemnities, reimbursements and other related expenses, and further including amounts owed by Concessionaire to its suppliers, contractors and sub-contractors. Under the above quoted portions of Section 4.04 in relation to the definition of Attendant Liabilities, default by PIATCO of its loans used to finance the NAIA IPT III project triggers the occurrence of certain events that leads to the assumption by the Government of the liability for the loans . Only in one instance may the Government escape the assumption of PIATCOs liabilities, i.e., when the Government so elects and allows a qualified operator to take over as Concessionaire. However, this circumstance is dependent on the existence and availability of a qualified operator who is willing to take over the rights and obligations of PIATCO under the contract, a circumstance that is not entirely within the control of the Government. Without going into the validity of this provision at this juncture, suffice it to state that Section 4.04 of the 1997 Concession Agreement may be considered a form of security for the loans PIATCO has obtained to finance the project, an option that was not made available in the draft Concession Agreement. Section 4.04 is an important amendment to the 1997 Concession Agreement because it grants PIATCO a financial advantage or benefit which was not previously made available during the bidding process. This financial advantage is a significant modification that translates to better terms and conditions for PIATCO. PIATCO, however, argues that the parties to the bidding procedure acknowledge that the draft Concession Agreement is subject to amendment because the Bid Documents permit financing or borrowing. They claim that it was the lenders who proposed the amendments to the draft Concession Agreement which resulted in the 1997 Concession Agreement. We agree that it is not inconsistent with the rationale and purpose of the BOT Law to allow the project proponent or the winning bidder to obtain financing for the project, especially in this case which involves the construction, operation and maintenance of the NAIA IPT III. Expectedly, compliance by the project proponent of its undertakings therein would involve a substantial amount of investment. It is therefore inevitable for the awardee of the contract to seek alternate sources of funds to support the project. Be that as it may, this Court maintains that amendments to the contract bidded upon should always conform to the general policy on public bidding if such procedure is to be faithful to its real nature and purpose. By its very nature and characteristic, competitive public bidding aims to protect the public interest by giving the public the best possible advantages through open competition.[45] It has been held that the three principles in public bidding are (1) the offer to the public; (2) opportunity for competition; and (3) a basis for the exact comparison of bids. A regulation of the matter which excludes any of these factors destroys the distinctive character of the system and thwarts the purpose of its adoption.[46] These are the basic parameters which every awardee of a contract bidded out must conform to, requirements of financing and borrowing notwithstanding. Thus, upon a concrete showing that, as in this case, the contract signed by the government and the contract-awardee is an entirely different contract from the contract bidded, courts should not hesitate to strike down said contract in its entirety for violation of public policy on public bidding. A strict adherence on the principles, rules and regulations on public bidding must be sustained if only to preserve the integrity and the faith of the

general public on the procedure. Public bidding is a standard practice for procuring government contracts for public service and for furnishing supplies and other materials. It aims to secure for the government the lowest possible price under the most favorable terms and conditions, to curtail favoritism in the award of government contracts and avoid suspicion of anomalies and it places all bidders in equal footing.[47] Any government action which permits any substantial variance between the conditions under which the bids are invited and the contract executed after the award thereof is a grave abuse of discretion amounting to lack or excess of jurisdiction which warrants proper judicial action. In view of the above discussion, the fact that the foregoing substantial amendments were made on the 1997 Concession Agreement renders the same null and void for being contrary to public policy. These amendments convert the 1997 Concession Agreement to an entirely different agreement from the contract bidded out or the draft Concession Agreement. It is not difficult to see that the amendments on (1) the types of fees or charges that are subject to MIAA regulation or control and the extent thereof and (2) the assumption by the Government, under certain conditions, of the liabilities of PIATCO directly translates concrete financial advantages to PIATCO that were previously not available during the bidding process. These amendments cannot be taken as merely supplements to or implementing provisions of those already existing in the draft Concession Agreement. The amendments discussed above present new terms and conditions which provide financial benefit to PIATCO which may have altered the technical and financial parameters of other bidders had they known that such terms were available. III Direct Government Guarantee Article IV, Section 4.04(b) and (c), in relation to Article 1.06, of the 1997 Concession Agreement provides: Section 4.04 Assignment . (b) In the event Concessionaire should default in the payment of an Attendant Liability, and the default resulted in the acceleration of the payment due date of the Attendant Liability prior to its stated date of maturity, the Unpaid Creditors and Concessionaire shall immediately inform GRP in writing of such default. GRP shall within one hundred eighty (180) days from receipt of the joint written notice of the Unpaid Creditors and Concessionaire, either (i) take over the Development Facility and assume the Attendant Liabilities, or (ii) allow the Unpaid Creditors, if qualified to be substituted as concessionaire and operator of the Development facility in accordance with the terms and conditions hereof, or designate a qualified operator acceptable to GRP to operate the Development Facility, likewise under the terms and conditions of this Agreement; Provided, that if at the end of the 180-day period GRP shall not have served the Unpaid Creditors and Concessionaire written notice of its choice, GRP shall be deemed to have elected to take over the Development Facility with the concomitant assumption of Attendant Liabilities. (c) If GRP, by written notice, allow the Unpaid Creditors to be substituted as concessionaire, the latter shall form and organize a concession company qualified to takeover the operation of the Development Facility. If the concession company should elect to designate an operator for the Development Facility, the concession company shall in good faith identify and designate a qualified operator acceptable to GRP within one hundred eighty (180) days from receipt of GRPs written notice. If the concession company, acting in good faith and with due diligence, is unable to designate a qualified operator within the aforesaid period, then GRP shall at the end of the 180-day period take

over the Development Facility and assume Attendant Liabilities. . Section 1.06. Attendant Liabilities Attendant Liabilities refer to all amounts recorded and from time to time outstanding in the books of the Concessionaire as owing to Unpaid Creditors who have provided, loaned or advanced funds actually used for the Project, including all interests, penalties, associated fees, charges, surcharges, indemnities, reimbursements and other related expenses, and further including amounts owed by Concessionaire to its suppliers, contractors and sub-contractors.[48] It is clear from the above-quoted provisions that Government, in the event that PIATCO defaults in its loan obligations, is obligated to pay all amounts recorded and from time to time outstanding from the books of PIATCO which the latter owes to its creditors.[49] These amounts include all interests, penalties, associated fees, charges, surcharges, indemnities, reimbursements and other related expenses.[50] This obligation of the Government to pay PIATCOs creditors upon PIATCOs default would arise if the Government opts to take over NAIA IPT III. It should be noted, however, that even if the Government chooses the second option, which is to allow PIATCOs unpaid creditors operate NAIA IPT III, the Government is still at a risk of being liable to PIATCOs creditors should the latter be unable to designate a qualified operator within the prescribed period.[51] In effect, whatever option the Government chooses to take in the event of PIATCOs failure to fulfill its loan obligations, the Government is still at a risk of assuming PIATCOs outstanding loans. This is due to the fact that the Government would only be free from assuming PIATCOs debts if the unpaid creditors would be able to designate a qualified operator within the period provided for in the contract. Thus, the Governments assumption of liability is virtually out of its control. The Government under the circumstances provided for in the 1997 Concession Agreement is at the mercy of the existence, availability and willingness of a qualified operator. The above contractual provisions constitute a direct government guarantee which is prohibited by law. One of the main impetus for the enactment of the BOT Law is the lack of government funds to construct the infrastructure and development projects necessary for economic growth and development. This is why private sector resources are being tapped in order to finance these projects. The BOT law allows the private sector to participate, and is in fact encouraged to do so by way of incentives, such as minimizing the unstable flow of returns,[52] provided that the government would not have to unnecessarily expend scarcely available funds for the project itself. As such, direct guarantee, subsidy and equity by the government in these projects are strictly prohibited.[53] This is but logical for if the government would in the end still be at a risk of paying the debts incurred by the private entity in the BOT projects, then the purpose of the law is subverted. Section 2(n) of the BOT Law defines direct guarantee as follows: (n) Direct government guarantee An agreement whereby the government or any of its agencies or local government units assume responsibility for the repayment of debt directly incurred by the project proponent in implementing the project in case of a loan default. Clearly by providing that the Government assumes the attendant liabilities, which consists of PIATCOs unpaid debts, the 1997 Concession Agreement provided for a direct government guarantee for the debts incurred by PIATCO in the implementation of the NAIA IPT III project. It is of no moment that the relevant sections are subsumed under the title of assignment. The provisions providing for direct government guarantee which is prohibited by law is clear from the terms thereof. The fact that the ARCA superseded the 1997 Concession Agreement did not cure this fatal defect. Article IV, Section 4.04(c), in relation to Article I, Section 1.06, of the ARCA provides:

Section 4.04 Security . (c) GRP agrees with Concessionaire (PIATCO) that it shall negotiate in good faith and enter into direct agreement with the Senior Lenders, or with an agent of such Senior Lenders (which agreement shall be subject to the approval of the Bangko Sentral ng Pilipinas), in such form as may be reasonably acceptable to both GRP and Senior Lenders, with regard, inter alia, to the following parameters: . (iv) If the Concessionaire [PIATCO] is in default under a payment obligation owed to the Senior Lenders, and as a result thereof the Senior Lenders have become entitled to accelerate the Senior Loans, the Senior Lenders shall have the right to notify GRP of the same, and without prejudice to any other rights of the Senior Lenders or any Senior Lenders agent may have (including without limitation under security interests granted in favor of the Senior Lenders), to either in good faith identify and designate a nominee which is qualified under sub-clause (viii)(y) below to operate the Development Facility [NAIA Terminal 3] or transfer the Concessionaires [PIATCO] rights and obligations under this Agreement to a transferee which is qualified under sub-clause (viii) below; . (vi) if the Senior Lenders, acting in good faith and using reasonable efforts, are unable to designate a nominee or effect a transfer in terms and conditions satisfactory to the Senior Lenders within one hundred eighty (180) days after giving GRP notice as referred to respectively in (iv) or (v) above, then GRP and the Senior Lenders shall endeavor in good faith to enter into any other arrangement relating to the Development Facility [NAIA Terminal 3] (other than a turnover of the Development Facility [NAIA Terminal 3] to GRP) within the following one hundred eighty (180) days. If no agreement relating to the Development Facility [NAIA Terminal 3] is arrived at by GRP and the Senior Lenders within the said 180-day period, then at the end thereof the Development Facility [NAIA Terminal 3] shall be transferred by the Concessionaire [PIATCO] to GRP or its designee and GRP shall make a termination payment to Concessionaire [PIATCO] equal to the Appraised Value (as hereinafter defined) of the Development Facility [NAIA Terminal 3] or the sum of the Attendant Liabilities, if greater. Notwithstanding Section 8.01(c) hereof, this Agreement shall be deemed terminated upon the transfer of the Development Facility [NAIA Terminal 3] to GRP pursuant hereto; . Section 1.06. Attendant Liabilities Attendant Liabilities refer to all amounts in each case supported by verifiable evidence from time to time owed or which may become owing by Concessionaire [PIATCO] to Senior Lenders or any other persons or entities who have provided, loaned, or advanced funds or provided financial facilities to Concessionaire [PIATCO] for the Project [NAIA Terminal 3], including, without limitation, all principal, interest, associated fees, charges, reimbursements, and other related expenses (including the fees, charges and expenses of any agents or trustees of such persons or entities), whether payable at maturity, by acceleration or otherwise, and further including amounts owed by Concessionaire [PIATCO] to its professional consultants and advisers, suppliers, contractors and sub-contractors.[54] It is clear from the foregoing contractual provisions that in the event that PIATCO fails to fulfill its loan obligations to its Senior Lenders, the Government is obligated to directly negotiate and enter into an

agreement relating to NAIA IPT III with the Senior Lenders, should the latter fail to appoint a qualified nominee or transferee who will take the place of PIATCO. If the Senior Lenders and the Government are unable to enter into an agreement after the prescribed period, the Government must then pay PIATCO, upon transfer of NAIA IPT III to the Government, termination payment equal to the appraised value of the project or the value of the attendant liabilities whichever is greater. Attendant liabilities as defined in the ARCA includes all amounts owed or thereafter may be owed by PIATCO not only to the Senior Lenders with whom PIATCO has defaulted in its loan obligations but to all other persons who may have loaned, advanced funds or provided any other type of financial facilities to PIATCO for NAIA IPT III. The amount of PIATCOs debt that the Government would have to pay as a result of PIATCOs default in its loan obligations -- in case no qualified nominee or transferee is appointed by the Senior Lenders and no other agreement relating to NAIA IPT III has been reached between the Government and the Senior Lenders -- includes, but is not limited to, all principal, interest, associated fees, charges, reimbursements, and other related expenses . . . whether payable at maturity, by acceleration or otherwise.[55] It is clear from the foregoing that the ARCA provides for a direct guarantee by the government to pay PIATCOs loans not only to its Senior Lenders but all other entities who provided PIATCO funds or services upon PIATCOs default in its loan obligation with its Senior Lenders . The fact that the Governments obligation to pay PIATCOs lenders for the latters obligation would only arise after the Senior Lenders fail to appoint a qualified nominee or transferee does not detract from the fact that, should the conditions as stated in the contract occur, the ARCA still obligates the Government to pay any and all amounts owed by PIATCO to its lenders in connection with NAIA IPT III. Worse, the conditions that would make the Government liable for PIATCOs debts is triggered by PIATCOs own default of its loan obligations to its Senior Lenders to which loan contracts the Government was never a party to. The Government was not even given an option as to what course of action it should take in case PIATCO defaulted in the payment of its senior loans. The Government, upon PIATCOs default, would be merely notified by the Senior Lenders of the same and it is the Senior Lenders who are authorized to appoint a qualified nominee or transferee. Should the Senior Lenders fail to make such an appointment, the Government is then automatically obligated to directly deal and negotiate with the Senior Lenders regarding NAIA IPT III. The only way the Government would not be liable for PIATCOs debt is for a qualified nominee or transferee to be appointed in place of PIATCO to continue the construction, operation and maintenance of NAIA IPT III. This pre-condition, however, will not take the contract out of the ambit of a direct guarantee by the government as the existence, availability and willingness of a qualified nominee or transferee is totally out of the governments control. As such the Government is virtually at the mercy of PIATCO (that it would not default on its loan obligations to its Senior Lenders), the Senior Lenders (that they would appoint a qualified nominee or transferee or agree to some other arrangement with the Government) and the existence of a qualified nominee or transferee who is able and willing to take the place of PIATCO in NAIA IPT III. The proscription against government guarantee in any form is one of the policy considerations behind the BOT Law. Clearly, in the present case, the ARCA obligates the Government to pay for all loans, advances and obligations arising out of financial facilities extended to PIATCO for the implementation of the NAIA IPT III project should PIATCO default in its loan obligations to its Senior Lenders and the latter fails to appoint a qualified nominee or transferee. This in effect would make the Government liable for PIATCOs loans should the conditions as set forth in the ARCA arise. This is a form of direct government guarantee. The BOT Law and its implementing rules provide that in order for an unsolicited proposal for a BOT project may be accepted, the following conditions must first be met: (1) the project involves a new concept in technology and/or is not part of the list of priority projects, (2) no direct government

guarantee, subsidy or equity is required, and (3) the government agency or local government unit has invited by publication other interested parties to a public bidding and conducted the same.[56] The failure to meet any of the above conditions will result in the denial of the proposal. It is further provided that the presence of direct government guarantee, subsidy or equity will necessarily disqualify a proposal from being treated and accepted as an unsolicited proposal.[57] The BOT Law clearly and strictly prohibits direct government guarantee, subsidy and equity in unsolicited proposals that the mere inclusion of a provision to that effect is fatal and is sufficient to deny the proposal. It stands to reason therefore that if a proposal can be denied by reason of the existence of direct government guarantee, then its inclusion in the contract executed after the said proposal has been accepted is likewise sufficient to invalidate the contract itself. A prohibited provision, the inclusion of which would result in the denial of a proposal cannot, and should not, be allowed to later on be inserted in the contract resulting from the said proposal. The basic rules of justice and fair play alone militate against such an occurrence and must not, therefore, be countenanced particularly in this instance where the government is exposed to the risk of shouldering hundreds of million of dollars in debt. This Court has long and consistently adhered to the legal maxim that those that cannot be done directly cannot be done indirectly.[58] To declare the PIATCO contracts valid despite the clear statutory prohibition against a direct government guarantee would not only make a mockery of what the BOT Law seeks to prevent -- which is to expose the government to the risk of incurring a monetary obligation resulting from a contract of loan between the project proponent and its lenders and to which the Government is not a party to -- but would also render the BOT Law useless for what it seeks to achieve - to make use of the resources of the private sector in the financing, operation and maintenance of infrastructure and development projects[59] which are necessary for national growth and development but which the government, unfortunately, could ill-afford to finance at this point in time. IV Temporary takeover of business affected with public interest Article XII, Section 17 of the 1987 Constitution provides: Section 17. In times of national emergency, when the public interest so requires, the State may, during the emergency and under reasonable terms prescribed by it, temporarily take over or direct the operation of any privately owned public utility or business affected with public interest. The above provision pertains to the right of the State in times of national emergency, and in the exercise of its police power, to temporarily take over the operation of any business affected with public interest. In the 1986 Constitutional Commission, the term national emergency was defined to include threat from external aggression, calamities or national disasters, but not strikes unless it is of such proportion that would paralyze government service.[60] The duration of the emergency itself is the determining factor as to how long the temporary takeover by the government would last.[61] The temporary takeover by the government extends only to the operation of the business and not to the ownership thereof. As such the government is not required to compensate the private entity-owner of the said business as there is no transfer of ownership, whether permanent or temporary. The private entity-owner affected by the temporary takeover cannot, likewise, claim just compensation for the use of the said business and its properties as the temporary takeover by the government is in exercise of its police power and not of its power of eminent domain. Article V, Section 5.10 (c) of the 1997 Concession Agreement provides: Section 5.10 Temporary Take-over of operations by GRP. .

(c) In the event the development Facility or any part thereof and/or the operations of Concessionaire or any part thereof, become the subject matter of or be included in any notice, notification, or declaration concerning or relating to acquisition, seizure or appropriation by GRP in times of war or national emergency, GRP shall, by written notice to Concessionaire, immediately take over the operations of the Terminal and/or the Terminal Complex. During such take over by GRP, the Concession Period shall be suspended; provided, that upon termination of war, hostilities or national emergency, the operations shall be returned to Concessionaire, at which time, the Concession period shall commence to run again. Concessionaire shall be entitled to reasonable compensation for the duration of the temporary take over by GRP, which compensation shall take into account the reasonable cost for the use of the Terminal and/or Terminal Complex, (which is in the amount at least equal to the debt service requirements of Concessionaire, if the temporary take over should occur at the time when Concessionaire is still servicing debts owed to project lenders), any loss or damage to the Development Facility, and other consequential damages. If the parties cannot agree on the reasonable compensation of Concessionaire, or on the liability of GRP as aforesaid, the matter shall be resolved in accordance with Section 10.01 [Arbitration]. Any amount determined to be payable by GRP to Concessionaire shall be offset from the amount next payable by Concessionaire to GRP.[62] PIATCO cannot, by mere contractual stipulation, contravene the Constitutional provision on temporary government takeover and obligate the government to pay reasonable cost for the use of the Terminal and/or Terminal Complex.[63] Article XII, section 17 of the 1987 Constitution envisions a situation wherein the exigencies of the times necessitate the government to temporarily take over or direct the operation of any privately owned public utility or business affected with public interest. It is the welfare and interest of the public which is the paramount consideration in determining whether or not to temporarily take over a particular business. Clearly, the State in effecting the temporary takeover is exercising its police power. Police power is the most essential, insistent, and illimitable of powers.[64] Its exercise therefore must not be unreasonably hampered nor its exercise be a source of obligation by the government in the absence of damage due to arbitrariness of its exercise.[65] Thus, requiring the government to pay reasonable compensation for the reasonable use of the property pursuant to the operation of the business contravenes the Constitution. V Regulation of Monopolies A monopoly is a privilege or peculiar advantage vested in one or more persons or companies, consisting in the exclusive right (or power) to carry on a particular business or trade, manufacture a particular article, or control the sale of a particular commodity.[66] The 1987 Constitution strictly regulates monopolies, whether private or public, and even provides for their prohibition if public interest so requires. Article XII, Section 19 of the 1987 Constitution states: Sec. 19. The state shall regulate or prohibit monopolies when the public interest so requires. No combinations in restraint of trade or unfair competition shall be allowed. Clearly, monopolies are not per se prohibited by the Constitution but may be permitted to exist to aid the government in carrying on an enterprise or to aid in the performance of various services and functions in the interest of the public.[67] Nonetheless, a determination must first be made as to whether public interest requires a monopoly. As monopolies are subject to abuses that can inflict severe prejudice to the public, they are subject to a higher level of State regulation than an ordinary business undertaking. In the cases at bar, PIATCO, under the 1997 Concession Agreement and the ARCA, is granted the exclusive right to operate a commercial international passenger terminal within the Island of Luzon at the NAIA IPT III.[68] This is with the exception of already existing international airports in Luzon

such as those located in the Subic Bay Freeport Special Economic Zone (SBFSEZ), Clark Special Economic Zone (CSEZ) and in Laoag City.[69] As such, upon commencement of PIATCOs operation of NAIA IPT III, Terminals 1 and 2 of NAIA would cease to function as international passenger terminals. This, however, does not prevent MIAA to use Terminals 1 and 2 as domestic passenger terminals or in any other manner as it may deem appropriate except those activities that would compete with NAIA IPT III in the latters operation as an international passenger terminal.[70] The right granted to PIATCO to exclusively operate NAIA IPT III would be for a period of twentyfive (25) years from the In-Service Date[71] and renewable for another twenty-five (25) years at the option of the government.[72] Both the 1997 Concession Agreement and the ARCA further provide that, in view of the exclusive right granted to PIATCO, the concession contracts of the service providers currently servicing Terminals 1 and 2 would no longer be renewed and those concession contracts whose expiration are subsequent to the In-Service Date would cease to be effective on the said date.[73] The operation of an international passenger airport terminal is no doubt an undertaking imbued with public interest. In entering into a BuildOperate-and-Transfer contract for the construction, operation and maintenance of NAIA IPT III, the government has determined that public interest would be served better if private sector resources were used in its construction and an exclusive right to operate be granted to the private entity undertaking the said project, in this case PIATCO. Nonetheless, the privilege given to PIATCO is subject to reasonable regulation and supervision by the Government through the MIAA, which is the government agency authorized to operate the NAIA complex, as well as DOTC, the department to which MIAA is attached.[74] This is in accord with the Constitutional mandate that a monopoly which is not prohibited must be regulated.[75] While it is the declared policy of the BOT Law to encourage private sector participation by providing a climate of minimum government regulations,[76] the same does not mean that Government must completely surrender its sovereign power to protect public interest in the operation of a public utility as a monopoly. The operation of said public utility can not be done in an arbitrary manner to the detriment of the public which it seeks to serve. The right granted to the public utility may be exclusive but the exercise of the right cannot run riot. Thus, while PIATCO may be authorized to exclusively operate NAIA IPT III as an international passenger terminal, the Government, through the MIAA, has the right and the duty to ensure that it is done in accord with public interest. PIATCOs right to operate NAIA IPT III cannot also violate the rights of third parties. Section 3.01(e) of the 1997 Concession Agreement and the ARCA provide: 3.01 Concession Period . (e) GRP confirms that certain concession agreements relative to certain services and operations currently being undertaken at the Ninoy Aquino International Airport passenger Terminal I have a validity period extending beyond the In-Service Date. GRP through DOTC/MIAA, confirms that these services and operations shall not be carried over to the Terminal and the Concessionaire is under no legal obligation to permit such carry-over except through a separate agreement duly entered into with Concessionaire. In the event Concessionaire becomes involved in any litigation initiated by any such concessionaire or operator, GRP undertakes and hereby holds Concessionaire free and harmless on full indemnity basis from and against any loss and/or any liability resulting from any such litigation, including the cost of litigation and the reasonable fees paid or payable to Concessionaires counsel of choice, all such amounts shall be fully deductible by way of an offset from any amount which the Concessionaire is bound to pay GRP under this Agreement. During the oral arguments on December 10, 2002, the counsel for the petitioners-in-intervention for

G.R. No. 155001 stated that there are two service providers whose contracts are still existing and whose validity extends beyond the In-Service Date. One contract remains valid until 2008 and the other until 2010.[77] We hold that while the service providers presently operating at NAIA Terminal 1 do not have an absolute right for the renewal or the extension of their respective contracts, those contracts whose duration extends beyond NAIA IPT IIIs In-Service-Date should not be unduly prejudiced. These contracts must be respected not just by the parties thereto but also by third parties. PIATCO cannot, by law and certainly not by contract, render a valid and binding contract nugatory. PIATCO, by the mere expedient of claiming an exclusive right to operate, cannot require the Government to break its contractual obligations to the service providers. In contrast to the arrastre and stevedoring service providers in the case of Anglo-Fil Trading Corporation v. Lazaro[78] whose contracts consist of temporary hold-over permits, the affected service providers in the cases at bar, have a valid and binding contract with the Government, through MIAA, whose period of effectivity, as well as the other terms and conditions thereof, cannot be violated. In fine, the efficient functioning of NAIA IPT III is imbued with public interest. The provisions of the 1997 Concession Agreement and the ARCA did not strip government, thru the MIAA, of its right to supervise the operation of the whole NAIA complex, including NAIA IPT III. As the primary government agency tasked with the job,[79] it is MIAAs responsibility to ensure that whoever by contract is given the right to operate NAIA IPT III will do so within the bounds of the law and with due regard to the rights of third parties and above all, the interest of the public. VI CONCLUSION In sum, this Court rules that in view of the absence of the requisite financial capacity of the Paircargo Consortium, predecessor of respondent PIATCO, the award by the PBAC of the contract for the construction, operation and maintenance of the NAIA IPT III is null and void. Further, considering that the 1997 Concession Agreement contains material and substantial amendments, which amendments had the effect of converting the 1997 Concession Agreement into an entirely different agreement from the contract bidded upon, the 1997 Concession Agreement is similarly null and void for being contrary to public policy. The provisions under Sections 4.04(b) and (c) in relation to Section 1.06 of the 1997 Concession Agreement and Section 4.04(c) in relation to Section 1.06 of the ARCA, which constitute a direct government guarantee expressly prohibited by, among others, the BOT Law and its Implementing Rules and Regulations are also null and void. The Supplements, being accessory contracts to the ARCA, are likewise null and void. WHEREFORE, the 1997 Concession Agreement, the Amended and Restated Concession Agreement and the Supplements thereto are set aside for being null and void. SO ORDERED.

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

providing, among other things, for the election of representatives of the District Chapters in the City Chapter of Manila and setting the elections for both chapters thirty days after the barangay elections. Section 3 (A) and (B) of the assailed ordinance read: SEC. 3. Representation Chapters. Every Barangay shall be represented in the said Liga Chapters by the Punong Barangayor, in his absence or incapacity, by the kagawad duly elected for the purpose among its members. A. District Chapter All elected Barangay Chairman in each District shall elect from among themselves the President, VicePresident and five (5) members of the Board. B. City Chapter The District Chapter representatives shall automatically become members of the Board and they shall elect from among themselves a President, Vice-President, Secretary, Treasurer, Auditor and create other positions as it may deem necessary for the management of the chapter. The assailed ordinance was later transmitted to respondent City Mayor Jose L. Atienza, Jr., for his signature and approval. On 16 July 2002, upon being informed that the ordinance had been forwarded to the Office of the City Mayor, still unnumbered and yet to be officially released, the Liga sent respondent Mayor of Manila a letter requesting him that said ordinance be vetoed considering that it encroached upon, or even assumed, the functions of the Liga through legislation, a function which was clearly beyond the ambit of the powers of the City Council.[7] Respondent Mayor, however, signed and approved the assailed city ordinance and issued on 15 August 2002 Executive Order No. 011, Series of 2002, to implement the ordinance. Hence, on 27 August 2002, the Liga filed the instant petition raising the following issues: I WHETHER OR NOT THE RESPONDENT CITY COUNCIL OF MANILA COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF OR IN EXCESS OF JURISDICTION, WHEN IT ENACTED CITY ORDINANCE NO. 8039 S. 2002 PURPOSELY TO GOVERN THE ELECTIONS OF THE MANILA CHAPTER OF THE LIGA NG MGA BARANGAYS AND WHICH PROVIDES A DIFFERENT MANNER OF ELECTING ITS OFFICERS, DESPITE THE FACT THAT SAID CHAPTERS ELECTIONS, AND THE ELECTIONS OF ALL OTHER CHAPTERS OF THE LIGA NG MGA BARANGAYS FOR THAT MATTER, ARE BY LAW MANDATED TO BE GOVERNED BY THE LIGA CONSTITUTION AND BY-LAWS AND THE LIGA ELECTION CODE. II WHETHER OR NOT THE RESPONDENT CITY MAYOR OF MANILA COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF OR IN EXCESS OF JURISDICTION WHEN HE ISSUED EXECUTIVE ORDER NO. 011 TO IMPLEMENT THE QUESTIONED CITY ORDINANCE NO. 8039 S. 2002. In support of its petition, the Liga argues that City Ordinance No. 8039, Series of 2002, and Executive Order No. 011, Series of 2002, contradict the Liga Election Code and are therefore invalid. There exists neither rhyme nor reason, not to mention the absence of legal basis, for the Manila City Council to encroach upon, or even assume, the functions of the Liga by prescribing, through legislation, the manner of conducting the Liga elections other than what has been provided for by the Liga Constitution

and By-laws and the Liga Election Code. Accordingly, the subject ordinance is an ultra vires act of the respondents and, as such, should be declared null and void. As for its prayer for the issuance of a temporary restraining order, the petitioner cites as reason therefor the fact that under Section 5 of the assailed city ordinance, the Manila District Chapter elections would be held thirty days after the regular barangay elections. Hence, it argued that the issuance of a temporary restraining order and/or preliminary injunction would be imperative to prevent the implementation of the ordinance and executive order. On 12 September 2002, Barangay Chairman Arnel Pea, in his capacity as a member of the Liga ng mga Barangay in the City Chapter of Manila, filed a Complaint in Intervention with Urgent Motion for the Issuance of Temporary Restraining Order and/or Preliminary Injunction.[8] He supports the position of the Liga and prays for the declaration of the questioned ordinance and executive order, as well as the elections of the Liga ng mga Barangay pursuant thereto, to be null and void. The assailed ordinance prescribing for an indirect manner of election amended, in effect, the provisions of the Local Government Code of 1991, which provides for the election of the Liga officers at large. It also violated and curtailed the rights of the petitioner and intervenor, as well as the other 896 Barangay Chairmen in the City of Manila, to vote and be voted upon in a direct election. On 25 October 2002, the Office of the Solicitor General (OSG) filed a Manifestation in lieu of Comment.[9] It supports the petition of the Liga, arguing that the assailed city ordinance and executive order are clearly inconsistent with the express public policy enunciated in R.A. No. 7160. Local political subdivisions are able to legislate only by virtue of a valid delegation of legislative power from the national legislature. They are mere agents vested with what is called the power of subordinate legislation. Thus, the enactments in question, which are local in origin, cannot prevail against the decree, which has the force and effect of law. On the issue of non-observance by the petitioners of the hierarchy-of-courts rule, the OSG posits that technical rules of procedure should be relaxed in the instant petition. While Batas Pambansa Blg. 129, as amended, grants original jurisdiction over cases of this nature to the Regional Trial Court (RTC), the exigency of the present petition, however, calls for the relaxation of this rule. Section 496 (should be Section 491) of the Local Government Code of 1991 primarily intended that the Liga ng mga Barangay determine the representation of the Liga in the sanggunians for the immediate ventilation, articulation, and crystallization of issues affecting barangay government administration. Thus, the immediate resolution of this petition is a must. On the other hand, the respondents defend the validity of the assailed ordinance and executive order and pray for the dismissal of the present petition on the following grounds: (1) certiorari under Rule 65 of the Rules of Court is unavailing; (2) the petition should not be entertained by this Court in view of the pendency before the Regional Trial Court of Manila of two actions or petitions questioning the subject ordinance and executive order; (3) the petitioner is guilty of forum shopping; and (4) the act sought to be enjoined is fait accompli. The respondents maintain that certiorari is an extraordinary remedy available to one aggrieved by the decision of a tribunal, officer, or board exercising judicial or quasi-judicial functions. The City Council and City Mayor of Manila are not the board and officer contemplated in Rule 65 of the Rules of Court because both do not exercise judicial functions. The enactment of the subject ordinance and issuance of the questioned executive order are legislative and executive functions, respectively, and thus, do not fall within the ambit of judicial functions. They are both within the prerogatives, powers, and authority of the City Council and City Mayor of Manila, respectively. Furthermore, the petition failed to show with certainty that the respondents acted without or in excess of jurisdiction or with grave abuse of discretion.

The respondents also asseverate that the petitioner cannot claim that it has no other recourse in addressing its grievance other than this petition for certiorari. As a matter of fact, there are two cases pending before Branches 33 and 51 of the RTC of Manila (one is for mandamus; the other, for declaratory relief) and three in the Court of Appeals (one is for prohibition; the two other cases, for quo warranto), which are all akin to the present petition in the sense that the relief being sought therein is the declaration of the invalidity of the subject ordinance. Clearly, the petitioner may ask the RTC or the Court of Appeals the relief being prayed for before this Court. Moreover, the petitioner failed to prove discernible compelling reasons attending the present petition that would warrant cognizance of the present petition by this Court. Besides, according to the respondents, the petitioner has transgressed the proscription against forumshopping in filing the instant suit. Although the parties in the other pending cases and in this petition are different individuals or entities, they represent the same interest. With regard to petitioner's prayer for temporary restraining order and/ or preliminary injunction in its petition, the respondents maintain that the same had become moot and academic in view of the elections of officers of the City Liga ng mga Barangay on 15 September 2002 and their subsequent assumption to their respective offices.[10] Since the acts to be enjoined are now fait accompli, this petition for certiorari with an application for provisional remedies must necessarily fail. Thus, where the records show that during the pendency of the case certain events or circumstances had taken place that render the case moot and academic, the petition for certiorari must be dismissed. After due deliberation on the pleadings filed, we resolve to dismiss this petition for certiorari. First, the respondents neither acted in any judicial or quasi-judicial capacity nor arrogated unto themselves any judicial or quasi-judicial prerogatives. A petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure is a special civil action that may be invoked only against a tribunal, board, or officer exercising judicial or quasi-judicial functions. Section 1, Rule 65 of the 1997 Rules of Civil Procedure provides: SECTION 1. Petition for certiorari. When any tribunal, board or officer exercising judicial or quasi-judicial functions has acted without or in excess of its or his jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, and there is no appeal, or any plain, speedy, and adequate remedy in the ordinary course of law, a person aggrieved thereby may file a verified petition in the proper court, alleging the facts with certainty and praying that judgment be rendered annulling or modifying the proceedings of such tribunal, board or officer, and granting such incidental reliefs as law and justice may require. Elsewise stated, for a writ of certiorari to issue, the following requisites must concur: (1) it must be directed against a tribunal, board, or officer exercising judicial or quasi-judicial functions; (2) the tribunal, board, or officer must have acted without or in excess of jurisdiction or with grave abuse of discretion amounting lack or excess of jurisdiction; and (3) there is no appeal or any plain, speedy, and adequate remedy in the ordinary course of law. A respondent is said to be exercising judicial function where he has the power to determine what the law is and what the legal rights of the parties are, and then undertakes to determine these questions and adjudicate upon the rights of the parties.[11] Quasi-judicial function, on the other hand, is a term which applies to the actions, discretion, etc., of public administrative officers or bodies required to investigate facts or ascertain the existence of facts, hold hearings, and draw conclusions from them as a basis for their official action and to exercise discretion of a judicial nature.[12]

Before a tribunal, board, or officer may exercise judicial or quasi-judicial acts, it is necessary that there be a law that gives rise to some specific rights of persons or property under which adverse claims to such rights are made, and the controversy ensuing therefrom is brought before a tribunal, board, or officer clothed with power and authority to determine the law and adjudicate the respective rights of the contending parties.[13] The respondents do not fall within the ambit of tribunal, board, or officer exercising judicial or quasijudicial functions. As correctly pointed out by the respondents, the enactment by the City Council of Manila of the assailed ordinance and the issuance by respondent Mayor of the questioned executive order were done in the exercise of legislative and executive functions, respectively, and not of judicial or quasi-judicial functions. On this score alone, certiorari will not lie. Second, although the instant petition is styled as a petition for certiorari, in essence, it seeks the declaration by this Court of the unconstitutionality or illegality of the questioned ordinance and executive order. It, thus, partakes of the nature of a petition for declaratory relief over which this Court has only appellate, not original, jurisdiction.[14] Section 5, Article VIII of the Constitution provides: Sec. 5. The Supreme Court shall have the following powers: (1) Exercise original jurisdiction over cases affecting ambassadors, other public ministers and consuls, and over petitions for certiorari, prohibition, mandamus, quo warranto, and habeas corpus. Review, revise, reverse, modify, or affirm on appeal or certiorari as the law or the Rules of Court may provide, final judgments and orders of lower courts in: (a) All cases in which the constitutionality or validity of any treaty, international or executive agreement, law, presidential decree, proclamation, order, instruction, ordinance, or regulation is in question. (Italics supplied). As such, this petition must necessary fail, as this Court does not have original jurisdiction over a petition for declaratory relief even if only questions of law are involved.[15] Third, even granting arguendo that the present petition is ripe for the extraordinary writ of certiorari, there is here a clear disregard of the hierarchy of courts. No special and important reason or exceptional and compelling circumstance has been adduced by the petitioner or the intervenor why direct recourse to this Court should be allowed. We have held that this Courts original jurisdiction to issue a writ of certiorari (as well as of prohibition, mandamus, quo warranto, habeas corpus and injunction) is not exclusive, but is concurrent with the Regional Trial Courts and the Court of Appeals in certain cases. As aptly stated in People v. Cuaresma:[16] This concurrence of jurisdiction is not, however, to be taken as according to parties seeking any of the writs an absolute, unrestrained freedom of choice of the court to which application therefor0 will be directed. There is after all a hierarchy of courts. That hierarchy is determinative of the venue of appeals, and also serves as a general determinant of the appropriate forum for petitions for the extraordinary writs. A becoming regard of that judicial hierarchy most certainly indicates that petitions for the issuance of extraordinary writs against first level (inferior) courts should be filed with the Regional Trial Court, and those against the latter, with the Court of Appeals. A direct invocation of the Supreme Courts original jurisdiction to issue these writs should be allowed only when there are special and important reasons therefor, clearly and specifically set out in the petition. This is [an] established policy. It is a policy necessary to prevent inordinate demands upon the Courts time and attention which are better devoted to those matters within its exclusive jurisdiction, and to prevent further over-

(2)

crowding of the Courts docket. As we have said in Santiago v. Vasquez,[17] the propensity of litigants and lawyers to disregard the hierarchy of courts in our judicial system by seeking relief directly from this Court must be put to a halt for two reasons: (1) it would be an imposition upon the precious time of this Court; and (2) it would cause an inevitable and resultant delay, intended or otherwise, in the adjudication of cases, which in some instances had to be remanded or referred to the lower court as the proper forum under the rules of procedure, or as better equipped to resolve the issues because this Court is not a trier of facts. Thus, we shall reaffirm the judicial policy that this Court will not entertain direct resort to it unless the redress desired cannot be obtained in the appropriate courts, and exceptional and compelling circumstances justify the availment of the extraordinary remedy of writ of certiorari, calling for the exercise of its primary jurisdiction.[18] Petitioners reliance on Pimentel v. Aguirre[19] is misplaced because the non-observance of the hierarchy-of-courts rule was not an issue therein. Besides, what was sought to be nullified in the petition for certiorari and prohibition therein was an act of the President of the Philippines, which would have greatly affected all local government units. We reiterated therein that when an act of the legislative department is seriously alleged to have infringed the Constitution, settling the controversy becomes the duty of this Court. The same is true when what is seriously alleged to be unconstitutional is an act of the President, who in our constitutional scheme is coequal with Congress. We hesitate to rule that the petitioner and the intervenor are guilty of forum-shopping. Forum-shopping exists where the elements of litis pendentia are present or when a final judgment in one case will amount to res judicata in the other. For litis pendentia to exist, the following requisites must be present: (1) identity of parties, or at least such parties as are representing the same interests in both actions; (2) identity of rights asserted and reliefs prayed for, the reliefs being founded on the same facts; and (3) identity with respect to the two preceding particulars in the two cases, such that any judgment that may be rendered in the pending case, regardless of which party is successful, would amount to res judicata in the other case.[20] In the instant petition, and as admitted by the respondents, the parties in this case and in the alleged other pending cases are different individuals or entities; thus, forum-shopping cannot be said to exist. Moreover, even assuming that those five petitions are indeed pending before the RTC of Manila and the Court of Appeals, we can only guess the causes of action and issues raised before those courts, considering that the respondents failed to furnish this Court with copies of the said petitions. WHEREFORE, the petition is DISMISSED. SO ORDERED.

THIRD DIVISION [G.R. No. 162059, January 22, 2008] HANNAH EUNICE D. SERANA, G.R. No. 162059 Petitioner, VS. SANDIGANBAYAN and PEOPLE OF THE PHILIPPINES, Respondents. DECISION REYES, R.T., J.: CAN the Sandiganbayan try a government scholaran iskolar ng bayan a** accused, along with her brother, of swindling government fundsccused of being the swindler ng bayan? MAAARI bang litisin ng Sandiganbayan ang isang iskolar ng bayan, at ang kanyang kapatid, na kapwa pinararatangan ng estafa ng pera ng bayan? The jurisdictional question is posed in this petition for Certiorari with Prayer for the Issuance of Temporary Restraining Order or Preliminary Injunction certiorari assailing the Resolutions[1] of the Sandiganbayan, Fifth Division, denying petitioners motion to quash the information and herdenying petitioners motion for reconsideration. The Antecedents

Petitioner Hannah Eunice D. Serana was a senior student of the University of the Philippines-Cebu (UP). A student of a state university is known as a government scholar. She was appointed by then President Joseph Estrada on December 21, 1999 as a student regent of UP, to serve a one-year term starting January 1, 2000 and ending on December 31, 2000. In the early part of 2000, petitioner discussed with President Estrada the renovation of Vinzons Hall Annex in UP Diliman.[2] On September 4, 2000, petitioner, with her siblings and relatives, registered with the Securities and Exchange Commission the Office of the Student Regent Foundation, Inc. (OSRFI).[3] One of the projects of the OSRFI was the renovation of the Vinzons Hall Annex.[4] President Estrada gave Fifteen Million Pesos (P15,000,000.00) to the OSRFI as financial assistance for the proposed renovation. The source of the funds, according to the information, wais disputed the Office of the President. The renovation of Vinzons Hall Annex failed to materialize.[5] The succeeding student regent, Kristine Clare Bugayong, and Christine Jill De Guzman, Secretary General of the KASAMA sa U.P., a systemwide alliance of student councils within the state university, consequently filed a complaint for Malversation of Public Funds and Property with the Office of the Ombudsman.[6] On July 3, 2003, the Ombudsman, after due investigation, found probable cause to indict petitioner and her brother Jade Ian D. Serana forof estafa, docketed as Criminal Case No. 27819 of the Sandiganbayan.[7] The Information against her reads: The undersigned Special Prosecution Officer III, Office of the Special Prosecutor, hereby

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

of

the

Sandiganbayan

citing

the

case

of

Soller

v.

Sandiganbayan.[11]

The Ombudsman opposed the motion.[12] It disputed petitioners interpretation of the law. Section 4(b) of Presidential Decree (P.D.) No. 1606 clearly contains the catch -all phrase in relation to office, thus, the Sandiganbayan has jurisdiction over the charges against petitioner. In the same breath, the prosecution countered that the source of the money is a matter of defense. It should be threshed out during a full-blown trial.[13] According to the Ombudsman, petitioner, despite her protestations, iwas a public officer. As a member of the BOR, she hads the general powers of administration and exerciseds the corporate powers of UP. Based on Mechems definition of a public office, petitioners stance that she was not compensated, hence, thus not a public officer, is erroneous. Compensation is not an essential part of public office. Parenthetically, compensation has been interpreted to include allowances. By this definition, petitioner was compensated.[14] Sandiganbayan Disposition In a Resolution dated November 14, 2003, the Sandiganbayan denied petitioners motion for lack of merit.[15] It ratiocinated: The focal point in controversy is the jurisdiction of the Sandiganbayan over this case. It is extremely erroneous to hold that only criminal offenses covered by Chapter II, Section 2, Title VII, Book II of the Revised Penal Code are within the jurisdiction of this Court. As correctly pointed out by the prosecution, Section 4(b) of R.A. 8249 provides that the Sandiganbayan also has jurisdiction over other offenses committed by public officials and employees in relation to their office. From this provision, there is no single doubt that this Court has jurisdiction over the offense of estafa committed by a public official in relation to his office. Accused-movants claim that being merely a member in representation of the student body, she was never a public officer since she never received any compensation nor does she fall under Salary Grade 27, is of no moment, in view of the express provision of Section 4 of Republic Act No. 8249 which provides: Sec. 4. Jurisdiction The Sandiganbayan shall exercise exclusive original jurisdiction in all cases involving: (A) x x x

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

(g) Presidents, directors or trustees, or managers of government-owned or controlled corporations, state universities or educational institutions or foundations. (Italics supplied)

It is very clear from the aforequoted provision that the Sandiganbayan has original exclusive jurisdiction over all offenses involving the officials enumerated in subsection (g), irrespective of their salary grades, because the primordial consideration in the inclusion of these officials is the nature of their responsibilities and functions. Is accused-movant included in the contemplated provision of law?

A meticulous review of the existing Charter of the University of the Philippines reveals that the Board of Regents, to which accused-movant belongs, exclusively exercises the general powers of administration and corporate powers in the university, such as: 1) To receive and appropriate to the ends specified by law such sums as may be provided by law for the support of the university; 2) To prescribe rules for its own government and to enact for the government of the university such general ordinances and regulations, not contrary to law, as are consistent with the purposes of the university; and 3) To appoint, on recommendation of the President of the University, professors, instructors, lecturers and other employees of the University; to fix their compensation, hours of service, and such other duties and conditions as it may deem proper; to grant to them in its discretion leave of absence under such regulations as it may promulgate, any other provisions of law to the contrary notwithstanding, and to remove them for cause after an investigation and hearing shall have been had. It is well-established in corporation law that the corporation can act only through its board of directors, or board of trustees in the case of non-stock corporations. The board of directors or trustees, therefore, is the governing body of the corporation. It is unmistakably evident that the Board of Regents of the University of the Philippines is performing functions similar to those of the Board of Trustees of a non-stock corporation. This draws to fore the conclusion that being a member of such board, accused-movant undoubtedly falls within the category of public officials upon whom this Court is vested with original exclusive jurisdiction, regardless of the fact that she does not occupy a position classified as Salary Grade 27 or higher under the Compensation and Position Classification Act of 1989. Finally, this court finds that accused-movants contention that the same of P15 Million was received from former President Estrada and not from the coffers of the government, is a matter a defense that should be properly ventilated during the trial on the merits of this case.[16] On November 19, 2003, petitioner filed a motion for reconsideration.[17] The motion was denied with finality in a Resolution dated February 4, 2004.[18] Issue Petitioner is now before this Court, contending that THE RESPONDENT COURT COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK AND/OR EXCESS OF JURISDICTION IN NOT QUASHING THE INFORMATION AND DISMISING THE CASE NOTWITHSTANDING THAT IS HAS NO JURISDICTION OVER THE OFFENSE CHARGED IN THE INFORMATION.[19]

In her discussion, she reiterates her four-fold argument below, namely: (a) the Sandiganbayan has no jurisdiction over estafa; (b) petitioner is not a public officer with Salary Grade 27 and she paid her tuition fees; (c) the offense charged was not committed in relation to her office; (d) the funds in question personally came from President Estrada, not from the government. Our Ruling The Preliminarily, quash is petition the not denial cannot of correctible a by be motion granted. to certiorari.

We would ordinarily dismiss this petition for certiorari outright on procedural grounds. Wellestablished is the rule that when a motion to quash in a criminal case is denied, the remedy is not a petition for certiorari, but for petitioners to go to trial, without prejudice to reiterating the special defenses invoked in their motion to quash.[20] Remedial measures as regards interlocutory orders, such as a motion to quash, are frowned upon and often dismissed.[21] The evident reason for this rule is to avoid multiplicity of appeals in a single action.[22] In Newsweek, Inc. v. Intermediate Appellate Court,[23] the Court clearly illustrated explained and illustrated the rule and the exceptions, thus: As a general rule, an order denying a motion to dismiss is merely interlocutory and cannot be subject of appeal until final judgment or order is rendered. (Sec. 2 of Rule 41). The ordinary procedure to be followed in such a case is to file an answer, go to trial and if the decision is adverse, reiterate the issue on appeal from the final judgment. The same rule applies to an order denying a motion to quash, except that instead of filing an answer a plea is entered and no appeal lies from a judgment of acquittal. This general rule is subject to certain exceptions. If the court, in denying the motion to dismiss or motion to quash, acts without or in excess of jurisdiction or with grave abuse of discretion, then certiorari or prohibition lies. The reason is that it would be unfair to require the defendant or accused to undergo the ordeal and expense of a trial if the court has no jurisdiction over the subject matter or offense, or is not the court of proper venue, or if the denial of the motion to dismiss or motion to quash is made with grave abuse of discretion or a whimsical and capricious exercise of judgment. In such cases, the ordinary remedy of appeal cannot be plain and adequate. The following are a few examples of the exceptions to the general rule. In De Jesus v. Garcia (19 SCRA 554), upon the denial of a motion to dismiss based on lack of jurisdiction over the subject matter, this Court granted the petition for certiorari and prohibition against the City Court of Manila and directed the respondent court to dismiss the case. In Lopez v. City Judge (18 SCRA 616), upon the denial of a motion to quash based on lack of jurisdiction over the offense, this Court granted the petition for prohibition and enjoined the respondent court from further proceeding in the case. In Enriquez v. Macadaeg (84 Phil. 674), upon the denial of a motion to dismiss based on

improper venue, this Court granted the petition for prohibition and enjoined the respondent judge from taking cognizance of the case except to dismiss the same. In Manalo v. Mariano (69 SCRA 80), upon the denial of a motion to dismiss based on bar by prior judgment, this Court granted the petition for certiorari and directed the respondent judge to dismiss the case. In Yuviengco v. Dacuycuy (105 SCRA 668), upon the denial of a motion to dismiss based on the Statute of Frauds, this Court granted the petition for certiorari and dismissed the amended complaint. In Tacas v. Cariaso (72 SCRA 527), this Court granted the petition for certiorari after the motion to quash based on double jeopardy was denied by respondent judge and ordered him to desist from further action in the criminal case except to dismiss the same. In People v. Ramos (83 SCRA 11), the order denying the motion to quash based on prescription was set aside on certiorari and the criminal case was dismissed by this Court. [24] We do not find the Sandiganbayan to have committed a grave abuse of discretion. The set R.A. by jurisdiction P.D. No. of No. 1606, 3019, the as Sandiganbayan is amended, not by as amended.

We first address petitioners contention that the jurisdiction of the Sandiganbayan is determined by Section 4 of R.A. No. 3019 (The Anti-Graft and Corrupt Practices Act, as amended). We note that petitioner refers to Section 4 of the said law yet quotes Section 4 of P.D. No. 1606, as amended, in her motion to quash before the Sandiganbayan.[25] She repeats the reference in the instant petition for certiorari[26] and in her memorandum of authorities.[27] We cannot bring ourselves to write this off as a mere clerical or typographical error. It bears stressing that petitioner repeated this claim twice despite corrections made by the Sandiganbayan.[28] Her claim has no basis in law. It is P.D. No.1606, as amended, rather than R.A. No. 3019, as amended, that determines the jurisdiction of the Sandiganbayan. A brief legislative history of the statute creating the Sandiganbayan is in order. The Sandiganbayan was created by P.D. No. 1486, promulgated by then President Ferdinand E. Marcos on June 11, 1978. It was promulgated to attain the highest norms of official conduct required of public officers and employees, based on the concept that public officers and employees shall serve with the highest degree of responsibility, integrity, loyalty and efficiency and shall remain at all times accountable to the people.[29] P.D. No. 1486 was, in turn, amended by P.D. No. 1606 which was promulgated on December 10, 1978. P.D. No. 1606 expanded the jurisdiction of the Sandiganbayan.[30] P.D. No. 1606 was later amended by P.D. No. 1861 on March 23, 1983, further altering the Sandiganbayan jurisdiction. R.A. No. 7975 approved on March 30, 1995 made succeeding amendments to P.D. No. 1606, which was again amended on February 5, 1997 by R.A. No. 8249. Section 4 of R.A. No. 8249 further modified the jurisdiction of the Sandiganbayan. As it now stands,

the Sandiganbayan has jurisdiction over the following: Sec. 4. Jurisdiction. - The Sandiganbayan shall exercise exclusive original jurisdiction in all cases involving: A. Violations of Republic Act No. 3019, as amended, other known as the Anti-Graft and Corrupt Practices Act, Republic Act No. 1379, and Chapter II, Section 2, Title VII, Book II of the Revised Penal Code, where one or more of the accused are officials occupying the following positions in the government, whether in a permanent, acting or interim capacity, at the time of the commission of the offense: (1) Officials of the executive branch occupying the positions of regional director and higher, otherwise classified as Grade 27 and higher, of the Compensation and Position Classification Act of 989 (Republic Act No. 6758), specifically including: "_____ (a) Provincial governors, vice-governors, members of the sangguniang panlalawigan, and provincial treasurers, assessors, engineers, and other city department heads; "_____(b) City mayor, vice-mayors, members of the sangguniang panlungsod, city treasurers, assessors, engineers, and other city department heads; "_____(c ) Officials of the diplomatic service occupying the position of consul and higher; " _____(d) Philippine army and air force colonels, naval captains, and all officers of higher rank; "_____(e) Officers of the Philippine National Police while occupying the position of provincial director and those holding the rank of senior superintended or higher; " _____(f) City and provincial prosecutors and their assistants, and officials and prosecutors in the Office of the Ombudsman and special prosecutor; " _____(g) Presidents, directors or trustees, or managers of government-owned or controlled corporations, state universities or educational institutions or foundations. " _____(2) Members of Congress and officials thereof classified as Grade Grade '27' and up under the Compensation and Position Classification Act of 1989; " _____(3) Members of the judiciary without prejudice to the provisions of the Constitution; " _____(4) Chairmen and members of Constitutional Commission, without prejudice to the provisions of the Constitution; and " _____(5) All other national and local officials classified as Grade Grade '27' and higher under the Compensation and Position Classification Act of 1989.

B. Other offenses of felonies whether simple or complexed with other crimes committed by the public officials and employees mentioned in subsection a of this section in relation to their office. C. Civil and criminal cases filed pursuant to and in connection with Executive Order Nos. 1, 2, 14 and 14-A, issued in 1986. " _____In cases where none of the accused are occupying positions corresponding to Salary Grade Grade '27' or higher, as prescribed in the said Republic Act No. 6758, or military and PNP officer mentioned above, exclusive original jurisdiction thereof shall be vested in the proper regional court, metropolitan trial court, municipal trial court, and municipal circuit trial court, as the case may be, pursuant to their respective jurisdictions as provided in Batas Pambansa Blg. 129, as amended. " _____The Sandiganbayan shall exercise exclusive appellate jurisdiction over final judgments, resolutions or order of regional trial courts whether in the exercise of their own original jurisdiction or of their appellate jurisdiction as herein provided. " _____The Sandiganbayan shall have exclusive original jurisdiction over petitions for the issuance of the writs of mandamus, prohibition, certiorari, habeas corpus, injunctions, and other ancillary writs and processes in aid of its appellate jurisdiction and over petitions of similar nature, including quo warranto, arising or that may arise in cases filed or which may be filed under Executive Order Nos. 1, 2, 14 and 14-A, issued in 1986: Provided, That the jurisdiction over these petitions shall not be exclusive of the Supreme Court. " _____The procedure prescribed in Batas Pambansa Blg. 129, as well as the implementing rules that the Supreme Court has promulgated and may thereafter promulgate, relative to appeals/petitions for review to the Court of Appeals, shall apply to appeals and petitions for review filed with the Sandiganbayan. In all cases elevated to the Sandiganbayan and from the Sandiganbayan to the Supreme Court, the Office of the Ombudsman, through its special prosecutor, shall represent the People of the Philippines, except in cases filed pursuant to Executive Order Nos. 1, 2, 14 and 14-A, issued in 1986. " _____In case private individuals are charged as co-principals, accomplices or accessories with the public officers or employees, including those employed in government-owned or controlled corporations, they shall be tried jointly with said public officers and employees in the proper courts which shall exercise exclusive jurisdiction over them. " _____Any provisions of law or Rules of Court to the contrary notwithstanding, the criminal action and the corresponding civil action for the recovery of civil liability shall, at all times, be simultaneously instituted with, and jointly determined in, the same proceeding by the Sandiganbayan or the appropriate courts, the filing of the criminal action being deemed to necessarily carry with it the filing of the civil action, and no right to reserve the filing such civil action separately from the criminal action shall be recognized: Provided, however, That where the civil action

had heretofore been filed separately but judgment therein has not yet been rendered, and the criminal case is hereafter filed with the Sandiganbayan or the appropriate court, said civil action shall be transferred to the Sandiganbayan or the appropriate court, as the case may be, for consolidation and joint determination with the criminal action, otherwise the separate civil action shall be deemed abandoned." Upon the other hand, R.A. No. 3019 is a penal statute approved on August 17, 1960. The said law represses certain acts of public officers and private persons alike which constitute graft or corrupt practices or which may lead thereto.[31] Pursuant to Section 10 of R.A. No. 3019, all prosecutions for violation of the said law should be filed with the Sandiganbayan.[32] R.A. No. 3019 does not contain an enumeration of the cases over which the Sandiganbayan has jurisdiction. In fact, Section 4 of R.A. No. 3019 erroneously cited by petitioner, deals not with the jurisdiction of the Sandiganbayan but with prohibition on private individuals. We quote: Section 4. Prohibition on private individuals. (a) It shall be unlawful for any person having family or close personal relation with any public official to capitalize or exploit or take advantage of such family or close personal relation by directly or indirectly requesting or receiving any present, gift or material or pecuniary advantage from any other person having some business, transaction, application, request or contract with the government, in which such public official has to intervene. Family relation shall include the spouse or relatives by consanguinity or affinity in the third civil degree. The word close personal relation shall include close personal friendship, social and fraternal connections, and professional employment all giving rise to intimacy which assures free access to such public officer. (b) It shall be unlawful for any person knowingly to induce or cause any public official to commit any of the offenses defined in Section 3 hereof. In fine, the two statutes differ in that P.D. No. 1606, as amended, defines the jurisdiction of the Sandiganbayan while R.A. No. 3019, as amended, defines graft and corrupt practices and provides for their penalties. Sandiganbayan the has offense jurisdiction of over estafa.

Relying on Section 4 of P.D. No. 1606, petitioner contends that estafa is not among those crimes cognizable byover which the Sandiganbayan has jurisdiction. We note that in hoisting this argument, petitioner isolated the first paragraph of Section 4 of P.D. No. 1606, without regard to the succeeding paragraphs of the said provision. The rule is well-established in this jurisdiction that statutes should receive a sensible construction so as to avoid an unjust or an absurd conclusion.[33] Interpretatio talis in ambiguis semper fienda est, ut evitetur inconveniens et absurdum. Where there is ambiguity, such interpretation as will avoid inconvenience and absurdity is to be adopted. Kung saan mayroong kalabuan, ang pagpapaliwanag ay hindi dapat maging mahirap at katawa-tawa. Every section, provision or clause of the statute must be expounded by reference to each other in order to arrive at the effect contemplated by the legislature.[34] The intention of the legislator must be

ascertained from the whole text of the law and every part of the act is to be taken into view.[35] In other words, petitioners interpretation lies in direct opposition to the rule that a statute must be interpreted as a whole under the principle that the best interpreter of a statute is the statute itself.[36] Optima statuti interpretatrix est ipsum statutum . Ang isang batas ay marapat na bigyan ng kahulugan sa kanyang kabuuan sa ilalim ng prinsipyo na ang pinakamainam na interpretasyon ay ang mismong batas. Section 4(B) of P.D. No. 1606 reads: B. Other offenses or felonies whether simple or complexed with other crimes committed by the public officials and employees mentioned in subsection a of this section in relation to their office. Evidently, the Sandiganbayan has jurisdiction over other felonies committed by public officials in relation to their office. We see no plausible or sensible reason to exclude estafa as one of the offenses included in Section 4(bB) of P.D. No. 1606. Plainly, estafa is one of those other felonies. The jurisdiction is simply subject to the twin requirements that (a) the offense is committed by public officials and employees mentioned in Section 4(A) of P.D. No. 1606, as amended, and that (b) the offense is committed in relation to their office. In Perlas, Jr. v. People,[37] the Court had occasion to explain that the Sandiganbayan has jurisdiction over an indictment for estafa versus a director of the National Parks Development Committee, a government instrumentality. The Court held then: The National Parks Development Committee was created originally as an Executive Committee on January 14, 1963, for the development of the Quezon Memorial, Luneta and other national parks (Executive Order No. 30). It was later designated as the National Parks Development Committee (NPDC) on February 7, 1974 (E.O. No. 69). On January 9, 1966, Mrs. Imelda R. Marcos and Teodoro F. Valencia were designated Chairman and Vice-Chairman respectively (E.O. No. 3). Despite an attempt to transfer it to the Bureau of Forest Development, Department of Natural Resources, on December 1, 1975 (Letter of Implementation No. 39, issued pursuant to PD No. 830, dated November 27, 1975), the NPDC has remained under the Office of the President (E.O. No. 709, dated July 27, 1981). Since 1977 to 1981, the annual appropriations decrees listed NPDC as a regular government agency under the Office of the President and allotments for its maintenance and operating expenses were issued direct to NPDC (Exh. 10-A, Perlas, Item Nos. 2, 3). The Sandiganbayans jurisdiction over estafa was reiterated with greater firmness in Bondoc v. Sandiganbayan.[38] Pertinent parts of the Courts ruling in Bondoc read: Furthermore, it is not legally possible to transfer Bondocs cases to the Regional Trial Court, for the simple reason that the latter would not have jurisdiction over the offenses. As already above intimated, the inability of the Sandiganbayan to hold a joint trial of Bondocs cases and those of the government employees separately charged for the same crimes, has not altered the nature of the offenses charged, as estafa thru falsification punishable by penalties higher than prision correccional or imprisonment of six years, or a fine of P6,000.00, committed by government employees in conspiracy with private persons, including Bondoc. These crimes are within the exclusive, original jurisdiction of the

Sandiganbayan. They simply cannot be taken cognizance of by the regular courts, apart from the fact that even if the cases could be so transferred, a joint trial would nonetheless not be possible. Petitioner is UP a student public regent officer.

Petitioner also contends that she is not a public officer. She does not receive any salary or remuneration as a UP student regent. This is not the first or likely the last time that We will be called upon toare required to define a public officer. In Khan, Jr. v. Office of the Ombudsman, We ruled that it is difficult to pin down the definition of a public officer.[39] The 1987 Constitution does not define who are public officers. Rather, the varied definitions and concepts are found in different statutes and jurisprudence. In Aparri v. Court of Appeals,[40] the Court held that: A public office is the right, authority, and duty created and conferred by law, by which for a given period, either fixed by law or enduring at the pleasure of the creating power, an individual is invested with some portion of the sovereign functions of the government, to be exercise by him for the benefit of the public ([ Mechem Public Offices and Officers,] Sec. 1). The right to hold a public office under our political system is therefore not a natural right. It exists, when it exists at all only because and by virtue of some law expressly or impliedly creating and conferring it (Mechem Ibid., Sec. 64). There is no such thing as a vested interest or an estate in an office, or even an absolute right to hold office. Excepting constitutional offices which provide for special immunity as regards salary and tenure, no one can be said to have any vested right in an office or its salary (42 Am. Jur. 881). In Laurel v. Desierto,[41] the Court adopted the definition of Mechem of a public office: A public office is the right, authority and duty, created and conferred by law, by which, for a given period, either fixed by law or enduring at the pleasure of the creating power, an individual is invested with some portion of the sovereign functions of the government, to be exercised by him for the benefit of the public. The individual so invested is a public officer.[42] Petitioner claims that she is not a public officer with Salary Grade 27; she is, in fact, a regular tuition fee-paying student. This is likewise bereft of merit. It is not only the salary grade that determines the jurisdiction of the Sandiganbayan. The Sandiganbayan also has jurisdiction over other officers enumerated in P.D. No. 1606. In Geduspan v. People,[43] We held that while the first part of Section 4(A) covers only officials with Salary Grade 27 and higher, its second part specifically includes other executive officials whose positions may not be of Salary Grade 27 and higher but who are by express provision of law placed under the jurisdiction of the said court. Petitioner falls under the jurisdiction of the Sandiganbayan as she is placed there by express provision of law.[44] Section 4(A)(1)(g) of P.D. No. 1606 explictly vested the Sandiganbayan with jurisdiction over Presidents, directors or trustees, or managers of government-owned or controlled corporations, state universities or educational institutions or foundations. We find no reason to disturb the findings of the Sandiganbayan that Petitioner falls under this category. As the Sandiganbayan pointed out, the BOR performs functions similar to those of a board of trustees of a non-stock corporation.[45] By express mandate of law, We find that petitioner is, indeed, a public officer as contemplated by P.D. No. 1606

the

statute

defining

the

jurisdiction

of

the

Sandiganbayan.

Moreover, it is well established that compensation is not an essential element of public office.[46] At most, it is merely incidental to the public office.[47] We uphold that the conclusions of the Sandiganbayan that Delegation of sovereign functions is essential in the public office. An investment in an individual of some portion of the sovereign functions of the government, to be exercised by him for the benefit of the public makes one a public officer.[48] The administration of the UP is a sovereign function in line with Article XIV of the Constitution. UP performs a legitimate governmental function by providing advanced instruction in literature, philosophy, the sciences, and arts, and giving professional and technical training.[49] Moreover, UP is maintained by the Government and it declares no dividends and is not a corporation created for profit. [50] Petitioner is therefore a public officer by express mandate of P.D. No. 1606 and jurisprudence. The in to offense relation to charged public the was office, committed according Information.

Petitioner likewise argues that even assuming that she is a public officer, the Sandiganbayan would still not have jurisdiction over the offense because it was not committed in relation to her office. According to petitioner, she had no power or authority to act without the approval of the BOR. She adds there was no Board Resolution issued by the BOR authorizing her to contract with then President Estrada; and that her acts were not ratified by the governing body of the state university. Resultantly, her act was done in a private capacity and not in relation to public office. It is axiomatic that jurisdiction is determined by the averments in the information.[51] More than that, jurisdiction is not affected by the pleas or the theories set up by defendant or respondent in an answer, a motion to dismiss, or a motion to quash.[52] Otherwise, jurisdiction would become dependent almost entirely upon the whims of defendant or respondent.[53] In the case at bench, the information alleged, in no uncertain terms that petitioner, being then a student regent of U.P., while in the performance of her official functions, committing the offense in relation to her office and taking advantage of her position, with intent to gain, conspiring with her brother, JADE IAN D. SERANA, a private individual, did then and there wilfully, unlawfully and feloniously defraud the government x x x. (Underscoring supplied) Clearly, there was no grave abuse of discretion on the part of the Sandiganbayan when it did not quash the information based on this ground. Source be of raised funds during is a trial defense on that the should merits.

It is contended anew that the amount came from President Estradas private funds and not from the government coffers. Petitioner insists the charge has no leg to stand on. We cannot agree. The information alleges that the funds came from the Office of the President and not

its then occupant, President Joseph Ejercito Estrada. Under the information, it is averred that petitioner requested the amount of Fifteen Million Pesos (P15,000,000.00), Philippine Currency, from the Office of the President, and the latter relying and believing on said false pretenses and misrepresentation gave and delivered to said accused Land Bank Check No. 91353 dated October 24, 2000 in the amount of Fifteen Million Pesos (P15,000,000.00). Again, the Court sustains the Sandiganbayan observation that the source of the P15,000,000 is a matter of defense that should be ventilated during the trial on the merits of the instant case.[54] A and lawyer honesty owes to candor, the fairness Court.

As a parting note, petitioners counsel, Renato G. dela Cruz, misrepresented his reference to Section 4 of P.D. No. 1606 as a quotation from Section 4 of R.A. No. 3019. A review of his motion to quash, the instant petition for certiorari and his memorandum, unveils the misquotation. We urge petitioners counsel to observe Canon 10 of the Code of Professional Responsibility, specifically Rule 10.02 of the Rules stating that a lawyer shall not misquote or misrepresent. The Court stressed the importance of this rule in Pangan v. Ramos,[55] where Atty Dionisio D. Ramos used the name Pedro D.D. Ramos in connection with a criminal case. The Court ruled that Atty. Ramos resorted to deception by using a name different from that with which he was authorized. We severely reprimanded Atty. Ramos and warned that a repetition may warrant suspension or disbarment. [56] We admonish petitioners counsel to be more careful and accurate in his citation. A lawyers conduct before the court should be characterized by candor and fairness.[57] The administration of justice would gravely suffer if lawyers do not act with complete candor and honesty before the courts.[58] WHEREFORE, the petition is DENIED for lack of merit DUE COURSE and DISMISSED. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION

CLARITA DEPAKAKIBO GARCIA, Petitioner, - versus SANDIGANBAYAN and REPUBLIC OF THE PHILIPPINES, Respondents. x-----------------------------------------x CLARITA DEPAKAKIBO GARCIA, Petitioner,

G.R. No. 170122

G.R. No. 171381 - versus SANDIGANBAYAN and REPUBLIC OF THE PHILIPPINES, Respondents. Present: CARPIO, J., Chairperson, CHICO-NAZARIO, VELASCO, JR., LEONARDO-DE CASTRO,* and PERALTA, JJ. Promulgated: October 12, 2009 x-----------------------------------------------------------------------------------------x DECISION

VELASCO, JR., J.: The Case

Before us are these two (2) consolidated petitions under Rule 65, each interposed by petitioner Clarita D. Garcia, with application for injunctive relief. In the first petition for mandamus and/or certiorari,

docketed as G.R. No. 170122, petitioner seeks to nullify and set aside the August 5, 2005 Order,[1] as reiterated in another Order dated August 26, 2005, both issued by the Sandiganbayan, Fourth Division, which effectively denied the petitioners motion to dismiss and/or to quash Civil Case No. 0193, a suit for forfeiture commenced by the Republic of the Philippines against the petitioner and her immediate family. The second petition for certiorari, docketed as G.R. No. 171381, seeks to nullify and set aside the November 9, 2005 Resolution[2] of the Sandiganbayan, Fourth Division, insofar as it likewise denied the petitioners motion to dismiss and/or quash Civil Case No. 0196, another forfeiture case involving the same parties but for different properties.

The Facts

To recover unlawfully acquired funds and properties in the aggregate amount of PhP 143,052,015.29 that retired Maj. Gen. Carlos F. Garcia, his wife, herein petitioner Clarita, children Ian Carl, Juan Paulo and Timothy Mark (collectively, the Garcias) had allegedly amassed and acquired, the Republic, through the Office of the Ombudsman (OMB), pursuant to Republic Act No. (RA) 1379,[3] filed with the Sandiganbayan (SB) on October 29, 2004 a petition for the forfeiture of those properties. This petition, docketed as Civil Case No. 0193, was eventually raffled to the Fourth Division of the antigraft court.

Civil Case No. 0193 was followed by the filing on July 5, 2005 of another forfeiture case, docketed as Civil Case No. 0196, this time to recover funds and properties amounting to PhP 202,005,980.55. Civil Case No. 0196 would eventually be raffled also to the Fourth Division of the SB. For convenience and clarity, Civil Case No. 0193 shall hereinafter be also referred to as Forfeiture I and Civil Case No. 0196 as Forfeiture II.

Prior to the filing of Forfeiture II, but subsequent to the filing of Forfeiture I, the OMB charged the Garcias and three others with violation of RA 7080 (plunder) under an Information dated April 5, 2005 which placed the value of the property and funds plundered at PhP 303,272,005.99. Docketed as Crim. Case No. 28107, the Information was raffled off to the Second Division of the SB. The plunder charge, as the parties pleadings seem to indicate, covered substantially the same properties identified in both forfeiture cases.

After the filing of Forfeiture I, the following events transpired in relation to the case:

(1) The corresponding summons were issued and all served on Gen. Garcia at his place of detention. Per the Sheriffs Return[4] dated November 2, 2005, the summons were duly served on respondent Garcias. Earlier, or on October 29, 2004, the SB issued a writ of attachment in favor of the Republic, an issuance which Gen. Garcia challenged before this Court, docketed as G.R. No. 165835. Instead of an answer, the Garcias filed a motion to dismiss on the ground of the SBs lack of jurisdiction over separate civil actions for forfeiture. The OMB countered with a motion to expunge and to declare the Garcias in default. To the OMBs motion, the Garcias interposed an opposition in which they manifested that they have meanwhile repaired to the Court on certiorari, docketed as G.R. No. 165835 to nullify the writ of attachment SB issued in which case the SB should defer action on the forfeiture case as a matter of judicial courtesy. (2) By Resolution[5] of January 20, 2005, the SB denied the motion to dismiss; declared the same motion as pro forma and hence without tolling effect on the period to answer. The same resolution declared the Garcias in default. Another resolution[6] denied the Garcias motion for reconsideration and/or to admit answer, and set a date for the ex-parte presentation of the Republics evidence. A second motion for reconsideration was also denied on February 23, 2005, pursuant to the prohibited pleading rule. (3) Despite the standing default order, the Garcias moved for the transfer and consolidation of Forfeiture I with the plunder case which were respectively pending in different divisions of the SB, contending that such consolidation is mandatory under RA 8249.[7] On May 20, 2005, the SB 4th Division denied the motion for the reason that the forfeiture case is not the corresponding civil action for the recovery of civil liability arising from the criminal case of plunder. (4) On July 26, 2005, the Garcias filed another motion to dismiss and/or to quash Forfeiture I on, inter alia, the following grounds: (a) the filing of the plunder case ousted the SB 4th Division of jurisdiction over the forfeiture case; and (b) that the consolidation is imperative in order to avoid possible double jeopardy entanglements.

By Order[8] of August 5, 2005, the SB merely noted the motion in view of movants having been declared in default which has yet to be lifted.

It is upon the foregoing factual antecedents that petitioner Clarita has interposed her first special civil action for mandamus and/or certiorari docketed as G.R. No. 170122, raising the following issues: I. Whether or not the [SB] 4th Division acted without or in excess of jurisdiction or with grave abuse of discretion x x x in issuing its challenged order of August 5, 2005 and August 26 2005 that merely Noted without action, hence refused to resolve petitioners motion to dismiss and/or to quash by virtue of petitioners prior default in that: A. For lack of proper and valid service of summons, the [SB] 4th Division could not have acquired jurisdiction over petitioners, [and her childrens] x x x persons, much less make them become the true parties-litigants, contestants or legal adversaries in forfeiture I. As the [SB] has not validly acquired jurisdiction over the petitioners [and her childrens] x x x persons, they could not possibly be declared in default, nor can a valid judgment by default be rendered against them. B. Even then, mere declaration in default does not per se bar petitioner from challenging the [SB] 4th Divisions lack of jurisdiction over the subject matter of forfeiture I as the same can be raised anytime, even after final judgment. In the absence of jurisdiction over the subject matter, any and all proceedings before the [SB] are null and void. C. Contrary to its August 26, 2005 rejection of petitioners motion for reconsideration of the first challenged order that the issue of jurisdiction raised therein had already been passed upon by [the SB 4th Divisions] resolution of May 20, 2005, the records clearly show that the grounds relied upon by petitioner in her motion to dismiss and/or to quash dated July 26, 2005 were entirely different, separate and distinct from the grounds set forth in petitioners manifestation and motion [to consolidate] dated April 15, 2005 that was denied by it per its resolution of May 20, 2005. D. In any event, the [SB] 4th Division has been ousted of jurisdiction over the subject matter of forfeiture I upon the filing of the main plunder case against petitioner that mandates the automatic forfeiture of the subject properties in forfeiture cases I & II as a function or adjunct of any conviction for plunder. E. Being incompatible, the forfeiture law (RA No. 1379 [1955]) was impliedly repealed by the plunder law (RA No. 7080 [1991]) with automatic forfeiture mechanism.

F. Since the sought forfeiture includes properties purportedly located in the USA, any penal conviction for forfeiture in this case cannot be enforced outside of the Philippines x x x. G. Based on orderly procedure and sound administration of justice, it is imperative that the matter of forfeiture be exclusively tried in the main plunder case to avoid possible double jeopardy entanglements, and to avoid possible conflicting decisions by 2 divisions of the [SB] on the matter of forfeiture as a penal sanction.[9] (Emphasis added.)

With respect to Forfeiture II, the following events and proceedings occurred or were taken after the petition for Forfeiture II was filed: (1) On July 12, 2005, the SB sheriff served the corresponding summons. In his return of July 13, 2005, the sheriff stated giving the copies of the summons to the OIC/Custodian of the PNP Detention Center who in turn handed them to Gen. Garcia. The general signed his receipt of the summons, but as to those pertaining to the other respondents, Gen. Garcia acknowledged receiving the same, but with the following qualifying note: Im receiving the copies of Clarita, Ian Carl, Juan Paolo & Timothy but these copies will not guarantee it being served to the above-named (sic). (2) On July 26, 2005, Clarita and her children, thru special appearance of counsel, filed a motion to dismiss and/or to quash Forfeiture II primarily for lack of jurisdiction over their persons and on the subject matter thereof which is now covered by the plunder case. To the above motion, the Republic filed its opposition with a motion for alternative service of summons. The motion for alternative service would be repeated in another motion of August 25, 2005. (3) By Joint Resolution of November 9, 2005, the SB denied both the petitioners motion to dismiss and/or to quash and the Republics motion for alternative service of summons. On January 24, 2006, the SB denied petitioners motion for partial reconsideration.[10]

From the last two issuances adverted to, Clarita has come to this Court via the instant petition for certiorari, docketed as GR No. 171381. As there submitted, the SB 4th Division acted without or in excess of jurisdiction or with grave abuse of discretion in issuing its Joint Resolution dated November 9, 2005 and its Resolution of January 24, 2006 denying petitioners motion to dismiss and/or to quash in that:

A. Based on its own finding that summons was improperly served on petitioner, the [SB] ought to have dismissed forfeiture II for lack of jurisdiction over petitioners person x x x. B. By virtue of the plunder case filed with the [SB] Second Division that mandates the automatic forfeiture of unlawfully acquired properties upon conviction, the [SB] Fourth Division has no jurisdiction over the subject matter of forfeiture. C. Being incompatible, the forfeiture law (RA No. 1379 [1955]) was impliedly repealed by the plunder law (RA No. 7080 [1991]) with automatic forfeiture mechanism. D. Based on orderly procedure and sound administration of justice, it is imperative that the matter of forfeiture be exclusively tried in the main plunder case to avoid possible double jeopardy entanglements and worse conflicting decisions by 2 divisions of the Sandiganbayan on the matter of forfeiture as a penal sanction.[11] (Emphasis added.)

Per Resolution of the Court dated March 13, 2006, G.R. No. 170122 and G.R. No. 171381 were consolidated.

The Courts Ruling

The petitions are partly meritorious.

The core issue tendered in these consolidated cases ultimately boils down to the question of jurisdiction and may thusly be couched into whether the Fourth Division of the SB has acquired jurisdiction over the person of petitionerand her three sons for that matterconsidering that, first, vis--vis Civil Case Nos. 0193 (Forfeiture I) and 0196 (Forfeiture II), summons against her have been ineffectively or improperly served and, second, that the plunder caseCrim. Case No. 28107has already been filed and pending with another division of the SB, i.e., Second Division of the SB.

Plunder Case in Crim. Case No. 28107 Did Not Absorb the Forfeiture Cases in Civil Case Nos. 0193 and 0196

Petitioner maintains that the SB 4th Division has no jurisdiction over the subject matter of Forfeitures I and II as both cases are now covered or included in the plunder case against the Garcias. Or as petitioner puts it a bit differently, the filing of the main plunder case (Crim. Case No. 28107), with its automatic forfeiture mechanism in the event of conviction, ousted the SB 4 th Division of its jurisdiction over the subject matter of the forfeiture cases. The inclusion of the forfeiture cases with the plunder case is necessary, so petitioner claims, to obviate possible double jeopardy entanglements and colliding case dispositions. Prescinding from these premises, petitioner would ascribe grave abuse of discretion on the SB 4th Division for not granting its separate motions to dismiss the two forfeiture petitions and/or to consolidate them with the plunder case on the foregoing ground.

Petitioners contention is untenable. And in response to what she suggests in some of her pleadings, let it be stated at the outset that the SB has jurisdiction over actions for forfeiture under RA 1379, albeit the proceeding thereunder is civil in nature. We said so in Garcia v. Sandiganbayan[12] involving no less than petitioners husband questioning certain orders issued in Forfeiture I case. Petitioners posture respecting Forfeitures I and II being absorbed by the plunder case, thus depriving the 4th Division of the SB of jurisdiction over the civil cases, is flawed by the assumptions holding it together, the first assumption being that the forfeiture cases are the corresponding civil action for recovery of civil liability ex delicto. As correctly ruled by the SB 4th Division in its May 20, 2005 Resolution,[13] the civil liability for forfeiture cases does not arise from the commission of a criminal offense, thus:

Such liability is based on a statute that safeguards the right of the State to recover unlawfully acquired properties. The action of forfeiture arises when a public officer or employee [acquires] during his incumbency an amount of property which is manifestly out of proportion of his salary x x x and to his other lawful income x x x.[14] Such amount of property is then presumed prima facie to have been unlawfully acquired.[15] Thus if the respondent [public official] is unable to show to the satisfaction of the court that he has lawfully acquired the property in question, then the court shall declare such property forfeited in favor of the State, and by virtue of such judgment the property aforesaid shall become property of the State.[16] x x x (Citations in the original.)

Lest it be overlooked, Executive Order No. (EO) 14, Series of 1986, albeit defining only the jurisdiction over cases involving ill-gotten wealth of former President Marcos, his immediate family and business associates, authorizes under its Sec. 3[17] the filing of forfeiture suits under RA 1379 which will proceed independently of any criminal proceedings. The Court, in Republic v. Sandiganbayan,[18] interpreted this provision as empowering the Presidential Commission on Good Government to file independent civil actions separate from the criminal actions.

Forfeiture Cases and the Plunder Case Have Separate Causes of Action; the Former Is Civil in Nature while the Latter Is Criminal

It bears stressing, as a second point, that a forfeiture case under RA 1379 arises out of a cause of action separate and different from a plunder case, thus negating the notion that the crime of plunder charged in Crim. Case No. 28107 absorbs the forfeiture cases. In a prosecution for plunder, what is sought to be established is the commission of the criminal acts in furtherance of the acquisition of ill-gotten wealth. In the language of Sec. 4 of RA 7080, for purposes of establishing the crime of plunder, it is sufficient to establish beyond reasonable doubt a pattern of overt or criminal acts indicative of the overall unlawful scheme or conspiracy [to amass, accumulate or acquire ill-gotten wealth]. On the other hand, all that the court needs to determine, by preponderance of evidence, under RA 1379 is the disproportion of respondents properties to his legitimate income, it being unnecessary to prove how he acquired said properties. As correctly formulated by the Solicitor General, the forfeitable nature of the properties under the provisions of RA 1379 does not proceed from a determination of a specific overt act committed by the respondent public officer leading to the acquisition of the illegal wealth.[19]

Given the foregoing considerations, petitioners thesis on possible double jeopardy entanglements should a judgment of conviction ensue in Crim. Case 28107 collapses entirely. Double jeopardy, as a criminal law concept, refers to jeopardy of punishment for the same offense,[20] suggesting that double jeopardy presupposes two separate criminal prosecutions. Proceedings under RA 1379 are, to repeat, civil in nature. As a necessary corollary, one who is sued under RA 1379 may be proceeded against for a criminal offense. Thus, the filing of a case under that law is not barred by the conviction or acquittal of the defendant in Crim. Case 28107 for plunder.

Moreover, given the variance in the nature and subject matter of the proceedings between the plunder case and the subject forfeiture cases, petitioners apprehension about the likelihood of conflicting decisions of two different divisions of the anti-graft court on the matter of forfeiture as a penal sanction is specious at best. What the SB said in this regard merits approving citation:

On the matter of forfeiture as a penal sanction, respondents argue that the division where the plunder case is pending may issue a decision that would collide or be in conflict with the decision by this division on the forfeiture case. They refer to a situation where this Courts Second Division may exonerate the respondents in the plunder case while the Fourth Division grant the petition for forfeiture for the same properties in favor of the state or vice versa. Suffice it to say that the variance in the decisions of both divisions does not give rise to a conflict. After all, forfeiture in the plunder case requires the attendance of facts and circumstances separate and distinct from that in the forfeiture case. Between the two (2) cases, there is no causal connection in the facts sought to be established and the issues sought to be addressed. As a result, the decision of this Court in one does not have a bearing on the other. There is also no conflict even if the decisions in both cases result in an order for the forfeiture of the subject properties. The forfeiture following a conviction in the plunder case will apply only to those illgotten wealth not recovered by the forfeiture case and vise (sic) versa. This is on the assumption that the information on plunder and the petition for forfeiture cover the same set of properties.[21] RA 7080 Did Not Repeal RA 1379

Petitioner takes a different tack in her bid to prove that SB erred in not dismissing Forfeitures I and II with her assertion that RA 7080 impliedly repealed RA 1379. We are not convinced.

Nowhere in RA 7080 can we find any provision that would indicate a repeal, expressly or impliedly, of RA 1379. RA 7080 is a penal statute which, at its most basic, aims to penalize the act of any public officer who by himself or in connivance with members of his family amasses, accumulates or acquires ill-gotten wealth in the aggregate amount of at least PhP 50 million. On the other hand, RA 1379 is not penal in nature, in that it does not make a crime the act of a public official acquiring during his incumbency an amount of property manifestly out of proportion of his salary and other legitimate income. RA 1379 aims to enforce the right of the State to recover the properties which were not lawfully acquired by the officer.

It has often been said that all doubts must be resolved against any implied repeal and all efforts should be exerted to harmonize and give effect to all laws and provisions on the same subject. To be sure, both RA 1379 and RA 7080 can very well be harmonized. The Court perceives no irreconcilable conflict between them. One can be enforced without nullifying the other.

Sandiganbayan Did Not Acquire Jurisdiction over the Persons of Petitioner and Her Children

On the issue of lack of jurisdiction, petitioner argues that the SB did not acquire jurisdiction over her person and that of her children due to a defective substituted service of summons. There is merit in petitioners contention.

Sec. 7, Rule 14 of the 1997 Revised Rules of Civil Procedure clearly provides for the requirements of a valid substituted service of summons, thus:

SEC. 7. Substituted service.If the defendant cannot be served within a reasonable time as provided in the preceding section [personal service on defendant], service may be effected (a) by leaving copies of the summons at the defendants residence with some person of suitable age and discretion then residing therein, or (b) by leaving the copies at defendants office or regular place of business with some competent person in charge thereof.

It is basic that a court must acquire jurisdiction over a party for the latter to be bound by its decision or orders. Valid service of summons, by whatever mode authorized by and proper under the Rules, is the means by which a court acquires jurisdiction over a person.[22]

In the instant case, it is undisputed that summons for Forfeitures I and II were served personally on Maj. Gen. Carlos Flores Garcia, who is detained at the PNP Detention Center, who acknowledged receipt thereof by affixing his signature. It is also undisputed that substituted service of summons for both Forfeitures I and II were made on petitioner and her children through Maj. Gen. Garcia at the PNP Detention Center. However, such substituted services of summons were invalid for being irregular and

defective.

In Manotoc v. Court of Appeals,[23] we broke down the requirements to be:

(1)

Impossibility of prompt personal service, i.e., the party relying on substituted service or the

sheriff must show that defendant cannot be served promptly or there is impossibility of prompt service within a reasonable time. Reasonable time being so much time as is necessary under the circumstances for a reasonably prudent and diligent man to do, conveniently, what the contract or duty requires that should be done, having a regard for the rights and possibility of loss, if any[,] to the other party.[24] Moreover, we indicated therein that the sheriff must show several attempts for personal service of at least three (3) times on at least two (2) different dates.

(2)

Specific details in the return, i.e., the sheriff must describe in the Return of Summons the facts

and circumstances surrounding the attempted personal service.

(3)

Substituted service effected on a person of suitable age and discretion residing at defendants

house or residence; or on a competent person in charge of defendants office or regular place of business.

From the foregoing requisites, it is apparent that no valid substituted service of summons was made on petitioner and her children, as the service made through Maj. Gen. Garcia did not comply with the first two (2) requirements mentioned above for a valid substituted service of summons. Moreover, the third requirement was also not strictly complied with as the substituted service was made not at petitioners house or residence but in the PNP Detention Center where Maj. Gen. Garcia is detained, even if the latter is of suitable age and discretion. Hence, no valid substituted service of summons was made.

The stringent rules on valid service of summons for the court to acquire jurisdiction over the person of the defendants, however, admits of exceptions, as when the party voluntarily submits himself to the jurisdiction of the court by asking affirmative relief.[25] In the instant case, the Republic asserts that

petitioner is estopped from questioning improper service of summons since the improvident service of summons in both forfeiture cases had been cured by their (petitioner and her children) voluntary appearance in the forfeiture cases. The Republic points to the various pleadings filed by petitioner and her children during the subject forfeiture hearings. We cannot subscribe to the Republics views.

Special Appearance to Question a Courts Jurisdiction Is Not Voluntary Appearance

The second sentence of Sec. 20, Rule 14 of the Revised Rules of Civil Procedure clearly provides:

Sec. 20. Voluntary appearance.The defendants voluntary appearance in the action shall be equivalent to service of summons. The inclusion in a motion to dismiss of other grounds aside from lack of jurisdiction over the person of the defendant shall not be deemed a voluntary appearance. (Emphasis ours.)

Thus, a defendant who files a motion to dismiss, assailing the jurisdiction of the court over his person, together with other grounds raised therein, is not deemed to have appeared voluntarily before the court. What the rule on voluntary appearancethe first sentence of the above-quoted rulemeans is that the voluntary appearance of the defendant in court is without qualification, in which case he is deemed to have waived his defense of lack of jurisdiction over his person due to improper service of summons.

The pleadings filed by petitioner in the subject forfeiture cases, however, do not show that she voluntarily appeared without qualification. Petitioner filed the following pleadings in Forfeiture I: (a) motion to dismiss; (b) motion for reconsideration and/or to admit answer; (c) second motion for reconsideration; (d) motion to consolidate forfeiture case with plunder case; and (e) motion to dismiss and/or to quash Forfeiture I. And in Forfeiture II: (a) motion to dismiss and/or to quash Forfeiture II; and (b) motion for partial reconsideration.

The foregoing pleadings, particularly the motions to dismiss, were filed by petitioner solely for special appearance with the purpose of challenging the jurisdiction of the SB over her person and that of

her three children. Petitioner asserts therein that SB did not acquire jurisdiction over her person and of her three children for lack of valid service of summons through improvident substituted service of summons in both Forfeiture I and Forfeiture II. This stance the petitioner never abandoned when she filed her motions for reconsideration, even with a prayer to admit their attached Answer Ex Abundante Ad Cautelam dated January 22, 2005 setting forth affirmative defenses with a claim for damages. And the other subsequent pleadings, likewise, did not abandon her stance and defense of lack of jurisdiction due to improper substituted services of summons in the forfeiture cases. Evidently, from the foregoing Sec. 20, Rule 14 of the 1997 Revised Rules on Civil Procedure, petitioner and her sons did not voluntarily appear before the SB constitutive of or equivalent to service of summons.

Moreover, the leading La Naval Drug Corp. v. Court of Appeals[26] applies to the instant case. Said case elucidates the current view in our jurisdiction that a special appearance before the court challenging its jurisdiction over the person through a motion to dismiss even if the movant invokes other groundsis not tantamount to estoppel or a waiver by the movant of his objection to jurisdiction over his person; and such is not constitutive of a voluntary submission to the jurisdiction of the court.

Thus, it cannot be said that petitioner and her three children voluntarily appeared before the SB to cure the defective substituted services of summons. They are, therefore, not estopped from questioning the jurisdiction of the SB over their persons nor are they deemed to have waived such defense of lack of jurisdiction. Consequently, there being no valid substituted services of summons made, the SB did not acquire jurisdiction over the persons of petitioner and her children. And perforce, the proceedings in the subject forfeiture cases, insofar as petitioner and her three children are concerned, are null and void for lack of jurisdiction. Thus, the order declaring them in default must be set aside and voided insofar as petitioner and her three children are concerned. For the forfeiture case to proceed against them, it is, thus, imperative for the SB to serve anew summons or alias summons on the petitioner and her three children in order to acquire jurisdiction over their persons.

WHEREFORE, the petitions for certiorari and mandamus are PARTIALLY GRANTED. The Sandiganbayan, Fourth Division has not acquired jurisdiction over petitioner Clarita D. Garcia and her three children. The proceedings in Civil Case Nos. 0193 and 0196 before the Sandiganbayan, Fourth Division, insofar as they pertain to petitioner and her three children, are VOID for lack of jurisdiction

over their persons. No costs.

SO ORDERED.

HIRD DIVISION [G.R. No. 133365. September 16, 2003] PLATINUM TOURS AND TRAVEL, INCORPORATED, petitioner, vs. JOSE M. PANLILIO, respondent. DECISION CORONA, J.: Before us is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the January 15, 1998 decision[1] of the Court of Appeals which ruled that: xxx Consequently, the respondent judge committed grave abuse of discretion in allowing the consolidation of Civil Case No. 96-635 with Civil Case No. 94-1634. x x x We also leave it to the respondent Judge to decide whether he will return Civil Case No. 96-635 to Branch 146 or keep it in his docket but should he opt for the latter, he should act on it as a separate case from Civil Case No. 94-1634. WHEREFORE, the petition is partially granted and the assailed Orders dated July 23, 1996 and September 17, 1996, allowing the consolidation of Civil Case No. 96-635 with Civil Case No. 94-1634 and denying petitioners motion for reconsideration, respectively, are ANNULLED and SET ASIDE, with the consequent complete severance of the two (2) cases.[2] The facts follow: On April 27, 1994, petitioner Platinum Tours and Travel Inc. (Platinum) filed a complaint for a sum of money with damages against Pan Asiatic Travel Corporation (PATC) and its president Nelida G. Galvez. Platinum sought to collect payment for the airline tickets which PATC bought from it. The case was docketed as Civil Case No. 94-1634. On October 24, 1994, the Regional Trial Court of Makati City, Branch 62, rendered a judgment[3] by default in favor of Platinum and ordered PATC and Nelida G. Galvez to solidarily pay Platinum actual damages of P 359,621.03 with legal interest, P 50,000 attorneys fees and cost of suit. On February 10, 1995, a writ of execution was issued on motion of Platinum. Pursuant to the writ, Manila Polo Club Proprietary Membership Certificate No. 2133 in the name of Nelida G. Galvez was levied upon and sold for P479,888.48 to a certain Ma. Rosario Khoo. On June 2, 1995, private respondent Jose M. Panlilio filed a motion to intervene in Civil Case No. 941634. Panlilio claimed that, in October 1992, Galvez had executed in his favor a chattel mortgage over her shares of stock in the Manila Polo Club to secure her P1 million loan and that Galvez had already delivered to him the stock certificates valued at P5 million. On June 9, 1995, the trial court denied Panlilios motion for intervention: Submitted for resolution is Jose M. Panlilios Motion for Intervention dated May 31, 1995. This Court has to deny the motion because (1) a decision had already been rendered in this case and that the only matters at issue is the propriety of the execution; (2) it will only delay or prejudice the adjudication of the rights of the original parties; and, (3) the Intervenors rights may be fully protected in a separate action.[4] On January 29, 1996, the trial court declared the execution sale null and void due to irregularities in the

conduct thereof. On May 3, 1996, Panlilio filed against Galvez a collection case with application for a writ of preliminary attachment of the disputed Manila Polo Club shares, docketed as Civil Case No. 96-365. The case was raffled to Branch 146 of the Regional Trial Court of Makati City[5]. In the meantime, Panlilio again attempted to intervene in Civil Case No. 94-1634, this time by incorporating in his complaint a motion to consolidate Civil Case No. 96-365 and Civil Case No. 94-1634. On June 13, 1996, Judge Salvador Tensuan of Branch 146 granted the motion for consolidation on condition that Judge Roberto Diokno of Branch 62, who was trying Civil Case No. 94-1634, would not object thereto. Judge Diokno later issued an order, dated July 23, 1996, allowing the consolidation of the two cases and setting for hearing Panlilios application for a writ of preliminary attachment. Platinum, as plaintiff in Civil Case No. 94-1634, moved to reconsider the July 23, 1996 order of Judge Diokno but its motion was denied. On January 31, 1997, Platinum filed a petition for certiorari at the Court of Appeals assailing, among others, the July 23, 1996 order of Judge Diokno allowing the consolidation of Civil Case No. 96-365 and Civil Case No. 94-1634. In a decision dated January 15, 1998, the Court of Appeals annulled the assailed order but left it to Judge Diokno to decide whether to return Civil Case No. 96-365 to Judge Tensuan in Branch 146, or to keep it in his docket and decide it as a separate case. Platinum filed a motion for partial reconsideration of the decision of the Court of Appeals, praying that Civil Case No. 96-365 be returned to Branch 146 or re-raffled to another RTC Branch of Makati. However, the motion was denied by the Court of Appeals on April 2, 1998. In the instant petition, Platinum insists that the Makati RTC, Branch 62, has no jurisdiction to try Civil Case No. 96-365. It argues that, when Judge Dioknos July 23, 1996 order allowing the consolidation of the two cases was annulled and set aside, RTC Branch 62s basis for acquiring jurisdiction over Civil Case No. 96-365 was likewise extinguished. We disagree. Jurisdiction is the power and authority of the court to hear, try and decide a case.[6] In general, jurisdiction may either be over the nature of the action, over the subject matter, over the person of the defendants or over the issues framed in the pleadings. Jurisdiction over the nature of the action and subject matter is conferred by law. It is determined by the allegations of the complaint, irrespective of whether or not the plaintiff is entitled to recover upon all or some of the claims asserted therein.[7] Jurisdiction over the person of the plaintiff is acquired from the time he files his complaint; while jurisdiction over the person of the defendant is acquired by his voluntary appearance in court and his submission to its authority, or by the coercive power of legal processes exerted over his person. Since jurisdiction is the power to hear and determine a particular case, it does not depend upon the regularity of the exercise by the court of that power or on the correctness of its decisions. In the case at bar, there is no doubt that Panlilios collection case docketed as Civil Case No. 96-365 falls within the jurisdiction of the RTC of Makati, Branch 62. The fact that the Court of Appeals subsequently annulled Judge Dioknos order granting the consolidation of Civil Case No. 96-365 and Civil Case No. 94-1634, did not affect the jurisdiction of the court which issued the said order. Jurisdiction should be distinguished from the exercise of jurisdiction. Jurisdiction refers to the authority to decide a case, not the orders or the decision rendered therein. Accordingly, where a court

has jurisdiction over the person and the subject matter, as in the instant case, the decision on all questions arising from the case is but an exercise of such jurisdiction. Any error that the court may commit in the exercise of its jurisdiction is merely an error of judgment which does not affect its authority to decide the case, much less divest the court of the jurisdiction over the case. We find no reversible error on the part of the Court of Appeals when it left to Judge Diokno of Branch 62 the discretion on whether to return Civil Case No. 96-365 to Branch 146 or to decide the same as a separate case in his own sala. Moreover, we find the instant petition premature and speculative. Had Platinum waited until Judge Diokno decided on what to do with Civil Case No. 96-365, the parties would have been spared the trouble and the expense of seeking recourse from this Court, which in turn would have had one petition less in its docket. The unfounded fear that Civil Case No. 96-365 would unduly delay the final resolution of Civil Case No. 94-1634, if the former were retained by Branch 62, made Platinum act with haste. In so doing, it wasted the precious time not only of the parties but also of this Court. All told, nothing legally prevents the RTC of Makati, Branch 62, from proceeding with Civil Case No. 96-365. Should it decide to retain the case, it is hereby directed to resolve the same with dispatch. WHEREFORE, petition is hereby DENIED. SO ORDERED.

THIRD DIVISION [G.R. No. 139791. December 12, 2003] MANILA BANKERS LIFE INSURANCE CORPORATION, petitioner, vs. EDDY NG KOK WEI, respondent. DECISION SANDOVAL-GUTIERREZ, J.: Before us is a petition for review on certiorari assailing the Decision[1] dated March 26, 1999 and Resolution[2] dated August 5, 1999 of the Court of Appeals in CA-G.R. CV No. 40504, entitled Eddy Ng Kok Wei vs. Manila Bankers Life Insurance Corporation. The factual antecedents as borne by the records are: Eddy Ng Kok Wei, respondent, is a Singaporean businessman who ventured into investing in the Philippines. On November 29, 1988, respondent, in a Letter of Intent addressed to Manila Bankers Life Insurance Corporation, petitioner, expressed his intention to purchase a condominium unit at Valle Verde Terraces. Subsequently or on December 5, 1988, respondent paid petitioner a reservation fee of P50,000.00 for the purchase of a 46-square meter condominium unit (Unit 703) valued at P860,922.00. On January 16, 1989, respondent paid 90% of the purchase price in the sum of P729,830.00. Consequently, petitioner, through its President, Mr. Antonio G. Puyat, executed a Contract to Sell in favor of the respondent. The contract expressly states that the subject condominium unit shall substantially be completed and delivered to the respondent within fifteen (15) months from February 8, 1989 or on May 8, 1990, and that (S)hould there be no substantial completion and fail(ure) to deliver the unit on the date specified, a penalty of 1% of the total amount paid (by respondent) shall be charged against (petitioner). Considering that the stipulated 15-month period was at hand, respondent returned to the Philippines sometime in April, 1990. In a letter dated April 5, 1990, petitioner, through its Senior Assistant Vice-President, Mr. Mario G. Zavalla, informed respondent of the substantial completion of his condominium unit, however, due to various uncontrollable forces (such as coup d etat attempts, typhoon and steel and cement shortage), the final turnover is reset to May 31, 1990. Meanwhile, on July 5, 1990, upon receipt of petitioners notice of delivery dated May 31, 1990, respondent again flew back to Manila. He found the unit still uninhabitable for lack of water and electric facilities. Once more, petitioner issued another notice to move-in addressed to its building administrator advising the latter that respondent is scheduled to move in on August 22, 1990. On October 5, 1990, respondent returned to the Philippines only to find that his condominium unit was still unlivable. Exasperated, he was constrained to send petitioner a letter dated November 21, 1990 demanding payment for the damages he sustained. But petitioner ignored such demand, prompting respondent to file with the Regional Trial Court, Branch 150, Makati City, a complaint against the former for specific performance and damages, docketed as Civil Case No. 90-3440. Meanwhile, during the pendency of the case, respondent finally accepted the condominium unit and on April 12, 1991, occupied the same. Thus, respondents cause of action has been limited to his claim for damages.

On December 18, 1992, the trial court rendered a Decision[3] finding the petitioner liable for payment of damages due to the delay in the performance of its obligation to the respondent. The dispositive portion reads: WHEREFORE, judgment is hereby rendered in favor of plaintiff and against defendant, ordering Manila Bankers Life Insurance Corporation to pay plaintiff Eddy Ng Kok Wei the following: 1. 2. 3. 4. One percent (1%) of the total amount plaintiff paid defendant; P100,000.00 as moral damages; P50,000.00 as exemplary damages; P25,000.00 by way of attorneys fees; and

Cost of suit. SO ORDERED. On appeal, the Court of Appeals, in a Decision dated March 26, 1999, affirmed in toto the trial courts award of damages in favor of the respondent. Unsatisfied, petitioner filed a motion for reconsideration but was denied by the Appellate Court in a Resolution dated August 5, 1999. Hence, this petition for review on certiorari. Petitioner contends that the trial court has no jurisdiction over the instant case; and that the Court of Appeals erred in affirming the trial courts finding that petitioner incurred unreasonable delay in the delivery of the condominium unit to respondent. On petitioners contention that the trial court has no jurisdiction over the instant case, Section 1 (c) of Presidential Decree No. 1344, as amended, provides: SECTION 1. In the exercise of its functions to regulate the real estate trade and business and in addition to its powers provided for in Presidential Decree No. 957, the National Housing Authority [now Housing and Land Use Regulatory Board (HLURB)][4] shall have exclusive jurisdiction to hear and decide cases of the following nature: xxx C. Cases involving specific performance of contractual and statutory obligations filed by buyers of subdivision lots or condominium units against the owner, developer, dealer, broker or salesman. x x x. Pursuant to the above provisions, it is the HLURB which has jurisdiction over the instant case. We have consistently held that complaints for specific performance with damages by a lot or condominium unit buyer against the owner or developer falls under the exclusive jurisdiction of the HLURB.[5] While it may be true that the trial court is without jurisdiction over the case, petitioners active participation in the proceedings estopped it from assailing such lack of it. We have held that it is an undesirable practice of a party participating in the proceedings and submitting its case for decision and then accepting the judgment, only if favorable, and attacking it for lack of jurisdiction, when adverse. [6] Here, petitioner failed to raise the question of jurisdiction before the trial court and the Appellate Court. In effect, petitioner confirmed and ratified the trial courts jurisdiction over this case. Certainly, it is now in estoppel and can no longer question the trial courts jurisdiction. On petitioners claim that it did not incur delay, suffice it to say that this is a factual issue. Time and

again, we have ruled that the factual findings of the trial court are given weight when supported by substantial evidence and carries more weight when affirmed by the Court of Appeals.[7] Whether or not petitioner incurred delay and thus, liable to pay damages as a result thereof, are indeed factual questions. The jurisdiction of this Court in a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as amended, is limited to reviewing only errors of law, not of fact, unless the factual findings being assailed are not supported by evidence on record or the impugned judgment is based on a misapprehension of facts.[8] These exceptions are not present here. WHEREFORE, the petition is DENIED. The assailed Decision dated March 26, 1999 and Resolution dated August 5, 1999 of the Court of Appeals are hereby AFFIRMED IN TOTO. Costs against the petitioner. SO ORDERED.

Republic SUPREME Manila

of

the

Philippines COURT

SECOND DIVISION G.R. No. 155206 October 28, 2003 GOVERNMENT SERVICE INSURANCE SYSTEM, petitioner, vs. EDUARDO M. SANTIAGO, substituted by his widow ROSARIO ENRIQUEZ VDA. DE SANTIAGO, respondent. DECISION CALLEJO, SR., J.: Before the Court is the petition for review on certiorari filed by the Government Service Insurance System (GSIS), seeking to reverse and set aside the Decision1 dated February 22, 2002 of the Court of Appeals (CA) in CA-G.R. CV No. 62309 and its Resolution dated September 5, 2002 denying its motion for reconsideration. The antecedent facts of the case, as culled from the assailed CA decision and that of the trial court, are as follows: Deceased spouses Jose C. Zulueta and Soledad Ramos obtained various loans from defendant GSIS for (the) period September, 1956 to October, 1957 in the total amount of P3,117,000.00 secured by real estate mortgages over parcels of land covered by TCT Nos. 26105, 37177 and 50365. The Zuluetas failed to pay their loans to defendant GSIS and the latter foreclosed the real estate mortgages dated September 25, 1956, March 6, 1957, April 4, 1957 and October 15, 1957. On August 14, 1974, the mortgaged properties were sold at public auction by defendant GSIS submitting a bid price of P5,229,927.84. Not all lots covered by the mortgaged titles, however, were sold. Ninety-one (91) lots were expressly excluded from the auction since the lots were sufficient to pay for all the mortgage debts. A Certificate of Sale (Annex "F," Records, Vol. I, pp. 23-28) was issued by then Provincial Sheriff Nicanor D. Salaysay. The Certificate of Sale dated August 14, 1974 had been annotated and inscribed in TCT Nos. 26105, 37177 and 50356, with the following notations: "(T)he following lots which form part of this title (TCT No. 26105) are not covered by the mortgage contract due to sale to third parties and donation to the government: 50-H-5-C-9-J-65-H-8, 50-H-5-C-9J-M-7; 50-H-5-C-9-J-65-H-5; 1 lots Nos. 1 to 13, Block No. 1 -6,138 sq.m. 2. Lots Nos. 1 to 11, Block No. 2 4,660 sq.m. 3. Lot No. 15, Block No. 3 487 sq.m. 4. Lot No. 17, Block No. 4 263 sq.m. 5. Lot No. 1, Block No. 7 402 sq.m. 6. Road Lots Nos. 1, 2, 3, & 4 2,747 sq.m." In another "NOTE: The following lots in the Antonio Subdivision were already released by the GSIS and therefore are not included in this sale, namely: LOT NO. 1, 6, 7, 8, 9, 10, and 13 (Old Plan) Block I; 1, 3, 4, 5, 7, 8 and 10 (Old Plan) Block II; 3, 10, 12 and 13 (New Plan) Block I (Old Plan) Block III; 7, 14 and 20 (New Plan) Block III (Old Plan) Block V; 13 and 20 (New Plan) Block IV (Old Plan) Block VI; 1, 2, 3 and 10 (New Plan) Block V (Old Plan) Block VII; 1, 5, 8, 15, 26 and 27 (New Plan) Block VI (Old Plan) Block VIII; 7, 12 and 20 (New Plan) Block VII (Old Plan) Block II; 1, 4 and 6 (New Plan) Block VIII (Old Plan) Block X; 5 (New Plan) Block X (Old Plan) Block ZXII; 6 (New Plan) Block XI (Old Plan) Block XII; 1, Block 9; 12 Block 1; 11 Block 2; 19 Block 1; 10 Block 6; 23

Block 3." And the lots on "ADDITIONAL EXCLUSION FROM PUBLIC SALE" are "LOTS NO. 6 Block 4; 2 Block 2; 5 Block 5; 1, 2 and 3 Block 11, 1, 2, 3 and 4 Block 10; 5 Block 11 (New); 1 Block 3; 5 Block 1; 15 Block 7; 11 Block 9; 13 Block 5; 12 Block 5; 3 Block 10; 6." On November 25, 1975, an Affidavit of Consolidation of Ownership (Annex "G," Records, Vol. I, pp. 29-31) was executed by defendant GSIS over Zuluetas lots, including the lots, which as earlier stated, were already excluded from the foreclosure. On March 6, 1980, defendant GSIS sold the foreclosed properties to Yorkstown Development Corporation which sale was disapproved by the Office of the President of the Philippines. The sold properties were returned to defendant GSIS. The Register of Deeds of Rizal cancelled the land titles issued to Yorkstown Development Corporation. On July 2, 1980, TCT No. 23552 was issued cancelling TCT No. 21926; TCT No. 23553 cancelled TCT No. 21925; and TCT No. 23554 cancelling TCT No. 21924, all in the name of defendant GSIS.1awphi1.nt After defendant GSIS had re-acquired the properties sold to Yorkstown Development Corporation, it began disposing the foreclosed lots including the excluded ones. On April 7, 1990, representative Eduardo Santiago and then plaintiff Antonio Vic Zulueta executed an agreement whereby Zulueta transferred all his rights and interests over the excluded lots. Plaintiff Eduardo Santiagos lawyer, Atty. Wenceslao B. Trinidad, wrote a demand letter dated May 11, 1989 (Annex "H," Records, Vol. I, pp. 32-33) to defendant GSIS asking for the return of the eighty-one (81) excluded lots.2 On May 7, 1990, Antonio Vic Zulueta, represented by Eduardo M. Santiago, filed with the Regional Trial Court (RTC) of Pasig City, Branch 71, a complaint for reconveyance of real estate against the GSIS. Spouses Alfeo and Nenita Escasa, Manuel III and Sylvia G. Urbano, and Marciana P. Gonzales and the heirs of Mamerto Gonzales moved to be included as intervenors and filed their respective answers in intervention. Subsequently, the petitioner, as defendant therein, filed its answer alleging inter alia that the action was barred by the statute of limitations and/or laches and that the complaint stated no cause of action. Subsequently, Zulueta was substituted by Santiago as the plaintiff in the complaint a quo. Upon the death of Santiago on March 6, 1996, he was substituted by his widow, Rosario Enriquez Vda. de Santiago, as the plaintiff. After due trial, the RTC rendered judgment against the petitioner ordering it to reconvey to the respondent, Rosario Enriquez Vda. de Santiago, in substitution of her deceased husband Eduardo, the seventy-eight lots excluded from the foreclosure sale. 1awphi1.nt The dispositive portion of the RTC decision reads: WHEREFORE, judgment is hereby rendered in favor of plaintiff and against the defendant: 1. Ordering defendant to reconvey to plaintiff the seventy-eight (78) lots released and excluded from the foreclosure sale including the additional exclusion from the public sale, namely: a. Lot Nos. 1, 6, 7, 8, 0, 10, 13, Block I (Old Plan). b. Lot Nos. 1, 3, 4, 5, 7, 8 and 10, Block II (Old Plan). c. Lot Nos. 3, 10, 12, and 13, Block I (New Plan), Block III (Old Plan), d. Lot Nos. 7, 14 and 20, Block III (New Plan), Block V (Old Plan). e. Lot Nos. 13 and 20, Block IV (New Plan), Block VI (Old Plan).

f. Lot Nos. 1, 2, 3 and 10, Block V (New Plan), Block VII (Old Plan). g. Lot Nos. 1, 5, 8, 15, 26 and 27, Block VI (New Plan), Block VIII (Old Plan). h. Lot Nos. 7 and 12, Block VII (New Plan), Block II (Old Plan). i. Lot Nos. 1, 4 and 6, Block VIII (New Plan), Block X (Old Plan). j. Lot 5, Block X (New Plan), Block XII (Old Plan). k. Lot 6, Block XI (New Plan), Block XII (Old Plan). l. Lots 2, 5, 12 and 15, Block I. m. Lots 6, 9 and 11, Block 2. n. Lots 1, 5, 6, 7, 16 and 23, Block 3. o. Lot 6, Block 4. p. Lots 5, 12, 13 and 24, Block 5. q. Lots 10 and 16, Block 6. r. Lots 6 and 15, Block 7. s. Lots 13, 24, 28 and 29, Block 8. t. Lots 1, 11, 17 and 22, Block 9. u. Lots 1, 2, 3 and 4, Block 10. v. Lots 1, 2, 3 and 5 (New), Block 11. 2. Ordering defendant to pay plaintiff, if the seventy-eight (78) excluded lots could not be reconveyed, the fair market value of each of said lots. 3. Ordering the Registry of Deeds of Pasig City to cancel the land titles covering the excluded lots in the name of defendant or any of its successors-in-interest including all derivative titles therefrom and to issue new land titles in plaintiffs name. 4. Ordering the Registry of Deeds of Pasig City to cancel the Notices of Lis Pendens inscribed in TCT No. PT-80342 under Entry No. PT-12267/T-23554; TCT No. 81812 under Entry No. PT12267/T-23554; and TCT No. PT-84913 under Entry No. PT-12267/T-23554. 5. Costs of suit.3 The petitioner elevated the case to the CA which rendered the assailed decision affirming that of the RTC. The dispositive portion of the assailed decision reads: WHEREFORE, premises considered, the herein appeal is DISMISSED for lack of merit. The Decision of December 17, 1997 of Branch 71 of the Regional Trial Court of Pasig City is hereby AFFIRMED.4 The petitioner moved for a reconsideration of the aforesaid decision but the same was denied in the assailed CA Resolution of September 5, 2002. The petitioner now comes to this Court alleging that: THE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR IN RULING THAT A) PETITIONER WAS GUILTY OF BAD FAITH WHEN IN TRUTH AND IN FACT, THERE WAS NO SUFFICIENT GROUND TO SUPPORT SUCH CONCLUSION; AND B) THERE WAS NO PRESCRIPTION IN THIS CASE.5

In its petition, the petitioner maintains that it did not act in bad faith when it erroneously included in its certificate of sale, and subsequently consolidated the titles in its name over the seventy-eight lots ("subject lots") that were excluded from the foreclosure sale. There was no proof of bad faith nor could fraud or malice be attributed to the petitioner when it erroneously caused the issuance of certificates of title over the subject lots despite the fact that these were expressly excluded from the foreclosure sale. The petitioner asserts that the action for reconveyance instituted by the respondent had already prescribed after the lapse of ten years from November 25, 1975 when the petitioner consolidated its ownership over the subject lots. According to the petitioner, an action for reconveyance based on implied or constructive trust prescribes in ten years from the time of its creation or upon the alleged fraudulent registration of the property. In this case, when the action was instituted on May 7, 1990, more than fourteen years had already lapsed. Thus, the petitioner contends that the same was already barred by prescription as well as laches. The petitioner likewise takes exception to the holding of the trial court and the CA that it (the petitioner) failed to apprise or return to the Zuluetas, the respondents predecessors-in-interest, the seventy-eight lots excluded from the foreclosure sale because the petitioner had no such obligation under the pertinent loan and mortgage agreement. The petitioners arguments fail to persuade.1awphi1.nt At the outset, it bears emphasis that the jurisdiction of this Court in a petition for review on certiorari under Rule 45 of the Rules of Court, as amended, is limited to reviewing only errors of law. This Court is not a trier of facts. Case law has it that the findings of the trial court especially when affirmed by the CA are binding and conclusive upon this Court. Although there are exceptions to the said rule, we find no reason to deviate therefrom.6 By assailing the findings of facts of the trial court as affirmed by the CA, that it acted in bad faith, the petitioner thereby raised questions of facts in its petition. Nonetheless, even if we indulged the petition and delved into the factual issues, we find the petition barren of merit. That the petitioner acted in bad faith in consolidating ownership and causing the issuance of titles in its name over the subject lots, notwithstanding that these were expressly excluded from the foreclosure sale was the uniform ruling of the trial court and appellate court. As declared by the CA: The acts of defendant-appellant GSIS in concealing from the Zuluetas [the respondents predecessorsin-interest] the existence of these lots, in failing to notify or apprise the spouses Zulueta about the excluded lots from the time it consolidated its titles on their foreclosed properties in 1975, in failing to inform them when it entered into a contract of sale of the foreclosed properties to Yorkstown Development Corporation in 1980 as well as when the said sale was revoked by then President Ferdinand E. Marcos during the same year demonstrated a clear effort on its part to defraud the spouses Zulueta and appropriate for itself the subject properties. Even if titles over the lots had been issued in the name of the defendant-appellant, still it could not legally claim ownership and absolute dominion over them because indefeasibility of title under the Torrens system does not attach to titles secured by fraud or misrepresentation. The fraud committed by defendant-appellant in the form of concealment of the existence of said lots and failure to return the same to the real owners after their exclusion from the foreclosure sale made defendant-appellant holders in bad faith. It is well-settled that a holder in bad faith of a certificate of title is not entitled to the protection of the law for the law cannot be used as a shield for fraud.7 The Court agrees with the findings and conclusion of the trial court and the CA. The petitioner is not an ordinary mortgagee. It is a government financial institution and, like banks, is expected to exercise greater care and prudence in its dealings, including those involving registered lands.8 The Courts

ruling in Rural Bank of Compostela v. CA9 is apropos: Banks, indeed, should exercise more care and prudence in dealing even with registered lands, than private individuals, for their business is one affected with public interest, keeping in trust money belonging to their depositors, which they should guard against loss by not committing any act of negligence which amounts to lack of good faith by which they would be denied the protective mantle of land registration statute, Act [No.] 496, extended only to purchasers for value and in good faith, as well as to mortgagees of the same character and description.10 Due diligence required of banks extend even to persons, or institutions like the petitioner, regularly engaged in the business of lending money secured by real estate mortgages.11 In this case, the petitioner executed an affidavit in consolidating its ownership and causing the issuance of titles in its name over the subject lots despite the fact that these were expressly excluded from the foreclosure sale. By so doing, the petitioner acted in gross and evident bad faith. It cannot feign ignorance of the fact that the subject lots were excluded from the sale at public auction. At the least, its act constituted gross negligence amounting to bad faith. Further, as found by the CA, the petitioners acts of concealing the existence of these lots, its failure to return them to the Zuluetas and even its attempt to sell them to a third party is proof of the petitioners intent to defraud the Zuluetas and appropriate for itself the subject lots. On the issue of prescription, generally, an action for reconveyance of real property based on fraud prescribes in four years from the discovery of fraud; such discovery is deemed to have taken place upon the issuance of the certificate of title over the property. Registration of real property is a constructive notice to all persons and, thus, the four-year period shall be counted therefrom.12 On the other hand, Article 1456 of the Civil Code provides: Art. 1456. If property is acquired through mistake or fraud, the person obtaining it is, by force of law, considered a trustee of an implied trust for the benefit of the person from whom the property comes. An action for reconveyance based on implied or constructive trust prescribes in ten years from the alleged fraudulent registration or date of issuance of the certificate of title over the property.13 The petitioners defense of prescription is untenable. As held by the CA, the general rule that the discovery of fraud is deemed to have taken place upon the registration of real property because it is "considered a constructive notice to all persons" does not apply in this case. The CA correctly cited the cases of Adille v. Court of Appeals14 and Samonte v. Court of Appeals,15 where this Court reckoned the prescriptive period for the filing of the action for reconveyance based on implied trust from the actual discovery of fraud. In ruling that the action had not yet prescribed despite the fact that more than ten years had lapsed between the date of registration and the institution of the action for reconveyance, the Court in Adille ratiocinated: It is true that registration under the Torrens system is constructive notice of title, but it has likewise been our holding that the Torrens title does not furnish a shield for fraud. It is therefore no argument to say that the act of registration is equivalent to notice of repudiation, assuming there was one, notwithstanding the long-standing rule that registration operates as a universal notice of title. For the same reason, we cannot dismiss private respondents claims commenced in 1974 over the estate registered in 1955. While actions to enforce a constructive trust prescribes in ten years, reckoned from the date of the registration of the property, we, as we said, are not prepared to count the period from such a date in this case. We note the petitioners sub rosa efforts to get hold of the property exclusively for himself beginning with his fraudulent misrepresentation in his unilateral affidavit of extrajudicial

settlement that he is "the only heir and child of his mother Feliza with the consequence that he was able to secure title in his name [alone]." Accordingly, we hold that the right of the private respondents commenced from the time they actually discovered the petitioners act of defraudation. According to the respondent Court of Appeals, they "came to know [of it] apparently only during the progress of the litigation." Hence, prescription is not a bar.16 The above ruling was reiterated in the more recent case of Samonte. In this case, as established by the CA, the respondent actually discovered the fraudulent act of the petitioner only in 1989: ... [T]he prescriptive period of the action is to be reckoned from the time plaintiff-appellee (then Eduardo M. Santiago) had actually discovered the fraudulent act of defendant-appellant which was, as borne out by the records, only in 1989. Plaintiff-appellee Eduardo M. Santiago categorically testified (TSN of July 11, 1995, pp. 14-15) that he came to know that there were 91 excluded lots in Antonio Village which were foreclosed by the GSIS and included in its consolidation of ownership in 1975 when, in 1989, he and Antonio Vic Zulueta discussed it and he was given by Zulueta a special power of attorney to represent him to recover the subject properties from GSIS. The complaint for reconveyance was filed barely a year from the discovery of the fraud.17 Following the Courts pronouncements in Adille and Samonte, the institution of the action for reconveyance in the court a quo in 1990 was thus well within the prescriptive period. Having acted in bad faith in securing titles over the subject lots, the petitioner is a holder in bad faith of certificates of title over the subject lots. The petitioner is not entitled to the protection of the law for the law cannot be used as a shield for frauds.18 Contrary to its claim, the petitioner unarguably had the legal duty to return the subject lots to the Zuluetas. The petitioners attempts to justify its omission by insisting that it had no such duty under the mortgage contract is obviously clutching at straw. Article 22 of the Civil Code explicitly provides that "every person who, through an act of performance by another, or any other means, acquires or comes into possession of something at the expense of the latter without just or legal ground, shall return the same to him." WHEREFORE, the petition is DENIED for lack of merit. 1a\^/phi1.net The assailed Decision dated February 22, 2002 and Resolution dated September 5, 2002 of the Court of Appeals in CA-G.R. CV No. 62309 are AFFIRMED IN TOTO. Costs against the petitioner. SO ORDERED.

THIRD DIVISION [G.R. No. 151149. September 7, 2004] GEORGE KATON, petitioner, vs. MANUEL PALANCA JR., LORENZO AGUSTIN, JESUS GAPILANGO and JUAN FRESNILLO, respondents. DECISION PANGANIBAN, J.: Where prescription, lack of jurisdiction or failure to state a cause of action clearly appear from the complaint filed with the trial court, the action may be dismissed motu proprio by the Court of Appeals, even if the case has been elevated for review on different grounds. Verily, the dismissal of such cases appropriately ends useless litigations. The Case Before us is a Petition for Review[1] under Rule 45 of the Rules of Court, assailing the December 8, 2000 Decision[2] and the November 20, 2001 Resolution[3] of the Court of Appeals in CA-GR SP No. 57496. The assailed Decision disposed as follows: Assuming that petitioner is correct in saying that he has the exclusive right in applying for the patent over the land in question, it appears that his action is already barred by laches because he slept on his alleged right for almost 23 years from the time the original certificate of title has been issued to respondent Manuel Palanca, Jr., or after 35 years from the time the land was certified as agricultural land. In addition, the proper party in the annulment of patents or titles acquired through fraud is the State; thus, the petitioners action is deemed misplaced as he really does not have any right to assert or protect. What he had during the time he requested for the re-classification of the land was the privilege of applying for the patent over the same upon the lands conversion from forest to agricultural. WHEREFORE, the petition is hereby DISMISSED. No pronouncement as to cost.[4] The assailed Resolution, on the other hand, denied the Motion for Reconsideration filed by petitioner. It affirmed the RTCs dismissal of his Complaint in Civil Case No. 3231, not on the grounds relied upon by the trial court, but because of prescription and lack of jurisdiction. The Antecedent Facts The CA narrates the antecedent facts as follows: On August 2, 1963, herein [P]etitioner [George Katon] filed a request with the District Office of the Bureau of Forestry in Puerto Princesa, Palawan, for the re-classification of a piece of real property known as Sombrero Island, located in Tagpait, Aborlan, Palawan, which consists of approximately 18 hectares. Said property is within Timberland Block of LC Project No. 10-C of Aborlan, Palawan, per BF Map LC No. 1582. Thereafter, the Bureau of Forestry District Office, Puerto Princesa, Palawan, ordered the inspection, investigation and survey of the land subject of the petitioners request for eventual conversion or reclassification from forest to agricultural land, and thereafter for George Katon to apply for a homestead patent. Gabriel Mandocdoc (now retired Land Classification Investigator) undertook the investigation, inspection and survey of the area in the presence of the petitioner, his brother Rodolfo Katon (deceased) and his cousin, [R]espondent Manuel Palanca, Jr. During said survey, there were no actual occupants on the island but there were some coconut trees claimed to have been planted by petitioner and [R]espondent Manuel Palanca, Jr. (alleged overseer of petitioner) who went to the island from time

to time to undertake development work, like planting of additional coconut trees. The application for conversion of the whole Sombrero Island was favorably endorsed by the Forestry District Office of Puerto Princesa to its main office in Manila for appropriate action. The names of Felicisimo Corpuz, Clemente Magdayao and Jesus Gapilango and Juan Fresnillo were included in the endorsement as co-applicants of the petitioner. In a letter dated September 23, 1965, then Asst. Director of Forestry R.J.L. Utleg informed the Director of Lands, Manila, that since the subject land was no longer needed for forest purposes, the same is therefore certified and released as agricultural land for disposition under the Public Land Act. Petitioner contends that the whole area known as Sombrero Island had been classified from forest land to agricultural land and certified available for disposition upon his request and at his instance. However, Mr. Lucio Valera, then [l]and investigator of the District Land Office, Puerto Princesa, Palawan, favorably endorsed the request of [R]espondents Manuel Palanca Jr. and Lorenzo Agustin, for authority to survey on November 15, 1965. On November 22, a second endorsement was issued by Palawan District Officer Diomedes De Guzman with specific instruction to survey vacant portions of Sombrero Island for the respondents consisting of five (5) hectares each. On December 10, 1965, Survey Authority No. R III-342-65 was issued authorizing Deputy Public Land Surveyor Eduardo Salvador to survey ten (10) hectares of Sombrero Island for the respondents. On December 23, 1990, [R]espondent Lorenzo Agustin filed a homestead patent application for a portion of the subject island consisting of an area of 4.3 hectares. Records show that on November 8, 1996, [R]espondent Juan Fresnillo filed a homestead patent application for a portion of the island comprising 8.5 hectares. Records also reveal that [R]espondent Jesus Gapilango filed a homestead application on June 8, 1972. Respondent Manuel Palanca, Jr. was issued Homestead Patent No. 145927 and OCT No. G-7089 on March 3, 1977[5] with an area of 6.84 hectares of Sombrero Island. Petitioner assails the validity of the homestead patents and original certificates of title covering certain portions of Sombrero Island issued in favor of respondents on the ground that the same were obtained through fraud. Petitioner prays for the reconveyance of the whole island in his favor. On the other hand, [R]espondent Manuel Palanca, Jr. claims that he himself requested for the reclassification of the island in dispute and that on or about the time of such request, [R]espondents Fresnillo, Palanca and Gapilango already occupied their respective areas and introduced numerous improvements. In addition, Palanca said that petitioner never filed any homestead application for the island. Respondents deny that Gabriel Mandocdoc undertook the inspection and survey of the island. According to Mandocdoc, the island was uninhabited but the respondents insist that they already had their respective occupancy and improvements on the island. Palanca denies that he is a mere overseer of the petitioner because he said he was acting for himself in developing his own area and not as anybodys caretaker. Respondents aver that they are all bona fide and lawful possessors of their respective portions and have declared said portions for taxation purposes and that they have been faithfully paying taxes thereon for twenty years. Respondents contend that the petitioner has no legal capacity to sue insofar as the island is concerned because an action for reconveyance can only be brought by the owner and not a mere homestead applicant and that petitioner is guilty of estoppel by laches for his failure to assert his right over the land for an unreasonable and unexplained period of time. In the instant case, petitioner seeks to nullify the homestead patents and original certificates of title

issued in favor of the respondents covering certain portions of the Sombrero Island as well as the reconveyance of the whole island in his favor. The petitioner claims that he has the exclusive right to file an application for homestead patent over the whole island since it was he who requested for its conversion from forest land to agricultural land.[6] Respondents filed their Answer with Special and/or Affirmative Defenses and Counterclaim in due time. On June 30, 1999, they also filed a Motion to Dismiss on the ground of the alleged defiance by petitioner of the trial courts Order to amend his Complaint so he could thus effect a substitution by the legal heirs of the deceased, Respondent Gapilango. The Motion to Dismiss was granted by the RTC in its Order dated July 29, 1999. Petitioners Motion for Reconsideration of the July 29, 1999 Order was denied by the trial court in its Resolution dated December 17, 1999, for being a third and prohibited motion. In his Petition for Certiorari before the CA, petitioner charged the trial court with grave abuse of discretion on the ground that the denied Motion was his first and only Motion for Reconsideration of the aforesaid Order. Ruling of the Court of Appeals Instead of limiting itself to the allegation of grave abuse of discretion, the CA ruled on the merits. It held that while petitioner had caused the reclassification of Sombrero Island from forest to agricultural land, he never applied for a homestead patent under the Public Land Act. Hence, he never acquired title to that land. The CA added that the annulment and cancellation of a homestead patent and the reversion of the property to the State were matters between the latter and the homestead grantee. Unless and until the government takes steps to annul the grant, the homesteaders right thereto stands. Finally, granting arguendo that petitioner had the exclusive right to apply for a patent to the land in question, he was already barred by laches for having slept on his right for almost 23 years from the time Respondent Palancas title had been issued. In the Assailed Resolution, the CA acknowledged that it had erred when it ruled on the merits of the case. It agreed with petitioner that the trial court had acted without jurisdiction in perfunctorily dismissing his September 10, 1999 Motion for Reconsideration, on the erroneous ground that it was a third and prohibited motion when it was actually only his first motion. Nonetheless, the Complaint was dismissed motu proprio by the challenged Resolution of the CA Special Division of five members with two justices dissenting pursuant to its residual prerogative under Section 1 of Rule 9 of the Rules of Court. From the allegations of the Complaint, the appellate court opined that petitioner clearly had no standing to seek reconveyance of the disputed land, because he neither held title to it nor even applied for a homestead patent. It reiterated that only the State could sue for cancellation of the title issued upon a homestead patent, and for reversion of the land to the public domain. Finally, it ruled that prescription had already barred the action for reconveyance. First, petitioners action was brought 24 years after the issuance of Palancas homestead patent. Under the Public Land Act, such action should have been taken within ten years from the issuance of the homestead certificate of title. Second, it appears from the submission (Annex F of the Complaint) of petitioner himself that Respondents Fresnillo and Palanca had been occupying six hectares of the island since 1965, or 33 years before he took legal steps to assert his right to the property. His action was filed beyond the 30year prescriptive period under Articles 1141 and 1137 of the Civil Code. Hence, this Petition.[7]

Issues In his Memorandum, petitioner raises the following issues: 1. Is the Court of Appeals correct in resolving the Petition for Certiorari based on an issue not raised (the merits of the case) in the Petition? 2. Is the Court of Appeals correct in invoking its alleged residual prerogative under Section 1, Rule 9 of the 1997 Rules of Civil Procedure in resolving the Petition on an issue not raised in the Petition?[8] The Courts Ruling The Petition has no merit. First Issue: Propriety of Ruling on the Merits This is not the first time that petitioner has taken issue with the propriety of the CAs ruling on the merits. He raised it with the appellate court when he moved for reconsideration of its December 8, 2000 Decision. The CA even corrected itself in its November 20, 2001 Resolution, as follows: Upon another review of the case, the Court concedes that it may indeed have lost its way and been waylaid by the variety, complexity and seeming importance of the interests and issues involved in the case below, the apparent reluctance of the judges, five in all, to hear the case, and the volume of the conflicting, often confusing, submissions bearing on incidental matters. We stand corrected.[9] That explanation should have been enough to settle the issue. The CAs Resolution on this point has rendered petitioners issue moot. Hence, there is no need to discuss it further. Suffice it to say that the appellate court indeed acted ultra jurisdictio in ruling on the merits of the case when the only issue that could have been, and was in fact, raised was the alleged grave abuse of discretion committed by the trial court in denying petitioners Motion for Reconsideration. Settled is the doctrine that the sole office of a writ of certiorari is the correction of errors of jurisdiction. Such writ does not include a review of the evidence,[10] more so when no determination of the merits has yet been made by the trial court, as in this case. Second Issue: Dismissal for Prescription and Lack of Jurisdiction Petitioner next submits that the CA erroneously invoked its residual prerogatives under Section 1 of Rule 9 of the Rules of Court when it motu proprio dismissed the Petition for lack of jurisdiction and prescription. According to him, residual prerogative refers to the power that the trial court, in the exercise of its original jurisdiction, may still validly exercise even after perfection of an appeal. It follows that such powers are not possessed by an appellate court. Petitioner has confused what the CA adverted to as its residual prerogatives under Section 1 of Rule 9 of the Rules of Court with the residual jurisdiction of trial courts over cases appealed to the CA. Under Section 1 of Rule 9 of the Rules of Court, defenses and objections not pleaded either in a motion to dismiss or in the answer are deemed waived, except when (1) lack of jurisdiction over the subject matter, (2) litis pendentia, (3) res judicata and (4) prescription are evident from the pleadings or the evidence on record. In the four excepted instances, the court shall motu proprio dismiss the claim or action. In Gumabon v. Larin[11] we explained thus: x x x [T]he motu proprio dismissal of a case was traditionally limited to instances when the court

clearly had no jurisdiction over the subject matter and when the plaintiff did not appear during trial, failed to prosecute his action for an unreasonable length of time or neglected to comply with the rules or with any order of the court. Outside of these instances, any motu proprio dismissal would amount to a violation of the right of the plaintiff to be heard. Except for qualifying and expanding Section 2, Rule 9, and Section 3, Rule 17, of the Revised Rules of Court, the amendatory 1997 Rules of Civil Procedure brought about no radical change. Under the new rules, a court may motu proprio dismiss a claim when it appears from the pleadings or evidence on record that it has no jurisdiction over the subject matter; when there is another cause of action pending between the same parties for the same cause, or where the action is barred by a prior judgment or by statute of limitations. x x x.[12] (Italics supplied) On the other hand, residual jurisdiction is embodied in Section 9 of Rule 41 of the Rules of Court, as follows: SEC. 9. Perfection of appeal; effect thereof. A partys appeal by notice of appeal is deemed perfected as to him upon the filing of the notice of appeal in due time. A partys appeal by record on appeal is deemed perfected as to him with respect to the subject matter thereof upon the approval of the record on appeal filed in due time. In appeals by notice of appeal, the court loses jurisdiction over the case upon the perfection of the appeals filed in due time and the expiration of the time to appeal of the other parties. In appeals by record on appeal, the court loses jurisdiction only over the subject matter thereof upon the approval of the records on appeal filed in due time and the expiration of the time to appeal of the other parties. In either case, prior to the transmittal of the original record or the record on appeal, the court may issue orders for the protection and preservation of the rights of the parties which do not involve any matter litigated by the appeal, approve compromises, permit appeals of indigent litigants, order execution pending appeal in accordance with Section 2 of Rule 39, and allow withdrawal of the appeal. (Italics supplied) The residual jurisdiction of trial courts is available at a stage in which the court is normally deemed to have lost jurisdiction over the case or the subject matter involved in the appeal. This stage is reached upon the perfection of the appeals by the parties or upon the approval of the records on appeal, but prior to the transmittal of the original records or the records on appeal.[13] In either instance, the trial court still retains its so-called residual jurisdiction to issue protective orders, approve compromises, permit appeals of indigent litigants, order execution pending appeal, and allow the withdrawal of the appeal. The CAs motu proprio dismissal of petitioners Complaint could not have been based, therefore, on residual jurisdiction under Rule 41. Undeniably, such order of dismissal was not one for the protection and preservation of the rights of the parties, pending the disposition of the case on appeal. What the CA referred to as residual prerogatives were the general residual powers of the courts to dismiss an action motu proprio upon the grounds mentioned in Section 1 of Rule 9 of the Rules of Court and under authority of Section 2 of Rule 1[14] of the same rules. To be sure, the CA had the excepted instances in mind when it dismissed the Complaint motu proprio on more fundamental grounds directly bearing on the lower courts lack of jurisdiction[15] and for prescription of the action. Indeed, when a court has no jurisdiction over the subject matter, the only power it has is to dismiss the action.[16] Jurisdiction over the subject matter is conferred by law and is determined by the allegations in the

complaint and the character of the relief sought.[17] In his Complaint for Nullification of Applications for Homestead and Original Certificate of Title No. G-7089 and for Reconveyance of Title,[18] petitioner averred: 2. That on November 10, 1965, without the knowledge of [petitioner, Respondent] Manuel Palanca Jr., [petitioners] cousin, in connivance with his co-[respondent], Lorenzo Agustin, x x x fraudulently and in bad faith: 2.1. x x x made the request for authority to survey as a pre-requisite to the filing of an application for homestead patent in his name and that of his Co-[Respondent] Agustin, [despite being] fully aware that [Petitioner] KATON had previously applied or requested for re-classification and certification of the same land from forest land to agricultural land which request was favorably acted upon and approved as mentioned earlier; a clear case of intrinsic fraud and misrepresentation; xxx xxx xxx 2.3. In stating in his application for homestead patent that he was applying for the VACANT PORTION of Sombrero Island where there was none, the same constituted another clear case of fraud and misrepresentation; 3. That the issuance of Homestead Patent No. 145927 and OCT No. G-7089 in the name of [Respondent] Manuel Palanca Jr. and the filing of Homestead Patent Applications in the names of [respondents], Lorenzo Agustin, Jesus Gapilango and Juan Fresnillo[,] having been done fraudulently and in bad faith, are ipso facto null and void and of no effect whatsoever.[19] xxx xxx xxx x x x. By a wrongful act or a willful omission and intending the effects with natural necessity arise knowing from such act or omission, [Respondent Palanca] on account of his blood relation, first degree cousins, trust, interdependence and intimacy is guilty of intrinsic fraud [sic]. x x x.[20] Thereupon, petitioner prayed, among others, for a judgment (1) nullifying the homestead patent applications of Respondents Agustin, Fresnillo and Gapilango as well as Homestead Patent No. 145927 and OCT No. G-7089 in the name of Respondent Palanca; and (2) ordering the director of the Land Management Bureau to reconvey the Sombrero Island to petitioner.[21] The question is, did the Complaint sufficiently allege an action for declaration of nullity of the free patent and certificate of title or, alternatively, for reconveyance? Or did it plead merely for reversion? The Complaint did not sufficiently make a case for any of such actions, over which the trial court could have exercised jurisdiction. In an action for nullification of title or declaration of its nullity, the complaint must contain the following allegations: 1) that the contested land was privately owned by the plaintiff prior to the issuance of the assailed certificate of title to the defendant; and 2) that the defendant perpetuated a fraud or committed a mistake in obtaining a document of title over the parcel of land claimed by the plaintiff.[22] In these cases, the nullity arises not from fraud or deceit, but from the fact that the director of the Land Management Bureau had no jurisdiction to bestow title; hence, the issued patent or certificate of title was void ab initio.[23] In an alternative action for reconveyance, the certificate of title is also respected as incontrovertible, but the transfer of the property or title thereto is sought to be nullified on the ground that it was wrongfully or erroneously registered in the defendants name.[24] As with an annulment of title, a complaint must allege two facts that, if admitted, would entitle the plaintiff to recover title to the disputed land: (1) that the plaintiff was the owner of the land, and (2) that the defendant illegally dispossessed the plaintiff of

the property.[25] Therefore, the defendant who acquired the property through mistake or fraud is bound to hold and reconvey to the plaintiff the property or the title thereto.[26] In the present case, nowhere in the Complaint did petitioner allege that he had previously held title to the land in question. On the contrary, he acknowledged that the disputed island was public land,[27] that it had never been privately titled in his name, and that he had not applied for a homestead under the provisions of the Public Land Act.[28] This Court has held that a complaint by a private party who alleges that a homestead patent was obtained by fraudulent means, and who consequently prays for its annulment, does not state a cause of action; hence, such complaint must be dismissed. [29] Neither can petitioners case be one for reversion. Section 101 of the Public Land Act categorically declares that only the solicitor general or the officer in his stead may institute such an action.[30] A private person may not bring an action for reversion or any other action that would have the effect of canceling a free patent and its derivative title, with the result that the land thereby covered would again form part of the public domain.[31] Thus, when the plaintiff admits in the complaint that the disputed land will revert to the public domain even if the title is canceled or amended, the action is for reversion; and the proper party who may bring action is the government, to which the property will revert.[32] A mere homestead applicant, not being the real party in interest, has no cause of action in a suit for reconveyance.[33] As it is, vested rights over the land applied for under a homestead may be validly claimed only by the applicant, after approval by the director of the Land Management Bureau of the formers final proof of homestead patent. [34] Consequently, the dismissal of the Complaint is proper not only because of lack of jurisdiction, but also because of the utter absence of a cause of action,[35] a defense raised by respondents in their Answer. [36] Section 2 of Rule 3 of the Rules of Court[37] ordains that every action must be prosecuted or defended in the name of the real party in interest, who stands to be benefited or injured by the judgment in the suit. Indeed, one who has no right or interest to protect has no cause of action by which to invoke, as a party-plaintiff, the jurisdiction of the court.[38] Finally, assuming that petitioner is the proper party to bring the action for annulment of title or its reconveyance, the case should still be dismissed for being time-barred.[39] It is not disputed that a homestead patent and an Original Certificate of Title was issued to Palanca on February 21, 1977,[40] while the Complaint was filed only on October 6, 1998. Clearly, the suit was brought way past ten years from the date of the issuance of the Certificate, the prescriptive period for reconveyance of fraudulently registered real property.[41] It must likewise be stressed that Palancas title -- which attained the status of indefeasibility one year from the issuance of the patent and the Certificate of Title in February 1977 -- is no longer open to review on the ground of actual fraud. Ybanez v. Intermediate Appellate Court[42] ruled that a certificate of title, issued under an administrative proceeding pursuant to a homestead patent, is as indefeasible as one issued under a judicial registration proceeding one year from its issuance; provided, however, that the land covered by it is disposable public land, as in this case. In Aldovino v. Alunan,[43] the Court has held that when the plaintiffs own complaint shows clearly that the action has prescribed, such action may be dismissed even if the defense of prescription has not been invoked by the defendant. In Gicano v. Gegato,[44] we also explained thus: "x x x [T]rial courts have authority and discretion to dismiss an action on the ground of prescription when the parties' pleadings or other facts on record show it to be indeed time-barred; (Francisco v. Robles, Feb. 15, 1954; Sison v. McQuaid, 50 O.G. 97; Bambao v. Lednicky, Jan. 28, 1961; Cordova v. Cordova, Jan. 14, 1958; Convets, Inc. v. NDC, Feb. 28, 1958; 32 SCRA 529; Sinaon v. Sorongan, 136

SCRA 408); and it may do so on the basis of a motion to dismiss (Sec. 1,f, Rule 16, Rules of Court), or an answer which sets up such ground as an affirmative defense (Sec. 5, Rule 16), or even if the ground is alleged after judgment on the merits, as in a motion for reconsideration (Ferrer v. Ericta, 84 SCRA 705); or even if the defense has not been asserted at all, as where no statement thereof is found in the pleadings (Garcia v. Mathis, 100 SCRA 250; PNB v. Pacific Commission House, 27 SCRA 766; Chua Lamco v. Dioso, et al., 97 Phil. 821); or where a defendant has been declared in default (PNB v. Perez, 16 SCRA 270). What is essential only, to repeat, is that the facts demonstrating the lapse of the prescriptive period be otherwise sufficiently and satisfactorily apparent on the record; either in the averments of the plaintiff's complaint, or otherwise established by the evidence."[45] (Italics supplied) Clearly then, the CA did not err in dismissing the present case. After all, if and when they are able to do so, courts must endeavor to settle entire controversies before them to prevent future litigations.[46] WHEREFORE, the Petition is hereby DENIED, and the assailed Resolution AFFIRMED. The dismissal of the Complaint in Civil Case No. 3231 is SUSTAINED on the grounds of lack of jurisdiction, failure to state a cause of action and prescription. Costs against petitioner. SO ORDERED.

EN [G.R. No. 182865,

BANC December 24, 2008]

ROMULO F. PECSON, PETITIONER, VS. COMMISSION ON ELECTIONS, DEPARTMENT OF INTERIOR AND LOCAL GOVERNMENT AND LYNDON A. CUNANAN, RESPONDENTS. DECISION BRION, J.: This petition for certiorari - filed by Romulo F. Pecson (Pecson) under Rule 64, in relation with Rule 65 of the Revised Rules of Court - seeks to set aside and annul the Resolution dated May 21, 2008 of the Commission on Elections en banc (COMELEC) in SPR 60-2007.[1] The assailed Resolution nullified the grant (via a Special Order) by the Regional Trial Court ( RTC), Branch 56, Angeles City, of the execution pending appeal of its Decision in the election contest between Pecson and the private respondent Lyndon A. Cunanan (Cunanan), the proclaimed winner in the 2007 mayoralty election in Magalang, Pampanga. THE ANTECEDENTS Pecson and Cunanan were candidates for the mayoralty position in the Municipality of Magalang, Province of Pampanga in the May 2007 elections. On May 17, 2007, Cunanan was proclaimed the winning candidate, garnering a total of 12,592 votes as against Pecson's 12,531, or a margin of 61 votes. Cunanan took his oath and assumed the position of Mayor of Magalang. Soon thereafter, Pecson filed an election protest, docketed as EPE No. 07-51, with the RTC. On November 23, 2007, the RTC rendered a Decision in Pecson's favor. The RTC ruled that Pecson received a total of 14,897 votes as against Cunanan's 13,758 - a vote margin of 1,139. Cunanan received a copy of the Decision on November 26, 2007 and filed a Notice of Appeal the day after. The RTC issued on November 27, 2008 an Order noting the filing of the notice of appeal and the payment of appeal fee and directing the transmittal of the records of the case to the Electoral Contests Adjudication Department (ECAD) of the COMELEC. Pecson, on the other hand, filed on November 28, 2007 an Urgent Motion for Immediate Execution Pending Appeal, claiming that Section 11, Rule 14 of the Rules of Procedure in Election Contests before the Courts Involving Elective Municipal and Barangay Officials[2] (Rules) allows this remedy. The RTC granted Pecson's motion for execution pending appeal via a Special Order dated December 3, 2007 (Special Order) but suspended, pursuant to the Rules, the actual issuance of the writ of execution for twenty (20) days. The Special Order states the following reasons: 1. The result of the judicial revision show[s] that the protestant garnered 14,897 votes

as against protestee's 13,758 votes or a plurality of 1,139 votes. The victory of the protestant is clearly and manifestly established by the rulings and tabulation of results made by the Court x x x; 2. It is settled jurisprudence that execution pending appeal in election cases should be granted "to give as much recognition to the worth of a trial judge's decision as that which is initially ascribed by the law to the proclamation by the board of canvassers." The Court holds that this wisp of judicial wisdom of the Supreme Court enunciated in the Gahol case and subsequent cases citing it is borne by the recognition that the decision of the trial court in an election case is nothing but the court upholding the mandate of the voter, which has as its source no other than the exercise of the constitutional right to vote. While it is true that the protestee can avail of the remedy of appeal before the COMELEC, the Court is more convinced that between upholding the mandate of the electorate of Magalang, Pampanga which is the fruit of the exercise of the constitutional right to vote and a procedural remedy, the Court is more inclined to uphold and give effect to and actualize the mandate of the electorate of Magalang. To the mind of the Court, in granting execution pending appeal the Court is being true to its bounden duty to uphold the exercise of constitutional rights and gives flesh to the mandate of the people. The foregoing is, as far as the Court is concerned, considered far superior circumstance that convinces the Court to grant protestant's motion; 3. Public interest and the will of the electorate must be respected and given meaning; 4. In the case of Navarosa v. Comelec, the Supreme Court held that "In the Gahol case, the Court gave an additional justification for allowing execution pending appeal of decisions of trial courts, thus: Public policy underlies it, x x x [S]omething had to be done to strike the death blow at the pernicious grab-the-proclamation-prolong-theprotest technique often, if not invariably, resorted to by unscrupulous politicians who would render nugatory the people's verdict against them and persist in continuing in an office they very well know they have no legitimate right to hold. x x x." A primordial public interest is served by the grant of the protestant's motion, i.e., to obviate a hollow victory for the duly elected candidate. In the words of Chief Justice Cesar Bengzon, "The well known delay in the adjudication of election protests often gave the successful contestant a mere pyrrhic victory, i.e., a vindication when the term of office is about to expire or has expired." Expectedly, Cunanan moved to reconsider the Order, arguing that the RTC gravely abused its discretion: (1) in ruling that there were good reasons to issue a writ of execution pending appeal; and (2) in entertaining and subsequently granting the motion for execution pending appeal despite the issuance of an order transmitting the records of the case. Thereupon, Cunanan filed with the COMELEC a Petition for Application of Preliminary Injunction with Prayer for Status Quo Ante Order/Temporary Restraining Order (TRO) with Prayer for Immediate Raffle. He argued in his petition that: (1) the RTC Decision did not clearly establish Pecson's victory or his (Cunanan's) defeat - a requirement of Section 11, Rule 14 of the Rules; among other reasons, the number of votes the RTC tallied and tabulated exceeded the number of those who actually voted and the votes cast for the position of Mayor, and (2) the RTC had constructively relinquished its jurisdiction by the issuance of the Order dated November 27, 2007 directing the transmittal of the records of the

case. The Second Division of the COMELEC issued on January 4, 2008 a 60-day TRO directing: (1) the RTC to cease and desist from issuing or causing the issuance of a writ of execution or implementing the Special Order; and (2) Cunanan to continue performing the functions of Mayor of Magalang. In his Answer and/or Opposition, with Prayer for Immediate Lifting of TRO, Pecson argued that: (1) preliminary injunction cannot exist except as part or incident of an independent action, being a mere ancillary remedy that exists only as an incident of the main proceeding; (2) the "petition for application of preliminary injunction," as an original action, should be dismissed outright; and (3) Cunanan is guilty of forum shopping, as he filed a motion for reconsideration of the Special Order simultaneously with the petition filed with the COMELEC. The COMELEC's Second Division denied Cunanan's petition in a Resolution dated March 6, 2008. It ruled that: (1) the resolution of the motion for execution pending appeal is part of the residual jurisdiction of the RTC to settle pending incidents; the motion was filed prior to the expiration of the period to appeal and while the RTC was still in possession of the original record; and (2) there is good reason to justify the execution of the Decision pending appeal, as Pecson's victory was clearly and manifestly established. Ruling on the alleged defect in the RTC count, the Second Division ruled: [A]fter a careful scrutiny of the Decision, We found that the error lies in the trial court's computation of the results. In its Decision, the trial court, to the votes obtained by the party (as per proclamation of the MBOC), deducted the votes per physical count after revision and deducted further the invalid/nullified ballots per the trial court's appreciation and thereafter added the valid claimed ballots per the trial court's appreciation, thus: Votes obtained per proclamation of the MBOC ( -) Votes per physical count (-) Invalid or nullified ballots (+) Valid claimed ballots = Total Votes Obtained The formula used by the trial court is erroneous as it used as its reference the votes obtained by the parties as per the proclamation of the MBOC. It complicated an otherwise simple and straightforward computation, thus leading to the error. The correct formula should have been as follows: Total Number of Uncontested Ballots (+) Valid Contested Ballots (+) Valid Claimed Ballots = Total Votes Obtained Using this formula and applying the figures in pages 744 and 745 of the trial court's Decision, the results will be as follows: For the Petitioner Cunanan Total Number of Uncontested Ballots Add: Valid Contested Ballots Add: Valid Claimed Ballots Total Votes of Petitioner For the Private Respondent (Pecson) Total Number of Uncontested Ballots Add: Valid Contested Ballots 9,656 2,058 36 11,750 9,271 2,827

Add: Valid Claimed Ballots Total Votes of Petitioner

39 12,134

Using the correct formula, private respondent still obtained a plurality of the votes cast and enjoys a margin of 384 votes over the petitioner. Although not as wide as the margin found by the trial court, We are nevertheless convinced that the victory of private respondent has been clearly established in the trial court's decision for the following reasons: First, the error lies merely in the computation and does not put in issue the appreciation and tabulation of votes. The error is purely mathematical which will not involve the opening of ballot boxes or an examination and appreciation of ballots. It is a matter of arithmetic which calls for the mere clerical act of reflecting the true and correct votes of the candidates. Second, the error did not affect the final outcome of the election protest as to which candidate obtained the plurality of the votes cast. We are likewise convinced that the assailed order states good or special reasons justifying the execution pending appeal, to wit: (1) The victory of the protestant was clearly and manifestly established; (2) Execution pending appeal in election cases should be granted to give as much recognition to the worth of a trial judge's decision as that which is initially ascribed by the law to the proclamation by the board of canvassers; (3) Public interest and the will of the electorate must be respected and given meaning; and (4) Public policy underlies it, as something had to be done to strike the death blow at the pernicious grab-the-proclamation-prolong-the-protest technique often, if not invariably resorted to by unscrupulous politicians. Such reasons to Our mind constitute superior circumstances as to warrant the execution of thetrial court's decision pending appeal. Pecson thus asked for the issuance of a writ of execution via an Ex-Parte Motion. Despite Cunanan's opposition, the RTC granted Pecson's motion and issued the writ of execution on March 11, 2008. Pecson thereafter assumed the duties and functions of Mayor of Magalang. The Assailed Resolution

On Cunanan's motion, the COMELEC en banc issued its Resolution dated May 21, 2008 reversing the ruling of the Second Division insofar as it affirmed the RTC's findings of good reasons to execute the decision pending appeal. It affirmed the authority of the RTC to order execution pending appeal; it however nullified the March 11, 2008 writ of execution on the ground that the RTC could no longer issue the writ because it had lost jurisdiction over the case after transmittal of the records and the perfection of the appeals of both Cunanan and Pecson (to be accurate, the lapse of Pecson's period to appeal). On the propriety of executing the RTC Decision pending appeal, the COMELEC en banc ruled that it was not convinced of the good reasons stated by the RTC in its Special Order. It ruled that recognition of the worth of a trial judge's decision, on the one hand, and the right to appeal, including the

Commission's authority to review the decision of the trial court, on the other, requires a balancing act; and not every invocation of public interest will suffice to justify an execution pending appeal. It added that at a stage when the decision of the trial court has yet to attain finality, both the protestee and the protestant are to be considered "presumptive winners." It noted too that the Second Division already cast a doubt on the correctness of the number of votes obtained by the parties after the trial court's revision; thus, the resolution of the pending appeal becomes all the more important. Between two presumptive winners, considering the pending appeal of the election protest to the Commission and public service being the prime consideration, the balance should tilt in favor of non-disruption of government service. The execution of the RTC Decision pending appeal would necessarily entail the unseating of the protestee, resulting not only in the disruption of public service, but also in confusion in running the affairs of the government; a subsequent reversal too of the RTC Decision also results in the unseating of the protestant. This situation ( i.e., the series of turn-over of the seat of power from one presumptive winner to another) cannot but cause irreparable damage to the people of Magalang, and overweighs the reasons asserted by the RTC in its Special Order. In the end, according to the COMELEC, public interest is best served when he who was really voted for the position is proclaimed and adjudged as winner with finality. The Petition and the Prayer for the issuance of a Status Quo Order

In imputing grave abuse of discretion to the COMELEC en banc, Pecson argues that: (1) the RTC Decision clearly showed Pecson's victory; (2) the reasons for the reversal of the RTC Decision practically render impossible a grant of an execution pending appeal; and (3) the RTC correctly found the presence of the requisites for execution pending appeal. Threatened to be unseated, Pecson asked, as interim relief, for the issuance of a Status Quo Order. He claimed that: (1) the Department of Interior and Local Government already recognized (based on the issuance of the assailed Resolution) Cunanan's assumption of office even if the assailed Resolution had not attained finality; and (2) in order to prevent grave and irreparable injury to Pecson and the perpetuation of a travesty of justice, a Status Quo Order must immediately issue. THE COURT'S RULING We find the petition meritorious.

The remedy of executing court decisions pending appeal in election contests is provided under the Rules as follows: SEC. 11. Execution pending appeal. - On motion of the prevailing party with notice to the adverse party, the court, while still in possession of the original records, may, at its discretion, order the execution of the decision in an election contest before the expiration of the period to appeal, subject to the following rules: (a) There must be a motion by the prevailing party with three-day notice to the adverse party. Execution pending appeal shall not issue without prior notice and hearing. There must be good reasons for the execution pending appeal. The court, in a special order, must state the good or special reasons justifying the execution pending appeal. Such reasons must: (1) constitute superior circumstances demanding urgency that will outweigh the injury

or damage should the losing party secure a reversal of the judgment on appeal; and (2) be manifest, in the decision sought to be executed, that the defeat of the protestee or the victory of the protestant has been clearly established. (b) If the court grants execution pending appeal, an aggrieved party shall have twenty working days from notice of the special order within which to secure a restraining order or status quo order from the Supreme Court of the Commission on Elections. The corresponding writ of execution shall issue after twenty days, if no restraining order or status quo order is issued. During such period, the writ of execution pending appeal shall be stayed.[3] This remedy is not new. Under prevailing jurisprudence,[4] the remedy may be resorted to pursuant to the suppletory application of the Rules of Court, specifically its Section 2, Rule 39.[5] What the Rules (A.M. No. 07-4-15-C) has done is to give the availability of the remedy the element of certainty. Significantly, the Rules similarly apply the good reason standard (in fact, the even greater superior circumstances standard) for execution pending appeal under the Rules of Court, making the remedy an exception rather than the rule. At the heart of the present controversy is the question of whether there has been compliance with the standards required for an execution pending appeal in an election contest. As heretofore cited, the RTC found all these requisites present. The Second Division of the COMELEC supported the RTC's ruling, but the COMELEC en banc held a contrary view and nullified the execution pending appeal. This en banc ruling is now before us. Our review of a COMELEC ruling or decision is via a petition for certiorari. This is a limited review on jurisdictional grounds, specifically of the question on whether the COMELEC has jurisdiction, or whether the assailed order or resolution is tainted with grave abuse of discretion amounting to lack or excess of jurisdiction. Correctly understood, grave abuse of discretion is such "capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction, or [an] exercise of power in an arbitrary and despotic manner by reason of passion or personal hostility, or an exercise of judgment so patent and gross as to amount to an evasion of a positive duty or to a virtual refusal to perform the duty enjoined, or to act in a manner not at all in contemplation of law."[6] Because this case is essentially about the implementation of an RTC decision pending appeal, we must first dwell on the writ the RTC issued. The COMELEC ruled in this regard that the writ of execution the RTC issued on March 11, 2008 was void; the RTC could no longerissue the writ because of the lapse of the period for appeal, and because the RTC no longer held the records of the election contest which had then been transmitted to the ECAD-COMELEC. Cunanan argues in his Comment that this ruling has become final and executory because Pecson did not question it in the present petition. In Cunanan's view, the finality of this aspect of the COMELEC ruling renders the issue of the nullification of the Special Order moot and academic, as any ruling we shall render would serve no practical purpose; it can no longer be implemented since the means (obviously referring to the writ the RTC issued on March 11, 2008) of executing the RTC decision ( i.e., seating Pecson as Mayor of Magalang) has, to all intents and purposes, been nullified and rendered ineffective. We see no merit in Cunanan's argument. The writ of execution issued by the RTC is a mere

administrative enforcement medium of the Special Order - the main order supporting Pecson's motion for the issuance of a writ of execution. The writ itself cannot and does not assume a life of its own independent from the Special Order on which it is based. Certainly, its nullification does not carry with it the nullification of the Special Order. This consequence does not of course hold true in the reverse situation - the nullification of the Special Order effectively carries with it the nullification of its implementing writ and removes the basis for the issuance of another implementing writ. In the present case, the reality is that if and when we ultimately affirm the validity of the Special Order, nothing will thereafter prevent the RTC from issuing another writ. Another legal reality is that the COMELEC is wrong in its ruling that the RTC could no longer actually issue the writ on March 11, 2008 because it no longer had jurisdiction to do so after the appeal period lapsed and after the records were transmitted to the ECAD-COMELEC. That the RTC is still in possession of the records and that the period to appeal (of both contending parties) must have not lapsed are important for jurisdictional purposes if the issue is the authority of the RTC to grant a Special Order allowing execution pending appeal; they are requisite elements for the exercise by the RTC of its residual jurisdiction to validly order an execution pending appeal, not for the issuance of the writ itself. This is clearly evident from the cited provision of the Rules which does not require the issuance of the implementing writ within the above limited jurisdictional period. The RTC cannot legally issue the implementing writ within this limited period for two reasons: (1) the cited twenty-day waiting period under Section 11(b); and (2) the mandatory immediate transmittal of the records to the ECAD of the COMELEC under Section 10 of the Rules.[7] On the substantive issue of whether a writ of execution pending appeal should issue, we do not agree with the COMELEC's view that there are "two presumptive winners" prior to its ruling on the protest case. We likewise cannot support its "balancing act" view that essentially posits that given the pendency of the appeal and the lack of finality of a decision in the election protest, the unseating of the protestee, and the need for continuity of public service, the balance should tilt in favor of continuity or non-disruption of public service; hence, the execution pending appeal should be denied. As Pecson correctly argued, this reasoning effectively prevents a winner (at the level of the courts) of an election protest from ever availing of an execution pending appeal; it gives too much emphasis to the COMELEC's authority to decide the election contest and the losing party's right to appeal. What is there to execute pending appeal if, as the COMELEC suggested, a party should await a COMELEC final ruling on the protest case? Effectively, the "two presumptive winners" and the "balancing act" views negate the execution pending appeal that we have categorically and unequivocally recognized in our rulings and in the Rules we issued. To be sure, the COMELEC cannot, on its own, render ineffective a rule of procedure we established by formulating its own ruling requiring a final determination at its level before an RTC decision in a protest case can be implemented. We additionally note that "disruption of public service" necessarily results from any order allowing execution pending appeal and is a concern that this Court was aware of when it expressly provided the remedy under the Rules. Such disruption is therefore an element that has been weighed and factored in and cannot be per se a basis to deny execution pending appeal. What comes out clearly from this examination of the COMELEC ruling is that it looked at the wrong material considerations when it nullified the RTC's Special Order. They are the wrong considerations because they are not the standards outlined under Section 11, Rule 14 of the Rules against which the validity of a Special Order must be tested. Significantly, the use of wrong considerations in arriving at a decision constitutes grave abuse of discretion.[8]

The proper consideration that the COMELEC made relates to the correctness of the RTC's Decision in light of the Rules' requirement that the victory of the protestant and the defeat of the protestee be clearly established for execution pending appeal to issue. According to the COMELEC, no less than the Second Division cast a doubt on the correctness of the number of votes obtained by the parties after the revision of ballots when the Second Division proposed a mathematical formula to correct the RTC count. At the same time, the COMELEC noted that the Second Division could not have corrected the RTC count, as the petition before it was one for certiorari while the correction of errors in computation properly pertained to the resolution of Cunanan's pending appeal. To the COMELEC, all these showed that the correctness of the RTC Decision in favor of Pecson was far from clear and cannot support an execution pending appeal. We disagree once more with the COMELEC en banc in this conclusion, as it failed to accurately and completely appreciate the Second Division's findings. The RTC Decision, on its face, shows that Pecson garnered more valid votes than Cunanan after the revision of ballots. The Second Division properly recognized, however, that the RTC computation suffered from a facial defect that did not affect the final results; as Cunanan pointed out, the votes for Pecson and Cunanan, if totally summed up, exceeded the total number of valid votes for mayor. Duly alerted, the Second Division looked into the purported error, analyzed it, and found the error to be merely mathematical; the RTC formula would necessarily exceed the total number of votes cast for mayor because it counted some votes twice. In making this finding, the Second Division was guided by the rule that one of the requisites for an execution pending appeal is a clear showing in the decision of the protestant's victory and the protestee's defeat. Its examination of the RTC Decision was only for this limited purpose and this was what it did, no more no less. Specifically, it did not review the RTC's appreciation of the ballots on revision; it did not review the intrinsic merits of the RTC Decision issues that properly belong to the appeal that is currently pending. It merely found that the defect Cunanan noted was actually inconsequential with respect to the results, thus showing Pecson's clear victory under the RTC Decision. In other words, the Second Division's corrected view of the RTC count confirmed, rather than contradicted or placed in doubt, the conclusion that Pecson won. Other than the clarity of Pecson's victory under the RTC Decision, the Special Order cited good and special reasons that justified an execution pending appeal, specifically: (1) the need to give as much recognition to the worth of a trial judge's decision as that which is initially given by the law to the proclamation by the board of canvassers; (2) public interest and/or respect for and giving meaning to the will of the electorate; and (3) public policy - something had to be done to deal a death blow to the pernicious grab-the-proclamation-prolong-the-protest technique often, if not invariably, resorted to by unscrupulous politicians who would render nugatory the people's verdict against them. Unfortunately, the COMELEC en banc simply glossed over the RTC's cited reasons and did not fully discuss why these reasons were not sufficient to justify execution pending appeal. A combination, however, of the reasons the RTC cited, to our mind, justifies execution of the RTC Decision pending appeal. A striking feature of the present case is the time element involved. We have time and again noted the well known delay in the adjudication of election contests that, more often than not, gives the protestant an empty or hollow victory in a long drawn-out legal battle.[9] Some petitions before us involving election contests have been in fact dismissed for being moot, the term for the contested position having long expired before the final ruling on the merits came.[10] In the present case, the term for mayor

consists of only three (3) years. One year and six months has lapsed since the May 2007 election; thus, less than two years are left of the elected mayor's term. The election protest, while already decided at the RTC level, is still at the execution-pending-appeal stage and is still far from the finality of any decision on the merits, given the available appellate remedies and the recourses available through special civil actions. To be sure, there is nothing definite in the horizon on who will finally be declared the lawfully elected mayor. Also, we reiterate here our consistent ruling that decisions of the courts in election protest cases, resulting as they do from a judicial evaluation of the ballots and after full-blown adversarial proceedings, should at least be given similar worth and recognition as decisions of the board of canvassers.[11] This is especially true when attended by other equally weighty circumstances of the case, such as the shortness of the term of the contested elective office, of the case. In light of all these considerations, we conclude that the COMELEC erred in nullifying the RTC's Special Order in a manner sufficiently gross to affect its exercise of jurisdiction. Specifically, it committed grave abuse of discretion when it looked at wrong considerations and when it acted outside of the contemplation of the law in nullifying the Special Order. WHEREFORE, premises considered,we GRANT the petition and accordingly ANNUL the assailed COMELEC Resolution. SO ORDERED.